Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael LaMotte – J.P. Morgan.
Michael LaMotte – J.P. Morgan
Quick question on Latin America. Revenue looked a little light to me relative to the degree of activity. Is that just offsets from Argentina and Venezuela?
Andrew Becnel
Yes.
Michael LaMotte – J.P. Morgan
And $200 million in incremental CapEx Bernard, can you comment more specifically on where that's going either by parts and services or geography?
Bernard Duroc-Danner
It's going to North Africa and Asia Pac so I would say about 75% of the $200 million is going there. The balance is other areas of the Eastern Hemisphere.
Michael LaMotte – J.P. Morgan
And the catalyst being Q1 contract wins?
Bernard Duroc-Danner
Yes.
Michael LaMotte – J.P. Morgan
Can you comment on the status of the rotary steerable tool and the introduction for this year?
Bernard Duroc-Danner
Actually following the original CapEx we had had a large allocation for the RSS and some of the other directional tools and will allow us to introduce it. That's proceeding as scheduled. I think most of the early market penetration will be in Q3.
Operator
Your next question comes from James Crandell – Barclays Capital.
James Crandell – Barclays Capital
Andy can you comment on the, give more detail on the fixed costs rate down in North America, to what extent is it service locations, manufacturing facilities and then also how much further you see margins going down in North America in the second quarter.
Andrew Becnel
On the fixed cost side it's not just really mainly service facilities, not so much, it's very light on the manufacturing side where we've been able to load shift if you will across various plants just based on total delivery cost that we can get out of each facility and obviously we have a global footprint on the manufacturing side.
In terms of margins, I would expect at this point, don't know, but given the impact of a decline in Canada which is more of a very seasonal thing as opposed to continued activity declines, exacerbating it a bit this quarter will be additional pull back that we see probably in the U.S.
I would expect something on the order of 500 basis points of additional decline from Q1 to Q2 and from there I see us building back up on the margin side with 200 to 300 basis points each quarter and subsequently margin expansion in each of Q3 and Q4.
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