Helix Energy Solutions Group, Inc. (HLX) Q1 2013 Earnings Report, Transcript and Summary

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 website at www.helixesg.com. The press release can be accessed under the Press Release’s 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 and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical facts, are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 two and in our annual report on Form 10-K for the year ended December 31st, 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 website. Owen Kratz will now make some opening remarks.

Good morning everyone. We are going to start with skipping slide three and four, so moving on to slide five, which is a high level summary of the first quarter results, [this regarding] [ph] the losses associated with the divestiture of E&P 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 six, 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 cost related to the divestiture. In addition as oil prices moved against us from yearend, 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 a 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 relatively low vessel utilization particularly in our strongest region in the North Sea where activity levels are often impacted by winter weather patterns. Recently we extended the Helix Fast Response System contract to the 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 seven, 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 yearend to $624 million at March 31. We paid down $318 million of debt in the quarter. Our liquidity levels of more than $1.1 billion remain very strong. Our strong balance sheet condition put us is a position to execute our long term strategy. I’ll turn the call over to Cliff for an in-depth discussion of our Contracting Service results.

Okay. Thanks, Owen. If you move on to slide nine there. First let me point out that starting this quarter, we are now breaking out the revenues of our three business units, Well Intervention, Robotics and Subsea Construction that make up our Contracting Services Segment. Production Facilities revenues and gross profits are there for your review as well. They’ve 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 of Robotic fleet was primary driver in the $26 million decrease in Robotics revenues quarter-over-quarter. The 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, IRS2, which is our standalone and spare IRS system saw quite a bit of utilization for the quarter on board another client’s drilling vessel. We expect to put IRS2 back on hire again later in Q2 for a different customer. The H534 remains on schedule to enter the fleet in the third quarter with full backlog for the rest of 2013 with a 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 once she enters the fleet in 2015. We had full utilization for the North Sea light Well Intervention assets that have now taken the Skandi Constructor on charter. The constructor is currently being used as an ROV support vessel in a windfarm project as she awaits mobilization of CL3 in June in order for her to begin the Well Intervention service. She currently has 95 days booked for Well Intervention work as well as commitment in our fourth quarter for our West Africa campaign, similar to the work we did with Well Enhancer a little over 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 and beyond as well. So if we 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 set 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 in the London Array windfarm offshore in the U.K. Olympic Triton kicked off its seismic support project down in Brazil in the first quarter, which continues in the Q2. We also signed the three charter for our new vessel, the Rem Installer in Q1 and expect her to enter the fleet midyear along with two new XLX work class ROVS. We still expect deliveries of the Grand Canyon II and Grand Canyon III 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 Express has been requested to complete additional work which now pushes to close of the vessels -- of the sale of the vessel in July along the Caesar to the buyer. On to slide 13, I’ll leave the slide detailing the vessel utilization for your reference. And with that, I’ll turn it back to Tony on the oil and gas side.

Thanks Cliff. 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 [$350] [ph] million of bank facility debt in Q1 with the proceeds of ERT sales. We expect to payoff the remaining $150 million of bank facility debt upon the sale of the pipelay assets which is currently expected to close in July. We continue to value and consider retiring the remaining $275 million of the senior unsecured notes as well. Over the slide 16, slide 16 provides an update on our gross to net debt levels historically and through March 31st of this year. Our net debt levels are now down to only $72 million at quarter end, after the sale of the pipelay vessels we expect to be in the 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 in 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, which represents our updated outlook for 2013, we continue to forecast total EBITDA exit approximately $300 million for 2013. However, when backing out the stub impact of our discontinued operations both oil and gas, and pipelay, and filling into the equation of full years impact for the two vessels that were entered in fleet in 2013 both the Skandi Constructor and 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 at 25% increase in 2013 over 2012 and despite the relatively weak first quarter we now expect Robotics revenues to increase slightly in 2013. We are forecasting total CapEx spend for 2013 of $365 million. The major items representing the $365 million number are as follows, progress payments and spending on the Q5 currently under construction Singapore at $135 million, the modifications improvement to 534 Well Intervention vessel also currently in shipyards Singapore $55 million, additional intervention riser systems for Well Intervention operations of $63 million, additional Robotics vessels and trenchers of $40 million, life extension expenditures for the Seawell of $12 million and drydock spending for the Helix Producer I of $20. $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 light in the fourth quarter of 2013 with backlog starting to fill in for 2014 and 2015. The Helix 534 is fully booked for 2013 when she entered service with backlog filling in for 2014 all the way into 2016. As Cliff mention, 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 develop our world-class trenching technology, we recently completed the London Array windfarm project utilizing the Grand Canyon vessel and the T1200 trencher. We have an important ROVDrill project for Statoil commencing this quarter. From the overall standpoint the two key variables for 2013 relate to our ability to have both the 534 and Skandi Constructor successfully enter service in Well Intervention mode. Our outlook assumes the 534 enter service mid-Q3 in the Gulf of Mexico, while Skandi Constructor entered service in the North Sea for Well Intervention activities midyear. I'll skip slides 22 and 23 and leave them for your reference. And at this time, I’ll turn the call back over to Owen for his closing remarks.

Thanks Tony. Well 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 are 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, it is mentioned we do anticipate a year-over-year growth improvement. We continue to see building demand in all segments, work class, ROVs, ROVDrill and especially trenching. We continue to add work class capacity in our well along in the construction of our next large trencher do out next year. The extension of our contractor 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 option. This is conformation that the service offer to 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 are fortunate now to be in a strong financial position in response to the industry demand. This is the primary reason the Helix team has worked so hard but patiently to build our liquidity to level up over $1 billion and reduce the burden of debt. We are in dialogue with producer and that would anticipate being in construction with the next vessel by year end. The story is not all about long-term growth. This year we’ll see Helix add capacity to our Robotics, as well as fleet two additional Well Intervention vessels into service. As mentioned in the presentation, the Skandi Constructor will join our North Sea Well Intervention fleet by midyear. This will provide our clients with greater capacity to allow us -- to not only service that region but expand geographically. The Helix 534 joined the Gulf of Mexico fleet by Q3 of this 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 the Gulf of Mexico demand. We continue to build and strength our capital projects team as well as that to our operating team, the head of the 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 the productive one within our means. We’ve taken our time to plan and we'll take our time in executing the plan but we’re just at the beginning. At this time, we’ll be happy to take any questions.

(Operator Instructions) Our first question comes from the line of Ole Slorer with Morgan Stanley. Please go ahead.

Yeah. Thank you very much. Well, nice to see you guys having a mean-lean company again. First, question, Tony, just -- if -- on the exit rate of $350 million this year, what would you say that the maintenance CapEx is on that? I mean, we have you down for about, say that $30 million a quarter or something like that. Is that the right ballpark?

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 say in the $350 million run rate in 2014, you only need $50 million of maintenance CapEx?

Yeah.

Very good. Could you talk a little bit about the equipments that you are taking delivery of in 2014. It’s sort of waiting for the bigger 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. It’s 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. Beyond that the ROVDrills have been in high demand. So I see us adding a ROVDrill every other year. And we haven't added one in a while. So probably 2014 sees another ROVDrills added.

Okay. So in terms of 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 cite just what we have coming now.

Yeah. 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. Q4000 is an important asset and what type of conversations are you having with other oil companies. Also now you have to address their subsea needs?

Well, I rather not give into this 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 stack and we’re building the Q5000 on stack. Very little of what we do is done without a lot of dialog with the clients ahead of time. It takes a lot of client input as to what the specific tasks they are going to be requiring the vessels to do so that we can customize them. So the -- I’d say that the conversations we’re having with clients is around whether there is 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.

I mean, so far our vessels has been heavily centered on the Gulf of Mexico and also breaking now into the North Sea. But how do you view sort of the global opportunity? Do you think you’ll spread your wings? Do you think you’ll 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 matured deepwater market so as our -- 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 Petrobas’ needs. That is also a mature market. But I’d really say that those are the two primary markets that we’re looking at going forward.

Okay. Thanks Owen.

Our next question comes from the line of Michael Marino with Stephens Inc. Please go ahead.

Thanks. Good morning. Owen, you mentioned a lot of dialog 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. I mean, it seems like the Gulf of Mexico, you’ve got, I guess, you will have three vessels in that market upon delivery of the 5,000. I guess -- so my question is, one, is that all you want to do for that market for now. And you’re kind of looking at overseas. And if so, is there a specific market that kind of jumps out at you at this point based on your dialog with producers?

Yeah. It’s significant about -- it's sort of an oversight of the different markets. The Gulf of Mexico market has been extraordinarily strong recent year-to-year because of the idle iron rule and the increases in the P&A work that’s required in the deep water. Over the next two to three years, that probably tails back off to a normal level. At the same time, the sea intervention production enhancement work increases. So for the next two or three years, I see, sort of, Gulf of Mexico as being a steady state market. We have not had enough capacity to handle the demand that exist now. So adding the Q5000 is a real plus. How much capacity more it can take is our question to my mind. But in the North Sea, we’re adding another vessel right now but there is also an increasing work scope that requires little more sophisticated kind of vessel. That’s adventurous 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 got the Brazilian market that has an existing high demand for vessels like what we supply. And they are coming out with a market enquiry in the 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 extent, it's several markets. We’d actually downsize 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 from -- on a campaign basis from the excess capacity that we’re adding in the other regions. So that gives you sort of an overview.

Yeah. That’s very helpful. Shifting gears into kind of the Robotics business, you mentioned year-on-year increase despite kind of a bit slower start than you would have expected. Is -- 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 and so what’s it look like kind of this year and what’s it look like into the future?

Yeah. Maybe I can answer that best, Owen. Well, this year in ’13, we are seeing a fairly flat year. It’s still good but there is not a lot of growth increase. But in ’14 and ’15, we are seeing, there is lots of projects that are going to happen in 2014 and 2015. And hence while we picked up another vessel, the Rem Installer and we are also placing order for another trencher of the T1500 that we'll get early next year, anticipate in that market as well. And it’s starting to get some traction in other markets as well besides just the European theater.

For wind farm related work or just in general?

Yeah.

How about the -- as it relates to Robotics, the outlook on the Gulf of Mexico, is that market you guys might make a bigger push to do more work in?

Well, I don’t know if it’s really the farm has a bigger push. We’ve always been hearing this is our birthplace in the Robotics market and we’ve been here and are still here. It’s just after post Macondo had been rather slow here from the construction side but the cycles is turning now. All the majors have brought rigs back in and drilling and so yeah, we see the same and timeframe, probably the second half of ’14 and in ’15, there is a lot of projects that are listed to be done on the construction side as well, which we will involve our vessels. So we will probably have 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 will turn it back.

Our next question comes from line of Jim Rollyson with Raymond James. Please go ahead.

Hey. Good morning, guys.

Good morning, Jim.

Good morning.

Congrats on the contracts of the Q5000. Maybe a couple questions around that, Owen. First of all, I know you are not going to probably share the exact rates you are 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, yeah. 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 builders that’s still trying to figure out what market that’s going to?

No. I think we are pretty clear on what we want to do. I think it’s a matter of just waiting. Well, we not have announced pool of events to put out right now. But I don’t think it’s any secret that we do want to build another vessel and we’ve had discussions and we’ve had plenty of time to do a lot of sell searching about what that vessel looks like. So, I don’t think there is any secret. It’s our intentions that we would like to be in construction of another vessel before the year is out, but I have to go and talk to the Board.

Okay. So that’s over. The current thinking is still what you have been saying. Okay. That’s helpful.

Yeah. And keep in mind, we sort of build the balance sheet up to launch this as our strategy and it’s going to be planned on certain holding, according to plan but that’s why we are sitting on the liquidity that we are.

Absolutely. Makes sense. So that’s what you were shooting for, so that’s excellent. And last one for me. Just 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 just give me a little color there?

I can probably answer that, Owen.

Sure.

It’s a four year commitment that starts in April of this year for going one for four year 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 just two vessels of Q4000 and HP I are part of that response system. We will be doing a drill with some of that equipment here in early May as well.

Great. Thanks you, guys.

Our next question comes from line of Joe Gibney with Capital One. Please go ahead.

Thanks. Good morning. There is a couple of quick ones for me. On the Skandi Constructor, just trying to understand a little bit in terms of its contribution. It is doing ROV support work now in any position of vessel. But then we also have some work being done in intervention riser system and deck modification. I was just trying to understand timing utilization contributions for this asset, so it’s going to be a contributor in 2Q ROV support and then there is some downtime associated with intervention riser system work, just trying to clarify that.

Yeah. The deal with that is we picked the vessel up in April and we got some ROV work that we can use the vessel on for now, while we are 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 finished the ROV work, we will commence, spend the couple of weeks of the dock and put the IRS system on and it will start our first campaign of geotechnical. And right now they’ve got 95 days booked for this year, starting in June and we got -- the rest of the year is highly likely that we have a contract of that shortly. In fact, we have one with -- the contract that we are going to take into aperture of MD&A for -- they’ve already signed off the contract, a lump sum to pay to get us down there. In fact, I think that’s in a 20 something million dollar range. What they haven’t given us is service orders reach individual well. We are going to do when we get there. For those who are coming in short, we are working those operationally now.

Okay. Helpful. Tony, just quick question on the H534. It looks like the estimated total spend on this vessel was $199. It was $180 before us. Anything new there relative to some of the conversion work that is picking that number higher?

Yeah. It is $190 now. Owen, you want to talk little bit about why the cost drifted up $10 million since our last estimate.

I think there are two primary reasons. One is additional vessel and as we got into it instead of just putting our, what you might call band aid fixes on some of the things that needed to be refurbished. We took these 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 of significance if not major operator and they have a continuos service requirement. And we’ve 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 continuos service experience on board. That was sort of a late call that we made and it did add to the cost of the overall project.

Okay. Makes sense. And last one for me. Tony, if you can maybe give a little help in terms of how we should think about within your revenue splits elimination line items? It’s $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 this exit rate you come out with the year?

Yeah. The 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 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, gentlemen. I will turn it back.

(Operator Instructions) Our next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.

Good morning.

Hey, Marty.

Good morning.

Good morning. Could you talk a little bit maybe about the pricing with, what we can think about for the next couple of years about your visibility with these contracts for the well and trencher vessels?

Hey, Marty, I will continue to say that the pricing in our backlog is higher than the pricing historically. For example, the Q4000 just re-upped the contract in a multiyear basis for the major customer here in Gulf of Mexico and the rates in that contractor are higher than rates we’ve been realized with the customers historically. The rates on Q5000, for example are higher than the rates were getting on the Q4, so on and so forth. So generally speaking without getting into too much specific, so I’d say our backlog has higher rates than our historical rates.

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

Not for this year, we don’t have…

HP1

Right. We had HPI in September of this year but from the Well Intervention vessels, we don’t have any schedule for this year. Then next what we have is the well enhancer for next year.

Okay. And that -- the life extension, I think you prefer do it before, as what’s going on there is that…

That’s on the Seawell.

I’m sorry, the Seawell. Okay.

Yeah.

Thank you.

Our next question comes from line of Travis Bartlett with Simmons. Please go ahead.

Hi, guys. Good morning.

Good morning.

First, I just wanted to revisit the contract with BP for the Q5000. So I wanted to ask guys whether or not you’re in discussion 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 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 but there is 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 -- and rest of them in 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’d 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 our vessels. After we start construction of the vessels, 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 design. They are the basically the same, building on the experience and what we’ve learnt with Q4000. But we do have some twist to them depending on what the client specific needs are and of course the geographic and regulatory environment we have to build to. So that’s -- hopefully that’s going to become a repetitive pattern for us.

Yeah. Okay. That’s helpful. Again, secondly, here just shifting to backlog, looks like backlog increased to $1.6 billion after adjusting for the Q4000 and Q5000 contracts. So I’m assuming that the majority of the backlog increase was attributable to the BP contract. But just kind of wondering if you can share what happened to the backlog sequentially if you exclude backlogs under the BP contracts and if you have those numbers handy or not?

Let me answer that. First of all, the backlog that we’re 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 Gulf of Mexico. So it really consists of three different contracts that were major multi-year contracts. Our backlog we stated for contract in 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’s helps you.

Yeah. That’s, that’s good. So backlog excluding the Q4000, Q5000 contracts, that were in the press release increased from the $800 million to roughly $950 million?

Yeah. 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 or timing of the vessel deliveries or are there factors that we should be thinking about here?

Yeah. Couple of things. Travis, number one, quarter one, we had greater utilization and we modeled. So we never modeled 100% utilization because you always figure you have some downtime. So we are 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 works it’s doing today. Now, the works it’s doing today, the 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.

Our next question comes from the line of Anthony Guegel with Upstream. Please go ahead.

Yeah. 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 than a Q6, so to speak?

I don’t want to tip our hat too much, but I think it’s pretty obvious. We are 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 are firm believers that semi submersible motions are the way to go in the deepwater intervention. So unless there is something an extraordinary twist occurs, it would likely be a 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?

Reminder, this year, we only got two and going forward in the next year, I think we’ve got there other customers for us but it’s still enough. It’s booked up. Soon as you get to the year, it goes to work with the rest of the year and it’s booked up for the next three years quite nicely, not 100% but we are getting there.

Okay. And then lastly on the HP I dry dock, I think I heard September timeframe, about how long do you expected to be in dry docks?

60 days.

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

Correct.

Okay. Thank you very much.

(Operator Instructions) The next question is a follow-up from Michael Marino with Stephens Inc. Please go ahead.

On the sea well life extension project, what’s the timing of that in terms of down days, what should we kind of figure in our models?

Well, we haven’t budgeted figure exact. Sorry, go ahead, Owen.

No, I was just going to say -- I know it’s very early in the planning, we are 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?

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

Okay. So it’s going to be most of the…

It does fall concurrent with the regularly scheduled dry dock period for the sea well.

Right. That’s what’s driving it. As we have to go to dry dock anyway and we offer probably best case a month or something like that. So we are going to go ahead and do this extension while we are in there probably that will lengthen the time that we are in there and the cost as well, but then we should be able to get decades more out of it and the reason we are 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 its built back when the holes were built really well and thick iron on it and is one of the one vessel that 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 a -- or I guess what I am trying to figure out in the guidance for the exit rate guidance you gave its in that 350 number you assume and it’s a little downtime in the sea well and then may be budget more in ’14, in the first part of ’14.

No, I don’t think that’s actually correct. The net scheduled dry dock for the sea well is actually at the beginning of 2015 and that will be the time period we are targeting for the extension dry dock period.

We are thinking right now going in December ’14 and then December and January.

Okay. Okay. Perfect. Thanks for the clarification.

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

Okay. Well with that, I would just say thanks to everybody for calling in and we will talk to you next quarter.