Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Mike Urban. You may proceed sir.
Michael Urban – Deutsche Bank
Thanks, good morning. You said that you are seeing some moderate price increase in the U.S. land business so far. There is a view out there that given you still have, or just the industry has a reasonable amount of stack capacity that pricing gains may be hard to come by or take a while. Is there, is there anything out there that could change that view? In other words, for instance, the stack capacity is primarily held between you and neighbors and then crews. You know potentially an issue. I mean I just wanted to think through the pricing dynamic as the market tightens up here.
Mark S. Siegel
Well Mike, let me, let me start and throw it to Doug second. There is, as you correctly point out, the idle capacity is held by Patterson and by neighbors that we believe, or at least most of it. So there is a relatively limited supply of this idle capacity. More importantly, the capacity to do the kinds of work that our customers require is not in substantial excess capacity, that is relatively limited in capacity and we think that our customers are starting to see, as they want to increase their drilling programs, a shortage of the kind of equipment that they want to use and we believe we are fortunate to have that equipment and to be able to meet that demand. But there is not so much of it available that we think that, that that the relative shortage of what is available we think is going to push prices up. Doug?
Douglas J. Wall
Mike, I think we are certainly having different conversations with a lot of our customers today than we were having 30 and 45 days ago. We started to see some signs of some price increases in certain markets and with certain kinds of equipment. I think that operators realize that prices may be on the way back up and certainly some of them are already starting to ask about term contracts. We are having those conversations but we are being very careful in the marketplace today.
Michael Urban – Deutsche Bank
Okay great and–
Douglas J. Wall
On the people side, I know you asked about the people, I certainly think the number of rigs that go back to work from the idle capacity probably is going to be governed some, governed somewhat by the number of people. I think if rigs go back in an orderly fashion over some period of time we, in the industry, will be able to manage it accordingly. But I think it would be difficult to put a huge number of rigs together next week.
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