Helix Energy Solutions Group Inc (HLX) 2024 Q1 法說會逐字稿

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2020 for Helix Energy Solutions Group, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd 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 one again, thank you. I would now like to turn the call over to Brent Arriaga, our Yagen Chief Accounting Officer.

Please go ahead.

Thank you.

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, Ken 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 at the investor page on our website at w. w. w. 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 today's webcast icon.

Before we begin our prepared remarks, can I Kirk will make a statement regarding forward-looking information.

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 final business or financial results. All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and 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 statements and disclaims 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 Investors section of our website at w. w. w. dot Helix ESG.com. Please remember that information on this conference call speaks only as of today, April 25, 2024, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call.

Scott, and thanks, Ken.

Good morning, everyone. Thank you. For joining our call today, and we hope everybody is doing well. This morning, we will review our first quarter highlights. Financial performance and operations will provide our view of the current market and an update of our guidance for 2020.

For 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 seasonal winter months. 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 pretax losses related to the extinguishment of the remaining convertible notes. 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 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 equity overhang.

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 fund, the Hawk wells. And on the sales front, the HWCG. contract also 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 favorable economics.

Over to Slide 9, 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 US 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.

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 utilization 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. 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. Well Enhancer completed its scheduled regulatory dry dock over 54 days in the quarter.

Moving to slide 11, slide 11 provides further detail of our robotics business. Robotics had a good quarter considering the seasonal winter months. The business performed the high standards operating six vessels during the quarter, working between trenching and ROV support and site survey work on renewables and oil and gas related projects globally for six vessels worked on renewables related projects within the quarter. Grand Canyon three had low utilization due to spending a good portion of the quarter having fuel-saving battery equipment permanently installed into the vessel that should lower fuel costs and emissions going forward. And we have now commenced the transition 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.

Slide 12 provides detail of our shallow water abandonment business. Q1, as expected, had lower utilization primarily due to seasonal weather patterns in the shallow water Gulf of Mexico with several of the vessels and spreads in stacked mode for the winter as well as a general near term softening in the shelf abandonment markets in Q2, with the better conditions, we should activate more of the vessels and spreads from the winter stacking mode and back into operations. Also in Q2, we will recommence work back on the larger full-field decommissioning projects after the winter broke with the project scheduled to utilize the applicator and heavy lift barge. Some of the dive vessels, support vessels and P&A spreads.

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. 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'll now turn the call over to Brent.

Thanks, Scotty. Moving to slide 14, it outlines our debt instrument and debt instruments. Key balance sheet metrics as of March 31st, 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 in availability under our ABL of $96 million, with resulting liquidity of $419 million. We had negative net debt of 6 million at quarter end 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'll now turn the call over to Eric for a discussion on our outlook for 2024 and beyond.

Thanks, Brett. Based on our first quarter performance and the continued strength of the offshore energy markets. We're maintaining guidance of certain key financial metrics from our forecast revenue in the 1.2 to 1.4 billion range. It's essentially flat to slightly positive from last year. Ebitda in the two 70 30 range with slight improvements over 23, specifically in our well intervention, partially offset by the softer shallow water shallow-water. The market free 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. Once again, this is a mix of regulatory maintenance on our vessels and fleet renewal for our robotics ROVs.

Moving on to Slide 17. The Well Enhancer completed its 54 day drydock in Q1. The HP. one is currently mobilizing to its scheduled drydock. Q7000 will have a maintenance period during this Mobion Brazil, our CapEx forecast continues to be weighted towards regulatory maintenance, which prime primarily falls into our own cash flows.

Reviewing our balance sheet, our funded debt stands at $312 million, reduced by the extinguishment of the 2026 convertible notes. Our next significant maturity is not until 2029. We are currently targeting 20 to 30 million of share repurchases in our 2024 program with 5 million completed in Q1. Our quarterly financial performance in 24 is expected to follow a similar cadence as our results in 23 with the second and third quarter 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. We generated relatively strong first quarter free cash flow, and we expect a weaker free cash flow in Q2 with the Alliance earn-out payments 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, providing some key assumptions by segment and region.

Starting on Slide 18 well intervention. The Gulf of Mexico continues to be a very strong market, supported by the improving rates and expected strong utilization on the Q4000 and Q5000. Q4000 has contracted work in every quarter this year with limited white space to fill that schedule. The Q4000 has contracted work into Q2, and 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 demo in the UK North Sea. We expect good utilization for most of the year. The Well Enhancer has contracted work through Q. three. The seawall is currently working in the Mediterranean before being scheduled to return to the North Sea for contracted work. We are we are anticipating a return to seasonally adjusted utilization in the winter months.

In the North Sea, Q7000 working in Australia with projects scheduled for three different operators. Projects are expected to continue to midyear, followed by scheduled transit to Brazil and mobilization. First contracted work in Brazil in Brazil. The Siem Helix two is contracted into mid December of 24 with Petrobras, the Siem Helix one is contracted for Hong Kong for Trident into Q4 of 2025. We do expect to benefit from the Trident contract extension at market rate starting in 2025.

Moving to Robotics segment continues to benefit from the tight market where oil and gas and renewables markets are extremely active competing for assets, APAC region. We have both the Grand Canyon and Siem Topaz supporting renewables projects in Taiwan into the second half of 2020 for the Siem Topaz, along with our T. 1,400 trencher, are contracted and expected to remain in Taiwan through mid Q4 of this year.

In the North Sea, the Grand Canyon three commenced trenching network completed its battery pack installation in mid-April, so expected to have strong utilization into Q4. The North Sea neighbor has contracted trenching projects. Q3 and Q4 from our WAVE is forecasted to have good seasonal utilization performing site clearance operations, the U.S. facility, a borderline working in the Gulf of Mexico and expected to transit projects on the US East Coast to provide wind farm support.

Moving to production facilities. HP. one is our contract with no expected change. We do have variability in production for our ski field continues to deplete. The Thunder Hawk field is producing after completion of the well clean out in January when we got a shallow water abandonment. After the robust 18 to 24 month period activity, we're seeing operator scale back activities to mitigate the impact of winter weather following the slower Q1 we do expect the second and third quarters to be very active with potential for competition for asset assets. If and as schedules fill out, we do anticipate this to be a seasonal build business with variability in results, depending in part on operator spending. But we remain confident 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 how much beyond 24 and for closing comments owned for a very good morning.

Our performance for the first quarter was marginally better than plan of well intervention and robotics provided solid year-over-year improvements with production facilities impacted by the workover expense on the Thunder Hawk Field. As expected shallow-water abandonment declined driven by winter weather and customers reassessing the pace of their abandonment. Overall, we're pleased with our performance and happy to deliver good results with a solid start to 2024, and we're maintaining our guidance. The overall strength in activity in the energy market continues to support the premise of a multiyear investment cycle in the offshore market. The well intervention market continues to show strength as evidenced by rig activity and rates. The demand in our Robotics segment of benefiting from our geographical expansion in the renewables markets continues to tighten with additional market support from the oil and gas services. The dynamics of supply and demand are working in our favor, but near-term pullback in 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. We believe we're in the right place 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 UK sector well intervention market. The demand for our services is holding consistent with incremental improvements expected on rate with the work pretty evenly split between decommissioning and production enhancement variable for us and seasonality of when or where, if work continues in the winter, then there's potential upside for us. The West Africa well intervention market is becoming more significant force will be sending the Q4000 to Nigeria, but expected to return to the Gulf for the 2025 season. We're seeing meaningful demand in West Africa have only worked in Nigeria. There's 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 the deepwater intervention in the US Gulf of Mexico will 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 relocating from Australia to Brazil for Shell. And we're in discussions with Petrobras for a multiyear contract on the SH. two, all new rates would be a meaningful increases with further potential increases driven by our efficiencies and a continuation of a tight rig market. Australian A-Pac is also another market where we are seeing increasing demand. All the 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, 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 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. We're currently working on the wind farms off the coast of the US, and we believe we're just beginning to see the ramp up demand from this market.

Our Robotics segment is strong and expected to continue improving with further upside and potential to deploy capital accretively. 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 shallow water Gulf of Mexico decommissioning market to pull back in 2024. We do expect a robust decommissioning market and in the U.S. government for years to come with Helix maintaining a significant market share.

Our initial expectations for this business was 30 to 40 million of EBITDA. We believe this business with the current exit assets could have an approximate $60 million EBITDA full cycle run rate. Our 2023 results may have been an indication that my previous expectations for earnings potential at 70 million was perhaps conservative, a few things are occurring in this market. Our 2023 results significantly benefited from work associated with the field with bankruptcy, both 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. Cox declared bankruptcy in 2023, and that is that the crew and we expect that they're reverting work will begin towards the end of 2020 for adding to demand similar to the field with 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 provides significant opportunities. We still would expect to be 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. This is what led to Talos awarding us their decommissioning work for the next five years. So big picture, what we're looking at a pull back for 2024. We remain confident in our outlook and our positioning for 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 competencies, we're successfully we've success. We've simplified our balance sheet, and the Company is financially strong 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 we're now generating strong free cash flow with potential to generate double-digit yield on free cash flow going forward. With the cash, we'll look for and be open to deploying cash for growth in the areas mentioned where we can utilize adding capacity. We'll deploy for growth when the value is accretive to share price, and we'll seek to do so on a sustained full cycle long term basis, if the opportunities don't present for growth than 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 Eric for Q&A.

Thanks.

So And operator, this time we're ready for questions.

(Operator Intsructions) James Sue, TD. Helen.

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

They are $30 million to $40 million of EBITDA that I mentioned was the initial guidance that we gave at the time of the acquisition. I believe for this year, we will more than exceed that.

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

I'll say that it's going to it's basically just down to the weather patterns you work in shallow waters. So to see the rough run low shallow waters, you've got the diving facilities, not just the heavy-lift barge, you got the lift boats that are all affected by shallow-water heavy weather. Obviously, in the deepwater, we have a bit more room to play around with the vessels. It's literally just Silke and we have a patent.

Okay, that makes sense. Thanks. And just maybe on well intervention O 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 Q4000 out of that market? And I think it 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 low for I don't know, 12 to 18 months. So if you could talk about rates, I appreciate it.

And it's a mixed bag. We are pushing rates up. There's a if the rig rates are moving up of 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 and so there's a there's a step down from the UDW. rates to the harsh-environment rates and then there's a slight discount down to rates. That would be what we would consider leading market wherever we are pushing leading market rates.

But that's compounded a little bit by the producers now seeking multi, there's more producers seeking multiyear commitments. And of course, they want a rate cut for forward, giving you that kind of utilization where we're in negotiations on a number of these trying to balance how far out we're willing to commit and what kind of discount are we willing to take for a multi-year commitment hub versus the strength of our our view that the market's going to remain strong and we're very tight.

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 we'll be on the new rate. So we do expect a pretty significant increase in our EBITDA contribution in 25. So it's from a rollover of these legacy rates.

It's an oh And maybe just to dumb, just to follow up on that, like 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 leading edge rates generally on average, 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?

I'd say versus I have I tried to look at it from a percentage basis for that, I would say we're looking at our rates being leading edge rates are roughly 15% higher.

Okay, Craig, thanks so much, guys.

I appreciate it.

Your next question comes from the line of Don Crist with Johnson Rice.

Morning, gentlemen. I wanted to start, Alan, with the Cox bankruptcy and the significant amount of wells that are being put back to the original operators, where are we in kind of discussions to put contracts in place to start doing that work? Is that do you think any of that kind of hits in the fourth quarter or do you think that's still a '25 issue?

Again, it goes by operator by operator. 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, some of them have been anticipating it and pretty much know what they want to do. They have not yet, to my knowledge receive mandates from the government and a notification of precisely which fields they're getting back. But like I said, they have a pretty good ideas. Some of them have been planning.

I think you could see some of that work potentially to give you some context, the fieldwork bankruptcy occurred in August of 20, and we really didn't see the work until July, August of 22. So that was the 18 month of a good 12 to 18 month lag. I don't think it'll take that long on cost per because so everyone's known that this was coming. So you could see some work begin late this year. But I think most of the work it's going to take them the rest of this year to figure out what properties they're getting back how they want to handle the contracting and then go out for the tendering and then to negotiate contracts.

I think all of that takes until the fourth quarter to occur. So we haven't included anything from Cox. And of course, Apache has decided to shut down their operations for this year as they reassessed 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 expectations that 24 was going to be slow. But then that's just sort of pulling back the rubber band and everyone is talking about 25 just being just an over the top demand here.

Okay. And can you remind us how many wells you believe are being put back through the car bankruptcy. It depends on how you count what holds. I know that sounds like a Dodge, but the number I've heard or is 1,860 wells coming back from Cox, 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 seven to 20 years. Of course, that depends on the capacity in the Gulf to do the work and the pace that the producers execute to work at. But it's going to be a long multiyear demand-driven cycle.

Right, exactly. And switching over to the deepwater side, I know in past conference calls you had said that we were several vessels short given the current demand, but you know, as 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 and '26 of seasons.

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 than the Q7, leaving the Asia Pacific market for the demand in Brazil, so that leaves us without an asset to floating asset to cover of West Africa and Australia.

And with last year, we did add two new intervention systems and our thinking at that time was that rigs were going to be required to do. Some of the work that we can't cover of the rig market is also very, very tight. We do have one system that is working on a rig off of Australia so that that strategy was starting to pay off now where we're looking at the fact that the rig market is continuing to tighten further the pricing and the rates are going up. And we're still short, basically an asset to cover West Africa and another asset to cover Australia. So we're starting to explore our options as to how to do that. If the rig market is this time, we don't have any conclusions right now to share, though. I appreciate the color.

Thanks.

Your next question comes from the line of on W. Mitchell with Daniel Energy Partners.

Hey, guys, thanks. Thanks for fitting me in here. 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 and with respect to intervention, there seems to be a multiyear runway for that business with significant improvements in profitability coming in 25. 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.

Right right now, we do have a 200 million facility that we're working on doing share repurchases. Our plan is to continue to do at least the minimal level of share repurchase with the priority of the cash targeting some of the areas where we're really tight in the market and could add capacity. So I'd say our first priority would be to deploy cash for growth in areas where it was immediately accretive to shareholder value and the EBITDA contribution sustainable long term, that will be the first priority. And to the extent that we don't see the opportunities or the value isn't able to be achieved, then we would revert to the share repurchase. And beyond that, I think we would like to grow our the cash balance on our balance sheet a little bit about to borrow a phrase from Warren Buffett. If you're going to go certain products, move by developments, you better carry a loaded gun, all right thanks. Maybe one more for me. Just kind of outside of dayrates continuing higher O and where rig rates have elevated to, 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 announced or just given economics, but just kind of how do you think about growing that business outside of dayrates moving higher?

Well, I think newbuild 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 cost to build and the cost of capital, we're a long ways from a new building assets being commercially viable. So I'd say that that's sort of off off the table for consideration. When you're talking about adding floating assets in this market, it's a very tight market right now, the of the value propositions have sort of. So there are few and far between, but there are a couple of things that might might be of interest beyond that you're looking at the wind market, which I think there's been a lot of talk about how it's hard to derive returns in the wind market. And you've seen some of the of the economics that causes some delays. I think that's just the exponential growth curves of the wind market have never been I'm a believer in, but I do believe that it's long term of 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. And then finally, in the shallow water market?

Yes, depending on what we're the only ones that have all five asset classes that are required to do a shallow-water abandonment in the Gulf of Mexico, depending on which asset class you look at, we own between one-third and two-thirds of all the assets. There are areas where we could add to that. But the pricing expectations, again, were a little blue sky after such a robust year of 2023. So I don't really see the pullback in 2024 as being necessarily a bad thing if you're wanting to add capacity in that market, it could inject some rational thought among some of the sellers.

Yes, thanks for the color. Appreciate it.

As a reminder, if you would like to ask a question, press star followed by the one on your telephone. Your next question comes from the line of James soon with TD Cowan.

Please go. Hey, thanks for letting me back in. Just maybe following up on the vessel strategy, BO., and are there any cold-stacked semi-subs that that might be of interest to you at a good price and what are the what are the thoughts around what a potential retrofit would be or like what are the economics there?

I don't think that we're right now engaged in looking at the cold stacked fleet that's been cold-stacked for so long that the retrofit numbers just don't make much commercial sense. I think there are a few assets in the marketplace and very few of. But there's there are a few that have existing assets that are working that that could be of interest.

Okay. And then I was wondering if you guys could give some directional comments on the cadence of earnings from two Q. three Q. four Q., you've got I think in the third quarter you're going to transit the Q4000 and the Q7000. So, you know, just the way your accounting works, I'm wondering if Q3 is sort of unusually low and Q4 is unusually high this year, or how should we think about that?

Yes, as of the mix still is Jim. The second quarter and third quarter are going to be our strongest month by, you know, you do identify that in the third quarter, we are going to have some unusual items that will impact that quarter. That will probably make it lower than what would otherwise be if we weren't on deferring the mobilizations, but that's still the second and third quarter our strongest QUARTERS.

Okay, great. Thanks. Or and then just last one, you know, the Siem Helix two. Yes, but just to be clear that's deferring the accounting treatment of not deferring the mobilization.

Okay. The Siem Helix two is contracted until December. There's been some reports. Maybe that you are the lowest bidder on some incremental work for Petrobras in Brazil. What are your expectations or what when do you think we will get an update on that?

Faisel, when we will, you'll be the first to know when we know Petro, Petrobras has a very pretty peculiar of tendering style. And just to lay out the facts for you, there is basically one tender for two riser vessels that they issued and another tender for a riserless vessel that was issued the way the Petrobras process works is that you submit your commercial terms, the lowest bidders then are asked to negotiate then the contract. But where the process stands right now is that we were the low bidder on the two riser vessels as well as the riserless vessels we have we have been invited to start negotiating the first of the riserless vessels, which is the SH. two mentioned in our of our Britten presentation via the recent announcement of the riserless vessel is very, very fresh off the press. We were not only the low bidder. We were the only bidder of. 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 and they take everything very sequentially and process driven, but they don't put any times on it. So that would be best I can share with you for now.

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 it in Brazil, but paying Likewise, we have I think Petrobras in Brazil is though, 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-and-coming shallow-water abandonment market as well as a potential future wind offshore wind market. So it's a very important market to us strategically. Having said that, we will depending on rates, we will load contract the vessel that too any anywhere or any one that represents greater value to the service.

Okay. And then sorry, last one for me. You've got I think you said 250, 240 million of cash after you pay the earnout. That's a lot of cash. You're only doing 5 million of share repo quarter, which seems very low given if you believe your stock is worth more than it is right now, what's what are the why not get more aggressive with the share repo? And does it have something to do with the fact that, you know, maybe you're keeping your options open for additional vessels for well intervention or something else?

I wouldn't say that the main driver is keeping options open. Our options are always open and being considered. I think the fact that we've sort of underperformed on the number of share repurchases to date is just a reflection of the fact that we've actually outperformed our expectations compared to where we thought we would be at this point.

Okay.

Okay.

Thank you very much. I appreciate it.

There are no further questions at this time. I will now turn the call back over to Eric Stang for closing remark. Please go ahead.

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.

Thank you.

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