Q1 2024 TechnipFMC PLC Earnings Call

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Okay.

Operator: Thank you for standing by, and welcome to the TechnipFMC First Quarter 2024 Earnings Conference. I would now like to welcome Matt Seinsheimer to begin the call. Matt, over to you. Thank you, Mandeep.

Speaker Change: Thank you for standing by and welcome to the technique.

Speaker Change: M C.

Mat: First quarter 2024 earnings conference call I would now like to welcome Mat signed Cymer to begin the call Matt over to you.

Matt: Thank you Monday, good morning, and good afternoon, and welcome to techniques Fmc's first quarter 'twenty 'twenty four earnings conference call.

Matt Seinsheimer: Good morning and good afternoon, and welcome to TechnipFMC's first quarter 2024 earnings conference call. Our news release and financial statements issued earlier today can be found on our website. I'd like to caution you with respect to any forward-looking statements made during this call.

Our news release and financial statements issued earlier today can be found on our website.

Speaker Change: I'd like to caution you with respect to any forward looking statements made during this call.

Matt Seinsheimer: Although these forward-looking statements are based on our current expectations, beliefs, and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q, and other periodic filings with the U.S. Securities and Exchange Commission.

Speaker Change: Although these forward looking statements are based on our current expectations beliefs and assumptions regarding future developments and business conditions. They are.

Speaker Change: Our subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.

Speaker Change: Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q and other periodic filings with the U S Securities and Exchange Commission.

Matt Seinsheimer: We wish to caution you not to place undue reliance on any forward-looking statements which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer. Thank you, Matt. Good morning and good afternoon.

Speaker Change: We wish to caution you not to place undue reliance on any forward looking statements, which speak only as of the date hereof.

Speaker Change: We undertake no obligation to publicly update or revise any of our forward looking statements. After the date. They are made whether as a result of new information future events or otherwise.

Speaker Change: I will now turn the call over to Doug for any hurt Technip FMC as chair and Chief Executive Officer.

Doug: Thank you, Matt good morning, and good afternoon.

Douglas J. Pferdehirt: Thank you for participating in our first quarter earnings call. I am very pleased with the strong performance in the quarter, which further highlights our continuing success in delivering on our commitment. Total company revenue for the first quarter was $2 billion.

Doug: Thank you for participating in our first quarter earnings call.

Doug: I am very pleased with the strong performance in the quarter, which further highlights our continuing success in delivering on our commitments.

Doug: Total company revenue for the first quarter was $2 billion.

Douglas J. Pferdehirt: Total company adjusted EBITDA was $257 million, with an adjusted EBITDA margin of 12.6% when excluding foreign exchange impact. Total company involvement orders in the quarter were $2.8 billion. In sub-C, we had a solid start to the year with first quarter orders of $2.4 billion, representing a book-to-bill of $1.4. Importantly, a significant portion of our inbound was driven by new technology, several of which were industry firsts for subsea that will help unlock opportunities in both new and mature offshore basins. In January, we announced our first IEPCI for Petrobras, this one utilizing subsea processing for the Mero III HiSEP development.

Doug: Total company adjusted EBITDA was $257 million with an adjusted EBITDA margin of 12, 6% when excluding foreign exchange impacts.

Doug: Total company inbound orders in the quarter were $2 8 billion.

Doug: In subsea we had a solid start to the year with first quarter orders of $2 4 billion, representing a book to Bill of one four.

Doug: Importantly, a significant portion of our inbound was driven by new technologies.

Doug: Several of which were industry <unk> for subsea that will help unlock opportunities in both new.

Doug: And the mature offshore basins.

Doug: In January we announced our first IEP Ci for Petrobras.

Doug: This one utilizing subsea processing for the Merrell three high Sip development.

Doug: The project represents a major industry milestone.

Douglas J. Pferdehirt: The project represents a major industry milestone, as it will be the first to use subsea separation to capture CO2 directly from the well stream for injection back into the reservoir, all of which will occur on the seafloor. During the quarter, we were also awarded the first IEPCI to utilize a 20K production system. This is for Shell's Sparta project in the Pele-Eugene play in the U.S. Gulf of Mexico. The 20,000 PSI production system includes new technology required to meet the demands of high-pressure, high-temperature reservoir conditions.

Doug: It will be the first to use subsea separation.

Doug: To capture COPD directly from the well stream.

Doug: For injection back into the reservoir.

Doug: All of which will occur will occur on the sea floor.

Doug: During the quarter. We were also awarded the first <unk> utilize a twin teekay production system.

Doug: This being for shell sport a project in the Paleogene play in the U S Gulf of Mexico.

Doug: The 20000 Psi production system includes new technologies required to meet the demands of high pressure high temperature reservoir conditions.

Doug: This marks our third award for 20, K production equipment as clients look to produce from deeper waters and reservoirs in the maturing basin.

Douglas J. Pferdehirt: This marks our third award for 20K production equipment, as clients look to produce from deeper waters and reservoirs in the maturing basin. The Paleogene formation spans the central and western regions of the Gulf of Mexico, with reservoirs located in water depths that exceed 1,500 meters and generally exhibit higher pressure.

Doug: The Paleogene formation spans the central and western regions of the Gulf of Mexico.

Doug: With reservoirs located in water depths that exceed 500 meters and generally exhibit higher pressures.

Doug: The Paleogene has become one of the most productive and fastest growing sources of supply in the Gulf.

Douglas J. Pferdehirt: The Paleogene has become one of the most productive and fastest-growing sources of supply in the Gulf, and it is estimated that one billion barrels of discovered reserves will require the use of 20K technology for development. We expect additional projects to successfully move forward over the next 24 months, representing yet another opportunity set for our company. And finally, we announced an award from the Northern Endurance Partnership to deliver the first all-electric subsea IEPCI, which is anticipated to be in place in the second half of this year.

Doug: And it is estimated that 1 billion barrels of discovered reserves will require the use of 20 K technology for development.

Doug: We expect additional projects to successfully move forward over the next 24 months.

Doug: Representing yet another opportunity set for our company.

Doug: And finally, we announced an award from the Northern endurance partnership to deliver the first all electric subsea IEP Ci.

Doug: Which is anticipated to be inbound in the second half of this year.

Doug: The partnership which is a joint venture between BP.

Douglas J. Pferdehirt: The partnership, which is a joint venture between BP, Equinor, and Total Energy, is building CO2 transportation and storage infrastructure for carbon capture projects in the UK's East Coast cluster. Our all-electric solution will collect and feed the pressurized gas into an aquifer for permanent storage. All-electric systems drive simplification of the field design, enabling the reduction of infrastructure and installation time through the removal of hydraulic components and simplified mobility.

Doug: <unk> and total energies.

Doug: Is building <unk> transportation and storage infrastructure for carbon capture projects in the UK. These east coast cluster.

Doug: Our all electric solution will collect and feed the pressurized gas into an aquifer for permanent storage.

Doug: All electric systems drive simplification of the field design, enabling the reduction of infrastructure and installation time.

Doug: Through the removal of hydraulic components and simplified and <unk>.

Doug: The technology also enables the development of projects over long distances.

Douglas J. Pferdehirt: The technology also enables the development of projects over long distances. For example, with Northern Endurance, the power and controls to the subsea equipment will extend 145 kilometers from the onshore host facility. The award of an entirely all-electric subsea system is a significant achievement for both our company and the industry. Mero III HiSIP, Sparta, and Northern Endurance are all strong examples of our Differentiated Technology Portfolio. Each of these projects provides a unique solution to an industry challenge.

Doug: With northern endurance, the powering controls to the subsea equipment.

Doug: We will extend 145 kilometers from the onshore host facility.

Doug: The award of an entirely all electric subsea system is a significant achievement for both our company and the industry.

Doug: Marrow three high Sip Sparta and northern <unk> are all strong examples of our differentiated technology portfolio.

Doug: Each of these projects provides a unique solution to an industry challenge.

Douglas J. Pferdehirt: And it is this unique combination of innovative technologies and integrated execution that is creating new market opportunities for our company. While project selectivity remains a critical objective, it is even more important that we successfully deliver, on time and on budget, as promised, as demonstrated by our financial performance in the quarter. Operational execution across the portfolio continues at a high level, driven in part by this focus on project selectivity and the favorable impact it is having on the quality of orders in our backlog.

Doug: And it is this unique combination of innovative technologies and integrated execution.

Doug: That is creating new market opportunities for our company.

Doug: While project selectivity remains a critical objective.

Doug: It is even more important that we successfully deliver.

Doug: On time and on budget.

Doug: As promised.

Doug: As demonstrated by our financial performance in the quarter.

Doug: Operational execution across the portfolio continues at a high level.

Doug: Driven in part by this focus on project selectivity and the favorable impact it is having on the quality of orders in our backlog.

Doug: Having both the right backlog and strong execution gives us confidence that we can capitalize on the strong market and achieve our financial targets.

Douglas J. Pferdehirt: Having both the right backlog and strong execution gives us confidence that we can capitalize on the strong market and achieve our financial targets. Finally, we completed the sale of our measurement solutions business in March. In keeping with our commitment to shareholder distribution, a significant portion of the process was allocated to repurchasing $150 million of shares in the first quarter. This brings our total shareholder distributions to $520 million in less than two years.

Doug: Yeah.

Doug: Finally, we completed the sale of our measurement solutions business in March.

Doug: In keeping with our commitment to shareholder distributions.

Doug: Significant portion of the proceeds for.

Doug: Allocated to repurchasing $150 million of shares in the first quarter.

Doug: This brings our total shareholder distributions to $520 million in less than two years.

Doug: And given this acceleration in share repurchases.

Douglas J. Pferdehirt: And given this acceleration in share repurchase, we now expect total shareholder distributions in the current year to grow at least 70% when compared to the levels achieved in 2023. I will now turn the call over to Alf.

Doug: We now expect total shareholder distributions in the current year to grow at least 70% when compared to the levels achieved in 2023.

Doug: I will now turn the call over to al.

al: Thanks, Doug.

Alf T. Melin: Thanks, Doug. Inbound in the quarter was $2.8 billion, driven by $2.4 billion of subsea orders. Total company backlog increased sequentially to $13.5 billion. Revenue in the quarter was $2 billion. EBITDA was $257 million, when excluding a gain on the sale of our measurement solutions business of $75 million, restructuring impairment and other charges totaling $5 million, and a foreign exchange loss of $4 million.

al: Inbound in the quarter was $2 8 billion driven by $2 4 billion of subsea orders.

al: Total company backlog increased sequentially to $13 $5 billion revenue in the quarter was $2 billion.

al: EBITDA was $257 million when excluding a gain on the sale of our measurement solutions business of $75 million.

al: Restructuring impairment and other charges totaling $5 million and foreign exchange loss of $4 million.

Alf T. Melin: Turning to the segment results, in sub-C, revenue of $1.7 billion was largely flat versus the fourth quarter; higher project activity in Brazil and the Gulf of Mexico was largely offset by lower activity in the North Sea and Sub-Asia Pacific and reduced services revenue due to typical offshore seasonality. Adjusted EBITDA was $242 million with a margin of 14%, up 90 basis points from the fourth quarter. This sequential increase was driven by strong execution and an improved earnings mix from back to front.

al: Turning to the segment results in subsea revenue, one 7 billion was largely flat versus the fourth quarter.

al: Higher project activity in Brazil, and the Gulf of Mexico was largely offset by lower activity in the North Sea and.

al: Asia Pacific and reduced services revenue due to typical offshore seasonality.

al: Adjusted EBITDA was $242 million with a margin of 14% up 90 basis points from the fourth quarter.

al: The sequential increase was driven by strong execution and improved earnings mix from backlog.

al: In surface technologies revenue was $307 million down 14% sequentially.

Alf T. Melin: In surface technologies, revenue was $307 million, down 14% sequentially. revenue decreased due to the closing of the sale of measurement solutions before the end of the quarter, lower activity in North America, and portfolio optimization in Latin America.

al: Revenue decreased due to the due to the closing of the sale of measurement solutions before the end of the quarter.

al: Lower activity in North America and portfolio optimization in Latin America.

al: Adjusted EBITDA was $41 million or 21% decrease from the fourth quarter, driven by lower revenue from measurement solutions and lower activity in North America.

Alf T. Melin: Adjusted EBITDA was $41 million, a 21% decrease from the fourth quarter, driven by lower revenue from measurement solutions and lower activity in North America. Adjusted EBITDA margin was 13.5%, down 120 basis points versus the fourth quarter. According to corporate and other items in the period, corporate expense was $27 million when excluding charges of $5 million, which were primarily transaction-related costs associated with the sale of measurement solutions; foreign exchange loss was $4 million; net interest expense was $13 million, which benefited from higher average cash balances in the period; and tax expense in the quarter was $50 million.

al: Adjusted EBITDA margin was 13, 5% down 120 basis points versus the fourth quarter.

al: Turning to corporate and other items in the period corporate expense was $27 million when excluding charges of $5 million, which were primarily transaction related costs associated with the sale of measurement solutions.

al: Foreign exchange loss was $4 million.

al: Net interest expense was $13 million, which benefited from higher average cash balances in the period.

al: <unk> expense in the quarter was $58 million.

Alf T. Melin: Cash required by operating activities was $127,000. The outflow follows the typical seasonal pattern of arbus. Additionally, cash flow in the period included a payment of $56 million to the PNF. Similar payments will occur in the second and third quarters and will fulfill our remaining obligations. Capital expenditures were $52 million. This resulted in free cash flow consumption of $179 million in the quarter.

al: Cash required by operating activities was $127 million.

al: The outflow follows the typical seasonal pattern of our business.

al: Additionally, cash flow in the period included a payment of $56 million to the P&L.

al: Similar payments will occur in the second and third quarters and will fulfill our remaining obligation.

al: Capital expenditures were $52 million.

al: This resulted in free cash flow consumption of $179 million in the quarter.

al: As Doug highlighted we completed the sale of the measurement solutions in March proceeds from the sale.

Alf T. Melin: As Doug highlighted, we completed the sale of the measurement solutions in March. Proceeds from the sale were $186 million, with the majority being used for share repurchase. This drove a significant increase in total shareholder distributions in the first quarter to $172 million, which included $150 million for share repurchase and $22 million in dividends. We ended the period with cash and cash equivalents of $697 million, and net debt was $327 million.

al: $186 million with the majority being used for share repurchase.

al: This drove a significant increase in total shareholder distributions in the first quarter to $172 million.

al: Which included $150 million for share repurchase and $22 million in dividends.

al: We ended the period with cash and cash equivalents of $697 million.

al: Net debt was $327 million.

Speaker Change: Now I will provide some thoughts on our outlook starting with the second quarter.

Alf T. Melin: Now I will provide some thoughts on our outcome, starting with the second quarter. For sub C, we expect to benefit from the typical seasonal uplift, as well as improved margins in backlog, with sequential revenue growth of approximately $200 million and margin expansion of approximately $250 basis points. For Surface Technologies, we expect revenue and adjusted EBITDA margin to be in line with the first quarter. This includes the impact of the sale of measurement solutions.

al: For subsea, we expect to benefit from the typical seasonal uplift as well as improved margins in backlog with sequential revenue growth of approximately $200 million and margin expansion of approximately 250 basis points.

al: For surface technologies, we expect revenue and adjusted EBITDA margin to be in line with the first quarter.

al: This includes the impact of the sale of measurement solutions.

Speaker Change: Now I will also give you an update to our full year outlook.

Alf T. Melin: Now, I will also give you an update on our full-year outlook, given the anticipated strength of our first half results. And taking into account a range of outcomes, we now expect total company adjusted EBITDA to approximate $1.29 billion when excluding foreign exchange, an increase of approximately $40 million from the guidance we provided in February. Within this total company outlook, we see the following relative to the guidance provided in February: Subsea revenue and EBITDA margins both trending towards the upper half of the guidance range.

al: Given the anticipated strength of our first half results and taking into account a range of outcomes.

al: Now expects total company adjusted EBITDA to approximate $1 29 billion when excluding foreign exchange and an increase of approximately $40 million from the guidance we provided in February.

al: Within this total company outlook, we see the following relative to the guidance provided in February.

al: Subsea revenue and EBITA margin, both trending towards the upper half of the guidance ranges.

Alf T. Melin: Both revenue and EBITDA margin for service technologies, as well as corporate expense, remain on track for the midpoint of their respective guidance ranges. Lastly, I want to discuss our current view of our capital structure. In March, we received an upgrade from Standard & Poor's to Investment Grade.

al: Both revenue and EBITDA margin for surface technologies as well as corporate expense remain on track for the midpoint of their respective guidance ranges.

al: Lastly, I want to discuss our current view of our capital structure in March we received an upgrade from standard <unk> Poor's to investment grade. This upgrade serves as a significant milestone for the company and reflects the tremendous efforts by the entire organization to materially Deleveraged our balance sheet.

Alf T. Melin: This upgrade serves as a significant milestone for the company and reflects the tremendous efforts by the entire organization to materially deleverage the balance sheet and achieve Investment Grade metrics. With this update, we are also revising our target capital structure to approximately $800 million of cash and $800 million of debt, together amounting to zero net debt. This is a $500 million reduction versus our prior target and a level we can achieve over time as scheduled debt maturities come due.

al: And achieve investment grade metrics.

al: With this update we are also revising our target capital structure to approximately $800 million of cash and $800 million of debt together amounting to <unk> net debt.

al: This is a 500 million reduction versus our prior target and a level, we can achieve over time as scheduled debt maturities come due.

al: Importantly, we believe this capital structure provides us with the flexibility to manage our operations and fund our capital needs. While also delivering on our commitment to shareholder distributions.

Alf T. Melin: Importantly, we believe this capital structure provides us with the flexibility to manage our operations and fund our capital needs while also delivering on our commitment to shareholder distribution. Operator, you may now open the line for questions. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.

Speaker Change: Operator, you May now open the line for questions.

Speaker Change: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Speaker Change: We ask that you please limit yourself to one question and one follow up question.

Operator: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our raw data. Our first question comes from the line of Arun Jayaram, with JPMorgan Securities. Please go ahead.

Speaker Change: We will now take a moment to compile a roster.

Speaker Change: Our first question comes from the line of our gay ROM.

Speaker Change: With J P. Morgan Securities. Please go ahead.

Arge: Good morning, Doug I wanted to see if you could provide more details on northern endurance. What do you think drove your success on the projects.

Arun Jayaram: Good morning, Doug. I wanted to see if you could provide more details on Northern Endurance. What do you think drove your success on the project? Maybe more details on the scope and perhaps what technologies FTI is providing in terms of the CCS nature of that project. Thank you, Arun, and good morning. Look, this was, as stated in my prepared remarks, a major milestone for our company and also for the industry. This will be the first application of an all-electric production system.

Arge: Maybe more details on the scope and perhaps what technologies.

Speaker Change: S T I, providing in terms of the Ccs nature of that project.

Speaker Change: Thank you Arun and good morning.

Doug: Look this was a as stated in my prepared remarks, a major milestone for our company, but also for the industry. This will be the first application of an all electric production system.

Douglas J. Pferdehirt: We are extremely, extremely proud to have been selected. There was a very rigorous technical qualification required to be able to be considered and to receive the award, and we're pleased that we came out on top of that qualification. Think of it as everything from the shore to the seafloor.

Speaker Change: We are extremely extremely proud to have been selected there was a very rigorous technical qualification.

Speaker Change: Our required to be able to be considered and to receive the award and we're pleased that we came out on top of that quantification.

Speaker Change: Think of it as everything from the shore to the seafloor.

Douglas J. Pferdehirt: We call it the Integrated Carbon Transportation System. We have a specific CO2.0 tree, so it's part of our 2.0 family. We have developed a configure-to-order CO2 injection tree. It looks simplified compared to a traditional oil and gas tree, but it's actually very technical, particularly when it comes to the sealing surfaces because of the number of cycles that you will, the number of times that you will open and close, or what is called a cycle.

Speaker Change: We call it the integrated carbon transportation system.

Speaker Change: We have a specific C O 2.0 tree so part of our two family we have developed a configure to order Seo to injection tree.

Speaker Change: It looks simplified compared to a traditional oil and gas tree, but it's actually very technical particularly when it comes to the ceiling surfaces.

Speaker Change: Because of the number of cycles that you will the number of times that you were opening closer we'll just call. It a cycle the cycling of a valve and then into.

Speaker Change: <unk> injection.

Douglas J. Pferdehirt: The cycling of a valve in a CO2 injection tree is far, far greater than what you would do in a typical oil and gas development. So, a higher technical standard. We were extremely pleased to be selected for that, and we have that entire scope, and what's really interesting about it is the distance that is being traversed is over 145 kilometers, and there will be nothing floating on top of the water. In other words, we've taken it all submarine, much like we did on the CCS project in Brazil.

Speaker Change: <unk> is far far greater than what you would do in a typical oil and gas development. So a higher technical standard we were extremely pleased to be selected for that and we have that entire scope and what's really interesting about it is the distance that is being traversed is over 145 kilometers.

Speaker Change: And there will be nothing floating on top of the water in other words, we've taken it all subsea much like we did on the Ccs project in Brazil on the Hiseq project. It is it is just a major major milestone, where we are really driving the ccs market by enabling the seafloor.

Speaker Change: To be a key component of these projects.

Speaker Change: Great and I wanted to see if you could maybe comment in your prepared remarks, you talked about some new technologies that you're using to unlock opportunities in more mature basins. I was wondering if you can maybe expand upon that and maybe comment on what you see in some of.

Douglas J. Pferdehirt: On the HISEP project, it is just a major, major milestone where we are really driving the CCS market by enabling the seafloor to be a key component of these projects. Great, Doug, and I wanted to see if you could maybe comment on, and in your prepared remarks, you talked about some new technologies that you're using to unlock opportunities in more mature basins. I was wondering if you could maybe expand upon that and maybe comment on what you see in some of the more mature basins that I know one of your peers talked about, anticipating maybe an improvement in West Africa starting next year. But maybe if you could elaborate on that.

Speaker Change: The.

Speaker Change: More mature basins I know one of your peers talked about anticipating maybe an improvement in West Africa, starting next year, but maybe if you could elaborate on that.

Speaker Change: Yes.

Speaker Change: Sure. So there is just the I would call it a <unk>.

Speaker Change: Traditional projects that are likely to be driven forward in mature basins, given the project economics by doing it with an integrated.

Speaker Change: With an integrated approach, what we call PCI along with our to.

Speaker Change: Our family, we can help unlock the economic value of those projects, but specifically what I was referring to was in a mature basin.

Speaker Change: There's really two opportunities is to find a different producing horizon.

Speaker Change: And then in the case of the payload Paleogene, it's a deeper horizon.

Speaker Change: In the Gulf of Mexico, or it could just be a further step out.

Speaker Change: From the host facility and so what are the technologies that are the key enablers to get to the Paleogene, It's 20, K and to have a full 20 K production system fully qualify supported by the.

Douglas J. Pferdehirt: Sure, so there are just the traditional projects that are likely to be driven forward in mature basins given the project economics. By doing it with an integrated approach, what we call IEPCI, along with our 2.0 family, we can help unlock the economic value of those projects. But specifically, what I was referring to was in a mature basin, there are really two opportunities: to find a different producing horizon, in the case of the Paleogene, it's a deeper horizon in the Gulf of Mexico, or it could just be a further step out from the host facility.

Speaker Change: The regulators as well as our clients major achievement as noted this is our third project. This is the first integrated 20, K project to be awarded and as alluded to in the script, we expect more to come.

Speaker Change: In the future.

Speaker Change: When you look at the further step outs in a mature basin that will be enabled by all electric.

Speaker Change: So this will be the primary application in the traditional energy or the oil and gas.

Speaker Change: Environment when it comes to the all electric production systems again, enabling a much greater distance up to three to four times further than you can do via using hydraulic controls.

Douglas J. Pferdehirt: And so what are the technologies that are the key enablers to get to the Paleogene, it's 20K, and to have a full 20K production system fully qualified, supported by the regulators as well as our clients, you know, a major achievement. As noted, this is our third project; this is the first integrated 20K project to be awarded, and as alluded to in the script, we expect more to come in the future. When you look at the further step-outs in a mature basin, that will be enabled by all electronics. So this will be the primary application in traditional energy or the oil and gas environment when it comes to all-electric production systems.

Speaker Change: To reach back to an existing host facility. So the two key technology enablers in this case being 20 K.

Speaker Change: And the all electric in the in the case of Hi, Seth as we talked about in the first quarter. It was <unk>.

Speaker Change: Advanced <unk> separation subsea separation technology.

Speaker Change: Where we are separating than reinjecting.

Speaker Change: Oh on the seafood.

Speaker Change: Great. Thanks, a lot Doug.

Speaker Change: Our next question comes from the line of James West with Evercore ISI. Please go ahead.

James West: Hey, good morning, guys.

James West: Good morning, James how are you.

James West: I'm doing alright, Doug how are you.

James West: Good. Thank you actually I actually I saw your results. So I know how you doing.

James West: Well thank.

James West: Well I wanted to start a little bit bigger picture.

James West: It's something we've talked about a bit in the past.

James West: With the backlog that you have now all of these.

James West: EPC contracts coming through.

James West: Again, enabling a much greater distance, up to three to four times further than you can do via using hydraulic controls to reach back to an existing host facility. So the two key technology enablers, in this case, are 20K and all-electric. In the case of HISEP, as we talked about in the first quarter, it was advanced CO2 separation, subsea separation technology, where we are separating and then re-injecting oil on the seabed. Thanks a lot, Doug. Our next question comes from James West with Evercore ISI. Please go ahead.

James West: How are you feeling about capacity and are you starting to really lever into some of these.

James West: Joint ventures, and partnerships to add to that capacity to make sure you can deliver on all of this backlog.

James West: James a timely question.

James West: I would expect.

James West: You will see us.

James West: Utilize the support that we have within our ecosystem.

James West: To be able to continue to grow and expand the <unk> market and just for those that are not as familiar with the terminology.

James West: <unk> system we.

James West: We made a decision years ago that.

James West: We would restructure the way that.

James West: The subsea industry operated both from the integrated projects, but also from the way that we would drive higher asset utilization and drive through cycle returns to a standard that was not only higher than in the past, but sustainable and the way we would do that was to work well with others.

Douglas J. Pferdehirt: Hey, good morning, guys. Good morning, James. How are you?

James West: And that's the personality of our company, we're not a big Monster, we work well with people, we have very deep relationships and they're all trust based and we put a lot of time and effort into that so what that has allowed us to do was to go out to other vessel operators.

James West: I'm doing alright Doug, how are you? Good, thank you. Actually, I saw your results, so I know how you're doing. You're doing well. Thank you. So, I wanted to start with a little bit bigger picture and something we've talked about a bit in the past. You know, with the backlog that you have now, all of these EPCI contracts coming through, how are you feeling about capacity, and are you starting to really leverage into some of these joint ventures and partnerships to add to that capacity to make sure you can deliver on all this backlog? James, a timely question.

James West: Introduce them to the <unk> concept.

James West: And as the <unk> market continues to grow and become a very significant portion of the total projects that are being awarded today.

James West: Giving providing access to our partners to work alongside us on those projects and deliver integrated projects.

James West: So that's what allows us to if you will expand beyond theoretical capacity.

James West: In the installation portion of the projects, but there's also the manufacturing side of the projects and the and this is the.

Douglas J. Pferdehirt: I would expect that you will see us and utilize the support that we have within our ecosystem to be able to continue to grow and expand the IEPCI market. And just for those that are not as familiar with, you know, the terminology, you know, the ecosystem, you know, we made a decision years ago that we would restructure the way that the subsea industry operated, both from the integrated project, but also from the way that we would drive higher asset utilization and drive through cycle returns to a standard that was not only higher than in the past but sustainable, and the way we would do that was to work well And that's the personality of our company. You know, we're not a big monster.

James West: A significant benefit and I think one that has not been fully understood, but as you could you see it showing up in our financial results now of the ability to be able to get leverage.

James West: By using subsea to configure to order.

James West: It runs through our plant at approximately double the cadence or one half the time.

James West: As a traditional 1.0, which is with the rest of the industry is building today. So they have to get additional capacity either through consolidation or by expanding their capital budgets and building plant, whereas we've invested in the technology and the technology and then the system.

James West: From an engineering to order to configure to order allows us to have that additional cadence through the plant, so again, allowing us to expand far beyond the traditional theoretical capacity so.

James West: Look we monitor the situation very closely we're very open we share with our clients, we're having very long term discussions.

Douglas J. Pferdehirt: We work well with people. We have very deep relationships, and they're all trust-based, and we put a lot of time and effort into that. So what that's allowed us to do is go out to other vessel operators, introduce them to the IEPCI concept, and as the IEPCI market continues to grow and become a very significant portion of the total projects that are being awarded today, giving, and providing access to our partners to work alongside us on those projects and deliver integrated projects.

James West:

James West: Well beyond the time period that we would traditionally be having discussions and they have the confidence to have those discussions with us because of this new operating model and they see that we will.

James West: They understand that we are doing things that will allow us to have the capacity to be to continue to expand and deliver and support their projects.

Speaker Change: Okay got it very helpful. Doug and then I thought the some of the the first time awards, particularly on the carbon capture side of or fascinating.

Doug: Could you maybe expand on the use of the C. Four for Ccs.

Doug: And was this contemplated initially as we targeted these projects in.

Doug: If so are there additional offshore projects all targeting that and then is the technology are you using kind of existing technology or is this new novel technology.

Douglas J. Pferdehirt: So that's what allows us to, if you will, expand beyond theoretical capacity in the installation portion of the projects, but there's also the manufacturing side of the project. And this is a significant benefit, and I think one that's not been fully understood, but as you see it showing up in our financial results now, the ability to be able to get leverage by using Subsea 2.0 configured to order. It runs through our plant at approximately double the cadence, or one-half the time, as a traditional 1.0, which is what the rest of the industry is building today.

Speaker Change: Both great questions.

Speaker Change: So look we've been working on this for quite some time.

Speaker Change: And you know James as you know, we kind of we look at any challenge from the sea floor up.

Speaker Change: And I think we might be the only company that really takes that approach because.

Doug: Most companies and quite frankly, most developers kind of think about.

Doug: Onshore and then if they go offshore they want to have some sort of fixed bottom like.

Doug: Our motto power or something that is touching the sea floor or if they go further offshore they wanted to have some sort of a floating structure.

Douglas J. Pferdehirt: So they have to get additional capacity either through consolidation or by expanding their capital budgets and building plants, whereas we've invested in the technology, and the technology and then the system of going from engineering to order to a configured to order allows us to have that additional cadence through the plant. So, again, allowing us to expand far beyond the traditional theoretical capacity. So, look, we monitor the situation very closely. We're very open.

Doug: We fundamentally believe the right way to do it is to eliminate the greenhouse footprint associated with those structures is to put everything on the sea floor.

Doug: But it takes very advanced technology material science automation and controls that quite frankly, there's very few places.

Doug: And the industry, but beyond the industry.

Doug: In academia et cetera that really exist today, and we're proud that is where we operate.

Doug: We're putting things one to two miles deep in the water on the seafloor designed to last for 25% to 35 year life with all advanced automation robotics and controls.

Douglas J. Pferdehirt: We share it with our clients. You know, we're having very long-term discussions, well beyond the time period that we would traditionally be having discussions, and they have the confidence to have those discussions with us because of this new operating model, and they see that we, you know, they understand that we are doing things that will allow us to have the capacity to continue to expand and deliver and support their projects. Very helpful, Doug. And then I thought some of the first-time awards, particularly on the carbon capture side, were fascinating. Could you maybe expand on this use of C4 for CCS?

Doug: That quite frankly are challenge anything that's being done.

Doug: In the industry here beyond the industry today so.

Doug: When we look at a challenge like Ccs sure.

Doug: Can be involved in a terrestrial projected and happy to be involved in those projects, but fundamentally.

Doug: We believe that the safest and best place to store. The C. O two will be in say liner or abandon aquifer are abandoned.

Doug: Depleted reservoirs for offshore.

Doug: And they exist they are well known.

Doug: You can then transport from shore, all the way out to those.

Doug: And of those injection fields, all subsea without having any sort of a floating infrastructure is being demonstrated in the northern endurance partnership project.

James West: And was this contemplated initially as we targeted these projects? And if so, are additional offshore projects all targeting that? And then the technology – are you using any kind of existing technology, or is this new, novel technology? Both great questions.

Doug: As we described from a technology point of view.

Doug: It is important to note there.

Doug: There are people that believe you just reverse the flow we use existing oil and gas infrastructure. That's not that's not true. It is much more of a technical challenge than than that.

Douglas J. Pferdehirt: So, look, we've been working on this for quite some time. And you know, James, as you know, we kind of look at any challenge from the seafloor up. And I think we might be the only company that really takes that approach because, you know, most companies and, quite frankly, most developers kind of think about, you know, onshore. And then if they go offshore, they want to have, you know, some sort of fixed bottom like, you know, a monopower or something that is touching the seafloor.

Doug: Would would make one believe I talked a little bit about the tree and the tree design the valves on the tree as I explain it also comes down to the control and automation and also the monitoring that's required on these projects. So we have developed an entire we again Cowen integrated carbon transportation system that allows us to.

Doug: Take it basically from the host facility to an injection point.

Doug: And we would see we definitely see the trend and not used and Ccs, but also in other forms of energy and new energies that were really for them to reach their fullest potential to achieve the scale that is required we see this going offshore.

Doug: That is certainly the trend and one that we are helping to enable and we're proud to do so.

Speaker Change: Got it thanks, Doug.

Douglas J. Pferdehirt: Or if they go further offshore, they want to have some sort of floating structure. But we fundamentally believe the right way to do it is to eliminate the greenhouse footprint associated with those structures is to put everything on the seafloor.

Doug: Our next question comes from the line of Luke Lemoine with Piper Sandler. Please go ahead.

Luke Lemoine: Hey, good morning, Doug.

Luke Lemoine: You recap the merits of all electric subsea already and you have the personnel stones in order insurance for Ccs.

Douglas J. Pferdehirt: But it takes very advanced technology, material science, automation, and controls that, quite frankly, there are very few places in the industry, but beyond the industry, you know, in academia, et cetera, that really exist today. And we're proud that's where we operate. You know, we're putting things one to two miles deep in the water on the seafloor, designed to last for, you know, 25 to 35 years. With all the advanced automation, robotics, and controls that, quite frankly, challenge anything that's being done in the industry or beyond the industry today.

Luke Lemoine: Look we made you dropped off.

Luke Lemoine: If you don't mind repeating the question you dropped off Luke.

Luke Lemoine: Yes sure.

Speaker Change: Just talking about the first all electric system for.

Speaker Change: Northern endurance for Ccs.

Luke Lemoine: When you kind of look at oil and gas when can we start seeing the uptake for all electric and when Youre speaking with customers one of the pinch points. If there are any.

Luke Lemoine: When you're chatting with them.

Speaker Change: Sure. Thank you Luke.

Luke Lemoine: The.

Speaker Change: Look I oil and gas is happening in parallel to the Ccs opportunity. So you will see oil and gas opportunities using all electric.

Speaker Change:

Luke Lemoine: Full field development and I stress full field because.

Luke Lemoine: Keep in mind, we've been using electric actuation for many years and we have over 600 electric actuators installed on subsea equipment.

Douglas J. Pferdehirt: So when we look at a challenge like CCS, sure, you know, we can be involved in a terrestrial project and happy to be involved in those projects. But fundamentally, you know, we believe that the safest and best place to store the CO2 will be in saline or abandoned aquifers or abandoned depleted reservoirs far offshore.

Luke Lemoine: Around the world So that part of it is not novel.

Luke Lemoine: To go to a fully electric system, which would include an electric subsurface safety valve.

Luke Lemoine: Would be unique and that's a partnership for us that.

Luke Lemoine: But we're working together with Halliburton to enable an all electric.

Douglas J. Pferdehirt: And they exist, they're well known; you can then transport from shore all the way out to those injection fields, all subsea without having any sort of floating infrastructure as demonstrated in the Northern Endurance Partnership project, as we described. From a technological point of view, you know, it is important to know that there are people that believe you can just reverse the flow and use existing oil and gas infrastructure. That's not true.

Luke Lemoine: Subsea field development, but again there are theirs.

Luke Lemoine: There is commercial activity going on in parallel.

Luke Lemoine: So you will see more in that area also I would stress, though in the area of oil and gas that.

Luke Lemoine: See the bigger opportunities in the tie backs and why is that.

Speaker Change: Okay, and always extra tree is more expensive than a hydraulically electro hydraulically operated three.

Luke Lemoine: For all the right reasons.

Luke Lemoine: Now when you look at it from a tie back point of view.

Luke Lemoine: Those economics dissipate very quickly because of their long distance tieback, the umbilical and the cost of the umbilical across that very long distance to be able to use hydraulic actuation would either be limiting it would not be possible or it would be very costly, but when you look at it on a unit cost versus a unit cost.

Douglas J. Pferdehirt: It is much more of a technical challenge than that would make one believe. I talked a little bit about the tree and the tree design, the vows on the tree, as I explained. It also comes down to the control and automation and also the monitoring that's required in these projects. So we have developed an entire, what we again call an integrated carbon transportation system that allows us to take it, you know, basically from the host facility to an injection point.

Luke Lemoine: That's a tree is more expensive so therefore in a greenfield development.

Luke Lemoine: Those opportunities will be there and but the big market and I stress it will be a significant market will be in the area of brownfield, we've talked about it before if you look around the world at all the floating for the floating production assets at a relative today <unk> psus theyre producing yet between <unk>.

Douglas J. Pferdehirt: And we definitely see the trend and not just in CCS but also in other forms of energy and new energies that, you know, are really for them to reach their fullest potential to achieve the scale that is required. We see this going offshore, and that is certainly the trend and one that we are helping to enable, and we're proud to do so.

Luke Lemoine: 60, and 70% of nameplate capacity, all electric brownfield tie backs will allow them to be able to bring that back up to near nameplate capacity without any significant capital cost and we've gotten the cycle time now on those brownfield projects down to such a level slightly over one year.

Luke Lemoine: That it makes the economics very very compelling.

Luke Lemoine: Thanks, Doug. Our next question comes from Luke Lemoine with Piper Sandler. Please go ahead. Hey, good morning, Doug. You recapped the merits of an all-electric subsea already, and you had the first announcement with Northern Endurance for CCDF. Luke, we, you dropped off Luke.

Speaker Change: Our next question comes from the line of <unk> <unk> with Bernstein.

Bernstein: Please go ahead.

Bernstein: Yes, good morning, Doug Good morning.

Bernstein: Maybe a quick question regarding Europe, you kept dual allocation pretty see I'm not sure. We can put it that way so heat essentially resulting from I would say a bit our financial outlook.

Operator: If you don't mind repeating the question, you dropped off, Luke. Yeah, sure. Just talking about, you know, the first all-electric system for, you know, Northern Endurance for CCS. You know, when you kind of look at oil and gas, when can we start seeing the uptake for all that? And when you're speaking with customers, what are the pinch points, if there are any, when you're. Sure. Thank you, Luke. Oil and gas is happening in parallel to the CCS opportunities, so you will see oil and gas opportunities using all-electric, full-field development.

Bernstein: Or is there also some kind of underlying I would say strategy thinking behind it. So maybe if you can elaborate a little bit on that.

Speaker Change: And that's actually a good question, maybe I know, it's time for capital discipline, but are you still considering.

Speaker Change: May consider to do some small targeted acquisition again in the coming quarters. Thank you.

Speaker Change: So let me start with the second part D. AUM and thank you for the questions look we have and will continue to do.

Bernstein: Small targeted acquisitions.

Bernstein: In most of the in most cases, we're taking.

Bernstein: Small investments and early startups.

Operator: I stress full-field because, keep in mind, we've been using electric actuation for many years, and we have over 600 electric actuators installed on subsea equipment around the world, so that part of it is not novel, but to go to a fully electric system, which would include an electric subsurface safety valve, would be unique.

Bernstein: Often it doesn't cost any capital because were using if you financial capital because we are using human capital. The greatest currency, we have in our company today as our subsea engineering. It is very unique to our company and we have by far the most significant and most experienced and talented workforce. So often we can trade if you.

Bernstein: We'll subsea engineering hours to a company who's trying to tackle this challenge of how do I go from being a terrestrial developer to being an offshore developer things change quite a bit and we have that knowledge, particularly when it comes to dynamic design and I won't get into the details of that but that's a major component and then also.

Luke Lemoine: And that's a partnership for us, working together with Halliburton to enable an all-electric sub-CPO development. But again, there's commercial activity going on in parallel, so you will see more in that area also. I would stress, though, in the area of oil and gas, that I see bigger opportunities in the tiebacks. And why is that?

Bernstein: Obviously, putting things on to the seafloor.

Bernstein: Going to.

Speaker Change: Weigh in on the first part of your comment, but I do want to comment Gil and there were two major.

Douglas J. Pferdehirt: Look, an all-electric tree is more expensive than an electro-hydraulically operated tree for all the right reasons. Now, when you look at it from a tieback point of view, those economics dissipate very quickly because in a long-distance tieback, the cost of the umbilical across that very long distance to be able to use hydraulic actuation would either be limiting, it would not be possible, or it But when you look at it on a unit cost versus a unit cost, an all-electric tree is more expensive.

Bernstein: Messages that <unk> delivered earlier, one we were upgraded by S&P and two we are targeting net zero.

Bernstein: In terms of our net debt. So two major two major milestones, but I'll pass it over to Doug.

Doug: Thank you and maybe just to build on that so it today. So we have a gross debt of just above 1 billion and a net debt of $327 million and we have previously stated that we will operate this company on $800 million of cash.

Doug: And further as Doug said I.

Doug: Honestly.

Doug: But the net debt neutral position position is a good target for us and it would imply that we would reduce debt by a little more than 200.

Douglas J. Pferdehirt: So therefore, in a greenfield development, I think those opportunities will be there. But the big market, and I stress, it will be a significant market, will be in the area of brownfield. We've talked about it before.

Doug: Reduced that by a little bit more than $200 million.

Doug: From the current 1 billion level and so this is a call it an intermediate term target and not necessarily.

Douglas J. Pferdehirt: If you look around the world at all the floating production assets that are out there today, FPSOs, FPSUs, they're producing at between 60% and 70% of nameplate capacity. All-electric brownfield tiebacks will allow them to be able to bring that back up to near nameplate capacity without any significant capital cost. And we've gotten the cycle time now on those brownfield projects down to such a level, slightly over one year, that it makes the economics very, very competitive. Our next question comes from the line of Guillaume Delaby with Burns. Please go ahead. Yes, good morning, Doug. Good morning, Alf.

Doug: Certainly when we need to be immediately.

Doug: And we'd certainly have depth that is going to mature over the next two years that will take us there naturally.

Speaker Change: I will also emphasize that.

Speaker Change: That you know.

Speaker Change: Given our business outlook and our strong cash generation. We see ahead, we continue to believe that share repurchases remains one of our best uses of funds and we demonstrated that by.

Speaker Change: Distributing the majority of.

Speaker Change: Measurement solutions proceeds hearing in the first quarter.

Speaker Change: But we also remain committed to achieving investment grade.

Speaker Change: And as Doug said, we achieved an upgrade to investment grade from S&P now just in March but overall, when you think about it longer term and strategically and maybe that's what you're asking with expected growth in EBITDA and we'd be depth keep on coming down from current levels clearly expect to be below one time.

Guillaume Delaby: Maybe a quick question regarding your new capital allocation policy. I'm not sure we can call it that. So is it essentially resulting from, I would say, a better financial outlook? Or is there also some kind of underlying, I would say, strategic thinking behind it?

Speaker Change: Gross debt to EBITDA leverage ratio as we go forward.

Speaker Change: Okay, very useful I hand, it over thank you al.

Guillaume Delaby: So maybe if you can elaborate a little bit on that. And an associated question. Maybe, I know it's time for capital discipline, but are you still considering or will you consider doing some small targeted acquisitions again in the coming quarters? Thank you.

Speaker Change: Our next question comes from the line of Marc Bianchi with TD Cowen. Please go ahead.

Marc Bianchi: Hi, Thank you.

Marc Bianchi: I wanted to ask about.

Marc Bianchi: Sort of your your scope opportunity on on large projects and.

Douglas J. Pferdehirt: So let me start with the second part, Guillaume, and thank you for the questions. Look, we have and will continue to do small targeted acquisitions, but in most cases, we're taking small investments in early startups. Often, it doesn't cost us any capital because we're using – financial capital – because we're using human capital.

Marc Bianchi: I'm looking at the with tail award in the <unk> earlier, I think you had expected them to be over $1 billion of inbound and they ended up being 500 to a $1 billion I suspect what might be going on there is some of the scope that you anticipated.

Marc Bianchi: To get Didnt Didnt materialize for you went to competitors, but could you maybe address that and then talk about for your direct awards sort of what what scope youre getting right now versus maybe what your opportunity could be over time.

Douglas J. Pferdehirt: The greatest currency we have in our company today is our subsea engineering. It is very unique to our company, and we have, by far, the most significant and the most experienced and talented workforce.

Marc Bianchi: Yeah.

Speaker Change: Thanks, Mark appreciate it and look that's a important question. If it's on your mind, then we need to clarify it. So I appreciate you, giving us the opportunity to clarify it.

Speaker Change: The subsea opportunity list that we publish every quarter is published from an industry perspective.

Douglas J. Pferdehirt: So often, we can trade, if you will, subsea engineering hours with a company who's trying to tackle this challenge of, how do I go from being a terrestrial developer to being an offshore developer? Things change quite a bit. And we have that knowledge, particularly when it comes to dynamic design. And I won't get into the details of that, but that's a major component. And then also, obviously, putting things on the sea floor. I'm going to have Alf weigh in on the first part of your comment.

Speaker Change: Think of it as the rig count if you will so we're trying to demonstrate to give.

Speaker Change: People the opportunity to be able to see the opportunity set that exists within the subsea industry. Therefore, when we put that out that's not what we expect or what we anticipate its these or tenders. These are projects that are being tendered by our clients.

Speaker Change: And the full scope of that is reflected in the value of those awards are yet we places the value. If you will we use purple blue and Red on our chart. So hopefully that clarifies. This is just with the comfort with the company happens to be tendering, we may or may not be targeting the full scope of the project in many case.

Douglas J. Pferdehirt: But I do want to comment, Guillaume, on two major messages that Alf delivered earlier. One, we were upgraded by S&P. And two, we were targeting net zero in terms of our net debt. So two major milestones. But I'll pass it over to Alf.

Speaker Change: As we are.

Speaker Change: Whats important also to understand is that is a subset of the opportunity list for Technip FMC now that is the full opportunity set for the competition, but for technique FMC because we are an integrated company because we have ie PCI because we do integrated feed feed studies.

Alf T. Melin: Yeah, Doug, thank you. And maybe just to build on that, so today we have a gross debt of just about $1 billion and a net debt of $327 million. And we have previously stated that we will operate this company on $800 million of cash. And further, as Doug said, I honestly believe that the net-debt-neutral position is a good target for us, and it would imply that we would reduce debt by a little bit more than $200 million from the current $1 billion level.

Speaker Change: We have the ability to enter into an exclusive.

Speaker Change: Prior Tory integrated feed study that upon completion.

Speaker Change: Assuming we achieve the economical hurdle rate for the project and the project receives if I D that project that project is then direct awarded to our company.

Speaker Change: Those aren't on the subsea opportunity list occasionally one might show up on there just because it's such a well known project we need to put it out there, but because these are direct awards and proprietary to us they're not on that opportunity list. So we have a second opportunity list that we look at every day.

Alf T. Melin: And so this is a, call it an intermediate-term target, and not necessarily where we need to be immediately. And we certainly have debt that is going to mature over the next two years that will take us there naturally. I will also emphasize that, you know, given our business outlook and the strong cash generation we see ahead, we continue to believe that share repurchases remain one of our best uses of funds, and we demonstrated that by distributing the majority of the measurement solutions proceeds here in the first quarter.

Speaker Change: And that's really what drives the performance of our company and quite frankly, the outperformance and why our inbound numbers often surprise to the upside. So just to give you a little bit of an idea of which theres really two less we're looking at one of the world's looking at the other we may not be tendering some of the projects by the way on the subsea opportunity list.

Speaker Change: Because we may not think that there are projects that we can contribute the greatest value to meeting integrated or subsea two point or whatever it may be or we may be concerned about.

Alf T. Melin: But we also remain committed to achieving investment grade, and as Doug said, we achieved an upgrade to investment grade from S&P now just in March. But overall, when you think about it longer term and strategically, and maybe that's what you're asking, with expected growth in EBITDA, and with the debt keep on coming down from current levels, clearly expect to be below one time gross debt to EBITDA leverage ratio as we go forward. Okay, very useful. I end it here. Thank you, Alf. Our next question comes from the line of Marc Bianchi, with T.D. Cowan

Speaker Change: Something about the projects, we may or may not tender those as well.

Speaker Change: As far as the scope I think you know we are we have the most comprehensive we can do.

Speaker Change: An entire subsea project, we don't have to bring in a third party or by third party.

Speaker Change: Key components, we've talked about it before you know the ability to be able to have the entire Sps the entire serve both products and installation capability makes us and position us and positions us uniquely.

Speaker Change: Okay. Thanks for that Doug I'll turn it back.

Speaker Change: Our next question comes from the line of Kirk how lead with benchmark. Please go ahead.

Marc Bianchi: Please go ahead. Hi, thank you. I wanted to ask about... sort of your scope of work on large projects. And I've been looking at the Whiptail Award and the YARU earlier.

Kirk: Hey, good morning, Doug Good morning, everybody.

Kirk: Good morning, Kurt.

Kirk: Hey, maybe just a quick follow up.

Kirk: With respect to Mark's question right. So again.

Kirk: And in the most recent past you guys have given some.

Kirk: Of your outlook regarding what you.

Marc Bianchi: I think you had expected them to be over a billion dollars in inbound, and they ended up being 500 to a billion. I suspect what might be going on there is some of the scope that you anticipated getting didn't materialize for you; it went to competitors. But could you maybe address that and then talk about for your direct awards sort of what scope you're getting right now versus maybe what your opportunity could be over time? Thanks, Marc. I appreciate it. And look, that's an important question.

Speaker Change: But anticipate your subsea order book to look like over the course of the next couple of years.

Speaker Change: That wasn't explicitly referenced on this call. However.

Speaker Change: Given the dynamics at play where you.

Kirk: Talk about.

Kirk: No.

Kirk: Our key over quantity and then you talk about new technology, unlocking new business opportunities.

Kirk: I was wondering if you might be able to give us some update on how that on how the order outlook has changed or.

Speaker Change: Well if it has changed at all.

Speaker Change: Again Kurt.

Kurt: Like Mark Thank you for clarifying because we do our best to communicate effectively but.

Kurt: You learn you learn as well so the fact that we did not mention that we have a target of $30 billion of orders for three years through the through 2025 are that we remain very confident in achieving our 2024 guidance of approaching $10 billion of orders.

Douglas J. Pferdehirt: If it's on your mind, then we need to clarify it. So I appreciate you giving us the opportunity to clarify it. The subsea opportunity list that we publish every quarter is published from an industry perspective. [inaudible] And the full scope of that is reflected in the value of those awards. Or yeah, what we place as the value, if you will, we use purple, blue, and red on our charts.

Kurt: It's not it's not saying it we thought was was a strong message that we're very confident but let me be very clear we remain very very confident in terms of the in terms of the feed activity in terms of the tendering activity and in terms of the I would say very mature.

Douglas J. Pferdehirt: So hopefully that clarifies, you know, this is just what the company happens to be tendering. We may or may not be targeting the full scope of the project. In many cases, we are.

Kurt: Meaning late stage <unk> conversations that I'm, having with clients today.

Douglas J. Pferdehirt: What's important also to understand is that this is a subset of the opportunity list for TechnipFMC. Now, this is the full opportunity set for the competition. But for TechnipFMC, because we are an integrated company, because we have IEPCI, because we do integrated feed studies, we have the ability to enter into an exclusive proprietary integrated feed study that upon completion, assuming we achieve the economical hurdle rate for the project and the project receives FID, that project is then directly awarded to our company. Those aren't on the subsea opportunity list. Occasionally, one might show up on there just because it's such a well-known project; we need to put it out there, but because these are direct awards and proprietary to us, they're not on that opportunity list.

Speaker Change: And I'm not complaining about it mark, but I'm very very busy.

Speaker Change: Kurt I'm sorry, that's okay. That's okay.

Speaker Change: That's it for me thanks for clarifying appreciate it.

Speaker Change: Our next question comes from the line of Scott Gruber with Citigroup. Please go ahead.

Scott Gruber: Yes, good morning.

Scott Gruber: Good morning, Scott.

Scott Gruber: I got one for al.

Scott Gruber: You know what the profitability of the business improving the tax rate should trend toward a more normalized level over time, and we have the guidance for this year.

Scott Gruber: How should we think about the evolution of.

al: The tax rate and 25, and 26 work of that sort.

al: <unk> in the years ahead.

Speaker Change: So thanks for the question with taxes here. So first of all maybe just point out if you look at the effective tax rate for the quarter. There is a little bit of a timing effect of it being a little bit lower than normal in this quarter.

al: First of all we stand behind our guidance of 280 to 290 million for 2024, and if you consider the growth in EBITDA and et cetera that we are projecting.

Douglas J. Pferdehirt: So we have a second list of opportunities that we look at every day, and that's really what drives the performance of our company and, quite frankly, the outperformance and why our inbound numbers often surprise to the upside. So just to give you a little bit of an idea of what's, you know, there are really two lists. We're looking at one, the world's looking at the other.

al: I'd say that the this is implying a roughly 35% effective tax rate for the year with our current earnings mix.

al: And as we've talked about a little bit before we are targeting a normalized tax rate of 30% and I would continue to build on that model on that if you are looking for the out years.

Douglas J. Pferdehirt: We may not be tendering some of the projects, by the way, on the subsea opportunity list because we may not think that they're projects that we can contribute the greatest value to, meaning integrated or subsea 2.0 or whatever it may be, or we may be concerned about something about the projects. We may or may not tender those as well. As far as the scope is concerned, I think we have the most comprehensive. We can do an entire subsea project.

al: It's largely come from a combination of earnings mix and some other use.

al: Utilization of our tax opportunities like we can't Couldnt take advantage all in the past. So overall, we remain confident to drive towards that 30% normalized tax rate.

al: And how long do you think.

al: It would take to get there that's possible in 25 or 26.

Speaker Change: I mean, you're in the right ballpark of somewhere in between.

Speaker Change: Between those two years yet.

Speaker Change: Okay. Okay. That's it for me thank you.

Speaker Change: Our next question comes from the line of Doug Becker with capital one. Please go ahead.

Douglas J. Pferdehirt: We don't have to bring in a third party or buy third party, you know, key components. We've talked about it before. You know, the ability to be able to have the entire SPS, the entire surf, both products and installation capability, you know, makes us and positions us uniquely. Okay, thanks for that Doug. I'll turn it back. Our next question comes from the line of Kurt Hallead with Benchmark.

Douglas J. Pferdehirt: Thank you.

Douglas J. Pferdehirt: You previously mentioned that all electric subsea production systems could result in incremental tie back opportunities of $8 billion through 2030.

Douglas J. Pferdehirt: I was just hoping you could frame, maybe a realistic realistic or risk opportunity as you see it today for FTR.

Speaker Change: Yeah. Thanks, Doug.

Speaker Change: Yes that number is probably a little stale actually at this point.

Douglas J. Pferdehirt: I would say there is upside to that number in terms of you know we put that out in I think 2021.

Kurt Hallead: Please go ahead. Hey, good morning, Doug. Good morning, everybody. Hey, maybe just a quick follow-up, you know, with respect to Marc's question, right? So again, you know, in the recent past, you guys have given, you know, some of your outlook regarding, you know, what you would anticipate your subsequent order book to look like over the course of the next couple of years. That wasn't explicitly referenced in this call, however, given the dynamics, talk about quality over quantity.

Douglas J. Pferdehirt: Clearly all electric and the adoption and qualification of all electric is now we've pretty much covered our entire client base.

Douglas J. Pferdehirt: And you know that takes some time.

Douglas J. Pferdehirt: It's obviously developing the technology, but then quantifying it and then getting your customers.

Douglas J. Pferdehirt: <unk>.

Douglas J. Pferdehirt: In terms of I don't have a hard set.

Douglas J. Pferdehirt: Year by year kind of how I see that developing yet it might still be a little bit early.

Kurt Hallead: And then you talk about new technologies unlocking new business opportunities. I was wondering if you might be able to give us some update on how the order outlook has changed, or if it has changed at all.

Douglas J. Pferdehirt: But obviously getting the first award was key.

Douglas J. Pferdehirt: Being in the Ccs environment.

Douglas J. Pferdehirt: Not in the brownfield tieback environment.

Douglas J. Pferdehirt: But as I said things are being bid in parallel today between Ccs and traditional energy so there'll be more to come but look Doug remained very confident in this one I'll be honest this one's a little bit of a no brainer.

Douglas J. Pferdehirt: Again, Kurt, you know, much like Marc, thank you for clarifying because, you know, we do our best to communicate effectively, but you learn as well. So, the fact that we did not mention that we have a target of 30 billion orders for three years through 2025 or that we remain very confident in achieving our 2024 guidance of approaching 10 billion orders, us not saying it, we thought it was a strong message that we're very confident, but let me be very clear, we remain very, very confident.

Douglas J. Pferdehirt: If you are sitting with an existing host facility that's aging everyday.

Douglas J. Pferdehirt: Can get some additional hydrocarbon.

Douglas J. Pferdehirt: Hydrocarbon to flow through and obviously improve their financial results.

Douglas J. Pferdehirt: Leverage the cost of that capital investment that you may have made many years ago. It just makes sense. So we're kind of in a unique position we have a lot of the infrastructure you know over 50% of the world's infrastructure on the sea floor. So we're in a unique position to really try to help to kind of marry up somebody that has a would be.

Douglas J. Pferdehirt: In terms of the feed activity, in terms of the tendering activity, and in terms of the, I would say, very mature, meaning late stage, pre-FID conversations that I'm having with clients today, and I'm not complaining about it, Marc, but I'm very, very busy. That's okay. That's all right. All right. That's it for me.

Douglas J. Pferdehirt: Called a stranded asset simply meaning it was too far away from a host facility to.

Douglas J. Pferdehirt: To be able to be economically produced and could not support its own host facility because of the capex required to do so to be able to marry that up with.

Douglas J. Pferdehirt: Somebody that has a production asset.

Douglas J. Pferdehirt: And that's certainly what we're doing today and the conversations that we're having.

Kurt Hallead: Thanks for clarifying. I appreciate it. Our next question comes from the line of Scott Gruber with Citigroup. Please go ahead.

Speaker Change: No that certainly sounds encouraging is it reasonable to expect an.

Speaker Change: And all electric award on the oil and gas side, this year or more of a 2025.

Scott Gruber: Yes, good morning. Morning, Scott. I got one for Alf, you know, with the profitability of the business improving, the tax rate should trend toward a more normalized level over time. And we have the guidance, you know, for this year. How should we think about the evolution of the tax rate in 25 and 26? You know, where could that fall to in the years ahead?

Speaker Change: Yeah.

Speaker Change: A word we like to think about things in 24 month timeframe just to be a little bit conservative but.

Douglas J. Pferdehirt: You could see something on the shorter end of that.

Douglas J. Pferdehirt: For an all electric oil and gas award.

Douglas J. Pferdehirt: You know being I.

Douglas J. Pferdehirt: I do think you could see that.

Douglas J. Pferdehirt: Again up to our customers when they EBIT if I just think about the commercial discussions and the maturity of those discussions.

Alf T. Melin: So first of all, maybe just point out that if you look at the effective tax rates for the quarter, there is a little bit of a timing effect of it being a little bit lower than normal in this quarter. But first of all, we stand behind our guidance of 280 to 290 million for 2024. And if you consider the growth in EBITDA, et cetera, that we are projecting, I'd say that this is implying a roughly 35% effective tax rate for the year with our current earnings mix as planned. As we talked about a little bit before, we are targeting a normalized tax rate of 30%, and I would continue to build on that or model on that if you're looking for the future years.

Douglas J. Pferdehirt: And that's what I meant by in parallel meaning.

Douglas J. Pferdehirt: It wouldn't be too far away.

Speaker Change: Got it and then just a quick one L. A the free cash flow loss was narrower than at least I expected seem like consensus expected in the context that subsea.

Speaker Change: Is towards the upper half of the guidance range.

Douglas J. Pferdehirt: For free cash flow is that trending towards the upper half or mid point is still the best place to anchor.

L: So so first of all on free cash flow you are right. We had a strong first quarter for for being us at least you know the net outflow represents really.

L: 179 really represents a solid start for the year for us and because it is typically our seasonally most weak quarter that we have and also point out that we did have the $56 million payment towards that legal settlement.

Alf T. Melin: It largely comes from a combination of earnings mix and some other utilization of tax opportunities that we couldn't take advantage of in the past. So overall, we remain confident in driving towards a 30% normalized tax rate. And how long do you think it would take to get there?

L: For the quarter. So overall, we feel really good about where we are and how you expect obviously this to build during the year, we typically trend up during the year and you will see the majority yoga or the cash flow generation in the second half of the year end.

Scott Gruber: Is that something that's possible in 25 or more, 26? I mean, you're in the right ballpark of, you know, somewhere in that, between those two years. Yeah. Okay. Okay, that's it for me.

L: And clearly as we grow EBITDA and in particularly in subsea, we expect to see a little bit of additional conversion of all the free cash flow from EBITDA. So we typically use a 50% ratio is where we operationally sit today. So if you want to use that as an approximation, but we're not ready to to officially take up free cash flow there's always.

Scott Gruber: Thank you. Our next question comes from a line from Doug Becker with Capital One. Please go ahead. Thank you.

Douglas J. Pferdehirt: Doug, you previously mentioned that all electric subsea production systems could result in incremental tieback opportunities of $8 billion through 2030. I was just hoping you could frame maybe a realistic or risked opportunity as you see it today for FTI. Yeah, thanks, Doug. Yeah, that number is probably a little stale, actually, at this point.

L: Working capital dynamics and other things that lead to the end of the year and again, if you look at our business profile, if fourth quarter would still be the big quarter to determine the overall cash flow for the year.

Speaker Change: Understood. Thank you.

L: Our next question comes from the line of Daniel Thompson with Exane BNP Paribas. Please go ahead.

Douglas J. Pferdehirt: I would say there's upside to that number in terms of, you know, we put that out in, I think, 2021. Clearly, all electric and the adoption and qualification of all electric are now, we've pretty much covered our entire client base. And, you know, that takes some time.

Daniel Thomson: Hi, Good morning, I had a question on on high Sip.

Daniel Thomson: I mean now that the contract has been awarded until you're part of the technology has been qualified at Petrobras can you talk about the sort of conversations you're having with the clients around using the technology in other fields anything specific to flag and have you had any interest from.

Daniel Thomson: Other clients in Brazil, or internationally about using some of that technology.

Douglas J. Pferdehirt: It's, you know, obviously, developing the technology, but then qualifying it and then getting your customers, you know, aligned. In terms of, I don't have a hard set, year by year, kind of how I see that developing yet. It might still be a little bit early.

Daniel Thomson: Thanks.

Speaker Change: Thank you and good afternoon Daniel.

Speaker Change: The answer is yes, and yes is the short answer, but I'll give you a little bit of color around it.

Daniel: Clearly Petrobras.

Daniel: Is approaching this as a design one build many.

Daniel: Obviously.

Douglas J. Pferdehirt: But, obviously, getting the first award was key, that being in the CCS environment, not in the brownfield tieback environment. But, as I said, things are being bid in parallel today between CCS and traditional, you know, energy. So, there'll be more to come. But, look, Doug, remain very confident. And this one, I'll be honest, this one's a little bit of a no-brainer.

Daniel: A benefit of being part of this first award.

Daniel: But they clearly see this as an opportunity to reduce the greenhouse gas intensity first and foremost, but also in the case of the Merrell III project, because it's an existing.

Daniel: In an existing field or brownfield. If you will it also allows to debottleneck and increase production at the same time.

Daniel: But I don't want to speak too much on behalf of my clients, but I can assure you Petrobras has stated and very much see this technology is one that they are going to use.

Douglas J. Pferdehirt: You know, if you're sitting with an existing host facility that's aging every day, you can get some additional hydrocarbon to flow through and, obviously, improve their financial results and, you know, leverage the cost of that capital investment that you may have made many years ago. It just makes sense. So, we're kind of in a unique position. We have a lot of the infrastructure, you know, over 50% of the world's infrastructure on the seafloor.

Daniel: Multiple times.

Daniel: Interest from other clients first of all there are partners in the <unk> III project, a very well known large.

Daniel: World Class companies, along with Petrobras, So they've obviously been intimately involved and are supportive of the technology and obviously supportive of the project.

Daniel: They provided you bolt partner approval for the F. D. So we have those who are quite intimately.

Douglas J. Pferdehirt: So, we're in a unique position to really try to help to kind of marry up somebody that has a stranded asset, simply meaning it was too far away from a host facility to be able to be economically produced and could not support its own host facility because of the CAPEX required to do so.

Daniel: Included and I'll tell you just recently I traveled actually with the client to Brazil, because they wanted to learn more about it now they won't be using it in Brazil, but it would be using this type of technology outside of Brazil, but they were so interested in it.

Douglas J. Pferdehirt: To be able to marry that up with somebody that has a production asset is certainly what we're doing today in the conversations that we're having. Now, that certainly sounds encouraging. Is it reasonable to expect an all-electric vehicle on the oil and gas side this year or more of 2025? We like to think about things in 24-month timeframes just to be a little bit conservative, but you could see something on the shorter end of that for an all-electric oil and gas award or project being FID. I do think you could see that.

Daniel: I was more than happy to participating in that.

Daniel: And that visit with them and with the support of Petrobras you know, we were able to share with them. Some of the good things that we're doing and what we've done in terms of the development of the technology. So again short answer, yes, and yes.

Speaker Change: Thanks, Doug and if I can squeeze in a follow up.

Daniel: At this time on the surface business.

Speaker Change: In Saudi Arabia after the DRAM kind of MSC 12 announcements I mean, given the incremental spending is going onshore.

Speaker Change: Unconventional gas from from an offshore market, where you don't compete.

Speaker Change: It seems like an incremental positive for your particular mix and the middle East.

Speaker Change: Can you confirm you'll you'll sort of readiness to respond to that incremental onshore demand for surface equipment and how does the opportunity.

Douglas J. Pferdehirt: Again, it's up to our customers when they FID, but if I just think about the commercial discussions and the maturity of those discussions, and that's what I meant by, you know, in parallel, meaning, you know, it wouldn't be too far. And then just a quick one, Alf, the free cash flow loss was narrower than I expected, or so my consensus expected, in the context that sub-C is toward the upper half of the guidance range. For free cash flow, is trending toward the upper half or midpoint still the best place? So, first of all, free cash flow. You're right. We had a strong first quarter for being us, at least.

Speaker Change: Consolidated compared to your expectations for demand before the announcement from Aramco.

Speaker Change: Thanks.

Speaker Change: Sure and Daniel maybe just to clarify for everyone.

Speaker Change:

Speaker Change: In Saudi Arabia that business falls under our surface technologies business.

Speaker Change: And when we when we think about Wellheads and trees, if they don't get wet I E. They don't go below the water surface, then that falls under our surface business.

Daniel: So our business in Saudi Arabia is primarily an onshore business that's what we do.

Alf T. Melin: The net outflow of 179 really represents a solid start for the year for us because it is typically our seasonally most weak quarter that we have. And I also point out that we did have the $56 million payment towards a legal settlement that affected the quarter. So, overall, we feel really good about where we are. And I expect, obviously, this to build during the year.

Daniel: And actually we're very very good at it.

Daniel: So the reduction in the <unk>.

Speaker Change: The jackup market in the reduction in some of the offshore activity.

Speaker Change: It does affect us because again they typically are produced from a production platform. So it's a dry tree, but the number of wells versus the further capex dollar spend versus the number of wells that can be drilled for the same amount of capex on land.

Alf T. Melin: We typically trend up during the year, and you will see the majority of cash flow generation in the second half of the year. And, And clearly, as we grow EBITDA, and in particular, in subsea, we expect to see a little bit of additional conversion of free cash flow from EBITDA. So we typically use the 50% ratio because that's where we operationally sit today. So if you want to use that as an approximation, but we're not ready to officially take up free cash flow.

Speaker Change: The latter is obviously far greater so far are from our perspective, but I'm only answering from our perspective selfishly a shift to land capex from off shore Capex is very favorable to our company. Thank.

Speaker Change: Think of it as simple as we sell product that allows a well to be.

Speaker Change: Safely and environmentally.

Alf T. Melin: There's always working capital dynamics and other things that lead to the end of the year. And again, if you look at our business profile, the fourth quarter will still be the big quarter. Understand? Thank you. Our next question comes from the line of Daniel Thompson, with Exane BNP Parabas. Please go ahead. Hi, good morning.

Speaker Change: Appropriately produced and so we get we get paid by the Wellbore. If you will and that's what matters. In addition gas is important to us.

Speaker Change: Our revenue per unit sold is hiring gas than it is in oil. So the shift to gas is favorable and in unconventional gas we are able to provide additional products.

Speaker Change: The the fracturing in the stimulation side of it.

Daniel Thomson: I had a question about HiSEP. I mean, now that the contract has been awarded, and clearly your part of the technology has been qualified with Petrobras, can you talk about the sort of conversations you're having with that client around using the technology in other fields, anything specific to FLAG? And have you had any interest from other clients in Brazil or internationally about using a similar technology? Thanks. Thank you, and good afternoon, Daniel. The answer is yes, and yes is the short answer, but I'll give you a little bit of color around it.

Speaker Change: As well so it expands our let's say revenue per well so.

Speaker Change: That's how the market works for US now more importantly.

Speaker Change: <unk>.

Speaker Change: As you've been following the company you know, we decided to make a strategic investment in kingdom to bring manufacturing capacity from Asia to the Kingdom.

Speaker Change: We continue to ramp up our new facility and that has gone very successfully we've not yet reached its fullest potential and we anticipate.

Speaker Change: Further improvement in the second half of the year, So Saudi Aramco remains very important to us the kingdom is.

Douglas J. Pferdehirt: Clearly, Petrobras is approaching this as a design one, build many. Obviously, you know, a benefit of being part of this first award, but they clearly see this as an opportunity to reduce the greenhouse gas intensity, first and foremost, but also, in the case of the Merrill-3 project, because it's in an existing field, or a brownfield, if you will. It also allows to de-bolt and increase production at the same time.

Speaker Change: As a key contributor in our surface international business, and we're very well positioned and quite frankly, some of the announcements have been favorable from our perspective.

Speaker Change: That's helpful. Thanks, Doug.

Speaker Change: Okay.

Speaker Change: Okay.

Sarah PON: Our next question comes from the line of Sarah PON.

Sarah PON: With Bank of America. Please go ahead.

Sarah PON: Hi, good morning, Doug.

Sarah PON: Good morning.

Sarah PON: Doug maybe spend.

Sarah PON: Spend a little time on the quality of the backlog that you've been talking about on the subsea side.

Speaker Change: It's a little bit and the results you are delivering the margins you had in everything but also the new technology.

Douglas J. Pferdehirt: But, you know, I don't want to speak too much on behalf of my clients, but I can assure you that Petrobras has stated and very much sees this technology as one that they are going to use multiple times because of interest from other clients. First of all, there are partners in the Merrill 3 project, very well-known, large, world-class companies, along with Petrobras. So they've obviously been intimately involved and are supportive of the technology and, obviously, supportive of the project.

Speaker Change: If you could spend a moment on a phrase you maintaining your press release that the heightened focus on project selectivity. How are you doing that what's the focus of that multiple terms and conditions on I'll be talking about just integrated called nitrosamines in Standalone pumps.

Speaker Change: Sure.

Speaker Change: Great question, we talk about it every day.

Speaker Change: As we look at the different opportunities that we have in front of us.

Speaker Change: Look it's a combination of all of the above.

Speaker Change: But let's start with the main thing that really drives.

Speaker Change: We would deem as quality because we believe it and we've demonstrated its best for the project in terms of shortening cycle time accelerating time to first production and it greatly simplifies our execution model.

Douglas J. Pferdehirt: They provided partner approval for the FID. So we have those who are quite intimately involved. And I'll tell you, just recently, I traveled with a client to Brazil because they wanted to learn more about it. But now, they won't be using it in Brazil.

Speaker Change: Is the subsea two pointed out configure to order.

Speaker Change: So clearly the higher the 2.0 orders the higher the quality of the backlog.

Speaker Change: And that allows us to go from engineered order to configure to order as I've talked about before on this call that allows us to eliminate nine months of engineering. So we take a 1.0 order which is how the rest of the industry is operating but you have to spend nine months or we would have to spend nine months doing detailed engineering, because you're building it.

Douglas J. Pferdehirt: They would be using this type of technology outside of Brazil. But they were so interested, and I was more than happy to participate in that visit with them. And with the support of Petrobras, we were able to share with them some of the good things that we're doing and what we've done in terms of the development of the technology. So again, short answer: yes and yes. Thanks, Doug.

Speaker Change: First article, which never been built before so you have to go through that before you place a single purchase order with a subsidy to configure to order a platform and again you can't just say I have it you have to have a platform you have to have critical scale that allows you to not only simplify the internal as I talked about.

Daniel Thomson: And if I can squeeze in a follow-up, this time on the surface business, you know, in Saudi Arabia after the Aramco MSE-12 announcement, I mean, given the incremental spending is going onshore, you know, unconventional gas from an offshore market where you don't compete, I mean, this seems like an incremental positive for your particular mix in the Middle East. But can you confirm your readiness to respond to that incremental onshore demand for surface equipment, and how does the opportunity in Saudi compare to your expectations for demand before the announcement from Aramco? Thanks.

Speaker Change: Putting twice the volume through our existing manufacturing footprint, but it also allows us to simplify and to secure a much more reliable and competent.

Speaker Change: Partners in our supply chain. So it's really a combination of the two that lead to the quality and.

Speaker Change: In addition to that an integrated project, we just have many more levers.

Speaker Change: We take on the full scope, we have the ability to be able to schedule activity that best works for us.

Speaker Change: And that's why it was so important to consummate the relationship and create Technip FMC, because very difficult to do when youre not a single entity with a single set of financial reporting and a single set of objectives. Because then you have underlying competing.

Douglas J. Pferdehirt: Sure. And Daniel, maybe just to clarify for everyone, in Saudi Arabia, that business falls under our surface technologies business. And when we think about wellheads in trees, if they don't get wet, i.e.

Speaker Change: Competing interest so we have that.

Speaker Change: And then on top of that sure the terms and conditions of the contracts are important our customers understand that we've talked in the past about what we've done to ensure that.

Douglas J. Pferdehirt: If they don't go below the water surface, then that falls under our surface business. So our business in Saudi Arabia is primarily an onshore business. That's what we do. And actually, we're very, very good at it. So the reduction in the jack-up market and the reduction in some of the offshore activity does affect us because, again, they are typically produced from a production platform, so it's a dry tree. But the number of wells for the CapEx dollars spent versus the number of wells that can be drilled for the same amount of CapEx on land is obviously far greater.

Speaker Change: The things are being shared.

Speaker Change: Appropriate way and for instance.

Speaker Change: When it comes to inflation, we put in place.

Speaker Change: Several parameters that allow us to be more confident that we're not going to be surprised on that side. So all in all it's a combination of the three but it's very clear for us where our focus is and as you hear us announce these <unk> and <unk> in two point of awards.

Speaker Change: It's just it's just very very favorable to the future and to the surety of our execution. Thank you.

Douglas J. Pferdehirt: So from our perspective, I'm only answering from our perspective, selfishly, a shift to land CapEx from offshore CapEx is very favorable to our company. Think of it as simple as we sell product that allows a well to be safely and environmentally appropriately produced. And so we get paid by the wellbore, if you will, and that's what matters. In addition, gas is important to us.

Speaker Change: No Doug.

Speaker Change: Just a very quick follow up Doug I know you had a $13 million in order to open up with something that does not include any of the frontier basin.

Speaker Change: But the new flow, especially from them, maybe I have been particularly positive or can you shed any updated thoughts on the on your outlook in terms of the frontier basins I know, it's beyond 'twenty, five but any updated thoughts there.

Douglas J. Pferdehirt: Sure lots of discussions lots of activity, where using our playbook from Guyana in Mozambique, both of which we were the first mover.

Douglas J. Pferdehirt: Our revenue per unit sold is higher in gas than it is in oil, so the shift to gas is favorable. And in unconventional gas, we are able to provide additional products around the fracturing and the stimulation side of it as well. So it expands our, let's say, revenue per well. That's how the market works for us.

Speaker Change: We understand how to do this in these emerging markets. We're executing the same playbook in the other emerging markets and I would say net net.

Speaker Change:

Speaker Change: Most recently the indications from our clients that they did they have stated publicly I'm not saying anything that's not public.

Douglas J. Pferdehirt: Now, more importantly, as you've been following the company, we decided to make a strategic investment in Kingdom to bring manufacturing capacity from Asia to Kingdom. We continue to ramp up our new facility, and that has gone very successfully. We've not yet reached its fullest potential, and we anticipate further improvement in the second half of the year. Saudi Aramco remains very important to us. The Kingdom is a key contributor to our surface international business, and we're very well positioned, and quite frankly, some of the announcements have been favorable from our perspective. That's all, folks; thanks Doug. Our next question comes from the line of Saurabh Pant, with Bank of America. Please go ahead. Hi, good morning, Doug. Good morning.

Speaker Change: I would say is more favorable.

Speaker Change: No trending in a very favorable fashion. So we look forward to the contribution from those emerging markets in the latter part of the decade.

Speaker Change: Right. Okay perfect. Thank you I've done it back.

Speaker Change: Okay.

Speaker Change: Our last question will come from the line of Bertrand <unk> with Kepler Chevron. Please go ahead.

Speaker Change: Yes.

Bertrand: I have a probably a follow up on.

Bertrand: On <unk>.

Bertrand: Based on your early discussion.

Bertrand: Clearly no need to mention any names here.

Bertrand: Conceptually from your understanding do you believe each week cry a specific technology.

Bertrand: <unk> or <unk>.

Bertrand: <unk> mother or subsea two point all.

Bertrand: We will be well suited for.

Bertrand: For future <unk> development.

Saurabh Pant: Doug, maybe we can spend a little time on the quality of the backlog that you've been talking about on the subsea side, right? And I think it's visible in the results you are delivering, the margins you are delivering, but also the new technology that you're winning. If you could spend a moment on a phrase you mentioned in your press release, Doug, the heightened focus on project selectivity. How are you

Speaker Change: Thank you Bertrand.

Speaker Change: Look the speaking of them maybe in particular.

Bertrand: The <unk>, one well known challenge will be the water depth.

Bertrand: So these are very deep.

Bertrand: It's very deep.

Bertrand: Within the operating parameters of 2.0 so.

Speaker Change: No concern there.

Speaker Change: And certainly we believe the <unk> model as we've demonstrated in an in.

Douglas J. Pferdehirt: What's the focus? Is it more about terms and conditions, or are we talking about just integrated projects versus standalone projects? Sure. Great question.

Speaker Change: Other emerging markets is clearly a very favorable model and one that we would expect would unlock the greatest value and accelerate time to first oil for our customers, which drives their project economics. So.

Douglas J. Pferdehirt: We talk about it every day as we look at the different opportunities that we have in front of us. Look, it's a combination of all of the above, but let's start with the main thing that really drives what we would deem as quality because we believe it and we've demonstrated it's best for the project in terms of shortening cycle time, accelerating time to first production, and it greatly simplifies our execution model, which is to subsea 2.0 configure to order.

Speaker Change: <unk> 2.0, but working very closely with our clients. So they're obviously learning as they're doing their extended well tests in terms of.

Speaker Change: The produce ability of the <unk>.

Speaker Change: Of the reservoirs compartmentalization the geochemistry, so there's things we're learning along the way, but we are actively engaged with them.

Speaker Change: To ensure that we'll be ready to provide them world class subsea support.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: I would now like to turn the call over to Matt sign Cymer for closing remarks.

Douglas J. Pferdehirt: So, clearly, the higher the 2.0 orders, the higher the quality of the backlog, and that allows us to go from engineer to order to configure to order. As I've talked about before on this call, that allows us to eliminate nine months of engineering. So, we take a 1.0 order, which is how the rest of the industry is operating, that you have to spend nine months, or we would have to spend nine months doing detailed engineering because you're building the first article.

Matt Seinsheimer: This concludes our fourth quarter conference call a replay of the call will be available on our website beginning at approximately eight P. M. Greenwich mean time today.

Matt Seinsheimer: If you have any further questions. Please feel free to contact any member of the Investor Relations team. Thanks for joining us.

Speaker Change: Now end the call.

Matt Seinsheimer: This concludes today's call you may now disconnect.

Matt Seinsheimer: Please wait the conference will begin shortly.

Matt Seinsheimer: [music].

Douglas J. Pferdehirt: It's never been built before, so you have to go through that before you place a single purchase order. With the Subsea 2.0 platform, to order, a platform, and again, you can't just say I have it. You have to have a platform. You have to have critical scale. That allows us to not only simplify the internal processes, as I talked about, putting twice the volume through our existing manufacturing footprint, but it also allows us to simplify and to secure much more reliable and competent partners in our supply chain. So, it's really a combination of the two that leads to quality.

Matt Seinsheimer: Okay.

Matt Seinsheimer: Yes.

Matt Seinsheimer: Yeah.

Matt Seinsheimer: Yeah.

Matt Seinsheimer: Okay.

Matt Seinsheimer: Okay.

Matt Seinsheimer: Yes.

Matt Seinsheimer: Yeah.

Matt Seinsheimer: Yeah.

Matt Seinsheimer: Okay.

Matt Seinsheimer: Yeah.

Matt Seinsheimer: Okay.

Matt Seinsheimer: [music].

Douglas J. Pferdehirt: In addition to that, as an integrated project, we just have many more levers. We take on the full scope. We have the ability to be able to schedule activity that best works for us, and that's why it was so important to consummate the relationship and create Technique FMC because it's very difficult to do when you're not a single entity with a single set of financial reporting and a single set of objectives because then you have underlying competing interests. So, we have that. And then on top of that, sure, the terms and conditions of the contracts are important.

Douglas J. Pferdehirt: Our customers understand that. We've talked in the past about, you know, what we have done to ensure that, you know, things are being shared in the most appropriate way. And, for instance, when it comes to inflation, we put in place several parameters that allow us to be more confident that we're not going to be surprised on that side.

Saurabh Pant: So, you know, all in all, it's a combination of the three, but it's very clear for us where our focus is. And as you hear us announce these IEPCI and IEPCI 2.0 and 2.0 awards, it's just very, very favorable to the future and to the assurity of our execution. Thank you. No, Doug, that's very helpful.

Douglas J. Pferdehirt: Just a very quick follow up, Doug. I know you are $30 billion in the three-year order outlook for subsidies, but that does not include any of the frontier basins.

Saurabh Pant: But the news flow, especially from Namibia, has been particularly positive. Can you share any updated thoughts on your outlook in terms of these frontier basins? I know it's beyond 25, but any updated thoughts?

Douglas J. Pferdehirt: Sure. Lots of discussion, lots of activity. We're using our playbook from Guyana and Mozambique, both of which, you know, we were the first mover. We understand how to do this in these emerging markets. We're executing the same playbook in other emerging markets.

Matt Seinsheimer: [music].

Saurabh Pant: And I would say net-net from, you know, most recently, the indications from our clients that they've, you know, that they have stated publicly, I'm not saying anything that's not public, I would say are more favorable and trending in a very favorable fashion. So we look forward to the contribution from those emerging markets in the latter part of the decade. Okay, perfect. Thank you. I'll turn it back. Our last question will come from the line of Bertrand Hodee with Kepler Chevro. Please go ahead.

Bertrand Hodee: Yes, hello, Doug. I probably have a follow-up on Namibia. Based on your early discussions, and clearly no need to mention any operator name here, but conceptually, from your understanding, do you believe it will require specific technologies?

Douglas J. Pferdehirt: And or whether the IEPCI model or subsea 2.0 will be well-suited for future Namibian development? Thank you, Bertrand. Look, speaking of Namibia in particular, one well-known challenge will be water depth.

Douglas J. Pferdehirt: So these are very deep, you know, it's very deep within the operating parameters of 2.0, so no concern there. And certainly, we believe the IPCI model, as we've demonstrated in other emerging markets, is clearly a very favorable model and one that we would expect would unlock the greatest value and accelerate time-to-first oil for our customers, which drives their project economics. So IPCI 2.0, but working very closely with our clients, they're obviously learning as they're doing their extended well tests in terms of, you know, the producibility of the reservoirs, compartmentalization, the geochemistry. So there are things we're learning along the way, but we are actively engaged with them to ensure that we'll be ready to provide them world-class subsea support. Thank you.

Matt Seinsheimer: I would now like to turn the call over to Matt Seinsheimer for closing remarks. This concludes our fourth quarter conference call. A replay of the call will be available on our website beginning at approximately 8 p.m. Greenwich Mean Time today.

Operator: If you have any further questions, please feel free to contact any member of the Investor Relations team. Thanks for joining us. This concludes today's call. You may now disconnect.

Operator: Please wait, the conference will begin shortly. Please wait, the conference will begin shortly. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you for standing by and welcome to the TechnipFMC, First Quarter 2024 Earnings Conference. I would now like to welcome Matt Seinsheimer to begin the call. Matt, over to you. Thank you, Mandeep.

Matt Seinsheimer: Good morning and good afternoon, and welcome to TechnipFMC's first quarter 2024 earnings conference call. Our news release and financial statements issued earlier today can be found on our website. I'd like to caution you with respect to any forward-looking statements made during this call.

Matt Seinsheimer: Although these forward-looking statements are based on our current expectations, beliefs, and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q, and other periodic filings with the U.S. Securities and Exchange Commission.

Matt Seinsheimer: We wish to caution you not to place undue reliance on any forward-looking statements which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer. Thank you, Matt. Good morning and good afternoon.

Matt Seinsheimer: [music].

Douglas J. Pferdehirt: Thank you for participating in our first quarter earnings call. I am very pleased with the strong performance in the quarter, which further highlights our continuing success in delivering on our commitment. Total company revenue for the first quarter was $2 billion.

Douglas J. Pferdehirt: Total company adjusted EBITDA was $257 million, with an adjusted EBITDA margin of 12.6% when excluding foreign exchange impact. Total company and bond orders in the quarter were $2.8 billion. In sub C, we had a solid start to the year, with first quarter orders of $2.4 billion, representing a book-to-bill of $1.4. Importantly, a significant portion of our inbound was driven by new technology, several of which were industry firsts for subsea that will help unlock opportunities in both new and mature offshore basins. In January, we announced our first IEPCI for Petrobras, this one utilizing subsea processing for the Mero III HiSEP development.

Douglas J. Pferdehirt: The project represents a major industry milestone as it will be the first to use subsea separation to capture CO2 directly from the well stream for injection back into the reservoir, all of which will occur on the seafloor. During the quarter, we were also awarded the first IEPCI to utilize a 20K production system. This is for Shell's Sparta project in the Pele-Eugene play in the U.S. Gulf of Mexico. The 20,000 PSI production system includes new technology required to meet the demands of high-pressure, high-temperature reservoir conditions.

Douglas J. Pferdehirt: This marks our third award for 20K production equipment, as clients look to produce from deeper waters and reservoirs in the maturing basin. The Paleogene formation spans the central and western regions of the Gulf of Mexico, with reservoirs located in water depths that exceed 1,500 meters and generally exhibit higher pressure.

Douglas J. Pferdehirt: The Paleogene has become one of the most productive and fastest growing sources of supply in the Gulf. It is estimated that one billion barrels of discovered reserves will require the use of 20K technology for development. We expect additional projects to successfully move forward over the next 24 months, representing yet another opportunity set for our company. And finally, we announced an award from the Northern Endurance Partnership to deliver the first all-electric subsea IEPCI, which is anticipated to be inbound in the second half of this year.

Douglas J. Pferdehirt: The partnership, which is a joint venture between BP, Equinor, and Total Energy, is building CO2 transportation and storage infrastructure for carbon capture projects in the UK's East Coast cluster. Our all-electric solution will collect and feed the pressurized gas into an aquifer for permanent storage. All-electric systems drive simplification of the field design, enabling the reduction of infrastructure and installation time through the removal of hydraulic components and simplified umbilical.

Speaker Change: Thank you for standing by and welcome to the technique F. M C.

Douglas J. Pferdehirt: The technology also enables the development of projects over long distances. For example, with Northern Endurance, the power and controls to the subsea equipment will extend 145 kilometers from the onshore host facility. The award of an entirely all-electric subsea system is a significant achievement for both our company and the industry. Merrill Three High School, Sparta, and Northern Endurance are all strong examples of our Differentiated Technology Portfolio. Each of these projects provides a unique solution to an industry challenge.

Mat: First quarter 2024 earnings conference call I would now like to welcome Mat signed Cymer to begin the call Matt over to you.

Matt Seinsheimer: Thank you Monday.

Matt Seinsheimer: Morning, and good afternoon, and welcome to the techniques Fmc's first quarter 2024 earnings conference call.

Speaker Change: Our news release and financial statements issued earlier today can be found on our website.

Matt Seinsheimer: I'd like to caution you with respect to any forward looking statements made during this call.

Speaker Change: Although these forward looking statements are based on our current expectations beliefs and assumptions regarding future developments and business conditions. They are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.

Douglas J. Pferdehirt: And it is this unique combination of innovative technologies and integrated execution that is creating new market opportunities for our company. While project selectivity remains a critical objective, it is even more important that we successfully deliver on time and on budget. As demonstrated by our financial performance in the quarter, operational execution across the portfolio continues at a high level, driven in part by this focus on project selectivity and the favorable impact it is having on the quality of orders in our backlog.

Speaker Change: Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q and other periodic filings with the U S Securities and Exchange Commission.

Speaker Change: We wish to caution you not to place undue reliance on any forward looking statements, which speak only as of the date hereof.

Speaker Change: We undertake no obligation to publicly update or revise any of our forward looking statements. After the date. They are made whether as a result of new information future events or otherwise.

Douglas J. Pferdehirt: Having both the right backlog and strong execution gives us confidence that we can capitalize on the strong market and achieve our financial targets. Finally, we completed the sale of our measurement solutions business in March. In keeping with our commitment to shareholder distribution, a significant portion of the process was allocated to repurchasing $150 million of shares in the first quarter. This brings our total shareholder distributions to $520 million in less than two years.

Speaker Change: I will now turn the call over to Doug for any hurt Technip FMC as chair and Chief Executive Officer.

Douglas J. Pferdehirt: Thank you, Matt good morning, and good afternoon.

Douglas J. Pferdehirt: Thank you for participating in our first quarter earnings call.

Douglas J. Pferdehirt: I am very pleased with the strong performance in the quarter, which further highlights our continuing success in delivering on our commitments.

Douglas J. Pferdehirt: Total company revenue for the first quarter was $2 billion.

Douglas J. Pferdehirt: And given this acceleration in share repurchases... We now expect total shareholder distributions in the current year to grow at least 70% when compared to the levels achieved in 2023. I will now turn the call over to Alf.

Douglas J. Pferdehirt: Total company adjusted EBITDA was $257 million with an adjusted EBITDA margin of 12, 6% when excluding foreign exchange impacts.

Douglas J. Pferdehirt: Total company inbound orders in the quarter were $2 8 billion.

Douglas J. Pferdehirt: Thanks, Doug. Inbound in the quarter was $2.8 billion, driven by $2.4 billion of subsea orders. Total company backlog increased sequentially to $13.5 billion, and revenue in the quarter was $2 billion. EBITDA was $257 million when excluding a gain on the sale of our measurement solutions business of $75 million, restructuring, impairment, and other charges totaling $5 million, and a foreign exchange loss of $4 million. Turning to the segment results, in sub-C, revenue of $1.7 billion was largely flat versus the fourth quarter.

Douglas J. Pferdehirt: In subsea we had a solid start to the year with first quarter orders of $2 4 billion, representing a book to Bill of one four.

Douglas J. Pferdehirt: Importantly, a significant portion of our inbound was driven by new technologies.

Douglas J. Pferdehirt: Several of which were industry <unk> for subsea.

Douglas J. Pferdehirt: Will help unlock opportunities in both new.

Douglas J. Pferdehirt: And the mature offshore basins.

Douglas J. Pferdehirt: In January we announced our first IAA PCI for Petrobras.

Douglas J. Pferdehirt: This one utilizing subsea processing for the marrow three high Sip development.

Alf T. Melin: Higher project activity in Brazil and the Gulf of Mexico was largely offset by lower activity in the North Sea and Sub-Asia Pacific and reduced services revenue due to typical offshore seasonality. Adjusted EBITDA was $242 million, with a margin of 14%, up 90 basis points from the fourth quarter. The sequential increase was driven by strong execution and an improved earnings mix from back to front. For circus technologies, revenue was $307 million, down 14% sequentially. Revenue decreased due to the closing of the sale of measurement solutions before the end of the quarter, lower activity in North America, and portfolio optimization in Latin America.

Douglas J. Pferdehirt: The project represents a major industry milestone.

Douglas J. Pferdehirt: Is it will be the first to use subsea separation.

Douglas J. Pferdehirt: To capture COPD directly from the well stream.

Douglas J. Pferdehirt: For injection back into the reservoir.

Douglas J. Pferdehirt: All of which will occur will occur on the sea floor.

Douglas J. Pferdehirt: During the quarter. We were also awarded the first ipi to utilize a 20 K production system.

Douglas J. Pferdehirt: This being for shell sport a project in the Paleogene play in the U S Gulf of Mexico.

Douglas J. Pferdehirt: The 20000 Psi production system includes new technologies required to meet the demands of high pressure high temperature reservoir conditions.

Alf T. Melin: Adjusted EBITDA was $41 million, a 21% decrease from the fourth quarter, driven by lower revenue from measurement solutions and lower activity in North America. Adjusted EBITDA margin was 13.5%, down 120 basis points versus the fourth quarter. Turning to corporate and other items in the period, corporate expense was $27 million when excluding charges of $5 million, which were primarily transaction-related costs associated with the sale of measurement solutions; foreign exchange losses were $4 million. Net interest expense was $13 million, which benefited from higher average cash balances in the period. Tax expense in the quarter was $50 million.

Douglas J. Pferdehirt: This marks our third award for 20, K production equipment as clients look to produce from deeper waters and reservoirs in the maturing basin.

Douglas J. Pferdehirt: The Paleogene formation spans the central and western regions of the Gulf of Mexico.

Douglas J. Pferdehirt: With reservoirs located in water depths that exceed 1500 meters and generally exhibit higher pressures.

Douglas J. Pferdehirt: The Paleogene has become one of the most productive and fastest growing sources of supply in the Gulf.

Douglas J. Pferdehirt: And it is estimated that 1 billion barrels of discovered reserves will require the use of 20 K technology for development.

Douglas J. Pferdehirt: We expect additional projects to successfully move forward over the next 24 months, representing yet another opportunity set for our company.

Alf T. Melin: Cash required by operating activities was $127,000. The outflow follows the typical seasonal pattern of our business. Additionally, cash flow in the period included a payment of $56 million to the PNF. Similar payments will occur in the second and third quarters and will fulfill our remaining obligations. Capital expenditures, we're 52 minutes. This resulted in free cash flow consumption of $179 million in the quarter.

Douglas J. Pferdehirt: And finally, we announced an award from the Northern endurance partnership to deliver the first all electric subsea IEP Ci.

Douglas J. Pferdehirt: Which is anticipated to be inbound in the second half of this year.

Douglas J. Pferdehirt: The partnership which is a joint venture between BP.

Douglas J. Pferdehirt: <unk> and total energies.

Douglas J. Pferdehirt: He is building <unk> transportation and storage infrastructure for carbon capture projects in the UK as east coast cluster.

Alf T. Melin: As Doug highlighted, we completed the sale of the measurement solutions in March. Proceeds from the sale were $186 million, with the majority being used for share repurchase. This drove a significant increase in total shareholder distributions in the first quarter to $172 million, which included $150 million for share repurchase and $22 million in dividends. We ended the period with cash and cash equivalents of $697 million, and net debt was $327 million.

Douglas J. Pferdehirt: Our all electric solution will collect and feed the pressurized gas into an aquifer for permanent storage.

Douglas J. Pferdehirt: All electric systems drive simplification of the field design, enabling the reduction of infrastructure and installation time.

Douglas J. Pferdehirt: Through the removal of hydraulic components and simplified and bill at Kohl's.

Douglas J. Pferdehirt: The technology also enables the development of projects over long distances.

Douglas J. Pferdehirt: With northern endurance, the powering controls to the subsea equipment will extend 145 kilometers from the onshore host facility.

Alf T. Melin: Now I will provide some thoughts on our outcome, starting with the second quarter. For sub C, we expect to benefit from the typical seasonal uplift, as well as improved margins in backlog, with sequential revenue growth of approximately $200 million and margin expansion of approximately $250 basis points. For Surface Technologies, we expect revenue and adjusted EBITDA margin to be in line with the first quarter. This includes the impact of the sale of measurement solutions.

Douglas J. Pferdehirt: The award of an entirely all electric subsea system is a significant achievement.

Douglas J. Pferdehirt: For both our company and the industry.

Douglas J. Pferdehirt: Marrow three high Sip Sparta and northern endurance are all strong examples of our differentiated technology portfolio.

Douglas J. Pferdehirt: Each of these projects provides a unique solution to an industry challenge.

Douglas J. Pferdehirt: And it is this unique combination of innovative technologies and integrated execution.

Douglas J. Pferdehirt: That is creating new market opportunities for our company.

Alf T. Melin: Now, I will also give you an update on our full-year outlook, given the anticipated strength of our first half results. And taking into account a range of outcomes, we now expect total company adjusted EBITDA to approximate 1.29 billion when excluding foreign exchange, an increase of approximately 40 million from the guidance we provided in February. Within this total company outlook, we see the following relative to the guidance provided in February: subsidy revenue and EBITDA margins both trending towards the upper half of the guidance range. Both revenue and EBITDA margin for service technologies as well as corporate expense remain on track for the midpoint of their respective guidance ranges.

Douglas J. Pferdehirt: While project selectivity remains a critical objective.

Douglas J. Pferdehirt: It is even more important that we successfully deliver.

Douglas J. Pferdehirt: On time and on budget.

Douglas J. Pferdehirt: As promised.

Douglas J. Pferdehirt: As demonstrated by our financial performance in the quarter.

Douglas J. Pferdehirt: Operational execution across the portfolio continues at a high level.

Douglas J. Pferdehirt: Driven in part by this focus on project selectivity and the favorable impact it is having on the quality of orders in our backlog.

Douglas J. Pferdehirt: Having both the right backlog and strong execution gives us confidence that we can capitalize on the strong market and achieve our financial targets.

Douglas J. Pferdehirt: Okay.

Douglas J. Pferdehirt: Finally, we completed the sale of our measurement solutions business in March.

Douglas J. Pferdehirt: In keeping with our commitment to shareholder distributions.

Douglas J. Pferdehirt: Significant portion of the proceeds for.

Alf T. Melin: Lastly, I want to discuss our current view of our capital structure. In March, we received an upgrade from Standard & Poor's to Investment Grade. This upgrade serves as a significant milestone for the company and reflects the tremendous efforts by the entire organization to materially de-leverage the balance sheet and achieve Investment Grade metrics. With this update, we are also revising our target capital structure to approximately $800 million of cash and $800 million of debt, together amounting to zero net debt.

Douglas J. Pferdehirt: Allocated to repurchasing $150 million of shares in the first quarter.

Douglas J. Pferdehirt: This brings our total shareholder distributions to $520 million in less than two years.

Douglas J. Pferdehirt: And given this acceleration in share repurchases.

Douglas J. Pferdehirt: We now expect total shareholder distributions in the current year to grow at least 70% when compared to the levels achieved in 2023.

Douglas J. Pferdehirt: I will now turn the call over to al.

al: Thanks, Doug.

al: Inbound in the quarter was $2 8 billion driven by $2 4 billion of subsea orders total company backlog increased sequentially to $13 $5 billion revenue in the quarter was $2 billion.

Alf T. Melin: This is a $500 million reduction versus our prior target and a level we can achieve over time as scheduled debt maturities come due. Importantly, we believe this capital structure provides us with the flexibility to manage our operations and fund our capital needs while also delivering on our commitment to shareholder distribution. Operator, you may now open the line for questions. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.

al: EBITDA was $257 million when excluding a gain on the sale of our measurement solutions business of $75 million.

al: Restructuring impairment and other charges totaling $5 million and a foreign exchange loss of $4 million.

al: Turning to the segment results in subsea revenue, one 7 billion was largely flat versus the fourth quarter.

al: Project activity in Brazil, and the Gulf of Mexico was largely offset by lower activity in the North Sea and.

Operator: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our raw data. Our first question comes from the line of Arun Jayaram. With J.P. Morgan, Securities. Please go ahead. Good morning, Doug. I wanted to see if you could provide more details on Northern Endurance.

al: Asia Pacific and reduced services revenue due to typical offshore seasonality.

al: Adjusted EBITDA was $242 million with a margin of 14% up 90 basis points from the fourth quarter.

al: The sequential increase was driven by strong execution and improved earnings mix from backlog.

Arun Jayaram: What do you think drove your success on the project? Maybe more details on the scope and perhaps what technologies FTI is providing in terms of the CCS nature of that project. Thank you, Arun, and good morning. Look, this was, as stated in my prepared remarks, a major milestone for our company but also for the industry. This will be the first application of an all-electric production system.

al: In surface technologies revenue was $307 million down 14% sequentially.

al: Revenue decreased due to the due to the closing of the sale of measurement solutions before the end of the quarter.

al: Lower activity in North America and portfolio optimization in Latin America.

al: Adjusted EBITDA was $41 million or 21% decrease from the fourth quarter, driven by lower revenue from measurement solutions and lower activity in North America.

Douglas J. Pferdehirt: We are extremely, extremely proud to have been selected. There was a very rigorous technical qualification required to be able to be considered and to receive the award, and we're pleased that we came out on top of that qualification. Think of it as everything from the shore to the seafloor.

al: Adjusted EBITDA margin was 13, 5% down 120 basis points versus the fourth quarter.

al: Turning to corporate and other items in the period corporate expense was $27 million when excluding charges of $5 million, which were primarily transaction related costs associated with the sale of measurement solutions.

Douglas J. Pferdehirt: We call it the Integrated Carbon Transportation System. We have a specific CO2.0 tree, so it is part of our 2.0 family. We have developed a configure-to-order CO2 injection tree. It looks simplified compared to a traditional oil and gas tree, but it's actually very technical, particularly when it comes to the sealing surfaces because of the number of cycles that you will, the number of times that you will open and close, or what is called a cycle. The cycling of a valve in a CO2 injection tree is far, far greater than what you would do in a typical oil and gas development.

al: Foreign exchange loss was $4 million.

al: Net interest expense was $13 million, which benefited from higher average cash balances in the period.

al: Tax expense in the quarter was $58 million.

al: Cash required by operating activities was $127 million.

al: The outflow follows the typical seasonal pattern of our business at.

al: Additionally, cash flow in the period included a payment of $56 million through the P&L.

al: Similar payments will occur in the second and third quarters, and we will fulfill our remaining obligation.

Douglas J. Pferdehirt: So a higher technical standard; we were extremely pleased to be selected for that, and we have that entire scope. And what's really interesting about it is the distance that is being traversed is over 145 kilometers, and there will be nothing floating on top of the water.

al: Capital expenditures were $52 million.

al: This resulted in free cash flow consumption of $179 million in the quarter.

al: Okay.

al: As Doug highlighted we completed the sale of the measurement solutions in March proceeds from the sale were $186 million with the majority being used for share repurchase.

Douglas J. Pferdehirt: In other words, we've taken it all subsea, much like we did on the CCS project in Brazil. On the HI-SEP project, it is just a major, major milestone where we are really driving the CCS market by enabling the seafloor to be a key component of these projects. Great. And I wanted to see if you could maybe comment in your prepared remarks about some new technologies that you're using to unlock opportunities in more mature basins.

al: This drove a significant increase in total shareholder distributions in the first quarter to $172 million, which included $150 million for share repurchase and $22 million in dividends.

al: We ended the period with cash and cash equivalents of $697 million.

al: Net debt was $327 million.

Speaker Change: Now I will provide some thoughts on our outlook starting with the second quarter.

al: For subsea, we expect to benefit from the typical seasonal uplift as well as improved margins in backlog with sequential revenue growth of approximately $200 million and margin expansion of approximately 250 basis points.

Douglas J. Pferdehirt: I was wondering if you could maybe expand upon that and maybe comment on what you see in some of the more mature basins. I know one of your peers talked about anticipating maybe an improvement in West Africa starting next year, but maybe you could elaborate on that. Sure, so there are just the, I would call them, traditional projects that are likely to be driven forward in mature basins given the project economics. By doing it with an integrated approach, or what we call IEPCI, along with our 2.0 family, we can help unlock the economic value of those projects.

al: For surface technologies, we expect revenue and adjusted EBITDA margin to be in line with the first quarter.

al: This includes the impact of the sale of measurement solutions.

Speaker Change: Now I will also give you an update to our full year outlook.

al: Given the anticipated strength of our first half results and taking into account a range of outcomes.

al: And now expect total company adjusted EBITDA to approximate $1 29 billion when excluding foreign exchange and an increase of approximately $40 million from the guidance we provided in February.

Douglas J. Pferdehirt: But specifically, what I was referring to was in a mature basin, there are really two opportunities: to find a different producing horizon, in the case of the Paleogene, it's a deeper horizon in the Gulf of Mexico, or it could just be a further step out from the host facility.

al: Within this total company outlook, we see the following relative to the guidance provided in February.

al: Subsea revenue and EBITA margin, both trending towards the upper half of the guidance ranges.

Douglas J. Pferdehirt: And so what are the technologies that are the key enablers to get to the Paleogene, it's 20K, and to have a full 20K production system fully qualified, supported by the regulators as well as our clients, you know, a major achievement. As noted, this is our third project; this is the first integrated 20K project to be awarded, and as alluded to in the script, we expect more to come in the future. When you look at the further step-outs in a mature basin, that will be enabled by all electronics. So this will be the primary application in traditional energy or the oil and gas environment when it comes to all-electric production systems.

al: Both revenue and EBITDA margin for surface technologies as well as corporate expense remain on track for the midpoint of their respective guidance ranges.

al: Lastly, I want to discuss our current view of our capital structure in March we received an upgrade from standard and poors to investment grade. This upgrade serves as a significant milestone for the company and reflects the tremendous efforts by the entire organization to materially Deleveraged our balance sheet.

al: <unk> and achieve investment grade metrics.

al: With this update we are also revising our target capital structure to approximately $800 million of cash and $800 million of debt together amounting to zero net debt.

Douglas J. Pferdehirt: Again, enabling a much greater distance, up to three to four times further than you can do via using hydraulic controls to reach back to an existing host facility. So the two key technology enablers, in this case, are 20K and all-electric. In the case of HISEP, as we talked about in the first quarter, it was advanced CO2 separation, subsea separation technology, where we are separating and then re-injecting oil on the seabed.

al: This is a $500 million reduction versus our prior target annual level, we can achieve over time as scheduled debt maturities come due.

al: Importantly, we believe this capital structure provides us with the flexibility to manage our operations and fund our capital needs. While also delivering on our commitment to shareholder distributions.

Speaker Change: Operator, you May now open the line for questions.

Speaker Change: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Douglas J. Pferdehirt: Great. Thanks a lot, Doug. Our next question comes from James West with Evercore ISI. Please go ahead. Hey, good morning, guys. Good morning, James. How are you? I'm doing all right, Doug. How are you?

Speaker Change: We ask that you please limit yourself to one question and one follow up question.

Speaker Change: We will now take a moment to compile a roster.

Speaker Change: Our first question comes from the line of our J ROM.

James West: Good. Thank you. Actually, I saw your results, so I know how you're doing.

J ROM: With J P. Morgan Securities. Please go ahead.

J ROM: Good morning, Doug I wanted to see if you could provide more details on northern endurance. What do you think drove your success on the projects.

Douglas J. Pferdehirt: You're doing well. Thank you. I wanted to start with a little bit of a bigger picture, and something we've talked about a bit in the past. With the backlog that you have now, all of these EPCI contracts coming through, how are you feeling about capacity? Are you starting to really leverage some of these joint ventures and partnerships to add to that capacity to make sure you can deliver on all those backlogs? James, a timely question.

J ROM: Maybe more details on the scope and perhaps what technologies.

J ROM: His STI, providing in terms of the Ccs nature of that project.

J ROM: Thank you Arun and good morning.

Douglas J. Pferdehirt: Look this was a as stated in my prepared remarks, a major milestone for our company, but also for the industry. This will be the first application of an all electric production system.

Speaker Change: We are extremely extremely proud to have been selected there was a very rigorous technical qualification.

James West: I would expect... that you will see us utilize the support that we have within our ecosystem to be able to continue to grow and expand the IEPCI market. And just for those that are not as familiar with, you know, the terminology, you know, the ecosystem, you know, we made a decision years ago that we would restructure the way that the subsea industry operated, both from the integrated project. But also in the way that we would drive higher asset utilization and drive through cycle returns to a standard that was not only higher than in the past but sustainable. And the way we would do that was to work well with others. And that's the personality of our company. You know, we're not a big monster.

Douglas J. Pferdehirt: Required to be able to be considered and to receive the award and we're pleased that we came out on top of that quantification.

Douglas J. Pferdehirt: Think of it as everything from the shore to the sea floor.

Douglas J. Pferdehirt: We call it the integrated carbon transportation system.

Douglas J. Pferdehirt: We have a specific C O 2.0 tree so part of our two family we have developed to configure to order <unk> injection tree.

Douglas J. Pferdehirt: It looks simplified compared to a traditional oil and gas tree, but it's actually very technical particularly when it comes to the ceiling surfaces.

Douglas J. Pferdehirt: Because of the number of cycles that you will the number of times that you were opening closer would just called a cycle the cycling of about <unk>.

Douglas J. Pferdehirt: <unk> injection a tree is far far greater than what you would do in a typical oil and gas development. So a higher technical standard we were extremely pleased to be selected for that and we have that entire scope and what's really interesting about it is the distance that is being traversed.

Douglas J. Pferdehirt: We work well with people. We have very deep relationships, and they're all trust-based. And we put a lot of time and effort into that. So what that allowed us to do was to go out to other vessel operators and introduce them to the IEPCI concept. And as the IEPCI market continues to grow and become a very significant portion of the total projects that are being awarded today, providing access to our partners to work alongside us on those projects and deliver integrated projects.

Douglas J. Pferdehirt: There's over 145 kilometers and there will be nothing floating on top of the water in other words, we've taken it all subsea much like we did on the Ccs project in Brazil on the <unk> project. It is it is just a major major milestone, where we are really driving the ccs market by enabling the <unk>.

Douglas J. Pferdehirt: The floor.

Douglas J. Pferdehirt: To be a key component of these projects.

Speaker Change: Great, Doug and I wanted to see if you could maybe comment in your prepared remarks, you talked about some new technologies that you're using to unlock opportunities in more mature basins. I was wondering if you can maybe expand upon that and maybe comment on what you see in some of.

Douglas J. Pferdehirt: So that's what allows us to, if you will, expand beyond theoretical capacity in the installation portion of the projects. But there's also the manufacturing side of the project. And this is a significant benefit, and I think one that's not been fully understood, but as you see it showing up in our financial results now, the ability to be able to get leverage by using subsea 2.0 configured to order. It runs through our plant at approximately double the cadence, or one half the time, as a traditional 1.0, which is what the rest of the industry is building today.

Douglas J. Pferdehirt: The.

Douglas J. Pferdehirt: More mature basins I know one of your peers talked about anticipating maybe an improvement in West Africa, starting next year, but maybe if you could elaborate on that.

Douglas J. Pferdehirt: Yes.

Speaker Change: Sure. So there is just the I would call it.

Speaker Change: Traditional projects that are likely to be driven forward in mature basins, given the project economics by doing it with an integrated.

Speaker Change: With an integrated approach, what we call IEP Ci along with our to.

Speaker Change: Our family, we can help unlock the economic value of those projects, but specifically what I was referring to was in a mature basin.

Douglas J. Pferdehirt: So they have to get additional capacity either through consolidation or by expanding their capital budgets and building plants, whereas we've invested in the technology, and the technology and then the system of going from engineering to order to a configure to order allows us to have that additional cadence through the plant. So again, allowing us to expand far beyond the traditional theoretical capacity. So look, we monitor the situation very closely. We're very open.

Speaker Change: There's really two opportunities is define a different producing horizon.

Speaker Change: And then in the case of the payload Paleogene, it's a deeper horizon.

Speaker Change: In the Gulf of Mexico, or it could just be a further step out.

Speaker Change: <unk>.

Speaker Change: From the host facility and so what are the technologies that are the key enablers to get to the Paleogene, It's 20, K and to have a full 20 K production system fully qualified supported by the regulators as well as our clients major achievement. As noted this is our third project is the <unk>.

Douglas J. Pferdehirt: We share it with our clients. We're having very long-term discussions, well beyond the time period that we would traditionally be having discussions. And they have the confidence to have those discussions with us because of this new operating model. And they see that we, you know, they understand that we are doing things that will allow us to have the capacity to continue to expand and deliver and support their projects. Okay, God, very helpful, Doug. And then I thought some of the first-time awards, particularly on the carbon capture side, were fascinating. Could you maybe expand on this use of C4 for CCS?

Speaker Change: <unk> integrated <unk> project to be awarded.

Speaker Change: And as alluded to in the script, we expect more to come.

Speaker Change: In the future.

Speaker Change: When you look at the further step outs in a mature basin that will be enabled by all electric.

Speaker Change: So this will be the primary application in the traditional energy or the oil and gas.

Speaker Change: Environment when it comes to the all electric production systems again, enabling a much greater distance up to three to four times further than you can do.

Speaker Change: Using hydraulic controls.

Speaker Change: To reach back to an existing host facility. So the two key technology enablers in this case being 20 K.

James West: And was this contemplated initially as we targeted these projects? And if so, you know, additional offshore projects all targeting that. And then the technology, are you using any kind of existing technology, or is this new, novel technology? Both great questions.

Speaker Change: And the all electric and in the case of <unk> as we talked about in the first quarter. It was.

Speaker Change: Advanced Cotr separation subsea separation technology.

Speaker Change: Where we are separating than reinjecting coal on the seafood.

Douglas J. Pferdehirt: So, look, we've been working on this for quite some time. And you know, James, as you know, we kind of look at any challenge from the seafloor up. And I think we might be the only company that really takes that approach because, you know, most companies and, quite frankly, most developers kind of think about, you know, onshore. And then if they go offshore, they want to have, you know, some sort of fixed bottom like, you know, a monopower or something that is touching the seafloor.

Speaker Change: Great. Thanks, a lot Doug.

Speaker Change: Our next question comes from the line of James West with Evercore ISI. Please go ahead.

James West: Hey, good morning, guys.

James West: Good morning, James how are you.

James West: I'm doing all right Doug how are you.

James West: Good thank you actually I actually.

James West: I saw your results I know how're you doing.

James West: Doing well.

Speaker Change: Thank you so I wanted to start a little bit bigger picture.

James West: It's something we've talked about a bit in the past.

James West: With the backlog that you have now all of these.

James West: PC.

Speaker Change: EPC contracts coming through.

Speaker Change: How are you feeling about capacity.

Speaker Change: And are you starting to really lever into some of these.

Speaker Change: Joint ventures, and partnerships to add to that capacity to make sure you can deliver on all of this backlog.

Douglas J. Pferdehirt: Or if they go further offshore, they want to have some sort of floating structure. But we fundamentally believe the right way to do it is to eliminate the greenhouse footprint associated with those structures is to put everything on the seafloor.

James West: James a timely question.

James West: I would expect.

Speaker Change: That you will see us.

James West: <unk>.

James West: Utilize the support that we have within our ecosystem.

Speaker Change: Be able to continue to grow and expand the PCI market and just for those that are not as familiar with the terminology. The ecosystem, we made a decision years ago that.

Douglas J. Pferdehirt: But it takes very advanced technology, material science, automation, and controls that, quite frankly, there are very few places in the industry, but beyond the industry, you know, in academia, et cetera, that really exist today. And we're proud that's where we operate. You know, we're putting things one to two miles deep in the water on the seafloor, designing them to last for, you know, 25 to a 35-year life with all advanced automation, robotics, and controls that, quite frankly, challenge anything that's being done in the industry or beyond the industry today.

Speaker Change: And that we would restructure the way that.

Speaker Change: The subsea industry operated both from the integrated projects, but also from the way that we would drive higher asset utilization and drive through cycle returns to a standard that was not only higher than in the past, but sustainable and the way we would do that was to work well with others.

Speaker Change: And Thats the personality of our company, we're not a big Monster, we work well with people, we have a very deep relationships and they're all trust based and we've put a lot of time and effort into that so what that has allowed us to do was to go out to other vessel operators.

Speaker Change: Introduce them to the <unk> concept.

Speaker Change: And as the <unk> market continues to grow and become.

Speaker Change: Sure.

Speaker Change: Very significant portion of the total projects that are being awarded today.

Douglas J. Pferdehirt: So when we look at a challenge like CCS, sure, you know, we can be involved in a terrestrial project and happy to be involved in those projects. But fundamentally, you know, we believe that the safest and best place to store the CO2 will be in saline or abandoned aquifers or abandoned depleted reservoirs far offshore.

Speaker Change: Giving providing access to our partners to work alongside us on those projects and deliver integrated projects. So that's what allows us to if you will expand beyond theoretical capacity.

Douglas J. Pferdehirt: And they exist, they're well known; you can then transport from shore all the way out to those injection fields, all subsea without having any sort of floating infrastructure as demonstrated in the Northern Endurance Partnership project, as we described. From a technological point of view, you know, it is important to know that there are people that believe you can just reverse the flow and use existing oil and gas infrastructure. That's not true.

Speaker Change: In the installation portion of the projects, but there's also the manufacturing side of the projects and the way in.

Speaker Change: And this is the.

Speaker Change: A significant benefit and I think one that's not been fully understood that as you see it showing up in our financial results now of the ability to be able to get leverage by using subsea to configure to order. It runs through our plant at approximately double the cadence or <unk>.

Speaker Change: After that time.

Speaker Change: As a traditional 1.0, which is with the rest of the industry is building today. So they have to get additional capacity either through consolidation or by expanding their capital budgets and building plant, whereas we've invested in the technology and the technology and then the system.

Douglas J. Pferdehirt: It is much more of a technical challenge than that would make one believe. I talked a little bit about the tree and its design and the valves on the tree, as I explained. It also comes down to the control and automation and also the monitoring that's required in these projects. So we have developed an entire, what we again call an integrated carbon transportation system that allows us to take it, you know, basically from the host facility to an injection point.

Speaker Change: Going from an engineering to order to configure to order allows us to have that additional cadence through the plant, so again, allowing us to expand far beyond the traditional theoretical capacity. So look we monitor the situation very closely we're very open we share with our clients, we're having very long term discussions.

Douglas J. Pferdehirt: And we definitely see the trend and not just in CCS but also in other forms of energy and new energies that, you know, are really for them to reach their fullest potential to achieve the scale that is required. We see this going offshore, and that is certainly the trend and one that we are helping to enable, and we're proud to do so.

Speaker Change: Well beyond the time period that we would traditionally be having discussions and they have the confidence to have those discussions with us because of this new operating model and they see that.

Speaker Change: They understand that we are doing things that will allow us to have the capacity to be to continue to expand and deliver and support their projects.

Speaker Change: Okay got it very helpful. Doug and then I thought the some of the the first time awards, particularly on the carbon capture side of or fascinating.

Luke Lemoine: Thanks, Doug. Our next question comes from a line by Luke Lemoine with Piper Sandler. Please go ahead.

Douglas J. Pferdehirt: Could you maybe expand on this use of the <unk> four for Ccs.

Speaker Change: And was this contemplated initially as we targeted these projects.

Operator: Hey, good morning, Doug. You recapped the merits of an all-electric subsea already, and you had the first announcement with Northern Endurance for CC. Luke, we, uh, maybe you dropped off.

Speaker Change: Sure.

Douglas J. Pferdehirt: If so are there additional offshore projects all targeting that and then is the technology are you using kind of existing technology or is this new novel technology.

Speaker Change: Both great questions.

Luke Lemoine: If you don't mind repeating the question, you dropped off Luke. Yeah, sure. Just talking about, you know, the first all-electric system for Northern Endurance for CCS, you know, when you kind of look at oil and gas, when can we start seeing the uptake for all of that? And when you're speaking with customers, you know, what are the pinch points if there are any, when you're, Sure, thank you, Luke.

Speaker Change: So.

Speaker Change: Look we've been working on this for quite some time.

Speaker Change: And you know James as you know, we kind of we look at any challenge from the sea floor up.

Speaker Change: And I think we might be the only company that really takes that approach because.

Douglas J. Pferdehirt: Most companies and quite frankly, most developers kind of think about onshore.

Douglas J. Pferdehirt: Onshore and then if they go offshore they want to have some sort of fixed bottom like.

Douglas J. Pferdehirt: Our motto power or something that.

Douglas J. Pferdehirt: It is touching the sea floor or if they go further offshore they wanted to have some sort of a floating structure.

Luke Lemoine: Look, oil and gas is happening in parallel to the CCS opportunities, so you will see oil and gas opportunities using all-electric, you know, full-field development, and I stress full-field because, you know, keep in mind, we've been using electric actuation for many years, and we have over 600 all-electric actuators installed on subsea equipment around the world. So, that part of it is not novel, but to go to a fully electric system, which would include an electric subsurface safety valve, would be unique.

Douglas J. Pferdehirt: We fundamentally believe the right way to do it is to eliminate the greenhouse footprint associated with those structures is to put everything on the seafloor.

Douglas J. Pferdehirt: But it takes very advanced technology material science automation and controls that quite frankly, there's very few places in.

Douglas J. Pferdehirt: In the industry, but beyond the industry.

Douglas J. Pferdehirt: In academia et cetera that really exist today, and we're proud that to where we operate.

Douglas J. Pferdehirt: We're putting things one to two miles deep in the water on the sea floor designed to last for 25% to 35 year life with all advanced automation robotics and controls.

Douglas J. Pferdehirt: That quite frankly are challenge anything that's being done.

Douglas J. Pferdehirt: In the industry or beyond the industry today so.

Douglas J. Pferdehirt: When we look at a challenge like Ccs short, where we can be involved in a terrestrial projected and happy to be involved in those projects, but fundamentally we believe that the safest and best place to store the <unk> will be in say liner or abandon aquifer are abandoned.

Douglas J. Pferdehirt: And that's a partnership for us, working together with Halliburton to enable an all-electric sub-CPO development. But again, there's commercial activity going on in parallel, so you will see more in that area also. I would stress, though, in the area of oil and gas, that I see bigger opportunities in the tiebacks. And why is that?

Douglas J. Pferdehirt: Depleted reservoirs for offshore.

Douglas J. Pferdehirt: They exist they are well known.

Douglas J. Pferdehirt: You can then transport from shore, all the way out to those.

Douglas J. Pferdehirt: Look, an all-electric tree is more expensive than an electro-hydraulically operated tree for all the right reasons. Now, when you look at it from a tieback point of view, those economics dissipate very quickly because in a long-distance tieback, the cost of the umbilical across that very long distance to be able to use hydraulic actuation would either be limiting, it would not be possible, or it But when you look at it on a unit cost versus a unit cost, an all-electric tree is more expensive.

Douglas J. Pferdehirt: Into those injection fields, all subsea without having any sort of a floating infrastructure is being demonstrated in the northern endurance partnership project.

Douglas J. Pferdehirt: As we described from a technology point of view.

Douglas J. Pferdehirt: It is important to note there are people that believe you just reverse the flow would use existing oil and gas infrastructure. That's not that's not true. It is much more of a technical challenge than than that.

Douglas J. Pferdehirt: Would make one believe I talked a little bit about the tree and the tree design the valves on the tree as I explain it also comes down to the control and automation and also the monitoring that's required on these projects. So we have developed an entire we again Cowen integrated carbon transportation system that allows us to take.

Douglas J. Pferdehirt: So therefore, in a greenfield development, I think those opportunities will be there. But the big market, and I stress, it will be a significant market, will be in the area of brownfield. We've talked about it before. If you look around the world at all the floating production assets that are out there today, FPSOs, FPSUs, they're producing at between 60% and 70% of nameplate capacity.

Douglas J. Pferdehirt: It basically from the host facility to an injection point.

Douglas J. Pferdehirt: And we would see we definitely see the trend and not just in Ccs, but also in other forms of energy and new energies that were really for them to reach their fullest potential to achieve the scale that is required we see this going offshore and that is certainly the trend and one that.

Douglas J. Pferdehirt: We are helping to enable and we're proud to do so.

Douglas J. Pferdehirt: All-electric brownfield tiebacks will allow them to be able to bring that back up to near nameplate capacity without any significant capital cost. And we've gotten the cycle time now on those brownfield projects down to such a level, slightly over one year, that it makes the economics very, very competitive. Our next question comes from the line of Guillaume Delaby with Burns. Please go ahead. Yes, good morning, Doug. Good morning, Ralph

Speaker Change #102: Got it thanks, Doug.

Douglas J. Pferdehirt: Our next question comes from the line of Luke.

Luke Lemoine: <unk> with Piper Sandler. Please go ahead.

Luke Lemoine: Hey, good morning, Doug.

Luke Lemoine: You recap the merits of all electric subsea already and you have the personnel stones in order and turns for Ccs.

Speaker Change #103: Look we made you dropped off Luke.

Luke Lemoine: If you don't mind repeating the question you dropped off Luke.

Speaker Change: Sure just talking about the first all electric system for.

Speaker Change #105: Northern endurance for Ccs.

Speaker Change: <unk>.

Luke Lemoine: When you kind of look at oil and gas when can we start seeing the uptake for all electric.

Guillaume Delaby: Maybe a quick question regarding your new capital allocation policy. I'm not sure we can call it that. So is it essentially resulting from, I would say, a better financial outlook? Or is there also some kind of underlying, I would say, strategic thinking behind it?

Luke Lemoine: And when Youre speaking with customers one of the pinch points. If there are any when you're chatting with them.

Speaker Change #100: Sure. Thank you Luke.

Speaker Change #100: The.

Speaker Change #100: Oil and gas is happening in parallel to the Ccs opportunity. So you will see oil and gas opportunities using all electric.

Guillaume Delaby: So maybe you can elaborate a little bit on that and answer an associated question. Maybe, I know it's time for capital discipline, but are you still considering or will you consider doing some small targeted acquisitions again in the coming quarters? Thank you. So, let me start with the second part, Guillaume, and thank you for the questions. Look, we have and will continue to do small targeted acquisitions, but in most cases, we're taking small investments and early startups. Often, it doesn't cost any capital because we're using – if you will – financial capital because we're using human capital.

Speaker Change #101: Full field development and I stress full field because keep in mind, we've been using electric actuation for many years and we have over $600 and electric actuators installed on subsea equipment.

Speaker Change #101: The world So that part of it is not novel up but to go to a fully electric system, which would include an electric subsurface safety valve.

Speaker Change #101: Would be unique and that's a partnership for us.

Speaker Change #100: We're working together with Halliburton to enable an all electric.

Speaker Change #100: Subsea field development, but again.

Speaker Change #100: There is commercial activity going on in parallel.

Speaker Change #100: So you will see more in that area also I would stress, though in the area of oil and gas that.

Douglas J. Pferdehirt: The greatest currency we have in our company today is our subsea engineering. It is very unique to our company, and we have, by far, the most significant and the most experienced and talented workforce.

Speaker Change #100: I see the bigger opportunities in the tie backs and why is that.

Speaker Change #100: Okay, and always extra tree is more expensive than a hydraulically electro hydraulically operated three.

Speaker Change #100: For all the right reasons.

Douglas J. Pferdehirt: So often, we can trade, if you will, subsea engineering hours with a company who's trying to tackle this challenge of, how do I go from being a terrestrial developer to being an offshore developer? Things change quite a bit. And we have that knowledge, particularly when it comes to dynamic design. And I won't get into the details of that, but that's a major component. And then also, obviously, putting things on the seabed.

Speaker Change #100: Now when you look at it from a tie back point of view.

Speaker Change #100: Those economics dissipate very quickly because of their long distance tieback, the umbilical and the cost of the umbilical across that very long distance to be able to use hydraulic actuation would either be limiting it would not be possible or it would be very costly, but when you look at it on a unit cost versus a unit cost.

Speaker Change #100: And always that's a tree is more expensive. So therefore in a greenfield development.

Speaker Change #100: Think those opportunities will be there.

Speaker Change #100: And but the big market and I stress it will be a significant market will be in the area of brownfield, we've talked about it before if you look around the world and all the floating for the floating production assets at a relative today <unk> psus, they're producing at between 60 and 70% of nameplate capacity.

Douglas J. Pferdehirt: I'm going to have Alf weigh in on the first part of your comment, but I do want to comment, Guillaume, on two major messages that Alf delivered earlier. One, we were upgraded by S&P. And two, we were targeting net zero in terms of our net debt. So two major milestones. But I'll pass it over to Alf.

Speaker Change #100: <unk> electric.

Speaker Change #100: <unk> field tie backs will allow them to be able to bring that back up to near nameplate capacity without any significant capital cost and we've gotten the cycle time now on those brownfield projects down to such a level slightly over one year that it makes the economics very very compelling.

Alf T. Melin: Yeah, Doug, thank you. And maybe just to build on that, so today we have a gross debt of just about $1 billion and a net debt of $327 million. And we have previously stated that we will operate this company on $800 million of cash. And further, as Doug said, I honestly believe that the net debt-neutral position is a good target for us. And it would imply that we would reduce debt by a little bit more than $200 million from the current $1 billion level.

Speaker Change #106: Our next question comes from the line of <unk> <unk> with Bernstein. Please go ahead.

Bernstein: Yes, good morning, Doug Good morning, maybe a quick question regarding Europe, you kept coal allocation policy I'm not sure. We can put it that way so hit essentially resulting from I would say a bit our financial outlook.

Alf T. Melin: And so this is a, call it, an intermediate-term target and not necessarily where we need to be immediately. And we certainly have debt that is going to mature over the next two years that will take us there naturally. I will also emphasize that, you know, given our business outlook and the strong cash generation we see ahead, we continue to believe that share repurchases remain one of our best uses of funds, and we demonstrated that by distributing the majority of the measurement solutions proceeds here in the first quarter.

Speaker Change #111: Or is there also some time off.

Speaker Change #107: I would say strategy.

Speaker Change #100: King behind it.

Speaker Change #104: So maybe if you can elaborate a little bit on that.

Speaker Change #116: Good question, maybe I know, it's time for capital discipline, but.

Speaker Change #104: Are you still considering.

Speaker Change #104: You may consider to do some small targeted acquisition again.

Speaker Change #109: Thank you.

Speaker Change #108: So let me start with the second part D. AUM and thank you for the questions look we have and will continue to do.

Alf T. Melin: But we also remain committed to achieving investment grade, and as Doug said, we achieved an upgrade to investment grade from S&P now just in March. But overall, when you think about it longer-term and strategically, and maybe that's what you're asking, with expected growth in EBITDA and with the debt keep on coming down from current levels, clearly expect to be below the one-time gross debt to EBITDA leverage ratio as we go forward. Okay, very useful. I end it here. Thank you, Alf. Our next question comes from the line of Marc Bianchi, with T.D. Cowan

Speaker Change #108: Small targeted acquisitions, but in most of the in most cases, we're taking.

Speaker Change #104: Small investments and early startups.

Speaker Change #104: Often it doesn't cost any capital because we're using financial capital because we're using human capital the greatest currency, we have in our company today as our subsea engineering. It is very unique to our company and we have by far the most significant and most experienced and talented workforce. So often we can trade if you will.

Speaker Change #104: Subsea engineering hours to a company who's trying to tackle this challenge of how do I go from being a terrestrial developer to being an offshore developer things change quite a bit and we have that knowledge, particularly when it comes to dynamic design and I won't get into the details of that but that's a major component and then also on.

Marc Bianchi: Please go ahead. Hi, thank you. I wanted to ask about... sort of your scope of work on large projects. And I've been looking at the Whiptail Award and the YARU earlier.

Speaker Change #104: Obviously, putting things on to the seafloor im going to weigh.

Speaker Change #112: Weigh in on the first part of your comment, but I do want to comment Gil and there were two major mess.

Marc Bianchi: I think you had expected them to be over a billion dollars in inbound, and they ended up being 500 to a billion. I suspect what might be going on there is some of the scope that you anticipated getting didn't materialize for you; it went to competitors. But could you maybe address that and then talk about for your direct awards sort of what scope you're getting right now versus maybe what your opportunity could be over? Thanks, Marc. I appreciate it. And look, that's an important question.

Speaker Change #112: Messages that <unk> delivered earlier, one we were upgraded by S&P and two we are targeting net zero.

Speaker Change #104: In terms of our net debt. So two major two major milestones, but I'll pass it over to Doug.

Douglas J. Pferdehirt: Thank you and maybe just to build on that so it today. So we have a gross debt of just above 1 billion and a net debt of $327 million and we have previously stated that we will operate this company on $800 million of cash.

Douglas J. Pferdehirt: If it's on your mind, then we need to clarify it. So I appreciate you giving us the opportunity to clarify it. The subsea opportunity list that we publish every quarter is published from an industry perspective. [inaudible] And the full scope of that is reflected in the value of those awards. Or yeah, what we place as the value, if you will, we use purple, blue, and red on our charts.

Speaker Change #104: And further as Doug said.

Speaker Change #104: Honestly believe that the net debt neutral position position is a good target for us and it would imply that we would reduce debt by a little more than 200.

Speaker Change #104: We reduced debt by a little bit more than $200 million from the current 1 billion level and so this is a call it an intermediate term target yeah.

Speaker Change #104: And not necessarily where we need to be immediately.

Speaker Change #104: And we'd certainly have depth that is going to mature over the next two years that will take us there naturally I will also emphasize that.

Douglas J. Pferdehirt: So hopefully that clarifies, you know, this is just what the company happens to be tendering. We may or may not be targeting the full scope of the project. In many cases, we are.

Speaker Change #104: Debt.

Speaker Change #104: Given our business outlook and our strong cash generation. We see ahead, we continue to believe that share repurchases remains one of our best uses of funds and we demonstrated that by.

Douglas J. Pferdehirt: What's important also to understand is that this is a subset of the opportunity list for TechnipFMC. Now, this is the full opportunity set for the competition. But for TechnipFMC, because we are an integrated company, because we have IEPCI, because we do integrated feed studies, we have the ability to enter into an exclusive proprietary integrated feed study that upon completion, assuming we achieve the economical hurdle rate for the project and the project receives FID, that project is then directly awarded to our company. Those aren't on the subsea opportunity list. Occasionally, one might show up on there just because it's such a well-known project; we need to put it out there, but because these are direct awards and proprietary to us, they're not on that opportunity list.

Speaker Change #104: Distributing the majority of it.

Speaker Change #104: Measurement solutions proceeds hearing in the first quarter.

Speaker Change #104: But we also remain committed to achieving investment grade and as Doug said, we achieved an upgrade to investment grade from S&P now just in March but overall, when you think about it longer term and strategically and maybe that's what you're asking with expected growth in EBITDA.

Speaker Change #104: And we'd be depth keep on coming down from current levels clearly expect to be below one time draw steps to EBITDA leverage ratio as we go forward.

Speaker Change #114: Okay very useful.

Speaker Change #110: Thank you al.

Speaker Change #110: Our next question comes from the line of Marc Bianchi.

Marc Bianchi: With TV Cowen. Please go ahead.

Marc Bianchi: Hi, Thank you.

Marc Bianchi: I wanted to ask about.

Marc Bianchi: Sort of your scope opportunity on on large projects.

Douglas J. Pferdehirt: So we have a second list of opportunities that we look at every day, and that's really what drives the performance of our company and, quite frankly, the outperformance and why our inbound numbers often surprise to the upside. So just to give you a little bit of an idea of what's, you know, there are really two lists. We're looking at one, the world's looking at the other.

Marc Bianchi: I'm looking at the wet tail award in the <unk> earlier, I think you had expected them to be over $1 billion of inbound and they ended up being 500 to a $1 billion I suspect what might be going on there is some of the scope that you anticipated.

Speaker Change #110: To get Didnt Didnt materialize for you went to competitors, but could you maybe address that and then talk about for your direct awards sort of what what scope youre getting right now versus maybe what your opportunity could be over time.

Speaker Change #110: Yeah.

Speaker Change #118: Thanks, Mark appreciate it and look that's important.

Douglas J. Pferdehirt: We may not be tendering some of the projects, by the way, on the subsea opportunity list, because we may not think that they're projects that we can contribute the greatest value to, meaning integrated or subsea 2.0 or whatever it may be, or we may be concerned about, you know, something about the projects; we may or may not tender those as well. As far as the scope is concerned, I think, you know, we have the most comprehensive; we can do an entire subsea project.

Speaker Change #115: Important question if it's on your mind, then we need to clarify it. So I appreciate you, giving us the opportunity to clarify it.

Speaker Change #119: The subsea opportunity list that we publish every quarter is published from an industry perspective.

Speaker Change #113: Think of it as the rig count if you will so we're trying to demonstrate to give.

Speaker Change #113: People the opportunity to be able to see the opportunity set that exists within the subsea industry. Therefore, when we put that out that's not what we expect or what we anticipate.

Speaker Change #113: These are tenders. These are projects that are being tendered by our clients.

Speaker Change #113: And the full scope of that is reflected in the value of those awards are yet we places the value. If you will we use purple blue and Red on our chart. So hopefully that clarifies. This is just with the comfort with the company happens to be tendering, we may or may not be targeting the full scope of the project.

Douglas J. Pferdehirt: We don't have to bring in a third party or buy third-party, you know, key components. We've talked about it before, the ability to be able to have the entire SPS, the entire surf, both products and installation capability, you know, makes us and positions us uniquely. Okay, thanks for that, Doug. I'll turn it back. Our next question comes from the line of Kurt Hallead with Benchmark.

Speaker Change #113: In many cases, we are.

Speaker Change #113: Whats important also to understand is that is a subset of the opportunity list for Technip FMC now that is the full opportunity set towards the competition, but for technique FMC because we are an integrated company because we have IEP Ci because we do integrated feed feed studies.

Kurt Hallead: Please go ahead. Hey, good morning, Doug. Good morning, everybody.

Kurt Hallead: Maybe just a quick follow-up, you know, with respect to Marc's question, right? So again, in the recent past, you guys have given, you know, some of your outlook regarding, you know, what you would anticipate your subsequent order book to look like over the course of the next couple of years. That wasn't explicitly referenced in this call, but talk about quality over quantity. And then you talk about new technologies unlocking new business opportunities. I was wondering if you might be able to give us some update on how the order outlook has changed, if it has changed at all.

Speaker Change #113: We have the ability to enter into an exclusive <unk>.

Speaker Change #113: <unk> integrated feed study that upon completion of <unk>.

Speaker Change #113: Sumit, we achieved the economical hurdle rate for the project and the project receives if that project that project is then direct awarded to our company.

Speaker Change #113: Those arent on the subsea opportunity list occasionally one might show up on there just because it's such a well known project we need to put it out there, but because these are direct awards and proprietary to us they're not on that opportunity list. So we have a second opportunity list that we look at every day.

Speaker Change #113: And that's really what drives the performance of our company and quite frankly, the outperformance and why our inbound numbers often surprise to the upside. So just to give you a little bit of an idea of which theres really two less we're looking at one of the world's looking at the other we may not be tendering some of the projects by the way on the subsea opportunity list.

Douglas J. Pferdehirt: Again, Kurt, you know, much like Marc, thank you for clarifying because, you know, we do our best to communicate effectively, but you learn as well. So, the fact that we did not mention that we have a target of 30 billion orders for three years through 2025 or that we remain very confident in achieving our 2024 guidance of approaching 10 billion orders, us not saying it, we thought it was a strong message that we're very confident, but let me be very clear, we remain very, very confident.

Speaker Change #113: Because we may not think that they are projects that we can contribute the greatest value to meaning integrated or subsea two point or whatever it may be or we may be concerned about.

Speaker Change #113: Something about the projects, we may or may not tender those as well as.

Speaker Change #113: As far as the scope I think you know we are we have the most comprehensive we can do.

Douglas J. Pferdehirt: In terms of the feed activity, in terms of the tendering activity, and in terms of the, I would say, very mature, meaning late stage, pre-FID conversations that I'm having with clients today, and I'm not complaining about it, Marc, but I'm very, very busy. That's okay. That's all right. So good. All right. That's it for me.

Speaker Change #113: An entire subsea project, we don't have to bring in a third party or by third party.

Speaker Change #113: Key components, we've talked about it before the.

Speaker Change #113: The ability to be able to have the entire Sps the entire serve both products and installation capability.

Speaker Change #113: US and position us and positions us uniquely.

Speaker Change #117: Okay, Thanks to that Doug I'll turn it back.

Speaker Change #117: Our next question comes from the line of Kurt <unk> with benchmark. Please go ahead.

Kurt Hallead: Thanks for clarifying. I appreciate it. Our next question comes from the line of Scott Gruber with Citigroup. Please go ahead. Yes, good morning. Morning, Scott.

Kurt: Hey, good morning, Doug Good morning, everybody.

Kurt: Good morning, Kurt.

Kurt: Hey, maybe just a quick follow up.

Kurt: With respect to Mark's question right. So again.

Kurt: And the most recent past you guys have given some.

Scott Gruber: I got one for Alf, you know, with the profitability of the business improving, the tax rate should trend toward a more normalized level over time. And we have the guidance, you know, for this year. How should we think about the evolution of the tax rate in 25 and 26? You know, where could that fall to in the years ahead?

Kurt: Your outlook regarding what you.

Speaker Change #129: I would anticipate your subsea order book to look like over the course of the next couple of years.

Speaker Change #120: That wasn't explicitly referenced on this call. However.

Speaker Change #120: Given the dynamics at play where you.

Speaker Change #120: Talk about.

Speaker Change #120: Yeah.

Speaker Change #120: Quality over quantity and then you talk about new technology, unlocking new business opportunities.

Speaker Change #120: I was wondering if you might be able to give us some update on how that on how the order outlook has changed or.

Alf T. Melin: So first of all, maybe just point out that if you look at the effective tax rates for the quarter, there is a little bit of a timing effect of it being a little bit lower than normal in this quarter. But first of all, we stand behind our guidance of 280 to 290 million for 2024. And if you consider the growth in EBITDA, et cetera, that we are projecting, I'd say that this is implying a roughly 35% effective tax rate for the year with our current earnings mix as planned. As we talked about a little bit before, we are targeting a normalized tax rate of 30%, and I would continue to build on that or model on that if you're looking for the future years.

Speaker Change #120: If it has changed at all.

Speaker Change #124: Again Kurt.

Kurt: Like Mark Thank you for clarifying because we do our best to communicate effectively but.

Kurt: You learn you learn as well so the fact that we did not mention that.

Kurt: We have a target of $30 billion of orders for three years through the through 2025 are that we remain very confident in achieving our 2024 guidance of approaching $10 billion of orders.

Kurt: It's not it's not saying it we thought was was a strong message that we're very confident but let me be very clear we remain very very confident in terms of the in terms of the feed activity in terms of the tendering activity and in terms of the I would say very mature.

Kurt: Meaning late stage <unk> conversations that I'm, having with clients today.

Alf T. Melin: It largely comes from a combination of earnings mix and some other utilization of tax opportunities that we couldn't take advantage of in the past. So overall, we remain confident in driving towards a 30% normalized tax rate. And how long do you think it would take to get there?

Speaker Change #121: And I'm not complaining about it mark, but I'm very very busy.

Speaker Change #122: Sorry, sorry.

Speaker Change #123: Okay. Okay.

Speaker Change #136: Yes, that's it from me thanks for clarifying appreciate it.

Speaker Change #123: Our next question comes from the line of Scott Gruber with Citigroup. Please go ahead.

Scott Gruber: Yes, good morning.

Scott Gruber: Good morning, Scott.

Scott Gruber: Is that something that's possible in 25 or, you know, 26? I mean, you're in the right ballpark of, you know, somewhere in that between those two years. Yep. Okay. Okay. That's it for me.

Scott Gruber: I got one for al.

Scott Gruber: You know with the profitability of the business improving the tax rate could trend toward a more normalized level over time and we have the guidance for this year, how should we think about the evolution of the.

Scott Gruber: The tax rate in 'twenty five 'twenty six work of that fall to in the years ahead.

Douglas J. Pferdehirt: Thank you. Our next question comes from a line from Doug Becker with Capital One. Please go ahead.

Speaker Change #131: So thanks for the question with taxes here. So first of all maybe just point out if you look at the effective tax rate for the quarter. There is a little bit on the timing effect of it being a little bit lower than normal in this quarter.

Douglas J. Pferdehirt: Thank you. Doug, you previously mentioned that all electric subsea production systems could result in incremental tieback opportunities of $8 billion through 2030. I was just hoping you could frame maybe a realistic or risked opportunity as you see it today for FTI. Yeah, that number is probably a little stale, actually, at this point.

Scott Gruber: First of all we stand behind our guidance of 280 to 290 million for 2024, and if you consider the growth in EBITDA and et cetera that we are projecting.

Scott Gruber: I'd say that the this is implying a roughly 35% effective tax rate for the year with our current earnings mix as planned.

Douglas J. Pferdehirt: I would say there's upside to that number in terms of, you know, we put that out in I think 2021. Clearly, all electric and the adoption and qualification of all electric is now, we've pretty much covered our entire client base. And, you know, that takes some time.

Scott Gruber: As we've talked about a little bit before we are targeting a normalized tax rate of 30%.

Scott Gruber: And I would continue to build on that model on that if you are looking for the out years.

Scott Gruber: Yeah.

Scott Gruber: It's largely come from a combination of earnings mix and some other use.

Scott Gruber: Utilization of tax opportunities like we can't Couldnt take advantage only in the past. So overall, we remain confident to drive towards 30% normalized tax rate.

Douglas J. Pferdehirt: It's, you know, obviously, developing the technology, but then qualifying it, and then getting your customers, you know, aligned. In terms of, I don't have a hard set, year by year, kind of how I see that developing yet, it might still be a little bit early. But obviously, getting the first award was key.

Speaker Change #127: And how long do you think.

Speaker Change #125: It would take to get there.

Speaker Change #128: Possible in 25 or 26.

Speaker Change #130: I mean, you're in the right ballpark of somewhere in between.

Speaker Change #125: Between those two years yet.

Speaker Change #126: Okay. Okay. That's it for me thank you.

Speaker Change #126: Our next question comes from the line of Doug Becker with capital one. Please go ahead.

Douglas J. Pferdehirt: That being in the CCS environment, not in the financial results and, you know, leverage the cost of that capital investment that you may have made many years ago, it just makes sense. So we're kind of in a unique position; we have a lot of the infrastructure, you know, over 50% of the world's infrastructure on the seafloor. So we're in a unique position to really try to help to kind of marry up somebody that has a, what would be called, a stranded asset, simply meaning it was too far away from a host facility to be able to be economically produced and could not support its own host facility because of the CAPEX required to do so, to be able to marry that up with somebody that has a production asset.

Douglas J. Pferdehirt: Thank you.

Douglas J. Pferdehirt: You previously mentioned that all electric subsea production systems could result in incremental tie back opportunities of $8 billion through 2030.

Douglas J. Pferdehirt: I was just hoping you could frame, maybe a realistic realistic or risk opportunity as you see it today for FTR.

Speaker Change #132: Yes, Thanks, Doug.

Speaker Change #133: Yes that number is probably a little stale actually at this point.

Speaker Change #139: I would say there is upside to that number in terms of we put that out in I think 2021.

Speaker Change #133: Clearly all electric and the adoption and qualification of all electric is now we've pretty much covered our entire client base.

Speaker Change #133: And that takes some time.

Douglas J. Pferdehirt: It's obviously developing the technology, but then quantifying it and then getting your customers.

Douglas J. Pferdehirt: And that's certainly what we're doing today in the conversations that we're having Now, that certainly sounds encouraging. Is it reasonable to expect an all-electric vehicle on the oil and gas side this year or more of 2025? You know, we like to think about things in 24-month timeframes just to be a little bit conservative, but you could see something on the shorter end of that for an all-electric oil and gas award or project, you know, being FID. I do think you could see that.

Douglas J. Pferdehirt: <unk>.

Douglas J. Pferdehirt: In terms of I don't have a hard set.

Douglas J. Pferdehirt: Year by year kind of how I see that developing yet it might still be a little bit early.

Douglas J. Pferdehirt: But obviously getting the first award was key.

Douglas J. Pferdehirt: Being in the Ccs environment.

Douglas J. Pferdehirt: Not in the brownfield tieback environment.

Douglas J. Pferdehirt: But as I said things are being bid in parallel today between Ccs and traditional energy so there'll be more to come but look Doug remained very confident in this one I'll be honest this one's a little bit of a no brainer.

Douglas J. Pferdehirt: Again, up to our customers when they FID, but if I just think about the commercial discussions and the maturity of those discussions, and that's what I meant by, you know, in parallel, meaning, you know, it wouldn't be too far. And then, just a quick one, Alf, the free cash flow loss was narrower than at least... I expected to my consensus expected in the context that sub C is toward the upper half of the guidance range. For free cash flow, is that trending toward the upper half or midpoint still the best? So first of all, on free cash flow, you're right. We had a strong first quarter for being us, at least.

Douglas J. Pferdehirt: If you are sitting with an existing host facility that's aging everyday.

Douglas J. Pferdehirt: Can get some additional.

Douglas J. Pferdehirt: Hydrocarbon to flow through and obviously improve their financial.

Douglas J. Pferdehirt: <unk> results in and.

Douglas J. Pferdehirt: Leverage the cost of that capital investment that you may have made many years ago. It just makes sense. So we're kind of in a unique position we have a lot of the infrastructure you know over 50% of the world's infrastructure on the same floor. So we're in a unique position to really try to help to kind of marry up somebody that has a would be.

Douglas J. Pferdehirt: Called a stranded asset simply meaning it was too far away from a host facility.

Douglas J. Pferdehirt: To be able to be economically produced and could not support its own host facility because of the capex required to do so to be able to marry that up with.

Alf T. Melin: You know, the net outflow represents really, 179 represents a solid start for the year for us. And because it is typically our seasonally most weak quarter that we have. And also point out that, you know, we did have the $56 million payment towards a legal settlement that affected the quarter. So overall, we feel really good about where we are. And I expect, obviously, this to build during the year. We typically trend up during the year, and you will see the majority of cash flow generation in the second half of the year.

Douglas J. Pferdehirt: Somebody that has a production asset.

Douglas J. Pferdehirt: And that's certainly what we're doing today and the conversations that we're having.

Speaker Change #142: No that certainly sounds encouraging is it reasonable to expect an.

Douglas J. Pferdehirt: And all electric award on the oil and gas side this year more of a 2025.

Douglas J. Pferdehirt: No.

Douglas J. Pferdehirt: A word we like to think about things in 24 month timeframe just to be a little bit conservative but.

Douglas J. Pferdehirt: You could see something on the shorter end of that.

Douglas J. Pferdehirt: For an all electric oil and gas.

Douglas J. Pferdehirt: Award.

Douglas J. Pferdehirt: J B I.

Speaker Change #134: I do think you could see that.

Speaker Change #134: Again up to our customers when they EBIT if I just think about the commercial discussions and the maturity of those discussions.

Alf T. Melin: And And clearly, as we grow EBITDA, and in particular, in subsea, we expect to see a little bit of additional conversion of free cash flow from EBITDA. So we typically use the 50% ratio, which is where we operationally sit today. So if you want to use that as an approximation, but we're not ready to officially take up free cash flow. There's always working capital dynamics and other things that lead to the end of the year.

Speaker Change #134: And Thats, what I meant by in parallel meaning.

Speaker Change #134: It wouldn't be too far away.

Speaker Change #135: Got it and then just a quick one else the free cash flow loss was narrower than at least I.

Speaker Change #135: Expect it seems like consensus expected.

Speaker Change #135: In the context that.

Speaker Change #135: Subsea is towards the upper half of the guidance range.

Speaker Change #135: For free cash flow is that trending towards the upper half of our mid point is still the best place to anchor.

Speaker Change #135: So so first of all on free cash flow you are right. We had a strong first quarter for for being us at least the net outflow represents really.

Speaker Change #135: 179 really represents a solid start for the year for us and because it is typically our seasonally most weak quarter that we have and also point out that we did have the $56 million payment towards the legal settlement that affected the quarter. So overall, we feel really good about where we are and how you expect obviously this to build during the.

Alf T. Melin: And again, if you look at our business profile, the fourth quarter will still be the big quarter. Understand? Thank you. Our next question comes from the line of Daniel Thomson, with Exane BNP Parabas. Please go ahead. Hi, good morning.

Speaker Change #135: Here, we typically trend up during the year and you will see the majority yoga or the cash flow generation in the second half of the year end.

Daniel Thomson: I had a question about HiSEP. I mean, now that the contract has been awarded, and clearly your part of the technology has been qualified with Petrobras, can you talk about the sort of conversations you're having with that client around using the technology in other fields, anything specific to FLAG, and have you had any interest from other clients in Brazil or internationally about using a similar technology? Thanks. Thank you and good afternoon, Daniel. The answer is yes and yes, that is the short answer, but I'll give you a little bit of color around it.

Speaker Change #135: And clearly as we grow EBITDA and in particularly in subsea, we expect to see a little bit of additional conversion of all the free cash flow from EBITDA. So we've typically used a 50% ratio is where we operationally sit today. So if you want to use that as an approximation, but we're not ready to to officially take up free cash flow.

Speaker Change #135: As always working capital dynamics and other things that lead to the end of the year and again, if you look at our business profile, if fourth quarter would still be the big quarter to determine the overall cash flow for the year.

Douglas J. Pferdehirt: Clearly, Petrobras is approaching this as a design one, build many, obviously, you know, a benefit of being part of this first award, but they clearly see this as an opportunity to reduce the greenhouse gas intensity, first and foremost, but also in the case of the Merrill-3 project because it's in an existing field or a brownfield, if you will. It also allows to de-bulk and increase production at the same time, but, you know, I don't want to speak too much on behalf of my clients, but I can assure you that Petrobras has stated and very much sees this technology as one that they are going to use multiple times.

Speaker Change #137: Understood. Thank you.

Speaker Change #135: Our next question comes from the line of Daniel Thompson with Exane BNP Paribas. Please go ahead.

Daniel Thomson: Hi, Good morning ahead of <unk>.

Daniel Thomson: Question on on high Sip.

Daniel Thomson: I mean now that the contract has been awarded and clearly you're part of the technology has been qualified et cetera can you talk about the sort of conversations you're having with the clients around using the technology in other fields anything specific to flag and have you had any interest.

Daniel Thomson: From other clients in Brazil or internationally.

Daniel Thomson: Using some of that technology.

Daniel Thomson: Thanks.

Speaker Change #138: Thank you and good afternoon Daniel.

Speaker Change #147: The answer is yes, and yes is the short answer, but I'll give you a little bit of color around it.

Speaker Change #138: Clearly Petrobras.

Speaker Change #138: Is approaching this as a design one build many.

Douglas J. Pferdehirt: Interest from other clients. First of all, there were partners in the Merrill-3 project, very well-known, large, world-class companies, along with Petrobras. So they've obviously been intimately involved and are supportive of the technology and obviously supportive of the project. They provided partner approval for the FID. So we have those who are quite intimately involved. And I'll tell you, just recently, I traveled with a client to Brazil because they wanted to learn more about it. Now, they won't be using it in Brazil.

Speaker Change #138: Obviously.

Speaker Change #138: A benefit of being part of this first award.

Speaker Change #138: But they clearly see this as an opportunity to reduce the greenhouse gas intensity first and foremost, but also in the case of the Merrell III project, because it's an existing.

Speaker Change #138: In an existing field or brownfield if you will it also allows to.

Speaker Change #138: Debottleneck and increased production at the same time.

Speaker Change #138: But I don't want to speak too much on behalf of my clients, but I can assure you Petrobras has stated and very much see this technology is one that they are going to use.

Speaker Change #138: Multiple times.

Speaker Change #138: Interest from other clients first of all there were partners in the <unk> III project, a very well known large.

Speaker Change #138: World class companies as well along with Petrobras. So they've obviously been intimately involved and are supportive of the technology and obviously supportive of the project.

Douglas J. Pferdehirt: They would be using this type of technology outside of Brazil. But they were so interested, and I was more than happy to participate in that visit with them. And with the support of Petrobras, we were able to share with them some of the good things that we're doing and what we've done in terms of the development of the technology. So again, short answer: yes and yes. Thanks, Doug.

Speaker Change #138: They provided you bolt partner approval for the <unk>. So we have those who are quite intimately.

Speaker Change #138: Included and I'll tell you just recently I traveled actually with our client to Brazil, because they wanted to learn more about it now they won't be using it in Brazil. They would be using this type of technology outside of Brazil, but they were so interested in it.

Speaker Change #138: I was more than happy to participating in that.

Speaker Change #138: And that visit with them and with the support of Petrobras, we were able to share with them. Some of the good things that we're doing and what we've done in terms of the development of the technology. So again short answer, yes, and yes.

Speaker Change #150: Thanks, Doug and if I can squeeze in a follow up.

Douglas J. Pferdehirt: And if I can squeeze in a follow-up, this time on the surface business, you know, in Saudi Arabia after the Aramco MSC12 announcement, I mean, given the incremental spending is going onshore, you know, unconventional gas from an offshore market where you don't compete, I mean, this seems like an incremental positive for your particular mix in the Middle East. But can you confirm your readiness to respond to that incremental onshore demand for surface equipment? And how does the opportunity in Saudi compare to your expectations for demand before the announcement from Aramco? Thanks.

Speaker Change #138: At this time on the surface business.

Speaker Change #140: In Saudi Arabia after the the arabica MSC 12 announcements I mean, given the incremental spending is going onshore.

Speaker Change #138: Unconventional gas from from an offshore market, where you don't compete.

Speaker Change #141: It seems like an incremental positive for your particular mix and the middle East.

Speaker Change #141: Can you confirm your readiness to respond to that incremental onshore demand for surface equipment and how does the opportunity.

Speaker Change #138: Consolidated compared to expectations for demand before the announcement from Aramco.

Speaker Change #138: Thanks.

Daniel Thomson: Sure. And Daniel, maybe just to clarify for everyone, in Saudi Arabia, that business falls under our Surface Technologies business. And when we think about wellheads in trees, if they don't get wet, i.e., if they don't go below the water surface, then that falls under our Surface business.

Speaker Change #152: Sure and Daniel maybe just to clarify for everyone.

Speaker Change #138:

Speaker Change #143: In Saudi Arabia that business falls under our surface technologies business.

Speaker Change #138: And when we when we think about Wellheads and trees, if they don't get wet I E. If they don't go below the water surface, then that falls under our surface business.

Douglas J. Pferdehirt: So our business in Saudi Arabia is primarily an onshore business. That's what we do, and we're very, very good at it. So the reduction in the jack-up market and the reduction in some of the offshore activity does affect us because, again, they are typically produced from a production platform, so it's a dry tree. But the number of wells for the CapEx dollars spent versus the number of wells that can be drilled for the same amount of CapEx on land is obviously far greater.

Daniel: So our business in Saudi Arabia is primarily an onshore business that's what we do.

Daniel: And actually we're very very good at it.

Daniel: So the reduction in the <unk>.

Daniel: The jackup market in the reduction in some of the offshore activity.

Daniel: It does affect us because again they typically are produced from a production platform. So it's a dry tree, but the number of wells versus the further capex dollar spent versus the number of wells that can be drilled for the same amount of capex on land.

Daniel: The latter is obviously far greater so for our from our perspective, but I'm only answering from our perspective selfishly a shift to land capex from off shore Capex is very favorable to our company. Thank.

Douglas J. Pferdehirt: So from our perspective, I'm only answering from our perspective, selfishly, a shift to land CapEx from offshore CapEx is very favorable to our company. Think of it as simple as we sell a product that allows a well to be safely and environmentally appropriately produced. And so we get paid by the wellbore, if you will, and that's what matters. In addition, gas is important to us. Our revenue per unit sold is higher for gas than it is for oil, so the shift to gas is favorable.

Daniel: Think of it as simple as we sell product that allows a well to be.

Daniel: Safely and environmentally.

Daniel: Appropriately produced and so we get we get paid by the Wellbore. If you will and that's what matters. In addition gas is important to us.

Daniel: Our revenue per unit sold is hiring gas than it is in oil. So the shift to gas is favorable and in unconventional gas we are able to provide additional products around the fracturing in the stimulation side of it.

Douglas J. Pferdehirt: And in unconventional gas, we are able to provide additional products around the fracturing and the stimulation side of it as well. So it expands our, let's say, revenue per well. That's how the market works for us.

Daniel: As well so it expands our let's say revenue per well so.

Daniel: That's how the market works for US now more importantly.

Douglas J. Pferdehirt: Now, more importantly, as you've been following the company, we decided to make a strategic investment in the Kingdom to bring manufacturing capacity from Asia to the Kingdom. We continue to ramp up our new facility, and that has gone very successfully. We've not yet reached its fullest potential, and we anticipate further improvement in the second half of the year. Saudi Aramco remains very important to us.

Daniel: And you.

Daniel: As you've been following the company, we decided to make a strategic investment in kingdom to bring manufacturing capacity from Asia to the Kingdom.

Daniel: We continue to ramp up our new facility and that has gone very successfully we've not yet reached its fullest potential and we anticipate.

Daniel: Further improvement in the second half of the year so.

Daniel: Saudi Aramco remains very important to us the kingdom.

Douglas J. Pferdehirt: The Kingdom is a key contributor to our surface international business, and we're very well positioned. Quite frankly, some of the announcements have been favorable from our perspective. That's helpful.

Daniel: As a key contributor in our surface international business, and we're very well positioned and quite frankly, some of the announcements have been favorable from our perspective.

Speaker Change #148: That's helpful. Thanks, Doug.

Saurabh Pant: Thanks, Doug. Our next question comes from the line of Saurabh Pant, with Bank of America. Please go ahead. Hi, Doug. Good morning.

Speaker Change #148: Okay.

Daniel: Okay.

Sarah PON: Our next question comes from the line of Sarah PON.

Sarah PON: With Bank of America. Please go ahead.

Sarah PON: Hi, good morning, Doug.

Sarah PON: Good morning.

Saurabh Pant: Doug, maybe we can spend a little time on the quality of the backlog that you've been talking about on the subsea side, right? I think it's visible in the results you are delivering, the margins you are delivering, but also the new technology that you're winning. If you could spend a moment on a phrase you mentioned in your press release, Doug, the heightened focus on project selectivity. How are you doing

Sarah PON: Doug maybe spend.

Sarah PON: Spend a little time on the quality of the backlog that you've been.

Sarah PON: And both on the subsea side.

Linda: It's Linda.

Sarah PON: The results you are delivering the margins you're delivering but also the new technology.

Sarah PON: Whitney.

Sarah PON: You can spend a moment on a phrase you maintaining your press release that the heightened focus on project selectivity. How are you doing that but the focus is it multiple times and conditions that would all be talking about just integrated and.

Douglas J. Pferdehirt: What's the focus? Is it more about terms and conditions, or are we talking about just integrated projects versus stand-alone projects? Sure. Great question.

Sarah PON: <unk> Standalone pumps.

Sarah PON: Sure.

Whitney: Great question, we talk about it every day.

Douglas J. Pferdehirt: We talk about it every day as we look at the different opportunities that we have in front of us. Look, it's a combination of all of the above, but let's start with, you know, the main thing that really drives what we would, you know, deem as quality because we believe it and we've demonstrated it's best for the project in terms of shortening cycle time, accelerating time to first production, and it greatly simplifies our execution model is sub C 2.0 configure to order.

Whitney: As we look at the different opportunities that we have in front of us.

Speaker Change #145: Look it's a combination of all of the above.

Speaker Change #145: But let's start with the main thing that really drives.

Speaker Change #145: We would deem as quality because we believe it and we've demonstrated its best for the project in terms of shortening cycle time accelerating time to first production and it greatly simplifies our execution model.

Speaker Change #145: Is the subsea two point or configure to order.

Douglas J. Pferdehirt: So, clearly, the higher the 2.0 orders, the higher the quality of the backlog, and that allows us to go from engineer to order, to configure to order. As I've talked about before on this call, that allows us to eliminate nine months of engineering. So, if we take a 1.0 order, which is how the rest of the industry is operating, you have to spend nine months, or we would have to spend nine months, doing detailed engineering because you're building a first article. It's never been built before.

Speaker Change #145: So clearly the higher the 2.0 orders the higher the quality of the backlog.

Speaker Change #145: And that allows us to go from engineered order to configure to order as I've talked about before on this call that allows us to eliminate nine months of engineering. So we take a 1.0 order which is how the rest of the industry is operating but you have to spend nine months or we would have to spend nine months doing detailed engineering, because you're building it.

Speaker Change #145: First article it's never been done before so you have to go through that before you place a single purchase order with a subsidy to configure to order a platform and again you can't just say I have it you have to have a platform you have to have critical scale that allows you to not only simplify the internal as I talked about.

Douglas J. Pferdehirt: So, you have to go through that before you place a single purchase order. With the Sub-C 2.0, configure to order a platform, and again, you can't just say, I have it. You have to have a platform. You have to have critical scale. That allows us to not only simplify the internal processes, as I talked about, putting twice the volume through our existing manufacturing footprint, but it also allows us to simplify and to secure much more reliable and competent partners in our supply chain. So, it's really a combination of the two that leads to quality.

Speaker Change #145: Putting twice the volume through our existing manufacturing footprint, but it also allows us to simplify and to secure a much more reliable and competent.

Speaker Change #145: <unk> and our supply chain. So it's really a combination of the two that lead to the quality and.

Douglas J. Pferdehirt: In addition to that, as an integrated project, we just have many more levers. You know, we take on the full scope. We have the ability to be able to schedule activity that best works for us, and that's why it was so important to consummate the relationship and create Technique FMC because it is very difficult to do when you're not a single entity with a single set of financial reporting and a single set of objectives because then you have underlying competing interests. So, we have that. And then on top of that, sure, the terms and conditions of the contracts are important.

Speaker Change #145: In addition to that an integrated project, we just have many more levers.

Speaker Change #145: We take on the full scope, we have the ability to be able to.

Speaker Change #145: Schedule activity that best works for Us and that's why it was so important to consummate the relationship and create technip FMC, because very difficult to do when youre not a single entity with a single set of financial reporting and a single set of objectives. Because then you have underlying competing competing competing in.

Speaker Change #145: So we have that.

Speaker Change #145: And then on top of that sure the terms and conditions of the contracts are important our customers understand that we've talked in the past about what we've done to ensure that.

Douglas J. Pferdehirt: Our customers understand that. We've talked in the past about, you know, what we have done to ensure that, you know, things are being shared in the most appropriate way, and, for instance, when it comes to inflation, we put in place several parameters that allow us to be more confident that we're not going to be surprised on that side. So, you know, all in all, it's a combination of the three, but it's very clear for us where our focus is, and as you hear us announce these IEPCI and IEPCI 2.0 and 2.0 awards, it's just very, very favorable to the future and to the assurity of our execution. No, no, Doug, that's very helpful.

Speaker Change #145: The things are being shared.

Speaker Change #145: Most appropriate way and for instance.

Speaker Change #145: When it comes to inflation, we put in place.

Speaker Change #145: <unk> parameters that allow us to be more confident that we're not going to be surprised on that side. So all in all it's a combination of the three but it's very clear for us where our focus is and and as you hear us announce these <unk> and <unk> in two point of awards.

Speaker Change #145: Just it's just very very favorable to the future and to the surety of our execution. Thank you.

Speaker Change #159: No that's very helpful.

Saurabh Pant: Just a very quick follow up, Doug. I know you are $30 billion in the three-year order outlook for subsidies, but that does not include any of the frontier basins.

Speaker Change #149: Follow up Doug I know you had a $13 million in telling you that all of the ore that open up with something that does not include any of the frontier basin.

Saurabh Pant: But the new flow, especially from Namibia, has been particularly positive. Can you share any updated thoughts on your outlook in terms of these frontier basins? I know it's beyond 25, but any updated thoughts?

Speaker Change #153: But the new flow, especially from them, maybe I have been particularly positive.

Douglas J. Pferdehirt: Can you shed any updated thoughts on the on your outlook in terms of the country because I know, it's beyond 'twenty five but any updated thoughts.

Douglas J. Pferdehirt: Sure. Lots of discussion, lots of activity. We're using our playbook from Guyana and Mozambique, both of which, you know, we were the first mover. We understand how to do this in these emerging markets. We're executing the same playbook in other emerging markets.

Douglas J. Pferdehirt: Sure.

Douglas J. Pferdehirt: Lots of discussion and lots of activity, where using our playbook from Guiana in Mozambique, both of which we were the first mover.

Douglas J. Pferdehirt: We understand how to do this in these emerging markets. We're executing the same playbook in the other emerging markets and I would say net net.

Saurabh Pant: And I would say net-net from, you know, most recently, the indications from our clients that they've, you know, that they have stated publicly, I'm not saying anything that's not public, I would say are more favorable and, you know, trending in a very favorable fashion. So we look forward to the contribution from those emerging markets in the latter part of the decade. Right. Okay. Perfect. Thank you. I'll turn it

Douglas J. Pferdehirt: Most recently the indications from our clients that they did they have stated publicly I'm not saying anything that's not public.

Douglas J. Pferdehirt: I would say is more favorable.

Douglas J. Pferdehirt: Trending in a very favorable fashion. So we look forward to the contribution from those emerging markets in the latter part of the decade.

Speaker Change #151: Right. Okay perfect. Thank you I'll turn it back.

Douglas J. Pferdehirt: Yeah.

Douglas J. Pferdehirt: Our last question will come from the line of Bertrand <unk> with Kepler Chevron <unk>. Please go ahead.

Bertrand Hodee: Our last question will come from the line of Bertrand Hodee with Kepler Chevro. Please go ahead. Yes, hello, Doug. I probably have a follow-up question on Namibia. Based on your early discussions, and clearly no need to mention any operator name here, but conceptually, from your understanding, do you believe it will require specific technologies?

Bertrand: Yes, Hello, Doug.

Bertrand: I have a probably a follow up on.

Bertrand: On <unk>.

Bertrand: On your <unk>.

Bertrand: Early discussion.

Bertrand: And clearly no need to mention any names.

Bertrand: And then here.

Bertrand: Conceptually from your understanding do you believe each week cry specific technologies.

Douglas J. Pferdehirt: And or whether the IEPCI model or subsea 2.0 will be well-suited for future Namibian development? Thank you, Bertrand. Look, speaking of Namibia in particular, one well-known challenge will be water depth.

Bertrand: Or is he.

Bertrand: <unk> mother or subsea two point all.

Bertrand: We will be well suited.

Douglas J. Pferdehirt: For future <unk> development.

Speaker Change #157: Thank you Bertrand.

Speaker Change #157: Look the speaking of them maybe in particular.

Douglas J. Pferdehirt: The <unk>, one well known challenge will be the water depth.

Douglas J. Pferdehirt: So these are very deep, you know, it's very deep within the operating parameters of 2.0, so no concern there. And certainly, we believe the IPCI model, as we've demonstrated in other emerging markets, is clearly a very favorable model and one that we would expect would unlock the greatest value and accelerate time to first oil for our customers, which drives their project economics. So IPCI 2.0, but working very closely with our clients, they're obviously learning as they're doing their extended well tests in terms of, you know, the producibility of the reservoirs, compartmentalization, and geochemistry.

Douglas J. Pferdehirt: So these are very deep.

Douglas J. Pferdehirt: It's very deep.

Douglas J. Pferdehirt: Within the operating parameters of two point out so.

Speaker Change #154: No concern there.

Speaker Change #154: And certainly we believe the <unk> model as we've demonstrated in and out.

Douglas J. Pferdehirt: Other emerging markets is clearly a very favorable model and one that we would expect would unlock the greatest value and accelerated time to first oil for our customers, which drives their project economics. So.

Douglas J. Pferdehirt: PCI 2.0, but working very closely with our clients. So they're obviously learning as they're doing their extended well tests in terms of.

Douglas J. Pferdehirt: The produce ability of the.

Douglas J. Pferdehirt: Of the reservoirs compartmentalization the geochemistry, so there's things we're learning along the way, but we are actively engaged with them.

Douglas J. Pferdehirt: So there are things we're learning along the way, but we are actively engaged with them to ensure that we'll be ready to provide them with world-class subsea support. Thank you. I would now like to turn the call over to Matt Seinsheimer for closing remarks. This concludes our fourth quarter conference call. A replay of the call will be available on our website beginning at approximately 8 p.m. Greenwich Mean Time today. If you have any further questions, please feel free to contact any member of the Investor Relations team. Thanks for joining us. You may now end the call. This concludes today's call. You may now disconnect.

Douglas J. Pferdehirt: To ensure that we'll be ready to provide them world class subsea support.

Speaker Change #155: Thank you.

Speaker Change #155: Yeah.

Speaker Change #158: I would now like to turn the call over to Matt Science Cymer for closing remarks.

Speaker Change #156: This concludes our fourth quarter conference call a replay of the call will be available on our website beginning at approximately eight P. M. Greenwich mean time today.

Speaker Change #160: If you have any further questions. Please feel free to contact any member of the Investor Relations team. Thanks for joining US you may now end the call.

Speaker Change #160: This concludes today's call you may now disconnect.