MDR
#Hello, Rick.
So as you know, Andy, we never disclose the order intake, and obviously try never ---+ or never forecast backlog.
As we look at it, I think we said earlier is if you look at today, 79% of our business is now driven by what's happening in the offshore and moving forward.
And again, that's a reflection of a market where it's typically shallower water and typically areas where the costs to recover a barrel of oil is obviously less than some of the deepwater.
If you look at our supplemental deck, you'll see that also reflects the largest part of our revenue pipeline is still coming from NOCs, and that reflects the activity that obviously we see in places like Middle East and also parts of the Americas, which is predominately Mexico and Caribbean.
So we see that continuing and the bidding activity on that to remain steady.
Areas of opportunity for us, so if we talk in the offshore is that obviously we're still not made any penetration in either West or East Africa.
So we see that as being an opportunity for us, as well as some of the activity that's ongoing in the North Sea, and again, we're taking a look at that at this time.
And over a period of time, hopefully, we can evolve into those areas.
Longer-term growth is that we have shown this year like what we've done in Ichthys in Australia, but also with the three, I'd call the pipeline subsea tied backs, plus the other projects that we executed on, Jack, St.
Malo for Chevron and Julia for Exxon Mobil is that we are poised as a company to really take advantage of the deepwater subsea business.
The issue there is that seems to be a little bit further away in terms of the ---+ in terms of horizon of when that comes back.
And so we are looking at not seeing a lot of activity in that area until 2018 onwards.
But what is clear from the work that was done on Ichthys and with the projects that were executed in the deepwater subsea is that McDermott is more than capable to compete in these markets, but also compete strong commercially.
I feel that with the execution model that we have with the spoolbase, with the assets that we have is that McDermott is in a good position today in terms of its ability to compete against our peers from a commercial business.
So I think if you look at it, I mean, what obviously gives us a lot of confidence is the fact that at the end of Q3, we're at $2.4 billion of revenue in the backlog.
And if you compare that to our revenues that we've had in 2016 is that we are in this year in a stronger position moving into 2017 than what we've been in previous years at this time of the calendar.
If you consider also the bids that are outstanding, and some of these have been outstanding for a period of time, is that we would expect some of our customers to move ahead with some of these awards before year end.
Now none of that is obviously guaranteed, because obviously our customers are currently and constantly evaluating pricing, but we would expect that certainly one major and probably one other customer to move ahead with awards before the year end, or certainly no later than early next year.
So as you look at $2.4 million into the year, it gives us more confidence than what we've had in the previous two years.
And as I said, if you go back to who's our largest customer and the customer that we have, the largest market share is that we still have a large bid ---+ a large backlog of outstanding bids, which is sitting with that customer at this time.
So, we're sitting here today what we feel is a reasonable position moving into 2017.
Good afternoon.
Yes, the majority of the work that we're bidding with Aramco today is brownfield.
Now, brownfield is where we are either modifying, enhancing or expanding existing facilities.
So a lot of the bids today are on the famous fields such as Safaniya and Marjan and Berri.
So, we would expect that to continue in the same path moving forward.
I would expect next year is that you will see some greenfield awards in the market.
I'm not saying it'll come to McDermott, but there will be some ---+ .
Awards.
I mean, there are some areas offshore where particularly the major operators need to move to, and a lot of them will actually ---+ could be in the deepwater.
But I think over this next 12 months, I would anticipate that the most of our bids will continue still in a shallow water and more of that brownfield type, and again, in areas such as Middle East, Americas, and maybe some slight activity starting to evolve in Asia.
<UNK>, this is <UNK>.
We've been very CapEx-disciplined over the last two years, really kind of holding back to that $40 million to $50 million maintenance at project level.
We look forward into 2017, we would say we would see that $50 million level continuing, but we also see some maybe some tactical moves to add to our capabilities or just putting in some additional growth CapEx there.
That's correct.
That's correct, and we've kind of finished our capital build program on the vessel side, so we don't see a significant new capital build program at this point in the cycle.
Thanks, <UNK>.
Yes.
<UNK>, I think if you look at Q3, we demonstrated a very successful quarter from an earnings and free cash flow perspective.
Our CapEx level was the lowest it's been in the last few years, given the completion of the DLV 2000, the majority of it.
So I think that's a very good reflection of the capability of this business.
As I cautioned around 2017 initial outlook, we've yet to tie-down with our projects and our final backlog, where the potential working capital goes.
So I think at this point in the cycle, the only real variable that McDermott's looking at is on the working capital side.
But with that said, we feel comfortable given the discipline around cash so far and the large gross cash balance that we're maintaining at this point.
I think with what we're looking at today is that you can expect at least to, what I'd call one large project and one you would put in the major category to get kicked off during 2017.
Thank you.
Thank you, operator.
I appreciate you taking the time today to listen to McDermott's third quarter 2016 earnings call.
As a reminder, this earnings call will be available for replay for seven days after this call on our website at www.mcdermott.com.
Operator, this concludes our call.
