Q1 2025 Helix Energy Solutions Group Inc Earnings Call
James Schumm, David Smith, Donald Crist, Scott Sparks, Owen Kratz
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Speaker Change: Thank you for standing by and welcome to Q1 2025 Helix Energy Solutions Group I&C Earnings Conference call. All lights have been placed on mute to prevent any background noise.
Speaker Change: 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, follow the number one in your telephone keypad. If you would like to withdraw your question, press star one again, thank you. I would now like to turn the call over to Mr. Brent Arriaga, CSO, and Vice President for Finance and Accounting. Please go ahead. Thank you very much.
Brent Arriaga: Good morning everyone and thanks for joining us today on our conference call or we'll be reviewing our first quarter 2025 earnings release
Speaker Change: Participating on this call for Helix today are Owen Kratz, our CEO , Scottie Sparks, our CEO , Erik Staffeldt, our CFO , Ken Neikirk, our General Counsel, Daniel Stewart, our Vice President of Commercial and Myself.
Speaker Change: Hopefully you've had an opportunity to review our press release in the related slide presentation release last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixes.com
Speaker Change: The press release of slides can be accessed through the news and events tab.
Before we begin our prepared remarks
Kid Neikirk will make a statement regarding forward booking information again.
Kenneth 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.
Kenneth Neikirk: All statements in this conference call or in the associated presentation, other than statements of historical facts, are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 Bye.
Kenneth Neikirk: Our actual future results may differ materially from our projections and fordling statements due to a number and variety of risks on certain of these assumptions and factors.
Kenneth Neikirk: including those set forth and slide two of our presentation, and our most recently filed annual report on Form 10K, our quarterly reports on Form 10Q, and in our other filings with the SEC.
Kenneth Neikirk: You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement [inaudible]
Kenneth Neikirk: We 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
Kenneth Neikirk: and in accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures.
Owen: Please remember that information on this conference call speaks only as of today, April 24th, 2025, and therefore you are advised that any time sensitive information may no longer be accurate as of any replay of this call.
Speaker Change: Thanks, Ken, and good morning, Edelome. Starting with slide five, we deliver a straw for a quarter of a month, where by higher rates in our Brazil, we'll intervention business and on our Q-buzzles. Revenues for the quarter were 278 million with the gross profit of 28 million, resulting that income of 3 million.
Speaker Change: Adjusted each assault with just 2 million for the quarter, and we had positive operating cash flow of 16 million resulting in pre-tash flow of 12 million.
Speaker Change: Our cash and liquidity remain strong with cash and cash equivalence of $370 million and liquidity of $405 million.
Speaker Change: Before I turn the call over to Scotty, excuse me, I'd like to provide our view of the macro backdrop. Briefly, you address the current market environment and acknowledge the uncertainty our sector is facing and highlight the ways Helix is addressing that uncertainty. [inaudible]
Speaker Change: We know that earlier in the month the U.S. announced drastic terror fights and OPEC announced significant increases to production and as a consequence we've seen a lot of upheaval in the global financial markets and oil dropped to the low of 60s.
Speaker Change: These events are in addition to other challenges already facing our industry, which we'll address later on. But all of this is to say we're operating in a dynamic, changing, challenging, and uncertain market environment. Helix is in a good place to meet these challenges.
Speaker Change: At quarter end we had approximately 1.4 billion of backlog. Our balance sheet is perhaps the strongest it's ever been with negative net debt.
Speaker Change: No significant maturities until 2029, and a war test of cash on hand Even in this environment, we're still forecasting to generate a hundred to a hundred and sixty million in pre-cash flow for 2025
Speaker Change: We're also reacting quickly, taking steps to lower costs by stacking several vessels and adjusting our capital spending.
Speaker Change: to say all of that is a single business is an understatement and to be sure we're navigating a new set of challenges today.
Speaker Change: Our business is resilient and built to withstand these cycles. I believe in the value proposition we provide our customers, whether production enhancements, decommissioning in deep or shallow water, follicle fuels or renewables.
Speaker Change: As we present the details of our quarterly results and our updated outlook for 2025, know that we recognize the challenges of the current macro-environment and that he looks for maintenance, well-positioned, perhaps uniquely to meet these challenges.
Speaker Change: With that, I'll turn the call over to Scotty. Thanks Owen, good morning everyone. Continuing on slide six, highlights for the first quarter include, we commenced operations with the Q7000 in Brazil for Shell on the 400-day contract press options.
Speaker Change: The seam helix 2 commenced a new three-year contract, continuing work for patch of asset higher rates and we commenced operations on the trim, our dedicated site clearance vessel in the North Sea.
Speaker Change: and signed one of our largest trenching contracts to date for over 300 days of trenching in 2026 and the Hornsie Free Wind Farm in the UK.
and Renewal of the HWCG contract for March of 2027.
Speaker Change: I would slide eight. Slide eight provides a more detailed review of our segment results and segment utilization.
Speaker Change: In the first quarter, we continue to operate globally with minimal operational disruption with operations in Europe , Asia Pacific, Brazil, Africa, the Gulf of America and the US East Coast.
Speaker Change: As Owen mentioned, our solid first quarter results were driven by our core well into venture markets globally, along with good season results from our robotics group.
Speaker Change: Moving to Slide 9, Slide 9 provides further detail of our Women's Adventure segment. In Q1, we achieve strong utilization in West Africa, the Gulf of America, and Brazil, performing very well with solid overall uptime efficiency.
Speaker Change: On North Sea vessels, the Well Enhancer and Seawell were impacted by the winter season slowdown, resulting in lower utilization and both vessels being warm stacked through most of the quarter. The Well Enhancer commenced working much and the Seawell completed a planned regulatory dry docking.
Speaker Change: in the North Sea, due to the windfall sex, the operator merger announcements, and combined with recent events that have resulted in the lower oil price.
Speaker Change: The Q7000 completed its paid transit to Brazil, and then completed the 47-day planned regulatory docking, prior to commencing work for Shell, on the 400-day plus options decommissioning campaign.
Speaker Change: Staying with Brazil, in January , SH2 commenced a new 3-year contract with Petrobras at higher rates, and the SH1 also recognised the full quarter of Trident 1-year contract extension at higher rates.
Speaker Change: We had a very strong quarter for both the US-based Q units, the Q-4000 continued operations in Nigeria, and she has currently transferred it back to the Gulf of America and is contracted with work once she returns.
Speaker Change: The Q5000 worked the entire quarter of the shell in the Gulf of America and in Q2 she will undertake planned regulatory docking period.
Moving to slide ten
Speaker Change: Slide 10 provides further detail of our robotics business. Fotics had a strong quarter considering the seasonal winter conditions. The business performed high standards operating six vessels during the quarter. Working between trenching, RV support and site survey work on renewables and oil and gas-related projects globally.
Speaker Change: Robotics worked four vessels on renewables related projects within the quarter and had good seasonal vessel utilization overall.
Speaker Change: With two vessels working on trenching projects, the GC-free and the North Sea Enabler are trenching in Europe , while the Golemaw Wave and the recently contracted trim support vessel are working on renewable site clearance work in Europe .
Speaker Change: The Shulila borderline in the Gulf of America and the GC-2 in the Asia-Pacific region both completed planned regulatory dock in the quarter and the GC-2 then completed an ultra-deep water salvage project offshore Japan.
Speaker Change: Our renewables and trenching outlook remain very robust with numerous contracted works in 2025, 26 and 27. The long-term outlook for the global renewables market is very strong with tender activity as far out of 2032.
Speaker Change: Slide 11, provides further detail of our shallow water abandonment business.
Speaker Change: Q1 activities that will reflect the expected low seasonal utilization and we are now starting to see activity that was increased with the commencement of the season and expect the shallow water abandonment business to have improved utilization in Q2 and Q3.
Speaker Change: We have temporarily stacked several of the smaller vessels, as a cost reduction measure, based on the current market levels, to continue to believe in the long-term outlook of this segment, as well as continue to age, and customers reduce their decommissioning obligations.
Speaker Change: In summary, we had another very good quarter considering the seasonal factors. Now we'd like to thank our employees for their efforts delivering again at the high level of execution and for securing a strong backlog and long-term contracts to produce what should still be a strong year for Helix, despite the current uncertainty. I will now turn the call over to Brent.
Brent Arriaga: Thanks, Gotti. Moving in place there are teams that outlines our good instruments to keep out. She metrics those of March 31.
Brent Arriaga: At quarter end, we had 370 million of cash and availability under the ABL facility of $63 million with resulting liquidity of $405 million.
Brent Arriaga: Our funded debt was 319 million and we had a negative net debt of 59 million at quarter end.
Brent Arriaga: Our balance sheet is strong and is expected to strengthen further as we continue to anticipate generating meaningful free cash flow and have minimal debt obligations between now in
Brent Arriaga: Slide 14 has been provided to illustrate the impact that seasonality has historically had on our overall results [inaudible]
Erik: I will now turn the call over to Eric for discussion on our outlook.
Thanks Brent.
Erik: As we provide an outlook for the remaining balance of 2025, we must account for the significant impact the current
Erik: Geopolitical environment has had it on our energy sector, our off-road market, and our near-term activities [inaudible]
Erik: We have a negative UK North Sea market driven by difficult regulatory environment, low oil prices, and operational paralysis from M&A activity.
Erik: We have a negative oil supply dynamics with greater than expected supply increases by OPEC, and we have negative oil demand dynamics and ongoing uncertainty from the global tariff war and other political regulatory developments.
Erik: With the challenging macro backdrop in lower oil prices, market risk for our spot access and services has increased.
Erik: The decision to stack the sea well due to the weak North Sea well intervention market is the primary driver for the adjustment to our outlook.
Erik: In our outlook, we have endeavored to account for the increase in certainty in risk in our markets. We are adjusting our outlook as follows
Erik: Revenue approximately 1.3 billion with a range of 1.25 to 1.41 billion. Revenues are decreasing with the stacking of the C-Wheel.
Erik: Ibidah, approximately 275 million with a range plus or minus 10 percent, decreasing with the stacking of the C-well and the overall negative market.
Erik: Free cashflow, approximately 130 million, with a range plus or minus 30 million, variability driven by our ultimate EBITDA, as well as working capital movement.
Erik: Capital expense 65 to 75 million. Our spending is primarily a mix of regulatory maintenance on our vessels, intervention system, and fleet renewal of robotics ROB.
These ranges include some key assumptions and estimates [inaudible]
Erik: Adjusting for the current market environment and with any significant variation from these key assumptions and estimates causing results that could fall outside the estimates and ranges provided.
Erik: Our quarterly results typically follow a seasonal pacing with a more active summer months and slower winter months The time in our vessel maintenance periods and project mobilizations will cause variances between quarters [inaudible]
Erik: For 2025, our second quarter will be impacted by the Q5,000 maintenance period and the Q4,000 transiting back to the Gulf of America. With these non-revenue periods, we expect our second quarter results to be approximate our first quarter results.
Erik: With these quarterly impacts and capital spend expected to be front-loaded, the timing of our free cash flow generation is still expected to be skewed to the latter part of the year.
Thank you, everyone. Bye-bye.
Erik: First our well intervention segment, the Q4000, as I said, currently returning to the Gulf America with completion of its African campaign in early April . The Q5000 has contracted work in every quarter with limited white space to fill its schedule.
Erik: We expect both vessels to have good utilization this year with some gaps to fill late in the year.
Erik: As we have discussed, the UK North Sea is significantly weaker than we had planned, the combination of basin-specific issues, weaker oil prices, and operator M&A has stalled activity.
Erik: As a result, we have stacked the C-Well and we're focusing work on the well-enhancer, even so there is continued risk to our UK well intervention outlook.
Erik: 27,000 is operating for Shell in Brazil on a firm 400-day project. The CM Helix II is on contract for Petrobrough. The CM Helix I is performing well abandonment work for Trident with contracted work into the second half of 2025 followed by a three-year contract with Petrobrough.
Erik: The vessel is expected to have an approximate 30-day off-hired period between contracts [inaudible]
Subs by www.zeoranger.co.uk
Erik: Moving to robotics, the robotics market is a mixed bag with some positive developments against the challenging backdrop. We recently announced the significant trenching contract in the North Sea, representing over 300 days of trenching. Bidding activity has been and continues to be extremely active.
Erik: The moratorium on the US wind farm development and the recent stop work order by the Department of Interior are counter to the positive market, but provides examples of this uncertain climate.
Erik: In the A-PAC region, the Grand Canyon II has contracted work through Q3 with identified opportunities thereafter. The T-14001 Venture is working on the client to provide the vessel and is expected to remain in Taiwan through the end of 25.
Erik: In the North Sea, the Grand Canyon III is expected to have an active trenching season with overall strong utilization. The North Sea and Neighbor has contracted trenching projects in Q3 and Q4.
Erik: The Glimmar Wave is forecasted to have good utilization performing site clearance operation.
Erik: The trim site clearance vessel commenced operations in March and is expected to have good utilization through Q3. The T-1402 trencher is contracted for its first work in the Mediterranean.
Erik: In the U.S. of Chile, a board long has contracted work in the Gulf of America, and the U.S. East Coast into Q3. Also, although some of that East Coast work is now in question with the stop work order on the Empire Wind Project.
The HP1 is on contract.
Erik: For the balance of 2025, recently extended to June of 26th with no currently expected change.
Erik: We have expected variability with production as Droschky Field continues to deplete, and Thunderhawk is shut in.
Continuing to shallow water abandonment [inaudible]
Erik: Now, Charlotte Water-Batman segment will have seasonal variability with greater impacts in Q1 and Q4. We have reduced our cost structure, commensurate with our current market, but we are retaining the ability to scale back up if the market improves.
Erik: We expect the market to be flat to marginally better than 24 absent any regulatory developments albeit also impacted by the current macro environment.
Erik: We expect the offshore business to maintain good utilization on five to seven lift boats with some variability seasonality on the OSVs and crew boats.
Erik: The energy services should have seasonal utilization for up to 12 P&A spreads and three cold tubing units.
Erik: There is seasonality in the diving and heavy lift business where the epicodron is currently idle and is expected to mobilize in May. We do expect an active season during Q2 and Q3.
Erik: Moving to Slide 18, our CAPEX WorldCats for 2025 is heavily impacted by the dry docks and maintenance period on our vessels. The C-Well and Q7000 completed their dry docks in Q1. The Q5000 is currently in dry dock with a forecasted completion at the end of May.
Erik: We are low in our Capix range for 2025 to 65 to 75 million. The majority of our Capix forecast continues to be maintenance and project related which primarily falls into our operating cash flows.
Erik: Reviewing our balance sheet, our funded debt of 319 million at March 31st is expected to decrease by a further 4 million and 25, with the scheduled principal payments on our married debt.
Erik: We expect to execute on our shareware purchase program with the target repurchase of at least 25% of free cash flow to coincide with our cash generation
Erik: At this time, I'll turn the call back to Owen for discussion on our Outlook for 25 and beyond and for closing comments.
Speaker Change: Thanks, Erik. Well, it's very hard to process the pace and impact from all the changes that are occurring in the market since last quarter. It'd be easy to tell you that we just don't know what to expect and to not provide guidance revisions.
Speaker Change: However, we felt the right thing to do is to let you know where we believe 2025 could shake out and what the future holds based on what we know and expect at present
Speaker Change: Last order, we reported to you that we felt good about where we are and that we were confident as we were looking forward.
Speaker Change: This is still true for the long term. The long-term demand for our services is still strong. The multi-year contracts we could replace on the Q5, Q7, FH1, and FH2 or college examples.
Helix is performing well with a few market driven exceptions.
Speaker Change: The most significant negative impact to our previously expected results is in the UK sector of the North Sea.
Speaker Change: Much of the previously identified work had simply been cancelled for 2025.
Speaker Change: Not fully due to tariffs, but due to government policy from the red current administration. M&A activities such as reps all merging with Neo and Shell, combining its UK assets with Ecuador, has frozen somewhat the work to a large extent that these giants were planning.
Speaker Change: The UK government has seemingly held events on their no-oil stands with permits difficult to obtain in the windfall of profits tax remaining in place despite yielding lower tax revenues.
Speaker Change: On top of this, there's the forecast for lower commodity pricing, resulting in all producers lowering their spending levels.
Speaker Change: These factors would be expected to accelerate abandonment work, and it likely will, but it just won't be in 2025. The UK Nord Sea is, for the most part, a spot market, so this will meaningfully impact us.
Speaker Change: We're stacking the sea well potentially for all of 2025 and potentially, or potentially repurposing her to another reach and depending on what the indications are for in 2026.
Speaker Change: The rest of the company is performing well with puts and takes two numbers to cover, but should allow it to achieve result consistent with previous marking consensus with the exception of the UK.
Speaker Change: We estimate the net negative impact of 2025 expectations could be approximately 75 million, so accordingly we're revising our guidance for 2025 to 275 plus or minus 10%.
Speaker Change: So that's where you're seeing, on a real-time basis, things can't and do always change [inaudible]
Speaker Change: The U.K. government could capitulate on its annual dance, or the abandonment work could proceed sooner. The U.S. shallow water Gulf of Mexico work could proceed sooner than our expectations of 2026.
Speaker Change: Our robotics work to be stronger, four-weeker given the dynamic market factors for offshore wind with global positive bias, offset by potential softness in the U.S. East Coast [inaudible]
Speaker Change: There are many variables that this is our transparent proof and assessment at this time. As I mentioned at the opening of this call, we believe in the existing...
Speaker Change: Opportunities in the market we serve. We believe in our ability to provide value enhancing services to our customers.
Speaker Change: We believe in our ability to provide value to our shareholders. Our results will be subject to the volatile cyclical nature of our industry and our sector is under pressure.
Speaker Change: But Helix is resilient and with significant backlog and robust balance sheet, we're well positioned to dwell in the storm Erik. Thanks, Elin. Operator at this time, we'll take questions.
Speaker Change: Paying Q, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the R1 on your telephone keypad to raise your hand and join the Q.
Speaker Change: If you would like to adore your question, simply press star one again. If you are called upon to ask your question and are listening by a loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Your first question comes from the line of Jim Rollyson with Raymond Chains, your line is now open Hey, good morning Owen Erik and everyone Scotty
Speaker Change: One error just to confirm, so the 70 million revenue change in well intervention revenues that is essentially all-norsy.
Speaker Change: Yeah, there are some positives in there, so yeah, that's the net overall. I think the impact to the Norse is actually greater than 70 million.
Speaker Change: Got it and no one I know we've talked in the past but it means
Speaker Change: A lot of crazy things going on at the moment, but what do you think about the North Sea market over the next?
Speaker Change: 2, 3, 4, 5 years. There seems like there's a tremendous amount, if the government stays on the track that it's on, there's a tremendous amount of P and A that ultimately has to get done. Maybe just kind of your view of how that plays out and how you think about the time horizon of that work. [inaudible]
Speaker Change: You know, given the story of history, you know, that could slide a little bit, but right now everyone is doing the engineering and the tendering process is underway.
Speaker Change: In fact, I'm on my way over there in the near future to talk directly with some of the clients It's worked that we're a very well positioned for and we do expect to see that work starting to commence in 2026 [inaudible]
Speaker Change: It kind of sets you up for your term drag obviously, but pick it up on the back end, I guess.
Speaker Change: on the macro uncertainty and kind of what's happened with chair prices and just in general.
Context of what the market is seeing and doing.
Speaker Change: How do you think about in the last couple quarters we've talked about pre-cash flow and what do you do with it?
Speaker Change: You know, the options that I recall were M&A potential and...
and obviously share repurchases and I believe your preference [inaudible]
at the time.
Speaker Change: was kind of maybe not oil field M&A because things were elevated in price but maybe more on the wind side. Maybe a little color on how that's evolving and how does this down draft make you more likely to pursue M&A or more likely to kind of keep dry powder and pursue more airy purchases.
Speaker Change: I think in this market gym with the pricing levels of new companies and the uncertainty in the market, M&A
Speaker Change: Even if the opportunities exist, they're difficult to close. So I think our priority right now is always being open to M&A, but starting to really focus on the share repartus.
Speaker Change: Got it. I appreciate the answers. I'll turn it back for other questions questions.
[inaudible]
Here next question comes from the line of James Schumm
with TD Cohen, your line is now open.
Close enough. Good morning, guys.
Okay, so-
Speaker Change: I guess, you know, I think for me, and for a lot of the investors, I think that people were surprised by the magnitude of the guide down. You guys did a great job of really...
Speaker Change: Contracting, a lot of your vessels and locking up vessels on long-term contract and so I think maybe you'd be helpful
Speaker Change: and shallow water is going to be negative Z of that 75. I'd imagine production facilities not that much different, you know, lower oil prices on Drosky, but I would think that's only, you know, modest.
Speaker Change: A couple million impact to the guy, so any color there would be really helpful.
Speaker Change: Let me just add a little color before giving the questions there. It's a valid question, but it's very difficult in this market right now to be precise.
on on different segments.
Speaker Change: Having said that, if it weren't for the North Sea, I don't think that we would have changed our guidance.
Speaker Change: We might have guided to the lower half of the range.
Speaker Change: But the main reason for the lowering of our guidance here is just to try and deliver guidance that we have a high degree of confidence in and the magnitude is primarily of the North Sea.
in the negative market till now, but the primary driver is the Norse.
Okay, thanks guys and then
Speaker Change: You know, maybe it would be helpful, and I don't know if this is maybe a question for Scotty, but maybe we could do a little bit of a not a deep dive on the UK North Sea operations, but just help us frame like how to think about maybe like what was the peak?
Speaker Change: EBITDA contribution annually from the UK North Sea asset a couple of years ago. What is the trough look like, you know, assuming you sort of stack the sea well?
What are the warm stack costs?
Per Day on the C-Well...
Speaker Change: and then just what do you you know finally like what's the outlook for that business I know it's tough but I mean you talk about PNA accelerating
Speaker Change: Why can't they just kick the can down the road? What does 2026 look like, do you think, and why doesn't that PNA activity just get pushed to the right?
Speaker Change: So Jim, I'll go ahead and start and then pass it on to Scotty to frame more of the market.
Speaker Change: I think if you go back the last couple of years. Thank you very much.
You can say for a two vessel market . .
that probably represents the recent peak.
Thank you very much.
Speaker Change: I think the TROF, we've had a couple of those in the recent years, obviously COVID-19-1, and it's really ends up being, you get to say, slightly above break even from that standpoint.
Speaker Change: So, you know, that provides at least boundaries for peak and trough of that well-intervention market.
Speaker Change: That's really helpful. Erik, just to clarify, that is for both vessels, right? Like, so roughly 40 to 45 per vessel, something like that. On the peak, correct. Yeah, okay, great. Thank you.
Speaker Change: the oil price, the government tax system, and it did surprise us, but the work's just been paused and pushed out for the right, and then there are some significant tenders as low-end shut-out there.
Speaker Change: We've been here before and we've cheated around and listened to the operatism thought that we would either not stack the boat and wait around for work this year, we've just said okay, we're going to make our own decision here, we're going to stack the boat, get down to the lowest cost post we can rather than waiting around and getting caught out like we have done in the past. That's right.
Speaker Change: So we've got the vessel underway. We're reducing the staff levels right now to the minimum Coast Guard requirement to keep the vessel safe and active and the cost should be below 30,000 a day on that vessel as we go forward.
Speaker Change: Hopefully we'll get them down lower but that's sort of a prediction going forward from the end of this month. We're in the process of stacking the vessel right now.
Speaker Change: Okay, great. And then just lastly on the outlook, I know it's difficult in this environment, but what do you, you know, could...
Speaker Change: If this year is break even from the EBITDA standpoint, what's your best guess on next year?
Speaker Change: It's hard to say right now. I mean, I'd like to think we go back into positive territory with there's a lot of work out there. If that happens, we should get back to more of a normalized
Speaker Change: Likewise, with the low oil price, we're concerned that that work in 26 could push out, but at the moment what we're hearing from the approaches is work is there in 26 and it should get back to a normalised year. We could actually go back to work this year and we're setting the vessel up that if we have to reactivate, we can reactivate quickly within two to three weeks.
Speaker Change: We're just making sure that we take care of our own business in this environment at this time.
Speaker Change: And then sorry, but it's all related. So maybe just lastly for me, how do you think how do the operators think about?
Speaker Change: Depressed Activity in the low 60s, does it dry up in the 50s, like just how do you think they typically respond to the different oil prices?
Speaker Change: Again, it's sort of hard to call the North Sea right now a usual cycle, because I think there's a lot of posturing between the government and the producers right now with several of the producers saying that they're going to exit the North Sea, in which case, you know, the government's saying, okay, we'll
Speaker Change: Abandoning your properties that will kick off and that's the posture that they're taking right now is that the North Sea is going to shift to an abandonment of market taking off in 20-26. I think most of the announcements that I've seen is big.
Speaker Change: Abendement Projects Between 26th and 2030, so that would be a big positive. But as I said in my comments, the stance is not good for the UK.
Speaker Change: Chancellor, you know, the increasing the excess profit tax is actually leading to lower tax revenues.
Speaker Change: So, you know, there's meaning going on and posturing the current between the producers and the government.
Speaker Change: You do have some producers that are North Sea captives, though. They don't have assets anywhere in the rest of the world.
Speaker Change: So I think they're taking a pause this year with the answer in the commodity pricing with fears of recession and further downsizing at $50.00, a barrel I think you see where...
Speaker Change: really starts to dry up. Right now, I think it's politically motivated. As long as it stays in the 60s to 70 range, I think you can see the producer's start to become more active again in the court scene. [inaudible]
Thank you for watching!
Speaker Change: Got it. Guys, thanks for all the color. I appreciate it.
Thank you. Thank you. Thank you.
David Smith: Your next question comes from the line of David Smith with Pickering Energy Partners. Your line is now open.
Take it morning. Thank you for taking my question.
Good morning.
Speaker Change: Not to be the dead horse, but I wanted to circle back to the longer term opportunities for the the North Sea well intervention vessels and specifically was hoping for a color on how you see
Speaker Change: opportunities for those vessels to work in other regions. It would be opportunistic opportunities like the Sea Weld-Lost Program in the Mediterranean.
Is it repurposing for other regions that could?
Speaker Change: Includes Meaningful CapEx, and also when would you want to make that decision to pursue work in other regions versus holding out for a more active PNA market in the UK next year?
There probably is work of... [inaudible]
Speaker Change: In the rest of the world for the C-well to go do, but I'll be honest with you, the R2 vessels in the North Sea are that's limited. They were designed and built for the North Sea. Most of the other regions of the world require greater depth capability. So in order to really really deploy the C-well, it would take some capital upgrades. [inaudible]
Speaker Change: We're working on those right now but I think it's too early to make that decision that that's what we're going to do because as I said before we do expect the market to start to recover in 2026.
Speaker Change: which is one of the reasons why our backing costs are a bit high now and as Goddard said we could re-mobilize the vessel in a couple of weeks.
Speaker Change: So, we're in the process of trying to assess just how strong the market will be, whether the Z-Well stays there, which is obviously our first preference or as an option. What is it cost to target the other regions where we know that there's work, but we would have to spend some capital to make the Z-Well compliant?
Speaker Change: Nigeria this month. I'm curious if there were other opportunities for work in the region that just didn't pan out in time, or if it was a stronger demand pull to return to the US Gulf.
Speaker Change: and related. Are you seeing any signs of pricing pressure for new work in the U.S. Gulf? Heavywell intervention market.
Speaker Change: Okay, so I'll take that one. Currently, we came back to the Gulf, or we're on the way back to the Gulf because we completed the X on contract.
Speaker Change: There was other operators interested in doing work but they didn't order long lead items in time so that made us take our decision to come back. We also have contracted work in the Gulf so...
Speaker Change: I do think in the future the Q4, or the Q5 may venture back to Africa, there's definitely work scopes over there, but at this time we have work here, and it's good work, it's well priced work, we're not at this time seeing price in pressure.
Speaker Change: I think we've said previously that the price is sort of stabilized, I don't see how price is going up very much, but we have the backstop of the shell contract that allows us to put all the other operators onto the key 4,000 [inaudible]
Okay, thank you very much. Stay right now.
I appreciate it. That's all for me.
Thank you.
Speaker Change: Your next question comes from the line of Greg Lewis with BTIG. Your line is now open. If I thank you and good morning and thanks for taking my question. Just two quick ones for me. One is, you know, you called out...
Greg Lewis: You know, the drag and revenue and the well intervention being the North Sea, is it safe to extrapolate that the weakness and the challenges in the UK are also what drove the guy down in robotics
Greg Lewis: I think Greg, I think what we did is took into consideration the current negative macro backdrop as we looked at our opportunities within those areas. I think it's just a small shift in those recognizing the current environment.
Greg Lewis: Okay, so but as we think about like robotics and SWA and in a place like the US Gulf of Mexico that was more flatish or potentially additive, like it wasn't well intervention.
Greg Lewis: Yes, for shallow water, it's more flatish. Your rear activity is expected to remain broadly flat. However, your profitability is slightly up as a consequence of our cost reduction measures, but again, broadly flat and really the
and the big impact is on the North Sea.
Speaker Change: and Hanser, which was an asset now. It's cost and money, or is there any other drivers of that you know, guide down in the EBITDA margin?
Speaker Change: So by far the most significant reason for the for the guy down was the stacking of the C-well.
Speaker Change: So yeah, I think absent that, Greg, I think more than likely we would have just been a qualitative update with the recognizing the negative environment guiding towards a lower range but with the step down on the C-Well, it was a step down that we had to count for.
Super helpful. Thank you very much.
[inaudible]
Speaker Change: It's just like to get a little closer out of order on a couple of points that were mentioned, right? So it's gotten right on well and mentioned. I don't think that we're seeing any downward pressure right now on our rates. We're able to hold those. The North Sea, I think, is a decrease in utilization, more so than rates, especially if we're limiting the...
Speaker Change: The supply to the market, which should be able to maintain better rates, but that remains to be seen.
Speaker Change: On the shallow water Gulf of America abandonment work, I think that utilization is going to remain weak, our cost basis is better, and we are seeing some downward pressure on pricing there as all of the contractors become competitive in this market for this year anyway.
Thank you for watching!
Speaker Change: There are no further questions at this time. I would now like to turn a conference back over to Mr. Eric Staffeldt for closing remarks. Please go ahead.
Speaker Change: Thanks for joining us today. We very much appreciate your interest in participation and look forward to having you in our second quarter of 2025 call in July . Thank you.
and Scott Sparks. Thank you. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's conference. Thank you all for joining. You may now disconnect.
Please wait, the conference will begin shortly.
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