Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jim Rollyson - Raymond James.
Jim Rollyson - Raymond James
Wide range of margins on spot rigs depending on the different, categories of rigs, when you think about where your fleet matches up in the different categories of rigs you guys tends to breakout. How do you think about that weighted-average if the spot today ignoring the term contracts you have? Is that more in the mid to upper single digits as opposed to the 1500 or just kind of how do you think about that?
Eugene Isenberg
No, it certainly not single digits. I would say for the rigs we consider the quality rigs it’s in the mid teens and for the low end rigs it’s marginally above the costs or dayrates are marginally above our costs. It would be but we have on the low end I don’t think the averages the way we look at it anyway is that we have these rigs that are essentially paid for, the low end rigs.
We have the infrastructure to put them to work and some of our customers require those as well as the better rigs and if we can make some money compare to no money why not do it even though it adversely affects the average.
Jim Rollyson - Raymond James
I’m just thinking from kind of near term earnings standpoint do you think that fleet averages kind of the middle.
Eugene Isenberg
Most of the earnings don’t come from that something. I would say the most encouraging single indication is, number one, the rig counts is increased, number two there’s actually been an up tick in the leading edge rates for the leading for the high end rigs. Major and not anywhere near where the term contracts were put but there’s been an up ticks. So the direction is right in both those things.Net we are going to be down next year in operating income.
Jim Rollyson - Raymond James
If you look at the strips for next year, which you talked about earlier, what’s your gut feel, where is the rig count looks likely goes?
Eugene Isenberg
I don’t know the rig count, I think we’ll do better and I think we’ll gain market position. I think there’s going to be sooner or later and I think it’s going to be sooner rather than super later that this strip comes to pass. There’s not going to be a super surplus of the high end rigs.
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