My name is Regina, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Baker Hughes Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now turn the conference over to Mr. Adam Anderson, Vice President of Investor Relations. Sir, you may proceed.

Thank you, Regina. Good morning, everybody. Welcome to the Baker Hughes Fourth Quarter 2011 Earnings Conference Call. Here with me today are Martin Craighead, President and CEO; and Peter Ragauss, Senior Vice President and Chief Financial Officer. Following management's comments, we will open the lines for your questions. Reconciliation of operating profits and non-GAAP measures to GAAP results for historic periods can be found on our website at www.bakerhughes.com in the Investor Relations section under Financial Information. Finally, I must 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 call prevents a more thorough discussion of these risk factors. For a full discussion of these risk factors, please refer to our annual report 10-K, 10-Q and, in 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 Peter Ragauss. Peter?

Thanks, Adam. Good morning. This morning, we reported adjusted net income for the fourth quarter of $534 million or $1.22 per share. This excludes the previously reported noncash impairment charge of $220 million after tax or $0.50 per share, primarily associated with our decision to minimize the use of the BJ Services tradename as part of our overall branding strategy for Baker Hughes. On a GAAP basis, net income to Baker Hughes for the fourth quarter was therefore $314 million or $0.72 per diluted share. Revenue for the fourth quarter was $5.4 billion, up 22% or $964 million from last year and up 4% or $209 million sequentially. Adjusted EBITDA for the fourth quarter was $1.2 billion, up 25% from last year and up 3% sequentially. For the year, adjusted net income was $1.84 billion or $4.20 per share. This excludes certain charges totaling $102 million after tax or $0.23 per share, which are not operational in nature and reconciled in detail in Table 1 of our earnings release. On a GAAP basis, net income to Baker Hughes for the year was therefore $1.74 billion or $3.97 per diluted share. For the year, revenue was $19.8 billion, up 38% or $5.4 billion from the prior year. Adjusted EBITDA was $4.31 billion, up 64% or up $1.7 billion from the prior year. To help in your understanding on the moving pieces, I'll bridge Q4 last year EPS to this quarter's EPS. GAAP EPS a year ago was $0.77 per share, add $0.07 for charges incurred last year related to the acquisition of BJ Services, subtract $0.01 for higher net interest expense and net income attributed to noncontrolling interests, add $0.04 for lower income taxes. Operations added $0.35. This results in $1.22 per share for adjusted net income for this quarter. Then…

Thanks, Peter. And good morning, everyone. Before I discuss the quarter, I'd like to take a minute and comment on the leadership transition here at Baker Hughes. After assuming the CEO role on January 1, I made the following changes to our executive management team. Derek Mathieson is now leading our Western Hemisphere operations; while Gacem Chariag continues leading our Eastern Hemisphere operations. Art Soucy is leading our Global Products and Services function; and Andy O'Donnell reports to me in an executive advisory role. These names should be familiar to you as these changes are evolutionary in nature and in keeping with our long-range succession plan. As all of you know, Chad Deaton remains Executive Chairman of the Board of Baker Hughes, and I wanted to credit him and our board for executing what has been smooth transition. Chad has a long legacy of driving transformational change, and I'm committed to building on his progress. Now to performance. The fourth quarter results were mixed. Our international operations performed well on all fronts. This activity was up, X was favorable and our delivery execution was strong. As we told you last quarter, making those deliveries and getting our products and services into customers' hands was critical. And as expected, our employees stepped up and met those challenges. As a result, our international business margins were up 650 basis points year-over-year. In North America, our results were disappointing as very strong performance in drilling systems, completions and artificial lift were more than offset by Pressure Pumping, where we've experienced a variety of cost and efficiency challenges associated with ramping demand. These cost challenges come in 3 categories. First, we experienced inefficiencies associated with our freight, fuel and other logistical operations. Second, there are significant shortages of specific sizes and qualities of proppant,…

Thank you, Martin. At this point, I'll ask Regina to open the lines for your questions. To give everyone a fair chance to ask a question, we ask that you limit yourself to a single question and one related follow-up question. Regina, may we have the first question, please?

The first question comes from the line of David Anderson with JPMorgan. John David Anderson - JP Morgan Chase & Co, Research Division: I just want to delve into a little bit more on the supply chain issues that you're facing in North America and how you're seeking to resolve it. Is there a particular region where this is most acute? And I guess, I'm just wondering, how much of a function of supply agreements was sand mines, or is it railcar capacity? Can you just kind of dig into a little bit more? And I guess I'm just trying to understand, are you sourcing all of the materials for U.S. operations, or is it just some of them? I'm just trying to get more color on what the issues are here.

Okay. I would say that the issues are not the sand mines, per se. For us, primarily, the issue is related to getting it from our storage centers to, let's say, the first drop-off point to the respective customer locations. This is a combination of railcars as well as trucking fleets. But the other issue around the supply chain is the infrastructure as well as processes and capabilities. And if I had to look at -- and if I could, let's say, put it this way, the margin compression, you could put it into 2 buckets. One is the supply chain. And whether it's processes, a little bit of infrastructure and capabilities, that's a longer-term issue to resolve. The other element of this, though, is as Peter highlighted, some inflationary cost pressures on the materials, profit not being the only one, fuel being one. And I expect that really from that, we'll see sooner, first half of the year. John David Anderson - JP Morgan Chase & Co, Research Division: On a related topic, one of your main competitors yesterday was talking about their problems with margins had to do with a lot of the customers moving out of gas basins and shifting to oil plays. I guess it's related also to your supply chain different basins. But you didn't talk about this as a reason for some of your weaker margins today in today's call. Is this something we should think is going to start coming into your numbers over the next quarter or 2 and could lean on margin? I guess what I'm trying to understand, if pricing is stable, but it seems like there's going to be a dislocation on this market, how are you kind of thinking about how everything shifting here and how do you stay in front of this?

Well, actually, Dave, we -- on the last call, we actually highlighted the fact that there's cost associated with moving, and I think we used the example out of the Haynesville at the time. So it's no surprise, but frankly speaking, the other elements of our story are a little bit bigger than the cost associated with demobilizing or repositioning some of these fleets. So, yes, we experienced that, it's an element in there. As I said, for us, particularly, we had what I would consider to be unusual challenges relative to the market associated with handling this ramping demand and some of the inefficiencies associated with that. John David Anderson - JP Morgan Chase & Co, Research Division: So and just lastly, so it sounds like margins are going to kind of see a little bit of a slide over first quarter and second quarter, but you're expecting it to start recovering in the second half of the year. Did I hear you correctly?

Well, actually, I think I said in my prepared remarks, Dave, that we expect a partial recovery in Q1 in North America. And that's -- we think some of the costs, some of the transitory costs in pressure pumping won't repeat in Q1. And we have also got Canada. And don't forget about Canada, gets very strong in Q1, and that's going to help overall North American margin picture. John David Anderson - JP Morgan Chase & Co, Research Division: And you'd expect the second half of the year to start seeing improvements on that side?

On the supply chain, yes, Dave.

The next question comes from the line of James West with Barclays Capital.

Just to follow up a little bit on Dave's question. For the second half of '12, I know, Martin, you're pretty confident that your margins will come back. Do they come back to a level that you saw in 3Q of '11 as we think about kind of 3- and 4Q '12? Or are there some other issues that will linger, and that maybe the more normalized margin is a little bit lower than what you just saw last quarter?

James, I would -- I think it's reasonable to expect that we could return to Q3 levels based on the resolving the issues, which we're fully confident that we will. Obviously, market conditions have to remain constant. I think it's reasonable to assume that market is staying where it is, that we will get back to those -- most of those numbers, absolutely.

Okay, fair enough. And then how are you thinking about Pressure Pumping capacity additions in 2012 versus the additions you made in 2011? Are you thinking higher, the same, lower? And then a related question is what kind of contract coverage do you currently have on your pressure pumping fleet in North America?

Yes, James, you have to remember for us, we had a slow start to '11 in adding pressure pumping capacity. And I would say that on a year-on-year basis, it will be up in terms of horsepower, but we will be consistent with the run rate in the final -- this final quarter of last year, Q4. And then the second part to your question, I'm sorry, was regarding...

Contract coverage. I know, historically, you've had lower coverage on your pressure pumping fleet but it seems like your bigger competitors have added a lot of coverage to their pressure pumping assets over the last few months. I wanted to know if you had changed it on the same thing.

Yes, ours has -- it's increased, well, probably up to a little over 60% of what I consider to be contract or pricing agreements. With that all said, I think as you've also heard, there are still pockets of improving spot pricing and you'll see that changing in some of the oil basins. So we're happy with our portfolio. Obviously, it's not something that you can't change. But our strategy right now is to have the mix that we have around -- like I say, around 60% to 65%. The other comment I want to make since you asked about the capacity that's coming on line, all of the fleets that we have dedicated for U.S. land are spoken for in terms of the basin and the customer at this point.

For all of 2012?

All of 2012. That's correct.

And your run rate in Q4 was a spread every 6 weeks or am I off on that?

Yes, it's probably -- I'd have to go back and run that, but I think we've tightened it up to probably about every 4 weeks.

Your next question comes from the line of Jim Crandell with Dahlman Rose. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Martin, can you talk a little bit more about the -- or I want to ask about the pressure pumping issues that took place. What part of the shortfall do you think was preventable, that you should have reacted quicker, whether it was lining up your proppants, gels, guar earlier? Or did you know you had these issues when you acquired BJ and there was not much that you could have done?

I think we should have done it all better, frankly. The reality is that, Jim, one way to look at this is as the business has ramped, I think it's safe to say that the efficiency grew along with it given the strain on the supply chain and the systems that we had in place. Now there's 3 areas around efficiency, I think; there's people, there's assets and there's products. The ability to get the people on board really improved in the second half. Our ability to manage the assets in terms of R&M and getting them at the right place has been a challenge. As I just mentioned to James and as you all know, we were a little bit later to the supply addition or horsepower addition than we would have liked. And then there's the key is getting those products, particularly to consumables, to the right place and the right time. And frankly, BJ just wasn't set up to scale up relative to what's happened in the market. It's that simple. And it's, like I say, though, the issues are identified, we have resources dedicated to them. We have absolutely no doubt we'll get these issues fixed. As you know, we've done it on other tasks that we've had, and most recently, the international project issues that we took on. So this is -- we've been here before and we'll get through it. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Okay. Now you indicated that you're addressing your freight and fuel logistics and that you can solve these over time. Can you, given the situation, or maybe you could address again the issue of proppants, gels, guars, shortages out there, your supplier relationships that you have? Are you at a disadvantage to your major competitors and can that be fixed as you go here in the next 6 to 12 months?

That's a good question, and it's been an element of, let's say, the investigative process in Q4 as these results unfolded. I tell you, I'm really encouraged with just the change in our relationships status from where we were, in a different world, single vendors to multiple vendors now on multiple of those consumable fronts. As well as engaging in the discussions that, frankly, weren't taking place like they needed to in terms of having our suppliers respond and facilitate some of the logistical challenges that we've had. Now those discussions just weren't -- because we were probably a little late to getting horsepower into the market for a variety of reasons, I don't think we were having the conversations that we needed to have relative to where the market is going. So those type of things, our supply chain, a challenge, but I'm very encouraged so far with the progress we've made. And so I don't think that's going to be a big disadvantage. The disadvantage, relatively speaking, will be in our own capabilities of moving the stuff around and getting it where it needed to be and making sure that we don't a lot of the emerged costs that we've incurred as a result of making some of the mistakes.

Your next question comes from the line of Angie Sedita with UBS.

Martin, you guys did a very nice job of hitting your target on international margins here in 2011. Can you give us some thoughts looking forward into 2012 as far as the pace of margins? And any color on the potential exit rate for the year?

I would expect that our exit rate will be better than it is -- than what it was in Q4, Angie. I'm encouraged by a couple of fronts internationally. One is our execution mechanisms. I mean, we hit all cylinders. It wasn't only supply chain, it was the service side, it was across all the regions and virtually all the geomarkets. I would say that our international business is on very firm footing right now. So I'm very, very confident in our execution ability. Market is still a bit of a struggle. That all said, I would think that if you take an average of the environment in '12 relative to '11, I think it's going to be discernibly different. We're getting more pockets of tightness. I believe that the behaviors out there and the competitive environment will be better, I generally believe that. We had some big tenders that are still out there. And when those happen, there's heightened levels of aggressiveness. But I suspect our customers across beyond just the Middle East, which I think was one of the drivers in '11, are going to increase your spending and it will tighten up resources pretty quick. As well, if we don't see a softness in North America and at the Gulf of Mexico keeps moving in the direction it is, I think you're going to find that international pricing is going to be a little bit more buoyant than it was in '11.

Okay, very helpful. And then, obviously, you've done a very good job of winning a number of large awards in Iraq. Some of your peers -- I mean we could say are you going to see the same, could you initially have a negative impact on your margins in the first half of 2012 as you've mobilized equipment into Iraq and have the natural growing pains of starting up the ramping up those projects?

I think there is risk associated, obviously. We've seen it on some of the projects we've been on so far. And this award that you're referring to is the biggest awarded to date in Iraq. So yes, there is some risk. But I'm not too worried about that. The way we've worked with both parties, the customer as well as the SOC in mapping out the rigs and getting the resources. I don't -- we're not planning on seeing anything real impactful borrowing if it goes according to , I think, a pretty conservative plan.

Your next question comes from the line of Bill Herbert with Simmons & Company. William A. Herbert - Simmons & Company International, Research Division: Martin, how should we think about North American revenues in relation to the rig count over the course of 2012 as you confront these challenges on the supply chain front? Are we going to outpace the rig count? Or are we going to perform in line or underperform the rig count?

We're going to outperform the rig count. I made the reference in Canada in terms of the complexity, Bill, of these wells, but the services of the city hasn't changed. It's only getting better. And let me just take the opportunity on -- with your question to say, this margin compression is, I would venture to say, very much our issue, Bill. Okay? I think that needs to be understood. There's no market-driven issue that we can see at this stage. William A. Herbert - Simmons & Company International, Research Division: Okay, that's clear. And then, secondly, with regard to your capital spending budget, up pretty considerably year-over-year. And I'm struck by the magnitude of the increase considering the digestion challenges you're having right now with regard to the supply chain and logistics and putting capacity to work. Walk me through the rationale there with regards to the 30% to 35% increase in capital spending. Is this purely to meet growth? Is it part of a replacement cycle exercise in terms of freshening up your fleet and retiring more obsolete older equipment, new lines of businesses? Walk me through the buckets of capital spending allocation.

I'll give you as much as I'm comfortable providing on this call. First of all, there is an element, an increased element from last year to this year of replacement, but also pressure pumping equipment that goes to the front line for efficiency enhancement. There's a record level in this budget for non-pressure pumping CapEx, both in terms of rental tools as well as infrastructure. Okay? So it's not all a horsepower story on our CapEx. And then, as I think I mentioned on one of the previous questions, Bill, we're only staying pace with what we delivered in Q4. Yes, it's a year-on-year increase, but the first quarter particularly was completely unrepresentative of what we needed to be delivering in the world of pressure pumping. So yes, the fleets that hit in Q4 strain our organization, absolutely. But it's part of what we have to work through as being able to scale the other side of the support, people, capabilities and the infrastructure to handle those fleets as they come on stream. So we're comfortable where we are relative to that horsepower add. William A. Herbert - Simmons & Company International, Research Division: Okay. Just 2 very quick ones for me in terms of housekeeping items. Peter, you mentioned Q1 margins are partial recovery. Should we think about Q1 landing somewhere -- in terms of North America, should we think about North America margins in Q1 landing somewhere between Q4 and Q3?

Yes. And partial recovery, I would say, is less than half of the sort of basis points that we loss from Q3 to Q4. So yes, definitely, it's between those 2 bookends. But I would say it's on the lower end of those bookends. But we expect a meaningful partial recovery, if you will. It's in the lowest end -- sorry, go ahead. William A. Herbert - Simmons & Company International, Research Division: Yes, that is helpful. And then finally, you may have addressed this, I didn't quite understand it. The meaningful uptick in corporate expense with regard to guidance for 2012. What's driving that?

Part of that is the $10 million per quarter of the noncash amortization of the BJ tradename, which we put an 8-K out right before Christmas. And then Q4 was unusually low. We got down to $64 million or so. And we still have SAP implementation going on worldwide for BJ. And also in Q1, typically you have a share-based comp hitting the corporate line as well. So it comes up in Q1.

Your next question comes from the line of Joe Hill with Tudor, Pickering, Holt. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Martin, when I think about the seasonal improvement in the international margin, I tend to think in terms of around 150 basis points for the fourth quarter. But I know you guys had record orders on the books going into the quarter. And I'm just curious as to whether or not we can try and dial in the level of seasonal headwind in Q1 a little bit given those record orders.

Joe, it wasn't record level orders. I'm not going to tell you what it was, but it, by no means, was it is biggest as it's been in some of the previous years. Peter, you want to add?

Yes, as it turned out, I'll try to answer that more specifically. We had about $50 million in product sales that we don't expect to repeat in Q1. And then, typically, in Q1, you've got weather and mix. Weather really hits you in Russia, the North Sea, Asia Pac. And that's probably a similar magnitude. So add those up, maybe $100 million or so of revenues impacting Q1 relative to Q4 with pretty healthy detrimentals there. Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. That's very helpful. Just as a follow-up. Martin, I was wondering if you would talk about the pricing environment by product line for, say, non-pressure pumping C&P and then for Drilling and Evaluation?

Yes, Joe, what I'm comfortable telling you, we still have very good price traction being led by drilling services. Behind that would be artificial lift. And that would be followed by completion tools, in that order. All of them up, and I would forecast all of them to be up this time next year. And when we're talking price, I'm not talking new technology or anything else. I'm simply talking about the price improvement we can get from supply and demand situation as well as the performance that's out there. And on the -- I'd say it's probably flat on areas such as drill bits and wireline services. Does that answer your question? Joe Hill - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: It does.

Your next question comes from the line of Ole Slorer with Morgan Stanley.

Just a follow-up on Joe's question. Was -- were those comments relating to North America or were they global?

Ole, they were North America.

Okay. If we look a little bit overseas, what do you think will be the strongest regions for you next year? You highlight -- you spoke very favorably on Latin America, yet Latin America seems to be the area of your margins lagging a little bit in the recovery into the fourth quarter.

I would say that our most optimistic region is the Middle East, not only Iraq, but just given the announcements that have come out from a variety of the customers. As well as our increasing position there in terms of, I think, share and relationships, the geomarket model as most every region of Eastern Hemisphere. But I think our geomarket model there, our leadership that we have in place has done an excellent job of positioning Baker Hughes concurrent with the increase in the spending environment.

Okay. And back to the Iraq question again. Security seems to have gone from bad to worse. Are you afraid that this party might be spoiled a little bit by more slippage of start of a project?

I'm going to let Peter answer that. He was -- just came back from there. Peter?

Yes. Ole, I was just there 2 months ago almost to the day. And security is -- you've never seen security like you have it there, and it's required. But one thing I will say is that the security situation there, physical security hasn't changed at all in the past couple of months. In fact, I think it's remarkable that the Iraqi security forces haven't had really any major events. You've had random acts of attacks probably at the same pace as you had for the past 7 years. In fact, if anything, they've come down in the region in which we operate, which is in the south near Basra. And so I think it's holding together pretty nicely. I think the biggest challenges, the mother of all challenges in Iraq is just the logistics and getting things through the bureaucracy, getting things through customs, moving things around in a safe manner. And that hasn't -- that we expect to improve over time. So I think there's some unfounded fear. And so far, the past few months have been pretty uneventful, quite frankly.

Well, that's good to hear. Just finally, on the bridge from the fourth quarter into the first quarter. I mean, North America, higher. It sounds like both the U.S. is rebounding a little bit on operations, and Canada has its seasonal positives. And then internationally, you have the product sales and a few other things. So do you -- how should we think about sequential earnings into the first quarter, up or down?

Down. I think you could see flattish from oilfield ops. Don't forget, we've got corporate cost increasing $20 million, as we mentioned. Tax rate, we said, is going to be between 34% and 35%, and that compares to the 31% and change we had this quarter. So just those 2 items are $0.09 in and of themselves. And we also said industrial will be a little bit lower on an operating basis.

So goes down and oilfield up a little bit sequentially, okay?

We said oilfield flattish and a few other negatives.

The next question comes from the line of Brad Handler with Crédit Suisse. Brad Handler - Crédit Suisse AG, Research Division: Maybe to come back on a couple of issues quickly. I had gotten the impression that you were -- you had labor shortages as a challenge in Canada in Q4. I'm not sure we really addressed that on this call. But is that the case? And does that in any way hamper your opportunity in Q1 to take advantage of the winter season? It doesn't sound like it, but I'm just curious for some...

No, that's a good question, Brad. Labor is a big problem in the province of Alberta. I think unemployment is probably like it is in the Bakken. So it's affecting everybody. It's a challenge. I think we're working through it very well. Our organization up there has done a terrific job of making sure that we're able to take care of our customers. But it certainly is a limiter. And I think it's very safe to say that all of us are going to experience turn down work in Q1 in Canada given the inability to staff every opportunity. But that's the way it is in a high-peak environment like the winter months of Canada, particularly prior to a drop off of Q2. Brad Handler - Crédit Suisse AG, Research Division: But I guess it's your sense that you've made enough progress and that's -- you're not differentially hurt?

No, no. In fact, I would say we're probably the least hurt. I think you're going to find the industry very challenged up there. But given our size and importance of the business to our customers up there in terms of our position, we're not disadvantaged at all. Brad Handler - Crédit Suisse AG, Research Division: Have you guys done the backward calculation of what Q4 revenues sort of should have looked like for you in North America, had you been able to get the materials where they needed to be?

Yes. Brad Handler - Crédit Suisse AG, Research Division: Can you share that with us?

No. Brad Handler - Crédit Suisse AG, Research Division: Okay. And then maybe if I could slip one in -- one more in, please?

I didn't answer that one. Go ahead. Brad Handler - Crédit Suisse AG, Research Division: Yes, right, that's what I figured. Revenue, if I think about that -- sort of a similar question, maybe, internationally. But how did revenue growth -- how did revenues compare with your expectations in the fourth quarter? I know the margins came through.

I'd say right in line. A little bit more favorable in terms of the product mix, but in line with expectations.

Our next question comes from the line of Waqar Syed with Goldman Sachs.

A couple of questions. First on Iraq. Do you have the rigs on the ground, or they still need to be brought into the country?

Rigs are on -- the rigs that we'll be mobilizing in Q1 are there already. And then we, as I think mentioned to Angie, we're adding a rig about every other month once we get going. So it's gradual.

So those really need to come from outside, the one that -- one rig a month?

Yes.

Okay. And secondly, are you exporting any pressure pumping capacity to the international market?

The answer, Waqar, is yes. We'll deliver more pressure pumping horsepower internationally this year than we did definitely last year.

Okay. And what reasons in the world is the capacity going to go to? Is that something you can share, or should we assume that all the 4 or 5 basins that everybody highlights those are days when it's going to end up?

That's pretty much what you can assume. That's right.

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

Hey, Martin, I just wanted to try and get a general sense, you guys referenced that you think you'd be able to grow your international revenues faster than the rig count that's been a common refrain from the other large competitors so far. So in a general sense, do you think that if we go back and kind of look at the growth rates relative to rig count in prior periods, do you get a feeling that 2012, you guys can actually grow revenues faster than you have historically relative to the rig count? Are there certain dynamics that we need to be aware of that would cause that? Do you think it might be slower? Just trying to look at some relative sense of magnitude potentially on how to think about it for '12.

On the revenue side, I would say that the rig count -- consistent with the rig count is a safe bet. And I can't forecast any reasons why there'd be any variances, up or down, from what that is right now. And if we see any shock in pricing on the upside, then, obviously, that would change quickly. But I think right down the middle of the fairway, with the rig counts, is where to be.

And then you guys have been spot on here with your execution and performance on the international front, as you said, exiting 2011 here with a 16% kind of margin. With pricing as competitive as it is and volume growing, what kind of incremental margins do you think you'll be able to achieve on the international front going out into 2012? And I think at some point you may have referenced that 2012 exit rate, your target will be, I think, consistent with the peer group average or something along those lines. So I just wondering if you can give us an updated view on that.

I think you could, Kurt, model in 20% incrementals on the revenue next year, I think, is the place to be.

Okay. And then just appreciate being that explicit. On the North American front, I don't want to beat this one to death here. From a pricing standpoint, we've heard pricing down in the gas basins and pricing up in the oil and liquids basins. And we've heard a pretty consistent refrain on supply chain and cost inflations. So I understand all that. I was just wondering if you can give us some order of magnitude of change in the pricing that you're seeing in the gas basins in which you're still active, knowing that, that's going to be coming down in terms of volume. And what the general range of price increments you're able to get out of the oil and liquids basins. Plus, again, just relative magnitude, is it like 10% down in gas and 10% up in oil and liquids? Can you just give us some general sense of what's going on in the market?

Yes, I appreciate the question and trying to get some greater transparency. What I'd say at this stage is that the increases in the oil basins are offsetting the compression in the gas basins. Now, obviously, as you've heard, people are repositioning their fleets given the apparent or the oncoming softness in some of the gas basins. I -- the way we look at this is this market, I would say we're still in the very early stages of these unconventional plays. And I know that might be very hard for a lot of people to understand given how rapidly they've come on the scene. But in talking to our customers, tens of thousands of locations are coming up in these discussions to be drilled in these plays, like the Marcellus, the Eagle Ford and even the Utica. And Kurt, when you see that kind of outlook, it's that you can't but conclude that adding additional capacity, and not only in pressure pumping, but also in roofline and rental tools, is absolutely the right way to go forward. So there may be a little bit of weakness in some of these basins until things settle down and you get the right balance of supply and demand balance. But overall, collectively, there's no softness in the price. And I wouldn't expect it to be anything dramatic even if it does soften in a couple of places.

Okay. And then just final. On the horsepower you referenced, frankly, every 4 weeks now, so that supply chains is loosening. Was that just specific to the U.S., or what kind of allocation are you going to have between, say, U.S., Canada and international?

Now, that's our global capacity. And I don't want to share exactly what's dedicated. But as I did say, we will be delivering more. But I would tell you that a meaningful amount of it is skid mounted and beyond what's going international can be rerouted, if necessary.

Okay. So not even a tidbit on the allocation to Canada maybe?

No.

Your next question comes from the line of Bill Sanchez with Howard Weil.

Martin, I was curious as we think about international margin growth opportunities here, is there anything left at this point as it relates to margin improvement from the move you made from a product service line to a geomarket model? And also anything on the supply chain that's left in the international markets here that could be additive to margins during 2012.

The answer is, on both of those, yes.

Okay. Anything -- is it quantifiable or is it not necessarily?

Well, no. I mean, we've quantified it as part of our continuous improvement plans with regards to margins. But I wouldn't say -- I think what you're referring to, Bill, is that in the early stages of our improvement process, there was a lot of internal -- it was internally driven in terms of aligning cost structure with where the market was. That's -- that played off in the second half and it's getting smaller, but it's still something that we're working towards. But the majority of any margin expansion is likely to come from mix improvements, price or just volume as costs are absorbed.

Sure. My follow-up would be, I guess, Martin, you've been candid here that this quarter represented for you getting less out of BJ Services that I think you guys had hoped for. I'm just curious as to the decision to minimize the use of the BJ services tradename. Was that something that internally you guys decided needed to be done because you're disappointed, if you will, on the progress there? Or is that something really more externally driven by your customers? Can you just talk a little bit about that decision?

Yes, look, there's absolutely no connection between our decision, which is a business decision, a long-term decision, with regards to the name. I mean, it's a powerful brand, obviously, as you can tell by the numbers that are out here, quite a bit of value associated with it. But it's in keeping with the movement from a product line driven company to a geographical base company. Some of our service names are no longer in the portfolio that you may have been familiar with before within Baker Hughes in the legacy side. Some of the strong product names like you Hughes Christensen and Centrilift, they still get the banner. But the service lines have -- the product line names have been deemphasized. And it's just in keeping with the Baker Hughes strategy that took off 2 years ago when we reorganized the company.

Regina, at this point, we'll take one final question.

Our final question will come from the line of Scott Gruber with Bernstein. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Martin, a quick follow-up on your CapEx guidance. Is the growth rate in international CapEx more or less than the total if we utilize the mid-point of your guidance range?

Could you ask that another way? Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Well, is the rate of international CapEx growth more or less than, I think it's about 32% growth year-on-year if you use the mid-point of your CapEx guidance?

I'd say it's probably around that number, to say it's consistent with that. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And an unrelated follow-up. Can you provide an update on the appetite for the multi-stage completions systems that you've recently developed, especially since some of these systems can help improve operating efficiency? Are the completion sleeves gaining traction outside of the Bakken? And if you can also comment on the annular fracing, which I believe you recently introduced in the U.S.

Yes. Scott, the sliding sleeves, the product development folks have been just incredible in terms of continually upgrading these. And we were the -- we introduced it. We have the lion's share of the positions, particularly in the Bakken. We've taken it to the next level with the DirectConnect, teleport type of technology. In this particular case, 32-stage capability. But within each stage, 10 sleeves open, more than twice the nearest competitor. So I wouldn't want to say that you got 300-some fracs on their capability, but a lot of initiation frontage in that reservoir phase. It's just really incredible technology. And I hand it to our North American guys and our product guys. And on the OptiPort technology, which is to an infinite number of stages capability, it's really, really, really strong in Canada. And we've done a handful of jobs with very good success. And I expect it will take off. But like a lot of things in this business, they have longer takeoff runs than we'd like. But it's going to give the customers another option in our portfolio of -- in completions. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Okay. So it sounds like improvement over the course of '12, but not a meaningful transition toward some of these products. Is that a fair assessment?

Yes, I wouldn't say it's a step change, but it's a continuation of the growth. We have quite a bit of growth planned in our product line, '12 relative to '11.

Thank you, Martin and Peter. And I want to thank all of our participants this morning for your time and your thoughtful questions. Following the conclusions of today's calls, I will be available to answer your calls. Once again, thank you for your participation.

Thank you for participating in today's Baker Hughes Incorporated Conference Call. This call will be available for replay beginning at 11:30 a.m. Eastern Time, 10:30 a.m. Central, and will be available through midnight Eastern Time on Tuesday, February 7, 2012. The conference ID number for the replay is 29422162. The number to dial for the replay is 855-859-2056 in the U.S. or 404-537-3406 international. You may now disconnect. Thank you.