Welcome to the National-Oilwell Varco first quarter 2010 earnings conference call. My name is Kim and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Loren Singletary, Vice President of Global Accounts and Investor Relations. Mr. Singletary, please go ahead.

Thank you, Kim, and welcome everyone to the National-Oilwell Varco first quarter 2010 earnings conference call. With me today is Pete Miller, Chairman, CEO, and President of National-Oilwell Varco; and Clay Williams, Chief Financial Officer. Before we begin this discussion of National-Oilwell Varco’s financial results for its first quarter ended March 31, 2010, please note that some of the statements we make during this call may contain forecast, projections, and estimates including, but not limited to, comments about our outlook for the company’s business. These are forward-looking statements within the meaning of the Federal Securities laws based upon limited information as of today, which is subject to change. They are subject to risk and uncertainties, and actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. I refer you to the latest Form 10-K National-Oilwell Varco has on file with the Securities and Exchange Commission for more detailed discussion of the major risk factors affecting our business. Further information regarding these, as well as supplemental financial and operating information may be found within our press release on our website at www.nov.com or in our filings with the SEC. Later on this call, we will answer your questions which we ask you to limit to two in order to permit more participation. Now, I will turn the call over to Pete for his opening comments.

Thanks, Loren and good morning. Earlier today, we announced first quarter 2010 net income of $422 million or $1.01 a share on revenue of $3.03 billion. This compares to net income of $394 million or $0.94 a share in the fourth quarter of 2009 on revenues of $3.13 billion. We are very pleased with these results and they speak to the outstanding execution of performance of our great employees as they continue to provide the best products and services to our customers. Clay will expand upon these numbers in just a moment. Additionally, we announced new capital equipment orders of $618 million and a quarter-ending backlog of $5.4 billion. I will speak a little later in this call about our operations and the backlog more in-depth, but at this time, I want to turn the call over to Clay.

Thanks, Pete. National-Oilwell Varco generated first quarter 2010 earnings of $422 million or $1.01 per fully diluted share compared to $0.94 in the fourth quarter of 2009 and $1.13 per share in the first quarter of 2009. Included in these results are $38 million or $0.09 in charges related to our operations in Venezuela where the bolivar was recently officially devalued against the U.S. dollar. $27 million of this charge relates to the devaluation of monetary assets NOV has in country and $11 million balance was the write-down of receivables in view of deteriorating business conditions there. Excluding this devaluation charge, first quarter earnings were $1.10 per fully diluted share, up 15% from the fourth quarter of 2009 earnings, excluding $0.02 in transaction charges last quarter and down 3% from the first quarter of 2009. This was a great result for the quarter which rose from the highest operating margins posted by NOV since late 2001 along with a little help from an ascending North American rig count in the first quarter. Consolidated revenues were $3 billion, down $102 million or 3% from the fourth quarter and down $449 million or 13% from the first quarter of 2009. Operating profit, excluding devaluation charges, was $648 million or 21.4% of sales. Despite the sequential revenue decline, operating profit rose $26 million from the fourth quarter. All three segments posted higher sequential margins without benefit of significant sequential sales growth for any of the three. There are two big reasons for this. The first is experience. We continue to steadily navigate our way up the learning curve on complex offshore rig-building projects. Those of you who have followed our company for many years will recall that in 2005 we began to highlight two long simmering challenges that the oil and gas industry…

Thanks, Clay. Listen, I just want to make a few brief comments about our operations and some things that we are seeing around the world and then what we will do is we'll turn it over to you guys for some questions. But last call, we really talked about six predominant themes that we were seeing throughout the industry and they really kind of held forth, I think, even with this quarter. Basically, they've been the inventory replacement. We talked about a lot of the rigs that were stacked out early, took all of our inventory off of that, utilized it sort of in the latter part of 2008 and the first part of 2009, you really were eating up existing inventory. And today, that’s gone. And that's one of the reasons when you look at our distribution business that we've been able to stay fairly vibrant in a tough environment. When you look at our competition, we are doing quite well, vis-à-vis then. So I think a lot of that has to do with inventory replacement. Clay mentioned our mission operation, same thing there. So that inventory replacement is really helping both the distribution in our petroleum services and supplies business. The second big one and the big theme is shales. And I could talk about shales for a long, long time. They impact everything that we do. We are opening up new distribution facilities throughout the United States in different plays. In our PS&S group, when you talk about bottom-hole assemblies, bids, Clay mentioned the drill pipes, Tuboscope, they are all impacted directly with that, and we are also making very specific rigs that deal with these shales, things like the Drake Rig and the IDEAL Rig, which we are utilizing. The other thing that's pretty interesting about…

Thank you. (Operator Instructions). At this time, we have a question from Kurt Hallead from RBC. Please go ahead. Kurt Hallead – RBC: Hey, good morning.

Good morning.

Hi, Kurt. Kurt Hallead – RBC: Well, I'll start off and with the most obvious of obvious questions as it relates to the Petrobras orders. You guys seem very confident about the prospect of the bidding going in May and not necessarily being delayed again. Can you give us some backdrop to that high level of conviction as to why you think you won't get pushed out to the right again? And then could you give us benchmarks just that we can look for that will give us some indication as to whether it's going to go through or get – or potentially get delayed again?

Kurt, obviously, anything can happen and it could potentially get moved more to the right. But we feel pretty confident that they want to get these tenders and they want to be looking at them. And I think that that's important for them. I think that most of the questions have been answered at this point in time. I'm talking specifically really about the ones going into the Brazilian shipyards. I think that's the – those are the ones that we are spending a lot of time concentrating on right now. And my guess – and it is clearly a guess, I'll put a caveat here. They are not going to come out tomorrow and say, "We've extended it another two weeks." But the fact is we don't feel that way right now and the signals that we are getting is that they will go in the mid-May time frame. I think once those are in, I think there are going to be a lot of clarifications, there is a lot of specific processes that the Brazilians have to have legally, have to be able to have everybody to be able to take a look at it so you can see if everybody is bidding the same thing technically. There is different issues like that. So my guess is there will be a couple of months that are going to be involved about clarifications, whether or not everybody is kind of bidding apples and apples or apples and oranges. And then I think ultimately, as we look into the second half of the year and late into the third quarter, we'll start to get a little bit better feel as to when we think they will – they might come back and ask for additional clarifications, they might – I don't think that adds for a complete re-tender, but they can do things like that. And I think as we get into the fourth quarter, we should be looking at either orders being placed or being fairly imminent at that point. So that's kind of – that’s – and again, I'm going to put a caveat on that. I mean, I – obviously, I'm not in the inner workings of Petrobras, but based upon – we've got very close connections down there and that's kind of our best feel at this point. Kurt Hallead – RBC: And then my follow-up would be, the margin performance is just exceptional. So well done on that front. So with the backlog declining the way it is and the prospect of in the very near term, call that next one to two years, of maybe the rig tech backlogs not getting back to where it was in 2008, kind of begs the question, can you drive as much to the bottom line on a lower revenue base given this learning curve as we move forward? What would be your take on that?

Yes, I think we are actually demonstrating that now, Kurt. If you look at rig technologies, the revenues were down year-over-year double digits. And in spite of that, margin was substantial higher. So what you are seeing is a very finely tuned machine now, working on lower volumes and generating great margins. As I pointed out in my opening comments though, to be fair, the backlog that we have now still reflects pricing back from '07 and '08 and that pricing was pretty buoyant. We come under a little pressure lately, so it's not quite as good, but still solid. And we've got a lot of confidence in the ability of our team to execute these orders and post a really strong margin. Kurt Hallead – RBC: As the cycle evolves here, the prospect of you doing some add-on businesses, bottom line is can you generate as much of an earnings – as much earnings power in this upcoming cycle without $12 billion of rig tech backlog? What will be your take on that, Clay?

Yes, we've been in that kind of dollar per share range even with the downturn. I mean, our backlog – our starting backlog this quarter was 6.4, 1.12, it was $6.4 billion. And we are generating good earnings, over $1 a share. So think the machine is running well. Obviously, we recognize we need to reload with backlog, but again, the largest tender that we've ever seen in this industry is due this year and we like our chances. And I'll add, it's not the only thing out there. We are talking to other operators as well about other opportunities to build rigs. Kurt Hallead – RBC: Okay, great. Thank you.

Thank you, Kurt.

Thank you. Our next question comes from Jim Crandell from Barclays. Please go ahead. Jim Crandell – Barclays: Good morning, guys. Great quarter.

Thanks, Jim. Jim Crandell – Barclays: I know you don't like to talk about specific orders, but given the attention and potential size of this DELBO [ph] order, could you give us some kind of indication where that makes sense?

No, Jim. I don't like to talk about specific orders. Jim Crandell – Barclays: You were so expansive on Petrobras. So I think you could – I thought you would maybe want to talk about DELBO.

Well, the Petrobras is expansive in their own right. We – what we do is – if our customers talk about it, we talk about it. If they don't, we don't. I know there is a lot of interest out there on it, Jim. But it would be imprudent for me to make a direct comment about what they are doing. I will say this though. We are excited and it's not just the Petrobras tender that's out there today that’s available to us. So there is other things that could potentially happen. Jim Crandell – Barclays: Okay. Pete, in addition, I guess you talked about Brazil. Could you talk about the other sort of potential sources for new deepwater rig orders touching on India, China, the Arctic, and maybe how major oil companies might feel about ordering new rigs over the next year or so?

Absolutely. Good question, Jim and I know that we've talked about that a little bit in the past. And I think that's one of the things that people have to realize is that while Petrobras clearly is the one that everybody wants to talk about, there is still a lot of activity going on around the world and there is lot of deepwater necessity around the world. Arctic, in particular, you've heard some drilling contractors talk very openly about that. And I think having rigs that are capable of drilling in the Arctic, they are different animals and they – you can't take something out of the West Coast of Africa or the West Coast of Brazil and move into the Arctic. And so I – we are excited about some opportunities there. I think if you look at the other continental shelf of Northern Norway, we are actually working with Statoil right now on an engineering contract to design a rig very specifically for that particular area. The India area, I think, in particular is pretty exciting and as you take a look at some of the deepwater that's off the West Coast of India – and the other interesting thing there is unlike West Africa and Brazil, those waters aren’t benign. They have typhoons, they have – it's much more like a Gulf of Mexico-type operation. So the rigs themselves have to be a little stouter and a little bigger. So I think that's another area that's exciting. South China Sea, you are seeing more opportunities there, offshore Australia. And I think the other thing is that people are looking at a slimmed-down version of drill ships too. Not only are we talking about the big exploratory-type discovery, clearly there are type (inaudible) like Transocean has, but also some of the smaller ones that are going to be more for the development once these big fields are discovered. So we think there is a lot of potential out there for things like that. And we are excited about it and while it – all might not come in the next quarter or two, we think over the next couple of years, you are going to a good inflow of opportunities like that. Jim Crandell – Barclays: Okay. And then final question, Pete. What do you think of the prices paid recently to do acquisitions or let's say, large acquisitions and how do the prices paid sort of influence your thinking on not only the prices paid, but let's say the – because of those, the prices that companies may want that, how does that influence your thinking about doing acquisitions at this point in time?

Well, there have been some nice prices paid. Actually, that doesn't impact what we offer. What it does do is it impacts what the folks that were offering, think we are going to offer. We stay pretty disciplined and I think that we have an awfully good track record of that and we are not – everything we do, we want to make accretive immediately. We want to kind of stick with the criteria that we have and that makes it difficult sometimes. However, we've still got an awful lot of opportunities out there today, Jim. And as we look at those, we probably have as many things that we are working on right now as I can recall us having worked on in the past. And I'm excited about it and we are still able to close deals. I can't pass judgment on what other people paid, but I can assure our shareholders that we are going to stay very disciplined and we are going to try to continue with the same sort of track record that we have. And we will be successful, I mean, I – there is no doubt in my mind. We are patient, we can write things out and we'll give the targets that we have on our scope.

I'll add too, Jim. We are not afraid to roll up sleeves and tackle acquisitions that need a little fixing and in fact, a couple of the acquisitions we did last year came in at pretty dilutive margins and we are not afraid of that and have active kind of turnaround projects underway. We've done that consistently for many, many years and have a lot of confidence in our managers to execute on that well. And we are in many ways looking for targets in – we are a strategic buyer. And that’s one of the things in addition to our infrastructure, our reputation, our global footprint, the willingness to tackle some businesses that are, let's say, challenged. It means we can get really, really good deals that offer good returns for our shareholders. Jim Crandell – Barclays: Okay. Great to hear. Thanks, guys.

Okay, Jim. Thank you.

Thank you. Our next question comes from Robin Shoemaker from Citi. Please go ahead. Robin Shoemaker – Citi: Thank you. Clay and Pete, I wanted to ask on the non-capital piece of rig technology, we can kind of see the revenues there kind of drifting down as the markets declined in the sort of running $500 million, $600 million a quarter in '08, $400 million, $500 million a quarter in '09, starting out $380 million in the first quarter. So what could you tell us about the non-capital – the aftermarket business in rig technology?

Yes. First, Robin, most of that non-backlog revenue is aftermarket. And the aftermarket is actually fairly stable. It was, call it, flat sequentially from Q4 to Q1. The volatility that you are referencing there is largely the non-aftermarket piece of the business. These are smaller capital goods. We have a – by necessity, we have a pretty arbitrary cutoff of what goes in the backlog and what doesn't. And we cut off orders at $250,000. If they fall below that $250,000 threshold, they don't hit the backlog and so they go through non-backlog. And if that piece is very volatile and it just depends on which side of that line orders fall in a particular quarter. So you are seeing that sort of non-backlog capital equipment business, it will go up five-fold quarter-to-quarter and then will contract and we just saw a big contraction this quarter. But the aftermarket business did drift down from '08, but we remain pretty bullish on it and it's been pretty stable through '09 and into the first quarter this year and again, its rig counts have recovered and as we add new floating rigs to the fleet, we think we are going to see growth in that aftermarket business. Robin Shoemaker – Citi: Yes, that's what I was anticipating. So we should see it going forward. The – just going back to your comments on the drill pipe business, Clay, it seems like you did – you exceeded 100% on book-to-bill. That – do you have a sense of – now of how much inventory of drill pipe is on the ground or on stack drilling rigs? How much has been worked down and is there a potential for the kind of surge in drill pipe sales, very pronounced or – that we've seen in previous cycles?

Yes, I think you are – we can't quantify it exactly, Robin. Those inventories are held by joint contractors around the world. But what we think we are seeing here is the increase in North American rig count has driven consumption of inventories of drill pipe and that means we are kind of burning through that inventory. And then the other phenomenon we are seeing is kind of the flavors of drill pipe that are on the ground out there may not be the best flavors for the shale plays that are driving a lot of the rig count increase. So that's why we are particularly excited about the interest we are getting from customers in the – on the HI TORQUE premium connections that are going into these shale plays. So it's not just a matter of the volume of drill pipe on the ground, but it’s also – what it matters the flavor of the drill pipe that’s out there. Robin Shoemaker – Citi: Okay. That's good. Thanks a lot.

Thanks, Robin.

Thank you. Our next question comes from Geoff Kieburtz from Weeden & Co. Please go ahead. Geoff Kieburtz – Weeden & Co.: Thanks, good morning.

Good morning, Geoff. Geoff Kieburtz – Weeden & Co.: Clay, I'd just like to pick up on that last subject. You lost me a little bit in your discussion about the drill pipe margins. I thought you said that the mix was getting more negative that is more API pipe than you've commented on the shales requiring the HI TORQUE connections. Could you just walk through what you expect in terms of drill pipe margins?

Yes, Geoff, the difference I think is the difference between revenue recognized in the quarter and orders flowing. Geoff Kieburtz – Weeden & Co.: Okay.

We are seeing orders flowing in, reflective of a more – higher interest of premium connections and versus sales going out in the quarter, more reflective of a traditional mix. If you recall our comments late last year, drill pipe held up really, really well despite a low backlog. And the reason for that was it was mostly sales strings into these new offshore rigs. Geoff Kieburtz – Weeden & Co.: Right.

For heavy pipe, premium pipe, high tensile strength, high torque connections and those carry a very, very good margin. What we saw in the first quarter in terms of shipments – and this is in line with our guidance last quarter, was a shift more towards the traditional mix of API pipe and that's – that did in fact occur in the quarter and so margins went down at a pretty good clip. Now, our group did a good job offsetting that. It was – it's lower-margin pipe, but it's higher sort of piece count moving through the factories and so that helped us on the absorption front. Geoff Kieburtz – Weeden & Co.: Okay.

And we are also – we are using lower-price green tubes which help us on the cost front in the quarter. Geoff Kieburtz – Weeden & Co.: Okay. So the drill pipe, though, was the primary reason we saw revenue down sequentially in PS&S?

Yes, absolutely. Very sharp decline, I mentioned in the comments, over 30%, it's close to 40% sequential decline. Geoff Kieburtz – Weeden & Co.: And that should become a positive to PS&S revenue trends?

Yes, I think as we work through the next couple of quarters with the orders picking up, as the rig – if the rig count remains high, which is certainly a question mark, and as the builders of these new offshore rigs come back to the marketplace and buy strings to outfit those rigs, those are all positives. And so we – we got our fingers crossed for a recovery late this year and so far so good. Geoff Kieburtz – Weeden & Co.: Okay. And then on the rig tech margins, I think you said in your guidance that you expect the margins to pull back to the mid-20% range in the second quarter?

High-20s, Geoff. We are kind of upping our guidance on that a little bit. We've been, as I mentioned, very positively surprised with favorable cost on projects that we've executed over the last few quarters. Geoff Kieburtz – Weeden & Co.: Right.

And we've had $30 million, $40 million of positive cost experience kind of hitting quarter by quarter. So kind of resetting our guidance on that, we think, Q2, we should be in the high-20% range, despite – but we do know volumes went down this quarter, revenues went down this quarter for rig technology. They are going to go down again in Q2, but we are kind of resetting to a little higher margin level. Geoff Kieburtz – Weeden & Co.: Okay. And if I could just ask one last question, Pete, you obviously don't want to talk about orders in terms of specific customers and so on. I wonder if I could get from you a sense on – generally, if you look out over, let's say, three to five years, you pick the time period, what do you think the average capital equipment orders in rig tech are going to be?

Geoff, I answered that. I think my General Counsel would run in here and behead me right now. Geoff Kieburtz – Weeden & Co.: I know you don't have a great experience with forecasting orders here, but –

Well, Geoff, it just goes back to – we like where we are, we like our strategic position in this industry. We've consolidated, we've made sure that we are somebody there that has an integrated package that we can offer people. We think the industry continues to need what we have. We've gotten a good start on retooling the industry and we've been talking about retooling the industry for 10 years. And it's come into pass and so I like where we are. To make any prediction on that, if I gave you dates, I wouldn't give you numbers and I gave you numbers, I wouldn't give you dates. So – again, we just like where we are strategically and we think that the industry still needs an awful lot of stuff over the next five or 10 years. Geoff Kieburtz – Weeden & Co.: You think '09 would be the low point for the next five years?

I – you tell me what's going to happen on the general economy. I mean, I would ask you, are we going to have another meltdown like we had in '08, are we going to have – you know, our fear is not so much where we are today. I mean, at $84, $85 oil, the vast majority of our backlog that we created was created at a much lower oil price. The fear I have is what happens to the rest of the world is are you going to rescue Greece, is there going to be a prolonged recession in Europe, do we have a double-dip recession in the United States, I mean if you can answer all those questions, I'll answer yours. Geoff Kieburtz – Weeden & Co.: All right. We'll take it up later.

Okay. It sounds good.

Thanks, Geoff.

Thank you. Our next question comes from Collin Gerry from Raymond James. Please go ahead. Collin Gerry – Raymond James: Hey, good morning. I just got a couple of quick ones. Clay, you touched on the M&A margins being a little bit dilutive on the out – at first. You made quite a bit of M&A last year. Could you maybe talk to us about how the integration is going there and maybe how that affected the quarter?

Well, I mean, I think great news all the way around. The integrations are going just according to plan and in any of these acquisitions, Collin, we always run into some negative surprises we didn’t expect. We try to flush out as much as we can during due diligence before we close, but inevitably, you hit a little – some stumbles along the way and I'm pleased to report that the businesses we acquired, those have been pretty minimal, and so I think we've got good contributions from those acquisitions and a couple particularly late in the year and the one we did in the first quarter are under process. So we've got tight integration plans that we put together before we close and then we stick to them after we close, and so far so good. I can't stress enough the importance of experience in this area. We've got business unit managers across the company that have done many acquisitions, who had successfully integrated many businesses and it is a very challenging undertaking, but one that our folks really know how to do well. Collin Gerry – Raymond James: Yes, I guess that's kind of what I was getting at is you all arguably have the – a better track record than anybody on that. And so just as I look at the quarter, you all did some M&A relatively recently. I was wondering if margins were somewhat diluted by that. And then as we see – as we look out going forward that you have a rebound effect.

Yes, the – and the answer is yes, but not in a big way, Collin. I don't – I'd be reluctant to – I mean, I will tell you that margin improvement within acquired business is baked into the guidance that I give in the second quarter and so it's all sort of accounted for there. But yes, there was a little effect in Q1. But for us, this is a – this is an ongoing process. We do M&A pretty much every quarter. I think in the last four years we've done 38 acquisitions, we've spent about $8.5 billion total including the Grant Prideco acquisition and so every quarter, we hope to have acquisitions pulled in and be executing integration and consolidation exercise within NOV and that's kind of a long-term growth strategy. Collin Gerry – Raymond James: Okay. Last one for me. Pete, you've been talking about Russia with somewhat of a cautious optimistic tone for the last few years. It sounds like you are getting a little bit more bullish. I listened to some of the other service companies, it sounds it's a 2011 event. Maybe just give us a little bit more color on what you are seeing out of Russia and how you see that market evolving over the next couple of years.

Actually, Collin, we kind of like what's going on there right now. I think that as you take a look at it, probably other people when they are talking about 2011, probably are talking much more about hitting maybe full stride. What we are seeing today is we are starting to get some equipment orders in there. We are starting to get some clarity around some M&A opportunities. I mentioned that we opened up a new facility in (inaudible). It's doing a lot for us with our downhole tools and PS&S area. We've got a little company that we bought not long ago over in Sakhalin Island. We think we see some expansion opportunities over there. But it's more – I think that it's finally opening up a little bit. We are sensing a freeing up of funds to do things. The Russians were hit pretty hard when we had all the economic downturn of late '08. And I think they are really kind of coming out of it right now pretty well. Obviously, $84, $85 oil isn't hurting that. And so we are starting to sense that there is some real deals now that are on the table and they will start to manifest themselves in 2010 and clearly, we will be picking up speed by 2011. So we kind of like what we are seeing over there right now. Collin Gerry – Raymond James: All right. That's it for me. Thanks again.

Thanks, Collin.

Thank you. Our next question comes from Roger Read from Natixis Bleichroeder. Please go ahead. Roger Read – Natixis Bleichroeder: Yes, good morning.

Hey, Roger Roger Read – Natixis Bleichroeder: I guess, maybe kind of hitting a little more on the deepwater stuff since we haven't hit it hard enough, you all talked about the pricing issues, the backlog today, you've got kind of the '07, '08 peak pricing in there. What are you seeing in terms of, if maybe not in absolute price or maybe the margin is – obviously, some of the raw material costs came down and bounced back up a little bit. What do you think the impact is as you look into a 2011, 2012, the next wave of orders, not just the ones out of Brazil, but also some of these other potential regions and projects?

Well, Roger, I think there is a bunch of dynamics here right now. When you start talking about pricing, number one, we are not going to really tell you what we are pricing because of our competition listens to this. But I will tell you that we've become a lot more efficient. If you go back and look at 2005, 2006, Varco and National were merging and we have a lot of the challenges there, we are also coming out of a downturn that really didn’t have our plans moving at anywhere near the speed with which we move today. And so what you have today is a tremendous efficiency gain. I think that's manifested in 30% margins that you are seeing out of drilling. And so we kind of like where we are and we think that while pricing may come down, we have an efficiency and a reduction in some cases of raw materials that ought to be able to offset that so we still maintain some decent margins. And let me also stress, we don't work for practice. I mean – this is, we get to sell something one time and when we sell it, then we'll support it for the next 20 years, but this isn’t a situation where we are going to just give something away so we can work for practice, that’s not what we do. So I'm confident that we are going to be able to continue to return good margins to our shareholders in the future. Will they be at 30% all the time? No, not necessarily, but I like the way we do things today. Roger Read – Natixis Bleichroeder: Okay. I mean, so as – you kind of look at prior – obviously, you have to go back and look at National and Varco as two separate companies, but it was not unusual to see margins drop into the single digit in a trough. Obviously, we are all expecting the orders to pick up before we hit a real trough, but as I think about two – say, second half of '11 or '12 when this next wave should start to come through, mid-20s is not an unusual – it’s not an unreasonable level to think you can hit.

Yes, I mean we are – we feel pretty good, Roger and I'll add to perhaps some numbers around this. In '04, on a pro forma basis, you had National and Varco together and look at our production of top drives and mud pumps and dry works [ph] and all the things that we made and then you compare that to what we actually did in 2008. Most of those product categories were up six, seven, eight-fold huge growth through that period. Part of the efficiency gains that you are seeing now come out of a little bit of a slowdown in '09. We are just working through this at a little more workman like fashion. So we are paying less overtime, we've kind of retrenched back to our first year suppliers and cut loose some of our bottom-tier suppliers that were less efficient. So the marginal cost of manufacturing the stuff in this kind of environment is a little better too. So that helps us as well. Roger Read – Natixis Bleichroeder: Okay, thank you.

Thanks, Roger.

Thank you. Our last question comes from Bill Herbert from Simmons & Company. Please go ahead. Bill Herbert – Simmons & Company: Thanks, good morning.

Good morning, Bill. Bill Herbert – Simmons & Company: A couple of questions here. First of all, Clay, you were speaking more quickly than my brain could process. So you may have answered this, but I'm not sure if I quite caught it with regard to your summary comments. And that is what I'm trying to drill down into is essentially the composition of orders for rig capital equipment in Q1, you mentioned three jack-ups. But fundamentally, in Q4, if I recall correctly, you had a nice surge in pressure pumping equipment, land rig equipment, maybe even a little coiled-tubing, although I'm not sure if that in the right bucket and driven by North America, as well as China and other ports of call. So apart from the three jack-ups that we benefitted from in Q1, what else was the mix?

Sequential – sequentially, pressure pumping was up again. Bill Herbert – Simmons & Company: Okay.

And one of the big factors this quarter were top drives, Bill. Bill Herbert – Simmons & Company: Okay, nice.

We had a huge quarter for top drives and what we hear is that a lot of these land rigs are required to put top drives into their fleet in order to win work. And so that's spurring a lot of demand and it's not just the U.S. I think about half of those were domestic and the other half were international. So a lot of interest in that area. So it was just a good – all the way around, another good, broad-based quarter for orders. Bill Herbert – Simmons & Company: Okay.

We also – one other thing too, we had a big crane in here too. Bill Herbert – Simmons & Company: A big crane?

Right. Bill Herbert – Simmons & Company: Got it. So as we look out, based upon the visibility that you see with regard to your clients and the feedback mechanism on the order front and as you look out with regard to the balance for 2010, we were running, for example, for most of last year at a non-floater quarterly capital equipment order rate of about $3560 million per quarter, and that seems to have risen to about $400 million to $500 million per quarter, if not a bit higher.

Two quarters make a trend. Bill Herbert – Simmons & Company: I understand. But – so there is a rub of my question here. I mean, while everybody is uncertain with regard to North American drilling activity, Pete mentioned positive mix shift towards oil. So the likelihood of a collapse is probably unlikely and the service intensity theme is still with us, obsolescence, inventory, et cetera. So I'm just kind of wondering why it can't continue.

Well, it's a great question. And Bill, I can't tell you precisely what our orders are going to be. They've always been volatile. What I can tell you is drilling consumes an awful lot of stuff that we make. And we are seeing the shale plays, the intensity of the frac jobs going into these shale plays the many, many stages that they are pumping, I read somewhere that six and seven-fold type comparisons compared to a conventional frac job. That's good for the equipment that we make and we make all kinds of lenders and coiled-tubing units and coiled-tubing itself. We make the rigs going into that trend, we make the downhole tools used to directionally drill those wells, all good for us. So hard to quantify, but feel very good about the future consumption of a lot of iron that NOV manufactures. Bill Herbert – Simmons & Company: Okay. And last line of enquiry from me is we've touched on it at various times in this call, but I kind of want to specify, if you will, what – I think you don't get credit for is really how you've quietly and consistently augmented your earnings power through acquisitions and we've – I think if I'm researching well, you've done about $600 million odd worth of deals over the last 12 months, perhaps more. You've got a pretty sizeable LOI on the table right now. So call it $800 million pro forma. With regard to the rate of acquisitions that you've been consummating over the past year and with the improvement in industry conditions worldwide, do we think that the current pace that you've been on is sustainable going forward?

Absolutely, Bill. I mean, I think that as we look at things today and again, we've – we've already said we look at about seven deals for every one that we do. But we have as many things on the table today as we've had in quite sometime. We really like the opportunities that we have out there and you are going to continue to see us being very aggressive in the M&A business. I mean, we think we know how to do it. We like the opportunities that are rising there today and you are going to continue to see, I think, a good movement from us on this front. Bill Herbert – Simmons & Company: So really we shouldn’t be surprised to witness anywhere from $0.5 billion to like a $1 billion worth of deals consummated over the next 12 months?

Not – shouldn’t – wouldn't be surprised at all. Bill Herbert – Simmons & Company: All right. That's it for me. Thanks, guys.

Thanks, Bill.

Thank you.

Thank you. This concludes our question-and-answer session. I'll now turn the call back to Mr. Miller for closing remarks.

We appreciate your interest and we look forward to talking to you at the end of the second quarter. Thank you very much.