Question-and-Answer Session
Operator
Thank you, sir. (Operator instructions). Our first question will come from the line of Angie Sedita of Macquarie. You may proceed.
Angie Sedita – Macquarie
Alright. Thanks. Good quarter, guys.
John Rynd
Thank you.
Angie Sedita – Macquarie
John, you signed the contracts on the 203 and 350 in the Gulf of Mexico one of them actually at a pretty decent rate and the other one essentially a market rate. Can you give us a little bit of inside into conversations with customers what's driving them to pick up the rates, is it the rigs low day rates? Is it project driven? And given where gas prices are, hard to believe that the economics work so could you give us the mind-set there?
John Rynd
Yes, Angie, good question. I think it's a combination of both. I think it is project driven. These people were fortunately had capital to spend. Service costs are coming down. You have seen our average day rates are down roughly 50% from their highs and with the decimation in the North American land rig count all service costs are starting to recalibrate. So some people opportunistically are taking advantage of that. I think as we said in our prepared remarks, we have seen a modest uptick kind of coming off bottom here. I think we are cautious about activity levels as we mentioned as we get into the heart of the hurricane season.
Angie Sedita – Macquarie
Okay. And then on the hurricane season, can you give us a little bit of insight on your windstorm insurance and when you are up to renew and details on cost?
John Rynd
Yes. We don't have the details yet on cost as we are in the market right now. Our goal is to, A, protect the balance sheet from any losses to that magnitude, try to reduce the overall insurance package cost but at the same time there's limited coverage, little of capital in the market and I think that you are going to get not as much coverage as we have seen over the last three or four years. Your self-insured retention is probably going to go up.
Angie Sedita – Macquarie
Okay. And then finally, you touched on the covenants, etcetera. Any update with any conversations with the banks on that front?
Stephen Butz
No. I mean as we said in our last call, we have been in constant discussions with our agent bank, our lenders, other financial institutions and advisors and we are just continuing to monitor, monitor our forecast and compliance. Really across the board the advice was that we needed to wait until we had better visibility as to if we actually were going to breach the covenants and as to what we would need if in fact that was going to happen.
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