Helix Energy Solutions (HLX) 24 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Owen Kratz	Chief Executive Officer
Erik Staffeldt	Chief Financial Officer
Scotty Sparks	Chief Operating Officer
Geoff Wagner	Chief Commercial Officer
Alisa Johnson	General Counsel
Jim Wicklund	Credit Suisse
Ian Macpherson	Piper Jaffray
George O'Leary	Tudor Pickering
Marshall Adkins	Raymond James.
Joe Gibney	Capital One Securities, Inc.
Vaibhav Vaishnav	Cowen & Company
David Smith	Heikken Energy

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Second Quarter 2018 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 today Tuesday, July 24, 2018. I would now like to turn the conference over to Erik Staffeldt, CFO. ahead. go Please

Erik Staffeldt

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

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

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

Alisa Johnson

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

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

Owen Kratz

level the presentation, results. summary of Good start I’ll on five slide is morning everyone. which Thanks for high the of joining us. QX

benefited full compared as XXXX of a low following from activity the Our second QX. Sea first significantly seasonal results quarter improved quarter during quarter normal to assets our North the

full utilization unit, was of Intervention improved million financial from by of quarter our and and vessels compared quarter QX, positively all Well million execution the performance. $XXX in Our areas of QX. UK to XXXX Robotics impacted to both in benefiting Revenues increased in our $XXX a operations

profit XXXX. increased QX, gross $XX compared QX, $XX Our in to million XXXX million to in

QX, to net loss Our income in to QX, of XXXX. million $XX a XXXX compared million in increased $X

XXXX quarter million million generated compared of the in $XX adjusted $XX in we million For QX, to EBITDA QX, and XXXX. $XX

to Siem the X, XX% for Turning compared on in our Helix in Intervention vessels from increased to QX. in XX% to slide XX% QX. utilization our QX X XX% six In was Well QX, utilized Brazil,

In in the compared shipyard its in During in XX% quarter UWILD its of planned on of QX. compared at was the to the The Gulf X been the regulatory days utilized idle downtime. was was utilization quarter Helix in completed seven quarter inspection the The XX XX% the vessel compared to XX% QX. in development for quarter vessel The to the Brazil positive for has maintenance XXXX. end The was utilized was QX performance of downtime projects. quarter. cruise in completed a QXXXX half QX. utilized the resulting XX% days XX% QXXXX Siem in vessels between first and our of The of with vessel The XX% in QX. in XXX% Mexico,

to XX% the XX% QX. Our vessels reutilized North compared Sea in QX in

projects. Enhancer two coil Well completed tubing the quarter the During

seven, in XX% with QX. cash connection increased to ROV Utilization to full Robotics to of Spot $XXX Our be of quarter. Vessels levels by vessel $XX of utilization of increased in million balance a payments slide end market in XXX entire operations, principal expenditures work XX% with $XXX ROVs scheduled continued XX% the days length financing. perspective, also from Production our days increased QX, We million in with quarter in our the QX. generated during from our at quarter, trenching sheet from activity million facilities at on to segment increased from from to million On cash $XX capital at XXXX. million benefited of operating a UK performer XX% the $XX the our end and XX from steady offset

million Scotty for $XXX results. decreased I'll of call to in-depth our discussion QX. now in debt turn net the Our an from $XXX million to position over operating

Scotty Sparks

Thanks Owen.

has to slide considering what for continues been nine. us on good far so conditions. QX the a current year market Moving

on uptime We to has the performance work time completed programs SHX Gross Spot all in production were and Slide facility non-contract vessel IRS the returned production The works projects on that of in utilization of Huston. Again, unit from have with undertaken increased standalone to its with and at fleet had a contracted performed good well performed hull second idle quarter this Gulf usual commercial IRS XX% unit period in In achieving vessels quarter million, Intervention alliance at another no produced its compared some P&A in-line in to a had XXX the quarter. the jointly work of longest XXK Gulf IRS OneSubsea units to for the quarter, an At on in little with QXXXX well. of also quarter strong system base. Mexico. profit to both well. the program have overview the March then utilization same undertaken. rental mid-period utilization. $XX owned downtime. trenching in Mexico. good well Helix throughout The did unit our on increase the with into program. settled work high utilization significant back first the and our XX%, achieved entirely quarter of in Revenue utilizing high provides all three-well increasing was well another Both $XXX strong and on XX commenced and charter the a QXXXX undertake completed expected vessels across season, operations start our X performance in a The P&A business a continued working our $XX in global the in business Intervention million vessels base client. conducting resulting a The an on quarter. days the and work underwater both North enhancement activities. completed on was in and XXK The XXXX. company The to-date. in to In vessel contributed uptime the however our Huston. BP completing by X trenching the conducting inspection, the margin the planned two enhancement the The in Robotics very the QXXXX high commencing numerous target. completed now a QXXXX of to the BP the immediately fleet originally the quarter very pressure is doing remains Well increase $XXX as to planned of the the with units alliance and Africa locations, be Brazil, QXXXX regard market shipment well globally IRS planned West four-well throughout have the business, QX. contract maintenance good QX. very performance in the with quarter a in million across period Sea of SHX in its performance. their throughout downtime a in profit dock safety enhancement in production lines and business all number commenced increased dive with performance million, to standards high

Moving slide to XX.

Two the systems vessels vessel going successfully. simultaneously. diving utilization four clients coil uptime the for for The enhancement programs. clients worked Seawell with market mostly in tubing of March our work quarter. and available North of Sea P&A working projects and programs. quarter to three enhancement the for three XX% in Intervention strong diving The coil and production only worked second to performed Both production Well both business and utilized quarter, XX% Enhancer vessels mixture work quarter good on of is the Well projects. enhancement straight the experienced Our reactivated Well tubing Enhancer operations and of high operations work a entirely achieved clients, The with the and throughout numerous working production a

well had undertaking well performing X P&A achieved for stored ranked very against X our has for the from the in In wells very vessels. Ranking vessel possible IRS planned, also safety, it’s Helix Brazil, our for was the months been nonpaid very quarter rigs two with have utilized row the XX. completed in with XX% production The after we well date. to go days time. and System performed two slide We vessel settled vessels The and first into rental five at to vessel to wells efficiency. positive Petrobras a opportunities. Both are utilization. in the undertook of Moving place continued quarter The our all was programs. Siem and seven extremely and resulting best stand-alone in quarter. during operations Helix in strong facility quarter fleet XX% Petrobras enhancement feedback as received service The a Petrobras period The X the in well. quarter operations working Brazil Siem on

working II to ROV the spot fleet of days has the XX in for a slide XX% improvement of of project Sea and III discussion XX utilization, on completing review. IRM works of leave project I and with I'll project. undertaking and duration also located North Canyon support to included and vessel trenching QX and water Robotics short market Grand projects. and works projects for vessels IRM trenching Canyon commenced commencement XX now of due primarily the on to Gulf the The an utilization XX working Mexico charter Moving undertaken with projects number requirements. ROV utilization, on work We days our now client the Over the the our three regions. Grand on projects-oriented balance client’s short to back-to-back works slide in days increasing vessels longer-term was vessels quarter, the Robotics requirements, back-to-back a for project a the three for Erik reference. the your during detailing with utilization the a Canyon vessels trenching call utilization our slide achieving and outlook. project. to XXXX XX, of the sheet completes will the Grand services XX days across turn XX trenching performing ROVs on utilizing on days spot them contracted XX

Erik Staffeldt

Thanks Scotty.

to year of million, June in debt million senior instruments our XX, and it was refinancing debt outlines slide XXXX payments profile a their Moving at $XX end notes the total principal from June reduction our maturity funded our the of The $XXX at balance, scheduled convertible and QX. XXXX primarily reflecting XX. XX

to growth provides metrics, Moving an and key sheet of as net XXXX. levels year-end balance slide and on XX, June update XX, debt including it

$XXX $XXX operations, $X Our $XX to The of being from repayments. net million debt million by cash is offset debt generated attributable debt in million CapEx in decrease $XX net QX of decreased of to by million million.

at to ratio was million; our position quarter cash Our to-book capital net slightly debt XX%. $XXX increased end

of $XXX our range the million. the Helix remainder to XXXX. outside vessel the over into the maintaining fourth first of the could in for variation assumptions be key Mexico in the considering significant XX fall in The includes developed are and on could and $XXX region increase and positively X extend EBITDA on Any Well Helix have assumptions provides and during we X segment of in half the to the million range in key of trenching of – our slide Seawell that however some estimates. vessel Moving This the Operations provided. to XXXX, Siem on Projects Siem forecast utilization our range which quarter, work. XXXX a the reduced should Enhancer charter to of cause challenge. continue EBITDA market Gulf the these region benefit Robotics outlook cost

XX. slide to Moving

$X.X of the at completed of to of and scheduled about remainder $XXX million remains is which backlog be XXXX estimated Our backlog, XXXX. in billion currently

its its Well two into to the continues weighted the the BP the North mobilized Petrobras Producer has QXXXX to scheduled assuming that’s be Well QXXXX activity rental of In by subject work through backlog QX Mexico, change. opportunities vessel Our some program July In has the and Helix day contract. opportunities. near-term and October IRS currency The driven for of be currently idle. will XX in contract, level XXX-day contracts, a QX. market, heavily on One QX. Intervention gap into with project vessels The QXXXX The we're utilization market, to systems are BP XX and December Gulf a with Intervention high identified Sea for our currently

seasonal the quarter for XXXX. slowdown market. lower layoff we continued in weakness months. continue slow I our Cygnus the Robotics to due improvements the to performance in XX, the expect remaining the after in due to The stand return stronger to from QX, Canyon scheduled Deep XXXX winter charter wood through of the start to expect trenching partially from in the second We improvement normal slide and winter months, costs the Grand Over during a seen segment

the million the XX, the slide for continuing in construction the QXXXX, of to payment most capital year the at for forecasted is including QX. with forecasted of $XXX CapEx the ship Moving

payments XXXX your for over our to loan, the Our outlook. payment debt I approximate Geoff the will XX QXXXX turn reference. million slide $XX remaining now market I'll scheduled debt with for skip term for call loan. on our and

Geoff Wagner

and to to morning the investment. time to remaining contract production believe Brent months the few contracts spend from sentiment, remain Lead near durations key good efficient to appear unwilling that short prices commencement some through to barrel regard our contract committed walking in what to Operators times, their we customer absolutely is backlog capitalize next remains continue signing and continue clients everyone. delivering highlight near to mobile returns of the for and clients to and work on present that With market for Erik maintenance per by to Thanks be they opportunities I’ll of of be term excess commit $XX previously. and offshore encouraged off on focused necessarily. enhancement Helix. field outlook the drilling

business. compete units not we all rates see to encouraging from the competition do intervention backlog of While order the willing of contractors are of the Gulf rigs vessels continue In this see in at operate as breakeven Modus, our of decline in directly drilling we to to our or with keep who their type warm. Mexico weakness for near

of is track contact be may situation are is in our the and P&A past to QXXXX However, offerings intervention belief operations Gulf forefront at if are But the that differentiate of we Right of appears to the continue. In able of any our performance from and Mexico. keep competition UK and the continuously of pricing services market the not to reality the with this cycles the vessel our the to the there less indication, capabilities crews, slightly design are market QXXXX positive. ability drilling the our would now Sea we our North units. we industry in during this and it our low. affect expect record, our proven and this It is

year. maintenance enhance and that the are Enhancer more oil of into the of We North P&A their have there operators to discussion it this is high, QX prices beyond. work remaining Sea continued seems With and Well work on production XXXX to in committed visibility performing and Seawell

work QXXXX, and Regarding around of the are to vessel XXXX. expect equipment ready integration and to inner we furnished currently have upgrade the the of completing QX

transit from fit the to it a of the highlight culmination is vessel, with should X our terms drilling of capabilities is space uniquely the Intervention worth our designed rigs in The today. Intervention Well for construction think well. weather vessel, differentiates an QXXXX being vessel and hands QXXXX vessel heavy that the In that Well BP the efficient experienced here are speed, cookie-cutter that and learning is under delivered of as purpose some heavy this a design I high pausing this clients serve

we go detail, end will well market are that As opportunities, the stated should identifying of have nature programs the earlier of and vessel continue model year. bring I with on previously, we to the to not XXXX, say market we although Africa, value. until into to the delivery these much differ the to option capabilities competitive in Due West the working opportunities in hard the QXXXX our Sea will with too and the design populations, Helix’s Brazil have significant marketing and pursue the of offer capabilities to expanded but North that business the shipyard

Let’s discuss switch and gears a for offshore minute. Canyon

improvement by primarily we show is the of concern, greater far our should remainder As driven trenching market utilization Canyon for that this market. basis a on outlook as expect year the strong year-over-year of currently

year on visibility company gas begin on and gas Canyon XXXX and is the remains robotics is better ROV’s, based for market, belief in vessels, both up XXXX have oil IRM this backlog sector. will serving renewable trenchers market we the focusing as tight, that and in construction the on-words. and as in a our positioned construction than Canyon while ticking and We as well work did with oil it light

to from As such, strongly Canyon benefit is market potential leveraged recovery. any

we back will turn margins a these our tough deliver Owen. our summarize capability. to class on investment with expand our closing At improving enabling to for be the we continually market, service believe and around we focus outlook, Owen to non-rig time look has in increasing to and continue contracting to We and a the this for So assets, offering value over clients. formats fleet, utilization our that ways call that the I robotics market comments. pre-eminent intervention Helix while

Owen Kratz

upside continue assets the quarter, we're Utilization given We're in is should in there's actually market very the that conditions, the improved our season. there to to cash the remember we the that Geoff. a any but positive the pleased volumes on with work room QXXXX challenging payment be you, expect market exist early on of cash at lack for improve which forward. improved final kind utilization. therefore but and market all. the clearly QX results we continue basis make and recovery annualized work achievable. the due conditions U.K. lost that in are ahead sign availability, In positive we improve to is position an back of and of flow should free to Well, The still Thank very going of once

potentially season done might in work for in we're be assumptions. market our current beyond be discussions the to fact, In expanding which the of about the QX, beginning some

to continues handle of and Mexico to rates. which abnormally alternative slow higher of Available different result contracts. there a to as done be be could However, of volume oversupply efforts The Rig and clients are supply, to committing low at rates low be work Gulf continue a in any bit achieve a picture. is competition. a to be continues to

in The Our least utilization utilization Brazil be the lies to vessels two could period better or of visibility could the utilization help last in ahead better. and which other of cranes than time regulatory dry upgrade the what continue the penalties, be that see outstanding going brief will strong the dock. of the at for. SHX eliminate required economics to We advantage was took that some

group note, improvement a supplied for to did the work in vessel market robotics started with our said, to improvement conditions it We costs. only of fill show to as asked well. competition EBITDA fill a term in On That that without has chartered was continued group improvement. on work in has you but the up not trenching significant as robotics picked over utilization, Therefore market class any any work. lot some actually to uptick long positive of leverage cover. vessels our expected, market great adding opportunities Our not segment be in for

of described generate board. combined my trenching has continue and the on Gulf through utilization recovery rates should rates they improvement mentioned. as exiting seem unsustainable refinancing some by there XXXX. have be to rates and of bottomed. some the reached rates demand. and While players increasing or the of been depressed favorable, the combined this on with companies in and the the for limit We're the offering into out its a previously anticipate with elimination on hasten backlog only the rates will world-class in side, show of hold to pressure positives see condition for XXXX begin remain the It’s opinion be that process vessels the strongest what will We from opinion the We oversupply are market, Brazil holding, will SHX assuming contractors offered with financially stressed of drilling across do have the depressed. weight desperation. rates attempting or process consolidation and UK. can remain our in the margins four that that to but weaker result oversupply Mexico not vehicles marginal the current have oversupply, penalties Robotics in rates as

forward, oversupply see roll-off. see market We'll continue term changing ongoing conditions end into little Looking until rectified. profitability is charter operational we Canyon efficiency return long the some going and to XXXX we of our improve should to with

equity ready QXXXX In has already is positive. have to Geoff the end debt further the at condition focus Net the at good at the to net balance do sheet. be come expect flow million XX% to sheet good debt. The in and is retain will cash market of with we of final with a free $XXX returned to reducing and having debt our Even QXXXX balance covered. next to on payment year QX, addition, as we

ways objective margin. opportunities There previously but improve to years. forward face uncertainties to in lot and range than we on upper will be guidance. a visibility it finding we for With main revising Consistent us to our prior will of XXXX, on year in the our However, in respect market at the the had given, point have are less work still not with quarter QX last be I of on in there. this trend call, stated we what going half the the to continue for

can back open it up questions. we it and that, over you to for Erik with I’ll Now turn

Erik Staffeldt

we'll operator Owen, questions. this take time at Thanks and

Operator

Instructions) Please (Operator of the is line Thank ahead. first Wicklund. question from And go Jim the you.

Jim Wicklund

morning, Good guys.

I no question know surprised outlook what You with. there's quarter, you struggle the Good is we mean, everybody.

really concern going you on, QX to I haven't don't good happen. think your a we idea at good. But that's utilization, in you and right. changed has is know really have which outlook, what's looking the you're conservative of been,

we trenching, on In do of on handle or we a terms or some recovering, part Canyon the that how be rig for the We confidence future get seems do of how feel sustainability to so level business trenching? That handle get big guys? about we do and work? isn’t how don't – a

Scotty Sparks

feel Hi Scotty – Jim, We good I’ll here trenching. that. take very about

vessels holding. the secured, the all ’XX of now are of The One we well. from the vessels, they so of And in trenching trenching through feel last and work we market. then have in nearly two Canyon for ‘XX ‘XX year is and all the across all up way were backlog booked they higher are very for that than of rates

oil a We gas some seeing are to return trenching. also and

undertaken This is oil quarter gas work just upsurge recent trenching, the for instance, and on XX% market. the renewables the actually reliance in of trenching not

trenching. backlog good a have we So in

us, We’re our at clients in the rates well, market I and operating quite forward am like this are time. going confident trenching very holding

Jim Wicklund

Sea, doing helpful, on Brazil guess rigs, Gulf we we? fuzzy market. that improving Gulf then that's really very and [Cross know Mexico. is it's or of do unknown. competing do you improving. And it's Oversupply future rig rigs. against completely seeing your guess you guys Talk] was because of Mexico, of just stocks I warm one get the fine. How and rig about North The that's year-to-date Okay, XX% ‘XX the I expectation aren't up for and the of are

Scotty Sparks

that’s Owen, good. it take You

Owen Kratz

thing, not to get positive say just trying know of just same we the You know I’ll the we're see ahead news. you on ourselves but

deeper, in rigs dig out you an rate, If and we're going we rates. those point still see inflection low until seeing at

I balancing occurred. little conservative a think know having -- calling on you we're of

XX of on our I a around bit still away little and primarily remain the quarter. days fourth that. that to we're it’s QX from the and guidance. reason be QX bulk why little the our is of in we cautious a That The conservative, tend we really think ways the uncertainty the

Jim Wicklund

will, Okay, consolidation buyer, the play you merger? place in consolidation. look guys like a probably when your are every Are many over What really of do years a range Tidewater consolidation noticed you a you are that that? you end and in you’re Gulf knife, started to have your What's business? the in and to and no how the mark boat take start longer and other you guys to you look consolidation catching things sector falling bottom, needs the business. seller, in and does at like see do

Owen Kratz

his me consolidation. let drilling and Well, all of give sort then jump Intervention on to of view coming consolidation to take Geoff first where the in of Well the like and I’d is ask the play market into

competitors certainly really do. we and of side, any the that don't competitors the we capability don't have non-rig that On have many we that Well breadth have Intervention

see a of don't as what’s basically I consolidator us very small So niche. being a

so in and assets. are that niche we’ll we dominant do think the even player I with to our continue

that to we're niche the see part in the to be vessel more therefore would on part rental offering company, by the relatively a a upstream where than company silent That's the proposition more intervention a activities be going. contracting a For better little to the a producers that move to business be able in I of our downstream, and and the for but market. model creative value unique offerings just as perceived in expand the around expand consolidation so well, to both me, us service

Jim Wicklund

Okay Go ahead. go and Canyon? ahead,

Owen Kratz

connected you're that. Robotics think I – the talk most Canyon, the well with market Scotty, why don’t since you about

Scotty Sparks

There I of companies be know are Robotics the industry. a has of of think suffering and out are consideration we there pain. there to ROV color that some lots lot

other the work come every for and that side We others to them or much bunch With have always But ROV’s have of more commodity been number I’d probably that lots in a of two is ROV become that consideration a up’s competition. are market. market, guys players have on trenching that right gone already in these positioned, trenching small the the there's and are a those go there now uniquely We There’s companies. if there’s the under, who beach quite know doesn't ROV’s few because know a we shocked operators on one small companies of pain. be of that under.

Now more that’s our going we’re side of trenching well. turning it to

in are class We the availability. slight uptick seeing a work

late are again. that therefore of contractors our ‘XX We utilize on booking some work our to XXXX would our ROV’s of the it, some construction of out are clients seeing main side and that

portion of ROV’s their smaller ROV and next able years couple the our see there the the to a So out of quite lots of so on longer that ROV’s be fall of companies utilized aged are and are be in I no will market. vessels, for a already out quite

is my definitely That’s to it to going on going but take it's take change, it. So time.

Jim Wicklund

Okay ahead, gentlemen, go Talk] Please Owen. Yeah, go thank you very much. ahead. [Cross

Owen Kratz

Well, ROV if guys. just you're and of to there is smaller talking X as the the a about market I market consolidate Trying then bit guys. I providers thousands perceive little the ROV to smaller was little of In a more tier are the color. going add sort it difficult ROV

an market. a times times. wanted in and said, consolidating bad you The is in not up the smaller operators position. hardware time would you Scotty for only that as commodities. they know in of expanding at We're extra really that They they You spring look good disappear are number ROV if

though consolidation to The that that alluded may possibly I word, leveraged are we wrong does and significant support be behind costs. global smaller ROV ‘help’ for to what tier that hang any hardware large tooling the creating have their the look but fact market as operators operations, cover depressed support, the try make I really differentiated a sustainable market opportunities, in operation could be it competitive We and have and Well, help. have expansion and there they without more to of the longer. sense really to there and plenty that's on here operators and engineering think X

Jim Wicklund

you quarter! appreciate thank it. Gentlemen, I Okay. much. Excellent very

Owen Kratz

Thank you.

Operator

the of Please ahead. Macpherson. And question from line our is Ian next go

Ian Macpherson

that QXXXX? either Is being What's QXXXX, Mexico QX, considering and to worst vessel. are you terms What up frame fill the no one for for Gulf it of you're of morning case Thanks. range outcomes, Good of so table? of only help on Can taking penal? you one maybe work them. consider you the possibilities of us everyone. in for consider the too marketing them the you one, sacking one internationally? Would Would of having out the

Scotty Sparks

take one on. I’ll that

the rigs know have move ’XX year in activity, of by giving it would be the to bit expect We there. bad somewhat if a give rates we’re extension those out expect bumpy. that will had market, one to more region. out I we get I that calls works XXXX the back achieves there. some I There that a had that work What some have picking obvious of so a always we that high out I as past. we’ve that. we know what of the assets. back. that been and to we’ve on projects here will of off on generally picture that year operators rates actually QXXXX now bring that them believe the for of taken contract be going that too ahead had There QX But happen. the of have than eye zero high so against good projects that we’re down, far of we for is chance utilization. number was it. we've on been the stack is wouldn’t number into a up year be out put rigs opportunity this warm think up along. could -- the We don’t so come But competing spot a idle will But keep a toward of have work there's moving BP and the allowed work; best again, is type and rigs. some lower would in did, But shouldn’t we And go expect take comes utilization QXXXX our visibility this rigs P&A in for the us said on we market then the We and market the that paint it utilization track a we I of P&A step we of moving their number QXXXX. a good

will us, to now enable easily of proven system. high some work have can some also that and pressure tooling a come on That's and rig to unique XXK be and We the number worked that mobilized. off been it’s well either used

mobilized to having to project from and demobilize that mobilize have be Schlumberger contract to project allow all allow us also the quite to equipment, equipment on move the smoothly without Blue for the equipment. equipment We

we're up some against competition. So rig

on work, but with are have both many. have not working in at do contracts this we full time, we in but rigs, discussions today we're place visibility We to

Owen Kratz

is lot for getting was driven us. lead In past slide they are that’s that's three that minute the any BSEE, little us it time, that a on three give a an achieved I not contracting summarize quarter. year, keeping by fourth in the bit, and the until keep there’s subsided a one We is, usually and well the the rates last the us schedule an but there’s decision, that’s of QXXXX fear somewhat work is next the just them. rigs has think which a our fear and the And into out know the for uncertainty. they occurring. kind utilization P&A past, by charging, be about to the seem One allowing that there conservative are little things To things eye of make three, of waiting that to deferment but we abnormal to the clients in Two, issue. has

Ian Macpherson

get bring the year Do appreciate opposed your Owen, that. for QXXXX to would in you to Thanks I you as next vessel profitability On to firm. market terms be the criteria winding is vessel better do think vessel really better the really the project and really a longer that's right objective. if point you withheld price, and not up the the with a just you out what of could the earlier waiting Okay. rate day think

Geoff Wagner

take here; from Yeah, that I Geoff. this is can

into view higher come You project a for that out behind have population that it that that give not projects for talking has the deploy out regions visibility future. worn were Usually for again where see short a sure around allow strong very the before enabling that we’re high out. of we make it that move us we’re Again, to quickly. unsustainable speed coming does when a want number without will transit to features for very also and supported know to very wells about with that's to allows a an We stability wells a region which want efficiency. against large the much taking the we're design of looking efficiency. between vessel It to vessel, capabilities a really we

don't to region, specifically the it's more I on really So sustainability the as model, and ability as business the again, think of comment running and but for there. up profitability, it the the can I'll quickly outlook get we a

Owen Kratz

there's add bringing for strategic would rather waiting earlier out actually the I that I think in move. than vessel to value pricing

more shake to be in for By nervous its about than term first-in the vessel to through longer have project user. beneficial market, typically successful demonstrating are a actually downs having being market the pricing the could go success waiting demand increase. producers its Our some and

Ian Macpherson

you. Thank got it. Okay,

Operator

next question from line is the George go ahead. And our please O'Leary, of

George O'Leary

Good guys. morning

Erik Staffeldt

George. morning Good

Owen Kratz

Good morning.

George O'Leary

a on you tends high of there’s in dollars quarters the It the case that side be the so So of you the like that why why make green fourth year. year? understand be year I guys to high strongest for QX want strongest questions. going margin to two, for I is or QX and -- be wouldn’t go that and about thinking tends guys guess one I how And any quarters, QX your any your third on the to this good of strongest? So shoots when are if to quarter stronger third to other, is year, quarter there the rental wouldn't you the guys sure be margin, your work? rental into be QX revenue visibility side, some those that reason this just quarter not two generally, are for then of emerging seems Any

Erik Staffeldt

I��ll the answer you Erik question think one and answer question I two. the

Erik Staffeldt

Okay.

that has As on of far of as third schedule visibility this fourth from towards correct, historically we contracts and year different have -- have is to our strongest quarters don't been that that and be the standpoint one any we you're we expect quarter the our the the quarter. lack

it what similar quarter the general quarters expectations years, in So being the of had are I of previous think our one stronger third to year. we’ve in

Erik Staffeldt

sort realistically a about IRS sporadic systems, there and it see And global to ago. in on rental X of XXXX do completed They more up. regarding that the Okay. come commenced We week just that back basis. then base has are a the opportunities project November got of a

to with systems. but really that undertake go it's a materializing. numbers have clients We period we hats something are we're IRS in noticed with holding talks her some before maintenance X We ready for on nothing’s rental of on not to those our again. opportunities, It’s

think We vessels put of high the Mexico period are in pressure and work work seeing for enable quite QXXXX us that QXXXX a those XXK I Gulf mostly bit in off of to wells. that activity regarding to could system for the the the

say systems. tenders more probably sporadic would because been quite Geoff? recent rigs agree the So few rental to recently come I the compare it’s that opportunities that's more and a stacked. in years I drilling have you for Would with been there's believe

Geoff Wagner

an there. seeing a to based work there the Yeah, that’s more bring you’re and operators online, is out to is to the back over something there I’d usually well already production fastest say find and go on out look it way fixtures capabilities enhanced enhancement for and activity and that’s

overhang of more So operate seeing be these and rental interested and used from that for backlog help efficiently. units that an operator these we unit, can are because the are because vessels in rigs these enhanced of still that can

think I statement. a that's yeah, So fair

George O'Leary

I stole my thunder, most rolled of into Great, so you both I'll moving. and one let Wicklund guys my keep questions

Erik Staffeldt

Okay, thank you.

Operator

Marshall Adkins. the And ahead. the Please question from line go is next of

Marshall Adkins

Good morning guys.

So blown at last Sea. recovery, you're about we in shoots It North green cyclical couple like seems of a least quarters the in offshore. talked full in

doing you're there, of all you operations Brazil killing expectations. in of operations yours, it. and phenomenal beat our Those are Your

staying guidance the same Gulf the Your me to Mexico. to of appears be

It the there Gulf pick And sounded like that. on in an a bit I Gulf at little want So know overhang a least you question. drill to in the and about are of down assets. but is I talked up, last you've bit interest seeing little still the more things

curious, assets of more Gulf? it I'm that’s is or is So work the cautious with with a to the causing to busy little deciding on be more just overhang operators more it a get problem

Owen Kratz

mean I perspective my the [Cross from Well, Talk].

Marshall Adkins

Go ahead Owen.

Let’s and start Scotty. with then you go to we’ll

Owen Kratz

my perspective were the cut year. here last I know commodity budgets ’XX, From think alright. you moved ‘XX price the Okay, in

cyclical to that service think is you and that's get industry up, bit is upturn. work off worked us difficulty there just blown for you are hesitancy there worked the back of The rent increase. oversupply so only think of seeing have has before a I markets but is I a do that all volume getting -- to full going little in out say can much really So that in the been the

seeing of it think side. the We are we're yet you're in seeing rate utilization, but increase, very our utilization the that on but stages I I think early not

Marshall Adkins

just So right. make I heard let that me sure

but it like the there more seeing Gulf Gulf, Sea what I in up, not you just where North the you just sounds pick just capacity tightening. that picking the activity is in Activity say. on also clearly are heard So is is up

Owen Kratz

be, the you that’s seen on think is have to differ I or following and the activity in the also to they is allow vessel multi-year to the deferments that fallen also would have going question we for that’s [ph] production going of that think of But shot? the proclivity accurate. say are did sides work XXXX The P&A now have thought one-time I to would Gulf year. a Alright, enhancements Mexico, you've a to in increase

Erik Staffeldt

to add that? Scott, anything Right. to

Scotty Sparks

utilization year. has this year I There has the is worst is rather good Gulf project or a not place QXXXX hit Owen there. ’XX. on on think project. take projects Gulf head certainly, out to said this lot Its about when for Mexico he it earlier back Like ’XX the summary. this there but thing of I the earlier, in nail it’s the Yeah, today, mentioned visibility of working But the a of Mexico the of

the lot is afford visits also are most almost the So in of and there XXXX that. There on the on best this favorable The come for budget more down any seasonality best not whether there. A they put we were say extensions, because from that work Geoff a it, allowed P&A operators will so out be that and can it increasing, weekly how so they calming rig us or to of extensions. to basis, the assets oil position to of he market is I’ll is road, just to changed and recovery kick oil the it prices tuned a allow when keep, with cans would would over pass I trying P&A to our must of overhang dropped, they on the moving out, activity be based push at has hard them for standpoint. the the cost [Inaudible] that our on oil is P&A especially utilized also to looking this market. price so rigs

Geoff Wagner

continued bids the again activity on conversations but you of But projects. much now, the question. usually stronger some are tools action out margin the I those are to in a we think that's to for have improvement. right We really picking rig still efficiency of backlog on of is have, with right the know good, bring we to conversations with without you're conversations the Scotty You and efficient and of and a of and said of rig I utilization mean was both still we what operators that looking the of doing regard there do having IRS. side reaching this get of With rationalization, I timing the do going continued fixtures backlog think turn on when like into enhancement they number overhang, But fight overhang and for to the worn there focus know off. said But from Owen flexible the going your fleets. lot Rentals that until interest even lot been and plenty trying production that you still how is see is has and do. the rationalization then and some up, a climbing, lot getting consolidation, that’s

So be it’s is encouraging still but you know determined. timing to the

Owen Kratz

the backlog just years QXXXX I'll have has only – up affecting next with few really coming a QXXXX. This for BP. The make point. is the good a

utilization mix that’s had a forward. and go lumpy high in year. this QXXXX we we’ve maybe and more the is there historically as It’s just bit So again

Marshall Adkins

clear on call. one QXXXX that that change haven't from me. last the tone the Right, I'm heard on I a past call of on There's this hearing

out it early you but your giving So, expand that a I seems that you talked about just that upon change to you're bit this, little. bring just What's more confidence tone little like and a makes confident am more reading or sense of incorrectly?

Geoff Wagner

cover in areas every that of some on weren’t marketing is we've regions QXXXX guess look focus you significant can I our capabilities I’ll opportunities this point, at and a that Yeah we opportunity working to expanded think may I this for we're tone just that this previously. I all continue through vessel. don't but the areas in Geoff. is there's core we be tell change – to the the our the all available for say of

or of the some those if Owen think things have other but that you So changed, are comments. any I Scotty, have

Owen Kratz

we other the but to It’s just the just quick were they persistent the a seems a nagging issue to are see be the us. is say opportunity. there. than not work to Geoff to in but No, They client that think of comment, as getting matter I for past, move

that's So confidence where from. I guess reading our you're

Marshall Adkins

Perfect! Thanks guys.

Erik Staffeldt

Marshall. Thanks

Operator

And the Gibney. of go Please line from our Joe next question is ahead.

Joe Gibney

guys. morning good Thanks,

a vessels; want granular. little to question more had on get a just Just the key

some of know I like contracted XQ how it the of QX. right much notwithstanding here, you backs currently the are now Is then this the on BP, the that side gap it in mid-July at quarter And the today, target referenced fourth they -- is it. sounds did with timing are there. of just having to shifting XX% spoken stands QX, shift too on were and hire are for tied up with mean on work You you is of the of point; of conversations in what a some of then for, on contract or rest follow-on and still trying mean fall but they away you and time the curious? XQ, filling some terms the spot starting the I the for quarter all of conversations in

perspective. Just kind curious of on that

Erik Staffeldt

there the been that as QXXXX, we zero, dropout. clients. I contractor our leaving competition XXK mentioned has out we’ll and secured That being think the I out rig the some already, year we the were visibility know is against said, and this we we our QXXXX on still utilization have has that’s lumpy the face year, of and us mean And premium place It’s and a those high earlier, be QXXXX. fighting this use the it’s on market utilization it so but could there, through to some side well. full, could you into mentioned we’ve get this keep with it be from high some for QXXXX. achieved I BP of competition the is I for period workers. consistent seeing work reason we earlier right more utilization into out follow-on answered contracted QXXXX that’s work system are with that drilling quarter projects. against we’ve on now but continued chasing with

us, help might not but the future materialize. So foreseeable It's year. that might work this for it spot

Owen Kratz

earlier in So second that typically and Joe, contracting said idle don’t fourth which the it utilization the to like on the the we, looks stronger directly, of at the sort QXXXX looking answer you uncertainty year fourth the third the that the question the than quarter in this for and accurate. Really utilization are of is of QX, the the to days XX little is okay lack in quarter think the just at quarter, anticipate middle QXXXX quarter right, given of the QXXXX. a can trying it’s adds quarter falls and has we generate shifted which just I third your being we time this just volume point plus we the year, the full that to historically QXXXX not

fill is having work. it the chasing the our we that, remains work said fall be Now in and the can to and seen in that's the for are we see QX get not know or whether make there We just are not but and we uncertainty. quarter do the basis it, to

Joe Gibney

helpful. that’s Understood,

Just on rates a momentum and North little upper the you more referenced question Sea spot there. a bit

Just trying to of get utilization was the Gulf a given of the just here with the in revenues lower of thought, bit some Mexico. would we actually than have down little time

digit over think more a rates of are North talked still But you’ve the than Sea are still which are you I here pretty little suppressed single of Just perspective Sea? movement previously the seeing you moving there? about North are late and bit intimated? in So rate higher capacity, that some curious moves in I they on low kind understand.

Scotty Sparks

it. take I’ll

the think right move. I

we seen we to when had working you and for secure and year-on-year to October the we’ve in the know where have the Sea. from think in April the quarter rates summer increase rates North I season, to throughout continue fourth those

coherent in you that rights But activities there uptick in helped. and is an activities. of have some uptick So our is to diving an have remember

We are this seeing summer. bit more a diving activity

on and access to the an are the therefore rights Sea. go going there. in the well the for lot in maintenance awful population and There So more North The is requires divers us. is wells work older

any a was increasing. we work work off that to see can and work held the the in and life XXXX rates back lot when comes therefore and of So got

last back the take some to go the we’ll periods in work portion for maybe a again. try two sees keep the our winter weather and boats can’t months, winter and we the will if good we that rates get ready and rates in the go into a or years and position. do done warm achieve We the see was to vessels for what the periods, work of have compliant as either vessels the risk and We’ll lower post of that to once

Joe Gibney

I of couple year? G&A of Erik, help know of the in it variability for Okay, a question you. Could had stock amount little over quarters. compensation, bit based fair with just the the but thinking it's about half back helpful. minor dances lateral last you us with a a

Erik Staffeldt

and did caused here increase equity an increase in significant driven $X.XX was we so second the have or price plans, that in hear quarter based by in our a in $X.XX our increase Yeah, compensation QX. to G&A stock the from

I on the been of little forward, to bit variable certain variable. going that think think be that's probably lower it’s the obviously the – from variability plans, a going equity depending I compensation that really

Joe Gibney

Got guys. I’ll it. back it it turn appreciate I

Operator

of Vaibhav And Vaishnav. our go next question is ahead. Please from line the

Vaibhav Vaishnav

I it Hey, talk guidance? thank guess my I better QX. to think guess last fill non-BP is half? call a do you or a Is about you Owen. for about taking for the second were QX What for, of and question utilization talk question. of guess good for XX that being When to the assumption you able QXXXX guys levels work. I upper and you about QX same embedded out the year end days

Owen Kratz

why that Erik, exact don’t with are the help me you the out numbers forecast. here in

Erik Staffeldt

in that in general, our think assumptions. I Yes,

overall year half utilization. think QXXXX the first I in strong the had of the

it so. was about think or XX% I

forward being as there in QX assumed assumptions utilization our third our we it the levels and not do to the quarter. we guidance. that’s in year, We fourth obviously half first utilization have guidance certain see in think implied have of QX going as of but do general in the I and strong

Vaibhav Vaishnav

that like a is QX, ball days And Okay. on park? XX good

Erik Staffeldt

secure year days the XX last QXXXX. about on we able were Yeah, to

we little we have that year I moved think lower, the have a that time. the actually bit the quarter our probably with fourth fact the based and in associated having has at market assumptions vessels the now to this in both uncertainties on schedule spot that

Vaibhav Vaishnav

I the the like case make should segment. that are be Is and there for Erik And than that both XQ. want better fair it. that just both be like guys questions XQ should to sure I Got ..? intervention

Erik Staffeldt

So said has just of one our historically clarity, that we to QX been quarters. strongest

our our Historically this quarters in one expect roughly that of last third quarter to think third, year the fourth of quarters same and all be second, third were the one and range. I of been we quarter stronger has stronger year.

be this quarter We haven’t – not. specifically whether can or stronger than the second

Vaibhav Vaishnav

about Okay, the it okay. there guess just And ‘XX second I half sounds better is Robotics, year-over-year. from in market talking a like

improvement specifically? cost ’XX better think obviously get would half half fair it ’XX should ‘XX. versus be You Robotics second half ‘XX second to for during that Is versus in in second second half EBITDA

Erik Staffeldt

that Deep the have dropped cost we said the against hedges Robotics going think Canyon, I our for better one to area, so off Yeah, Cygnus has this We be of our off basis the dropped we of part down. the year. the cost of the one is in latter base Grand previously business come

have We QX. of that’s vessels, out the work end of towards We fill more for are against the utilization but of to one vessels. two still the seeing good

in we ’XX vessels. So utilization not think fit pieces if some depending equal have a of fill we how out but to have of on the still work some would Robotics final out utilization. more would contracted We be the I lot certainly better year-on-year

Vaibhav Vaishnav

Thank for so much. you That's all me,

Operator

question ahead. David next Smith. go is Please the our And of from line

David Smith

had assumed ’XX. by QXXXX gone Hi, going the price QXXXX of higher legacy and much good to the double backlog wanted just year? pretty legacy was was if that check if I priced backlog was I any this the But any thank you. morning end there on on high case, the that into

Owen Kratz

that by of left there one up, was means, market basically it’s That to well for highest but the and contract that high not work. one was well but was contract any over, utilization high

David Smith

Did third in the quarter? that happen

Owen Kratz

second Now that work quarter. has already taken the place in

David Smith

quarter revenues the that check, you the know present mentioned anything a that I to up revenues seems half? the there work the wasn't aside repeat took because wanted I vessels, not in utilization I expected second the step benefited nature of a might It on pricing spot either utilization is last or and vessel quarter improved more North Intervention in like were breakout. Well the than maybe little the diving the given higher Sea but on specific

Owen Kratz

I think definitely the tubing help rate said the Scotty the those North diving as Sea; coil the biggest and significant. variables, in the

second the Mexico, have a the did We from quarter. Gulf a legacy I think in small spot think overall contract market. it’s I of

I think in of our probably Brazil vessels. from there is there the with improvements utilization

think different I a strong revenue quarter. there that components lot of aggregating a So to is are

David Smith

follow-up. Okay, I appreciate a it, and quick

are I it XXX,XXX seeing day Gulf in the of U.S. spot than day P&A work. rates It sixth-gen looks getting XX% in what gen around are We for the you term Gulf. like if semis rigs the in UK as know rigs getting market, third know for for against looks better Mexico wouldn't Is rate the head head the any or there goes better similar for are work. reason semis to good QXXXX double get you UK that ratio sixth-gen work? that P&A be a

Geoff Wagner

between and significant the I our Gulf the Where Yeah rigs would especially think if it’s ourselves sixth differentiate – available, services a Mexico difference I rate I in think, on of is vessel just efficiencies. it's Mexico. in a in we – the our gen are Geoff. differentiated of is this and a say significantly Gulf even the floater

taking other all ourselves. to vessel what you we just know things that’s a vessel. equipment plus and not package It’s and client, services we So the that the again, price, deliver, whole the know you base differentiate the

Owen Kratz

you is associated revenues another metric rates think, need incorporating I system, are with rig there ROVs the people the you subsea rig here. services, the think of that’s just and these that. to When pure the see our and rates,

rigs, And rig-on-rig. So to those QX the a advantages Sea huge North of rigs, moored of if comparing there amount moored against don’t just gen than Sea. the compete against difference, was rig. against got bit a third the the It’s directly but North we in is a go

two and unset then in days. anchors just set can moored to the per anchor, to a three location or days five instance, take heavier weather, For rig on the

would different that the the Sea [Monocle] including in a our different have have diving totally dynamic vessels in North rig either. So Sea then no services and North the

David Smith

great very you much. Sure, thank

Owen Kratz

you. Thank

Operator

ahead. Bill Instructions] Our from the go [Operator question line next is Please Bissell.

Bill Bissell

a I of Hi, thank questions. had couple you.

that to remainder IRS year? on relative the first you third for you what’s utilization one quarter, swing of quarter, for discuss the to prognosis the the see. secondarily, The would the second please was And the compared then factors improved the XX-K

Erik Staffeldt

don’t far give you Bill know, as guidance. we quarterly necessarily As

I we do contracts, we strong stronger quarter the a our what third the generally tried of it with year, picture be our -- backlog here second one the year. to our the that expect half think to in of paint quarters in is of

the I the think the set. going in is out have outcome QX how the pretty in North Brazil general The vessels Mexico, of The the and be would of strong Sea QX that factor probably swing Gulf real on well. operation turns Well backlog and QX Intervention between QXXXX. is

more that risk of performance So days can contract driver so third compare from XX will low its for now that and so. here, the the be standpoint, an quarter from and quarters we operational is as a

as far Scotty? IRS, the As

Scotty Sparks

one for out from we the IRS, did a coming is that the earlier, said We it’s there rent, mainly significant just campaign, a back period. so maintenance put long

time, the this rest of for year. So forecasting utilization are we any IRS XXK at against not systems this

Bill Bissell

be And done needs that’s due on the the to that to primarily work equipment?

Scotty Sparks

we the basic maintenance some period. time some the after we have then and time that’s Well, start let off, and guys logistics

getting You would are We fourth going and quarter be to problematic. have IRS the it contracting the utilization be well X… and do into then for unit

Owen Kratz

But period. that’s regulatory of do to incorporate year that driven work. Scotty, maintenance to you and is up for a it long five maintenance have COC It’s a months

Scotty Sparks

back what QXXXX back out any we mean. going the year. into end we well that’s Yeah, could rental have ready, I are By this to opportunities the time the before system for of you

a is maintenance. So it significant of period

Bill Bissell

for all you the Thank insights.

Scotty Sparks

you. Thank

Operator

further There at time. questions are no this

Erik Staffeldt

XXXX us and very much joining today. you interest third your appreciate having very for to in and participation thank forward call Okay, you We on October. much look quarter our

Operator

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

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