Helix Energy Solutions Group Inc (HLX) 2013 Q1 法說會逐字稿

Good morning, everyone, and thanks for joining us today. Joining me this morning, we have Owen Kratz, our CEO; Tony Tripodo, our CFO; Cliff Chamblee, Executive Vice President and Chief Operating Officer; and Alisa Johnson, our General Counsel. Hopefully you all have had an opportunity to review our press release and related slide presentation released yesterday evening. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our Web site at www.HelixESG.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, Alisa Johnson will make a statement regarding forward-looking information.

During this conference call, we anticipate making certain projections or statements based upon expectations. All statements in this conference call are in the associated presentation, other than statements of historical fact, are forward-looking statements and are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2 and in our annual report on Form 10-K for the year ended December 31, 2012. Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation, along with this presentation, the earnings press release, our annual report, and a replay of this broadcast, are available on our Web site.

Owen Kratz will now make some opening remarks.

Good morning, everyone. We're going to start with skipping Slides 3 and 4, so moving on to Slide 5, which is the high level summary of the first quarter results, disregarding the losses associated with the divestiture of the EMP business in February, our EPS for quarter one amounted to $0.26, while EBITDA for the first quarter amounted to $74 million in the aggregate.

On to Slide 6, we booked an additional loss on the sale of ERT in Q1 in the amount of $22.7 million, mainly associated with the increase in the book basis from the end of 2012 to closing, and severance costs related to the divestiture. In addition, as oil prices move against us from year end, we booked an additional $14.1 million of losses upon the settlement of our commodity price hedges related to the oil and gas business. On the services side of the business, we achieved 100% utilization on our well intervention vessels in Q1 and the outlook for well intervention services continues to look strong, but more on this later.

The robotics business, however, had a relatively low vessel utilization, particularly in our strongest region, the North Sea, where activity levels are often impacted by winter weather patterns. Recently, we extended the Helix pass response system contract to Gulf of Mexico operators for spill response emergencies for another four years into 2017. Also, the scheduled sale of the Express in February is now expected to take place in July, along with the Caesar. The contracted backlog for the Express is taking longer to complete, as customer operational issues have extended the workout longer.

On to Slide 7, from a balance sheet perspective, our cash and liquidity levels increased nicely in Q1 as a result of the ERT sale. Cash increased from $437 million at year end to $624 million at March 31. We paid down $318 million of debt during the quarter. Our liquidity levels of more than $1.1 billion remain very strong. Our strong balance sheet conditions put us in a position to execute our long-term strategies.

I'll now turn the call over to Cliff for an in-depth discussion of our contracting service results.

Thanks, Owen. If you move on to Slide 9 there. First, let me point out starting this quarter we're now breaking out the revenues of our three business units, well intervention, robotics and subsea construction. That makes up our contracting services segment. Production facilities revenues and gross profits are there for your review as well, as they have always been in prior quarters. With that being said, you can see that contracting service revenues were relatively flat from Q4 to Q1, with the exception of robotics. Low vessel utilization, robotics fleet, was the primary driver in the $26 million decrease in robotics revenues quarter over quarter. But full utilization of our well intervention fleet led to gross profit margin increases of 2% from Q4 to Q1. I'll get into more detail of each business unit in the upcoming slides.

So moving on to Slide 10, all three of the well intervention vessels were fully utilized in the first quarter. This marks the third consecutive quarter of 100% utilization for the Q4000. IRS 2 was at our standalone and spare IRS system saw quite a bit of utilization for the quarter, boring other clients' drilling pads vessel. We expect to put RS2 back on hire again later in Q2 before I get some customer. The H 534 remains on schedule to enter the fleet in the third quarter with full backlog for the rest of 2013, with the growing number of days booked in 2014, 2015, and 2016 as well. We've also reached agreements for multi-year contract extensions for the Q4000, as well as signing up the Q5000 for a five year contract with BP that will begin when she enters the fleet in 2015.

We had full utilization for the North Sea, light well intervention assets and have now taken the Skandi Constructor on charter. The Constructor is currently being used as an ROV support vessel in the wind farm project, as she awaits mobilization of CO3 in June in order for her to begin well intervention service. She currently has 95 days booked for well intervention work, as well as commitment in fourth quarter for West Africa campaign, similar to the work we did with a well enhancer a little over a year ago off the coast of Equatorial Guinea. Both the Seawell and the Well Enhancer are fully booked in Q2 and Q3 and all three vessels are building backlog into Q4 as well.

If you move on to Slide 11 for robotics, revenues in this business unit were $26 million lower for the quarter versus Q4 of 2012, primarily due to decrease in vessel utilization. The Deep Cygnus, which is over North Sea, sat idle for 75 days during the quarter, which is not uncommon during the winter months in the North Sea as harsh weather conditions tend to hamper robotics activities during that period. The Trencher 1200 on board the Grand Canyon completed its trenching scope with the London Array wind farm offshore in the UK. Olympic Triton kicked off its seismic support project down in Brazil in the first quarter, which continues into Q2. We also signed a three-year charter for our new vessel, the Rem Installer in Q1, and expect her to enter the fleet mid-year, along with two new XLX work class ROEs. We still expect deliveries of the Grand Canyon 2 and Grand Canyon 3 vessels in 2014 and 2015.

Moving on to Slide 12, for subsea construction, utilization for the Express improved in Q1 versus Q4 of last year and the Caesar continued at 100% utilization working down in Mexico. Due to unforeseen issues with the customers' pipeline, the Express has been requested to complete additional work, which now pushes the close of the vessels, of the sale of the vessel into July, along with the Caesar to the buyer. On the Slide 13, I'll leave this slide detailing vessel utilization for your reference.

And with that, I'll turn it back to Tony on the oil and gas side.

Thanks, Cliff, and good morning, everybody. Looking at Slide 15. Slide 15 provides an illustration of our debt maturity profile as previously mentioned. We paid off [$300] million of bank facility debt in Q1 with the proceeds of the ERT sale. We expect to pay off the remaining $150 million of bank facility debt upon the sale of the pipe lay assets, which is currently expected to close in July. We continue to evaluate and consider retiring the remaining $275 million of the senior unsecured notes as well.

Over to Slide 16, Slide 16 provides an update on our gross and net debt levels historically and through March 31 of this year. Our net debt levels are now down to only $72 million at quarter end. After the sale of the pipeline vessels, we expect to be in roughly a zero net debt position. As a frame of reference, since the end of '08, we have reduced our gross debt levels by over $1.3 billion and our net debt position by over $1.7 billion. At quarter end, our net debt to book capitalization ratio was down to a very conservative 5%. We are most pleased to have gotten in this position. Our liquidity defined as cash on hand and our borrowing availability under our revolver continues to be at a very strong level. At quarter end, liquidity totaled $1.14 billion.

Moving on to Slide 18, we -- which represents our updated outlook for 2013, we continue to forecast total [EBIT tax] at approximately $300 million for 2013. However, when backing out the stub impact of our discontinued operations, both oil and gas and pipe lay, and filling into the equation a full year's impact of the two vessels that will enter the fleet in 2013 -- both the Skandi Constructor and the Helix 534 -- our expected pro forma exit rate EBITDA for 2013 is more like $350 million. We've also broken out revenues by product line with well intervention showing a 25% increase in 2013 over 2012, and despite the relatively weak first quarter, we now expect robotics revenues to increase slightly in 2013.

We're forecasting a total CapEx spend for 2013 of $365 million. The major items represented in $365 million number are as follows. Progress payments and spending on the Q5, currently under construction in Singapore at $135 million. The modifications improvements to the 534 well intervention vessel, also currently in the shipyard in Singapore at $55 million. Additional intervention riser systems for well intervention operations at $63 million, additional robotics vessels and trenchers of $40 million, life extension expenditures for the Seawell of $12 million, and dry dock spending for the Helix Producer 1 of $20 million. $1.6 million of backlog provides a solid foundation for both our well intervention and robotics businesses for 2013 and beyond. For example, the Q4000 spoken for through 2015 with additional commitments and progress beyond.

The Seawell and Well Enhancer have backlog into late in the fourth quarter of 2013, with backlog starting to fill in for 2014 and 2015. The Helix 534 is fully booked for 2013, once she enters service with backlog, filling in for 2014 all the way into 2016. As Cliff mentioned, the Skandi Constructor has backlog for 95 days in 2013 in well intervention mode, after she completes the current ROV support project. Canyon, our robotics unit, continues to expand its technological and market envelope. For example, we continue to develop our world class trenching technology. We recently completed the London Array wind farm project utilizing the Grand Canyon vessel and T1200 trencher. We have an important ROV drill project for Statoil commencing this quarter.

From an overall standpoint, the two key variables for 2013 relate to our ability to have both the 534 and the Skandi Constructor successfully enter service in well intervention mode. Our outlook assumes the 534 enters service mid Q3 in the Gulf of Mexico, while the Skandi Constructor enters service in the North Sea for well intervention activities mid-year. I'll skip slides 22 and 23 and leave them for your reference. At this time, I'll turn the call back over to Owen for his closing remarks.

Thanks, Tony. To give everyone some flavor on what's going on in your company, let me begin by saying that I'm not only pleased, but excited about where we are, where we're heading, and the way our team is working. The first quarter was perhaps not as robust as we expected in robotics, all from the strong first quarter of last year. As mentioned, we do anticipate a year-over-year growth improvement. We continue to see building demand in all segments, work class, ROVs, ROV drill and especially trenching. We continue to add work class capacity in are well along into construction of our next large trencher due out next year. The extension of our contract to support our industry with the Helix fast response system for another four years, is a nice positive to add. Of course, the big news is the contract on the Q5000 for five-year plus options. This is confirmation that the service offering to our high end well intervention that we started 25 years ago and culminated in the Q4000 concept is the correct path for us.

We continue to see interest and demand grow for our well intervention expertise and we do have aspirations to add further to our fleet. We're fortunate now to be in a strong financial position and can respond to the industry demand. This is the primary reason that the Helix team has worked so hard, but patiently, to build our liquidity to a level of over $1 billion and reduce the burden of debt. We are in dialogue with producers and I would anticipate being in construction with the next vessel by year end. The story's not all about long-term growth. This year, we'll see Helix add capacity to our robotics, as well as slate two additional well intervention vessels into service. As we mentioned in the presentation, the Skandi Constructor will join our North Sea well intervention fleet by mid-year. This will provide our clients with greater capacity to allow us to not only service that region, but expand geographically. The Helix 534 joins our Gulf of Mexico fleet by Q3 of this year, allowing us to provide services to our clients that needed our services that couldn't wait for availability on the Q4000. The 534 will allow us to service more of the Gulf of Mexico demand.

We continue to build and strengthen our capital projects team, as well as add to our operating teams ahead of delivery of the new assets to assure safe and effective operating when the assets come to market. We're also continually analyzing our financial position to make our accelerating growth rate -- to make sure that our accelerating growth rate remains a productive one within our means. We have taken our time to plan and we'll take our time in executing the plan. We're just at the beginning.

At this time, we'll be happy to take any questions.

(Operator Instructions)

Ole Slorer, Morgan Stanley.

Thank you very much. Well, nice to see you guys having a mean, lean company again. First, question --

Thanks.

If on the exit rate of $350 million this year, what would you say that the maintenance CapEx is on that? We have you down for about, say, $30 million a quarter or something like that. Is that in the right ball park?

Ole, I would say our maintenance CapEx is more like $50 million a year. So, on continuing ops.

That is the exit rate. So, to sustain the $350 million run rate in 2014, you only need $50 million of maintenance CapEx?

Yes.

Very good. Could you talk a little bit about the equipment that you are taking delivery of in 2014? We are waiting for the big Q5000 to come into the fleet in the middle of '15.

I'll jump in there. For 2014, I would see us continuing to add in the robotics realm, about the same pace that we have here, which is about six work-class vehicles a year -- two for fleet replacement and four for growth. I don't know that we would -- we have a trencher already under construction coming in 2014. I'm not sure that we start the next one at that point, but we're going to look at the market. And then beyond that, the ROV drills have been in high demand. So, I see us adding a ROV drill every other year, and we haven't added one in a while. So, probably 2014, see another ROV drill added.

Okay. So, in terms of the 2014 growth CapEx, how should we think about that number?

I think it's way too early to be pegging a number for 2014 until we fully analyze the market, and digest what we have coming now.

The market is looking incredibly strong. So, could you share a little bit about the kind of conversations that you're having at the moment when it comes to the longer-term demand for well servicing and increasingly we're seeing more and more subsea processing activity requiring different type of robotics and maintenance inspection. The Q4000 is an important asset, and what type of conversations are you having with other oil companies that also now have to address their subsea needs?

Well, I would rather not get into the specific conversations that we're having, but I will sort of put it in context by sort of pointing out the history of the 534. Everyone was saying -- well, we bought it on spec, and we're building the Q5000 on spec. Very little of what we do is done without a lot of dialogue with the clients ahead of time. It takes a lot of client input as to what specific tasks they are going to be requiring the vessels to do, so that we can customize them. So, I would say that the conversations we're having with clients is around -- what are their specific needs, what are the geographical areas we're targeting, and what are the regulatory requirements that we're going to have to meet? So, with that in mind, we have several teams working on several different versions of vessels going forward.

So far, your business has been heavily centered on the Gulf of Mexico, and also breaking now into the North Sea. But how do you view the global opportunity? Do you think you will spread your wings, or do you think you will focus on these two markets?

I definitely think we'll spread our wings. The thing about the intervention market, though, is that it's just in its infancy here. The Gulf of Mexico has a relatively mature deepwater market. So, that's true for the North Sea as well. But I think the future holds really promising -- well-head counts are increasing in Nigeria, Angola, Ghana. I don't think that you can rule out Petrobras's needs. That is also a mature market. But I would really say that those are the two primary markets that we're looking at going forward.

Okay. Thanks, Owen.

Sure.

Michael Marino, Stephens, Inc.

Thanks. Good morning. Owen, you mentioned a lot of dialogue with producers, and kind of new or additional vessel concepts. Is there any one market that maybe you guys at this point are leaning more towards? It seems like the Gulf of Mexico, you've got -- I guess you will have three vessels in that market upon delivery of the 5000. So, my question is -- one, is that all you want to do for that market for now? And you're kind of looking overseas? And if so, is there a specific market that kind of jumps out at you at this point based on your dialogue with producers?

To give you sort of an oversight of the different markets, the Gulf of Mexico market has been extraordinarily strong of recent years here because of the idle iron rule, and the increase in the P&A work that's required in the deepwater. Over the next two to three years, that probably tails back off to a normal level. At the same time, the fee intervention production enhancement work increases. So, for the next two or three years, I see the Gulf of Mexico as being a steady-state market. We have not had enough capacity to handle the demand that exists now though, so adding the Q5000 is a real plus. How much capacity more it can take is a question in my mind.

But in the North Sea, we're adding another vessel right now, but there's also an increasing work scope that requires a little more sophisticated kind of vessel. That's of interest to us, as well as the West Africa market. But I would say that the West Africa market is probably a few years from really maturing. And then you've got the Brazilian market that has an existing high demand for vessels that -- that we supply -- and they are coming out with a market inquiry and a tender this year. So, we do anticipate in participating down there.

Then turning to the Asia-Pacific market, that's not one market; that's really, because of the geographical, extended several markets. We've actually downsized our presence out there. I think the work scope that we see developing out there is more individual field related and, therefore, our plan is to service on a campaign basis from the excess capacity that we're adding in the other regions. So, that gives you sort of an overview.

Yes. That's very helpful.

Shifting gears into kind of the robotics business, you mentioned the year-on-year increase, despite kind of maybe a bit slower start than you would have expected. My question is on kind of the wind farm-related work -- what's kind of the visibility there, and is that one of the big drivers on a year-over-year basis? So, what's it look like kind of this year and what's it look like into the future?

Yes, maybe I can answer that best, Owen. This year in '13 we're seeing a fairly flat year. Still good, but not a lot of growth increase. But in '14 and '15, we're seeing there is lots of projects that will happen in 2014 and '15, and hence, why we picked up another vessel, the Rem Installer. And we're also placing an order for another trencher, the T1500, that we'll get early next year -- anticipate in that market as well. And starting to get some traction in other markets as well besides just the European theater.

For wind farm-related work?

Yes.

In general. How about as it relates to the robotics -- the outlook on the Gulf of Mexico? Is that a market you guys might make a bigger push to do more work in?

Well, I don't know if it's really defined as a bigger push. We've always been here. This is our birth place in the robotics market, and we've been here and are still here. It's just after post-Macondo, it had been rather slow here from the construction side. But the cycle's turning now, and all the majors brought rigs back and drilling, and so, yes, we see the same time frame, probably the second half of '14 and into '15, there's a lot of projects that are listed to be done in the construction side as well, which will involve our vessels. So, we'll probably have both a bigger vessel presence back in the Gulf of Mexico than we've had in the last two or three years.

Okay, great. Thanks. I'll turn it back.

Jim Rollyson, Raymond James.

Hi, good morning, guys.

Good morning.

Congrats on the contract for the Q5000. Maybe a couple questions around that, Owen. First of all, I know you're not going to probably share the exact rates you're getting on the contract with BP, but did you basically hit the target you guys were shooting for, in terms of implied rates?

Simple answer is yes, Jim. I think we've got satisfactory returns.

Okay, helpful. And now that you've got this pretty well locked up for good visibility, or derisked maybe is a better way to say it, how do you think about the timing of evaluating and pulling the trigger on your next new build, or is it still trying to figure out what market that's going to?

No, I think we're pretty clear on what we want to do. I think it's a matter of just waiting -- well, we don't have announceable events to put out right now, but I don't think it's any secret that we do want to build another vessel. We've had discussions, and we've had plenty of time to do a lot of soul searching about what that vessel looks like. I don't think it's any secret. It's our intention that we would like to be in construction of another vessel before the year's out, I would say. But I have to go and talk to the Board.

Yes. So, that's still the current thinking -- still what you've been saying. Okay. That's helpful.

Yes, and keep in mind, we've sort of built the balance sheet up to launch this strategy, and it's rare that a plan actually starts unfolding according to plan. But that's why we're sitting on the liquidity that we are.

Absolutely. Makes sense, and that's what you were shooting for. That's excellent.

Last one for me -- the new four-year contract on the Helix fast response system -- terms there similar to what you had before, or did you get any better terms, or a little color there?

I could probably answer that, Owen. Yes, so it's a four-year commitment. Starts in April of this year ongoing for four years with an option beyond that. But it's an increase in rates over what we had before, and so it's a good thing for us. It requires us [to do] two vessels -- the Q4000 and the HP 1 are part of that response system. We'll be doing a drill with some of that equipment here in early May as well.

Great. Thank you, guys.

Joe Gibney, Capital One.

Thanks, good morning. Just a couple quick ones for me. On the Skandi Constructor, just trying to understand a little bit in terms of its contribution. It's doing ROV support work now. I know you've [positioned] the vessel, but then we also have some work being done on the intervention riser system and deck modification. Just trying to understand timing and utilization contributions for this asset. So, it's going to be a contributor in 2Q on ROV support, and then there's some downtime associated with intervention riser system work? Just trying to clarify that.

Yes, the deal with that is we picked the vessel up in April, and we've got some ROV work that we can use the vessel on for now, while we're finishing the build of the IRS 3 system and some of the equipment that goes along with that for the deck handling, as you mentioned. So, that stuff will be -- that equipment will be delivered here soon. And as soon as we finish the ROV work, we'll come in, spend a couple weeks at the dock and put the ROS system on, and then we'll start our first campaign [with Total].

Right now, I think we've got 95 days booked for this year, starting in June, and we got -- the rest of the year is highly likely that we'll have a contract with that shortly. In fact, we have one with the contractor that we're going to take into Equatorial Guinea for [big Marty] signed off the contract and wants someone to pay to get us down there and back, and I think that's in the $20 million-something range. What they haven't given us is the service orders for each individual well we're going to do when we get there, but those are coming in shortly. They are working those out operationally now.

Okay. Helpful.

Tony, just a quick question on the H 534 -- it looks like the estimated total spend on this vessel is $190 million now. I think it was $180 million before. Is there anything new there relative to some of the conversion work that is ticking that number higher?

Yes, it is $190 million now. Owen, do you want to talk a little bit about why the costs have drifted up $10 million since our last estimate?

I think there's two primary reasons. One is -- it is an old vessel, and as we got into it, instead of just putting what you might call band-aid fixes on some of the things that needed to be refurbished, we took the steps to go ahead and dig a little deeper, and do a little more root-cause analysis, and try and improve the operability of the vessel down the road.

Then on top of that, the second reason was -- most of the clients that we work for are significant, if not major, operators. And they have a continuous service requirement, and we have elected to put our full crews on board early so that they are familiar with the machinery. We can do a lot of training. And then when the vessel hits the ground running when it gets to the Gulf, it will have experienced crews, all with continuous service experience on board. And that was sort of a late call that we made, and it did add to the costs of the overall project.

Okay. Makes sense.

Last one for me, Tony, maybe give a little help in terms of how we should think about, within your revenue splits, the elimination line item. It was $47 million for the year, and your guidance of $21 million this quarter. How should we sort of flow that through expectations as we work our way towards the exit rate here coming out of the year?

Yes, eliminations rate was a bit higher in Q1 because we still had the oil and gas business for part of the year. That was a factor. But in terms of it trying to sort out and look out as to how the $41 million develops, I would say pretty evenly throughout the rest of the year.

Pretty evenly, okay. I appreciate it, gentlemen. I'll turn it back.

(Operator Instructions)

Martin Malloy, Johnson Rice.

Good morning.

Hi, Marty.

Good morning.

Could you talk a little bit maybe about the pricing with what we can think about for the next couple of years, now that you have visibility with these contracts for the well-intervention vessels?

Marty, I'll continue to say that the pricing in our backlog is higher than the pricing historically. For example, the Q4000 just re-upped a contract on a multi-year basis with a major customer here in the Gulf of Mexico, and the rates in that contract are higher than the rates we've been realizing with that customer historically. The rates on the Q5000, for example, are higher than the rates we're getting on the Q4 -- so on and so forth. So, generally speaking, without getting in too much specifics, I would say our backlog has higher rates than our historical rates.

Okay. And then, could you talk about dry-docking schedule? Any big dry dockings we should be aware of for the remainder of the year?

Not for this year. We don't have any --

HP 1.

That's right. We have HP 1 in September of this year. But from the well-intervention vessels, we don't have any scheduled for this year. The next one we have is the Well Enhancer for next year.

Okay, and the [life] extension, I think you referred to it before, is what's going on there. Is that --

That's on the Seawell.

I'm sorry, on the Seawell, okay.

Yes.

Thank you.

Travis Bartlett, Simmons.

Hi, guys, good morning.

Good morning.

First, just wanted to revisit the contract with BP for the Q5000. Wanted to ask you guys whether or not you were in discussions with multiple operators for the Q5000 contract, or was it just BP? And what I'm getting at here is just kind of curious as to what the potential is for a contract on the next new-build vessel, assuming that you go ahead and place the order.

I have to say that there were multiple conversations going. There's a lot of interest in the Q4000. A lot of people would like to get some time on the Q4000. So, there are multiple people that were interested in the Q5000. We're really pleased with the relationship that we've got building with BP, and so far that turned out to be a great partner -- really good to talk with.

Going forward, I think what I would like to see is just a repetitive pattern here, where we are building on the basis of multiple dialogues with clients. We'll start building a vessel. After we start construction of the vessel, we'll move on to formalizing a contract. And then at that point, we'll look at the follow-on vessel. So, that's why earlier I said we have multiple designs. They are basically the same, building on the experience and what we've learned with the Q4000. But we do have some twists to them, depending on what the client's specific needs are, and of course, the geographic and regulatory environment we have to build to. So, hopefully that's going to become a repetitive pattern for us.

Yes, okay. That's helpful.

And then secondly here, just shifting to backlog, looks like backlog increased to $1.6 billion after adjusting for the Q4000 and Q5000 contracts. I'm assuming that a majority of the backlog increase was attributable to the BP contract. But just kind of wondering if you can share what happened to backlog sequentially, if you exclude backlog from the BP contract? I don't know if you have those numbers handy or not.

Yes. Well, Travis, let me answer that. First of all, the backlog that we are stating is really a current backlog number. We thought it would be helpful to the market to know what the backlog number was. After the BP contract, and after two extensions on the Q5000 with customers we have for the Q4000, I mean, here in the Gulf of Mexico. So, it really consists of three different contracts that were major multi-year contracts.

Our backlog, we stated for contracting services last quarter, was $800 million. I believe the number, and it's going to be in our 10-Q for March 31, precisely is around $950 million, more or less. So, hopefully that helps you.

Yes, that's good. So, backlog excluding the Q4000, 5000 contracts that were in the press release, increased from $800 million to roughly $950 million?

Approximately, yes.

Okay. Perfect.

And then last one here, just digging into your guidance, well-intervention revenue guidance increased by $30 million compared to your prior guidance. Is there any color that you can offer here as to what's leading to the increase in revenue guidance for well intervention? Are there any variances for timing of invested deliveries or other factors that we should be thinking about here?

Couple things, Travis. Number one, quarter one we had greater utilization than we modeled. So, we never model 100% utilization because you always figure you have some downtime. We're off to a good start. Last quarter, our backlog for the Skandi Constructor assumed only 75 days, and we indicated today we have 95 days for the Skandi Constructor, plus the work it's doing today. Now, the work it's doing today -- for wind farm, ROV support -- has very little profit contribution, but there are revenues associated with it. So, those are the primary variables from last update.

Okay. That's very helpful. Thank you. I'll turn it back.

Anthony Guegel, Upstream.

Yes, hi, guys. Just curious on this new vessel you plan to build by the end of the year. Is it more than likely this is another semi sub then -- a Q6, so to speak?

I don't want to tip our hat too much, but I think it's pretty obvious. We're firmly committed to the high end of the intervention market, and back in the late '90s when we were looking at the Q4000, I think we made the decision back then that we're firm believers that semi submersible motions are the way to go in the deepwater intervention. So, unless there's something extraordinary to us occurs, it would likely be semi submersible.

Okay. The Helix 534, I don't believe you've named the customers. Can you say at least how many different customers have already booked work for it in the Gulf?

The remainder of this year we've got two. Going forward into next year, I think we've got three different customers for it. But it's filling up. It's booked up -- as soon as it gets here, it goes to work for the rest of the year, and it's booked up for the next three years quite nicely. Not 100%, but we're getting there.

Okay, and then lastly, on the HP 1 dry dock, I think I heard September timeframe. About how long do you expect it to be in dry dock?

60 days.

Okay. And then return back to service at the original field site?

Correct.

Okay. Thank you very much.

(Operator Instructions)

Michael Marino, Stephens, Inc.

On the Seawell life extension project, what's the timing of that? And in terms of down days, what should we kind of figure in our models?

Well, we haven't budgeted or put together exactly -- sorry, go ahead, Owen.

No, I was just going to say -- I know it's very early in the planning. We're in the engineering now. So, I was going to ask you, Cliff, if you had a feel for the actual dry-dock period, or not yet at this point.

We don't yet. We've got a team in Aberdeen that are working on the life extension, and looking at what long lead items we need to order for it now. So, we don't really know how long that's going to be, but it's going to be a pretty substantial dry dock with major engine changes and things like that. So, I would expect it to be probably 60-plus days or so, and we'll time it through the worst part of the North Sea winter time frame -- December, January, February timing.

Okay, so it's going to be mostly --

Does fall concurrent with the regularly scheduled dry-dock period for the Seawell.

Right. That's what's driving it is we have to go to dry dock anyway, and be out for probably, best case, a month or something like that. So, we're going to go ahead and do this extension while we're in there, probably double the length of the time that we are in there, and the costs as well. But then we should be able to get decades more out of it. And the reason we're excited to do it is, it's a pretty unique and rare asset that's got a really good reputation in the North Sea, and it was built back when the hulls were built really well, and thick iron on it, and it's one of the vessels will have diving capability on it. So, we think it still has a long life left in the North Sea.

But it's mostly a '14 event from -- what I'm trying to figure out -- in the guidance for the exit rate guidance you gave, it's in that $350 million number. You're assuming at least a little downtime with the Seawell, and then maybe budget more in '14 -- in the first part of '14 --

No, I don't think that's actually correct. The net schedule dry dock for the Seawell is actually at the beginning of 2015. And that would be the time period we're targeting for the extension dry-dock period.

We're thinking right now of going in December '14, and then maybe December and January.

Okay. Okay. Perfect. Thanks for the clarification.

And gentlemen, there are no further questions on the phone lines.

Okay. With that, I would just say thanks to everybody for calling in, and we'll talk to you next quarter.