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Helix Energy Solutions Group Inc (NYSE:HLX)
Q3 2019 Earnings Call
Oct 22, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Third Quarter 2019 Earnings for Helix Energy Solutions Conference Call. [Operator Instructions]

I would now like to turn the conference over to Erik Staffeldt, CFO with Helix Energy. Please go ahead.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Good morning, everyone. Thanks for joining us today on our conference call for our Q3 2019's earnings release. Participating on this call for Helix today is Owen Kratz, our CEO; Scotty Sparks, our COO; 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 Investors page on our website at www.helixesg.com. The press release can be accessed under the Press Releases tab and the slide presentation can be accessed by clicking on today's webcast icon.

Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken?

Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical facts, are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2, in our most recently filed annual report on Form 10-K and in our other filings with the SEC.

Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slide of our presentation provides reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation, the earnings press release, our annual report and a replay of this broadcast are available under the For the Investors section of our website at www.helixesg.com. Owen?

Owen Kratz -- President and Chief Executive Officer

Good morning, everyone. We'll start on Slide 5, which is a high level summary of the Q3 results. The third quarter results reflect improvements in operations with increased utilization in both our Well Intervention and our Robotics segment. Revenue increased $11 million and our net income increased $15 million from second quarter results. Our results for the third quarter reported at revenues of $213 million and net income of $32 million. We generated $66.3 million of EBITDA.

Moving to Slide 6. For the quarter, the $32 million of net income represented an improvement compared to $17 million in Q2 and the $66 million of EBITDA in Q3 was an increase of $16 million, which is compared to the $50 million in Q2. Our operating cash flow was $57 million and free cash flow was $39 million. For our year-to-date results, we recorded a net income of $50 million, compared to net income of $42 million, during the same period in 2018. We generated EBITDA of $147 million compared to $138 million during the same period in '18.

Moving to Slide 7. We benefited from high utilization across our business segments. Well intervention vessel utilization increased to 97% from 94% in Q2. And we believe we've successfully address the downtime issues that plagued us during the first half of the year on the 15K IRS system. Robotics performance also improved with utilization increasing to 96% on our chartered vessels and 44% on our ROVs.

Moving to Slide 8. From a financial statement perspective, our cash levels at quarter end increased to $286 million from $261 million at the end of Q2. We invested $18 million in capital expenditures, and we made $13 million of debt repayments. Our debt -- our net debt at the end of Q3 was $127 million, compared to $163 million in the second quarter.

I'll now turn to Scotty for an in-depth discussion of the operating results.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thanks, Owen, and good morning, everyone. Moving on to Slide 10. The third quarter was a good period, you know best quarter, since 2014 with all vessels contracted with strong utilization for the quarter. We've achieved cut results across the fleet for minimal operational downtime, where all of our business lines are performing well.

In the third quarter, we increased revenues of $213 million, compared to $202 million in the second quarter. Gross profit margin increased to 26%, resulting in a profit of $55 million, increased from 20% and $40 million gross profit in Q2. Across the fleet, we had signed high levels of utilization. The Well Intervention fleet achieve utilization of 97% globally. Gulf of Mexico had 95%, North Sea had 96%, and Brazil had 99% utilization. The Robotics charter fleet achieved the utilization of 96% globally.

In the Gulf of Mexico, the Q5000 continued for BP throughout the quarter; Q4000 work on three wells, including successfully completed in the abandonment of the first Droshky well owned by Helix. The North Sea business performed well working in the better weather seasonal period with both vessels working on 13 wells in search of numerous clients. Performance in Brazil was strong again. Both vessels performed very well achieving high utilization of 99% with remarkable upturn.

Robotics chartered vessel fleet was very active working between ROV support and trenching works complete in a 168 days of work in renewable energy projects in the North Sea and in Taiwan. On the robotic side, the Q7000 trenching system achieved 92 days utilization in Mexico, that continues into the fourth quarter. We continue to be excited about expanding our product and service lines geographically. Q7000 is now being ready to transit from Singapore to West Africa in Q4, and is currently being a sort of a Schlumberger [Phonetic] service equipment where we can provide our integrated Helix Schlumberger alliance offering globally.

Slide 11 provides more detail review of our operations from our Well Intervention business in the Gulf of Mexico. The Q5000 continued working for BP for almost the entire quarter, achieving 93% utilization. On completion of this year's BP campaign at the end of September, the vessel commenced abandonment activities on our second Helix owned Droshky well. The Helix OneSubsea joined behind 15K IRS system, which utilized 79% on the Q5000 for BP with minimal MPT throughout the quarter. The Q4000 achieved good utilization of 97%. The vessel performed well with minimal commercial downtime completing development of the first Droshky well owned by Helix on budget. The vessel then completed further production enhancement well for one client prior to commencing the five well campaign for another client.

Moving to Slide 12. I don't see Well Intervention business performed well with both vessels achieving high utilization throughout the quarter with near 100% operational uptime performance. The Well Enhancer achieved 100% utilization performing very well on our well abandonment operation and completing production enhancement activity on seven wells. The Seawell also had performed well working to the four clients achieving 92% utilization on six wells conducting production enhancement activities. Due to the project timing, the vessel had the short seven-day idle period between projects. The Q7000 continues mission preparation in Singapore. The vessel is now fully manned and training on the vessel continues. Offshore trials were completed without issue in the quarter and the client subsets and process continues. The vessel is now been mobilized with Schlumberger service equipments and is very close to being ready to commence transit to West Africa in the fourth quarter.

Moving to Slide 13. In Brazil, our operations with Petrobras continued to go extremely well, again producing an exceptional quarter 100% utilization and uptime performance. Both vessels continued to undertake numerous various scopes mostly related to production enhancements. In the third quarter, the Siem Helix 1 achieved the 100% utilization working on two wells on production enhancement scopes. The Siem Helix 2 achieved 99% utilization working on five wells performing full production enhancement scopes and one abandonment scope. At the request of our customer, the shipyard maintenance period for the Siem Helix 2 has now been deferred to Q1 of 2020. Overall, we continue to perform well in Brazil for Petrobras and we're now starting to engage with some further tender activity from our operators as they expand into the region.

Moving on to Slide 14, for our Robotics review. Robotics continues to go well. Q3 is the best performing quarter in quite some time for Robotics with strong operational performance and significantly better commercial results. In the third quarter, vessel charter fleet utilization was 96%, including spot vessels. Two vessels, we utilized mostly on trenching projects in the North Sea, the Grand Canyon II works in the APAC region, and the Ross Candies operated in the Gulf of Mexico. In the quarter, we achieved 241 days of trenching operations comprised of 149 trenching investor related days, 92 days for the Q750 trenching system in Mexico on the client provided vessel.

The Grand Canyon worked in the North Sea achieving 100% utilization on a combined hard and soft ground trenching projects. Investors to remain busy into November and then is being returned to -- sorry, and then further reducing our cost base. The Grand Canyon II had a 100% utilization in performing works on ROV support projects in the APAC region, including 60 days on our renewable projects offshore Taiwan. Grand Canyon III had 87% utilization in the North Sea work in 57 days trenching and 23 days ROV supports. The Ross Candies at 28 days utilization price commencements 10-year dry-dock high for Helix available against us in the fourth quarter.

Over to Slide 15. I'll leave this slide detail in the vessels ROV and trenching utilization for your reference.

I'll now turn the call over to Erik, for a discussion on the balance sheet and our 2019 outlook.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thanks, Scotty. Slide 17, outlines our debt instruments and their principal maturity profile. I'll leave this slide for your reference and move on to Slide 18. This slide provides an update on key balance sheet metrics, including long-term debt and net debt levels as of September 30th. Our net debt in Q3 decreased to $127 million from $163 million in Q2, the decrease in net debt during Q3 is primarily attributable to $57 million of operating cash flow offset in part by $18 million of capex. Our cash position at quarter end increased to $286 million. At quarter end, net debt-to-book capitalization was 7%.

Moving to Slide 20, for a discussion on our 2019 outlook. We are adjusting our guidance for 2019 to range of $172 million to $184 million of EBITDA. Our year-to-date results are in line with our expectations and the expected activity levels in our markets for the fourth quarter support our guidance. This range includes some key assumptions, expectations and estimates as follows. We're assuming full year benefit for Siem Helix 1 and Siem Helix 2 in Brazil. As previously discussed, the planned shipyard maintenance on both the Siem Helix 1 and Siem Helix 2 have now been pushed into 2020, the latter at the request of the customer.

We expect the Q4000, Q5000 who have strong utilization in the fourth quarter, although we have gaps to fill. We expect to both North Sea Well Intervention vessels to work through November and expect to warm stacked vessels at the end of the traditionally slower winter season. Overall, we expect a step down in the fourth quarter, but expect an improved market as compared to 2018. Any significant variation from these key assumptions could cause our EBITDA to fall outside of the range provided.

Moving to Slide 21, we have $800 million backlog of which $115 million is currently scheduled and estimated to be completed during the remainder of 2019. Our backlog continues to be heavily weighted to the BP Q5000 contract, the two Petrobras contracts, and the Helix Producer 1 contract.

In the Gulf of Mexico Well Intervention market, we expect the Q4 -- Q4000 to have high utilization. In Q4, the Q5000 began the quarter working on the Droshky field. The vessel has backlog into November with opportunities thereafter. In the North Sea Well Intervention market, we expect both vessels worked through November and expect typical seasonal weakness during the winter months. In Brazil, we expect the full year from both vessels with the shipyard maintenance now being pushed into 2020.

Over to Slide 22, the robotics, I mean, we'll see the typical slowdown with the onset of the winter season in the North Sea, the Grand Canyon should complete this trenching project early to mid-quarter, vessels chartered expires here in the fourth quarter. Grand Canyon II is expected to have good utilization in the APAC region, and the Grand Canyon III will look toward the spot market in the North Sea with gaps to fill our schedule.

Over to Slide 23. Our capex for the year is forecasted at approximately $150 million with most of it -- most of the capital being related to completing the Q7000. During the fourth quarter, we're trying to make our final shipyard payment approximately $70 million and vessel scheduled to transit to West Africa for its first project expected to start in early 2020. Maintenance capex includes the dry docks completed during the first quarter of the HP1, Seawell and Well Enhancer. Our scheduled remaining debt payments for the year approximate $10 million.

I'll skip Slide 25, and leave it for your reference.

At this time, I'll turn the call back to Owen for closing comments.

Owen Kratz -- President and Chief Executive Officer

Thanks, Erik. While another quarter is behind us, in this the fifth year of the longest down cycle in our industry in the last 40 years. The good news is that we're headed into what could be considered the second year of the slowest recovery in our history, but it should continue. Uncertainty over the future of shale is making it more likely that we'll see capital reallocated to the offshore. The huge oversupply in the offshore service segment has kept rates down and very favorable for producers. We may see this positively impact the producers 2020 budgets.

We were concerned that the increased tendering volume touted by some contractors earlier this year, may not translate into actual work. It may be a slow process, but we do see the volume of working and increasing, although slowly. Rig utilization is improving as our rates, but also slowly. Rigs in our universe are at 60% utilization and 80% of marketed utilization. I have a feeling that rig operators are also starting to wake up to the unsustainability of the rates at the bottom of the cycle and are starting to behave more rationally. The raise of rigs scrapping slowed this year. This is either a sign that all scrap worthy rigs have been scrapped, which I don't believe, or possibly that operators truly see a pickup in utilization. The new rig contracts are definitely being priced higher.

Last year, at this time, we were cautiously optimistic about marginally stronger 2019, but we're very concerned with the fourth quarter of 2018. We have seen the marginally stronger 2019 with improved utilization across all of our service lines, although we still have gaps to fill and will need to execute. We have less concerned over meeting our targets for the fourth quarter than we did this time last year. We are not yet able to see any meaningful rate improvement in 2019 over 2018. We had some issues this year that will likely keep us from overachieving our guidance. The 15K system, a slower start to the well ups UK season, FX rates and deferred work for the Q7000 into 2020 are the main ones that we don't see repeating.

We have some uncertainties in Q4, that we need to fill, but nowhere near the level of uncertainty of last year. We also have opportunities that still might allow us to overachieve in Q4. At this time, we do expect it to be an improvement over Q4 of 2018. As a result, we're nearing our guidance while maintaining a similar midpoint. We're hopeful 2020 will show yet further improvement. Our cost in Robotics will continue to reduce as our high rate charters roll off and FX hedge is expire.

We're planning to test the market strength this coming year with marginal rate increases going into 2020. The Q7000 is planned to begin work in January, and we have good visibility for demand beyond the first project. It may be a bit early to qualified the Q7000 contribution in the first full year, but we should have a good idea by February, when we present the guidance for 2020. We have some clients returning as a result of long-term rig commitments rolling off, and that combined with the more active market should support high utilization in the future. Operationally, with the modifications completed on the 15K system and it performing well, our operational execution is at its highest level in years. The two vessels in Brazil are consistently rated the best performing in the Petrobras fleet each month something we're very proud of.

With the results we're achieving in this challenging market, if 2020 is not the year for a significant market improvement, then we're at least on the cost. We expect a slow, but continued improvement ahead based on rate increases, cost reduction, marked demand increase, rig operator rational behavior and the entry of the Q7000 enrollment device into the market. Helix is in a really good place right now and we plan to proceed with caution and prudence toward further improvement.

With that color, I'll hand it back over to Erik.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thanks, Owen. Operator, at this time, we'll take any questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Praveen Narra. Please proceed with your question.

Praveen Narra -- Raymond James -- Analyst

Hey, good morning guys.

Owen Kratz -- President and Chief Executive Officer

Good morning.

Praveen Narra -- Raymond James -- Analyst

I guess, I wanted to -- I guess I wanted to start on the early discussions on 2020 and kind of what you're hearing from your customers and getting visibility and/or tendering conversations. And then I guess two, you mentioned a bit of a pricing power or potential price rates a little bit, we've seen that with some rig contracts. So I guess could you give us some color on how operators are responding to that pricing press, I guess?

Owen Kratz -- President and Chief Executive Officer

Well, I think it's a little early. I think for 2019, we basically gave our pricing earlier in the year, and so they've been aware of that. Going into next year, we haven't given firm pricing yet to the client, so they haven't seen the amount of the increase, but in general, we have told them that our cost is starting to rise and therefore they should start to expect higher rates. And for the most part, the clients, and I'll let Scotty speak to the ones he's talked to, but the clients I've spoken with are expecting rates to go up, which is also prompting some early discussion on longer commitments, of course, the producers want to lock in on low rates and the contractors are holding out for our market improvement.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. I think the clients do expect prices to go up next year. How far we can push them is another discussion. But definitely seeing our schedules pack out for next year better than we've seen in previous years. There's more volume of work out there and more structure discussions around that, that volume of work. As already mentioned earlier, we have some historical clients coming back to the full year and that's going to help our schedule. As the schedules pack out that should lead to an increase in rates and that's the current plan right now.

Praveen Narra -- Raymond James -- Analyst

Okay. Great. Then I know we've talked about this before, but wanted to see if there's any updates. You guys are, certainly by our models, set to generate a lot of cash flow. So do you have any updates on how you guys are thinking about pushing up maturities or it's just doing something on a capital return to shareholders, how do you guys think about that today?

Owen Kratz -- President and Chief Executive Officer

That will ultimately be a Board decision, but the management recommendation would be to at some point consider returning value to shareholders, more than likely through share repurchase. But the timing of that and the quantification of that, I think we're a little early. I think we have to get closer to our contract renewals and rollovers. And at that point, when we have longer-term visibility on our sustainable cash flow, we can make those decisions.

Praveen Narra -- Raymond James -- Analyst

Okay. If I could squeeze one more in just, you mentioned normal seasonality for the winter season in the North Sea. I guess, are we nearing a point where we may see the winter months expand in terms of activity, given the amount of activities out there, or is it still a bit early to see that?

Owen Kratz -- President and Chief Executive Officer

I think it's slightly changing. We have both vessels in the North Sea booked into November with some weather split that will take us into December. We have discussions ongoing that could close out the vessels for the year, not there yet, but we're in discussions with a number of clients, not numerous. And we also are hopeful of an earlier start, which then brings to get them from what was the couple of years ago, four months to five months may be a month or two.

Praveen Narra -- Raymond James -- Analyst

All right. Perfect. Thank you very much guys. Good quarter.

Owen Kratz -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Ian Macpherson. Please proceed with your question.

Ian MacPherson -- Simmons & Company -- Analyst

Thanks, good morning. Good quarter.

Owen Kratz -- President and Chief Executive Officer

Good morning, Ian.

Ian MacPherson -- Simmons & Company -- Analyst

I have a question either for Owen or Scotty. When we look at the sensitivities around your fourth quarter outcomes, it sounds like the -- the North Sea vessels are more likely to just hit the seasonal wall, but I guess there could be some, some variability with regard to the utilization for the Q4 and the Q5. And you still have, I guess, what two in a fraction of Droshky wells remaining in inventory and I wanted to see what your plans are? If you have a plan yet to, to get more into Droshky for maximum utilization in the fourth quarter in the Gulf of Mexico, or if you intend to reserve the remaining couple of wells for next year. And then following to that, if you're looking at any more Droshky like opportunities next year to expand that inventory?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Okay. Well, it's Scotty here. I'll take that in. And like I said we're in discussions with number of clients. The work is packing out in the fourth quarter, both in the North Sea and in the Gulf of Mexico. Right now, envisage us having to fall back on to any further Droshky work. So we're quietly confident that we're going to max out the rest of the year. We're not there yet, but there's good structure discussions ongoing right now.

Owen Kratz -- President and Chief Executive Officer

I'll just add to that. We are looking at additional opportunities for Droshky-type deals, there's nothing imminent. But there is visibility of things out there. But we still have these two wells, so we're not really pressed to considered anything rash. One thing I would like to mention though is that, for the past couple of years, the BP work on the Q7000, or the Q5000 hence fallen into the latter part of the year. Oh, I'm sorry, the earlier part of the year with the GAAP, you know they take it for 270 days and then there is a 90-day GAAP, that's been late in the year. Going into next year, that, it flips a little bit. BP is planning to take the vessel later in the year with the GAAP showing up in the first quarter. So everyone needs to sort of recalibrate their quarter-by-quarter expectations with that in mind.

Ian MacPherson -- Simmons & Company -- Analyst

Thanks, Owen. So I have that, and this -- the downtown for Q5000 does not heed into your 270 days then?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Correct.

Ian MacPherson -- Simmons & Company -- Analyst

Okay, thanks. Last one for me, Erik, I know, we'll talk about guidance for next year or next quarter's call, but as when we think about Helix in a maintenance capex mode starting next year, that's been only $20 million to $25 million per year in 2018 and '19. Is there anything that looks different than that next year?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Yeah. I think in general, we have talked a big picture going forward that our maintenance capex will be in about the $30 million to $50 million range. I recognize here probably in the last three years or four years we have been running lower. We probably have to go back to about 14, when we were closer to the $50 million range to last time, we were in this $30 million to $50 million range. I think, we still feel that $30 million to $50 million is the right range. It will be lumpy. Next year we will have a heavier, or expect to have a heavier amount of dry-dock or vessel shipyard maintenance, including the Q5 in the first quarter. And so I think $30 million to $50 million is the right way to think about the maintenance cost going forward.

Ian MacPherson -- Simmons & Company -- Analyst

Got it. Perfect. Thank you guys.

Owen Kratz -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of George O'Leary. Please proceed with your question.

George O'Leary -- Tudor, Pickering, Holt & Co -- Analyst

Good morning, guys.

Owen Kratz -- President and Chief Executive Officer

Good morning, George.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Good morning.

George O'Leary -- Tudor, Pickering, Holt & Co -- Analyst

Just tapping on to that last question. As you figured today and look out at the 2020 timeframe, are there any intriguing growth opportunities that you think you might pursue or should we expect capex, at least as you sit here today, I realize you have to go through the whole budgeting process to move more toward that maintenance capex level in 2020. It looks like The Street. I assume that, that's where you guys are headed. So just don't want to set false expectations there.

Owen Kratz -- President and Chief Executive Officer

Yeah. At this time, we don't have any anticipated capex allocated toward growth. I think our focus on going into next year will be now that our utilization is at sufficiently high levels. We're going to be trying to push rates, maximize cash flow and focus on further debt reduction and then possibly on earlier rather than later moved to returning value to shareholders. That's, that's probably the priority versus expanding capital for growth. Personally, until rates improved quite a bit and the market conditions improve, I don't think that there is no place in our sector, where you can deploy capital with an appropriate targeted return on capital. So we're going to be looking to go into harvest mode here for a while. It's not to say that we can't grow. I just don't think that it takes capital to grow. I think, we have plenty of room to add adjacent services to what we do and to penetrate some new geographic areas. We should again spur that, that will create more utilization more demand in higher rates.

George O'Leary -- Tudor, Pickering, Holt & Co -- Analyst

Okay, great. That sounds like a prudent approach in improving market into that point alongside rates, one of the other things that would be a positive sign is just the potential for you guys to see longer-term contract signed and maybe income something longer term for that Q7000. So just how is dialog with customers on reloading that backlog hopper with some long-term backlog? And then for the Q7000 in particular, do you need to get a bunch of reps under your belt before you can get a long-term contract there? Is there the opportunity in the next six months, 12 months to get a contract signed for that vessel?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Keep in mind, that Well Intervention as an industry is short duration contracts. There is very few producers out there that have sufficient well headcounts to support a long-term contract. To my knowledge there is only five long-term contracts and Well Intervention in the world. We have three of them. Aker Solutions or Aker Oilfield Services has one in Norway for Equinor and Ireland has the other. Beyond that, I won't say that there is not a potential, but there's not a likelihood of the long-term contract. It's more of a spot market and that is also where we're very adept at for years we've been able to build our schedule out from linking together shorter duration projects. So we actually see it as a competitive advantage. The only caveat to that is, as I sort of mentioned before producers are looking at the hopper of work that they've got realizing that they have more work and they're looking to try and lock-in on the lower rates. So there is discussion about long-term partnering agreements, not necessarily contracts, but how that, how that unfolds and what form that may take, we'll just have to keep working the issue and see if we can come up with a good deal.

George O'Leary -- Tudor, Pickering, Holt & Co -- Analyst

All right. Great. Thanks for the color, guys.

Operator

Our next question comes from the line of Vebs Vaishnav. Please proceed with your question.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Hey, good morning. Thank you for taking the question and a good quarter. I guess, I just wanted to clarify on the down time, so order dry docking. On Q5, so you will have dry docking in 1Q, but it doesn't impact the BP work. So BP will basically start from 2Q to 4Q. Is that the way to thing?

Owen Kratz -- President and Chief Executive Officer

Correct, yes.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Okay. And can you just remind us about any other dry dockings, I think there is some dry docking on Q4 and Siem Helix 1 as well?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Okay, I'll take that. We only have one major dry dock next year, which is the Q5000. We do have some wet maintenance period. So the SH1 and SH2 will have wet maintenance period relatively small timescales compared to large dry docks in the first half of the year? And then we also have a wet maintenance period that will undertaken the winter season months for the Seawell, which again is a shorter period duration.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Okay. And when you say like shorter term is, is that like 10 days to 15 days a good way of thinking about it?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

I think the best way to put it because we're in the planning phase right now, that best way to put it will be less than a month.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Got it .

Owen Kratz -- President and Chief Executive Officer

The only one I would add to that, Scotty is, in the -- with the Q7000 later on in the year there will be a down period of about 30 days, in order to dry dock for a new bottom.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah.

Owen Kratz -- President and Chief Executive Officer

A final bottom thing.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. Good point.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Got it. Okay. If I think about Q7 and I understand it's too early, but I just wanted to see, if we can book in that vessel. So let's say, at least my thinking is, let's say, if you have, I'd call it 60%, 65% utilization for the year, that kind of breaks it even. And I was just trying to see if that is right. And if -- let's say it has a good utilization, call it like 85%, are we talking about maybe like $10 million, $15 million of gross profit contribution. I don't know, if you can help me over there?

Owen Kratz -- President and Chief Executive Officer

Well, it's very early in the process for us to really start quantifying a whole lot about the Q7000. I'll tell you -- I think, 65% of that, that utilization is a bit high. I would think for breakeven. I think breakeven is more around the 50% utilization. And then the total earnings power for the vessel. We have a lot of visibility on work, how much of that falls in line is yet to be seen, but it could be anywhere from breaking even next year to a $20 million contribution is. And I know that's a wide range, but that, that's about all I'd be willing to say at this point.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Actually, that's very helpful. So, if I just think about the puts and takes on Well Intervention EBITDA growth for next year, so I just wanted to make sure the bigger moving pieces. So I need to think about, obviously the maintenance aspect and the Q7, but outside those moving parts, I think like the market itself is getting better, so that should help you guys. Is there any other moving part that I should be thinking about when I think about just Well Intervention?

Owen Kratz -- President and Chief Executive Officer

Well, I think, right now, if you go through the details of what Scotty was outlining for each of the vessels, I think you'll notice that most of the work that we're undertaking right now is for production enhancement. There is an awful lot of talk about P&A, becoming a much stronger market. Of course, I always take that with a grain of salt that seems to be the hockey stick that never arrives, but should that -- if that comes to fruition like people think, then there is definitely going to be more work then we can cover. So, I don't know, you have anything else, Scotty?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. I'll add a little bit of color there. We have definitely seen an uptick in production enhancement related activity throughout this year. Certainly, in the last quarter, I think we undertook close to 25 wells roughly, and 20 of those wells were all production enhancement-based activities. So we're seeing the operators return to spending money on ways to get bows out from the ground rather than focusing on abandonment activity and some cost there.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Okay. And maybe one last question for Erik. Just could you remind us of how much cost savings should we think about in Robotics in 2020 versus 2019, and just the drivers?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

So, yeah. So from the big initial driver is going to be obviously the hedges that have rolled off. We have a Great Canyon II hedge rolled off in July of this year and we will have the Grand Canyon III had to roll off in February of next year. And the cost that we incur on those is, say $10,000 to $15,000 a day associated with those hedges. So from that standpoint, those hedges go in late due to the cost savings and I think in general, we've talked in the $7 million to $10 million range of cost benefits associated with that going forward.

Vaibhav Vaishnav -- Scotiabank -- Analyst

Okay. And I think Grand Canyon was supposed to be coming up for renewal in October, is that correct?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Yeah. Right now, we plan to work the vessel into November. So on a, currently on the hard and soft ground trenching projects and at that point we will demobilize the vessel and hand it back to the owner. We have had some discussions about keeping it for a longer term, but in a much different commercial arrangement with the owner. If it does go back then we will let to -- we look at our vessels throughout the year and see what requirement we need to pick up spot vessels to covenant.

Vaibhav Vaishnav -- Scotiabank -- Analyst

That's all for me. Thank you so much.

Owen Kratz -- President and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Martin Malloy. Please proceed with your question.

Martin Malloy -- Johnson Rice & Company -- Analyst

Good morning,

Owen Kratz -- President and Chief Executive Officer

Good morning, Martin.

Martin Malloy -- Johnson Rice & Company -- Analyst

Good morning. Just following up on some of the discussion there regarding the mix on Well Intervention. Could you maybe help us with, I think the last couple of years, it's been kind of 50-50 P&A versus Well Intervention kind of where you see that going? And then also on the Robotic side, the mix there in terms of the renewable related work versus traditional oil and gas, and it sounds like the market is pretty strong for the trenching?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

I'll take that one. Good morning. So the Well Intervention mix right now, I'd say over the current view looking back would be about 50-50 in the last few years. This year, I'd say it's more 70% to 30% split production enhancement in this third quarter and their older was production enhancement. So we are definitely seen a change there. The work is planned or the discussion work is planned for next year, I would say, is in that range as well. There's definitely more talk of production-related enhancement-type activities.

Regarding the Robotic side of the business, all of our ROV-type, rental growth ROV workers is mainly oil and gas-based that the Trenton side is predominantly owned to the renewable side of the business and by renewable it can be either wind farm working or export cables, it's not just down into a wind farm it can be quite large trenching activity. So this -- I think it was 168 days in this quarter as renewable-based activity. A good portion of that comes from trenching. We have work planed in 2020 all the way up to 2023 for renewables related trenching activity.

Martin Malloy -- Johnson Rice & Company -- Analyst

Okay. And then just as a percentage of your revenue in Robotics from the renewables, is it 20%, 30%, 40%?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

It's roughly 30% to 40%.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Yeah. Marty, it's been, I think in that range in 2018 and 2019.

Martin Malloy -- Johnson Rice & Company -- Analyst

Okay, great. Thank you. And then just on the -- in terms of thinking about the BP contract, I think that, that ends in early 2021, and then the Brazil vessels later on in 2021. Could you maybe talk about your thoughts in terms of timing of negotiations and when we might learn something about what those vessels are going to be doing going forward?

Owen Kratz -- President and Chief Executive Officer

I'll take the easy ones first. The Petrobras contracts, they don't enter into discussions about our renewal until six months prior to the end of the contract. I think we've had some feedback from their operational group that they're very happy and they want to extend, but they will not talk about it until six months before the contract. But we don't see too great of worry about that with the way it's going down there. It's looking very favorable. The other one with BP. BP it's still probably early, but I think what you're going to see there is probably a reworking. Scotty, you're involved with it more, I'll let you sort of describe what's going on.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

I think, Owen is correct here. It is early to discuss options of expansion for the vessels with BP right now. But I do -- the way we're seeing them plan their work, they do have an awful lot of production enhancement-related activity coming up. And from that, I think the way it will work going forward is it's going to be more of trying to tie in subcontracts and taking more responsibility for the vessel and the work that we undertake, but again, early days and early discussions right now.

Owen Kratz -- President and Chief Executive Officer

I think that goes along with our stated intention to expand our service offerings around our assets. The discussions with BP are precisely whereas about, quite what added services can we provide as part of the package. So it's a little bit more of a complicated discussion than just simply are we going to renew our rates or not.

Martin Malloy -- Johnson Rice & Company -- Analyst

Great, thank you.

Operator

[Operator Instructions] Our next question comes from the line of David Smith. Please proceed with your question.

David Smith -- Heikkinen Energy -- Analyst

Hey, good morning and congratulations on the quarter.

Owen Kratz -- President and Chief Executive Officer

Thank you.

David Smith -- Heikkinen Energy -- Analyst

First, the Q7000, you mentioned demand visibility past the first contract. Could you give us any color on that visibility in terms of geography or duration, where you're -- kind of where you're seeing that interest and maybe the nature of the work?

Owen Kratz -- President and Chief Executive Officer

Yeah. I can't be too specific, but we do have a work order come from the first project of 80 days. The work being planned is an excess of that. Typically, the projects grow rather than shrink. Behind that, I believe we have four clients, all of them -- all of which are looking to form into the contract, each of them with varying scopes of work. So the vessel could be, and I -- let's say it could be, because we don't have it signed yet, but it looks like the vessel could be in the West Africa region foremost -- most of this year or this coming year, I mean, 2020. Then beyond that, we've got discussions going with clients in the UK, Asia-Pacific and Brazil. So where it goes after that is still very much up in the year. It depends on which client sign up first, but there is multiple clients in multiple regions. And the vessel was built with ship-shaped contents or it transits at 11 knots, theoretically. So, it was built to be our swing vessel to transit to different regions and to penetrate new regions. So, so far everything is lining up about as we expected.

David Smith -- Heikkinen Energy -- Analyst

That's great color. Thank you. And the other one, on -- you mentioned rig pricing picking up. I think we've seen some drillships in the Gulf of Mexico book rates more recently in the $180,000 to $200,000 a day range versus $130,000 to $150,000 earlier this year. Just wondering, if that's enough of a pricing increase on the rig side to give you cover to -- the bond pricing for the Q5 -- the Q4000, or I guess Q5000 will have much availability next year, but that gives you cover the bond pricing for you have a Well Intervention asset you kind of anything more than low single digit?

Owen Kratz -- President and Chief Executive Officer

Well, keep in mind, in the North Sea, we compete against more rigs. The more rig rate we have seen increase rather meaningfully, so that's good news for the North Sea. In the Gulf of Mexico, you're right, some of the renewal rates, actually I think are a little better than the $180,000 to $200,000. There's been one notoriously low-cost producer that renewed at a rate in excess of $200,000, so that's a very positive sign. And then keep in mind, that when comparing our rates to rig rates to get comparable rig rates, you have to add the cost of ROVs in the cost of the lending stream to a rig rate to approximate what our rates might be. So, I think all of that means that we do have room to move our rates, just how much we can move it, depends on how -- how it impacts the commerciality of the projects with the producers are looking at, and how many producers there are in the queue. And like we've said before, especially if P&A work picks up, there's going to be more work than we can get to so we're going to have the luxury of being able to high grade, the better paying clients from those thinking that the downturn is going to last forever.

David Smith -- Heikkinen Energy -- Analyst

That's great color. Thank you.

Operator

[Operator Instructions] There are no further questions at this time.

Owen Kratz -- President and Chief Executive Officer

Okay. Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our fourth quarter 2019 call in February of 2020. Thank you.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary

Owen Kratz -- President and Chief Executive Officer

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Praveen Narra -- Raymond James -- Analyst

Ian MacPherson -- Simmons & Company -- Analyst

George O'Leary -- Tudor, Pickering, Holt & Co -- Analyst

Vaibhav Vaishnav -- Scotiabank -- Analyst

Martin Malloy -- Johnson Rice & Company -- Analyst

David Smith -- Heikkinen Energy -- Analyst

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