Hello. My name is Dawn, and I will be your conference facilitator. At this time, I would like to welcome everyone to Baker Hughes Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Trey Clark, Vice President of Investor Relations. Sir, you may proceed.

Thank you, Dawn. Good morning, everyone. Welcome to the Baker Hughes Fourth Quarter 2012 Earnings Conference Call. Here with me today is our President and CEO, Martin Craighead; and Peter Ragauss, Senior Vice President and Chief Financial Officer. Today's presentation and the news release that was issued earlier today can be found on our website at bakerhughes.com. Additional reconciliation of operating profit and non-GAAP measures to GAAP results for historic periods can also be found on our website in the Investor Relations section under Supplemental Financial Information. During today's presentation, 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 review of these risk factors, please refer to the Baker Hughes' SEC filings and in particular, the forward-looking disclosure in this morning's news release. With that, I'll turn the call over to Martin Craighead. Martin?

Thanks, Trey, and good morning. This morning, Baker Hughes reported record annual revenue of $20.9 billion, including an 11% increase in our international segments and a 5% increase in our North America segment. Much of this growth can be attributed to the new products and services we've brought to the market, especially in the deepwater and unconventional plays, as well as solid operational performance in the Gulf of Mexico and our international businesses in Europe, Africa Russia and the Middle East. In North America, we experienced challenging market conditions for most of the year, including the oversupply of pressure pumping capacity and activity levels in Canada that were below expectations. Later in the call, I'll provide more detail on these markets. In the near term, we are focused on improving the quality of earnings by positioning Baker Hughes as the partner of choice in a business environment where customers are pressured to reduce their finding and development costs, but also improve their ultimate recoveries even as they expand into harsher and more challenging frontiers. In these market conditions, customers turn to those companies that can deliver differentiating products and technology, products like our FracPoint sliding sleeve system and our steerable drilling liner technology and of course, our AutoTrak Curve rotary steerable system, which just hit another impressive milestone bypassing 3 million feet drilled in the U.S. alone since being launched less than 2 years ago. These products differentiate, and they are becoming increasingly important to our customer and our own income statement. That's why we continue to increase our investment in technology and new product development and accelerate the commercialization of new products. I'll speak to these items more in a few minutes, but first, I'll turn the call over to Peter to give more detail on the quarter and full year's results. Peter?

Thank you, Martin, and good morning. Before I start the review of our financial results, I'd first like to remind everyone of last quarter's announcement pertaining to our Process and Pipeline Services business. This business was reclassified to discontinued operations in our financial statements, and all prior periods were restated. For purposes of today's call, I'll only be discussing financial results from continuing operations. This morning, we reported income from continuing operations for the fourth quarter of $211 million or $0.48 per share. This includes a $63 million or $0.14 per share reserve for bad debt in Latin America. Excluding this reserve, income from continuing operations would have been $274 million or $0.62 per share. Revenue for the fourth quarter was $5.2 billion, which is flat compared to the previous quarter, as deteriorating market conditions in North America were offset by record revenues in all of our international segments. EBITDA for the fourth quarter was $841 million, down 2% sequentially, including the additional bad debt reserve in Latin America. As Martin highlighted, we posted record revenue of $20.9 billion for the year, which is up approximately 8% or $1.5 billion from the prior year. This was the result of strong growth in every region of the world, with the exception of Canada, which experienced a 13% reduction in market activity. Adjusted EBITDA for the year was $3.7 billion, and adjusted income from continuing operations was $1.32 billion or $3 per share. On a GAAP basis, income from continuing operations for the year was $1.28 billion or $2.90 per share. To help in your understanding of the quarter's results, I'll bridge last year's earnings per share to this quarter. In the third quarter, we posted earnings from continuing operations of $0.60 per share. First, add back $0.10 for previously identified items…

Thanks, Peter. I'd like to provide an overall update and outlook on the business, starting with North America. At current commodity prices, we expect activity to remain stable this year and as our customers keep a cautious outlook. We predict that the average North American rig count will be down compared to last year. However, this decline will be partially offset by continued gains in rig efficiencies that can be attributed to increased pad drilling, a more modernized rig fleet and a continued absorption of new drilling completions and production technologies that we are bringing to the market. On the last earnings call, we reported that rig efficiencies in the U.S. have improved about 15% during 2012. This year, we project roughly another 10% increase in wells per rig compared to 2012. In addition to rig efficiencies, our customers will focus increasingly on production enhancement. For example, in the past, the drilling and completion design of a well was defined by the reservoir, while artificial lift consideration was usually dealt with years later. Today, Baker Hughes is working with U.S. customers to engineer artificial lift solutions during the well planning stages, and by planning for production enhancement techniques upfront, we're helping our customers improve ultimate recovery. Now I'd like to comment on some of the various operations in North America. First, to Canada, which is a meaningful part of our North American business. Many of our customers continue to deal with constrained cash flows from low natural gas prices and an abundance of projects that are marginally profitable. Our U.S. shale oil production, coupled with decreasing consumption and limited refining and pipeline capacity, is increasing differentials for heavy oil close to $40 a barrel. Considering that break-even prices for new heavy oil projects can be as high as $65 a…

Thank you, Martin. At this point, I'll ask Dawn to open the lines for your questions. [Operator Instructions]

[Operator Instructions] Our first question comes from James West from Barclays.

Martin, in your comments, your prepared comments, a lot of commentary around North America, also in Peter's comments as well. Some of it, I guess, negative. Some of it Baker Hughes specific, positive. As we think about an environment where you are introducing new technologies, you are getting an improving customer mix, you do see the Gulf of Mexico being a good driver of growth. Yet, U.S. land rig count down, maybe completions are up in that scenario, still pricing challenges and pricing weakness spreading out. How should we think about margin progression kind of off of this fourth quarter level? Is that the low? Or are we stuck in this kind of single-digit range? Or should we kind of bounce back off this as we go through the year as some of the positives in your mix and in your business come through?

Well, this is Peter. I'll answer first and maybe Martin can supplement that. But we think the Gaum is going to progress nicely. We've got good share positions there. We've had a 30% increase in revenues last year, and that -- and revenue should continue to move forward in the Gaum. Canada, of course, bounces around with seasonality, should be up in Q1, should be down sharply in Q2, and the second half looks like second half of last year. So that leaves you with 2 other variables, which are the pressure pumping business in U.S. land and our other product lines in U.S. land. And other product lines seem to be holding up in U.S. land, haven't had much pricing pressure there yet, so that's been pretty good. And we expect the rig count to continue to improve throughout the year, so those product lines right now look like they're pretty stable and pretty good. And I think the big variable is what happens in pressure pumping, whether or not pricing continues to decline and outpaces our cost savings. We are expecting guar cost to improve further into Q1, and they did improve in Q4, so that's good. But pricing's been pretty much eating up those savings in recent quarters, so that's the big volatility, and we're not going to try to make a call on that right now.

Okay. So Peter, do you think that given that the rig count -- you just said the rig count to improve that you're greater than, I guess, your peers' exposure to the spot market for pressure pumping? Is it -- would it be a net positive? Or is that a net negative for you?

Well, James, this is Martin. Now we do...

I know it's a tough question.

Well, we do expect the -- as Peter said, the rig count to improve from here on out slightly, more towards the back half of the year than the early part. And -- but on a year-on-year average, it's down. And in terms of the pricing, we have been and continue to be probably still a little bit more exposed to the spot market and that price environment is continuing to weaken. It's not -- I don't think it's found bottom yet. I think it's a tough thing to call. The flip-side of that is we're -- I don't think we have as much price decline opportunity versus, let's say, in operator or service company that's got still a -- more of a contract mix. So with the year-on-year decline in the rigs, a little bit more pricing softness in that particular product line, it's -- as Peter said, it's a little difficult to say exactly where it's going to end up.

Our next question comes from Bill Herbert from Simmons & Company. William A. Herbert - Simmons & Company International, Research Division: Martin, with regard to your international commentary here, it sounds like EAC and MEAP up or expected to be up reasonably nicely in 2013 and Latin America, probably down year-over-year. If I heard you correctly, you said Andean, Mexico, everything but Brazil, only partially offsets the declines in Brazil. So when you -- when that -- how does that distill into an overall international top line growth rate for 2013? Is it high single digits with kind of EAC and the Middle East, Asia Pacific, up maybe high single low double and Latin America, down low single. Is that about right?

Yes, I'd say that's pretty reasonable, Bill. William A. Herbert - Simmons & Company International, Research Division: Okay. And then we didn't talk much about margins. You were flat year-over-year in 2012. Historically, we've talked about kind of the current environment, which is mostly sort of volumetric driven, very selective pricing and hopefully, some mix opportunities as well, distilling into, call it, 20% to 25% incremental margin environment internationally. Is that what we should assume for 2013?

Yes, it might be a bit better than that, but I think that's a reasonable number from here on out. William A. Herbert - Simmons & Company International, Research Division: Okay. And last one for me, Peter, year-end product sales, I think Q4 2011, we witnessed kind of a $50 million contribution quarter-on-quarter. Was that roughly in the ballpark for this fourth quarter? Or was it a bit better than that?

In terms of contribution margin? William A. Herbert - Simmons & Company International, Research Division: No, no, no. In terms of top line fourth quarter versus third quarter.

Oh no, it was better than that. I would say much of the sequential improvement in revenues internationally was year-end product sales, and it's pretty much spread across the 3 regions, pretty strong, I think we said in our remarks in Africa and Russia, strong in Asia Pacific and strong in Latin America. So therefore, we would expect that to reverse out into Q1. William A. Herbert - Simmons & Company International, Research Division: Sure. So the of the $178 million revenue improvement quarter-on-quarter, call it, at least 50% of that was year-end product sales on pretty high incrementals?

Yes, more than 50%.

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

I wanted to -- I want to focus my question on the international front and just get a little color for, first, what kind of drag on margins has Iraq been. If you could put that into context in terms of basis points, that'd be great and then give us some indication -- that'll give us some indication on what we can expect for a tailwind as we go into the second half of the year, specifically in the Middle East as it relates to Middle East/Asia margin.

Kurt, this is Martin. I'm not going to get specific on the basis point impact. I can tell you that, obviously, it's still a drag on the margin. As we said, it's going to continue to be. We're still experiencing some issues with regards to the mobilization and the startup there. A lot of those issues, frankly, are just us on the learning curve, but a lot of them continue to be associated with the difficulty in the lack of transparency with regards to institutional responsibilities and bureaucracy and so forth. Now I'll tell you this, that a lot of issues that we have control over are improving pretty rapidly, and that's being driven by, again, moving up the learning curve. And on the other hand, some of the issues, I think, you're not just hearing it from us with regards to operating there. It's still challenged. But I'll tell you that, we -- as I said, we finished with 7 rigs there. We should probably be mobilizing 2 to 3 more rigs in this quarter, and we expect it will be providing additional EPS for the Middle East region. I mean, So that's the outlook right now.

And Kurt, let me add, we expect our Middle East, Asia-Pacific region to sort of grow the most in terms of revenues and grow the most in terms of margin and much of that is driven by Iraq for the revenue improvement and very high incrementals from here. And so -- and that plays into it, and of course, Saudi also plays into that Middle East equation, too. So let's not forget about Saudi, but Iraq and Saudi will -- we expect to drive very handsome returns by the end of the year.

Okay. Appreciate that additional color, Peter. Maybe as a follow-up question, similar process, kind of different product line, you mentioned that you had some benefit of the guar rolling off, the high-cost situation through your P&L, and then you have pricing kind of eating away at that. Can we just kind of focus on the guar? Can you remind us what you expected to recapture in a gross number from the guar inventory roll off from the high?

I can't, because we never specified the number, but it's a couple of hundred basis points certainly of margin.

So that'd be from your high point to once all the inventory rolled off. Is that way to look?

Yes, that's probably quarter-to-quarter, so that's -- it's even greater than that if you think about high point to low point.

Okay. And Peter, just would that be like 400, 500 basis points in aggregate?

I'm talking about that particular product line. I'm not talking about North American margins general.

Yes, yes, I'm focusing on guar, too. So would that kind of be the order of magnitude?

Yes, that's a little high, but yes, it would be that order of magnitude from high to low.

Our next question comes from Michael Urban from Deutsche Bank.

Wanted to stick with pressure pumping for a second. Given some of the things that you've done over the course of the last year specific to Baker Hughes improving supply chain logistics 24-hour operations, you've given us a pretty good path or outlook here for North America and the U.S., but on an apples-to-apples basis, as that market progresses and hopefully improves at any given level of market demand and pricing, would you expect Baker Hughes margin to be higher?

Yes.

And I mean, if you talked about -- I know you talked about kind of how much it was hurting you at one point, at various points over the last year. I mean, do you have an estimate of roughly what that difference would be, whether that's in basis points and margin or absolute cost or whatever the case may be?

Well, Mike, I can't -- I don't want to quantify by product line in a specific region. I can tell you, as Peter said in his remarks, the non-pressure pumping business for Baker Hughes are -- some of them setting records and just excelling. They're doing fantastic. And this particular product line and the pressure pumping has made tremendous headway, but these headwinds on pricing, it's not over yet. And I just -- it's going to be a drag on the overall North America margin for all of '13 easily. But I think, as you asked in the first part of your question there, at any given point, wherever it maybe in terms of market pricing, we will be better than we were before just given the way we're running the business today around the supply chain, as well as around the efficiency and the type of customers we have where we can have a number of 24-hour fleets that we have now. So walking forward, our -- that particular business, I believe, will perform differentially favorably for us than it will for the market.

Right, makes sense. And then sticking with North America more broadly, talked about the cooperation with CGV, how important is seismic becoming in North America in terms of just getting better by wellbore placement, reservoir optimization? You talked about better integration across the life cycle of a well. And then more broadly, how -- are you able to get access to their best technology and fully integrate that with what you're doing based on the structure of that venture?

Structure of the agreement. The answer to your last part is yes. It's a fully -- no barriers between the 2 organizations in terms of cooperating on behalf of the customer. I'd say that it depends on the customer, which one is more evolved in understanding the reservoir, where they're at in it and how sophisticated they are. But as we said on previous calls, Mike, there is a reinjection of technology into the North American operator culture. There's -- it's -- I'd -- I think as one of our guys termed it, the stage wars are ending. It's now about efficiency and being smart, and I think you're going to see a separation in the customer community as well to the ones that are able to capitalize on, embracing technology and applying it. And you can't be smart about the reservoir if you don't have a seismic component. There is no reservoir understanding without a seismic understanding. And we like what we have with CGG and their recent alignment with Fugro, and their own Hampson and Russell capabilities matched up with our geomechanical and petrophysical capabilities is really helping. I can tell you that we have a waterfall of opportunities since this has been announced, and frankly, we're just trying to sort out the best opportunities and digest them but if the market is ready for this type of hookup.

So that collaboration is sufficient. You don't feel like you need to own it right now?

We don't like big, heavy boats, and so I think we like what we have right now.

Our next question comes from Jim Wicklund from Credit Suisse. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Martin, your comment about moving frac equipment in Saudi were so unconventional. Can you tell me about that?

That's the South part of the kingdom that's called the Jafora basin. It's primarily, as you know, Jim, they call it unconventional there, but it's really, really tight. There is some shale reservoirs. This isn't particularly that, but it will have a lot of the same characteristics of the unconventional. You remember back in February, we had a opening of the unconventional research center in the kingdom. We have now dozens of people working there, as well as embedded in Saudi Aramco, both reservoir people, as well as engineers and so forth. And that frac fleet will go to work hopefully by the end of the quarter. It's kind of being commissioned right now. And the projects, the relationship with Aramco is very good in terms of defining where the wells should be, what kind of wells they should be. We're starting off with just some stratigraphic and delineation wells. But I think you've heard about the rig count expansion that's going to occur in Saudi, and it's a lot of exploration, a lot of just to keep their oil production up or get it up to that 12 million barrels a day, and a large part of it's going to be in this gas area. James Knowlton Wicklund - Crédit Suisse AG, Research Division: We are all very hopeful. There had been talk about how one of the smaller pressure pumping companies had been invited over to the kingdom to look at that, possibly moving frac equipment to do unconventionals at the northern part of the kingdom. Is that the -- do I have that right? Has Aramco been looking for frac capacity in other parts of the country to pursue unconventionals?

It -- I would assume that they probably are, but I'm not aware of any particular company moving in there, Jim, sorry. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Okay. As my follow-up, it's interesting to me the technology discussion that you're starting to have now, which is kind of a shift from where you guys have been for the last while. Is this -- Gaffney Cline's 50th anniversary and all this and your mention of the CGV collaboration, is Baker finally moving into the reservoir digital age after the -- all these years?

Well, I hope we're not in the analog age, let's put it that way. James Knowlton Wicklund - Crédit Suisse AG, Research Division: No, but you guys have lagged. You haven't had a landmark or a WesternGeco, and what you did have in seismic you got rid of. And all of a sudden, I'm now hearing you guys talk about reservoir more than ever before.

Well, I think it's a continuation of -- if you remember, when Chad got here, we recognized the gap we had in understanding the reservoir and yes, whether it was geomechanics international, whether it was RDS, whether it was Gaffney Cline, we've consolidated a pretty strong organization. We're not done. We're going to muscle up that organization more, but also, as I said in my prepared remarks, we're going to increase our spending on R&D because the global customer community, in light of what you're saying, Jim, as ever for -- their appetite's even more ferocious than it's ever been about having the right products to get the job done, and that's because their job is getting a lot tougher to get those reserves. So it plays right into our wheelhouse, and we're going to keep -- we're going to stay the course. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Thought it just sounds like you're accelerating the effort. It sounds great.

Our next question comes from David Anderson from JPMorgan. John David Anderson - JP Morgan Chase & Co, Research Division: You're talking about pressure pumping utilization in the industry, 20%, 25% overcapacity, pricing continuing to go down. Can you talk about your own utilization right now? In the face of the continuing declining pricing, do you keep signing up rigs -- excuse me, do you keep signing up contracts on the fleet? Or do you start to furlough some more here?

No, we don't furlough anymore. As we said, we have a certain percentage of our fleets that's cold stacked. We've actually seen our utilization improve from Q4 into these first few weeks of Q1. We're winning a lot of good work. It's the type of work with the right customers, and what I mean by that is they're near our centers of -- our new R&M centers, and they have a portfolio of rigs and -- that they're able to keep our fleets going 24 hours. So no, I expect -- in fact, our forecast shows more and more stages going throughout the -- 2013, and those are share gains. And we're happy with the work we're winning, I can tell you.

And let me just add. We've talked about rig efficiency even though the rig counts go down year-over-year. It's going up from here, and we expect rig efficiency to improve, so you still see some improvement in well count. And so yes, we are predicting the number of stages going up this year, so that's probably good for everybody and good for us differentially.

And David, I think you guys kind of struggle with the whole pricing thing, but we estimate probably 25% of the work that's being done out there is still under some kind of price agreement or take or pay we never had the luxury of having. As those peel off, then that -- then you're put into the spot market, and the customer's going to try to take it out of your hide. So -- but we didn't enjoy that in the back 12 months. So is our pricing going down? Well, not really, but we're talking to the market price going down. Does that make sense? John David Anderson - JP Morgan Chase & Co, Research Division: Yes, it does. Well, that's what kind of what I'm trying to understand. I'm trying to isolate your U.S. land business in terms of margins. If your utilization is going up and I recognize you on spot market a year ago, at this level of pricing, can you expect the overall U.S. land margins themselves to pick up throughout the year based upon just increased utilization?

Yes, absolutely and the continuing improvements in some of the other cost categories. Yes, they certainly can. Utilization plays a big role outside of pricing. Utilization can affect your margins just as powerfully as pricing can. John David Anderson - JP Morgan Chase & Co, Research Division: Okay. I'm sorry, I'm going to break the rules. I have totally unrelated follow-up. On your CapEx, you talked about 30% lower. Can you, a -- can you first -- can you break out where the CapEx was spent in 2012? And secondarily, you guys have spent -- done a pretty good expansion job over the last 4 or 5 years internationally. Are you stepping back now and kind of look and you're kind of reassessing where you are? Are you thinking about where you're good and where you're not. And are you sort of retrenching certain areas. Can you just explain to us your kind of -- as you look out internationally in terms of the expansion kind of where you are now?

Let me give that a try. Almost half of our CapEx in 2012 was North America. We since dropped that to about 1/3. Our infrastructure spend is gone down a bit, but our rental tool CapEx, as we said, is about flat. And we're operating at record levels internationally. We're operating at the very high levels on U.S. land still for the -- our traditional production lines, which is in rental tools, and so we've got to keep that rental tool spend up. And so that rental tool spend hasn't shifted much really between North America and international. It's just the -- a lot of the pressure pumping investment has declined, and a lot of infrastructure spend is behind us now.

Yes. And let me just add that this -- it doesn't mean that our pressure pumping business is being starved dramatically. There's still a great cementing business there, and the market's expanding for that and the coil market. And there are still, frankly, some stimulation equipment going in to improve our efficiencies in terms of sand kings and some new blender designs and so forth. But in terms of raw horsepower, that's the most dramatic drop, as you would expect, in the CapEx. John David Anderson - JP Morgan Chase & Co, Research Division: And what about your international footprint? Where do you stand on that? Are you kind of reassessing that now? When you institute a geomarket approach, obviously, you expand that to fill out that, but are you now kind of looking at certain areas where maybe you're are not as strong as you should be and maybe pulling back there and reallocating different areas? How are you thinking about that right now?

Yes, we are. We're taking a pretty tough line on certain businesses, either they got to be improved or they got to be exited, and we started that in '12, and we're going to continue on that. And that's just prudent capital discipline and margin discipline. And I just think that's just the way to operate a business relative to, I think, once we did the whole geomarket thing, it was about growth. And we're not giving up on growth, but we're going to take a harder line on returns.

Our next question comes from Jud Bailey from ISI.

A follow-up question on Latin America, I believe you indicated earlier we're probably looking at revenues probably down year-over-year in 2013. Can you help us think about maybe, I don't know, magnitude given some of the losses in Brazil and also how we think about your margins in that environment if revenue is sequentially down? Have you been cutting costs there to kind of maintain margins at current level? Or are we going to see those drop a bit at the start of the year?

We intend to maintain pretty decent margins there. The rig count actually in Latin America is going up, all -- everywhere just about. It's just we're talking about specifically a difference in share in Brazil. That would be going down, we think, for us, and so we think we can make it up elsewhere. So we're not talking about drastic declines in revenue, certainly because we can make it up elsewhere. And we think we can keep margins sort of flattish from here by offsetting some of that Brazil share loss with gains elsewhere so...

Okay. And my follow-up is another region, for Europe, Africa, it sounds like that's probably where you're going to see the most growth behind Middle East. Can help us think about the moving parts there? Obviously, the North Sea is going to be very strong, but you talked about some of your gains in East Africa. Can you help us think about within the geomarket your best revenue growth and maybe margin there as well?

Yes, Jud, this is Martin. Let me -- as Peter, I think, highlighted in his prepared comments, we had some record performance in -- across the world, and I can tell you that, particularly, that was led by, well, smaller Russia Caspian, did exceptionally well in the fourth quarter, and I think some nice contract awards are going to be underway there. In Africa, on all corners, putting North Africa aside right now with the chaos that's unfolding there, but East Africa and our position in Mozambique, our new facilities in Pemba and customers moving in there and some contract awards and of course, our strength in Nigeria and Angola and the Ivory Coast. So I think Africa will lead and compete with Russia Caspian in terms of the specific regional growth there. And then Europe is a massive business force and just a lot of numbers, it's going to be hard to move the needle, but we're in the process of mobilizing on those additional rigs in Norway. And it's such a technology-driven basin, and with some of the products, the steerable drilling liner that I mentioned and some other things, it's -- I wouldn't count out the ability of Norway, in particular, to add some real numbers in 2013. But it's already so big, so in terms of differential, it's not going to be like Africa or Russia Caspian.

Okay. That's a good color. And then in terms of margins, it sounds like some of the work you're talking about can -- I think the number was mentioned in terms of incrementals, maybe 20%, 25% incremental margins. Is that a safe assumption in that market? Or could it be a little higher than that?

We think it could be higher than that if we fire on all cylinders throughout the year.

Our next question comes from Brad Handler from Jefferies & Company. Brad Handler - Jefferies & Company, Inc., Research Division: Let me -- I'll stick with the -- some of the non-North America stuff as well, I guess just seeking whatever additional clarity. Coming back to this notion of kind of high grading and the quality of earnings and Martin, you obviously had a number of references in your comments to that. I guess I'm curious, have you already made decisions about exiting certain countries or certain product lines? Have you already affected those changes?

Yes and no. It's a process. It's a -- I wouldn't want to make -- I wouldn't want you to think that this is some kind of new or I -- it's just the way we're going to run the business. You have to make money or it has to be very clear when you're going to make money or there's no reason to be doing it. We have that same outlook on places as high profile as Iraq. We have a line of sight into where it's going to contribute, and if we can't, it's -- it doesn't make the cut. And we have to take some -- we have to make some decisions. And I think, in response to the earlier question, the way that we emerged out of our reorganization, it just takes time to sort out to see where -- which ones aren't going to make the cut, and only a few years into it, so I -- but I'm not going to be any more specific on that for obvious competitive reasons. But it's part of our mission to get our quality of earnings up and remain disciplined. So I don't want you to make it sound like it's a whole new way of operating or wave here. It's just that we're just going to continue to bring discipline to the numbers. Brad Handler - Jefferies & Company, Inc., Research Division: Sure. No, I understand that. I mean it's helpful. I appreciate you qualifying that for me. Does it -- so should -- as we've talked a little bit about your 2013 growth outlook internationally, did -- would you say it had an impact on others? I think you identified high single-digit, all in, sort a high single-digit revenue target or growth rate target for the year. Do you think it had some impact already in terms of that? Could it have been higher but sacrificing some margin opportunity? I mean would it -- decisions have already been made, I guess, is what I'm asking you to get at for us.

Yes, this is Peter. It's a continuous process, and it didn't contribute much, I think, in 2012. I think there's a little bit more emphasis on it in 2013, and we're counting on some of that to happen perhaps more in 2013 than what occurred in 2012. Brad Handler - Jefferies & Company, Inc., Research Division: Okay, okay. Maybe very unrelated follow-up, but I appreciate some more color on it. Your read on what's happening in Colombia right now because I know that's been a problem area for a few quarters already?

We like our position there, and the permit situation that challenged the service sector over the last couple of quarters seems to be abating. There's been some nice geological success on part of a couple of the customers, got a real professional state oil company there. And so I think '13 will be much better than it was in '12 given some of those bureaucratic things behind us.

Our last question comes from Doug Becker from Bank of America Merrill Lynch.

Martin, just hoping you could take a step back and talk about just some of the self-help initiatives and maybe you've addressed some of these already, but I'm thinking along the lines of supply chain, reliability of tools, just an update on some of these self-help initiatives, major self-help initiatives Baker Hughes has ongoing.

Yes. Well, Doug, look, it's -- I'd say that we're probably at second base with regards to the opportunity around running that business more effectively and efficiently in light of how the markets evolve these unconventionals because as we've learned and as you guys know, logistics is a big driver and the efficiency behind that. So we've made great progress in freight, supply chain in general, which drives the utilization. The staffing numbers, we expect a lot more in terms of stages, but yet, we don't see the headcount going up anywhere near what it would have been under the way the business used to be run frankly. The leadership team that's been injected into that product line is first class. They know the customers. They know how to make money in the business. We're making the right decisions. So -- but the biggest impact and the one that takes the longest because you don't have complete control over it is the customer mix. You got for the wait for the contracts to come up. You got to wait for them to roll. You got to have a facility nearby, and I really like our win rate. I'm not going to comment on it explicitly and give you any kind of numbers, but I am really happy with the type of work, who customers are, where it's at, what the pricing is. And like I say, because we're probably on second base, we got a lot more opportunity through '13 and '14. And then any favorability in terms of pricing, should that occur, will be more impactful, I think, versus the less efficient way we were running the business before.

And this is something you do expect that we'll be able to see. I know there's a lot of moving parts in North America, but we're talking meaningful improvements here in terms of several hundred basis points. Correct?

We made meaningful improvement in '12, which just got tidal waved out because of the pricing situation. And I think we can make meaningful improvement in '13 and '14. Now we don't as many low-hanging fruits as we had in the early stages of, if you remember, Q2 and Q3 of last year, but the numbers, potentials are still there. It just may take a little bit longer to roll out through '13 and into '14.

Okay. And then, Peter, just a quick one, you highlighted the international margins typically declined in the fourth quarter. You talked about some of the product sales and the impact there, talking about a flat U.S. rig count. Is it reasonable to say that first quarter EPS should be below the fourth quarter?

Certainly, Canada, we would expect to improve. You saw -- you see the rig count week by week getting much stronger, so Canada should get its -- a traditional increase. Gulf of Mexico, not much help necessarily into Q1 for us. International, certainly down, and I think the big question mark is pressure pumping and whether or not we're going to get our utilization up in Q1, and I'm not going to call that for you.

So I guess -- I mean, so if I paraphrase, you think there's at least a chance that first quarter could be higher than the fourth quarter?

Sure.

Always a chance.

But there's a lot of volatility there, high beta [ph] there.

But chance is probably the wrong term, a reasonable, realistic chance.

You be the judge of that.

Thank you, and 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 Time, 9:30 a.m. Central Time and will be available through 11:30 p.m. Eastern Time on Wednesday, February 4 -- or February 6, 2013. The number for replay is (888) 843-7419 in the United States or (630) 652-3042 for international calls, and the access code is 33868070. You may now disconnect. Thank you.