Feb 23, 2012
Executives
Tony Tripodo – CFO Alisia Johnson – General Counsel Owen Kratz – CEO Alisa Johnson – General Counsel Cliff Chamblee – EVP, Contracting Services Johnny Edwards, EVP, Oil and Gas Lloyd Hajdik – SVP, Finance Terrance Jamerson - IR
Analysts
Marshall Adkins – Raymond James Michael Marino – Stephens Incorporated Martin Malloy – Johnson Rice & Co. Joe Gibney – Capital One Anthony Google - Upstream
Operator
Ladies and gentlemen, thank you for standing by and welcome to the review of Fourth Quarter 2011 Results and 2012 Outlook with Investors Conference Call. During the presentation, all participants will be in a listen-only mode.
Afterwards, we’ll conduct the question-and-answer session. (Operator Instructions).
As a remainder this conference is being recorded, Thursday, February 23, 2012. It is now like to turn the conference over to Mr.
Tony Tripodo, please go ahead.
Tony Tripodo
Good morning everyone and thanks for joining us today. Joining me today is Owen Kratz our CEO; Cliff Chamblee, Executive Vice President, Contracting Services; Johnny Edwards, Executive Vice President of Oil and Gas; Alisa Johnson, our General Counsel; Lloyd Hajdik, our Senior VP of Finance.
And at this time I’d also like to introduce Terrance Jamerson. He’s coming over from Canyon, our Robotics business unit to assume the Investor Relations responsibility from Stephen Powers.
Stephen is actually swapping positions with Terrence, and has transferred to Canyon. Terrence has been with the Helix organization for four-plus years.
And at the end of this call, I’ll have Terrence supply you his contact information and particulars. 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 Investor Relations page on our website at www.helixesg.com. The press release can be accessed under the press release’s tab and the slide presentation can be accessed by clicking on today’s webcast icon.
Before we begin our prepared remarks, Alisa Johnson will make a statement regarding forward-looking information. Alisa?
Alisa Johnson
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 Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Our actual futures results may differ materially from our projections and forward-looking statement due to a number and variety of factors including those set forth in slide two and in our annual report on Form 10-K for the year ended December 31st, 2010, and in subsequent Form 10-Qs. Also during this call, certain non-GAAP financial disclosures may be made.
In accordance with SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation, along with this presentation, the earnings press release, our annual report and replay of this broadcast are available on our website.
Owen Kratz, will now make some opening remarks.
Owen Kratz
Good morning everybody, we’ll start with slide five, which is the high level summary of fourth quarter results. Quarter four’s revenues increased from $372 million in Q3 to $396 million.
The increase is attributable to our Oil and Gas segment, a factor of both higher production and higher oil prices. As we previously signaled, our Contracting Services revenue declined in Q4 due in part to the transfer of the well enhancer to West Africa.
However, we expect contracting service revenue to return to Q3 levels in the first quarter of 2012. In addition to the good operating results, we continue to generate a significant amount of cash flow with $166 million of EBITDA in Q4.
Moving to Slides 6 and 7, quarter four’s EPS is $0.16. However, backing out the impairment charges and other items noted in our press release, our Q4 EPS would have been $0.66.
Much of the impairment’s related to declining economics and natural gas fields. Utilization remained high in our well intervention business at 98%.
However, accounting convention required us to defer the mobilization revenues for the well enhancer until Q1 of this year. We did achieve 100% utilization for our two reel pipelay asset; albeit that no profit contribution.
The outlook for the Contracting Services business is definitely looking up. Given that both our production and reserves are now more heavily weighted to oil, we’re transitioning our reporting format to speak in terms of barrels of oil equivalence versus cubic feet of gas equivalent.
Our Oil and Gas production in the fourth quarter averaged 24,000 barrels of oil equivalent, up from 21,000 barrels of oil equivalent in Q3. Quarter three’s production was impacted by tropical storm activity and production from our Phoenix field continues to outperform our expectations.
Again, much of our oil production is sold at Louisiana light sweet prices, which is at a significant premium to the West Texas intermediate prices. We sold our oil production at an average price of nearly $111 a barrel in Q4.
The entire – for the entire year, our oil and gas production amounted to 8.7 million barrels equivalent or in bcfe equivalent 52.2 bcfe. Tony?
Tony Tripodo
Yes, continuing on Slide 7, from a balance sheet and cash flow perspective, quarter four was very good for Helix. Our cash balances increased by $171 million, from $375 million at the end of Q3, to $546 million at year-end.
We also paid down an additional $18 million of principal on our term loan. Our total liquidity now stands at a very healthy $1.1 billion, and our net debt has been reduced to $609 million at year-end.
After a committed focus to balance sheet improvement, we have now reduced our net debt-to-cap ratio from an unhealthy 60% at year-end ’08, to below 30% at year-end ’11. I’ll now turn the call over to Cliff for an in-depth discussion of our contracting services results.
Cliff Chamblee
Thanks, and good morning all. As you can see, Contracting Services had a good fourth quarter with total revenues of $225 million, up from a year ago but slightly down from Q3.
Our gross profit margins at 22% in quarter four, was down quarter-to-quarter but significantly higher than a year ago when it was at only 4%. Utilization’s harvest business unit with both Well Ops and Canyon vessels of 98% and 93% respectively.
The pipeline vessels utilization was at 87% with the Express and the Intrepid working in the pipeline mode, and the Caesar on accommodations mode down in Mexico. Moving over to Slide 10, this slide shows the equity and earnings contribution of the independence Marco Polo and the now SapuraCrest JV.
The results are fairly consistent with Q3, so I’ll leave the slide for your reference. On to Slide 11, Well Intervention business has continued to be very robust to the point we’re looking at alternatives to expand that capacity.
To that point, we announced last week that we plan to commence construction of a new build, Semisubmersible Well Intervention vessel this year, styled after the Q4000. The Q had nearly 100% utilization between working for Shell and Anadarko, and is booked through the year-end of 2012 and beyond.
Our two North Sea vessels were also very busy with 96% utilization and also carry a great backlog going forward. The Well Enhancer sailed to West Africa in December, and is performing very well, setting new water depth records for that vessel, and roughly 500 meters.
On the Robotics side, Canyon experienced high utilization for the construction, support vessels as well. In addition to that, the individual ROVs and trenching assets realized higher utilization also.
We completed the first road drill projects with our new assets, and we are optimistic about this service line, and hope to grow this business very rapidly. The renewable side of the business also continues to be a highlight for us in the fourth quarter.
And along with our new vessel at Grand Canyon, which will be delivered this summer, we believe this business will change and grow for us. On over to Slide 13.
In the Subsea Construction, the Pipeline Group which historically has been the Gulf of Mexico focused, has two of the three assets outside of our traditional U.S. Gulf of Mexico arena, Intrepid’s been in California and the Caesar in Mexico, while the Express continues to experience high utilization here in the Gulf.
The outlook for this business is actually improving nicely. On to Slide 14, this slide’s just a bit of a confirmation on the utilization side, which I’ve been speaking about in all three of the groups.
So with that, I’ll turn it over to Johnny, for the Oil and Gas side of the business.
Johnny Edwards
Good morning. Please turn over to Slide 15.
I guess both Slides 15 and 16, the financial highlights for fourth quarter. Production and revenue for Q4 2011 was higher than Q3, basically due to better run time than oil price improvement.
The Phoenix field with the HP1 continued to produced very well in Q4. Our production mix was two thirds oil.
As for the footnote on Page 15, we recorded impairments in Q4 of 108 million. Approximately 79 million was related to natural gas properties where economics could not support the carrying values of those properties with the lower gas prices.
The remaining 28 million was related to ARO impairments, the largest being our only U.K. property, which was negatively impacted by a regulatory changes in the well abandonment process.
Slide 16, I’ll make a note, the absolute dollars of operating cost were slightly higher in Q4, mainly due to two facility upgrades on the shale, where we had some piping corrosion, and a more active shale well workable program to improve our shale production. Our operating cost per Boe actually decreased.
Slide 17 and 18 provide much detail on our year-end reserve report. Slide 17 provides the breakout of reserves in oil, gas and oil equivalence, for the reconciliation of reserves from year-end 2010 to year-end 2011.
The total proved reserves at year-end 2011 are about 39 billion barrels equivalent. This is the first year that we’ve provided SEC probable reserves.
The probable reserves are almost 20 million barrels equivalent. Most of the downward revision improved natural gas reserves, mainly at our Bushwood field, moved to probable.
We added both proved and probable oil reserves at mainly at a Phoenix field, due to our better than expected production performance. The reserves are shown in oil equivalence because we’re now over 58% oil for our proved reserves.
Slide 18 provides a breakout between proved developed and undeveloped reserves by Shale, and deep and by oil and by gas. The combination of higher oil prices and oil reserve additions, actually increased our PV-10 at year-end 2011 for the proved reserved to almost 1.5 billion, which is higher than our year-end 2010.
Looking forward, we have some very exciting opportunities. In Bushwood field we expect to add production from two wells in 2012.
The Nancy well was drilled in fourth quarter 2008, has now been completed and is waiting to flow. First production for Nancy is now estimated in Q3 of 2012.
Also we’ve contracted a rig now to drill the Danny II oil well. This well is an exploration well targeting oil production just below the Danny oil well.
The Danny II is expected to spud by May 1 of 2012, with first production in Q3 of 2012. We have multiple drilling opportunities in The Phoenix field.
We have filed the APD permit for the Wang exploration oil well. We also have a (Pud) well were we’d like to drill at Phoenix, it’s called our Head and Neck Pud well in the main pay zone.
We expect to receive the Wang APD at any time now, and we’re trying to secure a drilling rig as we speak. We are targeting drilling the Wang well in Q3 of 2012.
The timing, of course, of these wells would be depending upon receiving the required drilling permits and securing a rig. Over to you, Lloyd.
Lloyd Hajdik
Thanks, Johnny. Slide 19 details our commodity hedge positions covering our 2012 production and a portion of our 2013 production.
The 4.6 million barrels of oil equivalent hedged for 2012 covers about 60% of our forecasted combined production of 7.5 million barrels equivalent. And regarding our oil hedges, 75% of our current hedges in place by volume for 2012 and 2013, are based on the Brent benchmark to better correlate our financial hedges against the actual pricing we’re receiving for our Gulf of Mexico accrued sales.
The actual spread between the WGI benchmark and what we actually receive for our crude oil sales, in the fourth quarter there was approximately $20 per barrel. Generally speaking, we have a goal of hedging up to 75% of our forecasted proved developed production for the current year, and we begin to layer in hedges on our forecasted production from our approved undeveloped reserves, only when the reserves are very close to the first production.
Turning over to Slide 21, this slide profiles our current debt levels and liquidity position at December 31. And as Tony mentioned earlier, we paid down an additional $18 million of our term loan in the fourth quarter, and for the full-year 2011, we have repaid a little over $210 million in debt, bringing our gross and net debt balances down to 1.2 billion and 609 million respectively at the end of the year.
We ended December with $546 million of cash on hand, and again, that’s up $171 million from the $375 million at September 30. As mentioned earlier, our liquidity position stands at a very healthy $1.1 billion at the end of the year.
And as we mentioned in our press release, earlier this week we closed an amendment to our credit facility to allow for a new $100 million term loan committed by Seneca the Banks. And the terms of this loan are the same as the resolver and is expected sometime in March.
Together with proceeds from the term loan and an incremental $100 million of existing liquidity, we intend to call $200 million of our high-yield bonds with a redemption date in late March. Net debt balances do not change, but the cash interest savings from replacing the more expensive 9.5% debt, is very significant from now until January 2016 maturity of the high-yield.
Tony?
Tony Tripodo
Yes, turning to Slide 23, where we present our 2012 outlook. We’re following up a very strong 2011 with another strong outlook for 2012.
Forecast EBITDAX at approximately the 600 million and I’ll get in to the basic assumptions that underlay that number. While this is slightly down from 2011 levels, we don’t anticipate being able to match 2011 production levels due to the slower pace in securing permits for our two key exploration projects scheduled in 2012.
Also, even though we forecast stronger market conditions for our Contracting Services business in 2012, four dry docks presents a bit a bit of a headwind. As you can see, based on our commodity price forecast coupled with the hedges we have in place, we estimate realized commodity prices at $104.80 for oil, $4.56 for natural gas.
That being said, we are actually realizing higher LLO prices for oil than our forecast. CapEx spending is pegged at $445 million including an estimated $130 million in 2012 for the construction of the new build well intervention semi that we announced last week.
On Slide 24 the key assumptions and factors that go in our outlook are as follows. Number one, we have a very strong backlog for our well intervention vessels with the Q4000 fully booked in 2012 and building backlog into 2013.
The Well Enhancer and Sea Well are expected to stay very busy in 2012 as well. We expect to grow in revenue base for Robotics, particularly for renewable energy trenching and coring services.
We are adding capacity in ROVs and we expect our robotic business to have a very strong year. We have four dry docks scheduled for 2012 with an estimated P&L impact of 25 million.
The dry dock schedule is presently scheduled as follows. The Intrepid in April upon return from California, the Q4000 in March, the Sea Well in April and the Well Enhancer in July.
The above schedule is subject to change, but this is our best estimate for now. On to Slide 25, for our Oil and Gas business, aside from the commodity price assumptions previously outlined, the key variables baked in to our forecast are as follows.
No significant tropical storm disruptions in 2012, much like 2011. The Danny II well and The Phoenix field and oil target gets drilled in the first half of 2012, is successful and commences production mid-year.
The permit and the rig for this well is secured. In The Phoenix field, either the Wang prospect or the Head and Neck pod both oil targets get drilled, and commence production sometime in Q4.
Permit is pending and rig negotiations are in process. As with 2011, we anticipate 90% of our oil and gas revenues to be from liquids, thus we are highly levered to the price of oil.
On to Slide 26, we will spend more in CapEx in 2012 than 2011, partly due to the estimated $130 million for the well intervention semi and in part as we pivot to a growth mode, with the goal of capturing a multitude of opportunities in our Robotics businesses. Thus, $250 million is projected with the Contracting Service business, including the $130 for the new build.
On the oil and gas side, we project to spend $195 million with the majority slated for drilling and if successful, completion of the Danny II and either the Head and Neck or Wang wells. I’ll skip Slides 28 and 29, leave them for your reference.
And at this time, I’ll turn the call back over to Owen.
Owen Kratz
Okay, thanks Tony. As you can see from this quarters reported results, we’re continuing to progress the transition of the company in line with our previously stated strategy.
We continue to improve the balance sheet and have now reached the targeted 30% debt ratio that we’re comfortable with. We’re now running a more efficient oil and gas business by high-grading our properties and de-risking the business model, while at the same time, generating significant cash flow.
We’ll continue to try in monetize our noncore assets, but it’s also time for us to begin new capacities for growth. Our emphasis will be to add [inaudible] and capability primarily in well intervention and robotics.
We’re now asset constrained in those areas, so you’ll see us add capacity there. We recently announced plans for construction of the New Build Semisubmersible Well Intervention Vessel based on the success and lessons learned from the Q4000.
For now we’ll refer to it as the Q plus. In the near-term, we’re adding a new vessel to the robotic support fleet to be in service during the second half of this year, and we’re looking at another vessel beyond that.
We’re adding a new trencher as well to be in service in the back half of this year. We’re in process of also adding a minimum of 6 new work class ROVs over the next 12 months.
We’re building new well interventions and seeking the best deployment platforms. There’s a lot in the works.
We’re basically opportunity rich, but we will address growth as a measured pace, with an ability to retain quality of service, and only at a pace that allows us to maintain the strong balance sheet and liquidity position. I realize this is a bit vague, but as I said, there’s a lot in the works.
For the past few years, we focused on the balance sheet, and have now put ourselves in a position to launch growth. So they’ll be a period here during 2012 where the process will be the initiation of steps to grow, but actual ramp – actual results will ramp up over time.
So stay tuned, and with that, I’ll turn it back over for Q&A.
Tony Tripodo
Yes, before we do that, let me have Terrance introduce himself and then we can go to Q&A.
Terrance Jamerson
Okay, thanks, Tony. Good morning.
As Tony mentioned, my name is Terrance Jamerson. For the past four years, I’ve worked in our robotics division serving as a General Manager of Accounting and Finance of that business unit.
I look forward to the new opportunity and working with each of you guys and the new investor relations capacity. My new phone number, which is actually the same as Stephen’s old number, 281-848-6644.
This number as well as my e-mail address is also posted on the Helix website under investor relations, at the contact information tab.
Tony Tripodo
We’re ready for Q&A now, operator.
Operator
Certainly, thank you. (Operator instructions).
And our first question comes from the line of Marshall Adkins with Raymond James, please go ahead.
Marshall Adkins – Raymond James
Morning guys, I want to get a little more specifics I guess on the Q-Plus, that we’re calling it, you know, the new build. Walk me through what is going to be different about this, you know, how are you going to fund it, timing, and what kind of rate of return do you think you’re going to get on this thing?
A lot, of questions there, I know.
Tony Tripodo
Well, the Q-Plus is basically taking the methodologies that are incorporated in the Q4000, and just putting it on a slightly larger platform. You know, some of the things that we have learned from the Q4000 was a primer for a little larger air gap, a little greater deck load.
So, it’s basically the Q4000-plus, with respect, and I’m not sure if I remember all of your question, but…
Marshall Adkins – Raymond James
Well, overall cost and, you know, how do you think the returns are going to be on this one et cetera, et cetera?
Tony Tripodo
I think – well, the overall cost, I might as well mention, it’s going to be in the neighborhood of half a billion. On financing this, it is our intentions right now to finance this on our own balance sheet, but the timing of the payments, we believe, we’re going to be able to fund this out of our existing cash flow without an increase in debt.
With respect to the returns, if you go back and historically you remember the initial returns on the Q4,000 were relatively low, we were very – we were the pioneers in this business market and it took a few years to ramp up. Without getting into too much detail, I’ll just save it, I think the visibility of the backlog and the acceptance of our methodologies and the quality of our service, means that this one will hit the ground running in about three years with much better returns then what the Q4,000 started with.
And then we have, in general, we have mid-team return on capital targets for the corporation, and I think this will follow in that rage.
Marshall Adkins – Raymond James
Fantastic, last question form me, you know, Owen, you’ve been around awhile, not that you’re old, but I would like to get your perspective, or at least your gut feel on the market going forward of for both, pipe laying well intervention now that we’re starting to ramp up around the world, you got all kinds of new build rigs out there – you know, it just seems like everything is heading your way on a somewhat lag basis, but I would rather hear it from you in terms of what’s your perspective out over the next two years for that industry in general?
Owen Kratz
Well, I will speak more to the part of the industry that I am really excited about, and that’s the well intervention side – I mean, for years, if not decades now, our vision has been that oil and gas profits is going to go [inaudible] for deeper waters, the commercial way of developing that is subsea to make that buyable, but oil and gas doesn’t know how much water is over it, so, you have to come up with paradigm shifts in the way that you do things. The area – I think there has been a lot of focus on doing bad on the subsea construction side, I think there has been less focus on the what you do on the well side.
Most of what is done in the deep waters is currently done by drill rigs, and it has been our focus to come up with drill rig alternatives. Admitting the work that drill rigs do, providing vessels that are more efficient at doing them, and there for approaching the deep water drilling a little differently than the shallow water drilling – now, that has a lot of different segments depending on how you work, divide that scope.
It’s been our preference to focus on a vessel design that is – you know, there is two schools of thought in this area, one is to build smaller vessels that are more task specific and there for lower cost. In these early days of the developing market, our preference has been to focus on larger vessels with greater capability looking forward to the future, regulatory demands, and I think the Q4,000, I think it’s surprising how right we got it.
And this vessel is just a continuation of that process, but this industry, the subsea well intervention market is still in its infancy, which is what really excites me, and I see business, you know, restarting the growth of the company, but certainly not the end of where we can take this.
Marshall Adkins – Raymond James
Very helpful, and thank you.
Operator
Our next question comes from the line of Michael Marino with Stephens, please go ahead.
Michael Marino – Stephens Incorporated
Morning, Owen.
Owen Kratz
Good morning.
Michael Marino – Stephens Incorporated
I was curious if you could expand on that a little bit as it relates to the Gulf of Mexico, and maybe more in your term, I guess in the prepared remarks there were some notable to me at least, was optimism in the robotics business in the Gulf of Mexico, and I was curious if that impacts – if your thoughts on the Express as optimistic as well?
Owen Kratz
On the Express, meaning the pipeline vessel?
Michael Marino – Stephens Incorporated
Right, in the Gulf.
Owen Kratz
I think our path forward, if you look at our company, I think it is best to think of us as having a preference for focusing on the highly specialized niches. I think the Q4000 fits in the realm, I think what we do in robotics, we’re not a commodity type robotic provider, we really focus on – we’re the number on the number one provider of the specialty trenching market, recently, penetrating into the robotic driller market.
So, it’s specialty aspects of the market place that I think we bring the most to bare and not the greatest competitive advantage. Given the limited balance sheet of future growth, I think will be slanted in that direction, with respect to the Express, that – it’s a real pipe laid vessel, it’s in the subsea construction market, while it’s a very capable vessel, if you look at the limitations of our balance sheet and the competitive position we have in the market place, I don’t think that’s an area where you will see us as focused on future growth.
I do, having said that though, the market is finally recovering after [inaudible], the backlog is growing, hopefully, we will see the margins improve going forward as the market does strengthen, but I am a little worried about the supply outside in that market place. So, all things considered, I think you will see us take a deemphasized look at the subsea construction market going forward, and a greater focus on robotics and well intervention.
Michael Marino – Stephens Incorporated
Okay, and maybe more specific to maybe your near term outlook, or your 2012 outlook on the Gulf of Mexico, you noted some, I guess, some anticipated recovery, or you know, continued recovery in the Gulf, maybe a little bit more color on kind of the ramp there in 2012 in the Gulf.
Owen Kratz
2011 we were very pessimistic about the outlook on subsea construction in the Gulf of Mexico, we positioned vessels outside of the Gulf, through the year, I think the market has greatly improved and our backlog is actually filled in quite nicely, but I think I’ll turn this over to Cliff, because he works closer with the day-to-day, let him give you his perspective on the Gulf of Mexico subsea market.
Cliff Chamblee
Okay, thank you, yes, for 2012, I don’t think we’re saying the Gulf we see a huge ramp up, and someone mentioned earlier, you know, there’s a lot of drilling rigs being built and a lot of permits being release, or more than there were, but, we’re a lifetime, usually 12, 18, maybe 24 months behind that. The good news for us is that we’ve got a pretty decent back bubble, you asked us specifically about the Express, and it’s been really the only vessel in the Gulf here, lately we had to trap it out in California and [inaudible] down in Mexico as we had mentioned, but for the backlog for the Express, we’ve got more [inaudible] for it now, it’s been busy, and continues to be busy, and we’re going to move it out of the Gulf for some projects that we’ve got over in the Mediterranean in Europe, but the good news is when that’s over there, and it’s booked up until September or October, then it comes back here for work, we also have got work booked for the Intrepid here in the Gulf of Mexico as well.
So, I wouldn’t – it’s not great times in the Gulf of Mexico, but it’s certainly improving, and we’re keeping these assets moving around so that…
Operator
Our next question comes from the line of Martin Malloy with Johnson Rice and Company. Please go ahead.
Martin Malloy – Johnson Rice & Co.
Congratulations on the quarter.
Tony Tripodo
Thank you.
Martin Malloy – Johnson Rice & Co.
Is there an update on the stat oil contract?
Tony Tripodo
I’ll take that. The stat oil contract was delayed in their announcement severely and was supposed to have been announced February 15.
February 15 came and went and there’s been no word, so the simple answer is we simply don’t know. And we’re – they’re – we simply don’t know.
Having said that, we’ve just decided that enough time has gone by and enough effort and we’ve decided to move on rather than focus on the CATB and that’s what prompted our announcement last week of building the new vessel.
Martin Malloy – Johnson Rice & Co.
Okay. You mentioned being asset constrained in the oil intervention, Oil V markets, can you talk about what you’re able to do in terms of pricing there?
Tony Tripodo
The pricing is increase – we were able to increase the oil price. Cliff, you want to speak to the specific pricing that you’re seeing?
Cliff Chamblee
Okay. Well, on the oil intervention side, you know, we’re pretty optimistic about that, or very optimistic about that and with the backlog that we mentioned with the Q in the Gulf and the – through this year and most of ’13 as well already filled up and the rates are coming up and hence the new build, and the same with the two well intervention vessels that are based out of the North Sea, one being in Africa at the moment, [inaudible].
We’re seeing rates to continue to improve in that theater as well. And also on the robotics side, not so much on the Oil V’s themselves, but the vessel side that we have, we see the rates continue to increase there as well.
But probably more importantly is the utilization side of it from the robotics side is increasing and we’re able to move those assets bouncing back and forth between here and the UK sector as well.
Martin Malloy – Johnson Rice & Co.
Thank you.
Operator
(Operator instructions). Our next question comes from the line of Joe Gibney with Capital One.
Please go ahead.
Joe Gibney – Capital One
Thanks. Good morning.
Just a question on the dry dock schedule, the $25 million impact on EBITDA, show the color there on when these dry docks occurs. Should we be thinking about timeframe for each of these or vessels out of the fleet in the same, kind of three to four weeks kind of bandwidth, or is it a little bit longer?
I’m just trying to drill down a little bit on those expectations.
Tony Tripodo
I think, Joe, generally, we estimate 30 days per vessel. You know, it really depends on what you find once you bring it into dry dock.
Sometimes it can take a few days less, sometimes it can take a few days more. For instance, back in October, we mentioned we had five dry docks and this time we’re saying four, and the reason why one has come off is because Express actually went through it’s dry dock earlier this year and that was only a week process and she’s off and back to work.
We don’t expect that to be as good an outlook for the rest of the vessels but it’s just a pure estimate and the 25 million is based on about an average of 30 days per vessel.
Joe Gibney – Capital One
Okay, that’s helpful. And just to clarify, your commentary that – correct me if I’m wrong, I think you referenced quarter one marine revenue being equivalent to what you saw in the third quarter.
Is that the case even with the dry dock of the Q4000 30 days or is some of that just a function of this deferred mode revenue on the well enhancers accurate?
Tony Tripodo
Yes. Even though we’ll lose about a month’s worth of revenues on our highest revenue generating asset, the Q4000, we do expect Q1 revenues to bounce back to Q3 levels.
And a part as a function of booking the mode revenues for the well enhancer here in the first two months that we were unable to book in December.
Joe Gibney – Capital One
Okay, helpful. And then just one last one for me.
You referenced some of the capacity additions on the robotics side. I was just wondering if you could repeat that.
It looks like you did pick up another vessel on your charter [inaudible]. I thought the – I believe it was the Norman Clipper was expected to roll off, it looks like you added a vessel addition and you referenced potentially another vessel coming on.
What would be the timing of that additional charter vessel, is that second half of ’12?
Tony Tripodo
Yes, what we do have coming on is a vessel called the Grand Canyon that’s going to be delivered to use in probably June of this year and we have a new trencher, called the T1200 and a couple of [inaudible] that will go in there for mid this year. But we’re also negotiating for another one, another vessel to follow that in 2013.
Joe Gibney – Capital One
Okay, and that was – and it was six, an addition of potentially six [inaudible] RVs in the next 12 months, is that correct?
Tony Tripodo
That’s correct.
Joe Gibney – Capital One
All right. Thank you, gentlemen.
I’ll turn it back.
Operator
(Operator instructions). And we do have another question from the line of Anthony Google from Upstream.
Please go ahead.
Anthony Google - Upstream
Yes, hi. Regarding the Q-Plus, when and where will construction of this semi-sub occur?
Tony Tripodo
We’ve not announced the location of the construction because we’re still in contract negotiations which should be over here shortly and of course, sensitive to the yard’s announcement criteria, we’re going to hold off on announcing where it is. But when it’s due would be early – right now we’re forecasting early 2015 short of putting it into service.
Anthony Google - Upstream
Okay, and my other question, this engineering must draw upon some of your effort for the Stat Oil CATB bid, but to be clear, this is not a Norwegian Sea class type semi-sub that you’ll be building, correct?
Tony Tripodo
No. What we’ve done is every since we’ve build the Q4000, we immediate started the design process trying to look at what the next vessel would be.
If you go back to the year 2000 with the Q4000, it was always our intentions to have a fleet of these. So immediately following the Q, we started incorporating design ideas based on how the Q was functioning.
When the Stat Oil CATB came up, it actually required a redesign to meet the Stat Oil spec but it was a separate effort from what we had started previously. I think back then we were calling it the H4500, but – then during the Stat Oil CATB process, we continued – and then – but parallel design process that led towards this vessel.
So this is not the CATB vessel that we’re building, this is our own design based on the Q4000.
Anthony Google - Upstream
Okay, appreciate it. Thank you.
Operator
And there appears to be no further questions at this time.
Tony Tripodo
Thanks for joining us today. We are very much – we very much appreciate your interest and participation and look forward to having you participate on our first quarter 2012 call in the next couple of months.
Operator
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
Have a good day, everyone.