Trends

Helix Energy Solutions Group, Inc. (HLX) Q4 2022 Earnings Call Transcript

Trending 1 year ago
beritaja.com

Helix Energy Solutions Group, Inc. (NYSE:HLX) Q4 2022 Earnings Conference Call February 21, 2023 10:00 AM ET

Company Participants

Brent Arriaga - CAO

Kenneth Neikirk - General Counsel

Owen Kratz - CEO

Scott Sparks - COO

Erik Staffeldt - CFO

Conference Call Participants

Sherif Elmaghrabi - BTIG

James Schumm - Cowen

Don Crist - Johnson Rice

Samantha Hoh - Evercore ISI

Operator

Greetings and invited to nan Fourth Quarter Helix Energy Solutions 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this convention is being recorded, Tuesday, February 21, 2023.

I would now for illustration to move nan convention complete to Brent Arriaga, Chief Accounting Officer. Please spell ahead.

Brent Arriaga

Hi, bully morning. Good morning, everyone, and acknowledgment for joining america coming connected our convention telephone for our 4th fourth and afloat twelvemonth 2022 net release.

Participating connected this telephone for Helix coming 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 reappraisal our net property merchandise and nan related descent position released past night. If you do not person a transcript of these materials, some tin beryllium accessed done nan -- for nan investor page connected our website astatine www.helixesg.com. The property merchandise tin beryllium accessed nether nan Press Releases tab, and nan descent position tin beryllium accessed by clicking connected today's webcast icon.

Before we statesman our prepared remarks, Ken Neikirk will make a connection regarding forward-looking information. Ken?

Kenneth Neikirk

During this convention call, we expect making definite projections and forward-looking statements based connected our existent expectations and assumptions arsenic of today. Such forward-looking statements whitethorn see projections and estimates of early events, business aliases manufacture trends aliases business aliases financial results. All statements successful this convention telephone are successful nan associated presentation, different than statements of humanities truth are forward-looking statements and are made nether nan Safe Harbor provisions of nan Private Securities Litigation Reform Act of 1995.

Our existent early results whitethorn disagree materially from our projections and forward-looking statements owed to a number and assortment of risks, uncertainties, assumptions and factors, including those group distant successful Slide 2 and successful our astir precocious revenge Annual Report connected Form 10-K, our quarterly reports connected Form 10-Q and successful our different filings pinch nan SEC. You should not spot undue reliance connected forward-looking statements, and we do not undertake immoderate work to update immoderate forward-looking statements. We disclaim immoderate written aliases oral statements made by immoderate 3rd statement regarding nan taxable matter of this convention call.

Also during this call, definite non-GAAP financial disclosures whitethorn beryllium made. In accordance pinch SEC rules, nan last descent of our position provides reconciliations of definite non-GAAP measures to comparable GAAP financial measures. These reconciliations on pinch this presentation, nan net property release, our yearly study and a replay of this broadcast are disposable nether nan Investors conception of our website astatine www.helixesg.com. Please retrieve that accusation connected this convention telephone speaks only arsenic of today, February 21st, 2023, and therefore, you are advised that immoderate time-sensitive accusation whitethorn nary longer beryllium meticulous arsenic of immoderate replay of this call.

Owen?

Owen Kratz

Thanks, Ken. And bully morning, everyone. And we dream everyone retired location and their families are doing well.

This morning, we'll reappraisal our Q4 and afloat twelvemonth results, capacity and operations. We'll supply our outlook for nan market, some what we presently are experiencing, arsenic good arsenic our expectations beyond that, and we'll supply our guidance for 2023.

Moving to nan presentation, Slides 6 done 9 supply a high-level summary of our results and cardinal highlights for nan 4th fourth and afloat twelvemonth 2022. During nan 4th quarter, activity levels crossed each segments were precocious pinch nan accrued activity from nan beardown world offshore power marketplace driving improved rates.

Highlights for nan 4th see nan completion of our West Africa Well Intervention campaign, beardown activity and utilization successful nan Gulf of Mexico, nan SH1 commenced its good decommissioning task for Trident successful Brazil, a resilient North Sea Well Intervention marketplace driving utilization, Robotics and Helix Alliance some providing coagulated seasonal adjusted contribution, our accumulation installation conception continues to beryllium a dependable performer, our acquisition of 3 trenching systems and our liking successful 2 IRS systems and to strategically deploy successful nan emerging markets.

And connected nan income front, we were awarded a minimum 12-month good decommissioning statement for nan Q7000 offshore Brazil pinch Shell, and we secured an hold of nan HP1 done astatine slightest mid-2024. Revenues for nan 4th were $288 million, an summation of $15 cardinal complete our 3rd 4th results. Our nett income was $3 million, a $22 cardinal betterment complete Q3. Adjusted EBITDA for nan 4th was $49 million.

Our 4th fourth results were stronger than forecast, driven by nan Q7000 moving into December successful West Africa and nan robust North Sea Well Intervention marketplace activity. For nan afloat twelvemonth 2022, revenues improved by $198 cardinal to $873 million. Our gross profit improved by $36 cardinal to $51 million, nett nonaccomplishment accrued by $26 cardinal to $88 million, impacted by $23 cardinal of FX nonaccomplishment from nan devaluation of nan British pound. Our EBITDA accrued to $121 cardinal successful 2022 from $96 cardinal successful 2021.

Operating rate travel for nan twelvemonth was $51 million, resulting successful free rate travel of $18 million. We cautioned astatine nan opening of nan twelvemonth that 2022 would beryllium a modulation twelvemonth for Helix. Our anticipation was that nan challenges of a multiyear anemic marketplace would modulation into a overmuch improved marketplace for nan 2nd half of 2022. As we presently spot it, basal improvements successful nan offshore market, some domestically and internationally, person established nan instauration for a multi-year betterment of activity.

With nan marketplace betterment taking shape, we acquired Alliance past summertime to position Helix arsenic a full-field abandonment work provider, expanding our offerings successful marketplace and diversifying our gross stream. This acquisition added shallow h2o marine surfaces, aboveground good P&A and involution services, diving and installation and pipeline removal capabilities to our existing services. With this acquisition and nan offshore marketplace improvements, we proceed to execute our strategy of becoming nan pre-eminent offshore power modulation company.

I'd for illustration to convey our employees, including nan caller squad members that Helix Alliance for their efforts and precocious level of execution successful 2022. Executing safe and businesslike operations for our customers has ever been our hallmark, and our extremity is to stay an established leader successful our industry.

On to Slide 10, from a equilibrium expanse perspective, our rate equilibrium astatine nan extremity of nan 4th was $187 million. During nan quarter, our operating rate travel was $50 cardinal including $5 cardinal of barren dock and recertification costs. In Q4, we spent $29 cardinal connected CapEx, resulting successful $21 cardinal successful free rate flow.

At twelvemonth end, we were successful a nett indebtedness position of $75 million. During nan quarter, we optimistically -- aliases opportunistically acquired 2 further IRS systems and 3 trenching assets. As nan world offshore upwind marketplace continues to turn and grow its footprint, we strategically acquired nan trenches to reside nan processing markets successful nan APAC and nan U.S. East Coast.

The further IRS systems are intended to let america to target strategical opportunities globally. I'd for illustration to item yesterday's announcement that our Board of Directors authorized a stock buyback programme for nan repurchase of up to $200 cardinal of our outstanding shares.

We've agelong communicated our creation -- desire to return superior to nan shareholders and consciousness nan spot of nan offshore market, nan institution outlook for 2023 and beyond and a coagulated equilibrium expanse has put america successful a position to denote this program.

As always, we will equilibrium nan request to negociate and money our operations. Capital spending including Alliance are now maturing nan strategical finance opportunities on pinch nan stock repurchase program.

We scheme to mostly align this programme pinch our rate travel procreation and initially target deploying 25% of our free rate flow, noting nan seasonality of our business. We are proud to beryllium successful a position to denote this repurchase program, which we position arsenic an fantabulous opportunity to return worth to our shareholders.

I'll now move nan telephone complete to Scotty for an in-depth chat of our operating.

Scott Sparks

Thanks, Owen. And bully morning, everyone.

Moving connected to Slide 12. Firstly, I would for illustration to convey our teams, offshore and onshore, for different good executed 4th and finishing nan twelvemonth pinch their continued exceptionally precocious standards. Market conditions proceed to improve, and we tin concluded 2022 amended than forecasted pinch precocious utilization crossed nan fleet.

Going forward, we person a overmuch stronger backlog than we've had successful caller years and very bully visibility for nan adjacent fewer years. Our outlook for 2023 is importantly improved year-over-year pinch immoderate semipermanent contracts successful spot pinch a precocious number of contracted days of activity for our spot marketplace assets. All of our businesses are good positioned for 2023 and beyond.

In nan 4th fourth 2022, we proceed to run globally pinch minimal operational disruption pinch operations successful Europe, West Africa, Asia, Brazil, The Gulf of Mexico and disconnected nan U.S. East Coast. We proceed to run astatine precocious standards pinch beardown uptime ratio for nan quarter.

During nan 4th quarter, we produced revenues of $288 million, resulting successful a gross profit separator of 11%, generating a gross profit of $31 million, producing EBITDA for nan 4th of $49 million, a important betterment against nan 4th fourth of 2021 and nan twelvemonth ended pinch EBITDA of $121 cardinal compared to $96 cardinal of 2021.

During nan 4th quarter, nan Well Intervention fleets achieved utilization of 97% globally, pinch 97% utilization successful nan Gulf of Mexico, 92% successful Brazil, 99% successful nan North Sea and 100% utilization successful West Africa, including Q7000 completing useful successful Nigeria and commencing its paid transit to nan APAC region.

The Robotics division, chartered alloy fleet achieved precocious utilization of 96% successful nan quarter, operating 4 vessels moving 332 days betwixt ROV support, trenching, renewable useful globally and moving connected aggregate renewables projects successful Europe and nan U.S. East Coast.

Helix Alliance fleet of vessels achieved 69% utilization for nan liftboats and nan Alliance P&A Systems achieved 8% utilization pinch 1,106 operational days moving for galore clients successful nan Gulf of Mexico. The free diving support assets achieved 63% utilization and nan dense assistance barge was seasonally lukewarm stacked arsenic expected.

Slide 13 provides a much elaborate reappraisal of our Well Intervention business successful nan Gulf of Mexico. The Q5000 again had beardown utilization of 100% successful nan 4th fourth performing accumulation enhancement activity connected 4 wells successful ultra-deepwater, moving nether a multiyear run for Shell.

The Q4000 had accrued utilization of 94% successful nan 4th fourth compared to utilization of 81% successful nan 3rd quarter. The alloy completed 2 good accumulation enhancement scopes for 1 customer, followed by a azygous good abandonment for different customer and past commenced a 2 good accumulation enhancement run for different clients successful ultra-deepwater.

Positively, we expect some vessels will person precocious utilization pinch nan precocious number of contracted days successful 2023 and bully visibility of imaginable further activity pinch steadily expanding rates. Both cardinal vessels proceed to run nether nan integrated Helix SLB Subsea Services Alliance package.

Moving connected to Slide 14, our North Sea Well Intervention business had a very beardown 4th considering nan seasonal wintertime months. With coagulated utilization for some vessels successful nan U.K, nan Q7000 concluded different run successful West Africa anterior to commencing its paid transit to nan APAC region. The Well Enhancer performed very good and achieved 100% utilization successful Q4 compared to 80% utilization successful Q3. The alloy performed accumulation enhancement useful connected 5 wells for 2 customers.

The Sea Well had a bully 4th pinch 97% utilization. The alloy performed decommissioning useful connected galore wells for respective customers besides utilizing our diving services. The North Sea marketplace continues to amended and our business is seeing overmuch improved utilization and achieving higher rates.

The Sea Well has a afloat twelvemonth and has precocious contracted a 180-day decommissioning task successful nan Mediterranean expected to commence astatine nan extremity of Q3, apt until nan extremity of Q1 of 2024 and nan Well Enhancer is contracted for astir each of 2023.

Typically, we would seasonally spec nan vessels successful nan wintertime months successful nan North Sea; however, this winter, we are readying to proceed moving done nan existent wintertime months and astatine this time, scheme to beryllium moving done nan adjacent winter, pinch a short planned attraction play for each vessel.

The Q7000 was 100% utilized successful Q4, moving successful Nigeria, undertaken accumulation enhancement useful for an existing customer until December. The alloy past commenced a paid transit to nan APAC region to undertake a drydock that commenced successful early February. Upon completion, nan alloy is simply a planned transit to New Zealand to commence a contracted good abandonment campaign.

The alloy is past scheduled to transportation retired a paid transit to Australia to undertake activity successful nan 2nd half of 2023 for 7 good abandonment campaigns for Cooper Energy and past a further 2 wells for different customer covering astir of 2023.

The Q7000 is past contracted for 12 months for an early 2024 abandonment activity for Shell successful Brazil. So nan Q7000 is now contracted until early 2025, and we person already visibility connected pursuing activity successful 2025. Also successful Australia, 1 of our precocious acquired 10K IRS systems has been booked connected an 18-month statement commenced successful February of 2023.

Moving connected to Slide 15. In Brazil, we had bully utilization of 92% successful nan 4th quarter. The Siem Helix 1 was 87% utilized successful Q4, undertaken ROV study activity for Trident and past commenced nan two-year decommissioning task besides for Trident, performing activity connected 3 wells successful nan quarter.

The Siem Helix 3 had a beardown 4th pinch 98% utilization, completing accumulation enhancement activity connected 3 wells and decommissioning activity connected 3 wells. The two-year statement hold for Petrobras for nan Siem Helix 2 commenced successful December pinch a important complaint increase.

In nan 4th quarter, Helix again won nan Petrobras Rig Contract of nan Year Award. We person now won this grant 3 times and won it each twelvemonth that we've been eligible for nan award. We are very pleased to person won this grant based connected our information and performance. Congratulations and a large acknowledgment to our Brazil squad and nan unit of SH2.

We expect 2023 is going to beryllium a acold amended twelvemonth for america successful Brazil pinch some vessels being backmost to Well Intervention rates. We are pleased to person some vessels erstwhile again secured into semipermanent contracts. I'm pleased that we are scheduled to person 3 vessels contracted into Brazil region successful 2024 pinch nan summation of nan Q7000 Shell contracts.

Slide 16 provides specifications of our Well Intervention utilization.

Moving connected to Slide 17 for our Robotics review. Robotics continued their beardown capacity and had different bully quarter, concluding a very bully year, performing astatine precocious standards pinch beardown utilization, operating 4 vessels globally during nan quarter, chiefly moving betwixt trenching, ROV support, tract study activity and lipid and state and renewables related projects. In nan APAC region, nan Grand Canyon II had 100% utilization successful Q4. The alloy performed good connected a semipermanent decommissioning task successful Thailand.

In February of 2023, 1 of nan recently acquired T1400 trenching systems commenced paid vessel into Singapore to mobilize for an awarded renewables task successful Taiwan, group to proceed nan world description of our renewables trenching services.

In nan North Sea, nan Grand Canyon III was utilized 100% undertaking renewables trenching operations for 3 clients, performing highly good and performed an lipid and state trenching task for 2 clients.

The Horizon Enabler was -- had 68 days of spot alloy utilization, completing renewables trenching useful for 1 customer successful nan North Sea and past completed an lipid and state trenching scope for different customer. Both of nan trenching vessels successful nan North Sea had beardown backlog for 2023's trenching play pinch a operation of renewable and lipid and state trenching works.

In nan USA, this year, nan Shelia Bordelon, a Jones Act compliant alloy was utilized 91% successful Q4. The alloy performed nan tract clearance task utilizing our ain in-house-built boulder drawback supporting upwind workplace operations disconnected nan U.S. East Coast. The alloy past performed further useful successful nan Gulf of Mexico to support nan seismic node installation projects.

On nan U.S. East Coast, nan precocious acquired iCloud trenching strategy has been contracted and mobilized connected a customer provided alloy to undertake tract clearance mentation for upwind workplace support, again expanding our services that we connection to nan renewables sector.

Helix Robotics has performed good this year, and we person a bully backlog and visibility globally successful tightening markets successful some nan lipid and state and nan world renewables, and we're expecting beardown capacity successful 2023 and beyond.

Slide 18 specifications our robotics vessels ROV and trenching utilization.

Slide 19 provides an overview of our shallow h2o decommissioning and Construction Support Service business, Helix Alliance, reported arsenic our shallow h2o abandonment segment. Shallow h2o tends to beryllium seasonally affected successful nan wintertime months owed to nan worsening wintertime upwind conditions, starring to little utilization and seasonal stocking for immoderate of our assets successful Q4.

The Offshore section had 10 liftboats operating successful Q4 pinch a mixed utilization of 69%, performing decommissioning services specified arsenic good abandonments and pipeline abandonment. Offshore besides supplied six OSVs and 1 unit vessel pinch a mixed utilization of 74%.

In Q4, nan Energy Services section had 1,106 days of operations aliases 80% utilization for nan 15 marketable P&A systems deployed, conducting decommissioning services. The section had 141 days of operations aliases 26% utilization for nan six coiled tubing systems. The diving and Heavy Lift section had mixed 63% utilization crossed nan 3 diving assets and nan dense assistance barge was arsenic expected seasonally spec.

Over to Slide 20. Slide 20 provides item for nan Helix Alliance alloy and systems caller utilization. Overall, we commenced 2022 expecting it to beryllium a reliable transitional year. As nan marketplace turns, we reacted good and I would again for illustration to convey our Helix labor and partners for producing nan results and turning nan twelvemonth astir acold amended than we had first forecasted, again, pinch beardown operational efficiency, minimal NPT and again group precocious standards successful information performance.

Our markets are now overmuch improved for each of our businesses, starring to beardown utilization for our vessels and a unchangeable level for our employees. For nan adjacent fewer years, we expect to beryllium successful a beardown position pinch immoderate good won semipermanent contracts, contracted high-utilization processes, improving rates and mostly amended position and conditions.

I will now move nan telephone complete to Brent.

Brent Arriaga

Thanks, Scotty.

Moving to Slide 22, it outlines our indebtedness instruments and their maturity floor plan arsenic of December 31. Our full funded indebtedness was $271 cardinal astatine nan extremity of nan year. During 2023, we person semi-annual instalments connected nan MARAD debt, successful summation to nan maturity of nan remaining $30 cardinal of our 2023 convertibles.

Moving connected to Slide 23 provides an update connected cardinal equilibrium expanse metrics, including cash, liquidity, semipermanent indebtedness and nett indebtedness levels astatine twelvemonth end. With rate of $187 million, our nett indebtedness position was $75 million. At twelvemonth end, nether our $100 cardinal ABL facility, we had nary borrowings outstanding and $98 cardinal of availability, pinch nan resulting liquidity of $285 million.

Slide 24 presents our five-year performance. We are happy to study our 5th consecutive twelvemonth of affirmative free rate travel successful 2022 contempt being a play that included 2 years completing our important superior description shape successful '18 and '19 and nan COVID-19 marketplace disruptions successful 2020 and 2021.

Slide 25 shows different compositions of our revenues. The conception and surface science charts item our diversification and nan shallow h2o decommissioning successful 2022 and geographically into West Africa successful 2020. We besides coming 2022 revenues by nan 3 components of our power modulation strategy. During 2022, astir 10% of our revenues came from renewables upwind workplace activity and 35% from decommissioning successful subsea wells and infrastructure. Production maximization, a halfway marketplace for Well Intervention has been bolstered by nan world request for power security.

I will now move nan telephone complete to Erik for a chat connected our outlook for 2023 and beyond.

Erik Staffeldt

Thanks, Brent.

As you've heard, we expect to proceed nan momentum from nan 2nd half of 2022 into 2023. Based connected nan spot of nan offshore marketplace and our contracted work, we are providing nan pursuing 2023 guidance and definite cardinal financial metrics from our forecast. We expect gross to beryllium betwixt $1.0 cardinal and $1.2 cardinal for '23 pinch EBITDA successful nan scope of $210 cardinal to $250 million.

We expect to make free rate travel betwixt $110 cardinal and $150 cardinal and our superior walk to beryllium betwixt $50 cardinal to $70 million. These ranges see immoderate cardinal assumptions and estimates. Any important variety from these assumptions and estimates could origin our results to autumn extracurricular nan ranges provided.

Our quarterly results are apt to proceed to beryllium impacted by seasonal upwind successful nan North Sea and Gulf of Mexico shelf, chiefly successful nan first 4th and 4th quarter. In addition, nan timing of our alloy attraction periods and task mobilization will origin variances betwixt quarters. Overall, we expect nan 2nd half of '23 to beryllium stronger than nan first half pinch nan 3rd 4th apt to beryllium our strongest quarter.

Providing our cardinal assumptions by conception and region starting connected Slide 28. First pinch our Well Intervention segment. The Gulf of Mexico is expected to proceed to beryllium a very beardown marketplace pinch improving rates and expected beardown utilization connected nan Q4000 and Q5000.

Contracted activity extends into Q3, Q5000 is anticipated to person an approximate 35-day attraction play successful Q1. The Q4000 has a scheduled drydock of astir 75 days, starting astatine nan extremity of Q1. In nan U.K. North Sea, some vessels person contracted activity into Q4 pinch nan Sea Well having activity into Q1 of 2024.

Both vessels completed short attraction periods successful Q1. Since mid-2022, nan activity levels successful nan North Sea Well Intervention marketplace person importantly accrued pinch constricted seasonal effect successful 2022 and minimal effect expected successful 2023. The Q7000 started its transit to APAC region successful mid-December.

The alloy is presently successful barren dock successful Malaysia. Upon completion of nan barren dock, nan alloy is group to resume it's paid transit to New Zealand pinch nan task scheduled to commencement mid-Q2. The alloy has contracted activity successful nan APAC region into Q4. In Brazil, nan Siem Helix 2 is contracted into mid-December '24. With Petrobras, nan Siem Helix-1 has contracted performing good abandonment activity connected Trident into Q4 of 2024.

Moving connected to our Robotics segment, Slide 29, Robotics conception is benefiting from a tight market, some nan lipid and state marketplace and nan renewables marketplace are highly progressive competing for assets. In nan APAC region, nan Grand Canyon II is contracted to execute decommissioning and ROV support activity successful Thailand into nan 2nd half of 2023, pinch expected bully utilization for nan equilibrium of '23 successful that region. In addition, 1 of nan precocious acquired T1400 trenchers has been deployed to nan region for activity expected successful Q2, Q3.

In nan North Sea, nan Grand Canyon III is contracted to execute trenching activity pinch expected beardown utilization for '23. The Horizon Enabler, pinch its elastic charter, has trenching projects successful Q2 and Q3. The GloMar Wave precocious chartered for tract clearance and Helix removal is forecasted to person bully utilization.

In nan U.S., nan Shelia Bordelon is moving nan Gulf of Mexico, performing ROV study support. With opportunities successful nan Gulf of Mexico and nan U.S. East Coast, nan alloy is expected to person beardown utilization. The precocious acquired i-Cloud that is being deployed for short task connected nan East Coast.

Moving to accumulation facilities, nan HP1 is connected statement for nan equilibrium of '23 pinch nary expected change. We person expected variability pinch accumulation arsenic nan Droshky section continues to deplete. We should use from nan Thunder Hawk acquisition, though nan producing installation has astatine slightest 2 expected outages for attraction successful 2023 pinch nan first extended play present successful Q1.

Continuing connected to Slide 30 for our caller Shallow Water Abandonment segment, pinch nan acquisition of Helix Alliance successful July '22, successful 2023, we should use from a afloat twelvemonth of Helix Alliance. The support decommissioning marketplace continues to beryllium highly active. We expect nan marine offshore section to support digitalization connected 8 to 10 liftboats pinch immoderate adaptable seasonality connected nan OSVs and unit boat.

The Energy Services section should person beardown utilization for 12 to 15 P&A dispersed and 1 to 3 acold tubing units passim '23. There is seasonality successful nan diving and dense assistance wherever nan Epic Hedron is presently idle pinch constricted near-term opportunities. We do expect an progressive play during nan 2nd and 3rd quarter.

Moving connected to Slide 31. Our CapEx forecast for '23 is heavy impacted by nan barren docks and attraction play connected our Q vessels. The Q4000, Q5000 and Q7000 each has scheduled attraction periods successful early '23. With a dense regulatory twelvemonth and nan inclusion of Helix Alliance, our CapEx scope for '23 is presently $50 cardinal to $70 cardinal pinch a important magnitude expected successful nan first half of nan year.

The mostly of our CapEx continues to beryllium attraction and task related which chiefly falls successful our operating rate flows. Reviewing our equilibrium sheet, our funded indebtedness of $271 cardinal astatine December 31st is expected to alteration by $38 cardinal successful 2023 pinch nan scheduled main payments.

I'll skip nan remaining slides starting pinch Slide 32 and time off them for your outlook.

At this time, I'll move nan telephone backmost to Owen for a chat connected our outlook beyond '23 and for closing comments.

Owen Kratz

All right, acknowledgment Eric, and what a quality a twelvemonth makes.

Last twelvemonth astatine this time, we did not person nan visibility into nan marketplace -- we didn't person a visibility into nan marketplace uncertainties that would let america to supply an informed guidance. Today, we now person nan champion visibility for nan foreseeable early that we've had successful years. Demand began to summation pursuing nan Ukraine penetration and realization that power information was an basal constituent of nan power transition. We did look challenges going into 2022 pinch uncertain demand, semipermanent contracts rolling disconnected successful a little complaint environment.

The SH1 and SH2 negatively impacted EBITDA contributions successful our 2022 results. These 2022 headwinds were offset successful portion by maturation from Robotics and nan remainder of our Well Intervention business, wherever nan Q5000 achieved complete 90% utilization for 2022, without being disposable for a azygous time of VP activity nether nan caller 3 twelvemonth call-off contracts.

For 2023 rates, rates person accrued and are expected to summation further. We expect nan SH1 and SH2 effect to reverse by astir $50 million. In addition, going into 2022, we tendered rates now considered beneath marketplace rates and these -- and arsenic these commitments rotation off, it sets up for further upside successful '24 and '25.

Beyond these, location are a fewer typical affirmative marketplace trends worthy mentioning that bode good for Helix. The UK North Sea has returned to being a afloat twelvemonth marketplace successful 2023 versus nan seasonality of caller years that led to our believe of staffing nan vessels located successful that region for 2 to 4 months during nan winter. This is simply a ample summation and utilization connected apical of escalating rates. The APAC marketplace continues to grow.

Some outlooks telephone for it to yet surpass moreover nan EU marketplace for offshore upwind development, and we now person a trencher on pinch our vessels and ROVs to reside that market. While nan East Coast marketplace is yet to afloat return disconnected for offshore wind, we now person a trencher, a tract clearance boulder drawback and entree to vessels to reside that marketplace arsenic it grows further.

In Brazil, nan divestiture of properties by Petrobras has brought further players to nan market. We now person contracts pinch 3 producers providing a overmuch much diversified customer base, which should lead to Brazil being a 3 alloy marketplace for Helix from 2024. Brazil is besides becoming a decommissioning marketplace for some heavy and support decommissioning of fields while still being a prolific producing region. This has implications for our caller introduction into being a important deepwater and support abandonment contractor.

Australia is besides processing into a beardown decommissioning marketplace arsenic evidenced by nan activity we secured for nan Q7000 for 2023 anterior to transitioning Brazil. After successfully conducting operations successful West Africa, nan request for our services continues to grow. With nan re-location of nan Q7000 to Australia successful 2023, we're assessing our options for West Africa.

We person multi-regional connection -- optionality and pricing leverage going forward. Our Well Intervention assets are virtually sold out. And we person a beardown outlook for robotics successful 2023. We did precocious adhd 2 further pitchy trenchers, nan iCloud trenching strategy and our liking successful 2 further Intervention Systems.

A 2nd boulder drawback was besides added that will target nan U.S. East Coast upwind workplace market. The iCloud trenching strategy went connected statement immediately. The first task is committed nether an LOI and 1 of nan Intervention Systems is contracted for 2023. This shape for adding incremental capacity to our existing halfway businesses whitethorn proceed wherever we spot sustainable request and beardown returns, but we still person nary plans for immoderate important maturation superior spending.

We did make a important acquisition of Alliance successful nan Gulf of Mexico that extends our decommissioning business into nan shallow h2o support decommissioning market. Our first guidance for EBITDA publication from Alliance was $30 cardinal to $40 cardinal annually.

For nan 2nd half of 2022 alone, since nan acquisition, Helix Alliance generated $30 million. We spot multi-year request for shallow h2o support decommissioning and Helix Alliance is positioned to beryllium nan starring contractor successful that space.

The takeaway is that we spot multiyear beardown request for each Helix capabilities. We whitethorn go plus short successful gathering each nan demand, but our strategy will beryllium to look toward maintaining superior spending subject and attraction connected free rate travel generation. It's our existent intent to build nan basal rate to beryllium successful a affirmative position to rate settee each of our outstanding indebtedness commitments.

We'll proceed to measure nan due level of indebtedness to beryllium included successful our superior building depending connected nan position of nan indebtedness marketplace successful nan future. We will apt reserve a information of free rate travel for smaller incremental additions to our capabilities and our existent niches pinch nan remainder of nan free rate travel procreation arsenic discretionary.

To that end, nan Board has approved a $200 cardinal stock repurchase plan, representing astir 17% of our existent marketplace value. We envision a target of astir 25% of our free rate travel allocated to stock repurchases and that we would mostly align nan timing of our repurchases pinch our rate travel generation.

If and arsenic free rate travel grows, nan magnitude of stock repurchases could turn and nan 25% allocation whitethorn besides beryllium increased. This was a important announcement successful our state -- successful our company's story, a extremity we've agelong communicated to investors, and we look guardant to deploying superior to execute connected nan programme and return worth to our shareholders.

We spot request continuing to build for nan 3 legs of our business model, maximizing remaining reserves, decommissioning lipid and state fields and supporting upwind workplace development. Our Well Intervention assets are predicted to beryllium afloat utilized and people hedged betwixt maximizing remaining reserves and decommissioning depending connected commodity prices and governmental wins. Both are mature end-of-life lipid and state activities.

The Robotics group chiefly support nan Well Intervention Group, but besides has focused connected maintaining our beardown position successful offshore upwind workplace activity for trenching, arsenic good arsenic tract mentation work. Overall, pursuing a number of challenging years, we judge we've positioned ourselves well. We expect to person a beardown multi-year play of free rate travel procreation ahead.

Erik?

Erik Staffeldt

Thanks, Owen. Operator, astatine this time, we'll return immoderate questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And our first mobility comes from Sherif Elmaghrabi pinch BTIG. You whitethorn proceed pinch your question.

Sherif Elmaghrabi

Good morning, acknowledgment for taking my questions. I wanted to inquire about, excuse me, what opportunities beryllium for nan 15K Well Intervention stacks? And really do you spot request trending for them this year?

Scott Sparks

So bully morning, I'll return that. Scotty here. We do spot request for nan 15K system, it will chiefly beryllium deployed disconnected nan Q4000, this useful for astatine slightest 2 clients and obviously, we're besides bidding immoderate different activity towards nan extremity of nan year. So, I would expect nan 15K systems person akin utilization successful '23 arsenic it had successful '22.

Sherif Elmaghrabi

Thanks. And you talked astir visibility for nan Well Intervention vessels, uncontracted days successful nan backmost half of nan twelvemonth and past further upside adjacent year. So is location immoderate quality betwixt basins regarding really acold retired you tin gauge semipermanent interest? For example, Brazil seems to person beautiful bully visibility because we cognize we've sewage 3 vessels moving already contracted adjacent year.

Scott Sparks

I would opportunity we person bully visibility crossed each 3 regions. We've ne'er had -- it's been a agelong clip since we haven't had to stack nan vessels successful nan North Sea region for instance, and we've sewage bully visibility successful that region going retired to 2024 and already person contracted work. And successful nan Gulf of Mexico, we spot bully visibility.

We person immoderate days near to waste astatine nan backmost extremity of nan year, but rather assured pinch nan magnitude of customer inquiries we person that will return those days up and support expanding nan rates and for illustration you opportunity Brazil is looking good. Australia is already booked up, truthful visibility is good, is nan champion we've seen successful a agelong time.

Sherif Elmaghrabi

Thanks very much.

Scott Sparks

Thank you.

Operator

Our adjacent mobility comes from James Schumm pinch Cowen. You whitethorn proceed pinch your question.

James Schumm

Thanks, and bully morning, everyone. If I look astatine nan guidance, conscionable looking astatine nan gross guidance for nan shallow h2o abandonment and past I conscionable return nan midpoint, it looks for illustration you're expecting revenues to beryllium little successful '23 versus 2022. What's driving that?

Erik Staffeldt

Yes, Jim, arsenic we create our outlook, we really attraction connected our aliases you tin say, our gross generating separator generating capabilities. There is variability pinch immoderate of nan pass-through items successful that either nary separator aliases very debased separator and because of nan variability of that, we don't really forecast those aliases fund those. So overall, to nan grade they travel successful akin to nan complaint of '22, our revenues and our costs would astir apt beryllium higher successful that segment.

James Schumm

Okay. Maybe I should inquire -- thanks, Eric. Maybe I should person asked what astir connected nan profitability? I mean, what are you expecting location connected an EBITDA level? Is that -- are you expecting a akin present aliases you expecting improvement? What are you seeing there?

Erik Staffeldt

So I deliberation from our standpoint, we do expect a very akin twelvemonth to what we experienced. Obviously, for illustration we said, location is seasonality. And I deliberation you'll spot that successful nan first and 4th fourth results, but we do expect a very progressive 2nd and 3rd quarter.

James Schumm

Okay, thanks. And past conscionable curious, what nan trajectory of nan P&A activity aliases activity is successful nan Gulf of Mexico and globally? Just funny if you're seeing an acceleration successful either region.

Owen Kratz

I'll person to return that and spell by region. In nan U.K. a twelvemonth ago, it was a existent beardown push towards P&A. With nan power situation successful Ukraine, that benignant of shifted backmost to accumulation enhancement. The U.K. authorities besides imposed an excess profit taxation wherever decommissioning disbursal is not deductible.

So that's had nan effect of cooling nan request for P&A successful nan adjacent term. I spot that returning astir apt successful '24, '25 clip play depending connected geopolitical events, but that's nan North Sea. There is simply a immense backlog of activity though that needs to beryllium done, and I deliberation there's a societal will successful nan U.K. to spot that commencement commencing.

The -- fto maine displacement to Australia. Australia is simply a marketplace -- it's a mature marketplace pinch a batch of fields that are nearing commercialized extremity of life. It precocious had a bankruptcy successful Australia wherever nan spot reverted backmost to nan government, successful fact, two. In fact, we're going down to activity for nan New Zealand authorities connected removing 1 of those fields.

But arsenic a result, I deliberation nan regulatory bodies down location go overmuch much fierce connected pushing for a drawback up connected nan backlog of abandonment work. So Australia for nan adjacent fewer years, I spot arsenic being a beardown and increasing marketplace for decommissioning.

In nan Gulf of Mexico, it's beautiful position quo, nan -- successful nan deepwater. The support though has seen a tremendous surge successful decommissioning activity arsenic a consequence of nan Fieldwood bankruptcy wherever each of nan support properties reverted backmost to successor owners, and nan successor owners are predominantly nan majors, and they conscionable want to get these things gone retired of nan way. So that's driving a large boom. Plus nan regulators don't want to spot a recurrence of this. So they're pushing for different operators to commencement to drawback up connected nan backlog location arsenic well.

Then finally, successful Brazil, nan Brazil support market, I think, is going to beryllium an absorbing 1 developing. There's besides liking from nan regulatory bodies down location to not fto it get retired of power and to commencement seeing nan support decommissioning performed. And successful summation to that, Petrobras has been divesting packages to immoderate of nan caller players down there, included a committedness to execute a definite magnitude of P&A wrong a definite play of time. So that's driving a multiyear surge successful decommissioning successful Brazil.

So globally, particularly fueled by nan power modulation push distant from lipid and gas, there's a large -- I dislike to opportunity it, but nan perpetual lucky instrumentality of expected P&A whitethorn really travel to walk here.

James Schumm

Okay, great. Thanks for each nan color. I'll move it back.

Operator

Our adjacent mobility comes from Don Crist pinch Johnson Rice. You whitethorn proceed pinch your question.

Don Crist

Morning, gentlemen. Owen, I had a mobility connected nan '26 notes. I cognize they're coming adjacent to imaginable conversion value there. And historically, you person talked astir trying to settee those successful rate and keeping capable rate connected nan equilibrium expanse to do that. Is that still nan plan? Number one. And number two, really does nan stock buyback play into that? Would you usage nan stock buyback to combat immoderate imaginable dilution from nan '26 notes conversion?

Owen Kratz

So I deliberation overall, our wide scheme is to evidently execute nan stock buyback. The convertible notes successful '26, they do mature successful February '26. The earliest that telephone proviso that we would person would beryllium later connected this year. I think, overall, Don, you're right, nan wide thought process is that we would settee these successful cash.

I deliberation we're going to support our options unfastened depending connected what nan wide indebtedness markets look like. I deliberation if there's an action that would astir apt steer america distant from nan convertible market, that would beryllium our preferred action astatine this time, but we're going to support our options open.

But conscionable to summarize, our intent correct now because of nan information of nan indebtedness marketplace is that we will beryllium benignant of squireling distant capable rate to beryllium assured of rate settling these. The 2nd action would beryllium if nan indebtedness markets are sufficient, past we'll look astatine immoderate shape of imperishable indebtedness successful our superior structure. But utilizing shares from nan repurchase scheme present for settling nan converts is not an action that I'd opportunity is connected nan table.

Don Crist

Okay, I admit that color. And conscionable 1 further 1 for me. Are location further opportunities for lipid and state assets successful nan Gulf of Mexico arsenic it relates to nan shallow h2o P&A market? I cognize you've done a bully occupation consolidating that and becoming a large subordinate successful that market. Are location further assets retired location that you could target to bolster your position there?

Owen Kratz

There are further assets. I'd opportunity correct now, depending connected which of nan 5 plus classes you're talking astir that are included successful what's needed for abandonment, we person anyplace from 20% to 35% of nan disposable assets.

What we don't person is capable group to man each of nan assets we really have. The group constraint is nan large bottleneck and that's facing everybody. So yes, location are further assets retired there. There are further consolidation opportunities, but I deliberation we're going to person to lick for nan group equation first.

Don Crist

I admit each nan color. I'll move it back. Thank you.

Operator

Our adjacent mobility comes from Samantha Hoh pinch Evercore ISI. You whitethorn proceed pinch your question.

Samantha Hoh

Hi, guys, congrats connected conscionable a really awesome quarter. I wanted to possibly talk a small spot much astir nan Well Intervention complaint progression. Owen, you gave america a batch of accusation location successful position of conscionable really overmuch amended time rates are moving. And directionally, this conscionable seems really, really successful nan correct direction. I was conscionable wondering if you could talk possibly astir really it compares to past rhythm aliases erstwhile cycle? And wherever do you deliberation -- is location for illustration a emotion for wherever time rates could move to complete nan adjacent respective years?

Scott Sparks

I'll return that. Good morning. The rates person importantly improved complete nan past 12 months. I would opportunity that we're astir 40% higher crossed nan committee from wherever we were a twelvemonth ago. And we proceed to push rates. Rig rates offshore support expanding successful definite regions, and arsenic they do, we'll proceed to push our rates. There's besides a shortage for our assets astatine this time, truthful we're continuing to summation rates.

Our customers person been told there's a validity connected our proposals and if they don't return up work, rates will increase. So we will proceed to push. Right now, I don't spot it. Even a twelvemonth ago, rig rates were saying they were targeting 300,000 a day. Now they're targeting 400,000 a day, location is moreover talk of 500,000 a day. So I don't person a clear position connected nan play correct now, but I do spot that they're expanding crossed nan board.

Samantha Hoh

Okay, great. And past my different mobility has to do pinch nan Robotics segment. It looks for illustration location was a bully uptick successful nan renewables operation conscionable from past year. And you mentioned that location was a batch of title for assets pinch lipid and gas. I was conscionable wondering if you spot that operation possibly reaching that 50% aliases moreover much for renewables this year? And what does that mean really connected nan profitability broadside for nan segment?

Scott Sparks

So again, we spot an accrued marketplace successful renewables. There's a geographic description . We conscionable acquired 2 -- well, 3 trenching systems. One of them has been deployed consecutive to nan East Coast, one's going to Asia and wills enactment successful Asia for rather immoderate time. We're seeing an accrued marketplace successful nan North Sea for renewables retrenchment tract clearance. We're seeing tract clearance accrued connected nan East Coast.

I deliberation arsenic Owen mentioned, nan Asia marketplace will yet beryllium a larger marketplace than nan renewables marketplace successful nan EU. And eventually, we'll soon commencement seeing decommissioning opportunities successful renewables. So decidedly an accrued market. Some of nan older renewable upwind farms are truthful overmuch smaller now they're viable, truthful location will beryllium a play successful nan coming years for decommissioning and renewables also.

Samantha Hoh

Okay, acknowledgment truthful overmuch and congrats again.

Scott Sparks

Thank you.

Operator

[Operator Instructions] We person nary further telephone questions astatine this time.

Brent Arriaga

Okay. Thanks for joining america today. We very overmuch admit your liking and information and look guardant to having you connected our first 4th 2023 telephone successful April. Thank you.

Operator

That does reason nan convention telephone for today. We convey you for your information and we inquire that you please disconnect your lines.

Editor: Naga



Read other contents from Beritaja.com at
More Source
close