Nabors Industries Ltd.
Q1 2012 Earnings Call Transcript

Published: 25 Apr 2012

[Operator:]

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Nabors Industries First Quarter 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, April 25, 2012. I would now like to turn the conference over to Mr. Dennis Smith. Please go ahead, sir.

[Dennis A. Smith:]

Good morning, everyone, and I also want to thank you for joining our first quarter 2012 earnings conference call this morning. Our format today is customarily we do will be to have Tony Petrello, our President and Chief Executive Officer, provide with you with our perspective on the quarter's results and give you some insight into how we see our business and markets evolving. Following Tony's prepared remarks, we will open up for a question-and-answer for the balance of 1 hour and then limit the call to 1 hour. In support of his remarks, we posted some slides to our website, which you can access to follow along if you desire. These are accessible in 2 ways. If you're participating via the webcast over the Internet, they are downloadable right from that particular webcast website. Alternately, if you are on the telephone and -- you can access them from our website, nabors.com, under the Investor Relations menu; under that, the submenu Events Calendar; and you scroll down a little bit and they're right there in PDF format for you to download. With us today in addition to Tony and myself are Laura Doerre, our General Counsel; Clark Wood, our Principal Accounting Officer; and essentially, all of the heads of our various principal business units. As you all understand, much of our remarks, of course, will be forward-looking statements and as such, are subject to numerous risk factors as elaborated on in our 10-K and other filings. Since they constitute forward-looking statements within the meaning of the Securities Act of 1933 and '34, such forward-looking statements are subject to certain risks and uncertainties as discussed in our filings from time to time, and we encourage you to refer to those. And with that, I will -- now that the lawyers are smiling, I will turn it over to Tony.

[Anthony G. Petrello:]

Thank you, Denny. Good morning, everyone. Welcome to our first quarter conference call. I want to thank everyone for participating this morning. As Denny explained, we have on the website a series of slides. These slides contain details of our business, the performance of the various segments and other relevant information, and I'm going to be referring to them by the page number on the bottom right-hand corner. As you saw in yesterday's press release, we had a solid quarter, a prime example of what I think distinguishes our company. Before I go into the quarter's results and outlook, I would like to give you a brief overview of certain key initiatives I've previously spoken about and where they stand. First, E&P monetization. As you know, we are committed to monetizing our E&P portfolio as expeditiously but as prudently as possible. In addition to the previous year-end sale of our California properties, we have now sold our remaining Colombia oil and gas operation for $73 million, as well as certain residual holdings in the US Lower 48 for $4 million. These are summarized on Slide 3. To date, these sales total $149 million, which in the context of our overall investment is low-hanging fruit, but I hope reflects our commitment to get this done expeditiously. Slide 3 also lists the remaining E&P properties to be monetized. We have engaged investment bankers, as we've previously said, to market our Eagle Ford and Alaska properties. Because of the oil's nature, we expect we will be able to conclude sales on these properties before year end. On the tape this morning, I noticed that GeoResources has received a buyout from Alcon. GeoResources is our partner in the Eagle Ford. We are evaluating various avenues for our gas assets in the British Columbia shales and our NFR Energy joint venture. The current gas commodity environment makes that challenging, of course, but we are looking for any way to create value and we're open to all kinds of suggestions, if any of you out there have any. The timing is, of course, uncertain with respect to these gas assets, but they remain high on the priority list. Second, other asset monetization. As I indicated during our last quarter's call, we would review a number of our different asset classes and identify whether they made sense to retain them. We have, as a result of that, identified additional assets for divestiture. These are summarized on Slide 4. These assets include our Canadian aircraft business, hybrid coiled tube drilling rigs and our Canadian well-servicing operation. We have also decided to sell our Alaska oilfield hauling and services operation. We have engaged in a Canadian investment bank to help with the Canadian assets and we anticipate concluding most of this, if not all of these processes, in the second half of the year. We've also retained a U.S. investment bank for the Alaska assets. Additionally, during this process, we decided to sell off the remaining assets of our Peak U.S.A. oilfield hauling business in South and East Texas for $14 million. That was just completed this quarter. In addition, we reviewed our offshore position. We've decided our Gulf of Mexico jack-up barge rigs are not core, and the only issue is timing. We have also engaged an investment bank to provide estimates of market value on those assets. We are also still evaluating whether the international jack-ups, whether it makes sense to keep them as part of the core portfolio. And most of them, as you know, now have contracts. We're trying to assess the strategic value for key customers in certain markets, and we haven't decided one way or another yet. That's an ongoing process. Third topic, balance sheet. As we've previously stated, another area of focus is to improve our balance sheet flexibility. Slide 5 is a summary of our current financial position and also sets forth an aspirational target of where we want it to be within 2 years. We finished the quarter with $500 million in cash and investments. Our financial position is solid, with leverage now at 2.1x the first quarter annualized EBITDA and interest coverage of more than 9x that amount. Except for a revolver balance of a little over $1 billion and $275 million in senior secured notes maturing in August, our terms debt matures in 2018 or later. So I think we're in a very comfortable position in any times of uncertainty. Total debt does stand at $4.8 billion and our net debt to cap is 45%. The next 2 columns on this slide, to the right, set forth our targets to get to the net debt to cap of around 25% within the 2 years. We would like to accomplish this through a combination of sales of nonstrategic assets and increased capital discipline to facilitate the positive cash flow. The chart assumes getting there with only free cash flow generation, of course, depending on how the events proceed and roll out the next 2 years. Obviously, asset sales will accelerate this process, while also providing a cushion in the event of a weaker market condition in an uncertain environment. Fourth topic, organizational streamlining. We previously announced we want to modify our historical business unit structure to enhance efficiencies and improve our customer interface. We are now in the process of merging Nabors Well Services and Superior Well Services into one organizational structure. We expect that to occur over the next 2 quarters. With over 80 well-servicing locations and 35 pressure pumping locations throughout the Lower 48, we believe there is potential to realize both cost and operational efficiencies. We are also consolidating certain core support functions across the organization, moving to more of a matrix-type organization that you're all familiar with. In some sense, we've been in that position for a long time with the shared services environment, and I think we were one of the first of the service companies to go that route many years ago. Starting in May, we've hired a new Corporate Vice President of HSE and we'll be filling corporate positions in HR and subsequent to that, in engineering. Some macro comments before we get into our company specifics, and of course, when it comes to macro, all of you on this call are infinitely better poised to be a prognosticator as to what's happening. If I knew the macro for sure, I wouldn't be doing what I'm doing and I wouldn't tell you. That's for sure. Everyone is well aware of the weak natural gas environment and the potential ramification it holds for certain sectors of the North American operations, specifically land rigs and pressure pumping. As we mentioned in our release, we are seeing a degree of hesitancy on the part of customers with respect to initiating incremental projects, as well as an increasing contraction in activity in dry gas areas. As some of you may recall, we have previously stated that the second half of 2012 would see a flat to slightly lower rig count and diminishing demand for pressure pumping. Today, we also expect to see awards for new reconstruction moderating considerably. Slide 6 illustrates the trends in the weekly rig counts for oil, natural gas and horizontal wells since the beginning of last year. As you all are aware, the natural gas rig count was flat to modestly declining in October of last year, while the horizontal unconventional oil rig count was growing at a pace that outstripped the gas rig count, providing the overall growth in land drilling. Slide 7 breaks down the horizontal rig count between oil and gas wells. Starting in October, you see the rapid decline in the horizontal gas rig count is more than the increase in the horizontal oil rig count. We believe that the horizontal drilling is the best approximation of demand for both new rigs and hydraulic fracturing. The horizontal gas rig count will continue to be challenged in this commodity price environment, hence our view as to where we stand today. At the current oil price levels, however, we do not foresee a substantial sharp drop in overall rig activity, but we can see a sagging rig count well into next year. On the other hand, the impact on pressure pumping will likely be much more severe and protracted, given the excess pumping capacity and the number of new entrants that have to work their way out of the system. Nabors is in a differentiated position to weather these situations, as we have a healthy backlog of firm contracts in U.S. land drilling, as well as expected growth in our International, Canada, Alaska and U.S. well-servicing operations. Now let me turn to the first quarter financial results. Our earnings per diluted share were $0.65, with most of the sequential increase attributable to strong operational performance. The quarter did include investment income of $0.05 per share, which was about $0.02 per share higher than we realized in the fourth quarter. As we've previously indicated, falling gas prices are resulting in significant noncash ceiling test impairment charges in our oil and gas affiliate, NFR Energy. These amounted to 68 -- roughly $68 million this quarter or $0.16 per share. We expect the 12-month rolling average ceiling test methodology to impact subsequent quarters as well, of course, depending on where the gas price continues to go. These charges notwithstanding and as shown on Slide 8, we had a solid quarter operationally with operating income improving by $48 million, roughly 18%, sequentially; and $113 million, 54%, year-over-year. Seasonally strong first quarters in Alaska and Canada more than offset the customary seasonal weakness we usually see in our well-servicing and pressure pumping businesses. The majority of our businesses improved sequentially, the exceptions being pressure pumping, U.S. well-servicing and International, which were down but all better than expected. A few additional preliminary remarks before I get into the units. First, on taxes. Our reported effective tax rate from continuing operations for the first quarter was 32.5%, roughly. We anticipate our 2012 tax rate to be in the range of 32% to 34% for continuing operations. Even though we expect our International operations to grow, this segment will nevertheless be outweighed by the size of our North American operations, where the effective U.S. tax rate is around 38% to 40% and about 25% in Canada. I want to emphasize, however, that the majority of our worldwide tax expense is deferred. Furthermore, our cash taxes in the U.S. are minimal. We currently have a U.S. NOL that approximates $1.2 billion. These are all good characteristics for producing superior after-tax cash returns. Second, capital expenditures. Capital expenditures for the quarter totaled $470 million. Depreciation and amortization was $248 million. For the full year 2012, to give you some idea of where we think we're going to be, we think D&A is anticipated to be about $1.1 billion. We previously advised that we anticipated capital expenditures for 2012 to total about $1.5 billion. With the announcement today, which I'll get to, of the new rigs for Lower 48 land, we expect that number to be revised to be closer to $1.6 billion. We're also reflecting reductions in capital expenditures and other areas. That number may go down with further scrutiny and as the market evolves -- and I can assure you that one of the things that's very high on the plate is capital spending and making sure we're spending our money wisely, and that's under constant review. Third category, run rate. Slide 9 tries to put in context where we are on this journey. It provides a look at where our operating cash flow stands today compared to our prior high achieved in 2008. As you can see, our 2011 cash flow approximates 2008, while our first quarter annualized run rate is well ahead of that prior peak, even when adjusted downward to reflect first quarter seasonality in Alaska, Canada and rig services. Finally, some mention of asset quality and diversification. We have always recognized the cyclicality of this business. One way we try to mitigate risk and improve the value proposition for our customers is through long-term contracts, which provides the opportunity for constancy of work and serves our customers' interest as well. And I really want to emphasize it

[Dennis A. Smith:]

Camille, I think we're ready to commence the question-and-answer session please.

[Operator:]

[Operator Instructions] Our first question is from the line of Jim Crandell with Dahlman Rose & Co.

[James D. Crandell:]

My first question has to do with the asset divestiture program, and I guess it has 2 pieces. Number one, it seems to me that you might be backing off a little bit your decision to sell the International jack-ups. Does this reflect at all what you think you can get for those jack-ups in an environment where other companies are selling equipment? And my second question is, I wondered if you could just tell me your thinking about why sell Canada well-service rigs and keep U.S. And what were the considerations in that decision?

[Anthony G. Petrello:]

Sure, let me deal with the first one -- the second one first. The Canadian well-servicing marketplace, there's a number, it's not as -- whereas the U.S., there's a couple of big guys; in Canada, there's several big guys. And to get to a leadership position, I think we would have to grow that position, that's number one, and invest a bunch of capital. Number two, our position up there, unlike in the U.S., we don't have the fluids management trucking and other ancillary stuff that we have in the position down here. And then number three, in terms of just the way things seem to work up there, the amount of overlap between the 2 in terms of the synergies to be attracted, I just didn't see it -- us getting there as quickly. So those were all the motivations with respect to Canadian well-servicing. That -- I think it's a different position up there than here. With respect to the International jack-up, I remember reading your write-up and I don't think I've said actually anything different on the International jack-up than what I did last month. I think there's no question on the Gulf of Mexico jack-ups. The only issue with the International jack-ups, Jim, is some of our participation in that market has been at the insistence of some key NOCs, and we -- there's some relationships there and we just want to make sure that we do 2 things

[James D. Crandell:]

Okay. And just as a follow-up, one operational question, Tony. What do you think is the outlook now for new sort of 3- to 4-year contracts on fit-for-purpose rigs over the course of the year? What are your customers thinking now in terms of ordering more equipment? And have you seen any price competitiveness at all in that market? And is there any indication that, that 27,000 to 30,000 type day rate that you and some select others have been getting for that equipment might be under pressure?

[Anthony G. Petrello:]

Well, I'll let Joe answer some of these comments. But the first thing, I do think, as I said, that the appetite for certain people is not as great until people get a clearer view of their overall cash flow. The economics of the newbuilds, I still think, both in an operational and economic sense, will be liquid plays. And I think even in the medium term, that's going to drive the interest in them. In particular, [indiscernible] Texas as the plays move from vertical to horizontal drilling, the existing fleet of rigs out there, I think, is ill equipped to optimize that and I think there will be demand. I think the pace of the willingness of people to sign up, frankly, is going to be a function of what their position is, the commodity exposure on the gas and how much cash flow they have available and what other demands there are for that cash flow and whether it's free to invest. Now I think the fact that we just signed these contracts in this environment, I think, shows that people that have a program that they've committed capital to and have that horizon, that the newbuilds are still the way to go. And what we intend to do is add a bunch of stuff to it -- to those rigs to make that value proposition even more attractive, which is the reason why we're trying to extract more value out of Canrig. So, Joe, you have anything to add to that?

[Joe M. Hudson:]

Yes, Jim, again, the newbuild market is being driven by mainly the majors, large independents. A lot of them have strong asset positions. We think there's still the opportunity, specifically in our northern markets, which Tony spoke to earlier, specifically in the liquids area of the Bakken, that we think there's incremental opportunities there to move the rigs in. We do see some pressure from contractors who build rigs on specs, but those are drying up as announced on some of the previous calls. They're backing off. So as long as the operator wants a strong, premium asset to work in that area, then we think there's great opportunities for us.

[Operator:]

And our next question is from the line of Jim Rollyson with Raymond James.

[James M. Rollyson:]

Tony, maybe just following up real quickly on Jim's last question. You mentioned earlier in your commentary about expecting kind of spot market land rates that may see some pressure throughout the course of the rest of the year. Is that strictly limited to the lower tier rigs? Or is that in certain markets on the newer class of rigs as well?

[Anthony G. Petrello:]

Well, so far the rigs that rolled over, actually, they rolled over -- the stuff that was on extensions rolled over basically at the levels they were at. And rigs that rolled existing newbuilds -- or AC-type rigs, I should say, existing AC rigs that rolled to different operators actually rolled at a higher margin than what they were at. So thus far, we haven't seen -- thus far, we've been in pretty good shape. Now as Joe mentioned, obviously, with the market, there is pressure, but in terms of what's happened so far, that's what happened so far. Clearly, when I talk about the downward pressure, I'm speaking of the -- I'm speaking of rigs that are in the gas areas, and we still have some of them. And as I mentioned, that is going down, so I am talking about those. And then, of course, now I have to be realistic. To the extent the commodity prices really tubes here and those rigs become available, I think there is a point at which everything gets affected. But that, I don't -- that -- we're not there yet.

[James M. Rollyson:]

Okay, that's very helpful. You guys put up really good numbers sequentially and frankly, for a long time in Alaska this quarter. I'm kind of curious, outside of the seasonal dip you'll normally have when you go into the second and third quarter, how is Alaska set up -- setting up as you go into next winter season? Are you going to get back to 8 rigs? Or is there upside of that number? We haven't seen 8 rigs in a while.

[Anthony G. Petrello:]

I'll let Denny talk.

[Dennis A. Smith:]

Yes, Jim, things are shaping up to be a pretty good exploration season next year as well. There's always some variability and risk in that, but -- and then we do have some prospects in other regions for this summer. And the big catalyst will be if, it may not happen this year yet, is the legislature tweaks the tax progressivity up there. Now that's really holding back a lot of capital spending in the legacy fields. And if that breaks loose, then we're almost in a position of being the marginal supplier.

[Anthony G. Petrello:]

Yes, the other thing I find, frankly, exciting is that the state definitely has an attitude now that they really want to encourage the independents or new entrants into the market, and they're spending a lot of effort. There were state representatives down here during a tour, meeting with all size companies, not just the large independents, but private companies. I think you all know about Hilcorp buying the position of Chevron up there. And so to the extent there are these new entrants into the market, I think it bodes well for incremental activity. And in fact, the way the tax scheme currently works up there, there's some great subsidies that people haven't really appreciated for new entrants. And I think that's now becoming better known and I think all that is -- creates at least the platform for maybe good things to happen. So with that pipeline only half full, it's a shame for having that resource not being drilled. So we're -- we have -- we -- long-term, I think it's a great position to be in that market.

[James M. Rollyson:]

That's excellent. And the last question, just you mentioned the way things are setting up for at some point down the road in well-servicing in the Lower 48. You kind of see, maybe at some point, supply and demand coming together to where you maybe get some pricing leverage above and beyond the kind of "keeping up with cost" creep that you've had here in the last 12 or 18 months or so. Any venture of a guess of when that may happen? Is that a 2012 event, a 2013 event? Or kind of what are you thinking?

[Anthony G. Petrello:]

I'll probably just talk directionally. I mean, I think if -- to the extent you believe in the oil shale fee system and those types of wells, they are going to require these workover programs, and we've been at it for a while. And once we get on that cycle, once that cycle hits -- the stuff that's been going on in North Dakota, it's been going on for a while. But once that maintenance cycle starts, I think then, given the amount of drilling that's occurred, there should be a sort of regularized ongoing demand. And given the length of those horizontals and other aspects, it seems like most of the fleet that's out there may need some incremental investment to be in a position to handle that work, and I think that is pretty good. Whether that's beginning at 2013 or late 2013 or I -- I don't want to be guessing. I just -- but that's the way we see it.

[Operator:]

And our next question is from the line of Jeff Tillery with Tudor, Pickering and Holt.

[Jeff Tillery:]

Tony, it was just kind of other rig services in the Alaska business. I mean, Q1 such a big quarter and should come off hard seasonally. Could you just give us a feel for how you think about year-over-year growth for those businesses [indiscernible] this year?

[Anthony G. Petrello:]

Sure. I mean, I think we're already complicated and we already are producing lots of segment information, so there's a point at which -- we don't want to get into a position of giving everything out. But directionally, I know it's a really big number, and I think I said in my remarks a substantial portion came from Peak. The way that -- the other way to think about it is that the Canrig-Ryan component together had about a 25% increase. Okay? And frankly -- well, I'll leave it at that.

[Jeff Tillery:]

That's helpful. And for the -- as you think about the Alaska outlook for the rest of the year, I wouldn't expect to see the same type of year-over-year growth that you demonstrated in the first quarter. But do we see growth year-over-year in the subsequent quarters from Alaska?

[Dennis A. Smith:]

I think that subsequent quarters will be somewhat ahead of last year. But obviously, there's -- things go south pretty quick with the mid-April-type time when we get to get off the ice and get out of the exploration program. So second quarter will be down demonstrably in the Alaska businesses, but probably better than last year.

[Jeff Tillery:]

Okay. And then, Tony, you talked about the outlook for domestic rig count just industry-wide being flat to down as you go through the second half of the year. You guys have some contracted newbuilds coming into the fold. Do you think you'll be able to hold a stable rig count through the course of the rest of the year?

[Anthony G. Petrello:]

I -- well, that's our quest, but -- and thus far, on the rollovers, we've done a pretty effective job. And -- but as I said, there are challenges and I've tried to identify what the order -- what the principal challenges with those gas rigs that we have exposed and whether we could find homes and homes at acceptable prices will be the issue. But that's what we get paid to do.

[Operator:]

Our next question is from the line of Kurt Hallead with RBC Capital Markets.

[Kurt Hallead:]

Tony, I just -- you laid out your game plan for finding some alternatives for guar and then integrating pressure pumping into the rest of the well serve -- into the -- into your existing operations in warehousing and so on and so forth. So 2 things. I'm just wondering if you can give a little bit more color in terms of, when you talk about finding alternatives to your guar supply, can you provide a little bit more information on that? And then secondly, what are you targeting in terms of potential margin improvement or cost reduction from the integration of the pressure pumping ops?

[Anthony G. Petrello:]

Okay, let me speak to the second thing -- second item first. Obviously, both Superior and Nabors well-servicing have -- with the range of offices we have, they both have considerable overheads. We have not yet put a number on the consolidation, what the benefits are in terms of a cost consolidation, but we think it's going to be a decent number. On the issue of the guar, to be honest with you, I'm a little reluctant to tell you what we have up our sleeve. We are looking for is different country sources, as well as different alternatives as alternatives to the conventional guar. One thing that you have heard from other people that we are looking at is dry guar and mixing it as an alternative. But beyond that, unless, Dave, you're comfortable talking, that's something you can -- feel free.

[David E. Wallace:]

So, I think there's some chemistry options that we're looking at to take the place of linear gel. The cross-linked part gets a little more complicated. And as everybody's mentioned, guar is a big component of the frac-ing process, especially in the oil wells today. So we feel like we've got some stuff to help offset the linear and the cross-linked component. We're working on some stuff, but nothing to announce at this point.

[Kurt Hallead:]

The follow-up is along the lines again on pressure pumping. I know we've heard from many different angles so we might as well just add another angle here. So what are you seeing in terms of the declines in spot market pricing? Do you anticipate that the pricing magnitude and hit will be felt primarily in the first half of the year? And then do you think it'll base out in -- around the third quarter? Can you give us some color along those lines? And then I know you have your -- I think you said 70% of your frac crews are on some sort of long-term contract. As those frac crews are rolling off them, I'm assuming you're going to roll off at lower margins, which would impact your margin compression into 2013. So I'm just wondering if you could give us some color on those items.

[Anthony G. Petrello:]

Sure. Dave?

[David E. Wallace:]

Yes, I think, Kurt, as you said, obviously the spot pricing is deteriorating, plus you have the utilization on top of that. Then again, that's one reason why we elected to stack out part of the crews at this point. We have a lot of -- we have a strong position with our LTSAs, and again, we're going to manage to ride those and take advantage of the position we have there. But we think the spot pricing's going to be a little choppy for a little while as the rig count kind of balances to where it needs to be. If we see more rigs going to horizontal, again, that's going to suck up a lot of the capacity. The oil areas, we have a really strong position there, so we're looking at the opportunities and deciding if it makes sense to shift resources there or let it stabilize a little bit.

[Anthony G. Petrello:]

Yes, and we're not afraid, as you've heard, to stack out if the -- if it becomes unprofitable, we're not afraid to stack out. And because we have a base of activity, whereas other people that are in a position where if they stack out, they may not have an operation left, we are not in that position. So with the existing contracts; with all the other things that Nabors does; and frankly, with the combination of putting the organizations together, we're actually going to be, I think, even in a stronger position. So that's part of the thinking about what we're doing in terms of organization. But we will not be afraid to stack out some stuff because the profitability on the existing contracts is quite attractive.

[Operator:]

Our final question is from the line of John Daniel with Simmons & Company.

[John M. Daniel:]

Just a quick question on Slide 5. When you look at the shareholder equity numbers, $5.8 billion going to $6.7 billion for targeted, I just want to make sure that -- are you guys guiding $900 million of net income, the balance of the year?

[Dennis A. Smith:]

The net income, the $900 million...

[Anthony G. Petrello:]

Yes, well, part of that is the treatment of the $100 million [ph] [indiscernible] so there is an increased equity this quarter in addition to net income.

[Dennis A. Smith:]

John, part of that's a $100-million pickup from the reversal of the liability we booked in the fourth quarter.

[Anthony G. Petrello:]

Yes, the $100-million charge in the fourth quarter had to come back -- according to the accounting rules, had to come back through the equity statement, not through the P&L. So that's probably what you're seeing.

[John M. Daniel:]

Should we -- but should we view this as guidance from an earnings standpoint for the balance of the year?

[Anthony G. Petrello:]

No.

[John M. Daniel:]

Okay, I just want to make sure. Can you say how much of the -- and if you said this on the call, I apologize, but what the revenue contribution of the 4 idle frac fleets was in Q1?

[David E. Wallace:]

Yes, they were pretty minor, pretty low utilization and if anything, negative operating income. And again, that's why we elected to do that. Probably a small percentage.

[Dennis A. Smith:]

Thank you, John. And Camille, with that, we'll wind up the call. And we want to thank everybody for joining us today and look forward to talking to you next quarter.

[Operator:]

Ladies and gentlemen, that does conclude the Nabors Industries First Quarter 2012 Earnings Conference Call. Thank you for your participation. You may now disconnect.