Q1 2021 Helix Energy Solutions Group Inc Earnings Call
Okay.
Greetings and welcome to the Helix energy solutions first quarter 2021 earnings conference call. During the presentation, all participants will be in a listen only mode. Afterwards, well conduct a question and answer session at that time and if you have a question. Please press. The one followed by the four on your telephone if at any time during the call.
And I'm French you need to reach and operator, Please press Star Zero as a reminder, this conference is being recorded Tuesday April 27th 2021 I would now like to turn the conference over to Eric Sockol, Chief Financial Officer Helix Energy. Please go ahead.
Good morning, everyone and thanks for joining us today on our conference call for our first quarter 2021 earnings release participating on this call for helix today are Owen Kratz, our CEO, Scotty Sparks, our CFO and Ken and like our general counsel and myself.
Hopefully you've had an opportunity to review our press release and the related Slide presentation released last night. If you do not have a copy of these materials both can be accessed through the investors page on our website at www dot.
Helix ESG dot com and press release can be accessed under the press releases tab and.
And the slide presentation can be accessed by clicking on todays webcast icon before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward looking information.
During this conference call, we anticipate making certain projections and forward looking statements about our expectations. All statements in this conference call well and the associated presentation. Other than statements of historical fact are forward looking statements and are made under the safe Harbor provisions of the private Securities Litigation Reform Act and 1995.
Actual future results may differ materially from our projections and forward looking statements due to a number and variety of factors, including those set forth in slide two and our most recently filed annual report on form 10-K and in our other filings with the SEC also during this call certain non-GAAP financial disclosures may be made and in accordance with SEC rules. The final slide of our.
And provides reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation. The earnings press release, our annual report and a replay of this broadcast are available under the for the investors section of our website at Www Dot helix ESG Dot com.
Good morning, everyone well.
We hope everyone out there and their families are doing well healthy in this day and safe.
Morning will review, our Q1 performance our operations our view of the current market dynamics and provide our outlook for the balance of 2021.
Moving to the presentation slides five through seven and provide a high level summary of our results. Our performance in Q1 was in line with expectations as our teams continued to execute at high levels of Operability.
<unk> 7000 and successfully commenced.
Commenced operations in West Africa, the well enhancer was reactivated and mid February from warm stack and we mobilized for wind farm site clearance work and the North sea at the end of the quarter.
Well on the sales front, we entered into a new agreement with H WCG for response services effective Q2, well.
Returning to our more traditional retainer based agreement for our services. We also extended the Siem helix, one for 120 days and Brazil, albeit at a slightly reduced rate.
The vessel will now continue working until mid August with additional options thereafter.
Our results for the first quarter of 2021 were generally consistent with our results from fourth quarter 2020 revenues, we reported 163 million with a net loss of $3 million.
And EBITDA of $36 million or gross profit was $15 million or 9%.
On to slide eight from.
Our balance sheet perspective, our cash balance at the end of the quarter was $205 million with an additional $66 million and temporarily restricted cash associated with the short term LC for our work from Nigeria.
During the first quarter, we generated $40 million of operating cash flows and spent $1 million on capex with resulting free cash flow of $39 million.
And we repaid the remaining 54 million balance on our Q 5000 loan, reducing our long term debt to $336 million.
Net debt at the end of the quarter was $66 million and our net debt to book capital was 4%.
I'll now turn the call over to Scotty for an in depth discussion of our operating results.
Thanks, Owen and good morning, everyone moving onto slide 10, and we continue to operate and an extraordinary and challenging environment due to the COVID-19 pandemic and such.
Teams and partners, both onshore and offshore continues to respond well operationally to the challenges presented to and a remarkable job.
I would like to thank the entire from these team.
We've now started the process, if we actually and our offices and some locations and shortly expect to I from our Houston headquarters and our state's rights and.
Safety measures and price goes up and put in place following local regulatory guidance and we are <unk>.
Well, it's COVID-19 related safety equipment August volumes will have safe access to return to work and our office locations.
Our work force onshore has done a great job of working remotely communication on teams calls and meetings.
And suddenly and with clients and vendors to keep our operations function and.
They are all very excited to seem to be sent into our book and our offices.
The COVID-19 pandemic still presents many logistical challenges, including travel restrictions <unk> testing and screening personnel and nearly 14000 times to date and we have continued to successfully transport personnel to our offshore websites globally.
And he is now more easily available and the vaccine <unk> eight and the situations.
And the first quarter, we continued to operate 10 vessels globally with minimal operational disruption. Despite the logistical challenges as the market is beginning to show signs of an up cycle and rebound in 2022, and we anticipate contract awards will be driven by execution and performance well.
We continue to work and high standards with 98, 6% uptime and efficiency, we have a very strong safety culture and performance leading to an extremely low and recordable incident rates.
We are descendants and drive performance, leveraging our capabilities and knowledge technologies and personnel, so continuous and market leader for the services we provide.
I am at slide 11 and I'll.
And I'll stop operating through these pandemic conditions and aviation and lower utility utilization due to seasonal weather conditions. During the first quarter, we produced revenues of $163 million, resulting and the gross profit margin of 9% producing a gross profit of $15 million.
Compared to $160 million revenue and $14 million gross profits and the fourth quarter and $181 million revenue can accumulate and gross profits and Q1 of 2020.
And the first quarter, we produced EBIT for the quarter and $36 million compared to $35 million, and Q4 and $19 million and Q1 of 2020.
Considering the effects of the first quarter seasonal winter weather conditions.
Largely consistent levels of utilization.
The well intervention fleet achieved utilization of 70% globally, achieving 100% utilization and Brazil, 88% utilization.
And the Gulf of Mexico and <unk>.
8% utilization and North Sea, and West Africa, and the first quarter with one vessel being warm stacked for the entire quarter.
And robotics chartered vessel fleet achieved utilization of 90% globally types, and and 165 days during the quarter.
And the Gulf of Mexico, and we had <unk>, four and <unk> 5000, and working and operational from nice this quarter.
And North Sea business continues to be the one less affected by the COVID-19 pandemic, the well enhancer and see well warm stacked as we seasonally day for the Hodgkin's and bumps and the Scotland and to mid February when the well enhancer was reactivated and commenced operations works and the remainder of the quarter.
And the West Africa region. The Q 7000 completed transit back to Nigeria efforts contracted work that is currently ongoing and is contracted to remain in Nigeria and for the third quarter.
Performance in Brazil was at their usual high standards as both vessels performed very well achieving high utilization of 100% and Q1 nicely undertaken abandonment activity.
The robotics chartered vessel fleet was active in the quarter work and between RV support salvage book Trenching and renewable works globally complete and 165 days a vessel utilization primarily between the two Grand Canyon vessels.
Slide 12 provides a more detailed review of our operations for our well intervention business and the Gulf of Mexico.
<unk> had 100% utilization, while continuing work for BP and through mid February undertake and ultra deepwater production enhancement operations on one well and thats simply a value on another well performing extremely well the vast and will remain working for BP and <unk> and the BP equipment into Q2.
The key for Fathom performed well with 76% utilization Q2, GAAP and schedule alignment between projects completing work and ultra deepwater <unk> clients.
And creating welcome five wells per one client and then undertaken a flatline remediation for another client.
Thanks, Keith vessels have integrated helix from jail audience personnel, working very well and there's one can <unk> and <unk> customers have awarded work into Q2 with some gaps between projects. Please.
Pleasingly, we have recently seen an increase and tender activity and the Gulf of Mexico, and we now have visibility of book for the vessels into the third and fourth quarters. However at this time, it's still a degree of uncertainty for the work to be contracted.
Moving to slide 15.
And north Seawell intervention business continues to be the most affected by reduced work opportunities related to COVID-19, leading to the continued warm stacking of the seawell.
The well enhancer state and warm stack as you free parts of the harsh and weather seasonal period, and then was reactivated and mid February and commenced operations and.
And well enhancer achieved 46% utilization in Q1, well it can <unk> clients in the quarter, including completing one production and pension Skype for one clients followed by chief production enhancement scopes for the other clients divestments nicely into Q3, and as visible chief works and multiple clients.
We see well remains warm stacked and the Scotland with Cigna significantly reduced vessel operating costs and reduced crew levels to net minimum and and allowance.
The markets and the North Sea has been slow to return and then in previous times, mostly we suspect to each of the government imposed lockdown and Scotland. However, we have recently been awarded work that we expect will become contracted that would enable us to reactivate the vessels towards the end of Q2 work and in Q3.
The key 7000, and the write back and Nigeria early Q1 and commenced contracted work at the end of January.
The vessel performed extremely well with zero commercial downtime well, there's a multinational and integrated helix Schlumberger Alliance team.
The vessel works on four wells and the quarter, one production enhancement scopes and integra cheaper fares on free wells, the vessel's contracted work and to key freight and Nigeria, and we have visibility for further potential works and the West Africa region. Later this year.
Moving to slide 14.
And Brazil.
Our operations and Petrobras continues to go extremely well again, producing another quarter of operational excellence and continued strong performance regarding safety uptime and efficiency.
Vessels achieve strong utilization and the quarter.
The Siem helix, one had 100% utilization in Q1 and then.
Completed abandonment work on four wells and environmentally protected area of the northern coast and Brazil. The vessels has been awarded a 120 day contract extension and commenced in mid April.
The Siem helix, two had 100% utilization and completed production enhancement work on C wells and the abandonment work on four wells during the quarter.
Moving to slide 15 from a robotics reviewed.
And <unk> had another good quarter after a solid year and 2020 operating free vessels during the quarter, primarily works and our non oil and gas renewables.
And Savage related projects, resulting in chartered vessel fleet utilization of 90%.
During the first quarter and the North Sea decline and Canyon free was utilized 80% undertake and renewables and oil and gas trenching the vessels and feature the renewable trenching scope and then changes to Egypt undertaken a pipeline trenching projects and BP early in the quarter and trying to put back to the north sea to undertake and additional renewable trenching projects. After a short drydock for sure.
And with regulatory and maintenance periods.
We also commenced and mobilized section of the vessel and the south to mobilize and free days and the and the quarter for North Sea site clearance and survey works on our wind farm project that is expected to last into Q3.
And the APAC region, the Grand Canyon, and so you had 100% utilization in Q1, performing well on our renewable energy projects and Japan and installed and are targeting sidelined.
Thanks, and speak to this average purchase of Guam and the vessels secured work in 2021, and 2022 to provide RV support and the APAC region.
And the Gulf of Mexico, and we mobilized and RV answer Sheila borderlands vessels.
Vessel that we expect selectors are payers, we gave vessels going forward for this year.
We've also recently contracted our first work offshore Guyana that well take a further spot vessel and early Q3 for approximately 50 days.
As mentioned previously our plan as per the Robotics group the continued transition and further into the green and renewable sector.
We currently have renewable trenching works contracted each year from 2021% to 2023 and that tender activity after 2025 well.
And also have increased tender activity from 2021 to 2025 or other renewables services to include site survey definitely removal odor removal UX site clearance and destination trench and installation support and combination supports and RV support some of which could be awarded for operations and 2021 that may require us.
Two contract service spot vessels.
Over to slide 16.
I'll leave this slide detailing the vessels already entrenched and utilization for your reference.
Before I turn the call over to Eric I would again like to thank our helix global team our offshore personnel, our onshore personnel and our partners are keeping up that growth assets under these challenging circumstances, we look forward to say and I'll change returns are often seen in a safe and controlled manner.
There's no doubt we expect 2021 for helix will continue to be challenging. However, it has created and now that we have seen operators returning to work and starting to contract the vessels and the north sea and the Gulf of Mexico and well.
We're starting to get better visibility towards where it could be awarded this year and beyond.
However, there is still some uncertainty of how much work well be contracted we're also seeing an increase and international tenders from services, especially in West Africa, and Brazil, Australia, and Asia Pacific net of strategic geographical and for the company.
Okay.
Thanks Scotty.
And the outlines our debt instruments and their maturity profile at March 31.
Our total funded debt decreased to $347 million down from $405 million at December 31 during the quarter, we repaid them for the Q five zone at its maturity.
Moving to slide 19, and provide an update on key balance sheet metrics, including long term debt and net debt levels at year end and March 31, our net debt approximated $66 million at quarter and during the quarter, we repaid approximately $58 million of debt, our long term debt balance and net debt balance at $3 30.
And one reflect from early adoption of ASU 2020 that show six which simplifies the accounting treatment of our of our outstanding convertible notes.
Our cash position at the end of Q1 was $205 million. This balance does not include 66 million from restricted cash that supports a temporary project LLC.
Our quarter and net debt to book capitalization was 4%.
Moving to our outlook.
We continue to operate and a very challenging market. As we have previously expressed 2021 is shaping up to be more challenging for our business in 2020, our customers continued to be very cautious and committing to spending in 2021.
Current relatively stable macro backdrop has increased customer dialogue and interest but has been slow to develop into firm orders and positive developments globally and within our sector are providing a positive foundation for a recovery and our markets book, primarily beyond 2021.
At this time, we feel we have sufficient visibility to issue 2021 guidance and a good faith attempt to provide investors information that is appropriate and Chad the added as best we can against the backdrop of the current environment.
And we're setting our guidance for 'twenty, one as well.
Revenues and the range of $625 million to $700 million EBITDA of $75 million to $100 million and free cash flow generation between $45 million and $75 million.
Beyond Q1, we anticipate working five well intervention vessels and the spot market, where visibility is currently limited we expect visibility and utilization will be on a quarter to quarter basis Gulf of Mexico, well intervention business, both vessels will likely be and the spot market for the remainder of the year, we generally expect lower.
And levels of activity in 2021.
And the North Seawell intervention business, we expect to have one vessel working most of the season. The second vessel gets deployed and will be dependent on the strength of the market.
And Brazil, the cm helix tubes on contract into December the Siem Helix. One is now on contract into August at reduced rates.
There is a potential for follow on work with the restaurants.
And West Africa, we expect towards the Q 7000 and into Q3 with possibilities thereafter, robotics and may have a weaker year. This year with less clearance work expected in 2021.
Production facilities should be consistent we recently performed a production and completion of Droshky and April using our idle asset time, while the operations were successful and the early indications are potential upsides appears to be smaller.
Well.
Providing more color by segment and region on slide 23.
And well intervention segment growth Mexico, two 5000 was under contract for BP into Q2 and is completing the work on Droshky now Q4 thousand has contracted work into may and both vessels have additional opportunities with GAAP and the scheduled as expected.
And North Sea well enhancer has contracted work into Q3, the seawell remained warm stacked with earliest opportunities mid year and.
<unk> 7000, and the operational and West Africa and as expected.
Contracted work to last into Q3.
Brazil, the Siem helix two contract is under contract and to December with the Siem helix one contracted into mid August and is scheduled to have an approximate.
30 to 40 day, dry dock and Q3 or Q4.
Moving to our robotics segment, and 524 robotics work and Q1 was was affected by the winter slowdown before likely rebounding and the spring and summer months Grand Canyon, II and APAC. So on contract and Q2 and is expected to have good utilization for the balance of 'twenty, one and that region. The Grand Canyon III is contracted to be perfect.
And trenching and the North sea with expected strong utilization into Q4.
To follow on wind Farm survey and site clearance work began at the end of Q1.
Moving and production facilities HP, one is on contract and the balance of 'twenty, one with no expected change.
We entered into a new agreement with H WCG from response services effective Q2, returning to a more traditional retainer based agreement.
Continuing on slide 25, our Capex forecast range remains the same and the 20% to $40 million range. The majority of our Capex forecast as maintenance and project related and.
And also includes the production enhancement opportunity at Droshky performed in April.
Reviewing our balance sheet, our funded debt decreased to $347 million with the repayment of the coupon.
And with an additional $33 million decrease expected during the balance of 'twenty, one as a result of scheduled principal payments.
Our cash position at the end of Q1 was 205 million. Once again. This does not include $66 million and restricted cash that supports a temporary project well see.
We received a $7 million tax refund in Q1 and anticipate an additional $12 million in 2021 as a result of the tax changes from the cares Act.
I'll Skip slide 27 and leave it for your reference at this time I'll turn the call back to Owen for closing comments Owen.
Thanks, Eric.
For 2021 continues to be challenging.
We're seeing green shoots and signs with the markets beginning to turn but oversupply and the service sector remains a strong headwind.
We are seeing tendering volumes increase we understand the deferrals on abandonment work or more difficult per producers could dip.
And there was an increase and discussion about work from 2022 and beyond commodity price expectations are positive.
And all seem like positive indicators for our business on a macro level for the long term. However.
However, like trying to silicon and a uniquely challenging position the market and slow and recovering at the same time, we are seeing our three long term contracts wind down with their legacy rates as the market reverts back to historically traditional spot market.
We took steps relatively early.
Net and strengthen our balance sheet by refining financing our convertible debt to provide a longer runway to the balance sheet is in good shape.
Our current efforts are focused on.
And one maintaining.
And maintaining our market share and position and our three historic markets. The U K North Sea Gulf of Mexico, and Brazil actually four markets.
Well, we still feel we're in good and in a good position with significant leverage to the market recovery.
And as our service offerings to include hydraulic stimulation and riser loose capabilities and the Gulf of Mexico.
Number two our efforts are.
And our efforts to expand our geographic footprint and increased volume demand for our services continues to progress.
We've added contracted work and West Africa, which we believe could see the Q 7000, and working in West Africa and near year end.
And the credibility gain should translate into hopefully a sustainable future and West Africa.
We saw and what we expect to be and anchor contract in Australia, and they've been pursuing significant tendering that we believe could lead to a sustainable programs and that region.
We're also receiving interest from other operators in Brazil, which could reduce our client concentration there.
Each one contract with Petrobras and rescheduled and in April, but it's been extended at low rates to allow the vertical to remain and Brazil, avoiding repatriation costs, while Petrobras and say, they're preparing to re tender later this year as required by Brazilian law, we're not relying solely on Petrobras re tendering butter pursuing.
Other potentials for the assets, both in Brazil and internationally.
Third we're continuing to seek mature property opportunities similar.
Similar to Drosky.
Several offers or pending while the best time to achieve these deals and when costs are our expectations for abandonment or high <unk>.
Turning market and indicates abandonment costs spectation are becoming more of a concern for producers pumped and greater interest and our offering.
Our aspirations and disbursements model are grounded and our confidence to analyze bid for and execute the underlying decommissioning work.
Four.
And we've mentioned our involvement in the offshore wind market and the potential to expand our offering beyond the current trenching and site clearance and we're actively tendering the clearance opportunities to see the market is more competitive and just two years ago trenching appears that it'll be it'll continue to be our bread and butter and robotics, we think so.
<unk> growth and wind farm projects, but continue to see tremendous amounts of capital chasing work and theirs.
Uncertainty and our mind about the potential to achieve sustainable.
Returns.
We're still progressing our plans for offshore wind, but we will be cautious as the market continues to evolve and this will not be and exercise for us to simply improve our ESG profile, but will be a longer and hopefully more sustainable growth area, albeit at a slower rate.
Helix was healthy well positioned and progressing on our initiatives, but some patients may be required.
With that I'll turn it back over there. Thanks.
Thanks, Owen operator at this time well take questions.
Thank you if you'd like to register for a question. Please press the one followed by the four on your telephone.
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Our first question comes from the line of Ian Macpherson. Please proceed with your question.
Thanks, Good morning, everyone.
Hi, Ian.
Sure.
Alan or Eric I wanted to ask.
About the.
The guidance walk from 2022 actuals to 2021 at the mid point <unk> got.
Severe EBITDA decrementals on the revenue decline and when you think about the resiliency of the production facilities piece it looks like <unk>.
100% EBITDA decrementals on the EBIT on the revenue dropped this year across.
Intervention and robotics, and so we know there.
There is legacy contract.
And there that are that are a big component and we know there is sub optimal utilization and the operating leverage of this business that hurts as well are you also witnessing now.
Some of these inflationary headwinds that we're seeing globally and within the energy supply chain as well is that a factor to the decrementals it and when we think about your leverage and to a recovering market and 2022.
You should also be getting some relief I would think and hope from the COVID-19 disruptions that have impacted your cost structure.
This year as well so there is a ton and that question, but really what I'm asking is how you think about the nonrecurring.
And maybe the abating headwinds to your cost structure, when we can get into a recovery market next year.
Well.
And we answered yes.
[laughter].
That is without <unk>.
And Eric why don't you yes.
Yes, I think from a big.
Tried to address the different components of your question I think that we're starting to see or I guess more to get the feel for the headwinds that youre talking about the.
Pressure on the on the pricing or you could say our cost structure I don't think we've seen that yet we havent seen it in our in our results.
But I think it's definitely a headwind that we recognize is potentially out there.
I think that what you see going from 2020 into 2020. One is really the roll off of the legacy contracts as Owen mentioned.
So I think Thats really you could see some of the impact that is hitting us I think also.
The as you mentioned the impact on utilization of our fleet.
And significant I think when we get to the lower levels of utilization, obviously that will have a dramatic impact on our results.
And I think we see that.
The impact of COVID-19, and our utilization and the North Sea is still being felt.
Think we get indications that that may be coming to an and.
But until it does well still.
<unk> there I think previously Scott had mentioned.
And the amounts that we are incurring on a quarterly basis for additional COVID-19 costs.
I think it was and $1 million to $2 million per quarter.
We still have not seen those starting to abate I think our expectation is that we'll probably continue at least for that for the balance of this year.
And now that's a mouthful I tried to cover most of your points I am not sure. If I did yes, Dan and my fault for asking a mouthful question, but really I just wanted to kind of see if you agree with with my hypothesis that.
Your last negative pricing and what will be the S. H two and beyond that if the market is recovering and utilization is recovering next year that we could find several buckets for pretty healthy incrementals.
And as depend on swings back from those those severe decrementals that we saw this year that was really just wanted to kind of confirm those those opportunities for improvement.
If I could if I could just add a little something.
And I know lots and said about the impact of COVID-19, but I think also it's something that I've mentioned on past calls.
And what version of the commodity price Didnt occur this year until after the budgets were set and thats.
As always a big problem.
Budgets.
And spending and the work was not budgeted towards very difficult and its current environment for the operators to go back and ask for additional spending so thats impacting 2021 well.
And that's done and Youre right. There is an awful lot of dialogue now about 2022.
No.
And the snapshot I would expect 2022 to be much stronger we have room and our fleet for our increasing utilization.
But whats really hurting us right now our rates.
And so hopefully in 2022, and we will see some increasing rates, we're not seeing the cost Escalations, you mentioned, but coming out of every downturn the industry always does as people become scarce.
Cost increases on personnel, we're seeing some of that and non oilfield related skill sets.
And where we compete with the broader market on the oil and gas side, we're not seeing it yet, but we certainly expect to which leaves me to say that day.
Return of the intervention market to the spot market is sort of a blessing in disguise because youll have producers looking to lock in on low rates from.
From a multi year here with uncertainty about where the costs are going so I think we're trying to be very cautious about what rates were giving and starting to put out for 2022.
Okay good to hear.
Follow up.
We saw the contract as well.
For the Q 7000, and Australia. It sounds like you have you have options now and two different parts of the world.
West Africa, and southern Australia work, well as calendar strategy or do you need to choose one or the other or get mobilization.
Compensation and that that maybe we're underappreciated and today's market.
Yeah.
Right.
They are.
It worked well together.
From a seasonal basis the auto trends. It is very very long. So we will always be looking to get some mobilization and demobilization.
And from the clients.
The way things are turning out right now I'm not sure of West Africa, and it's going to be and annual campaign, a year long campaign, or whether or not and it's going to be like every other year when sort of fits well.
Other.
The other.
And I think both regions are shaping up to look like they have utilization for a vessel so I'm not sure, but going forward I'm guessing.
And the ideal scenario would have a vessel and each region and what.
Each case would be one vessel short unless we took one of the lessons from Brazil and repositioned. It and then the other market that youre sort of leaving out there. There are no heavy intervention vessels and the North Sea and we are tendering work and the North Sea for the Q 7000, and following its campaign and Australia, so well.
We're becoming very successful and international markets, where we haven't previously been which may require us to rethink.
Rethink our fleet allocation.
Okay. Good.
That's helpful color I'll pass it over thanks Owen.
Yes.
Our next question is coming from the line of Mike Sabella. Please go ahead.
Hey, good morning, everyone.
Good morning.
And maybe you can just talk a bit about the revenue guide and and.
And robotics.
We've got this guide out there and $1 15 to $1 35 per the year.
And last year renewables, 41% of the segment can you kind of talk us through how and how you think you see that split moving this year.
And then just.
And we kind of think of the high end of that guide low and to that guide what are some of the things that could that could take you to either of those places.
Yes.
Well I'll take that one.
Yeah.
Yes, and remember that last year, we had a bunch of projects and the clearance market.
That project was suffice the last three months of announcement.
The whole year and ended up being sea vessels. This year on the site clearance and market. We have at least one quarter of work for one vessel and that possibly will expense and we have some tenders out so for other tenants, which then we're quite hopeful and.
Most of the changing well undertake a share will be renewables.
And I'll still see and a good set.
And <unk> renewables trenching.
Sales of 41% guidance from last year would be lower because of the bump from South <unk> project.
We're also seeing an uptick in.
And requirements for Rovs and the renewable sector. Currently we have contracted eight rovs that will be and renewables and then we have four rovs on vessels.
Power and renewables work or changing with so I think it will be slightly lower and the enable side.
I think the guidance right now is set and.
And a good place and then there is other things accounts and I would just won our first R&D project special projects and Guyana.
And we didn't have any visibility on net that's going to be a 50 day project and Q3, well take a vessel, Okay Atlantic cable for Exxon and.
And if so does that have a stuff that comes out from the RV side of the plant.
Got it thanks, and then if we can just quickly circle back to the Q seven headed to Australia.
Can you just clarify.
And what can you give us an idea of what the mobilization cost is to move it from West Africa down to Australia and.
Is that is that number included and the cost this year or how should we think about.
How should we think about the cost flowing through.
And I think first from the timing standpoint, and Mike I think whether we start trends and the and this year or early next year really is dependent on some of the continued work that we're chasing in West Africa, I think theres opportunities. There as I think was mentioned in our call to possibly have the vessel working all year in and.
And in West Africa, So the timing of it will be dependent on some of that add on work I think when the vessel does mobilize.
And the transit will roughly be I believe about 90 days about 90 days to transit there.
The the transit cost and the revenue will be will be deferred when that happens and then amortized over the existing contracts that are in place right. Now we do have a potential contract anchor contract their subjects.
And so I think it's.
We're in a good place there.
It's too complicated further.
And during that transfer further and they stopped for a dry dock period, which is required for entry into Australia.
And the original delivery of the vessel and we did not finish the bottom and knowing the bottom paint on the vessel knowing that this was a requirement for Australia. So there will be a stop for dry dock at which time that that portion of the cost would revert back to the capital budget.
Got it got it so theres no basically no impact from that contract and Australia, either from and from a cost perspective in the guide this year.
I think that's correct I think well.
Right now and our guidance, we would expect either and the Q 7000 to be to be working the entire year and West Africa or.
Begin its transit towards the end of the year, which would be deferred.
Okay, perfect and then can I just ask one more quick point of clarification I think Eric you said theirs from the cares Act theres $12 million incremental coming and this year or it's 12 million total seven of which was collected and <unk> 12.
12 million additional.
Yes, I think it was 19% and $20 million total we received $7 million and Q1.
Perfect Alright, thanks, everyone.
Our next question is coming from the line of James Shuck. Please go ahead.
Hey, good morning, guys.
I was wondering if you could comment on the rate reduction on the Siem helix one just in percentage terms.
Well, we've never given out from rates in Brazil, the request for Petrobras and so I think we'll stick with that but from a percentage basis, it's significant.
The goal of the extension of the vessel working in Brazil for Petrobras This year, well, it's merely to keep it in the region and avoid the large repatriation costs well ahead of the re tendering process. So.
So I wouldn't I wouldn't.
I wouldn't.
Too much of a positive EBITDA from <unk>.
Okay.
And then what's the expectation after the contract completes in mid August do you have a 30 to 40 day dry dock you talked about and then so if we think about like maybe the midpoint of your guidance are you assuming that you go back to work for Petrobras and the <unk>.
Fourth quarter or not.
Or some level of utilization there.
So yes, I think it's correct to assume Jim that in the range of the guidance, we assume at the high and obviously that we would have some additional work from the vessel on the low and not.
Okay.
And then my next question.
Just if you guys could quantify the HW CG benefit and potential customer discounts, so and then well as part of that it is one of your customers currently expected to utilize the Q4 thousand or the Q 5000, and this year.
So I think we've returned to like we said a more traditional retainer based.
I think we've been operating I think two years essentially.
And our extreme discount.
And so so we've gone to the more traditional I don't think well.
We are at the levels that we were previously.
It will be a positive impact to our production facilities results.
To the extent and we said to the extent that we do gain utilization for our assets and the well intervention that will reduce.
The retainer fee there.
H WCG has I believe 16 members and so I think we would expect to do some work from those members.
And on a go forward basis.
Okay. Thank you very much I'll get back in the queue.
Our next question is coming from the line of Taylor Zurcher. Please go ahead.
Hey, good morning, and thank you if I could circle back to the robotics guidance. If you take the midpoint of the revenue guidance for 2020, one and it looks like revenues down, 30% and year over year and a big piece of that.
And the roll off or or less impact of the site clearance work you had and in 2020 could you talk a little bit about the some traditional oil and gas work and that segment for 2021 is that type of activity, you're going to be lower year over year or do you see that traditional oil and gas type activity actually trending higher year over year.
And embedded into that guidance you provided.
I think.
We're seeing more activity, but I think it will be on par with last year on the oil and gas side.
And as more tenders going on as well and authorized works come to fruition.
We are seeing more requirements for rental Ross services.
We're seeing more requirements for spotlights, but again, the big difference from last year and the bumper two to free vessel <unk> project that we had.
There is definitely going to be an upturn and RV work oil and gas related and RV works coming from the trenching and site.
And as more talk and 2021, and 2022 tie backs and the North Sea and will lead to some more traditional pipeline and umbilical and oil and gas trenching.
But it's still a very slow markets and the outright just stopped spending money on maintenance at this time I think conventionally level have to but we're not seeing so I would say well be on par with last year.
Okay, Thanks for that and how.
You talked about.
The pipeline of tenders.
Tendering opportunities for some.
These renewable markets continuing to trend higher into 2022 at the same time, you said that the.
The possibility to achieve sustainable returns and that business seems to be getting lower versus our declining versus improving into 2020 two as more competition enters the picture.
And from a volume perspective could you help us think about how much tendering activity you're thinking for 2022, if we if we compare that to the type of.
Renewable activity that you already booked and did in 2020 is it sort of on par with that level of activity is at last just just help us think about what sort of tendering activity, you're seeing right now for 2022 and the renewable side of the equation.
So that's a 2022 and beyond and we've got a huge amount of tender activity and renewables retrenching, which secured work in 'twenty, one 'twenty free from renewables trench and we have works and tentative with.
Good partners of ours and unusual customers. After 2025 and one thing. We are seeing is these wind farms will be telling and much largest say the trenching scopes of becoming larger and with that and the site clearance and some of the other services that we're offering often larger wind farms.
You look back last year, we had one center and site clearance, we want and that center and it was a great job for us this year and slight clearance from 'twenty. Two onwards, we have 16 site clearance projects and again all of these wind farms against and largest volume should increase we should win some of the work, but like Kevin and Rodney says there is a huge amount of people looking at this.
And there's more competition coming through it and.
As with any commodity when this competition, that's going to drive prices down sorry.
Well volume less profit I guess.
Understood. Thanks for that I'll turn it back.
Our next question is coming from the line of Igor Levi. Please go ahead.
Hi, good morning.
Morning, So following up on that in question and your 'twenty. One guide of 75 to 100 million EBIT Bad this implies that the quarterly EBITDA will be cut in half from Q1 levels and you mentioned and it's largely attributed to the contract roll offs could you provide some more color how much of this well.
Proportionately be attributed to the Q 5000 versus the vessel and Brazil.
So I think when you look at our at our guide once again, we're giving and annual guide and we recognize the roll offs here in Q2.
Q 5000, and the Siem helix one from their from their legacy contracts.
I think when you when you look at the entire year moving into a more spot.
<unk> environment.
Visibility is going to be on a quarter and quarterly basis, like we said and so I believe that we're seeing the variability and the range that we provided is really being towards the.
And of our of our guide so really and the fourth quarter, we see the variability related to just seasonality and the visibility that we have.
Obviously, the legacy contracts like you mentioned are rolling off and those will have an impact as well well the utilization that we're able to achieve on those vessels.
But are the two vessels rolling off having a similar impact on the EBIT dollars one proportionately much big.
And bigger part of that drop.
I believe the Q five is going to have.
Proportionately larger impact.
Due to the comparison of the historic rates that they were both up.
Perfect very helpful and then on 2022.
You said that the snapshot could look better our biggest concern is that yield a full year of low rates and the Brazil vessel. The first one and then the second one that we expect to rollover at the end of this year at the beginning of next so that's a pretty big headwind and I was hoping you could talk about what factors will be strong enough to more than off.
Net.
This headwind.
You are correct potentially it's a huge headwind and it's one that we've been trying to position for and plan for.
The first the first step is to create competition.
We know we believe that Petrobras is going to want the vessels.
So in order to get some rate leverage we need to have alternatives for the vessels, which is why we've been pushing so hard on the international work.
And as I mentioned Theres, a additional clients in Brazil, but are now asking about the availability of the vessel and as I previously mentioned that it could be that our West Africa, Australia, and the U K actually develop into strong enough markets to warrant more than just the Q seven ability to cover them. So.
Moving on how strong 2022 is and our ability to generate alternative opportunities for the vertical well that'll have a big impact on the.
Re tendered rates with Petrobras.
I'll just got it.
We have about 10 large international tenders out there and they're all very large tenders and other over 10, plus well. So there is work out well.
And to look elsewhere.
Great. Thank you very helpful I'll turn it back.
Our next question is coming from the line of Samantha Hoh. Please go ahead.
Hey, guys and thanks for taking my call.
So maybe just to stay on Brazil and.
Curious if the options for DHS, one Jenny and Matt.
Great.
And then also in terms of discussions with other customers potentially from under term contract and.
Are there cost escalators Milton to like.
These contracts if they go from multi tenants.
Just wanted to kind of thing going on but you guys said about customers potentially taking advantage of interest.
No.
Contract pricing given that there might be EBIT ability to hire costs over time.
You mentioned that there.
Each project has.
And it warrants a zone of analysis it depends on how far and the future and then.
Well.
And how competitive the tender is nearer term work with and without.
Any signs of competitors, we probably would not be as aggressive on the cost escalators.
Work for farther and the future.
And would definitely looked add cost escalators into the contracts, which is pretty acceptable and the industry.
Okay, Great and then maybe going back to your robotics you guys. Previously said that this segment could be EBITDA positive and.
For the year and I was wondering if that is still.
Is that still part of your guidance.
And what are sort of be.
Did you see different scenarios that would come out to.
On the EBITDA side I guess.
Price was negative.
And the segment for the year.
Yes, so on the robotics side, we fully expect the segment to be EBITDA positive.
I think what we saw here and the first quarter and net EBIT positive.
I think last year, we were we were definitely EBIT positive.
Positive this year I think our expectations are right now and then.
And it would be EBIT positive I think it's fairly nominal but it's still positive on our expectations.
So I think.
And it's within the range of plus or minus.
I think well see the seasonal upticks here that we expect here and the second and third quarter as far as activity goes.
But that would be our expectation to be in the positive range.
Okay, Great and then if I could just sneak one more and.
I wanted to actually share a little bit more in terms of the increased dialogue that you're having in the Gulf of Mexico.
And I think he's sitting at the parent and Mark that.
Yes.
And increased tendering and.
Both fourth quarter and I was wondering if you could see.
Maybe the type of work that entails and the customer mix.
Anything you can share on the golf and safe.
Yes.
Currently standing at tender activity increase we see visibility of works with the customers on the us out into the third and fourth quarter.
The work is a mixture of production enhancements MTA opportunities, we have definitely seen recently a number of clients.
And and ask for pricing for <unk>.
P&I activity or temporary abandonment activity and we believe that's because they've been force now to get on and do some of the work and how the price of oil and is return and so it's a mixture of production enhancements and P&I activity, but there's definitely more inquiries coming in and we're getting very close to contracting from Elisa.
Yes.
Oh, great. Thanks, guys.
Thank you.
And our last question and <unk> as a follow up question coming from the line of James Sheehan. Please go ahead.
Hey, Thanks for letting me back and would.
Would you guys be willing to just give a little bit more color on the droshky re completion. It sounded like you said it was <unk>.
Successful, but maybe not as successful as you'd hoped.
Can you give any sort of indication of like maybe what the flow rate might be of the well or some comment on pricing or net backs or just how should we think about this.
I can give you a lot of detail on that.
And it's my legal counsel and Cringes.
Anyway.
We don't know what the flow rate is going to be.
Form and shut in so we will not be able to put the well on all production until the beginning of June.
Near the end of May.
We did the work and we have perforated we've run a log and we've done pressure.
Our valuation.
And where we thought the reservoir was an isolated sand and it looks like it was.
Partially drained by the number two well.
And so we had a higher water content.
It's not watered out.
You would expect given the production coming out of the number two.
So there is some isolated oil there.
Sufficient quantity of oil too.
More than recoup the cost of our <unk>.
<unk> completion, but how and how much more profitable that's going to be I think we're gonna have to wait and.
Until June until we see the flow rates.
And it'll be it'll be positive, but we're just not sure how much.
Now, having said that the just actually doing the work on the re completion and getting our money back out of it serves the purpose of doing the re completion, which was to offset idle asset time. So the economics from the re completion does not include the cost savings that we would have incurred.
And so that the book causal.
Yes.
All right.
SaaS slightly pointed out the platform shopping because the highest operator has annual maintenance on it and there's nothing within the seasons and we finished and re completion last night.
Gotcha understood. So so owen.
What do you think what do you think the payback time would be on this.
If you.
Whether you use the vessel utilization or not.
Could you answer that I mean is it.
Three years or Oh, no no.
Well it'll be much faster than that.
Hey, al there'll be within 12 to 18 months.
And the precise amount of time will depend on the flow rates that we achieved when we actually start flowing.
Okay, alright, thanks, so much guys that's.
That's an estimate.
Based on what we know right now.
Alright understood. Thanks, guys.
And we have no further questions at this time.
Okay. Thanks for joining us today, we very much appreciate your interest and participation and look forward to having you and our second quarter 2021 call in July and thank you.
That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
Okay.
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Okay.
And Ted.
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