Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jim Crandell – Barclays Capital
Jim Crandell – Barclays Capital
I seems that many of the items that adversely affect the third quarter such as the rains at Chico the gas drilling at Veracruz, the operating issues in Nigeria startup costs in Iraq and the delays, startups and ITM should be rectified by the fourth quarter or at least significantly improved in the fourth quarter, is that correct?
Bernard Duroc-Danner
Yes I think so. When one has a bad quarter I think its best to just go out and put out a good quarter afterwards. I think that answers all the questions. As a point of logic, yes you’re absolutely correct.
Jim Crandell – Barclays Capital
Can you talk at how you think the Chicontepec outlook has changed in the past three months, in the aggregate what emphasis by Pemex on increasing production will mean for Weatherford the potential for incentive contracts and lastly that if Pemex reduces its budget in ’10 where this could be felt?
Bernard Duroc-Danner
Many of these questions are best answered by Pemex. If you look at Chicontepec what you have is a very large heavy oil reservoir which is in the early stages of its development. Heavy oil has a long learning curve before you find the optimal way to drill and produce the reservoir. I think both Pemex and its vendors, service companies, are going through this learning curve. At some point the drilling and completion and production path will mature and it’ll be essentially an exercise in increasing efficiency and productivity.
All of this to say that I think Pemex is looking for the right level of activity on Chicontepec whether it is at the present level, whether it is at the lower level or at a higher level and also what are the optimum zones that one has to go after because there are numerous zones in Chicontepec. Also resolving some of the issues that they may have with completion techniques or top side problems. All of this is being looked at and worked on, this is normal. When you have a reservoir of this size with multiple zones and one that has not been developed until now we would expect all of the things I just described and this is happening right now.
What does is mean for 2010 for us? There are two aspects to our work in Chicontepec. On the one hand we are executing contracts that are multi-year contracts and they will go on. They are called ATG-1, ATG-2, and ATG-4. On the other hand there are supplementary work that will pick up when some of those contracts are completed such as ATG-1, ATG-2 and the supplementary work is a function of the budget.
- To read the full transcript on Seeking Alpha, click here »
