Good day, everyone and welcome to the Fourth Quarter and Full Year 2008 Results Conference Call for Transocean Limited. Today's conference is being recorded. At this time, for opening remarks and introductions I would like to turn the conference over to Mr. Gregory Panagos, Vice President of Investor Relations and Communications. Please go ahead, sir.

Thank you, Anthony. Good morning and welcome to Transocean's fourth quarter 2008 earnings conference call. A copy of the fourth quarter press release covering our financial results along with supporting statements and schedules is posted on the company's website at www.deepwater.com. We have also posted a file containing four charts that will be discussed during this morning's call; I think that's actually six charts now. That file can be found on the company's website by selecting Investor Relations, followed by Quarterly Toolkit. Joining me on this morning's call from Geneva are Bob Long, our Chief Executive Officer; Steven Newman, Chief Operating Officer; and Terry Bonno, Vice President of Marketing. With me here in Houston this morning is Greg Cauthen, our Senior Vice President and Chief Financial Officer. Before I turn the call over to Bob, I would like to point out that during the course of this conference call, participants may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts, including financial performance, operating results, and the prospects for the current drilling business. As you know, it's inherently difficult to make projections or other forward-looking statements in a cyclical industry since the risks, assumptions and uncertainties involved in these forward-looking statements include the level of crude oil and natural gas prices, rig demand, and operational and other risks which are described in the company's most recent Form 10-K and other filings with the U.S. Securities and Exchange Commission. Should one or more of these risks and uncertainties materialize or underlying assumptions prove incorrect, actual results may vary materially from those indicated. Also note that we will use various numerical measures on the call today that are or maybe considered non-GAAP financial measures under Regulation G. You'll find the required supplemental financial disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation on our website under the Investor Relations, Non-GAAP Financial Measures and Reconciliations tab. And for your convenience, non-GAAP financial measures and reconciliation tables are included with today's press release. Our website also includes schedules detailing our operating and maintenance costs, other revenue, deferred revenue, and revenue efficiency in Investor Relations Financial Reports. Finally, under News and Events and Webcasts & Presentations, we posted slides detailing average contracted dayrate by rig type, out-of-service rig months, operating and maintenance costs, trends and contract backlog. That concludes the preliminary details. Now I'll turn the call over to Bob.

Thanks, Greg. Good morning, everyone, and thanks for joining us on the call. As you saw from our press release, we earned $2.50 per share with a number of items, including goodwill impairments, asset impairments, and bad debts having a significant impact. Adjusting for these items, we earned $3.69 per share, pretty much in line with expectations. Greg's going to give you some detail on the quarter in just a few minutes. And most of you also have seen our recent press release, announcing the Board's intent at our next Annual Meeting to recommend a shareholders 3.5 billion Swiss franc share repurchase program. That's approximately $3 billion at today's exchange rates. Just to remind everyone, as a Swiss company we need shareholder approval before we can undertake either a dividend or a share repurchase program. As the press release indicates, if shareholders approve the repurchase program, we may or may not be in the market in the near-term to repurchase shares, but did want to have the flexibility to do so over the coming year; hence are intended to get such approval in May. Turning to the markets and general business conditions, we continue to enjoy the benefits of a very significant backlog. Our backlog has decreased from last quarter and now stands at just under $39 billion. The decrease is a result of our high revenue run rate and a slowdown in new contracting activities. The two areas of our business which have been impacted the most negatively by continuing economic slowdown and low commodity prices are the North Sea flow-to-market and the Gulf of Mexico turnkey business. In North Sea, we now have two midwater floater stack, and have had a letter of intent cancelled. There are also a number of rigs which are available for farmouts from…

Thanks Bob and good morning to everyone. In the fourth quarter 2008, we had net income of $800 million or $2.50 per diluted share. This compares to net income of $1.106 billion or $3.44 per diluted share in the third quarter of 2008. Fourth quarter net income was adversely affected on a net basis by certain items totaling $385 million or $1.19 per share. After adjusting for these items, fourth quarter net income was $1.185 billion or $3.69 per share as compared to third quarter 2008 net income adjusted for similar items of $1.091 billion or $3.39 per share. The $3.69 per share was slightly below street estimates primarily due to higher annual effective tax rate than expected. Items adversely affecting fourth quarter net income included $208 million of ADTI goodwill and intangible impairment, $97 million for impairment of the Audit II and Audit IV; $20 million of discrete tax items, C&Is, impairments and costs related to the GSF merger; $46 million of incremental depreciation related to the final GSF merger purchase accounting; $17 million of oil extra bad debts; $18 million of material and supply obsolescence, and finally partially offsetting these charges were $21 million of income related to the sales contract termination fee on the Transocean Nordic and income from the TODCO tax sharing agreement. Similarly, third quarter 2008 net income was adversely impacted by similar items totaling $15 million or $0.05 per share. Contract drilling revenues for the fourth quarter were $2.830 billion as compared to $2.699 billion in the third quarter. The increase is primarily related to a previously anticipated reduction in shipyard projects and the commencement of higher dayrate contracts. Revenue efficiency was basically flat between the quarters. Other revenues decreased in the fourth quarter to $307 million from $350 million in the third quarter.…

Thanks Greg. Before I open up for questions I just wanted to clarify one thing. I think Greg meant to say $1.08 billion commercial paper backstop and I think I heard him say 1.8 billion.

Yeah, correct. It's a 1.08.

Okay. With that, we'll open up for questions.

(Operator Instructions). We'll take our first question from Angie Sedita, at Macquarie Securities.

Hi Bob. The first question I have is regarding, considering close jacking rigs, whether it's a jackup or there is something, you're looking at the Cochran, it's down already and potentially there's 703. What is the thought processes to whether you won't stack the rig, cold stack the rig, obviously depends on demand and really in this market we're not seeing a lot for either category?

Angie, that's kind of a complex question. We look at a lot of things including the near-term prospects for the rig and factors like what money we might have to put in the rig to keep it operating. If the rig has a significant special survey or a shipyard maintenance project coming up. That will require us to spend a lot of money on it, and the prospects look dim in the near-term, we're more likely to make a decision to cold stack it, if the rig is in excellent condition, and we're in a market where we see a number of prospects then we'll keep it warm stacked as we try to capture those opportunities. So, not a simple answer to that question.

All right. Give me a little bit of a tone then on what your thought about the market or what do you think about the market on the midwater side specifically; certainly the jackup market appears to be weaker and more likely to see some cold stacked rigs, versus the midwater market seems to be the same. But, could you give us your thoughts?

I'll let Terry answer that for me.

Hi, Angie. Just a few thoughts on the difference between how we see the midwater and the jackup. The jackups we're starting to see some significant exposure here with the lack of tendering. The midwater floaters we have seen some market slowdown a bit, but, we're have not a significant exposure to that. We've have it over 80% of our fleet contracted and only about a little over 15% that's available. So, we have seen the slowdown in the UK market. We do see some steadiness in some extensions of West Africa. So, we do see the midwater market just a little bit different than the jackup. But certainly with both, the lack of tendering in the near term is causing concern.

Okay. And then as a follow-up to that, a little bit of demand as you indicated on the midwater market, outside of Temex are you seeing any incremental demand on the jackup side?

And I think we're currently in discussion for some extensions with our current clients. But as for tendering no, we're not seeing a whole lot of activity at the moment.

Okay. And then the final question is certainly an increase in sublets in the North Sea and other areas. Are you seeing, or hearing any prices that are being offered or are they being offered at significant discounts? What are you hearing?

We are not hearing any pricing of what the sublets are being offered at this time Angie.

Okay. Great, thanks guys.

We will take our next question from Dan Boyd at Goldman Sachs.

Hi, thanks. My question was going to relate to the sublet market, but it doesn't seem like you are seeing anything there. Are you... do you see any near term prospects at all for the current rigs that are stacked, or what do you think about warm stacking or basically, are there any bids that you have submitted those rigs for?

We have had a couple of tenders we've submitted for. We've just noticed that one in India was cancelled. Again, we're certainly looking at the prospective markets, but just again a little bit of pause in the market, and not a lot of tenders.

Okay, thanks. I'll turn it back over.

And we'll take our next question from Ian Macpherson of Simmons & Company. Ian Macpherson - Simmons & Company: Hi. Bob, I thought you made the comment in your opening remarks that you actually see the deepwater markets stronger today than you saw it a year ago. Is that correct?

Not quite, Ian. What I said was, I anticipated deepwater market to be even stronger in the future, and maybe that's 2011 or 2012, than I would have anticipated it to be a year ago as I look forward. And that's primarily, because I think the supply of deepwater rigs is going to be lower. One because, nobody is ordering any additional newbuilds. Two, I think we've seeing one or two rigs cancelled already and may be we'll some more. And we're certainly seeing delays in deliveries for a number of the deepwater rigs. So there is got to be less supply. And I think the demand is going to be even more robust than I would have thought a year ago, particularly coming out of Brazil. But, we continue to see exploratory success in West Africa and growing demand in India, Black Sea. The long-term fundamental story of deepwater to me still remains exceptionally good. Ian Macpherson - Simmons & Company: Okay, got that. Thanks. Greg, I wonder if you could help us talk about in a little more detail of your assumptions in your cost guidance, as it relates to stack rigs. And you said that your... the low-end of your cost guidance assumes more rigs are stacked. Can you give us a ballpark sense of what that is, and the timing or any help there?

Not really. That's... as you can understand our actual views on the market in the stack rigs is pretty sensitive. But the low end of the cost would assume significantly more stack rigs than what we're seeing today. The high end of the cost still assumes more stack rigs than what we're seeing today, but not as significant as the low end. Ian Macpherson - Simmons & Company: Okay. Would it be fair to assume that if you do go to cold-stack rigs, the first ones that will be cold-stacked or the ones that are warm-stacked today?

Steven, why don't you answer that question?

The idle rig in the Far East to Nordic is already well on its way to being cold-stacked. We have agreements surrounding the two midwater floaters in the North Sea that have allowed us to reduce costs. But we maintained those rigs and are ready to go condition. So there is a variety of factors that affect our ability to execute stacking program in a timely manner. Ian Macpherson - Simmons & Company: Okay. I'll turn it over. Thank you.

We'll take our next question from Dan Pickering at Tudor Pickering Holt. Dan Pickering - Tudor Pickering Holt & Company.: Good morning. Bob or Greg, I was wondering if you could just walk us through the logistics around the share repurchase. You've got a vote and then at your discretion you could enter the market. Remind us again on the timing of these items?

Dan, the shareholder vote will take place at our Annual Meeting which will be in May. Assuming the shareholders approved the repurchase program, then it will be up to the Board to decide when and if we're going to go into the market and there are all kinds of different considerations, obviously which we'll looking at as we decide when and if to execute on that program. So, not sure there is anymore logistics to it than that. Dan Pickering - Tudor Pickering Holt & Company.: Well, I guess what I am wondering is this strictly for share repurchase, does it give you the levy to do a special dividend instead of a share repurchase, is that something you've considered and eliminated?

We did consider all alternatives, including special dividends, but this... the recommendation that we've gotten big to shareholders would be for approval of the repurchase program only. It would not authorize any kind of dividends whether recurring or special, because we're not asking for that. It's primarily is in terms of maintaining our flexibility in this market that we decided to go with the share repurchase program instead of a special dividend. Once the shareholders approve a dividend, they approve specific amounts and specific dates. And we don't have much levy in terms of deviating from that depending on the situation at the time, whereas, obviously we do at the stock repurchase program. So, we decided with the conditions in the market to general economy and credit markets, that it would be more prudent to maintain as much flexibility as we could. Dan Pickering - Tudor Pickering Holt & Company.: Okay. That's a helpful answer. Then, as we look at the market out there, your deepwater commentary, positive outlook, we know that there are some rigs out there Partmina (ph) has I guess a $550 million offer for one of the rigs there constructing. I mean how do you think about newbuilds opportunities, 550 that seems like a distress there, it was a distressed. Now how does all this fit into your thinking about the longer term?

Well, in terms of availability of opportunities or the advantage to take... opportunity to take advantage of some favorable acquisitions in this difficult market, we are interested. But frankly I don't view $580 million purchase as a particularly good discount price in a market like this. So, we're going to continue to monitor the market. But my idea of what a good discount would be hasn't quite been met yet. Dan Pickering - Tudor Pickering Holt & Company.: Okay. Too early there, it sounds like. Thank you.

Okay.

And we'll take our next question from Kurt Hallead at RBC Capital Markets.

Hey, good morning.

Good morning.

As we go into this kind of slowdown mode and we just now talked about backing costs, can you give us some general sense as to what the per dayrate is for a warm-stack versus cold-stack rig and if you can break that out for us by the classification whether jackup, midwater?

You're talking about per day cost... checking costs?

Yeah. As things have changed over many, many years and we haven't had to think about what the per day cost is for stacking the rig now. So I just want to get an update on there.

Well, I would ask Steven to comment on that, but to really pretty complex issue there Kurt and I am not sure that we could give you a very crisp answer. It depends a lot on the type of rig, where it is, how cold we want to stack it, the condition of the rig as we go into stack, there's just a lot of variables there. Steven, you've got anything to add to that?

Yeah, typically what would happen Kurt is from a labor perspective, you've let your unskilled labor go first. And so the labor cost that would remain on a warm-stack rig would be proportionately higher than simply cutting it in half or something like that? Your maintenance costs would go down but typically what we would do is try and take advantage of the idle time to catch up on some of the maintenance we would normally do in and out of service type situation. So, your maintenance costs don't necessarily go down dramatically either. But as Bob said there is just a lot of factors that would play into that to make it really difficult for us to give you any meaningful role of that.

Okay. And as things kind of slow down here at, I understand its region-to-region it's going to rig kind of specific. But is it that you are holding out hope that things will get better or do you think it might take a little bit more aggressive approach here, with the fact that industry cash flows are going to be down about 50% year-on-year. So, your customers have less money to spend on all projects on a global basis. So, not sure why I guess my question is just trying to get a... each from you guys, how quickly you guys can move from a working mode to a warm-stack mode to cold-stack mode? Is there any additional information on that?

Kurt, as I think we're going to be fairly aggressive in moving down the ladder there. It's pretty easy to go to a warm-stack mode very quickly, the difficult decision is to go to cold-stack. But if we don't have a firm opportunity that is staring us in the face it probably means we've already bid it over in negotiations where the customer, we are not going to keep the rig warm-stack whether just open a frail (ph) we're going to go very quickly to cold-stack.

Okay. And you think you can see how the market has evolved here, can you talk a little bit about the asset acquisition opportunities and whether or not the bid as spread has narrow in and if are we getting... how close are we getting to have seen some acquisitions to be done here?

I don't detect much of a market out there right now for opportunities to acquire rigs of any class whether there is jackups or floaters. I suspect that some of those opportunities is going to develop but there aren't very many being discussed right now. So I don't think I can give you an indication because its not really a willing seller, a willing buyer market at the moment.

So you mean despite this downtick, there is nobody really on their knees begging you to take assets of their hands yet?

No. I think as just downturn started people clearly had interest particularly speculators with the rigs... had interest in perhaps being taken out. But the price expectations were not what I would consider to be a discount at all. And there just hasn't been much movements there, so nothing much has developed.

Okay, okay great. Thanks.

We'll take our next question Robin Shoemaker at Citigroup.

Yes, thank you. I want to ask about the CapEx outlook. Greg, I think you mentioned that the newbuild... the 10 newbuild program drops from 3 billion CapEx in '09 to something like 770 in 2010?

That's a crack out, that's $3 billion; 750 million is non-cash. It relates to the Petrobras capital lease that we will capitalize... that capital lease shows $750 million of rig investments and debts. So the cash is about 2.25 billion and going down to 775 million in 2010 and that should complete the program.

Okay. So clearly then the free cash flow would be significantly improved in 2010, even if the overall earnings were a little lower. But the 3 billion... my point is that 3 billion in share repurchase authorization seems to be considerably less than the free cash flow that you would anticipate generating in the course of 2009 and '10? So, is the balance... can we assume that the balance of that, the difference between those two is pure debt reduction?

Greg, go ahead and answer that.

Well, as we've tried to make it clear, we have actually not made any decisions on the execution of the $3 billion program. And the 3 and in any share repurchase program or other decisions, we need to take to the shareholders can be updated, revised, increased whatever in May of 2010. So, the map isn't necessarily as simple, as what you imply even we have made decision. I would point out though in 2010, we have $4 billion of maturing debts. So, we've got about $2 billion related to our bank term loan that matures in the first quarter, and $2.2 billion of the convert, the 2010 convert, that we currently expect would get back to us and effectively mature in the fourth quarter. So, that's a lot of debt... maturing debt that we are looking at. Now clearly, as we get to 2010 we may decide to refinance some of that debt. There is all sort of decisions that we should make. So, don't draw any conclusions from the fact we only would ask for $3 billion.

Yeah, okay. My other question then had to do with the goodwill impairment. Could you comment as to whether that impairment you took on ADTI was the full amount of goodwill associated with that company? And in terms of the remaining 8 billion of goodwill, you obviously had an impairment test at the end of '08, and are you... with regard to the rig fleet, are you continuing in '09 to have that kind of periodic test?

Yeah, the goodwill impairment on ADTI took out most of the goodwill, all the goodwill of ADTI and most of the other intangibles; we have some other intangibles straightening in customer relationships and everything. So, there is still some of that left on ADTI. We of course, did as you said do an impairment evaluation of all of our drilling rigs, the only drilling rigs that we ended up impairing, with the two that were held for sale, the Artic II and Artic IV. The rest of the rigs under the way the U.S. GAAP rules work are evaluated by asset class, by jackups, by deepwater et cetera. And so, based on that we didn't see an impairment. And then we evaluated the goodwill of the contract drilling segment, and based upon our analysis there was no impairment. But, you're exactly right, as the year progresses, we'll continue to do those evaluations on the same basis. And depending on how the market develops and everything, we may or may not have additional impairments in our contract drilling segment.

Yeah, okay. Thank you.

We'll take our next question from Roger Read at Natexis Bleichroeder.

Yeah good morning gentlemen.

Good morning.

A quick question for you on the subletting, I guess getting back to that topic. Is there a kind of a typical sublet that's out there in other words, people are trying to fill a one well program, or is a more of a I've got nine months left in a contract, and I just want to get it out on my hair, and so I'll sublet the whole thing. And does that differ by region.

Terry?

We've had a mixed bag. We've had seen some well to well sublets to fill gaps. And then we've also seen some operators potentially saying that they do not have programs to finish and then they will send out some questionnaires to see who would be interested. So we have seen a bit of both at the moment.

Okay. And then my other question unrelated to that. Just from a strategic situation here, you start stacking rigs that you put... I guess, you are not certain if you put, but will require more capital going forward. So your more expensive rigs go down from both, maybe not so much from an operating standpoint, from a capital standpoint. If these rigs cold stack for say two years, do they move more to an ultimate disposal situation? And if the market stays tougher longer, you're in a pretty good cash position. Do you use this to upgrade your fleet from an overall standpoint?

No, the two years... stacking rig for two years and then what you do to bring it out, it depends on the condition of the rig and how you stack it. How much would it cost you to bring it out? But, it doesn't really fundamentally change the situation with the rig, the economics at the time. The market will determine whether the economics justify it bringing it out. This industry tends not to have rigs disappear very easily, regardless of how long they're stack. Ultimately rigs that have been stacked for five, six, 10 years get refurbished and brought back into the fleet. So, I don't think you can draw any conclusions about what might happen to the rigs based on the fact that they are stacked.

Bob, is it safe to assume that you would stack rigs by a cash, capital cost estimate in there not just whether or not a particular rig has a firm contract in front of it?

Well, we don't really get much choice in terms of the rigs we stack. It's not like we decide on the condition of a rig and then decide whether we stack that one or not; it's determined by the market. If the rig does not have a contract and does not have a good opportunity for it, then it's likely to get stacked. So I am not sure that the question implies that you think that we can kind of swap and play among the rigs and decide which ones we'll stack and which ones we'll keep working. But the market really is the biggest factor in making that decision for us.

And then how you stack in terms of how cold or how warm it is if the determination of where you think that rig is in your overall hierarchy?

No, I think that is again dictated by the market and the outlook, warm stack rig keep in situation where we can respond to bids and get it back on contract very quickly. Once we decide to cold stack a rig, then we'll take a disciplined approach following a pretty set procedure that would apply to any rig very slightly by class, but it involves getting the crew compliment customers down as low as possible, in some cases down to zero. And preserving all of the equipments so that we can have it as efficient as possibly start up later on, whenever later on is.

Okay, thank you.

And we'll take out next question with Arun Jayaram at Credit Suisse.

Good morning guys, good afternoon in Switzerland. Steve, I was wondering that if you could give us an update on how you are doing with the newbuild program and how confident you are in the delivery schedule, versus what's out there?

I would be happy to give you an update on that because I think things are going really well. The clear leader is the first one on the block to be delivered and the rigs been out and done, the basic marine and sea trials and performed extremely well. We're now in a process of finalizing rig floor commissioning and anticipate that we'll have the rig on contract in the second quarter as we indicated in our fleet status report. The KG1 is at Samsung, slightly behind the clear leader, but again she's been out and done the marine trials and performed extremely well. And so there again we're in the process of finalizing rig floor commissioning. While we anticipate, we'll have that rig on contract on schedule. Then the third one would be the DD III which is at Keppel FELS in Singapore, a little bit behind the other two, but again in line with the schedule we published in the fleet status report. So I think our newbuild program is proceeding extremely well. The teams that we have and the team that we've assembled with vendors and suppliers is doing a very good job of putting the equipment together, assembling it in a real professional manner and then getting it working efficiently and ready to go to work for our clients.

That's good to hear. Terry, I was wondering if you could comment a little bit on West Africa. There are now six jackups which are idle today and obviously there is a very important market for you guys. What are your near term prospects because you do have a lot of rigs which come up for renewal in the second and third quarter? And particularly I wanted to get your thoughts on what you're seeing from Cabinda Gulf where now is a tender out there as well?

Well we, like I'd spoken to about the West Africa market a little earlier with the fact that we are in discussions on a few of the rigs with the existing client, which would include our rigs in Cabinda, so we certainly can't discuss what the particulars are but we can say that we are in discussions, we're hopeful on a few of those rigs. But again, the tendering pace in West Africa, it has been challenging. Nigeria with the approval processes is also been a bit challenging. So we're still just on a wait and see and certainly waiting for tenders to become more prevalent. But, at the moment it's been a bit short on that effort.

What Terry would be your expectations for some other rigs to continue but some could be stacked?

I think that's a good expectation.

Okay, okay thanks. And last question Bob, can you talk about what your strategy is regarding Brazil and what do you think Petrobras will do regarding in the current and future rig needs? And is there a bigger opportunity for incumbent rigs versus newbuilds given the issues in the credit environment?

I think Brazil is clearly going to be a very, very big and growing market for deepwater rigs for a long time. And I think there is a market down there for any rigs that have availability. Petrobras is currently out with a request for expansion of interest for a number of deepwater rigs. I think they've turned in one or more and our impression is depending on the raise they could take as many as four or even more. While they talk about newbuilds for these additional 28 rigs that ultimately they want to order. My sense is that if they could get access to a deepwater fifth or sixth generation rig that exists and had availability, they would be very interested. So, I think that we're going to continue look at capturing as much opportunity down as we can. It's a big market for us. Petrobras is one of our biggest customers. And we see that continuing for a long time.

Okay. And any sense of the timing on this indication of interest?

Terry, you know when its doing?

They are going through the process now, and we understand it and we hope to hear it very soon. It wasn't really a timeframe; its the normal expression of interest process.

Okay. And thanks a lot guys.

And we'll take our next question from Tom Curran at Wachovia.

Good morning guys. Bob, given the likely timing of the vote on the requested $3 billion authorization, your stocks and evaluation and your free cash flow outlook, it looks as if you could burn through that fairly quickly. First, you wouldn't have to wait until May 2010 to request a renewed authorization or an increase. And then second should we assume that buybacks will remain your preferred use of surplus cash flow going forward?

On your first point when you say we wouldn't have to wait till May of 2010 to renew our re-authorization; that is technically correct if we wanted to call a special shareholders meeting. That's something that we could always considered doing, but the more likely outcome would be that we consider this annually at our normal shareholder meetings. In terms of whether or not we use share repurchase as our preferred method to return cash with time immemorial here, I would not assume that. One of the big considerations that was on our mind this time was the flexibility that we have to a share repurchase program, versus more rigid timing requirements particularly, under Swiss law and rules, with a dividend. And in the U.S., the Board of Directors can change its mind about a dividend. But under Swiss law, once the shareholders have decided on imbalance and the timing, absence of special circumstances is something that we would have to follow through on. So, there is a lot less flexibility there. So, don't assume that just because we elected share repurchase this time. It means we wanted some time in the future consider a dividend, whether it's recurring or special.

Okay. But presumably your own assessment of your stock... the attractiveness of your stocks current valuation would remain the primary determinant of whether or not you decide on a buyback as opposed to special dividend. Fair?

Well, that's clearly, I think factor in terms of our considerations and in terms of whether or not we actually go into the market, we currently continue to feel that the stock is significantly undervalued.

Great. I would definitely agree. And then Bob going back to 2005, different points throughout the up cycle, you would occasionally share your best guesstimate as to how many prospects were remaining in the North Sea midwater market, and are prevailing oil price assumption. Given that at oil price range of let's say 40 to $50, what would be your best guess at this time?

I don't think that I could give you a guess at this time. We haven't done a significant canvassing of the operators in a while. And the cost structure clearly has changed dramatically since several years ago, when we were talking to the operators about opportunities out there, many of which are small. With the higher cost environment not quite sure we feel that threshold would be. But, we'll try and renew our conversations of the operators, and see if we can get some better insights. Right now I just can't give you much.

Okay. Would you assume that given the changes in economics and the drilling that's taken place since the last time oil prices were expected to remain in a 40 to $50 range, if that overall pool has likely meaningfully shrunk?

Well, I would guess that some of those opportunities have been tapped and produced. But, I am not sure how many more have come on the radar screen, and how much more potential activities out there that can be created by our operators trying to increase the production from the existing reserves, increase recoverability from 30 or 40% to 40 or 50%. So, not sure that we can really comment intelligently on what's might drive the activity and what oil prices up there.

That makes sense. Okay. Thanks for the answers. Very helpful. I'll turn it back.

Operator, we have time for one more question.

And so, we'll take our final question from Lee Cooperman at Omega Advisors.

Yeah, thanks. I guess... I don't know, it's probably a better question offline. But, I have kind of asked myself have you announced this morning that you were seeking shareholder approval to pay $1.25 dividend and that your stock wouldn't be down $2.50? And given the amount of free cash flow that we have, and the outlook that you portray, I don't quite understand this lack of willingness to enter into a recurring quarterly dividend. Now, maybe you could explain to me how rigid the Swiss law is? If you announced intention of paying a dividend and circumstances radically change, you could not eliminate the dividend, you legally have to pay it.

Lee, I think that under the Swiss rules that we'll have to follow through unless we have worked into the program some specific guidelines or criteria which says, If this happens, then the dividend would be suspended or we could avoid the payment. And that is very difficult to do. And I assume that we could call a special shareholder meeting and see about getting shareholder approval to terminate the previously approved program. But, it's not anywhere near as simple as what you can do in the United States.

We'll take this up offline. But the question I'm trying to figure out is, what is the right corporate financial policy. Given the amount of free cash flow you generate, if you pay the $4, let's say, a year dividend, I don't think a stock would trade at 57. And $4 is about 1.2 a year. So, it would take you three years to spend the same amount of money you would on your repurchase program. So, I don't know whether the repurchase program is a more function of the uncertainty because don't have to execute on it, or because you think that stock is darn undervalued that you'd rather buyback stock. And... but, we could do the offline. And I appreciate whatever thought you'd have.

Okay. I guess, we can take it up offline. But as I said before, flexibility is a big issue. I'd also say, it's been our sense that part of the concern about from a number of investors and it's having an impact on a stock is the level of our debt. We detect from a lot of investors that there is a significant amount of concern about the level of debt, which is why we've been concentrating on paying down our debt as quickly as we can and the flexibility to continue paying down that debt is something that is important to us in effect with our considerations. But, as we've discussed before there are a lot of different considerations in this. So...

Well, I really observed a $4 dividend is 1.2 billion a year, which takes you almost three years to spend the same amount of money on the repurchase program. And the question really is which is going to have a more salutary effect on your stock price. And my guess is, with the dividend of $4, your stock wouldn't be trading at 57. But, we can do this offline. I know you are trying to do the right thing for sure, because you guys have done a very good job over the years.

Okay. Thanks Lee.

You're welcome.

Okay. I guess that's all the time we have. We appreciate everybody's interest. And we'll look forward to the talking to you again in the future.

This does conclude today's presentation. We thank everyone for their participation. You may disconnect your lines at anytime.