Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2017 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, February 20, 2018. I would now like to turn the conference over to Erik Staffeldt, CFO. Please go ahead.

Good morning, everyone, and thanks for joining us today on our conference call for our Q4 2017 earnings release. Participating on this call for Helix today is Owen Kratz, our CEO; Scotty Sparks, our COO; Alisa Johnson, our General Counsel; and myself. Hopefully, you’ve had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of 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 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. Alisa?

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 of variety of factors, including those set forth on Slide 2 and in our annual report on Form 10-K for the year ended December 31, 2016. 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?

Good morning, everyone. Let’s skip over Slide 3 and 4 and start with Slide 5, which is the high-level summary of Q4 results. Our fourth quarter financial results were in line with our third quarter results. Revenues in Q4 were flat, remaining at $163 million, a decline in Well Intervention revenues, primarily as a result of the usual winter slowdown in the North Sea, was offset by an increase in Robotics revenue. Our gross profit increased slightly in Q4, $23 million from $21 million in Q3, driven primarily by improved results of our Robotics segment. Our net income increased to $50 million in Q4, benefited by $51.6 million non-cash benefit as a result of the U.S. tax law changes. The improved performance in operations resulted in EBITDA of $32 million in Q4 compared to $30 million in Q3. Turning to Slide 6, our Well Intervention utilization was at 74% in Q4, down on 88% in Q3. In Brazil, the Siem Helix 1 was 98% utilized for Q4 compared to 96% in Q3. The performance of our crews and vessels continue to improve. In mid-December, the Siem Helix 2 was accepted by Petrobras in commenced contract operations. The vessel did experience some start-up downtime, with a one-time negative impact of $2.4 million of EBITDA for the quarter. However, the vessel was on operational rates at the end of the quarter. In the Gulf of Mexico, the utilization for the quarter was 83%. The Q5000 was 100% utilized for the quarter after remobilizing for its BP campaign in early September. The Q4000 utilization decreased to 66% in Q4 after experiencing a gap in the schedule at the start. Our North Sea vessels were utilized 55% in Q4, the Well Enhancer worked into the November, while the Seawell worked into December. At the end of the quarter, both vessels were warm stacked as expected for the winter. Our Robotics segment improved quarter-over-quarter, driven by increased trenching activity levels and utilization of the charter vessel fleet. Production facilities continue to be a steady performer, operating at full length the entire quarter. Onto Slide 7, from a balance sheet perspective, our cash levels at quarter-end decreased to $267 million from $357 million at the end of Q3. During Q4, we made a $69 million shipyard payment and invested an additional $31 million in another capital expenditures and $10 million of scheduled debt repayments. Our debt increased – I’m sorry, our net debt increased to $229 million at year-end compared to $147 million in the third quarter, while gross debt was reduced to $504 million to $496 million at year-end. I’ll now turn the call over to Scotty for an in-depth discussion of our operating results.

Thanks, Owen. Moving on to Slide 9. As we enter the more challenging winter season, revenue in the fourth quarter remained flat at $163 million, equal in the third quarter. Gross profit margin increased to 14%, resulting in profits of $23 million, up from $21 million in Q3 due to achieving good utilization across the Well Intervention fleets and five vessel intervention utilization in the Robotics fleet. In 2017, we concluded the year completing well from 77 wells in total across the six Well Intervention assets for numerous clients globally. In the North Sea intervention business, as I expected, both vessels finished the year with good utilization for 2017. Most of the projects undertaken required our unique fully integrated diving services. In December, both vessels entered seasonal low-cost warm stacked mode for the winter. In the Gulf of Mexico, the Q5000 had another strong quarter with BP, with zero downtime through the period and we’re continuously at depth for nearly 80 days. The Q4000 also completed our deepest well to date working at 9,356 feet water depth. In Brazil, the SH2 finalized the acceptance program in December and commenced work at Petrobras. SH1 had a strong quarter of 98% utilization and very good uptime. Robotics finished the year with a good quarter of utilization of 85% across the vessel charter fleets, working primarily on trenching projects. All business units as expected produced strong results relating to safety performance. Slide 10 provides an overview of our Well Intervention business in the Gulf of Mexico. Throughout 2017 in the Gulf of Mexico, we have seen a workflow significant increase to more production enhancement-related activity. Approximately 80% of the work undertaken by the Q units was production-based and the remaining works were primarily abandonment activity. In previous years, the work we move towards…

Thanks, Scotty. Moving to Slide 16. It outlines our debt instruments and their maturity profile. I will leave the slide for your reference and move on to Slide 17. Slide 17 provides an update on key balance sheet metrics, including growth in net debt levels as of year-end. Our net debt in Q4 increased to $229 million from $147 million in Q3. The increase in net debt during Q4 is directly attributable to $100 million of CapEx outflows, including the Q7000 shipyard payment. Our cash position at quarter-end decreased to $267 million reflecting the CapEx outflows and paydown of $10 million of our debt. Our year-end net debt to book capitalization was 13%. Moving over to Slide 19, which provides our initial outlook on 2018. We are forecasting 2018 EBITDA in the range of $135 million to $165 million. This range includes some key assumptions and estimates. We’re assuming a full year benefit for the Siem Helix 1 and Siem Helix 2 in Brazil. We expect the 2018 North Sea Well Intervention market to maintain a high level of activity. We expect the Q4000 to have good utilization in the Gulf of Mexico. Although the robotic market continues to be weak, we expect to benefit from the reduced chartered cost and increase in trenching work. Any significant variation from these key assumptions could cause our EBITDA to fall outside of the range provided. Moving to Slide 20. We enter 2018 with $1.6 billion in backlog, of which approximately $500 million is currently scheduled and estimated to be completed in 2018. Our backlog is heavily weighted to the BP Q5000 contract at two Petrobras contracts, and the Helix Producer I contract. In Brazil, we expect to benefit from a full year of operations of both the Siem Helix 1 and Siem…

Thanks, Erik. Well, 2017 is behind us as is the capital construction that we’ve committed to prior to 2014. The Q5000 completed and working long term with BP, the two Siem vessels are complete, working along term for Petrobras and the Q7000 shipyard component of this construction is largely complete, including sea trials, pending the closeout of punch list items. We do have the OFE work to complete installing and integrate topside equipment on the Q7000, but the construction risk is largely over and we’re starting to see contract opportunity for the vessel. Our 2018 capital budget includes the shipyard cost and the cost to complete all the OFE work throughout 2018. I’m pretty – given there are some pretty excited looking forward to the potential of 2018, that some people have noted that our guidance of $135 million to $165 million EBITDA may seem a bit conservative and perhaps it is. However, in this market and given how difficult the past three years have been, we feel that it’s a prudent level. We do feel that there may be some room for us improvements in our budget through reduction of downtime, operational efficiencies and contracting. For instance, the fourth of 2017 alone, we incurred a negative $2.4 million impact to EBITDA with respect to Brazil start-up downtime and another $3 million negative impact from a client dispute. Without these Q4 results, would have been even stronger. We plan to work on mitigating these types of issues to the extent possible. To that end, in 2018, we’ll be focusing on transitioning from the construction phase of our company and refocus on operating and contracting. We’ve added Geoff Wagner to the corporate team as Chief Commercial Officer, allowing Scotty to focus on operations. We back – back from getting Siem Helix…

Thanks, Owen. And at this time, operator, we’ll take any questions.

Thank you. [Operator Instructions] Our first question comes from the line of Ian Macpherson with Simmons. Please go ahead.

Hi. Thanks, good morning everyone. My first question, I wanted to clarify regarding the Q5000 with about three weeks of downtime this quarter. I assume that’s carved out as a 270 day commitment from BP. And so that we should factor in that downtime in addition to the un-contracted quarter of time that would fall later in the year. Is that correct?

Yes. That is correct. The days for the year – while they have come off but they can be added by BP at the end of the contract, at the end of five or seven year period.

Okay. Thanks, Scotty. And then you made the comment that your recent Gulf of Mexico work has been more production enhancement biased compared to history, which has been, I guess, more abandonment-driven. How would you project that shift in the future? And what does that mean with regard to the profitability for Helix with that next shift?

I mean, if we – try and break that down a little bit. We’re seeing on Q4000 in Gulf of Mexico for instance, that’s gone from about 40% production activity to more 66%, 67% production activity. All of the work on the Q5000 is all production-based activity. And we’re seeing that, I think, because of an increase in the oil price and clients saying, that they can get a recover quickly. It doesn’t affect our profitability much because the rates are somewhat the same when we do abandonment to a production enhancement.

Okay. That’s helpful. Thanks. And then if I can squeeze in one more just with regard to – it sounds like there’s going to be a pretty a highly variable seasonal swing for Robotics as we roll out of Q1 and into the rest of the year. If Q1 is going to be comparable to Q1 of last year, but then things are getting much better for a few different reasons that you’ve articulated, are the remaining three quarters of this year possibly or highly confidently EBITDA-positive for Robotics after we moved past Q1?

I think from our expectations – excuse me, we’re seeing opportunities where in Q2 and Q3, which are our higher season that we would be in the positive range.

Okay. Thanks.

Our next question comes from the line of Vaibhav Vaishnav with Cowen & Co. Please go ahead.

Hey, good morning. Thank you for taking my question. So I guess, if I look at the guides revenues are in line or better than what was expected, but EBITDA is below. Can you help us reconcile or provide some color around that?

I think that has to do with different mix of utilization versus rate assumptions. Our costs are pretty consistent, but I don’t know without digging into it a little bit further, that would be my guess is that there is probably a dip – a departure from the rates assumed. I would assume that our budget is assuming lower rates and higher utilization and that would achieve that kind of result.

Okay. If I think assuming like midpoint of $150 million EBITDA, I’m just using 2017 rates are so like $40 million corporate loss, $50 million production facility EBITDA, may be breakeven Robotics versus the $50 million loss in 2017. That implies like Well Intervention owns about call it $155 million, $160 million EBITDA 2018, was this about $110 million in 2017. Am I thinking about it correctly or would you correct me in a significant way over the year?

Yes. I think from a high-level standpoint, I didn’t write down all your numbers, but I think you’re thinking about it directionally in the correct manner.

Okay, okay. So I guess, like the major variance will come from Well Intervention. How would you rank vessels within Well Intervention from a risk perspective that will take the EBITDA down to $135 million, which has the most risk?

Well, I think when you look at our vessels, we now have obviously the six vessels operating. We have three of the vessels with long-term contracts, the Siem Helix 1 and Siem Helix 2. We have the Q5000 that has 75% of its work in backlog. We have the two North Sea vessels, which are obviously going to be affected by the seasonal factors, but we currently expect them to have a good utilization during their core season from that perspective. So I’d say one of the swing factors that we have in the Well Intervention will be the Q4000. It’s a vessel that had been in the spot market. And I think it’s going to be really a vessel that has – that’s going to be managing the near-term opportunities from that perspective.

Just if I – just for clarification, you are implying Well Enhancer and the Seawell should have similar profitability in 2018 versus 2017?

I think in high level, we expect 2018 to be fairly similar to 2017 for the North Sea activity.

Okay. That’s all from me. Thank you so much.

Our next question comes from the line of George O’Leary with TPH & Co. Please go ahead. George O’Leary: Good morning, guys.

Good morning. George O’Leary: Good to hear that the 15K system is on the Q5000 and that alliance with OneSubsea is progressing. I guess, does that improve the profitability of the vessel meaningfully for the 2018 time frame? Just on a per day basis. How much of a needle mover is that for the Q5000?

Q5000 is just the 15K. The alliance offering of one contract is for the Q4000. And that allows us to offer a more integrated packages with more services, a one contract approach. So there is an uplift on the Q5000 for the 15K system going out to Q5000.

But I think, Scotty, that the vessels and the 15K are not an integrated package. The 15K system is sold to the client as a separate asset. So these vessels remain with their regular day rates and margins. And then the 15K revenue would be added to on top of that.

And once again, we only own 50% of the 15K.

Correct. George O’Leary: Okay. That’s super helpful. And then on the Siem 1 and 2, I just want to make sure I got these numbers right. You said the EBITDA for the Siem 1 $20 million to $25 million and EBITDA for the Siem 2, $25 million to $30 million and is that just the expectation for 2019? Or is that what we should kind of model for them going forward on an annualized basis.

I would hold off on an annualizing that going forward. Our relationship with Petrobras is improving every day. We have certain assumptions in here, given the difficulties that we’ve had in the past. We’re outperforming right now the assumptions that we’re using for our 2018 guidance. But given the difficulties of the past, we haven’t uplifted that. So I don’t know – I would give it a little while longer for the relationship to settle in and see where the profitability actually lands before I extrapolate it beyond 2018. George O’Leary: Okay. That’s fair. And maybe sneaking one more if I could. Just on the ROAM systems, sounds like good progress is being made there. And I think you said, mid-year, you can effectively be good to go with that. When do you expect that to be commercial or potentially revenue-generative for you guys?

So we haven’t included any commercial drivers in the budget for 2018 for the ROAM. The ROAM will be completed towards the end of Q2. We’re looking opportunities in the Gulf of Mexico as an added to utilization days for Q4000. And also, it’s an abandonment tool that really helps the Q7000 coming to the North Sea. So it’s not really a factor for 2018.

Well, it’s not a factor in our guidance, but – both the ROAM will be available for the second half of the year. We do have opportunities for it. Again, we’ve just been conservative and not added that to our guidance, so that just represents further upside. George O’Leary: Super helpful. Thanks for the color guys. Thanks Owen.

Our next question comes from the line of Chase Mulvehill with Wolfe Research. Please go ahead.

Hey, good morning. So I guess, the first question is, is really kind of on the Well Intervention side. Can you talk about Well Intervention and how you’re managing cost in 2018? Do you see any kind of inflationary pressure as we get through 2018?

No, if anything our cost would come down slightly.

I think one of the benefits with the alliance is we continue this integration of the Schlumberger services with Helix Services is that there’s going to be a continuation of cost-reduction across the fleet.

Okay. I guess, I’ll follow-up on the Schlumberger alliance. The more integration you have, probably the blurrier the lines get from revenue and EBITDA generation. Is there any talk about formalizing more – doing a more formalize partnership? May be a JV or something here?

Not beyond what we’ve already done, which is basically joint ownership in the assets that are co-owned.

Okay. Moving on to Robotics. You’ve got some costs coming out with the Deep Cygnus being returned and some hedges that rolled off. Can you may be quantify how much of each of those will impact in 2018? And when they start impacting?

Yes. The hedge for the Grand Canyon well has already rolled off. It rolled off at the end of Q3 2017. The Deep Cygnus, that one vessel has been return. We will have cost coming here in the first quarter after which second quarter going forward, nail cost will be hitting for the Deep Cygnus from that perspective. I think the general guidance that we gave, I believe, for the Deep Cygnus was, I believe, $10 million to $12 million benefit from that. And I believe on the hedge roll off was about in the $3 million to $5 million range.

Okay. All right. And the implied EBITDA range for Robotics in 2018 guidance, do you care to share kind of that range that was implied in the $1.35 to $1.75.

We don’t – again, to the specifics from that perspective, Chase. Obviously, we’ve said that we expect first quarter to be similar to 2017, and then see the improvements from the changes that have been made to our structure and our improved contracting on the trenching side.

The only thing I would add is that in our guidance, we are assuming significant improvement over 2017, but nowhere near the potential that we see beyond 2018.

Okay. When you say significant improvement, does that get back to EBITDA positive or breakeven?

Yes.

Okay.

Or slightly negative, one of the three.

We have a lot more contracted work for the Robotics side of business in 2018 than we did in 2017 going forward.

All right, that clears my – all right thank you.

Our next question comes from the line of Igor Levi with Morgan Stanley. Please go ahead.

Good morning.

Good morning, Igor.

Could you comment a bit on pricing trends in the Gulf of Mexico and the North Sea? And as I remember previously, you mentioned the Gulf of Mexico was still under pressure, but North Sea could see some improvements. So I was hoping to get an update.

Yes. I think if you want to break it down, I think we hit an inflection in the North Sea towards the end of 2016. 2017, we were able to see a modest recovery in rates, nowhere near historic norms. Clients are still getting a great deal. I didn’t see that potential continuing given the visibility of the work in the North Sea, I think there will be modest but very slow, improvement in rates there. Turning to the Gulf of Mexico. I think the road bricks out there are still offering the clients proposals that are keeping a firm lead on the rates. We are – as we mentioned earlier, we are seeing a shift away from abandonment near term, more to production enhancement, within that production enhancement being such as a value-adding proposition to the clients versus P&A, which is non-revenue producing. There’s potential for coming up with creative contracting term that allows us to improve margins but in the spot market on a 3 bps on a buy basis, I think it’s going to be very challenging to get the rates to move meaningfully higher. If we’re in the early – if we’re in a recovery here, it’s a very, very early and we won’t see anything meaningful, I don’t think.

Great. Thank you. And turning to the Q7000, what are the discussions likely with customers? Do you think there’s a chance you’ll take it – you’ll take delivery earlier than the year-end 2019 extension that you just recently received?

That is our hope, but there’s nothing in our guidance for the 2018 for the Q7000. Although we are pursuing a number of potential bankable contract opportunities that would allow us to bring it out early. But I think it’s too early to either talk in detail about that obviously, for competitive reasons. But also, I think, it’s too early to start assuming anything in our guidance for any kind of positive results. Again, we’re taking the conservative route, and assuming that we’re going to have the vessel idle through 2018. But we are talking with a number of potential opportunities.

Would you need to at least have a one-year plus contract to take delivery of that ahead of time?

I think that’s something that has to be assessed on case-by-case basis, depending on how strategic it is? Who the client it is? What commercial terms were? I don’t know if I can give a yes or no, answer to that.

Okay. Thank you. I’ll turn it back.

Our next question comes from the line of Haithum Nokta with Clarksons Platou Securities. Please go ahead.

Hi, good morning. Most of my questions have been answered, but I think, I’ll try it in a slightly different way. I think – yes, you pointed to North Sea rates firming for well intervention. And it sounded like what you might have in backlog for 2018 might be slightly higher year than in 2017. One, is that correct? And then two, if we see you add any incremental work for 2018 for the North Sea, should we assume that, that would be even how you rates than what you’ve booked so far?

I wouldn’t say as higher rates. I think the seasonal market for the North Sea, I think, we’ve had quickly well in hand. I think last year was possibly impacted by a high percentage of the diving work that carries the higher rate. This year, it’s uncertain as to what percentage is that going to be, but I think this year also has a potential look of generating more coil-tubing operations, which carries the higher rate. So we’ll have to make – we just have to wait, see if we see any incremental work in the North Sea. I think it’s going to have to fall into the fourth quarter. And as such, in order to entice the clients to move back out of just a strictly seasonal cycle, there – I wouldn’t expect to see the rates in the fourth quarter as being opportunistically raised.

Okay. And was there any mix shift in that region at all around work scope like the Gulf of Mexico or is it kind of what we we’ve seen?

No, it’s pretty much the same.

Okay. And then on Siem Helix 1 and 2, the EBITDA guidance, I appreciate that for those vessels. Is that assumed that both vessels are similar, call it, level of revenue utilization and uptime? Or is that kind of assumed that the second vessel is still kind of perking up through – working through the commencement?

Yes. Sort of – first from a high level obviously, the amendment that was done in 2016 set different weights for the vessels. So the vessels are at different rates and that’s built into our assumption. I think overall, our trend for the year is that it would be similar utilization and uptime for the vessels. Obviously, here, the start-up we’ve made adjustments here for the start-up of the Siem Helix 2 in the first quarter. But I think the overall trend would be similar utilization and uptime on the vessels.

Okay. And then Q7000, can you just may be map out some how the opportunities are looking? And are those kind of geographically any particular region? Or any particular work scopes? Just a little bit color on that will be interesting?

It’s pretty diverse. The vessel was specifically built for working the North Sea, so I would probably rank the opportunities in the North Sea as the highest potential. The second market that we’re chasing opportunities in is West Africa. There’s a number of opportunities in there, but West Africa is always been a market that is not quite mature to the point of requiring a long-term dedicated vessel in the region. So that’s sort of a hurdle that we have to overcome, and that it’s just a matter of negotiating and working the relationships with the client. And then I think there is potential that the Q4000, historically, has always generated the required utilization. So I would just few vessels in the Gulf of Mexico if there’s a pickup in the market activity here, then something for the Q4000 or Q7000, it’s not out of the question. Although I heard that probably that last is the potential. And then finally, I think as you’re seeing new players moving into Brazil, there is an upswing in the demand for this kind of owned asset in Brazil. Our two vessels down there are working very well. I think Petrobras is very happy. They’re fully utilized, so there’s no opportunity to add any work there. But to the extent, some new player from the region have a need and that represents another opportunity.

The vessel design allows us to move between regions as well. Remember, we have a high transit speed vessels here. So we can come down, we can work the North Sea in the summer months, and then come down to Africa in relatively quick time compared to the [Audio Dip].

This sort of goes back to the prior question as to whether or not we have required a one-year bankable contract. We have optionality with this vessel based on this technical ability to transit quickly.

Fair enough. That’s great. Thank you, if I can just actually squeeze in one more. I’m sorry. The midpoint of the guidance, does that kind of assume Q4000 is on a more or less breakeven level of utilization? It was the higher, lower kind of – based on up and downside to that?

Our assumption in there is that the Q4000 will have good utilization and it won’t be – we are not assuming its traditional level of utilization that it’s had. If it reach that that would definitely provide upside to our midpoint in our guidance.

Okay. Thank you.

And our next question comes from the line of Joe Gibney with Capital One. Please go ahead.

Thanks. Good morning. Just a follow up on that last question on the Q4000 on-spot utilization. So backlog into 2Q, I’m just trying to understand if you’re indicating full utilization in that backlog? Or the pockets between jobs, given the fact that it’s working in the spot? Just understand you’re indicating a lower run rate and certainly, what it’s enjoyed in the last couple of years, but relative to the backlog that you have secured now. So near term, is it full utilization that you’re looking for in the first quarter? Or are there gaps in the scheduling, given the nature of the spot?

In the first quarter, we have full utilization. Obviously, we always allow some breakdown allowance for each month. And we have good visibility into towards the end of Q2. And after that, that’s where we’re seeing as a spot vessel where lots of discussions going on with the clients, and could they have a strong utilization like we’ve always said or it could be slightly less. As we go into Q2, Q3, we have allowed some gaps as we work in the spot vessel. We appreciate that all clients are going to be just to follow in one after the other. So there will be gaps in the schedule. So our guidance allows us to have some gaps in the project.

Joe just a follow up on that. Just to give you a little flavor for the dynamic of the market. Historically, we would evolved probably just assumed full utilization on the Q4000 because it has always achieved it. What we’re seeing in the market right now, though, is that due to the options that the clients have given rigs. And the rates that rigs are willing to work for right now. The clients are sort of taking a wait and see attitude, knowing that they have optionality and therefore, they’re not committing to the work as early as what we’ve seen historically. It’s not that we’re not seeing the work out there. It’s just there’s a new element of uncertainty that we’re just trying to be cautious about.

Okay. Understood. And just to clarify again on the Siem vessels. I’m still a little confused. So we have the $80 million original EBITDA of expectation, and then it shifted with your initial amendment to $70 million and now this run rate of $55 million. So I mean well intervention revenue outlook, as indicated by another call, it definitely looked little better than what we would have thought. And so I’m just trying to understand the shift, I understand its developing relationship, whether it is just the cost basis as is little bit higher than anticipated for these assets out of the chute? I mean, is it the punch list related to rate that still sort of a lingering issue? Just trying to understand as to a little bit lower run rate out of the chute you’re anticipated.

It all boils down to the delay that we incurred and going on contract and the extra cost associated [Audio Dip] with the Petrobras impose penalties. All of that was accounted for as deferred mobilization, which then gets amortized over the term of the contracts. And therefore, it’s a non-cash charge to EBITDA, and that’s the difference that you’re seeing between the $70 million and the $55 million.

Okay. That make sense. I appreciate it. Thank you guys. I will turn it back.

[Operator Instructions] Our next question comes from the line of Marshall Adkins with Raymond James. Please go ahead.

Hey, Owen, a few years ago, the only question you seem to get was the impact of these drilling rigs coming down into your market and competing and I haven’t heard anyone ask that in a while. What’s the status of that? And you are pretty clear a few years back why you didn’t think they would complete it. It seems as if that assumption is right, but not as close to as you are.

All right. It’s different for each region, Marshall. The North Sea, we do not compete against the rigs, which is probably why we’ve seen the opportunity to start reaching rates back to more normalized level. In the Gulf of Mexico, though, you still have some of the lower class rigs that are sitting there and trying to avoid being stacked, and therefore, their sales efforts out there, given them a way of really low cost and you’ve got a certain group of clients that are trying to sustain that optionality in the market by awarding the work. I don’t see it as a long-term threat, but it certainly keeping rates – cap on rates. There’s no way around it. It’s hurting our rates here.

Okay. The U.S. tax reform, how does that impact you all? Is it healthy? Or is it non-issue?

Well, Marshall, we still obviously, we recording to our estimate for the year and the initial impact of that tax law. And the – I guess, impact on the forward-looking basis, it something that is still being designed. And I guess, there’s a lot of technical issues that have to be clarified from that standpoint. I think from a high level, in a normalized view, we would expect that our tax range would be obviously in the low 20%, obviously, the U.S. tax rate at 21% and then our other main region in the UK being roughly the same range. So I think long term, normalized prior to this, we were in the mid-20s. In a normalized situation, we probably expect that to do – probably in the low 20s from that perspective on the normalized basis.

Right. So a modest positive then?

Yes.

Okay. Then really this last kind of summary question here Owen for you. It sounds like just paraphrasing what if I heard you say. You are starting to see green shoots in the conversations with customers, particularly in North Sea, whereas the – even so much of an improvement that you may even consider the 7000 or early if things get even better. But is that what I heard correctly, that basically, your – the raise we’ve seen in oil price is creating more interest than you would have six months ago?

Certainly helping the cash flows from the producers, I think, the supply and demand, as I said in my color comments, I think that’s really going to dictate the pace of what’s happening offshore. I do think that the producers for two reasons are looking at doing more work rather than last one. One is related to the higher commodity pricing, we’re seeing in production enhancement work. So that’s picking the low hanging fruit for the producers. And the second is the wells can only go through so long without having remedial work done on the wells. And I think that’s also sort of catching up with the industry. I’d like to just go back a minute here. Marshall, what you mentioned on the rigs. I’ve said in the past that I don’t think that the rigs are serious long-term competitive threat to us. And that’s been the premise of our model. We still maintain a 25% to 30% of competitive advantage on time versus the rig. But in this marketplace right now, which is driven by supply chains on three rigs apply just looking at our day rate and the rig ops – not all the rig operators, some of – lot of the rig operators are being rational. But there’s a rig operator that is being a little irrational, trying to remain offset, moving less, I guess, would be the term – versus tacking a rig. And that’s the discounts that they’re offering are approaching the point where it overcomes our advantage of that 30% additional competitive range we have on time.

I think also, by adding the alliance and for the piece, it allows us contract – and just a rig and by keeping the equipment probably installed allows quick remobilizations and demobilization’s, which again adds to the efficiency that we have over rig coming in on the low day rate is spending five days to mobilizing this equipment, and then is starting against the efficiencies that we used to have. So that’s benefits that we can put out there and that mechanism is working very well to date.

I think, I also, Marshall, the third element that are maybe driving a little uptick and the volume amount of work is that we’re seeing a roll off of the legacy contracts. Whereas in the past years, we are losing a lot of work to rigs that were on long-term contracts producers. They have no drilling plans for them. Therefore, they are redoing our work. And I think you’re starting to see that roll off in over the next year or two that will accelerate and continue.

Make sense. Thank you.

And we have no further questions at this time.

Okay. Well, thanks for joining us today. We very much appreciate your interest and participation, and look forward to having you on our first quarter call 2018 in April. Thank you.