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Executives

James M. Holland - Senior Vice President and Secretary

John R. Irwin - President and Chief Executive Officer

Analysts

Collin Gerry - Raymond James

Daniel Boyd - Goldman Sachs

Tom Curran - Wachovia

Judson Bailey - Jefferies & Company

Atwood Oceanics, Inc. (ATW) Q1 2009 Earnings Call February 5, 2009 11:00 AM ET

Operator

Good day and welcome to today's First Quarter Results for Fiscal Year 2009 Conference Call. All lines are currently in a listen-only mode and later you will have the opportunity to ask a question during our Q&A session.

It is now my pleasure to turn the call over to Mr. Jim Holland. Please go ahead sir.

James M. Holland

Good morning and welcome to Atwood Oceanics conference call and webcast to review the company's operating results for the quarter ended December 31, 2008. Speakers today will be John Irwin, President and CEO; myself, Jim Holland, Senior Vice President and CFO. Also we have with us today Glen Kelley, Senior Vice President, Marketing and Administration.

Before we commence our financial and operational review let me as usual remind everyone that during the course of this conference call, we may make forward-looking statements based upon management's current plans, expectations, estimates and assumptions and believes concerning future event impacting us. And therefore, involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and actual results could differ materially from those expressed or implied in the forward-looking statements. The words believe, estimate, impact, intend, anticipate or predict hereby the uncertainty of future events or outcomes. Undue reliance should not be placed on these forward-looking statements which are applicable only on the date hereof.

Before John provides some comments on the company's current operations, let me comment on some events that impacted results for the quarter. Our diluted earnings per share for the quarter ending December 31, 2008 was the $22, with effective tax rate of 15% for the quarter, our total drilling cost for the quarter was around $35 million.

In our last conference call on November 25th, I stated at that time we believed that total drilling cost for the first quarter will be around $56 million, with an effective tax rate for the quarter of approximately 15%. In our Form 8-K filed on January 13th, we lowered our expectations for drilling cost in the quarter to around $52 million. There were primarily two extraordinary items that we became aware of at the end of our quarter closing process that resulted in our actual drilling costs for the quarter being above our revised guidance.

First, we incurred approximately $1 million of currency of currency exchange loss in the quarter, primarily related to Australia. And second, we expense approximately $1 million of equipment maintenance spares that will be used by several of our rigs as part of their ongoing for maintenance program.

After John's comments, I will revive some current expectations for drilling costs for the March quarter and comment on trends for the year. During the quarter, we incurred three planned zero rate days at Atwood Beacon for its required regulatory inspections.

In addition to zero rate days incurred by Atwood Southern Cross upon completion of its contract on December 12th. We incurred following (ph) unplanned zero rate days during the quarter, Vicksburg four days and one day each on the Atwood Eagle and Richmond.

I will now turn the conference call over to John.

John R. Irwin

So, thank you, Jim and good morning, everyone. Yesterday, we filed our fleet status report with contract day rate and cost information. As usual I am not going to repeat all of that, but I will comment on some highlights and additional items. We will be pleased to respond to any questions at the end of the call.

Our first quarter fiscal '09 earnings more than doubled from our first quarter fiscal year '08 earnings, our operational performance of our operating units during that time also met expectations in this first quarter. In mid December, this Atwood Southern Cross completed its contract Mauritania and it's now idle and ongoing maintenance and repairs. Well, our future contract opportunities are pursued and bid.

In December our 9th unit, the Atwood Aurora constructed in Brownsville, Texas was delivered by the shipyard is now mobilizing to its first contract in Egypt. Progress also continued as planned on construction of our 10th and 11th units, two deepwater ExD Millennium semisubmersible being build at Jurong Shipyard in Singapore. While deteriorating global financial conditions together with reduced prices, oil and natural gas have negatively impacted worldwide offshore drilling markets. We believe the long-term outlook for the worldwide deepwater drilling remains positive.

The current market has resulted though in declining day rates and a decrease in contract activity, some though program deferrals for jack-ups in our markets and for semisubmersible markets in which the Atwood Southern Cross is competing. This provides uncertainty with regard to future work and day rates for the Vicksburg, Atwood Beacon and Richmond which have contracts expiring in fiscal year '09 and also for the Atwood Southern Cross which is currently idle.

A key goal for us in 2009 is achieving high utilization of our fleet. Our current estimated contract backlog in terms of available rig days is approximately 75% for the reminder of this fiscal year, 50% for fiscal 2010 and 35% for fiscal 2011.

Out of our eight active units and three new construction units, meeting total 11; five have current contract commitments that extend into 2011. One we have the Seahawk which as we just announced has... had another option exercise extending its contract commitment to March 2010. It has one option left which is expected to be exercised and if so, we will extend its contract through our fiscal year 2010. Three units as I said the Atwood Beacon, Vicksburg, and Richmond have current contract commitments, which will over during fiscal year 2009, and one, the Atwood Southern Cross currently idle and being marketed actively and one unit our ultra deepwater semisubmersible under construction with other contract is not scheduled to be delivered until mid 2012.

Currently, we have approximately $1.2 billion of after-tax cash flow backlog from the long-term contract commitments on our deepwater semisubmersibles, compared to approximately $1 billion of estimated capital commitments relating to the two new deepwater semisubmersibles we now have under construction in Singapore.

Now some comments on specific units. There Atwood Hunter is now on its first well of its contract commitments in the Mediterranean, West Africa that extend to September 2012, the day rates ranging from $511,000 to $545,000 per day. These day rates are subject to adjustments pursuant to cost escalation provisions and clients are also to provide tow vessels and a day rate of $460,000 during all mobilization periods.

The first well of two possible wells to built... to be drilled by the Atwood Hunter in Eastern Mediterranean commenced back in November last year. Possible additional work in the Eastern Mediterranean beyond the current first well which was still on could take the Atwood Hunter to our third quarter fiscal year '09, or possibly through the third quarter fiscal '09 before it mobilizes to West Africa for the balance of its full year contract.

The Atwood Falcon is currently in the shipyard in Singapore undergoing approximately $5 million of capital equipment upgrades in addition to certain required inspections and maintenance preserving (ph) 37 days of this period, the client will pay a day rate of approximately $155,000. Any shipyard days exceeding the 37 days will be a zero rate and we currently estimate that the rig could incur seven to 10 zero rate days during this period.

The client will also pay approximately $3.3 million of the capital equipment upgrades in addition to the 37 days of day rate are mentioned and this $3.3 million will be amortized into revenue. I think that's approximately $4,000 a day Jim. Over the remaining firm contract commitment period which extends into August 2011. And following completion of the shipyard work which is now estimated to be around February 10, 2009 few days, the rig will return to work in Malaysia. Its current contract extends to August this year at day rates of a $160,000 to $200,000 depending on water depth. The rig will then commence our two year contract commitment at day rates of $425,000 subject to cost escalations.

Atwood Southern Cross has been idle since mid December, as I said after completing its contract Mauritania, during this idle period certain equipment is being replaced and general maintenance is being performed. The priority maintenance part of this work required before the rig returns to work is expected to be finished by mid February, meaning the middle of this month. Currently, three contract opportunities are being bid and pursued. The estimated starting dates of these opportunities vary from third fiscal quarter and one could in our first quarter fiscal year '10 later in the year.

In 2009, we expect to see much lower day rates renewed contracts in the markets in which the Atwood Southern Cross is competing and which we're bidding. As advice, we anticipate the rig will be idle all of the second quarter of fiscal year 2009, but middle of this month we'll have the important priority work, maintenance work done and it would be at least ready to mobilize at that point.

The Atwood Beacon is drilling the final well under its current contract offshore India. It is currently estimated this well could extend into May or June 2009. We currently pursuing in additional work in India. Market day rate levels, the jack-ups are trending down. And it is possible that future rates maybe around or perhaps below the Atwood Beacon's current day rate.

The Vicksburg has its current contract commitment offshore Thailand that extends into June this year. We're currently... they are also pursuing additional work for this unit and its current area of operation, also at day rate levels below its current day rate. Out only rig in the U.S. Gulf for Mexico, the Richmond has a contract expected to be finished in March of this year. We're currently pursuing ongoing opportunities for the Richmond and the goal for Mexico at day rate levels also below its current highest day rate of $85,000.

As you know, the Richmond has been highly utilized in the Gulf of Mexico for many years. It's a very unique rig for service, especially during hurricane season here in the Gulf.

Our new ultra premium jack-up, Atwood Aurora, the part of the U.S. in mid-January by dry transport following shipyard delivery commissioning and testing. The Aurora is currently on wrap (ph) to Egypt as a two year contract at a day rate of $165,000. The rig is currently expected to arrive in Egypt on February 6th, tomorrow and after offloading and moving to the location and moving on location, the Aurora will then undergo a final commissioning, personal inductions and related training and testing is required for acceptance by the client as ready to commence operations.

Operations are currently expected to commence late this month or early March 2009. In addition to the newly constructed Atwood Aurora, we also have two new deep order semisubmersibles I said being constructed in Singapore. Both units of ExD Millennium designs, construction of these two units is as I said before based on a proven design being build to their proven experience shipyard with effective use of resources. First of these two new semisubmersibles, Atwood Osprey, it's a conventional mode unit to be provided to Chevron Australia for a firm three year contract. The option do extend to six years contract provides an operating day rate of $470,000 for the three years and $450,000 if the firm commitment is extended to six years and these rates are subject to cost escalation provisions with contract.

The Atwood Osprey is scheduled to be delivered in early 2011. Progress is currently on schedule and our project teams in Singapore and here in Huston continue by working at a higher level of activities. New rig will be able to conventionally mooring to up to 6,000 feet of water and become 10th mobile offshore drilling units. A second new semi being constructed at Jurong in Singapore is also Friede & Goldman ExD Millennium design unit. In this case a dynamically positioned rig to be built and equipped for a water depth rating of 10,000 feet. This second semi currently has no contract. This is scheduled for delivery and mid 2012 and will become our 11th company-owned mobile offshore drilling unit. We do continue discussions with potential international clients regarding their future possible opportunities in deepwater. Financing for the construction of both of these two semisubmersibles will be provided from a combination of operating cash flows and a $580 million credit facilities.

It is our goal to continue to develop and position the company for the future and to remain opportunistic in terms of identifying value enhancing opportunities when the time is right. We've no immediate plans for further growth in addition to our present two unit construction program. Based on longer term expectations for energy demand and our ongoing fleet major upgrade, a new construction capital program we started in 97, we believe our fleet and services we provide position the company well to meet the drilling and completion needs of our clients in the future and take advantage of attractive international markets, particularly in deepwater.

And further, we actively continue to develop our organization, our people and our capability for the future. So on simple terms, the company's strategy is based on meeting the needs of our clients with safe quality operations, premium equipment and being leveraged to attractive deepwater and international markets. This has served us well and continues to guide our path forward even in the current market environment in creating value over the longer term.

As I stated earlier, execution on current activities is a high priority for us in 2009 with a focus on high utilization our fleet, financial results, operational performance and delivering as planned with progress on our current new construction program.

So thank you all for your time today, and for your interest. We will be available to answer questions Jim finishes his comments.

James M. Holland

Thank you, John. Before we open the conference call to questions, let me address certain items that will impact our results for the second quarter of reminder fiscal year 2009. As John stated, the Atwood Southern Cross expected to incur zero rate days for the entire quarter ended March 31st, with continuing uncertainty on the rigs, ultimately impacting results for remainder of fiscal year 2009. As he also stated certain equipment is being replaced and maintenance (ph) is being performed during this period, which will keep the per day operating cost for the Atwood Southern Cross already high $100,000 or $110,000 during the second quarter.

The Atwood Falcon has reduced day rate during first 37 days of its shipyard time plus pass the 10 days of zero rate time could negatively impact revenues for the Atwood Falcon during the quarter about approximately $2 million.

Even though the Atwood Aurora expected to arrive in Egypt into this weekend, it may not commence operations until late February or early March due to having to undergo some additional commissioning, training of personnel and acceptance by our customer. In the unexpected delays in acceptance by our customer may negatively impact our results for the quarter.

Thus far of the second quarter of fiscal year 2009, we have only incurred one unplanned zero rate day due to equipment issues. Besides the zero rate downtime already discussed with the Atwood Southern Cross and possibly the Atwood Falcon, we expect the following drilling units will incur some planned zero rate time during the second half of fiscal year 2009. Vicksburg, approximately of 30 days in June and July for an estimated $30 million equipment upgrade.

Atwood Hunter 10 zero rate days during the third quarter... fourth quarter regulatory inspections. And Seahawk 35 zero rate days during the second half for some required maintenance. We currently expect drilling cost for the second quarter to be around $61 million with the approximately $5 million of this amount relating to the expected commencement of the Atwood Aurora operations and some extraordinary maintenance and other costs.

On a rig-for-rig basis, our expected per day operating cost levels for the second quarter of fiscal 2009, we expect to be as follows. Atwood Hunter, a $100,000; Atwood Eagle, a $135,000; Atwood Falcon, $75,000, Atwood Beacon, $50,000; Seahawk, $70,000; Atwood Southern Cross, a $110,000; Vicksburg, $50,000; Richmond, $40,000; other costs around $20,000 per day. We also expect, approximately up to $3 million cost will be incurred in the Atwood Aurora during this, when it commences operation, we're not obviously sure when that may occur yet.

After the Atwood Aurora's initial start-up, whereby we expect the operating costs will be relatively high, we expert this normal operating cost will be around between $55,000 and $60,000 per day.

We currently expect general and administrative expenses to be around $8 million for the second quarter of fiscal year 2009 and between $33 million and $34 million for the year. Depreciating expense is expected to be around $9 million for the second quarter and $36 million for the year with the addition of the Atwood Aurora to our fleet.

Excluding any discrete items that may be incurred, we currently expect our effective tax rate for the second quarter and remainder of fiscal year 2009 will be approximately 16%, 1% higher than what we incurred here in the December quarter which is about 4% increase over our effective rate of 2008, due primarily do additional tax expected in Australia.

The two rigs now are under construction. I will now comment on expected capital expenditure for this fiscal year 2009. We currently have $300 million outstanding under our $580 million five year revolving credit facilities to date we've expended approximately $170 million and $210 million respectively towards construction with Osprey and dynamic positions semisubmersible.

We expect to expand between $350 million to $450 million over the remainder of fiscal year 2009 till the construction of these two semisubmersible units, which we expect to result an outstanding debt of between $450 million and $500 million at the end of fiscal year 2009 and debt to cap ratio around 30%.

We will now open the conference call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). We'll go to our first question and that comes from the side of Collin Gerry from Raymond James. Please go ahead, your line is open.

Collin Gerry - Raymond James

Hey, thanks guys and thanks for you all gave us a lot of detail on some of the bidding activity and also on the new build activity. I guess, I just want to go back into a little bit more on your debt capacity. It sounds like based on what you just said, Jim that outstanding debt's going to be $450 million to $500 million by the end of the year, that's pretty close to tapping up the revolver of $580 million. Can you walk us through, is there any risk that may be you needed to take on some extra debt capacity as we go through 2010 or compassing (ph) your cash flow in your backlogs, certainly I don't think it's necessary?

James Holland

Well, right now at current we don't believe it will be necessary. We believe we've got a strong backlog with we believe some strong customers backing it up, so at this point, we believe the credit facilities we have in place $580 million as you stated. It will be adequate to allow us to complete this construction of these two semisubmersibles. We would expect, I mean, as I said may be $450 million, $500 million at the end of this year. But we would expect based on our backlog, that we would probably not increase that very much, if any in 2010.

We expect our cash flow of 2010 on our current backlog commitments here would pretty well cover our expenditures that we have on construction of these two units. And so we still feel pretty good right now that we have adequate capacity under our facilities and do not anticipate having anything to that.

Collin Gerry - Raymond James

Okay. And then just kind of on another note, you talked about the marketing behavior on the lot of your rigs, I am curious on the Richmond, that rig has certainly been an out performer to submersible rig in the Gulf of Mexico, but we are seeing a lot of softness or softening in the Gulf of Mexico, what's the day rate implications there and what kind of demand do you see for that rig? I know it's been the great customer for long time here, but just kind of walk us through the dynamics for the Richmond ?

John Irwin

Collin, activity is down as you know. Rates will be down as I said. When you're bidding, of course it's hard to share that one for competitive reasons, but two, it depends on when you are working with a particular client at a particular time, we are talking to client, more than one client and certainly the Richmond has very favorable characteristics for operating in the Gulf of Mexico which has lead to its high utilization, particularly during hurricane season and we hope to capitalize on that and that's some of the reason for its long track record.

So we're working, marketing aggressively and while there isn't anything committed yet, we still believe that the Richmond has some outstanding characteristics that even in a down market, hopefully it will perform at the higher end in terms of utilization.

Collin Gerry - Raymond James

Okay. That's it from me. Thanks.

Operator

Thank you we'll go to our next question from the side of Dan Boyd of Goldman Sachs. Please go ahead your line is open.

Daniel Boyd - Goldman Sachs

Hi, thanks. I was hoping that you could add a little more comment on what you're seeing in the deepwater market given that you... I assume that you are currently marketing the new build. What opportunities are you seeing in terms of term and then what region, I believe, there are some tenders in India that you may or may not have bid on and then also just what are you seeing from Pemex for that particular unit, well I am sorry, not Pemex, Petrobras?

John Irwin

With regard to the ultra deepwater unit, the 10,000 foot rig we're building to be delivered in 2012, Dan we do have sometime before it's delivered, so as we've said for sometime here we're not rushed in committing to something that does not meet our financial hurdles or financial requirements. Certainly, we are interested in moving ahead, should those opportunities exist. And our people are remaining in close contact with all clients who may have future opportunities internationally and directly in those cases where they can be more specific discussion going on.

And you mentioned the couple of areas and certainly those two areas among others are of interest to us and are on our list and what we are marketing. So I think a lot of that information probably out in the public arena in terms of some of that being term work and people determining how quickly that will move, and for what lengths of time and certainly that's something we're remaining in very close contact with and believe we have a great rig that can fulfill those opportunities together with others over the longer term.

Daniel Boyd - Goldman Sachs

Can you just help me on where rigs are then being bid into India since I may have not seen that public information on most recent rounds?

John Irwin

Well, just that they have been bidding enquires out for deeper water units and one recent deal was I believe disclosed. But certainly, there, we believe continues to needs in that market as well as other markets you've mentioned.

Daniel Boyd - Goldman Sachs

Okay, and then jumping to the Southern Cross. Can you give us just a little more color on the three opportunities that you have in terms of what regions that they are in and in the terms and then also how many rigs do you find yourself bidding against for those opportunities?

James Holland

The opportunities we're bidding are not near the current area where it's decked and off the coast of Africa, it's in the Canary Islands, in a location where it could be ready to mobilize by dry transport or wet for that matter. But it could be mobilized by dry transport. Clearly, our interest in utilization would be in opportunities that and let me say in pursuing those in more attractive terms from the client point of view, where those opportunity start earlier and take us into next year and position us in the market where there may be future opportunities. So, a lot of those, all of them probably would required moving the rig by dry transport and that usually takes a month or more. And getting the rig ready now, so it's ready to go, should of the one of these parties have interest in the rig and be willing to move forward, we would want to be ready to do so.

So the current, as I said, two of them probably in our third quarter start and then one of them is later in the year, but clearly as we bid and pursue them, it would be, we are seeking and trying to start as soon as we can and with a program that could take us into next year and position us for the future. So we'd be looking for something it's in the kind of the one year bracket or something that would take us through the year or down.

Daniel Boyd - Goldman Sachs

Okay, I appreciate the color. Thank you.

Operator

(Operator Instructions). We will go our next question from Tom Curran of Wachovia. Please go ahead, your line is open.

Tom Curran - Wachovia

Good morning guys, congratulations on another great quarter.

John Irwin

Thank you, Tom.

Tom Curran - Wachovia

I had a few pertaining to some of the earlier lines. Questioning first in terms of your borrowing capacity, if I recall correctly as of late summer, when we last discussed some detail, Nordia had indicated that based on your backlog and cash flow outlook at that time, they would be comfortable extending up to a $1 billion in total credit to you. Is it your sense that they would still be comfortable with up to that amount if for whatever reason you should need to push above what you expect you are going to require?

James Holland

Tom, we've no discussion with Nordia in recent times over and we feel comfortable where our $580 million level is today. I do feel we can get some more. I don't whether it would be up to them out in a days environment or not, but again as I said earlier, as we feel that the level. of debt capacity we have today will be more than adequate to fund these two semisubmersibles and that we feel with our backlog where it is today, we feel pretty good and we have recorded that backlog and so we would not anticipate leaving any more capacity.

But I mean we can say whether we could that much capacity, additional capacity or not, I mean that's something we're not pursuing and I not having any discussion with Nordia on that. I do believe we can get a little if we needed, I just don't think we need at this point, but softer (ph) from where we are.

Tom Curran - Wachovia

Okay, thanks Jim, And John, looking out across the mid water markets, based on the strategy you just reviewed in terms of the opportunities that ideally you'd like to pursue for it and how you'd like to set it up? Which markets would you clearly want to avoid based on the discussions you're having and the Paragon (ph) anecdotal data flow?

John Irwin

Tom I don't want to appear that I am avoiding your question because it might be that I can't characterize it by saying those markets we try to avoid. It's these days really focusing on those opportunities that are there, and where people are likely to move ahead and where we believe we've got a great rig to meet their needs and where those opportunities can take us into this future. So I think probably the first two of those would put us in areas that would meet the bill and also the one later in the year as well. So they 're, generally Asia Pacific type opportunities.

Tom Curran - Wachovia

Okay. And that's obviously on the strong side relatively speaking?

John Irwin

Yeah we think that if they came off, we want some term to move the rig and make it attractive, but also some thought that it could put us in a position for the future and benefiting from what we still believe is a great rig to meet clients needs for that market.

Tom Curran - Wachovia

And then one more here. When it comes to the Seahawk and the Richmond, could you share with us where your thoughts are currently about the level of interest and effort you put into a potential sale of both of either units and then whether or not you are having any discussions along these lines on either?

James Holland

Well, I can say first off, we are not having any discussions as to selling either of those units at this point in time. Both fourth these are excellent units that have been performing outstanding work for their clients in my opinion, just based on the feedback we've had, I mentioned the Richmond, but the Seahawk is now being working on along side of deepwater TLP and we believe that it's performed very well in meeting the needs.

And in that tender assist market interestingly, there may be few and it's a fairly type group of rigs as you know and within that group there is only a limited number that are let's say columns stabilized floating units. So able to work against TLPs and those recent announcements on rigs that have come out doing that work is actually being at higher levels. So interestingly, the Seahawk deal was down at a point when the market was down that market's picking up and there is interest, there has been interest both in West Africa and in the Asia Pacific area for the period after it finishes meaning, even if all the options are used in the current program and what we would think would be potentially at higher day rates today.

And the Richmond, it's special rig that's done well and we think it, while it's a unique rig and only rig in the Gulf of Mexico, currently today it meets our needs and even in the current market. I mean at this point it hasn't changed our view. Longer term as we continue to move into deepwater and get down the road, where we always review these things, but not today.

Tom Curran - Wachovia

Okay, thanks for the thoughtful answers guys. I'll turn it back.

Operator

Thank you. (Operator Instructions). We'll take our next question from a side Judson Bailey from Jefferies & Company. Please go ahead, your line is open.

Judson Bailey - Jefferies & Company

Thanks, good morning. Jim, you mentioned the Southern Cross you're looking for substantially lower rates for that rig once it does find a job, would you care to clarify how much lower substantially it could be?

John Irwin

Yeah, I think you meant John, probably Jud.

Judson Bailey - Jefferies & Company

I am sorry.

John Irwin

Yeah it's okay. We can both answer, but clearly we are in a bidding situation now and in that situation you can't really share, it's not advisable to share, share too much. But certainly, we had day rates that had been up in the $300,000s, perhaps at a very high end up around $400,000 at one period of time

And we... that was really an extraordinary period of time and so rates going forward will be significantly lower and as I said for us there is still an advantage in terms of making it attractive for those jobs, or perhaps a little more attractive for those jobs even where it can start early carry us into next year and position us well for the future. So, I know I am not giving you exactly what you want and but it's.... certainly we're interested in utilization and positioning and taking caring of this next year and trying to put together the arrangement that meets our client, but we think potentially it could still make sense for us financially as well.

Judson Bailey - Jefferies & Company

I've kind of appreciate, you being a competitive situation, but it's fair to summarize that the 300s for that rig was an extraordinary time and given market conditions, we're likely to see something significantly below that.

John Irwin

Yes, well you won't see 300s for this next period, all these jobs that we're looking at now and it's certainly going to be significantly below those levels.

Judson Bailey - Jefferies & Company

Okay and then on the Beacon you indicated very potentially, I think you said at or below the rigs current rate which I believe is in the 130s. Would those be longer term types of the jobs available or are we talking kind of well-to-well stuff.

James Holland

I think at this point, what we are perusing is longer than the well-to-well stuff. And talking about day rates, I was trying to characterize the market it self that we have to whenever we are bidding that we've got to track and which can be a moving target and you have to adapt accordingly. So it wasn't necessarily gone, somewhat we're bidding specifically, but the market in which we are working and having to work in and try to adapt in as it moves along.

Judson Bailey - Jefferies & Company

Okay, great thank you.

James Holland

Thank you.

Operator

And it appears with that we have no further questions at this time.

John Irwin

Thank you very much.

James Holland

Okay. Thank you very much for your interest in Atwood. Bye.

Operator

This concludes today's teleconference. You may disconnect at any time. Thank you and have a wonderful day.

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