Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from James Crandell - Barclays Capital.
James Crandell - Barclays Capital
In the environment that you outlined for international E&P spending growth, I think you said double-digit, what would you expect to happen to your overall profit margins in that scenario?
Bernard J. Duroc-Danner, Ph.D.
I don’t think we know. We have different forces in motion. On the one hand there are some pricing declines that are occurring on one-third business that rolls forward and gets renegotiated. On the other hand we have absorption effects and the lower cost structure. I don’t think we know what will happen to the international margins. Not within the ability as in North America.
James Crandell - Barclays Capital
Chicontepec project seems to be to date, both an operational and financial success for you despite your critics. Do you agree? What are the risks from here, and given the scope of what Pemex has planned, do you believe you can take on more work during 2009 than what you are contracted to do now?
Bernard J. Duroc-Danner, Ph.D.
I think we count our blessings. The project is successful operationally, so far, and the project appears to be successful financially, so far. Time will tell if between now and year end it is a success. I think before year end you will have the full results of the project. So within Latin America, so you will be able to judge.
Insofar as growing the scale and scope of Chicontepec, and I think we have to leave it to Pemex to decide whether it’s something that is in their interest, insofar as we are concerned, Mexico is a place of great focus for us so we would welcome that.
James Crandell - Barclays Capital
This coming year, 2009, seems to be one in which you are starting up a lot of integrated, bundled projects. Will it be a year in which you will have a marked increase in start-up costs for those projects, and if so, when will that hit the P&L?
Bernard J. Duroc-Danner, Ph.D.
I think you have a lot of start-up costs in Q3, I think you have a lot of start-up costs in Q4. I don’t think you will have any higher rate of start-up costs in Q1. I think it will be about the same. I think just about everything that we were hoping to operate will be started up, at least in part if not in full, by the end of the second quarter.
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