Helix Energy (NYSE:HLX) Solutions Group, Inc. (HLX) reported an encouraging financial performance for the second quarter of 2024, with revenues reaching $365 million, gross profit at $75 million, and net income standing at $32 million. The company's adjusted EBITDA was recorded at $97 million. Helix Energy Solutions highlighted the strong performance of its Well Intervention and Robotics segments and the successful deployment of the Q7000 vessel in Australia. The company has updated its full-year 2024 revenue guidance to $1.25 billion to $1.4 billion and adjusted its EBITDA forecast to $270 million to $330 million. Additionally, Helix Energy Solutions has revised its capital expenditure (CapEx) forecast downward to $60 million to $80 million.
Key Takeaways
- Helix Energy Solutions Group reported Q2 2024 revenues of $365 million, gross profit of $75 million, and net income of $32 million.
- Adjusted EBITDA for the quarter was $97 million.
- The company's Well Intervention and Robotics segments showed strong results, contributing significantly to the financial performance.
- Updated 2024 guidance projects revenue between $1.25 billion and $1.4 billion, with adjusted EBITDA ranging from $270 million to $330 million.
- CapEx forecast for 2024 has been reduced to $60 million to $80 million.
- Helix Energy Solutions has strong cash and liquidity positions, with $275 million in cash and $370 million in total liquidity.
Company Outlook
- The company anticipates the second half of 2024 to be comparable or slightly stronger than the first half.
- Helix Energy Solutions expects to achieve $20-30 million in share repurchases as part of the 2024 program, with $5 million already completed in Q2.
- The company plans for significant growth in EBITDA in 2025 following the replacement of legacy contracts with current market rates.
- A 40% increase in rates in Brazil and a 20% rate increase for the Q5000 are anticipated in 2025.
- Helix Energy Solutions expects to have over $300 million in cash and substantial free cash flow in 2025, aimed at acquisitions and share repurchases.
Bearish Highlights
- The shallow water decommissioning market in the Gulf of Mexico has underperformed expectations.
- The company has experienced a soft year and is adjusting its resources due to softer market conditions.
- EBITDA guidance for the remainder of 2024 remains conservative, factoring in seasonality and weather-related impacts.
Bullish Highlights
- The US robotics sector posted its strongest quarterly revenue in nearly a decade.
- The company is negotiating longer-term contracts for well intervention assets at higher rates.
- There is a good pipeline of trenching opportunities for the upcoming winter season.
- Helix Energy Solutions is optimistic about a demand rebound in the shallow water Gulf of Mexico abandonment market in 2025.
Misses
- Year-to-date free cash flow was impacted by a $58 million alliance earn-out payment in April.
- The market's softer performance has required additional cost to maintain capacity for an anticipated future rebound.
Q&A Highlights
- Helix Energy Solutions is in advanced discussions to secure market rate contracts for well intervention assets.
- The company is considering adding more assets to meet the growing demand in the wind farm market.
- They acknowledge the uncertainty in the shallow water Gulf of Mexico abandonment market but remain optimistic for the future.
- Seasonality and the timing of asset mobilization and transit will influence the financial performance in the fourth quarter.
InvestingPro Insights
Helix Energy Solutions Group, Inc. (HLX) has demonstrated resilience with its second-quarter results, and the updated guidance provides a positive outlook for investors. To further enhance the understanding of the company's financial health and stock performance, let's consider some key metrics and insights from InvestingPro.
InvestingPro Data reveals a significant revenue growth of 37.28% over the last twelve months as of Q1 2024, with the latest quarterly growth at 18.44%. This aligns with the company's reported strong performance and updated guidance for 2024. The adjusted market capitalization stands at $1.91 billion, reflecting the company's current valuation in the market.
Despite a challenging environment, Helix Energy Solutions has managed to maintain a price to book ratio of 1.3, which can be appealing to value investors looking for assets potentially priced below their intrinsic value. Moreover, the company's stock has experienced a large price uptick over the last six months, with a total return of 25.15%, nearly reaching its 52-week high at 96.09% of the peak price.
InvestingPro Tips highlight several factors that investors should consider. Analysts predict that Helix Energy Solutions will become profitable this year, which could be a turning point for the company. Additionally, while the company does not pay dividends, its liquid assets surpass short-term obligations, suggesting a robust liquidity position that could support operations and growth initiatives.
For investors seeking more comprehensive analysis and insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/HLX. These tips indicate that while the company operates with a moderate level of debt and suffers from weak gross profit margins, its net income is expected to grow, and the stock price has been quite volatile. Investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to all 10 InvestingPro Tips that can further inform investment decisions.
Full transcript - Helix Energy Solutions Group Inc (HLX) Q2 2024:
Operator: Thank you for standing by. My name is John, and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Second Quarter 2024 Helix Energy Solutions Group Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Brent Arriaga, Chief Accounting Officer. Please go ahead.
Brent Arriaga: Good morning, everyone, and thank you for joining us today on our conference call for our second-quarter 2024 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO, Ken Neikirk, our General Counsel, and myself. Hopefully you've had an opportunity to 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 page on our website at w. www.helixesg.com. The press release can be accessed under Press Release tab and the slide presentation can be accessed by clicking on today's webcast icon. Before we begin, our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken.
Kenneth Neikirk: During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends and business or financial results. All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions and factors, including those set forth in slide 2 of our presentation in our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q and our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statements and disclaims any written or oral statements made by any third party regarding the subject matter of this conference call. Also during this call, certain non-GAAP financial disclosures may be made in accordance with SEC rules and the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation, the earnings press release, our annual report on Form 10-K and a replay of this broadcast will be available under the for the Investors section of our website at www.helixesg.com. Please remember that information on this conference call speaks only as of today, July 25, 2024, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. Scotty.
Scotty Sparks: Thanks, Ken, and good morning, everyone, and thank you for joining our call today. We hope everybody is doing well and those in Houston and recovering from the storm, we thank our Houston staff for their efforts during the recent weeklong power outages. This morning, we will review our second quarter highlights. Financial performance and operations will provide our view of our current market and update our guidance for 2024, the teams offshore and onshore outperformed again safely producing another well-executed quarter. Moving on to the presentation, slides 6 and 7 provide a high-level summary of our results and key highlights for the quarter. Our second quarter results improved both sequentially and year over year. Revenues for the quarter were $365 million with a gross profit of $75 million and net income of $32 million compared to $296 million in revenue, $20 million in gross profit and a net loss of $26 million in Q1 of 2024 and $309 million in revenue and $55 billion of gross profits and a net income of $7 million in Q2 2023. Adjusted EBITDA was $97 million for the quarter, and we had negative operating cash flow of $12 million, resulting in negative free cash flow of $16 million. Both results include $58 million of the $85 million alliance earn-out paid out in cash during the quarter. Excluding the impact of the earnouts are operating cash flow would have been $46 million and our free cash flow would have been $42 million in Q2. Likewise, our year to date results show significant improvements. Over 2023. We generated revenues of $661 million gross profits of $95 million, net income of $6 million with adjusted EBITDA of $144 million a year to date, net income increased $21 million in pre-tax losses related to the redemption of our remaining 2026 convertible notes during the first quarter. Our cash and liquidity remains strong with cash and cash equivalents of $275 million and liquidity of $370 million at quarter end. Highlights for the quarter include strong results in Well Intervention across all regions, strong results in robotics, including some well-executed trenching projects, the successful initial deployments of the rise of the site from water abandonment module in Australia, from operations from the Q7000 and strong results from production facilities. Slide 9 provides a more detailed review of our segment results and segment utilization in the second quarter of 2024. We continued to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, Africa, the Gulf of Mexico and the US East Coast. Our overall second quarter results were in line with expectations driven by strong performance from our core well intervention markets and robotics groups. Our shallow water abandonment results were impacted by a later start to the season due to the weather and timing of operative spending. Moving to slide 10, slide 10 provides further detail of our Well Intervention segment. We achieved strong utilization in the Gulf of Mexico, the North Sea (NYSE:SE) and Europe, Brazil and Australia. Performing very well with solid overall uptime efficiency of 98.9% for the quarter. The Q7000 performed extremely well with 100% utilization working in Australia with the successful deployment of the round. The vessel is expected to continue working in Australia for the second half of this year and then commenced transit to Brazil for the share of the commission and campaign. We had solid utilization for both units in the Gulf of Mexico with the Q4000 now due to complete works in Q3 and then scheduled to commence pay transit to Nigeria for the, so minimum six month well campaign due to commence in the fourth quarter. Moving to slide 11, slide 11 provides further detail of our robotics business. Robotics had an exceptional quarter. The business performed at high standards operating six vessels during the quarter, working between trenching and ROV support site seven, current work on renewables and oil and gas projects globally, all six vessels worked on renewables related projects within the quarter or vessels had strong utilization with three vessels working on renewable trenching projects. So those vessels trenching in Europe and one trench and in Taiwan, we are now well into the trenching season globally and expect high utilization for the rest of the year, excuse me, across the fleet, which we anticipate will lead to robotics had another strong year. Slide 12 provides detail of our shallow-water abandonment business. In Q2, the shallow-water team had a late start to the season than expected due to unexpected weather conditions in the shallow water Gulf of Mexico as well as the general near term softening in the shelf abandonment markets. This resulted in less than expected utilization for the die floats, the heavy-lift barge and P&A spreads. Also in Q2, we recommenced work back on the larger four field decommissioning project after the winter break with the project schedule to utilize the Epic Hedron heavy-lift barge, along with some of the dive vessels support vessels and P&A spreads. In summary of and then the slow start to shallow water operations we are pleased with 2024 with year-over-year improvements in our overall results. Our business segments are positioned to benefit from the expected increase in activity during Q3 and into Q4, as we look forward to 2025, we expect to benefit from some of our larger well intervention assets coming off legacy contracts and pricing at market rates. We believe we are well positioned to benefit from market improvements and our customers' continued belief in the value we deliver. I would like to thank our employees for their efforts and high level of execution, delivering safe and efficient operations for our customers has established us as a leader in our industry. I will now turn the call over to Brent.
Brent Arriaga: Thanks, Scotty. Moving to Slide 14. It outlines our debt instruments and key balance sheet metrics. As of June 30, funded debt at quarter end was $328 million. At quarter end, we had cash of $275 million and availability under the ABL credit facility of $95 million. With the resulting liquidity of $370 million, we have net debt of $44 million at quarter end. During Q2, we settled the earn out related to the Alliance acquisition, paying cash of $85 million, $58 million of that flowing through our operating cash flow. I'll now turn the call over to Erik for a discussion on our outlook for 2024 and beyond.
Erik Staffeldt: Thanks, Brent. On second quarter and year-to-date performance and our expectation and the strength of the offshore energy market. We are updating our guidance on certain financial metrics from our forecast revenue. Our revenue guidance is $1.25 billion to $1.4 billion, EBITDA, $270 million to $330 million. We have maintained our EBITDA guidance with the improvement in our legacy business units offsetting our lower near term outlook in the shallow water segment. The concentration of our remaining variability exists during the fourth quarter with the uncertainty of the season, free cash flow, we're increasing our guidance to $90 million to $125 million. This includes $58 million impact from the earn-out made in early April. Excluding the impact of the earnout, our Q2 free cash flow would have been $42 million. And accordingly, our 2024 free cash flow guidance range would have been benefiting from working capital inflows. We are reducing our CapEx forecast to $60 million to $80 million. Lower guidance is based on pushing approved amounts into 2025. Our spend continues to be a mix of regulatory maintenance on our vessels and a fleet renewal of robotics. Moving to slide 17. The Well Enhancer completed its scheduled dry dock in Q1 and HP1 completed its drydock in Q2. The Q7000 will have a maintenance period during its mobilization in Brazil, possibly spanning parts of Q4 and Q1 2025. Our full year CapEx forecast continues to be weighted towards regulatory maintenance, which primarily falls into the operating cash flow. Reviewing our balance sheet, our funded debt stands at $328 million. Our next significant maturity is not until 2029. We are still targeting $20 million to $30 million of share repurchases in our 2024 program with $5 million completed in Q2 and $10 million year to date. Our quarterly financial performance in 2024 is expected to follow similar cadence as our '23 results with the second and third quarters likely being our most active quarters and first and fourth quarters impacted by winter weather. Overall, with anticipated impacts of the Q4000 transit in Q3 and the Q7000 transit in Q4, we expect the second half of 2024 to be on par or slightly stronger than the first half. Our year-to-date free cash flow was a positive $45 million and would have been significantly higher if not impacted by the $58 million alliance earn-out payment in April, providing some key assumptions by segment and regions for the balance of the year. Starting on slide 18. First, our Well Intervention segment. The Gulf of Mexico continues to be strong market, supporting improving rates and expected strong utilization on the Q4000 and Q5000, the Q4000 has contracted work in every quarter this year with limited white space to fill that schedule. The Q4000 has contracted work into Q3. The Gulf of Mexico vessel is scheduled for an estimated 60 day transit and mobilization to West Africa for a minimum six month contract in Nigeria with paid mode and . In the UK North Sea, we expect good utilization for most of the year. The Well Enhancer Sea will have contracted work through Q3. We are anticipating a return to seasonally adjusted utilization in the winter months in the North Sea. The possibility of winter season utilization provides support for the upper range of our targets. Q7000 is currently working in Australia with projects scheduled for three different operators and projects are expected to continue into late Q3, followed by scheduled transit to Brazil and mobilization for its contracted work in Brazil expected to commence early 2025. In Brazil, the Siem Helix two is contracted into mid-December of 2024 with Petrobras, the Siem Helix one is contracted performing well. Abandonment work for Trident into Q4 of 2025. We expect to benefit from the Trident contract extension at market rates in 2025. Moving to robotics, the body segment continues to benefit from the tight market. Both oil and gas market and renewables market, extremely active competing for assets. A-Pac region has both the Grand Canyon two and Siem Topaz supporting renewables projects and Taiwan scheduled last into the second half of 24 Siem Topaz and the T1400-1 trencher are contracted and expected to remain in Taiwan through mid Q4 of 2024. In the North Sea, the Grand Canyon three is performing trenching projects is expected to have strong utilization into Q4. The North Sea neighbor has contracted operate trenching operations in Q3 and Q4 to grow more wave is forecasted to have good seasonal utilization performing site storage operations. In the US, especially of our lines in the US East Coast, providing wind farm support moving to production facilities. The HP1 is on contract with balance of '24 with no expected changes. We have expected variability with production as the Droshky field continuously, continuing to shallow water abandonment. We continue to anticipate this to be a seasonal business with higher Q2 and Q3 activity. And we are currently seeing more than expected variability in operator spending shelf decommissioning as a call-out business. But given customers' needs and continues reversion of properties through bankruptcies long term, we still believe in the solid foundation for this market. At this time, I will turn the call back to Owen for a discussion on our outlook beyond 2024 and for closing comments
Owen Kratz: Thanks, Eric. Good morning all. We've provided you a lot of better insight into our outlook for 2024. Our team has performed well, delivering solid financial performance in most of our segments. As we begin the third quarter, we do have some noise impacting our outlook for the second half of '24. First, we're expecting to incur more than 150 days of transit and mobilization as we deployed the Q4000 to Nigeria and the Q7000 Brazil, even though these projects have paid mobilizations accounting treatment requires us to defer to defer the mobilization fee and costs during the mobilization period and recognize it over the life of the project. This is expected to shift approximately $20 million of EBITDA into 2025. Second, the soft shallow water decommissioning market in the Gulf of Mexico. That segment has underperformed to date this year. But as mentioned, with customers' needs and reversion of shelf properties, we still believe in the foundation for the market long term based on the strength of the overall global OFS market. We're not altering our existing guidance other than sharpening our projected free cash flow and capital spend. Looking ahead for the balance of '24 and into '25. We're near that point for the legacy rates that were secured during the downturn to begin to roll off and be replaced with current market rates as previously announced, we're in advanced discussions with multiple customers with expectations of market rate contracts on several of our well intervention assets, which would achieve meaningful growth to our EBITDA for 2025 and secure utilization for multiple years ahead. More specifically in Brazil, we expect to see a 40% increase in rates year over year going into 2025 with utilization out into 2028. The Q7000 is expected to work in Australia through Q3 and then transit to Brazil beginning early Q4. Once it begins its Brazil operations, we expect to generate an EBITDA contribution per utilized day some $50,000 to $70,000 a day greater than what we expect to achieve in 2024, subject to the actual timing of the transit from Australia to Brazil. Go forward rates have escalators for the term through 2026 with options beyond. In addition, with legacy contracts rolling off in the Gulf of Mexico, we expect an approximate 20% rate increase on the Q5000 starting in 2025. The Q4000 is scheduled to transit to Nigeria starting early August with the contract there beginning in late September, early October. The term of the work is six months with mutual options to extend. There's further demand for work in West Africa and depending on the demand in the Gulf of Mexico and rates achievable, we'll make the area of deployment decision next year or otherwise may see added capacity. These are examples of the tailwinds we're seeing it's too early to be precise. But based on what we know now, we would expect well intervention on its own to add in the range of $60 million to $100 million of EBITDA for 2025 over 2024. In our robotics business, we're seeing a robust market in general with supply tightening further trenching. The cables and the wind farms is currently the most significant driver in our profitability. There's good visibility on the pipeline of projects out through 2028 with year-over-year growth in the market each year. We've already contracted some work as far out as 2027 and are in discussions about awards for 2028. For 2025, we expect continued strong performance from our robotics group with the potential to deploy our last available trencher, which was idled during all of 2024. We've already secured a second vessel for site clearance starting in 2025. And based on the work that we're seeing coming in the pace of our awards, we'll likely look to add a third boulder grab for site clearance work in the wind farm market. Adding UXO clearances, enhance our offering to the market for site preparation. Overall, we continue to be excited about the Robotics segment led by leveraging our expertise within the larger renewables market and potential for further growth there. The status of the shallow water Gulf of Mexico abandoned market is hard to forecast at this time. The work, certainly there to support a strong market for a long time to come. Following the bankruptcies of Field wood, the market got off to a rapid start, excuse me, producers have pulled back in 2024 to reassess the pace of the work going for. The bankruptcy has added significantly to the work that needs to be done, but delays over settling the bankruptcy delayed the majority of the start into 2025. As a result, 2024 will be an off year compared to 2023 and likely more in line with our original guidance for that business, given at the time of the acquisition, work on both field wood and Cox properties are expected to come to market in 2025 we would not expect the frantic pace of 2023 to be repeated by any one producer, but a greater number of producers are likely to put work to the market each at a slower pace, compared to the first half of 2024, we do expect to see a rebound in demand on a more sustainable basis, even if it's not at the 2023 level. The EBITDA contribution from our production facilities may drop in 2025, consistent with the decline in the production rates from our two fields. We do remain and constant dialogue with producers about adding additional wells to our production backlog as more fields approach the end of their life. This is purely an opportunistic alternative for producers as a means of dealing with their abandonment liabilities. And as such, we don't model the potential upside into our forecast. On a final note, if the market behaves as we think in our assumptions based on current information hold, Helix should in 2024 with approximately $300 million in cash on the balance sheet and beginning in 2025, our free cash flow generation could be well over $200 million for the year. This provides meaningful dry powder. Barring a major event, we'll consider deploying cash to a bolt-on type of acquisitions in our existing business units where we see it to be accretive and sustainable and be continue to repurchase our shares under our approved share repurchase plan as always, we'll remain open to and explore all opportunities to further value creation for our shareholders. We're looking forward to a strong 2025. Eric?
Erik Staffeldt: Thanks, Owen. Operator, at this time we'll take questions.
Operator: [Operator Instructions]. The first question comes from the line of Sherif Elmaghrabi from BTIG. Please go ahead.
Sherif Elmaghrabi: Thanks for taking my questions, starting with Well Intervention, you've given some drilling rigs are dealing with white space in their schedules. Are you seeing some rig operators start to bid on Well Intervention contracts? And is that something that's more prevalent in some basins versus others?
Scotty Sparks: I'll take that. Good morning, and we are seeing some longer-term contracts fill for rigs and operators using the white space to undertake some well intervention But as we've said on the call, we're expecting high utilization for the coming years at better rates, better market rates as we come off these legacy contracts. And we're seeing high utilization. You also have to remember in the North Sea, we're not really competing against drilling white spaces or different diver based operations.
Sherif Elmaghrabi: Thanks. And on the robotics side, the US posted its strongest quarterly revenue in about 10 years. Some of that is due to seasonality. Can you remind us of the typical seasonal cycle for robotics? And is that changing as you start to taper off related to that?
Scotty Sparks: So robotics is it can be seasonal. And this year, we have a very good backlog of trenching works going into 2025 and through the winter season, but it's basically where we're working in wind farms that are generally in shallow water that can lead to seasonality and winter breaks on the trenching side of the business. So much of the ROVs are on longer-term contracts and continue for the winter works. So it's mainly the trenching side that can be affected through seasonality. But this this winter going up into the fourth quarter. We expect a very strong season and we have a very good pipeline of that for the trenching and the trenching business used to be short contracts. We're now looking at some contracts that a number of years and looking well out to the future. We have a very good pipeline of opportunities for the trenching business.
Brent Arriaga: Okay, I appreciate that color. Thanks for taking my questions.
Scotty Sparks: You're welcome.
Operator: The next question comes from the line of Josh Jayne from Daniel Energy Partners. Please go ahead.
Josh Jayne: Thanks. Good morning. First question that I wanted to ask just now when I look at the last couple of weeks, notable offshore drillers have announced contracts that show not only continued dry dock improvement but also, in some cases, some willingness on the part of operators to term-out assets into 2027 and 2028, even with today's day rates you've talked to on the last couple of calls about how we'll see higher rates for well intervention and Owen just alluded to it as well with the $60 million to $100 million increase in EBITDA. I'm just curious, could you talk about and discussions for further work have accelerated here in the last three to six months for your fleet with respect to term for operators and how comfortable they are going forward, contracting your fleet out sort of beyond '26 and '27? Maybe you could just expand on that a little bit would be helpful.
Kenneth Neikirk: Yeah, good morning. As Owen said, we're in some good negotiations with solid clients for some of the larger well intervention assets. Those assets are at much higher rates. Those negotiations are much better rates and they are longer-term contracts. Some of those contracts we are, you know, two to three years in duration with a firm, like I say, very good clients of ours and good negotiations. We would expect to be announcing before the end of the year where those assets are going to end up.
Josh Jayne: Okay. And on the just touch on the shallow water abandonment business, and you've been pretty transparent over the course of this year that this is going to be weak and yet there seems to be a significant amount of long-term runway in this business in '25, '26 and beyond from what we've heard. So can you just talk us through how you're managing that business today, assuming there's going to be a turnaround coming in the next couple of years?
Owen Kratz: Yeah. Right now, it's a balancing act of the biggest bottleneck in that segment of our people. And so far, we knew that this was going to be a soft year with a potential rebound in 2025. So we've been trying to while we've been incurring additional costs in order to maintain our capacity to be able to respond to that rebound. You know, the market this year has probably been softer than we anticipated, and we're trying to assess the actual pace of the work that's going to be of coming next year and adjusting our resources to be appropriate. But what that means is that it's probably an inordinate amount of high negative impact for '24 as we maintain that capacity going into '25. But we should reap the benefits of that in '25 and beyond.
Josh Jayne: Okay. Thanks. And then just one last follow-up, if I may. You highlighted that the potential for some of the variance in your EBITDA guidance for the rest of '24 could be surrounding this, the seasonality of the Well Enhancer and the Sea-well and normal normally there is seasonality, but in the last two years, so in Q4 of '22 and '23 close to 100% utilized on those assets. I just want to understand maybe going back to those years, why the utilization in Q4 of those years was so strong? Was it all weather driven or what the what the opportunity is and if the business has potentially structurally changed a little bit where you could see less seasonality going forward for those assets. And that's all I have. Thanks.
Kenneth Neikirk: I think at the moment we're being conservative and referring back that that business unit has always had seasonal downturns in the winter because of the weather and clients that want to pay for us to go out and work on their wells. And so on weather last year, we had a very good contract where one of the vessels went to the Mediterranean. The suit was working for good weather periods in the Mediterranean for the whole season this year. We do see opportunity there as we were saying that could be some upside. We're in discussion with clients that are looking at work for this winter. And as we go into next year, one of the vessels will have a dry dock as well, but there's opportunity out there that's not signed up yet. So we're just being a little bit conservative as we look at the historical view of how the well intervention in the winter months in the UK works.
Owen Kratz: I'd like to reserve a another factor of the variability in our Q4 has to do with a believer mentioned we have something like a hair over 140 days of transit time and then the costs and the revenue that is deferred and amortized over the term of the contract. So the impact to the fourth quarter depends largely on the timing of how many days fall in '24 versus '25. And there's no way for us to assess what that is right now. Until we see when the mobilization actually begins. And that depends on how long the current contracted work continues.
Josh Jayne: Understood. Thanks, guys. I'll turn it back.
Operator: As there are no further questions at this time, I would like to turn the call over back to Mr. Eric Staffeldt, Chief Financial Officer for closing remarks.
Erik Staffeldt: Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our third-quarter 2024 call in October. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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