HLX - Earnings call transcript Q4 2017 | Helix Energy Solutions Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2017 Earnings Conference Call.

During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, February 20, 2018. I would now like to turn the conference over to Erik Staffeldt, CFO. ahead. go Please

Erik Staffeldt

our and you’ve conference everyone, night. slide Participating joining today our Counsel; and Owen us this Alisa release our Good our press an Johnson, for thanks released opportunity our presentation our General Kratz, is today call for myself. release. related Scotty QX on last Sparks, call COO; Hopefully, morning, and Helix for CEO; had XXXX the on review earnings to

copy www.helixesg.com. of tab through accessed a icon. materials, release you both page be accessed have If Press and do be be these the can webcast presentation on accessed can not Releases can slide the under our The by Relations the today’s Investor clicking website at press on

remarks, will regarding Johnson begin Before make prepared we information. forward-looking our statement Alisa? a Alisa

Alisa Johnson

call, During anticipate made facts, in the safe statements Litigation provisions of than projections based All and harbor under conference statements our certain Reform associated call Securities forward-looking the making statements and current of XXXX. are or forward-looking in statements of expectations. other this this on Act Private the conference presentation, are we historical

reconciliation, our this a this slides the reconciliation our Our from and certain comparable statements variety annual December financial our XXXX. are of report our non-GAAP replay release, GAAP disclosures to measures. for be year to Owen? differ may made. with XX-K forward-looking and the the along on available of presentation, actual Also broadcast report those ended certain materials of XX, presentation non-GAAP a and projections number set may including In in call, accordance our with results a due on provide factors, during of press forth rules, future The X website. materially of Slide earnings annual SEC on measures final this financial Form

Owen Kratz

everyone. morning, Good

the results. summary Let’s and Slide of X, skip is with X X start which high-level over Slide QX and

results decline revenue. in remaining third of quarter offset Robotics North financial increase a Revenues were primarily were quarter in Well slowdown usual the line as the result our in in revenues, results. Our in an fourth by million, flat, Sea, was QX Intervention $XXX winter with at a

in $XX QX, Our by Robotics million segment. increased million results $XX QX, in of from improved driven slightly gross primarily profit our

Our in benefited result net $XX.X a in tax $XX non-cash as of EBITDA law $XX million increased income to changes. the in to U.S. $XX performance improved QX, million QX by The operations compared in QX. benefit resulted of million in million

continue Well In in our XX% was compared QX, commenced Siem for The to $X.X in in XX% XX% QX EBITDA million was accepted Helix XX% did downtime, on X, some In operations. utilization Slide quarter. improve. Intervention a at start-up with Siem performance X of utilized to our experience to and crews contract The Petrobras of down Helix for QX. was mid-December, Turning vessels Brazil, in negative QX. the by the one-time X vessel impact of the

the the utilized in September. at a in schedule was in The utilization operational was the after quarter the However, In campaign the QXXXX the after its Gulf for the vessel Mexico, of early quarter end QXXXX XXX% for decreased on gap the experiencing at of the to rates remobilizing The XX%. XX% utilization BP was quarter. for QX start.

November, winter. December. for QX, both into stacked vessels the Seawell in the XX% while into worked At Enhancer the utilized expected were vessels Sea the were as the quarter, end of the Well warm worked North Our

million at length performer, be million perspective, balance from levels quarter. from at a increased quarter-over-quarter, facilities operating Our Robotics at QX. X, segment driven sheet of improved full decreased the Production activity our and to a $XXX to vessel utilization the levels trenching of charter Onto fleet. by cash $XXX entire the end steady Slide continue quarter-end

shipyard and of During in $XX and an additional QX, $XX capital another invested million million million scheduled $XX payment debt made we expenditures a repayments.

year-end Our third debt debt gross compared was $XXX our quarter, increased to – turn $XXX I’ll an at increased now Scotty million call reduced over while $XXX discussion operating million the the million at sorry, our in I’m debt to net to for to $XXX results. year-end. of to million in-depth

Scotty Sparks

Owen. Thanks,

on Moving to Slide X.

the profit low-cost our December, at Sea finished numerous vessels XX% fleets, acceptance good year primarily uptime. enter date to intervention X,XXX with through In overview season, quarter and for work the very All relating completing nearly resulting December the strong provides well projects vessel units Brazil, profits concluded feet required quarter both clients with working had XX% finalized trenching deepest Slide across the XX% globally. to more Mexico, the have we across at significant a downtime vessel finished of units was warm utilization XX%, Gulf the winter strong work business, projects. due performance. business and the Intervention quarter depth to XX In wells a unique XXXX. million, The Q water diving our business days. In integrated Mexico, North and flat the Intervention in from third entered seasonal million, and both in production-based the results the more the fourth the QXXXX quarter. primarily the XXXX continues the production of workflow commenced charter QXXXX of challenging Well of with fully good million XX BP, zero had depth. were I we undertaken expected, across remained expected quarter for fleet. and activities. fleets by in as at achieving services. from up stacked Well Intervention abandonment BP $XXX previous the period Approximately activity. As at Throughout on $XX Mexico. seen enhancement years, Petrobras. QX of XXXX, in SHX assets undertaken intervention undertake winter. In increase the abandonment The revenue of Gulf as remaining the of another Gross produced the SHX for activity. the well utilization the Robotics QXXXX enhancement-related Robotics towards in well of Most in margin the Well in with to production program the vessels equal for utilization mode good XX of on for also quarter, $XX Gulf to safety works continuously in completed our the of two a activity. we’re in we six with an good the five In we working working utilization locations to utilization year In year the strong increased work move total

a completing The to The the got one included dive in due date for the vessel two-well downtime the client. for keeping experienced longest XX well in depth work system client systems QX to program period. its days, XX% completed well IRS unit unit the earlier, four-well the the schedule the nearly the and zero a year throughout good campaign and completed at had replacing ended quarter. of the mentioned a earlier in intervention first to date. on early deployment subsea deepest quarter QXXXX another in The result As the after utilization and our

in facility Houston. project in units Regarding five a with rates on in IRS stand-alone October, work in X our rental at mobilized Africa. intervention months a expected West to duration riser at is full day systems, commencing of six we’ve our December IRS X rate of

it IRS owned alliance alliance We OneSubsea and for and OneSubsea. system The now completed is XXK on our have BP positive Louisiana. jointly contracted work. Schlumberger acceptance And the the has at in commenced currently with news testing and regarding QXXXX facility

further module on offshore offer system times consolidated the ROAM with open-water mechanism on with We subsea to OneSubsea XXXX Manufacturing Helix expected clients. providing installed permanently Louisiana keeping QXXXX vessel The the XXXX, in on continues QX. to numerous ROVs a package providing completion enhance workforce. services sorry, equipment continues. now look the continued this systems as manufacturing more multi-scale with the during the the alliance during our riserless our – by partner riserless and the open-water to abandonment of and in facility This in service Schlumberger was we’d in and contracted one package all a to

Moving to Slide XX.

stacked vessel was quarter, one Denmark. in three in Dundee Kingdom. and Sea worked clients warm vessel in in working projects United working works a small warm first drydock good good in for the experiencing had considering quarter. vessels with Both onboard business unique worked utilized conditions. Well XX% Intervention utilization North both our vessels quarter weather in for that The XX% integrated The Well a then the completed the it’s quarter, for client. Our then Enhancer the harshest the services seasonal was diving The Seawell repair stacked for the

March for above, of the integrated warm As in both a are to are low-cost, Most work require diving vessels winter and mode period XXXX. also in good XXXX activity with expected services. work of for the mentioned will backlog in stacked commence

vessels and XX% SHX for Siem of the had finalized December activity. period small completed high first acceptance XX. contract penalties the Petrobras perform work wells in now in its vessel to was on commenced well on minimal live X XX is performing well. utilized vessel the Moving and The some very working start-up we to scope a Slide downtime. wells and quickly quarter Brazil, enhancement In the working interventional that well. some has continued third The XX three the to amount primarily reduced the on an production Helix the downtime. went with The on clients, Currently, with

completed full market, utilization downtime. III for on Canyon Canyon the good separate with performing achieving providing in The projects expected, the worked the Slide vessel be utilization finished continues our ROV Egypt. provide Grand to And of XX% of in North trenching in the worked Canyon utilization Grand work with of utilization of in Robotics of to support that XX chartered Egypt. the review. walk-to-work QX projects. completing days two will Robotics completed offshore a fleet Grand Cygnus in XXXX days days trenching year as Sea to XX Gulf utilization in Moving services project the part full II for trenching utilization with in zero harsh Deep quarter, Mexico, our XX a project QX XX on undertaking quarter. continue business.

in high-utilization recently Canyon concluding big Cygnus Gulf secured have to the Deep trenching In for work-to-walk early III, a February, as we Grand the for the owner the returned well XXXX, as However, projects and II. Grand projects backlog UK Canyon call we the of of business slide the Canyon Mexico for detailing the in I in leave Grand the the Erik its vessels. a the our to the Over reference. sheet in will I’ll are our now your long-term base turn XX. balance XXXX trenching any to and three Robotics vessels reducing outlook. to utilization cost charter, the thus in for on discussion Slide three

Erik Staffeldt

Thanks, Scotty.

slide our net Slide XX. of maturity including debt levels their to Moving will growth to the balance Slide Slide year-end. an provides in I update key profile. leave metrics, your reference outlines for on and and XX. move It on sheet instruments as XX debt

Our The in $XXX increase debt directly million $XXX debt in net outflows, million attributable CapEx QX. to increased in QX the net payment. of is million QXXXX from shipyard to QX including $XXX during

$XXX million Our of debt. outflows at to decreased of and million cash position $XX CapEx reflecting paydown quarter-end the our

capitalization was net to book year-end debt Our XX%.

XX, over our provides Slide initial outlook Moving on XXXX. to which

and range includes range This forecasting $XXX $XXX some in estimates. EBITDA of the are XXXX million We assumptions million. key to

assuming Brazil. full X Helix a Siem benefit We’re the Siem year in Helix and X for

XXXX the high Intervention expect level maintain to market a North activity. Well We Sea of

QXXXX expect in have to good of Mexico. Gulf We utilization the the

to assumptions cost chartered the benefit outside continues of from robotic Any trenching the in variation could market range we cause EBITDA work. and reduced provided. to to these the key significant our expect be Although from increase fall weak,

$X.X XX. of Slide with $XXX in scheduled backlog, to completed Moving in which XXXX. approximately currently XXXX million billion We to is be and estimated enter

shipyard operations of X. the backlog heavily In benefit and expect Helix Well identified full weighted vessel new In Brazil, into Our Helix to will a utilization required downtime driven contract. XXX-day it at Helix performs have approximately on duration is our incur to on near to strong the program expect to Siem the The into is QXXXX XXK for into XX went the to term, the into QX and Sea expect IRS both duration an vessels. as vessel program. rental XX-day commencing underwater mid-January has contracts, in X the QXXXX Helix QX. we market Siem and servicing a scheduled currently expected has during a year thereafter. the downtime maintenance provided QX the expected by two and be contract daily market experience and with Producer do near-term XXK XXXX unit service approximate crew. Mexico market, with our in we will contract of vessel of base-level X Siem North utilization vessel The period a spot QX days Last BP. Well I the market, Gulf Intervention day downtime we’re The IRS the two from for In start-up the The SHX this with assuming Petrobras the support opportunities. on unit the worked QX, activity currently in inspection. QXXXX for Intervention rental rate normal issues The the we of vessels. some BP regulatory contract year, is and continued In opportunities

We We our work than contract. more forecasted be of XX% have under expect XXXX similar. the currently to

during winter will business is We expect The months. lag expected any infrastructure Over segment improvements. likely Slide subsea continued market seasonal struggle weakness the as spending XX. continue to to Robotics to

segment QX, lower stronger trenching due the in Cygnus rolling off Grand return the cost charter XXXX farm in due the market. Deep of the a and we significant performance over I, hedge expect However, in Canyon its improvement wind to to

The quarter to Sea, the to by season first be with results continue be of similar QX impacted in to winter North XXXX. the will expected

to at shipyard starting $XXX CapEx the capital QX. forecasted in million, We most Over Slide approximately significant for forecasted of with improvement for expect construction including in continuing in its QXXXX, the is a The the year of XX. Robotics QX. payment

of XX turn At Owen it I’ll that we reference. to convertible your back for to Our comments. the the million net time, approximate closing leave XXXX debt year Slide payments and million, skip $XX for expect notes in March. $XXX repurchase including his this for call I’ll

Owen Kratz

Erik. trials, have installing construction are items. contract the the to complete, capital of component that along The construction starting we’re topside over is for complete do to long punch closeout the XXXX work largely complete, vessels including shipyard the the and QXXXX this Thanks, BP, sea as for but committed integrate of risk the We QXXXX OFE see two the Well, is equipment working opportunity and is Petrobras list the construction and largely completed XXXX. QXXXX, behind to pending we’ve on with us term Siem working and prior to is vessel. term

to budget capital excited are $XXX XXXX, XXXX I’m all noted XXXX. $XXX conservative it guidance bit work people seem of that our potential shipyard of and given EBITDA is. the may there pretty some – Our forward perhaps million includes the cost and the a have some pretty cost that to to complete the throughout million OFE looking

us market contracting. However, room through and a reduction for in operational three improvements that been, of this difficult some that how there past it’s budget in downtime, may and feel we efficiencies the prudent given We years feel do level. be have our

contracting. been negative negative fourth the a EBITDA and instance, Brazil results, XXXX, focusing stronger. the possible. that to from of up QX would reliability on on be improvements. on up these Technical and systems added end, We mitigating To these work back be dry-dock, in as team phase company getting of Chief with to construction and XXXX We’ve we operating alone, from focus a Siem focused Without operations. million another downtime role Chief $X.X impact our will technical Commercial Officer, from X of issues to Then take – and to client $X have even the on Officer. Scotty start-up on the For to refocus and impact transitioning Wagner as corporate respect to plan dispute. allowing the million Geoff running, back we’ll types incurred We we’ll our extent Helix

expect in XXXX. work although is, seasonal will this least We continue follow it that through in it’s As market cycle. showed XXXX, do North my to the continue the The at improvement has Sea a bottom. to opinion put the

than early Mexico in recovery Gulf have any commodity the fear to relax appeared that we say body little stabilize may that government recovery market. and and bit production years. by regulatory abandonment prior for better extensions price. have U.S., believe fuel be and that the it’s a too The inside Helix that to While of grant begun the instance of has real segment bottomed, should supply/demand in The on for would dictated of well seen in first be more I positioned will enhancement issues be the a recovery

from and with generation reported with originally approximately X. million For delays to be us, estimated million major The additional vessels, million. million start-up $XX of Due be we contracts, to the thus two mobilization EBITDA to approximately working. from the estimate Brazil, from and original X vessels $XX Helix our cost, from million now finally third which $XX to EBITDA Siem these are now to amortized Helix settled $XX seems vessels be market Siem estimates we $XX the these over and to both

these using showed quarter, We’re than be hope our result year XXXX. a in to meaningfully fourth would expect better improvement The as market trenching to of itself ROV and well estimates of we in is improvement. the XXXX charter to market, a above pickup work. guidance This some roll-offs, mentioned be Canyon before a our in and vessel legacy as achieve challenge. is be one as continued to a expected

And back are I’ll Erik. pretty Our relatively things just looking good to remains balance with that sheet say here. turn I I over strong. that, think And will

Erik Staffeldt

operator, at take questions. Thanks, And time, this any Owen. we’ll

Operator

ahead. Instructions] Thank of with question you. line go comes Please Simmons. from Our Macpherson the first [Operator Ian

Ian Macpherson

question, day from first I quarter. BP. assume about My QXXXX weeks that’s of wanted with I as a carved regarding everyone. three the commitment this out morning XXX good Thanks, clarify downtime Hi. to

downtime un-contracted factor that that we And year. that the correct? would that time in addition to should in quarter so Is later of fall the in

Scotty Sparks

the they off the year come Yes. or seven of five That days is the but – for end of the end they have BP correct. at can at The contract, while period. year added by be

Ian Macpherson

Helix you more that next Okay. I shift? comment that would that does what to with Mexico enhancement has How to And the Gulf Thanks, production that for more the the regard made history, biased shift compared you in been then project guess, Scotty. your been, And which recent with has profitability of future? mean abandonment-driven. work

Scotty Sparks

I mean, little a that try down and if bit. break we –

QXXXX gone from for more We’re Gulf about Mexico activity production instance, in production activity. XX% XX% of that’s seeing to XX%, on

work the All And do of all activity. oil profitability production our when the same that doesn’t on recover somewhat price the are they an we It seeing I think, because QXXXX because increase saying, and in we’re is to production-based a that, much the get can enhancement. the clients abandonment rates affect quickly. of a

Ian Macpherson

more is Okay. it of after with then you’ve the for That’s EBITDA-positive seasonal for And squeeze going quarters just sounds I are be year, out Robotics roll last much a moved one to remaining QX comparable Thanks. helpful. we to of articulated, to different possibly the QX going that reasons year we QX rest QX? If like confidently year. better in but past or for of to are of highly this getting then few be three a and a swing things as regard can there’s the if pretty variable into – Robotics highly

Scotty Sparks

and expectations which QX, from in our – our positive that where we in are range. me, I higher we’re would opportunities excuse be season QX the think seeing

Ian Macpherson

Okay. Thanks.

Operator

Please Our Vaibhav Cowen Vaishnav from line next with ahead. question of & the go Co. comes

Vaibhav Vaishnav

you Thank morning. my taking question. for good Hey,

revenues what the than Can So in around color us I EBITDA some at but reconcile line look provide below. I was if or you expected, that? help better guess, guides or is are

Owen Kratz

of to think I with utilization assumptions. versus mix has rate that different do

result. rates little would there that kind lower I – a Our assumed. costs our without dip but would and assume of consistent, a rates I is are assuming budget and that don’t from digging the a bit that be probably pretty further, know would that higher into guess it achieve departure that utilization is my is

Vaibhav Vaishnav

$XXX in using I assuming midpoint XXXX $XX $XX million If think breakeven are $XX million I’m $XXX about you thinking about way implies EBITDA, like like production corporate year? owns over That XXXX. Intervention million in $XXX million me was be correct the million of in XXXX, EBITDA the million just it $XXX this may loss about I rates significant like so Okay. XXXX. call facility would EBITDA, Well a Am correctly Robotics it loss, million, or versus

Erik Staffeldt

Yes.

standpoint, but high-level your I directionally down I you’re it in think correct think I from about the all thinking manner. write a didn’t numbers,

Vaibhav Vaishnav

okay. Okay,

from Intervention. How So most has like down variance will will EBITDA $XXX risk risk? rank which take major that the Intervention vessels within the would million, come Well to I Well from guess, a you perspective the

Erik Staffeldt

look have Well, the vessels, obviously I vessels operating. you think six now when at our we

of the We the contracts, Siem and with X. X have Helix long-term Helix vessels Siem three

QXXXX We backlog. that have has of in XX% the work its

We Sea that them North we affected a be factors, from season the but expect vessels, going seasonal two utilization the currently to have during core by their to good perspective. which are obviously have

managing I’d from in has it’s factors So will Well be I we that to the It’s vessel been spot a of going QXXXX. really the And one that’s be vessel market. a – have that opportunities had near-term to the Intervention going think that perspective. say in be that the the swing

Vaibhav Vaishnav

Just Enhancer in similar should versus XXXX implying the Well XXXX? if I and you – just are have Seawell for profitability clarification,

Erik Staffeldt

I activity. fairly XXXX XXXX be think North we to high in similar expect to level, Sea for the

Vaibhav Vaishnav

much. Okay. from me. all so you Thank That’s

Operator

the question & George from next comes Our of O’Leary go with TPH Please line ahead. Co.

George O’Leary

guys. morning, Good

Owen Kratz

Good morning.

George O’Leary

on per hear that mover guess, the needle much a a of on basis. that that is the progressing. that and How does frame? the the the alliance day XXXX for of for profitability OneSubsea improve time vessel to Good is is meaningfully with system I Just the QXXXX? QXXXX XXK

Scotty Sparks

contract offering of integrated QXXXX. approach. to contract the more that the one offer is allows The a just is And for XXK. QXXXX a with services, one alliance packages us more

going QXXXX an there uplift So is system QXXXX. the for XXK to the out on

Owen Kratz

an vessels XXK the XXK Scotty, sold package. a client separate the The think, asset. and is I to not system the as that integrated are But

with vessels these to be So remain the added that. day on would revenue of And XXK rates regular and their margins. then top

Scotty Sparks

own XX% the And XXK. of once we again, only

Owen Kratz

Correct.

George O’Leary

Okay. helpful. to these got right. Siem on X, I numbers sure just And That’s make super then and X the want I

X million million the should Siem X, said the $XX going and $XX expectation $XX of that that million to Or and on to for what is just $XX EBITDA model an You forward for basis. them kind annualized the million Siem for XXXX? is we EBITDA for the

Owen Kratz

off I forward. an on would that annualizing going hold

Our Petrobras with relationship is improving every day.

We have certain that had assumptions the in difficulties here, given in the we’ve past.

We’re difficulties assumptions we for the the our we’re outperforming But guidance. using right the that now haven’t XXXX past, that. of given uplifted

see I the don’t relationship longer XXXX. I a So lands – know extrapolate before for while settle and give it I actually the to in it profitability would little where beyond

George O’Leary

And one if I more could. fair. maybe sneaking That’s Okay.

ROAM potentially being to commercial made Just expect with you do effectively go said, sounds is for And on be progress that I systems, you there. mid-year, be When the think guys? or good like revenue-generative that. to good can you you

Erik Staffeldt

in any The included commercial for XXXX be end towards ROAM completed the QX. So of budget haven’t we the ROAM. drivers will the for

days an looking really the And We’re coming QXXXX. North Gulf it’s of Mexico the as QXXXX an to Sea. that helps to abandonment also, in opportunities added tool utilization the for

factor really XXXX. for So it’s not a

Owen Kratz

conservative and represents not our for both the upside. will so opportunities that Well, have the to our it’s added just just guidance, been not a further be ROAM factor do year. second the We of available that – for half it. Again, but guidance, in we’ve

George O’Leary

Thanks Owen. the guys. for Thanks color helpful. Super

Operator

Wolfe question Research. go ahead. comes the from of next Mulvehill Our line Chase with Please

Chase Mulvehill

Hey, good morning.

of the we get you Intervention as first So you’re side. managing guess, is, XXXX? Well through you question is kind I really XXXX? and see how kind cost Intervention about in of Can the pressure Well Do on any inflationary talk

Scotty Sparks

No, if down anything come slightly. our cost would

Owen Kratz

benefits integration I Helix Schlumberger the fleet. the continuation is one the that we of continue of is of to services think with there’s a alliance across cost-reduction with the be going Services this

Chase Mulvehill

there be generation. Schlumberger probably the – guess, more and here? I from Is partnership? integration more about I’ll The formalizing formalize JV blurrier revenue Okay. get lines or more on EBITDA the any you follow-up talk doing something May the alliance. a a have,

Owen Kratz

which assets Not already in done, ownership co-owned. basically joint beyond what the we’ve are is that

Chase Mulvehill

Okay.

Moving to Robotics. on

out each in costs with some how Cygnus returned coming impacting? Deep got those when quantify of of the be rolled XXXX? you they and may And Can some hedges You’ve off. much that will being start impact

Erik Staffeldt

Yes. It rolled rolled The one The vessel Grand Canyon return. has off. Deep well QX the off of has end XXXX. Cygnus, for hedge at the already that been

We will quarter have that second forward, going cost here will coming after from the first cost in nail perspective. for Cygnus the hitting quarter be Deep which

I Deep think the million on believe, believe, about $XX million $X to the for roll range. the Cygnus was I $X guidance I believe that I hedge general gave, $XX we the benefit in was, million to And that. million from off

Chase Mulvehill

implied in $X.XX to of that range Okay. was the share the Robotics All right. care you $X.XX. to And implied EBITDA for range that in XXXX do guidance, kind

Erik Staffeldt

again, changes side. on improved we’ve similar trenching expect the made the that we Obviously, from – structure to XXXX, and perspective, and that to been that first the our quarter improvements the don’t We be from Chase. then said specifics contracting have our to see to

Owen Kratz

I we that we but would see assuming XXXX, over XXXX. are is the beyond our potential in improvement guidance, significant near thing only that The add nowhere

Chase Mulvehill

Okay. does When you that improvement, positive say back significant or get EBITDA to breakeven?

Owen Kratz

Yes.

Chase Mulvehill

Okay.

Owen Kratz

negative, of slightly one the Or three.

Scotty Sparks

did lot work side Robotics contracted than of XXXX we business in in for going a have forward. We XXXX the more

Chase Mulvehill

All right, all that – you. clears thank right my

Operator

question comes Please go ahead. Levi Stanley. next line Morgan from of Our with Igor the

Igor Levi

Good morning.

Owen Kratz

morning, Good Igor.

Igor Levi

could North trends North previously, Mexico the as And Sea Gulf see improvements. and on of the Gulf remember was some Mexico in a I you Could pressure, of pricing bit the mentioned you but Sea? comment still under

hoping update. was I to get So an

Owen Kratz

Yes.

given great deal. visibility didn’t rates the there continuing of an hit it modest I in XXXX, we Sea, slow, think the recovery I improvement North the potential getting a think see modest towards were near end in norms. Sea I but down, a of North Clients rates, still there. are XXXX. think to if you see to in work be want able break that historic in inflection very nowhere I the we will the

Gulf Mexico. the of to Turning

think I there lead offering clients still a on that are rates. proposals bricks are firm keeping the the road out the

on shift such mentioned to a We is near us we’re P&A, we’re term, move to very There’s to potential enhancement market are we contracting think. get I producing. improve being very bps production creative challenging a a meaningful, as If rates we coming – I are we more basis, but earlier, early very, see in meaningfully the if with that in as on value-adding buy it’s versus to a going margins in clients anything enhancement, abandonment think the here, which within the that up higher. it’s for production don’t recovery to allows a to spot seeing a term and non-revenue X – away won’t from be early proposition the

Igor Levi

Great. just chance QXXXX, you. what think with take turning Do to the received? year-end there’s likely are that a delivery earlier recently discussions you’ll Thank than you it you’ll customers? the And the you XXXX extension take –

Owen Kratz

That is our the our guidance hope, for QXXXX. but there’s nothing the in for XXXX

reasons. our in we’re positive idle the route, of through anything we potential assuming Although we’re that bring have with to But too early. start opportunities. detail talking also, allow us But and Again, taking number opportunities that results. bankable are to any either assuming it about obviously, of for it’s to we would pursuing competitive But vessel kind that conservative I early potential number guidance think, a in it’s of to XXXX. a early too out are for contract I think going talk the

Igor Levi

of to contract have delivery take a one-year plus to that least ahead Would at time? of you need

Owen Kratz

client don’t commercial has a be or that something on yes strategic give I if that’s on no, answer can think Who how it case-by-case that. the What to terms basis, it I is? depending to assessed is? know were? I

Igor Levi

you. Thank turn I’ll it Okay. back.

Operator

of question ahead. the Clarksons Securities. line Our Please comes Platou next Nokta Haithum with go from

Haithum Nokta

Hi, good I answered, my morning. have think, Most different it questions of slightly been way. a but I’ll in try

than in slightly think be rates for would North like far? to what for Sea correct? work well I yes, rates have might so One, should sounded how the you’ve you even is two, year incremental might if it in intervention. – then XXXX XXXX that, higher you for that what backlog you any we than we firming XXXX. pointed see North be booked for add that you assume And Sea, And

Owen Kratz

as say I wouldn’t rates. higher

I think quickly had we’ve the well market hand. I in North Sea, seasonal for the think,

was rate. generating rate. as year, possibly higher more coil-tubing what this carries I high by year that to be, the but it’s higher percentage diving that think of a year is uncertain which carries last percentage potential I the going impacted This of work look to the has operations, a also think

have have the to work North if we’ll we just see any – we make So in wait, Sea. to incremental see

rates fourth going of quarter. I order to fourth the wouldn’t being entice think raised. to clients to the back as such, there the fall quarter a out to And see move to I – into in seasonal in just the it’s opportunistically have expect cycle, strictly as

Haithum Nokta

work we that shift at Gulf of any was region what Mexico there seen? of it And Okay. or in scope all mix we’ve the around like kind is

Owen Kratz

much it’s pretty the No, same.

Haithum Nokta

that that still assumed kind EBITDA call those for Okay. similar, And the working vessels. is utilization second then X, vessels revenue vessel I Is perking Siem and are that kind on the level is and through up that both commencement? of of Helix – uptime? assumed X of through Or that it, appreciate guidance, the

Scotty Sparks

Yes.

obviously, a that Sort the set – in the from amendment first level different vessels. XXXX was for high weights of done

different that’s So the vessels our are at into and built rates assumption.

the and the I first the for of the and in we’ve utilization similar year the it overall, think is Obviously, X utilization vessels. for trend would for our be vessels. similar would uptime made adjustments trend uptime overall I start-up quarter. Siem start-up But on that the here the here, the think be Helix

Haithum Nokta

just then bit of any Or work a those how are scopes? particular looking? any interesting? region? particular you And kind And Just are may some geographically QXXXX, Okay. map little color out will the be that can opportunities on be

Owen Kratz

It’s potential. diverse. Sea, so North Sea vessel opportunities specifically as in the probably highest the pretty built for The working would rank North I the the was

long-term is The number in second of in is the that a market always dedicated that requiring to opportunities West there, of mature the been region. opportunities Africa West a quite we’re market is but chasing There’s not Africa. in point vessel a

a that and relationships I utilization. there required overcome, that’s then potential the So generated the a always it’s is historically, with think the hurdle of and client. that have sort working matter negotiating of And we QXXXX, that to has the just

activity would in in if something market then of here, I for vessels Gulf or the the a the out not pickup So just there’s few the of question. QXXXX, QXXXX Mexico it’s

of is And probably heard potential. that as upswing is demand asset that think I the you’re seeing last Although there Brazil. in for Brazil, the then finally, in I owned this moving new players kind into an

very well. down vessels are there working two Our

I very need player to region so opportunity. fully have the and think that another is They’re no some a there. add work opportunity any But represents extent, the happy. from utilized, to there’s Petrobras new

Scotty Sparks

speed us between well. allows transit design regions vessels here. have we vessel The Remember, to a high as move

North the down, summer can come can we down come we the the to to in then quick [Audio relatively work time Africa and in compared months, Sea So Dip].

Owen Kratz

to whether required bankable to a of not the sort prior have goes question one-year This back or contract. as we

quickly. ability We vessel this to with have on optionality technical based transit this

Haithum Nokta

great. one sorry. I’m enough. the of downside on kind more of up squeeze QXXXX The breakeven of less a based assume just was or level – guidance, on of That’s Fair and does to utilization? Thank you, lower higher, that? I midpoint in actually is the can that if It more. kind

Erik Staffeldt

the in have there to midpoint its in – utilization is will our that are that it level assumption traditional upside provide that be guidance. definitely it Our we If utilization assuming good reach that and of won’t had. not QXXXX our would it’s

Haithum Nokta

Okay. Thank you.

Operator

next Gibney the our line ahead. One. question Joe go of with Capital comes from And Please

Joe Gibney

morning. Good Thanks.

last follow the up that on question a QXXXX utilization. Just on on-spot

understand last given a utilization secured and enjoyed Just to in in backlog? couple between if jobs, that backlog I’m in full you’re fact working trying it’s the Or that indicating that the the you it’s to certainly, years, now. pockets indicating So rate have run you’re lower relative what into spot? the understand backlog but just the XQ, of

in spot? the term, that given near utilization the Or gaps of looking is scheduling, the in quarter? it nature the you’re for first there So are full

Scotty Sparks

have first we full that’s breakdown the going end as be and strong on clients, like have we’ve said we after where visibility discussions quarter, of utilization month. In And some or they towards with spot lots allowance that, less. always could where the utilization. a each we’re slightly Obviously, good the we QX. for allow into And always seeing a it of have could vessel

some As we all we clients the we that going QX, other. vessel. just work one follow are allowed We go into as appreciate gaps QX, be have in to after to in the spot

schedule. will the in be So there gaps

some project. our the have in gaps allows us So guidance to

Owen Kratz

follow Joe that. up just a on

little just that rigs. a It’s the we’ve right options dynamic of taking for we of assumed achieved the rigs optionality It’s now, the about. there’s sort the be has not element attitude, they’re now. the early on would clients that cautious Historically, and and in have that new the uncertainty we’re out that it as a just clients The to are just there. have are trying is the seen willing of therefore, that a you seeing give to we’re as we’re committing not because for right given wait Just that see market to knowing work they not the always to to flavor market. historically. seeing what full work utilization probably evolved rates What work though, the due QXXXX And it.

Joe Gibney

clarify little to confused. again just Siem And the I’m a on Understood. Okay. still vessels.

to and million. now the rate and this $XX million run shifted of have it then EBITDA your with we million $XX So expectation, original $XX initial amendment of

as thought. another have it So indicated what mean we I definitely better intervention well call, than would by looked little revenue outlook,

And trying little a I just anticipated relationship, chute it as lower assets out as the of to shift, a related is rate to trying is its understand lingering so bit to out these still I it of for sort the run basis whether the mean, chute? just is little I’m developing than rate you’re the higher list understand bit understand anticipated. the of punch that to issue? Just cost

Owen Kratz

all going we [Audio the the the on contract associated It penalties. to delay and boils extra impose that Petrobras with down Dip] incurred and cost

million. EBITDA, was the the $XX you’re of then between that non-cash which mobilization, deferred All and the of gets $XX the seeing to and a that’s And the accounted therefore, contracts. difference it’s term that charge for million amortized as over

Joe Gibney

Thank make That you appreciate will sense. Okay. it. turn it I I guys. back.

Operator

from line the Marshall [Operator of Our Please next Raymond James. ahead. Instructions] go with question comes Adkins

Marshall Adkins

to It a market ask Hey, few you of Owen, few get question why it. is was heard these think while. only down that? anyone of you coming status back would are. as but seems in and as a if your the ago, pretty years and into the right, the clear didn’t that as years that they rigs to you seem competing impact close drilling haven’t assumption a And What’s complete not you are I

Owen Kratz

to of cap seen lower region, the no not are There’s right. there Gulf It’s to therefore, each stacked, normalized North to Sea, rates of our hurting way don’t way start trying really optionality against we a awarding them threat, Marshall. it level. the sustain reaching sitting it the given rates. but more some rigs, rates rigs All It’s I opportunity different cost avoid the to why class though, still that group trying which the keeping have rates by In certain on there, you and The for of here. and being it. – market is work. in Mexico, do compete probably long-term back that we’ve clients out as efforts sales see their are got that low and certainly you’ve around the a of a

Marshall Adkins

that reform, tax it U.S. impact healthy? The Okay. how it is you Is Or non-issue? all? does

Erik Staffeldt

I still on designed. be forward-looking basis, Marshall, that that law. lot – we Well, to initial we tax the standpoint. And estimate there’s guess, And year impact guess, impact obviously, I and have still the clarified of something from recording a the issues the being is it that of technical for to our that

in expect view, our other in low tax I being the and U.S. we the same at level, region in the obviously tax the think our that then main obviously, normalized XX%, would roughly from a high XX% would be range. range UK a rate

in term, basis. that perspective long to normalized expect from normalized on – think this, probably situation, In low the to normalized I So mid-XXs. were prior do a probably the we we the XXs in that

Marshall Adkins

Right.

then? positive modest a So

Erik Staffeldt

Yes.

Marshall Adkins

like It summary what of here if kind Owen last question for this really Then paraphrasing just you Okay. say. you. heard I sounds

consider if conversations with have oil improvement the XXXX seen are – is raise the the that whereas six you North more shoots we’ve heard Sea, see basically, your green of or even in customers, an than starting much is You early better. particularly even But correctly, creating things would get even may interest price what that – I the ago? to you in months in so that

Owen Kratz

I we’re at said to helping Certainly demand, that the what’s more I think, color pace from dictate think my supply in and are the the the offshore. work. going to last cash related happening as higher reasons commodity One is that’s flows rather looking the doing of two seeing than think producers, producers I really pricing, I one. do in for enhancement work the production comments,

are being three marketplace and that is Marshall, don’t some there’s rig are serious of at us. premise apply the we offering range rig up operators, guess, still operators the rig. threat that in I’d think So what the second less, in they’re with a versus industry. I the the driven the of that’s a that on competitive time. where for that the on the be this discounts supply approaching to the And I on rigs. the right been which operator the fruit the so that’s can of sort ops past – advantage our through We – is that’s that’s I’ve trying all rate irrational, a picking advantage rational. the that rig. only long-term chains it maintain by have And model. term a remain – And to are time think overcomes done point you also the rig XX% looking go having now, producers. not moving XX% to I wells additional here. the our XX% But back on just the work our tacking like But competitive would long on said offset, rigs to competitive mentioned is wells. being versus rig low of And minute rigs of hanging remedial of the lot a little just catching without day go

Scotty Sparks

used contract alliance keeping again the the equipment that just which efficiency demobilization’s, it – the adding by over and for allows on remobilizations to probably also, in equipment, efficiencies allows installed day a think is we have quick rig we low to spending this the by adds rate is coming days to and then starting and piece, rig mobilizing that and five us have. and I the the against

out there and So can that that’s date. benefits put is that to we mechanism very working well

Owen Kratz

work. think, roll maybe uptick third volume off I that are for see of no I they will over years, starting to in roll and that producers. a seeing I Therefore, the think legacy that year accelerate past the continue. a off we or driving our little were next are element is and rigs on contracts. They Marshall, you’re the to are drilling contracts work plans that in have two amount long-term Whereas redoing a we’re the that also, of them. lot losing the work And of

Marshall Adkins

Make sense. you. Thank

Operator

time. at further no have questions we And this

Erik Staffeldt

you you. to Okay. having on Well, April. XXXX call Thank forward much your us participation, We very first thanks quarter for and interest joining in our and look appreciate today.

Operator

your Ladies and disconnect you you thank conclude lines. that today’s We gentlemen, participation this does conference please for your and call. ask

Helix Energy Solutions (HLX) 20 Feb 182017 Q4 Earnings call transcript