At this time, I would like to welcome everyone to the Noble Corp first quarter 2012 earnings call. (Operator Instructions) I would now like to introduce Mr. Jeff Chastain, Vice President of Investor Relations. Mr. Chastain, you may begin your conference.

I'd like to welcome everyone to the Noble Corporation's first quarter 2012 earnings call. A copy of the company's earnings report issued last evening along with the supporting statements and schedules can be found on the Noble website at noblecorp.com. Also I'd like to once again use this opportunity to remind you that members of the executive management of Noble will host an Analyst Day on Thursday, May the 24th. The event which will begin with a reception on the evening of May 23 will cover strategic, financial, operations and marketing discussions and will include a tour of the company's subsea control center in North Houston. Complete details on the event can be found at the home page of the Noble website. We look forward to seeing you in May. Before I turn the call over to David, I'd like to remind everyone once again that any statements we make about our plans, expectations, estimates, predictions or similar expressions for the future, including those concerning the drilling business, market outlook and industry fundamentals; financial performance, operating results, fleet condition, performance and downtime; also tax rate, spending guidance, backlog, dayrates, contract opportunities, tenders, announcements, commitments and extension; letters of intent and finally growth opportunities, newbuild delivery costs and dates; and plans and objectives of management for future operations. These are all forward-looking statements and are subject to risks and uncertainties. Our filings with the U.S. Securities and Exchange Commission which are posted on our website discuss the risks and uncertainties in our business and industry and the various factors that could keep outcomes of any forward-looking statements from being realized. Our actual results could differ materially from these forward-looking statements. Also note that we may use non-GAAP financial measures in the call today. If we do, you will find the required supplemental disclosure for these measures including the most directly comparable GAAP measure and an associated reconciliation on the website. I'll now turn the call over to David Williams.

Thanks, Jeff. Good morning and welcome to everybody. Joining with me today in Geneva in addition to Jeff are James MacLennan, Senior Vice President and Chief Financial Officer; and Roger Hunt, our Senior Vice President of Marketing and Contracts. I plan to make just a few opening comments covering some of the things that we've accomplished so far in 2012, and I'll be followed by James, who will give you a rundown on the first quarter financial performance. Roger, then will give us some commentary on the excellent offshore drilling business climate and I'll then offer some closing thoughts before we begin to take your questions. We've experienced an excellent start to 2012 with some achievements having positive long-term implications for the company. Several of these achievements occurred late in the quarter or into the month of April, so let me quickly note some of the more meaningful highlights. We commenced operations on the Noble Bully I and the Noble Bully II, two of eight new ultra-deepwater drillships that will be added to the fleet before the end of 2014. Bully I began its five-year contract in U.S. Gulf of Mexico in late March and Bully II began its 10-year contract all through Brazil in early April. In addition, the ultra-deepwater drillship Noble Globetrotter I arrived in the U.S. Gulf of Mexico to begin final testing and commissioning before commencing its 10-year contract currently expected later this month. Our remaining newbuild projects comprised of five ultra-deepwater drillships and six higher specification jackups are progressing on schedule in the three shipyards where they are currently being built. Collectively, these 14 premium asset additions are driving an impressive earnings and growth profile that begins this year. Our marketing effort so far in 2012, that resulted in a significant position of the floating…

Thank you, David, and good morning to everyone on the call. I've enjoyed the opportunity to meet many of you during my initial few months at Noble and I look forward to developing a meaningful dialogue as we move forward. This morning, I will cover some details regarding the first quarter 2012 results. A few comments on the balance sheet and I will close by updating our financial guidance for the remaining quarters of 2012. As you saw from the press release issued last evening, Noble reported first quarter net income of $120 million or $0.47 per fully diluted share on total revenues of $798 million. These results compared to net income in the fourth quarter of last year, of $127 million or $0.50 per diluted share on revenues of $751 million. A year ago, the company reported net income of $54 million or $0.21 per diluted share with revenues totaling $579 million. I know you will recall that results from a year ago were significantly curtailed by permitting delays following the U.S. Gulf of Mexico drilling moratorium. We're happy to say that that event is behind us in most regards. Reviewing our contract drilling services business, revenues for the first quarter of 2012 increased $27 million to $746 million. This represents an increase of approximately 4% compared to the fourth quarter of 2011. The revenue increase was attributed to four major items, first, we saw a reduction in unplanned downtime especially among our deepwater rigs in the U.S. Gulf of Mexico and Brazil and primarily driven by improved performance on the Noble Jim Day, Noble Driller and Noble Paul Wolff. This had a combined favorable impact of $19 million. Second, we recorded higher mobilization and demobilization revenues about $16 million, mainly due to the Noble Max Smith with the…

Thank you, James. Good morning to everybody. We're only one quarter into this year and it looks as that will be a good vintage. The main build is brisk, particularly in deepwater and we observe excellent fundamentals. As that concludes my remarks and I'll hand the call back to David. News of fixtures on deepwater rigs with improving dayrates and expanding contract terms is becoming a routine event. During the past quarter, over 40 rig years of commitments have been made, excluding the 26 Petrobras contract at dayrates ranging from $460,000 to $605,000. There is virtually no available ultra-deepwater capacity remaining in 2012 and operators have shifted their focus to contracting 2013 newbuilds. The extremely tight capacity in the ultra-deepwater segment of the business is also producing strong opportunities for conventionally moored deepwater rigs. We are now witnessing tight capacities throughout the floating rig sector as evidenced by a recently reported extension on a conventionally moored semi Amos Runner in the Gulf of Mexico at a dayrate of $460,000, up from $360,000 on its current contract. This tight capacity is not unique to the floating rigs. The standard jackup are continuing to post higher utilization and improving dayrates in most regions. It's difficult to find an offshore region, where marketed utilization of floating and shallow-water units, excluding those rigs that are cold stack and not actively marketed by the owner is less than 90%. As David mentioned earlier, our marketing efforts during early 2012 have produced a number of nice contracts for the Noble fleet. On the floating side of our business, we secured several contracts on the semi Jim Day, essentially filling the 2012 window of availability, with dayrates ranging from $550,000 to $605,000. Also semi Homer Ferrington received an additional 150 days of work in the Eastern MED…

Thanks, Roger. I will reiterate the measurable progress that Noble continues to make on several fronts. First, we received an LOI on our third JU3000M jackup newbuild for 80 months at $230,000 a day in the North Sea. Second, we've started operations on our initial deliveries of ultra-deepwater drillships, these first three units, Noble Bully I, Bully II and Globetrotter I should add approximately $500 million per year in annualized revenues, which is just a fraction of what all 14 of our newbuild assets, all eight drillships and six jakcups will contribute once they have completed and entered service between now and the end of 2014. If you make some very general market favored assumptions and add to that, the $2.7 billion in revenues we generated in 2011, you'll began to see the magnitude of the real potential growth of revenues and earnings power coming out of the newbuild program going forward and again as Roger said, we really like what we see in the marketplace today. As a final comment on the newbuild program I understand the concerns some of you have regarding the timely delivery of our newbuild drilling units. Considered the following the initial three deliveries of the 11 projects have remained, 10 of the 11 are located in Tier-1 yard Hyundai and Jerome. These are very well known yards and have a very long history of execution. Because of this consolidation of projects we believe the project execution risk has been lowered and the likelihood of pro-significant project delays in ship yards has reduce. Some of you have also expressed the concerns regarding future utilization in some of our existing deepwater floaters such as the EVA designs. We've not shared these concerns and the market has supported these highly capable assets in fact as you see…

Regina, we're going to go ahead and enter the question-and-answer phase of the call so if you will begin assembling the queue, I would like to ask you everyone to again honor our one-question, one-follow up rule, so that we can address as many questions in the time remaining, thank you.

(Operator Instructions) The first question will come from the line of Dave Wilson with Howard Weil.

Regarding your operations in Brazil, just kind of a bigger question to how has the recent situation down the Chevron and Transocean affected your view of operations down there, has it changed the way you see, Brazilian market longer-term or is it too early to kind of jump to any conclusions yet.

We are jumping at conclusions, I think it is novice in the market that the market doesn't need, Dave, it's certainly a distraction. It's something that concerns all of us. It's not just an issue for Transocean and Chevron, its something that we as an industry are watching very closely. We've got a lot of extra patriots down there, not only U.S. citizens but other nationalities and when government start doing things like this it makes people nervous. We haven't seen anything yet, it's not affecting our operation but clearly we are watching along with the entire industry.

And this is a follow-up, the industry is talking a lot about labor inflation over the past couple of quarters, kind of in the high single-digits in terms of percentage increases. But given all the rigs coming in the market over the next 18 months, do you see the risk at this rate of inflation, labor inflation could even accelerate more and specifically how are you guys prepared to crew up your newbuilds being delivered over this time and are you doing anything different from what you've done in the past.

There is risk. I mean I don't think it's huge that you see the rates accelerate that fast in the 12-month period. I think we've got enough visibility. We've given I think three raises offshore in the last about 22 months or so, our plans is to stay ahead of it. Our turnover for senior rigs staff is very low, I don't think we've lost a Subsea Engineer since late last year. And so I think at least for Noble, we've got our crews, we've got our crew development programs under control for the foreseeable future there. It's highly likely, there is going to be inflation in the wages, I don't think its naïve the way it will be. The way we're addressing it is we are developing our crews; for the way we are dressing our newbuilds we're developing our crews early. We've already got crews identified for the first two rigs for the senior positions. We're in the process of identifying the senior rig personnel for rigs three and four. In some cases, those guys are already working in the fleet in training capacity and other places. We've got as we've talked about the subsea development, we've got subsea capability, we've got lots of subsea engineers working and training throughout the fleet. One of the things that's good about the Noble's story is we've got a lot of brand royalty with the work force. Our turnover senior rig personnel runs generally 3.5% to 4% per year, so it's very, very low. So we have a great stable work force of senior operating personnel. So manning our newbuild rigs won't be a particular challenge for us, it will be a challenge, but nothing that we can't handle cleanly within our fleet. And we're planning for it now and we are working extras in the fleet. That's one of the reasons I think some of the expenses are little higher than we would like to see. We can't run the rig without the people and we are already working with some of these people extra in the fleet.

I might just an additional remark to Dave. With this pressure on the work force a customer sees the same kind of pressure, but they also value the contribution, that experienced people, competent people, will offer the operation. And because of that as we encourage them to think about cost escalation provisions in a long-term contracts, the more amenable to agreeing to that kind of the contract provision. So there is a way of dealing with this inflation.

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

So you guys obviously paint a very strong picture for the supply demand dynamics in the offshore markets. My question relates to the potential demand pool, as you mentioned, Roger, on some of the moored rigs. Do you expect to see a similar market dynamic that occurred essentially from 2005 through 2007, a lot of stack, mid-water floaters right now coming back to work? And do you expect to see significant increase in pricing on those assets as well? So do you think the ultra-deepwater is going to do the same as it did last cycle and drag everything else up along with it?

Yes, I'd be cautious about the term, everything. The first round that you're seeing is as we're observing with our EVA class that are capable of working in 7,000 feet. The rigs that are capable in the 5,000 feet to 7,000 feet, whether they be active or not, that's where the pool is going to occur first. I think it's a little bit early to talk about a floating rig just because that the floating rig is going to be a beneficiary of this pool. But clearly, the mid-range deepwater semis are going to benefit from in the near term the shortage.

When you guys have assessed the supply demand dynamics for the floating rig market and if you can go by class on this. What is the supply shortfall as you look at into '13, not sure if you have a window visibility out into '14, yet? And if you just kind of go through ultra-deepwater, deepwater, et cetera, how do you see the supply demand balance over the next couple of years?

Well, if you look at the numbers, depending on what they look at it, that maybe somewhere between 28 to 31 newbuild ultra-deepwater rigs that are yet to be contracted. And that's from today through the end of the 2014 that we know about. Additionally, there is some 71 ultra-deepwater rigs under contract. It's our view that most of those 71 rigs that the operators have had them, will keep them. So then if we are talking about a demand build for an additional 28 to 30 rigs, you heard me say that we're looking at 40 prospects and that's basically a West Africa story. Depending on what happens in Brazil, Brazil could have a significant impact on the demand build. And now the data point we have mentioned over various calls is that at this construction rate or availability rate, you got to take about three rigs a month off the market. And during the first quarter of 2012, there was 14 taken off the market. So when we look at the global demand picture, one could argue that the ultra-deepwater market is imbalanced and possibly short through 2015.

Your next question will come from the line of Robin Shoemaker with Citi.

I wanted to ask about Mexico and the jackups that you have there, including the two that are not yet contracted, the Frederickson and Joe. Just given what's happened as you've described the jackup market globally and given the number of jackups you have in Mexico and the kind of market conditions there. Are your jackups in Mexico being marketed outside the Gulf of Mexico? And is it likely that they just or is it likely, I should say that they just continue to work for Pemex under kind of day and rig structure that you can achieve their.

Yeah, Robin the way I would answer that is, you know we have a great reputation with Pemex that we have contributed probably more uptimes than anybody. Yes, there was some kind of structural disruptions over the past 12 to 18 months, but clearly Pemex needs more rigs. The rigs that are there, the number of rigs that are there are well suited to their needs for now. It would take substantial capital investment to export them, so I would say that it's likely those rigs will stay right where they are and we believe there will be demand and support them.

And will that market continue to have like dayrate caps as it has the last recently?

Well, already they are stepping outside the formal procedures and they are direct negotiating and that is a story that we're engaged in now. It's going to be a supply and demand situation and the market will dictate how Pemex can prevail with these caps Rob, and I think it's going to be put under test here in the future.

One another question that had to do with the rig construction cost in Korea, Singapore. It sounds like from the way you describe the market that once you get a few more jackups and maybe one or two more of your ultra-deepwater rigs committed, you probably be looking at newbuilds. And the recent costs that we've seen announced are very low. And do you think by the time you might be in a position in the future to build additional rigs and negotiate new rig construction contracts that pricing will have meaningfully escalated from where it is today.

I wouldn't look for meaningful escalation, no. I mean the beauty of what's going on with the newbuild programs in the industry right now is primarily being driven by drilling contractors and not investors. But into 2005, 2008 it was a lot of speculation in the market, capital was available. That's not the same story, its being primarily driven by drillers now who have limited capacity and limited appetite. So I think there is a lot of capacity in the shipyard right now. My expectation is that the prices will flatten or possible comedown some later this year or over the next year, and we look forward to that opportunity.

Your next question will come from the line of Mike Urban with Deutsche Bank.

I wanted to follow-up on those last couple of questions their on the newbuild side, I would agree with you that the market does look pretty tight; the work that we've done would suggest do you need additional rigs. And it sounds like you are considering it, what would be kind of the trigger for you, is it getting some of the additional builds, contract, is it anything around asset sales, that you've firmed up the balance sheet here a little bit with nice debt offering, what are some of the criteria that you're looking to go forward with additional construction?

I wanted to follow-up on those last couple of questions their on the newbuild side, I would agree with you that the market does look pretty tight; the work that we've done would suggest do you need additional rigs. And it sounds like you are considering it, what would be kind of the trigger for you, is it getting some of the additional builds, contract, is it anything around asset sales, that you've firmed up the balance sheet here a little bit with nice debt offering, what are some of the criteria that you're looking to go forward with additional construction?

Well, I mean we still got three uncommitted newbuild ships and we've got five uncommitted jackups, that's a very aggressive newbuild program that still have lot of capacity. We've got a lot of confidence in where we are and I must say, we've got floating side certainly a lot more dialogue going on that we have assets. So to get some more of those book I think it would be meaningful. Right now we have still 11 construction projects facing us. That's by any measure a lot. We'd like to get those little further down the road, I think. But I think if you see as contract the rest of these and have good visibility on some other rigs, some of the jackups, I guess our point is, I wouldn't surprise to see us back in the yard. We don't have immediate plans to get back in the yard. We still have some options that are available to us. But I guess we think the strength of this cycle will support everything we're doing and potentially more. So I guess the point is, don't be surprise, if you see us back in yard by the end of the year.

And then you talked about the clearly about strengthening market out there, both in the deepwater and the shallow water market, that's manifesting itself with higher rates, higher utilization, higher demand. What about in terms of the terms and conditions associated with the contracts and prior calls you've talked about trying to adjust to the new realities especially the floater side in terms of more perhaps equitable sharing of downtime risk. I just wonder if you could comment on that and if you are seeing ability to get more favorable terms and conditions as the market tightens.

And then you talked about the clearly about strengthening market out there, both in the deepwater and the shallow water market, that's manifesting itself with higher rates, higher utilization, higher demand. What about in terms of the terms and conditions associated with the contracts and prior calls you've talked about trying to adjust to the new realities especially the floater side in terms of more perhaps equitable sharing of downtime risk. I just wonder if you could comment on that and if you are seeing ability to get more favorable terms and conditions as the market tightens.

I like the way you say equitable sharing. I'll let Roger comment on exactly what we're working on.

Mike and the answer is yes. Since we last spoke, a quarters past and we have been able to execute a couple of contracts. And I would say that in all of those contracts if you looked at those types of provisions versus the previous contract, it's been an improvement. We got those provisions to where we believe they should be. It's going to be a journey and as you see the rates go up, then we all should be paying attention to the underlying contracts. So there is a good opportunity to have a more equitable contract in lots of provisions and that's a big one. So I assure you we're focused on it. It's a condition of all of our proposals and we're having a degree of success in moving it, the way we wish.

The next question will come from the line of James West with Barclays.

David, just a quick question for you about the newbuild drillships, there are obviously seen a lot of interest right now, what are the conversations about term on contracts for those rigs. Are we talking about three to five year contracts where you might get almost full payback?

I'll let Roger answer that, but I can tell you we're seeing a full range from two to five and four, so I'll let Roger to give some more color.

James, let me address your question from a kind of a view point of what are we saying with operators behavior. When I think about our conversations over the past 12 months, particularly let's say, a year ago, we would characterize operators behavior as taking more of adjusting time approach. They saw a supply bill and they thought like they had absolute plenty of access to rigs when they needed them. And so when you look back five six years ago, whereas the lead time on the project might have been two to three years, 12 months ago, people were just looking 12 months out. There was a few exceptions, there were a couple of operators that basically saw deepwater assets as strategic assets and they contracted very long, 10 years. Of course, with Petrobras they're going with 15 year deals and that's a particular situation. Today we see a lot more concern about access to the right rig; the right crews and I do believe it is becoming more of a strategic decision. So as you question about term, I think we'll see everything. But we're seeing you know two, three, five but you'll also see some customers go longer than five.

And obviously the psychology in the market has changed fairly dramatically in the last 12 months the way it sounds like, as you guys think about your contracting strategy versus you've obviously got a potential additional newbuild as well in the market, with the market where rates are rising fairly rapidly and it's probably hard I would think even for maybe your marketing people to know exactly where rates at certain points because they're going up so quickly. So how do you think about holding off from contracting in some of your newbuilds to given six more months or 12 more months for the ones that are build further out to see where rates go or we rather just go ahead and have the comfort of those newbuild being contracted?

Holding rigs off the market to kind of wait the market out is a dangerous strategy, you know it's a cyclical business and you never know what's going to happen. We price our services and in our view is if an operator gives us a legitimate opportunity, we can price it, if it's one well or ten years, we can come up with the pricing strategy that we're happy with. So we may strategically price if an operator asks for a two-year quote or five-year quote, there will certainly be a lot of (inaudible) that goes into how we develop that pricing structure. But if somebody gives a good opportunity on a three or five-year deal, we're going to take it. I mean that right there, if we can get the rest of and that gives us an opportunity more and to miss an opportunity and then impact the value of the enterprise longer term is not probably what we're going to do. So if we get a good opportunity we'll take it.

Our next question will come from the line of Ian Macpherson with Simmons.

I know it's just been a few weeks but can you comment on what you're seeing performance wise out of the Bully rigs and give us some ideas how we should think about the utilization for those rigs over the first few quarters and service?

So far we haven't seen anything that scares us. The rigs are operating as they're designed to operate. We have a construction side and the drilling side on the floor both sides are working beautifully, so with any new assets there are running issues, as there is newbuild rigs, there is kinks in the armor to work out but frankly the Bullys have done very well so far, so we're pleased with the kit, we're pleased the level of support that we're getting from the manufacturers. To guide you specifically on utilization I can't do that. But we've seen no surprises and we haven't seen any reason to change our view that we're excited about the kit.

Then just a quick follow-up from me, back to setting dynamics for ultra-deepwater, can you measure or can you appreciate the significant difference in the pricing power that your first Hyundai drillship has with a late '13 available window compared to the contracts that we've seen on early available rigs, say rigs with '12 availability that have gotten the three to five year terms in the high 500 or 600 better, is there a backwardation today and is that shrinking, just I want to think about how to frame expectations for contracts that you might announce later this year?

I don't want to get too specific Roger is grinning. As we eat up the 2012 capacity and as, Roger, correctly points out, the operator is looking for 2013 that shrinks it, shrinks the available capacity. In terms of expectation, I'll let Roger comment before but I don't want to set too much of an expectation. But again, we're pretty excited, what we see in the marketplace right now.

Ian, I really don't have an epiphany here that we're in the middle of a lot of discussions. And so therefore we are pricing. So we'll refrain from getting into predictions, but you'd capture the call that some of these recent fixtures have been taking advantage of being the last, girl on the dance floor. And that situation has gone. And so now operators have a little bit breathing room now, because they're now looking at projects that start 2013 and beyond. But the fundamentals that we spoke to are very strong. And so I think from a pricing perspective, we are really pleased with what we see.

I liked your comment that sounds appropriate.

I was concerned that the audience may not have knowledge of what I was speaking to but I was assured that it did.

Your next question will come from the line of Matt Conlan with Wells Fargo.

So I wanted to touch on the divestiture possibilities as you continue to evaluate the different avenues, a bulk sale, individual assets sales or spin-off. Has anything, any avenue become more likely or more attractive over the last three months?

No. We continue to look at opportunities. There have been opportunities out there. We continue to look at them. Matt, we looked at one and two sale opportunities that are out there. It's one of the challenge we've got with the fleet is they're just about all working or committed somewhere. So that is just an element that that complicates any kind of divestiture. I would say that that our preference is going to be something in bulk, not 1zs or 2zs, but you don't always get your preference. I mean the market dynamics and our desires haven't changed, likewise they don't really match up and so the challenge really is getting an appropriate value. And as I've said before, we just haven't seen a transaction yet that we can execute, that broaden up value and the door that we thought was reasonable. So as I said in my comments, we haven't given up on it. It's just getting rid of rigs, when the market becomes as energized as it is right now, it's just challenging. So we're still looking at it.

And as a follow-up, are there any prospects for reactivating the Bouzigard?

The Bouzigard is not really on our radar screen, right now. With what's going on in the Gulf of Mexico, from a BOP configuration, it's probably better suited to an international opportunity. And if the right one pops it to that, we'll certainly pursue it vigorously. But right now, there is no method on the radar that's looks really exciting for the Bouzigard.

Your next question will come from the line of David Smith with Johnson Rice.

Question is for, David Williams. David, am I correct in recalling that you were the VP of Marketing at the Diamond in '04 and '05?

Well, in '95, I did sort of time at Diamond Offshore. I've been with Noble now since 2006.

So the '04, '05 period, you probably remember that the rapid move in deepwater demand that saw the average deepwater rig backlog, you go from 400 days per rig in 4Q '04 more to you more than doubled to a 1000 days per rig in 4Q '05.

I did.

You were there when operator started to realize, they just couldn't get the rigs they wanted, when they wanted. So I want to ask given your background and the history, what kind of urgency you're seeing from the operators today. How that has changed, maybe versus six months ago and whether do you think operators adequately anticipate just how tight the markets are becoming?

I would say, operators don't ever accurately anticipate how fast the market is coming. Almost all operators operate almost all prospects in partnership with other operators. So they do share information. I would say based on what our marketing guys are telling us now, Roger and his guys, who are far better marketing team then I ever dreamed to be in. The level of excitement and I don't want to call it a panic, but the forward view of the operating community now is probably more tightly focused than it was at that time, previously. And I think it's because they have fewer alternatives, North American gas doesn't look very exciting. U.S. Gulf on the shelf doesn't look very exciting. So deepwater around the world, A to have access, and B, there is been a lot of, as Roger talked about a lot of success. So I think that they are tightly focused on those opportunities. So I think everybody is a little bit better forward looking now than they were in the past.

And quick follow-up question, regarding the comments that you're evaluating the hygrating fleet and you're focused on getting the appropriate value. Do you have an opinion on whether a private or public sale could be the best path to secure that appropriate value?

Either way, we could entertain any kinds of transaction that brought the appropriate value for our shareholders. The shareholders own them. And we have these bankers come in and say we get a half-turn must be given away. We don't want to give them away. And we think they got value. So it's either, you know, private equity or public company, either one would be a reasonable access strategy for us, given the strength of whoever the buyer is. And the value that we can derive from what the assets is involved in transaction.

So if you have not seen that value yet from the private side, so is it safe to assume that you're looking at maybe working towards the public side. Johnson Rice: So if you have not seen that value yet from the private side, so is it safe to assume that you're looking at maybe working towards the public side.

I wouldn't assume anything other than what we have already said. We're just going to assume that it's a deal that we couldn't do.

Our next question will come from the line of Waqar Syed with Goldman Sachs.

You had mentioned a number of times access to the right rig, what are the key features you think on let's say a fourth-gen rig that EMP company or operator is looking for that may differentiate one rig from another and similarly for a second or third-gen rig. You know is the word right rig that I just wanted to get some more color on the definition?

Depending on when you ask that question, I think you'll get a different answer. I think you're trying to get to what kind of drawer somebody refer to in terms of as ultra-deepwater rates go up. You know one of these less capability floaters, what are we going to see there. I think one of the big differentiating feature is probably today is the rig up of the BOP subsea system. I think there will be certain standards, but some of these all the rigs may have difficulty in meeting as operators take their standards from the Gulf of Mexico to other areas. So that would be one feature that you would look closely at.

And second, just one quick question on your CapEx, the newbuild CapEx $2.5 billion that you have coming up, could you split it for 2013 and 2014, what is due in '13 and what is due in '14?

We have not provided that guidance. We will update the CapEx guidance each quarter but we've not broken it out by year beyond the next 12 months.

Most of the newbuilds are back and loaded where I think 60% is due of the construction prices due on delivery. So you can probably do the math and the total value, it's back into the number.

The final question will coming from line of Alan Laws with BMO Capital Markets.

Two quick ones, West Africa, it's clearly a hot market deepwater, but also it seems like there is a more of a material uptick in demand for jackups. Even in Nigeria there has been some nice increases in dayrates. You got a number of rigs their to finish the contracts later this year, could you talk a little bit about your rate expectations and the importance of the Nigerian market to add to what is already kind of a tightening Africa situation?

Nigeria is a very important market for the last 10-20 years. Unfortunately there are so many kind of structural hurdles that our customers have to work through now as we do with local content issues. There is a lot of confusion in that market. So it's very important. If you have removed all of these kind of geopolitical type of issues then, I think there will be a big demand build. In the absence of that these dayrates changes that you're seeing now, nice as they are. Industry has done a good job of kind of limiting the fleet there. Hats off to the some of our competitors. The other aspect is that cost increases in Nigeria and new cost are delivered to us everyday. So a lot of this dayrate jump is just catching up with cost, it's a very expensive place for the business now. But having said all that, you're right. Recent jackup fixtures for 250 where around 140 and that's where they needs to be. So any rollovers that we have, we would certainly be looking for market rate.

Another quick one here to more general one, it seems like the cost shocks are declining for you and really the sector at large. I want to know, has the storm now passed or is there more volatility to come, maybe essentially, are you sort of, Dave, you'd like this one, you stand in your ground with your hands around the throat of the cost (inaudible), can you provide your thoughts on that?

Alan, we're always trying to stand our ground. There is going to be cost creep. We're not uncomfortable where we guided you through this year. We feel good about our assets to labor. What happens in individual markets that's where the shocks going to come from. But we feel good about where we are right now. I think we've got a hand along what we got in front of us. We'll see how it goes next year. There is a lot of things to play into it. I mean if the deepwater market or if the newbuild market kind of slows a little bit that will impact the price of goods and services, rope, soap, and dope. If it starts to accelerate again that has a different impact. So right now, we feel pretty good about where we are. Again, it's naive to believe the costs are going to go up, but I don't think they'll going to be crazy.

Okay, well with that we'll go ahead and close today's call. I'd like to thank everyone for your participation today. Make a note that our second quarter '12 earnings release will be on July 18 with the call on the 19 and we'll confirm those dates about three to four weeks out. I am available to take any follow-up questions over the day. Regina, thank you once again for your coordinating the call. Good day, everyone.

Thank you, ladies and gentlemen. This does conclude today's conference. You may now disconnect.