GulfMark Offshore (GLF) Q1 2018 Earnings Conference Call Transcript

GulfMark Offshore (NYSEMKT:GLF)
Q1 2018 Earnings Conference Call
May. 11, 2018 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the 2018 first-quarter operating results conference call. [Operator instructions] Please note, this event is being recorded. Some of the information you'll hear on today's call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts may be forward-looking statements, including statements reflecting GulfMark's expectations, intentions, assumptions or beliefs about future events or performance that do not solely relate to historical or current facts.

Forward-looking statements are subject to a variety of risks, uncertainties, and assumptions that are difficult to predict, many of which are beyond GulfMark's control. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements may be found in the risk factor section of GulfMark's most recent Form 10-K for the year ended December 31, 2017, and other documents filed with the SEC, which may be obtained on our website or through the SEC website at www.sec.gov. The information presented on this call speaks only as of today, May 11, 2018. And therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay.

Given the uncertainties related to forward-looking statements, you should not place undue reliance on GulfMark's forward-looking statements. GulfMark does not undertake any -- and disclaims any obligation to update or revise any forward-looking statements based on new information, future events or otherwise, and disclaims any written or oral statements made by any third party regarding the subject matter of this call. During our call today, we might also discuss non-GAAP financial measures. Please reference or refer to our filings with the SEC for a reconciliation to the most comparable GAAP measures.

I would now like to turn the conference over to Quintin Kneen, president and chief executive officer. Please go ahead.

Quintin V. Kneen -- President and Chief Executive Officer

Thank you, Phil. Good morning from Houston, everyone, and welcome to the first-quarter 2018 GulfMark earnings conference call. As usual, I have some prepared remarks on the first quarter and on current market conditions. Then I will hand over the call to Sam to go over the quarterly numbers in more detail, and then we will open it up for questions.

The optimism in the North Sea is quite exciting. And although we have a lot of room for day rates to run before I would suggest this industry is recovered, the recovery is under way. The obvious indicator that the market is in recovery is the observation of increasing day rates. And in late April, PSV spot rates pushed over $29,000 per day.

And the longer-term PSV rates for the summer has hit $17,000 per day. Well over the $11,000 mark we hit last year. Anchor handler spot rates topped $90,000 per day in early April. And although it's quite fair to say spot rates are fleeting, the trend in term and spot rate is real obvious.

These North Sea day rates are examples of a market that is pushing its way back up. It's pushing its way up and observing vessels coming out of layup as well as absorbing vessels mobilizing to the region. The other throw-down indicator of recovery is utilization. Utilization has been steadily improving over the past two years, but it's now gotten to the point where owners have the ability to materially push up day rates.

Vessels in layup in the North Sea topped down at just over 100 vessels in late 2016. In 2017, vessels and layup got down into the low 80s, and a recent count put the number at 68. The market is absorbing vessels coming out of layup. The market is absorbing vessels mobilizing to the region, and quite frankly, it would've been interesting to see what day rates would have done had these vessels stay put.

As it pertains to vessels coming out of layup and vessels mobilizing to the region, in both situations, the first wave is the strongest of the vessels and it diminishes after that. I saw 2017 as the first wave of reactivations out of layup, and I see 2018 as the first wave of mobilizations. Logically, I expect the cost of reactivating and relocating the vessel to continue to be the primary driver of incremental day rate increases. As we go deeper into the laid-up fleet, as we get into the last 40 vessels in layup and recall that these last 40 would typically be the smallest, oldest vessels in the regional fleet, I anticipate that reactivation costs will become prohibitive.

At the current pace that we are whittling away at the laid-up fleet in the North Sea, I believe we will see us dip into the final 40 in 2019. We've also seen some mobilizations to the North Sea. We know of eight PSVs that have relocated to the North Sea during 2018, and we understand three more are on the way. We relocated two anchor handlers, as we indicated in the press release.

Mobilization of vessels to the North Sea, vessels coming out of layup, all of this is expected in a recovery market. The key is day rates continuing to improve, overall utilization continuing to improve, and vessel oversupply is continuing to be reduced. As other regions continue to recover, particularly, those with North Sea-capable tonnage, we will see a further tightening of global supply, principally, for the larger PSV tonnage. And by larger, I would say above 850 square meters of deck size and about 280 foot of length.

The supply overhang is also beginning to be noticeably reduced through scraping. PSV owners, and to a lesser degree, anchor handlers owners has been historically been reluctant to scrap vessels. To give you a sense of the order of magnitude, in 2015 we saw five vessels scrapped. In 2016, we saw a quadrupling of scrapping, 20 vessels were scrapped.

But in 2017, we saw that the number nearly quadrupled again to just under 80. So now that's starting to getting meaningful. Thus far, in 2018, we're on a run rate for a 100 vessels to be scrapped this year, with 25 in the first quarter. So scrapping vessels is accelerating and reducing the headline number of oversupply.

But as I indicated in my reference to the 40 least-favorable vessels in layup in the North Sea region, the true level of oversupply is much less than what the aggregate supply numbers indicate. Offshore drilling activity, which is what pushes our industry to its periods of peak utilization and peak day rates has begun to show some improvement after almost four years of steadily declining offshore rig counts. Overall, contracted floaters began moving up in the fourth quarter of 2017, driven mostly by actively in northwest Europe. Jack-up activity has been flat for the last couple of years, but my belief is that prices stay reliably above $60 a barrel.

We should see a nice pick up in Jack-up activity in areas like Southeast Asia, West Africa, and Northwest Europe. And so, all of the pieces are falling into place. Vessel owners have withdrawn enough capacity to begin to put the spot market in balance in our key regions. Older vessels continue to atrophy and the pace of scrapping is picking up, offshore drilling demand is beginning to pick up.

And with Brent steadily above $60 a barrel, we should see noticeable improvement in 2019. The other attribute we remain focused on is our level of G&A expense and our ability to become the cost leader in our industry. Our sequential quarterly decrease in G&A should indicate to you how serious and committed we are to achieving our goal of being the most-efficient, high-quality OSV operator in the world. G&A cost was down 16% since last quarter, and we are forecasting to reach another 15% in the second quarter.

Our reductions are not simply headcount reductions. We are thoroughly revamping our way of business so that as utilization continues to increase, our headcount should remain steady. We have spent the better part of the decade investing in an IT infrastructure that enables this kind of scalability. I'll let Sam walk you through just how this is done in a bit more detail, as he has been instrumental in the development of this infrastructure platform.

But the entire organization is focused on our goal of getting to cash flow positive. Global vessels, sales and purchase activity for our PSVs and anchor handlers has also increased. There were over 150 vessels transacted in 2017, which is more than triple the level we saw in 2015. We see this as a good sign that investors are getting active again.

Globally, it appears that prices for the newer, larger tonnage has troughed both in the PSV and anchor handlers space. Consistent with the comment I made earlier about the last 40 vessels in layup in the North Sea, not all vessels have seen the trough in valuation. I believe it is logical to expect tonnage over in 20 years to continue to deteriorate in value. For tonnage between 15 and 20 years of age, it will depend on location, size and individual attributes.

But it is becoming a hard story for those vessels due to advancements of fuel economy and the design changes that have occurred since their construction. Similar to what I mentioned on the last call, interest in acquiring tonnage continues. We have held off on vessel sales as prices are continuing to increase, but prices on our lower expect tonnage is beginning to get our attention. Outside of the North Sea, areas that have been showing a slight pickup in activity include Latin America.

The pickup in those areas is just beginning to draw some tonnage out of the Gulf of Mexico, which is helping to reduce the marketed supply there. We have seen a small increase in larger vessel day rates in the first quarter, about 5%. And we are experiencing transient episodes of market tightness in the region, which is reminisce on what we saw in the North Sea in the late summer of 2016, early 2017. Every region is different but the intermittent ability to push price on high-end tonnage is the first sign of a tightening market.

The Southeast Asia market is further behind the Americas and the North Sea. The market is dominated by NOCs and with Brent over $60 a barrel, I expect to see meaningful increases in drilling activity as we go through the next 18 months. But there's also an area with significant vessel oversupply. I expect as we go through the recovery in Southeast Asia that, as it has been in all regions, we will first see small incremental increases in utilization until the market tightens enough to begin to push day rates back up.

Quite logical, but we anticipate that the period of simple incremental increases in utilization without day rate increases will be longer, just due to the relative oversupply in that area. Every region in the world is fragmented. Southeast Asia is highly fragmented, and Southeast Asia is as many as a dozen different markets depending on how you slice it. Consequently, I expect these factors to result in a longer recovery for this region.

Similar to the North Sea, Southeast Asia has a bit of calendar year seasonality with the first quarter being the softer quarter. This is due to charterers tending to avoid new activity in the December to March monsoon season. We experience a nice bump in utilization in the fourth quarter of 2017, when utilization pulled out at the highest 30s and settled into the mid-50s for that quarter. But as we go through 2018, we are now anticipating steady utilization of around 45% and day rates to remain flat.

Our near-term objective is to bring the business back to cash flow positive. Top-line growth will be part of the solution. As we look into the second quarter, we are targeting about a $4 million increase in additional revenue and about a $1.5 million lower cash cost. Of the $4 million in revenue growth, $3 million is expected to come from the North Sea, and 65% of that estimated revenue for the second quarter is already in the bag or contracted.

The remaining $1 million of improvement is expected to come from the Americas, and 52% of our estimated revenue for that region for the second quarter is either in the bag or contracted. As I indicated previously, I anticipate Asia -- Southeast Asia to being flat for the second quarter and in fact, flat for the remainder of the year. Many of you know members of the new board, and know them to be engaged and investor-focused. I, along with the rest of the management team are incentivized and engaged on the objective of getting to cash flow positive while simultaneously remaining focused on long-term value creation.

Our employees have been super through this downturn. We have reduced our executive facade, which results in us pushing decision making authority lower in the organization and empowers those closest to the customer and the operations to make quick decisions. It's an efficient, quick-responding environment with the over way of a controlled framework enabled by a consistent global IT infrastructure. And with that, Sam, why don't you walk us through the numbers?

Samuel R. Rubio -- Chief Financial Officer

Thank you, Quintin, and good morning. You have seen the press release and the 10-Q that came out last night. Please review our forward-looking guidance information contained in the press release related to our 2018 guidance. This information is based on our current expectations but could change based on future activity.

This is our first full quarter reporting under fresh-start accounting. However, there are transactions related to the bankruptcy that still have an impact on our financial statements. We also implemented a new accounting standard that, although had no impact to cash, it did affect the presentation of our cash flow statement. And I will provide more detail later in the call.

As we did in the last call, we need to add a little context to the numbers before we start. As you know, we emerged from bankruptcy on November 14, 2017. Concurrent with that emergence, we adopted fresh-start accounting, which allowed us to revalue our balance sheet and modify some accounting policies which were discussed in previous calls. For SEC reporting purposes, GulfMark became a new entity or successor and our results prior to the emergence are deemed to belong to the predecessor, the details of the reorganization and fresh start can be found on our 2017 Form 10-K.

Although the emergence occurred in the middle of the fourth quarter 2017, for this call I will make comparisons of the first quarter of 2018 results with the combined predecessor and successor of fourth quarter of 2017 numbers to stimulate an entire quarter, so you can have a better comparison. As Quintin mentioned, activity and pricing continues to improve. Overall market utilization for Q1 was strong at 86%, and overall utilization for the combined period was 46%, which is lower than Q4, 2017. The lower overall utilization is a direct result of typical North Sea seasonality.

Our North Sea segment continues to lead regional utilization at 57%, despite the winter season challenges. Our current forecast anticipates positive EBITDA, beginning in Q2 of this year. Although Q2 is only slightly above breakeven. And we also forecast to be cash flow positive in Q4 of this year.

Our first-quarter results demonstrate the discipline that we believe makes us industry leader in cost management. Our results and our forecast expect stable operating and continued reduction in G&A cost. So let's discuss the quarter. Our first-quarter net loss was $15.2 million, or $1.52 per share.

Excluding certain gains and costs for the quarter, net loss would have been $15 million, or $1.50 per share. For non-GAAP financial information, please refer to the data tables in yesterday's earnings release. In the three-month period ending March 31, 2018, we had an average vessel count of 66 owned vessels. As mentioned previously, our marketed vessel utilization remains strong at 86%, down from 90% during Q4, 2017.

Overall utilization was 46%, a decrease of 6 percentage points from Q4, and mostly reflective of our earlier comment about seasonal North Sea softness. Average quarterly day rates increased to 8,726 from 8,402 in Q4 2017. This was largely due to the tightness of the North Sea market. The North Sea day rates increased 13% from Q4 2017, and we are projecting them to increase 20% or perhaps more in Q2 2018.

Our overall revenue for the first quarter was $24.4 million, compared to $27 million in Q4 2017. The decrease was due in part to the relocation of two North Sea vessels from Trinidad, back to the U.K., to take advantage of the stronger North Sea market. However, there was some additional softness in Southeast Asia that added to the overall decrease in utilization. Our direct operating expenses for the three-month period ending March 31, were $22 million, compared to $20 million -- $20.7 million in Q4 2017.

The increase is due mainly to fuel costs incurred relocating the two North Sea vessels mentioned previously. We anticipate direct operating cost to be between $21 million and $22 million in Q2 2018. As previously mentioned, our drydock cost is now being capitalized and amortized over 30 months. In Q1 2018, we incurred $2.3 million of deferred drydock cost.

We anticipate additional deferred drydock cost to be between $5 million and $6 million for the remainder of 2018, none in Q2, approximately $3.7 million in Q3, and approximately $1.6 million in Q4. General, administrative expenses were $6.9 million in the first quarter, a decrease of 16% from $8.2 million incurred in Q4, but it's slightly higher than our previous estimate, due mainly to additional professional fees required to complete our annual audit. In Q4, we reported G&A cost of $8.8 million, however, that number included severance cost of $339,000 related to executive departures and $267,000 of noncash stock compensation. Our current estimate of G&A expense for 2018 will be between $26 million and $27 million, which includes severance cost of $500,000, and noncash stock expense of $1.8 million.

This is a year-over-year decrease of roughly $8 million, or 25%. The decrease was a result of the decrease in salaries and benefits of $5.6 million. Prior to the beginning of the downturn, we embraced technology and invested in system automation and process efficiencies. This allowed us to develop shared service centers, which helped us reduce our overall onshore headcount from approximately 200 to the current 96.

We also negotiated positive terms with our vendors that led us -- led to a reduction in office rent, insurance, travel expense and IT-related cost, which contributed $2.7 million to the decrease. Excluding severance cost and non-cash stock compensation, we expect G&A cost to be between -- to be $6 million in Q2. The decrease will result from lower salaries and benefits, professional fees, rent expense, travel expense, and IT-related expense as we continue benefiting from our process efficiencies and cost-cutting initiatives. We do believe that we have developed a scalable organization, that will give us a competitive advantage in the future and allows flexibility to continue to reduce the yearly amount.

Depreciation and amortization expense for Q1 was $8.9 million, compared to $11.2 million in Q4. A portion of Q4 depreciation was based on the pre-fresh-start values. So decrease is due mainly to the lower asset values, partially offset by shorter asset lives and lower salvage value. As a result of our change in accounting policies discussed previously.

We anticipate depreciation and amortization expense to be $9.2 million in Q2 2018, an increase approximately $200,000 per quarter as a result of the increase in deferred drydock amortization. Our stock vessel count remains at 29, the same as in Q4. As mentioned in our previous call, we had made some modifications to our preservation layup costs, with the goal of reducing our stacking cost as much as possible. Average cost per day in the current quarter was approximately $350, which decreased to -- from $500 per day in Q4.

Interest expense for the quarter was $2.8 million, which is the same as Q4. We expect the quarterly interest expense to be $2.9 million per quarter for the remainder of the year. Our cash interest cost in the quarter was $2.2 million, which will continue throughout the year as our reported interest includes $521,000 of noncash debt issue cost to amortization. In Q1, we recorded a tax provision of approximately $486,000, or effective tax rate of 3%, includes a recognition of the valuation allowance on our deferred-tax assets.

As a result of the valuation allowance on the deferred-tax assets and the effect of the lower tax rate in the U.S., due to the recent tax reform, excluding discrete items, we expect the tax rate less than 10% going forward. Although cash taxes will likely to be close to 0 in the near term as we continue to incur net operating losses. Our multicurrency credit facility includes four relevant financial covenants, which include a capitalization ratio, a collateral all to commitment ratio, and minimum liquidity and total liquidity covenant. As of March 31, 2018, we are compliant with all covenants and we forecast that we will be in compliance for the remaining of the year.

In Q1 2018, our cash used in operating activities was $17.1 million. We paid $10.4 million in post-petition professional fees as we settled most of all the remaining cost from the bankruptcy. We spent $2.3 million on deferred drydock cost and $2.2 million in interest payments. In addition in the quarter, we adopted a new accounting standard that resulted in a $3.5 million retroactive adjustment to the beginning cash balance in our cash flow statement, which impacted the results of the net cash used in operating activities.

Excluding payments for post-petition professional fees of $10.4 million and cash debt cost of $2.5 million, free cash flow for Q1 was a positive $1 million. Cash used in investing activities was $100,000, which mainly included capital purchases for equipment on a vessel. Cash used in financing activities was $228,000, resulting from additional debt issue cost that was incurred in the quarter. Cash on hand at March 31, 2018, was $52.9 million, and we had no capital commitments for 2018.

We ended the period with $100 million of long-term debt outstanding, which has no scheduled maturities until 2020. Net debt at March 31 was $47 million, and total liquidity was $76.2 million. We believe we have sufficient cash on hand plus borrowing capacity under our revolving credit facility to supplement our operations and to enable us to continue to fund our operations and to service our existing debt. And with that, I will turn the call back to Quintin.

Quintin V. Kneen -- President and Chief Executive Officer

Thank you, Sam. Before I open it up for questions, I wanted to take just a few minutes to talk about safety, which is so ingrained in our culture and industry that it often goes without saying on earnings calls. We have always been, and will always be, one of the industry's elite when it comes to safety performance. It's a testament to the competence and dedication of our crews who have been operating across the globe for many years.

We are committed to doing more than just maintaining this level. We are committed to improving our safety performance and continuously raising the bar in our industry. With the challenging market conditions over the last few years, we have had to change and adapt our business in a lot of areas, but one area we have maintained and continue to develop is crew and operational safety. We continue to invest in a number of safety programs in all of our operating regions, including the authority for each and every employee to stop the work when she or he feels safety may be compromised.

We're also in the process of rolling out improved global safety and operational systems that increase efficiency, reduce administration and allow further development of our safe systems at work. The safety of all employees is of the highest importance to the company, and I am personally committed to making sure our crews conduct their duties in a safe manner and to keep our crews free from harm. We as a company work in a challenging and hazardous industry, our employees offshore are exposed daily to risk and undertake frequent demanding tasks. A key expectation of all managers and leaders within GulfMark is to support our crews and share this commitment to safety.

Thank you. And Phil, please open it up for questions.

Questions and Answers:

Operator

[Operator instructions]. The first question comes from Turner Holm with Clarksons Platou. Please go ahead.

Turner Holm -- Clarksons Platou -- Analyst

Hey, good morning, Quintin and Sam. Thanks for taking the call.

Quintin V. Kneen -- President and Chief Executive Officer

Of course. Good afternoon.

Turner Holm -- Clarksons Platou -- Analyst

Yes, I just wanted to dig in a little bit to how you guys see 2018 developing based on the information you have now. You guided for a 20% or more increase in North Sea day rates for the second quarter, very encouraging there. Would you think that based on the rates that you're booking now that third quarter would be about the same? Or it's a possibility to see a little bit more momentum into the third quarter seasonally and I guess the strongest? What's sort of the moving pieces on that?

Quintin V. Kneen -- President and Chief Executive Officer

I do think there's a little bit of upside in Q3 as well, but my expectation is that they will lock a lot of books currently on the spot market in the remainder of the second quarter and that will run through the third quarter and hopefully into October as well. So I would say, the third quarter may be 3 or 4 percentage points. I'm optimistic for more, but that's what I'm thinking about as I think about third quarter this year so far.

Turner Holm -- Clarksons Platou -- Analyst

And as a correlator to that, I guess. If you have sort of the seasonally strongest quarters in second, third -- second quarter and third quarter, but you're guiding for moving cash flow positive in fourth quarter. What's sort of the missing piece there? Is it just that you expect cost to be materially lower in fourth quarter, relative to as you move through the year and the cost sort of rolled over? Is that what it is?

Quintin V. Kneen -- President and Chief Executive Officer

Well, I'm saying that there is actually a high amount -- a relatively high amount of drydocks that were scheduled for Q3, relative to Q4. So Q3 will be the top quarter for us from an operational-performance standpoint. But it won't be the top performance from a cash-flow standpoint because we've got a few drydocks scheduled in Q3. However, as I see in Q4, we don't have as many drydocks and running some of the benefit of what we see in Q3 into Q4.

And so I expect to be cash flow positive in Q4 for that reason.

Turner Holm -- Clarksons Platou -- Analyst

I see. OK, all right. One more if I may. Just on Southeast Asia, just looking at your commentary, your prepared remarks, Quintin, and you described Southeast Asia as maybe being a little bit behind the other two key markets in terms of recovery.

And you also mentioned that the prices that you're seeing on some of your assets starting to get your attention. Given the smallest region for you all with only 10 vessels, what is maybe makes sense now? Are you starting to consider maybe monetizing that business and deploying it in another region? Or what can you if anything on sort of the future structural development of GulfMark?

Quintin V. Kneen -- President and Chief Executive Officer

I definitely think that consolidation and concentration make a lot of sense in this industry at this time. Southeast Asia, in particular, is going to struggle over the next couple of years and there may be a strategic opportunity to redeploy capital invested in that area of the world into an area like the North Sea or maybe even in Latin America, where it could do more for us in the next three to five years. Those opportunities haven't presented themselves just as yet but certainly, things that we think about as we think about what GulfMark could look like in the next three to five years.

Turner Holm -- Clarksons Platou -- Analyst

OK. Thank you very much. I appreciate it.

Quintin V. Kneen -- President and Chief Executive Officer

Thank you, Turner

Operator

The next question comes from Joseph Gibney with Capital One. Please go ahead.

Joseph Gibney -- Capital One -- Analyst

Yes. Thanks. Good morning, guys. Just a question on the Americas.

Just curious on fleet mix here, exclusively Gulf of Mexico, are you seeing some movement in Trinidad? And just curious how we stand utilizationwise looking into 2Q? Now you referenced some seasonal boost on rate of 5% or so, just Quin, just some perspective there on what you're seeing utilization wise in the Americas? And maybe is it exclusively Gulf of Mexico? Or are you seeing pockets of opportunities for some tightening out of places like Trinidad, just curious on some perspective there?

Quintin V. Kneen -- President and Chief Executive Officer

All right. So what I'm seeing is, areas like Trinidad, Suriname, Guyana, and even Brazil, beginning to tighten up and to draw capacity out of the Gulf of Mexico, and I would even suggest that Mexico proper is going to be a component of that. Recently been taking some large tonnage into those areas, so from the U.S. Gulf of Mexico call it, boats larger than 260 foot.

But there are also smaller vessels that are getting into that level -- getting into those areas as well. So I expect to see some tightening in the Gulf of Mexico -- U.S. Gulf of Mexico because of that. So the market supply is beginning to dwindle a bit in the U.S.

Gulf of Mexico, that's given us the opportunity to push price from time to time. As it relates to utilization in the U.S. Gulf of Mexico, I'm starting to see maybe 2 and 3 percentage point increases as we go through the summer in the U.S. Gulf of Mexico.

So those are those small increases that I anticipate in the recovering market. So there may be some more episodes to push price on a regular basis in the U.S. Gulf of Mexico and we'll certainly push that. But currently, it's definitely on that kind of 280-and-above class of vessel in the U.S.

Gulf of Mexico.

Joseph Gibney -- Capital One -- Analyst

OK, that's helpful. And just back to the vessel sales and acquisition market. You referenced just holding off, obviously, because of some rising prices now, it's encouraging. Again getting some of your attention on the smaller tonnage side.

But as we think about vessel dispositions out of your fleet and some of the regularly scheduled thoughts that we had there flowing through the next six quarters or so. Would we still anticipate movement from some vessel sales this year? Or do you think things are really just sort of pushing out a little bit on that front, given the market tightening up a little bit here that you're willing to wait more? Just trying to understand some timing around sales of some of your less-capable assets within your fleet as we work through the rest of '18.

Quintin V. Kneen -- President and Chief Executive Officer

So we're getting multiple bids on older assets today. And so I [Inaudible] been willing to let go of them just because the prices have increased. I'll give you a general example. In early 2017, some of the smaller PSVs that we had that are still DP2 and still diesel-electric but the smaller -- smallest category, we were getting indications, $1.1 million a copy.

Recently getting indications of about $4 million a copy on those boats. So I'm starting to get interested in that level, honestly, but we're still taking a wait-and-see approach as we go through the summer. I definitely don't feel like the prices on that category of vessels are backsliding. So as a result, I'm willing to be a little bit patient to see how prices develop as we go through the remainder of 2018.

But longer term, I don't see them as core to the GulfMark fleet and expect them to find a home elsewhere in the world. They could find a home in Mexico, they could also find a home in West Africa, that category, that specific category of vessels so --

Joseph Gibney -- Capital One -- Analyst

OK, helpful. I appreciate it. I'll turn it back.

Quintin V. Kneen -- President and Chief Executive Officer

Thanks.

Operator

[Operator instructions]. I'm seeing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Quintin Kneen for any closing remarks.

Quintin V. Kneen -- President and Chief Executive Officer

Thank you, Phil, and thank you everyone for your interest in GulfMark. We look forward to updating you again next quarter. Goodbye.

Operator

[Operator signoff]

Duration: 38 minutes

Call Participants:

Quintin V. Kneen -- President and Chief Executive Officer

Samuel R. Rubio -- Chief Financial Officer

Turner Holm -- Clarksons Platou -- Analyst

Joseph Gibney -- Capital One -- Analyst

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