Good day everyone and welcome to the ENSCO International First Quarter of 2008 Earnings Conference call. As a reminder, this call is being recorded and your participation constitutes consent to its taping. I will now turn this conference over to Mr. Richard LeBlanc, Vice President of Investor Relations who will moderate this call. Please go ahead sir.

Thank you, Patricia. I'd like to thank everyone for joining us today. With me in Dallas are Dan Rabun, our Chief Executive Officer; Jay Swent, our Chief Financial Officer as well as other members of our executive management team. This morning we released our earnings announcement and filed our 8-K with the SEC. We also expect to file our 10-Q later today. The earnings release is available on our website www.enscous.com where you can also find a reconciliation to any non-GAAP financial measures that may be used on this call. As usual we'll keep our call to about an hour. Jay will first provide a financial overview. Dan will then discuss our markets and operations. I'd like to remind everyone that any comments we make today about our expectations of future events are forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. All such statements are subject to risks and uncertainties and many factors could cause actual results to differ materially. We refer you to our earnings release and SEC filings available on our website which defines such forward-looking statements, that the company undertakes no duty to update any such statement and risk factors which could cause actual results to differ materially from our expectations. I'd also like to remind everyone that with regard to our rig status a detailed listing is provided on our website and is updated at the middle of each month when we file our 8-K with the SEC. The last update was as of April 15. At the end of our prepared remarks we will have some time for questions. With that let me turn it over to Jay.

Thank you, Richard. Good morning and thank you all for joining us today. We are pleased to report another record quarter with net income of 17% from prior year levels to $272 million and earnings per share up 23% to $1.90. Our year-over-year improvement reflects higher day rates for our international jackup fleet. The addition of our newbuild jackup ENSCO 108 which commenced operations in May 2007 and significant day rate improvement on ENSCO 7500, our deepwater semi. There is one non-routine item included in this quarter's results that merit some discussion. We recorded a $3.1 million impairment charge in other income and expense related to auction rates securities that we hold in our investment portfolio. Given the current lack of liquidity in the auction rate securities market we took what we believed is a conservative position and recorded an impairment charge. It's important to note that this impairment is not related to the underlying credit worthiness of the issuers all of which are of very high quality but reflects the current illiquidity in the market. We have classified most of these securities as long term investments but plan to sell them as the market improves. With regard to our share repurchase program we did not conclude any share repurchases during the quarter as we were addressing a number of issues, most importantly the ENSCO 8504 newbuild that we announced this morning. Now let's look more closely at first quarter's specifics. Here we will compare first quarter 2008 sequentially to fourth quarter 2007. First quarter revenue increased by 10% from fourth quarter 2007 levels. I'll review the details of this improvement in just a moment when we discuss the regional breakdown in results. Contract drilling expense increased to $190.7 million in the first quarter compared to a 173.8 million in…

Thank you, Jay and good morning everyone. We are very pleased with our first quarter results and fully expect 2008 to be another record year for ENSCO. First, I will discuss recent developments and then follow the same format as last quarter's call and provide some insight into our markets and current operations. I'll refer you to our monthly contract status report filed nine days ago for specific rig details. In March, we announced a receipt of a letter of intent for ENSCO 8503. We expect to have a definitive contract in place very soon for an initial two year term at a day rate of $510,000. With our efficient low cost rig construction we believe this day rate will provide an industry leading return on our investment. Several years ago we decided that a key element of our long-term strategic plan was to expand within the deepwater sector. As most of you are aware we've acted on our plan and currently have four ultra-deepwater semis under construction. Because of the unprecedented demand for deepwater drilling equipment we continue to evaluate additional opportunities to increase our deepwater fleet. As noted in our new release this morning our Board of Directors has authorized us to proceed with the construction of a fifth ENSCO 8500 series semi. We are finalizing the pricing on the rig and currently estimate construction costs at approximately $515 million with the delivery date in the second half of 2011. Subject to the negotiation of a mutually acceptable construction contract with Keppel Fels in Singapore we should be in a position to place a firm order in the next few weeks. Deepwater has become very important to our business and we currently estimate that in all five of our new rigs [ph] delivered over one quarter of our…

Patricia, we have to take questions at this time. Question And Answer

Certainly, the question and answer session will be conducted electronically. [Operator Instructions]. Our first question today comes from Collin Gerry with Raymond James.

Good morning guys. I just had a quick question on the big newbuild. Clearly your costs continue to come in a lot lower than your competitors as far as building new rigs. Remind you kind of your differentiated this strategy and how you are able to get a bulk of that cost savings and where does that come from?

I'll let Jeff Saile who is in charge of deepwater for us respond to that.

Yes good morning. We've had this question a lot of times and we're going to just kind of give us a very the kind of consistent answer that basically this is a proprietary design. It's... we understand it. |It is very simple and it's very straightforward and it's very consistent. It's construction friendly. We don't have every single bell and whistle in the world on the rig. We have very adequately equipped drilling machine here. And what you see will continue. If we continue to build rigs we will be able to continue to build them cheaper than the competition just simply because of design. And the simplicity that it allows for the yard to... that we build... we build this in modular, in modular form as well. So we are stick building in it place. We are doing a multiple phases of construction simultaneously and then we are consolidating it in the master yard there at Keppel Fels in Singapore.

In addition, we are getting a great deal of synergies out of building all these rigs in one yard with Keppel Fels.

Okay. So maybe something I can take a word from that is that in the design part of the savings, is part of that just steel costs, less steel to put on an 8500 foot rig maybe versus some of the ten or 12000 foot rigs you see out there?

To some degree that's true but it's primarily in the construction. The simplicity of construction. It's as opposed to being round, square and rectangle.

Okay. Maybe I can follow up with you all a little bit more offline as it relates to that. Second question on the Gulf of Mexico jackups, I mean clearly all are lot more bullish than maybe past couple of quarters on that market, rebounding gas prices, less supply of rigs in the region, obviously boosting things there. Given that what is your strategy as far as leaving rigs in the Gulf or bidding some of those Gulf of Mexico rigs internationally, kind of how do you see that playing out over the next two years or so?

One thing that's been encouraging about the Gulf of Mexico recently is, as we're starting to have built some backlog. And we have operators talking about term. That having been said on the positive side, it's still not the term and day rate that you can get in the international markets. So as long as there continues to be the imbalance in day rate and term in the international markets so I think operators such as us will continue to evaluate moving rigs out of the Gulf of Mexico. And we continue to actively market our rigs for term work.

And are there any particular regions that you would market those rigs now more so or even to a less degree than 36 months ago? I mean I think six months ago or a year out, Middle East was kind of a hot budding issue [ph], now people seem to be talking about Mexico a little bit more. Kind of how has it changed regionally as far as where you market the rigs outside the Gulf?

I think there has been a lot more activity in this hemisphere. And given mobilizations, it's much more competitive to compete in this hemisphere. So I would say as compared to 6 months to a year ago, there has been a lot more activity in this hemisphere.

Okay, I appreciate it. I'll turn it back.

Our next question today comes from Dan Pickering with Tudor Pickering Holt. Mr. Pickering your line is open. Dan Pickering - Tudor Pickering & Co.: Sorry about that. Can't function not on with the mute button. This summer indications from the customers as it relates to hurricane season, the Gulf of Mexico, have you got any preliminary indications yet how they are going to react? ':

Well, this is Jeff Saile. Currently we're not them reacting as they have in the past few years. There is... it looks like they are going to try to remain active through hurricane season. We certainly see a lot of programs coming along that are going... in continuation through our hurricane season. So it looks though like there is less concern about hurricane season as compared to previous years... within the backdrop of what happened people were abundantly cautious in my opinion. Dan Pickering - Tudor Pickering & Co.: Right, okay so a little less cautious this year. On the contract drilling cost side, the increase in Q2 costs, would we expect that to continue then Jay into Q3 and Q4 running at that sort of level we'll see in the second quarter?

I think Dan the labor component clearly isn't going away. As we said the costs tend to be front end loaded in the first two quarters of the year on the repair and maintenance side. And so if you do... if you kind of check out the math you will see when you look at the full year number that guidance that we gave that implies there will be a reduction in the third and fourth quarters. Dan Pickering - Tudor Pickering & Co.: Okay, so a little bit of a lumpy here in Q2.

Yes I think if you look at the rig status reports we have a lot of the inspections in the first and second quarter. Dan Pickering - Tudor Pickering & Co.: Got you, thanks. Last question as it relates to the newbuild rig. Is this going to be a turnkey rig and have you got the long lead time items ordered? And do you have any other options with Keppel Fels? I was thinking this is the last one.

We are in the process of finalizing our order with Keppel Fels. And the answer is yes. We've got all the long lead time items secured. And we have every reason to expect we will get a contract in place or place a firm order here in the next few weeks. In terms of additional options bet questions when asked a lot of times. And we haven't had options with Keppel Fels, so the answer is no. Dan Pickering - Tudor Pickering & Co.: Okay, thank you

Our next question comes from Robin Shoemaker from Bear Stearns.

Thank you. I was curious about... you made some comments about the delays in delivery of 8500. And of course a lot of people are expecting many contracts just to have delays. I wonder if you could give us a few kind of just details as to what was involved in that delay of that rig and how... what was within and not within your control on that?

Robin, there are a number of factors that have contributed. There are a few elements of vendor furnished equipment which were not delivered on time. And that had some impact on retarding the overall progress on construction as a rig. Generally it is the actual fabrication of the vessel itself as impacted by some of these other things that are combining to generate a delay of a few months. But we think these are generally unique to the first unit. We have found solutions to whatever the issues were on the first unit to be able to limit the delay of a few months, we believe to eliminate it all together on the subject of what unit. So it's not any one thing. The owner furnished equipment played a role. But it's just a combination of factors that have accumulated, just key pass in the shipyard, we're completing it quite as soon as we'd originally anticipated.

Okay. And then the commissioning sea trial acceptance testing phases, that will be done I guess later this year and is there any reason to expect... I don't know that experience of the 7500 or anything else that would lead you to think that, that could take a little longer... or you've already factored perhaps a little longer period for that?

We have factored sometime and the fact that these are very complex pieces of both mechanical and electronic equipment, so you always allow a little bit of time for the unforeseen. That's why you do all of this testing and this commissioning trials. Because these are so complicated it's hard to know exactly what's going to happen when you turn on switching and the asset piece of equipment to perform as designed. But we have a very detailed, a very comprehensive commissioning plan has been worked out in cooperation with both of these yards [ph] and all of our vendors and we believe that it is sufficient to accomplish all of the trials and testing whatever last minute tweaking these will be done.

Robin I think in addition to what Bill said, I said in my remarks most of the key technical members of the crew for ENSCO 8500 are already on board the rig in Singapore. And they're all becoming familiar with the piece of equipment, respective pieces of equipment for which they have responsibility and they were actively involved in testing and commissioning this equipment. So hopefully together with the point that Bill described will minimize any big surprises. But as we know there are always surprises in this business.

Right.

Robin, I think the only other thing I would add is we have a pretty comprehensive factory expansion test program as well with inspectors all over the world looking at... as is being constructed. So I think we are getting on top of problems to the extent they are there for the early in the game as well.

Okay. One other small detail on the... you mentioned costs up 10, 12% in the second quarter and that you had a wage increase in the first quarter of '08. Is that the magnitude of the wage increase or is what always involved in this 10 to 12% cost increase?

Well as I said there is a piece of it that's labor and there's a piece of it that's repair and maintenance, and in the third quarter a big piece of it is repair and maintenance. If you look at the full year as I said in my comments half of our full year increase... actually a little bit over half of the full year increase is coming out of the labor rate increases and that's a combination of things. That's direct increases that we give people in terms of we give you an x percent raise. But it also factors in the impact of the weakening dollar. We have a number of people who are paid in foreign currencies or paid to foreign currencies.

Right. Okay. Thank you.

Our next question today comes from Arun Jayaram of Credit Suisse.

Hi good morning guys.

Good morning.

Dan, wonder if you could comment a little bit about Mexico. You said that previously you don't want to be a run rate company in Mexico. So I was a bit surprised that the only bid the ENSCO 93 leased into the most recent tender around. So I was wondering if you could maybe elaborate a little bit about your strategy and why didn't we see ENSCO more active in the latest tender in Mexico?

Good question. We closely evaluate that, anytime you are bidding against in common you have a bidding disadvantage. So Mexico... PEMEX has some very specific technical requirements for the equipment that operates there. So we have to carefully evaluate the technical requirements that PEMEX is looking for and see how that matches up to our existing fleet of assets in the Gulf of Mexico and seeing where those gaps are and what kind of money it would take to fulfill those technical requirements. And then that you have to put in the backdrop of what you think the competitors who are going to be willing to bid that equipment. And after looking at it and we spend a lot of time looking at it. We decided that the 250 foot rig was the rig we wanted to bid and not bid the complete package. I wouldn't say that if that bodes... will it be any indication of how we will bid in the future because we are going to look at them all individually and very closely. But I think it's a little bit different bidding situation when you have incumbents in the marketplace.

So just to characterize your comments it was just a function of maybe some of the capital that you would have to spend on your existing rigs in the Gulf and maybe some of the opportunity cost there?

Yes and then I think you put it in the backdrop of... quite frankly the Gulf of Mexico market is looking pretty good right now. So you just... it was just an overall marketed decision. We are very... you are right we don't want to be one rig operation in Mexico there.

Okay and real quickly on the latest newbuild on my math it's about $88 million of cost inflation last in the 10.5, 11 months. Can you help us understand where you are seeing that cost inflation versus the last rig that was done I think last year?

Yes I mean the vast bulk of all this Aaron is in the currency fluctuation. Half the costs of those rigs that's denominated in sing dollars and a good bit of the equipment that goes on these rigs a lot of it's built over in Norway and another jurisdictions which also have currencies that are rising against the U.S. dollar. So the fluctuation in the U.S. dollar has had a very significant impact and the second biggest reason of the increase in steel prices which have continued to escalate. So that really is commodity price driven.

Okay and are you seeing from a margin standpoint, the equipment suppliers and Keppel kind of... are they increasing their margins over the last year or so as part of the general increases in shipyard activity?

Clearly everybody is trying to increase margin. So yes there is clearly pressure on that side of the equations welling and we're continuing to push back on the other direction so.

Okay, thanks a lot, Dan

Sure.

Our next question comes from Pierre Conner with Capital One Southcoast.

Good morning gentlemen. Richard I didn't know who various other members of management were until Dan called on Jeff to answer that question. A little bit more actually on Aaron's question about the increment on the costs, but further relate I guess now on the rate expectations. Can you tell us some history of how mature was your negotiations on the prior rig that's you're coming to an LOI in and in the bottom line, is the current market for this next rig on day rate in the similar range or has it moved since you last negotiated?

So you have a lot of questions there. Was first question Pierre, what are we doing on the 8503 contract?

Yes and yes.

Yes, okay, the answer to that question, we're real close. I think we have finalized on the contracts. So I'd expect something here... a couple of weeks Joe?

That could most.

Yes a couple of weeks. And then in the market you have seen the fixtures just like we have. There has been a recent round of fixtures that have been north of that Peirre [ph]. So it's a pretty robust market out there.

How old or mature was the negotiations on 8503 I guess is that's what I was getting at. That's something that you... it's been working on for quite sometime?

I'm trying to remember it. Well with the current customer, we had bid with them [ph] for 03 in a long period of time, just kind of the... putting out what we had to offer there. And rates didn't really come in the discussion until later on in the process Pierre.

- Pierre Conner: Okay.

Maybe earlier in the year Pierre. I candidly don't recall, it's top off of my head.

That's fine. It's just a little color on that changes.

It's been... definitely been an uptick.

Yes that's what I was getting to. So in terms of total returns and should be in the same range even with this escalation in costs. The... Jeff, further on the whole 8500 design and the issue associated with the debate out there of a drill ships versus semis, is it the 8500 Series equipment capable of something like a offshore Brazil? Will there be modifications required? Is it very [ph] deck load issues, just expand upon the pros and cons and where is... how much more opportunity when people debate this drillship versus semi?

Once you asked a hard question Pierre. No, certainly we can work offshore Brazil. I don't know if I think there is a lot of that to be understood in the future I certainly think the 8500 can get in there and compete. I don't think it's going to compete with the drillship. It's going to come in behind these ships when they do some of this... some of these ships are going to do advanced exploration and then something like the 8500 would be required or certainly could be used in a very advantageous way to develop what discoveries are made. So to be... the 8500 can certainly... is certainly equipped to drill. It can drill in 10,000 feet of water with... we are going to have to do some minor modifications to it. And we are reviewing it that now. It can certainly drill in deeper water and we can get out there with the equipment on and drill these ultra-deep wells as well. So it's not a rig design, never was designed to go to work, to be all things to all people. But it's certainly can address the heart of the market which we focused on and the heart of the market that we have focused on continues to be the heart of the market.

Right.

And Pierre we've marketed the Petrobras and it's quite frankly we just thought we've got better returns in other markets for the equipment.

Okay that's helpful. Actually again you answered a lot of the questions already on the jackup markets, I appreciate your commentary on that at the outset so, with that I'll turn it back.

Thanks Pierre.

Our next question comes from David Smith with J.P. Morgan.

Hi, good morning.

Good morning.

Where are you seeing international jackup rigs come out their peak and thinking about pricing going forward, I wanted to get your thoughts on the impact of fragmentation of the contractor base. So, in other words, how much does it matter to pricing that the supply is going up by 33 jackups in the next 12 months and how much does it matter that these 33 jackups have been broadened by 23 different contractors and environments were below a bid it went to tender [ph] ?

Well, I think one way to address that is think about who those contractors are and what they are up against and what we've seen so far for the most part is they've been pretty disciplined about pricing and that's because they have to be. Million of those rigs are build with a substantial amount of debt and million of those companies that are trading today have very lofty evaluations based on expectations of kind of day rates that those rigs will receive. So people who are running those companies actually are probably under more pressure to keep day rates up than we are and I think so far what we've seen in the market is that for the most part when those people come to market they are very disciplined and they usually are getting pretty close to leading edge day rates and in many cases that's surprising because they don't have much of an operational track record.

I guess further to your question, I think what you are asking, I mean, different customers evaluate these new builds companies differently. So for instant Saudi Aramco has indicated that it didn't want a contract with new builds company so you see some established contractors doing alright and they charter rigs into Saudi. So I think you will see that continuing just depending on the operators.

Okay, thank you. On labor rate can you talk about what you are seeing on turnover and maybe a tougher question but how confident you are that the industry has a handle on wages over the next 2 years as the new builds recruit?

Yes, turnover is an interesting area. Its obviously a lot of concern to everybody in the industry and it really very substantially across the world stood depending on what market that you are talking about. So some markets are really pretty stable and others you see a much higher turnover. Probably where we are seeing the most turnover and I think everybody will see the same things are probably out in Asia where a lot of these new build rigs are entering the marketplace and these new build companies paying a pretty lofty price to get crews to crew these rigs. So, it really varies all across the map. In terms of having a handle, I think we are going to continue to see this as rigs enter the market. There will be a lot of pressure on talent.

Okay, well thank you.

Thanks David.

We will take our next question from Geoff Kieburtz with Citi.

Thanks very much. Just really one question left. As you look at the 63 shipyard days you are talking about in 2008 compared to the 442 in '07 you mentioned that they were a couple of categories of days that are not included in that 63, can you tell us how many of the 442 fell into those categories?

The 442 was specifically upgrade projects, it didn't include normal inspections and minor repair and maintenance projects just on a consistence basis.

So those are consistent?

Yes, right.

And the 63 days have already been incurred. ENSCO 93 reentered the fleet in March, those were January, February days.

ENSCO 93. Okay, that was it, thank you.

Thanks Geoff.

[Operator Instructions]. Our next question comes from Tom Curran with Wachovia.

Good morning guys.

Good morning.

Dan, in your opening comments you emphasized the strength of incremental demand emerging from China and recently there's been gathering news flow about national company's or their contract drilling subsidiaries using state affiliated yards to either launch or expand existing new build programs. Would you please try to put this phenomenon into perspective for us, how much of this activity to the extent that there is going to be any will just be used to filled demand, it was never really going to be available to non-state affiliated contract drillers and then ultimately how much incremental supply could it lead to?

Yes, I don't... we clearly don't have a great handle on what the incremental demand is out of China just for obvious reasons. The drilling activity is picking up there. What we continue to refer to in our conference calls about China and incremental demand is we are aware that Chinese are out there looking at building additional rigs. We're also aware that they are out there actively looking at buying equipments. So when we talk about incremental demand soaking up new builds, we could see some of these new builds ending up in China, wouldn't be surprised to see that.

Is there any risks now that we've heard about PetroVietnam deciding to move forward in addition I guess to the new builds already on order for PV drilling to move forward with a construction program at some state affiliated shipyard and now had base talking about potentially building some offshore rigs at a Venezuelan state affiliated shipyard, any read on how much... how many incremental orders those two players might end up adding to the construction queue?

Now it will really be speculation on my part, I'd be real surprise to see a lot of that come to fruition.

Okay, so it doesn't sound as if at that this point you're all that concerned about the reality of it, I guess?

That would be a correct statement. Some of it too Tom is purpose build equipment. So it's not really going to be as competitive in the international marketplace but it could consume some of the demand there locally.

Okay, that's helpful, thanks. Jay, delving into the labor component of the increase in your cost expectations, how much of that would you attribute to preventing poaching in the markets where competition is fierce such as Asia Pacific and how much would you attribute to higher than expected cost associated with staffing the 8500?

Well 8500 staffing costs are really a very minor component of the numbers that I was talking about here today, because obviously we're just crewing up on those rigs now for operation primarily next year and beyond. So very little of that has impacted there. I think it's hard to separate how much is trying to keep retain people versus just normal wage rate increases. I think we have tried to be very competitive in the market and most of the number that you see there is just our annual wage increase that we give to all the offshore as well as onshore people. There are some other things we are doing around retention and special programs for selective highly skilled and important people that are pretty targeted. They tend not to at the end of day actually add up to that much money when compared to the total contract drilling expense. So I come back to most of the money that we are talking about there is just to remain competitive in the marketplace.

That's helpful and then lastly returning to the Gulf of Mexico jackup market, at this point you have locked up 3 of your 13 jackups through the heart of hurricane season, is this part of a broader strategy and how to tackle it and if so how many total rigs would you look to try to get locked up that take you through lets say August into mid to late October?

I would love to tell you its all part of a carefully crafted strategy. The reality is... that's what our customers wanted. But I think that is the interesting conversation kind of to what Jeff was saying, you know, as we are discussions with customers and they are talking about wanting to get on with programs there is very little discussion about I want to get on with the program but I am going to wait till hurricane season is over or I want to have a break during hurricane season. There was a lot of that kind of discussion in the last few years. So it definitely has changed. I think most people that are in the Gulf of Mexico they are serious about drilling are not spending much time thinking about this issue. Its always the curious dynamic in the Gulf of Mexico, part of our strategy is to lock things and up on term and when customer calls to look something up on term we're afraid that they know that the markets going up, we don't want to --.

Alright that's helpful guys. Thanks, I'll turn it back.

Our next question today comes from Roger Read with Natixis Bleichroeder.

Yes, good morning. I'm going to ask a question I guess nobody else has asked, consolidation. We saw Seadrill make the investment and pride, just wanted to get your feelings on consolidation in the industry and without asking specifically about pride just what are your opinions on consolidation at this point?

It hasn't change. We get this question every quarter so, same answer we've had every quarter. We have always said we thought consolidation will be constructive and just wait and see, continue to evaluate ways to enhance shareholder value.

Okay and then regarding the commentary along the shareholder value thing, you didn't buy any shares back in the first quarter as your evaluating the next deepwater rig. Now that that's sounding more or less sad or at least awfully close do we expect you to restart that program or is that your commitment of capital and so share repos are less likely in the rest of the share?

I think we continue take a balanced approach on this. We've been pretty consistent that we said we want to invest in growing our core business with particular emphasis on the semi, on these semi's and that we also wanted to employ any excess cash, free cash flow that we have into share repurchases. So I think you should read into what happened in the first quarter that we just felt, we should probably hold back that quarter with all of the things that were going on. We still have $318 million under our existing authorization left to buy in and we are not going to give you specifics on that but we intend to be back in the market here shortly.

Okay, thank you.

Sure.

Our next question today comes from Waqar Syed with Tristone Capital.

Hi, good morning gentlemen. I have just one question and I apologize if its been answered before but the cost on 8504 is about $515 million, about 20% higher than that for 8503, are there any design differences or is it just cost inflation?

Yes, that question was asked it's primarily the fall of the U.S. dollar and the increase in steel prices.

It's the same design though Waqar.

What's that?

It's the same design.

Same design. There is no additional equipment or anything at all?

No.

No.

Okay, great. Thank you very much.

We will take our next question from Min Ting Bar [ph] with Principal Global Investors.

Good morning gentlemen. I actually just have a small question about your capital structure. As I noticed that last year you retired about $170 million of debt, this year you have about 600 million of cash on the balance sheet and only about 300 million of debt, you have 2 untapped revolvers and you have like two issues out public issues outstanding. Do you have any plans of looking into your cash structure and revising it or maybe increasing your public debt?

Well I think in the near term I wouldn't expect to see us increase any of our debt. The debt that was repaid by the way in the last couple of years has really been scheduled for retirements of debt. There was nothing that we did abnormally there. For us right now as you rightly point out we have a fair amount of excess cash flow, certain amount of that will be applied to paying for new semis as we build them and as we said the one we just announced today will probably have about a $115 million check that we write when we actually finalized the order on it. So in the near-term what we said consistently and it's the way the things will be here for the foreseeable future is we want to make sure that we don't build up large amounts of excess cash flow that's just sitting invested in low income investments. To the extend we have excess cash flow that we really don't need. We will either return it to shareholders or we will reinvest it in the business. We view balance sheet really is the one place that we will turn to when we could see something that really is of interest and in a M&A context, there is something strategic that we want to do that we think is really important to do. But we're not going to tap the balance sheet probably anytime before that.

Okay, thank you.

Does that answer the question.

Yes.

I think we probably have time for one or two more questions.

Certainly, our next question today comes from Mike Drickamer with Morgan Keegan. Michael Drickamer - Morgan Keegan & Company, Inc.: Hi good morning guys.

Hi Mike. Michael Drickamer - Morgan Keegan & Company, Inc.: Danny, in you comments you talked about you expect additional jackups to leave the Gulf of Mexico, do you guys have an estimate on how many you expect to leave?

No, it continues to be a pretty steady flow and I don't know if I'd make any bold predictions but there's two or three seem like they are leaving every six months and I think you'd continue to see something of that magnitude. Michael Drickamer - Morgan Keegan & Company, Inc.: Okay, so then perhaps if we look at the supply side of that statement there, how many jackups do you think are actually capable of leaving the Gulf of Mexico?

There are only a couple of dozen premium jackups remaining in the Gulf of Mexico. So it's a very limited fleet, really capable of going internationally. Michael Drickamer - Morgan Keegan & Company, Inc.: Okay, that's what I was trying to get out here. And Jay I apologizes if you covered this already but do you guys hedge any of your dollar exposure?

Sure do. We hedge a number of major currencies and drilling amounts using them much further out in about a year. We also have a fair amount of cash invested in sink dollar which we use as an offset to our purchases with a couple of fellows [ph]. Michael Drickamer - Morgan Keegan & Company, Inc.: Okay, and much of your discussion on the dollar, or the weakening dollar has been related to labor expenses but how long until we start seeing it as a bigger proportion of say repair and maintenance expenses?

I think it's already in there. I mean, in terms of the number we have projected there are a number of factors that labor impacts, it impacts repair maintenance, it impacts your catering expense, all your third party labor that's on the rigs and there is a very large segment of cost that one way or the other is either labor or steal related in this business. Almost everything goes back to one or the other of those two commodities. Michael Drickamer - Morgan Keegan & Company, Inc.: Okay, guys that's all for me, thank you.

Sure.

We will take our last question today from Philip Dodge with Stanford Group.

Good morning, thanks. Over the last few days, there have been some statement from Saudi Arabia that they were going to put a hiatus on their capacity expansion after they complete the current projects, I was wondering if that has any implications for the four rigs you have there?

This is Paul Mars, and no it doesn't... our contracts there are long term with options and we fully expect those rigs to remain in Saudi Arabia to fulfill the contracts.

And you see that extending for several years, in the rig status to complete their current contracts at the end of this year around the fourth quarter?

Yes, but they all have options with them.

And you expect those to be exercised.

Absolutely.

Okay, thanks very much.

So, I would like to thank everyone for joining us today, we look forward to talking to you again, Thursday July 24th, for our second-quarter 2008 earnings conference call. With this I'll turn it back to you.

That does conclude today's conference. Thank you for your participation and have a wonderful day.