OIS
#There are three different elements included there.
And I would say greater than 50% was exchange rate gain.
But there's about three different things in there.
It's not just the exchange rate gains
(Inaudible - multiple speakers) material.
I would just generally say in no given quarter, post spin-off of Civeo have we had exchange rate gains or losses.
Correct.
I'd keep it neutral.
We don't model it ourselves, <UNK>.
It's just never historically been that big.
<UNK>, we just model at zero, quite frankly.
Well, we would like to grow both markets.
Now, I would draw one distinction here, which is the sense that the quote unquote offshore deep water market is a truly global market.
You know, when I'm looking at the outstanding bids and quoting activity, I'd say there's probably a waiting long term in favor of Brazil and lower tertiary Gulf of Mexico but I've got this in Vietnam, China, Mozambique.
It's all over the place.
I think the true question is ---+ will shale plays of magnitude develop outside of the United States.
And so that may dictate more of the rate of growth in the segment more than anything else.
It's not about necessarily desire, but when we were at a peak rig count near 1900 rigs, we were adequately supplying the market in North America, and technology will evolve.
Technology will change.
We can consolidate.
But it's hard today to envision a significant rate of growth in the United States above and beyond where we are, without M&A.
So the question is what happens to international shale play development which has been slow to materialize.
Well we put in our investor presentation major project awards on a trailing 18-month basis, so you can clearly get color.
But there's been for us a significant weighting towards subsea production infrastructure.
That clearly seems to be a focus of Petrobras.
I would have done ---+ they done a lot of work in the [pre sales] area.
They need to bring these fields on production, get revenue coming on.
That's the best way to enhance their free cash flow.
The cuts that they have had have had less of an impact on our operations.
We are committed to Brazil.
You know, we're building ---+ expanding in [MACA].
We're building a new facility elsewhere, but staging that according to the demand.
What I can say about Brazil, for us, i.
e.
the products and services we offer, is that bidding and quoting activity remains strong.
And they pay us.
And that's all I want from my customers.
We monitor it.
We don't want to develop too much of a concentration with any one customer.
But that is not the case right now.
Oh, thank you for that.
I was going to say.
Whoever asked that question, don't look ---+ don't comment on our age here.
She you later, <UNK>.
Hi, <UNK>.
We try to work with our customers, and this is not all about pressuring the service base.
I mean their top line was cut in half by the commodity.
They're getting some relieve right now.
Crude oil pricing and somewhere around.
I haven't checked it today, $57, $58 today.
So, a little over 30% from the floor.
So that's helped.
It's not lost in most investors in the space that there have been debt and equity raises which have ---+ shoring up some balance sheets.
That's not necessarily pervasive but it's certainly present.
I know a lot particularly of the large companies, they realize that they've gotten material price concessions out of the service sector.
If you think about it, this is actually a real good time to invest, when you've stabilized your own cash flows and you're shoring up your balance sheet, you've got the service costs down to a fairly low level.
But I would just say we've got constructive dialog with our customer base and we were worried abouta lot of our customers and their leverage profile coming in the year.
That has eased, unequivocally.
We are hearing comments about particularly the deferred completions.
I would say the first one ---+ they'll start moving probably in the Bakken.
Yes.
That's where the concentration of the deferred completions are.
And again, it feels like kind of late second quarter we're optimistic that we'll see a little bit of improvement in activity.
But the dialog is sympathetic.
It'd be one thing if the service sector was making up [same] rates of return on their invested capital.
We're not.
We weren't before;we're not now.
And our customers know that.
And I go back to my earlier comment.
You know, providing high-quality operations, investing in technology and safety, it does come at a cost.
So we're trying to hit that equilibrium that works for our customers but allows us to offer quality services in the field.
Yes.
It is a great question.
It's probably one of the hardest ones to answer.
But fields that are already under development, I think we are the beneficiary of that because, first of all, there's not quite as many design elements yet to figure out.
Most of the time, once you've gone from field discovery to field delineation, you have pretty good idea of what type of production facilities that you need, what types of interfaces that we're looking at, what type of subsea ---+ and is it rigid risers, flexible risers, free-standing.
Those field design elements are somewhat in the rearview mirror, and a lot of interfaces.
So, again, that's why I feel better about subsea production infrastructure.
What you're really talking about in my view, and all these ---+ you can call them JVs, you can call them alliances, but to my view they're largely designed at the early stage, to get on the front end engineering and design phase, work through interfaces between service delivery customers optimize the vessels that are going to be used so that you get it right the first time.
There isn't anybody that operates in this equipment space that doesn't understand that once you get into development and manufacturing, when you have to re-engineer and redesign, because of the installation issues you face, the interface issues, that's where cost overruns come into play.
And so all these are geared towards ---+ you know, you've got multiple service providers offering unique different technology.
How can we work together at the front end to improve the cost delivery to our customer base.
But that's, to me, is a very long-term focus proposition.
Thank you.
Hi, <UNK>.
<UNK>.
That is a wide-open question, and if there is a change in behavior, I think it has to come down to a focus on return on investment capital more so than it is a focus on production growth.
And hard to tell, we've got so many customers, particularly in the United States, whether that truly materializes or not.
There's a good news/bad news.
If in fact that's where we get ---+ and you see a lot of these coming together, whether they're JVs or alliances in the deep water space or whether we're talking about Halliburton Baker, but that model speaks to greater consolidation in the market, the need for greater consolidation and rationalization costs throughout the marketplace, such that our customers would become more dependent on a handful, a few large companies.
That might be good.
That might not be good.
Historically it's been a lot of smaller cap companies.
Many of my customers will tell you this over and over who have really delivered a lot of the new technology in this space.
They're willing to invest in and focus on smaller product lines.
So I think it's very healthy to have a broad and highly competitive service space.
It's hard for me to predict where we go, but I think what's going to happen is you're going to see a greater rate of consolidation if in fact that picture develops where all we're worried about is service company costs.
Thanks, <UNK>.
Are you talking about land drilling.
In the ---+ you know, we're in narrow markets in the Permian and in the Rockies, and we are currently about 35% utilization and I don't see a trend line change at this point in time.
We've got really a handful ---+ I could count them on one hand, the customers that are contracting the rigs that we have working, which again ---+ you do the math ---+ that's 12 rigs working, and the statistic, the total US vertical working land fleet today is about 120.
So it's a pretty narrow market we're talking about.
And right now I do not see a trend line change in that market.
Thank you, <UNK>.
^ Thanks, <UNK>.
I didn't think we did at this point in time.
I want to thank everybody for joining our call.
It's certainly a dynamic time in the market and we appreciate your continued interest and willingness to work with us in a fairly volatile time, to help us get the market understanding right.
It's not lost on me that it's gorgeous outside.
It's OTC week next week, so I hope to see many of you out there.
Take care.
