Good day ladies and gentlemen and welcome to the Second Quarter 2010 Weatherford International Earnings Conference Call. My name is [Katie] and I will be your coordinator for today. At this time, all participants will be in a listen-only mode. We will be conducting a question-and-answer session for today’s call. (Operator Instructions). I will like to now to hand the call over to your host for today, Mr. Bernard Duroc-Danner, Chairman and CEO, please proceed.

Good morning. Andy will start off with his prepared comment and I will lead by taking Q&A as usual, Andy?

Good morning. For the second quarter of 2010, our reported EPS number is $0.11 before excluded items. This is a $0.04 improvement over last quarter and better than our anticipated performance of flat quarter-on-quarter earnings. The reported number excludes the following items totaling $106 million after tax. A non-cash charge of $82 million related to the revaluation of the TNK put and $24 million in severance costs related to the separation of four executives during the quarter as well as restructuring initiatives primarily in the Western Hemisphere. With respect to the TNK put we amended at during Q2, extending the expiration date to December 1 and increasing the strike price by $1 to $19.50. These two changes increased the fair value of the put by approximately $20 million. The remaining amount of the charge reflects the $2.72 per share decline in our stock price during the quarter. Following the Q2 charge, the puts recorded as $152 million liability on our balance sheet, to the extent that we settle the put and our share prices increased, the liability will be reduced, positively impacting the income statement. On the cash side, there will be no cash impact to the balance sheet if the put settled at or above the 1950 strike price. Of the aforesaid sequential step up, the field contributed $0.05 and below the line items took away a penny, North America is to credit for $0.02 of the operational uptake. Well international markets added $0.03. On a consolidated basis, revenue increased a $100 million sequentially or 4%; an advanced $443 million or 22% compared to the same quarter last year. North America revenue climbed 3% sequentially, stronger than expected performance in the US land market more than offset Canada’s traditional seasonal decline as well as one month of severely reduced…

Thank you Andy. Q2, as Andy said, rounded at $0.11. NAM already in the United States and Russia made the quarter. Within NAM, the US was strong in both oil and unconventionals. Oil and unconventionals represent over 80% of our business. This is by legacy and by design. Gulf of Mexico declines in June had operating income by a penny. Canada manages seasonal breakup lows efficiently on the back of this lower cost structure, this matters. We have more clean exposure than our peers. All of the Europe, FSU, SSA region progressed. Russia was the shinning star on all levels. The gains were primarily earned as a dividend of the organizational build up we achieved in this strategic market, both due to TNK acquisition internally. There’s room for further improvement and the margins although stronger remains subdued. Sub-Sahara Africa or SSA was also a good performer. SSA has consistently improved its performance from quarter-to-quarter at this time rather than eastern hemisphere’s highest operating margin. Latin-America held its own with lower revenues but high operating income. The dismantling of our large scale Mexican operation is essentially complete. The margin erosion coming from Mexico should be over. Besides in Venezuela, the rest of Latin-America was a strong performer. Brazil, Columbia and Argentina carried the region. Middle East Asia Pacific was laggard, the growing top-line, the marginally declining operating income. The region still suffers from a disproportion amount of startup expenses. We had much on the mobilization quarter-to-quarter. The region will benefit from future volume absorption. And their margins rose 140 basis points to 14%, even overcoming the Canadian break-up which is for us, highly unusual in the second quarter. The Canadian break-up always pushes up our second quarter margin substantially down. International margins rose in the Q1 trough by a 130 basis…

(Operator Instructions). Your first question comes from the line of Ole Slorer from Morgan Stanley. Please proceed.

Thank you very much, congratulations for now you exceeded expectations and you generated free cash flow in the same quarter.

I think it’s about time as you think.

Yes, very much welcome. Andy could you give us a little bit of a guidance for development in net debt for the rest of the year, do you think that you will continue to generate free cash flow here?

We do. So, without trying to be coy with everybody we try this year just to promise you that free cash flow we expect for the year to be positive, we are positive 55 as measured by reduction of net debt to the first half of the year and just lets leave it as we expect to improve upon that, throughout the remainder of the year

And Bernard if I understood you correctly pricing at this point is a North American phenomenon in a handful of stimulation related product lines, but international margins, how much higher can they go from here before you get the help of pricing?

First on NAM, its stimulation as in stimulation directional and completion you are absolutely right for artificial lift. On the international side, we have at the end when you count for all the pricing reductions that we experienced, it’s a solidly double-digit number until we lost anywhere depending on the market and part time anywhere from 10% and 20%, until which it takes 15% as a big point. And simplification, one would try to get that back as to when I don’t know.

My question was rather well you are operating in an environment let’s say limited pricing power, how much more efficient can you make your infrastructure, how much harder can you make your…

Its just absorption only, in absorption you have I think for the next 30% of volume increase coming out of the international infrastructure, the incrementals, once everything is started up, should be very good, simply because our fixed cost structure as we noted is larger than the present volume would require it will not be larger if you had 30% of volume on it.

Okay, so you should get the usual incremental.

That’s correct.

Could you talk a little bit about your bidding now? Are there any areas around the world where you are at the present seeing that you are able to raise prices, let say on projects that might start later this year or 2011?

I think it’s too early to tell, but if I was to guess. I would say that with exception of Asia Pacific it’s pretty much in most of the Eastern Hemisphere where there appears to be some opportunities to be a bit less, restrictive on pricing.

And then finally Bernard, on the board of directors you see the press release just recently or in 8-K where you have made certain changes I wonder whether you could, talk a little bit about that and what would you, this is expansion the board whether you are trying to change the profile of the board or the rationale for including, so then there is less people and what they bring to.

It’s obviously not my decision but I am happy to comment on it. We’ve added in three directors, we haven’t added anyone since 2004. The three directors are: the first gentlemen is the former Secretary of Energy. The second gentleman in no particular order is a Former Governor with Central Bank of Mexico. And the third gentleman is the Former Representative of the United Kingdom at United Nations, as ambassador. And so that’s what we did right now, simply because we hadn’t done it in quite some time in the company since 2004 has just about tripled in size and also increased in breadth and so forth. And so, it requires a larger [boat]. That’s really all we try to do. Next to the background as you can tell is diverse but it covers a lot of markets we operate in and then divest also expense.

Ladies and gentlemen, as a reminder, please limit your questions to one question and one follow up. Your next question comes from the line of Jim Crandell. Please proceed.

Bernard, this morning, there was a news article on the tape about Pemex presenting a 2011 budget. It was the Finance Ministry which was up 54%. Again, what’s your reaction to that? To the extent that they get that magnitude of the budget increase, where do you think it will be focused? And lastly, does it matter to Weatherford where it would be focused? I mean, will you do above the Cantarell, Chico or Bogart or whatever it is?

I think on the second question, the answer is yes. We have at this point, the market share and infrastructure in all reservoirs. I went through my notes, probably more extensively, description of the place and various reservoirs, whether its Bogart, who comes to play at the (Inaudible), we don’t have Mozart and Cantarell and KMZ because we are present in all and we have the same infrastructure and pretty much the same market share. So the number one, it doesn’t -- whatever the client wants is the answer on that. We will be placed second. I wouldn’t necessarily take the percentage requested and sort of beat it in models and things like that because there is a political process and its is really a balance between what Pemex thinks that they can legitimately demand what the political constituency will give them. But I do think and I have to down that one, it is what it is. I think the direction is positive for 2011 and thereon and after some positive relations in ‘09 and in ‘10. The fact it is a positive direction is happy.

A question about in other Latin-American country wouldn’t argue of running up 40% or better in Brazil this year from last year? To what extent are your gains in Brazil coming from new contracts? Is it general activity? Is it impart the introduction of new technology into the extent that its contracts in new technology. Could you elaborate on that a bit?

It is not market. Market in Brazil with come in a powerful way but it will come in some time. I’m talking, referring to the [pre-sold] place. But in our particular case, it is more of the syndrome of us being more present in that market and introducing product lines and service lines that didn’t exist in the past and doing a decent job of business development there. And so, it is more us finding our place in that market where it ought to be, given our capabilities and our technology where we didn’t have it before than anything else and not dissimilar to the process we go through in the Eastern hemisphere. And so that essentially has characterized our progression and you are correct. Brazil will be up roughly 40% or something like that, maybe a bit more. And it is reflection also on the future, of the forward basis, professional contracts. We have approximately a news count always cause I, surpassing $1.4 billion, $1.5 billion in new contracts. It’s not all in one year. So I should be very careful here and my count is not correct. And so, I mean this approximation and so, it carries; let’s call it 1.125 billion, carries over about four years. So you have something like that, three to five, sitting for. We’ve got an idea of the scale. It is a multitude of products and service lines. I would not want to go through litany on the phone right now and besides that would be wrong because I’d forget. But the magnitude invoice is what that matters.

Bernard, could you talk to your latest assessment your latest estimates of the timing of awards to oil service companies by the major in Iraq?

I’d hope you wouldn’t ask. Well, first of all, very much like we expected, it will be lumpy and it will be slow. There’ll probably be two or three. So the IUC awards this year would be my guess, is a just a guess. I don’t take it further than that. Now what you don’t see our smaller less dramatic assignments are then, we’re not called for drilling but rather production or work orders to this. They will not make quite a bigger splash. And I would tell you again on that market, it is the market that it is obviously very important, no question. There are security issues which are highlighted by a uncertain political process. Also, there’s a market in which our peers will also be present and do very well, it’s not one where we will see to do more than having our share and try to operate well and keep clients that we have there happy. So I’m afraid it is always the same way from the very beginning that won’t change. But again I think about three awards which is now in your end would be today the way its looks it could be more, or depending on the political processes it could be less. So, it has been quantitative about this, which you’ve to focus on is that the directionally it’s a very important market assuming there’s some measure of reasonable political processes.

Bernard my final question, you highlighted Russia as being an area of strength. To what extend in Russia is the reason for your improvement that you’re now being able to push tools and services through your infrastructure that acquired with TNK and to what extended is the result of you expanding your customer base beyond the TNK in Russia.

I think the financial scorecard in Russia has obviously now become good. But I think operationally it’s mixed, I think the integration has gone well, in hard work it’s gone well and it’s never finished but its about to finish as I would have hoped you would be at this time, so its gone very well. I think we have not progressed very well in terms of selling more products and services to TNK, maybe it takes more time. On the other hand, we’ve done rather well and better we’d have expected if product and service is different, more basket to other clients. And I can’t really point to a reason why except the fact that we become with our infrastructure very legitimate as a service provider in Russia, we were sort of less legitimate in [holding] our infrastructure. So we have progressed very well with three clients that I can think of unless you were thriving very respectable performance together with integration.

(Operator Instructions) Your next question comes from the line of Kurt Hallead from RBC Capital Markets, please proceed.

Sorry about that. So I was wondering we look at the progression in Latin America and you delineated where your opportunities do lie. I was just curious with some of the changes that you made in Mexico in redeploying equipment and reducing cost. What was the impact on the second quarter numbers from those costs and can you refresh my memory as to how much of those costs in total were occurred in the first quarter versus second quarter?

I would be very reluctant to give that actual number I think I would be even more reluctant than I will be but I will say this, we had very hard time in Q1 and in Q2 on and around Mexico. You think for a second that we had 50 strings budding in Q4 in Mexico. Right and then Q2 we were running 10 strings alright. Now I think 10 is a small number than 50 and having been in the business quite for some time going from 50 and 10 and then strings to be clear to the audience. String would be in rig with the entire suite of well construction products and service lines all the way down to our completion and stimulation, little known artificial lift. So I mean it is rather massive exercise. So it has been no fund in Q1 and Q2, can you put no fund in your model, no, but that’s all I am going to give you on that. But the no funds indication that it was difficult, it was more difficult for us than any of our peers obviously because we are the ones with largest infrastructure and the largest market share in Mexico. That’s no one’s fault these things happen but its no fun.

Now, also wanted to get general sense from you, clearly one of the positive elements as it relates to the Weatherford story has been the growth in the Eastern Hemisphere especially, the entrepreneurial element of it and the drawback on that has been some critic relating to free cash flow generation which I think you’ve already addressed. So on a go forward balance on the go forward basis two things, noticed no specific reference that 30% kind of target on Eastern Hemisphere growth, so, if you can given us an update on that. And then secondly, what’s the strategy and tactics going forward, you think you can strike a reasonable balance between growth and profitability and free cash flow generation?

That’s what we trying to do, Kurt. We certainly are not trying to do away with entrepreneurial drive and growth culture. No. Why would we want to do that? What we are trying to do and maybe will be successful it’s to strike, you choose the right word, balance, between your more intelligent use of capital as opposed to overly aggressive use of capital. And a successful growth, a successful growth doesn’t only mean you’re doing it with intelligent use of capital, it also means good operating performance as in service quality, which if you are overly aggressive not only do you tend to use capital may be inefficiently and at the same time you may have service quality problems, which in-turn are very expensive to fix and don’t do any justice with the clients. So, we are trying to find that balance between not only efficient use of capital but also service quality. Do not read into that any weakness in our growth culture and true potential not at all, we are just reasoning very much like owners who look at what we do well, we do growth well, not everyone does everything well and we don’t do everything well, but we do growth well, we are trying to do intelligent growth well, and uptick, I don’t know about 30% but I have to guess I said we are closer to 20s and 30s simply because first half is slow, but I don’t know, whatever we don’t do in second half of ‘10 will be pushed over in ‘11. So that’s what’s going on. So, I don’t really know so it’s very hard to give you metrics so I don’t know, and if I give you a metric before I was wrong and so far the first half is slower.

Your next question comes from the line of Bill Herbert from Simmons & Company. Please proceed. Bill Herbert - Simmons & Company: Back to Mexico, with respect to the outlook for next year and how you respond to it, you’ve gone from 50 strings to 10, yet you have maintained your infrastructure, first question on Mexico how easy and how quickly can you rig back up and along those lines you’ve gone from 50 to 10 rigs how many stock rigs do you have in country and are you going to keep those there?

I think the last question the answer is obviously too many as you will point out to be very quickly, but I think our fair estimate will be a little over 20. As I said it’s not [far to] your colleagues just a minute ago. That’s one part of the question and an indication of 2011 activity will be helpful in knowing how we allocate things although we’ll be again careful. And what was the first half of the question. Bill Herbert - Simmons & Company : How quickly can you rig back up I mean you’ve slashed your cost structure significantly I think your employee base has been reallocated or doing well? Yeah.

Yeah we still have, lets just start we still have a sizeable business in Mexico. These would be painful, so Weatherford has been where we were, and where we have to be. But today we have a sizable market in Mexico and a sizable organization in Mexico. I’d love to give you the employee count. As of today, I don’t have it, but I could give it back to you offline. I don’t remember, I should remember like as we have been moving every spot, every single month. But we have a sizable infrastructure, a sizable organization giving back up I think a couple of things, I think first of all let’s make sure that we have an increase in expenditure. And I realize this is you move directionally, so it appears that therefore it will happen. But let’s make sure from our standpoint that rig is going to be indeed that the political, constituency in that country will allow the budgetary expenditures to go up because we don’t know yet, we watched this very carefully. So before it even hits the wire and everything else we will know that the budgetary expenditures will go up by some number. We won’t know the exact number, we’ll have the sets. At that point in time, we’ll probably make whatever prudent moves are called for to expand the organization or prepare the expansion of organization or make some pool of people available and so forth. So the answer to your question is I don’t know, it depends on the scale. But then what I will say is that, as you would expect for people that have been gone, scaled up dramatically and scaled back down dramatically, because remember the ones at 0 to 50, were not 50 for the past 10 years. We have probably gained a certain muscular flexibility in terms of handling volatility in that market. I was thinking about your question, I don’t know it depends on the rate. Let’s see if it happens on that kind of good stock. But if anyone can do it with some measure of flexibility it’s probably us. Bill Herbert - Simmons & Company : With respect to business model in some corners people are inferring that Pemex is moving away from IPM, is it as important to have the rig infrastructure there?

[No, because we couldn’t care less]. We are not let me clear, I think the process of using rigs as conveyance together with cost and services associated with it, is in our minds a legitimate model to lower the cost structure to exploit oil and gas. That is one of our trademarks. However, the client doesn’t want to use that, is a religious issue for us. We resign the equipment the wonderful things about rigs also as equipment is that it can be traded away also. It’s a question whether you need them or not for the purpose of exploiting that combination rather than lowering the cost structure. This is not possible, don’t do it. No worries at all. Bill Herbert - Simmons & Company : Now you made the comment towards the tail end of your summary comments with regard to laying out early plans for ‘11 capital spending. Do you have so to guess as to what capital spending is going to be for next year?

Look I’ll give you a number right, but [things just] going to change. Right now it looks more like 1.5. But Bill actually in two months in average I will probably have a different number. But it’s rather elaborate as a process, and without being overly bureaucratic we look at every slice of what’s out there and do the best we can to see what is necessary. We also have a pool of equipment for that within the company which is not being utilized and that also takes priority, so all these things are factored in. So, that’s today sort of the guess, but please it’s early. Bill Herbert - Simmons & Company : Got it, final one from me. Back to international incremental margins you made the comment that again now with further volume gains you benefit from absorption unless we revert back to normal international incremental, just trying to define normal. I mean historically, during the expansionary phase of the international cycle, you’ve generated incremental margins of upward 25% to 35%. Is that what you describe or is normal unless that you’re expecting and targeting going forward?

I think for now, that’s fine Bill.

Your next question comes from the line of Jeff Tillery from Tudor Pickering Holt.

Andy, with the revolver coming due, and spring issue of next year, could you just update us on your thoughts with regards to that and timing on getting that re-up as well as size and pricing?

I will give you the later two things. Let’s wait till we actually pull the trigger and go market a deal but, its expiring in May as you point out. And so, I think that from a timing prospective, we don’t want to be acute about things, corporate spreads have been coming in here recently with improved credit environment. There have been some things that have hit the sector. Obviously Gulf of Mexico and what not, that are not too popular and maybe the recent progress in resolving the spill issue maybe we’ll bring spread tighter. But again, without being too acute, I think that it’s safe for you to assume that probably before the end of the year, we will take care of that short-term piece of our financing and that maybe just through renewing a deal that is at the same size. It maybe a larger facility or it may include a piece of fixed rate, longer term debt. But its, you understand as well as I do all the variables that are there until, but you have a good news on it and I think before the end of the year.

Just on one product line chemicals and stimulation showed pretty tremendous growth over 50% sequentially. I’m thinking I couldn’t evolve in US and was there help from Russia in that as well? Just trying to understand some

There is a significant. There is a significant component which is international. The fleet of the United States bought between 400,000 to 500,000 horsepower, that’s one thing. The fleet internationally bought between 100,000 to 200,000 horsepower and is growing internationally and indeed Russia is one of the place and not the only one. And now in that number, product lines, you do have a significant component which is not stimulation also. But otherwise, your question is right on point.

So significant help international, this quarter in our business line?

Yes.

Thank you once again ladies and gentlemen. (Operator Instructions) The next question comes from the line of Dan Boyd from Goldman Sachs. Please proceed.

Looking at the Middle East, Asia-Pac margins and there are that’s the only area that was a little bit weaker, I think we expected. Presumably, there is a lot of startup cost in Iraq for that. Can you just give us an update on where are you in that process in Iraq?

It’s not Iraq only, its, you have got about six or seven other countries and make that seven. So, the mobilization is not only strings also, it is a broader range of products and service that are moving around and you have a cutoff date in quarters. Either you are lucky or you are not. So you have little bit of everything this quarter which is they have lot of mobilization, start up expenses and we had also I think situations where you have products and services that are where you have a fair amount of cost expense and the revenues. And it is what it is, it happens. We suggest that the numbers are put forth by Andy that about setting the three penny also will be added to in our Eastern hemisphere in Q3 are reasonable.

And presumably, those start up cost mean increased visibility on revenue growth?

That’s correct. That’s correct.

Can you also put a magnitude around the, what you are investing in our startup cost today? How quickly that starts to translate into revenue when we could expect…

Dan, of course I can, but I’d rather not on a conference call. And what well things probably better handle offline, discussions of models with Andy. He’s quite prepared for that.

Your next question comes from the line of Brad Handler from Credit Suisse. Please proceed.

Just a couple of unrelated questions. First, I guess coming back to Iraq, I think you had mentioned going into 2010 that there was I think was 300 million or 350 million of revenues that were contracted. I guess I’m just curious. Are the revenues tracking consistent with that expectation thus far this year?

They certainly well they are Brad, yes and certainly in the second half of the year, Iraq will be running actually higher rate than that.

And then the unrelated follow-up is that I guess I’m noticing thanks to the cash flow information you are providing, about 80 million in divestures of businesses year-to-date. Maybe you can talk to us please a little about kind of some of where, what businesses you are divesting, how that. if there’s some

Equipment Brad, equipment. You had my comments on one of your peers about this particular play. People don’t want IPM and so on. So one comments that I made is that we are not what is that we reformed to pieces of equipment and they come in and one of the things about some of them is highly tradable. I think what you are referring to is about I’m telling to Andy is probably equipment, miscellaneous equipment if the market is it Andy?

Yes.

Yes, and then some of those stuff you’ll see Brad, in all markets are going on with us. Not necessarily, the loss or the gain, more that we don’t need our equipments, more cash anything else.

Make sense, and might we expect to continue to see that.

Yes, and sometimes you may stop; sometimes you may have more of it. If it has anything to with the overall corporate decisions has far more do with the logic of the individual market and the pool of equipment. More and more we looked carefully at the pool of equipment we have. Pool of equipment is nothing more but capital. Yes, capital in still form, same thing. So we look at it and with that look, there is still a part of time to be little bit more efficient as for the use of capital, without losing our aggressive nature perhaps but being more efficient, that’s all it is.

Your next question comes from the line of Mike Urban from Deutsche Bank. Please proceed

You did a great job in moving forward on Russia and the integration and getting some volume through there. You did express, I don’t know, disappointment is the right word but in the margin I guess you could do better there. Is that simply a function of continuing to ramp up the volume, is that doing a better job as you suggested earlier of pulling through more customers or little bit.

Everything you said Michael and there is also what we very seldom mention and which is that when economy went into a tailspin little over a year ago pricing really crashed in Russia, so you have a pricing issue of great magnitude in that market. Now would it come back, that’s debatable? In the meantime you may get good, good margin improvement, the old fashion way of simply with absorption and which is what we intend to see happen, and pricing would be sort of the other factor again pricing was, it’s hot in Russia year and year an half ago.

Shifting gears a little bit Sub-Sahara Africa was something that you mentioned for the first time in quite a while may be the first time that I can remember it all. It’s been a small, relative small business for you in the past is that something that is going to be more of a focus for you, or should we expect to hear more from that going forward...

We’ve run in regions, we don’t run them for many corporate center, be it Geneva, London, Dubai or Houston and so forth. All we had is an error we run them locally. And we’ve opened our headquarters in Johannesburg it’s about a bit less than a year ago with big emphasis on that market and it’s paying dividends. This is much of a land play for us as it is an offshore play. And it is the market that so doesn’t move quickly but it is a market where margins of exploitation were good but not from service standpoint, They have got our attention, you are absolutely right Michael we’ve been very observant that we traditionally have focused a lot on North Africa and Middle East not what on Sub-Sahara Africa. We are focusing on it now.

Your next question comes from the line of Robin Shoemaker from Citi, please proceed.

Bernard, just wanted to ask you about going back to North America, I guess you inferred that about 60% of your business did not benefit from price increases, the 40% that did. So is that true across all basins are you finding that your North American products and service lines are differentially priced according to basin and is there any prospect for that 60% that has not achieved price increases to get those under the scenario you envisioned for the second half of the year.

First, well done for paying attention to the comments and the notes first of all remember I was reporting events that took place essentially in Q2 and at different times in Q2. In Q2 you had breakup in Canada. So right there, you’re not doing any pricing increases during breakup. That doesn’t mean you can’t get them after breakup. Right, so that’s fair. So the first comment is a look-back comment so essentially now you’ve moved away from NAM essentially the Canadian play at least for Q2. Remember, this is again they are not perspective comments they are retrospective comments and its number one. So within so it’s a percentage of NAM to begin with, so now you are dropping from 100% to a percentage whatever was US net of Canada as because you have NAM in Q2. Second, within the US you have early starters, and then may I think the markets that are benefiting, they’re obvious. Its oil and shales. Now one of the comments that I’ve made is that 80% of our market exposure now, that number is probably going to go up simply because the Gulf of Mexico is coming down, 80% of what we do in United States honest to goodness is oil and shales to a degree of legacy the oil side. But it’s purposeful because it’s a shale type which is one of things that we did about a year, year and a half ago, systematically within those markets. And also we were less present in conventional gas market. So I think the oil and shale related plays are the ones that’s going to most generous within that category, the once that are going to be most generous in our judgments of a shale play that have gas and associated liquids. Now you can figure out which ones they are. Do I need to tell you on the conference call but when you have a play with shale gas, and nice volume of liquids at the end of the day the net cost on the gas side is still very low. So the economies of the reservoir allow the clients to be perhaps little bit more generous.

Just let me ask you one other question and related to the deepwater market and the disruption we’ve had there which you have commented on in terms of your earnings impact. But in terms of the longer term outlook for deepwater and its importance to Weatherford, have you taken a more cautious view on that whether in anticipation of regulatory changes or shifts in the mix of operators in deepwater, and how important is deepwater to Weatherford you know five years from now versus today?

It will be less important. I think it’s inescapable that the sort of, to what we think. We could be wrong of course, but probably it won’t happen. The way to regulations means that’s coming understandably in the United States and by osmosis, some of the other markets completely United States. And the deepwater market in United States is particularly important at this time. Means essentially that the time to get the projects done would be longer and the cost to do things will be greater. Also means that fewer people can play in that market. You understand all of this, simply because liabilities are now essentially open ended and so very few people can afford to play in that market. So now you have fewer people and so I think the process of selling properties and that sort of things which will take place, because some players simply can’t stay in that market; so much longer, more expensive. And by process of osmosis, it means that some of the plays abroad will be impacted to a lesser degree that they will be. So our view is that all things being equal. That’s an important; all things equal is an important statement. Deepwater as a percentage of the oilfield service market will go down, not only now because we got an extra moratorium, which is like free, but on a secular basis will go down. And that’s on the onshore land plays, which means both the land plays where there is potential. Now you think now where there are, and also the land plays as in unconventionals. And unconventional is not only shale; its also heavy oil, its also CBM, are going to have more impact. That’s our view. [The company and the model] disappear, not at all. But simply…

To the moderator, I’m told one last question if we can please.

Sure, great. And your final question comes from the line of Geoff Kieburtz from Weeden. Please proceed.

One question, Bernard, it’s a conceptual one. When you were earlier talking about more intelligent use of capital, I may or may not have gotten it right. But it seemed like you were reflecting, if you will, some learning that has gone on at Weatherford over the last several years and I wondered if you could elaborate a little bit more on what lessons have you learned, how important was the experience in Mexico to those lessons? How is Weatherford managing its business differently as a consequence of those lessons? And what do you think we’ll be able to see in regards to how Weatherford is managing the business differently?

I’m not making into a long answer. This is probably better answered offline because it is competitive issues and policy and so forth, relative to few things. First, Mexico was not really that germane in terms of our learning a lesson on the capital side. Mexico was enormously germane when it came learning lessons on the operating side. And even though it was a very rough ride given the ups and downs there, what our clients could do in Mexico, and it was a rough ride also I think on Wall Street. We learnt a lot operationally and I am personally very proud of the work that our Mexican operation did, drilling, I’m talking about drilling efficacy and about lowering the cost curve for Pemex as quickly as we did it. And so that the drilling economics towards the end of the process, remarkable, concerning our views to what could be achieved. So, it was more of on operating I think, lesson Mexico, than a capital one. I think the capital one Geoff, and you’ve known us for a long time is not a recent thing, having been a company that has grown further and faster and some of the kinder comments, I used to call out transformational. Well, the dark side of transformational is that you are immature and you don’t use things quite as efficiently as your more mature peers. And certainly, we never really focused hard enough on using capital more efficiently. So I think probably, it was time and so that whether we have sort of mid-course in our adolescence as we were as an organization, it was time for us to learn a little bit better how to use capital. They are sort of reasonably easy wins and not because we were sort of lax or sort of little bit uncaring before, but simply because I think with the years and realizing what we did well, we didn’t do so well, we began to understand ourselves better. That’s all it is. It’s not really Mexico or Russia or Middle East, no; it’s just the passing of time.

Thank you to everyone and I think we’ll conclude the call here.

Ladies and gentlemen, thank you for your participation in today’s conference call. You may now disconnect. Have a wonderful day.