Current period revenues included shipments of three frontend loaders, including two of the larger L-1850 model, compared with seven total units in the first quarter and eight units in the year ago period. Mining part sales totaled $12.1 million during the second quarter, down by 2% sequentially and by 6% year-over-year.

Excluding the impact of the external rig construction project, the second quarter 2007 average margin on direct manufacturing cost was 26% of remaining revenues or slightly ahead of 25% normalized margin during the first quarter of 2007. Similarly, the manufacturing operating income, which improved to 8% of revenues during the current period, would have been 13% without affects of the rig project. With about two thirds of the revenue base, the prior year period had a higher concentration of aftermarket part sales, thus better overall margins.

For the drilling division, revenues were a record $353.1 million, a sequential increase of $64.8 million or 22% and a year-over-year increase of $73 million or 26%.

The sequential increase in drilling revenues reflects the startup of two Tarzan class jackups under four-year contracts to offshore Saudi Arabia in late March and a full quarter of activity by the Gorilla VI, which commenced operations in the North Sea in late February.

Approximately one half of the year-over-year growth in drilling revenues resulted from rig fleet additions between periods with the balance primarily driven by an increase in overall average offshore day rate that followed relocation of several rigs from the Gulf of Mexico to more promising foreign markets.

The second quarter drilling expenses were $144.6 million, a sequential decrease to $2.2 million or 2% and a year-over-year increase of $24.9 million or 21%.

Over half of the year-over-year increase in drilling expenses is attributable to rig fleet additions between periods, including the Hank Boswell, which was delivered in September 2006, the rebuilding of the Rowan Louisiana, which was completed in December 2006, and the construction of 10 new 2,000 horsepower land rigs. The remaining increase is primarily attributable to higher labor, overhead, rig maintenance and towing costs associated with relocation of several offshore rigs to overseas markets. The sequential decrease in drilling expenses was not large and did not spread across many cost categories, though it does indicate that the cost impact of our ramp-up of international operations over the past year has been fully absorbed. The company’s focus going forward will be on further cost operations in existing operations where practicable.

The second quarter depreciation expense totaled $28.9 million, a sequential increase of $1.3 million or 5% and a year-over-year increase of $6.9 million or 31%, primarily due to the rig fleet additions mentioned previously.

The selling, general and administrative expenses totaled $22.9 million, a sequential increase of $0.5 million or 4% and a year-over-year increase of $4.3 million or 23%, primarily due to incremental incentive-based compensation costs associated with improving operating results. The prior-year amounts reflect a reclassification from operating expenses to be consistent with the current year presentation.

The second quarter capital expenditures totaled $145 million, bringing the year-to-date total to about $232 million at June 30, 2007.

Most of the expenditure is related to construction of the fourth Tarzan Class rig, the JP Bussell and first 240C class jackup at Rowan Mississippi. The company currently estimates that its full-year 2000 CapEx will be in the range of $390 million to $410 million and will continue to be financed through operating cash flows. The debt to capitalization ratio is at 18% and the average cost of debt is below 5%.

LTI Drilling Systems supplies mud pumps, drawworks, top drive, rotary tables and other drilling equipment.

The imported SourceOne marketing alliance is strengthening daily in its turnkey supply of drilling equipment packages. The firm is currently supplying packages for three external land rigs and four offshore rigs beyond those already delivered. The new lightning series land rig design 2000 horsepower AC, a million pound hook-load is now a mature product line. For worldwide construction of new jackups, the firm is supplying approximately one-third of all mud pumps.

The company’s new gear-driven drawworks are performing well, and they''re also maturing as another new product line. Based upon the strong favorable experience with its onshore applications to date with these new drawworks, the firm has begun applying this new product line offshore also. The new top drives use innovative technology and apply unique direct drive in its design.

The firm has extended into the Middle East and Singapore with further expansions to follow. The backlog totaled $139 million at June 30th, 2007, and included 35 mud pumps, one drawworks and 103 million of rig packages sold through SourceOne marketing alliance. This backlog was approximately $151 million on July 31st. The company expects most of its Drilling System backlog will be realized during 2007 with the remainder in the first half of 2008.

The company’s innovative low-speed, high-torque AC motors designed for top drives are performing extraordinarily well.

The firm’s leading-edge Switch Reluctance technology has been successfully proven on large loaders, and the firm is pursuing broader market application, and it is currently developing a higher capacity SR product.

The AC drives are also performing well, and related product development is continuing for niche applications. These innovative power designs will continue to drive new product development in each of the markets it serves. The backlog totaled $26 million at June 30, 2007.

LTI offshore products produces jackup rigs, rigs kit and related components and parts.

This backlog totaled $166 million at June 30th, 2007, including $150 million related to the firm’s seven rig and rig kit projects in progress. The firm expects that approximately two-thirds of LTI offshore products backlog will be realized over the remainder of 2007 with the balance over the first half of 2008. This backlog was approximately 159 million on July 31, 2007.