Good day, ladies and gentlemen, and welcome to Halliburton's Second Quarter 2011 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Christian Garcia, Senior Vice President, Investor Relations. Please begin.

Good morning, and welcome to the Halliburton's Second Quarter 2011 Conference Call. Today's call is being webcast and a replay will be available on Halliburton's website for 7 days. The press release announcing the second quarter results is available on the Halliburton website. Joining me today are Dave Lesar, CEO; Mark McCollum, CFO; and Tim Probert, President, Strategy and Corporate Development. I would like to remind our audience that some of today's comments may include forward-looking statements, reflecting Halliburton's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2010, Form 10-Q for the quarter ended March 31, 2011 and recent current reports on Form 8-K. Our comments include non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures are included in the press release announcing the second quarter results, which can be found on our website. Dave?

Thank you, Christian, and good morning, everyone. I'm very pleased with the overall performance of our business in the second quarter. Total revenues of $5.9 billion, which was a new company record, represents 12% growth sequentially. Our operating income grew 43% sequentially, with our North American and international businesses both registering double-digit growth rates. North America continued to experience strong margin growth while our international business saw a modest seasonal recovery from the first quarter. Against prior year, revenue and operating income grew 35% and 52%, respectively, with operating income more than doubling in North America. International revenue surged 9% against the rig count growth of 5%, while operating income declined from prior year level due to the disruptions caused by the turmoil in North Africa and international pricing deterioration. We are now seeing evidence that the international pricing is stabilizing. We believe that steady volume increases should be a precursor for overall international pricing to improve toward the end of the year. We also believe that continued execution of our strategies will lead to margin expansion in both our North America and international businesses and provide us with continued overall strong performance for the remainder of 2011 and beyond. Let me now discuss our operating results in more detail, starting with North America. North America experienced sequential revenue and operating income growth of 16% and 36% in the second quarter compared to a U.S. rig count growth of just 6%. We achieved these results despite weather-related issues in the Bakken and high decrementals we get from the Canadian spring breakup. Sequential incremental operating margin for the quarter was 57%, which is the highest level since the start of the North American recovery in the third quarter of 2009. More importantly, for the first time in many years, incremental margins…

Thanks, Dave, and good morning, everyone. Let me provide you with our second quarter financial highlights. Our revenue in the second quarter was $5.9 billion, up 12% from the first quarter. Total operating income for the second quarter was $1.2 billion, up 43% from the previous quarter. Our results in the second quarter included approximately $11 million in employee separation costs, primarily related to our Europe/Africa/CIS region. Our first quarter results included a charge of approximately $59 million to reserve for certain receivables and inventory in Libya. I'll be comparing our second quarter results sequentially to the first quarter, excluding both the second quarter restructuring charge and the first quarter Libya charge. For North America, we saw our incrementals accelerate in the second quarter as we continued to benefit from the shift to oil and liquids-rich reservoirs. The combination of the greater service intensity of these basins, coupled with higher activity levels from capacity additions and rig count increases have resulted in better fixed cost absorption. We were also able to capture sufficient pricing to offset cost inflation. We believe that we are going to continue to see continued margin expansion in the third quarter, but we expect incrementals will be less than what we experienced in the second quarter due to both cost inflation and lower incrementals in the Gulf of Mexico. For international, we believe that margins will gradually improve from second quarter levels due to increased activity with margin improvement to be weighted toward the latter part of the year. In terms of our segment results, Completion and Production revenue increased $446 million or 14%, while operating income grew by 33%. The sequential incremental operating margin for the division was a healthy 51%, driven primarily by higher activity in North America. Looking at Completion and Production on…

Thanks, Mark, and good morning, everyone. We continue to develop technology innovations designed to improve the efficiency and effectiveness of unconventional resource development. As Dave mentioned, the newly introduced RapidFrac completion system has provided material time savings and production increases, primarily because it allows a more surgical approach to stimulating the lateral and also allows us to reduce water usage. Improving reservoir conductivity is another key objective and has been a focus of ours for some time. We've introduced a range of conductivity enhancers such as SandWedge and Expedite, which provide improved flow powers for hydrocarbons through the fracture, resulting in sustained improvement in production. With some 25,000 treatments worldwide in North America, Asia, Latin America and the Middle East, they're proving their value in a range of operating environments. Further on the innovation path, operators are constantly looking for technologies that maximize their fracture stimulation investment and there's a significant opportunity in building a permanent connection with the maximum amount of reservoir while balancing cost and time to initial production. Halliburton's new access frac uses a basin-specific design process combined with biodegradable and environmentally friendly chemistry to redirect the fracturing slurry into portions of the reservoir not previously treated. Trials have demonstrated much improved well productivity in a wider range of applications than even Halliburton's patented proppant pillar distribution technology used by us and others as a result of this greater stimulated reservoir volume. Now we continue to be very bullish about the global outlook for gas and unconventionals in particular. Last month, the IEA released a special report on natural gas in the global energy mix, projecting gas consumption will rise by more than 50% from today and will account for 25% of world energy consumption by 2035. Importantly, they estimate that unconventional gas resources are now equal to those of conventional fields. Exploration for unconventional resources is underway in many areas outside the U.S., including Mexico, Argentina, Australia and Poland, where here the government has granted 86 concessions and has attracted broad interest from IOCs and independents. In our recent integrated services award for Chevron's drilling program in southeastern Poland, we'll be providing project management in a wide variety of well construction and stimulation services for this 3-year contract. Worldwide natural gas development, both conventional and unconventional, will be an important component of the upcoming international cycle, and we believe this secular trend will be a key driver in our future prospects. Dave?

Thank you, Tim. Let me just quickly summarize. Our contract wins in key Eastern Hemisphere markets should allow us to expand our international margins in 2012 by introducing incremental technology. Our visibility in North America suggests a prolonged cycle with opportunities to improve our revenue and margins further. So at this point, we believe that these improvements in North America, plus the international recovery, will lead us to a more favorable earnings picture during the second half of the year and into 2012. So let's open it up for questions now.

[Operator Instructions] Our first question comes from David Anderson with JPMorgan. John Anderson - JP Morgan Chase & Co: As you start thinking about the strength of the North American markets in 2012, it appears that pressure pumping and other services still are the gating factor in rig count growth. But how concerned are you now about the kind of the pace of new build rigs out there? We've talked a lot about rig count kind of being restrained 10% to 15%. But how great a risk is there that rigs all of a sudden become that gating factor perhaps in the second half of '12?

Dave, this is Tim. I think that's possible, but the one thing that we're seeing is tremendous efficiency gains in terms of the overall drilling process, the well construction process, if you like. It's been quite impressive. I mean we're drilling laterals now up to 10,000 feet or so, and the degree of efficiency has, I think, been quite surprising to all. So I am frankly less concerned about rig supply today than I probably was 2 or 3 quarters ago. John Anderson - JP Morgan Chase & Co: And then, I guess, just following up on that North American side. Obviously, a very different market today than we were back in '06, '07, '08. How different is your strategy now in terms of kind of as you're looking at, say, pricing increases or perhaps how you're looking at cost or how you're actually adding in capacity? Is that -- how has your thinking evolved over the last time to really kind of in order to keep that kind of margins continuing to go progressively higher?

Dave, this is Mark. I think that probably the most marked difference in our strategy this time than last was, in the last cycle, we probably were more myopically focused on strictly increasing price to maximize margins. And I think this time around, what we're trying to do is to think more holistically about our position in the marketplace to develop a strategy where our pricing reflects value add to our customers, not only in the ability to integrate the products and services that we have so that it's -- so that our pricing model is lifting all of our product service lines, but also thinking about the returns that our customers are getting from the work that we're doing in each of the basins that they're working. Dave made a comment about our thinking about the dry gas basins in helping our customers there. And while I think that the difference in margins that we are receiving today have leveled out between those various basins, as we just think about that, we're covering our costs certainly and we're getting a little bit more pricing, but we're trying to add equipment on a customer-specific basis to address that they -- the work that they're presenting to us. We're trying to work with them in what I call a very symbiotic way to maximize their value, and I think that it's -- this type of environment is lifting all boats. So we're seeing margin increases. We're seeing, as we look out ahead, the number of customers coming forward with even more robust drilling programs, extending the relationships that we have with them not only through the end of this year, but the end of next year and beyond. And so at least from our view, there's still the ability to add capacity into this market. There's still a lot of work to be done. There's still a lot more value to add. And I think as a result, what we'll see is continued not only top line growth, but marginal growth as well. John Anderson - JP Morgan Chase & Co: And there's still ability to add pricing as well?

Yes. But I think, again, we're trying to add price and making sure that we're covering our costs, but we're -- it's not all about just adding price for price sake.

Our next question comes from Doug Becker with Bank of America.

I want to touch base on the international margins. I think in the last call it was mentioned that there was the potential to get to 2010 levels late in the year. Is that still a realistic expectation given the second quarter results?

Doug, this is Mark again. I think that the way we look at trying to reach that margins that we had at the end of last year is still the goal for us. That's what we're working toward. Obviously, it's going to be very, very dependent upon recovery of some of the markets that Dave spoke to, the overall general economic recovery and the overall pricing environment, but we're still working toward it. But it's going to be challenging, we know that. And it's going to get -- we need some help from the markets to get there.

So I guess we -- the impact was talked about, I guess, 400 basis points, and certainly Libya and Algeria would seem to have limited visibility in those. Could those -- I guess what percentage of the Sub-Sahara Africa, the fixed cost structure in the U.K., how much of that 400 basis points would those 2 account for?

Doug, I don't know that I have that on the top of my head. We'll have to just kind of think through it. But obviously, it's not a small increment. I mean, those are -- they're smaller markets, but they're widespread and -- but I think as you think about Africa, the Libya market, the Algeria, those are all the largest markets in Africa. They'll definitely continue to be a drag as long as the conflicts there and the political issues persist.

Okay. And then in the past, you've mentioned the number of uncompleted wells or at least your estimate. Any update to that number?

Yes. I think in the last quarter, we said there were about 3,500 wells and that -- we know that, that has crept up and probably will continue to incrementally creep up towards the end of the year.

Our next question comes from Kurt Hallead with RBC.

The question I would have is on the sliding sleeve technology, you referenced that there's been a significant increase in efficiency and productivity. Just wondering what you guys may think that means from an industry standpoint. Or is that going to lead to too much, say, equipment-related capacity if the fracture becomes more efficient? And is this a Bakken-specific opportunity? It sounded like it isn't. So I'm just trying to gauge, with the increase in efficiency, how this all translates in your mind to a supply-demand balance as we head out into 2012.

Kurt, this is Tim. Yes, I mean, we're very pleased with the performance of RapidFrac to date and it's really providing some significant improvements in sort of well-to-well times for us and our customers. And there's no doubt that it allows us to be more efficient in what we do and allows us to optimize the performance of our fleets. But that's not something that we see spreading to the industry in general. I think this is something that Halliburton intends to capture for ourselves. So I don't see it having a broad impact on the industry at large.

Okay. And then Dave, maybe a follow-up for you. You referenced that the pace and magnitude of pricing improvement internationally will largely depend on some macro factors and I know how close you are to your large international customers. So what kind of hesitation or are your customers showing any reason to hesitate on their spending plans internationally? Are they getting cold feet or are they moving pretty aggressively forward?

I think, Kurt, a couple things. One is we're finally, I think, getting past the reengineering look and the process assurance look that a number of our customers were doing post-Macondo with respect to their offshore development. I think liquids prices are at a sufficient level that would allow these projects to go forward. These projects are getting sanctioned. They're getting final investment decisions in a positive way. It's really just how quickly the industry can gear up for some of these major projects. They're coming. Now whether they'll start toward the back end of this year or into 2012, they are definitely there. They're definitely coming at us, and we should get the benefit of equipment basically being picked up and put to work at that point in time. So I'm pretty optimistic that, that's all going to fall to the service industry's advantage.

Our next question comes from Brad Handler with Crédit Suisse. Brad Handler - Crédit Suisse AG: Perhaps first to Dave just to come back to your comments on kind of where incremental margins are headed over the next couple quarters in North America. Perhaps you can parse out just how much the Gulf of Mexico contributed to that, to the 57% in the second quarter. So in other words, maybe if we just looked at the U.S. land business on its own, can you share the incrementals there?

I don't know that I want to share exactly the incrementals -- Brad, this is Mark. But the Gulf of Mexico incrementals were much higher than the U.S. land incrementals during the quarter. But again, we're coming off a very, very low base. And so I wouldn't expect that, that will continue as activity levels out there. And of course, we highlighted the fact that we are somewhat concerned that the pace of permit approvals have been slowing down quite a bit, and if you -- most of these permits were for single wells. That work's underway. At some point here, those are going to start wrapping up and the question is, what's next? And so we need that pace to pick up if we want to continue to expand the Gulf of Mexico operations. Brad Handler - Crédit Suisse AG: Understood. All right. I guess as a follow-up, if I stick with the U.S. land side of the business, you mentioned some cost creep impacting kind of the opportunity to raise margins. I understand that. But can you comment on the opportunities for volume, maybe sort of revenue per rig as you see it over the second half of the year but on a volume side?

Yes, I think -- this is Dave. Let me take the first shot at that. Certainly, with the frac equipment being a serious gating issue right now, our ability to pull through other services, I think, was really demonstrated this quarter. And I think it was easy to overlook one of the comments I made in that our incremental margins on our Drilling and Evaluation business in North America were basically the same as our Completion and Production. And so I think the pull-through is one. Adding capacity is certainly something we're doing in all of our product lines in North America. And obviously, we are well past the point where we have absorbed our fixed cost. So that should also have an ability to increase our margins without any pricing impact. We also are looking at -- on things like fuel or diesel, things like that, either going to customer furnished or to a peer pass-through on some of these things. So I would say there's a lot of moving pieces, but all of them added together gives us confidence that we should be able to expand our margins and our absolute operating income.

Our next question comes from Ole Slorer with Morgan Stanley.

Congratulations in taking a significant share of international work in line with what you highlighted at your Capital Markets Day back in the fall. But could you sort of readdress a little bit where you stand right now on your strategy on market share relative to margin expansion?

Yes, this is Tim. I think that, as Dave said on this call, I mean, as we outlined to all of you during our Analyst Day, we're very focused on some specific areas, one of them being an area we felt that historically that we had underserved as a company for a variety of reasons, and that one being deepwater . And I think that was driven by a number of factors, including the availability to provide our customers with some of the technology which they required, and we worked hard on that as you know. And so I think that we've been very pleased with our win rate. We have gotten ourselves to a position that I think we feel fairly comfortable with, with respect to deepwater. And I think for us now the focus is on execution to make sure that we execute well, and we're confident we'll do that. And I think secondly, as Dave mentioned, I mean, lots of rhetoric around pricing out there in the market, but I stand by what Dave said. For every contract that someone whines about, I think I can demonstrate at least 1 or 2 where the offers they may be true with another competitor. So I think that's just in the noise.

Ole, this is Mark. Let me add to Tim's comments. You saw obviously, we took a restructuring charge in the quarter related to some employee separation costs. It was primarily focused in the part of the world that Dave highlighted were places where we were struggling a bit with our costs. Then I think that sort of lends to what Tim said that we are beginning to focus on margins. We've also been highlighting on a quarterly basis over the last several quarters the initiatives that were underway to -- part of those initiatives are addressing our North American service platform and reducing costs there. But there's a big chunk of that that's also addressing our supply chain and our manufacturing and technology delivery in the Eastern Hemisphere as well, and the headline on those is that's all designed to make us much more cost-effective and reduce our cost platform, service delivery platform in the Eastern Hemisphere as well. So all of these taken together are designed to sort of focus in on the cost side. And, of course, now as we get these projects underway, we've got the ability to begin to pull through other services, to add incremental high-value technologies that should allow us to expand the top line just as well. So it's definitely -- it's time to -- and we're focused on margins.

Okay. It sounds that you have gained the position that you want to have and it's about defending and it's about being more efficient and it's about getting more margin out of what you're doing. Is that correct?

That's absolutely right.

Another question on North America. You highlighted 2 constraints: people and proppants. I think we're all familiar with the people. But could you highlight a little bit what it means to be constrained on the proppant side and what you're doing about it?

I think, as you know, Ole, we have taken a fairly aggressive stance in terms of building capital equipment to satisfy what has been a gating issue in North America for stimulation equipment. And hand in glove with that, we have developed what I think is an extremely robust supply chain strategy, which our North America operations have executed. And that included -- has included investing in our supply chain to make sure that our supply chain can support our requirements. And that includes their specific investments in terms of providing proppant and our specific investments in making sure that we can get it to the well site effectively, and that includes obviously sand plants, transportation, et cetera, et cetera. So I think that there are clearly shortages in North America today, and there are some disruptions that I think certain service providers have experienced. I think we feel very good about our supply system and I think that making that investment, hand in glove with our capital investment, has paid dividends for us in the last quarter or so.

And so we're pumping about 1.3 billion pounds of proppants a month today. The entire industry pumped about 3 billion pounds in 2000. So I mean, it's quite dramatically different and we're obviously working to make sure that we have the proppant in the right place, the right proppant in the right place at the right time. It's obviously a very big challenge for the industry.

Our next question comes from Bill Herbert with Simmons & Company. William Herbert - Simmons & Company International: Mark, with regard to North American incrementals, I get the message with regard to a less robust rate of change in the third quarter for the Gulf of Mexico. On the other hand, you got Canada coming back. I know it's small for you guys, but when you distill it all into a conclusion, net pricing continues to be forthcoming, notwithstanding cost of goods sold, inflation, new frac equipment pricing, Canada up and Gulf of Mexico more muted. Are we in a range where incrementals are better than typical volumetric incrementals of, call it, 30% to 35%, but well off what we saw in the second quarter?

Yes. I think that you've probably got it targeted right. I mean, I think that, that should continue. But as you rightly said, Canada does -- is not going to really replace what potentially were the incrementals in the Gulf and I think that's going to be a big factor in this. And I think that you have some level of seasonal recovery that happens in Q2 that we offset from Q1 that probably played an impact in the incrementals this quarter that won't repeat. So I think you're absolutely right. As you think about the capacity additions and where those gross margins come in, the fact that we will get a higher fixed cost absorption will probably make it a little bit higher than the average margins today. William Herbert - Simmons & Company International: Okay. So it's not necessarily unreasonable to think about something in the 40% range?

I'm not going to give you any information on that. You'll have to pick your number. William Herbert - Simmons & Company International: Okay. I think I've already done that, but that's okay. And then secondly, with regard to international, you guys have been pretty consistent here with regard to the pace of international recovery, which is basically labored. And you're starting to refine your cost structure internationally. I guess to right-size to the expected environment and some of the dislocations that we talked about. With regard to the pricing initiatives that we -- that perhaps will be forthcoming late this year, probably not a P&L impact, but should we -- sometime this year, but should we expect the P&L impact from some of these pricing gains perhaps in 2012?

Yes. This is Tim, Bill. I think it's sort of helpful when we talk about this to sort of go back and sort of take a look at what is the fundamental driver for our business, which is rig count. And if we look in the short term back just over the last quarter, quarter-on-quarter, both land and offshore rig count is down about 2%. So that kind of demonstrates the labored nature of the recovery. And when we take a look at sort of year-on-year, you start to see some other pictures. On land, obviously, we've got Libya which declines a whole bunch; Asia/Pacific, flat; middle East is up; and Latin America was up. So it stands to reason to us that when you start to think about where you might exercise some increased pricing power, it's going to be in those areas where you've got a trajectory change in rig count. That means Latin America and that primarily is restricted to Brazil, Venezuela, Colombia. But Brazil, as we all know, is a very tightly managed market, and the ability to move margins there is more restricted perhaps than in other areas. And then in the Middle East where we've seen, obviously, big declines in Yemen. Saudi, in fact, is down year-to-year on land at least. And we're seeing some sizable increases in Kuwait with a restoration of Egyptian activity. So in terms of just kind of giving you a sense and a feel for what has to happen, we have to see a trajectory change and it's only in those areas where we're going to see a movement in rig count, which is going to drive that. So we feel, to answer your last point, that yes, we're starting to see some stability in these certain markets, starting to see that trajectory change in the markets that I've discussed seem to be, to us, the most likely ones where we'll see some ability to move price. William Herbert - Simmons & Company International: And when we talk about moving price, Tim, are we talking about gross pricing or net pricing?

Volume becomes a precursor to pricing change, and as Dave outlined, I think with a couple of good examples, of which we have many, the first opportunity that generally is in the area of scope change, where operators may feel the need to expand scope to achieve certain objectives. And so what you'll see is volume, which obviously helps drive margin, accompanied by scope change. And then the third block in the chain, if you like, is our real changes in price.

Our next question comes from Angie Sedita with UBS.

First, going back to the U.S. and the pressure pumping market, Dave. Your thoughts on your pressure pumping capacity additions that you could see in 2012, could you add as much capacity in '12 as you did in 2011?

Angie, this is Mark. I don't know that we want to give any information yet about that. We're going to be actually visiting with our board later this week to begin talking about our general views on the market. But maybe just closing and say it's fair to say, you heard our comments, it does not appear to us that this market is slowing down in any way. And so that may frame how the discussion goes. But I don't think at this point, we're in a position to say.

All right. All right. A partial answer, I'll take it. And then also, the only relatively important segment that Halliburton does not operate in today is artificial lift. Strategically, do you believe that you need to be in this segment long term? And if so, what you consider your viable options to get into this business?

Well, I think that historically I would say that artificial lift has generally historically been considered to be a relatively stand-alone business. I think that, as you all know, whether it's on the well construction side, whether it's on the completion side or the stimulation side in general, the degree of integration which is either requested by customers or desirable from a service operator standpoint, is significant, and we continue to invest a significant amount in trying to improve efficiency and effectiveness. So I think as you look forward over the next 5 years or so, the degree of integration in all aspects of the completion, including artificial lift, intelligent wells, et cetera, will become a more important factor. As to how we plan to address that, Angie, I'm afraid that, that's something we prefer not to chat about.

All right. And then finally on pricing in the international markets, you cited clearly that we're going to see a little bit of strength ultimately in the Middle East, parts of Latin America. Give us your thoughts on the rest of the markets, when can we see pricing? Is it not until the second half of 2012 in areas such as Southeast Asia, Russia, West Africa? Just a little color there.

I mean, we still -- Angie, this is Tim again. I mean, obviously, I have to go back to the basics, which is the rig count, and we have to see rig count and trajectory change to see the potential for pricing. And I think we've been pretty consistent in terms of our dialogue on a quarterly basis about the pace of the recovery and the fact that we have always felt that it's going to be somewhat sluggish. And that absent certain areas and deepwater that we've just discussed, I think we -- the jury is still out. I mean, look at some of these areas, the rig count changes just haven't happened yet, and I think we feel certainly more bullish as we look out. I would say that in general if we look at our quotation activity, it's coming through the system, we feel more positive about some of the areas you've just described. But it's going to require those rig activities to come through.

I was also going to add, it's also going to make a big difference on how our competitors behave because in some of those markets, there's still -- we're seeing our competitors continue to keep prices low.

So still a very difficult market competitively?

Yes.

Our next question comes from Jim Crandell with Dahlman Rose. James Crandell - Dahlman Rose & Company, LLC: My first question has to do with the fracturing market in the U.S. And I was wondering if you could take just the major markets there and describe how you think supply demand has changed, if it's changed, both in the big oil basins such as Eagle Ford or liquids-rich basins, Permian, Bakken, et cetera. And then how things might have changed in areas like the Haynesville and Marcellus?

Yes, Jim, this is Dave. I think it's basically a tale of 2 cities. Any of the liquids plays, be it the Bakken, the Eagle Ford, the liquids ends of the Marcellus, they are all continue to be undersupplied and in some cases, undersupplied dramatically from a fracturing market. In some of the dry gas basins, we're starting to see competitors leave. We understand, I think, that we heard the other day that one of our major competitors has, I believe, has left Kilgore, or somewhere in the Haynesville. We are not leaving those markets, as I've said before. We have found, I think, a business model that would allow us to stay there with our customers and make the kind of returns that they want and the kind of returns we want. But I think that if you think about the dry gas basins, I would say, they're probably at equilibrium. And the oil basins or liquids basins, they all continue to be underserved. James Crandell - Dahlman Rose & Company, LLC: Dave, might you, in looking at the market that you've indicated that you intend to stay in the Haynesville. But if pricing in the Haynesville does come off in here and it just continues to strengthen, might you take equipment out of those markets and move them into the oil markets?

Yes. As I said, Jim, I mean we have to find a business model that works for both sides. We are not going to leave equipment in a market that doesn't give us the kind of returns we want. So we will search for that model with a specific subset of customers. And if we get there, we'll stay. But if we don't get there, we will go to the liquids-rich play.

And we're bringing our costs down, as we speak, so that could be a ways off. James Crandell - Dahlman Rose & Company, LLC: Okay. And then just one last question related to that, Dave. In the areas that are very strong, let's just take the Eagle Ford example, are you attempting in that region to package your -- I don't know if package is the right word, but sell your entire product line and package other products with pressure pumping services as far as part of the pressure pumping contract?

Yes, absolutely. James Crandell - Dahlman Rose & Company, LLC: Okay. So that's a strategy. That's not just the case in the Haynesville, but it's the case across the board in the U.S.?

No. I think that anywhere where there is a market underserved by frac equipment and we have our other product lines, which we do, we will insist on some or most of our other product lines being involved with that customer.

We're even beginning to see some cases where our D&E product service lines are pulling through our frac work. It's actually turning the opposite way now. Yes, absolutely a strategy.

Our final question comes from Jeff Tillery with Tudor, Pickering. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc.: You guys are clearly optimistic about the business. The $3 billion CapEx number you guys have targeted and talked about this year, you've underspent a little bit. I'm just trying to understand is there -- are you running into bottlenecks in which you can -- is $3 billion the maximum you could realistically get through the Halliburton system? And if not, what would take that number to $3.5 billion or $4 billion?

No, no. There's no general constraints. I think it's just the pace of how things work through the system. Typically, when you approve your budget, it takes a little while for things to get mobilized. We do expect our CapEx for the entire year to probably be a little bit higher than $3 billion. I'm sort of currently forecasting maybe $3.1 billion to $3.2 billion for the year and it'll just -- as we go through the year, things will accelerate just a bit. So yes, no real bottlenecks at all. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc.: All right. Understood. A quick follow-up question. Mark, you've mentioned some unusual Latin American costs in a couple of countries. Could you just provide a little color on that?

Obviously, there's some -- as we look across Latin America, there are small dollars that add up over the course of several ones. And there were some in Argentina related to personnel costs. They're somewhat unusual. I do not expect them to be a long-term added cost. It's just something that we had to deal with from an accounting standpoint. And then in Colombia as well, we had some unusual costs. There was -- we had some equipment problems due to -- had a loss there that we just had to take care of and clean up. And so my own view is that as we look forward, part of the confidence that I have that margins will improve is also that some of these costs will not repeat over the long term.

Okay. So before we close, we'd like to announce that our third quarter earnings call will be held on Monday, October 17 at 8:00 a.m. Central, 9:00 a.m. Eastern Time. Shawn, please close out the call.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Everyone, have a wonderful day. Thank you.