Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Stephen Gengaro - Jefferies & Co.
Stephen Gengaro - Jefferies & Co.
The first thing is to help us in the first quarter understand what happened, could you give us a sense for the impact on margins of both mobilization costs and severance charges?
Thomas W. Stoelk
The severance charges are about $1 million in the first quarter, Stephen.
David E. Wallace
And the mobilization, we did start moving some equipment from west to east. And when you look it, kind of a good run rate is $1.50 a mile one way per unit, so it can translate into approximately $3,000 to $4,000 per unit depending on how far they came. So I don't think I have a good number for you; we're probably looking at $300,000 or $400,000 initially in first quarter.
Stephen Gengaro - Jefferies & Co.
You mentioned you'd closed some service centers. Can you tell us where the regions are or was that kind of in line with where you mentioned headcount reductions?
David E. Wallace
Mid-Con's probably been the hardest hit. We've closed four service centers to date - one in Ohio and three in Oklahoma.
And, again, we've had some major downsizing in a lot of the other service centers. We're trying to keep a presence in some of those waiting because they've been long-term areas that we feel like are going to bounce back; we're just going to minimize our exposure in those at this time.
Stephen Gengaro - Jefferies & Co.
When you look at the next couple of quarters - and obviously you've had a bigger drop off in activity and probably faster than most people had expected - but when you look at the back half of '09, in an environment where you start to get kind of a flattening of the rig count can you get margins moving higher off of cost-cutting initiatives as opposed to actually getting price? If activity starts picking up a little as you get some cost cutting, can that get margins moving or do you need the pricing to help really move the needle - when you talk about getting back to profitability, kind of getting a sense for what exactly do you think that takes.
David E. Wallace
I think it's a combination of the cost cutting to get right sized in some of the areas that have been heavily impacted. When you start looking at some of the Western regions rig counts down 65% to 70% and then from there it gets really competitive in those areas.
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