Good morning, my name is Jessica, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2011 fourth quarter and annual earnings conference call. [Operator Instructions] Thank you. Jack Jurkoshek, you may begin your conference.

Thank you, Jessica. Good morning, everybody. Thanks for joining us on our 2011 fourth quarter and year-end earnings call. As usual, a webcast of this event is being made available to the StreetEvents Network service by Thomson Reuters. Joining me today are Kevin McEvoy, our President and Chief Executive Officer, who will be leading the call; Marvin Migura, our Executive Vice President; and Cardon Gerner, our Senior Vice President and Chief Financial Officer. Just as a reminder, remarks that we make during the course of this call regarding our earnings guidance, business strategy, plans for future operations and industry conditions are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. And I'm now going to turn the call over to Kevin.

Good morning, and thanks for joining the call. It is a pleasure to be here today. But before I get into my customary opening remarks, I'd like to summarize 3 key points addressed in our earnings release. First, 2011 was a record earnings year for Oceaneering. Second, we are expecting an even better 2012 and are not changing our previously announced EPS guidance range for the year of $2.45 to $2.65. And third, we are initiating first quarter 2012 EPS guidance of $0.44 to $0.46. We recognize that may appear a little light to some of you. At this time of the year, we always seem to need to remind the investment community of the seasonality of our business especially in the Gulf of Mexico and the North Sea. We usually earn about 19% of our net income in the first quarter and 45% in the first half of the year. Our first quarter guidance is consistent with our historical quarterly earnings distribution. Now, for my opening remarks. Our 2011 earnings of over $235 million and EPS of $2.16 were the highest in Oceaneering's history. These were notable accomplishments, particularly in light of regulatory-constrained activity the U.S. Gulf of Mexico. This performance was largely attributable to our global focus on deepwater and Subsea completion activity. Our results were highlighted by best-ever operating income from our ROV and Subsea Products segments. At $484 million, our 2011 EBITDA was also a record high. In May, we initiated the regular quarterly dividend of $0.15 per common share to return a portion of our earnings to our shareholders, which underscores our confidence in Oceaneering's financial strength and future business prospects. We believe this will not compromise our ability to pursue organic growth and acquisition opportunities to expand Oceaneering's asset base and earnings capability. In…

[Operator Instructions] Your first question comes from the line of Jim Crandell with Dahlman Rose. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Kevin, if you look at this rig ordering cycle as a whole which began about maybe 18 months ago, has there been any changes in market share by region with the exception of Brazil? Or have you found that compared with prior cycles, that if you just eliminate Brazil, that your market share is as strong as ever around the world?

I think if you eliminate Brazil and also Mexico, we believe it is true, that our market share is as strong as it has been historically. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Okay, good. How about the non-rig side, Kevin? Any stab or any attempt for manned-ROV market share in the sort of vessel-oriented ROV market?

Well, the vessel-based part of the market is always been roughly 25%, give or take, of our overall utilization. There is, over time, we believe, going to be increasing demand for vessel-based ROV services on field support-type contracts and we are as we always have been focused on trying to get ROVs on vessels. I think that's a developing and longer-term event that we're very focused on, for sure. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Can you quantify, Kevin, about the opportunities out there or how many opportunities were there for manned-ROV work in the vessel-oriented ROV business in 2011? And what percentage you won of the percentage that you went after?

I really can't give any details on that. I mean, unfortunately, the vessel part of the market, as opposed to the rig part, is not as clear or as visible all the time and is pretty opportunistic. And in addition to that, a lot of these are seasonal or project-oriented so ROVs are going on and coming off continuously. So it's pretty difficult to characterize that beyond that. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Now is there any trend in the vessel-based business of either more jobs are unmanned and that companies are just selling equipment into that market and that's the majority of the market or no?

I'm not sure what you mean by unmanned. I mean, typically, we have ROVs on vessels and they are manned. It may be a call-out type situation, where you can go from job to job and there could be gas between jobs. But we would never, and I don't think the industry in general, just has ROVs out there with no people on them. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Okay, well I know you always sell your equipment with your trained personnel. I was just wondering about some of your competition FMC or others who would have more of a fail operation, if that was making inroads into that market?

No. I mean, FMC, with Schilling is definitely not a competitor in our view. I mean, they manufacture and sell ROVs to other service providers and so we don't view them as a competitor. And you know, Schilling will sell ROVs to a service competitor of ours, who will put those to work. But we already talked about our statistics and whatnot, so I think that reflects what's going on. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Okay, and then last question I had, Kevin, I know you indicated in your comments that the Panama City plant was still tough. What is your sense about improvement in that business over the course of 2012?

Well, I think 2012 is going to be a very challenging year, particularly since there hasn't been a lot of discovery activity in the Gulf that would generate any meaningful business in 2012. I do think in the longer-term, say the next 3 to 5 years, there should be an increase in opportunities here as some majors and some larger independents are making discoveries that will eventually end up with development project. So in the meantime, we continue to focus on trying to obtain foreign work for the Panama City plant and such as we have done on occasion with West Africa and Brazil. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: I mean, you would think given the ramp-up in drilling, wouldn't you, that the Gulf of Mexico market alone, at some point in the future, would provide a healthy enough activity so that utilization of the Panama City plant could be high or is it always going to be dependent upon now international work to...

I think in the future there could be enough work generated here. I mean, the problem is that, at the moment, the major operators and their very large independents are the ones who are pursuing the Gulf of Mexico in terms of exploration drilling that will produce some projects. And these are ultra-deepwater, larger projects that take 3 to 5 years from making a discovery to getting into hardware and installations and whatnot. So I think that's the timeline that we're looking at now.

Your next question comes from the line of Brad Handler with Credit Suisse. Brad Handler - Crédit Suisse AG, Research Division: Maybe a line of questioning with respect to the Subsea Projects division. How much of your revenue in 2012 do you expect to be internationally driven now? A fraction, if you would.

Brad, we're not disclosing how much since we have one job, international. We're not disclosing revenues, specifics about the BP Angola work. And it is going to be dependent upon, we're talking about we won't know the run rate of projects until the third quarter because it is going to ramp up in the first half and so we will be able to see the change and it's going to be a mix of some of the Australia contribution that will be in there from our AGR acquisition. And the BP Angola job and plus a ramp-up as we expect a gradual recovery in the vessel-based activity in the Gulf. But we're not, at this point, willing to take a flyer on how much is going to be Gulf and how much is it going to be international. I know I said only one job. We do have the Australian work but we're not at all comfortable with making forecast for that company's operations that we've only owned for a couple of months. Brad Handler - Crédit Suisse AG, Research Division: Okay, understood. Maybe you can still give -- trying to understand, as you push more internationally and maybe this is the longer-term question. How might the nature of the business change, how might the predictability of it merit perhaps a lot less for call-out work, a lot more kind of here's a certain commitment that's being made for work that will be executed over amount of time. Is that a relevant but as we think about projects going forward?

I think when you talk about outside the Gulf of Mexico, I think that is relevant. I think it is a longer-term view though in order to have some predictability in order to reduce the risk of this type of work outside the Gulf. We're looking for longer-term contracts and that is a developing aspect of the market as more subsea infrastructure is installed and requires constant maintaining than operators are going to go for year-plus or multiple year contracts in order to support that, similar to the BP contract in Angola. But that is an emerging market trend-right now and pretty hard to predict but obviously if the international work that we're trying to get is longer-term, then you would have a lot more visibility of that segment of our projects' business.

And one of the things, Brad, if we continue to be successful in growing the international fees, I would expect lower margins because of the pass-through of the vessel costs. Brad Handler - Crédit Suisse AG, Research Division: If I may, it's sort of still within this topic. I guess I recognize the sensitivity because we're largely talking about one project. But to what degree is there -- how large is the range of possible revenue recognition, revenues earned in 2012? I mean, I see there's some minimal level within your contract. How much bigger could it be off of that minimum?

Well, I think what we've contracted for is pretty clear and there's not -- I mean, there could be some upside but I would say, at this point, it would not be material. I mean, the big picture issue here is that it's going to be a relatively slow ramp-up between February 1 when we actually started the contract and probably get into the end of the second quarter will be at full speed for what we are being contracted to do. At the moment, I don't really see any huge upside variability to that. I mean, there always could be but right now it's just too early to make any predictions about that.

Your next question comes from the line of Andrea Sharkey with Gabelli & Company. Andrea Sharkey - Gabelli & Company, Inc.: Now, I was looking at the Subsea Projects' margins and if you back out from the third quarter, the $18 million gain that you guys had on the sale of the Ocean Legend, it looks like there was a pretty big sequential jump in the margins? And I was just curious if there was anything one-off going on there or that's more sort of a sustainable level, as you go forward, was that partially from the startup of Angola, what was driving that?

I don't think there's any one-off thing that is of substance and I just do caution that Subsea Projects is a very evolving segment right now with the acquisition of the operation in Australia. And the startup of the operation for BP in Angola. We are adopting a wait-and-see kind of attitude as to what our margin run rate is. I would not take the fourth quarter and extrapolate it. I think it's really going to be until we get to the second half of the year to truly appreciate what that segment is going to go. I know that makes modeling difficult and we respect that. But we're facing the same issues in trying to do our forecast. Andrea Sharkey - Gabelli & Company, Inc.: Sure. That's understandable. And then, I guess, just looking at the range of your EPS guidance. What's the sort of the swing factor that takes you from the low end to the top end? Is it just how fast Gulf of Mexico comes back or are there other things that are in there?

Well, I think that certainly securing the BP Angola contract, removes a lot of speculative risk out of our forecast. But there's still a substantial speculative work in the overall company plan. And so it would be very premature to make too much out of that, at this point in time.

And I think one of the things that I mean, we think projects and the recovery in the Gulf of Mexico, the rate that the BP Angola work ramps up, how much of the speculative work that we have for umbilicals and the timing of those awards and how soon they can be prosecuted and be recognized as revenue. But the main thing I'd like to point out is if you take the midpoint of our guidance range, we are saying we've got a 4% upside and a 4% downside. And 10 months out from the end of the year, I don't think 4% is too wide a range. So there's a lot of moving pieces within our segments and a lot of speculative work that we expect. So while we're absolutely positive that being awarded the BP work did derisk projects, there's still a lot of other assumptions that are not in backlog.

Your next question comes from the line of Jon Donnel with Howard Weil.

I was wondering if you could give us a more details on the AGR acquisition and kind of specifically, some of the metal offerings that this brings to your inspection of Asset Integrity division now. I know you talked about the previously about the subsurface inspection tool. How does that fit in with what you have now? How's it provide new opportunities for markets you're currently working with the Gulf of Mexico? And how might that creates some pull through from your other business segments, if any?

Well, I would start by saying that we've had the business for like 7 or 8 weeks or something so we're still pretty much gone through the organizational integration aspects of this thing. I think I've mentioned previously that both companies have started down the path of developing some subsea and inspection tooling technology and that is the focus that we're going to have trying to further develop that and then deploy that is just way premature to make any prediction about what that means in money terms, I think. And I think that the other thing I would say is that AGR was a lot more leveraged to the Asset Integrity part of the business as opposed to the NDT part of the business. The Asset Integrity being higher value, higher margin and so we are certainly going to be trying to leverage off of that to increase that portion of our business.

Okay, so kind of along those lines too. Given their current basis and their operations in Australia, how do you think about that in terms of going forward? I know it's been a pretty small focus for you guys in the past. Does this give you the opportunity to be bringing in more of your service offerings into that market here? Or is that something longer-term that is going to be less of a focus for the AGR side of the business?

Well, I think we're going to be very focused on what we can leverage out of AGR's Australia footprint. I think that our current presence in Australia is also relatively new on the non-AGR side. I mean, we recognize that this is a quickly developing market. And while we've operated in Australia off and on for probably 40 years, we've recently really tried to ramp up. And we are starting to win contracts and we have very high expectations for the added growth that Australia, as a region, can provide to us. And we view the AGR piece as another aspect of that, that we'll be trying to combine and leverage.

And our existing operations, John, were basically based out of Perth. And we feel like their Darwin logistics base is a good opportunity for us to provide a home for some assets and use as a platform perhaps for callout work, for tooling and even maybe vessel-based ROVs.

Your next question comes from the line of Tom Curran with Wells Fargo.

Starting with ROVs, two-parter. First, of the incremental ROVs you expect to deploy, so the new builds net of retirements that you expect to actually go to work, what percent do you expect to be deployed for drill support? And the second part of the question is, as you look out over the next several years, given the disproportionate portion of the high-spec new builds that will be heading into Brazil, what gives you such a high level of confidence that you'll be able to defend your 70%-plus historical market share, given some of the uglier pricing-based competition we've seen there recently?

Okay, the first -- answering the first question, we currently have firm contracts for 17 new ROVs that we expect to place into service during 2012, 10 are for rigs, 4 are for vessels and 1 each are for a spar, tension leg platform and a drill barge. And obviously, some of these expected start dates could slip into 2013 but that is as well as we could see at the moment. We are obviously pursuing opportunities on additional rigs and vessels and believe we may secure more work commitments for additional ROVs to be place into service during the year. Now your question about Brazil was, could you just restate that for me, please?

Sure. Kevin, in your opening remarks, you had expressed high level of confidence in being able to defend your current share of 72% on the global high-spec rig fleet. And as we look out over the next few years, of the new builds in the construction queue, the majority are going to be heading into Brazil, where least recently, you have suffered share loss because you haven't felt the pricing required to win reflects the value that you provide. And so I'm wondering where the confidence comes from that as we see the high-spec, the global high-spec fleet as it expands, as it shifts ever more heavily towards Brazil, how are you going to defend your share?

Well, I think what we stated was our current percentage of that market and our belief that we see no reason that we shouldn't maintain a dominant share in that segment, I don't think we said we were going to keep the 70%. But specifically, with respect to Brazil, I mean, it is true that, that area is pretty challenging commercially. There no doubt will be another award for a large number of systems there. And depending on who wins that, that will be a further indication of what's in store for us there. But we do not believe that it is worthwhile for us to pursue low-margin work in Brazil for Petrobras. It's a very difficult operating environment. I think the news is full of folks that have stumbled on increased costs and all kinds of other logistical issues, and I think we've got a good business there. We still have, I think, in the 40 percentile region of market share in Brazil. And we do continue to win some jobs there at prices that are attractive to us. So we're going to maintain that strategy. So I guess to recap, I think if you discount Brazil or don't talk about Brazil, we certainly believe that we'll maintain the dominant market share that we have enjoyed in the ultra-deepwater fleet. And Brazil is an evolving deal. I mean, they're making big orders for lots of things. And my personal observation is that for a place that is really just trying to start up, a lot of industry for local content in developing their own economy, they're ordering a lot of stuff, expecting it in a time frame that I will be very, very surprised that if they're able to achieve it.

Okay. Turning to Subsea Products, could you quantify for us how much you've improved Multiflex's run rate margin at this point?

No, we really don't break that out. There's too many pieces within the whole Subsea Products' basket of companies and things that we do. It would just be a nightmare.

Okay. Then turning to IWOCS, maybe an update there on the current total fleet size and where those assets are deployed by market?

We've never really given that out. I mean, it is predominantly Gulf of Mexico. We do have some reasonable international exposure, and we are continuing to try and grow that part of it. I think the IWOCS business was very strong in 2010 and in 2011. And we do expect that to decline in 2012 because initially, in the Gulf of Mexico, when it was difficult to drill an exploration well, it was pretty easy to get a permit to do other things that required the IWOCS business. So I think there was a level of business there that is not sustainable.

Okay, and are those assets readily redeployable?

Some are. I mean, it really depends on the region of the world where they go. I mean, some of them are kind of Gulf of Mexico specific in terms of water depth and certifications and whatnot. But I don't see that -- I don't see the inability to provide a system to some international location as being an impediment to our growing that business.

All right. And then last one for me, Marvin, how about just an update on the M&A pipeline and in particular, the prospects out there internationally?

You know, we don't have a pipeline that like others we can quantify how many hundreds of millions we're going to spend any given quarter. Right now, we are continuing to look. You stated it. Our focus is international, and what we're really looking for is something in the Subsea Products segment that has a service component so we don't have to deal with just a manufacturing margin and higher risk of execution as we've read about recently. So we're focused on continuing doing what we're doing. We had almost $300 million, $290 million of acquisitions in 2011. We'll just see how well we can keep that rate up, that was an extraordinary feat and -- but we're still out there with growth in our operations being our #1 objective and focus primarily on organic being augmented with acquisitions.

Your next question comes from the line of Edward C. Muztafago with Societe Generale.

I got on the call a little late so pardon me if you've already talked about this a little bit. But we've kind of heard over the course of 2011 here some of the subsea equipment manufacturers announced delays in shipments and project delays. And so I was wondering if you could just talk a little bit higher level as to how the risk of further slippage or equipment delivery delays kind of plays into your 2012 outlook and guidance and both specifically with respect to the ROVs and Subsea Products because as you indicated, the tree sales are a driver of demand, and so they're longer lead time, I think, than some of your products. So maybe you could just kind of walk us through your thought process there?

Okay, there's a couple of pieces there. I think with respect to the ROV business, I don't think there really is too much there really is the rig deliveries and their construction schedules. And I think there's pretty good visibility that obviously if they slip, then a start date for a contract that we may already have is going to slip along with it. So far, that has not been a driving factor in our ability to put ROVs to work because the vessel side of that kind of takes up the slack. With respect to products, it is true that the trees are generally longer lead-time item. But they're -- I think the difficulties and the issues that some folks have been having are not really reflective of a, our business; or b, even if we are providing some connection hardware or something to the same project, because usually these difficulties end up appearing pretty near the end of the project, orders are already in, deliveries are made, and so far, we have been fortunate not to have any significant impacts of our own in terms of inability to deliver.

Okay, that's helpful. And then maybe just as a second question if we can sort of flip back to Brazil a little bit. There's obviously a fair amount of chatter about subsalt development going horizontal there. And clearly, one of the implications is that they'll ultimately need less rigs to develop the subsalt reserves. Can you just talk generally speaking as to how that type of a genesis might play out for you and maybe even potentially if rigs go to work elsewhere, is that more beneficial than if they were to physically be working in Brazil?

Well, if they went to work somewhere else outside of Brazil, I think that's favorable in our view, whether there is any opportunity for Petrobras to reduce the number of drilling rigs they currently think they need to do their development programs or not, I really couldn't comment on that, I don't know. But I mean, obviously, if they can reduce that, then that's less ROVs. But presumably, we'd be looking to see whether those rigs can be utilized elsewhere in the world.

Your next question comes from the line of Daniel Burke from Johnson Rice. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: I have a question on the Subsea Products. If we look at Subsea Products and the revenue growth rate you enjoyed excluding umbilicals in 2011, you mentioned IWOCS but what reasons are there to believe that revenue growth rate would overall decelerate here in 2012 given the capital investments you're making in that sector?

I don't think there is a reason to believe that the growth rate or the sustainability, I think Kevin mentioned about IWOCS not being having a very good year in '10 and a very good year in '11. And we believe there is some aftereffect that when rigs go back to drilling exploration wells, they're not going to be using the IWOCS units as frequently as they had been. Other than that, I think your premise is pretty sound with the investments we've been making. We think that tooling and Grayloc and rotator valves and all of those specialty items that we provide will continue to grow. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Okay. And then switching to products on the margin side. I guess my presumption, I know you've made substantial improvements at Multiflex. But I guess I assumed in '12 that the Multiflex was probably -- or excuse me, '11 that Multiflex was probably towards the lower end of the margin range within products. I guess, what are the dynamics that could allow products' margin to decline in '12 given the healthy growth rate in revenue from the non-umbilicals side?

Well, it really is a function of mix and the predominance of umbilicals versus the rest of the Subsea Products offerings in that. And there still is roughly 50% worldwide umbilical plant capacity that is not being used at the moment. And so that is keeping margins pretty tight. And so until or unless that significantly changes, the margins on the umbilicals side are not going to see any dramatic improvement. I think maybe our ability to win more work will help us on the volume side in the amount of contributions that umbilicals solutions does provide to that segment.

And Daniel, while the non-umbilical side is growing, we are expecting the product mix in '12 to continue to shift to higher throughput on umbilicals. So while Panama City plant has been discussed and is facing a challenging market, we're expecting more throughput from our U.K. facility and our Brazil facility. So we look at the mix continuing to change being driven by higher throughput. And Kevin mentioned that while we're not forecasting any significant change in our margins, we could see products a little bit lower as the mix of umbilicals continues to strengthen.

Your next question comes from the line of John Lawrence with Tudor, Pickering, Holt. John D. Lawrence - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just on the 20 to 25 new builds for 2012, could you remind us of your capacity for additions? And then I think you raised it from -- you had 15 to 20 last quarter. I think you raised that. Is that correct? And then finally, would you consider raising it again if the market is strong enough?

We'll build as many as the market will take, that's for starters. I think we have not, so far, experienced any situation where we have not been able to deliver or provide in ROV even for emerging opportunities that we didn't see from a distance in order to satisfy a contract requirement. In fact, quite the opposite, we have won contracts because of our ability to quickly provide a system that probably most others would not be in a position to do because we have such a strong supply chain, and we're just able to ramp it up or ramp it down. So while I don't think we give any particular number as to what our capacity is, it's certainly a lot more than 20 to 25. And unless there was just some dramatic demand coming from someplace that I can't even fantasize, I would not see that as a problem for us.

We have said before that we could build 3 a month, if we needed to and yes, as Kevin said, if capacity is not a -- let me add another shift and push more ROVs through. And these are ROVs being placed in service. So most of the time, we're talking about a delivery that occurred or is going to occur early so that we can get it on if it's going to a new build rig. And since we said we had 17 contracts, we thought there was more upside to -- than adding 15 to 20 when we did change it to 20 to 25. But -- then I've been asked, why didn't you change your guidance? It's because there is a lot of speculation as to the exact date some of these rigs and vessels go to work. So we still have, and we have a lot of spec work in our ROV forecast. So we did go from 15 to 20 last quarter to 20 to 25 being added during '12. John D. Lawrence - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay, that's helpful. And then just switching gears to the AGR business. Is that going to see typical North Sea seasonality?

I think that -- I mean, there certainly is North Sea seasonality. Whether it is as dramatic as it has been historically, I'm not sure because right now, I think there is an increased emphasis on collecting data and doing asset integrity. We see an increase. That's part of why our 2011 was better than 2010. And so when demand is coming up like that, it tends to overwrite some of the -- what used to be seasonality. So it's kind of difficult to really peg that too closely there.

Directionally, the answer in our forecast is yes. We will see that kind of seasonality. Remember, in the first quarter -- I mean, most of the inspection first of all is in Norway, and they are weather challenged in Q1, and most of the activity occurs in the second and third quarter, tailing off again in the fourth. The other thing I might say is that we would expect lower margins in Q1 because we're still going to be incurring some integration costs in Q1 as we sort out how we best run our combined businesses.

There are no further questions at this time. I'll turn the call back over to the presenters.

Thank you very much. We appreciate your interest in Oceaneering.

Take care, guys.

This concludes today's conference call. You may now disconnect.