Richard LeBlanc - VP of IR Jay W. Swent III - Sr.

VP and CFO Daniel W. Rabun - Chairman, President and CEO Philip J.

Saile - Sr. VP, Operations

Collin Gerry - Raymond James Dan Pickering - Tudor Pickering & Co. Robin Shoemaker - Bear Stearns Arun Jayaram - Credit Suisse Pierre Conner - Capital One David Smith - J.P.

Morgan Geoff Kieburtz - Citigroup Tom Curran - Wachovia Securities Roger Read - Natixis Bleichroeder Inc. Waqar Syed - Tristone Capital, Inc.

Michael Drickamer - Morgan Keegan & Company, Inc. Philip Dodge - Stanford Financial Group

Thank you, Patricia. I'd like to thank everyone for joining us today.

With me in Dallas are Dan Rabun, our Chief Executive Officer; Jay Swent, our Chief Financial Officer as well as other members of our executive management team. This morning we released our earnings announcement and filed our 8-K with the SEC.

We also expect to file our 10-Q later today. The earnings release is available on our website www.enscous.com where you can also find a reconciliation to any non-GAAP financial measures that may be used on this call.

As usual we'll keep our call to about an hour. Jay will first provide a financial overview.

Dan will then discuss our markets and operations. I'd like to remind everyone that any comments we make today about our expectations of future events are forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995.

All such statements are subject to risks and uncertainties and many factors could cause actual results to differ materially. We refer you to our earnings release and SEC filings available on our website which defines such forward-looking statements, that the company undertakes no duty to update any such statement and risk factors which could cause actual results to differ materially from our expectations.

I'd also like to remind everyone that with regard to our rig status a detailed listing is provided on our website and is updated at the middle of each month when we file our 8-K with the SEC. The last update was as of April 15.

At the end of our prepared remarks we will have some time for questions. With that let me turn it over to Jay.

Thank you, Richard. Good morning and thank you all for joining us today.

We are pleased to report another record quarter with net income of 17% from prior year levels to $272 million and earnings per share up 23% to $1.90. Our year-over-year improvement reflects higher day rates for our international jackup fleet.

The addition of our newbuild jackup ENSCO 108 which commenced operations in May 2007 and significant day rate improvement on ENSCO 7500, our deepwater semi. There is one non-routine item included in this quarter's results that merit some discussion.

We recorded a $3.1 million impairment charge in other income and expense related to auction rates securities that we hold in our investment portfolio. Given the current lack of liquidity in the auction rate securities market we took what we believed is a conservative position and recorded an impairment charge.

It's important to note that this impairment is not related to the underlying credit worthiness of the issuers all of which are of very high quality but reflects the current illiquidity in the market. We have classified most of these securities as long term investments but plan to sell them as the market improves.

With regard to our share repurchase program we did not conclude any share repurchases during the quarter as we were addressing a number of issues, most importantly the ENSCO 8504 newbuild that we announced this morning. Now let's look more closely at first quarter's specifics.

Here we will compare first quarter 2008 sequentially to fourth quarter 2007. First quarter revenue increased by 10% from fourth quarter 2007 levels.

I'll review the details of this improvement in just a moment when we discuss the regional breakdown in results. Contract drilling expense increased to $190.7 million in the first quarter compared to a 173.8 million in the last quarter.

Labor increases represent about one third of this growth and the balance comes from repair and maintenance and mobilization expense increases. Labor costs were up as a result of wage increases we implemented during the quarter for many of our offshore personnel and the weakening U.S.

dollar which is negatively impacting our international payrolls that are tied to currencies other than the U.S. dollar.

We also completed maintenance and repair projects during the quarter on several of our Asia Pacific jackups and we began amortizing mobilization expenses on ENSCO 100 and ENSCO 85 following their relocations. G&A expense and depreciation were both consistent with our earlier guidance.

Our first quarter effective tax rate was 18.5% generally in line with the guidance given last quarter. Now let's look more specifically at first quarter results in each of our major geographic markets.

The average day rate for our Asia Pacific jackups was $143,300, a 5% increase compared to the fourth quarter, largely attributable to significant day rate increases on ENSCO 51, 52 and 67. Each of these rigs realized day rate increases of approximately 40% as older contracts expired and customers elected to exercise market priced options or in one case the rig commenced work for a new customer at current market day rates.

Asia-Pacific Jackup rig utilization was 97%, down slightly from 99% last quarter reflecting the repair and maintenance activity mentioned previously. The average day rate for our Europe Africa fleet was $213,100, little changed from the fourth quarter levels.

Utilization in our Europe Africa fleet increased to 99% this quarter, up from 89% in the fourth quarter, largely due to commencement of ENSCO 100 operations in the North Sea. Day rates for our North and South America jackup rigs averaged $89,400 in the first quarter compared to 88,600 in the fourth quarter.

North and South America jackup utilization improved significantly to 92% from 75% in the fourth quarter. ENSCO 81 commenced operations in Mexico early in the quarter and ENSCO 93 returned to service in March following a significant upgrade.

In addition, we saw a generally higher activity across the entire Gulf of Mexico jackup fleet. ENSCO 7500 worked during the fourth quarter 2007 at an average day rate of $201,000 per day.

During the first quarter the rig averaged 280,000 and we expect it to work for $370,000 per day during the second quarter. Now let's turn to the outlook for the second quarter of 2008.

We expect second quarter revenue to increase by approximately 6% from first quarter levels primarily due to higher day rates and utilization for our Gulf of Mexico jackups, higher revenue from our North Sea fleet following ENSCO 85's relocation to Tunisia, and a 25% day rate increase on ENSCO 92 in the North Sea. We anticipate second quarter contract drilling expense will increase by 10 to 12% with about two-thirds of this increase due to repair and maintenance projects, some of which slipped from first quarter into second quarter.

As we mentioned in our last earnings conference call, contract drilling expense is front end loaded in 2008 as we address a number of inspections and repair and maintenance projects on several international rigs during the first half of the year. In addition, we will incur a full quarter of wage increases that we implemented during the first quarter 2008.

Second quarter G&A expense is expected to increase slightly to approximately $14 million. We anticipate second quarter depreciation expense will be approximately $50 million, and we expect our effective tax rate to be about 18% generally in line with first quarter levels.

Now a few comments on full year 2008. Our outlook for shipyard days remains unchanged from last quarter's conference call.

We expect shipyard days associated with enhancement projects to be approximately 63 days in 2008. The 2008 shipyard days primarily relate to ENSCO 93 upgrade which was completed in March, which is down considerably from 442 days in 2007 and 491 days in 2006.

I should point it out that our estimate does not include rig inspections or repair and maintenance projects which we update in our monthly rig status report. Please also note this estimate does not include any potential shipyard time associated with rig relocations that might materialize over the course of the year.

We expect 2008 contract drilling expense to increase by approximately 15%, a slight increase from the 12 to 13% guidance given last quarter. Over one half of this 15% increase is labor related due in part to a need to respond competitively to labor market pressures and as a result of the weakening U.S.

dollar. Some of these cost increases are recoverable through the cost escalation provisions included in many of our international jackup contracts and our deepwater semi contracts.

As indicated last quarter, we expect depreciation expense to be approximately $200 million for the year and G&A expense to be in the range of 53 to $55 million. We expect our full year effective tax rate to be approximately 18%, down slightly from our earlier guidance.

2008 capital spending, excluding ENSCO 8504, should be in generally in line with last quarter's guidance of $565 million. 430 million of this amount represents payments on our four new deepwater rigs that are now under construction.

We also expect to spend about 25 million for rig enhancement projects and $110 million for sustaining projects this year. The ENSCO 8504 construction contract that we announced this morning will add approximately $115 million to our 2008 CapEx budget, bringing the total to $680,000.

With those comments, I'll now turn the call over to Dan.

Thank you, Jay and good morning everyone. We are very pleased with our first quarter results and fully expect 2008 to be another record year for ENSCO.

First, I will discuss recent developments and then follow the same format as last quarter's call and provide some insight into our markets and current operations. I'll refer you to our monthly contract status report filed nine days ago for specific rig details.

In March, we announced a receipt of a letter of intent for ENSCO 8503. We expect to have a definitive contract in place very soon for an initial two year term at a day rate of $510,000.

With our efficient low cost rig construction we believe this day rate will provide an industry leading return on our investment. Several years ago we decided that a key element of our long-term strategic plan was to expand within the deepwater sector.

As most of you are aware we've acted on our plan and currently have four ultra-deepwater semis under construction. Because of the unprecedented demand for deepwater drilling equipment we continue to evaluate additional opportunities to increase our deepwater fleet.

As noted in our new release this morning our Board of Directors has authorized us to proceed with the construction of a fifth ENSCO 8500 series semi. We are finalizing the pricing on the rig and currently estimate construction costs at approximately $515 million with the delivery date in the second half of 2011.

Subject to the negotiation of a mutually acceptable construction contract with Keppel Fels in Singapore we should be in a position to place a firm order in the next few weeks. Deepwater has become very important to our business and we currently estimate that in all five of our new rigs [ph] delivered over one quarter of our revenues will come from our deepwater assets.

As reported in our most recent contract status report, we expect to take delivery of the first of these semis ENSCO 8500 in the third quarter of this year, however will be late in the quarter due to some delays [indiscernible] as we finalize rig completion. After the rig is delivered it will take approximately 90 days to let out of Gulf of Mexico where we will prepare to commence operations in mid first quarter of 2009.

We are pleased to report that construction on our other three 8500 series semis is progressing on schedule and that we do not anticipate that delays may encounter on ENSCO 8500 will affect future deliveries. With the supply chain being very strained we will keep a close eye on equipment delivery and construction progress schedules.

We have several key milestones scheduled for August 1st 2008. We will have main engines start-up on ENSCO 8501, the launch of the ENSCO 8502 pontunes [ph] and field laying of ENSCO 8503.

I'm pleased to advise that we are on schedule with the crewing of the ENSCO 8500 series rigs and most of ENSCO 8500's key crew members are on location in Singapore overseeing final outfitting testing and commissioning. Now moving on to our market reports.

In Southeast Asia, with the exception of two rigs which have options associated with current contracts, the ENSCO jackup fleet is fully contracted through 2008. Although a few programs have been deferred, we believe that there is sufficient incremental demand in the region to keep the industry jackup fleet utilized through 2008.

We continue to keep an eye on demand from China and would not be surprised to see additional demand coming from this market. In the Middle East, there continues to be a great deal of activity.

There are several outstanding requirements, and we expect to see more announced in Iran, United Arab Emirates, Saudi and Kuwait neutral zone. Iran remains the most undersupplied market and with one newbuild recently committed at a favorable day rate and the recent tender for five jackups just announced, we believe that Iran could potentially be home for more of the newbuild capacity as it comes online.

Qatar is expected to be rather quite this year, but we understand additional rig requirements will likely be unannounced for 2009 and beyond. Overall we anticipate that the Middle East jackup market will continue to grow.

In India demand is increasing. ONGC just issued a tender for two newbuild jackups and more may be forthcoming this year in addition to several other requirements that have emerged.

We expect our Middle East and India jackup fleet to be committed through 2008. As extension options are exercised, old rigs will hold the new contracts.

The North Sea jackup market remains stable as large operators continue to come forward with the programs and wealth management companies consolidate short term programs for multiple smaller operators. We anticipate that all ENSCO rigs in this region will be fully committed through 2008.

We are encouraged by the level of additional enquires for work in the Mediterranean and a few additional jackups may be required in the region. We currently have two rigs committed to this market and have good prospects for continued work.

Now turning to the jackup market in the Gulf of Mexico, with the departure of two more of our competitors' rigs to the Middle East, ENSCO now owns and operates the entire 250 foot independent leg jackup fleet operating in this market. The 250 foot to 300 foot jackup market is gaining momentum.

As a result of the strong outlook for natural gas and its recent substantial increase in price, our backlog is growing, and in most cases, day rates are increasing. We are encouraged by the reemergence of some majors in this market which should help to stabilize utilization.

To give you some perspective on the uptick in this market, our outlook currently shows utilization of in excess of 95% in the second quarter of 2008 as compared to 73% for these same rigs in the fourth quarter of 2007. Our larger jackups are working consistently and if current conversations come to fruition, backlog will continue to build.

We expect that the competition for rigs may push day rates upward. Contractors including ourselves continue to market jackups outside of the Gulf of Mexico, and we believe more rigs will likely depart over the next few quarters.

With the smaller fleet size we continue to believe that the Gulf of Mexico premium jackup market has more upside potential in 2008. In Mexico, PEMEX recently issued a tender against three incumbent rigs.

The results of the tender were announced on Monday, and it looks as though that the incumbent rigs will receive the awards for this work. PEMEX representatives continue to be silent about their plans but we anticipate that they will also have incremental jackup requirements for 2008.

We are also seeing several requirements for work in Venezuela which we are currently evaluating. In summary, we note that there continues to be a great deal of conversation in the financial press regarding a moderation of international jackup markets and the effects on the drilling community.

I'd like to point out that taking into account options that we currently expect to be exercised, our international jackup fleet is virtually fully contracted for 2008. As a result, ENSCO's exposure to any moderation in international day rates is not material in 2008.

And for subsequent years, our exposure is not as significant as some might think when you take into consideration, the below market legacy rates that exist on a number of our international rigs. Rather than speculate on our exposure to day rates moderating beyond current contracts, let's examine the facts.

In the North Sea, we fully expect that rates will at a minimum be stable through 2009. In fact, several of our day rates in the North Sea increased as they rolled over or were extended this year.

In the Middle East, seven of the eight rigs we have in that market are contracted at below market rates with price options that will likely extent beyond 2009. And we expect nothing but upside as they roll off these legacy contracts.

The same situation exists with both of our rigs in New Zealand and our one rig in Venezuela. Our three rigs in Malaysia and Mexico are on long-term contracts extending beyond 2009.

So when you boil it down, what we're really talking for about ENSCO is exposure on 8 out of 31 international jackups. We expect that only two of these rigs will reprice in 2008 and that six will reprice in 2009.

These eight rigs are against the backdrop of 10 rigs that are currently contracted at below market rates which will reprice over the next several years. I think you can do the math and see that our exposure to any possible moderation in rates is most likely offset by our rigs that will roll off below market legacy contracts.

Keep in mind, we expect that our deepwater fleet will contribute over one quarter of our total revenues after all five of our 8500 Series deepwater rigs are delivered. In summary, the execution of our long-term strategic plan in deepwater, the global positioning of our jackup fleet, our growing backlog and earnings potential gives us every reason to be optimistic about our future.

Jay and I are available to answer your questions. Additionally several other members of management are also available to address questions regarding their respective areas.

Richard, I'll now hand the call back to you.

Patricia, we have to take questions at this time. Question And Answer

Good morning guys. I just had a quick question on the big newbuild.

Clearly your costs continue to come in a lot lower than your competitors as far as building new rigs. Remind you kind of your differentiated this strategy and how you are able to get a bulk of that cost savings and where does that come from?

I'll let Jeff Saile who is in charge of deepwater for us respond to that.

Yes good morning. We've had this question a lot of times and we're going to just kind of give us a very the kind of consistent answer that basically this is a proprietary design.

It's... we understand it.

|It is very simple and it's very straightforward and it's very consistent. It's construction friendly.

We don't have every single bell and whistle in the world on the rig. We have very adequately equipped drilling machine here.

And what you see will continue. If we continue to build rigs we will be able to continue to build them cheaper than the competition just simply because of design.

And the simplicity that it allows for the yard to... that we build...

we build this in modular, in modular form as well. So we are stick building in it place.

We are doing a multiple phases of construction simultaneously and then we are consolidating it in the master yard there at Keppel Fels in Singapore.

In addition, we are getting a great deal of synergies out of building all these rigs in one yard with Keppel Fels.

Okay. So maybe something I can take a word from that is that in the design part of the savings, is part of that just steel costs, less steel to put on an 8500 foot rig maybe versus some of the ten or 12000 foot rigs you see out there?

To some degree that's true but it's primarily in the construction. The simplicity of construction.

It's as opposed to being round, square and rectangle.

Okay. Maybe I can follow up with you all a little bit more offline as it relates to that.

Second question on the Gulf of Mexico jackups, I mean clearly all are lot more bullish than maybe past couple of quarters on that market, rebounding gas prices, less supply of rigs in the region, obviously boosting things there. Given that what is your strategy as far as leaving rigs in the Gulf or bidding some of those Gulf of Mexico rigs internationally, kind of how do you see that playing out over the next two years or so?

One thing that's been encouraging about the Gulf of Mexico recently is, as we're starting to have built some backlog. And we have operators talking about term.

That having been said on the positive side, it's still not the term and day rate that you can get in the international markets. So as long as there continues to be the imbalance in day rate and term in the international markets so I think operators such as us will continue to evaluate moving rigs out of the Gulf of Mexico.

And we continue to actively market our rigs for term work.

And are there any particular regions that you would market those rigs now more so or even to a less degree than 36 months ago? I mean I think six months ago or a year out, Middle East was kind of a hot budding issue [ph], now people seem to be talking about Mexico a little bit more.

Kind of how has it changed regionally as far as where you market the rigs outside the Gulf?

I think there has been a lot more activity in this hemisphere. And given mobilizations, it's much more competitive to compete in this hemisphere.

So I would say as compared to 6 months to a year ago, there has been a lot more activity in this hemisphere.

Okay, I appreciate it. I'll turn it back.

Sorry about that. Can't function not on with the mute button.

This summer indications from the customers as it relates to hurricane season, the Gulf of Mexico, have you got any preliminary indications yet how they are going to react?

Well, this is Jeff Saile. Currently we're not them reacting as they have in the past few years.

There is... it looks like they are going to try to remain active through hurricane season.

We certainly see a lot of programs coming along that are going... in continuation through our hurricane season.

So it looks though like there is less concern about hurricane season as compared to previous years... within the backdrop of what happened people were abundantly cautious in my opinion.

Right, okay so a little less cautious this year. On the contract drilling cost side, the increase in Q2 costs, would we expect that to continue then Jay into Q3 and Q4 running at that sort of level we'll see in the second quarter?

I think Dan the labor component clearly isn't going away. As we said the costs tend to be front end loaded in the first two quarters of the year on the repair and maintenance side.

And so if you do... if you kind of check out the math you will see when you look at the full year number that guidance that we gave that implies there will be a reduction in the third and fourth quarters.

Okay, so a little bit of a lumpy here in Q2.

Yes I think if you look at the rig status reports we have a lot of the inspections in the first and second quarter.

Got you, thanks. Last question as it relates to the newbuild rig.

Is this going to be a turnkey rig and have you got the long lead time items ordered? And do you have any other options with Keppel Fels?

I was thinking this is the last one.

We are in the process of finalizing our order with Keppel Fels. And the answer is yes.

We've got all the long lead time items secured. And we have every reason to expect we will get a contract in place or place a firm order here in the next few weeks.

In terms of additional options bet questions when asked a lot of times. And we haven't had options with Keppel Fels, so the answer is no.

Okay, thank you

Thank you. I was curious about...

you made some comments about the delays in delivery of 8500. And of course a lot of people are expecting many contracts just to have delays.

I wonder if you could give us a few kind of just details as to what was involved in that delay of that rig and how... what was within and not within your control on that?

Robin, there are a number of factors that have contributed. There are a few elements of vendor furnished equipment which were not delivered on time.

And that had some impact on retarding the overall progress on construction as a rig. Generally it is the actual fabrication of the vessel itself as impacted by some of these other things that are combining to generate a delay of a few months.

But we think these are generally unique to the first unit. We have found solutions to whatever the issues were on the first unit to be able to limit the delay of a few months, we believe to eliminate it all together on the subject of what unit.

So it's not any one thing. The owner furnished equipment played a role.

But it's just a combination of factors that have accumulated, just key pass in the shipyard, we're completing it quite as soon as we'd originally anticipated.

Okay. And then the commissioning sea trial acceptance testing phases, that will be done I guess later this year and is there any reason to expect...

I don't know that experience of the 7500 or anything else that would lead you to think that, that could take a little longer... or you've already factored perhaps a little longer period for that?

We have factored sometime and the fact that these are very complex pieces of both mechanical and electronic equipment, so you always allow a little bit of time for the unforeseen. That's why you do all of this testing and this commissioning trials.

Because these are so complicated it's hard to know exactly what's going to happen when you turn on switching and the asset piece of equipment to perform as designed. But we have a very detailed, a very comprehensive commissioning plan has been worked out in cooperation with both of these yards [ph] and all of our vendors and we believe that it is sufficient to accomplish all of the trials and testing whatever last minute tweaking these will be done.

Robin I think in addition to what Bill said, I said in my remarks most of the key technical members of the crew for ENSCO 8500 are already on board the rig in Singapore. And they're all becoming familiar with the piece of equipment, respective pieces of equipment for which they have responsibility and they were actively involved in testing and commissioning this equipment.

So hopefully together with the point that Bill described will minimize any big surprises. But as we know there are always surprises in this business.

Right.

Robin, I think the only other thing I would add is we have a pretty comprehensive factory expansion test program as well with inspectors all over the world looking at... as is being constructed.

So I think we are getting on top of problems to the extent they are there for the early in the game as well.

Okay. One other small detail on the...

you mentioned costs up 10, 12% in the second quarter and that you had a wage increase in the first quarter of '08. Is that the magnitude of the wage increase or is what always involved in this 10 to 12% cost increase?

Well as I said there is a piece of it that's labor and there's a piece of it that's repair and maintenance, and in the third quarter a big piece of it is repair and maintenance. If you look at the full year as I said in my comments half of our full year increase...

actually a little bit over half of the full year increase is coming out of the labor rate increases and that's a combination of things. That's direct increases that we give people in terms of we give you an x percent raise.

But it also factors in the impact of the weakening dollar. We have a number of people who are paid in foreign currencies or paid to foreign currencies.

Right. Okay.

Thank you.

Hi good morning guys.

Good morning.

Dan, wonder if you could comment a little bit about Mexico. You said that previously you don't want to be a run rate company in Mexico.

So I was a bit surprised that the only bid the ENSCO 93 leased into the most recent tender around. So I was wondering if you could maybe elaborate a little bit about your strategy and why didn't we see ENSCO more active in the latest tender in Mexico?

Good question. We closely evaluate that, anytime you are bidding against in common you have a bidding disadvantage.

So Mexico... PEMEX has some very specific technical requirements for the equipment that operates there.

So we have to carefully evaluate the technical requirements that PEMEX is looking for and see how that matches up to our existing fleet of assets in the Gulf of Mexico and seeing where those gaps are and what kind of money it would take to fulfill those technical requirements. And then that you have to put in the backdrop of what you think the competitors who are going to be willing to bid that equipment.

And after looking at it and we spend a lot of time looking at it. We decided that the 250 foot rig was the rig we wanted to bid and not bid the complete package.

I wouldn't say that if that bodes... will it be any indication of how we will bid in the future because we are going to look at them all individually and very closely.

But I think it's a little bit different bidding situation when you have incumbents in the marketplace.

So just to characterize your comments it was just a function of maybe some of the capital that you would have to spend on your existing rigs in the Gulf and maybe some of the opportunity cost there?

Yes and then I think you put it in the backdrop of... quite frankly the Gulf of Mexico market is looking pretty good right now.

So you just... it was just an overall marketed decision.

We are very... you are right we don't want to be one rig operation in Mexico there.

Okay and real quickly on the latest newbuild on my math it's about $88 million of cost inflation last in the 10.5, 11 months. Can you help us understand where you are seeing that cost inflation versus the last rig that was done I think last year?

Yes I mean the vast bulk of all this Aaron is in the currency fluctuation. Half the costs of those rigs that's denominated in sing dollars and a good bit of the equipment that goes on these rigs a lot of it's built over in Norway and another jurisdictions which also have currencies that are rising against the U.S.

dollar. So the fluctuation in the U.S.

dollar has had a very significant impact and the second biggest reason of the increase in steel prices which have continued to escalate. So that really is commodity price driven.

Okay and are you seeing from a margin standpoint, the equipment suppliers and Keppel kind of... are they increasing their margins over the last year or so as part of the general increases in shipyard activity?

Clearly everybody is trying to increase margin. So yes there is clearly pressure on that side of the equations welling and we're continuing to push back on the other direction so.

Okay, thanks a lot, Dan

Sure.

Good morning gentlemen. Richard I didn't know who various other members of management were until Dan called on Jeff to answer that question.

A little bit more actually on Aaron's question about the increment on the costs, but further relate I guess now on the rate expectations. Can you tell us some history of how mature was your negotiations on the prior rig that's you're coming to an LOI in and in the bottom line, is the current market for this next rig on day rate in the similar range or has it moved since you last negotiated?

So you have a lot of questions there. Was first question Pierre, what are we doing on the 8503 contract?

Yes and yes.

Yes, okay, the answer to that question, we're real close. I think we have finalized on the contracts.

So I'd expect something here... a couple of weeks Joe?

That could most.

Yes a couple of weeks. And then in the market you have seen the fixtures just like we have.

There has been a recent round of fixtures that have been north of that Peirre [ph]. So it's a pretty robust market out there.

How old or mature was the negotiations on 8503 I guess is that's what I was getting at. That's something that you...

it's been working on for quite sometime?

I'm trying to remember it. Well with the current customer, we had bid with them [ph] for 03 in a long period of time, just kind of the...

putting out what we had to offer there. And rates didn't really come in the discussion until later on in the process Pierre.

- Pierre Conner: Okay.

Maybe earlier in the year Pierre. I candidly don't recall, it's top off of my head.

That's fine. It's just a little color on that changes.

It's been... definitely been an uptick.

Yes that's what I was getting to. So in terms of total returns and should be in the same range even with this escalation in costs.

The... Jeff, further on the whole 8500 design and the issue associated with the debate out there of a drill ships versus semis, is it the 8500 Series equipment capable of something like a offshore Brazil?

Will there be modifications required? Is it very [ph] deck load issues, just expand upon the pros and cons and where is...

how much more opportunity when people debate this drillship versus semi?

Once you asked a hard question Pierre. No, certainly we can work offshore Brazil.

I don't know if I think there is a lot of that to be understood in the future I certainly think the 8500 can get in there and compete. I don't think it's going to compete with the drillship.

It's going to come in behind these ships when they do some of this... some of these ships are going to do advanced exploration and then something like the 8500 would be required or certainly could be used in a very advantageous way to develop what discoveries are made.

So to be... the 8500 can certainly...

is certainly equipped to drill. It can drill in 10,000 feet of water with...

we are going to have to do some minor modifications to it. And we are reviewing it that now.

It can certainly drill in deeper water and we can get out there with the equipment on and drill these ultra-deep wells as well. So it's not a rig design, never was designed to go to work, to be all things to all people.

But it's certainly can address the heart of the market which we focused on and the heart of the market that we have focused on continues to be the heart of the market.

Right.

And Pierre we've marketed the Petrobras and it's quite frankly we just thought we've got better returns in other markets for the equipment.

Okay that's helpful. Actually again you answered a lot of the questions already on the jackup markets, I appreciate your commentary on that at the outset so, with that I'll turn it back.

Thanks Pierre.

Hi, good morning.

Good morning.

Where are you seeing international jackup rigs come out their peak and thinking about pricing going forward, I wanted to get your thoughts on the impact of fragmentation of the contractor base. So, in other words, how much does it matter to pricing that the supply is going up by 33 jackups in the next 12 months and how much does it matter that these 33 jackups have been broadened by 23 different contractors and environments were below a bid it went to tender [ph] ?

Well, I think one way to address that is think about who those contractors are and what they are up against and what we've seen so far for the most part is they've been pretty disciplined about pricing and that's because they have to be. Million of those rigs are build with a substantial amount of debt and million of those companies that are trading today have very lofty evaluations based on expectations of kind of day rates that those rigs will receive.

So people who are running those companies actually are probably under more pressure to keep day rates up than we are and I think so far what we've seen in the market is that for the most part when those people come to market they are very disciplined and they usually are getting pretty close to leading edge day rates and in many cases that's surprising because they don't have much of an operational track record.

I guess further to your question, I think what you are asking, I mean, different customers evaluate these new builds companies differently. So for instant Saudi Aramco has indicated that it didn't want a contract with new builds company so you see some established contractors doing alright and they charter rigs into Saudi.

So I think you will see that continuing just depending on the operators.

Okay, thank you. On labor rate can you talk about what you are seeing on turnover and maybe a tougher question but how confident you are that the industry has a handle on wages over the next 2 years as the new builds recruit?

Yes, turnover is an interesting area. Its obviously a lot of concern to everybody in the industry and it really very substantially across the world stood depending on what market that you are talking about.

So some markets are really pretty stable and others you see a much higher turnover. Probably where we are seeing the most turnover and I think everybody will see the same things are probably out in Asia where a lot of these new build rigs are entering the marketplace and these new build companies paying a pretty lofty price to get crews to crew these rigs.

So, it really varies all across the map. In terms of having a handle, I think we are going to continue to see this as rigs enter the market.

There will be a lot of pressure on talent.

Okay, well thank you.

Thanks David.

Thanks very much. Just really one question left.

As you look at the 63 shipyard days you are talking about in 2008 compared to the 442 in '07 you mentioned that they were a couple of categories of days that are not included in that 63, can you tell us how many of the 442 fell into those categories?

The 442 was specifically upgrade projects, it didn't include normal inspections and minor repair and maintenance projects just on a consistence basis.

So those are consistent?

Yes, right.

And the 63 days have already been incurred. ENSCO 93 reentered the fleet in March, those were January, February days.

ENSCO 93. Okay, that was it, thank you.

Thanks Geoff.

Good morning guys.

Good morning.

Dan, in your opening comments you emphasized the strength of incremental demand emerging from China and recently there's been gathering news flow about national company's or their contract drilling subsidiaries using state affiliated yards to either launch or expand existing new build programs. Would you please try to put this phenomenon into perspective for us, how much of this activity to the extent that there is going to be any will just be used to filled demand, it was never really going to be available to non-state affiliated contract drillers and then ultimately how much incremental supply could it lead to?

Yes, I don't... we clearly don't have a great handle on what the incremental demand is out of China just for obvious reasons.

The drilling activity is picking up there. What we continue to refer to in our conference calls about China and incremental demand is we are aware that Chinese are out there looking at building additional rigs.

We're also aware that they are out there actively looking at buying equipments. So when we talk about incremental demand soaking up new builds, we could see some of these new builds ending up in China, wouldn't be surprised to see that.

Is there any risks now that we've heard about PetroVietnam deciding to move forward in addition I guess to the new builds already on order for PV drilling to move forward with a construction program at some state affiliated shipyard and now had base talking about potentially building some offshore rigs at a Venezuelan state affiliated shipyard, any read on how much... how many incremental orders those two players might end up adding to the construction queue?

Now it will really be speculation on my part, I'd be real surprise to see a lot of that come to fruition.

Okay, so it doesn't sound as if at that this point you're all that concerned about the reality of it, I guess?

That would be a correct statement. Some of it too Tom is purpose build equipment.

So it's not really going to be as competitive in the international marketplace but it could consume some of the demand there locally.

Okay, that's helpful, thanks. Jay, delving into the labor component of the increase in your cost expectations, how much of that would you attribute to preventing poaching in the markets where competition is fierce such as Asia Pacific and how much would you attribute to higher than expected cost associated with staffing the 8500?

Well 8500 staffing costs are really a very minor component of the numbers that I was talking about here today, because obviously we're just crewing up on those rigs now for operation primarily next year and beyond. So very little of that has impacted there.

I think it's hard to separate how much is trying to keep retain people versus just normal wage rate increases. I think we have tried to be very competitive in the market and most of the number that you see there is just our annual wage increase that we give to all the offshore as well as onshore people.

There are some other things we are doing around retention and special programs for selective highly skilled and important people that are pretty targeted. They tend not to at the end of day actually add up to that much money when compared to the total contract drilling expense.

So I come back to most of the money that we are talking about there is just to remain competitive in the marketplace.

That's helpful and then lastly returning to the Gulf of Mexico jackup market, at this point you have locked up 3 of your 13 jackups through the heart of hurricane season, is this part of a broader strategy and how to tackle it and if so how many total rigs would you look to try to get locked up that take you through lets say August into mid to late October?

I would love to tell you its all part of a carefully crafted strategy. The reality is...

that's what our customers wanted. But I think that is the interesting conversation kind of to what Jeff was saying, you know, as we are discussions with customers and they are talking about wanting to get on with programs there is very little discussion about I want to get on with the program but I am going to wait till hurricane season is over or I want to have a break during hurricane season.

There was a lot of that kind of discussion in the last few years. So it definitely has changed.

I think most people that are in the Gulf of Mexico they are serious about drilling are not spending much time thinking about this issue. Its always the curious dynamic in the Gulf of Mexico, part of our strategy is to lock things and up on term and when customer calls to look something up on term we're afraid that they know that the markets going up, we don't want to --.

Alright that's helpful guys. Thanks, I'll turn it back.

Yes, good morning. I'm going to ask a question I guess nobody else has asked, consolidation.

We saw Seadrill make the investment and pride, just wanted to get your feelings on consolidation in the industry and without asking specifically about pride just what are your opinions on consolidation at this point?

It hasn't change. We get this question every quarter so, same answer we've had every quarter.

We have always said we thought consolidation will be constructive and just wait and see, continue to evaluate ways to enhance shareholder value.

Okay and then regarding the commentary along the shareholder value thing, you didn't buy any shares back in the first quarter as your evaluating the next deepwater rig. Now that that's sounding more or less sad or at least awfully close do we expect you to restart that program or is that your commitment of capital and so share repos are less likely in the rest of the share?

I think we continue take a balanced approach on this. We've been pretty consistent that we said we want to invest in growing our core business with particular emphasis on the semi, on these semi's and that we also wanted to employ any excess cash, free cash flow that we have into share repurchases.

So I think you should read into what happened in the first quarter that we just felt, we should probably hold back that quarter with all of the things that were going on. We still have $318 million under our existing authorization left to buy in and we are not going to give you specifics on that but we intend to be back in the market here shortly.

Okay, thank you.

Sure.

Hi, good morning gentlemen. I have just one question and I apologize if its been answered before but the cost on 8504 is about $515 million, about 20% higher than that for 8503, are there any design differences or is it just cost inflation?

Yes, that question was asked it's primarily the fall of the U.S. dollar and the increase in steel prices.

It's the same design though Waqar.

What's that?

It's the same design.

Same design. There is no additional equipment or anything at all?

No.

No.

Okay, great. Thank you very much.

Good morning gentlemen. I actually just have a small question about your capital structure.

As I noticed that last year you retired about $170 million of debt, this year you have about 600 million of cash on the balance sheet and only about 300 million of debt, you have 2 untapped revolvers and you have like two issues out public issues outstanding. Do you have any plans of looking into your cash structure and revising it or maybe increasing your public debt?

Well I think in the near term I wouldn't expect to see us increase any of our debt. The debt that was repaid by the way in the last couple of years has really been scheduled for retirements of debt.

There was nothing that we did abnormally there. For us right now as you rightly point out we have a fair amount of excess cash flow, certain amount of that will be applied to paying for new semis as we build them and as we said the one we just announced today will probably have about a $115 million check that we write when we actually finalized the order on it.

So in the near-term what we said consistently and it's the way the things will be here for the foreseeable future is we want to make sure that we don't build up large amounts of excess cash flow that's just sitting invested in low income investments. To the extend we have excess cash flow that we really don't need.

We will either return it to shareholders or we will reinvest it in the business. We view balance sheet really is the one place that we will turn to when we could see something that really is of interest and in a M&A context, there is something strategic that we want to do that we think is really important to do.

But we're not going to tap the balance sheet probably anytime before that.

Okay, thank you.

Does that answer the question.

Yes.

I think we probably have time for one or two more questions.

Hi good morning guys.

Hi Mike.

Danny, in you comments you talked about you expect additional jackups to leave the Gulf of Mexico, do you guys have an estimate on how many you expect to leave?

No, it continues to be a pretty steady flow and I don't know if I'd make any bold predictions but there's two or three seem like they are leaving every six months and I think you'd continue to see something of that magnitude.

Okay, so then perhaps if we look at the supply side of that statement there, how many jackups do you think are actually capable of leaving the Gulf of Mexico?

There are only a couple of dozen premium jackups remaining in the Gulf of Mexico. So it's a very limited fleet, really capable of going internationally.

Okay, that's what I was trying to get out here. And Jay I apologizes if you covered this already but do you guys hedge any of your dollar exposure?

Sure do. We hedge a number of major currencies and drilling amounts using them much further out in about a year.

We also have a fair amount of cash invested in sink dollar which we use as an offset to our purchases with a couple of fellows [ph].

Okay, and much of your discussion on the dollar, or the weakening dollar has been related to labor expenses but how long until we start seeing it as a bigger proportion of say repair and maintenance expenses?

I think it's already in there. I mean, in terms of the number we have projected there are a number of factors that labor impacts, it impacts repair maintenance, it impacts your catering expense, all your third party labor that's on the rigs and there is a very large segment of cost that one way or the other is either labor or steal related in this business.

Almost everything goes back to one or the other of those two commodities.

Okay, guys that's all for me, thank you.

Sure.

Good morning, thanks. Over the last few days, there have been some statement from Saudi Arabia that they were going to put a hiatus on their capacity expansion after they complete the current projects, I was wondering if that has any implications for the four rigs you have there?

This is Paul Mars, and no it doesn't... our contracts there are long term with options and we fully expect those rigs to remain in Saudi Arabia to fulfill the contracts.

And you see that extending for several years, in the rig status to complete their current contracts at the end of this year around the fourth quarter?

Yes, but they all have options with them.

And you expect those to be exercised.

Absolutely.

Okay, thanks very much.

So, I would like to thank everyone for joining us today, we look forward to talking to you again, Thursday July 24th, for our second-quarter 2008 earnings conference call. With this I'll turn it back to you.