“International revenue was up 2% from the second quarter, compared to a 2% rig count decline, as a result of solid sequential growth in our Latin America and Middle East/Asia regions. Adjusted international operating income was up 5% sequentially due to strong activity improvements in key geographies such as Mexico, Brazil, Russia, Malaysia, and Australia.
“In Latin America, revenue was up 8% sequentially, despite a 5% drop in the rig count. Adjusted operating income increased 12% sequentially, led by excellent performance in Mexico and Brazil. We saw a significant increase in unconventional activity across Latin America during the quarter, and we expect margins to improve in the fourth quarter, aided by end of year software sales.
“In the Eastern Hemisphere, revenue has grown 19% and adjusted operating income has grown almost 70% compared to the third quarter of last year, relative to rig count growth of 5%, after normalizing for the recent addition of Iraq. We continue to see steady margin improvement and are optimistic about activity levels expanding in the fourth quarter and in the coming year.
“Middle East/Asia posted higher sequential revenue and operating income of 3% and 9%, respectively, while the rig count contracted 3%. These increases were driven by strong activity improvements this quarter in Malaysia and Australia and improved profitability in Iraq.“In Europe/Africa/CIS, we saw a slight decline in revenue and operating income in the third quarter, largely resulting from activity delays in the North Sea, shutdowns related to general elections in Angola, and reduced activity in Algeria and across continental Europe. Relative to the third quarter of 2011, revenue grew 14% and adjusted operating income grew 66% as we focused on repairing underperforming markets. “Overall, our outlook for the international market has not changed, and we expect a gradual progression in margins as we ramp up activity on recent wins and new projects, introduce new technologies, increase pricing on select contracts, and continue to improve results in those markets where we have made strategic investments.
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