Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the Nabors Industries Ltd. Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] And as a reminder, this call is being recorded today, February 19, 2014. I would now like to turn the conference over to Dennis Smith. Please go ahead.

Good morning, everyone, and thank you for joining our fourth quarter and full year 2013 earnings conference call this morning. We will follow our customary format today with Tony Petrello, our Chairman and Chief Executive Officer, providing our perspective on the quarterly and full year results. We will then provide some insight as to how we see our business and markets evolving. To supplement Tony's remarks, we have posted some slides to our website which you can access to follow along, if you desire. They are accessible in 2 ways. If you are participating by webcast, they're available to download within the webcast. Alternatively, you can download them from nabors.com under Investor Relations in the submenu, Events Calendar. And you will find them listed as supporting materials under the conference call listing. With us today, in addition to Tony and myself, are Laura Doerre, our General Counsel; Clark Wood, our Principal Accounting Officer; and all other heads of our various business units. Since much of our remarks today will concern our expectations for the future, they are subject to numerous risk factors as elaborated upon in our 10-K and other filings. These comments constitute forward-looking statements within the meaning of the Securities and Exchange Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements. Now I will turn the call over to Tony to begin.

Thank you, Denny. Good morning. Welcome to the Nabors Industries Conference Call to review results for the fourth quarter of 2013. Thank you all for participating this morning. As Denny mentioned, we have posted the quarterly presentation slides on nabors.com. I will refer to these by slide number during my remarks. Yesterday, we announced our results for the fourth quarter, which exceeded our expectations. Our GAAP earnings per share from continuing operations totaled $0.42 a share. This includes a few nonoperational items that should be considered. These include $0.12 per share of tax benefits related to the fourth quarter impact of our debt tender offer, discrete tax items as favorable geographic mix; second, $9 million or $0.02 per share from the favorable settlement of a previously reserved customer bankruptcy; and third, $5 million or $0.01 per share of lump sum early termination revenue in U.S. Lower 48 business. Collectively, these items account for $0.16 per share, thus, our fourth quarter non-GAAP earnings per share from continuing operations totaled $0.26 per share. The sequential earnings growth we are announcing today, without the impact of early termination revenue and other items, was driven by strong growth in our International Drilling and U.S. Lower 48 Drilling business. In the International segment, our days on revenue once again exceeded our expectations while, in our U.S. Drilling segment, margins benefited from favorable expense variances. In Completion Services, a relatively full pumping calendar through the quarter substantially offset the negative impact of harsh weather in December. Unusually severe winter weather conditions continue to significantly affect our completion operations in our northern operating areas this quarter. I will talk more about that in our outlook. Our Canadian Drilling business remained challenged by generally tougher market. Finally, we incurred increased expenses relating to both our strategic review process,…

[Operator Instructions] And our first question does come from the line of Jim Rollyson with Raymond James. James M. Rollyson - Raymond James & Associates, Inc., Research Division: It's pretty clear that on the newbuild rig market right now in the U.S., the demand remains strong, and it sounds like your backlog order book is going to continue to build. Patterson mentioned on their call a couple of weeks ago, because demand is strong for that type of rig, and obviously supply is just kind of steadily growing, that there's interest in reactivating some of the better SCR rigs. Curious what you guys are seeing in that regard?

As we've mentioned before on the conference calls, I view our SCR, particularly our SCR-Plus rig as a pre-option for Nabors. First, I think it would agree with the comment, particularly with respect to those customers, the same customers on the phone, I'll speak to them, that are looking at lowering well costs in situations where move time is not as important as drill time. And if that's the case, the SCR-Plus rigs are well-suited to that, and are a much more cost-effective solution. And I think that as people focus on economics now as things stabilize a little bit more, you might see more in that direction. Of course, for us, the other point we've been trying to make for a while, was there's built-in optionality of our SCR rigs because those rigs are still the core platform for International. And as you know, with our recent international awards, we sought to tap that inventory base and move it to International. I think we -- between -- and the announcement we've made today, I think I said it was 13 rigs, we're moving international that are SCR rigs. So I think what is challenged is obviously the mechanical rigs and the [ph] SCR rigs. James M. Rollyson - Raymond James & Associates, Inc., Research Division: Makes perfect sense. And as a follow-up, when you go back to your production service, the Completion and Production Service business, you guys obviously talked about the issues in the 1Q between the contract rollovers and the weather, maybe some sense of magnitude of how you see margins trending down in the first quarter, relative to the fourth quarter? And then I presume, we just kind of start building back up from there, is that the thought?

I think as we've indicated in the press release, there's going to be pretty extraordinary hit in the first quarter. We had basically, almost 10 revenue days shut down on all our crews in the northern areas, which are the Northeast and the Rockies. That's 14 crews, of loss of, in revenue for 10 days, and there wasn't a much -- opportunity to mitigate costs for that. And then in addition, as we previously said on the conference calls, we have, rolling over this quarter, we're rolling off of a long-term contract, there was substantial revenue. And we have made efforts to replace that equipment, but that's been a transition of moving that stuff to an new operator, so there's the modifying [ph] there as well. So when you put that all together, it's not just a small hit, it's a pretty big hit in the first quarter. As I said, away from that, we have activities for the fleet, and we think we're getting some good traction with customers and adding to the customer base. James M. Rollyson - Raymond James & Associates, Inc., Research Division: And is that work, Tony, mostly short term in nature, or are you getting a little bit of term with the new customers?

I'll let Ronnie Witherspoon answer that.

I think we're seeing a mix of both. But we strategically looked at client base, as Tony mentioned, we've grown it considerably. And we're really looking at growing with partners that can give us opportunities to increase our pump hours per day so, i.e. people that are going to be doing more and more pad work and even different frac opportunities, and we're seeing that and we think that's going to continue to take place. But again, obviously it's lumpy in the first quarter as for the reasons Tony's described. But as we go forward, we hope that lumpiness settles down and we can maintain a healthy calendar, as we just spoke about.

And our next question does come from the line of Jim Wicklund. Brittany Commins - Crédit Suisse AG, Research Division: This is Brittany in for Jim today. So it seems like, first of all, congratulations on a great quarter. And it seems like you're moving away from an earnings trough, and so which has been your best returns business during the down time, and which typically is the best returns business on an up-cycle?

Well, through the trough, it's actually Completion & Production Services, particularly on the production side in trough years has pretty good returns. And International, when you look at our real cash invested in that, on a net cash flow basis, we've actually pulled off a tremendous amount of cash flow out of a U.S. rig since 2006. But I would say in terms of looking forward, I think we see a great opportunity of improving returns across all 3 segments, because we have a pretty good -- a part of it [indiscernible] as good as it's ever been for the company as a whole, measuring against the markets we're in today. So I'm pretty hopeful we can extract more from these existing asset base, which is where we're seeing some of these numbers coming in from. Brittany Commins - Crédit Suisse AG, Research Division: Excellent. And then secondly, on the International side, there's been a lot of talk of Mexico with their energy reform. Do you see that as an opportunity for you in 2014, maybe 2015?

Absolutely. And I think, in particular, we've commented before that PEMEX is clearly interested in arresting the decline offshore with the Cantarell field. They have a need for several, many more platform rigs. And the platform rigs that Nabors has is uniquely positioned to suit their needs there, and so, there's that. And then there's also with the [indiscernible] opening up of the whole sector there. We see possibly some additional land opportunities.

And our next question does come from the line of Robin Shoemaker with Citi.

I wanted to ask how your scheduling outlook is for the balance of this quarter or second quarter for your Pressure Pumping equipment. And is it looking very -- like you'll continue to have very high-capacity utilization there?

Well, I think, as I mentioned, we have to hit the first month. And now, we start to move the fleet to customers. And as of today, we have 19 fully working -- 20 fully working, so. And we believe there's a book with that. Yes, it's a pretty full canvas. So we believe, in this market as I mentioned, we have the capacity to keep that leasehold busy right now.

Okay. And just in terms of this increased maintenance CapEx, you mentioned longer pumping hours per day and, I guess, longer pumping hours per frac stage, as I understand it. And so can you give a sense of how much of that increases your maintenance CapEx? And as a kind of corollary to that, what is the leadtime now for delivery of engines, transmission fluids that you may need in upgrading your equipment?

Obviously, the increase in pump hours and the more service-intensive that we're going to -- continue to experience as we move into the more 24-hour crews and 24-hour operations, our maintenance CapEx is going to go up. I think, if you look at 2014 compared to '13, it's probably about double what the planned maintenance versus what it was in '13. And that's heavily driven due to the age of the fleet, and what used to take a lot longer to reach 10,000 hours, we've almost cut that in half. And 10,000 hours is usually kind of our limit where we start looking at overhauls and refurbish time for equipment.

I think the point here is that, there's a lot of smaller-sized competitors entering the market, and they're having the same burden. And the cost structure for that is going to [ph] be more impacted. So we think that, that the market, that's going to have a stabilizing effect on pricing, in general.

Okay. And in terms of lead times for delivery of engines, transmissions, et cetera, is that...

For Nabors, on engines, I think we're the largest supplier of engines in the world in this sector. I have a problem with engine in general. On the other frac pieces of equipment today, I don't know of any real shortages available.

And our next question does come from the line of Jim Crandall with Cowen and Company.

Tony, can you -- I don't think I heard you say this on the call, but can you quantify where you are now on asset sales, and how much still to go and what kind of proceeds we can expect to receive from those?

Well, I think I did quantify the aggregate number that I've sold this year and [indiscernible] going forward. In terms of what's left to go, which number is, 6 -- where's the number here, 670 [ph] ? In total achieved so far?

And then, also Tony, the biggest components that are still to go?

Okay. The biggest components, they're still to go are -- we have the E&P probably in Alaska. As you know, we have that property. And then we have the Horn River properties, the 33,000 acres of Horn River properties that's up in Canada. Those are the 2 principal gas assets. In addition, as I've alluded to in the comments here, we don't see, we -- I've said this before, the barge rigs in the Gulf of Mexico and the jackup in the Gulf of Mexico is really core, and we're looking to do something with those rigs as well.

And would you be optimistic that all these events will occur in 2014?

So like -- I've said this to you before, Jim, what I -- I'm telling you what I focused on, and I think that they're focused on, I think I bought across the line, and these now are on my radar, just the way the other thing that came out in 2013. So they are my focuses.

Okay. Is it possible at this point, Tony, to quantify the quarter-to-quarter weakness you're looking for in either domestic or international Contract Drilling in the first quarter?

Well, it's difficult, like I said, I think the best indication of size is the fact that we're losing 10 days of revenue, coupled on top of -- in the Well Service and the Completion side. We're losing 10 days of revenue, coupled with the fact that we have some changeover because of [indiscernible] the big contracts and some other customers. There's a bunch of repositioning costs. So that is a serious amount of money there. It could be $0.04 to $0.05 a share.

And how about the international side?

On the international side, we've been signaling for a while, if you go back and look at our third quarter, operating income number back then, I think we told you that we're expecting a dip through [ph] that in January. And I think those same factors are still at work today. So that should give you some idea of both. Again, that's very difficult to predict. We know the jackup is in the yard, and we're working really hard to make sure it comes out on time, so we don't have any more leakage into the second quarter. On that, I think the team has done a great job of sort of preplanning that and figuring out what the work that has to be done so it get back on rate as quickly as possible. And there are a bunch of rig moves for moving between contracts, et cetera, that will be a cost impact. So those impacts we foresee to be back early in Q3, if you remember back then, we all said Q4 was going to not be -- we didn't expect to do so well, but it gives you an idea we keep focusing on things that we do. That's what we'll do.

Okay, and then my last question is about your domestic Contract Drilling business. Are you finding that you're having -- you're seeing a lot of opportunities for the PACE-X rigs to bid on shorter-term work? One of your competitors mentioned on their call that they weren't building -- they weren't getting a lot of rig orders because they were reluctant to come off of their 2- to 3-year time period. They said there was any real pressure on prices, but more pressure on term. Are you seeing that and how are you responding to that?

Yes, no, this is Joe. Your answer is, yes, there is some reduced term basis, but, however, we welcome that. It's an opportunity for us to put PACE-X out, show the value and begin to move our numbers. So, yes, we're seeing some. But again, the demand for the new, the PACE-X pad drilling continues to increase, so I think it's very positive.

So Joe, is what you're saying is that you are taking or working newbuild PACE-Xs selectively on 1 year or less contracts?

No. No, no, no. I'm just saying, there is some shorter duration, not 5 year, not 3 year, but they're multiyear contracts. And yes, we're working on some of those now, correct.

This is Denny. The average duration on all of our PACE-X rigs is still 2.75 years.

Good, good, okay. And just one more on the PACE-X. Joe, you had a tremendous reception initially when you introduced it, and I say initially, it's still I think tremendous, but as more and more have gotten out into the field, maybe you could give us an update on what you feel performance is out there in the field, and both absolutely and relative to the competitive equipment that's out there?

Well, we're -- of course, the first rigs went in, as you know, went in the Haynesville and they're outperforming anything that's in the market. We've deployed some up into the Northeast. We've deployed them into North Dakota. We've now deploying some into the Scoot [ph] . So a lot of areas we're at, we're not really rigged up next to competitive, or some of the other, I would use your words earlier, of announced terms. Bottom line is, we're moving a couple down now into the Eagle Ford, 1 into West Texas. And we'll get lined up door-to-door with some of our competition. I'll be able to give you a much clearer presentation on that the next discussion, the next board meeting.

I'll do a little bragging for Joe, both in the Scoot [ph] where we're head-to-head against other, the lead competitors, with a sample from a customer performance, PACE-X rig is clearly outperforming. In fact, it's the only rig to have crossed 1,200 feet per day for the wells, for strategic wells there. And in the Bakken, similarly, the PACE-X rigs where we get updates on a head-to-heads with a Cuban customer, comparative performance to the PACE-X, is outperforming. So we're really happy with the PACE-X. We think the concept of making a rig come to start at pad, multi-pad, contemplating the multi-goal trajectory of development drilling in the Lower 48 was the right move for us. And we think the customer reception's going to continue to garner momentum.

Another important point is those are data points for rigs that have been in the field less than 4 to 6 months against rigs [Indiscernible] .

And then, Tony, how many of these, what's your capacity now at building new PACE-X rigs, and what could you go to?

Well, I think right now, as we've announced, we're at 2 a month. But just to give you an idea, Canrig, I think is up to at least multiples of that, 4x that, in the ability to produce top drives. And so we have the ability to scale that, I think, as much of the market at demand. And in fact, we're working at Canrig's infrastructure to provide more of that ability to do with even more quickly. So I don't think that's going to be the issue for us. It's going to be an issue of how, what the market can absorb and what the demand is.

And our next question does come from the line of Mike Urban with Deutsche Bank.

So Tony, you mentioned your focus list earlier in the call, presumably, the strategic review is on that list somewhere. Your board reviewed it, latter part of last year, and presumably gave you some marching orders there. Do you have any update on where you stand in that process, or whether we might be able to get an update on that?

Yes, the update is, that basically, we have some plans underway, and we're actively working on it right now. And soon as they're done, you'll know. I don't want to talk about things that haven't happened yet, but I can assure you that we're focused on figuring out ways to highlight the value inherent in Nabors and have some good ideas on how to do that, and that's what we're going to do, and that's what the board has authorized, and that's what we're currently working on.

And presumably, kind of the better operating performance here, better outlook that we'll be seeing, and that doesn't necessarily preclude anything you're looking to optimize what you have, and then separately, you have this the strategic process that?

Yes. I think the tools from my point of view are complementary. Obviously, whatever we do, whether extraordinary-wise or strategic-wise will only be enhanced by improving the base case and improving the base case is where we have -- that everybody else the company focus whereas by a separate team working on the strategic review and implementing what the board has concluded we should pursue. That's where we are.

And last thing for me was, I would agree with you that we would not expect to see, at least not yet, very much new gas drilling, or drilling of new gas wells. As a leading indicator, though, are you seeing any interest from your customers on the Well Service side, or Production Services side or still not even there yet?

Not really on the production side. I think, no, not yet. I mean, the only thing I would say is, I think we -- our thesis on the production side has been, with the shale wells multiplying in number, with all this shale drilling, that there's a kind of built-in long term demand that's building up. We haven't really seen that demand hit the market yet, in part because I think there may have been a change in the life of the construction of the wells, to better pump setters that require intervention now on a longer period basis. But I think we're expecting is that we're going to be have to be at the age when we get to the new established lifecycle, and there should be an increased demand for those services, intervention [ph] services on those wells, so.

And our next question does come from the line of John Daniel with Simmons & company. John M. Daniel - Simmons & Company International, Research Division: In International, Denny, can you help us with modeling here? If you migrate through '14, would you expect cash margins to get back to the Q4 levels, just given the repricing of the rigs you noted in the release?

Yes, eventually, they will hold, probably be a down a little bit this time, but I think as we get into '15, we'll be taking out the old [indiscernible] pretty constantly. John M. Daniel - Simmons & Company International, Research Division: And then, with Pressure Pumping, you mentioned in the prepared remarks, 14 weeks for 24 hours, 5 for your [ph] daylight, 5 idle, and then -- which 19 working then, but 20 working now. Can you just walk us through what part of street level margins you're targeting to reactivate these fleets? Am I correct that one was reactivated?

That's correct.

What did you think the trend in margins was going to be on the reactivated fleet in general? Is that right, John? John M. Daniel - Simmons & Company International, Research Division: Yes, you can provide any color.

Yes, so, John, I think that's a bit of a mixed bag. Obviously, the margins are going to be largely dictated on, on job design, job mix, the type of volumes we're having, concentrations of sand, chemicals, materials. Obviously, we've run 24-hour operations, run zipper operations, continuous operations. So you see a huge, a wide gamut of things that can change the overall dynamics of your margin, when we start those up. But what we are looking for is continuous work and sustaining that footprint with a strategic client, so we have the opportunity to grow as again, as we mentioned, as Tony mentioned in his notes, that we think we're finally finding a bottom for that pricing. So we want to continue to maintain our strategic footprint to give us that opportunity to grow in the future.

John, the other thing these guys have done controlling costs, and there's still a lot we haven't seen in our numbers yet, but large reductions in the consolidating and overhead, that's in the current run rates, sizably below a year ago. All of this has been obscured by the deteriorating pricing environment, and reducing -- we hit the bottom, and then you haven't seen, really the impact of the stemming the losses that were in, well, $2 million in the Canadian pumping business. So that ought to augur fairly well for the second half of the year. John M. Daniel - Simmons & Company International, Research Division: Is it a reasonable supposition on our part to expect incremental continual audit EBITDA margin, sort of, at least 20%?

I don't know if I want to get on that.

I don't think I've got a note for that yet. I think you can assume that we're taking incremental rigs that are not losers, and that would be long-term profitability. John M. Daniel - Simmons & Company International, Research Division: All right, and then just 2 quick ones for me, and staying with Pressure Pumping for a moment, as you look across the 20 rigs that are working today, I mean, I know there's no take-or-pay contracts per se, but how many of them are under the dedicated pricing arrangement?

Yes, I think probably about half are under dedicated pricing, and then the other half are truly in a, what we call, spot market pricing. And they kind of juggle back and forth between different operators. John M. Daniel - Simmons & Company International, Research Division: Okay. And then -- and Tony, just a big picture one, how important will acquisitions be in the growth plans for this year?

Acquisitions of always been a key part of Nabors' strategy, as you know, that's how we sort of built the case, in the first 20 years I was here. I think for us, what we have promptly [ph] measured is, given our size and our asset base, down our opportunities to deploy capital at sort of defined return, what an acquisition gives us above that base case, and so the hurdle, I would say, given where we are now, is a little higher than it's been in the past. And so, looking at every deal and something that would complement the asset base and would provide some Day 1 cost-savings of some kind, that's synergistic with some customers that were not -- we're already in most of the market throughput, and are in the key markets of the world, as you know. But again, market entrance is not the deciding factor. It's something that would either differentiate us from our product or service. We're at a customer base, and that's the analysis that we are trying to do on the acquisitions and pass that test. [indiscernible] that has anything like that, but it's so.

Our final question comes from the line of Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just two quick ones for me. As I think about modeling the International segment, just given the mix of rig types, Tony or Denny, if I think about the 16 International newbuilds and upgrades that are listed on Page 10 of your slide deck, how should I think about the progression of those, in terms of deployment? And what I'm thinking about it is, all of these newbuild and upgrades are, I'm assuming are going to be accretive to that international segment, daily cash margin. Is that a reasonable way to think about it, in the progressive?

That's exactly right. The bulk of them deploy in the third and fourth quarter. The last of them deploy in the first quarter next year. Some of them -- or 1 or 2 are starting to play right now. I think there's 1 already started to --

Some are starting up in South America this, early -- late this quarter, early next quarter and then you see the progression based on the second tier.

Namely third or fourth quarter but carried over to the next year.

And the contract renewals that are renegotiated are stemming for 3 more years on their anniversaries, and those anniversaries, that renewal occur between March and December this year. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. And with regard to the PACE-X construction program, 24 rigs that are shown there, that are still in the Q, does that include the 9 untapped for this year that had yet to be contracted, or are those 9 incremental to what you're showing on page 10?

Those include the 9. So we deployed 3. We have 8 we're going to deploy the -- we have contracts. We have 9 more for this year and then 4 for next year. Thanks very much, everyone.

Thank you. Ladies and gentlemen, that will conclude the conference for today. We do thank you for your participation. You may now disconnect your lines at this time.