Drilling goes on but theUS has left the table.

Hyundai Heavy Industries announced Wednesday that Rowan RDC had ordered two ultra-deep-water drillships that can operate in water depths to 12,000 feet. The two rigs, which together will cost $1.12 billion, are planned to be delivered in the second half of 2013, and Rowan has an option for a third drillship. Rowan has indicated it would like to move into the ultra-deep-water market for some time, so the move isn't a surprise to us. We believe the new rigs, once under contract, offer an attractive growth avenue and the long-term nature of deep-water rig contracts brings a more secure stream of earnings versus the more volatile and short-term-oriented jackup market. In our view, after finding contracts for the rigs, the challenge for Rowan will be finding an experienced crew, as the skills needed for deep-water drilling is different than for shallow-water drilling. Other drilling contractors that have moved into the ultra-deep-water market over the past few years have had years of experience with mid-water and deep-water rigs, so the transition isn't quite as large. Overall, though, we believe the move is quite positive for Rowan.