Sean P. O'Neill - Vice President of Investor Relations & Communications Daniel W. Rabun - Chairman, Chief Executive Officer and President James W. Swent - Chief Financial Officer and Executive Vice President Kevin C. Robert - Senior Vice President of Marketing John Mark Burns - Senior Vice President of Western Hemisphere

Judson E. Bailey - ISI Group Inc., Research Division Ian Macpherson - Simmons & Company International, Research Division David Wilson - Howard Weil Incorporated, Research Division Robin E. Shoemaker - Citigroup Inc, Research Division David C. Smith - Johnson Rice & Company, L.L.C., Research Division Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division Michael W. Urban - Deutsche Bank AG, Research Division Matthew D. Conlan - Wells Fargo Securities, LLC, Research Division Darren Gacicia - Guggenheim Securities, LLC, Research Division Megan Repine - FBR Capital Markets & Co., Research Division Rhett Carter - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Good day, everyone, and welcome to Ensco plc's Second Quarter 2012 Earnings Conference Call. [Operator Instructions] I will now turn the call 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 Second Quarter 2012 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 management team. We issued our earnings release, which is available on our website at enscoplc.com. As usual, we will keep our call to one 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. Also, please note that the company undertakes no duty to update its forward-looking statements. As a reminder, our most recent Fleet Status Report was issued on July 16. Now let me turn the call over to Dan Rabun, Chairman and CEO.

Thanks, Sean, and good morning, everyone. Before Jay takes us through the financial results, I will discuss second quarter highlights and the state of our markets. Before I do though, I'd like to take a moment to extend my sincere thanks and gratitude to someone who has been a major contributor to Ensco's success from the first day we opened our doors for business. Bill Chadwick, our Chief Operating Officer, will be retiring from Ensco in August after 25 years of service to our company. Bill has guided us through challenging periods on our history during down cycles as well as growth periods during up cycles, always with the same steady demeanor and a deep commitment to safety and operational excellence. Put simply, we would not be where we are today without Bill's many contributions. Amongst Bill's most important achievements has been his ability to build strong teams, which has greatly facilitated our succession planning process. Mark Burns, who most of you know, will succeed Bill in August as EVP and Chief Operating Officer. Mark is an industry veteran who has reported to Bill for several years, and we anticipate a very smooth transition, especially given Mark's strong leadership skills. Steve Brady will succeed Mark as Senior Vice President of our Western Hemisphere. Stave has worked for Ensco for many years and has led all of our Eastern Hemisphere business units during his career. I'm confident Steve will do an excellent job in his new position. Julian Hall will replace Steve as Vice President of Europe and the Mediterranean, and Derek Kent has been promoted to Vice President of the Middle East and Africa business unit. We also promoted Jay Swent, our CFO, to Executive Vice President. You all know Jay from our investor events and earnings calls, and Jay's…

Thanks, Dan. Today I'm going to cover highlights of our second quarter results, the outlook for the third quarter and our financial position. We provided information on our earnings release, which should assist you in making certain year-to-year comparisons related to our acquisition. Therefore, my comments today will focus mainly on factors such as the growth of our fleet and rising utilization and average day rates that positively influenced the comparisons between periods. Now let's start with second quarter results versus prior year. Earnings were $1.47 per share, up from $0.59 a year ago. As noted in our earnings release, there were a few items that influenced that comparisons. In contract drilling expense, warranty claims received in the quarter increased earnings by $0.10 per share, and gains from the disposition of cold stacked jackup rigs increased earnings by $0.06 per share this quarter and $0.02 per share a year ago. In addition, acquisition-related costs reduced earnings a year ago by $0.14 per share, in which $0.13 was in general and administrative expense and $0.01 was in contract drilling expense. Total revenue for the quarter was just above $1 billion compared to $564 million a year ago. Excluding the effect of the acquisition, revenues grew 44% year-over-year. Deepwater revenues increased from $232 million to $572 million, and excluding the effect of the acquisition, grew by 71% due to the addition of ENSCO 8504 to the fleet, significantly higher utilization and average day rates and the reactivation of ENSCO 7500 late last year, following upgrades completed during 2011. Midwater revenues were $101 million, all related to the acquisition. The average day rate was $227,000 compared to $237,000 a year ago, and utilization was unchanged at 79%. Jackup segment revenues increased by approximately 31% due to an increase in both utilization and the…

Thanks, Jay, and now operator, please open up the line for questions.

[Operator Instructions] The first question comes from Jud Bailey of ISI Group.

Dan, I was wondering if I could follow up on one of your comments regarding -- you said in Brazil you expected some of the independent operators to get more active next year. I was wondering if you could give us a little more color on what you're referring to.

Sure. Kevin, you want to take that?

Okay. Jud, with the new government, the President of Petrobras and the president of the country being in place now for a while, we expect that they're going to finalize more of their strategies that you've already seen coming out in their 5-year budget, and part of that is the A&P we'll get on with this lease sale that we think will open up some of those properties to some of the independents that have been in the country for a while. So that's what that comment is referring to.

Okay. And just staying on Brazil, there's been a lot of talk about Petrobras' mid-water demand kind of gradually declining with several rigs rolling the next couple of years. You guys have a couple, I believe, rolling next year. Could you maybe talk a little bit about the opportunities for those rigs? And are you in discussions with Petrobras? Or are you marketing those rigs out of that country?

They were marketing the rigs both in Brazil and outside of the country. There are spud opportunities in the country from some of the other independents, and there's a few programs outside that we're looking at right now.

Okay. All right. And then just my last question is on the 8500 Series. Gulf of Mexico is tightening up pretty quickly. You have several rigs coming up for renewal the next year or 2. Can you talk a little bit about how the discussions for those rigs are going and are you looking at longer term commitments? And maybe just in general, kind of your discussions on those rigs.

I think all I can say, Jud, on that is the market is very tight.

Okay. Well I guess you've said it all then. And then finally, just one more, Jay, you mentioned in the release, you mentioned potentially increasing the dividend and investment in the fleet in pretty strong language. Could you talk to us a little more about that, and if you have any timing in mind on when you could perhaps do something with the dividend or make future investment decisions in the fleet?

I guess, Jud, let me maybe preface the answer with a couple of points. One is we're really comfortable today with our current debt structure and our leverage ratio, got down to 30% this quarter. So we're not feeling pressured to reduce debt at all. In fact, as you know, it makes for a very efficient balance sheet. So we don't feel like we need to be investing heavily in debt reduction in the near term. I think the other point I'd make is historically, we've invested heavily in fleet renewal, and our fleet is in great shape today. So our future capital investments are really primarily directed to newbuilds and those generate growth for us. We are not having to spend a lot of cash in the next several years renewing our existing fleet. So all of our -- most of our investment there will go to growth. If you look at the cash profile for the company for the future, it really does allow us a lot of flexibility to allocate capital wherever we choose to. And as I said, I think we can very efficiently allocate it to growth, and we can very efficiently allocate it to dividends as well. As you know, we increased the dividend to $1.50 in the first quarter. There was a 7% increase there. So I think we're well positioned, as we like to say, we're in investor meetings. We're a great income and a great growth story today, and I think we'll continue to be that. I think obviously, how we decide to allocate capital between dividends and growth in the future is going to depend on the facts and circumstances at the time. But all options are on the table. I think with that, I managed not to answer your timing question.

You did. So I will ask again, is there any way we think about timing? You guys sort of swing more cash flow positive next year. I guess it sounds like it's a decision you'd probably make closer to when you start to generate more free cash. Is that a fair assumption?

Well, I mean obviously, that's when you start to focus on it more. So we're not going to get too far ahead of ourselves at this point.

The next question comes from Ian Macpherson of Simmons. Ian Macpherson - Simmons & Company International, Research Division: Kevin, on the Noble conference call, they alluded to their analysis that I think close to 90% of the apparent available to [ph] deepwater capacity in 2013 is not really available. In other words, contract finalizations are pending. And I'm curious if you agree with that analysis and if so, I would presume that most of the 8500 Series rigs fall within that characterization of essentially being "spoken for"?

Yes, Ian, without getting into the specific numbers, just as you look at the rigs that are available, there are just really a handful of rigs that I can see available in the -- through the mid -- first half of '13. Other than that, it really looks like everything is spoken for. And then as you go to the end of '13, it's not easy to find very many rigs there either. So you see clients already expanding their search for rigs into mid '14. So yes, the rigs that we have available within really the calendar year '13 and even into the first quarter of '14, have a number of opportunities on each rig. Ian Macpherson - Simmons & Company International, Research Division: On the OGX deal, it sounded like their fleet reductions were -- they were aiming to get those done by the end of the first quarter of '13, and your 2 rigs with OGX are contracted into late next year. So have you had conversations with OGX regarding the long-term disposition of those rigs after November of next year?

We haven't gotten that far yet. We continue to talk to them about their current program. And certainly, with this production -- reduction they have, we've been in discussions with them about what options we do have beyond the current contract terms. Ian Macpherson - Simmons & Company International, Research Division: I'm curious if the Midwater rigs might at some point become a noncore disposal target within the fleet. Dan or whomever, if you could comment on that?

I mean it's a fairly small segment of our business, and just like we've done -- do with all our assets, we're always looking at opportunities to high grade the assets. There's a lot of money been put into those rigs, and we think they have some good life in them. So we plan on hanging onto them, but we're always evaluating opportunities.

The next question comes from Dave Wilson of Howard Weil.

Philosophy type question here. Some in the industry are choosing to build rigs with 2 BOPs installed on the rig from the shipyard. And others, like yourselves, are choosing to build rigs with a capacity for 2 but not putting 2 on them out of the gate. And I know there are some areas of risks associated with each type. But was wondering, could you explain your philosophy and rationale, if you will, for the path that you guys have taken on that?

Yes, Dave, this is Mark Burns. As you said, we are starting to see more requests for dual BOPs being offered or being requested by operators. And as you also said, it's a technical enhancement that you have to allow for in the structure of the rig and the way the rig is laid out itself. How do you maintain 2 BOPs, what's your maintenance program, those type of things. So as we continue to see this request coming out, we are certainly in front of it, and we're looking at it. We're doing our engineering and our due diligence on it. We have -- talking with our key suppliers on this. So it is something we are seeing more, and will continue to monitor and stay in front of it.

Okay. And then another one -- another kind of follow-on to Brazil. In the latest Fleet Status Report, there's a little more down time for the Deepwater rigs down there. I was wondering if you could address that a little further. Was it just a bunch of small one-off type things? Or should we take away that Petrobras is just a more demanding customer at the end of the day?

Dave, as you know, yes, we did have some unplanned downtime in Brazil during the last quarter. I'll say each of these events were unrelated in terms of the root cause and not all of them were subsea related. We've addressed each of these issues, implemented corrective actions as necessary and don't anticipate certainly these specific incidents occurring again. So again, we're not seeing any great change in contracting requirements or pressure from our customers there. These were just unrelated incidents.

One more if I can, preferably for Kevin. Well, there's been another slow increase in tender activity this year. I was just wondering if you can comment on the timing of kind of the whole bidding process in a post-Macondo environment. I imagine it's a little more drawn out of course, at least in the Gulf of Mexico. But are you seeing that in other regions as well?

Yes, it's a worldwide issue. Everyone is starting a little more in advance because they are asking more questions technically, operationally. They want to know more about how we're prepared to handle surprises and unplanned events. And also, the contract terms and conditions have taken on some additional terms and conditions that take longer to go through. So yes, it's a worldwide issue.

Okay. Would you say it's gone from like a 3-month or 4-month process to a 6 or 7-month process or something like that from a timing perspective?

No, it's hard to say because with the market being so tight right now, more operators are getting out there earlier just because they realize if they don't, they're going to have difficulty getting a rig. So it's a little hard to compare that versus right after Macondo when there wasn't much going on. So I would say in general, we're still for big deepwater projects, it's not uncommon to see them take 6 months. At the same time, a really motivated client can move very quickly if they choose to.

The next question comes from Robin Shoemaker of Citigroup.

I want to ask first off on the Midwater market. You've seen some pretty nice contracts signed for Midwater rigs in the North Sea here recently, which I'm sure you've noted. But outside the North Sea, doesn't seem to be much momentum in that market segment. Is that about the change? Because we have seen periods in the past where strength at the high end of the -- or the ultra-deepwater market pulls up the low end. But is there enough inquiries to -- for Midwater assets outside the North Sea to make that possible?

Robin, there's some activity in Southeast Asia, generally for rigs 2,000 feet and greater. But I think what you're really seeing here is our fourth generation rigs are really occupying a lot of what we used to see as the traditional midwater market. So as a result, once you get outside the North Sea, the rest of the worldwide midwater fleet is, I think, struggling to find places where you can get enough term like we saw in the last up cycle. So I would characterize that there's still a healthy midwater market. There's still a lot of activity, but what you see is more of our traditional fourth-generation semis and some of the higher spec third-generation rigs really starting to occupy that market.

I see. Okay. My other question had to do with kind of conventional jackup market where you noted some strength across all Jackup segments. But I wanted to ask about your contracts in Mexico that come up for renewal later this year or renewal or nonrenewal as it may be. But how do you see the -- if you could comment on the U.S. Gulf and then these 4 rigs in Mexico in terms of the market demand and the potential for further price increases there.

PEMEX is very interested in keeping every rig that they have in Mexico in country. They also would like to attract more rigs. As Dan mentioned in his comments, they have quite a large increase in their fleet that they need to achieve. So that, combined with the U.S. Gulf of Mexico market basically being in perfect balance is keeping the whole region pretty tight. So that bodes well for the contractors that have rigs in that region. And with the rest of the world staying fairly tight as well, it's difficult to see very many rigs moving into that region. So I think it's a positive outlook.

So I think you mentioned earlier on the call that Mexico is pursuing direct negotiations as opposed to this tendering process which they favored over time. But would these -- are they seeking multiyear contracts on jackups?

Well they, again, I'd rather not comment on specifics. But yes, you're right. They now have approval internally to pursue direct negotiations without going through a tender. So I think all possibilities exist down there right now in Mexico. It's a positive environment that we're actively involved in.

The next question comes from David Smith of Johnson Rice. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: Quick question on the 8504. It contracted until February '13 in the high 420s options at escalating rates. Are you able to provide some color on the duration and the rate of escalation on these options?

Dave, there's a slight day rate increase escalation for those options. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: And on duration, are these multiyear-type options?

No, they wouldn't be multiyear options, but that rig could be extended. And a long story short, given the market environment there, we expect that, that rig will probably stay in that vicinity for the foreseeable future. David C. Smith - Johnson Rice & Company, L.L.C., Research Division: Okay. Appreciate it. And just one follow-up, I was hoping to get a little more color on the warranty issue, just including the nature of the expenses and how long ago they were incurred. I don't see this issue called that much, so I was just a little curious for additional details.

Dave, it's Jay. I think a couple of things I'd say. One is it's a variety of different issues. I think in the past, we've highlighted that we've had some equipment problems with some of the newbuilds. And so I don't think we want to get into the detailed specifics. I would say, though, that people really ought to think about that recovery is offsetting a fair amount of losses that were incurred in the first quarter as opposed to it being all related to last year's kinds of events. So as one thinks about how to characterize that $22 million, that's really largely offsetting things that occurred in the first quarter.

The next question comes from Scott Gruber of Bernstein. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Quick one on cost inflation. Your costs are coming in well below our forecast, even accounting for some of the unique items this quarter. What is the underlying daily OpEx inflation that you're experiencing? And is that coming in below your expectations, which I think were coming into the year kind of high single digits?

Well I think we're, as we said in my comments, we're doing very well on our synergy numbers and that's helping a lot. I think we're seeing the same inflation in labor, probably, that everybody else is seeing and haven't seen that abate particularly. So if there was one line item I'd draw attention to in terms of escalation, costs escalation in the future, it's going to be labor right now and that's probably going to be the discussion for the next couple of years, quite frankly. Most of the other areas, as I say, I think we've done a pretty good job offsetting inflation with procurement synergies and synergies in general. And I think you'll see that continue for the rest of the year. I mean we have signaled some increases over the next couple of quarters as more rigs come on board. I'd say if you look at the outlook this quarter versus what we projected last -- 90 days ago, we did much better than even our own projection. A little bit of that is timing. There's probably $5 million or so that's timing related that will roll into future quarters, but the rest is really just savings and cost. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: And then as you look out into '13 given the expansion of the fleet, it still expects kind of mid to high-single digit underlying inflation rate?

We haven't articulated an outlook yet, Scott, for 2013. We'll give you that at the beginning of next year.

[Operator Instructions] The next question comes from Mike Urban of Deutsche Bank.

I wanted to follow up on Kevin's comments about operator discussions and deepwater beginning to extend into 2014, just given the tightness of the market now and in '13. We've seen some pretty healthy rates for rigs with availability, really all the way up through 2013 and not a whole lot quite yet extending into '14. Is that somewhat of a mental barrier at this point from an operator standpoint? I guess what I'm trying to get at is, are the types of rate discussions at those same levels even for those rigs going right up to the end of '13? Or do we have to continue to see the market tighten and get a little closer and continue to see those rigs get snapped up?

Mike, there are a number of tenders out right now actually requesting rigs to be bid for '14 deliveries, so that's what I was referring to. As you look at the availability of ultra-deepwater equipment, even just looking at the newbuilds, there's only about 10 newbuilds uncontracted left for delivery in 2013, and I think 8 or 9 of those are very close to getting a job. So just as the market develops, I think we're going to naturally see some '14 contracts and some -- more '14 timeframes for tenders coming from clients. And that's not only in response to lack of rigs, but it's also just in response to the lead time that clients are taking to get out there and get these projects figured out because they've also got to have subsea equipment, they got to have production equipment. So really, the natural cycle is requiring they get out there that far in advance.

And are the rate discussions similar? Or at this point, are operators still looking for a discount that far out?

We don't see any reason that the market's going to get any softer. So as we've been looking at those rates out there, we've still got a very positive outlook into '14.

Okay. And question for Jay given some of your new responsibilities, and you talked a little bit about cost inflation. As the newbuilds do come in to the industry, it's going to be an increasing challenge to staff those. And I think we've kind of done this before from just in terms of the number of rigs being added. But I'm not sure we were at this highly an absolute level of activity, and I'm seeing kind of a lot of, I guess, unconventional advertising in a lot of places. So do you think you'll see an acceleration in cost inflation? And what's your ability to offset either -- either offset that either through contracts or otherwise?

Well I think -- we have 7 newbuilds that we need to staff, and we view this the same way we did when we had to staff up the 8500 Series. It's a strategic staffing issue. It has to get managed pretty tightly. We're fortunate that we're much larger company now than we were when we had to staff up the 8500 Series rigs, and we've got a pretty good sized fleet of deepwater rigs as well as a very large fleet of jackups. So we've got a lot of ability to internally generate candidates for these new rigs. We also, more importantly, have the opportunity to put shadow cruise on rigs and get them trained up. So I think in terms of our ability to get our job done, we feel very comfortable about it. There's certainly a huge number of people that have to come in to this industry. The big crew change that everybody talked about I don't think has turned out to be quite as dramatic as it was expected, but we are -- I think everybody is seeing some level of retirements out of the industry. So there's going to definitely need to be more people brought into this industry and to your point, I think all of us are going to have to start tapping some other sources than the usual sources that we have in the past to bring that many people into the industry. And I think we view our job as, people that we do bring in, we've got to get them trained up into the skill level that is commensurate with the operational excellence targets that we have for ourselves.

The next question comes from Matt Conlan of Wells Fargo.

As we look at your ultra-deepwater fleet, currently, there's a lot more backlog on the newbuild drillships than there is on the 8500 Series. Is that a -- just kind of a current status based on the past history of negotiating these rigs? Or is there going to be a strategy to try and operate a portfolio of keeping the 8500 Series on shorter term contracts while locking up the drillships? I guess I'm asking what's your strategy going to be on your 2 new drillships that you have under construction? Are you going to be looking for longer term on those, or to try to have them more in the spot market?

This is Sean O'Neill, and I think it's really more a function of history. When we did the acquisition of Pride, as you know, the key part of the strategy was to pick up the drillships. But along with that, we picked up a very large amount of backlog with the acquisition. So that's more really a function of history in terms of where we are today.

Is there the demand out there for you 8500 Series to have longer term contracts on them?

Matt, this is Kevin. There is, and you might look at it this way. We do want to maintain a balanced portfolio and have a nice exposure to the more near-term markets as well as look at rigs that work really well for clients that have long-term programs. A number of our clients are planning business 10, 15 years out. So that does give you opportunity to enter into long-term contracts. And at the same time, when you look at the 8500 Series rigs, we've talked to clients about terms anywhere from 2 to 5 years on those rigs as well. So I don't think it's a function of the rig as much as it is the business that the client is chasing and kind of his program. Generally, even with the drillships, if a client wants something for exploration, they're not going to be as long-term focused as if they're going for a development project. But there's no differentiation between the rigs. Both of them have the same opportunities.

The next question comes from Darren Gacicia of Guggenheim.

The one question I sort of want to ask on a thematic basis, it seems like reports across your peers and you all reflect that utilization and efficiency are coming up on a fleet, and you sort of kind of passed through the post-Macondo slows of maintenance and regulatory down time that hit initially. Where do you think that, that settles out? Because I think if I remember correctly back to kind of the '06 to '08 period, utilizations kind of ranged in the 95% range on some of the deepwater stuff. It's probably been up ranging in the low 90s across fleets. I mean, do you think we're heading back in that direction?

Yes, Dan, this is Mark Burns. It's certainly true that over the past year, we have rose to the challenge of some of the technical challenges of commissioning and starting up newbuild rigs. As you mentioned, our utilization and efficiency rates have improved. The permitting and regulatory process in the U.S. Gulf of Mexico has become more transparent. We're understanding how to work with our operators and the regulatory authorities. So we're getting more confidence in that area. And yes, as these newbuilds continue to come on and startup and commissioning is completed, there's a number of lessons learned that the industry will learn relative to equipment, unplanned equipment downtime. And yes, I think you will continue to see an improvement in these utilization rates in the coming months.

And how do you think they -- where do you think they kind of settle out on a run rate basis as I think about modeling?

Well I think -- we haven't really given any guidance on that as of yet, Dan. So we'll just wait and we can discuss that in another time.

Well, if I could squeeze one more in. It seems too that the cash flow profile is pretty extreme in the positive sense, and that's credited to you have very strong markets and good management. But as I think about it, the constraint here could be either you, as kind of cash piles build, there's a question of how does that vent? Does that vent through newbuilds or dividends? And I realized it's tough to give an answer specifically either way, but can you kind of define your thought process between the 2 and how you look at that going forward?

I think we answered that probably while you were on a different call. Just to sort of paraphrase what I said earlier, I think it will depend on the facts and circumstances at the time. Obviously, the profile in terms of positive cash flow starts next year. And as you say, as the cash pile builds, the thought process builds along with it. But right now I think it's a little too early to make any predictions.

The next question comes from Robert MacKenzie of FBR Capital. Megan Repine - FBR Capital Markets & Co., Research Division: It's Megan Repine filling in for Rob. Most of my questions have been asked already, but I wanted to follow up on comments on your recent Analyst Day where you introduced some new designs for the 130 Series. Can you give any kind of update on what you're seeing in terms of customer demand for that type of rig, particularly given your commentary around the North Sea?

I think the demand is what we expected. In fact, we've been surprised a little bit that the number of clients are working as far out as they are. So for our 120 Series, for the rigs rates we have on order and the 130 series which we have in design, we've had strong customer interest, and most of the clients looking at those rigs are really using them as development planning tools. So we'll see how it develops, but so far, so good. Megan Repine - FBR Capital Markets & Co., Research Division: Okay. Great. And then we've seen some really strong jackup rates in West Africa recently. Can you speak to the likelihood of you guys increasing your presence in that region?

We try to maximize earnings on all our rigs, and the beauty of a company the size and scope of Ensco, we theoretically can look at any market, and we have a strong floater presence in West Africa. Right now we just don't have any spare rigs to move into that region and it's better for us to keep the rigs that we have in APR and EMEA and the North Sea and the Gulf of Mexico. There are multiple opportunities for those rigs, and we can earn the highest return on those assets with them sitting right where they are.

The next question comes from Rhett Carter of Tudor, Pickering. Rhett Carter - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just with you spoke to Mexico potentially opening up their deepwater, do you have any sense as to the timing of when that could happen, when they would begin tendering for some floaters?

The Mexicans have a tremendous challenge with their shallow water opportunities, and they have also this big deepwater. What we've seen so far in Mexico is, again, their decision-making process, their budgeting process and, frankly, their resource developments, resource opportunities make it very hard for them to shift enough into deepwater to see it materialize at a real big way very quickly. At the same time, I think it's a strategic imperative for that nation to develop their deepwater business. So we think they're doing everything they can but frankly, down there, it's very difficult to predict timing. Rhett Carter - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Right. Okay. And then just on the 120 Series, are you seeing strong interest out of markets outside of the North Sea, and if so, where?

Not as much as in the North Sea, but there are some good opportunities in the Middle East. Some of this real deep gas opportunity that requires some high-spec HPHT work are candidates. There are still some deep drilling opportunities in the Gulf of Mexico and in various parts of Southeast Asia. So the opportunities are there but not the number that you see in the North Sea just yet.

The next question is from Ian Macpherson of Simmons. Ian Macpherson - Simmons & Company International, Research Division: We're in the minutia territory here, but why not. Jay, you mentioned that your adjusted tax rate for the quarter was 11.2% in line with your prior expectation, and for some reason I had the thought that the standing guidance on tax rate was more like 12.5%. So I just want to clarify that.

I think we've generally said it's slightly below 12%. I guess actually I'm glad you asked the question, Ian, because I would make the point that I think as we look for the full year, currently, we see a rate that's probably around 11.5%. And I think the only color I'd add on that is we're still looking at the structure of the acquired company, and there's still probably some opportunities for additional restructuring. And we may make some adjustments to the structure later this year or early next year that might have some minor impact on the tax rate. But on an ongoing basis I think you ought to look at sort of something in the 11.5% range is the right kind of number.

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

Thanks, operator, and thank you, everyone, for your interest in Ensco. We greatly appreciate it, and we'll talk you on the next call. Thanks very much, and have a great day.

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