Q4 2023 Helix Energy Solutions Group Inc Earnings Call
Operator: www. HelixEnergy.com Please stand by. Your conference call will begin momentarily. We thank you for your patience, and we ask that you please remain on the line. www.helixenergy.com. Greetings and welcome to the Helix Energy Solutions' fourth quarter and year-end 2023 earnings conference call. During the presentation, all participants will be in a listen-only mode.
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Speaker Change: Please standby your conference call will begin momentarily we thank you for your patience and we ask that you. Please remain on the line.
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Speaker Change: Greetings and welcome to the Helix energy solutions fourth quarter and year end 2023 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: Afterward, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star zero.
Speaker Change: At that time, if you have a question. Please press the one followed by the four on your telephone.
Speaker Change: At any time during the conference you need to reach an operator, Please press star zero.
Operator: As a reminder, this conference is being recorded on Tuesday, February 27, 2020. I would now like to turn the conference over to Brent Arriga, Chief Accounting Officer. Please go ahead.
Speaker Change: As a reminder, this conference is being recorded Tuesday February 27th.
Speaker Change: 'twenty 'twenty four I would now like to turn the conference over to Brent Our Riga, Chief Accounting Officer. Please go ahead.
Brent Arriga: Good morning, everyone. And thanks for joining us today on our conference call for our fourth quarter 2023 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Eric Staffeld, our CFO; Ken Nykerk, our General Counsel; and myself.
Speaker Change: Good morning, everyone and thanks for joining us today on our conference call for our fourth quarter 2023 earnings release.
Speaker Change: Spending on this call for helix today are Owen Kratz, our CEO.
Speaker Change: Scotty Sparks, our COO, Eric <unk> our CFO.
Speaker Change: <unk>, our general counsel and myself.
Speaker Change: <unk>, our general counsel and myself.
Kenneth Neikirk Senior: Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you don't have a copy of these materials, both can be accessed through the For the Investor page on our website at www.helixcsg.com. The press release can be accessed under the Press Releases tab, and the slide presentation can be accessed by clicking on today's webcast icon. Before we begin our prepared remarks, Ken Nykirk will make a statement regarding forward booking information. Ken?
Speaker Change: You've had an opportunity to review our press release and the related slide presentation released last night.
Speaker Change: You don't have a copy of these materials.
Speaker Change: Through the for the Investor page on our website at Www Dot helix ESG dot com the.
Speaker Change: The press release can be accessed under the press releases tab and the slide presentation can be accessed by clicking on todays webcast icon.
Speaker Change: Before we begin our prepared remarks cannot Kirk will make a statement regarding forward looking information.
Kenneth Neikirk Senior: During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends, or business or financial results. All statements in this conference call or in 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 of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions, and factors, including those set forth in Slide 2 of our presentation, in our most recently filed annual report on Form 10-K You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference call.
Speaker Change: During this conference call, we anticipate making certain projections and forward looking statements based on our current expectations and assumptions as of today.
Speaker Change: Such forward looking statements may include projections, and estimates of future events business or industry trends or business or financial results. All statements in this conference call or in 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 of 1995.
Speaker Change: Our actual future results may differ materially from our projections and forward looking statements due to a number and variety of risks uncertainties assumptions and factors.
Speaker Change: <unk> set forth on slide two of our presentation and our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q and in our other filings with the SEC you should not place undue reliance on forward looking statements and we do not undertake any duty to update any forward looking statements. We disclaim any written or oral statements made by any third party regarding.
Speaker Change: The subject matter of this conference call.
Kenneth Neikirk Senior: Also, during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation provide reconciliation of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10-K, and a replay of this broadcast, will be available on the investor section of our website at www.helixesg.com. Please remember that information from this conference call speaks only as of today, February 27, 2024, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. Owen?
During this call certain non-GAAP financial disclosures may be made.
Speaker Change: In accordance with SEC rules. The final slides of our presentation provides a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation. The earnings press release, our annual report on Form 10-K, and a replay of this broadcast will be available under the investors section of our website at www.
Speaker Change: Dot helix ESG Dot com, please remember that.
Speaker Change: Call speaks only as of today February 27th 2024, and therefore, you're advised that any time sensitive information may no longer be accurate as of any replay of this call.
Owen E. Kratz: Good morning. We hope everyone out there and their families are doing well. This morning, we'll review the fourth quarter and full year 2023 results, performance, and operation. We'll provide our outlook for the market, both what we currently are experiencing as well as our expectations beyond that, and we'll provide our guidance for 2024. Moving on to the presentation, slides six through nine provide a high-level summary of our results and key highlights for the quarter.
Good morning.
Speaker Change: We hope everyone out there and their families are doing well. This morning, we will review the fourth quarter and full year 2023 results performance and operations.
Speaker Change: We will provide our outlook for the market. Both what we currently are experiencing as well as our expectations beyond that and we will provide our guidance for 2024.
Speaker Change: Moving to the presentation slides six through nine and provide a high level summary of our results and key highlights for the quarter.
Owen E. Kratz: During the fourth quarter, activity levels across all segments were very strong, with increased activity from the solid global offshore energy market driving improved rates. Highlights for the quarter include strong activity and utilization in the Gulf of Mexico, a resilient North Sea market, well intervention, including a seasonal project in the Mediterranean, and completion of our New Zealand Well Intervention Campaign.
Speaker Change: During the fourth quarter activity levels across all segments were very strong with the increased activity from the global solid global offshore energy market driving improve rates highlights.
Speaker Change: Highlights for the quarter include strong activity and utilization in the Gulf of Mexico, a resilient north sea market, well intervention, including seasonal project in the Mediterranean.
Speaker Change: Completion of our New Zealand well intervention campaign.
Owen E. Kratz: Robotics and Helix Alliance Solid Seasonal Adjusted Contribution. Production facilities continue to be a steady performer. And on the sales front, the Helix Producer 1 was extended an additional year to June 2025. In addition, we were awarded a 12-month extension with Trident in Brazil for the SH1. We expect to benefit from the market rate contract in 2025. We have also secured a minimum six-month contract for the Q4000 in West Africa at Favorable Economics. And we just recently established a five-year joint frame agreement with TELUS for their offshore decommissioning requirements, primarily on the Gulf of Mexico shelf. Revenues for the quarter were $335 million, a decrease of $61 million from third-quarter results.
Speaker Change: Robotics, and helix alliance solid seasonal adjusted contribution.
Speaker Change: <unk> facilities continues to be a steady performer and on the sales from the helix producer one was extended an additional year to June 2025. In addition, we were awarded a 12 month extension with Trident in Brazil for the S. H one.
Speaker Change: We expect to benefit from the market contracted in 2025.
Speaker Change: We also secured a minimum six month contract for the Q4 thousand in West Africa favorable economics, and we just recently established a five year joint frame agreement with tell us for their offshore decommissioning requirements, primarily on the Gulf of Mexico shelf.
Speaker Change: Revenues for the quarter were $335 million, a decrease of $61 million from third quarter results. Our net loss was $28 million, primarily driven by a $37 million loss associated with the refinancing of our 2026 convertible senior notes adjusted EBITDA for the quarter was <unk> 71.
Owen E. Kratz: Our net loss was $28 million, primarily driven by a $37 million loss associated with the refinancing of our 2026 convertible senior notes. Adjusted EBITDA for the quarter was $71 million. Our fourth quarter results were overall in line with expectations, driven by our core well intervention markets in the North Sea and Gulf of Mexico, with our robotics and shallow water abandonment segments providing good performance given the impact of the winter weather. For 2023, revenues improved by over 400 million, year over year, to $1.29 billion. Our gross profit improved by $150 million to $200 million.
Speaker Change: Yes.
Our fourth quarter results were overall in line with expectations.
Speaker Change: Driven by our core well intervention market and the North Sea and Gulf of Mexico, with our robotics in shallow water abandonment segments, providing good performance given the impact of the winter weather.
Speaker Change: For 2023 revenues improved by over 400 million.
Speaker Change: Year over year to 1.29 billion.
Speaker Change: Our gross profit improved by 150 million to $200 million, we reported a net loss of $11 million in 2023, which included $42 million loss on the earn out associated with our shallow water abandonment acquisition and another $37 million loss associated with our refinancing.
Owen E. Kratz: We reported a net loss of $11 million in 2023, which included a $42 million loss on the earn-out associated with our shallow water abandonment acquisition, and another $37 million loss associated with our refinancing efforts. However, without these two losses, our net income would have been significantly positive in 2023.
Speaker Change: FERC.
Speaker Change: Without these two losses, our net income would have been significantly positive in 2023.
Speaker Change: Nonetheless.
Owen E. Kratz: The net loss still decreased by $77 million to $11 million, despite the aforementioned losses. Our EBITDA increased to $273 million in 2023 from $121 million in 2022. Operating cash flow for the year was $152 million, resulting in free cash flow of $134 million, with both results representing significant improvements compared to 2022. The fundamental improvements in the offshore market, both domestically and internationally, continue to support the foundation of a multi-year recovery for our business, with the market recovery taking shape. We expect to build on our 2023 performance with incremental improvements for 2024 and a potential step change in 2025. Our expansion into shallow water abandonment services has solidified our leadership position in this re-emerging market. Helix continues to execute on its strategy of becoming the preeminent offshore energy transition company. I'd like to thank our employees for their efforts and high level of execution in 2023. Executing safe and efficient operations for our customers has established us as a leader in our industry. Now on to slide 10.
Speaker Change: Loss still decreased by 77 million to $11 million, despite the aforementioned losses.
Speaker Change: Our EBITDA increased to $273 million in 2023 from $121 million in 2022.
Speaker Change: Operating cash flow of the year was $152 million.
<unk> and free cash flow of $134 million with both results representing significant improvements compared to 2022.
Speaker Change: The fundamental improvements in the offshore market, both domestically and internationally continue to support the foundation of a multi year recovery for our business.
Speaker Change: With the market recovery taking shape.
Speaker Change: We expect to build on our 2023 performance with incremental improvements for 2024.
Speaker Change: <unk> step change in 2025.
Speaker Change: Our expansion into shallow water abandonment services has solidified our leadership position in this re emerging market helix continues to execute on its strategy of becoming the preeminent offshore energy transmission company.
Speaker Change: Like to thank our employees for their efforts and high level of execution in 2023, executing safe and efficient operations for our customers has established us as a leader in our industry.
Speaker Change: On to slide 10.
Owen E. Kratz: During the fourth quarter, we executed on our express desire to restructure our balance sheet, moving away from convertible notes to a more traditional debt instrument. We issued 300 million senior notes due in 2029, and following that, we repurchased 160 million of our convertible notes. In early January, we issued a redemption notice for the remaining balance of our convertible notes, a transaction we expect to close during the first quarter. This restructuring effort extends our maturity, simplifies our debt structure, eliminates dilution risk from the convertible notes, and mitigates the ultimate cost of replacing our convertible notes. We believe these efforts provide clarity and predictability to our balance sheet and position our investors to benefit from the improvement in the offshore market. Now on to slide 11.
Speaker Change: During the fourth quarter, we executed on our express desire to restructure our balance sheet moving away from convertible notes to a more traditional debit.
Speaker Change: We issued 300 million senior notes due 2029.
Speaker Change: And following that we repurchased $160 million of our convertible notes.
Speaker Change: In early January we issued a redemption notice for the remaining balance of our convertible notes are transaction, we expect to close during the first quarter. This restructuring effort extends our maturity.
Speaker Change: It simplifies our debt structure eliminates dilution risk from the convertible notes and mitigates the ultimate cost of replacing our convertible notes.
Speaker Change: We believe these efforts provide clarity and predictability to our balance sheet.
Speaker Change: And position our investors to benefit from the improvement in the offshore market.
On to slide 11.
Owen E. Kratz: From a balance sheet perspective, our cash balance at year end was $332 million, with liquidity of $431 million. For the year, our operating cash flow was $152 million, including $63 million of dry dot and recertification costs. We spent $20 million on CapEx, resulting in $134 million in free cash flow. At year-end, we were in a net debt position of $30 million. I'll now turn the call over to Scotty for a more in-depth discussion of our operations. Thanks, Owen, and good morning.
Speaker Change: On a balance sheet perspective, our cash balance at year end was $332 million with liquid liquidity of $431 million.
Speaker Change: For the year, our operating cash flow was $152 million, including $63 million of dry dock.
Speaker Change: Re certification costs.
Speaker Change: Then $20 million on Capex, resulting in $134 million in free cash flow at year end, we were in a net debt position of $30 million.
Speaker Change: I will now turn the call over to Scott for a more in depth discussion of our operations Scott.
Scott: Thanks, Adam and good morning, maybe now onto slide 13, it seems offshore and onshore outperformed again, producing another very well executed quarter completing a very strong 2023.
Scott Andrew Sparks Executive: Moving on to slide 13, the teams offshore and onshore outperformed again, producing another very well-executed quarter, completing a very strong 2023. In the fourth quarter of 2023, we continued to operate globally with minimal operational disruption. We have operations in Europe, Asia Pacific, Brazil, the Gulf of Mexico, and off the U.S. East Coast.
Scott: In the fourth quarter of 2023, we continue to operate globally with minimal operational disruption of operations in Europe Asia Pacific, Brazil, The Gulf of Mexico and off the East Coast. We continue to operate at high standards again with strong uptime efficiency for the quarter.
Scott Andrew Sparks Executive: We continue to operate at high standards again, with strong uptime efficiency for the quarter. During the fourth quarter, we generated revenue of $335 million and a gross profit of $49 million, a gross profit margin of 15%, compared to gross profits of $31 million in the fourth quarter of 2022, significantly improved year over year. For the year, we generated revenue of $1.29 billion and a gross profit of $200 million, and a gross profit margin of 16%.
Scott: During the fourth quarter, we generated revenue of $335 million and the gross profits of $49 million gross profit margin of 15% compared to a gross profit of 31 million in the fourth quarter of 2020 to significantly increase year over year.
Scott: For the year, we generated revenue of $4 $39 billion and a gross profit of $200 million and a gross profit margin of 16% very much improved compared to gross profit of $51 million in 2022.
Scott Andrew Sparks Executive: Very much improved compared to a gross profit of $51 million in 2022. 2023 has been a solid year for Helix, vastly improved over 2022, and we finished the year very strong, with the fourth quarter being our best fourth quarter since 2013. Visibility in 2024 and beyond is looking very positive. We have recently secured some good contracts at better market rates compared to our legacy contracts. That also sets up 2025 potentially for further improvement.
Scott: 2023 has been a solid year for helix vastly improved over 2022, and we finished the year very strong with the fourth quarter being our best fourth quarter since 2013.
Scott: Visibility in 2024 and beyond is looking very positive we.
Scott: We have recently secured some good contracts with best in market rates compared to our legacy contracts that also sets up 2025 potentially for further improvements tender activity remains strong and our client base is increasing.
Scott Andrew Sparks Executive: Tender activity remains strong, and our client base is increasing. Slide 14 provides a more detailed review of our well-intervention business in the Gulf of Mexico during the fourth quarter. The Q5000 had excellent utilisation of 96%.
Scott: Slide 14 provides a more detailed review of our well intervention business in the Gulf of Mexico during the fourth quarter.
Scott: The key 5000 that excellent utilization of 96% divestment performed very well conducting production enhancements and abandonment campaign utilizing our helix SMB June 15 case of thesis.
Scott Andrew Sparks Executive: The vessel performed very well conducting production enhancements and abandonment campaigns, utilising our Helix SLB jointly-owned 15K stop-heat system. The vessel then completed work on a single production enhancement well for Shell and finished the year conducting abandonment work on one well. The Q4000 had solid utilisation of 98% in the fourth quarter.
Scott: The vessel then completed work on a single production enhancement well for shelf and finished the year conducting abandonment work on one well.
Scott: The vessel is nameless wells contracted for 2024, and we expect the vessel to achieve high utilization.
Scott: Stronger rates.
Scott: Q4 had solid utilization of 98% in the fourth quarter. The vessel continued a multi well production enhancement campaign for one customer and then undertook a production enhancement project for another clients. The vessel then commence production enhancement works on our Thunder Hawk sales.
Scott Andrew Sparks Executive: The vessel continued a multi-well production enhancement campaign for one customer and then undertook a production enhancement project for another client. The vessel then commenced production enhancement works on our Thunderhawk field. The Q4000 also has numerous wells contracted in 2024, and again, we expect high utilisation at better rates. In the second half of the year, the vessel is scheduled to commence a paid transit in Nigeria to undertake a minimum six-month project, performing production enhancement works with a paid transit back to the Gulf of Mexico afterward. Both Q vessels continue to operate under the integrated Helix-SLB Subsea Services Alliance package, and we expect this to continue with the Q4000 whilst in Nigeria. Moving to slide 15.
Scott: The key 4000 also has numerous wireless contracted in 2024 and again, we expect high utilization at better rates in.
Scott: In the second half of the year divestment scheduled to commence a PE transits in Nigeria to undertake a minimum six month project performing production enhancement works with a tight transit back to the Gulf of Mexico asset base.
Scott: <unk> vessels continue to operate under the integrated helix <unk> Subsea services Alliance package and we expect this to continue with the key for Boston in Nigeria.
Scott: Moving to slide 15, our north Seawell intervention business continues to respond well to the increased demand in the region, having a very strong fourth quarter, considering the winter periods and <unk> relate to the seasonal slowdown or warm second periods for the vessels that are for.
Scott Andrew Sparks Executive: I know Sea Well Intervention Business continues to respond well to the increased demand in the region, having a very strong fourth quarter considering the winter period that would usually lead to a seasonal slowdown or warm second periods for the vessels. For the quarter, we achieved 100% utilisation for both vessels. The Well Enhancer performed very well working for two customers, performing production enhancement work on three wells, followed by decommissioned operations on two wells. The CWEL also had a good quarter, working for two customers, performing decommissioning work on two wells, and the vessel then completed a paid 22-day transit to the western Mediterranean to conduct a longer-term decommissioning campaign expected to last into the summer of 2024. Demand for our services continues to improve.
Scott: For the quarter, we achieved 100% utilization for both vessels.
Scott: The one handset performed very well working for two customers performing production enhancement work on three wells followed by decommission operations on two wells.
Scott: The Seawell also had a good quarter working for two customers performing decommissioning work on C wells and the vessels and complete to the page 22 day transit to the Western Mediterranean.
Scott: So longer term decommissioning campaign is expected to last into the summer of 2024.
Scott: Demand for our services continues to increase as mentioned the seawell is fully contracted well into December 2024.
Scott Andrew Sparks Executive: As mentioned, the seawall is fully contracted well into the summer of 2024, and following its approximate 50 to 60-day dry docking Q1, the well enhancer has contracted and awarded work through Q3 of 2024, starting to fill out the year with further increased rates. The Q7000 was 68% utilized, conducting the decommissioning contract in New Zealand throughout most of the fourth quarter. On completion of the work in New Zealand, the vessel completed a paid transit to Australia to undertake several intervention scopes for three clients, commencing in the fourth quarter.
Scott: Following its approximate 50 to 60 day dry dock in Q1, while intense has contracted and awarded work through Q3 of 2020 for starting to fill up the year with seven increased rates.
Scott: <unk> 7000 was 68% utilized conducting the decommissioning contract in New Zealand <unk> list of the fourth quarter.
Scott: On completion of the works in these islands. The vessel has completed tight transit to Australia to undertake several intervention scopes for free clients commencing in the fourth quarter.
Scott Andrew Sparks Executive: The G7000 is then contracted for 12 months plus options to undertake well abandonment work with Shell in Brazil, including the paid transit to Brazil. The work is estimated to commence towards the end of 2024, so the Q7000 is contracted for most of 2025. We have options that could potentially have it working in Brazil into 2026.
Scott: The <unk> thousand has been contracted for 12 months plus options to undertake well abandonment work with shell in Brazil, including the tight transit to Brazil.
Scott: The work is escalated to commence towards the end of 2020 full set of Keystone Fathom is contracted for most of 2025. They are options that could potentially have it working in Brazil into 2026.
Scott Andrew Sparks Executive: Moving to slide 16, in Brazil, we had good utilization of 99% for the fourth quarter. The theme Helix One had a strong quarter and was 100% utilized in Q4, undertaking work for Trident Energy, performing deconditioning works on six wells and production enhancement work on one well. We have recently extended our contract with Trident to take a further year and much increased market rates, commencing at the end of 2024 and for most of 2025. Team Helix 2 had 98% utilisation in Q4, completing decommissioning activities on three wells and one production enhancement well with Petrobras. We again won the Petrobras Rig of the Year Award in 2023, so congratulations to our teams both onshore and offshore in Brazil. We keep enhancing our position in Brazil by further extending contracts at increased market rates.
Scott: Moving to slide 16 in Brazil, we had good utilization of 99% for the fourth quarter the.
Scott: The Siem helix, one had a strong quarter and was 100% utilized in Q4 undertaken for <unk> energy.
Scott: The fall in decommissioning work on six wells and production enhancement work on one well we have recently extended our contract with <unk> take a further year in Russia increased market rates commencing at the end of 2024 and for the rest of 2025.
Scott: The Siem helix two had 98% utilization in Q4 completion decommissioning activity on three wells.
Scott: Production enhancement well with Petrobras, we again in 2023, when the <unk> of the year award so congratulations to our teams by financial and offshore in Brazil.
Scott: We keep enhancing our position in Brazil, but.
Scott: Further extending contracts and increased market rates, so as the legacy contracts roll off it should lead to much better results in 2025, and we look forward to bringing the Keystone thousands of Brazil, and commencing the shell decommissioning contracts again, that's inventory at market rates.
Scott Andrew Sparks Executive: So as the legacy contracts roll off, this should lead to much better results in 2025, and we look forward to bringing the Q7000 to Brazil and commencing the Shell decommissioning contracts, again at improved market rates. Slide 17 provides detail of our well-intentioned fleet utilization, moving on to slide 18 for our robotics review.
Scott: Slide 17 provides detail of our women's engine fleet utilization.
Scott: Moving on to slide 18 for our Robotics review.
Scott: Deposits continued their good performance, we had another strong quarter closing out a very solid year of being the best performing year in terms of revenue and EBITDA since 2015.
Scott: The business performed high standards with strong utilization operating six vessels globally during the quarter, primarily working between strengthened RV supports a slight survey work on oil and gas and renewables related projects.
Scott Andrew Sparks Executive: Robotics continued its good performance and had another strong quarter, closing out a very solid year, being the best performing year in terms of revenue and EBITDA since 2015. The business performed at high standards with strong utilization, operating six vessels globally during the quarter, primarily working on trenching, RV support, and site survey work on oil and gas and renewables-related projects. In the APAC region, Grand Canyon II had 100% utilization in Q4.
Scott: In the APAC region, the Grand Canyon pipeline, 100% utilization in Q4, the vessel completed a long term decommissioning project in Thailand, and then finished the year on an RV support projects in Malaysia.
Scott: <unk> 1400, one trenching systems onboard the same type of project chartered vessel continued work on our renewable trenching projects in Taiwan undertaking 92 days of trenching utilization in the quarter and is expected to continue into mid Q4 of 2024.
Scott Andrew Sparks Executive: The vessel completed a long-term decommissioning project in Thailand and then finished the year on an ROV support project in Malaysia. The T-1401 trenching system on board the CN-POPEZ, a project-charted vessel, continued work on a renewable trenching project in Taiwan, undertaking 92 days of trenching utilization in the quarter that is expected to continue into mid-Q4 of 2024. In the North Sea, the Grand Canyon III was utilized 95% to form an oil and gas trenching project for one customer prior to commencing a lump-sum renewable trenching project for another customer. The Verizon Enabler had 100% vessel utilization, completing oil and gas trenching works for two customers, then performing works on a renewables trenching project for another customer. Also in the North Sea, the Glomar Wave completed 15 days of operations, undertaking an ROV support project for a renewables customer. The U.S.B.
Scott: In the North Sea, the Grand Canyon, III, which utilized 95% performing in oil and gas Trenching project for one customer prior to commencing some renewable trenching project for another customer.
Scott: The horizon enabler had 100% vessel utilization competes in oil and gas Trenching works with two customers 10, performing works on renewables Trenching project for another customer.
Scott: Also in the North Sea, because I am always completed 16 days of operations undertaken in RV support projects for renewables customer.
Scott: The USA.
Scott: Machine, our board along with the Jones Act compliant vessel, which utilized 92% in Q4.
Scott: <unk> in the Gulf of Mexico about an hour of a survey projects for an oil and gas customer followed by seismic note installation project for another customer.
The vessel then took a pay transit to the U S East coast for an RV support projects on renewables works.
Scott: Headaches robotics performed very well in 2023, we have a good backlog visibility globally and we are expecting further strong performance in 2024.
Scott: Slide 19 details our robotics vessels already entrenched in utilization.
Scott Andrew Sparks Executive: The Shida Borderlong, a Jones Act compliant vessel, was utilized 92% in Q4. The vessel performed work in the Gulf of Mexico on an R&D survey project for an oil and gas customer, followed by a seismic node installation project for another customer. The vessel then took a paid transit to the US East Coast for an RV support project on renewables work. Helix Robotics performed very well in 2023, we have a good backlog in visibility globally, and we are expecting further strong performance in 2024. Slide 19 details our Robotics Vessels RV Entrenching Utilization. Slide 20 provides an overview of our shallow water decollisioning business, Helix Alliance, for the fourth quarter. Helix Alliance had a strong quarter considering the expected seasonal slowdown. Due to better weather conditions, many of the units worked further into the fourth quarter than we had expected. The offshore division had nine liftboats operating in Q4, with a combined utilisation of 80% performing decommissioned services.
Scott: Slide 20 provides an overview of our shallow water decommissioning business helix alliance for the fourth quarter.
Scott: Helix Alliance had a strong quarter, considering the expected seasonal slowdown due to better weather conditions. Many of the units what severance in the fourth quarter than what we had expected.
Scott: The offshore division had nine despite soft pricing in Q4 with the combined utilization of 80% performing decommission services.
Scott: <unk> six <unk> and one crew boats with a combined utilization of 71%.
Scott: The energy services Division had helped durations of 1188 days of utilization for 'twenty pretty nice systems deployed conducting decommissioning services division net operations of 100 lunch bags of utilization for cyclical achieving systems.
Scott: In Q4, the Diovan and Savi. This division had reduced combined utilization of 46% across the free dug in vessels.
Scott: The sensitivity is diving operations in the winter season.
Scott: The hatred on heavy lift barge had utilization of 76% undertaken decommissioning activities.
Scott: Last quarter, we reported that we had commenced work on our largest decommissioning contract to date to decommission 39 wells abandoned 15 pipelines and remove an expense of 700 platform structures.
Scott Andrew Sparks Executive: Offshore also supplied six OSVs and one crew boat with a combined utilization of 71%. The Energy Services Division had operations of 1,188 days of utilization for 20 pre-enabled systems deployed to conduct decommissioning services, and the Division of Operations had 198 Days of Utilization for 6 Cooled Tubing Systems. In Q4, the Diving and Heavy Lift Division had a combined utilisation rate of 46% across the three diving vessels due to the sensitivity of diving operations in the winter season.
Scott: Performing well on this contract. Thus far however has plan that work has been suspended for the winter months and we expect to recommence work on the project with some units later in Q1 and the heavy lift to recommence in Q2.
Scott: At the end of December our season did finally comes in and then due to the winter weather conditions, leading to the second of a good portion of the fleet PNA system, Nicole achieving systems, we expect the first quarter of 2020 for it to be slow until weather conditions start to improve late into a slow ramp up as the fleets in Q1 and into Q2.
Scott Andrew Sparks Executive: The H-1 heavy lift barge had a utilisation rate of 76% undertaking decommissioning activities. Last quarter, we reported that we had commenced work on our largest decommissioning contract to date to decommission 39 wells, abandon 15 pipelines, and remove and dispense with seven platform structures. We've been performing well on this contract thus far. However, as planned, the work has been suspended for the winter months, and we expect to recommence work on the project with some units later in Q1 and the heavy lift work to recommence in Q2. At the end of December, our season did finally come to an end due to winter weather conditions, leading to the stacking of a good portion of the fleet's P&A systems and core tubing systems.
Scott: Slide 21 provides detail of helix alliance versus <unk> systems utilization.
Scott: Looking back at 2023, we had a very good year and yes. The market has improved but more importantly, our global employees offshore and offshore <unk>.
Scott: <unk> exceeding expectation in 2023, but also setting up a strong 2024.
Scott: The recently awarded contracts, we expect an even stronger 2025, so I'd like to put out a big Thank you to our employees and partners stay safe and keep up the good work I'll now turn the call over to Brent.
Brent: Thanks, Scotty moving to slide 23 at.
Brent: It outlines our debt instruments maturity profile as of December 31.
Brent: During Q4, we initiated a refinancing of our convertible securities. We issued 300 million senior notes due 2029 and repurchased approximately $160 million principal amount of our 2026 convertible senior notes.
Scott Andrew Sparks Executive: We expect the first quarter of 2024 to be slow until weather conditions start to improve, leading to a slow ramp-up of the fleet in Q1 and into Q2. Slide 21 provides detail on the Helix Alliance vessels and systems utilization. Looking back at 2023, we had a very good year, and yes, the market has improved, but more importantly, our global employees, onshore and offshore, excelled, not only exceeding expectations in 2023 but also setting up a strong 2024, and with the recently awarded contracts, we expect an even stronger 2025. So I'd like to put out a big thank you to our employees and partners. Stay safe and keep up the good work. I'll now turn the call over to Brent. Thanks, Scotty.
Our funded debt at year end was $373 million.
Brent: In January we issued a redemption notice for the remainder of our 2026 convertible notes, which we expect to settle in March.
Brent: Following that settlement, we will have no significant maturities until 2029, we're refinancing brings us to a simplified capital structure and eliminate dilution overhang and potential higher cost to settle those convertible notes in the future.
Brent: Moving on Slide 24 provides an update on key balance sheet metrics, including cash long term debt liquidity and net debt levels.
Brent: At year end, we had cash of $332 million and availability under the ABL credit facility of 99 billion with resulting liquidity of $431 million. Our net debt position at year end was $30 million as mentioned earlier, we are settling the remaining $40 million principal amount of our 2026.
Brent Arriga: Moving to slide 23, it outlines our debt instruments maturity profile as of December 31. During Q4, we initiated a refinancing of our convertible securities. We issued 300 million senior notes due 2029 and repurchased approximately 160 million principal amount of our 2026 convertible senior notes. Our fund debt at year-end was $373 million.
Brent: Vertical notes we.
Brent: We anticipate the final redemption costs will exceed the carrying amount of those notes and any premium paid will increase our net debt.
Brent: Slide 25 presents a five year performance trends.
Brent: For certain financial metrics 2023, not only marks our sixth straight year of positive free cash flow, but also represents our highest annual EBITDA.
Brent Arriga: In January, we issued a redemption notice for the remainder of our 2026 convertible notes, which we expect to settle in March. Following that settlement, we will have no significant maturities until 2029. Your financing brings us to a simplified capital structure. It eliminates dilution, overhang, and potential higher costs to settle those convertible notes in the future.
Brent: 2014, and our highest level of free cash flow since we began presenting this metric.
Brent: Slide 26 presents our diversified revenue mix by segment geography, and by the three components of our energy transition strategy for your reference.
Brent: I will now turn the call over to Erik for a discussion on our outlook for 2024 and beyond.
Erik: Thanks Brent.
Erik: Based on the continued strength of the offshore energy market, our contracted work and the pipeline of bids and projects, we are providing guidance of certain key financial metrics from our forecast.
Brent Arriga: Moving on, slide 24 provides an update on key balance sheet metrics, including cash, long-term debt, liquidity, and net debt level. At year-end, we had cash of $332 million and availability under the ABL credit facility of $99 million, with resulting liquidity of $431 million. Our net debt position at year-end was $30 million.
Erik: Revenue in the range of $1 two to $1 $4 billion, we do expect revenues to be to be flat to slightly positive in 'twenty four.
Erik: EBITDA range of $270 million to $330 million.
Erik: Overall, we expect slight improvement from 2023 with improvements in the well intervention, partially offset by a softer shallow water market sharp shallow water abandonment market.
Brent Arriga: As mentioned earlier, we are settling the remaining $40 million principal amount of our credit facility with 2026 Convertible Notes. We anticipate the final redemption costs will exceed the carrying amount of those notes, and any premium paid will increase our net debt.
Erik: Free cash flow of $65 million to $115 million. This number includes an expected $58 million impact from the earn out payments scheduled in the second quarter of 2020 for.
Erik: Capital spend in the $70 million to $90 million range based on our expectations are in the mix of regulatory maintenance on our vessels and fleet renewal what robotics RMB.
Erik Staffeldt Senior: 525 presents a five-year performance trend. For certain financial metrics, 2023 not only marks our sixth straight year of positive free cash flow but also represents our highest annual EBITDA since 2014 and our highest level of free cash flow since we began presenting this metric. Slide 26 presents our diversified revenue mix by segment, geography, and by the three components of our energy transition strategy for your reference. I will now turn the call over to Erik for discussion on our outlook for 2024 and beyond. Thanks, Frank.
Erik: Moving on to slide 30, our Capex forecast for 24 target impacted by Drydock maintenance periods on our vessels and systems. The well enhancer is currently and drive that high dock undertaking an expected 50 to 60 day program. The HP. One is scheduled for dry dock in Q2, and Q seven will have.
Erik: The maintenance period terminals Buffalo station in Brazil.
Erik: Capex range for 2024 is currently $70 million to $90 million. The majority of the Capex forecast continues to be maintenance and project related which primarily volatile to our operating cash flows.
Erik: Viewing our balance sheet, our funded debt of 373 million is expected to decrease by $49 million in 2024 with the redemption of our 2026 convertible notes and scheduled principal payments on our merit that week.
Erik Staffeldt Senior: Based on the continued strength of the offshore energy market, our contracted work, and the pipeline of bids and projects, we're providing guidance on key financial metrics from our forecast. Revenue in the range of $1.2 to $1.4 billion. We do expect our revenues to be flat to slightly positive in 2024. They've been in a range of $270 to $330 million.
Erik: We expect to continue our share repurchase program with target repurchases in the $20 million to $30 million range in 2024.
Erik: Our forecast ranges include some key assumptions and estimates any significant variation from these key assumptions and estimates could cause our results to fall outside of the ranges.
Erik: Our quarterly results will continue to be impacted by seasonal weather in the north Sea and Gulf of Mexico shelf, primarily in the first quarter and fourth quarter. In addition, the timing of our vessel maintenance periods and project mobilizations will cause variations between quarters.
Erik Staffeldt Senior: Overall, we expect slight improvement from 2023 with improvements in the well intervention partially offset by a softer shallow water market. Shallow Water Abandonment Market. Free cash flow of $65 to $115 million. This number includes an expected $58 million impact from the earn out payment scheduled in the second quarter of 2024.
Erik: <unk> quarterly financial performance in 2024 is expected to follow a similar cadence as our results in 'twenty three with the second and third quarter being our most active quarters in first and fourth quarters impacted by winter weather.
Erik Staffeldt Senior: Capital spent in the 70s and 90s mills range, based on our expectations of the mix of regulatory maintenance on our vessels and fleet renewal robotics ROVs. Moving on to slide 30, our CAPEX forecast for 24 is probably impacted by dry dock maintenance periods on our vessels and systems. The well enhancer is currently in dry dock undertaking an expected 50 to 60 day program. The HP1 is scheduled for dry dock in Q2, and the Q7000 will have a maintenance period during its mobilization in Brazil.
Erik: Overall, we expect the second half of 'twenty forward to be stronger than the first half.
Erik: With seasonal quarter impacts the timing of our free cash flow generation is likely skewed to the latter part of the year.
Erik: Providing key assumptions by segment and region starting on Slide 31 first are well in the Gulf of.
Erik: <unk> continues to be a very strong market supported by improving rates and expect a strong utilization on the Q4 Q five.
Erik: Q 5000 is contracted work and every quarter limited white space to fill in that schedule.
Erik: Q4 thousand is contracted to work into Q2 in the Gulf of Mexico vessel scheduled to transit to West Africa for a minimum six month contract in Nigeria, with a paid mobilization and demobilization.
Erik Staffeldt Senior: Our CapEx range for 2024 is currently $70 to $90 million. The majority of the CapEx forecast continues to be maintenance and project related, which primarily falls into our operating cash flow. Reviewing our balance sheet, our funded debt of $373 million is expected to decrease by $49 million in 2024 with the redemption of our 2026 convertible notes and scheduled principal payments on our merit debt. We expect to continue our shareable purchase program with target repurchases in the 20 to 30 million range in 2024. Our forecast ranges include some key assumptions and estimates. Any significant variations from these key assumptions and estimates could cause our results to fall outside of the ranges provided.
Erik: In the UK North Sea, we expect both vessels dwelling handling <unk> had very good utilization for most of the year well enhancer is currently completing an approximate 50 to 60 day regulatory dodging followed by contracted work into Q3 <unk>.
Erik: The Seawell is currently working in the inventory and entered Q2 before is scheduled to return to the north sea for contracted work.
Erik: Since mid 2022, the activity levels in the North Seawell intervention market have significantly increase with limited seasonal impact in 'twenty, two and 'twenty. Three we are anticipating a return to a seasonally adjusted utilization in the winter months in the North Sea in 2024.
Erik Staffeldt Senior: Our quarterly results will continue to be impacted by seasonal weather in the North Sea and Gulf of Mexico shelf, primarily in the first quarter and fourth quarter. In addition, the timing of our vessel maintenance periods and project mobilizations will cause variations between quarters. Our quarterly financial performance in 2024 is expected to follow a similar cadence as our results in 2023, with the second and third quarters being our most active quarters and the first and fourth quarters impacted by winter weather. Overall, we expect the second half of 2024 to be stronger than the first half.
Erik: Q 7000 is currently enrolling in Australia with projects scheduled for three different operators projects are expected to continue to mid year, followed by a scheduled transit to Brazil in mobilization for its contracted work in Brazil.
Erik: In Brazil, the Siem helix two contracted into mid December 2024, with Petrobras Caisson helix. One is contracted performed well abandonment work for.
Erik: Tried it with the recent contract extending works in Q4 of 2025, we expect to benefit from the contract extension at market rates in 2025.
Erik: Moving to our robotics segment Slide 32, the robotics segment continues to benefit from a tight market, where both oil and gas market and renewables market are extremely active competing for assets in the APAC region. The Grand Canyon II is under contract supporting renewables projects in Taiwan into the <unk>.
Erik Staffeldt Senior: With seasonal quarter impacts, the timing of our free cash flow generation is likely skewed to the latter part of the year. Providing key assumptions by segment and region starting on slide 31. First, our well-informed Gulf of Mexico continues to be a very strong market supported by improving rates and expected strong utilization on the Q4000 and Q5000. Q5000 has contracted work in every corner, with limited white space to fill in its schedule. The Q4000 is contracted to work into Q2 in the Gulf of Mexico. The vessel is scheduled to then transit to West Africa for a minimum six-month contract in Nigeria with paid mobilization and demobilization.
Erik: <unk> half of 2023 with expected good utilizations for the balance of the year.
Erik: The <unk> and <unk>.
Erik: <unk> <unk> hundred one printer are contracted and expected to remains Taiwan through mid Q4 2024.
Erik: In the North Sea the Grand Canyon III is currently undergoing battery pack installation vessel is expected to begin trenching in April and have strong utilization into Q4.
Erik: The horizon, a neighbor has contracted trenching projects in Q3 and Q4 on the.
Erik: The Globe bar wave is forecasted to have good seasonal utilization performing site clearance operations.
Erik Staffeldt Senior: In the U.K. North Sea, we expect both vessels, the Well Enhancer and the SeaWaltz, to have very good utilization for most of the year. The Well Enhancer is currently completing an approximate 50 to 60 day regulatory docking, followed by contracted work into Q3. The Sea Wall is currently working in the Mediterranean Inter-Q2 before being scheduled to return to the North Sea for contracted work.
Erik: In the U S. The <unk> is working in the Gulf of Mexico unexpected transit to the U S East coast to provide wind farm support.
Erik: Really no production facilities. The HP one is on contract for the balance of 'twenty. Four recently extended to June of 2025 with no. Currently expected change we have expected variability with the production as the Droshky field continues to deplete.
Erik: Under half field is producing after completion of a well clean out in January.
Erik Staffeldt Senior: Since mid-2022, the activity levels in the North Sea water intervention market have significantly increased with limited seasonal impact in years 22 and 23. We are anticipating a return to seasonalally adjusted utilization in the winter months in the North Sea in 2024. Q7000 is currently working in Australia with projects scheduled for three different operators. Projects are expected to continue to mid-year, followed by a scheduled transit to Brazil and mobilization for its contracted work in Brazil.
Erik: Continuing on slide 33.
Erik: Second to have a more traditional season in our shallow water abandonment segment with greater seasonal impacts during Q1 and Q4.
Erik: After a robust 18 to 24 month period of activity, we're seeing operators scaled back to mitigate the impact of winter weather, we expect the second and third quarters to be very active with potential for competition for assets and as scheduled rollout.
Erik: We expect the offshore marine business to maintain good utilization on five to seven lift up with some variability on the <unk>.
Erik: Energy services had good utilization on 12 to 14, G&A spreads and 1% to three coiled tubing units.
Erik Staffeldt Senior: In Brazil, CM Helix 2 is contracted into mid-December 2024 with Petrobras. CM Helix 1 is contracted before all abandonment or for private use with the recent contract extension work Q4 of 2025. We expect to benefit from the contract extension at market rates in 2025. Moving to our robotic segment 532.
Erik: There is seasonality in diving and heavy lift business, where the <unk> is currently idle with limited opportunities, but we do expect a very active season during Q2 Q3.
Speaker Change: I'll skip.
Speaker Change: The remaining slides starting with <unk> 35, and leave them for your reference this time I will turn the call back to OLED discussion.
Speaker Change: Question on our outlook beyond 'twenty for closing comments.
OLED: Thanks, Eric.
Eric: As we begin a new year I thought it would be appropriate if we just restate what helix goes.
Erik Staffeldt Senior: The robotic segment continues to benefit from a tight market, where both the oil and gas market and the renewables market are extremely active competing for assets. In the APAC region, the Grand Canyon II is under contract supporting renewables projects in Taiwan into the second half of 2023, with expected good utilizations for the balance of the year. The CM Topaz and the P1401 Printer are contracted and expected to remain in Taiwan through mid-Q4 2024. Meanwhile, in the North Sea, the Grand Canyon III is currently undergoing battery pack installation.
Eric: You are aware since 2012, the helix business model has been focused on the late life aspects of the oil and gas.
Eric: Market and providing specialty support to the development of offshore wind renewable energy.
Eric: As a result, we offer services in three areas key to our energy transition focus.
Eric: First is maximizing existing reserves that remain.
Eric: Avoiding new drilling this incorporates subsea access for production enhancement will intervention marginal field production processing with RF Teu blowout.
Erik Staffeldt Senior: The vessel is expected to begin trenching in April and have strong utilization into Q4. The Horizon and Neighbor have contracted trenching projects in Key 3 and Key 4. The Globemar Wave is forecasted to have good seasonal utilization, performing site clearance operations. In the U.S., the Sharia borderline is working in the Gulf of Mexico and is expected to transit to the U.S. east coast to provide wind options.
Eric: Blowout containment contingency services and end of life operating in reservoir management with the potential for owning and operating in the <unk> fields.
Eric: As our offshore band among this includes shallow water pool field abandonment of wells pipelines and facilities and deepwater subsea decommissioning, including well PMA.
Eric: Third leg, especially support services for development of renewable energy projects, namely offshore wind farms. This includes jet in Qatar trenching of the cables Boulder site clearance and recently USO clearance.
Erik Staffeldt Senior: Molina Production Facilities. HP1 is on contract for the balance of 24, recently extended to June of 2025, with no currently expected change. We have expected variability with the production as Zdravsky Field continues to deplete. Thunderhawk Field is producing after completion of a wall clean-out in January. Continuing on slide 33.
Eric: Combined our focuses on the energy transition and sustainable energy from end of life reserves through abandonment to development of offshore wind farms.
Eric: Our strategy is to remain focused on these areas, where we have expertise in.
Eric: Efficiencies with a significant market position with ample growth opportunities within each of these niches.
Erik Staffeldt Senior: We are expecting to have a more traditional season in our shallow water abandonment segment with greater seasonal impacts during Q1 and Q4. After a robust 18- to 24-month period of activity, we've seen operators scale back to mitigate the impact of winter weather. We expect the second and third quarters to be very active, with potential for competition for assets if and as schedules fill out. We expect the offshore marine business to maintain good utilization of 5-7 liftboats with some variability on the OSBs and crewboats. Energy Services should have good utilization on 12 to 14 CNA spreads and 1 to 3 cold tubing units. There is seasonality in the diving and heavy lift business, where the Epicubic is currently idle with limited opportunities, but we do expect a very active season during Q2 and Q3. I'll skip the remaining slides, starting with 35, and leave them for your reference. At this time, I'll turn the call back to Owen for a discussion of our Outlook Beyond 24 and closing comments. Thanks, Erik.
Eric: For deepwater production enhancement, and well abandonment helix foods and nutrition.
Eric: This builds alternative to the use of drill rigs for non drilling activities.
Eric: Our field abandonment.
Eric: <unk> offers an integrated service, including all required engineering planning management and assets.
Eric: For both of these we are supportive of our robotics and diving depending on water depths.
Eric: Our robotics has evolved over time, allowing helix to become a global leader in <unk> and Qatar trenching.
Eric: Wind farm cables.
We've also evolved our robotics perform site clearance for one wind farms and recently added in house <unk> removal capabilities.
Eric: So let's look at the market outlook for each of these segments.
Eric: First deepwater well intervention.
Eric: 2023 about 60% of our revenues were generated from our assets that compete for work historically done and largely still done by drill rigs are non <unk> and non drilling mode.
Eric: There is a sizeable market share is still done by drilling routes.
Owen E. Kratz: As we begin a new year, I thought it would be appropriate if we just restated what Helix does. As you are aware, since 2012, the Helix business model has been focused on the late life aspects of the oil and gas market and providing specialty support to the development of offshore wind renewable energy. As a result, we offer services in three areas key to our energy transition focus. First, maximizing existing reserves that remain while avoiding new drilling.
Eric: Helix pricing is understandably sensitive to drill rig rates, which are driven by market supply and demand.
Eric: Drill rig rates and utilization have been rising and are expected to continue rising as many animals have indicated to summarize the recent written report.
Eric: The long duration up cycle remains healthy and solid growth as anticipated in most regions globally.
Owen E. Kratz: This incorporates subsea access for production enhancement, well intervention, marginal field production processing with our FPU, Blowout Containment Contingency Services, and End-of-Life Operating and Reservoir Management with the Potential for Owning and Operating End-of-Life Fields. Second, offshore abandonment. This includes shallow water, full field abandonment of wells, pipelines, and facilities, and deep water subsea decommissioning, including well P&A. The third leg is specialty support services for the development of renewable energy projects, namely offshore wind farms. This includes jet and cutter trenching of the cables, boulder site clearance, and recently, UXO clearance.
Eric: Significant ultra deepwater demand is expected in the Gulf of Mexico, Brazil Africa and Mediterranean.
Eric: Lower than expected reactivation of cold stacked rigs and a lack of a new build is expected to further drive opportunity for offshore drilling and.
Eric: And leading edge day rates for ultra deepwater floaters are expected to exceed 500000 per day in 2025.
Eric: To put this into perspective.
Eric: Current ultra deepwater rigs are over 400000, a day now with harsh environment rigs with discount to <unk> and the 350000, a day range, which is the rate.
Owen E. Kratz: Combined, our focus is on the energy transition and sustainable energy from end-of-life reserves through abandonment to the development of offshore wind farms. Our strategy is to remain focused on these areas where we have expertise and efficiency with a significant market position with ample growth opportunities within each of these niches. For deep water production enhancement and well abandonment, Helix is an efficient, purpose-built alternative to the use of drill rigs for non-drilling activities. For Field Abandonment, Helix offers an integrated service including all required engineering, planning, management, and assets.
Eric: Currently prices too in our forecast are legacy rigs that are still working that we're still working through but our average day rate is currently around 300000 a day.
Eric: All to say there are still meaningful increases in our rates that we expect to come over time.
Eric: Glenn with blended with ongoing longer term legacy rigs in 2025, there could be as much as 20% to 25 increase in rates over our current average rate.
Eric: Next let me say a few things about abandonment I've covered deepwater abandonment does and it's part of what we compete for against rigs.
Owen E. Kratz: For both of these, we have support from our robotics and diving, depending on water depth. Our robotics has evolved over time, allowing Helix to become a global leader in jet and cutter trenching of the wind farm cables. We've also evolved our robotics to perform site clearance for wind farms and recently added in-house UXO removal capability. So let's look at the market outlook for each of these segments.
Eric: I would add that the volume of work and the pressure both from the public as well as the regulatory bodies is increasing.
Eric: Primary basins for helix or the U K, Brazil, Australia, and the U S Gulf all of which have substantial work for years to come.
Eric: On July 22, we acquired alliance.
Eric: Reentry into the Gulf of Mexico, shallow water abandonment to complement our deepwater abandonment.
Owen E. Kratz: In 2023, about 60% of our revenues were generated from our assets that compete for work historically done and largely still done by drill rigs and non-in non-drilling mode. There's a sizable market share still done by drill rigs. Helix pricing is understandably sensitive to drill rig rates, which are driven by market supply and demand. Drill rig rates and utilization have been rising and are expected to continue rising, as many analysts have indicated.
Eric: The year prior to the acquisition of alliance generated low $20 million EBITDA, our expectations were for the shallow water abandonment market too significantly become active in the weight of the digital and the way from the field.
Eric: Bankruptcy.
Eric: Accelerate further following the bankruptcy of Cogs.
Eric: Both of these have occurred.
Eric: After generating roughly $50 million of EBITDA for the full year of 2022, we initially forecasted 2023 to be $60 million with an earnings potential for that business at $70 million EBITDA.
Owen E. Kratz: To summarize the recent rig report, the long-duration upcycle remains healthy, and solid growth is anticipated in most regions globally. Significant ultra-deepwater demand is expected in the Gulf of Mexico, Brazil, Africa, and the Mediterranean. Slower-than-expected reactivation of cold-stack rigs and a lack of new builds are expected to further drive opportunities for offshore drilling. And leading-edge day rates for ultra-deepwater floaters are expected to exceed $500,000 per day in 2025. To put this into perspective, current ultra-deepwater rates are over 400,000 a day now, with harsh environment rigs that discount to this in the 350,000 a day range, which is the rate that Helix currently prices to. In our forecast, there are legacy rates that we're still working through, but our average day rate is currently around 300,000 a day. All to say, there are still meaningful increases in our rates that we expect to come over time. Blended with ongoing longer-term legacy rates, in 2025, there could be as much as a 20 to 25 increase in rates over our current average rate. Next, let me say a few things about abandonment.
Eric: Actual results for 2023 came in at more than $85 million of EBITDA due to a greater volume of work than expected from multiple major recipients of properties from newfield with bankruptcy.
Eric: Can't guide to this level of activity for 2024 as clients may slow their work for 2024, and we cannot be certain that we will recapture another large turnkey projects. This year, although the potential remains there.
Eric: The <unk> bankruptcy did occur in 'twenty to 'twenty three.
Eric: Taking time to run through the courts.
Eric: We had expected this work to come to market in 2024, but that may be a bit delayed.
Eric: We're forecasting the shallow water market to generate similar EBITDA levels that we guided to for 2023.
Eric: Which is a meaningful reduction in EBITDA contribution year over year. However, we do expect a meaningful increase from there in 2025 and believe there'll be a strong shallow water market in the Gulf of Mexico for years to come.
Eric: Finally, let's take a quick look at the offshore wind market.
Eric: With increased cost of capital and higher costs, along the entire supply chain, we're seeing some projects delayed or canceled.
Owen E. Kratz: I covered deepwater abandonment as part of what we compete for against rigs. I would add that the volume of work and the pressure both from the public as well as regulatory bodies are increasing. Primary basins for Helix are the U.K., Brazil, Australia, and the U.S. Gulf, all of which have substantial work for years to come. In July 22, we acquired Allianz as a reentry into the Gulf of Mexico shallow water abandonment to complement our deep water abandonment. The year prior to the acquisition, Allianz generated a low 20 million EBITDA.
Eric: This market is sustainable and will grow but we are always tempered expectations that the growth may be less than the exponential forecast some previously thought.
Eric: We're also seeing that it's a challenge to achieve margins among the contractors that rushed into the market, we prudently decided to stay within our core competencies and leverage our robotics expertise to participate as a specialty niche provider for cable burial and site clearance. We believe there is significant growth ahead.
Owen E. Kratz: Our expectations were for the shallow water abandonment market to significantly become active in the wake of the Field Wood bankruptcy and accelerate further following the bankruptcy of COX. Both of these have occurred. After generating roughly $50 million of EBITDA for the full year of 2022, we initially forecasted 2023 to be $60 million, with an earnings potential for that business at $70 million. However, actual results for 2023 came in at more than $85 million of EBITDA due to a greater volume of work than expected from multiple major recipients of properties from the Fieldwood bankruptcy. We can't guide to this level of activity for 2024 as clients may slow their work for 2024, and we cannot be certain that we'll recapture another large turnkey project this year, although the potential remains there. The Cox bankruptcy did occur in 2023. But it's taking time to run through the court.
Eric: For offshore wind.
Eric: As a whole to generate growth for helix and move to niches as we explore other peripheral niches.
Eric: We're continuing to grow and our renewables were as a percentage of revenue is technically decreasing but only because of the greater rate of growth from our other business lines I'd.
Eric: I would like to take a few minutes and touch points that illustrate why helix is differentiated and has such a positive multi year outlook.
Eric: First again as deepwater intervention, while there is competition in light well intervention that comes and goes helix created the light intervention market and has been added for 2000 and over 25 years. Many competitors have tried but few have succeeded.
Eric: It's just not that simple and helix is the leader.
Eric: And rig alternative riser based interventions helix as the undisputed leader and operator of five of the seven assets globally better capable of non rig reservation intervention.
Owen E. Kratz: We had expected this work to come to market in 2024, but that may be a bit delayed. We're forecasting the shallow water market to generate similar EBITDA levels that we guided to for 2023, which is a meaningful reduction in EBITDA contribution year over year. However, we do expect a meaningful increase from there in 2025 and believe there will be a strong shallow water market in the Gulf of Mexico for years to come. Finally, let's take a quick look at the offshore wind market. With increased costs of capital and higher costs along the entire supply chain, we're seeing some projects delayed or canceled. This market is sustainable and will grow, but we've always tempered expectations that the growth may be less than the exponential forecast some previously thought. We're also seeing that it's a challenge to achieve margins among the contractors that have rushed into the market.
Eric: This market is growing as the mature deepwater fields become more plentiful competitive encroachments not likely first because it's not that simple to do and second helix has decades of experience and refining the technology enhancing efficiencies.
Eric: Third a majority of the work is still done by drill rigs, which are more expensive have a larger carbon footprint and are about 30% less efficient that work that he looks drugs and of course, the drilling rigs are being used to meet drilling needs. These are expensive assets.
Eric: The high cost of capital high shipyard pricing and the time required to deliver.
Eric: We continue to be well placed in the market.
Eric: Turning to shallow water abandonment.
Eric: We believe the Gulf of Mexico should be a strong demand driven market for at least <unk> seven years to perform the pool of denim under appeal.
Eric: Yields requires a mix of a number of different assets resources and capabilities.
Owen E. Kratz: We prudently decided to stay within our core competencies and leverage our robotics expertise to participate as a specialty niche provider for cable, burial, and site clearance. We believe there's significant growth ahead for offshore wind as a whole to generate growth for Helix in the two niches as we explore other peripheral niches. We're continuing to grow, and our renewables work as a percentage of revenue is technically decreasing, but only because of the greater rate of growth from our other business lines. I'd like to take a few minutes and touch on points that illustrate why Helix is differentiated and has such a positive multi-year outlook. First, again, is deepwater intervention. While there's competition in light well intervention that comes and goes, Helix created the light intervention market and has been in it for over 25 years. Many competitors have tried, but few have succeeded. It's just not that simple, and Helix is the leader.
Eric: Over the downturn years, the shallow water mark contracting community collapsed to a great extent, it's popular populated by shallow water contractors rarely having the requisite ownership of assets that can perform fully integrated field abandonment.
Eric: As the properties come out of bankruptcy and flow back to the successor ownership largely the majors there.
Eric: Also no longer have.
Eric: The majors no longer have the requisite teams in house to manage the work and do this.
Speaker Change: Excuse me.
Speaker Change: To manage their work in.
Speaker Change: But some will reconstitute shelf decaux teams and tend to work through their supply chains while.
Speaker Change: Others will contract project management consultants to tender of minutes, we work on an outsource basis either way. These clients don't have all the assets. We believe the market will be strong enough that most if not all Gulf of Mexico assets will be utilized as they were in 2023 and the market will be tighter going forward.
Owen E. Kratz: In RIG alternative riser-based intervention, Helix is the undisputed leader and operator of five of the seven assets globally that are capable of non-RIG riser-based intervention. This market is growing as mature deepwater fields become more plentiful. Competitive encroachment is not likely, first because it's not that simple to do, and second, Helix has decades of experience in refining the technology and enhancing efficiency. Third, a majority of the work is still done by drill rigs, which are more expensive, have a larger carbon footprint, and are about 30% less efficient at their work than Helix. And, of course, the drilling rigs are being used to meet drilling needs. However, these are expensive assets due to the high cost of capital, high shipyard pricing, and the time required to deliver them. We continue to be well placed in the market. Turning to shallow water abandonment,
Speaker Change: Helix Alliance is well positioned with a meaningful market share of all classes of assets, we're capable of working under any of these above contracting methods.
Speaker Change: Helix is the only contractor capable of providing the guarantee of availability to offer a truly integrated service managing all aspects of our full field abandonment, it's much simpler under a single contract with a single contractor that can guarantee the availability of the assets.
Speaker Change: We believe in the integrated integrated value proposition, we offer clients backed by helix you look to this decade delivering efficient results.
Speaker Change: This capability and expertise is also scalable globally as we see strong markets developing especially in Brazil and Australia.
Owen E. Kratz: We believe the Gulf of Mexico should be a strong demand-driven market for at least the next seven years. To perform the full abandonment of fields requires a mix of a number of differing assets, resources, and capabilities. During the downturn years, the shallow water contracting community collapsed to a great extent.
Speaker Change: Last segment I would like to comment on robotics, specifically as we're positioned to provide offshore wind farms.
Speaker Change: Farm support the forecasted rate for growth for the offshore wind farm work appears to be at a slower rate than most were forecasting but it is still growing we see this growth as being sustainable for multiple years.
Owen E. Kratz: It's populated by shallow water contractors rarely having the requisite ownership of assets that can perform fully integrated field abandonment. As the properties come out of bankruptcy and flow back to the successor ownership, largely the majors, they also no longer have their... The majors no longer have the requisite teams in-house to manage the work and do this.
Speaker Change: Helix is the global leader for jet and cutter retrenching of cables and we can see continuing demand in this niche. We have won trencher system, that's yet to be deployed we also have.
Speaker Change: Actively.
Speaker Change: We're also actively renewing our work class Rovs fleet to maintain quality operational credibility and continued strong performance.
Owen E. Kratz: Excuse me, to manage their work, but some will reconstitute shelf deco teams and tend to work through their supply chain, while others will contract project management consultants to tender and manage the work on an outsource basis. Either way, these clients don't have all the assets. We believe the market will be strong enough that most, if not all, Gulf of Mexico assets will be utilized, as they were in 2023, and the market will be even tighter going forward. Helix Alliance is well-positioned with a meaningful market share of all classes of assets. We're capable of working under any of these contracting methods. Helix is the only contractor capable of providing the guarantee of availability to offer a truly integrated service.
Speaker Change: In 2019, we began to enter the Boulder removal market on site clearance, we are adding our second robotic over grab and recently added an in house capability USO removal, we've established our credibility and see further growth building off this credibility.
Speaker Change: Our strength our strategy is to be patient improvement with progressive progressive growth in this market.
Speaker Change: To close let me highlight a few things impacting 2024 as compared to our longer term outlook.
First since the summer of 2020 to the North Sea has been active throughout the full year, we can't be certain that the market won't return to a seasonal market, which could impact 2024.
Owen E. Kratz: Managing all aspects of a full field abandonment is much simpler under a single contract with a single contractor that can guarantee the availability of the asset. We believe in the integrated value proposition we offer clients, backed by Helix's decades of delivering efficient results. This capability and expertise is also scalable globally as we see strong markets developing, especially in Brazil and Australia. The last segment I'd like to comment on is robotics, specifically as we are positioned to provide offshore wind farm support. The forecasted rate for growth for the offshore wind farm work appears to be at a slower rate than most were forecasting, but it is still growing. We see this growth as being sustainable for multiple years. Helix is the global leader for jet and cutter trenching of cables, and we can see continuing demand for this niche.
Speaker Change: Second we don't expect the we do expect the 207000 S. H, one and message to to work in Brazil for multiple years to come Q.
Speaker Change: <unk> 7000 deaths. Each one have now been successfully contracted through 2025, all three vessels should show significant improvement in rates for 2025.
Speaker Change: As a result, we've extended the charters on the Sichuan and message to the accounting treatment to blend and extend the charter rates have a negative impact on 2024 of somewhere around 6 million EBITDA, which has been included in our guidance for 2024, but the positive impact from Brazil.
Owen E. Kratz: We have one trencher system that's yet to be deployed. We also have actively, We're also actively renewing our Work Class ROV fleet to maintain quality, operational credibility, and continue strong performance. In 2019, we began to enter the boulder removal market for site clearance. We're adding our second robotic boulder grab and recently added an in-house capability for USO removal.
Speaker Change: In 2025 is estimated to be close to 25% to $30 million EBITDA for just the <unk> alone.
Speaker Change: Third point is the 7000 expected to complete its work in APAC over the course of 2020 for the past year. The vessel's been working under legacy rates, resulting in actually a loss for 2023 contracts in hand for 2024 all in APAC.
Owen E. Kratz: We've established our credibility, and we see further growth building off this credibility. Our strategy is to be patient and prudent with progressive growth in this market. To close, let me highlight a few things impacting 2024 as compared to our longer-term outlook. First, since the summer of 2022, the North Sea has been active throughout the full year. We can't be certain that the market won't return to a seasonal market, which could impact 2024. But second, we do expect the Q7000, SH1, and SH2 to work in Brazil for multiple years to come.
Speaker Change: And a mixture of legacy rates in new rates, where we expect strong improvement.
Speaker Change: The EBITDA contribution in the range of $40 million with another meeting meaningful rate increase for 2025 as the vessel transfers to Brazil for its contract there.
Speaker Change: Fourth the Gulf of Mexico was a strong market for a riser based.
Speaker Change: Intervention in 2023, the next year should be even better for our <unk> Division.
Speaker Change: Over the past few years, we focused on expanding our geographic footprint and we're successful in establishing our credibility in West Africa.
Owen E. Kratz: The Q7000 and SH1 have now been successfully contracted through 2025. All three vessels should show significant improvements in rates for 2025. As a result, we've extended the charters on the SH-1 and SH-2.
Speaker Change: Demand for our services remains strong there in the market, we'd like to maintain with the 207000 contracted elsewhere.
Speaker Change: We made a decision to take a contract in Nigeria, primarily because of multiple much improved rates and terms and performed its work with the Q4 the.
Owen E. Kratz: The accounting treatment to blend and extend the charter rates has a negative impact on 2024 of somewhere around 6 million EBITDA, which has been included in our guidance for 2024. But the positive impact for Brazil in 2025 is estimated to be close to 25 to 30 million EBITDA for just the SH-1 alone. Third point is the Q7000 expected to complete its work in APAC over the course of 2024. For the past year, the vessel's been working under legacy rates, resulting in a loss for 2023. The contracts in hand for 2024 are all in APAC at a mixture of legacy rates and new rates. We expect strong improvement in the EBITDA contribution in the range of $40 million, with another meaningful rate increase for 2025 as the vessel transfers to Brazil for its contract there. Fourth, the Gulf of Mexico was a strong market for our riser-based well intervention in 2023. The next year should be even better for our well-off U.S. division.
Speaker Change: As a result of this will be an even better year for well ops U S Division as the Nigeria work will report through the well ups U S.
Speaker Change: The Q4 thousand is scheduled to begin transit to Nigeria in August and then anticipated to return to the Gulf of Mexico in 2025, so while the Gulf of months Gulf of Mexico has been a strong market for us recently.
Speaker Change: Good to have opportunity to go where the rates and terms takes us.
Good points is robotics, they had a great year in 2023, and we expect this should continue again in 'twenty four 'twenty five we do have one center that could be deployed that was idle in 2023. We also have our startup <unk> offering for the market.
Speaker Change: Six point.
Speaker Change: I have <unk>.
Speaker Change: The Gulf of Mexico, shallow abandonment market and the reasons for not expecting meaning over performance of 2023 to repeat in 2024, our expectations for 2024 consistent with the initial guidance, we gave for 2003, but with the possibility of repeating the stellar 2023 again in 'twenty.
Owen E. Kratz: Over the past few years, we've focused on expanding our geographic footprint, and we've been successful in establishing our credibility in West Africa. Demand for our services remains strong there in this market we'd like to maintain. With the Q7000 contracted elsewhere, we made a decision to take a contract in Nigeria primarily because of much improved rates and terms and performed its work with the Q4000. The result of this will be an even better year for Well Ops U.S. Division as the Nigerian work will report through the Well Ops U.S. The Q4000 is scheduled to begin transit to Nigeria in August and anticipated to return to the Gulf of Mexico in 2025. So while the Gulf of Mexico has been a strong market for us recently, it's good to have the opportunity to go where the rates and terms take us. The fifth point is robotics. They had a great year in 2023.
Speaker Change: Five and as.
As I mentioned earlier, we just recently established a five year joint frame agreement with <unk> for their offshore decommissioning requirements, primarily on the shelf in the U S Gulf of Mexico, which we believe establishes the foundation for work for years to come.
Speaker Change: In summary, we are.
Speaker Change: Spectrum, one year pullback in shallow water abandonment more than offset by the strength of our other business groups. We're anticipating further meaningful growth for 2025 all of this based on just our existing assets and operating leverage.
Speaker Change: As I mentioned earlier, we recognized losses in 2023 related to the earn out payment for shallow water abandonment acquisition and related to our refinancing efforts without which we would have been significantly higher earnings in.
Owen E. Kratz: And we expect this should continue again in 24 and 25. We do have one printer that could be deployed that was idle in 2023. We also have our startup UXO offering for the market. The sixth point is that I covered the Gulf of Mexico shallow abandonment market and the reasons for not expecting the overperformance of 2023 to repeat in 2024. Our expectations for 2024 are consistent with the initial guidance we gave for 2023, but with the possibility of repeating the stellar performance of 2023 again in 2025. And as I mentioned earlier, we just recently established a five-year joint frame agreement with TELUS for their offshore decommissioning requirements, primarily on the shelf in the U.S. Gulf of Mexico, which we believe establishes the foundation for work for years to come.
Speaker Change: In 2024, we will be making the final earn out payment of $85 million for the alliance acquisition will have some noise in the accounting and P&L as a result of completing the redemption of the remaining convertible notes that are still outstanding.
Following this we have positioned ourselves to have a strong balance sheet and be meaningfully free cash flow positive.
Speaker Change: Helix should be enjoying growth from the existing operating leverage from existing assets with many market opportunities.
Speaker Change: That's true.
Speaker Change: Okay. Thanks, Alan and operator at this time, we will take any questions.
Speaker Change: Thank you if you would like to register a question. Please press the one followed by the four on your telephone.
Owen E. Kratz: In summary, we're expecting a one-year pullback in shallow water abandonment, more than offset by the strength of our other business groups. We're anticipating further meaningful growth for 2025. All of this based on just our existing assets and operating leverage. As I mentioned earlier, we recognize losses in 2023 related to the earn out payment for the shallow water abandonment acquisition and related to our refinancing efforts, without which we would have significantly higher earnings.
Speaker Change: You will hear three come from technology a request.
Speaker Change: If your question has been answered and you would like to withdraw your registration. Please press the one followed by the stores.
Speaker Change: One moment please for the first question.
Speaker Change: And our first question comes from James <unk>. Please proceed.
Owen E. Kratz: In 2024, we'll be making the final earn-out payment of $85 million for the Alliance acquisition. We'll have some noise in the accounting and P&L as a result of completing the resumption of the remaining convertible notes that are still outstanding. Following this, we have positioned ourselves to have a strong balance sheet and be meaningfully free cash flow positive. Helix should be enjoying growth from its existing operating leverage and from existing assets with many market opportunities.
James: Hey, good morning, guys.
James: Good morning, Thanks for good morning, Thanks for all the detail.
James: I think you partially answered this I wanted to I wanted you guys to quantify the increase in expenses on the blend and extend for the Siem helix, one and two you said $6 million of EBITDA is that per vessel or is that total.
James: That is total 24.
Operator: Okay, thanks Owen. And operator, at this time, we'll take any questions. Thank you. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3.
James: Total in 'twenty four is there a different number for 2025.
Speaker Change: Yes, there will be different numbers for 'twenty five.
Speaker Change: But like in 'twenty four or are we just capturing is it is it the delta on one of the vessels or is it like the full impact so and so maybe I'll ask that but I'll also ask.
Speaker Change: Is it fair to think about our cash opex of those vessels of close to 200000 per day, including the new charter costs.
Operator: One moment, please, for the first question. And our first question comes from James Shrum. Please proceed. Hey, good morning guys.
James Shrum: Thanks for all the detail. I think, you know, you partially answered this. I wanted to, I wanted you guys to quantify the increase in expenses on the blend and extend for CM Helix 1 and 2. You said 6 million of EBITDA. Is that per vessel, or is that total? That is Tom 20.
Speaker Change: So all things being equal.
Speaker Change: Obviously.
Speaker Change: Extension of those charters.
Speaker Change: Given the strength of the market is something that we pursued the impact that we're seeing in 'twenty. Four is primarily related obviously to the returning value associated with the vessel itself. There will be some incremental increases in the services that are provided associated.
Speaker Change: With that.
Speaker Change: Charter.
Speaker Change: Going forward, so there will be additional impacts in 'twenty five.
James Shrum: Total in 24, is there a different number for 2025? Yes, there will be different numbers for 25. But like in 24, are we just capturing, is it, is it the delta on one of the vessels or is it like the full impact?
Speaker Change: Okay.
Speaker Change: And maybe this is for Scotty, but like does that does that sound right Scotty or we are we pushing close to 200000 per day of Opex.
James Shrum: So, and so maybe I'll ask that, but I'll also ask, you know, is it fair to think about a cash OPEX of those vessels of close to 200,000 per day, including the new charter costs? So I'll say this, that obviously, the extension of those charters, given the strength of the market, is something that we pursued. The impact that we're seeing in 24 is primarily related, obviously, to the return in value associated with the vessel itself. There will be some incremental increases in the services that are provided associated with that charter.
Scott Andrew Sparks Executive: On these vessels.
Scotty Sparks: Hi.
Scotty Sparks: Okay.
Scotty Sparks: Okay. Okay.
And then maybe just shifting over to I think you partially or maybe fully answered. This question, but I can't remember the last time. The Q4 thousand was out of the Gulf of Mexico. So I mean is this is this driven by a really strong contract in a really good day rate in Nigeria.
Scotty Sparks: Or is it some some softness in the Gulf of Mexico, I know that.
James Shrum: Moving forward, so there will be additional impacts in 2025. Okay. And maybe this is for Scotty, but does that sound right, Scotty?
Scotty Sparks: For the offshore drilling market.
Scott Andrew Sparks Executive: Are we pushing close to $200,000 per day of OPEX? I think your numbers are a bit high there. Okay. Okay. And then maybe just shifting over to, I think you partially or maybe fully answered this question, but I can't remember the last time the Q4000 was out of the Gulf of Mexico.
Scotty Sparks: We might have seen a little bit of an air pocket here day rates have been sort of.
Scotty Sparks: Healthy very good but.
Scotty Sparks: Sort of Flatlined here for at least a year.
Scotty Sparks: So just didn't know if youre seeing any softness this year in the Gulf of Mexico.
Speaker Change: No we're seeing a strong market in the Gulf of Mexico.
Speaker Change: Going into the year, there is a bit of white space in the schedule, but nothing that we didn't expect to fill up the move to Nigeria with the Q4 thousand was strictly driven by the rates and the terms that we were able to get there as well as wanting to maintain our footprint in West Africa, which we believe is going to be.
Scott Andrew Sparks Executive: So, I mean, is this driven by a really strong contract and a really good day rate in Nigeria, or is there some softness in the Gulf of Mexico? I know that for the offshore drilling market, we might have seen a little bit of an air pocket here. Day rates have been sort of healthy, very good, but sort of flatlined here for at least a year, so I just didn't know if you were seeing any softness this year in the Gulf. Now we're seeing a strong market in the Gulf of Mexico, you know, as usual going into the year, there's a bit of white space in the schedule, but nothing that we didn't expect to fill up. The move to Nigeria with the Q4000 was strictly driven by the rates and the terms that we were able to get there, as well as wanting to maintain our footprint in West Africa, which we believe is going to be a strong market for years to come.
Speaker Change: Strong market for years to come and Baptist, establishing our credibility, we'd like to sort of maintain that presence.
Speaker Change: I'll just add to that.
Speaker Change: <unk> came to us for this contracts in single source it to us it wasn't.
Speaker Change: <unk> tender.
Speaker Change: We're getting paid at a very healthy multimode fee and decent day rate for the website today, but if you look back three or four years ago. Exxon did neither intervention work other than based on the rigs. So this is quite a big relationship move to that.
Speaker Change: Support and Exxon and rise of the ryzen based intervention Nonrenewed based intervention.
Scott Andrew Sparks Executive: And after establishing our credibility, we'd like to sort of maintain that presence. I'll just add that ESSO came to us for this contract and single-sourced it to us. It wasn't a competitive tender, so we're getting paid a very healthy mod B, mod C, and decent day rate for the work over there, but if you look back three or four years ago, Exxon did no intervention work other than on rigs, so this is quite a big relationship builder to keep supporting Exxon in riser-based intervention, non-rig-based intervention. Okay, great. And thanks for that. And just a quick clarification on the Alliance. I just want to be clear, the EBITDA that you're guiding to for this year, what is it exactly? Is it 60 or 70?
Speaker Change: Okay, great and thanks for that and just a quick clarification on the alliance I just wanted to be clear. The EBITDA that you are guiding to for this year is what is it exactly is at 60 or 70.
Speaker Change: What's the expectation there.
Speaker Change: I think it's in that $50 million to $60 million range I think as Owen mentioned similar to what that's what we had expected at the start of 2003 and obviously.
Speaker Change: It came in much stronger, but I think we're expecting something in that range for 'twenty four with the potential upside in 'twenty five.
Speaker Change: Give a little more color on the there was one major recipient of properties from field work that.
James Shrum: What's the expectation there? I think it's in that $50 million to $60 million range, I think, as Owen mentioned, similar to what we had expected at the start of 2023, and obviously, it came in much stronger, but I think we're expecting something in that range for 2024 with potential upside in 2025. I can give you a little more color on that. There was one major recipient of properties from Fieldwood that did an extraordinary amount of work in 2023. That tightened the market up quite a bit and drove utilization. In addition to that, we had a very large lump sum contract that we performed very well on.
Speaker Change: An extraordinary amount of work in 2023.
Speaker Change: That tightened the market up quite a bit and drove utilization. In addition to that we had a very large lump sum contract.
Speaker Change: We performed very well on and I think we mentioned that during the.
Speaker Change: The notes will be finishing that up early this year.
The major that had all of the work last year is pulling back for 24 sort of regrouping with the intention of beginning work again in 'twenty five.
Speaker Change: Then we also have Doug Cox bankruptcy, you guys held up in the courts for a little while and that work will be flowing back to successor owners by everyone gets a little later than what everyone expected in that.
Owen E. Kratz: I think we mentioned that in the notes, and we'll be finishing that up early this year. That major that had all of the work last year is pulling back for 24 and sort of regrouping with the intentions of beginning work again in 25. And then we also had Cox Bankruptcy held up in the courts for a little while, and that work will be flowing back to the successor owners by everyone's guess a little later than what everyone expected, and that's causing a pullback in our expectations on the shallow water abandonment for 24 but then returning to an all-out, Demand Driven Market for 25.
Speaker Change: Causing.
Speaker Change: Ah pulled back our expectations on the shallow water abandonment for 'twenty four but then returning to.
Speaker Change: An all out demand driven market for 25.
Okay, great. Thanks for all the color guys I appreciate it.
Speaker Change: Our next question is from David Smith. Please proceed with your question.
David Christopher Smith: Hey, good morning, and thank you for taking my question.
David Christopher Smith: Good morning.
Okay.
David Christopher Smith: I don't want to get those funds to the us.
David Smith: Just revisiting the solid water.
David Smith: I mean 23 was wasn't great.
Owen E. Kratz: Okay, great. Thanks for all the caller guys. Appreciate it. Our next question is from David Smith. Please proceed with your question. Hey, good morning.
David Smith: Revenue coming from 30%.
David Smith: The guidance midpoint provided a year ago.
Speaker Change: So just wanted to make sure I understand.
Speaker Change: To conclude the visibility you have.
David Christopher Smith: Thank you for taking my question, www.helix-energy.com www.helix-energy.com. I don't want to beat this one to death, but just revisiting the shallow water abandonment guidance, I mean, 23 was a great year with revenue coming in 30% ahead of the guidance midpoint provided a year ago. So I just wanted to make sure I understood, you know, if you could kind of compare the visibility you have for that segment today compared to a year ago, and maybe how much of that outlook is dialing in more seasonality or really just, you know, less demand visibility. So, I'll get some high levels and pass them on to Owen, but, you know, overall, once again, it is a call-off business. I think what we've seen so far this year is that in the first quarter with the winter weather, we've seen a pullback in activity. I think we started to see that at the end of December.
So that segment today compared to a year ago, and maybe how much of that outlook is dialing in more season lobby are are really just less less demand visibility.
Speaker Change: So I'll give some high level pass it onto OLED, but overall once again it is a call off business I think what we've seen so far this year is the first quarter with the winter weather, we've seen pull back in activity I think we started to see that right at the end of December So I think on a year over year basis, who depth.
Speaker Change: We expect the first quarter to be.
Speaker Change: To be slower I think with that I think we also expect activities to ramp up significantly in the second and third quarter as we view. It obviously is really the fourth quarter.
Is one are they going to continue at the pace that theyre doing is theyre going to be seasonality. There. So there is some variability there, but I would say at least here at the start first quarter, we're definitely seeing more of a seasonal impact than we did last year.
Speaker Change: I'll, just add a little bit to that.
Erik Staffeldt Senior: So, I think on a year-over-year basis, we definitely expect the first quarter to be slower. I think with that, we also expect activities to ramp up significantly in the second and third quarters. As we view it, obviously, the fourth quarter is one. Are they going to continue at the pace that they're doing, or is there going to be seasonality there? So, there's some variability there, but I would say, at least here at the start, the first quarter, we're definitely seeing more of a seasonal impact than we did last year.
Speaker Change: The major producers.
Speaker Change: A lot of work last year pulling back on their exports streams expectations for this year.
There is the uncertainty of the Cogs bankruptcy proceedings.
Speaker Change: This week.
Speaker Change: Our hearing.
Speaker Change: For the courts to finally approve chapter seven Thats a little later, that's much later than what everyone was expecting.
Speaker Change: The pace of that to move.
Speaker Change: We're just uncertain as to how fast that work comes to the market.
Speaker Change: It could be later on in 2024.
Speaker Change: But we don't want to guide to something that you can bank on.
Owen E. Kratz: I'll just add a little bit to that. Besides the major producer that had a lot of work last year pulling back on their expectations for this year, there's the uncertainty of the Cox bankruptcy proceedings. I think this week there's a hearing for the courts to finally approve Chapter 7. That's a little later. That's much later than everyone was expecting the pace of it to move.
Speaker Change: So we're sort of taking the same view as we did going into 2023.
Speaker Change: We'll see what happens with the Cox work.
Speaker Change: Okay.
Speaker Change: Understood and appreciated.
Speaker Change: Follow up was hoping to revisit the commentary.
Speaker Change: <unk>.
Speaker Change: Potential well intervention pricing in 25, I think I heard the comment that we could see a 20 to 25 increase in the rates versus the current average I want to make sure if that 20% to 25 was referring to average day rate and not a percentage increase.
Owen E. Kratz: We're just uncertain as to how fast that work will come to the market. It could be later in 2024, but we don't want to guide you to something that you can't bank on. So we're sort of taking the same view as we did going into 2023. And we'll see what happens with the Cox work.
As compared to our average day rate, which we've talked about it we have I think three sort of legacy contract as contracts that are holding our rates back.
David Christopher Smith: I'm just going to appreciate it and follow up. I think I heard the comment that we could see a 20 to 25 increase in rates versus the current average. I wanted to make sure that 20 to 25 was referring to the average day rate and not a percentage increase. If compared to our average stay rate, which we've talked about, we have, I think, three sort of legacy contracts that are holding our rates back. Thank you for watching. A percentage. And those major contracts roll off in 24 and have already been replaced with much better market rates for 25.
Speaker Change: Thanks <unk>.
Speaker Change: <unk> 25 was that a $1000 per day or was that percentage.
Speaker Change: Percentage.
Speaker Change: And I just wanted to get your contracts fell off in 'twenty, four and have already been replaced with much better market rates for 25.
Speaker Change: Perfect I appreciate that.
Speaker Change: Can I ask one clarifying question did I hear it correctly.
Speaker Change: I will say that the Siem helix, one repricing should add $25 million to $30 million of EBITDA and 25 versus 24.
Speaker Change: Yes, that's correct.
Speaker Change: Thank you very much and 25 to one.
Speaker Change: One by slightly for the 25 for the Siem helix, two and certainly for the Q 7000.
Speaker Change: Great Thats all I have thank you.
Speaker Change: And there are no further questions on the phones at this time I will turn call back to you for closing remarks.
Erik Staffeldt Senior: Perfect. I appreciate that. If I could ask one clarifying question, did I hear correctly? Ya'all say that the C&Helix One repricing should add $25 to $30 million of EBITDA in 2025 versus 2024?
Speaker Change: Okay. Thank you very much for joining us today, we very much appreciate your interest and participation and look forward to having you on our first quarter 2024 call in April Thank you very much.
Erik Staffeldt Senior: Yes, that's correct. Thank you very much. Great. That's all I have.
Speaker Change: That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
Operator: Thank you. And there are no further questions on the phone at this time. I'll turn the call back to you for closing remarks. Okay. Thank you very much for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2024 call in April. Thank you very much. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.
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