Q4 2023 Helix Energy Solutions Group Inc Earnings Call
Participants
Brent Arriaga; Chief Accounting Officer; Helix Energy Solutions Group Inc
Ken Neikirk; Executive Vice President, General Counsel, Corporate Secretary; Helix Energy Solutions Group Inc
Owen Kratz; President, Chief Executive Officer, Director; Helix Energy Solutions Group Inc
Scott Sparks; Chief Operating Officer, Executive Vice President; Helix Energy Solutions Group Inc
Erik Staffeldt; Executive Vice President, Chief Financial Officer; Helix Energy Solutions Group Inc
James Schumm; Analyst; TD Cowen
David Smith; Analyst; Pickering Energy
Presentation
Operator
Greetings, and welcome to the Helix Energy Solutions fourth-quarter and yearend 2023 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded Tuesday, February 27, 2024. I would now like to turn the conference over to Brent Arriaga, Chief Accounting Officer. Please go ahead.
Brent Arriaga
Good morning, everyone, and thanks for joining us today on our conference call for our fourth-quarter 2023 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO; 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 don't have a copy of these materials, both can be accessed through the For the investor page on our website at w. w. w. dot Helix CSG. dot com. The press release can be accessed under the Press Releases tab and the slide presentation may be accessed by clicking on today's webcast icon.
Before we begin our prepared remarks, Ken now Curt will make a statement regarding forward-looking information.
Ken Neikirk
During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today, such forward-looking statements may include projections and estimates of future events, business or industry trends or business or financial results. 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 risks, uncertainties, assumptions and factors, including those set forth in slide 2 of our presentation and our most recently filed annual report on Form 10 K, our quarterly reports on Form 10 Q and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statements. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference. Also during this call, certain non-GAAP financial disclosures may be made in accordance with SEC rules.
The final slides of our presentation provide reconciliation of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10 K and a replay of this broadcast will be available under the for the Investors section of our website at w. w. w. dot Helix ESG.com. Please remember, that in prior conference call speak only as of today, February 27th, 2024. And therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call only.
Owen Kratz
Good morning. We hope everyone out there and their families are doing well. This morning will review the fourth quarter and full year 2023 results performance in operations, we'll provide our outlook for the market, both what we currently are experiencing as well as our expectations beyond that, and we'll provide our guidance for 2020 for moving through the presentation, slides 6 through nine, provide a high-level summary of our results and key highlights for the quarter. During the fourth quarter, activity levels across all segments were very strong with the increased activity from the global solid global offshore energy market driving improved RATES highlights for the quarter include strong activity and utilization in the Gulf of Mexico, a resilient North Sea market, well intervention, including a seasonal project in the Mediterranean. Completion of our New Zealand well intervention campaign, robotics and Helix alliance solid seasonal adjusted contribution production facilities continues to be a steady performer. And on the sales front, the Helix Producer one was extended an additional year to June 2025. In addition, we were awarded a 12 month extension with Trident in Brazil for the SH. one, we expect to benefit from the market rate contract in 2025. We also secured a minimum six month contract for the Q4000 in West Africa at favorable economics. And we just recently established a five-year joint frame agreement with Talos for their offshore decommissioning requirements, primarily on the Gulf of Mexico shelf revenues for the quarter were $335 million, a decrease of $61 million from third quarter results. Our net loss was $28 million, primarily driven by a $37 million loss associated with the refinancing of our 2026 convertible senior notes. Adjusted EBITDA for the quarter was $71 million. Our fourth quarter results were overall in line with expectations driven by our core well intervention markets in the North Sea and Gulf of Mexico with our robotics and shallow water abandonment segments, providing good performance given the impact of the winter weather for 2023, revenues improved by over $400 million year over year to $1.29 billion. Our gross profit improved by 150 million to $200 million. We reported a net loss of $11 million in 2023, which included a $42 million loss on the earn out associated with our shallow-water abandonment acquisition and another $37 million loss associated with our refinancing efforts. Without these losses, our net income would have been significantly positive in 2023. Nonetheless, net loss still decreased by 77 million to 11 million. Despite the aforementioned losses, our EBITDA increased to $273 million in 2023 from $121 million in 2022. Operating cash flow the year was $152 million resulting in free cash flow of $134 million, with both results representing significant improvements compared to 2022. The fundamental improvements in the offshore market, both domestically and internationally continue to support the foundation of a multiyear recovery for our business. With the market recovery taking shape, we expect to build on our 2023 performance with incremental improvements for 2024 and a potential step change in 2025. Our expansion into shallow water abandonment services has solidified our leadership position in this re-emerging market. Helix continues to execute on its strategy of becoming the preeminent offshore energy transition company. I'd like to thank our employees for their efforts and high level of execution in 2023 executing safe and efficient operations for our customers has established us as the leader in our industry.
On to slide 10, during the fourth quarter, we executed on our expressed desire to restructure our balance sheet, moving away from convertible notes to a more traditional debt instrument. We issued 300 million senior notes due in 2029. And following that, we repurchased $116 million of our convertible notes. In early January, we issued a redemption notice for the remaining balance of our convertible notes, a transaction we expect to close during the first quarter. This restructuring effort extends our maturity. It simplifies our debt structure, eliminates dilution risk from the convertible notes and mitigates the ultimate cost of replacing our convertible notes we believe these efforts provide clarity and predictability to our balance sheet and position our investors to benefit from the improvement in the offshore market.
On Slide 11, from a balance sheet perspective, our cash balance at year end was $332 million with liquid liquidity of 431 million for the year. Our operating cash flow was 152 million, including $63 million of drydock and recertification costs. We spent 20 million on CapEx, resulting in $134 million in free cash flow. At year end, we were in a net debt position of 30 million.
So I'll now turn the call over to Scott for a more in-depth discussion of our operations. Scott?
Scott Sparks
Thanks, Evan, and good morning. Moving on to slide 13, the teams offshore and onshore outperformed again, producing another very well executed quarter, completing a very strong 2023 in the fourth quarter of 2023. We continued to operate globally with minimal operational disruption of operations in Europe, Asia Pacific, Brazil, the Gulf of Mexico, and off the US East Coast. We continue to operate at high standards, again with strong uptime efficiency for the quarter. During the fourth quarter, we generated revenue of 335 million and the gross profits of $49 million, gross profit margin of 15% compared to a gross profit of 31 million in the fourth quarter of 2020 to significantly improved year over year. For the year, we generated revenue of $1.29 billion and a gross profit of $200 million and a gross profit margin of 16%, very much improved compared to a gross profit of 51 million in 2022. 2023 has been a solid year for Helix, vastly improved over 2022 when we finished the year very strong with the fourth quarter being our best fourth quarter since 2013. Visibility in 2024 and beyond is looking very positive. We have recently secured some good contracts with better market rates compared to our legacy contracts that also sets up 2025 potentially for further improvement. Tender activity remains strong and our client base is increasing.
Slide 14 provides a more detailed review of our Well Intervention business in the Gulf of Mexico. During the fourth quarter, the Q5000 had excellent utilization of 96%. The vessel performed very well conducting production enhancement and abandonment campaign utilizing our Helix SLB jointly owned 15K subsea system. The vessel then completed work on a single production enhancement well for Shell and finished the year conducting abandonment work on one well. The vessel has numerous wells contracted for 2024, and we expect the vessel to achieve high utilization assets at stronger rates. The Q4000 had solid utilization of 98% in the fourth quarter. The vessel continued a multi-well production enhancement campaign for one customer and then undertaking production enhancement project for another client, the vessel, the incremental production enhancement works on our Thunder Hawk Field. Q4000 also has numerous wells contracted in 2024. And again, we expect high utilization at better rates in the second half of the year. The vessel is scheduled to commence a paid transit to Nigeria to undertake a minimum six month projects performing production enhancement works from a paid transit back to the Gulf of Mexico after both key vessels continue to operate under the integrated Helix SLB subsea services alliance package, and we expect this to continue as the Q4000 lost in Nigeria.
Moving to Slide 15. Our North Sea Well Intervention business continues to respond well to the increased demand in the region. Having a very strong fourth quarter considering the winter period that would usually to a seasonal slowdown or warm second periods for the vessels. For the quarter, we achieved 100% utilization for both vessels. One handset performed very well working for two customers performing production enhancement work on three wells, followed by decommissioning operations on two wells this year, while also had a good quarter, working for two customers perform and decommissioning work on three wells in the vessel then completed the paid 22 day transit to the Western Mediterranean. So contracts are longer term decommissioning campaigns is expected to last into the summer of 2024. Demand for our services continues to improve. As mentioned, the C was fully contracted well into the summer of 2024 and following its approximate 50 to 60 day drydock in Q1. The Well Enhancer has contracted and awarded works through Q3 of 2024, starting to fill up the year with serve increased rates. Q7000 was 68% utilized conducting the decommissioning contract in New Zealand throughout most of the fourth quarter on completion of the work to New Zealand, the vessel has completed the tight transit to Australia to undertake several interventions scopes for free clients commencing in the fourth quarter. The Q7000 has been contracted for 12 months plus options to undertake well abandonment work with Shell in Brazil, including the pay transit to Brazil. The work is estimated to commence towards the end of 2024. So the Q7000 is contracted for most of 2025 have options that could potentially have it working in Brazil into 2026.
Moving to Slide 16. In Brazil, we had good utilization of 99% for the fourth quarter. The Siem Helix one had a strong quarter and was 100% utilized in Q4. Undertaking work for Trident energy performing decommissioning works on six wells and production enhancement work on one well, we have recently extended our contract with Trident take a further year and much increased market rates commencing at the end of 2024. And for the rest of 2025, the Siem Helix two had 98% utilization in Q4 completion decommissioning activity on three wells on production enhancement well with Petrobras we again in 2023 when the rest of the year award. So congratulations to our teams, both onshore and offshore. In Brazil, we keep enhancing our position in Brazil, both affected by further extending contracts, increased market rates. So as the legacy contracts roll off, this should lead to much better results in 2025. And we look forward to bringing the Q7000 to Brazil and commencing the Shell decommissioning contracts. Again, it improved market rates.
Slide 17 provides detail of our insured fleet utilization.
Moving on to Slide 18 for our Robotics review for bus. It's continued their good performance and they had another strong quarter closing out a very solid year being the best-performing year in terms of revenue and EBITDA since 2015. The business performed high standards with strong utilization operating six vessels globally during the quarter, primarily work in between trenching and ROV support and site survey work on oil and gas and renewables related projects in the A-Pac region, the Grand Canyon two had 100% utilization in Q4. The vessel completed a long-term decommissioning project in Thailand and then finished the year on ROV support projects in Malaysia, the T. 4,101 trenching system on board, the same focus of project chartered vessel, continued work on renewable trenching projects in Taiwan, undertaking 92 days of trenching utilization in the quarter. That is expected to continue into mid Q4 of 2024. In the North Sea, the Grand Canyon three was utilized 95% performance in oil and gas trenching project for one customer sites commencing a lump sum renewable trenching project for another customer. The Verizon enabler had 100% vessel utilization competes in oil and gas trenching works for two customers performing works on a renewables trenching project for another customer also in the North Sea, the glioma ways completed 15 days of operations undertaken an ROV support projects for renewables customer, the USA, the sheet aboard along the Jones Act compliant vessel was utilized 92% in Q4 investment fund works in the Gulf of Mexico with an ROV survey project for an oil and gas customer followed by seismic node installation project for another customer vessels anticipate transit to the US East Coast for an ROV support projects on renewables works. Helix robotics performed very well in 2023. We have a good backlog and visibility globally, and we are expecting further strong performance in 2020.
For Slide 19, details our robotics vessels, ROV and trenching utilization. Slide 20 provides an overview of our shallow water decommissioning business. Helix alliance for the fourth quarter, Helix Alliance had a strong quarter considering the expected seasonal slowdown due to better weather conditions. Many of the units were further into the fourth quarter than what we had expected. The Offshore division had non-disclosed operation in Q4 with a combined utilization of 80%. Performing decommissioning services offshore also supplied six OSVs and one crew boats with a combined utilization of 71%. The Energy Services division had operations of 1,188 days of utilization for 2013. A systems deployed conducting decommissioning services division operations of 198 days of utilization for six coiled tubing systems in Q4, the diving and heavy lift division had reduced combined utilization of 46% across the free diving vessels due to the sensitivity of diving operations in the winter season, the Hadrian heavy-lift barge had utilization of 76% undertaking decommissioning activities. And last quarter we reported that we had commenced work on our largest decommissioning contract to date to decommission 39 wells, abandon 15 pipelines and remove and dispense of seven platform structures. We've been performing well on this contract thus far. However, as planned, the work has been suspended for the winter months. We expect to recommence work on the projects with some units later in Q1 and the heavy lift work to recommence in Q2 at the end of December, our season did finally come to an end due to the winter weather conditions leading to the second of a good portion of the fleet P&A system and coiled tubing systems. We expect the first quarter of 2024 to be slow until weather conditions start to improve fleet into a slow ramp-up of the fleet in Q1 and into Q2.
Slide 21 provides detail of Helix alliance vessels and systems utilization. Looking back at 2023, we had a very good year. And yes, the market has improved. But more importantly, our global employees offshore and offshore excelled not only exceed an expectation in 2023, but also setting up a strong 2024. And with the recently awarded contracts, we expect an even stronger 2025. So I'd like to put out a big thank you to our employees and partners stay safe and keep up the good work.
I'll now turn the call over to Brent.
Brent Arriaga
Thanks, Scotty. Moving to slide 23, it outlines our debt instrument maturity profile as of December 31st, and during Q4, we initiated a refinancing of our convertible securities. We issued $300 million senior notes due 2029 and repurchased approximately $160 million principal amount of our 2026 convertible senior notes. Our funded debt at year end was 373 million. In January, we issued a redemption notice for the remainder of our 2026 convertible notes, which we expect to settle in March. Following that settlement, we will have no significant maturities until 2029 through refinancing brings us to a simplified capital structure that eliminates dilution overhang and potential higher cost to settle those convertible notes in the future.
Moving on slide 24, provides an update on key balance sheet metrics, including cash, long-term debt, liquidity and net debt levels. At year end, we had cash of $332 million and availability under the ABL credit facility of $99 billion, with resulting liquidity of $431 million. Our net debt position at year end was $30 million. As mentioned earlier, we are settling the remaining 40 million principal amount of our 2026 convertible notes. We anticipate the final redemption costs will exceed the carrying amount of those notes and any premium paid full increase our net debt.
Slide 25 presents a five year performance trend for certain financial metrics. 2023. Not only marks our sixth straight year of positive free cash flow, but also represents our highest annual EBITDA since 2014 and our highest level of free cash flow.
Since we began presenting this metric slide 26 presents our diversified revenue mix by segment geography and by the three components of our energy transition strategy for your reference.
I will now turn the call over to Eric for a discussion on our outlook for 2024 and beyond.
Erik Staffeldt
Thanks, Brent. Based on the continued strength of the offshore energy market, our current pricing work and the pipeline of bids and projects. We're providing guidance of certain key financial metrics from our forecast revenue in the range of 1.2 to $1.4 billion. We do expect our revenues to be to be flat to slightly positive in 24, EBITDA range of 270 to 330 million. Overall, we expect slight improvement from 2023, with improvements in the well intervention, partially offset by a softer shallow water market, sharp shallow-water abandonment market free cash flow of 65 to 115 million This number includes an expected $58 million impact from the earn out payments scheduled in the second quarter of 2020 for capital spend in the 70 to 90 million range based on our expectations for the mix of regulatory maintenance on our vessels and fleet renewal of robotics ROV.
Moving on to Slide 30. Our CapEx forecast for 2014 impacted by drydock maintenance periods on our vessels and systems. The Well Enhancer is currently in dry dock, high dock undertaking an expected 50 to 60 day program. Stage P. one is scheduled for drydock in Q2, and the Q7000 will have a maintenance period Journal's mobilization in Brazil.
Our CapEx range for 2024 is currently 70 to $90 million. The majority of the CapEx forecast continues to be maintenance and project related, which fiber all of our operating cash flows.
Reviewing our balance sheet, our funded debt of 373 million is expected to decrease by 49 million in 2024 with the redemption of our 2026 convertible notes and scheduled principal payments on our Marriott debt, we expect to continue our share repurchase program with Target repurchases in the 20 to $30 million range in 2024. Our forecast ranges include some key assumptions and estimates any significant variations from these key assumptions and estimates could cause our results to fall outside of the ranges provided our quarterly results will continue to be impacted by seasonal weather in the North Sea and Gulf of Mexico shelf, primarily the first quarter and fourth quarter. In addition, the timing of our vessel maintenance periods and project mobilizations will cause variations between quarters our Q2 quarterly financial performance in 2024 is expected to follow a similar cadence as our results in 23 with the second and third quarter being our most active partners in first and fourth quarters impacted by winter weather. Overall, we expect the second half of 24 to be stronger than the first half with seasonal quarter impacts. The timing of our free cash flow generation is likely skewed to the latter part of the year, providing key assumptions by segment and region.
Starting on Slide 32st, our well in the Gulf of Mexico continues to be a very strong market, supported by improving rates and expected strong utilization on the Q4000 and Q5000. Q4000 has contracted work in every quarter with limited white space to fill in this schedule. The Q4000 has contracted work into Q2 in the Gulf of Mexico vessels scheduled to then transit to West Africa for a minimum six month contract in Nigeria with a paid mobilization and demobilization in the UK North Sea. We expect both vessels to one hand trying to see what have very good utilization for most of the year. Well Enhancer is currently completing an approximate 50 to 60 day inventory docking, followed by contracted work into Q3. The seawall is currently working in the inventory and into Q2 before scheduled to return to the North Sea for contracted work since mid 2022. The activity levels in North Sea Well Intervention market have significantly increased with limited seasonal impact in 22 and 23. We are anticipating a return to a seasonally adjusted utilization in the winter months in the North Sea in 2024, Q7000 currently in Australia with projects scheduled for three different operators. Projects are expected to continue to midyear, followed by a scheduled transit to Brazil and mobilization for its contracted work in Brazil. In Brazil, the Siem Helix two contracted into mid-December 2024 with Petrobras. The Siem Helix one is contracted performance. Well Abandonment work for private with the recent contract extending works in Q4 of 2025, we expect to benefit from the contract extension at market rates in 2025.
Moving to our Robotics segment, slide 32. The Robotics segment clearly continues to benefit from a tight market for both both oil and gas market and renewables market are extremely active competing for assets in the A-Pac region. The Grand Canyon two is under contract supporting renewables projects in Taiwan into the second half of 2023, with expected good utilizations for the balance of the year, the Siem Topaz and T. 1,401 printer are contracted and expected to remain in Taiwan through mid Q4 2024. In the North Sea, the Grand Canyon three is currently undergoing battery pack installation vessel is expected to begin trenching in April and have strong utilization into Q4. The Horizon neighbor has contracted trenching projects in Q3 and Q4. The gross margin rate is forecasted to have good seasonal utilization performing site clearance operations in the US. The should we have more line is working in the Gulf of Mexico and expected transit to the US East Coast to provide with our support really no production facilities. VHP. one is on contract for the balance of 24, recently extended to June of 2025 with no currently expected change. We have expected variability with the production as the Droshky field continues to deplete under hot field is producing after completion of a well fee now in January.
Continuing on slide 33, we are expecting to have a more traditional season in our shallow water abandonment segment with greater seasonal impacts during Q1 and Q4 after a robust 18 to 24 month period of activity, we're seeing operators scaled back to mitigate the impact of winter winter weather. We expect the second third quarters to be very active with potential for competition for assets. If and as schedules fill out, we expect the offshore marine business to maintain good utilization on five to seven left us with some variability on the OSP.s and crewboats energy services should have good utilization on 12 to 14 G&A spreads and one to three coiled tubing units. There is seasonality in diving and Heavy Lift business where the applicator is currently idle with limited opportunities, but we do expect a very active season during Q2 and Q3. I'll skip the remaining slides starting with 35 and leave them for your reference. This time, I'll turn the call back to Owen pushing on our outlook beyond 20 for closing comments.
Owen Kratz
Pentair, as we begin a new year, I thought it would be appropriate if we just restate what Helix does. As you are aware, since 2012, the Helix business model has been focused on the late life aspects of the oil and gas and market and providing specialty support to the development of offshore wind renewables, energy. And as a result, we offer services in three areas.
Key to our energy transition focus. First is maximizing existing reserves that remain of avoiding new drilling. This incorporates subsea access for Production Enhancement, well intervention, marginal field production processing with RFPU. blowout containment, contingency services and end of life operating and reservoir management with the potential for owning and operating end of life fields.
Second is our offshore abandonment. This includes shallow-water, full field abandonment of wells, pipelines and facilities and deepwater subsea de-commissioning, including well P&A, the third leg, especially support services for development of renewable energy projects, namely offshore wind farms. This includes jet and cutter trenching of the cables, Boulder site clearance and recently UXO. clearance combined, our focus is on the energy transition and sustainable energy from end of life reserves through abandonment to development of offshore wind farms Our strategy is to remain focused on these areas where we have expertise and efficiencies with a significant market position with ample growth opportunities within each of these niches for deepwater production enhancement and well abandonment Helix because inefficient fits built alternative to the use of drill rigs for non-drilling activities for field abandonment. Helix offers an integrated service, including all required engineering planning management and assets. For both of these, we have support of our robotics and diving depending on water depth on robotics has revolved evolved over time, allowing Helix video to become a global leader in jet and cutter trenching of the wind farm cables. We've also evolved our robotics platform site clearance for one wind farms and recently added in house UXO. removal capabilities. And so let's look at the market outlook for each of these segments. First, deepwater well intervention. In 2023, about 60% of our revenues were generated from our assets that compete for work historically done and largely still done by drill rigs and none in non-drilling mode. There is a sizable market share still done by drilling rigs, Helix pricing is understandably sensitive to drill rig rates, which are driven by market supply and demand. Drill rig rates and utilization have been rising and are expected to continue rising as many analysts have indicated to summarize the recent rig report, the long duration side up-cycle remains healthy and solid growth is anticipated in most most regions globally. Significant ultra-deepwater demand is expected in the Gulf of Mexico, Brazil, Africa and Mediterranean, lower than expected reactivation of cold-stacked rigs and a lack of new builds is expected to further drive opportunities for offshore drilling and leading edge day rates for ultra-deepwater floaters are expected to exceed 500,000 per day in 2025. To put this into perspective, current ultra-deepwater rates are over 400,000 a day now with harsh-environment rigs, a discount to this in the three 50,000 a day range, which is the rated Helix currently prices too. In our forecast, there are legacy rates that are still working that we're still working through, but our average day rate is currently around 300,000 a day. All the say there are still meaningful increases in our rates that we expect to come over time, one, with blended with ongoing longer term legacy rates in 2025, there could be as much as a 20 to 25 increase in rates over our current average rate.
Next, let me say a few things about abandonment of covered deepwater abandonments as it's part of what we compete for against rigs I would add that the volume of work and the pressure both from the public as well as the regulatory bodies is increasing primary basins for Helix or the UK, Brazil, Australia and the US Gulf, all of which have substantial work for years to come. In July of 22, we acquired alliance as the reentry into the Gulf of Mexico shallow-water abandonment to complement our deepwater abandonment the year prior to the acquisition of Alliance generated low 20 million EBITDA. Our expectations were for the shallow water abandonment market to significantly become active in the weight of the fish in the wake of the field was bankruptcy and accelerate further following the bankruptcy of costs. Both of these have occurred after generating roughly 50 million of EBITDA for the full year of 2022, we initially forecasted 2023 to be 60 million with an earnings potential for that business at 70 million EBITDA. Actual results for 2023 came in at more than 85 million of EBITDA due to a greater volume of work than expected from multiple major recipients of properties from the field with bankruptcy. We can't guide to this level of activity for 2024 as clients may slow their work for 2024, and we cannot be certain that we'll recapture another large turnkey project this year, although the potential remains there because bankruptcy did occur in 2023, but it's taking time to run through the courts. We had expected this work to come to market in 2024, but that may be a bit delayed. We're forecasting the shallow water market to generate similar EBITDA levels that we guided to for 2023, which is a meaningful reduction in EBITDA contribution year over year. However, we do expect a meaningful increase from there in 2025 and believe there'll be a strong shallow-water market in the Gulf of Mexico for years to come.
Finally, let's take a quick look at the offshore wind market with increased cost of capital and higher costs along the entire supply chain. We're seeing some projects delayed or canceled this. This market is sustainable and will grow. But we've always tempered expectations that the growth may be less than the exponential forecast some previously thought. We're also saying that it's a challenge to achieve margins among the contractors that rushed into the market. We prudently decided to stay within our core competencies and leverage our robotics expertise to participate as a specialty niche provider for cable, Verio and site clearance. We believe there's a very significant growth ahead for offshore wind as a whole to generate growth for Helix in the two niches. As we explore other peripheral niches, we're continuing to grow and our renewables work as a percentage of revenue is technically decreasing, but only because of the greater rate of growth from our other business lines, I'd like to take a few minutes and touch on points that illustrate why Helix is differentiated and has such a positive multiyear outlook. First, again, as deepwater and intervention, while there is competition in light well intervention that comes and goes Helix created the light intervention market and it's been at it for 20 over 25 years. Many competitors have tried a few have succeeded. It's just not that simple. And Helix is the leader in rig alternative riser based intervention Felix is the undisputed leader and operator of five of the seven assets globally that are capable of non-rig RaSer based intervention. This market is growing as the mature deepwater fields become more plentiful competitive encroachments, not likely first because it's not that simple to do. And second, Helix has decades of experience in refining the technology enhancing efficiencies. Third, a majority of the work is still being done by drill rigs, which are more expensive, have a larger carbon footprint and are about 30% less efficient at work that Helix does. And of course, the drilling rigs are being used to meet drilling needs. These are expensive assets and the high cost of capital, high shipyard pricing and the time required to deliver. We continue to be well placed in market.
Turning to shallow water abandonments, we believe the Gulf of Mexico should be a strong demand driven market for at least the next seven years to perform the full abandonment of field fields requires a mix of a number of differing assets, resources and capabilities over the downturn years, the shallow water mark contracting community class to a great extent, it's popularly populated by shallow-water contractors rarely having the requisite ownership of assets that can perform fully integrated field abandonment as the properties come out of bankruptcy and flow back to the successor ownership, largely the majors. They also no longer have the majors no longer have the requisite teams in-house to manage the work and do this and connecting is it to manage their work and are but some will reconstitute shelf Deco teams and tend to work through their supply chains, while others will contract project management consultants to tender and manage the work on an outsourced basis, either way the clients don't have all the assets. We believe the market will be strong enough that most, if not all, Gulf of Mexico assets will be utilized as they were in 2023 and the market will be even tighter going forward.
Helix alliance is well positioned with a meaningful market share of all classes of assets we're capable of working under any of these above contracting methods. Helix is the only contractor capable of providing the guarantee of availability to offer a truly integrated service, managing all aspects of a full field abandonment is much simpler under a single contract with a single contractor that can guarantee the availability of the assets. We believe in the integrated integrated value proposition we offer clients backed by Helix. We look for decades of delivering efficient results. This capability and expertise is also scalable globally as we see strong markets developing, especially in Brazil, and Australia.
The last segment I'd like to comment on is robotics specifically as we're positioned to provide offshore wind farm support the forecasted rate for global growth for the offshore wind farm work appears to be at a slower rate than most were forecasting, but it is still growing. We see this growth is being sustainable for multiple years. Helix is the global leader for jet and cutter trenching of cables. And we see continuing demand in this niche. We have one Chris trencher system that's yet to be deployed. We also have act actively we're also actively renewing our work class ROV fleet to maintain quality, operational credibility and continued strong performance. In 2019, we began to enter the Boulder removal market per site plan we're adding our second robotic Boulder grab and recently added an in-house capability for UXO. removal. We've established our credibility and see further growth building off this credibility. Our strength our strategy to be patient and prudent and with progress progressive growth in this market.
To close, let me highlight a few things impacting 2024 as compared to our longer-term outlook. First, since the summer of 2022, the North Sea has been active throughout the full year. We can't be certain that the market won't returns is a seasonal market which could impact 2024. Second, we don't expect the we do expect the Q7000 SH. one and SH. to work in Brazil for multiple years to come. The key 7,000. Nsh one have now been successfully contracted through 2025. All three vessels should show significant improvement in rates for 2025. As a result, we've extended the charters on the SH. one and message to the accounting trim treatment to blend and extend the charter rates have a negative impact on 2024 of somewhere around 6 million EBITDA, which has been included in our guidance for 2024. But the positive impact of Brazil, Brazil in 2025 is estimated to be close to 25 to 30 million EBITDA for just the SH one alone. Third point is the Q. 7,000 expected to complete its work in A-Pac over the course of 2020 for the past year, the vessels and working under legacy rates resulting in actually a loss for 2023, the contracts in hand for 2024, all in A-Pac and a mixture of legacy rates and new rates. We expect we expect strong improvement of the EBITDA contribution in the range of 40 million, with another main meaningful rate increase for 2025 as the vessel transfers to Brazil for its contract. There for the Gulf of Mexico was a strong market for our RaSer based low intervention in 2023. The next year should be even better for our well, our US division over the past few years, we focused on expanding our geographic footprint and were successful in establishing our credibility in West Africa demand for our services remained strong there in this market, we'd like to maintain for the Q7000 contracted elsewhere. We made a decision to take a contract in Nigeria, primarily because of Multon what's improved rates and terms and performed its work with the Q4000. The result of this will be an even better year for roll-ups U.S. division as the Nigeria work will report to the well up to U.S. The Q4000 is scheduled to begin transit to Nigeria in August and then anticipated to return to the Gulf of Mexico in 2025. So while the Gulf from US Gulf of Mexico has been a strong market for us recently, it's good to have opportunity to go where the rates and terms take us good point is that robotics, they had a great year in 2023, and we expect this should continue again in 24 and 25. We do have one trencher that could be deployed that was idle in 2023. We also have our start-up new XL offering from the market. But the point is that I have covered the Gulf of Mexico shallow abandonment market and the reasons for not expecting the overperformance of 2023 to repeat in 2024, our expectations for 2024, consistent with the initial guidance we gave for 23, but with the possibility of repeating the stellar 2023 again in 25. And as I mentioned earlier, we just recently established a five-year joint frame agreement with Telenor for their offshore decommissioning requirements, primarily on the shelf in the US Gulf of Mexico, which we believe establishes a foundation for work for years to come.
In summary, we're expecting a one year pullback in shallow water abandonment more than offset by the strength of our other business groups. We're anticipating further meaningful growth for 2025, all of this based on just our existing assets and operating leverage. As I mentioned earlier, we recognized losses in 2023 related to the earn-out payment for shallow water abandonment acquisition and related to our refinancing efforts, without which we would have been significantly higher earnings in 2024, we'll be making the final earnout payment of $85 million for the Alliance acquisition. Willow will have some noise in the accounting and P&L as a result of completing the redemption of the remaining convertible notes that are still outstanding Following this, we have positioned ourselves to have a strong balance sheet and be meaningfully free cash flow positive. Helix should be enjoying growth from the existing operating leverage from existing assets with many market opportunities.
With that said,
Erik Staffeldt
thanks, Owen.
And operator, at this time, we'll take any questions.
Question and Answer Session
Operator
(Operator Instructions) James Schumm.
James Schumm
Hey, good morning, guys, and thanks for Al.
Good morning.
Thanks for all the detail. I think you partially answered this. I wanted to I wanted you guys to quantify the increase in expenses on the blend-and-extend for the Siem Helix one and two, you said $6 million of EBITDA. Is that per vessel or is that total?
That is top 24 total and 24. Is there a different number for 2025?
Yes, it will be different numbers for 25, but like in 24, we just capturing it.
Is it the delta on one of the vessels or is it like the full impact. So so maybe I'll ask that, but I'll also ask, is it fair to think about cash OpEx of those vessels of close to 200,000 per day, including the new charter costs.
Erik Staffeldt
So our sense is that obviously, the odd exception of those charters, given the strength of the market is something that we pursued the impact that we're seeing in 24 is primarily related, obviously, to the return value associated with the vessel itself. There will be some incremental increases in the services that are provided associated with that Charter and going forward. So there will be additional impact in 25.
James Schumm
Okay. And maybe this is for Scotty, but like it does that does that sound right, Scott, here, we are we pushing close to 200,000 per day of OpEx.
Scott Sparks
I on the internals of the numbers I described it.
James Schumm
Okay.
Owen Kratz
Okay.
James Schumm
And then maybe just shifting over to I think you partially or maybe fully answered this question, but I can't remember the last time the Q4000 was out of the Gulf of Mexico. So what I mean is this is this driven by a really strong contract and a really good day rate in Nigeria? Or is it some some softness in the Gulf of Mexico?
I know that.
Yes, for the offshore drilling market, the we might have seen a little bit of an air pocket here. The rates have been sort of healthy, very good, but sort of flatlined here for at least a year or so.
Owen Kratz
Just to know if you're seeing any softness this year in the Gulf of Mexico, low finished strong market in the Gulf of Mexico as usual going into the year, there is a bit of white space in the schedule, but nothing that we didn't expect to fill up. The move to Nigeria with the Q4000 was strictly driven by the rate and the terms that we were able to get there as well as wanting to maintain our footprint in West Africa, which we believe is going to be a strong market for years to come. And after establishing our credibility, we'd like to sort of maintain that presence.
Scott Sparks
I'd just add to that. And as I came to us finish contracts and single source that to us, it wasn't a competitive tender. So we're getting paid a very healthy multi-mode fee and decent day rate for the works over the but if you look back three or four years ago, Exxon did no intervention work other than based on rigs. So this is quite a big relationship builder to keep supporting Exxon in riser, the riser based intervention, knowledge-based intervention.
James Schumm
Okay, great. And thanks for that. And just a quick clarification on the alliance. I just wanted to be clear the EBITDA that you're guiding to for this year is what is it exactly? Is it 60 or 70? What's the expectation?
Erik Staffeldt
I think it's in that 30 to 60 million range. I think as Owen mentioned, similar to what that's what we had expected at the start of 23. And obviously, I came in much stronger, but I think we're expecting something in that range for 24 with the potential upside in 25.
Owen Kratz
I can give a little more color on the there was one major recipient of properties from Fieldwood that did an extraordinary amount of work in 2023 that that tightened the market up quite a bit and drove utilization. In addition to that, we had a very large lump sum contract that we performed very well on. I think we mentioned that during the of the notes and we'll be finishing that up early this year. The major that had all of the work last year is pulling back for 24 and sort of regrouping with the intentions of beginning work again in 25. And then we also have Doug Cox bankruptcy got held up in the courts for a little while and that we'll be flowing back to the successor owners by everyone's guess, a little later than what everyone expected. And that's causing a pause a pullback in our expectations on the shallow water abandonment for 24, but then returning to a normal allowed demand-driven market for 25.
James Schumm
Okay, great. Thanks for all the color guys.
Owen Kratz
Appreciate it.
Operator
David Smith.
David Smith
Hey, good morning and thank you for taking my question.
Scott Sparks
Commodity.
David Smith
I don't want to beat this one to death, but just revisiting the shallow water abandonment guidance, 23 was a great year, right? With revenue coming in 30% of ahead of the guidance midpoint provided a year ago. And so just wanted to make sure I understand if you could kind of compare the visibility you have for that segment today compared to a year ago and maybe how much of that outlook is a styling and more seasonality or or really just you have less less demand visibility.
Erik Staffeldt
So I'll give some high-level pass it on to our end. But overall, once again, it is a call-off business. I think what we've seen so far this year is the first quarter with the winter weather. We've seen a pullback in activity. I think we started to see that right at the end of December. So I think on a year-over-year basis, we definitely expect the first quarter to be tied to be slower. I think with that, I think we also expect activities to ramp up significantly in the second and third quarter. As we view it, obviously is really the fourth quarter is one are they going to continue at the pace that they're doing is they're going to be seasonality there. So there's some variability there. But I would say at least here at The Star first quarter, we're definitely seeing more of a seasonal impact than we did last.
Owen Kratz
I'll just add a little bit to that, though, besides the major producer that had a lot of work last year, pulling back on their expectations expectations for this year. There's the uncertainty of the Cox bankruptcy proceedings. I think this week, Thursday of hearing of the court to finally approve a Chapter seven. That's a little later that's much later than what everyone was expecting at the pace of it to move. We're just uncertain as to how fast that work comes to the market. It could be later on in 2024, but we don't want to guide to something that you can bank on. And so we're sort of taking the same view as we did going into 2023. And now we'll see what happens with the tox work.
Erik Staffeldt
I understand and appreciate it and follow up with myself and to revisit the commentary about potential well intervention pricing and 25, I think I heard the comment that we could see a 20 to 25 increase in rates versus the current average, I wanted to make sure that 20 to 25 was referring to average day rate and not a percentage increase as compared to our average day rate, which we've talked about, we have, I think, three sort of legacy contractors contracts that are holding our rates back, but they also have about 20 that play will 25 was that a $1,000 per day or was that a percentage a percentage?
Scott Sparks
And I was wondering if your contracts roll off in 24 and have already been replaced with much better market rates for 25.
Owen Kratz
Perfect.
Erik Staffeldt
Touch about if I could ask one clarifying question. Did I hear correctly when you all say that the Siem Helix one repricing should add 25 to 30 million of EBITDA and 25 versus 24?
Scott Sparks
Yes, that's correct.
Erik Staffeldt
Yes, I don't that.
Owen Kratz
Thank you very much.
Scott Sparks
Senator 25 for the Series one most likely for the 20, it to say we needed to and certainly for the Q7000.
David Smith
Great. That's all I have.
Thank you.
Operator
And there are no further questions on the phones at this time. I'll turn the call back to you for closing remarks.
Erik Staffeldt
Okay. Thank you very much for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2024 call in April. Thank you very much.
Operator
That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
