HLX - Earnings call transcript Q3 2018 | Helix Energy Solutions Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third 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, today’s conference is being recorded Tuesday, October 23, 2018. I would now like to turn the conference over to Erik Staffeldt, CFO. Sir. ahead, go Please

Erik Staffeldt

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

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

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

Alisa Johnson

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

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

Owen Kratz

results. of a which Thank start will with X, Slide summary you Alisa. high-level Good morning QX is all. I

XXXX results. quarter saw to second compared quarter third Our the results as improvement

in As and was Well from segment. segment Intervention decline rentals IRS our a by improved our performance Robotics partially offset

During days of fleet its from XXX the of vessel work. trenching near quarter vessel our Robotics including operations segment XXX full spot and benefited days utilization chartered of

by QX of segment million QX in rentals in Intervention QX. Well was XX to IRS is by of QX. lower to days XXX from in compared Intervention XXX rentals higher Revenues negatively our Well impacted million XXX This fleet. in partially offset QX increased utilization Our in days

increased XX million from Our in gross to million QX XX profit QX. in

in QX. million from Our in net XX increased XX million income QX to

quarter the million. QX to from XXXX. cash in adjusted XX of At of million In quarter XX generated of million generated third our the to XX compared XXX EBITDA by million we For position we million XX and cash in quarter-end increased operations. QX million XX

basis a Turning to have results year. our last the improved year-to-year on Slide significantly period over X, same

free increased million near the year-to-date by Brazil have results of from and operating income our our has a comparative in improved offshore Sea improving million million. CapEx revenue XX completion XXX EBITDA net our the in and up to improved and program and XXX operations flow start each with our has by improved basis, cash third primarily quarter the XXXX the North cost in and are SHX Brazil. segment. Robotics was Our during Only market in operational reductions of our two On vessels

time XX% crews in Turning vessels during of QX be performance The line XXXX. XXXX QX XX% vessels to QX The increased to unplanned on in in with Helix days X utilization from QX. averaged positive XX% in continues a our in to X, six utilization experienced QXXXX The QX utilization. QXXXX Well in and for our Brazil, XXXX. contract X. XX% annual projects. our the utilization of in the worked October Siem Slide the a between the In for on in In at Intervention Brazil to the was few compared on maintenance Mexico vessel utilized The end was in its of quarter to of idle QX. commitment entire quarter The completing XX% XX% Gulf development the QX. the XX% BP compared quarter was quarter

utilized Our QX North Sea in vessels were compared XX% to XX% in QX.

During primarily intervention in diving the vessels quarter both and operated mode.

of trenching also be increased market performer UK segment ROV work to in steady from utilization full Our XX% the XX% XXX Robotics in activity facilities a from Utilization vessel QX. Production increased with to on QX. the in at XX% rates for the to XXX continued quarter. our days benefited days quarter. of from spot during vessels XX% ROV’s increased with operating

our Now our financing. principal from offset by from capital in cash perspective XXX payments XX connection cash scheduled the at million a levels end million of QX. X, We operations Slide to from increased on of million generated sheet XX XXX of with balance million our million and in at XX quarter-end to expenditures

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

Scotty Sparks

good Owen. Thanks And morning everyone.

was million uptime been at quarters a in Across million of the XX line incident to quarter. profit oil TRO achieved ever the and Helix safety, the and quarter on Moving utilization. North XX% times free second on XXX Ranking The System with combined zero business a Robotics was services. had achieved the ranks XX% Sea our with high In the Gulf three in globally. in to the safety in with utilization downtime. wells XX projects for works of QX. gas increasing and QXXXX achieved strong achieved strong. downtime. Mexico in between since preventative between million requiring a highest Brazil to million XX% achieved renewables our SHX The very our time lowest projects for business while maintenance no Slide performed resulting quarter gaps QXXXX Both quarter of of performance. In of North company Sea. lines wells in Grand on efficiency Intervention Petrobras trenching the throughout contractors achieved. our recent was had some with XXX Gross with performance margin vessel very from two utilization and diving increased contracted number at XXX% well increased strong XX% X. full near fleet vessels the we ten utilization. very achieving out to levels compared at on seasonal most all performance utilization all projects. of best trenching of vessels third one Both performance. The trenching Canyon undertaking utilization are quarter rates in the in in of QX mix SHX with conducted utilization in vessels, recordable good Performance another the XXX% profit terms has vessels the XX Revenue and in across working good of

abandoned quarter production an completion BP. activities. performed also for project X days stored vessel and on globally with working the downtime to IRS X The another on more concluded downtime Well of We for IRS enhancement at facility three a on for client. our was our program IRS Intervention QXXXX detailed its OneSubsea Africa campaign contracted one The maintenance in XX, a BP only X of the maintenance. facility with no vessel undertaking of of XXK with the the quarter QXXXX year. works remained this earlier enhancement client our well to The business preventative and the production XXX Houston undertake locations zero commercial of utilization. following Helix for on BP enabled demobilized early campaigning in Slide The utilized in the the achieved was operations XX% In for with XXX% and the working project October then review the spot QXXXX well yearly first throughout vessels. for provides part OneSubsea to Gulf was Mexico.

Moving during North working The experienced with Well at the Both worked during with enhancement entire zero Sea XX% on well commercial the quarter The quarter projects. working production for abandonment for of clients a one stronger both primarily in a vessels working seasonal production mix worked Well working Enhancer to work vessels programs. downtime. worked worked of quarter the quarter wells Slide maintenance on almost pre-P&A vessels XX% XX and the our in mode. and good diving quarter quarter two Intervention client on The rates virtually conducting Seawell XX, a XXX% business enhancement the programs.

quarter. to Moving Petrobras achieved go XX. to operations perform continued continue with vessels very Slide Both And In to well Petrobras. well. strong for another Brazil we our

the downtime and an utilization stored our place pleased testing XX% Unfortunately, due efficiency rental main events are and ten working be system three opportunities. Helix two the on working We X ranked to during unplanned out facility the the continues of X quarter. of the in on possible Siem contractors And achieved Helix The the wire. six Siem IRS Brazil performance. ranking change be in wells. in was to wells vessel in XXX% safety based of X extremely quarter second standalone at drilling manifold for a on utilized tower system had topside to Petrobras

walk Robotics. review. Moving With good vessels charter one a quarter utilized in contracted fleet with Gulf recent trenching to project in XXX%. QX the one on our of for North and projects was utilization Slide It two work on times XX a of best at for vessel their XXX% almost Robotics on to vessel the Sea in Mexico. was

XXX spot We vessels requirements. back-to-back market taken five also on project-oriented globally a contracted client days on with

vessels pumping trenching two and to for North also turn waterflow utilization Sea in time into projects. on undertake Canyon the and discussion on works support Grand your to of XXXX for in XX, call construction units will of the utilization then Slide scope worked ROV APAC the projects. contracts days first slide I'll III outlook. Eric utilization short Over a Schlumberger sea quarter. trenching fourth One worked continued Grand had days to project Canyon has in Mexico the we the Canyon completing Grand the unit XX over detail the this work the the region of and increased and the I and XX leave located Under the utilization for our contracted on Gulf from for [indiscernible] ROV the quarter. of alliance balance on trenching days concluding now the to completed sheet project. reference. the XX the performing in remainder

Erik Staffeldt

Thanks, Scotty.

and September XX, Moving to our outlines profile XX, maturity debt it Slide instruments XXXX. the

during growth with year-end metrics Our and and from key quarter. September net September at sheet balance million payments an $XXX reduction funded XXth million $XX debt XX principal balance of of XX, Slide the at update including XXXX. levels total June was scheduled for a provides debt XX our

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

to Our quarter-end $XXX X%. was cash increased at position net to book our debt capitalization million,

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

We fourth estimate for includes $XXX our This and for adjusting based a EBITDA are million. some in on of results a our key estimates. forecast to $XXX year-to-date is This adjustment million XXXX assumptions range to range the quarter.

During in on assumptions and X continue normal our slowdown Sea. mid Enhancer XXXX. Activity we're Sea the the to fourth the operations provided. EBITDA Any fourth Brazil, intervention to opportunities falling we and December operations and into Helix are a This the of Projects the Mexico the at impacted into outside most months. quarter, to with early operations run level Gulf the significant assuming Well in North North into December. expected the of could robotics in X variation the quarter. the be impact same the continue well high intervention In market weak winter on our levels Well cause activity these both in fall be to and our during for Siem will Seawell expect in by range

Moving is the $XXX to million XXXX. backlog XXXX Slide be which in our remains remainder XX, currently to of at of completed $X.X scheduled million would estimated and

Mexico currently contract. December. In work weighted opportunities. two and QXXXX contracts in the isle with has quarter opportunities. The the its and in XXX have heavily Gulf Helix day contract QXXXX Intervention to of QX QXXXX Producer program mobilize some some to The project Our QX vessel the market, that Well with completed the entered will is X and are the they BP scheduled and in BP limited backlog identified for the work well five Petrobras

level the activity onset Intervention for approximately robotics, the to of XX% $XXX Over the forecast during quarter. rental the currently late market, deliveries the in we have Slide in in the a December subject in Well the of Slide our shipyard months vessels weakness the the with The of work assuming in QXXXX into activity We we're QX. on continued expect XX, slowdown vessels forecasted Over seasonal we the with winter across IRS idle are approximately both North In months. winter systems XXK Sea to utilization capital potential in for expect continuing high region. to North timing our year system the and XX, the on with construction forecasted Sea. million including payment the the mostly CapEx for

Our for term scheduled reference. XX is outlook. call loan. the Slide remaining million I'll and Geoff skip on now market XXXX it turn for and leave debt for over payment approximate $XX I'll QXXXX payments your to

Geoff Wagner

and some outlook I'll morning Good Helix. next the everyone. developments market Eric. few Thanks, describing present the of for minutes spend highlight our

month our back front we’re contract interested entering bringing budgeting about is as loan they online appears sentiment, discussions it services are increased have the speaking prices having recently and industry opportunities customers for and the our production with customer in made Regarding season.

majors requiring While by volume conversations on Sea is we to of assets more encouraged of priority trend in divestment also thereby current plenty serious enhancement to from operators the the the and price the recovery invention well production the increasing been In increasing Brazil, of has witnessed. place North there enhanced of services. and still higher are sensitivity to

over market capabilities to QXXXX competitors. QXXXX, efficiency Brazil the gains in North the the Africa, the with Sea and West pursue the our For significant offer we programs continue should design of

a market our us in are from the and our still Gulf Mexico, of assets industry out crowd. experience hopeful we will Although rough stand that the

around to a relatively spot time assets very turn basis operating customers. our are We value on our market a good our and short campaigns in can to between ability bring

consolidation Mexico drilling assets. our discipline downside region. demand build visibility increased influence starting In of continues capabilities pricing competition to the to additional and ability our We continuing North UK of for units the the from contractors the from there financial to in backlog XXXX on We on due client significant the into unique currently we and see companies Enhancer is December provide competition and less Well On remain oil Sea, negatively and to are trends Seawell to customer schedules. Gulf services we both build positive. the have increase drilling

to a Regarding to several project vessels basis from strong IRM trending in on base go similar upside Trenching fleet. and our higher opportunity excess increased opportunity Canyon, engaged – potential a of to we of prices activity on commodity us have and XXXX remains economics. confidence is contracted and with XXXX trenching have work engaged period bias in in meet several due to demand we pay of vessels

Grand market outlook, due thriving present We and have to the Canyon summarize during Well, X not are cost work Deep the lack XXXX all overall our tide. point of of and with yet season our our good feature visibility basis when we Canyon carrying at we see hedge entering pockets for To of improvement. be will improved the of are those a budgeting Cygnus the expiry year. the the the seeing to

over continue our closing I increase We back At to evaluate the ways to margins to Owen will assets our value we for the our to time call improve and remarks. clients. to this leverage turn deliver

Owen Kratz

for expectations we as see results has of of in That's expected. of BP year up motivate as but the should was show pointing improving hopeful The We've QXXXX gone and QX now be finding there contract QX All it performing improving expected resulting achieving for that The this we've terms scheduled the is expected Gulf QX. we result for to clients work book to Operationally, Thanks, on pick that for the we're well, pretty work. more in QX third up. and had QX. well the much flow. Geoff. fourth work our primarily the on budget results will the QX the margins is in controlling uncertainty a done be during second Mexico to to costs, originally quarter. stronger should cash half we reducing XXXX focusing to to and a utilization We're are exceeded year. downtime. done Helix in that utilization quarter work rescheduled into year shift and done the work been that

probably is However, my in this than work results. feeling at XXXX to of mistake the feel is process the overall factors year backdrop, QX, on the this improving and as into Helix, phases early read of for in our it's improving in a are a XXXX with of macroeconomic of of will customers, well for our with discussions that at details. XXXX therefore our Gulf based we too well up stronger time is Nonetheless this the that Mexico. expectation our it for results exception trend from provide visibility early an number the it's to the at including ago. a would work business year-over-year on intervention our based be the too the a one much the operations sole XXXX Every as time continue budgeting clients time had weaker of

However, to be year. and over this in expect QXXXX results we QXXXX do improved XXXX the

the utilization future, to yet conventional is in improving the challenging. has yet offshore to degree of bottom. UK by not continues market Mexico, Commodity still but absorb will and pricing that In allocation by Just will recovered is into to client the be strong sufficient the segment, it well have but and expect business prices a bit impacting the our the bounce the market translated give of not color continue region we demand to capital that Gulf intervention. this supply for along to overhang,

QXXXX performed from anticipate that Gulf Brazil, currently and We of and on the period of results operations maintenance we the in on should had well the both have chartered SHX. did a two and very the mentioned in XXXX vessels there XXXX. QXXXX Mexico. the repeat improved In in our SHX the As

our strengthening our well due charter mid-year, cost realize in trenching expect another strong this over QX. robotic charter further with of robotics a to roll high as improved hedge also year, as of We roll-off be to another the will

in results the March our We expect for XXXX competition due our our of increased in contract existing softening business to production the and facilities HFRS the work. that end of from term

We of defer delivery market bring the have XXXX. to until intentions ahead our to previously QXXXX option our to stated

to don't guidance time continuing discussions sentiment we provide While have on the traction do We early call that a contract entry to offshore. this possible. include at the in announce to we normally that quarter to see improving the towards QX additional the We XXXX. of able in first details make the we're would be market funds to an of hope earnings

time down see for be predicting a that than cycle also work of is and well addressed there's cycle now for done. the end not but XXXX that to needs an that stop some me we're we We acquisition We near a for up been of I'd of of producer feels were a sort year activity much historically this really think that's drilling lack ago. seeking reserves nearer where to typical to been buy reserves. it to certainly

Our in flow and sheet good balance we're is positive. shape cash

XXXX that, that were good being reduce strongly our about debt my shareholders. while continues to will more opportunities It should feeling be optimistic plan the to ahead for you, of the we to turn going QXXXX. we're it be have watchful cycle XXXX. further general From we be over After with on into beneficial cash I'll just that to final We positive. And the perspective Eric. in than make payments back our and to

Erik Staffeldt

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

Operator

thank have proceed much. James]. We’ll [Operator Adkins ahead. Instructions] questions from first Certainly, with go And very Marshall our a do Please one, line we few of you up. queued the [Raymond

Marshall Adkins

down I to cadence of the the you into Thank get drill want commentary. the few guys. morning, Good next for quarters. detailed

less meaningful in pretty to down suggests going quarter at a $XX EBITDA reduction guidance from more roughly the QX midpoint. $XX or million million from Your this

where to year, than sounds want type assume make I'm obviously into Number things right. So sure I'm the number full were of one, I should modestly for doing two, it like XXXX better guessing math we QX some recovery my going just sense then help cadence us of next at are this Certainly quarters, of makes should you they stage. prices the we oil but process? the lot to of in our that with couple what a could modeling with think me about for

Erik Staffeldt

is I'll Erik, and level I'll the to directionally this high numbers on it But pass Yes, for XXXX. are XXXX Owen your correct. with Marshall, start then

robotics. here we're well what affect our fourth the think in slowdown as is to in the seeing is in North operations well where Sea I as intervention quarter the going

expect So see of we the where second that the the the expect both Gulf to downturn QXXXX market with QXXXX. in working the and is And see a area. Mexico to decrease really vessels in spot a then we area but

In to addition being to area going that being that's the low with fourth low challenged. activity visibility the quarter, that's be in levels an

areas those that that you towards could quarter quarter say color fourth two are don't main, Owen, if and reduction from a know, quarter XXXX. in to want of So then look add the to I to XXXX. you we driving as the are here really

Owen Kratz

for second QX big always that of the the XX% variable, of we've year. think been the spotting lack utilization the work about of visibility in out in work of I really there. the QXXXX the shows Yes, is concerned That's

earlier market the the going think and is this but on a fourth we year this working And think both work fourth this was was into then season more is down. But early a lot improvement it again took that QX think expectations work we visibility is seen BP like much seasonal December think seen is – year I've I be what the that year. in and were that thought to that's expanding the going the than doing basis. the back what quarter work to doing we year just we've I shows shifted to I our right expect go next quarter did the third And Sea into this really but an for fourth didn't in contracting I to they're North their well now it of looks which quarter, back are seasonal vessels they that happen. the the that

season expanding is So again. the

stronger So have same and about this I next we year don't that's we why the than weakness concerns year. much is the think visibility that had

You have anything to add Geoff? to that,

Geoff Wagner

I contracted Yes, next QX X, higher on going BP, going we’re to that’s systems higher back out the – think year go XXK into we’re January going back with with well. BP as

have QX towards we earlier QXXXX contracts. visibility BP QX, said, you've back a So for have like into And we start upstream. on have an we an visibility in

So expecting XXXX. I've it in

Marshall Adkins

That's guys. color what I needed. great That's

Owen, its be follow-up business to the rig I offshore a As very slightly. there. improving think now seem Directionally, seems be things head to there, rearing

you your up how Just of offshore sense drilling all might the impact at business. seeing any side? from give Are in that me impact your modest step the

Owen Kratz

to exposure work. to simply because Mexico from in with factor contributing had utilization standpoint a only losing I they going about hear of I to issues rates, talking QXXXX didn't cap drilling. the been cap that producers just you're Gulf of And the definitely pricing rig lot promoted everybody's pricing They've that's a rates to our a on as on starting Well, not is back the do. think rigs. a QXXXX they a the work the low got on We're any rig have to not our but rigs think the competitive by

drillers is rigs be I on for which us. back think their going think good the getting focus to the to going is I I think forward, work

a do. the bad have of we rigs benefit from adding Let's little In against what early emphasis at to focus a is the the historically incremental it's leverage cycle down The we if QXXXX. that. is our on It's a compete going where utilization don't are know Sea, talk, the to our reserves just coming on outside depressed. North results better if be we first you rates there. out not so pricing don't I look which of to

we the to leverage I able early getting pricing start probably when to for So leverage back some can is call, we're little think pricing see. XXXX a there's but

Owen Kratz

marginal the Great, are or held market too is the reactivate, a utilization out, starts the we we Gulf you. contract, of really front not said, once that’s against to continuing play always [Indiscernible] like right have if doing thank that Mexico And going you – really if much, we’re rates rate is to rate. you in. different the the marginal the climb have

We’re very market turning for. projects duration drilling spot that very and reactive around good at units wouldn’t the that are small short most

we you we do So think in market the differentiation that a needed? in that what have

Marshall Adkins

helpful Thank all. Right. you That's very guys.

Operator

from get our the Thank with to next your much. question. on We'll [Piper you very question line Please Macpherson Ian Jaffray]. go ahead

Ian Macpherson

Yes, nice morning Very results. everybody. thanks. Good

the in was if blanks you this book-ins be that You But for while QXXXX what North looks for for could with I the a utilization us also like what Sea. the the the gave wondering sense as the QXXXX sharp given to revenues utilization for fill the seasonality QX mentioning fourth could and quarter? quarter you were

Owen Kratz

see now, Gulf I of utilization in And I the combined quarter. for that. we fourth both think in XX% the vessels the to be think, to right spoke we way range that Mexico the for

Ian Macpherson

– how Okay. right that would how mean now? you And I booked is confident

Owen Kratz

work. confident That’s

Ian Macpherson

that response then And more the of also you that bit production wanted rolls. your understood. that re-priced? Okay, that mentioned well magnitude I Owen bit in retain roll-off as your I'm next retendered from the to is follow-up. contract little call facilities’ profitability you sorry. revenue us term have could their for wrong you or as year of a But a That's

Owen Kratz

about capital – beginning, the we're at had We investment We restricted of with I do CA the end return of that's are systems some been we're on HFRS it. The on it. looking most producers is which and I by from in with say go about discussions a discussing them mean, the it. how are the to contract. the at repaid expect can forward, the and I terms good and for

Ian Macpherson

both of okay. the visibility think if all QX another an utilization for And since you follow-up are how could factor more I'll you for ask context? to talk the there, – sort for it you're where cycle to I notwithstanding, in Canyon? you empty Intervention, shot. just recovery to trenching the the seeing XXXX? and spoke enough, describe for was IRM. of seasonality outlook how Obviously, into case that much Can Well pricing of about improving durability demand Fair that what a In we a the little Maybe, and for get improvement, just compared that much

Erik Staffeldt

Ian that I’ll one. take

similar to utilization XXXX XXXX very across Canyon will see we from think I the fleets.

will IRM stable. that portion think certainly of I and be the pricing

We have trenching not very slightly into a similar XXXX. next contracted of a and rates going if going of that work's better trenching work into good at backlog year lot

I to XXXX. the hedges lightest drop Grand the in the of next see the difference off QX one QX had going of for getting work zero have we're of of next against but Canyon XXXX, the off then, year Canyon And Deep drop also not think, Grand in year. and we Cygnus. we to is drop Cygnus we of Deep X The going carrying the into Canyon

than work. vessel canyons cost be cost work hand with no our realigns We with no won't recovering. where vessel cost see base to So or we less handling these

Ian Macpherson

going outlook think multi-year they are a are of I IRM, And I reductions we're looking trenching, addressed sustainability, uncertain. just continue. course, cost more The the permanent. strong at to of

Scotty Sparks

– I we have back have we Yeah. into in trench mean XXXX.

and visibility backlog a us. niche a good play for a stronger is trench, towards this So

we as further night, further can past reduce get that out so... costs Our

Owen Kratz

our that this that in the bad had debt, going which we’ve downtime, company is did pretty occurrence only this and through year. remarkable impact negatively Canyon So one

Ian Macpherson

Correct.

Owen Kratz

that should repeat. not So

Ian Macpherson

it. Got it. appreciate you Thank both. I

Owen Kratz

you. Thank

Operator

ahead our you question. go from next very Pickering]. to with get George your O'Leary of [Tudor Thank question Please line much. the We’ll

George O'Leary

Good morning, morning, Owen. Good guys.

Owen Kratz

morning. Good

George O'Leary

amortized that XXXX are excluding think Just reflected should the are want could. I prod if or guys color around there point to guys little a this to EBITDA just a be of think in to we low that costs given year, $XX a costs of given have further over incremental XXXX. provided bit that contract those some you XXXX, still the in little starting about as you I from I’m reduction will curious costs million life

Owen Kratz

the the with referenced associated through we years will costs in Petrobras mobilization million XXXX. of you contract, $XX earlier is, original that will this the about the Yes. term occurring that the so year. contract that recur be talked George, contract, the that of

George O'Leary

first prices, Got potential contract around That’s you’ve thought very heard commentary much helpful. interesting it. guys. I it’s while increases in about from pricing and the time four-month and the a was then pricing you

helpful. Just maybe I curious and strength maybe have rates, you’ll to but to of would the be day color realize if you weakness, could any magnitude reasons speak be and just color of incremental any of general, on regions there maybe

Owen Kratz

said years can increase I’ll becoming price what incremental the pricing there. another because start the can but I more, I two most There depressed and the North is pretty may the that’s be Gulf bit North pricing of a We’ve leverage. normalized still of result little overhangs. of Mexico in year the Sea. is in, rig we shift is very say don’t beyond that our modest know pricing and seen we where have more Scotty Sea

upward market – we for pricing, there, I this third budgeting yet. some how it’s think pricing and would us the process to start Brazil year don’t stock think would how exercising early there our is into much In is set. we room already much is that. I put – in the determined but we’ve movements

operationally are there results So, are more focused.

the robotic market. still expect There’s gross a side, movement IRM side. oversupply to wouldn’t much On in on the I that see

still the think do quality how I incremental levels. but we’re pricing don’t well is because strong we of because in I I trenching doing the the not cheap the see of everybody’s the we’re pricing current maintenance fairly of our are, trenching, increase in see just cheap leader, service, there. additional there.

Scotty Sparks

to add that, can I correct. much Not

Owen Kratz

a with in agree one row? you me Do

George O'Leary

And hedges, the correctly cost on something to business there. make color of forward there, taking Robotics appreciate lot out system contracts the pricing a the of about is want just taking moving the helpful. I out but it’s taking I and vessels. color out

have play XXXX a trenching So, the you work guys of the plush spot more and in you can should in lot market, hand. fact QX given

Just XXXX, Robotics be upward seasonality will as XXXX, XXXX? some territory, now, beyond in throughout that should it positive continued in be for QX think QX a modeling business move about that growing but we sitting trajectory generally really maybe I just

Owen Kratz

Yes.

in looking significantly bottom from down see growth always you So, said year-over-year, our but year. in come line, with you’ll utilization costs line be – Canyon, to should is I think a this we our be –

bad there’s machines. increase we had So, be I an a going as Canyon to with said, provision debt

there. So that’s not

I as plus be people the XXXX Canyon, the field we they’ve where significantly out we is if subdued side still wouldn’t vast, see of best certainly is it’s to years, from and a because put in XXXX. from started So, you maintenance really a investors have well perspective. as – haven’t this in possible work go improvement their couple of operators and increase business that back yet subsidies expect undertaking expect improvement IRM the a quarter been quite come since big

Owen Kratz

terms. I'd is think you like about we’re the first you since us because out start put it is little in very not to misnomer, well clients then start during but us. prices contracting the a downturns to go, contract terms for we’re to The price, [indiscernible] on thing about trick I competing all achieving we use doing really and that utilization add margin it’s at talking incentivize

And can focuses very is risks is done that And the we put to those that the that on and into is there and through are the our take market. you very cost extra your sword we exercise you diminishing work. the our do think do The with is to just edged we terms with our it’s that do there. just – look fact the clients taking month problem know effect think the risk It’s on how incentivize market without primary quarter-over-quarter, creative the our the managing you important that is and creatively contracting margins margin. really enough work as in Now possibilities of at contracting. Wagner concept of sort been contracting are way I it that way if the we’re trending Jeff I I well. outside not expand in in double to contracting clients we’re they our the one up is here, which utilizations that those heart along expand the of of But on

George O'Leary

Great guys. color. Thanks

Operator

next line go with from the James Thank our ahead your [Credit Suisse]. on get you very question. Wicklund question Please much. We’ll

James Wicklund

Good morning guys.

you’ll generating lot know mankind. in bring your of the downturns down one mentioned flow, You coming of a of of worst kind talk you’re free about dry of net cash you you the out history debt, powder, we’re clearly

stock, year. doing exceptionally Your well currency your this is

don’t store. plan open and card Winston’s you’re So for? what take which that an wife that my come have want like you you you don’t concept to And of would happened credit that this have by would downturn shopping of jewelry Harry more seems never you What out now? it you just can or But to. way. owning with the owning What then or of whatever enough are

Owen Kratz

organic Yes. of up you I’m over fan at pretty a look big history, successfully. acquisition. our we if Mexico Strategically [indiscernible] of rolled the Gulf growth under But

the cycle, looking Looking great a forward that not opportunity around coming out consolidation niche. of down certainly of there’s our in I’m

to base first asset niche. defend reaching of were end the when company of the you best-in-class floating do we’re to going we that And I especially asset And to period it. that don’t be the that XXXX could that strategically the in long was But after want watch have we a said our time dominant the you rebuilt a we think so we out now to as create thing are so process. XXX% We for niche.

then capital second and to less assets into value allow surrounding tap our services more us cost creation hard assets is that those utilization to generate greater the of. softer both assets The capable that phase with adding

in looking I’m that acquisition but all opportunities said related that not niches, consolidation having at are So close.

James Wicklund

business, that outside can would is, shallow that that could, some renewables. follow-up of would trenching part has know second recovery be part assume doing you’re question my into been gas My you maybe the so interesting. you and renewables if first of I’m That’s and Okay. water. oil if looking I and I sure I in far But the address the

a Sea market. of spec it’s Okay globally North moved floaters has shallow lift been but been water the Sea and is North to stereotypical, been it’s the rigs a surprise. high

water larger? do come guys so deep, do you be shallow opportunity like much of for since deepwater more and you at class you a that market You in the back rigs that going class forward that big are of renewables such it’s rigs to enough to really describe a revenue might interesting bridge primarily need is is

Owen Kratz

backlog good in We of We North we have Sea I'll and undertaken one. and interconnect working are large in And North of Sea. also QXXXX renewables is QXXXX good the our water under vessels Brazil we contract and there and And this add awful depths The to portion the have in was that's and Geoff probably very the power capable, take heavily are trenching that diving stay Gulf shallow trenching very niche an The know we QX us firstly do that work to I’ll you current are then reasonably a to to our lot XX% the the of contract of available QXXXX some can work also. a work as under questions. leads the sometimes mostly cables very market. in is on year XX side, and BP. obviously already we the water. feet there, two is play QXXXX Gulf in water assets we’ll pass into deep that is is water has to QXXXX run in shallow side in obviously time low deep shallow here it in

Geoff Wagner

those Yes, this definitely I mean jackup only can range go I think as competing depths. into another point, and it, all make water will the key down you I about it drill well, with ships, don't to of the work want as types think in when way think QX about

have it riser, I the for smaller envelope. mean, deviation operating does more lot disconnect So angle this a has really and a full triangle riser. a

full across So the space. it's functional very asset really a

QX the may you let’s So range wider say a QX even much than visibility wells, and have to. the have we

Erik Staffeldt

production enhancement metric client against against work work really of old another line mind view and environmental work from maintenance. the flowing, also abandonment production not XX% BP is which enhancement our runs they're our activities, field assets, is point production the is rough to and really intervention merely forced outside pre-abandonment out in or either rest to spend a work enhancement in or well of estimate is the water of is depth happens related, here, the abandonment XX% an is for Mexico There well the is keep money when the of QXXXX, Gulf the order in the is regulatory usually as oil production to and bear and

assets not you're water drilling the as related about. of it's talking So really construction type and depth sort per

James Wicklund

you can it, So get are pricing and come pricing for to stay that crush deepwater summary? offshore back going busy the you but the is board to across really and market to with activities fair rig have today have we

Erik Staffeldt

that QXXXX, QXXXX yes, the is pricing For really the has drilling unit against pressure units.

James Wicklund

Thanks Okay. quarter. guys. Good

Erik Staffeldt

you. Thank

Operator

we Thank you another [indiscernible]. line of Instructions] [Operator your with on question And much. Please from line have ahead question. queued up the very go the

Unidentified Analyst

have I you. Thank couple a of questions.

you're you seeing please of the bring there degree us the First that secondarily, you And for great up were detail phenomenon up to in vessels to that Asia-Pac region, think you said repeat? had that call, would Schlumberger all, discuss I has mentioned you come OneSubsea might then speed. would had which not the two What on believe you in contracted that you and there.

Owen Kratz

APAC a pumping I’ll two units, with under contracted that Sure. units a alliance we Malaysia the the start talking our vessel number two to in about were vessel. for ROV part to Schlumberger build provided in latter of put question. The and actually of we're that

actually truly it's other the been of of So the Mexico time supporting with each the alliance different in regions. we've outside Gulf first that

two wasn't ROVs. So roughly vessels, that covers hopefully two it’s that

approach the mostly Gulf onboard. of Regarding all Mexico is as on the work the services with contracted alliance nearly Schlumberger an in integrated QXXXX of

the met as approach budget on there less contract then BP also by start having year. good market integrated certainly as for declines yard contract, will come it's It So that be as a onboard to to And the the before allows the fully January mobilizations time. better and our same utilization usual approach. the QXXXX on also. vessels equipment of able offer business cost XXK to is market days contracted and minimum the system, demobilizations come and one safety X. integrated leaves the factors a and on campaign our that’s be teams a a quicken QXXXX and an the mobilizing will and commencing pretty We'll all all XXX it expectations

still activity So going good on.

Unidentified Analyst

at appealing That operators find really Or doing quite finding or an is services is to appealing expecting anything alternative you much point? helpful. seeing the But the it work this be not early with integrated are to enough OneSubsea too of just yet?

Scotty Sparks

I an Like nearly, it by approach. integrated has this to mobilizing average them had QXXXX said, It well I based on apartments. on time equipments the think a contract is just or and program for year appealing four reduces every days three the demobilizing overall

one or So many it directly has and on and that benefit companies contract less procurement to teams operators different allows not segments the the asset.

and adding think definitely benefits, more the not one. it's from utilization pricing it's in had that we're integrated a approach So

Unidentified Analyst

question. Congratulations for taking and the thank you

Operator

question David Thank next line Smith. your Energy] get you. to from Please question. ahead the go We'll on with [Heikken our

David Smith

expect is vessel think disconnect Just few in its executing fair and discussions earn thinking you the there pricing the QXXXX, the it that the programs pricing mind for pricing about today versus to after operators have could a between is demonstrating capabilities.

Geoff Wagner

taking think side. And prove prove to client with receiving efficiencies I I definitely and them. comes that our risk enough of to an The to in think the that exposure that then the gate changes work on every work with improve have time. then it spot beginning, that the the out and market It's on expectations our the ability we vessel efficiencies. hand-in-hand out and operator we to over and with they pricing settled in are definitely don't value a are

our So time. then, just value as the be that's market to that we way will over will to out, efficiencies expected and think we I prove proven our summarizing reflected work was come that we should our follow clients we out

David Smith

for seeing year working looks plug peep a UK the work I we perfect that's for look imagine over demand pretty for overs. it specially Makes in semi the of as up this UK XXXX is target the like juicy that And submersibles just rates semi's. are I XX% sense. at when out the and abandonment QXXXX

to just curious how about that pricing you and demonstrate between trade-off the QXXXX work programs earn think term shorter-term was trying verses build the capabilities I So leverage? that for

Geoff Wagner

well the between markets. mobilization is that we're realized integrated over efficiencies periods, two. shorter think our deliver and that stability mean, obviously our approach spot to and do We but for I we're efficiencies balancing looking near And looking are the and also market them as as demobilization gain the the ability act as I to contract find for margins. and

time. have we do justify what will So that to at

David Smith

for we contracting of approach sum could that creative for the QXXXX? see initial work the

Geoff Wagner

the across looking are we Yeah, board.

David Smith

you much. very Thank

Owen Kratz

from the the in the and of services Sea in smaller were abandonment North can programs vessels Canyon we where also. the offer Some related Diving Services place

David Smith

Right me. there you it turn Thank back Thank very further no Staffeldt. you for for that's much. Mr. are you. questions it remarks. at And to time. I'll this closing any

Erik Staffeldt

appreciate today XXXX quarter interest to Thanks for and of joining us XXXX. and Thank you. having call we in look February your much on fourth forward you very participation our

Operator

please for lines. that good Ladies the a your you today. and and call ask participation thank gentlemen, that conclude conference you your disconnect Have does day for everyone. We

Helix Energy Solutions (HLX) 23 Oct 182018 Q3 Earnings call transcript