Good day, everyone, and welcome to Ensco plc's Fourth Quarter 2011 and Full Year Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I will now turn this conference over to Mr. Sean O'Neill, Vice President of Investor Relations, who will moderate the call. Please go ahead, sir.

Thank you, operator, and welcome everyone to Ensco's Fourth Quarter 2011 Conference Call. With me today are Dan Rabun, CEO; Bill Chadwick, our Chief Operating Officer; Jay Swent, CFO; as well as other members of our executive management team. We issued our earnings release, which is available on our website at enscoplc.com. As usual, we will keep our call to 1 hour. Any comments we make about expectations are forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our earnings release and SEC filings on our website that define forward-looking statements and list risk factors and other events that could impact future results and disclose important additional information regarding our recent acquisition. Also, please note, that the company undertakes no duty to update forward-looking statements. As a reminder, our most recent fleet status report was issued on February 16. Now let me turn the call over to Dan Rabun, Chairman and CEO.

Thanks, Sean. Good morning, everyone. Before Jay takes us to the financial results, I will discuss the benefits we are seeing from recent acquisition, fourth quarter and full year highlights and the state of our markets. Last February, we announced a major acquisition. Looking back a year later, we are realizing the benefits that we discussed with our shareholders. Our larger customer base, expanded geographic presence and wider range of enhanced rig capabilities are giving us a distinct advantage. We have the world's youngest ultra-deepwater fleet, the largest number of active premium jackups and a major presence in the most strategic offshore basins across 6 continents. In addition, we are realizing benefits from standardization within our fleet, especially the ENSCO 8500 Series semisubmersibles, Samsung DP3 drillships and Keppel FELS premium jackups. We believe these advantages will differentiate Ensco from other drillers in terms of uptime, which, in turn, will lead to more business and the highest scores in our industry for overall customer satisfaction. The integration of operations and systems is proceeding well, and we are on track to achieve our targeted synergies for 2012 and beyond. Turning now to the highlights since last quarter. ENSCO 120, our first ultra-premium jackup that will be delivered next year, was contracted for $230,000 per day, plus mobilization for initial 500-day term in the Central North Sea. ENSCO 8505, which was recently delivered, was contracted to Anadarko, Apache and Noble Energy for at least 2 years and will commence its term contract next quarter. ENSCO 8506, the last rig in the ENSCO 8500 Series, was contracted to Anadarko at $530,000 per day for 2.5 years and will commence its term contract in the fourth quarter. Both of these 8500 Series contracts are for work in the U.S. Gulf, which is another positive sign…

Thanks, Dan. My comments today will cover highlights of our fourth quarter results, our outlook for the first quarter and full year 2012, and our financial position. Regarding fourth quarter results, let me start by saying that we have provided information on our earnings release, that we issued yesterday after the market closed, that should assist you in making certain year-to-year comparisons related to our recent acquisition. Therefore, my comments today will focus mainly on factors such as the growth of our fleet and rising utilization that influence comparisons between periods. Now let's discuss our fourth quarter results versus prior year. Earnings from continuing operations were $0.99 per share, up from $0.90 a year ago. Fourth quarter earnings per diluted share were $0.99 compared to $0.93 last year. Total revenue for the quarter was $1.0 billion compared to $409 million a year ago. Approximately $481 million of the $593 million increase was related to our recent acquisitions. Deepwater revenues increased from $113 million to $514 million, driven primarily by the acquisition, as well as new ultra-deepwater rigs that were added to the fleet. This increase in revenues is somewhat lower than previously expected, primarily due to OEM equipment issues on ENSCO DS-5, our newbuild drillships that Dan referred to earlier, as well as the delayed startup for Ensco 7500, which has now commenced its new contract in Brazil. Midwater revenues were $116 million, all related to the acquisition. The average day rate was $229,000 per day and utilization was 82%. Jackup segment revenues increased by approximately 18%, primarily due to more operating days year-to-year. Jackup utilization in the fourth quarter was 82%, up from 75% a year ago. And as Dan indicated earlier, utilization was 90% for the legacy Ensco jackup fleet in the fourth quarter. Average jackup day rates,…

Okay, operator, you can now open it up for questions, please.

[Operator Instructions] The first question comes from Robin Shoemaker of Citi.

I wanted to ask if you could give a little more color on the DS-6, and I know it's not yet a contract, but the modifications to the rig would seem to be extensive just given the length of time that will be required, nearly a year. Could you describe those modifications that would be required by the customer?

Robin, this is Kevin Robert. We can't really give any more detail than what we've already disclosed except to say that the rig is intended for a long-term program that's going to involve both exploration and development. And therefore, the extensions -- the modifications to the rig are designed to accomplish that work.

Okay. And with regard to the -- I mean, you've described some operational OEM-related downtime for the drillship, the DS series of drillships. And so, I have to believe that somehow there's -- this is reflected in that. But the DS-7 is late 2013, is there any change to the design or delivery of that rig that would be related to this OEM issues?

Robin, this is Mark Burns. As you know, as a company we have and we've been very proactive in managing BOP and associated equipment downtime. I will make a point that all our BOP and well-controlled equipment are fully certified to work in the U.S. Gulf of Mexico and our other global markets. Another point, Robin, to remember is our equipment is standardized on our DS series drillships and our ENSCO 8500 Series semis. Our BOP equipment is standard and of course, that benefits the management of maintenance times, operating procedures, lessons learned and personnel management. We're working very closely with our equipment manufacturers. We're being proactive with them. In terms of the ENSCO DS-7 and any associated OEM equipment issues, there is none. We are fully in control and working with our customers and equipment manufacturers to manage that.

Great. Well, it sounds like a great contract on the DS-6, and it looks like from what you were describing for the DS-7, even in late 2013, the market is looking quite strong for those types of rigs. Do you think that you'll -- with the strength of the market, you may sign a contract well in advance of the delivery of the DS-7?

Robin, it's Dan. We are very encouraged about the state of the market. So there are a number of opportunities that we're currently addressing with customers. So I would expect to see the contracting process be a lot further out from delivery than what we've seen over the last 1.5 years, 2 years.

The next question comes from David Wilson of Howard Weil.

Dan, real quick, you mentioned the Pride acquisition in your prepared comments. Just wanted to check back on that and see from your sort of perspective, if there were any surprises and possibly both some good ones and some bad ones that you guys have seen 9 months forward.

No, we've -- these acquisitions always have -- there's always some surprises, but most of the surprises are, quite frankly, been on the positive side in the customer reaction to the acquisition. So we're very pleased with the acquisition and the scale that's provided us and the opportunities for revenue growth. So it's been, frankly, somewhat surprising from a customer perspective how well it's been received.

Okay. And kind of sticking with this Pride acquisition a little bit here and considering some of your one-off divestitures over the past couple of years. When you look at your fleet, especially on a relative basis, just curious how you feel about it. Do you think something is missing or stands out as not belonging and has a real sense of urgency to get rid of anything?

Well, I don't think we have anything missing. And that was one of the benefits of the acquisition. We've got every asset our customers reasonably expect us to use in all the markets around the world. With respect -- and this really isn't a question about the acquisition, this is really a question about culling older less technically-capable assets and adding new assets, which Ensco has been doing for the last 20 years. So it really is not related to the acquisition. We hope you will continue to see us taking some of our less capable rigs and culling them out the fleet and adding newer assets. So we're not going to be doing anything different than what we've been doing before.

Okay. And then just one final one real quick, and I know I've asked this question before, probably last quarter. But I wanted to see given your backlog increasing by almost a couple of billion as the DS-6 gets done, this could change your answer. At least shed a little more light on the subject of returning cash to shareholders. Just trying to assess the potential for something like a dividend increase or share repurchase happening towards the end of this year.

I think, David, this is Jay. This topic always gets a lot of conversation amongst the management team and with our board. And as we've said many times, all options are on the table. I think obviously, we feel very good about having contracted some of the newbuilds and how the market is shaping up and the strength of the market. At the same time, remember in my comments, I made the point that we've got $1.83 billion of capital expenditures in 2012. We're still at our current dividend level. We'll be returning about a little over $300 million of capital to shareholders this year. So I think it's probably a little premature for us to be making any predictions of what we're going to do in the near term. But I'd certainly say stay tuned. I mean we , as you know, we have a very strong backlog and a very strong cash profile moving forward beyond 2012, and we'll obviously be looking at this area.

Next question comes from Ian Macpherson of Simmons & Company. Ian Macpherson - Simmons & Company International, Research Division: A fleet status question, if I may. Because you gave sort of specific hard coated guidance on your midwater revenues for this year and you've got a couple of rigs that we can't see the status of right now. So I was wondering if you could just, without being more specific than you care to, shade some color into your guidance with the 6000 and the 5003 which are open fairly soon.

Ian, the 6000, we expect to be extended by Petrobras and I think that rig will keep working right where it's at. It's something that Petrobras needs, especially with the ramp-up in work in those basins. The 5003, we've turned down some short-term work for that rig because we didn't think it was in the best interest of the operation and the income that we could produce, so we're looking for a longer-term opportunity for that rig before we put it back to work. Ian Macpherson - Simmons & Company International, Research Division: Got it. Switching over, Dan, would you agree on the surface with drillship price quotes out of Korea and leading edge day rates that the prospective returns on newbuild drillships are better today than they were a year ago? And on the heels of that answer, just give us a sense of your appetite for more spec rigs to be ordered for deepwater this year.

Well, the first question was easy. That's yes. The economics are much better today than they were a year ago. In terms of a number of new spec newbuilds, I don't really know how to predict shipyards -- or with the shipping industry in such disarray, the shipyards are very keen to book drillship orders so I would expect given the strength of the market we should anticipate seeing some orders placed. Ian Macpherson - Simmons & Company International, Research Division: By Ensco?

Nice try. Ian Macpherson - Simmons & Company International, Research Division: Okay. No. One more quick one, Jay just to clarify. You said your full year cost guidance is plus 49% year-on-year. Is that what you said?

That's correct.

The next question comes from David Smith of Johnson Rice. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: Was wondering of -- just following up on that last question, is 7 a lucky number for the 8500 Series rigs or maybe should we consider that the '08 financial crisis was a speed bump for that program? And should we look at that rig design as a good fit with future organic expansion plans?

It's an interesting question. You might recall that we ordered 3 of those rigs right in the midst of the global financial crisis. So clearly that wasn't an impediment to us. But we feel real comfortable with having 7 rigs in that series. We probably aren't real inclined to expand on. It's been a great investment. We've had fantastic returns. But we probably would move to some different designs, if we decide to expand the semi fleet. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: Okay, I appreciate it. And follow-up question for Kevin. Just with the availability for the ultra-deepwater rigs in '13 rapidly diminishing, how should we think about pricing opportunities for the moored deepwater rigs?

You need to take the moored fleet and kind of split it up into that, I'll call it, the 4,000 to 6,000-foot moored fleet and the kind of under 3,000-foot moored fleet. And I think for the deeper portion of that fleet, it's a positive market. There seems to be more inquiry for that rig class than there is supply. For the under 3,000-foot category outside of the North Sea, the North Sea continues to be strong. Prospects are not yet providing a lot of long-term opportunities for that fleet. And so I think it's a more difficult and kind of still a utilization challenge sector that probably we're not going to see a whole lot happening on rates until utilization kicks up on those lower spec moored rigs. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: Okay. And lastly, sorry if I missed this, but did you have an estimate for the synergy realizations in 4Q '11?

Not specifically for 4Q '11, David. No, we just gave guidance for 2012 and then 2013 and beyond.

The next question comes from Todd Scholl of Clarkson Capital Markets.

I was just wondering if you could give us a little bit more guidance in terms of the wage inflation you are seeing. I noticed that you guys gave that as part of your cost guidance. Is that pretty much just in the floater side? Or are you also seeing in the jackup side? And is it pretty much isolated to the Gulf of Mexico and Brazil? Are you also seeing it globally?

Well, Todd, it's really across the entire fleet and across the entire world. We're seeing it everywhere. And I'd say one comment I'd make on the 9%, you need to keep in mind that we had to harmonize the wage structures of 2 different companies and bring those together, as well as look at what it takes to be competitive in 2012. And we've accomplished all of that within the 9% guidance that we've given you.

In that cost guidance, is there anything else in particular that jumps out where you're really seeing any type of inflation?

I think labor is really the major one right now. We have -- there's obviously going to be material inflation. We're going to tend to counteract a very large portion of that with our procurement synergies that we're working on in terms of exercising the procurement leverage that we have. So I think we're going to not feel the same kind of burden there this year that maybe some others will.

[Operator Instructions] The next question comes from Scott Gruber of Bernstein. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Quick question on your Gulf jackups, do you know how many are drilling for gas today?

I don't have. Mark?

We've got 8 jackups currently under contract in the U.S. Gulf of Mexico, and I would say 75% of those still continue to work drilling natural gas wells. We are seeing some more liquids being sought after, but still it's 75% natural gas work. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: And how do you view the prospects for those rigs to continue to work? And are you starting to do a bidding of those units outside of the Gulf?

Well, if you just look at the total rig count of premium jackups in the U.S. Gulf of Mexico, obviously, the number of units has declined considerably. You're still having majors very active, rates continue to increase in the Gulf of Mexico. So we view that market as one of our core markets. If we have opportunities to move units out, we will look of that on a selective basis. But certainly, again, we look at it on a case-by-case basis. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then a follow-up on jackup demand in the Middle East, you highlighted some incremental demand out of Qatar. Is that for work in the Northfield? And if so, is that an indication that the slowdown in drilling activity in that field is starting to turn?

Yes, Scott, this is Carey Lowe. The incremental demand out of Qatar is oil. I do not see -- and I've just visited in Qatar. I do not see any major increase in the Northfield demand, gas demand at this time.

And the next question comes from Scott Burk of Canaccord.

I had a couple of follow-up questions on the DS-6 contract. Did you get any kind of payment or revenue stream while it's in the -- getting its upgrades in the shipyard? Or is that 0 revenue until it delivers in Q4?

No, we're receiving rate on the rig, which will be recognized over the contract term.

So the contract term would start while it dwells in the shipyard. Is that what you're saying?

No, once it commences drilling.

Okay, in Q4. And then once it -- the revenue associated with that, the $1 billion of backlog you guys disclosed, does that include some mobilization payments? Or would it be appropriate for us to just look at that divided by the 5 years?

No, that includes mobilization.

Okay, okay. And one question I had just kind of had a ruling on this transition, Macondo litigation yesterday and so thinking maybe, Dan, with your legal background, is there any way to write an indemnity clause that would protect the drilling companies from Clean Water Act fees? Or is that just something that's always going to be a risk for drilling companies?

I'm very proud that I've been out of the legal profession now long enough that I don't have any answer to your questions.

And the next question comes from John Lawrence of Tudor Pickering & Holt. John D. Lawrence - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just a question on the 121 and the 122. It sounds like you're already seeing a lot of interest there. Could you just talk kind of the timing of contracts maybe on the first the 121? And then, also would you expect rates to be higher than the 120? Or is that a good rate to expect?

I'd prefer not to speculate on rates and timing, but I can say that there's multiple clients already expressing interest in those rigs. Generally, there are clients that have long-term development programs that need a lot of lead time to get all the permits, and these are real robust big rigs that are going to be able to stay on location and do a lot of different things for those clients. So that's where the interest is coming from. And you saw how far in advance of the 120 contract happened, and I think we have similar market dynamics going forward on those 2 rigs.

[Operator Instructions] The next question comes from Andreas Stubsrud of Pareto.

I was actually going to ask a few questions about 121 and 122 as well. I think I just have one and that's for, are you just targeting those rigs for the North Sea? Or will the Middle East be an option as well?

Andreas, actually, there is probably 4 or 5 good places in the world those rigs can work. The North Sea seems to get most of the publicity, but there's deep drilling Gulf of Mexico. Middle East work, Southeast Asia. There's a number of places.

But typically you're targeting to 200,000 plus, I guess, for that type of rig, right?

We ordered those rigs with an expectation that they would give us equal or better rate of return than we got on the 120.

And if you get the -- to actually exercise the fourth option you have or the last option you have for those type of rigs? Do you need a contract for 121, then? Is that a trigger?

I'm sorry, what was the question?

I guess you had one more option.

I think, no, that's not a trigger.

Okay. So well, how do you decide on the last option? Is that in general the market or your balance sheet?

All of the above. I mean all capital allocation decisions are a mixture of market expectations, balance sheet and alternatives..

This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

Just want to thank everyone for your participation today on our conference call. We appreciate your interest in Ensco, and we will talk to you next quarter. Thanks very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.