Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mike Drickamer from Morgan Keegan.
Mike Drickamer - Morgan Keegan & Company, Inc.
Micki, you guys have been busy here. Rigs in Haynesville and now JV in Saudi Arabia. Can you just talk a little bit more about these rigs in Haynesville? You said 4 rigs costing more than $62 million. When do you expect them to be delivered in 2009? Is this early 2009, late 2009? And then what can we put down for financial impact here?
Munawar H. Hidayatallah
{Beosa] which is owned by the Bulgheroni family has acquired acreage in Haynesville and are continuing their programs in the Cotton Valley. We have ordered 4 rigs and will enter into a strategic alliance with {Beosa]. We will provide them directional drilling services, casing and tubing installation, as well as underbalanced drilling where required. The two 1100 horsepower rigs are currently are under manufacture at Stewart and Stevenson in Calgary. These will be delivered to us in probably the late third quarter. These are 1100 horsepower electrical rigs with 1500 horsepower grow works. The other two have recently been ordered and will be delivered in the second quarter and third quarter of 2009. The impact obviously for us, we believe that over the long run this drilling program will actually go on for 5 to 10 years and will provide us with again as per our strategic alliance with Pan American will provide us with predictable, stable cash flow and will give us the stability to grow in our business, specifically this part of it, so the impact will be again, we have not outlined the terms of the strategic alliance. We don’t know the exact details, but obviously it will be at market rates, maybe with a slight discount with inflation factors built in over a period for pricing increases as well as some pricing increase linked to the price of both natural gas and crude oil. We’re not trying to be vague. The reason is we ordered these rigs early because there won’t be delivery for as you know the manufacturing cycles are fairly long and we just placed the orders and the terms of the strategic alliance are being discussed as we speak.
Mike Drickamer - Morgan Keegan & Company, Inc.
Okay, and once you have the terms of the strategic alliance you’ll be able to tell us perhaps what the contract terms are, the duration, and everything for these rigs?
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