Capital Allocation and Debt Structure
Q: Are you considering streamlining your debt structure?
A: Management is evaluating ways to create a more appropriate debt capital structure for their cyclical business. They're considering consolidating current facilities and are opportunistic about exploring the debt capital markets to shape the capital structure going forward. They aren't facing any near-term maturities, which provides flexibility in their approach. "

Cash Flow and Capital Return Plans
Q: Will share repurchases, acquisitions, and dividends play a role in capital allocation?
A: Management anticipates significant cash generation in the next couple of years. They believe their intrinsic value is higher than the current trading price and have been focusing on share repurchases. However, they see potential for value-added acquisitions and acknowledge that share repurchases, acquisitions, and dividends will all play a role in capital allocation. "

Margin Outlook
Q: With the strong first quarter, could guidance exceed expectations?
A: The company acknowledges variables within the year but remains committed to their internal forecasting. They feel comfortable with the guidance communicated and are not indicating a shift beyond the high end of their guidance range at this time. "

Vessel Margin Progression
Q: Why is there a 700 basis point margin step-up expected in Q3?
A: The margin progression is impacted by several factors. Contract rollovers are definitely impactful. Additionally, drydocks scheduled in Q2, vessel mobilizations, and some unplanned maintenance are affecting margins. As these factors alleviate and with continued contract rollovers into Q3, management expects a significant positive impact on margins. "

Leading-Edge Contract Rates
Q: How should we think about leading-edge contract rates?
A: Management notes that the rate of acceleration in contract rates has leveled off slightly during the weaker Q4 and Q1 periods. However, they anticipate more meaningful increases in Q2 and Q3. Over the past few years, they've seen annual improvements in day rates accelerate, and they wouldn't be surprised to see continued growth into 2024 and 2025. "

Geographic Growth Opportunities
Q: Which regions will see the biggest growth in the next 2–3 years?
A: All regions are looking positive, but Asia Pacific is expected to be strong as national oil companies are starting to increase activity. Brazil remains strong with Petrobras projecting growth to 2030. Africa, particularly Southern Africa, also continues to look very positive with a lot of work ongoing. "

Gulf of Mexico Outlook
Q: Is the Gulf of Mexico expected to strengthen over the next 18–24 months?
A: Management agrees with drillers that the Gulf will be a pocket of strength. There was a slowdown in Q1 due to organizational movements and repositioning of rigs. They are positive about the long-term outlook and expect activity to pick up after this short-term slowdown. "

Chartering Strategy
Q: Are there opportunities for longer-term contracts, and how are customer conversations going?
A: While customers are still coming out with long-term tenders, the company is choosing to go shorter term to maintain optionality and because they believe there's still a lot of runway in the market globally. They are not precluding long-term contracts but are focusing on driving rates and favorable contract terms. "

Drydock Impact on Utilization
Q: How will drydocks affect utilization for the rest of the year?
A: The company expects to be heavy on drydocks in the first half of the year, with a 6% drag on utilization in Q1. This will drop off in the second half, reducing the impact to around 4% overall utilization. "

FPSO Outlook and Vessel Demand
Q: How will new FPSOs impact demand, and what is the balance between drilling rigs and production vessels?
A: The company is positive about the increase in FPSOs, with expectations of over 40 FPSOs coming out in the next five years. Currently, their fleet is skewed towards supporting drilling, but the allocation varies over time. They anticipate that demand from both drilling rigs and FPSOs will continue to require similar types of vessels, such as PSVs and anchor handlers. "

Emissions Regulations Impact
Q: Is there an effect on the supply book from emissions regulations?
A: The impact is primarily a European issue affecting vessels over 5,000 tonnes, which most of their vessels are not. Customers are seeking the most fuel-efficient vessels, and the company has 16 hybrid vessels in the fleet. They are not seeing a material impact from government regulations globally at this time. "