Q1 2024 Helix Energy Solutions Group Inc Earnings Call

[music].

Erik: Thank you for standing by. My name is Erik, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2024 Helix Energy Solutions Group, Inc. Earnings Conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Eric and I'll be your conference operator today.

Eric: At this time I would like to welcome everyone to the first quarter 2024 Helix Energy Solutions Group incorporated earnings Conference call.

Eric: All lines have been placed on mute to prevent any background noise.

Erik: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Brent Arriaga, Chief Accounting Officer. Please go ahead.

Eric: After the Speakers' remarks, there'll be a question and answer session.

Eric: I'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Eric: If you would like to withdraw your question Press Star one again.

Eric: I would now like to turn the call over to Brent Arriaga, Chief Accounting Officer. Please go ahead.

Brent Alexander Arriaga: Good morning, everyone, and thanks for joining us today on our conference call for our first quarter 2024 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO; Kenneth Neikirk, our general counsel; and myself. Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of those materials, both can be accessed on the investor page on our website at www.helixesg.com.

Brent Alexander Arriaga: Thank you.

Brent Alexander Arriaga: Good morning, everyone and thanks for joining us today on our conference call for our first quarter 2024 earnings release participating on this call for helix today are Owen Kratz, our CEO Scotty Sparks, our C O M Eric <unk> our CFO.

Brent Alexander Arriaga: <unk>, our general counsel and myself.

Brent Alexander Arriaga: Hopefully you've had an opportunity to review our press release and the related slide presentation released last night.

Brent Alexander Arriaga: If you do not have a copy of those materials, both can be accessed at it for the Investor page on our website at Www Dot helix ESG Dot com. The press release can be accessed under the press releases tab and the slide presentation can be accessed by clicking on todays webcast icon.

Brent Alexander Arriaga: The press release can be accessed under the Press Releases tab, and the slide presentation can be accessed by clicking on today's webcast icon. Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information.

Brent Alexander Arriaga: Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward looking information.

Kenneth English Neikirk: During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends, or business or financial results. All statements in this conference call or in the associated presentation, other than statements of historical fact, are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Kenneth English Neikirk: During this conference call, we anticipate making certain projections and forward looking statements based on our current expectations and assumptions as of today such forward looking statements may include projections and estimates of future events business or industry trends or business or financial results. All statements in this conference call or in the associated presentation. Other than statements of historical fact are.

Kenneth English Neikirk: Forward looking statements and are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Kenneth English Neikirk: Our actual future results may differ materially from our projections and statements due to a number and variety of risks, uncertainties, assumptions, and factors, including those set forth in Slide 2 of our presentation, in our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q, and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement.

Brent Alexander Arriaga: Our actual future results may differ materially from our projections.

Brent Alexander Arriaga: Statements due to a number and variety of risks uncertainties assumptions and factors, including those set forth in slide two of our presentation and our most recently filed annual.

Brent Alexander Arriaga: 10-K, our quarterly reports on Form 10-Q, and in our other filings with the SEC you.

Brent Alexander Arriaga: You should not place undue reliance on forward looking statements and we do not undertake any duty to update any forward looking statements disclaims any written or oral statements made by any third party regarding the subject matter of this conference call.

Brent Alexander Arriaga: Also during this call certain non-GAAP financial disclosures may be made in accordance with SEC rules. The final slides of our presentation provides reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation. The earnings press release, our annual report on Form 10-K, and a replay of this broadcast will be available under the four.

Kenneth English Neikirk: You disclaim any written or oral statements made by any third party regarding the subject matter of this conference call. Also, during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10-K, and a replay of this broadcast will be available under the For the Investor section of our website at www.helixesg.com.

Brent Alexander Arriaga: The investors section of our website at Www Dot helix ESG Dot com.

Brent Alexander Arriaga: Please remember that information on this conference call speaks only as of today April 22 at April 25, 2024, and therefore, you're advised that any time sensitive information may no be accurate as of any replay of this call.

Speaker Change: Got it.

Speaker Change: Thanks, Ken good morning, everyone.

Kenneth English Neikirk: Thank you for joining our call today hope everybody is doing well. This morning, we will review, our first quarter highlights financial performance and operations.

Kenneth English Neikirk: Our view of the current market and an update of our guidance for 2024.

Speaker Change: Moving on to the presentation slides six and seven provide a high level summary of our results and key highlights for the quarter.

Kenneth English Neikirk: It seems offshore and onshore outperformed again safely producing another very well executed quarter, considering the seasonal winter months.

Kenneth English Neikirk: Revenues for the quarter with 296 million with a gross profit of $20 million compared to $15 million in Q1 of 2023.

Kenneth English Neikirk: Please remember that information on this conference call speaks only as of today, April 22nd, and April 25th, 2024. Therefore, you are advised that any time-sensitive information may not be accurate as of any replay of this call.

Kenneth English Neikirk: Our net loss was $26 million, primarily driven by pre tax losses related to the extinguishment of the remaining convertible notes.

Kenneth English Neikirk: Adjusted EBITDA was $47 million for the quarter and operating cash flow was $64 million, resulting in a free cash flow of $61 million type results, representing significant improvements over Q1 of 2023.

Kenneth English Neikirk: Thanks Ken. Good morning everyone.

Scott Andrew Sparks: Thank you for joining our call today. We hope everybody is doing well. This morning, we will review our first quarter highlights, financial performance, and operations. We will also provide our view of the current market and an update of our guidance for 2024. Moving on to the presentation, slides 6 and 7 provide a high-level summary of our results and key highlights for the quarter. The teams offshore and onshore outperformed again, safely producing another very well executed quarter considering the season of winter months.

Speaker Change: During the quarter, we extinguish the remaining 2026 convertible notes, resulting in a $21 million loss.

Speaker Change: This completes the restructuring of our debt initiated in Q4 of 2023, and we are happy to have established a simplified more traditional debt structure without the impact of equity overhang.

Speaker Change: Our cash and liquidity remains strong with cash and cash equivalents of $324 million and liquidity of $419 million.

Speaker Change: Highlights for the quarter include strong results in well intervention across all regions commencement of Australia operations on the Q seven.

Speaker Change: Restoration of production on the front of the Hawk wells and on the sales front. The H WCG contracts, which are renewed for March of 2026, and as previously announced we were awarded a 12 month extension with <unk> in Brazil for their Sichuan and secured a minimum six month contract for the careful thousands in West Africa at favorable economics.

Scott Andrew Sparks: Revenues for the quarter were $296 million, with a gross profit of $20 million, compared to $15 million in Q1 of 2023. Our net loss was £26 million, primarily driven by pre-tax losses related to the extinguishment of the remaining convertible notes.

Speaker Change: <unk>.

Speaker Change: Slide nine slide nine provides a more detailed review of our segment results and segment utilization.

Speaker Change: In the first quarter of 2024, we continue to operate globally with minimal operational disruption with operations in Europe Asia Pacific, Brazil Africa, the Gulf of Mexico, and the East Coast. Our first quarter results were overall in line with expectations driven by our cold weather intervention markets globally with robotics in shallow water abandonment.

Scott Andrew Sparks: Adjusted EBITDA was $47 million for the quarter, and operating cash flow was $64 million, resulting in a free cash flow of $61 million, both results representing significant improvements over Q1 of 2023. During the quarter, we extinguished the remaining 2026 convertible notes, resulting in a £21 million loss.

Speaker Change: <unk> is impacted by seasonal winter weather.

Speaker Change: Slide 10 provides further detail of our intervention segment considering.

Speaker Change: Considering the seasonal winter months and regulatory docking of the well enhancer, we achieved strong utilization in the North Sea and Europe, the Gulf of Mexico, and Brazil performed very well with solid overall uptime efficiency of 98, 8% for the quarter.

Scott Andrew Sparks: This completes the restructuring of our debts initiated in Q4 of 2023, and we are happy to have established a simplified, more traditional debt structure without the impact of Exit T overhangs. Our cash and liquidity remains strong, with cash and cash equivalents of $324 million and liquidity of $419 million. Highlights for the quarter include strong results in well-intervention across all regions, commencement of Australia operations on the Q7000, restoration of production on the Thunderhawk welds and on the sales front the HWCG contract auto renewed through March of 2026 and as previously announced we were awarded a 12-month extension with Trident in Brazil for the SH1 and secured a minimum six-month contract for the Q4000 in West Africa at favourable economic, Over to slide nine.

Speaker Change: The Q 7000 performed extremely well with 100% utilization working in Australia. The vessel is expected to continue work in Australia into the second half of this year and then commenced transit to Brazil for the shell decommissioning campaign.

Speaker Change: Well enhancer completed its scheduled regulatory dry dock over 54 days in the quarter.

Speaker Change: Moving to slide 11, Slide 11 provides further detail of our robotics business.

Speaker Change: Robotics had a good quarter, considering the seasonal winter months the business performed to high standards operating six vessels during the quarter welcome between Trenching RV support and site survey work on renewable was in oil and gas related projects globally.

Speaker Change: All six vessels worked on renewables related projects within the quarter.

Speaker Change: Grand Canyon, III had lower utilization due to spending a good portion of the quarter, having fuel saving battery equipment, primarily installed into the vessel that should lower fuel costs and emissions going forward.

Speaker Change: And we have now commenced the trenching seasons globally and expect high utilization for the rest of the year across the fleet, which we anticipate will lead robotics to have another strong year.

Scott Andrew Sparks: Slide nine provides a more detailed view of our segment results and segment utilization. In the first quarter of 2024, we continue to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, Africa, the Gulf of Mexico, and the U.S. East Coast. Our first quarter results were overall in line with expectations, driven by our core weather intervention markets globally, with robotics and shallow water abandonment results impacted by seasonal winter weather.

Speaker Change: Slide 12 provides detail of our shallow water abandonment business.

Speaker Change: Q1, as expected had low utilization, primarily due to seasonal weather patterns in the shallow water Gulf of Mexico with several of the vessels and spreads and stagnate for the winter as well as a general near term softening in the shelf abandonment markets.

Speaker Change: In Q2 with the better conditions, we should activate more of the vessels in spreads from the winter stacking mode and back into operations.

Speaker Change: Also in Q2, we will recommence work back on the larger fulfill decommissioning projects. After the winter break with the projects scheduled to utilize the applicator and heavy lift barge some of the divestments support vessels and PNA spreads.

Speaker Change: In summary, the slow start to our shallow water operations. We are pleased with our start to 2024 with year over year improvements in our overall results.

Scott Andrew Sparks: Slide 10 provides further detail of our Well Intervention Segment. Considering the seasonal winter months and regulatory docking of the well enhancer, we achieve strong utilisation in the North Sea and Europe, the Gulf of Mexico, and Brazil, performing very well with solid overall uptime efficiency of 98.8% for the quarter. The Q7000 performed extremely well with 100% utilization working in Australia.

Speaker Change: Our business segments are poised to benefit from expected increase in activity during Q2, and Q3 and I would like to thank our employees for their efforts and high level of execution delivering safe efficient operations for our customers has established us as a leader in our industry. Thank you I will now turn the call over to Brent.

Brent Alexander Arriaga: Thanks, Scotty moving to slide 14, it outlines our debt instrument.

Brent Alexander Arriaga: That instruments key balance sheet metrics as of March 31. During Q1, we retired our remaining convertible securities and have simplified our capital structure.

Scott Andrew Sparks: The vessel is expected to continue working in Australia until the second half of this year and then commence transit to Brazil for the Shell decommissioning campaign. EWA Enhancer completed its scheduled regulatory dry dock for 54 days in the quarter. Moving to slide 11.

Brent Alexander Arriaga: Our funded debt at quarter end was $328 million.

Brent Alexander Arriaga: At quarter end, we also had cash of $324 million in availability under our ABL of $96 million with the resulting liquidity of $419 million.

Brent Alexander Arriaga: We had negative net debt of 6 million at quarter end.

Brent Alexander Arriaga: Following the end of the quarter, we settled the earn out related to the alliance acquisition paying cash of $85 million, which reduced cash and liquidity and increased net debt by the same amount.

Scott Andrew Sparks: Slide 11 provides further detail of our robotics business. We had a good quarter, considering the seasonal winter months. The business performed at high standards, operating six vessels during the quarter, working on trenching, RV support, and site survey work on renewables and oil and gas-related projects globally. All six vessels worked on renewables-related projects during the quarter. The Grand Canyon III had lower utilisation due to spending a good portion of the quarter having fuel-saving battery equipment permanently installed on the vessel, which should lower fuel costs and emissions going forward.

Brent Alexander Arriaga: I'll now turn the call over to Erik for a discussion on our outlook for 2024 and beyond.

Erik: Thanks Brent.

Erik: Based on our first quarter performance and the continued strength the offshore energy markets. We are maintaining guidance of certain key financial metrics from our forecast revenue in the one two to $1 $4 billion range.

Erik: Essentially flat to slightly positive from from last year EBITDA in the $2 $73 30 range with slight improvements over 23.

Erik: Specifically in our well intervention, partially offset by the softer shallow water management market free cash flow of 65 to 150 million once again impacted by the <unk>.

Erik: Art out payment that.

Erik: That we made in early April approximately $58 million.

Erik: Capital spending in the $70 million to $90 million.

Scott Andrew Sparks: And we have now commenced the trenching seasons globally and expect high utilisation for the rest of the year across the fleet, which we anticipate will lead robotics to have another strong year. Slide 12 provides details of our shallow water abandonment business. Q1, as expected, had low utilization, primarily due to seasonal weather patterns in the shallow water Gulf of Mexico, with several of the vessels and spreads in stack mode for the winter, as well as a general near-term softening in the shelf abandonment market.

Erik: Once again this is a mix of regulatory maintenance on our vessels and fleet renewal for our robotics Rovs will.

Erik: Moving on to slide 17, the well enhancer completed a 44 day dry dock in Q1. The HP. One is currently mobilizing to its scheduled dry dock Q 7000 will have a maintenance period during its mobile in Brazil, our capex forecast continues to be weighted towards regulatory maintenance, which primarily falls into our outbound.

Erik: Cash flows.

Erik: Reviewing our balance sheet, our funded debt stands at 328 million reduced by the extinguishment of the 2026 convertible notes. Our next significant maturity is not until 2029.

Scott Andrew Sparks: In Q2, with the better conditions, we should activate more of the vessels and spreads from the winter stacking mode and back into operation. Also, in Q2, we will recommence work on the larger full-field decommissioning projects after the winter break, with the project scheduled to utilize the Epic Hedron heavy lift barge, some of the dive vessels, support vessels, and P&A sprigs. In summary, other than the slow start to our shallow water operations, we are pleased with our start to 2024, with year-over-year improvements in our overall results.

Erik: We're currently targeting $20 million to $30 million of share repurchases and our 2024 program with $5 million completed in Q1.

Erik: Our quarterly financial performance in 'twenty four is expected to follow a similar cadence as our results in 'twenty three with the second and third quarter likely being our most active quarters in first and fourth quarters impacted by winter weather overall, we expect the second half to be stronger than the first half we generated relatively strong.

Erik: First quarter free cash flow and we expect a weaker free cash flow in Q2 with the alliance earn out payment with the seasonal quarterly impacts and the impact of the earn out payment the timing of our free cash flow likely skewed to the second half of the year.

Erik: Providing some key assumptions by segment and region starting on slide 18.

Erik: Well intervention the Gulf of Mexico continues to be a very strong market supported by the improving rates and expected strong utilization on the Q4 Q five.

Scott Andrew Sparks: Our business segments are poised to benefit from an expected increase in activity during Q2 and Q3, and I would like to thank our employees for their efforts and high level of execution. Delivering safe, efficient operations for our customers has established us as a leader in our industry. Thank you. I will now turn the call over to Brent.

Erik: <unk> has contracted work in every quarter this year with limited white space to fill it up schedule.

Erik: Q4 thousand is contracted to work into Q2 in the Gulf of Mexico vessel is scheduled to transit to West Africa for a minimum six month contract in Nigeria, with a paid mobilization and demobilization.

Erik: In the UK North Sea, we expect good utilization for most of the year. The well enhancer has contracted work through Q3. The Seawell is currently working in the Mediterranean before being scheduled to return to the North sea for contracted work.

Brent Alexander Arriaga: Thanks, Scotty. Moving to slide 14, it outlines our debt instrument. Debt instrument's key balance sheet metrics, as of March 31. During Q1, we retired our remaining convertible securities and have simplified our capital structure. Our funded debt at quarter end was $328 million. At quarter end, we also had cash of $324 million and availability under our ABL of $96 million, with resulting liquidity of $419 million. We had negative net debt of $6 million a quarter in.

Erik: We are we are anticipating a return to seasonally adjusted utilization in the winter months in the North Sea.

Erik: Q seven thousands working in Australia with projects scheduled for three different operators.

Erik: <unk> are expected to continue to mid year, followed by scheduled transit to Brazil, and mobilization first contracted work in Brazil.

Erik: In Brazil, the Siem helix two has contracted into mid December of 'twenty, four with Petrobras. The Siem helix one is contracted performing work.

Erik: Trident into Q4 of 2025, we do expect to benefit from the <unk> contract extension at market rates starting in 2025.

Erik: Moving to robotics segment continues to benefit from tight market, where oil and gas and renewables markets are extremely active competing for assets APAC region. We have both the Grand Canyon and Cm Topaz supporting renewables projects in Taiwan into the second half of 2024, the cm Topaz.

Brent Alexander Arriaga: Following the end of the quarter, we settled the earn-out related to the Alliance acquisition, paying cash of $85 million, which reduced cash and liquidity and increased net debt by the same amount. I will now turn the call over to Erik for discussion on our outlook for 2024 and beyond.

Erik: Along with our <unk> hundred trencher are contracted and expected to remain in Taiwan through mid Q4 of this year.

Erik: In the North Sea the Grand Canyon, III commenced trenching metric completed its battery pack installation in mid April is expected to have strong utilization into Q4, the north Sea neighbor has contracted trenching projects Q3, and Q4 Glomar wave is forecasted to have good seasonal utilization performing site clearance operations. The U S affiliate.

Erik Staffeldt: Based on our first quarter performance and the continued strength of the offshore energy markets, we're maintaining guidance on certain key financial metrics from our forecast, such as revenue in the $1.2 to $1.4 billion range. Essentially flat to slightly positive from last year, it's been in the 270 to 330 range with slight improvements over 23, specifically in our well intervention, partially upset by the softer shallow water abandonment market. Pre-cash flow, $65 to $115 million. Once again, impacted by the earn-out payment that we made in early April, approximately $58 million. Capital spending in the $70 to $90 million range. Once again, this is a mix of regulatory maintenance on our vessels and fleet renewal for our robotics ROVs. Moving on to slide 17.

Erik: <unk> working in the Gulf of Mexico, and expected to transit for projects in the U S East coast to provide wind farm support.

Erik: Moving to production facilities HP, what is our contract with no expected change we do have variability in production with Roski field continues to deplete the Thunder Hawk field is producing after completion of the well clean out in January.

Erik: Moving on to shallow water abandonment after the robust 18 to 24 month period activity, we're seeing operators scaled back activities to mitigate the impact of winter weather. Following the slower Q1, we do expect that.

Erik: The second and third quarters to be very active with with potential for competition for asset assets, if and as scheduled rollout.

Erik: We do anticipate this to be a seasonal business with variability in results depending in part on operator spending, but we remain confident long term outlook global business as we believe demand is likely to increase.

Erik: At this time I will turn the call back to Owen for.

Owen E. Kratz: A discussion of our outlook beyond 24 and for closing comments.

Owen E. Kratz: Thanks, Eric Good morning, our performance for the first quarter was marginally better than plan.

Owen E. Kratz: Well intervention and robotics provided solid year over year improvements with production facilities impacted by the Workover expense on the Thunder Hawk field.

Erik Staffeldt: The well enhancer completed its 54-day dry docking Q1. The HP1 is currently mobilizing to schedule another dry dock. Q7000 will have a maintenance period during its MOB in Brazil. Our CAPEX forecast continues to be weighted towards regulatory maintenance, which primarily falls into our operating cash flow. Reviewing our balance sheet, our funded debt stands at $312 million, reduced by the extinguishment of the 2026 convertible note. Our next significant maturity is not until 2029.

Owen E. Kratz: As expected shallow water abandonment.

Erik: Declined driven by winter weather and customers reassessing the pace of their abandonments overall, we're pleased with our performance and happy to deliver good results.

Erik: With the solid start to 2024.

Erik: We're maintaining our guidance the overall strength and activity in the energy market continues to support the premise of a multi year investment cycle in the offshore market.

Erik: The well intervention market continues to show strength as evidenced by rig activity and rates with.

Erik: The demand in our robotics segment.

Erik: Benefiting from our geographic expansion in the renewables market continues to tighten with additional market support from the oil and gas services the dynamics of supply and demand are working in our favor.

Erik Staffeldt: We're currently targeting 20 to 30 million shareable purchases in our 2024 program, with 5 million completed in Q1. Our quarterly financial performance in 2024 is expected to follow a similar cadence as our results in 2023, with the second and third quarters likely being our most active quarters, and first and fourth quarters impacted by winter weather. Overall, we expect the second half to be stronger than the first half.

Erik: But near term pullback in shallow water abandonment segments are more than offset by the regulatory drivers in current abandonment needs to support the longer term drivers of market activity.

Erik: We believe we are in the right place the right markets for both.

Erik: Near and long term, we'd like to think that we're the best of what we do and we're looking to capitalize on this overall strong offshore energy market to provide additional color on our markets and segments in the North Sea UK sector, well intervention market the demand for our services are holding consistent with.

Erik: Incremental improvements expected on rates were.

Erik: With the work pretty evenly split between decommissioning in production enhancement the variable for US is seasonality of winter work. If work continues in the winter than there is potential upside for us.

Erik Staffeldt: We generated relatively strong first quarter free cash flow, and we expect a weaker free cash flow in Q2 with the Alliance Earn Out Payment. With the seasonal quarterly impacts and the impact of the earn out payment, the timing of our free cash flow is likely to skew to the second half of the year. Providing some key assumptions by segment and region starting on slide 18.

Erik: The West Africa, well intervention market is becoming more significant for us we will be sending the Q4, thousands in Nigeria, but expect it to.

Erik: Return to the Gulf for the 2025 season.

Erik: We're seeing meaningful demand in West Africa have only worked in Nigeria, there are significant market expansion opportunities as well for us, including in Angola and other countries.

Erik: We are experiencing year over year, increasing demand from 24% to 25 for the deepwater intervention in the U S. Gulf of Mexico will also be looking for improving rates.

Erik Staffeldt: While intervention, the Gulf of Mexico continues to be a very strong market supported by improving rates and expected strong utilization on the Q4000 and Q5000. Q5000 has contracted work in every quarter this year with limited white space to fill it at schedule. The Q4000 is contracted to work into Q2 in the Gulf of Mexico. The vessel is scheduled to transit to West Africa for a minimum six month contract in Nigeria with a paid mobilization and demo.

Erik: The Brazilian market for well intervention is also very active with demand increasing not only from Petrobras.

Erik: But from other operators.

Erik: 207000 is scheduled to be relocating from Australia, and Brazil for show and we're in discussions with Petrobras for a multi year contract on the Osage too.

Erik: All new rates would be a meaningful increases with further potential increases driven by our efficiencies.

Erik: And a continuation of a tight market.

Erik: Australia APAC was also another market, where we are seeing increasing demand all to say that the markets are strong globally, and we don't anticipate having enough supply with our current fleet to meet all the demand as always we're assessing our options to best capture this market.

Erik Staffeldt: In the U.K. North Sea, we expect good utilization for most of the year. The well enhancer has contracted work through Q3. The seawall is currently working in the Mediterranean before being scheduled to return to the North Sea for contracted work. We are anticipating a return to seasonalally adjusted utilization in the winter months in the North Sea. Q7000 is working in Australia with projects scheduled for three different operators. Projects are expected to continue to mid-year, followed by scheduled transit to Brazil and mobilization for its contracted work in Brazil. In Brazil, the CM Helix 2 is contracted into mid-December of 2024 with Petrobras. The CM Helix 1 is contracted for Formula 1 and will work for Trident into Q4 of 2025.

Erik: Moving to robotics.

Erik: Demand is strong and expected to continue for multiple years.

Erik: Operating at near full capacity and are looking at our options for increasing capacity marginally.

Erik: We're proud of the work we're doing on the renewables front and our presence in the wind farm site clearance market is growing we now have two vessels working in the wind farm market in Taiwan, we have three vessels working in the EU, including two vessels trenching in one performing site clearance with more demand on the horizon.

Erik: We are finalizing a new deal that would add further trenching capacity in the EU as well as potentially deploying another trencher to Taiwan.

Erik: We're currently working on the wind farms off the east coast of the U S and we believe we're just beginning to see the ramp up demand from this market.

Erik: Our robotics segment is strong and expected to continue <unk>.

Erik: Improving with further upside potential to deploy capital Accretively.

Erik: Site in time for that business.

Erik: As we've communicated 2023 was a banner year for the shelf and we're expecting the contribution from shallow water Gulf of Mexico decommissioning market to pull back in 2024.

Erik Staffeldt: We do expect to benefit from the Trident contract extension at market rate starting in 2025. Moving to robotics, the segment continues to benefit from tight markets where oil and gas and renewables markets are extremely active competing for assets. In the APAC region, we have both the Grand Canyon and CM Topaz supporting renewables projects in Taiwan into the second half of 2024. The CM Topaz, along with our T1400 Trencher, is contracted and expected to remain in Taiwan through mid-Q4 of this year. In the North Sea, the Grand Canyon III commenced trenching after completing its battery pack installation in mid-April.

Erik: We do expect a robust decommissioning market in the U S gum for years to come with helix, maintaining a significant market share. Our initial expectations for this business was $30 million to $40 million of EBITDA. We believe this business with the current access assets should have an approximate $60 million EBITDA.

Erik: Cycle run rate. Our 2023 results may have been an indication that my previous expectations for earnings potential at $70 million was perhaps conservative.

Erik: Few things are occurring in this market.

Erik: Our 2023 results significantly benefited from work associated with the field would bankruptcy.

Erik: With Apache and Exxon, leading to the extraordinary $86 million of EBITDA in 2023. This year Apache has indicated their halting work as they reassess their plans.

Erik Staffeldt: It is expected to have strong utilization into Q4. The North Sea neighbor has contracted trenching projects in Q3 and Q4. Glomar Wave is forecasted to have good seasonal utilization performing site clearance operations. The U.S., the Shalia Borland, working in the Gulf of Mexico and expected to transit for projects on the U.S. East Coast to provide wind farm support.

Erik: <unk> declared bankruptcy in 2023.

Erik: And that in.

Erik: We expect that reverting work will begin towards the end of 2024, adding to demand.

Erik: Similar to the field with bankruptcy, we expect a lag period for this new.

Erik: New work to come to the market. These developments mean 2024 will be a slower year on the shelf. However work is expected to recommence in the near future and provide significant opportunities. We still would expect to be this to be a full cycle of $60 million EBITDA business with our current assets with spikes up as an <unk>.

Erik Staffeldt: Moving on to production facilities, HP1 is on contract with no expected change. We do have variability in production as the Vroschke field continues to deplete. The Thunderhawk field is producing after completion of the well clean-out in January. Moving on to shallow water abandonment.

Erik: <unk> thousand 23 and down as we expect in 2024.

Erik: In addition to the work flowing from bankruptcies, we expect regulatory pressure to drive decommissioning work on fields held by ongoing shelf producers. This is what led to tell us awarding us their decommissioning work for the next five years, So big picture, what we're looking at a pullback for 2024, we remain confident.

Erik Staffeldt: After the robust 18 to 24-month period of activity, we're seeing operators scale back activities to mitigate the impact of winter weather. Following the slower Q1, we do expect. The second and third quarters are expected to be very active with potential for competition for assets if and as schedules fill out. We do anticipate this to be a seasonal business with variability in results depending in part on operator spending, but we remain confident in the long-term outlook of the business as we believe demand is likely to increase. At this time, I will turn the call back to Owen for a discussion on our outlook for BEYOND24 and for closing comments. Thanks, Erik. Good morning.

Owen: And our outlook and our positioning for this market for the long term helix is well positioned to deliver in 2024 and beyond our markets of sustainable growth opportunities in each segment without the need to search for growth beyond our core competencies.

Erik: We are successfully we've successfully simplified our balance sheet and the company is financially strong.

Erik: After the final earn out payment for the alliance acquisition, we have $240 million of cash on the balance sheet and with relatively low gross debt and net debt.

Erik: We're now generating strong free cash flow with the potential to generate double digit yield on free cash flow going forward.

Erik: With the cash.

Speaker Change: We will look for and be open to deploying cash for growth in the areas mentioned, where we can utilize editing capacity.

Owen E. Kratz: Thanks, Erik. Good morning.

Speaker Change: We will deploy for growth when the values accretive to share price and we will seek to do so on a sustained full cycle long term basis. If the opportunities don't present for growth. Then we can deploy the cash to share repurchase as marketing pricing permits taking advantage of the $200 million buyback facility approved by the.

Owen E. Kratz: Our performance for the first quarter was marginally better than planned. Well intervention and robotics provided solid year-over-year improvements, with production facilities impacted by the work-over expense on the Thunderhawk field. As expected, shallow water abandonment declined driven by winter weather and customers reassessing the pace of their abandonments. Overall, we're pleased with our performance and happy to deliver good results. With the solid start to 2024, we're maintaining our guidance. The overall strength and activity in the energy market continue to support the premise of a multi-year investment cycle in the offshore market.

Erik: <unk> will also prioritize growing and maintaining a strong cash balance on the balance sheet with that I'll turn it back to Eric for Q&A.

Eric: Thanks, Owen operator at this time, we're ready for questions.

Erik: Sure.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: Your first question comes from the line of James <unk> with TD Helen.

James: Please go ahead.

Erik: <unk>.

Speaker Change: Hey, guys good morning.

James: So a lot going on with the shallow water business.

James: I just want to make sure I understand are we.

James: Are you sticking.

Owen E. Kratz: The well intervention market continues to show strength, as evidenced by rig activity and rates. The demand for our robotics segment, benefiting from our geographical expansion in the renewables markets, continues to tighten. With additional market support from oil and gas services, the dynamics of supply and demand are working in our favor. The near-term pullback and shallow water abandonment segments are more than offset by the regulatory drivers and current abandonment needs that support the longer-term drivers of market activity.

Erik: Sticking by the <unk>.

Erik: Our expectation of $30 million to $40 million of EBITDA This year.

Speaker Change: I guess the first part of the question it looks like you revised the revenues lower so just curious.

Erik: What what's your updated thoughts are on that.

Speaker Change: Now the 30% to $40 million of EBITDA that I mentioned was the initial guidance that we gave at the time of the acquisition.

Erik: I believe for this year, we will more than exceed that.

Erik: Okay.

Speaker Change: And then just just trying to understand you talked about the seasonality in this business, it's going to be a seasonal business.

Owen E. Kratz: We believe we're in the right place, in the right markets for both the near and long term. We'd like to think that we're the best at what we do, and we're looking to capitalize on this overall strong offshore energy market. To provide additional color on our markets and segments, in the North Sea, U.K. sector, well intervention market, the demand for our services is holding consistent with incremental improvements expected on rates, with the work pretty evenly split between decommissioning and production, and the variable for us is the seasonality of winter work.

Owen E. Kratz: In the Gulf of Mexico, Your deepwater well intervention in the Gulf of Mexico is not seasonal so other than the heavy lift barge why is the shallow water business seasonal.

Owen E. Kratz: Yes.

Owen E. Kratz: Take that as Scott, it's basically just answer the weather patterns, you're working in shallow water <unk> and reference those shallow waters.

Scott: You've got that the dive in facilities not just the heavy lift barge you got the lift boats that are all affected by shallow water heavy weather.

Owen E. Kratz: If work continues in the winter, then there's potential upside for us. The West Africa well intervention market is becoming more significant for us. We'll be sending the Q4000 to Nigeria but expect it to return to the Gulf for the 2025 season. We're seeing meaningful demand in West Africa, but have only worked in Nigeria.

Owen E. Kratz: <unk> seen the deeper water, we have a bit more room to play around with the vessels.

Erik: It's literally just.

Erik: And we have a patent.

Speaker Change: Okay that makes sense. Thanks.

Speaker Change: And just.

Owen E. Kratz: Just maybe on well intervention.

Speaker Change: Oh, and I think you sort of broadly touched on rate increases, but if you could give any color. There. Like are you are we are you pushing up leading edge rates in well intervention globally, and then specifically on the Gulf of Mexico, What does that look like you've taken the Q4.

Owen E. Kratz: There are significant market expansion opportunities as well for us, including in Angola and other countries. We are experiencing year-over-year increasing demand from 24 to 25 for deep water intervention in the U.S. Gulf of Mexico. We'll also be looking for improving rates. The Brazilian market for well intervention is also very active, with demand increasing not only from Petrobras but from other operators. The Q7000 is scheduled to be relocated from Australia to Brazil for Shell, and we're in discussions with Petrobras for a multi-year contract on the SH2. All new rates would be meaningful increases with further potential increases driven by our efficiencies and a continuation of a tight-ribbed market. Australian NAPAC is also another market where we're seeing increasing demand.

Speaker Change: And out of that market and I think you mentioned, it's very tight I think we've seen some rig rates.

Speaker Change: Moving a little bit up after being sort of stuck in a lull for 12 to 18 months. So if you could talk about rates I appreciate it.

Speaker Change: Okay.

Speaker Change: Mixed bag.

Speaker Change: We are pushing rates up.

The rig rates are moving up leading edge for us.

Speaker Change: The Institute of.

Owen E. Kratz: Slight discount to rig rates that rig rates that we compete against are the harsh environment rates or not.

Owen E. Kratz: You DW floaters.

Speaker Change: So theres.

Owen E. Kratz: Theres a step down from the UW rates to the harsh environment rates and then there's a slight discount found our rates that would be what we would consider leading market.

Speaker Change: We're able we are pushing leading market rates, but thats compounded a little bit by the producers now seeking.

Owen E. Kratz: Seeking multi there's more producers seeking multiyear commitments and of course, they want a rate cut.

Owen E. Kratz: All to say that markets are strong globally and we don't anticipate having enough supply with our current fleet to meet all the demand. As always, we're assessing our options to best capture this market. Moving to robotics.

Speaker Change: For for giving you that kind of utilization.

Owen E. Kratz: Sure.

Speaker Change: In negotiations on a number of these trying to balance how far out we are willing to commit and what kind of a discount are we willing to take for a multiyear commitment.

Owen E. Kratz: Demand is strong and expected to continue for multiple years. We're operating at near full capacity and are looking at our options for increasing capacity marginally. We're proud of the work we're doing on the renewables front, and our presence in the wind farm site clearance market is growing. We now have two vessels working in the wind farm market in Taiwan. We have three vessels working in the EU, including two vessels trenching and one performing site clearance, with more demand on the horizon. We're finalizing a new deal that would add further trenching capacity in the EU as well as potentially deploying another trencher to Taiwan.

Owen E. Kratz: Versus the strength of our.

Speaker Change: Our.

Owen E. Kratz: View that the market is going to remain strong and we're very tight.

Owen E. Kratz: It's a little bit of a mixed bag. We are working off of the last of our legacy rates I would say.

Speaker Change: Although we gave during the down period I think by the end of this year those will be gone and will be on the new rate. So we do expect a pretty significant increase in our EBITDA.

Speaker Change: <unk> EBITDA contribution in 'twenty five just from a rollover of these legacy rates.

Speaker Change: And maybe just.

Owen E. Kratz: Just a follow up on that like.

Speaker Change: I know that there's so many moving pieces, there's different geographies, you've got legacy rates on a lot of these vessels, but I mean would you think about.

Speaker Change: Leading edge rates generally on average would they be like 10% higher this year versus last year or.

Owen E. Kratz: We're currently working on wind farms off the east coast of the U.S., and we believe we're just beginning to see the ramp-up demand from this market. Our robotic segment is strong and expected to continue. Improving with further upside and the potential to deploy capital lucratively, it's an exciting time for that business. As we've communicated, 2023 was a banner year for the shelf, and we're expecting the contribution from the shallow water Gulf of Mexico decommissioning market to pull back in 2024.

Speaker Change: Is that a decent way to think about it or how would you think about that.

Speaker Change: Let's see.

Speaker Change: I haven't looked at it from a percentage basis, but I would say.

Owen E. Kratz: We're looking at our rates being leading edge rates are roughly 15% higher.

Speaker Change: Okay, great. Thanks, so much guys I appreciate it.

Owen E. Kratz: Your next question comes from the line of Don Crist with Johnson Rice.

Owen E. Kratz: Please go ahead.

Speaker Change: Good morning, gentlemen.

Owen E. Kratz: I wanted to start with the <unk> bankruptcy.

Scott Andrew Sparks: And the city.

Owen E. Kratz: The amount of wells that are being put back to the original operators.

Owen E. Kratz: We do expect a robust decommissioning market in the U.S. GOM for years to come, with Helix maintaining a significant market share. Our initial expectations for this business were 30 to 40 million dollars in EBITDA. We believe this business, with the current assets, could have an approximate 60 million dollars in EBITDA full cycle run rate. Our 2023 results may have been an indication that my previous expectations for earnings potential at $70 million were perhaps conservative

Speaker Change: Where are we.

Owen E. Kratz: In kind of discussions.

Owen E. Kratz: To.

Owen E. Kratz: Put contracts in place to start doing that work is that you think any of that kind of hits in the fourth quarter or do you think thats still 25 this year.

Owen E. Kratz: Again, it goes by operator by operator, I think thats been fairly obvious for quite a while.

Owen E. Kratz: Bankruptcy occurred last year, but it wasn't finalized until just this past month.

Owen E. Kratz: That was a big delay everyone thought it was going to be.

Owen E. Kratz: Finalized at the end of last year with the work beginning this year. So that's been a little bit of a surprise.

Owen E. Kratz: Process like I said varies from operator to operator, some of them have been anticipating it in pretty much know what they want to do.

Owen E. Kratz: A few things are happening in this market. Our 2023 results significantly benefited from work associated with the Fieldwood bankruptcy, both Apache and Exxon, leading to the extraordinary $86 million of EBITDA in 2023. This year, Apache has indicated they're halting work as they reassess their plans.

Owen E. Kratz: They have not yet to my knowledge of receive.

Owen E. Kratz: Mandates from the government.

Owen E. Kratz: Noted.

Owen E. Kratz: Notification of precisely which fields, they're getting back but like I said they have a pretty good idea of some of them had been planning I think you could see some of that work potentially.

Owen E. Kratz: To give you some context the field with bankruptcy occurred in August of 'twenty, and we really didn't see the work until July August of 'twenty two.

Owen E. Kratz: Cox declared bankruptcy in 2023, and we expect that the reverting work will begin towards the end of 2024, adding to demand. However, similar to the Fieldwood bankruptcy, we expect a lag period for this new work to come to the market. These developments mean 2024 will be a slower year on the shelf. However, work is expected to recommence in the near future and provide significant opportunities. We still would expect this to be a full-cycle 60 million EBITDA business with our current assets, with spikes up as in 2023 and down as we expect in 2024, in addition to the work flowing from bankruptcies. We expect regulatory pressure to drive decommissioning work on fields held by ongoing shelf producers.

Owen E. Kratz: So that was the 18 months.

Owen E. Kratz: A good 12 to 18 month lag.

Speaker Change: I don't think it will take that long on talks with.

Speaker Change: Everyone's known this was coming.

Owen E. Kratz: You could see some work begin.

Owen E. Kratz: Late this year.

Owen E. Kratz: But I think most of the work it's going to take them. The rest of this year to figure out what properties are getting back how they want to handle the contracting and then go out for the tendering has been negotiated contracts I think all of that takes until the fourth quarter to occur.

Speaker Change: So we haven't included anything from Cox.

Owen E. Kratz: And of course, Apache has decided to shut down their operations for this year as they reassess the way they were doing it and they don't expect to begin again until later on this year or early next year. So really that's what's driving the.

Owen E. Kratz: Expectations that 'twenty forward is going to be slow, but then that's just sort of pulling back the rubber band.

Owen E. Kratz: Everyone is talking about 25 just being.

Owen E. Kratz: This is what led to Talus awarding us their decommissioning work for the next five years. So, big picture, while we're looking at a pullback for 2024, we remain confident in our outlook and our positioning in this market for the long term. Helix is well positioned to deliver in 2024 and beyond. Our markets have sustainable growth opportunities in each segment without the need to search for growth beyond our core competence. We've successfully simplified our balance sheet, and the company is financially strong.

Owen E. Kratz: So it's an over the top demand here.

Speaker Change: Okay and can you remind us how many wells you believe are being put back through the <unk> bankruptcy.

Owen E. Kratz:

Owen E. Kratz: It depends.

Owen E. Kratz: On how you count we're holds I know that sounds like a dodge, but the number I've heard or <unk> hundred 60 wells coming back from Cox.

Owen E. Kratz: But I have not seen the exact list of whats being put back.

Owen E. Kratz: I've heard estimates on the duration of the work are requiring anywhere from 7% to 20 years.

Owen E. Kratz: That depends on the capacity in the Gulf to do the work and the pace.

Owen E. Kratz: Producers execute the work, but it's going to be a long multi year demand driven cycle.

Owen E. Kratz: After the final earn-out payment for the Alliance acquisition, we have $240 million of cash on the balance sheet, and with relatively low growth debt and net debt. We're now generating strong free cash flow with the potential to generate double-digit yield on free cash flow going forward. We will look for and be open to deploying cash for growth in the areas mentioned where we can utilize added capacity. We'll deploy for growth when the value is accretive to the share price, and we'll seek to do so on a sustained, full cycle, long-term basis.

Owen E. Kratz: Right exactly.

Owen E. Kratz: And switching over to the deepwater side I know in past conference calls you had said that we were several vessels short.

Owen E. Kratz: Given the current demand but.

Owen E. Kratz: As Guiana, and other kind of basins that are fairly new start to age how do you see that as we progress do you still think we're a couple of vessels short today and that could grow as we kind of move into the 25 to 26.

Owen E. Kratz: Seasons.

Owen E. Kratz: If the opportunities don't present themselves for growth, then we can deploy the cash to share repurchase as marketing pricing permits, taking advantage of the $200 million buyback facility approved by the board. We'll also prioritize growing and maintaining a strong cash balance on the balance sheet. With that, I'll turn it back to Erik for Q&A. Thanks, Owen.

Owen E. Kratz: We mentioned the need to bring back the Q4 to the Gulf of Mexico because of the demand we're seeing in the Gulf of Mexico.

Erik Staffeldt: Then the Q seven, leaving the Asia Pacific market for the demand in Brazil, So that leaves us without an asset floating assets to cover of West Africa and Australia.

Erik Staffeldt: Last year, we did add two new intervention systems in our thinking at that time was that our rigs we're going to be required to do some of the work that we can't cover.

Erik Staffeldt: Thanks, Owen. Operator, at this time, we're ready for questions.

Owen E. Kratz: But the rig market is also very very tight.

Speaker Change: We do have one.

Speaker Change: System that is working on a rig off of Australia.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. Your first question comes from the line of James Schumm with TD Cowen. Please go ahead.

Erik Staffeldt: That strategy was starting to pay off now.

James Joseph Schumm: We're looking at the fact that the rig market is continuing the tightened further the pricing the rates are going up.

James Joseph Schumm: And we're still short basically an asset to cover West Africa in another asset to cover Australia. So we're starting to explore our options as to.

James Joseph Schumm: How to do that if the rig market is this time.

James Joseph Schumm: We don't have any conclusions right now to share though.

James Joseph Schumm: Hey guys, good morning. So, a lot going on with the shallow water business. I just want to make sure I understand. Are you sticking by the expectation of $30 million to $40 million of EBITDA this year? That's, I guess, the first part of the question. It looks like you revised the revenues lower, so just curious what your updated thoughts are on that.

Speaker Change: I appreciate the color thanks Owen.

Speaker Change: And your next question comes from the line of John W. Mitchell This Daniel Energy partners.

Speaker Change: Please go ahead.

Speaker Change: Hey, guys. Thanks, Thanks for fitting me in here.

James Joseph Schumm: You guys have done a ton of work on the balance sheet. You currently sit in a net cash position have kind of taken out the convert we've seen where offshore drilling rig rates are in with respect to intervention there seems to be a multiyear runway for that business with significant improvements in profitability coming in 'twenty five.

Owen E. Kratz: Now the $30 to $40 million EBITDA that I mentioned was the initial guidance that we gave at the time of the acquisition. I believe that this year we will more than exceed that.

Owen E. Kratz: Okay. And then just trying to understand, you talked about the seasonality of this business. It's going to be a seasonal business. It's in the Gulf of Mexico. Your deep water well intervention in the Gulf of Mexico is not seasonal. So other than the heavy lift barge, why is the shallow water business seasonal?

Owen E. Kratz: Just maybe take a minute how are you thinking about returning capital to shareholders outside of the repurchase as we move into a period in the next couple of years, where free cash flow generation should be significant.

Speaker Change: Right right now we do have the $200 million facility that we're working on doing share repurchase. Our plan is to continue to do at least a minimal level of share repurchase where the priority of the cash targeting.

Owen E. Kratz: Some of the areas, where we're really tightened the market and could add capacity.

Scott Andrew Sparks: I'll take that; it's Scotty here. It's basically just down to the weather patterns. You're working in shallower water, so the seas are rougher in those shallower waters. You've got diving facilities, not just the heavy lift barge. You've got the lift boats that are all affected by shallow water and heavy weather. Obviously, in deeper water, we have a bit more room to play around with the vessels. It's literally just a weather pattern.

Owen E. Kratz: I'd say, our first priority would be to deploy cash for growth in areas, where it was immediately accretive to shareholder value.

Scott Andrew Sparks: And the EBITDA contribution sustainable long term.

Scott Andrew Sparks: That'll be the first priority and to the extent that we don't see the opportunities or the value is enabled to be achieved then we would revert to the share repurchase and beyond that I think we would like to grow our.

Scott Andrew Sparks: The cash balance on our balance sheet, a little bit to borrow a phrase from Warren Buffett, if theyre going to go searching for SaaS moving white elephants, you better carry a loaded gun.

James Joseph Schumm: Okay, that makes sense. Thanks. Just maybe on well intervention, Owen, I think you sort of broadly touched on rate increases, but if you could give any color there, like are you pushing up leading-edge rates in well intervention globally? And then specifically in the Gulf of Mexico, what does that look like?

James Joseph Schumm: Okay.

Speaker Change: Alright, Thanks, maybe one more for me just kind of outside of day rates continuing higher Owen.

Owen: With where rig rates have elevated two how are you thinking about growing the well intervention business over the next few years are there assets you could be interested in it seems like new assets would be a nonstarter just given the economics, but just kind of how do you think about growing that business outside of day rates moving higher.

Owen: Well I think new build is sort of out of the question right. Now if you work back from the available of day rates or even what the projected dayrates are going to be and you combine that with the.

Owen E. Kratz: You've taken the Q4000 out of that market, and I think you mentioned it's very tight. I think we've seen some rig rates moving a little bit up after being sort of stuck in a lull for, I don't know, 12 to 18 months. So if you could talk about rates, I'd appreciate it.

Owen: Cost to build and the cost of capital, we're a long ways from our new building assets being commercially viable. So I would say that that's sort of off the table for consideration.

Owen E. Kratz: When you were talking about adding floating assets in this market, it's a very tight market right now.

Owen E. Kratz: The.

Owen E. Kratz: Value propositions.

Owen E. Kratz: <unk>.

Owen E. Kratz: So there are few and far between but there are a couple of things that might be of interest.

Owen E. Kratz: It's a mixed bag. We are pushing rates up. The rig rates are moving up, so leading edge for us constitutes a slight discount to rig rates. The rig rates that we compete against are the harsh environment rates and not the UDW floaters. So there's a step down from the UDW rates to the harsh environment rates, and then there's a slight discount on our rates. That would be what we would consider a leading market.

Owen E. Kratz: Beyond that Youre looking at the wind market, which.

Owen E. Kratz: I think theres been a lot of talk about how it's hard to derive our returns in the wind market and you've seen some of the economics have caused some delays I think thats just the exponential growth curves of the wind market I've never been.

Owen E. Kratz: Oh.

Owen E. Kratz: A believer in but I do believe that its long term growth and sustainable. So there are other areas in the wind farm market, where I think we could deploy capital to add to what we're already doing.

Owen E. Kratz: And then finally in the shallow water market.

Owen E. Kratz: Depending on which we are the only ones that have all five asset classes that are required to do shallow water abandonment in the Gulf of Mexico.

Owen E. Kratz: Depending on which asset class you look at we own between one third and two thirds of all the assets.

Owen E. Kratz: We are pushing leading market rates, but that's compounded a little bit by the producers now seeking multi-year commitments, and of course, they want a rate cut for giving you that kind of utilization. We're in negotiations on a number of these, trying to balance how far out we're willing to commit and what kind of a discount we're willing to take for a multi-year commitment versus the strength of our... are, assuming that the market's going to remain strong and very tight.

Owen E. Kratz: There are areas, where we could add to that.

Owen E. Kratz: The pricing expectations again, we're a little blue Sky after such a robust year of 2023, So I don't really see the pullback on 2024 as being necessarily a bad thing if youre wanting to add capacity in that market could inject some rational thought among some of the sellers.

Speaker Change: Got it thanks for the color I appreciate it.

Owen E. Kratz: As a reminder, if you would like to ask a question press star followed by the one on your telephone keypad.

Owen E. Kratz: The next question comes from the line of James <unk> with TD Cowen. Please go ahead.

Speaker Change: Hey, Thanks for letting me back in.

Owen E. Kratz: Just maybe following up on the vessel strategy.

Owen E. Kratz: So it's a little bit of a mixed bag. We are working off of the last of our legacy rates, I would say, that we gave during the down period. I think by the end of this year, those will be gone and will be on the new rate. So we do expect a pretty significant increase in our EBITDA contribution in FY 25, just from a rollover of these legacy rates.

Owen E. Kratz: Oh and are there any cold stacked semi subs that that might be of interest to you at a good price and what are what are the thoughts around what a potential retrofit would be or like what are the economics there.

Owen E. Kratz: I don't think that we are right now engaged with looking at the cold stacked fleet thats been cold stacked for so long that the retrofit numbers.

James Joseph Schumm: Oh, and maybe just to follow up on that, I know that there are so many moving pieces, there's different geographies, you've got legacy rates on a lot of these vessels, but I mean, would you think about leading edge rates, generally, would they be like 10% higher this year versus last year, or is that a decent way to think about it, or how would you think about that?

James Joseph Schumm: Don't make much commercial sense.

James Joseph Schumm: I think there are a few assets in the marketplace and very few.

James Joseph Schumm: There are a few that exist.

James Joseph Schumm: Existing assets that are working but that could be of interest.

James Joseph Schumm: Okay, and then I was wondering if you guys could give some directional comments on the cadence of earnings from two Q3 Q4, Q you've got I think in the third quarter Youre going to transit the Q4 thousand in the Q 7000.

Owen E. Kratz: Let's see, this is... I haven't tried to look at it from a percentage basis, but I would say... We're looking at rates where the leading edge rates are roughly 15% higher. Okay.

Owen E. Kratz: So.

James Joseph Schumm: Okay, great. Thanks so much, guys. I appreciate it.

Owen E. Kratz: Just the way you are accounting works I'm wondering if Q3 is sort of unusually low in Q4 is unusually high this year or.

Operator: Your next question comes from the line of Don Crist with Johnson Rice. Please go ahead.

Donald Peter Crist: Good morning, gentlemen. I wanted to start, Owen, with the Cox bankruptcy and the significant amount of wells that are being put back to the original operators. Where are we in discussions to put contracts in place to start doing that work? Do you think any of that kind of hits in the fourth quarter, or do you think that's still a 25 issue?

Donald Peter Crist: Should we think about that.

Operator: Yes.

Owen: The mix still is Jim.

Donald Peter Crist: Second quarter, and third quarter are going to be our strongest months.

Owen: You do identify that in the third quarter, we are going to have some unusual items that will impact that quarter that will probably making lower than what would otherwise be if we werent deferring the mobilizations.

Owen: That's still the second and third quarter, our strongest quarters.

Speaker Change: Okay, great. Thanks, Eric and then just last one.

Donald Peter Crist: The Siem helix two.

Owen: Yes go ahead, yes, just to be clear thats deferring the accounting treatment of not deferring the mobilization.

Owen E. Kratz: Again, it goes by operator by operator. But I think it's been fairly obvious for quite a while. I mean, the bankruptcy occurred last year, but it wasn't finalized until just this past month. That was a big delay. Everyone thought it was going to be finalized at the end of last year with the work beginning this year, so that's been a little bit of a surprise. The process, like I said, varies from operator to operator.

Speaker Change: Alright, okay.

Owen E. Kratz: The Siem helix two contracted until December.

Speaker Change: <unk> been some reports maybe that you are the lowest bidder on some incremental work for Petrobras in Brazil.

Owen E. Kratz: What are your expectations there when do you think we will get an update on that vessel.

Owen E. Kratz: Okay.

Owen E. Kratz: When.

Speaker Change: We grow youll be the first to know when we know.

Owen E. Kratz: Okay.

Owen E. Kratz: Some of them have been anticipating it and pretty much know what they want to do. But they have not yet, to my knowledge, received mandates from the government and notification of precisely which fields they're getting back. But like I said, they have a pretty good idea. Some of them have been planning. I think you could see some of that work potentially, you know. To give you some context, the Fieldwood bankruptcy occurred in August of 20, and we really didn't see the work until July or August 22.

Owen E. Kratz: Petra Petrobras has a very peculiar tendering style just to lay out the facts for you. There is basically one tender for two riser vessels that they issued another tender for a riser, let's vessel that was issued.

Owen E. Kratz: The way that Petrobras process works is that you submit your commercial terms.

Owen E. Kratz: The lowest bidders than are asked to.

Owen E. Kratz: Negotiate then the contract.

Owen E. Kratz: Where the process stands right now is that we were the low bidder on the two riser vessels as well as the <unk> vessel.

Owen E. Kratz: We have been invited to start negotiating the first of the rigel as vessels, which as <unk> mentioned in our.

Owen E. Kratz: So that was an 18 month or a good 12 to 18 month lag. I don't think it'll take that long on Cox because everyone's known that this was coming. You could see some work begin late this year.

Owen E. Kratz: R R.

Owen E. Kratz: Written presentation.

Owen E. Kratz: The recent announcement of the Ryzen list vessel is very very fresh off the press.

Owen E. Kratz: We were not only below bidder, we were the only bidder.

Owen E. Kratz: So quite honestly, we don't know where Petrobras is going to go with that so that tells you exactly where we are in the process.

Owen E. Kratz: But I have not seen the exact list of what's being put back. I've heard estimates on the duration of the work requiring anywhere from 7 to 20 years. Of course, that depends on the capacity in the Gulf to do the work and the pace that the producers execute the work at. But it's going to be a long, multi-year, demand-driven cycle.

Owen E. Kratz: They take everything very sequentially and process driven.

Speaker Change: But they don't put any times on it so that's the best I can share with you for now.

Owen E. Kratz: Is there is there a point in time in the year, where you would look to contract the vessel outside of Petrobras I mean, keeping in Brazil, but.

Donald Peter Crist: We don't have any conclusions right now to share, though.

Owen E. Kratz: Hey, thanks for letting me back in. Just maybe following up on the vessel strategy. Owen, are there any cold stacked semi-subs that might be of interest to you at a good price? And, you know, what are the thoughts around what a potential retrofit would be? Or like, what are the economics there?

Donald Peter Crist: Okay.

Speaker Change: So do we.

Owen E. Kratz: I think Petrobras in Brazil is strategically very important market for us I think it's the most robust oil and gas market in the world and it's also got a up.

Owen E. Kratz: And coming shallow water abandonment market as well as a potential future wind offshore wind market. So it's a very important market for us strategically.

Owen E. Kratz: Having said that.

Owen: We will depending on rates, we will contract the vessel.

Owen E. Kratz: Any anywhere or any one that represents greater value to the shareholders.

Speaker Change: Okay, and then sorry last one for me.

Owen E. Kratz: The SIEM Helix 2 is contracted until December. There have been some reports, maybe, that you were the lowest bidder on some incremental work for Petrobras in Brazil. What are your expectations there? When do you think we will get an update on that vessel?

Owen E. Kratz: You've got I think you said 200 $240 million of cash after you pay the earn out.

Owen E. Kratz: That's a lot of cash youre, only doing $5 million of share repo quarter, which seems very low given.

Owen E. Kratz: If you believe your stock is worth more than it is right now.

Owen E. Kratz: The lowest bidders then are asked to negotiate the contract. So where the process stands right now is that we were the lowest bidder on the two riser vessels as well as the riserless vessels. The recent announcement of the riserless vessel is very, very fresh off the press. We were not only the lowest bidder; we were the only bidder.

Owen E. Kratz: What are the why not get more aggressive with the share repo.

Owen E. Kratz: And does it have something to do with the fact that.

Owen E. Kratz: Maybe you're keeping your options open for <unk>.

Owen E. Kratz: Additional vessels for well intervention or something else.

Owen E. Kratz: Yes.

Owen E. Kratz: I wouldn't say that the main drivers keeping options open.

Owen E. Kratz: Our options are always open and being considered I think the.

Owen E. Kratz: So quite honestly, we don't know where Petrobras is going to go with that. So that tells you exactly where we are in the process. They take everything very sequentially, and they're process-driven, but they don't put any times on it. So that's the best I can share with you for now.

Owen E. Kratz: The fact that we've.

Owen E. Kratz: Sort of underperformed on the number of share repurchases to date is just a.

Owen E. Kratz: A reflection of the fact that we've actually outperformed our expectations compared to where we thought we would be at this point.

Owen E. Kratz: Okay.

Speaker Change: Okay. Thank you very much I appreciate it.

Erik Staffeldt: There are no further questions at this time. I will now turn the call back over to Erik Staffeldt for closing remarks. Please go ahead.

Owen E. Kratz: There are no further questions at this time I will now turn the call back over to Eric Affeldt for closing remarks. Please go ahead.

Erik Staffeldt: Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our second quarter 2024 call in July.

Erik Staffeldt: Thanks for joining us today, we very much appreciate your interest and participation and look forward to having you on our second quarter of 2024 call in July. Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines.

Speaker Change: Ladies and.

Speaker Change: Gentlemen that concludes today's call. Thank you all for joining and you may now disconnect your lines.

Operator: [music].

Operator: Yes.