Helix Energy Solutions Group, Inc. (NYSE:HLX) Q4 2021 Earnings Conference Call February 22, 2022 10:00 AM ET

Company Participants

Brent Arriaga - Chief Accounting Officer
Ken Neikirk - General Counsel
Owen Kratz - Chief Executive Officer
Scotty Sparks - Chief Operating Officer
Erik Staffeldt - Chief Financial Officer

Conference Call Participants

James Schumm - Cowen & Company

Operator

Greetings and welcome to the Helix Energy Solutions Group 1 Fourth Quarter 2021 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, February 22, 2022.

I would now like to turn the conference over to Mr. Brent Arriaga, Chief Accounting Officer. Please go ahead.

Brent Arriaga

Thank you and good morning, everyone and thanks for joining us today on our conference call for our fourth quarter and full year 2021 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 do not have a copy of these materials, both can be accessed through the, For the Investor page on our website at www.helixesg.com. The press release can be accessed under the Press Releases tab and the slide presentation can be accessed by clicking on today's webcast link.

Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information.

Ken?

Ken Neikirk

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 the 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. Actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2 and our most recently filed annual report on Form 10-K and in our other filings with the SEC. Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slide of our presentation provides reconciliations to certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report and a replay of this broadcast are available under the For the Investors section of our website at www.helixesg.com.

Owen?

Owen Kratz

Good morning. We hope everyone out there and their families are doing well and staying [ph] morning, we'll review our Q4 and 2021 full year results and performance, our current operations, our view of the underlying market environment and how we think it will influence 2022 and beyond and provide our preliminary expectations for 2022.

Moving to the presentation, slides 5 through 7 provide a high-level summary of our results. Our performance for the quarter and for the year was in line with expectations as our teams continue to execute at high levels operationally. The Q7000 continued successful operations in West Africa. Gulf of Mexico intervention continues to improve. We benefit from increasing utilization and have visibility for work into Q3 of 2022. In Brazil, the Siem Helix 2 worked the entire quarter. The Siem Helix 1 transited and commenced an accommodation project in Ghana. Robotics projects extended late into Q4, limiting the impact of the winter season and delivering solid results for the quarter and year. Production facilities continues to be a steady performer and benefited from the production of our Droshky field which increased production -- with increased production and higher commodity prices.

Revenues for the quarter were $169 million with a net loss of $26 million and EBITDA of $9 million. Our gross profit was negative $5 million which is a negative 3%. For our year-to-date results, our revenues were $675 million with a net loss of $62 million compared to $734 million in revenues and net income of $22 million in 2020. We generated EBITDA of $96 million in 2021 compared to $155 million in 2020.

On the Slide 8; from a balance sheet perspective, our cash balance at the end of the quarter was $254 million, with an additional $74 million in temporarily restricted cash, primarily associated with the short-term LC for our work in West Africa. During the fourth quarter, we generated $19 million of operating cash flows and spent $1 million on CapEx with the resulting free cash flow of $18 million. For the year, we generated $140 million of operating cash flow and $132 million of free cash flow. During the year, we achieved a long-standing financial goal of ours by reaching net debt 0 and ending the year in a negative net debt balance of $22 million.

I'll now turn the call over to Scotty for an in-depth discussion of our operating results.

Scotty Sparks

Thanks, Owen and good morning, everyone. Moving on to Slide 10. Both onshore and offshore teams are doing a fantastic job keeping all of our operations functional and safe. Our business lines operated extremely well for a challenging year and handled the COVID-19 variants very well as it swiftly impacted our regions and offices.

In the fourth quarter, we continued to operate 14 vessels globally with minimal operational disruption continuing to operate to exceptional standards with 98.3% uptime efficiency for the full year. Our teams completed the year with very strong safety statistics, including a low rate of recordable incidents for the year, again emphasizing our strong safety culture and safety leadership globally. During the fourth quarter, we produced revenues of $169 million, resulting in a gross profit margin of negative 3%, generating a loss of $5 million, producing EBITDA for the fourth quarter of $8.8 million. For the full year, we produced revenues of $675 million, resulting in a gross profit margin of 2%, generating a gross profit margin of $15 million, producing EBITDA for the year of $96.3 million compared to $734 million revenue, $80 million gross profit and EBITDA of $155 million for 2020.

In the fourth quarter, the well intervention fleet achieved utilization of 56% globally with 52% utilization in Brazil with the Siem Helix 1 undertaking a planned regulatory docking n period prior to transit to Ghana. Utilization increased to 89% in the Gulf of Mexico. With low seasonal utilization in the North Sea and 99% utilization in West Africa for the Q7000. Robotics chartered vessel fleet achieved utilization of 99% globally, increasing to 419 vessel days during the quarter. In the Gulf of Mexico, we had both the Q4000 and the Q5000 working with increased utilization over the fourth quarter with some very small schedule gaps between projects working for numerous clients. In the North Sea, the Well Enhancer was operational during the quarter on two small projects and were seasonally warm-stacked for the remainder of the quarter. The Seawell remained warm-stacked for the first part of the quarter prior to being chartered by Robotics at a reduced daily cost to assist with renewables site clearance project.

In the West Africa region, the Q7000 had another impressive quarter working in Nigeria undertaking production enhancement works and P&A activity with 99% uptime. Operating performance in Brazil was at their usual high standard of the Siem Helix 2 100% utilized producing very well for Petrobras. The Robotics chartered vessel fleet achieved high utilization in the quarter, working between ROV support, trenching and renewable works globally. 237 days work was undertaken on four projects using spot chartered vessels.

Slide 11 provides a more detailed review of our Well Intervention business in the Gulf of Mexico. The Q5000 increased utilization to 88% in the fourth quarter compared to 77% in Q3, performing production enhancement operations in ultra-deepwater for two clients and a two well P&A campaign for another client. The Q4000 increased utilization to 90% in the fourth quarter compared to 71% in Q3. The vessel completed a construction scope on a platform damaged by Hurricane Ida, followed by a hydrate remediation scope and a temporary abandonment for one client. Then completed a production enhancement work for another client in ultra-deepwater.

At the end of the quarter, the vessel commenced the multi-well campaign that is ongoing and expected to last most of Q1 of 2022. Both sea vessels have integrated Helix-Schlumberger Alliance teams and equipment continually installed working as one complete productive and safe team offering our clients' numerous benefits. Pleasingly, both vessels have high utilization contracted work for the first half of 2022, with contracted and awarded works into the third quarter, with approximately 85 days expected to utilize in the Helix-Schlumberger jointly owned 15K Subsea system. We have good visibility of potential further activity with steady increase in rates for the remainder of 2022 in the Gulf of Mexico for the key units and we have recently been awarded work in 2023.

Moving to Slide 12. Our North Sea Well Intervention business continues to be most affected by reduced work opportunities related to COVID-19 with very low utilization in the fourth quarter, warm-stacking both vessels as we seasonally do each winter for most of the quarter. The Well Enhancer achieved 15% utilization in Q4, working for two clients completing small duration, diving and pump and enhancements operations in the quarter. The vessel was then warm-stacked in Leith, Scotland significantly reducing the vessel operating costs and crew levels. The Seawell also remained warm-stacked a part of the quarter in Leith with reduced cost in crews. The Robotics division rather than hiring a service spot vessel in November chartered The Seawell with minimal marine crew to undertake site clearance and boulder removal on a renewables project that lasted into February of 2022. This solution provided a benefit for our Robotics business while reducing the cost in a lose less scenario for the Seawell.

Looking ahead, we are seeing signs of slow improvement in the North Sea market and are expecting rates to hold with high utilization. Both vessels have contracts and further awards for Q2 and Q3 that should lead to them being reactivated in Q2 and what we anticipate being a trend of improving utilization. The Q7000 had another strong performing quarter in Q4. The vessel performed extremely well with 99% uptime, working with the multinational integrated Helix-Schlumberger Alliance teams. The vessel performed work on numerous wells in the quarter, conducting production enhancements and P&A activity. Vessel has contracted work in Nigeria into Q2 and thereafter, are likely to remain busy, albeit with a few possibilities for extensions.

Further works have been identified in West Africa in Q2 and Q3 and possibly Q4. Provided these wells are contracted, the vessel would stay in West Africa to perform this work. However, should the work not materialize, we expect we would commence the paid transit to the APAC region in preparation for our contracted work in New Zealand.

Moving to Slide 13. In Brazil, we achieved strong performance with 0 operational downtime working for Petrobras in the fourth quarter. The Siem Helix 2 had 100% utilization and completed abandonment work on two wells and the production enhancement work on three wells during the quarter. In December, we signed a one year extension at lower rates with Petrobras for the Siem Helix 2.

The Siem Helix 1 completed it's planned five year regulatory maintenance docking period and then commence mobilization to Ghana, arriving late in the quarter for it's accommodation contract that is expected to last well into Q2. We anticipate these Siem Helix 1 will be contracted on lose less scenarios for the first half of the year and then return to well work activity expected in the early Q4 on better rates, beginning with a long-term decommissioning project that is contracted for one year with multiple customer options to extend.

Moving on to Slide 14 for our Robotics review. Robotics had another good quarter, completing a good year for 2021, operating seven vessels during the quarter, primarily working between trenching, ROV support, decommissioning and the non-oil and gas and renewables-related projects.

In the APAC region, the Grand Canyon II had 100% utilization in Q4. The vessel is contracted in Thailand, undertaken a well-head decommissioning project that is expected to continue into Q2 of 2022. Vessel is then contracted for renewables work in Taiwan into Q3. In the North Sea, the Grand Canyon III was utilized 98%, undertaking oil and gas and renewables trenching operations for four clients. The vessel has contracted oil and gas and renewable trenching scopes which are anticipated to keep the vessel busy for most of 2022. The chartered vessels, the Salto, the South Heim and the VOS suite [ph] along with the Seawell beginning in November, continued site clearance and survey works for 197 days combined working on renewables projects in Q4. The project chartered Siem Dorado successfully completed work on a cable installation project on our first work offshore Guyana utilizing in 40 days in Q4, demobilizing back to Norway via Halifax in Canada.

The Robotics group's transition further into the green and renewables sector continues as they have secured contracts to undertake further site clearance and survey projects and we are seeing tender activity increase for renewable services that we offer -- that we provide globally. We have also recently been awarded further renewable trenching works in 2022 and 2023 and have contracted a spot market vessel with Horizon Enabler for our second trenching vessel in Q2 and Q3 of 2022 and for part of 2023. We have also recently chartered the Shelia Bordelon on a Jones Act-compliant vessel for one year, we have an option for a second year, site clearing works in the Gulf of Mexico and for renewable works on the U.S. East Coast.

Over to Slide 15. I'll leave this slide detailing the vessels ROV and trenching utilization for your reference.

Slide 16 highlights some of our key points for our environmental, social and governance programs. ESG plays a pivotal role in the company's value proposition. We foresee a global transition from relying primarily on fossil fuels to a more balanced approach that includes our renewable energy initiatives. We help our clients avoid drilling new wells and we properly and safely decommission end of life fields when the time comes and we believe our assets are largely more efficient and less pollutive than conventional alternatives. This is part of our strong ESG story, more on ESG can be found in our latest corporate sustainability report, a copy of which is available on our website.

Before I close and turn the call over to Brent, I would like to mention some other key points. As I just mentioned, it should be highlighted that our well intervention fleet undertaking production enhancement per barrel produces meaningfully less carbon emissions than conventional drill ships, also taking less time, far less fuel, far less logistics support vessels, travel, helicopters and personnel further reducing emissions. And compared to 2021, it is pleasing to see better visibility across most of our business lines and that utilization rates are steadily improving. Tender activity continues to increase and our geography and client base for well enhancements, well decommissioning and robotics is expanding further. We expect the headwinds of the Siem Helix 1 for the first half of the year, contracted on lose less projects and we could deal with a complicated schedule after Q2 for the Q7000. However, thereafter, we feel our participation in the market recovery is trending in our favor.

I would again like to thank our Helix global team. You did a great job handling the COVID variants and continue to do so. Our offshore and onshore personnel and our partners are doing a fantastic job under these challenging circumstances entailing operational excellence with minimal NPT while keeping very high standards in safety performance.

Brent?

Brent Arriaga

Thanks, Scotty. Moving to Slide 18. It outlines our debt instruments and their maturity profile at December 31, 2021. Our total funded debt was $314 million at the end of Q4.

Moving over to Slide 19. This slide provides an update on key balance sheet metrics, including long-term debt and net debt levels at year-end with cash and restricted cash of $327 million as of year-end, we were in a negative net debt position of $22 million. Our cash position at the end of Q4 was $254 million, with an additional $74 million of restricted cash that primarily supports a temporary project letter of credit. At year-end, we had no amounts outstanding and $51 million of availability under the new ABL facility with resulting liquidity of approximately $305 million.

I'll now turn the call over to Erik for a discussion on our 2022 outlook.

Erik Staffeldt

Thanks, Brent. As we enter 2022, we find ourselves in an interesting situation. We are in the early stages of an improving market, yet still working through the end of the contracting period impacted by the COVID pandemic.

The improving market is clearly evident by the improving macro backdrop and high commodity prices in our industry. We specifically are seeing the benefit through improved rate structure and utilization we see in certain markets and the contracted work recently awarded for 2023. Yet in the midst of this market recovery at the start of '22, Helix is hitting the trough of the COVID market but for an anticipated robust recovery in the second half of '22 and into '23. Given the significant variability we're facing in many areas, we feel it's premature to provide quantitative earnings guidance for 2022 at this point. Many of these areas should resolve in the near term and we hope to be in a position in April to provide quantitative guidance.

That being said, we can say this much on how we see the year unfolding in the near term. We expect Q1 to be our weakest quarter in what we believe will represent the bottom of the market for Helix. In addition to the seasonal winter downturn in Q1, we are planning for six of our well intervention vessels to undergo regulatory maintenance in the first half of 2022. Beyond Q1, we expect to see a recovery and anticipate all seven well intervention vessels working in '22.

In the Gulf of Mexico well intervention, both Q vessels are working in the spot market. Both vessels have contracted work into mid-'22 with opportunities thereafter. We expect both vessels to have strong utilization in '22 with the added backdrop of increasing rates. In the North Sea, Well Intervention business, as we expect to have the Well Enhancer working most of the season, the Seawell should have pockets of work and the ability to add utilization if the market strengthens. We continue to foresee this market as the slowest to recover from the challenges brought on by pandemic.

In Brazil, the Siem Helix 2 is on contract into December, the Siem Helix 1 is on the lower rate accommodations contract into midyear. We are exploring opportunities for spot work prior to the planned commencement of decommissioning work for Trident at the end of 2022. In West Africa, we expect the Q7000 to work into Q2 with possibilities thereafter. The Q7000 provides projects -- variability in our potential 2022 results with it's uncertain schedule of work in West Africa prior to it's planned transit to the APAC region to commence the Tui field abandonment.

In Robotics, we expect improvements year-over-year driven by the North Sea renewables activity driving increased trenching opportunities and site clearance work. We expect to benefit from increased vessel activity in the Gulf of Mexico, including renewables activity developing in 2022. Production facilities should be fairly consistent with production variability as the Droshky field continues to deplete. We continue to look for opportunities to replicate that model of taking on operators, decommissioning liability in exchange for light field production. Once again, with the many uncertainties we are currently seeing, we feel it is a bit premature to provide quantitative guidance for '22 at this point. We hope to be in a position in April to provide quantitative guidance.

Providing a bit more color by segment and region on to Slide 22. First, with our Well Intervention. In the Gulf of Mexico, this is likely our strongest market with improving rates and expected strong utilization on the Q4000 and Q5000. Contracted work extends into mid-'22. Both vessels do have regulatory maintenance periods approximately 10 to 20 days per vessel. In the U.K. North Sea, both vessels are scheduled to undergo regulatory maintenance during their seasonal idle period. The Well Enhancer is expected to have good utilization starting in May, the Seawell should begin work in mid-Q2, duration and timing of additional work to be determined. The Q7000 is contracted to continue operations into late April, early May. There is potential work in West Africa to late '22 but it is not yet firm. The vessel is expected to undergo an approximately 40-day maintenance period in Q2.

In Brazil, the Siem Helix 2 is contracted into mid-December with Petrobras, the Siem Helix 1 is performing accommodation work in Ghana. The vessel has availability midyear prior to it's contracted well abandonment work for Trident in Q4. The work for Trident is a 12-month contract with customer options to extend.

Moving to our Robotics segment, Slide 23. Robotics work in Q1 will likely be affected by the typical winter slowdown before it's expected seasonal rebound in the spring and summer months. The Grand Canyon II in APAC is on contract into Q3 and is expected to have good utilization for the balance of '22 in that region. The Grand Canyon III is contracted to perform trenching in the North Sea for multiple customers with expected strong utilization. We have secured a VOO for parts of '22 and '23, the Horizon Enabler for awarded trenching work in the North Sea in Q2 and Q3. We are working on the Shelia Bordelon in the Gulf of Mexico with expected good utilization.

Moving to production facilities, the HP1 is on contract for the balance of '22 with no expected change. We have expected variability with production as the Droshky field continues to deplete.

Continuing on Slide 24. Our CapEx forecast for '22 is impacted by the amounts from '21 pushed into '22 with an approximate $20 million volume from our 2021 budget and with a heavy regulatory year, our CapEx range for 2022 is currently $40 million to $50 million. The majority of our CapEx forecast continues to be maintenance and project related. Reviewing our balance sheet, our funded debt of $314 million is expected to decrease by $43 million as a result of scheduled principal payments which includes the maturity of our remaining 2022 convertible notes of $35 million which we intend to settle in cash.

I'll skip the remaining slides, starting with Slide 25 and leave them for your reference. At this time, I'll turn the call back to Owen for a discussion on our outlook beyond '22 and closing comments.

Owen?

Owen Kratz

Thanks, Erik. I'd like to provide some insight as to what we see for Helix going forward. Some of it will be a repeat of what you've already heard. But in 2022, it's going to be a rather unusual year for Helix. We currently expect the first half of the year to be challenging with most of our vessels having scheduled regulatory maintenance. The normal seasonal slowdown in the North Sea and the lingering effects of COVID pandemic will all be a factor. This period of weakness transitions in the second half to what we expect to be a robust recovery for the remainder of '22 and especially into 2023.

With this combination of factors, the first half of the year will likely be weak. First, the North Sea market is off to a slow start with strong visibility in the second half. Second, the Siem Helix 1 was off contract to Petrobras and has been deployed on an accommodation work to avoid sitting idle as we tendered for multiyear work with the Trident award beginning in Q4. It's contracted to return to the intervention market. The accommodations work is at lower rates and is anticipated to generate meaningful EBITDA losses until Q4. Third, similarly, we expected -- we accepted a one year extension from Petrobras for the Siem Helix 2 at marginal rates but with the smaller loss than the Siem Helix 1. Visibility for the Siem Helix vessels is strong for the return to profitability in 2023. Given the challenges of early '22 and to put ourselves in a position to capture what we anticipate to be a much improved market leader in the year, we're planning to incur dry docks or extended maintenance periods on all of the intervention vessels during 2022. The Well Enhancer and Seawell are scheduled to be in dry dock during the normal seasonal idle period in an effort to minimize the EBITDA effect.

On the other hand, the Q4000, Q5000, Q7000 and the Siem Helix 2 are all planned to be out of service at various times during the first half, meaningfully impacting availability and utilization for H1. Fifth, prior to realization of how accelerated the recovery would be for 2022, we did commit in 2021 to some low rates for the first half of 2022 as a hedge to utilization. We plan to work through these low legacy rates with most of them having the most impact in H1. Sixth, finally, at some point, we intend to redeploy the Q7000 to Asia Pacific with a backlog of contracts to perform, with work in that region beginning as early as Q4. This means the paid mobilization in transit, both cost and revenue would be deferred and amortized over the contract deferred period.

The accounting effect to 2022 would be full utilization but no EBITDA during the transit and mobilization in '22 with the associated impact on EBITDA falling into 2023. By the second half of this year, some of these issues will likely have been worked through and we should be on a full year EBITDA run rate north of $100 million with further recovery in 2023. First, the visibility for the North Sea is strong for the second half of 2022. As always, it's up to us to capture it. Second, the Q7000 may complete it's transit and mobilization and go to work in Asia Pacific as early as Q4 2022. But certainly, the expectation is by 2023, depending on the duration of the work in West Africa. Third, the Siem Helix 1 is contracted to return to profitable deployment in Brazil for what appears will be a multiyear period. The contract for 2023 is signed and negotiations are ongoing for additional years. Fourth, the Siem Helix 2 will complete it's marginal contract with Petrobras and it's being tendered on more profitable work for 2023. Assuming the Q7000 will be working in Asia Pacific for 2023, that leaves only the Siem Helix 2 to cover West Africa, Brazil and the North Sea for riser intervention work. Fifth, the HP1 likely needs to undergo regulatory dry dock around midyear. Sixth, we're now tendering rates which are much higher than in 2021 average rates and there appears to be upward bias to where rates go from here. This is not all that will be transitioning during 2022.

Our strategy will be to continue to strengthen our energy transition story. We're planning to move forward into 2023 with three legs to our business, all related to energy transition. First, we'll be highlighting and emphasizing our capabilities pertaining to mature fields. We currently offer enhancement of existing production and we want to continue to assist the oil and gas producers to improve recovery of existing fields which mitigates some of the need for new drilling. We plan to continue marketing our offer for alternative solutions for the end of life of fields by assessing the fields and extending their commercial life while providing a cost-effective abandonment solution. Second leg would be, we intend to explore ways to increase our abandonment capabilities beyond subsea wells and subsea architecture abandonment. We previously had success as a full field abandonment contractor. Before the pivot of interest from oil and gas to renewables, decommissioning was the buzzword. This expected demand did not go away. We believe the transition from oil and gas and recent events in several regions that have caused regulators to push for accelerated P&A will accelerate the growth of the abandonment niche. At current commodity prices, this can also be paid for.

Third, we intend to continue and broaden our offering to the renewables market. We currently provide site clearance and cable trenching. This can be expanded as the market grows but we can also offer further capabilities and geographic expansion. We see this as having meaningful growth potential for 2023 and beyond. These three legs establish Helix as a meaningful energy transition company with significant potential. In fact, I think our operating leverage to the market recovery is sometimes underestimated. There's a lot of work through, though in 2022 to get to this point but a very bright future.

With that, I'll turn it back over to Erik for Q&A.

Erik Staffeldt

Thanks, Owen. Operator, we're ready to take any questions.

Question-and-Answer Session

Operator

[Operator Instructions] We have a question from James Schumm with Cowen. Please proceed.

JamesSchumm

Hey, good morning, guys. Thanks for taking my question. Is it reasonable to model flat working capital this year? And then just curious whether you expect to be free cash flow positive this year?

ErikStaffeldt

Thanks for the questions. I think in general, there are some variabilities out there as we consider working capital. I think our initial assessment is expectation would be flat working capital. I think one of the variables that could shift that would be the transit that we talked about towards the APAC region. That could cause some noise within the working capital. But I think big picture, we currently don't identify any specific variables that would provide some type of longer-term adjustment to working capital in '22. As far as our free cash flow forecast, we've discussed the variability that we see in '22 at this time. Obviously, it affects the top line and our EBITDA generation. And I think until we can properly quantify that, we refrain from issuing guidance and I think we'll have to refrain from addressing that as well.

James Schumm

Okay. And then for the Q7000, so it sounds like you're going to -- you potentially have some follow-on work in West Africa. If that does not materialize and we model a 0% utilization for the third quarter. What -- how should we model daily cash OpEx during vessel transit and maintenance periods?

ErikStaffeldt

So during the transit and once again, this is a situation where our transit costs are covered. The requirement is to defer both our -- any type of revenue associated with the transit in any of the cost. So during the transit time, that is definitely deferred until the contract actually starts and then you recognize not only your day rate but also your deferred mob cost and revenue. On the maintenance period, there is a small impact to the P&L during the maintenance period for, you could say, regular O&M that's done on the vessel. But it's not near the -- it's not the normal daily operating cost but there is a small amount that still hits our P&L during the maintenance period on the vessels.

James Schumm

Okay. And just to clarify, like on the transit, you defer the cost. So would you have like depreciation, you have depreciation of the vessel but basically no OpEx?

ErikStaffeldt

I think that big picture, that's directionally correct, Jim.

James Schumm

Okay, thanks. I'll get back in the queue. Appreciate it.

Operator

[Operator Instructions] And we have a follow-up from James Schumm. Please proceed.

James Schumm

Hey, long time, no speak. So, the SG&A was -- the SG&A or the corporate operating loss, however, you guys want to speak to that but it looked like that was as high as it's been in years. Just wondering if -- was any of that pulled forward from 2022? Or was that all accrued in 2021 if it's all 2021, just curious why the big jump there. And what should we expect going forward on that line?

ErikStaffeldt

Yes. Thanks, Jim. I think the big picture first on our SG&A, if you look at our 2021 results there, I think directionally in line with what you saw in '20. So big picture, there wasn't a significant shift. And there's definitely no pull forward from '22. It is all 2021. We did have significant, you could say, variability as we entered the fourth quarter. And I think we ended up having a very strong fourth quarter booking and performing work in West Africa, in our Robotics segment and in the Well Intervention in Gulf of Mexico that allowed our business units to achieve some of the, you could say, additional compensation metrics that were targeted. That being such a big variable, that's what really caused an unusual Q4. But if you look at the big picture, '21 was essentially in line with 2020.

James Schumm

Okay, got it. And then I guess, lastly for me. So wondering if you guys would be able to give us a sense of the economics of an ROV spread versus a typical trencher spread? Any help you could offer there?

Scotty Sparks

Sure. Yes. So firstly, the rates are increasing on both lines. But there's a difference between trenching and hard ground trenching as well. So a typical RV spread would go out for sort of 60,000 to 80,000 a day, it's quite broad depending on which region we're in. Most of our trenching takes place currently in the North Sea and it's a mix between renewables and oil and gas trenching. So jet trenching spread will be above the 100,000 range and our hard cutting spread would be about 120,000. Obviously that varies...

James Schumm

Okay, great. And then -- and just fair to assume that the trenching gross profit or operating income spread would be materially higher than like an ROV spread?

Scotty Sparks

It's slightly higher. You have more cost. You have more people on the vessel. We have more survey contractors, more survey components. So there's a much higher cost that goes with it but it's slightly higher.

OwenKratz

Just to add a little color to the Q7 discussion that you're having with Erik. I thought I heard him mention of the possibility of idle for the third quarter. Just wanted to address that a little bit. We have some flexibility on the starting of the work in Asia Pacific. So the work -- the remaining work that we're looking at in West Africa, if it didn't materialize, we'd be able to accelerate the start of the Asia Pacific work. Of course, that puts more of the transit and mob into 2022 with the accounting impact. To the extent that we continue working with Africa, then that potentially pushes the Asia Pacific work start all the way back into '23 which has a different impact on the mob demob. So that's one of the big variables which is why we're unable to give quantitative guidance right now is because until we know the outcome of the West Africa work and the placement and timing of the mob and demob transit, it just creates a lot of noise in our forecasting.

James Schumm

Okay, the for that, Owen. Because that's really helpful because -- yes, I was assuming -- I didn't know that you could pull forward the Asia Pacific work. Okay, so that gives you a little flexibility so you don't necessarily get 0% utilization in the third quarter.

Okay, great. Thank you for that.

Operator

Mr. Staffeldt, there are no further questions at this time.

Erik Staffeldt

Okay. Well, thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2022 call in April, 2022. Thank you.

Operator

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.