This call may also include references to non-GAAP financial measures. Please refer to our website for a reconciliation of any non-GAAP financial measures provided in this call to the comparable GAAP financial measures. For reference, our general investor presentation is available on Key's website at keyenergy.com under the Investor Relations tab.Now I'll turn the call over to Dick Alario, Key's Chairman, President and CEO. Richard J. Alario Thank you, Gary. Good morning. Keeping with our typical format today, I'll make a few introductory comments and then Trey Whichard, our CFO, will summarize our financial results and provide some financial guidance commentary. Then Trey Wilson, our COO, will provide an operational overview, and I'll come back and wrap up and take your questions. In the second quarter, we generated earnings per share of $0.21, $0.01 a share above our revised guidance range. There were several factors that impact our second quarter results. Activity and pricing continue to decline in natural gas markets in the U.S. This has had a negative impact on our Fluid services Coiled Tubing and Edge Frac Stack and Well Testing businesses, primarily due to drilling rig activity declines in the Haynesville Shale. Last year, Coiled Tubing and Edge businesses in the Haynesville produced significant revenues at high operating income margins than this year due to lower activity and pricing pressure we've seen there to downsize these businesses and move the assets to other markets. We ended last year with roughly 75% of our U.S. business derived from oil markets. Now due to activity trends and our own operation relocations, our U.S. split is roughly 80% oil and 20% natural gas. While we've seen a steady drop in activity in the gas markets, they appear to be stabilizing. And while customer activity is still growing in the oil markets, that rate of growth is slow in response to the decline in oil prices this year. Also, significant additional service capacity have entered these markets. In fact, just over 50% of U.S. land drilling activities now concentrated in 3 major oil plays, the Permian Basin, Eagle Ford Shale and Gulf, [ph] compared to 34% approximately in 2011.
The revenue and profitability of our Coiled Tubing business in the second quarter was much better than first and we're expecting continued revenue growth and margin improvement in the third quarter. The we're definitely applying our own dose of self help. We believe the market of Coiled Tubing services remains favorable, and we feel good about the leadership and operation changes we've made in that business.Key's Rig Services units have been a strong performer in 2012 and the financial results for the business were roughly in line with our original forecast for the year despite market dynamics that I described earlier. Customer demand for our premium workover rigs in oil markets remain strong and we expect that will remain the case through the year-end. Internationally, our franchise continues to grow and prosper. We believe that the success of our Mexico operations is attributable to the efforts of our international management group and our operations team in the country. Our talented leadership understands this complicated market very well and have been very effective in demonstrating Key's value and service quality to our customers, thereby enabling us to generate more opportunities there. In fact, in addition to the 40 rigs we're already operating in Mexico, we expect to deploy additional assets there in the second half the year and Trey Wilson will make a commentary on that in his presentation. Our efforts to sell our Argentine business have been complicated by the change in the political landscape there, yet sale process continuous and we are certainly in discussions with potential buyers. Commensurate with flattening activity levels in the U.S., we recently announced the $100 million of reduction in our capital budget this year. Trey Wilson will elaborate further on our capital plans. Now I'll turn the call over to Trey Whichard for his financial review. Read the rest of this transcript for free on seekingalpha.com