04-HP-876_newMDA.qxd 12/15/04 3:04 PM Page 77 and the remittance of those U.S. dollars as dividends by the Company’s Venezuelan subsidiary to the U.S. based parent. The Company was able to remit $8.8 million of such dividends in January 2004. This reduced the Company’s exposure to currency devaluation in V enezuela. As stated above, the Company is exposed to risks of curr ency devaluation in Venezuela primarily as a result of bolivar receivable balances and bolivar cash balances. As a result of the 20 percent devaluation of the bolivar during fiscal 2004 (from September 2003 through August 2004), the Company experienced total devaluation losses of $1.9 million during that same period. This 20 percent devaluation loss may not be reflective of the potential for futur devaluation losses because of the exchange controls that are currently in place. There have been recent press reports of a potential devaluation in calendar 2005. However, the exact amount and timing of such devaluation is uncertain. While the Company is unable to predict future devaluation in Venezuela, if fiscal 2005 activity levels ar similar to fiscal 2004 and if a 10 percent to 20 percent devaluation would occur, the Company could experience potential currency devaluation losses ranging from approximately $1.2 million to $2.3 million. In late August 2003, the Venezuelan state petroleum company agreed, on a go-forward basis, to pay a portion of the Company’ dollar-based invoices in U.S. dollars. While this is a positive development in light of the existing exchange controls, ther is no guarantee as to how long this arrangement will continue. Were this agreement to end, the Company would revert back to receiving these payments in bolivars and thus increase bolivar  cash balances and exposure to devaluation. Venezuela continues to experience significant governmental instability. In the event that extended labor strikes occur or turmoil increases, the Company could experience shortages in material and supplies necessary to operate some or all of its Venezuelan drilling rigs. The Company, on a regular basis, makes commitments for the purchase of contract drilling equipment. At September 30, 2004, the Company did not have any material commitments for the purchase of drilling equipment. NOTE 14 CONTINGENT LIABILITIES AND COMMITMENTS  COMMITMENTS 78