04-HP-876_firstsection.qxd 12/15/04 2:41 PM Page 7 Outlook The Company had its share of fr ustration and disappointment in 2004, but we are encouraged by the momentum we see developing for 2005 and beyond. U.S. land market activity indicates that the industry is entering a different, but improving part of the drilling cycle, and as rig counts continue to move up, we  expect dayrate pricing will also ratchet up. The Company’s FlexRig3 continues to receive high marks in the field, and as oil field costs escalate, the Company expects to see increasing recognition of its value in the form of higher margins. We are also encouraged by improvements in the international market and look to this arena to be a leading source of long-term growth. difficult wells compared to an average of 26 percent for the industry fleet. The FlexRig3 is setting the industry pace in pricing with 20 out of 32 FlexRig3s currently contracted at $14,000 per day or higher. The counter cyclical investment made in the FlexRig has strategically positioned the Company by doubling its U.S. capacity and by  demonstrating a clear performance differ ential to the customer.  Forty-nine of our 50 FlexRigs ar located in the U.S. and will  give the Company improved potential earnings leverage in this  growing up-cycle. Although the offshore platform mar ket has been a disappointment, the Company maintains a solid foothold in this segment of the  business with the newest rigs in the Gulf of Mexico fleet and a wealth of engineering and project management experience that is essential for