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Helix Energy Solutions Group Inc (NYSE:HLX)
Q2 2020 Earnings Call
Jul 23, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Helix Energy Solutions Second Quarter 2020 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded Thursday, July 23rd, 2020.

I'd now like to turn it over to Mr. Erik Staffeldt, Executive Vice President and CFO. Please go ahead.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Good morning everyone and thanks for joining us today on our conference call for our second quarter 2020 earnings release. Participating on this call for Helix today are 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 our Investors page on our website at www.helixesg.com. The press release can be accessed under the 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?

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 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 factors, including those set forth in Slide 2 and 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 Investor section of our website at www.helixesg.com.

Owen?

Owen Kratz -- President and Chief Executive Officer

Good morning, everyone. We hope everyone out there and their families are doing well and staying safe. This morning we will review our Q2 performance, our operations in this challenging environment and provide our outlook for the coming quarters.

Moving to the presentation. Slides 5 to 7 provide a high-level summary of our results. Our results in the second quarter reflected the expected improvement from the seasonal increase in activity levels. Our revenues and EBITDA increased as we benefited from increased utilization in the Gulf of Mexico Well Intervention segment and the seasonal increase in activity in the North Sea that benefits our Well Intervention and Robotics segments.

As for Robotics, increased renewables activity from trenching and the continued site clearance project were the catalysts for quarterly improvements in that segment. Revenues in Q2 were reported $199 million with a net income of $5 million and EBITDA of $48 million. Our gross profit increased to $30 million from $2 million in the previous quarter. Our quarter was negatively impacted by the depressed OFS market largely resulting from COVID-19. We warm stacked the Seawell and the Q7000 significantly reducing their costs. In addition, we have incurred incremental costs for additional logistics and safety requirements to continue operations in this environment. This depressed market and operational challenges will continue until the pandemic is behind us, but our team is addressing them head-on.

For our year-to-date results, our revenues were $380 million with a net loss of $6 million compared to $369 million of revenues and net income of $18 million in 2019. We generated EBITDA of $67 million in the first half of 2020 compared to $81 million in the first half of 2019.

On to Slide 8. From a balance sheet perspective, our cash balance at the end of the quarter was $178 million with an additional $42 million in temporarily restricted cash associated with the short-term LC. We generated $23 million of operating cash flow and spent $5 million on capex. Our net debt at the end of the quarter decreased by $17 million to $166 million.

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

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thanks, Owen and good morning everyone. Moving on to Slide 10. We continue to operate in a different and challenging environment as the teams and partners, both offshore and onshore, continue to respond well to the logistical challenges presented to us by COVID-19. In the second quarter we had 15 vessel working and so they currently have 12 vessels on hire. All vessels have corrective control measures in place designed to keep our vessels operating, including pre-testing globally all offshore staff prior to joining our vessels. We acquired what we feel is a sufficient surplus of PPE for our offshore teams instructing that all wear mask at all times on the vessels and enhanced regular decree and is continuously undertaken.

The second quarter was one of our best in relation to safety statistics and operational uptime performance. Our fleet operated at 99% uptime efficiency. It's extremely pleasing to note that our staff can produce such solid operational performance in these testing times and I am grateful and proud of them. We have in response to reduced intervention activity in the North Sea and West Africa warm stacked two vessels with considerably reduced operating cost of those vessels. Further, we are undertaking targeted cost cutting measures across all businesses and reduced SG&A spending.

Over to Slide 11. In the second quarter, we increased our results with revenues of $199 million resulting in a gross profit margin of 15%, producing a profit of $30 million compared to $181 million in revenue and $2 million in gross profits in the first quarter. Considering the effects of the virus causing warm stacking of the two vessels, we obtained reasonably strong levels of utilization. The Well Intervention fleet achieved utilization of 72% globally and Robotics chartered fleet achieved utilization of 95% globally.

In the Gulf of Mexico at the start of the quarter the Q5000 commenced its annual commitment to BP and completed a very successful well with the 15K subsea system with no commercial downtime. In the North Sea the Seawell completed work and was then warm-stacked in Leith in Scotland and the Well Enhancer had a good quarter including successful co-achieving operations on two wells.

The Q7000 completed its first projects in Nigeria with great success, performing very well with very little downtime, completing work on five wells for the clients. The vessel was -- the vessel has been warm stacked in the Canary Islands and it's possible to commence planned work in Nigeria later in Q4 or Q1 next year.

Performance in Brazil, as expected, was strong again. Both vessels performed very well to our usual standards achieving high utilization of 99% with excellent uptime. The Robotics chartered vessel fleet was very active, working between ROV support, trenching, renewable works and salvage operations completing 499 days of utilization across seven vessels with five of the vessels working outside of the oil and gas markets.

Slide 12 provides a more detailed review of our operations for our Well Intervention business in the Gulf of Mexico. The Q5000 had 87% utilization working for two clients. The vessel completed one well ultra-deepwater abandonment campaign for one client and then the vessel undertook scheduled deepwater testing and preparation of the jointly owned Helix Schlumberger 15K subsea system. After successfully completing the testing of the system, the vessel commenced its yearly campaign for BP performing very well with zero commercial downtime on the first well. The vessel now has an integrated Schlumberger spreading team and our two teams are working very well together. The client is very happy with this innovative approach and the vessel is on contract to BP for the remainder of the quarter -- of the year.

The Q4000 performed well with 98% utilization, completing work in ultra-deepwater for two clients. A two well production enhancement project was completed for the first customer and a production enhancement program on one well, followed by a one well abandonment that was completed for the next client.

Talking about the deepwater working, today the Q4000 is on hire and currently working at our deepest ever depth of 9,583 feet. The vessel is currently contracted through August and has identified opportunities into Q4.

Moving to Slide 13. Our North Sea Well Intervention business has been most affected by reduced work requirements due to COVID-19 leading to the warm stacking of the Seawell. The Well Enhancer, however, has work contracted into September and several other project -- potential work scopes identified in the fourth quarter. The Well Enhancer achieved 87% utilization working for four clients in the quarter, including completing two successful co-achieving interventions on two wells. The Seawell achieved 21% utilization completing abandonment programs on four wells for two clients. We then significantly reduced the vessel operating costs, putting the vessel into warm-stack in Leith in Scotland, reducing the [Indecipherable] allowance.

The Q7000 completed its first project in Nigeria with exceptional performance completing work on five wells with little commercial downtime and completing one of our longest ever continuous durations with a subsea system. On completion, the vessel is transited to Tenerife in the Canary Islands, where it remains in warm stack mode, again significantly reducing our daily operating cost of the vessel. We are hopeful the vessel will be back to work in Nigeria on identified work scopes in Q4 or Q1.

Over to Slide 14. In Brazil, our operations for Petrobras continued to go extremely well, again producing another quarter of operational excellence with continued strong performance regarding safety, uptime and efficiency. Both vessels achieved 99% utilization and we continue to be ranked number one rig contractor for Petrobras.

The Siem Helix 1 completed work on four wells conducting production enhancement work on one well and abandonment work on three wells. Siem Helix 2 completed production enhancement work on three wells in the quarter.

Moving on to slide 15 for our Robotics review. Robotics continues to have a very good year and is expecting a good second half of the year with five vessels working on non-oil and gas projects. We continue to expand our renewable energy services by product line and geographically securing renewable energy works in Europe, East Coast USA and Taiwan.

In the second quarter the vessel charter fleet utilization was 95% including 342 days from spot chartered vessels. Four vessels were utilized mostly in renewable energy projects in the North Sea. The Grand Canyon II and the MV Pride worked in the APAC region and the Ross Candies operated in the Gulf of Mexico.

In the APAC region the Grand Canyon II had 100% utilization performing works on ROV support projects and is currently working on a renewable energy project in Taiwan and will be contracted for Q3 with expected good utilization for the remainder of the year.

The MV Pride completed 56 days working in Australia undertaking an interesting salvage projects. In the Gulf of Mexico, the Ross Candies had a 91-day utilization work on ROV support for five clients. In the North Sea the Grand Canyon III had 72% utilization working mostly in renewable trenching. We continue to work with the GloMar Wave and the Kristiansand throughout the quarter, working on the long-term wind farm site clearance and survey projects. Due to the increase in number of boulders found at the sites, we have added a third vessel, the World Peridot, to the project. The T1200 trenching unit continue to work on a client provided vessel on the US East Coast conducting renewable trenching works.

Over to Slide 16. I will leave this slide detail on the vessels, ROV, and trenching utilization for your reference. Before I turn the call to Erik, I would again like to thank our Helix teams and partners for their exceptional work this quarter. I'm really proud of our offshore teams. They are doing a great job in following our requirements to keep the fleet performing extremely well and our onshore staff continue to do a great job, mostly working remotely supporting all of our businesses.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thanks, Scotty. Moving on to Slide 18, it outlines our debt instruments and their principal maturity profile. I'll leave this for your reference and move to Slide 19. This slide provides an update on key balance sheet metrics, including long-term debt, and net debt levels [Technical Issues].

Our net debt in Q2 decreased to $166 million from $183 million in Q1. The decrease in net debt during Q2 was driven by $23 million of operating cash flow, $5 million of capex during the quarter. We reduced our long-term debt by $10 million. Our cash position at the end of Q2 was $178 million, excluding $42 million of restricted cash. Our quarter-end net debt-to-book capitalization was 9%.

Moving to Slide 21 for a discussion on our 2020 outlook. Our industry continues to be challenged by COVID-19 and operations and logistics continued to be significantly impacted. As you may recall, in late March we withdrew our guidance for 2020 with a clear expectation of being cash flow positive in 2020. The uncertainty that led to that decision to withdraw guidance remains today, but we now have been operating in this environment for almost five months. We believe we have a better understanding and appreciation for operating in this time, the market and customer environment along with operational challenges. So at this time, we feel we have sufficient visibility to issue revised 2020 guidance in a good-faith attempt to provide investors information that is appropriately caveated as best we can against the backdrop of the current environment.

We're setting our revised guidance for 2020 as follows with revenues in the range of $655 million to $740 million, EBITDA in a range of $115 million to $145 million and free cash flow of $40 million to $80 million. The range we have provided is wide. But we feel it appropriately balances the risks we face. Our guidance is based primarily on contracted work. Our backlog for the balance of 2020 is approximately $263 million. Although subject to change, especially in this environment, we currently expect the majority of this contracted work to be completed in 2020.

Providing more color by segment and region on Slide 22. First with our Well Intervention segment, the UK, North Sea, we expect this region to be a one vessel region for the balance of 2020. The Well Enhancer has contracted work into September with opportunities into Q4. The Seawell remains warm-stacked available for work. The Q7000 is warm-stacked with earliest opportunities for work in late Q4.

In the Gulf of Mexico, the Q5000 is working for BP and expected to remain on hire for the balance of 2020. The Q4000 has contracted work through August with opportunities into Q4. In Brazil, Siem Helix 1 and Siem Helix 2 are on hire for the balance of 2020.

Moving to our Robotics segment, Slide 23. Robotics continues to be more resilient in this market than Well Intervention. Work in the renewables wind farm sector has continued mostly undeterred by current events. Project renewals have continued during this time providing much needed signs of sustained work. Robotics is being impacted by the slowdown in oil and gas work. But ongoing reductions in cost and activity levels in the renewables markets are mitigating a significant portion of that impact to date.

The Grand Canyon II is on contract through Q3 and is expected to have good utilization for the remainder of 2020. Grand Canyon III is currently trenching in the North Sea through September with good prospects thereafter. The Ross Candies' charter commitment expires in early August. The vessel is then expected to operate on a pay-as-you-go basis over the near term.

Our wind farm survey and site clearance project using two VOOs is expected to continue into Q4. We also expect to mobilize a VOO in August for an expected 60-day North Sea decommissioning project.

Moving to Production Facilities. The HP1 is on contract for the balance of 2020 with no expected change. As we have previously stated, we intend to continue to aggressively reducing our costs commensurate with levels of activity by assets and overhead.

Moving to Slide 24. Our capex forecast remains at $38 million for the year, comprised primarily of the recertification costs of our vessels, the majority of which is already spent in the first quarter. Reviewing our balance sheet, our funded debt is scheduled to decrease by $23 million in the remainder of 2020 as a result of scheduled principal payments. Our restricted cash position of $42 million was released on July 17th, although it may be required again if we return to work in West Africa.

We anticipate tax refunds in the amount of $16 million to $20 million in the next six to 12 months as a result of the tax changes from the CARES Act.

I'll skip Slide 26 and leave it for your reference. And at this time, I'll turn the call back to Owen for closing comments.

Owen Kratz -- President and Chief Executive Officer

Thanks, Erik. It's been and continues to be a wildly vacillating year of circumstance like no other year. Utilization on our assets is down across the board as could be expected, but not down as much as we had anticipated. We were actually surprised by new projects approved and awarded that were not unseen -- or were not foreseen, sorry.

Rates declined as expected. The surprise for us was that the pressure on rates did not stem from competitors and drill rigs but rather from the commercial assessment as to what cost the projects could carry in this uncertain commodity price environment. Of course, there are the usual effects of supply chain putting pressure on rates just because they could as well. Our rates probably declined more than we had anticipated as we perhaps overreacted to concerns about utilization. But that just means that there may be a chance that they will recover with commodity pricing a little quicker should the competitive situation remain as rational as it currently is.

The protocols and responses to COVID-19 certainly added cost to operating. But those aren't as high as one might expect as we've been able to offset that with reductions in crude change costs and logistics.

Early on in March, we implemented protocols that have proven fairly effective. We've always taken the safety of our personnel very seriously. In fact, we've been told several producers have actually adopted our protocols for their entire contracted fleet. We've had a couple of work suspensions while we address contaminations, but we had no zero revenue days due to the coronavirus.

Production from our Droshky field was halted in late April because the host platform that accepts our production was shut down. While we do require the profitability of the production to support the economics of the Droshky deal, the added profitability would have improved our Q2 results. The field is now producing again with one of its two remaining wells. This delay means that we will probably not see decommissioning work being done in 2020 on that field, but more likely will slide into 2021. The negatives on the year have been partially offset by operational cost reductions. Some of these are temporary and will vary with work volume such as vessel stacking, but some are structural and should be sustainable.

In addition to operational and overhead cost reductions, our operating group has done a great job with the result being a significant reduction in the downtime on our assets. In this environment that's truly commendable.

Our Robotics group has done a great job outperforming our expectations, resulting in a relatively strong year. Expansion into the renewables market as well as international markets has so far resulted in a stronger year than we anticipated and this does seem to be sustainable.

Many companies, including Helix, withdrew guidance as all this uncertainty started to unfold. And like most, we couldn't state with confidence what was likely in store for the year. Historically, we have provided annual guidance and we feel that if we can provide honest guidance, we believe that we should. We know investors are always looking for transparency and insight into our potential ranges of outcomes and we always strive to provide that transparency wherever possible.

There is still challenges ahead in 2020, but we now have improved confidence in how 2020 is going and our ability to meet the challenges we see. We have decided to issue revised 2020 annual guidance with a range of $115 million to $145 million of EBITDA.

For 2021, it's way too early and too many variables to say what kind of year it will be. Our best guess is that it will continue to be a challenging -- it will continue to be challenging with a strong recovery not likely to occur, in our view, until 2022. On the positive side, we've seen meaningful work that was contemplated for 2020 now deferred into 2021. New projects are also being assessed by our clients. The outlined commodity strip and analyst projections seem favorable for intervention work. The commodity price seems sufficient to warrant intervention given its relative low cost per barrel. Wells are being neglected as work is deferred and that work will have to be -- have to occur at some point. There is currently a lot of discussion about some major decommissioning work that will be coming as well.

We will continue our efforts to expand our work in the renewables market and hope our international expansion continues to add potential. We also see the market conditions becoming favorable for additional Droshky type deals sometime in the near future. Uncertainties for 2021 will be similar to 2020. Would commodity price hold steady? Will there be a significant reaction to a potential COVID-19 resurgence that again impacts demand recovery? Will there be a vaccine or therapeutics for 2021? And will upstream balance sheets achieve the stress [Phonetic] drive a reduction in all-cash spending?

We feel better about 2020. And even if we don't have clarity yet on 2021, based on our ability to react thus far, we do feel more confident in our market position and the ability to cope with the uncertainties. We still expect to be free cash flow positive for 2020 and 2021 with sufficient cash on hand plus forecasted to be able to meet our debt obligations. We will, however, continue to look for opportunities to strengthen our balance sheet in ways that provide greater flexibility on how we might use our cash and free cash flow.

I'll turn the call back over to Erik now.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

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

Questions and Answers:

Operator

[Operator Instructions] And our first question is from the line of Ian Macpherson. Please go ahead.

Ian Macpherson -- Piper Jaffray -- Analyst

Thanks. Good morning everyone. Great to see that despite the chaos that the year is shaping up a little bit better than we might have feared recently. So thank you for that outlook and, of course, understand that there is prevalent uncertainty still. But I was wondering if you could talk a little bit about the book-ins of the guidance range.

It doesn't sound like there is a lot in store with regard to your expectations for the Seawell which I assume is -- remains warm stacked throughout your scenarios and the Q7000 work more likely late in the year or next year. So is the guidance sensitivity more around the second half or mainly the fourth quarter filling up for Q4000 and Well Enhancer or are there other factors that we should consider as well?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

No, I think that's the right way to think about it, Ian. I think we're fairly clear on our expectations for the Seawell. The Q7000 is bit of unknown but as we expect that the opportunities there will be toward the end of the year or early next year. You could say the variables will be, of course, filling in some of the work on the spot vessels and, of course, any additional curve balls that our COVID-19 environment can throw us.

Owen Kratz -- President and Chief Executive Officer

Yeah, I just might add. I think Erik said it in his narrative that the guidance is based on our visibility of contracted work. I think we'd strongly guide toward the middle of the range. The upside of the range is based on potential work that we see. But there is uncertainty as to whether or not it gets contracted or moved into 2021. And then the downside of the range is based on basically unforeseeable events. We haven't suffered any zero revenue days from COVID-19, but that doesn't mean there won't be any. So we put a cushion in.

Ian Macpherson -- Piper Jaffray -- Analyst

Understood. Thank you both. I know there is still, again, plenty of uncertainty and instability in the market overall, but I know that the priority will be to renew the long-term backlog on the Q5000 starting next year, as well as extensions in Brazil. Has the world settled down enough that you've been able to resume those negotiations or is that still on the shelf for the time being?

Owen Kratz -- President and Chief Executive Officer

I'll start but I'll let Scotty comment further on this. I don't think that our outlook on our contract renewals has changed that much. Both the clients are very happy with the vessels. They've been a commercial success for all parties. We haven't seen any indications that there won't be a renewal going forward.

But having said that, I think the uncertainties of next year, you can deal with the operating groups but then they take their mandates from the corporate. And until the corporate groups decide on what their budgets and their perspective of 2021 is going to be, it's just too early to say what kind of rate might be achieved or what kind of duration.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah, I agree with that, Ian. Translating [Phonetic] is that we've had a very good start to the BP campaign this year and they're very happy with the vessel and we are still currently ranked number one in Brazil. So Petrobras is very happy with both vessels. They have a lot of work scheduled in there and the vessels are very efficient for them down there. So we keep doing a good job for these clients and hopefully that will lead to some discussions later in the year.

Ian Macpherson -- Piper Jaffray -- Analyst

Thanks and appreciate it. Good luck.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thank you.

Operator

The next question is from the line of George O'Leary. Please go ahead.

George O'Leary -- Tudor Pickering -- Analyst

Good morning, guys.

Owen Kratz -- President and Chief Executive Officer

Good morning.

George O'Leary -- Tudor Pickering -- Analyst

The Robotics business certainly had an impressive quarter. I wondered if you could provide some color around the salvage project in particular and how much that benefited results. Is there anything in there that materially helps the profitability of the business? And just kind of any incremental color on the nature of that work would be helpful, given the magnitude of the beat, at least versus our expectations?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Okay. So I'll take that one. The salvage project in Australia was a very interesting job. It was actually recovering the containers that were washed overboard in a storm from a container vessel. It lasted approximately 80 days. So you have to take that as a one-off. About every few years we get the odd salvage job. But it was a spot vessel, so it was normal sort of oil and gas type margins on that one.

Most of the uptick really for the Robotics side is coming from renewables and changing our products, service and geographic expansion into renewables. We've had three vessels work on a site clearance project that's continuing and we expect that to continue into the fourth quarter. We've expanded our renewables offerings into Taiwan and we currently have a trencher on the client-provided vessels on the East Coast of the USA. So the renewables side of the business is helping prop up against the downside of less ROV days on the oil and gas side of the market.

Owen Kratz -- President and Chief Executive Officer

Yeah, just want to add there Scotty. The ROV business is really transforming itself. So something like 40%-plus of our revenues in the Robotics is now derived from the renewables market and we see that growing.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. We continue to look at backlog on the renewables trenching side. We have work contracted out there now to 2024 on renewables trenching and we haven't seen any erosion in rates on the renewable side of the trenching.

George O'Leary -- Tudor Pickering -- Analyst

That's very helpful color. That actually answers the next question I was going to ask. So I'll move on to a different topic. Just -- Owen, you mentioned the competitive situation has been more rational than you might have anticipated. I wondered if you could provide a little more color there, just talk about the competitive landscape more broadly and maybe anything that you think might be driving that more rational behavior.

Owen Kratz -- President and Chief Executive Officer

Well, our main competition -- we really don't have that many direct competitors in what we do. We're the only one that provide heavy intervention vessels. The others in the market are all light intervention vessels from the direct competitors. Most of our competition comes from the drill rigs. Of course that's why we went into this business was to offer a better option to drill rigs for this kind of work. In the last downturn that was the anomaly.

Typically in a downturn rig operators will stack and then cut up rigs. In the last downturn what we saw was a tremendous crashing of the rates in order to try and hold on to market share and keep assets active. This time around though, we're seeing sort of a return to the historic rationale when the rigs are finished with their work and don't have contracting opportunities. It looks like they're being stacked rather than just working for sub-cash operationally. That's been beneficial. But then like I said in my comments, it still hasn't avoided the -- we're probably pricing a little more aggressively than what we need to from looking at the rig market. But we have been conscious about trying to provide impetus for the producers to make decisions to go ahead with work for this year by pricing at a level that makes their projects extremely attractive commercially.

George O'Leary -- Tudor Pickering -- Analyst

That is very helpful color. Thank you, guys. I'll turn it back over.

Operator

The next question is from the line of Mike Sabella. Please go ahead.

Mike Sabella -- Bank of America Merrill Lynch -- Analyst

Hey. Good morning everyone.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Good morning.

Owen Kratz -- President and Chief Executive Officer

Good morning.

Mike Sabella -- Bank of America Merrill Lynch -- Analyst

I was kind of wondering if you could dive in a little bit on the cost side of Robotics. You all managed this [Phonetic] big ramp in revenues quarter-over-quarter with relatively small increase in comparable costs. Were there -- I know there has been some kind of chunky one-time costs that have rolled off. Can you talk about how -- if that impacted the cost side of the business at all over the -- over kind of quarter-over-quarter?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Yeah. So I'll start that Mike and then Scotty can fill in. I think from the Robotics side, we did have some additional cost flow through the first quarter associated with the hedges that we had on the Grand Canyon III and those rolled off. So I think our overall fixed cost was reduced. I think -- also I think what you see also in the quarter-over-quarter, the improved utilization on our chartered vessel fleet, especially the long-term charters, that goes a long way. The cost is always there. When we're able to increase utilization on that [Indecipherable] significant driver of improvements that we see quarter-to-quarter.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. And year-over-year we've dropped off long-term charters and now moving more to a spot scenario. You can see we had seven vessels working for the Robotics side and those vessels are far cheaper than the longer term charters that we had.

Mike Sabella -- Bank of America Merrill Lynch -- Analyst

Yeah. That's great. Thanks guys. And then just one follow-up. When we think of wells that were shut in that are now being brought back on production, is there work for Helix? Do those create revenue opportunities or it's just more kind of getting back to a normal operating environment?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

I'll take that one. I think it could lead to work. Obviously it depends on the status with the well as it comes back on. If the wells have been left for a long time, they have the potential to wax up and that could lead to an intervention. Yeah, the potential for failure inside the wells are some of the mechanical components.

So as these wells that have been shut in come back on line, there is the potential for more work. We've got a lot of discussions in all regions for work next year. Like Owen said earlier, a lot of the work has been deferred for next year, but there is a lot of talk of new work next year and talk of decommissioning activities as well because these wells have been shut in so long. That being said, that work is not contracted yet, but there is a lot of healthy discussions going on for next year.

Mike Sabella -- Bank of America Merrill Lynch -- Analyst

Perfect. Thanks a lot, guys.

Operator

The next question is from the line of James Schumm. Please go ahead.

James Schumm -- Cowen and Company -- Analyst

Hey. Good morning, guys, and congrats on a great quarter.

Owen Kratz -- President and Chief Executive Officer

Thank you.

James Schumm -- Cowen and Company -- Analyst

I just wanted to go back to the prior commentary on well intervention pricing. And can you sort of talk a little bit about how vessel pricing behaved in the second quarter relative to the first quarter and then what do you expect the percentage change would be roughly in the third quarter? Just trying to get a sense of how that's moving around.

Owen Kratz -- President and Chief Executive Officer

Well, I'll just start off by saying that it will take us a little while to dig in and try and find out. We haven't really looked at that. Just off the top of my head and my gut feel is that, well, the first quarter was heavily impacted -- let me preference it all by saying first of all that utilization drives our margin a lot more than day rate does.

In the first quarter utilization was way down primarily because we put a lot of vessel maintenance periods into the first quarter. So to compare them quarter-by-quarter rate wise is very difficult for us to do. I think in the second quarter, we had a few projects that were probably at legacy rates. But then we started to fill in utilization by giving perhaps lower than market required rates.

So on a blended basis, going forward I think for the rest of this year we will probably continue to price aggressively in order to fill utilization because that drives our margin more than the rate does. But then for next year, I sort of see an opportunity to rationalize the rates a little bit based on what we've seen this year.

James Schumm -- Cowen and Company -- Analyst

Okay.

Owen Kratz -- President and Chief Executive Officer

I know that doesn't -- that doesn't give you a percentage. It's just -- I think we'd have to get back to you on that.

James Schumm -- Cowen and Company -- Analyst

Okay. Yeah, I totally understand. And then on Robotics, you had total vessel days that were close to 500 in the second quarter. Assuming zero contribution from the Ross Candies, I get something close to 400 days of utilization in the third quarter based on your 2020 outlook. Does that sound reasonable or am I missing something? And then what's the normal likelihood of picking up additional Q3 work, given that we're near the end of July?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

I'll take that one. We do have planned work for the Ross Candies in Q3. We have some contracted work for it already. But the Ross Candies contract now will be as a pay-as-you-go type contract. We have also mentioned that we plan to take a spot vessel in the North Sea for 60 days. I think days over days is going to be somewhat similar to Q2.

James Schumm -- Cowen and Company -- Analyst

Okay.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

We expect the site clearance project to continue through Q3. The Grand Canyon II will be on hire for the whole Q and the Grand Canyon III will be on hire the whole time. So it's going to be very similar.

James Schumm -- Cowen and Company -- Analyst

Okay. Great. Thanks for that. Appreciate it, guys.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Okay. Thank you.

Operator

[Operator Instructions] The next question is from the line of Craig Gilbert [Phonetic]. Please go ahead.

Craig Gilbert -- Analyst

Thanks for taking my question. I just had a few on the cash flow forecast. Can you let me know if the CARES Act recovery of $16 million to $20 million is captured within that forecast of $40 million to $80 million?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

I would say on the higher end a portion of it is. I think we disclosed that we expect that in the next six to 12 months. So there is variability. I think on the higher end of our free cash flow range would assume a certain amount of recovery there. But it's really -- I think it's something that we expect. The timing is just a little bit uncertain.

Craig Gilbert -- Analyst

Okay. That makes sense. And then just taking it down from EBITDA less capex, I would have gotten a little bit higher free cash flow. Is there anything going on with working capital? Is there a usage that's, I guess, depressing free cash flow, because I would have thought at the midpoint EBITDA of about $130 million less the $38 million and then interest is fairly small and the EBITDA is net of the $20 million mobilization cost. So I would have thought it was a little bit higher. Is there anything at play there that I might be missing?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

No, I think -- first of all, I think there is no specific, you can say, buildup in uses of working capital. I think that what we have layered in into our models and our estimates is obviously a conservative outlook on working capital based on the current environment. And I think our assumption here is that there could be some extension there as far as collections. But there is nothing that is specifically targeted in our assumptions other than conservatism.

Craig Gilbert -- Analyst

Okay. Okay. And then just the last question is renewables within Robotics seem to do very well. And I recall that the expectation was 2021 was going to be a better year on that front than 2020. Was there anything that was pulled forward or is it still -- is that previous expectations still hold that 2021 should be even better?

Scotty Sparks -- Executive Vice President and Chief Operating Officer

We do have more trenching work booked in 2021, yes. So -- but be mindful that a lot of the renewals work this year is coming from the site clearance projects and we don't have one of those booked next year. We're in discussions and that is a product line that we will be offering now. It's been very successful, the clients are very happy. So, we're in discussions with others and we will be bidding more of that type of work. But the trenching side is very good.

Craig Gilbert -- Analyst

Okay. Thanks very much. Appreciate it.

Operator

The next question is a follow-up from James Schumm. Please got ahead.

James Schumm -- Cowen and Company -- Analyst

Hey. Thanks for letting me back in. I think in the prepared remarks, you guys mentioned some additional cost for COVID-19 and stacking. I just wanted to know if there might be a 3Q benefit from the absence of these costs. And if so, can you quantify it?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

I think in general, Jim, we have incurred additional costs in the COVID environment and I think we expect that to continue for the time being and it's included in our forecast. Also I think we've disclosed roughly the cost of stacking the vessels. The Seawell, I think it's less than $20,000 a day and Q7 in the mid $20,000 a day cost. Those, I think, are assumptions that would continue going forward.

James Schumm -- Cowen and Company -- Analyst

Right. Okay. I just didn't know if there is any like one-time mobilization costs into the stacking period or something that you would -- that would not recur in the third quarter, but it sounds like not really meaningful.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Not really, no.

James Schumm -- Cowen and Company -- Analyst

Right.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

No.

James Schumm -- Cowen and Company -- Analyst

Okay. All right. Thanks again, guys. Appreciate it.

Operator

There are no other questions in the queue. Would you like to reprompt or go to closing remarks?

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Closing remarks. Thanks for joining us today. We very much appreciate your interest and participation. Look forward to having you on our third quarter 2020 call in October. Thank you.

Operator

[Operator Closing Remarks]

Duration: 44 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

Ian Macpherson -- Piper Jaffray -- Analyst

George O'Leary -- Tudor Pickering -- Analyst

Mike Sabella -- Bank of America Merrill Lynch -- Analyst

James Schumm -- Cowen and Company -- Analyst

Craig Gilbert -- Analyst

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