Good morning. My name is Celeste and I will be your conference facilitator. At this time, I would like to welcome everyone to the Baker Hughes First Quarter 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Gary Flaharty, Vice President of Investor Relations. Sir, you may proceed.

Thank you, Celeste and good morning, everyone. Welcome to the Baker Hughes First Quarter 2010 Earnings Conference Call. With me here this morning are Chad Deaton, Baker Hughes' President, Chief Executive Officer and Chairman; Peter Ragauss, Baker Hughes' Senior Vice President and Chief Financial Officer; and Martin Craighead, Senior Vice President and our Chief Operating Officer. Following management's comments this morning, we'll open the lines for your questions. Reconciliation of operating profits and any non-GAAP measures to GAAP results for historic periods can be found on our website and within the news release. Website is www.bakerhughes.com and you can find it in the Investor Relations section under Financial Information. Last, I would caution you that any company outlooks discussed this morning are subject to various risk factors. We'll try to highlight these risk factors as we make these forward-looking statements. However, the format of the conference call does prevent a more thorough discussion of these risk factors. For a full discussion of these risk factors, please refer to our annual report 10-K or 10-Q, and the particular, the forward-looking disclosure in this morning's news release. With that, I'll conclude our discussion of the administrative details and turn the call over to Chad Deaton. Chad?

Thank you, Gary, and good morning, everyone. Q1 was a good quarter for Baker Hughes. We delivered strong results in North America, with the increase in drilling activity and the benefits of a lean organization drove the improvement in our operating margins. And I have to say as a credit to our North America geomarket and management team that they delivered this margin improvement without significant price increases in the quarter. Their focus on individual basins rather than discrete product lines is beginning to deliver share gains in North America. International activity is showing signs of improvement. It's driven by steady oil prices and the need to offset declines and to meet the demand from China and India. And over the last several quarters, our geomarket organization has delivered what we call stable market share, laying the foundation for future market share gains. In many international markets, we continue to face price pressure, resulting from contract negotiations and tenders that were awarded in 2009. In addition, competition for market share is also contributing to lower pricing. However, we believe that our international operating margins reached a bottom in Q1. Margin improvement will be an important area of focus for our geomarkets in 2010. We expect margins to show very solid improvement in the second half of the year. Last week, we closed on the acquisition of BJ Services and the integration of the two companies' international operations has already begun. For example, we are already beginning to mobilize coil tubing and C-manning units [ph] into our base in Iraq, which will be open by the end of June. As noted in the past, the acquisition of BJ Services is significant for Baker Hughes as it addresses a major gap in our product portfolio. It enhances our ability to deliver integrated operations and although it increases our exposure to North America, it also significantly enhances our international growth opportunities. In conjunction with the acquisition, we have agreed to sell two vessels and related assets in the Gulf of Mexico. Until that sale is complete, we are required to operate Baker Hughes and BJ Services U.S. operations separately. We expect the sale of these vessels to be completed in the next few months when we've experienced a high-level interest in these assets. We look forward to realizing the full potential that will come from combination of the two companies. To manage the standalone U.S. business during the divestiture period, and to help quickly integrate the international portion of BJ, we have appointed Andy O'Donnell as President of BJ Services. At this point, I'm going to turn the call over to Peter, for a financial review and then Martin, for an operational review and I'll come back later with some closing comments about what we see for future activity and then we’ll open it up later for Q&A. Peter?

Thanks, Chad. This morning, we reported net income on a U.S. GAAP basis of $129 million or $0.41 per share. This compares to $0.63 per share a year ago and $0.27 per share for the fourth quarter of 2009. Q1 revenue was $2.5 billion, down 5% or $129 million year-over-year and up 5% or $110 million sequentially. Looking at quarterly comparisons, our North American revenue was $1 billion in the first quarter, down 5% year-over-year and up 16% sequentially. Revenue outside of North America was $1.5 billion in the first quarter, also down 5% year-on-year and down 2% sequentially. In recent quarters, we have provided a breakdown of costs associated reorganization, severance and increases in the allowance for doubtful accounts, due to the magnitude of these event-driven charges. For the first quarter, these expenses were not significant. We don't believe it is necessary to highlight them as unusual in their magnitude. However, we will continue to highlight acquisition-related costs, as they will be significant in the second quarter. Acquisition related costs in Q1 were $10 million or $0.02 per share. As has been our practice, for the balance of our comments this morning, references to operating profit and operating profit margins will be on this adjusted basis. So our oil field operating margin for the first quarter was 11%, down from 12% in the fourth quarter. North American margin was particularly strong, with a sequential incremental margin of 45%. Before I cover sequential and year-on-year bridges, I want to highlight a change that we have made in accounting for certain corporate costs. In the first quarter and in the future, we are reallocating certain costs from corporate to operations, who are most directly responsible for managing these costs. In Q1, our corporate costs were $49 million compared to $76 million…

Thanks, Peter. I'll start with a review of our international operations. The Europe, Africa, Russia Caspian region exhibited good revenue performance, supported by increases in directional drilling and fluid sales in the North Sea, completions in wireline activity in Sub-Sahara Africa, completion sales in Nigeria and wireline and completion sales in the North Africa geomarket. In addition, strong artificial list sales in Russia more than offset the impact of unfavorable weather during the quarter. As a result, revenue was up 3% sequentially. Operating profit margin for the Europe Africa Russia Caspian region was 11% in the first quarter, down from 16% in the prior quarter. In Denmark, Baker Hughes recently helped Maersk set a new Danish record by drilling a well through a measured depth of 31,140 feet. In conjunction with extended reach drilling in this challenging environment, Baker Hughes also supplied LWD evaluation services and tried cone and PDC drill bits. The well has been completed using a Baker Hughes reactive element packer, the first deployment of this application in Denmark. Our technology is helping operators save valuable rig time as well. We enabled a North Sea operator to abandon a well in just one run, resulting in time savings of approximately six days over the previous test run. New cutter technology resulted in 150% improvement over conventional cutters and a Baker Hughes senteal [ph] 24:05 , which is a downhole data acquisition tool, provided real time data, allowing the operator to react to changes in downhole pressure during the milling process. Turning to the Middle East Asia Pacific region, revenue increased in the Egypt and Australasia geomarkets. The increase in Egypt was led by the completion, directional drilling and drill bit product lines and by fluids and directional drilling in Australasia. In total, revenue was down 5% for…

Thank you, Martin. So as I stated earlier overall, we're pleased with the progress we made in the first quarter. Our North America operation delivered very strong results relative to competition and while our international markets were challenged by pricing pressures, we believe margins will improve in the second half of the year. Looking forward in the U.S., there are many positives. Oil activity has been robust. Last week, the oil rig count was 513 and that's up 23% from year end. We’re confident that oil directed drilling activity will continue at current price levels and are forecasting that the oil rig count will average about 570 rigs in the second half of the year. The oil directed drilling has been split between vertical drilling and the Permian and service intents of horizontal multi-laterals and multi-stage fracing in the Bakken. We see a possibility for more technologically sophisticated oil directed drilling in other areas as well, as operators are looking to develop new plays in the Eagle Ford and even the older plays in the Permian Basin. The gas rig count has increased 26% from the year-end levels and last week stood at 958 rigs. Gas activity is ahead of where we thought it might have been in May. The mixed change to long horizontal and multi-stage fracing favors Baker Hughes in our new acquisition. Demand for natural gas could still surprise us. Summer isn’t here and industrial demand could react favorably to low natural gas prices thus far in demand. Looking forward, we expect the gas recount to peak in Q2 and show a modest decline in the second half of 2010, averaging 765 rigs for the second half of the year and 840 rigs for 2010, as a whole. So for the year, we see the gas rig…

At this point, I will ask Celeste to open the lines for your questions. To give everyone a fair chance to ask a question, we do ask that you limit yourself to a single question and a related follow-up question. Celeste, could we have the first question please?

[Operator Instructions] Your first question comes from the line of Bill Herbert with Simmons & Company.

Chad, calling for a bottom in international margins in Q1. That's a pretty consistent refrain that we’ve heard from your peer group. A question that I asked on another call, which I’d like you to take a stab at, is over the next two years if you will, what do you think is a reasonable road map for international margins keeping essentially volume, pricing and mix in mind? And also using as a reference back to call it '06 when you were generating international incremental margins of about 40%, what's it going to take to get back there and what do you think is a reasonable road map for the next two years?

Well, if you map it out over two years, Bill, I think as we said, I think bottom was hit in Q1. I don't think Q2 is going to be any shining star. It will be flat to up, but we do anticipate seeing the second half of 2010 it’s a fairly significant improvement both on the revenue side as well as the bottom-line margin side. Over the next, and I think 2011, we'll just continue that acceleration as we go into it.

You talked about significant improvement second half of this year, I assume that's mostly, if not all driven by volume and mix. You're probably not going to get any pricing as early as second half of this year?

I think we'll get a little bit, Bill, but it's going to be volume mix, margin side will be costs control. I think one of the things we need to look at on the international margins, I think we still have some allocation issues as we moved from a Houston focused product line. Everybody's sitting in Houston to international and as we've allocated out some costs, I think that's been reflected in some of our margins internationally. I think the volume side, one thing that will help us going forward on the volume is the BJ acquisition. If you look at it, if you look at the two areas where we seem to have most of our issue right now on margin, are the two areas where we needed to be pretty aggressive in our infrastructure build out. That's Latin America and Mexico, Brazil etc. and then the Middle East Asia Pac. And when there is a little downturn and you have some pricing that hit you as well, that amplifies some of your challenges in those areas. So, that additional revenue that we will get out of BJ will help us work some of those costs and I think that's why we're feeling pretty good about the second half of the year and into 2011.

I think I heard you say that notwithstanding the really strong incremental’s generated in Q1 in North America of 45% and change, you didn't witness any significant pricing quarter-on-quarter. Is that correct?

Yes, that's correct.

I guess my query is this. While average pricing quarter-on-quarter may not have been up, I'm curious as to your exit rate pricing in Q1 and whether that was exit rate pricing and also margins whether that was significantly better than the Q1 average?

No, I don't think it was. We were starting to get some nibbles in the typical ones that you would see and that's the directional drilling, the high end DD LWD bits, to some degree completions. But I don't think we saw a lot in March as we came out that really is accelerating now as we go forward. It's getting tight. There's no doubt about it. Our resources are tight. I'm not sure how tight some of our competitors are yet. If they're getting tight, then I think we'll see some improvement in Q2.

I'm going to slip one more in there and that relates to the corporate expense, Peter. I was a little bit unclear as to your expense allocation issues and the sort of apples-to-apples or apples-to-pineapples comparison, Q1, Q4 corporate expense, $49 million versus $76 million gross in the fourth quarter. What would've been an apples-to-apples comparison using the same allocation? I guess, approach?

I don't have the exact numbers but mostly it's in one pocket out of the other. We did, as a conscious effort, part of the re-org, we basically turned the organization upside down and we've decided to allocate and put costs where we felt they would be better represented in the future. So most of those costs were just shifted out of corporate into the operations and a lot of those went into the international operations.

Your next question comes from the line of Marshall Adkins with Raymond James. J. Adkins - Raymond James & Associates: On the BP blowout, can you give us an overview of what you think the ultimate impact may be on your offshore business? Is this going to knock down activity? Just kind of give us your thoughts on the potential impact here.

Well Marshall, I don't think we really know yet because the actual cause and problems and everything else haven't been investigated. The only thing we can say right now that I think there are three or four rigs that we have had to move our equipment off of just because they were involved in the oil slick or they're being surrounded by the oil slick and there's a safety measure that clients got the people off the rigs. Other than that, we're not seeing deterioration in that activity. If it stops some of the drilling out five years from now, under the new leases that the President talked about, maybe that will that have some effect at that time but in the near term, the only thing we've seen are these three or four rigs that we've had to come off of so far. J. Adkins - Raymond James & Associates: Too early to really determine, but not a lot of impact yet?

Yes, I think it's way too early. J. Adkins - Raymond James & Associates: BJ, give us some more color on the integration, how you see that coming? What are the issues you're going to have to get over? And more specifics on where you see the cost savings coming from?

The integration has begun already internationally, including Canada. And domestically, in the U.S., and the Gulf of Mexico, obviously we are limited to keep those companies at a stand-alone operation until we sell the assets in the Gulf of Mexico. We are actively putting together a package on those assets now. We've had a fair amount, quite a bit of interest in those assets. So it's going to take us a couple of months to probably get that together, and sell it, get the approval from the DOJ. Once that's done, we will then go ahead and incorporate, and roll, or integrate I should say, the U.S. side of the BJ acquisition. It's not all bad because we have always said that the international side would go quickly and the U.S. side would take a little longer, as we wanted to learn their people and understand and know who they are and give them some key roles, et cetera. So that's the integration plan. But I could say internationally, we're already moving. The guys have had plenty of meetings and sessions and welcomed the BJ people in place and starting to combine where we can. J. Adkins - Raymond James & Associates: So probably three months on the U.S. side just to get everything divested?

Yes, I'd say three to four months, probably. J. Adkins - Raymond James & Associates: And the costs?

This is Peter. Let me just touch on the cost. The story there hasn't changed a whole lot. If anything, we've just gotten more confident because we've had sessions, a lot of sessions now with our integration team and actually now that we've closed, we actually met with the BJ team the next day on the plans and forecasts and so on. So the $75 million in the next four quarters, most of that is just coming out of some corporate expenses that you would expect, you don't have the Board of Directors anymore. We'll combine our insurance and things like that, things that are mainly corporate in nature and that's already baked into their forward forecasting. If anything, we'd hope to exceed that but right now, that's the number we're sticking to and it looks very solid. And the additional 75 that comes after that in the following year is really when you start looking at your operating bases around the world and consolidation of various offices and real estate that sort of thing and back-office functions. That takes a little bit more work. It doesn't start day one and we've got pretty concrete plans for that built in as well and again, the 75 to 150 doesn't include any revenue synergies at all, which those come contract by contract. We'll start to peg those as soon as we can.

Marshall, this is Martin. Let me follow up on a couple of comments that Chad and Peter made. As Chad mentioned, we're already underway in terms of the integration, but specifically, their task forces that had been assigned in each region. All the international regions have been bucketed into three buckets in terms of the first phase, the second phase and the third phase. Within that integration, there are kind of a two-pronged approach, as Peter mentioned, the cost synergies really can't happen until we understand what the support needs are. But the first and foremost priority is the commercial synergies and those were the first and foremost, existing contracts that both companies currently hold. And looking for any opportunities where there's no contract bearers to where we can leverage each other's relationships and terms and conditions. And then any new opportunities, that for the first time, Baker Hughes will be solicited as a broader provider. So we're feeling very good in terms of the way these guys have hit the ground running on both sides, BJ's side as well as Baker Hughes' side, to get this thing moving quickly.

Your next question comes from the line of Robin Shoemaker with Citi.

Just staying on the BJ Services thing for a minute, we have seen quite a few pressure pumping companies in North America announce capacity or plans to spend on new pressure pumping capacity and in your pro forma CapEx figure for the year that you cited, what is in there or can you comment on what you perceive as the need to increase capacity in light of the shale plays, the wear and tear factor that we hear about et cetera?

Robin, this is Chad. That's correct. We did show that we would be -- to combine CapEx of 17, 18. I don't want to break down how much of that's going to go to BJ and how much will go anywhere else, but obviously there is a fair amount that is going into BJ. As Peter said, we had our first session with them the other day and the BJ North America team has in their plan to build some additional equipment. The whole industry is tearing up a lot of equipment especially in Haynesville, a lot of replacement equipment. We're also looking at building some equipment for other parts, or BJ in other parts of the world. So there will be an increase in capital spending for BJ versus '09 for 2010 and 2011.

Just in that arena, have they seen any pricing improvement off the bottom in pressure pumping or in certain basins or in the totality of North America?

Yes they have. You guys can go back and calculate what Q4 was from the Q for them and then take a look at what we put in the press release as $1.1 billion. You could see that they had a pretty significant revenue increase.

Yes, that was a 20% increase.

A 20% increase globally and worldwide, so you can see that they had a very, very strong quarter from a revenue standpoint and if you look at where this pricing is, you're right, it depends on the basins. And a little bit of that depends on how many fleets are in each basin or what part and what competition has and so yes, they are seeing some price improvement.

Your next question comes from the line of Joe Hill with Tudor Pickering Holt.

You guys have demonstrated some great incremental margins in North America without the benefit of any real price improvement and given that, I would imagine at least for the second quarter, we should expect that 45% incremental level to be maintained. Is that a reasonable assumption?

Joe, don't forget Canada. You're going to see a major hit in Canada. It happens every year, every quarter and every second quarter and it's going to happen again this year. I think if you broke down the three areas, U.S. land, Gulf of Mexico and Canada, I'm not worried about U.S. land and Gulf of Mexico. They're going to be fine in the second quarter, continuing to show some improvement but Canada -- it's not going to be enough to offset Canada.

If we think about the rate of improvement in international margins, it sounds like the acquisition of BJ is really going to be helpful in terms of cost absorption and without knowing specifically how much corporate got allocated into the different geomarkets, is it possible to get a sense as to whether or not say Latin America and Middle East Asia-Pac exit the year north of 12% or is that too aggressive?

Well I hate to pin down to a number, but I don't think you'd be all that far off if you're assuming that.

Your next question comes from the line of Kurt Hallead with RBC.

A Follow-up, Chad, just wanted to see kind of where you stand. I guess you've made this baseball reference on what inning you are in the geomarket rollup and where you are on the product side. So just wanted to get an update from you on that front first?

Well, I think we're probably finished the game, pretty close on the geomarket side. And now we've got to roll in the BJ group into that, so I don't know if we start a new game or not. But from the reorganization in the geomarkets I think our guys are in place, they're feeling comfortable with it, they know what to do. We've got some cleanup to do but for the most part, that's pretty much along the way. And I think on the product line side, Martin, I'd turn it to you. Still somewhere in the sixth or seventh inning, somewhere in there, but getting close to getting that. Everybody knows what they're supposed to do now and what their roll is, so that part is pretty much over with. I think we -- another quarter or two clearly everything is fine just on any type of -- this is actually the anniversary, one year anniversary today since we announced the reorg. So I'm pleased with how far we've come in that one year.

Was the progress that you made in that one year kind of hit the timeframe you expected or did you get some positive surprises along the way?

Well, I actually think we got some positive surprises. I've done this before several years ago and it seemed like it took a long time to get the thing done, but I think it was a little easier this time and I think people, for one reason, obviously our competition several of them were along that way already, and so it was expected by, especially our field people, that we were going to this. So I think that did make it easier for it.

You talked about the new opportunities may be on a joint-company basis, I know that Baker's been involved in Russia, BJ had pulled out. What's the opportunity to bring BJ back into Russia? You think that's a 2010 event or is it more likely a 2011 event?

I would imagine Kurt, it's probably going to be a 2011 event. It would depend on what negotiations and what happens from the clients in Russia. If we got contracts, we have had a couple of them ask us to bring stuff back in there. If we got contract, then we would seriously consider it in 2010. But I think right now, we would be focusing on some other opportunities that we see around the world that probably are better for us right now.

I think in your earlier commentary , Chad, you referenced some pricing pressures I think explicitly in the Middle East to Far East region with kind of a market share mentality going on. Is that across all product lines or some specific product lines and is it across the whole region or some specific countries? And I was hoping you would be able to elaborate on that.

I think you hit it right on the head. It's at some countries, and it's across some product lines. And I think it's just some turf wars depending on the product line, and depending on the country that people are kind of protecting their turf. I can't say that we're any different, and some area, where we may be strong, we're protecting our turf. And it's not across all regions but there are several countries where it's pretty aggressive right now.

Can you get a little more specific on that, either that or that of product line?

I'm not going to go there.

Your next question comes from the line of Dan Boyd with Goldman Sachs.

Can you give us just an update on sort of on the Alma Marine project, the two rigs now? I believe that the break-even is still five rigs or have you been able to do anything to lower your cost base and along the same line, how should we think about the drag that, that's having on margins so when this does get resolved the improvement that we're likely to see?

Well we have brought the break-even, down from the five rigs. This last quarter was a fairly decent quarter. We averaged about three rigs but it was primary drilling and we set pipe in some intermediate and along streams and therefore, we're able to get paid. Our performance has been good. Martin and I just got back from there a couple of weeks ago, we get down about every three weeks now working with PEMEX on this. They know where we stand. We have seen the forward drilling curves or drilling plans for rigs. We're in a good position to win additional rigs or be awarded additional rigs and I think our cost now is down to the point where we still need three, maybe four. But we think that in the second half of the year, based on our performance and based on some of the comments that we've heard from management there, we think we'll start seeing ourselves ramp back up in the second half of the year and we think that the second half of the year should be pretty good for us down there if we can get back on those rigs.

When I look at your margin -- not your margin but your revenue growth in Europe Africa Russia Caspian, you bucked the trend a little bit by actually showing -- posting sequential improvement in revenue despite any -- some of the seasonality or issues that some of your peers had in that region. Can you help me better understand what happened that was different for Baker than some others?

Well I think you have to go back the last couple three quarters and I think we bucked the trend the last two to three internationally on revenues. We've held our own. In fact, I think we've gained a little bit in the last couple three quarters. I think I have to attribute a lot of that to the new organization. I think the region in the geomarket managers are just that much more focused on the customer, that much more aggressive in terms of winning contracts. So I would have to say, that because of the geomarket and region structure right now, we're just being more responsive in being there and we're starting to see, again more cross-product line contracts, where we've got the bit, where we've got the bottom hole assembly and now we get awarded the Drilling Fluids just because it's a Baker Hughes team going in to try to get the works. I think that's helped us in these last couple three quarters. One of the reasons why we're excited about getting BJ onboard, being able to throw in another significant part of the market there that works very closely with our guys.

You want to step back to Latin America just quickly, can you help us with, keep in mind that you did lower your cost basins now in that project maybe with a roadmap of margins in Latin America to get to maybe an 11% exit rate in 4Q. Is it truly going to be a step up in 3Q or 4Q? Or should we see gradual improvements?

I think the second quarter is not going to be anything to write home about for Latin America. I think Q3, Q4, you'll start seeing improvement and it'll be a combination of some of these costs that we talked about, but also when the Brazilian rigs swing from drilling to completion, it makes a big difference because we have a significant infrastructure in Brazil today. And when those rigs aren't drilling, we can't do much with the people. We can keep them on the shore so we see the rigs going back to more drilling, especially in Q3 and into Q4, it's going to help us quite a bit in that area.

Your next question comes from the line of Stephen Gengaro with Jefferies & Company. Stephen Gengaro - Jefferies & Company, Inc.: Two questions, do you have some numbers you could provide us with going forward on things like D&A and interest expense as you see it as a combined entity?

What I'd rather do, I'd rather wait until Q2 because we've got a lot of mapping to do between their systems and our systems and we've only owned that company for three business days as of this morning. Interest expense, a little simpler, so that's on the D&A side and we also still have to work through the purchase price accounting which can change that number. On the interest side, you could probably figure Q2, we were at about -- we'll probably be at about $28 million, $29 million BHI stand-alone and we've inherited the two BJ bonds and so add another $7 million for the BJ interest expense just in round numbers, so call that $35 million in interest expense. Stephen Gengaro - Jefferies & Company, Inc.: That's helpful. And then as a follow up, I think on the last quarter's call you gave a very good concrete example of some of the benefits of the new geomarket structure. Do you have anything new you can share? Any examples of concrete product line pull-through?

We've got some nice contracts this last quarter and they're kind of a combination of one or two or three product lines but nothing that I would say is big. A lot of completions in drilling work in Norway across some of the IOCs that are two or three different product lines involved.

Stephen, this is Martin. I would say it's hard to identify any specifically, as Chad mentioned earlier, it's just a whole different approach for Baker Hughes relative to what it was before. We just have a holistic view of what the customer's issues are, including the reservoir interpretation group as well. To be honest with you, we have probably a dozen examples that Gary or Gene can get to you later but I don't have them at my fingertips right now. But it's great combinations of Atlas and BOT in North America. As you heard in the Andean region, INTEQ and Hughes Christiansen and the chemicals in the ESPs, particularly the 500 degree ESPs in the SAGD area in Canada, they were across the board, we can get you pages of them that are coming in.

Your next question comes from the line of Geoff Kieburtz with Weeden.

Peter, just to clarify, the second quarter earnings guidance you gave, low $0.40 range excluded any asset step-up in the D&A charge, right?

Correct.

Are you able, at this stage, to give us some sense of some kind of a range in cents per share that the asset step up might fall within?

I really can't. I'd rather not. As I said earlier, we've had -- we closed the deal three or four days ago and our valuation people haven't had a chance to go and investigate in detail all the different businesses that BJ Services and how those impact the numbers. All we've been able to do is look at it from topside until you go in there and do the detail work, you can change dramatically so I really am not comfortable until that work is done.

And just to go back on the comments about the divestiture, presumably the divestiture won't have a meaningful impact on the D&A charge either?

No, you're not talking about huge asset balance there.

On a separate topic, I understand -- do you think international margins have bottomed. Would you say that international margins have bottomed in each of the three international regions as far as you can see?

Definitely two, one's still in question.

And which one is that?

Well I think Eastern hemisphere, let me put it that way, and you can figure it out real quickly. Eastern hemisphere is going to improve. Like I said earlier, Latin America I think second quarter is still going to be a challenge.

In the Eastern hemisphere, the press release talked about product sales into Russia, low margin product sales into Russia and then Martin, you mentioned that there was artificial lift sales into [indiscernible]. Can we equate low-margin and artificial lift here?

Yes, that's a pretty good -- it's a legacy contract.

So it's a contract that's running off here and not necessarily a comment on the artificial lift market in Russia?

Not running off soon enough.

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

Chad, you talked about some of the investments that you've made in positioning for future share growth internationally and it sounds like that's primarily Middle East Asia and Lat-Am but I was wondering if you could comment a little more about where you're happy with your share internationally and where you might hope to move forward, whether that's on a regional, country, or product specific basis.

We want to move forward in Asia. We don't feel like our share is to the point where it needs to be in Asia. Similarly, in parts of the Middle East, obviously we're strong in certain parts of the Middle East. We do quite well in Saudi, we do well in Oman, voted fairly well in Oman, we do fairly well in Qatar. We think we've got opportunities and growth opportunities in Egypt. We believe we have opportunities in India. Latin America, we've got very good share and I liked our position in Brazil. We're improving in Mexico, although as we all know it's a tough market. And then we like our position and continue to see good gains in the Columbia/Ecuador, that area and we think that with the BJ acquisition, that's going to help us there. It's going to help us across all of Latin America. They have a fairly decent presence there and they have a good presence in Asia, which should help us going forward. So I think those are the key points, Mike.

Shifting back to North America, Canada, I think pretty big market for BJ and also looks like on a stand-alone basis, you had some successes there just on the Baker Hughes side. Is there a bigger opportunity set there now especially as some of the oil plays come back?

I think Canada again, once we get through Q2, there's no doubt that BJ is going to get hit hard there in Q2. But once we get through that, we see Q3, Q4 coming back to a Q1, close to that level. Martin referred in his comments about the micro seismic project on some 75 wells up in Canada. We see this as a great opportunity for Baker Hughes/BJ combination. BJ had a very good quarter last quarter. Up in Canada and we see it coming back and our position up there’s pretty strong. So we think Canada is going to be a good area for us going forward.

Celeste, I see we are approaching the bottom of the hour. So with that, thank you, Mike. Also want to thank Chad and Martin and Peter and thank everyone, all off our participants this morning for your time and your thoughtful questions. Following the conclusion of today's call, both Gene and I will be available to answer any additional calls you may have. Once again, thank you for your participation. Celeste?

Ladies and gentlemen, thank you for participating in today's Baker Hughes Incorporated Conference Call. This call will be available for replay beginning at 10:30 a.m. Eastern, 9:30 a.m. Central and will be available through 10:00 p.m. Eastern time on Tuesday, May 18, 2010. The conference ID number for the replay is 58693127. The number to dial for the replay is 1-800-642-1687 in the U.S. or (706)645-9291 international. You may now disconnect.