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Atwood Oceanics (NYSE:ATW)

Q2 2011 Earnings Call

May 04, 2011 10:00 am ET

Executives

Mark Mey - Chief Financial Officer, Chief Accounting Officer and Senior Vice President

Robert Saltiel - Chief Executive Officer, President, Director and Member of Executive Committee

Analysts

G. Scott Burk - Canaccord Genuity

Matthew Beeby - Global Hunter Securities, LLC

Janice Rudd

David Wilson - Howard Weil Incorporated

Christopher Butschek

Matthew Conlan - Wells Fargo Securities, LLC

Operator

Good day, and welcome to the Atwood Oceanics Second Quarter Results for Fiscal Year 2011. [Operator Instructions] And please note, the call is being recorded. It is now my pleasure to introduce today's speakers, Mark Mey, Senior Vice President and CFO; and Rob Saltiel, President and CEO. Mr. Mey, please go ahead.

Mark Mey

Thanks, Tasha. Good morning, and welcome to Atwood Oceanics Conference Call and Webcast to review the company's operating results for the quarter ended March 31, 2011. The speakers today will be Rob Saltiel, President and CEO; and I, Mark Mey, Senior Vice President and CFO.

Before we begin, let me remind everyone that during the course of this conference call, we may make forward-looking statements which are not historical facts and are based upon management's current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us. These statements involve a number of risks and uncertainties, including the risks which are described in the company's most recent Form 10-K and other filings with the U.S. Securities and Exchange Commission. We caution that forward-looking statements are not guarantees, and that actual results could differ materially from those expressed or implied in the forward-looking statements if one of these risks or uncertainties would occur or our assumptions prove incorrect. Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. Now let me turn the call over to Rob with his opening remarks.

Robert Saltiel

Thank you, Mark. Good morning, and welcome to all of you joining today's call. I will make a few comments on our operations highlights and our market outlook before passing it back to Mark to discuss the financial results. Overall, we had an excellent second quarter operationally that resulted in strong revenue recognition and earnings performance. For our 6 active rigs, our zero-rate downtime was less than 1%, a testament to the consistent reliability focus of our rig teams. This performance is valued highly by our clients and the operators I meet with repeatedly cite our reliability and consistency as key reasons for entrusting Atwood with their drilling programs. The second quarter's performance was also aided by the fact that we did not have any planned regulatory surveys or major projects that resulted in out-of-service time.

Looking to the current quarter's operations, we are planning a shipyard stay of approximately 6 weeks for the Atwood Aurora. This work is expected to begin later this month immediately after the conclusion of our drilling program in Egypt, and we'll incorporate improvements in operations capability and safety. These enhancements will aid the Aurora's performance for envisioned follow-on work that is under advanced discussions. Besides the Aurora work, we do not anticipate any zero-rate downtime attributable to maintenance or regulatory projects in the current quarter for our 5 other working rigs.

Perhaps the most significant development for Atwood has been the recent completion of the shipyard phase at the Atwood Osprey project. The Osprey departed Singapore on April 29 and is currently on tow to Australia with an expected arrival by the middle of this month. Once the Osprey arrives in Australia, it will undergo a series of deepwater integration tests as part of the rig's final acceptance. We expect that these tests will last a total of 8 to 10 days, after which the Osprey will commence its 3-year drilling program for Chevron on Greater Gorgon. Mark will comment on the expected financial impacts of the Osprey's activities on our current quarter's results. The 5 other newbuild rigs that we are constructing remain on track with their schedules and budgets unchanged from our previous guidance.

Turning now to our market outlook. We are seeing a continuation of the trend highlighted on our last call of a general improvement in market conditions. Our marketing team has now seen 4 quarters of sequential increases in bid and inquiry activity. Geographic areas that are seeing increased activity include Mexico, West Africa, the Middle East, India, Southeast Asia and Australia. High oil prices and growing optimism from the operator community typically go hand in hand and this is clearly a big driver.

The resumption of deepwater permitting in the Gulf of Mexico is an overdue but very welcome development for our industry and for Atwood Oceanics, as is the growing expectation of a Gulf of Mexico lease sale either later this year or by early 2012. This progress has most operators believing that we may finally be turning the corner on getting our industry back to work in the Gulf in a meaningful way. However, some operators I speak with remain cautious as to whether the pace of permitting approvals will be sustained once we get through the wells that were already underway at the time of the moratorium. It is clear, based on statements made this week by the BOEM Director, that our industry will still face some regulatory uncertainty in the days ahead.

Worldwide, ultra-deepwater day rates remain relatively strong. While we have seen only a few fixtures in the last quarter, they have typically been at healthy rates. Looking forward, we expect to see more fixtures of uncontracted newbuilds that are scheduled for delivery in 2011 announced in the near term. Two other potential catalysts for ultra-deepwater rate improvement include resumption of drilling, tenders and awards by Petrobras and the continued resumption of deepwater activity in the Gulf of Mexico.

Turning to the jack-up segment. We are seeing a general market improvement in all geographies where we were working or are considering work with the exception of the Mediterranean. The continuous political and civil disruptions in Libya, Egypt and Tunisia, coupled with the environmental limitations imposed on further drilling in Italy have dampened near-term prospects and delayed or canceled a number of planned programs in the Med. These issues have negatively impacted the Atwood Aurora, and we are expecting to relocate the rig out of the Mediterranean after its shipyard stay. The Atwood Beacon's program in South America is now expected to continue through the end of calendar year '11, and we are marketing it for follow-on work currently.

The recently announced 6-month extension of the Vicksburg in Thailand with our current client, NuCoastal, was agreed after considering other available opportunities for the rig in Southeast Asia. We remain bullish on the future prospects for our 3 deepwater rigs, the Atwood Eagle, Atwood Falcon and Atwood Hunter. Each of our current clients for these 3 rigs has potential follow-on work, and a general improvement in market conditions has presented new opportunities for each of these rigs as well. We anticipate announcing extensions on 1 or more of these 3 rigs before our next earnings call.

We continue our marketing of the Atwood Condor, scheduled for delivery in mid-2012. The clients we are meeting with concur that the Condor's drilling package and BOP configuration are particularly well-suited for technically challenging ultra-deepwater drilling in a post-Macondo environment. The continued absorption of previously uncontracted ultra-deepwater newbuilds scheduled for delivery before the Condor has improved our prospects for securing an attractive contract. And finally, we have begun preliminary marketing for our 3 newbuild high-spec jack-ups and our drillship, the Atwood Advantage. It is still early days, but we are encouraged by the client responses to the designs we have selected.

That concludes my prepared comments, so I'll now turn it back to Mark to provide more details on our financial results and outlook. Mark?

Mark Mey

Thanks, Rob. Let me now walk you through our financial results for the second quarter ended March 31, 2011. I will then compare this quarter to the quarter ended March 31, 2010 and also to the previous fiscal quarter. Finally, I will discuss our expectations for the remainder of fiscal 2011.

Our diluted earnings for the quarter ended March 31, 2011 were $1.08 on revenues of approximately $159 million, as compared to earnings of $1.03 on similar revenues for the same period in 2010. This was achieved with 180 fuel operating days during the quarter as the Seahawk and the Richmond were cold stacked the entire quarter, but working during the quarter ended March 31, 2010. This outperformance was driven by: One, an increase in our average day rate of $74,000, totaling $295,000 this quarter versus $221,000 during the same period in 2010, and improved revenue utilization of 96.3% during the 2011 quarter as compared to 93.2% for the same period in 2010.

Contract drilling costs totaled $50 million for the quarter as compared to $63 million for the same period last year, which include operating costs for the cold stacked rigs previously mentioned. Operating margins increased from 49% in the same period last year to 57% this quarter, and net margins increased from 42% to 44%. These excellent operating results driving margin improvements are attributed to both strict cost control and higher revenue utilization. This is despite an increase in our effective tax rate of 22% from our previous guidance of 16% to 18%. This increase in rate for the quarter is due to upward adjustment that reserves for uncertain tax positions as a result of tax assessments received during the quarter in 2 jurisdictions concerning operations in 2005 through 2009.

I'll next discuss our quarter-on-quarter trend by comparing this quarter to the first fiscal quarter ended December 31, 2010. Revenues increased $13 million or 9%, and earnings per share increased $0.27 or 33%. This strong performance is attributed to 25 more operating days as the Eagle did not work for approximately 29 days in October 2010, resulting in higher revenue utilization across the fleet, 96.3% versus 87.8% and lower operating costs. This once again is despite the 550-basis point increase in our effective tax rate this quarter as compared to the previous quarter.

Now let's take a look at the balance sheet. As a result of making $284 million in capital expenditure investments on the Atwood Orca, Atwood Advantage, Atwood Osprey and Atwood Condor during the quarter, we increased our long-term debt balances from $300 million to $455 million. Consequently, cash also decreased from $200 million to $162 million during this quarter. As a result, our net debt to cap has increased from 4% to 17% during the quarter.

I will now comment on certain items that could impact results for the remainder of fiscal 2011. Firstly, as noted on our fleet status report on Monday, the Atwood Osprey went on mobilization rate on Wednesday evening, April 28, 2011. Although we'll be capitalized in the mobe [mobilization] revenue and associated mobe costs, the mobilization day rate is 60% of the operating rate.

As Rob mentioned, the rig departed via West Africa for Australia in April 29 and is expected to arrive in mid-May. Upon arrival, the rig will complete final Chevron acceptance testing, which will take approximately 10 days before commencing its multiyear contract. Noted upon Chevron's acceptance of the Atwood Osprey, the Atwood Eagle's 6-month extension begins at the new day rate of $390,000 per day. Secondly, as discussed in previous conference calls and as noted in our fleet status reports, we expect to incur 0 rate days on our rig fleet due to rig upgrades or regulatory inspections as follows: the Atwood Aurora, as Rob mentioned, have 43 days in this quarter; the Atwood Hunter, approximately 20 days in the fiscal fourth quarter; and the Atwood Beacon, approximately 5 days in fiscal fourth quarter.

We currently expect total drilling costs for the fiscal third quarter 2011 to approximate $65 million and total drilling costs for the full fiscal year to be between $245 million and $255 million. Any cost increases from the prior quarter or year in 2010 are attributed mainly to the number of scheduled regulatory inspections being completed on an operating fleet and the startup of the Atwood Osprey in Australia. Partially offsetting these cost increases are reduced costs in the 3 cold stacked rigs.

We expect G&A expenses for the fiscal 2011 to range between $40 million and $44 million and about $10 million per quarter for the remaining 2 quarters in 2011. Depreciation expense is expected to increase by approximately $2 million per month in the fiscal third and fourth quarters when the Atwood Osprey begins operations in Australia. Our fiscal year-to-date effective tax rate is 20% and 22% for the quarter. I reiterate, however, our effective tax rate guidance for the fiscal year 2011 of 16% and 18%, emphasizing the higher end of that range.

I will now comment on expected total capital expenditures for fiscal 2011. For the first 2 quarters of 2011, we incurred capital expenditures of $420 million, as follows: Atwood Osprey, $78 million; Atwood Condor, $78 million; then down payments on the Atwood Mako, Atwood Manta, Atwood Orca and Atwood Advantage of $262 million. For the remaining 2 quarters of 2011, we expect to incur $53 million from fleet in Atwood Osprey, $93 million on progress payments on the Atwood Condor and maintenance and other CapEx of about $30 million. The other CapEx includes project management and OSP on newbuild rigs. These capital expenditures are being financed by cash balances, cash flow from operations and from our 3 credit facilities. We are, however, finalizing a new $1.1 billion secured credit facility to refinance the 2 existing credit facilities, fully fund any remaining capital expenditures on the aforementioned newbuild rigs and provide additional liquidity opportunistic purposes.

Our current revenue contract backlog remains at $1.1 billion and is expected to provide approximately $600 million in future after-tax cash flows. That concludes my prepared remarks today. I will now turn the call over to Tasha for any questions. Tasha?

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Dave Wilson with Howard Weil.

David Wilson - Howard Weil Incorporated

Rob, just a quick question on the Condor. You're considering all the deepwater rigs that have been ordered recently and considering the delivery dates out in 2013, 2014, do you feel your position around the Condor and its delivery date, which is sooner, is more advantage now? I guess another way to ask it would be, has the outlook for the Condor improved because of the delivery ahead of all these other newbuilds?

Robert Saltiel

Thanks, Dave. I think there's actually a couple of things that are helping the Condor's prospects. The first is the general improvement in the overall macro picture for ultra-deepwater drilling. The commodity price certainly has played a role in that as has the improved prospects for the Gulf of Mexico. So generally speaking, I think all the rigs that are in the queue are probably feeling a bit more confident about contracting than, let's say, they and their companies would have been 6 months ago.

But in addition to that, because of the enhancements we've made to the Condor around the drilling package and the BOP configuration specifically and these decisions were executed post-Macondo, we really believe that the Condor is particularly well-positioned both in terms of its technical capabilities and as you point out, the timing with the mid-2012 delivery, mid-calendar year 2012 delivery, roughly June of 2012. So we are feeling that the prospects for the rig have improved and the opportunity, as I said, to get an attractive contract has improved as well.

We are also seeing these other rigs that proceed us in our arrival to create a bit more of a perceived scarcity and a lack of availability in the ultra-deepwater for the operator group, and again I think that will work toward helping the Condor get the right contract when it comes out of the yard.

David Wilson - Howard Weil Incorporated

And just kind of reading between the lines given the enhancements you mentioned, particularly to the BOP. Does that mean it's probably destined for the Gulf of Mexico?

Robert Saltiel

Well, it certainly is well-suited for the Gulf of Mexico, but I think wherever you have ultra-deepwater and deep drilling, which certainly the rig itself and the drilling packages is well-suited, as well as if you're drilling for major operators who want that additional operational integrity, and that's not just reserved to the Gulf of Mexico. I think the Condor is particularly well outfitted.

David Wilson - Howard Weil Incorporated

Sure. And then just one more on another rig, the Aurora and based on previous comments and then some of your prepared remarks around what's going on in the Med. The other, I think, prospect in the past had been mentioned, West Africa, is that still most likely the case where that rig ends up after its shipyard time?

Robert Saltiel

Well, West Africa is certainly a strong candidate for follow-on work for the rig. Outside of the Med, it's the most approximate locale for drilling, and we don't have anything to announce yet, but that's certainly one of the areas we're focusing on.

David Wilson - Howard Weil Incorporated

All right, great. Thanks for that, Rob. That's it for me. I'll turn it over.

Robert Saltiel

Thanks, Dave.

Operator

We'll take our next question from Chris Butschek with Raymond James.

Christopher Butschek

I wanted to look at the jack-up market for a moment. Great quarter, of course. The high spec jack-up market, that's been in an upswing for quite some time now. But we're starting to see a little movement on the standard side as well. I mean, this booked at 90k for a while now. Do you think the market's kind of caught up with that rate? Would you say that's leading edge or is that kind of a special one-off situation especially with special operators?

Robert Saltiel

The Vicksburg rig compares very well with rates in Southeast Asia for similarly equipped rigs and rigs of a similar vintage in terms of their construction. As we said before, the Vicksburg has some particular attributes in terms of its design and outfitting that we think could distinguish it from the rest of certainly many of the 300-footers in that area. And so we have felt for a while that the $90,000 rate was a good rate. I take your point that we do think that the general market is moving upward and so as we look to renew the Vicksburg in the days ahead, we'll have to consider opportunities both inside and outside of Thailand. But right now, we feel very good about the extension, very good about the relationship with our current client, and just happy to be able to continue a program without any loss of continuity in operations.

Christopher Butschek

Perfect, perfect. I'm going to follow-up. A couple of 5,000 ft. deepwater rigs, the Eagle and the Falcon, repriced in kind of early 2012. Do either of those rigs need any sort of upgrade in between contracts? And could we see a mobile of the region or are we kind of looking at Southeast Asia, India for those rigs?

Robert Saltiel

At this point, there are no plans to mobilize those rigs outside of the areas where they work. Let me just talk about each one. The Eagle is in Australia which, as most people know, is seeing quite a bit of activity now. There's a lot of the interest around further gas developments there that's driving a lot of the drilling. So we feel good about the Eagle's prospects in Australia. The Falcon has worked out for Shell for, we'd say, about 13 to 14 years now. It's got a good position there in Malaysia. In fact, that position has improved with the loss of a competitor rig from the region, and we know that Shell and others have got a lot of prospects to drill in that area. So at this point in time, we're not planning to mobilize those rigs outside of their current locales for follow-on work.

Christopher Butschek

Okay. Well, focusing on the Falcon real quick. I seem to remember a while back considering taking that rig to the yard quite a while to upgrade it. Is that something you would consider, like you said, it's with Shell for quite a while? Would that be something Shell would want you to do? Or would that be something you would consider if you were moving on to another operator?

Robert Saltiel

Yes, there was at one point in time plans for some extended upgrade of the rig that we had basically put back on the shelf about a year ago. As we go forward, whenever we get into a discussion with a client about an extension, especially an extension with some duration, there's typically discussions about potential upgrades or enhancements you can make to the rig, not always, but typically that's not uncommon. So we're not in a position now to say anything specific about potential upgrades to the Falcon or any other rig, but those would be parts of any discussion to extend the rig.

Christopher Butschek

Perfect. I'll turn it back.

Robert Saltiel

Great. Thanks.

Operator

We'll take our next question from Scott Burk with Canaccord.

G. Scott Burk - Canaccord Genuity

I wanted to -- I appreciate the comments about the contract deal on the Falcon, but I also wanted to ask about the debt financing for the newbuilds. It's actually about the new $1.1 billion credit facility, would you need anything beyond that or does that cover expected debt, or does that cover all the newbuild commitment that you have for the next 2 years?

Mark Mey

Scott, that $1.1 billion new credit facility more than covers the current 5 rigs that are in the yard and the CapEx programs. And the fact is, there's sufficient additional liquidity in that, as I mentioned earlier, to provide opportunities for further growth for the company. If you look at from 2012 to 2014, the CapEx we're going to need is around $1.2 billion, only about $350 million of that to expect to be debt-financed. The rest is going to be cash flow from operations or cash on hand.

G. Scott Burk - Canaccord Genuity

Okay. That kind of leads me to my next question. So plenty of room to fund the 2 options left to declare by the summer. Can you talk about the options for additional newbuilds and what you're thinking about those?

Robert Saltiel

Yes, I'll be happy to take that, Scott. We have 2 options remaining on the high specification jack-ups we're building at the PPL Shipyard and then 2 options remaining as well for identical drillships to be constructed at DSME. And the first of the options that will be coming due is on the first of the 2 jack-up options that we have to make a decision at the end of June.

At this point, we haven't made a decision how we're going to go forward on that. Clearly, we've been happy to have exercised the first of the 3 options, so we now have the 3 jack-ups under construction. And as we come up to the decision point later next month, we'll be taking a look at a number of factors including the pricing because there are some reset mechanisms in the pricing and the pricing for those options. The latter 2 jack-up options are different than what we had on the first 3 rigs, so we will have to consider some pricing implications and again, there's some indexation on that pricing, so we need to actually determine what that will be. And then at the same time, we want to take a look at the jack-up market and how we're feeling about our position there and the desire to bring another rig on, which will be delivered down the road. So that's something that I'll just ask the group to stay tuned on, but something that we'll be turning our attention to in the next few weeks.

G. Scott Burk - Canaccord Genuity

Okay. And regarding that, are they still hinged[ph] at all on the ability to get some additional contract coverage perhaps for the Eagle or the Falcon or the Aurora?

Robert Saltiel

Well, it's really hard to link the decision to any specific event, but there's no question that the more confidence we have in the market, the more likely we are to enhance our position. And I think it's fair to say that the more contract cover you've got, the more confidence you have in the market. So there is definitely a linkage, but I don't want to make it a direct linkage to any particular rigs or duration. I think we've already showed our colors in that. We're certainly confident in the market that's why we stepped out and already made the decision to build 5 speculative rigs without contract. And so the question about doing more is something that we will seriously consider.

G. Scott Burk - Canaccord Genuity

All right. Let me ask you one more question. It's about where your rigs are located. I know there's a lot of activity in Brazil, obviously with all the tenders coming out of there. Does it make sense to start looking to get some rigs in that basin, maybe some of your newbuilds or perhaps maybe the Southern Cross could go to work in Brazil? Can you talk about that?

Robert Saltiel

Yes, I mean, Brazil is one of those markets that ultimately we're going to find ourselves working in. I've got a high degree of confidence of that as our fleet grows, especially as we grow our ultra-deepwater high-spec floater fleet. I think there's going to be a real attraction to having 1 or more rigs in Brazil. Up to now, it's just been a question of having located the right opportunity either in Brazil or elsewhere and so far, that just hasn't happened. But I think as we think about the Condor, the Advantage and any future rigs, we might build in the ultra-deepwater space. Brazil is certainly a likely candidate market.

Operator

[Operator Instructions] Our next question comes from Matt Conlan with Wells Fargo.

Matthew Conlan - Wells Fargo Securities, LLC

Mark, could you clarify on the Condor? Are you going to be recognizing any real-time revenues during the mobe for that rig?

Mark Mey

Do you mean the Osprey, Matt?

Matthew Conlan - Wells Fargo Securities, LLC

Yes, I'm sorry. Yes.

Mark Mey

No. We're going to be capitalizing both the costs and the revenues during the mobilization period and then amortizing that over the length of the drilling contract.

Matthew Conlan - Wells Fargo Securities, LLC

Okay. So you'd expect to have the full day rate and the proportion of amortization of mobe starting late May or early June when it begins operations?

Mark Mey

I'd say that's right, yes.

Matthew Conlan - Wells Fargo Securities, LLC

Okay, terrific. And also on the Eagle and the Hunter and the Beacon, you had, on all 3 of those rigs, very good cost reductions from last quarter to this quarter about $15,000 a day. Is the lower cost level sustainable? Is there any reason that it came down so dramatically?

Mark Mey

I think if you look at my guidance for the rest of the year for the next quarter, Matt, and if you compare that to what we've been trying to communicate over the last 2 quarters, we still believe that a lot of the cost that we anticipated for the year as it relates to our present maintenance is going to occur throughout the remaining 2 quarters. Typically, as you know, during the first quarter you start planning your work for the year and then you start getting the parts delivered, then you start doing the work in the second, third and fourth quarters. So I would not expect to see a dollar per dollar repeat of what we saw in the second quarter, but we certainly are focused on cost control every day.

Matthew Conlan - Wells Fargo Securities, LLC

Okay. All right, that will do it for me. Thank you.

Operator

We'll take our next question from Janice Rudd with Pritchard Capital.

Janice Rudd

I just want to check and find out when Chevron deadline is for extending the Osprey's contract. Is that tomorrow or Friday?

Robert Saltiel

Janice, this is Rob. It's after commencement. It's within a week of commencement of operations of the Osprey in Australia. And keep in mind that right now, we're on the tow to Australia and we expect to arrive by middle of May. As I mentioned in my comments, we've got about 8 to 10 days of further integration tests. So after the rig actually has completed all those tests and undergoes final acceptance, that becomes the commencement date and then there's that short period of time after the commencement date that they have to exercise that option.

Janice Rudd

Okay. And just how big is the mobilization fee that you're getting, cost?

Mark Mey

It's in the form of a day rate, Janice. So it's 60% of the day rate, which we disclosed in the fleet status for the number days that it moves, which is going to be around 14 days.

Janice Rudd

And cost is about equal to that?

Mark Mey

No. Cost should be substantially less than that. Obviously, as it gets capitalized and amortized, the impact on a per day basis is negligible.

Janice Rudd

Okay. And are you seeing any wage inflation from the other contractors that complained about?

Mark Mey

We're seeing modest increases in wages. I'd say it's certainly below 5% at this stage. On an annualized basis, certainly a half of that. But we could see modest in the future, especially as it relates to certain areas, Brazil being one, because of the local content regulations that you could see the requirement to get access to more local Brazilians, which as a result of that could create a bottleneck and cost inflation.

Janice Rudd

Any other areas in particular?

Mark Mey

Not where we're currently operating, no.

Operator

And we'll take our next question from Matt Beeby with Global Hunter Securities.

Matthew Beeby - Global Hunter Securities, LLC

I want to follow up on a couple of other questions as it relates to the Osprey. Is there any operator pay downtime in the contract as you all potentially work through some startup issues in the first couple of months at the startup for that rig?

Mark Mey

No, it's a standard 24 hours per month that we have for that rig.

Matthew Beeby - Global Hunter Securities, LLC

Okay, that's helpful. And then also, Rob, you had mentioned that you're pretty confident about the existing deepwater fleet staying put. Is there a longer-term market that might be potentially more attractive or at least as attractive that would give other opportunities for those rigs?

Robert Saltiel

You mean other than where we currently are?

Matthew Beeby - Global Hunter Securities, LLC

Yes. Outside of Australia, Southeast Asia.

Robert Saltiel

Yes, I mean, there are other markets out there that we could take a look at. But frankly, we feel well-positioned where we are and if you want to say, okay, Australia is pretty much a market onto itself but Southeast Asia, there are other markets in Southeast Asia, outside of Malaysia, including Indonesia. So that's a potential area. But right now, our focus is really on staying in the markets where we are. The Hunter, of course, has been working between Ghana and Equatorial Guinea and again, there's any number of West African areas where we could drill. So those might be different countries but really in the same geographic area.

Operator

It appears that we have no further questions at this time.

Robert Saltiel

Okay. Well, we want to thank everybody for joining in on our call, and we look forward to picking it up next quarter.

Operator

This concludes today's teleconference. You may now disconnect your lines and have a wonderful day.

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