Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from Roger Read of Morgan Keegan.

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

I guess, really -- I'd just like to ask you, maybe about the '12 outlook, since I think that will be where most people are focused. When you look at the increase in the bookings side, particularly in New Units, where do you think that -- or where do you see that coming from, Vince? Is that more Brazil as you highlighted earlier, or is that a global uptick, just exactly what is driving that?

Vincent R. Volpe

I think there's a couple of things, Roger. One, the upstream -- our strongest position among these market segments is clearly in the Upstream, just because the type of equipment we offer and the efficiency and so forth. So that has traditionally been our strongest segment in terms of a share -- from a share standpoint, and that is a segment that we think is going to continue to grow and bring us -- sort of, we'll reap the greatest benefits from that space. It's not just Brazil, I ought to be clear. There are a variety of different FPSO and floating LNG projects being studied in places beyond Brazil. So I think that this is more than just a single country that is going to provide this kind of yield. I don't believe we're going to book another 8 floaters next year on one contract for Brazil per se. But we do think, if you recall the guidance that we gave over the next 12 to 18 months on the last quarter's call, we said we thought we'd book, maybe 12, a dozen or so floaters, 10 to 12, I can't remember the exact number over the next 12 to 18 months. Given the fact that we booked 8 of them in the third quarter, I'm prepared to say we're going to go beyond what I said the last time, that we'll book more than 10 or 12 in total. We've had a few more lined up. So that's a big piece of it. Midstream, actually, we're seeing more activity than we normally see, principally because in the shale gas play, a lot of high-speed separable machines are being used, which we don't have a big share of. But the gas is principally wet, and so what we're finding is, a fair amount of applications for residue and gas, gas-processing applications where they're taking the liquid and hydrocarbons and water out of that gas. So opportunity there in the Midstream that we really haven't been focused on before. Downstream, we're going to see some growth. I don't think this is going to be anywhere near as prolific as in the Upstream. Mostly offshore U.S. I mean, U.S. refining, which is most of our Downstream business in the U.S., is limited really to refurbishments and upgrades. But there are greenfield project being looked at in places like Saudi and Kuwait and Vietnam, and other parts of the world. And then finally, we believe we're going to see another pick-up, or a continued pick-up in the Environmental space. The synergy that we get from the Guascor-Dresser-Rand combination has really already started to yield the results. We've booked some nice jobs, without either Guascor or Dresser-Rand selling channels, and without the combination of Guascor and Dresser-Rand products, we wouldn't have booked. And so we believe that we're going to see growth in that. So to summarize, principally Upstream, principally in the floating markets, not just Brazil. But we do think we're going to see a pick-up in activity, versus this year in refining Midstream, and again in other incremental pick-up in Environmental. So fairly positive all the way around, but the biggest positive is the Upstream space, Rog.

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

Okay, that's very helpful. Maybe just a quick follow-on into Libya then -- obviously, none of us know exactly how that situation is going to roll out. But assuming that it heads to a, let's call it, a normalized or even take the IA [ph] forecast of, a few hundred thousand barrels gets added each quarter, and maybe they're back to normal by some time in 2013. Do you have any feel for what the infrastructure condition is there? I understand what you lost this year, and what you could make back next year in terms of normal. But it's not normal there. There probably was some damage. And could Libya be, in the end, at least by the second half of '12, quite a significant improvement for you?

Vincent R. Volpe

Well, all right. What we modeled is, '12 is half as good as '10 was, okay? Where '11 was nothing. So that's what we modeled. The back half of '12, it is possible that it could be higher than that, but all we've put in, is half a year, okay? Now if we're able to go even faster, then you might pick up a little bit in the front half of the year. I wouldn't count on the back half of '12 being enormous either though, Roger. It just takes time for these things do move forward. So yes, it could be bigger than the equivalent .5 year that we've modeled, more than likely, it probably moves out to '13. And again, it depends on what happens in the country, right? I mean, there's been a regime change, but to what?

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

No, I understand. Just for a bit, I was just trying to -- did you have any clarity?

Vincent R. Volpe

But the point is with the pendulum -- the pendulum will swing back to greater than it was. At some point in time, there's going to be more than a $15 [ph] million opportunity in earnings there, because not only does everything need to keep happening that was happening, but clearly, there's a lot of repair that's got to take place. So it should be a bigger opportunity, whether that shows up in the back end of 2012 or '13, is beyond me.

Operator

Our next question is from James West of Barclays Capital.

James C. West - Barclays Capital, Research Division

Vince, looking at the guidance for 2012 on New Unit margins, low double-digits. We've been in that range, 2008, 2009, 2010, even as revenue was flat becoming down. We are now at point where revenue is really starting to accelerate here in '12. Why wouldn't we see more margin growth on the New Unit's side as we go into 2012? Or are you just being conservative? Or is there something that we're missing with Guascor coming in or pricing coming down? Can you help me with that a little bit?

Vincent R. Volpe

Well, it's not pricing, so the good news is we can check that one off. I mean, I think, the relationship between price and cost, it translates to standard variable margins for us, James. And they look like they're pretty solid and constant. There's not a lot of motion in the base business. The Guascor variable margins are the same level of magnitude, and in some cases even a little bit higher, so it shouldn't be Guascor variable margins pulling us down. We are spending more money in infrastructure, as you know. And it doesn't all go into non-allocated, right? That stuff gets allocated, so that's a little bit of an anchor. And then the other thing is, I think it's important to recognize that we're talking about another -- depending on how you calculate it, nominally, another 15% increase in bookings year-over-year. That takes more SG&A, particularly more salespeople to do that. So you've those got those costs that show up as period costs, they're really investments in the future. The other thing is, I talked about a $10 million hit on operating income based on the strategic acquisitions that we're quite excited about, and hopefully, we'll do. If we do it, probably half of that money shows up in what's known as other variable costs. So that puts a little bit of an anchor on it. And so you add all those things up, and that is what is tamping a little bit or keeping those margins in the range. But your question is absolutely legitimate. I think if you do look at the overall operating leverage, so you're getting more than 2:1 in terms of increase in operating income versus increase in sales. So we think holistically looking at the business, it's a really good step forward. Yes, we are reinvesting as we said we would be doing, in some of these pieces. So some of that flows through and your margins don't expand on the Aftermarket and Unit side, the way that you would have otherwise imagined. So I don't know if that gives you enough detail, but that's sort of a macro view of what's going on.

James C. West - Barclays Capital, Research Division

I think that's fair. So we would expect at some point, may be into '13, may be into '14. But at some point, we are going to see this expansion then in margins?

Vincent R. Volpe

Yes, look, I mean, if you take out a business that we're buying this year that's going to generate negative $10 million earnings, if we're able to do it, and you look at what we're doing in terms of increasing our infrastructure, we're not going to continue to increase our infrastructure over the next 3 to 5 years the way that we are -- we've done over this 3- to 5-year period, which started last year, if you will. So because we just aren't going to need to. I mean, we've got a factory we've got to set up in Brazil. We're in the middle of doing a factory in Saudi. I don't believe that we're going to need to continue to make those type of expenses -- expenditures now. Some of that's CapEx, and a lot of that also goes to the operating line. So I think that your statement is accurate.

James C. West - Barclays Capital, Research Division

Okay, okay, fair enough. Then the acquisition, is this the supersonic compressor technology that you guys have a piece of already?

Vincent R. Volpe

No. This is something else. This is like a -- this is sort of a cloak and dagger deal now. We can't say anything. And I didn't really want to talk about it, because it's not done yet, but it's awfully close and we hope it will get done. And it is not an insignificant impact. And so as you're looking at our range, and you're looking at the midpoint, and you're saying, what does all that mean? Recognize there is a $10 million anchor hanging off the end of that, which we think is highly strategic. So I wanted to mention it for that reason to just, sort of, help you think through why our numbers are where they are.

James C. West - Barclays Capital, Research Division

Okay, okay. Then last one for me. In the Aftermarket revenue growth next year up 20%, that's obviously a lot higher than normal, but you've got a group of Guascor in there, as well. What's the assumption for the tradition of the base Dresser-Rand business for the growth in '12?

Vincent R. Volpe

It's probably around 15, James. I don't have the exact number, but remember with Guascor, you've got 4 months extra of bookings, okay? Because we only started consolidating in May. And so that number, that brings us a few more points, right? So if we're talking about 20% growth in total, and I'm guessing, it's 15% or so, excluding Guascor. And that may or may not -- Mark is sitting here next to me, he's going to look -- he'll look at that and I will correct that if that's wrong. By the time we get to the end of the questions, James, because I want to give you a good answer and I don't have it off the top of my tongue.

Operator

Our next question is from Joe Gibney of Capital One.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Just a question on your Aftermarket patterns here in '12. I understand you're dealing with, sort of, a higher Field Services component to the mix with Grupo, but with the 22% to 24% guidance, certainly there's a movement higher here. I was wondering, Vince, if you could just talk a little bit about what you're seeing Downstream within that mix, and particularly from inventory cannibalization and sort of deferral of spend that we see in a little while, what you're seeing a little bit on the pricing front, Downstream Aftermarket as you look into '12?

Vincent R. Volpe

I think that we're going to get -- we will get slightly positive, or at least inflation on our pricing, okay? So I think that the growth that we're looking at is, and there's cost inflation obviously also, so I think the growth that we're looking at is real growth. And I don't know if that's specific enough to you, Joe, I'm not sure I followed exactly what you wanted me to get at, so let me ask you to rephrase if you could?

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Sure. Just in Downstream, certainly, your overall Aftermarket operating margin 22%, 24%, heading higher, but I believe you're depending with the higher group of Field Services mix. But your base Aftermarket business and what improving on the margin side? I'm just trying to understand what that says about Downstream, given it's such a large component of your Aftermarket.

Mark E. Baldwin

Yes, it's saying that Downstream is the -- we ought to see the same degree of growth and pricing in Downstream as we're seeing in the rest of the business. And clearly, there is margin expansion in the Aftermarket, unlike James' question on the Units, on the Aftermarket, there is margin expansion. I think that some of that comes from the volume effect of the growth in the Aftermarket that you get operating leverage. They're in the way that we allocate cost, frankly, but you're getting, maybe a little bit of pricing, but mostly what you're getting is a volume impact across-the-board. And between Upstream and Downstream, there's really not a difference.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Okay, that's helpful. And just to calibrate a little bit on your revenue trajectory into '12. I apologize if I missed this in your prepared remarks. But did you get a detail of what is scheduled to ship from near standpoint here in the fourth quarter of '11?

Vincent R. Volpe

We did not know, but we've got -- in the fourth quarter of '11, we're going to ship about $550 million of New Unit backlog and we've only got -- which -- we've got all -- everything we -- fundamentally everything we're going to ship is we've already got it in backlog, you need to on Units. And then in terms of the Aftermarket, we're going to ship about 300 -- in the high 300s for the fourth quarter.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Okay, that's helpful. And Mark, just a couple of quick ones. On '12, I think you referenced the CapEx for '11 on a percentage basis, I didn't know if you've provided that for '12. It's been 2.5% that you referenced on '11. I didn't hear what it was for '12, if you provided that.

Mark E. Baldwin

We did not provide that. I believe that the number should be between 3% and 4% though, maybe closer to 4. This is the year -- this year and probably '13, Joe, we're -- that's when the preponderance of the infrastructure costs of these big factories that we're putting up is going to hit. So that is higher than our traditional number, which is sort of 1.5% to 2.5% of sales. And our view, which we sort of explained last November, a year ago, in our Investor Meeting was, that was going to go up for, say, the next 3 years, and then probably come back down to the more traditional levels. So use 4% for now, Joe, to be safe. We'll recalibrate it and give you -- we'll give you another number on the Q4 call that takes place next February. We will update that.

Operator

Our next question is from Jon Donnel of Howard Weil.

Jonathan Donnel - Howard Weil Incorporated, Research Division

I have a question regarding the Aftermarket components that came along with the FPSO orders in Brazil and the kind of the outlook for, maybe, a similar awards going forward here. Is this something that is, may be just goes along with the FPSO contracts in general or with Petrobras? Or is this something that you're looking to do more hits, just generally, the Unit orders going forward here, kind of, like in the Aftermarket contracts along with this?

Vincent R. Volpe

Well, we love the idea of generating recurring revenue, John. And so our Aftermarket teams and our services group is very much focus on growing that business. We think it's good business. It gets much easier for us from our human resource standpoint to plan. We know where people need to go and they need to be there. It's a source of recurring revenue, so for all those reasons, we like the business and we want to grow it. We do not push to link Aftermarket with New Unit business. And now I'm going to hope no customers are listening, but we think we can do better on margins, if they don't link them. And we think if they need -- they fundamentally need to use us for the -- at least the initial installation and commissioning. They've got to use us, all right. To the least, do the supervisory work. The selling really comes a few years after the units have been installed, where we say, "Hey, let us provide operations or maintenance people or field supervision people," in terms of long-term service agreements. So we don't normally try and link those. Petrobras, I think, looked at this and said, it's going to be an important issue because, we as a company, are building -- putting in a tremendous amount of infrastructure and we want to absolutely make sure that we've got the proper support lined up right now. And frankly, sometimes people hire mechanics based on price. And what Petrobras, the procurement folks understood was, they didn't want to leave this to somebody else to decide 5 years from now to go higher a mechanic on the cheap and wreck the compressors. And so, they decided they would include, literally, overhauls and not only the field supervision work, but actual managing of the overhauls into the contract. Which is why, by the way, we can't book all of the contracts right now. Some of this stuff we'll book -- as we go, for instance when we do long-term service agreements, we only book 15 months in advance. So once we start delivering the units, we'll look out, and once those -- once that service revenue starts, we'll just keep moving it out, 15 to a 15-month basis. So not normal, but a very good reason why Petrobras did at this time. And we're very pleased that, that's part of the project, also because that helps us understand what we're going to do with our facility in Brazil over the next 10 to 15 years. It will be the source of a lot of overhaul work. So it helps us see through in justifying a significant investment in the country.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay. So it sounds like the $60 million that you booked for the Aftermarket's not really isn't going to be recognized, maybe until 2013, sort of the at the earliest, is that correct and...

Vincent R. Volpe

Yes, that's correct. That's correct.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay, and so for the remaining $200 million or so of our contract, is it that just going to be layered in here as we work our way through 2012 [indiscernible]?

Vincent R. Volpe

It will. I mean, there'll be change orders and different things that you're not going to see -- we're not going to have a quarter where we announce a $200 million bookings for Petrobras. It's just going to sort of bleed in as a natural course of events. But let me just reiterate that the 20% revenue increase year-over-year that we've guided to comprehends all of this. So what you're really saying is the other stuff in -- the Petrobras order is really building backlog for 2013, '14, '15 and even '16.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Right, that makes sense. Great, thanks for that. And then also with the Brazil FPSO bookings, the power generation piece of that is still out there for you guys to potentially look into the future? Or did that go to another bidder?

Vincent R. Volpe

No, that went to another company.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay, is that -- do you think that's more of a Petrobras just sort of doing the typical thing with a service provider, sort of just splitting that up amongst multiple competitors or does it really...

Vincent R. Volpe

Probably, we didn't -- and we really didn't ask them, because we were so happy with what we got. But we think is probably a $400 million or $500 million subject, in and of itself. So they give us $700 million. I mean, you could -- there is an argument that says that might be enough for one supplier, and let's give the other guys. I don't know if it's been announced. I know who received the order. I don't want to say it because they may not have made an announcement, but it ought to be in the public domain by now. If you look around for it, you can find at. And if it is in the public domain, I mean, Blaise can get it for you and he can send it to you. We'll do that, in fact.

Operator

Our next question is from David Anderson of JPMorgan.

John David Anderson - JP Morgan Chase & Co, Research Division

Vince, let's just beat this 2012 guidance to death, why don't we? Aftermarket, I guess I'm wondering, I'm looking at your Aftermarket guidance going forward, I'm trying to figure this out. You talked about Guascor being, I think you said $250 million or so on that with long-term contracts is impacting there. But you're saying 22% to 24% guidance. This has been a business that's typically, kind of, done in the mid- to high-20s, if you look historically. Are those days gone? Is this kind of a structural change in this business? Is this kind of how we should be thinking about this going forward? Or is there something kind of holding that back that can snap it back, a little bit further out. I mean, I'm just a little surprised to see the guidance kind of where it is now. I was expecting to see some a little bit higher.

Vincent R. Volpe

Well, I hear you, David. I think the year-over-year, of course, you're seeing a couple of hundred basis-point pick-up, right, okay? And don't forget that next year has a full year of that Guascor energy asset business in it. So if you just take 4 versus -- your 8 versus 12 months, or 7 versus 12 months, you've got -- the impact of Guascor on a full year basis is more than a couple of hundred basis points, let's call it 300. I mean, I'm kind of making this up but I'm not really, all right? Directionally, this is a right. So Guascor has caused in a string of basis points in that margin. Now remember, it's still on a variable margin basis, giving us nice incremental margin and it's important to the overall margin in the business. But at -- in terms of the Aftermarket segment, let's say, it's costing us 300 basis points. So now all of a sudden, you're back to 22% to 24%, now becomes 25% to 27%, and you're not asking me the question any more.

John David Anderson - JP Morgan Chase & Co, Research Division

Okay, that was my question, yes. So it is kind of lowly in structure. But there....

Vincent R. Volpe

It is lowly in structure. Now what can change that? Well, a couple of things. One is, those assets could go away at some point in time and stop running. But we don't see that happening in the near-term. Somebody could show up, they want to offer us a tremendous amount of money. I doubt that's going to happen, but those are things that could change it, but barring that, I think that's what we've got now.

John David Anderson - JP Morgan Chase & Co, Research Division

Okay. Now, you broke out Guascor pretty well in the release, which was very helpful. But one part, you mentioned that there is some seasonal weakness in Guascor this quarter. Can you help us understand a little bit about how the seasonality in this business, how it compares to, kind of, your base business? I mean, typically we've always seen -- first quarter has always been light, it kind of always ramps up in the fourth. So I'm just kind of curious, why was third quarter -- why is third quarter seasonally lowest for Guascor and how does that kind of look on a full year basis?

Vincent R. Volpe

Yes, the first part of the question is pretty easy to answer. The Guascor's business is much more of a book-and-ship business on a short cycle. For instance, the energy asset business, they book and ship the same time, right? And that's a big piece of their business, right? Because every month, it's a recurring revenue stream. The engine business -- it may take you 3 to 5 months to build an engine. So as you get people going on vacation in the summer in Spain, which is where the engine factory is, it doesn't take long for you to see a drop off in the sales activity. And so that's why there's a closer match there. Now remember, everybody else is on vacation in Europe, also, but our New Unit business and the rest of Dresser-Rand, for the most part, is 12- to 14-month cycle time. And so, the vacation period gets more masked than it does in Guascor. And we don't build a bunch of units for inventory. So we don't -- we really do need people in our factories to build and ship these things as we get orders. So that is the principal part of the explanation for why Q3 is seasonably low. I forgot what the second part of your question was, David.

John David Anderson - JP Morgan Chase & Co, Research Division

You pretty much answered it there. I was just trying to get a better handle on that. So it's not really the nature of the business is because the Europeans' have gone on vacation. So I guess one more thing to blame the Europeans on it. So...

Vincent R. Volpe

Well, I don't know, my wife's a European, I don't blame her for anything. I think it's that. It's the vacation period and a short-cycle time.

John David Anderson - JP Morgan Chase & Co, Research Division

All right. As you think about next year and you think about '12, and you think about then your overall guidance. I was just kind of curious, as you look out there, what are kind of the 2 or 3 swing factors in your mind, on maybe on New Unit orders and maybe Aftermarket operating income to kind of swing things? I guess, I'm just trying to understand, kind of, in the market dynamics, what could shift in the market dynamics that gives you more upside than expected or conversely kind of where is the greatest risk here? Maybe just a couple of things that in your mind that's swinging things around?

Vincent R. Volpe

Let's see, on the New Units side, the dye is pretty much cast, except for the engine business, because it's 3 to 5 months cycle time, right? We're just talking about that. So I think we've got a lot of business scheduled for -- or as an example, Venezuela, and so if there some sort of significant change down there, that could impact us. I think it could, negatively and positively, the way the we've set the year up. In other words, we're not counting on a full year of Venezuela in the ENC [ph] contract we're doing. We're building an assembly facility down there. So that would be on the New Unit thing, and probably from a revenue standpoint, probably the single biggest deal now in terms of bookings on Units, if oil came crashing down, David, I would say that we'd see a slowdown across-the-board in New Unit bookings. Not going to have an impact to speak of on the revenue side of the equation on New Units for 2012. I think the Aftermarket is where there are, perhaps more moving parts. We talked about Libya if, and by the way, if there is -- and not just Libya, but what's going on in the Middle East and other parts of the world, if there is political upheaval and unrest, you see the result of that more quickly, people don't order parts, right? They got a set of spare parts and they say, "You know what, I got spares, I'll use them for my next overhaul and I'll take my chances on not replenishing them." Which is exactly what we saw in 2008, 2009, right? They slowed down on the parts -- or really in '09, they slowed down on reordering parts. Now we're starting, and that's coming back now. I mean, clearly, we're in the middle of the recovery mode. So I think you can see, in the Aftermarket -- the Aftermarket is more susceptible to a financial crisis or an economic slowdown that drives the price of oil down, or have some other macroeconomic impact or geo-political impact. And how big could that be? I mean, it can be pretty big, right? We've stress-tested this thing already, David. So we know that, the first year when we went in the tank, we saw, in real terms, probably a 5% drop. So you could see a 5% drop, if everything sort of went to hell in a hand basket, to use a term. Overnight, in terms of the Aftermarket, you could see may be a flat or maybe even a slightly down revenue number from this year. I think it's fairly unlikely though. But that would be the worse case. And I think on the best case, there is probably another $10 million to $20 million in increased Aftermarket earnings that are in this number. And that has a meaningful impact also. David, I really wanted to give you a wider range than what I gave you, which was already huge, but I thought you'd just throw me out of the court, and just call me an idiot. But $60 million really isn't all that much of a range when you start to think about what's going on in the world. But I think, fundamentally, if things continue the way where they're going, we're very -- we're excited about 2012, both in the bookings standpoint and the operating leverage we're going to get on the sales. And we talked about the sales, I mean, and just to be clear, I think you're looking at total sales between $2.9 billion and $3 billion, right? So I mean, we talk in percentages, let me just get you centered on that, and I think most people that have been looking at our model had been thinking along those terms, but just to put that out there.

Operator

Our next question is from Robin Shoemaker of Citi.

Robin E. Shoemaker - Citigroup Inc, Research Division

Vince, I just wanted to ask you on -- you've highlighted the Aftermarket and New Unit orders of Guascor in this most recent quarter. And the Aftermarket was considerably higher than New Units and my impression was that overall Guascor has a much more substantial New Unit and a kind of a smaller Aftermarket, which is why you had indicated the intention to open more service centers and work hard on increasing the Aftermarket portion of Guascor.

Vincent R. Volpe

Robin, you listened very carefully to what I said before because that is what I said. And what I was thinking, when I -- the terminology that I use when I talked about the Aftermarket was, I should have said, to be more precise, the traditional Aftermarket. And so the traditional Aftermarket for us is Parts and Repairs, and basically, Field Service, that goes along with equipment that's installed. That number, if I look at just the engine business, because that would be a business that generates the Aftermarket, that's only about 10% to 15% of their total business. So in terms of the traditional Aftermarket, as we look at it, our traditional Aftermarket's 50-plus-percent of our total sales, and theirs was only about 10% to 15% of their total sales, okay? Now what you have to layer on top of that is what Mark was talking about before which is the energy asset business, which we classify as an Aftermarket business because it is aftermarket. The stuff is installed and it's giving us -- generating, recurring revenue streams, and its margins, by the way, are fairly consistent with what we're seeing in the other services margins and in the Field Service group. So the traditional Aftermarket, which is what we think we can really grow is pretty small. It's only 10% to 15% of the total when you look at the engine business. The overall Aftermarket, as we're now classifying it, is a much bigger number. And by the way, that is not the number that we think we are going to grow. The energy asset business is not a business that we're focused on investing in. We're not trying to build a bunch of more new assets and own and operate, and we don't like that model. It doesn't mean that more can't be done but we're just not going to use our balance sheet to do it, okay? So we're not going to prolong that business. And that business was never built into -- when we looked at long-term cash flows and so forth, we never counted on growing that business. And nor did Guascor's management team, originally. They said no, we've done what want to do there, and we think we probably don't want to go beyond where we are. So I don't know, does that help you at all, Robin, to think about this?

Robin E. Shoemaker - Citigroup Inc, Research Division

Yes, yes, that helps. And I just had one other quick one question that regarding, since your guidance here, adding up what you just mentioned previously was a little over $900 million in revenue in the fourth quarter, and we've always seen fourth quarter strong for Dresser, but for some reason, this year seems to be unusually large. Is this a kind of a new kind of expectation going forward that you're going to have this really large fourth quarter revenue operating income as a percentage of the year? Or is it going to be more like a past year's where it's bigger, but not quite so huge?

Vincent R. Volpe

That's what you said is the -- the latter is the accurate statement, or at least, that is our belief. This year, what -- we got into a situation of really just suffering from the back-end of the recession. Low New Unit booking to -- we had good bookings at the very tail end of 2008. We had terrible bookings in '09, and they weren't anything to write home about for the first 2 to 3 quarters of 2010. It wasn't until the last quarter of 2010 we had a nice pop in bookings. So you've got really 1.5 years of dirth, of sort of a dirth of activity. And that just a plays out to the, sort of, the first 3 quarters of this year. And it's all just sitting in Q4. Now it is true that Q4 is traditionally larger, and you should expect that in 2012. And we're not ready to give quarterly guidance for each of the quarters, but I would be surprised if the first quarter of 2012 was more than say, 10% to 15% of the total. I mean, we'll give you a number, right? But -- and the fourth quarter will be significantly higher than that. And that's -- so we're going to go back to sort of what we did historically, Robin, we believe.

Operator

Our next question is from William Conroy of Pritchard Capital.

William Cornelius Conroy - Pritchard Capital Partners, LLC, Research Division

Vince, may be a couple of a little bit higher level questions, as you think about the order potential in the guidance that you've given us, baked into that must be some thought in terms of market share. And really -- I'm thinking more in the New Unit side not so much in the Aftermarket side, although I think that's as relevant, but how are you guys are thinking about market share or how is that reflected in the guidance that you're giving us for 2012?

Vincent R. Volpe

There's no fundamental change in our traditional shares. And I'd be happy to add more to that. I'm not sure what else I can add, but that is, William, that is the basis of these -- that's the assumption.

William Cornelius Conroy - Pritchard Capital Partners, LLC, Research Division

No, that's fair. I'm looking to see if there was anything baked into that or not. Another question, just very quickly then, in terms of how we normally think of your backlog shipping, and really I'm thinking more of an order shipping. Is there any change to that? And I guess I'm thinking specifically with the Petrobras orders, or is there anything that is shifting your traditional shipping schedule?

Vincent R. Volpe

That's a great question. On the New Unit side, we give guidance that is sort of around, call it, 12 to 16 months, is sort of the widest range we give. But when we actually do forecast, each of them are discreet projects that have scheduled deliveries. So when we give you a forecast and what we think we're going to do on New Unit sales, we don't use our model, that's just sort of our rule of thumb for you guys to use. We'll actually give you a forecast on the New Unit side that is based on when they're scheduled to ship the actual contract. So we've got visibility into that, obviously. Most of our backlog is long-term. And so that's helpful on that side. On the Aftermarket, we do use a model that says, what you're referring to. If we book, for instance, $100 in parts, and I won't get it exactly right but we say that maybe 30% or 40% of that goes to the first month that we booked, and then another 30% goes to the second month, and 20% and 10%, right? So we have a way to -- we spread that out. And we've generated -- that, that model has been in existence for 10 years and it's been updated based on statistics twice a year, by the same person in fact. And so it does pick up changes where on a specific job, the parts are ordered but they're really not going to be delivered for a much longer time frame. It picks that up, but we do break it down. Parts are separate from Field Service, which is separate from Repairs, which is separate from revamps. And so we've got a model for each of these, because even though they may all be product services or they may be all Aftermarket Parts and Services, and in terms of being part of the segment, they have different delivery profiles from the time we build them to the time we book them to the time we ship them. So the model over the continuum is pretty darn accurate.

Operator

Our next question is from Robert Connors of Stifel, Nicolaus.

Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division

In the quarter, it looks like the parts -- mix of parts picked up. Was that the Downstream the one I'm picking up, and sort of like, what do you see for that -- the parts going into 2012?

Vincent R. Volpe

I can't answer the question, Robert. I think we know the answer. I just don't on why the parts, where -- what segment those parts came from. They are high. We normally don't look at that in detail, unless we're really key looking for something, because they're coded by customers. And so if we get an order from Chevron, was it for the Agbami FPSO? Or was it for El Segundo Refinery. We can find out if we look, but we normally don't look. We just say it was an order from Chevron. So I don't have the answer to that question. I can tell you, conceptually though, that we've seen a pick-up in the activity in the Refinery segment Downstream. And so Parts, it would not be unnatural for us to see an increase in the Parts piece of that.

Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division

That makes sense. And then just to piggyback on that. You had talked how you're finally picking up and places like Saudi, Kuwait, and Vietnam. But talking then just some of the engineering shops out there, there's -- actually I'm starting to see some projects coming pretty close to coming the FID within Latin America. Now I just want to know what your market condition is within those regions?

Vincent R. Volpe

You know what I mean, we have at least, obviously, we have -- not obviously, we have a long-term relationship with PDVSA, we have a long-term with Petrobras, I'm told, and with PEMEX, okay, the 3 Ps. And we have signed service agreements with them. So we are a regular supplier of equipment to them. And what happens in the Downstream business is the decisions become much more localized. In other words, if you're going to all offer a machine for -- given a refinery, pretty good, if it's an upgrade. It's probably the refinery manager who's got a lot to say about whose equipment goes in there because he or she says, "Look, I've got a bunch of Dresser-Rand equipment that's running well. I like their service. They got a new facility. They're setting up here. And then they've got their facility in Campinas. And so, let's go at Dresser-Rand because and I'm going to get the support. That's a big part of the purchasing decision. And as I said, we have 3 contracts, one with each of these 3 frame agreements, let's call them, with of the each of the 3 large users of our equipment in South America. So market share is good. It's very consistent with our Downstream market worldwide. It's certainly better. I think if I had to classify our market position in the United States, in Downstream it is the highest among Downstream shares. And then Latin America is probably next on the list. Asia may be behind that. And frankly, Western Europe is, and the Eastern block is were our lowest share is right now. And that is a lot to do with where our competitors are, I think.

Operator

This concludes the Q&A session. I'll turn the call over to...

Vincent R. Volpe

Excuse me, Operator, excuse me. I do want to just get back. James West from Barclays had a question, and I'm asking Mark Baldwin if he would respond to that. Mark has subsequently gotten the information. So let's do that if we could first, Mark?

Mark E. Baldwin

Yes, I think James was asking what the Aftermarket revenues for 2012 would be without Guascor. We had them for 8 months in 2011 and '12 for 2012. So when you strip Guascor, expected revenues out in both periods, it looks like about -- a little more with the 15% is our base business is growing in '11 to 12. Blaise, do you want to conclude the call?

Blaise E. Derrico

[indiscernible] We're going to conclude the call. I appreciate everybody joining today. If you have questions, please call me. My number can be found at the bottom of the earnings news release that we should last evening. Everybody, have a great day.

Operator

Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from Roger Read of Morgan Keegan.

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

I guess, really -- I'd just like to ask you, maybe about the '12 outlook, since I think that will be where most people are focused. When you look at the increase in the bookings side, particularly in New Units, where do you think that -- or where do you see that coming from, Vince? Is that more Brazil as you highlighted earlier, or is that a global uptick, just exactly what is driving that?

Vincent R. Volpe

I think there's a couple of things, Roger. One, the upstream -- our strongest position among these market segments is clearly in the Upstream, just because the type of equipment we offer and the efficiency and so forth. So that has traditionally been our strongest segment in terms of a share -- from a share standpoint, and that is a segment that we think is going to continue to grow and bring us -- sort of, we'll reap the greatest benefits from that space. It's not just Brazil, I ought to be clear. There are a variety of different FPSO and floating LNG projects being studied in places beyond Brazil. So I think that this is more than just a single country that is going to provide this kind of yield. I don't believe we're going to book another 8 floaters next year on one contract for Brazil per se. But we do think, if you recall the guidance that we gave over the next 12 to 18 months on the last quarter's call, we said we thought we'd book, maybe 12, a dozen or so floaters, 10 to 12, I can't remember the exact number over the next 12 to 18 months. Given the fact that we booked 8 of them in the third quarter, I'm prepared to say we're going to go beyond what I said the last time, that we'll book more than 10 or 12 in total. We've had a few more lined up. So that's a big piece of it. Midstream, actually, we're seeing more activity than we normally see, principally because in the shale gas play, a lot of high-speed separable machines are being used, which we don't have a big share of. But the gas is principally wet, and so what we're finding is, a fair amount of applications for residue and gas, gas-processing applications where they're taking the liquid and hydrocarbons and water out of that gas. So opportunity there in the Midstream that we really haven't been focused on before. Downstream, we're going to see some growth. I don't think this is going to be anywhere near as prolific as in the Upstream. Mostly offshore U.S. I mean, U.S. refining, which is most of our Downstream business in the U.S., is limited really to refurbishments and upgrades. But there are greenfield project being looked at in places like Saudi and Kuwait and Vietnam, and other parts of the world. And then finally, we believe we're going to see another pick-up, or a continued pick-up in the Environmental space. The synergy that we get from the Guascor-Dresser-Rand combination has really already started to yield the results. We've booked some nice jobs, without either Guascor or Dresser-Rand selling channels, and without the combination of Guascor and Dresser-Rand products, we wouldn't have booked. And so we believe that we're going to see growth in that. So to summarize, principally Upstream, principally in the floating markets, not just Brazil. But we do think we're going to see a pick-up in activity, versus this year in refining Midstream, and again in other incremental pick-up in Environmental. So fairly positive all the way around, but the biggest positive is the Upstream space, Rog.

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

Okay, that's very helpful. Maybe just a quick follow-on into Libya then -- obviously, none of us know exactly how that situation is going to roll out. But assuming that it heads to a, let's call it, a normalized or even take the IA [ph] forecast of, a few hundred thousand barrels gets added each quarter, and maybe they're back to normal by some time in 2013. Do you have any feel for what the infrastructure condition is there? I understand what you lost this year, and what you could make back next year in terms of normal. But it's not normal there. There probably was some damage. And could Libya be, in the end, at least by the second half of '12, quite a significant improvement for you?

Vincent R. Volpe

Well, all right. What we modeled is, '12 is half as good as '10 was, okay? Where '11 was nothing. So that's what we modeled. The back half of '12, it is possible that it could be higher than that, but all we've put in, is half a year, okay? Now if we're able to go even faster, then you might pick up a little bit in the front half of the year. I wouldn't count on the back half of '12 being enormous either though, Roger. It just takes time for these things do move forward. So yes, it could be bigger than the equivalent .5 year that we've modeled, more than likely, it probably moves out to '13. And again, it depends on what happens in the country, right? I mean, there's been a regime change, but to what?

Roger D. Read - Morgan Keegan & Company, Inc., Research Division

No, I understand. Just for a bit, I was just trying to -- did you have any clarity?

Vincent R. Volpe

But the point is with the pendulum -- the pendulum will swing back to greater than it was. At some point in time, there's going to be more than a $15 [ph] million opportunity in earnings there, because not only does everything need to keep happening that was happening, but clearly, there's a lot of repair that's got to take place. So it should be a bigger opportunity, whether that shows up in the back end of 2012 or '13, is beyond me.

Operator

Our next question is from James West of Barclays Capital.

James C. West - Barclays Capital, Research Division

Vince, looking at the guidance for 2012 on New Unit margins, low double-digits. We've been in that range, 2008, 2009, 2010, even as revenue was flat becoming down. We are now at point where revenue is really starting to accelerate here in '12. Why wouldn't we see more margin growth on the New Unit's side as we go into 2012? Or are you just being conservative? Or is there something that we're missing with Guascor coming in or pricing coming down? Can you help me with that a little bit?

Vincent R. Volpe

Well, it's not pricing, so the good news is we can check that one off. I mean, I think, the relationship between price and cost, it translates to standard variable margins for us, James. And they look like they're pretty solid and constant. There's not a lot of motion in the base business. The Guascor variable margins are the same level of magnitude, and in some cases even a little bit higher, so it shouldn't be Guascor variable margins pulling us down. We are spending more money in infrastructure, as you know. And it doesn't all go into non-allocated, right? That stuff gets allocated, so that's a little bit of an anchor. And then the other thing is, I think it's important to recognize that we're talking about another -- depending on how you calculate it, nominally, another 15% increase in bookings year-over-year. That takes more SG&A, particularly more salespeople to do that. So you've those got those costs that show up as period costs, they're really investments in the future. The other thing is, I talked about a $10 million hit on operating income based on the strategic acquisitions that we're quite excited about, and hopefully, we'll do. If we do it, probably half of that money shows up in what's known as other variable costs. So that puts a little bit of an anchor on it. And so you add all those things up, and that is what is tamping a little bit or keeping those margins in the range. But your question is absolutely legitimate. I think if you do look at the overall operating leverage, so you're getting more than 2:1 in terms of increase in operating income versus increase in sales. So we think holistically looking at the business, it's a really good step forward. Yes, we are reinvesting as we said we would be doing, in some of these pieces. So some of that flows through and your margins don't expand on the Aftermarket and Unit side, the way that you would have otherwise imagined. So I don't know if that gives you enough detail, but that's sort of a macro view of what's going on.

James C. West - Barclays Capital, Research Division

I think that's fair. So we would expect at some point, may be into '13, may be into '14. But at some point, we are going to see this expansion then in margins?

Vincent R. Volpe

Yes, look, I mean, if you take out a business that we're buying this year that's going to generate negative $10 million earnings, if we're able to do it, and you look at what we're doing in terms of increasing our infrastructure, we're not going to continue to increase our infrastructure over the next 3 to 5 years the way that we are -- we've done over this 3- to 5-year period, which started last year, if you will. So because we just aren't going to need to. I mean, we've got a factory we've got to set up in Brazil. We're in the middle of doing a factory in Saudi. I don't believe that we're going to need to continue to make those type of expenses -- expenditures now. Some of that's CapEx, and a lot of that also goes to the operating line. So I think that your statement is accurate.

James C. West - Barclays Capital, Research Division

Okay, okay, fair enough. Then the acquisition, is this the supersonic compressor technology that you guys have a piece of already?

Vincent R. Volpe

No. This is something else. This is like a -- this is sort of a cloak and dagger deal now. We can't say anything. And I didn't really want to talk about it, because it's not done yet, but it's awfully close and we hope it will get done. And it is not an insignificant impact. And so as you're looking at our range, and you're looking at the midpoint, and you're saying, what does all that mean? Recognize there is a $10 million anchor hanging off the end of that, which we think is highly strategic. So I wanted to mention it for that reason to just, sort of, help you think through why our numbers are where they are.

James C. West - Barclays Capital, Research Division

Okay, okay. Then last one for me. In the Aftermarket revenue growth next year up 20%, that's obviously a lot higher than normal, but you've got a group of Guascor in there, as well. What's the assumption for the tradition of the base Dresser-Rand business for the growth in '12?

Vincent R. Volpe

It's probably around 15, James. I don't have the exact number, but remember with Guascor, you've got 4 months extra of bookings, okay? Because we only started consolidating in May. And so that number, that brings us a few more points, right? So if we're talking about 20% growth in total, and I'm guessing, it's 15% or so, excluding Guascor. And that may or may not -- Mark is sitting here next to me, he's going to look -- he'll look at that and I will correct that if that's wrong. By the time we get to the end of the questions, James, because I want to give you a good answer and I don't have it off the top of my tongue.

Operator

Our next question is from Joe Gibney of Capital One.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Just a question on your Aftermarket patterns here in '12. I understand you're dealing with, sort of, a higher Field Services component to the mix with Grupo, but with the 22% to 24% guidance, certainly there's a movement higher here. I was wondering, Vince, if you could just talk a little bit about what you're seeing Downstream within that mix, and particularly from inventory cannibalization and sort of deferral of spend that we see in a little while, what you're seeing a little bit on the pricing front, Downstream Aftermarket as you look into '12?

Vincent R. Volpe

I think that we're going to get -- we will get slightly positive, or at least inflation on our pricing, okay? So I think that the growth that we're looking at is, and there's cost inflation obviously also, so I think the growth that we're looking at is real growth. And I don't know if that's specific enough to you, Joe, I'm not sure I followed exactly what you wanted me to get at, so let me ask you to rephrase if you could?

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Sure. Just in Downstream, certainly, your overall Aftermarket operating margin 22%, 24%, heading higher, but I believe you're depending with the higher group of Field Services mix. But your base Aftermarket business and what improving on the margin side? I'm just trying to understand what that says about Downstream, given it's such a large component of your Aftermarket.

Mark E. Baldwin

Yes, it's saying that Downstream is the -- we ought to see the same degree of growth and pricing in Downstream as we're seeing in the rest of the business. And clearly, there is margin expansion in the Aftermarket, unlike James' question on the Units, on the Aftermarket, there is margin expansion. I think that some of that comes from the volume effect of the growth in the Aftermarket that you get operating leverage. They're in the way that we allocate cost, frankly, but you're getting, maybe a little bit of pricing, but mostly what you're getting is a volume impact across-the-board. And between Upstream and Downstream, there's really not a difference.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Okay, that's helpful. And just to calibrate a little bit on your revenue trajectory into '12. I apologize if I missed this in your prepared remarks. But did you get a detail of what is scheduled to ship from near standpoint here in the fourth quarter of '11?

Vincent R. Volpe

We did not know, but we've got -- in the fourth quarter of '11, we're going to ship about $550 million of New Unit backlog and we've only got -- which -- we've got all -- everything we -- fundamentally everything we're going to ship is we've already got it in backlog, you need to on Units. And then in terms of the Aftermarket, we're going to ship about 300 -- in the high 300s for the fourth quarter.

Joseph D. Gibney - Capital One Southcoast, Inc., Research Division

Okay, that's helpful. And Mark, just a couple of quick ones. On '12, I think you referenced the CapEx for '11 on a percentage basis, I didn't know if you've provided that for '12. It's been 2.5% that you referenced on '11. I didn't hear what it was for '12, if you provided that.

Mark E. Baldwin

We did not provide that. I believe that the number should be between 3% and 4% though, maybe closer to 4. This is the year -- this year and probably '13, Joe, we're -- that's when the preponderance of the infrastructure costs of these big factories that we're putting up is going to hit. So that is higher than our traditional number, which is sort of 1.5% to 2.5% of sales. And our view, which we sort of explained last November, a year ago, in our Investor Meeting was, that was going to go up for, say, the next 3 years, and then probably come back down to the more traditional levels. So use 4% for now, Joe, to be safe. We'll recalibrate it and give you -- we'll give you another number on the Q4 call that takes place next February. We will update that.

Operator

Our next question is from Jon Donnel of Howard Weil.

Jonathan Donnel - Howard Weil Incorporated, Research Division

I have a question regarding the Aftermarket components that came along with the FPSO orders in Brazil and the kind of the outlook for, maybe, a similar awards going forward here. Is this something that is, may be just goes along with the FPSO contracts in general or with Petrobras? Or is this something that you're looking to do more hits, just generally, the Unit orders going forward here, kind of, like in the Aftermarket contracts along with this?

Vincent R. Volpe

Well, we love the idea of generating recurring revenue, John. And so our Aftermarket teams and our services group is very much focus on growing that business. We think it's good business. It gets much easier for us from our human resource standpoint to plan. We know where people need to go and they need to be there. It's a source of recurring revenue, so for all those reasons, we like the business and we want to grow it. We do not push to link Aftermarket with New Unit business. And now I'm going to hope no customers are listening, but we think we can do better on margins, if they don't link them. And we think if they need -- they fundamentally need to use us for the -- at least the initial installation and commissioning. They've got to use us, all right. To the least, do the supervisory work. The selling really comes a few years after the units have been installed, where we say, "Hey, let us provide operations or maintenance people or field supervision people," in terms of long-term service agreements. So we don't normally try and link those. Petrobras, I think, looked at this and said, it's going to be an important issue because, we as a company, are building -- putting in a tremendous amount of infrastructure and we want to absolutely make sure that we've got the proper support lined up right now. And frankly, sometimes people hire mechanics based on price. And what Petrobras, the procurement folks understood was, they didn't want to leave this to somebody else to decide 5 years from now to go higher a mechanic on the cheap and wreck the compressors. And so, they decided they would include, literally, overhauls and not only the field supervision work, but actual managing of the overhauls into the contract. Which is why, by the way, we can't book all of the contracts right now. Some of this stuff we'll book -- as we go, for instance when we do long-term service agreements, we only book 15 months in advance. So once we start delivering the units, we'll look out, and once those -- once that service revenue starts, we'll just keep moving it out, 15 to a 15-month basis. So not normal, but a very good reason why Petrobras did at this time. And we're very pleased that, that's part of the project, also because that helps us understand what we're going to do with our facility in Brazil over the next 10 to 15 years. It will be the source of a lot of overhaul work. So it helps us see through in justifying a significant investment in the country.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay. So it sounds like the $60 million that you booked for the Aftermarket's not really isn't going to be recognized, maybe until 2013, sort of the at the earliest, is that correct and...

Vincent R. Volpe

Yes, that's correct. That's correct.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay, and so for the remaining $200 million or so of our contract, is it that just going to be layered in here as we work our way through 2012 [indiscernible]?

Vincent R. Volpe

It will. I mean, there'll be change orders and different things that you're not going to see -- we're not going to have a quarter where we announce a $200 million bookings for Petrobras. It's just going to sort of bleed in as a natural course of events. But let me just reiterate that the 20% revenue increase year-over-year that we've guided to comprehends all of this. So what you're really saying is the other stuff in -- the Petrobras order is really building backlog for 2013, '14, '15 and even '16.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Right, that makes sense. Great, thanks for that. And then also with the Brazil FPSO bookings, the power generation piece of that is still out there for you guys to potentially look into the future? Or did that go to another bidder?

Vincent R. Volpe

No, that went to another company.

Jonathan Donnel - Howard Weil Incorporated, Research Division

Okay, is that -- do you think that's more of a Petrobras just sort of doing the typical thing with a service provider, sort of just splitting that up amongst multiple competitors or does it really...

Vincent R. Volpe

Probably, we didn't -- and we really didn't ask them, because we were so happy with what we got. But we think is probably a $400 million or $500 million subject, in and of itself. So they give us $700 million. I mean, you could -- there is an argument that says that might be enough for one supplier, and let's give the other guys. I don't know if it's been announced. I know who received the order. I don't want to say it because they may not have made an announcement, but it ought to be in the public domain by now. If you look around for it, you can find at. And if it is in the public domain, I mean, Blaise can get it for you and he can send it to you. We'll do that, in fact.

Operator

Our next question is from David Anderson of JPMorgan.

John David Anderson - JP Morgan Chase & Co, Research Division

Vince, let's just beat this 2012 guidance to death, why don't we? Aftermarket, I guess I'm wondering, I'm looking at your Aftermarket guidance going forward, I'm trying to figure this out. You talked about Guascor being, I think you said $250 million or so on that with long-term contracts is impacting there. But you're saying 22% to 24% guidance. This has been a business that's typically, kind of, done in the mid- to high-20s, if you look historically. Are those days gone? Is this kind of a structural change in this business? Is this kind of how we should be thinking about this going forward? Or is there something kind of holding that back that can snap it back, a little bit further out. I mean, I'm just a little surprised to see the guidance kind of where it is now. I was expecting to see some a little bit higher.

Vincent R. Volpe

Well, I hear you, David. I think the year-over-year, of course, you're seeing a couple of hundred basis-point pick-up, right, okay? And don't forget that next year has a full year of that Guascor energy asset business in it. So if you just take 4 versus -- your 8 versus 12 months, or 7 versus 12 months, you've got -- the impact of Guascor on a full year basis is more than a couple of hundred basis points, let's call it 300. I mean, I'm kind of making this up but I'm not really, all right? Directionally, this is a right. So Guascor has caused in a string of basis points in that margin. Now remember, it's still on a variable margin basis, giving us nice incremental margin and it's important to the overall margin in the business. But at -- in terms of the Aftermarket segment, let's say, it's costing us 300 basis points. So now all of a sudden, you're back to 22% to 24%, now becomes 25% to 27%, and you're not asking me the question any more.

John David Anderson - JP Morgan Chase & Co, Research Division

Okay, that was my question, yes. So it is kind of lowly in structure. But there....

Vincent R. Volpe

It is lowly in structure. Now what can change that? Well, a couple of things. One is, those assets could go away at some point in time and stop running. But we don't see that happening in the near-term. Somebody could show up, they want to offer us a tremendous amount of money. I doubt that's going to happen, but those are things that could change it, but barring that, I think that's what we've got now.

John David Anderson - JP Morgan Chase & Co, Research Division

Okay. Now, you broke out Guascor pretty well in the release, which was very helpful. But one part, you mentioned that there is some seasonal weakness in Guascor this quarter. Can you help us understand a little bit about how the seasonality in this business, how it compares to, kind of, your base business? I mean, typically we've always seen -- first quarter has always been light, it kind of always ramps up in the fourth. So I'm just kind of curious, why was third quarter -- why is third quarter seasonally lowest for Guascor and how does that kind of look on a full year basis?

Vincent R. Volpe

Yes, the first part of the question is pretty easy to answer. The Guascor's business is much more of a book-and-ship business on a short cycle. For instance, the energy asset business, they book and ship the same time, right? And that's a big piece of their business, right? Because every month, it's a recurring revenue stream. The engine business -- it may take you 3 to 5 months to build an engine. So as you get people going on vacation in the summer in Spain, which is where the engine factory is, it doesn't take long for you to see a drop off in the sales activity. And so that's why there's a closer match there. Now remember, everybody else is on vacation in Europe, also, but our New Unit business and the rest of Dresser-Rand, for the most part, is 12- to 14-month cycle time. And so, the vacation period gets more masked than it does in Guascor. And we don't build a bunch of units for inventory. So we don't -- we really do need people in our factories to build and ship these things as we get orders. So that is the principal part of the explanation for why Q3 is seasonably low. I forgot what the second part of your question was, David.

John David Anderson - JP Morgan Chase & Co, Research Division

You pretty much answered it there. I was just trying to get a better handle on that. So it's not really the nature of the business is because the Europeans' have gone on vacation. So I guess one more thing to blame the Europeans on it. So...

Vincent R. Volpe

Well, I don't know, my wife's a European, I don't blame her for anything. I think it's that. It's the vacation period and a short-cycle time.

John David Anderson - JP Morgan Chase & Co, Research Division

All right. As you think about next year and you think about '12, and you think about then your overall guidance. I was just kind of curious, as you look out there, what are kind of the 2 or 3 swing factors in your mind, on maybe on New Unit orders and maybe Aftermarket operating income to kind of swing things? I guess, I'm just trying to understand, kind of, in the market dynamics, what could shift in the market dynamics that gives you more upside than expected or conversely kind of where is the greatest risk here? Maybe just a couple of things that in your mind that's swinging things around?

Vincent R. Volpe

Let's see, on the New Units side, the dye is pretty much cast, except for the engine business, because it's 3 to 5 months cycle time, right? We're just talking about that. So I think we've got a lot of business scheduled for -- or as an example, Venezuela, and so if there some sort of significant change down there, that could impact us. I think it could, negatively and positively, the way the we've set the year up. In other words, we're not counting on a full year of Venezuela in the ENC [ph] contract we're doing. We're building an assembly facility down there. So that would be on the New Unit thing, and probably from a revenue standpoint, probably the single biggest deal now in terms of bookings on Units, if oil came crashing down, David, I would say that we'd see a slowdown across-the-board in New Unit bookings. Not going to have an impact to speak of on the revenue side of the equation on New Units for 2012. I think the Aftermarket is where there are, perhaps more moving parts. We talked about Libya if, and by the way, if there is -- and not just Libya, but what's going on in the Middle East and other parts of the world, if there is political upheaval and unrest, you see the result of that more quickly, people don't order parts, right? They got a set of spare parts and they say, "You know what, I got spares, I'll use them for my next overhaul and I'll take my chances on not replenishing them." Which is exactly what we saw in 2008, 2009, right? They slowed down on the parts -- or really in '09, they slowed down on reordering parts. Now we're starting, and that's coming back now. I mean, clearly, we're in the middle of the recovery mode. So I think you can see, in the Aftermarket -- the Aftermarket is more susceptible to a financial crisis or an economic slowdown that drives the price of oil down, or have some other macroeconomic impact or geo-political impact. And how big could that be? I mean, it can be pretty big, right? We've stress-tested this thing already, David. So we know that, the first year when we went in the tank, we saw, in real terms, probably a 5% drop. So you could see a 5% drop, if everything sort of went to hell in a hand basket, to use a term. Overnight, in terms of the Aftermarket, you could see may be a flat or maybe even a slightly down revenue number from this year. I think it's fairly unlikely though. But that would be the worse case. And I think on the best case, there is probably another $10 million to $20 million in increased Aftermarket earnings that are in this number. And that has a meaningful impact also. David, I really wanted to give you a wider range than what I gave you, which was already huge, but I thought you'd just throw me out of the court, and just call me an idiot. But $60 million really isn't all that much of a range when you start to think about what's going on in the world. But I think, fundamentally, if things continue the way where they're going, we're very -- we're excited about 2012, both in the bookings standpoint and the operating leverage we're going to get on the sales. And we talked about the sales, I mean, and just to be clear, I think you're looking at total sales between $2.9 billion and $3 billion, right? So I mean, we talk in percentages, let me just get you centered on that, and I think most people that have been looking at our model had been thinking along those terms, but just to put that out there.

Operator

Our next question is from Robin Shoemaker of Citi.

Robin E. Shoemaker - Citigroup Inc, Research Division

Vince, I just wanted to ask you on -- you've highlighted the Aftermarket and New Unit orders of Guascor in this most recent quarter. And the Aftermarket was considerably higher than New Units and my impression was that overall Guascor has a much more substantial New Unit and a kind of a smaller Aftermarket, which is why you had indicated the intention to open more service centers and work hard on increasing the Aftermarket portion of Guascor.

Vincent R. Volpe

Robin, you listened very carefully to what I said before because that is what I said. And what I was thinking, when I -- the terminology that I use when I talked about the Aftermarket was, I should have said, to be more precise, the traditional Aftermarket. And so the traditional Aftermarket for us is Parts and Repairs, and basically, Field Service, that goes along with equipment that's installed. That number, if I look at just the engine business, because that would be a business that generates the Aftermarket, that's only about 10% to 15% of their total business. So in terms of the traditional Aftermarket, as we look at it, our traditional Aftermarket's 50-plus-percent of our total sales, and theirs was only about 10% to 15% of their total sales, okay? Now what you have to layer on top of that is what Mark was talking about before which is the energy asset business, which we classify as an Aftermarket business because it is aftermarket. The stuff is installed and it's giving us -- generating, recurring revenue streams, and its margins, by the way, are fairly consistent with what we're seeing in the other services margins and in the Field Service group. So the traditional Aftermarket, which is what we think we can really grow is pretty small. It's only 10% to 15% of the total when you look at the engine business. The overall Aftermarket, as we're now classifying it, is a much bigger number. And by the way, that is not the number that we think we are going to grow. The energy asset business is not a business that we're focused on investing in. We're not trying to build a bunch of more new assets and own and operate, and we don't like that model. It doesn't mean that more can't be done but we're just not going to use our balance sheet to do it, okay? So we're not going to prolong that business. And that business was never built into -- when we looked at long-term cash flows and so forth, we never counted on growing that business. And nor did Guascor's management team, originally. They said no, we've done what want to do there, and we think we probably don't want to go beyond where we are. So I don't know, does that help you at all, Robin, to think about this?

Robin E. Shoemaker - Citigroup Inc, Research Division

Yes, yes, that helps. And I just had one other quick one question that regarding, since your guidance here, adding up what you just mentioned previously was a little over $900 million in revenue in the fourth quarter, and we've always seen fourth quarter strong for Dresser, but for some reason, this year seems to be unusually large. Is this a kind of a new kind of expectation going forward that you're going to have this really large fourth quarter revenue operating income as a percentage of the year? Or is it going to be more like a past year's where it's bigger, but not quite so huge?

Vincent R. Volpe

That's what you said is the -- the latter is the accurate statement, or at least, that is our belief. This year, what -- we got into a situation of really just suffering from the back-end of the recession. Low New Unit booking to -- we had good bookings at the very tail end of 2008. We had terrible bookings in '09, and they weren't anything to write home about for the first 2 to 3 quarters of 2010. It wasn't until the last quarter of 2010 we had a nice pop in bookings. So you've got really 1.5 years of dirth, of sort of a dirth of activity. And that just a plays out to the, sort of, the first 3 quarters of this year. And it's all just sitting in Q4. Now it is true that Q4 is traditionally larger, and you should expect that in 2012. And we're not ready to give quarterly guidance for each of the quarters, but I would be surprised if the first quarter of 2012 was more than say, 10% to 15% of the total. I mean, we'll give you a number, right? But -- and the fourth quarter will be significantly higher than that. And that's -- so we're going to go back to sort of what we did historically, Robin, we believe.

Operator

Our next question is from William Conroy of Pritchard Capital.

William Cornelius Conroy - Pritchard Capital Partners, LLC, Research Division

Vince, may be a couple of a little bit higher level questions, as you think about the order potential in the guidance that you've given us, baked into that must be some thought in terms of market share. And really -- I'm thinking more in the New Unit side not so much in the Aftermarket side, although I think that's as relevant, but how are you guys are thinking about market share or how is that reflected in the guidance that you're giving us for 2012?

Vincent R. Volpe

There's no fundamental change in our traditional shares. And I'd be happy to add more to that. I'm not sure what else I can add, but that is, William, that is the basis of these -- that's the assumption.

William Cornelius Conroy - Pritchard Capital Partners, LLC, Research Division

No, that's fair. I'm looking to see if there was anything baked into that or not. Another question, just very quickly then, in terms of how we normally think of your backlog shipping, and really I'm thinking more of an order shipping. Is there any change to that? And I guess I'm thinking specifically with the Petrobras orders, or is there anything that is shifting your traditional shipping schedule?

Vincent R. Volpe

That's a great question. On the New Unit side, we give guidance that is sort of around, call it, 12 to 16 months, is sort of the widest range we give. But when we actually do forecast, each of them are discreet projects that have scheduled deliveries. So when we give you a forecast and what we think we're going to do on New Unit sales, we don't use our model, that's just sort of our rule of thumb for you guys to use. We'll actually give you a forecast on the New Unit side that is based on when they're scheduled to ship the actual contract. So we've got visibility into that, obviously. Most of our backlog is long-term. And so that's helpful on that side. On the Aftermarket, we do use a model that says, what you're referring to. If we book, for instance, $100 in parts, and I won't get it exactly right but we say that maybe 30% or 40% of that goes to the first month that we booked, and then another 30% goes to the second month, and 20% and 10%, right? So we have a way to -- we spread that out. And we've generated -- that, that model has been in existence for 10 years and it's been updated based on statistics twice a year, by the same person in fact. And so it does pick up changes where on a specific job, the parts are ordered but they're really not going to be delivered for a much longer time frame. It picks that up, but we do break it down. Parts are separate from Field Service, which is separate from Repairs, which is separate from revamps. And so we've got a model for each of these, because even though they may all be product services or they may be all Aftermarket Parts and Services, and in terms of being part of the segment, they have different delivery profiles from the time we build them to the time we book them to the time we ship them. So the model over the continuum is pretty darn accurate.

Operator

Our next question is from Robert Connors of Stifel, Nicolaus.

Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division

In the quarter, it looks like the parts -- mix of parts picked up. Was that the Downstream the one I'm picking up, and sort of like, what do you see for that -- the parts going into 2012?

Vincent R. Volpe

I can't answer the question, Robert. I think we know the answer. I just don't on why the parts, where -- what segment those parts came from. They are high. We normally don't look at that in detail, unless we're really key looking for something, because they're coded by customers. And so if we get an order from Chevron, was it for the Agbami FPSO? Or was it for El Segundo Refinery. We can find out if we look, but we normally don't look. We just say it was an order from Chevron. So I don't have the answer to that question. I can tell you, conceptually though, that we've seen a pick-up in the activity in the Refinery segment Downstream. And so Parts, it would not be unnatural for us to see an increase in the Parts piece of that.

Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division

That makes sense. And then just to piggyback on that. You had talked how you're finally picking up and places like Saudi, Kuwait, and Vietnam. But talking then just some of the engineering shops out there, there's -- actually I'm starting to see some projects coming pretty close to coming the FID within Latin America. Now I just want to know what your market condition is within those regions?

Vincent R. Volpe

You know what I mean, we have at least, obviously, we have -- not obviously, we have a long-term relationship with PDVSA, we have a long-term with Petrobras, I'm told, and with PEMEX, okay, the 3 Ps. And we have signed service agreements with them. So we are a regular supplier of equipment to them. And what happens in the Downstream business is the decisions become much more localized. In other words, if you're going to all offer a machine for -- given a refinery, pretty good, if it's an upgrade. It's probably the refinery manager who's got a lot to say about whose equipment goes in there because he or she says, "Look, I've got a bunch of Dresser-Rand equipment that's running well. I like their service. They got a new facility. They're setting up here. And then they've got their facility in Campinas. And so, let's go at Dresser-Rand because and I'm going to get the support. That's a big part of the purchasing decision. And as I said, we have 3 contracts, one with each of these 3 frame agreements, let's call them, with of the each of the 3 large users of our equipment in South America. So market share is good. It's very consistent with our Downstream market worldwide. It's certainly better. I think if I had to classify our market position in the United States, in Downstream it is the highest among Downstream shares. And then Latin America is probably next on the list. Asia may be behind that. And frankly, Western Europe is, and the Eastern block is were our lowest share is right now. And that is a lot to do with where our competitors are, I think.

Operator

This concludes the Q&A session. I'll turn the call over to...

Vincent R. Volpe

Excuse me, Operator, excuse me. I do want to just get back. James West from Barclays had a question, and I'm asking Mark Baldwin if he would respond to that. Mark has subsequently gotten the information. So let's do that if we could first, Mark?

Mark E. Baldwin

Yes, I think James was asking what the Aftermarket revenues for 2012 would be without Guascor. We had them for 8 months in 2011 and '12 for 2012. So when you strip Guascor, expected revenues out in both periods, it looks like about -- a little more with the 15% is our base business is growing in '11 to 12. Blaise, do you want to conclude the call?

Blaise E. Derrico

[indiscernible] We're going to conclude the call. I appreciate everybody joining today. If you have questions, please call me. My number can be found at the bottom of the earnings news release that we should last evening. Everybody, have a great day.

Operator

Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.

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