Isabel Green - Head, IR Kristian Siem - Chairman Jean Cahuzac - CEO Ricardo Rosa - CFO John Evans - COO

Fiona MacLean - Merrill Lynch Mick Pickup - Barclays Capital Phillip Lindsay - HSBC Haakon Amundsen - ABG Sundall Collier Rob Pulleyn - Morgan Stanley Frederik Lunde - Carnegie Asad Farid - Berenberg Bank Mukhtar Garadaghi - Citigroup

Hello and welcome to the Subsea 7 Quarter Four and Full Year 2014 Results Conference Call. [Operator Instructions]. I will now hand you over to our first speaker, Isabel Green, Head of Investor Relations.

Welcome everyone. Here on the call with me today are Kristian Siem our Chairman, Jean Cahuzac, our Chief Executive Officer, Executive Director; Ricardo Rosa, Chief Financial Officer and John Evans, our Chief Operating Officer. The full press release containing of the results can be found on the Investor Relations section of our corporate website along with the presentation slides that we will be referring to on today's call. In a moment, I'll hand over to Kristian to open the call, but before I do I'm obliged to draw your attention to Slide number 2. Which contains important information regarding forward-looking statements? A similar disclosure is also provided in the press release. I will now turn the call over to Kristian.

Thank you and good afternoon, ladies and gentlemen and welcome to the year-end call for Subsea 7. 2014 was a great year; it was the best year ever. All areas were profitable with high vessel utilization and with a good safety record. The results confirm that rationale behind the merger in 2011 and that also help by the cost reduction program initiated already at the beginning of last year. I take this opportunity to compliment our organization with excellence in the execution. The AGM is brought forward to 17 April, 2015 Luxembourg law requires an EGM for special resolutions and we will therefore have an EGM on the same date. On the agenda for the EGM is the granting have forwarded to the board to increase the share capital by 10% of the issued capital for the period of three years without pre-emption rights for existing shareholders. We have consulted with major shareholders and arrived at 10% under three years. The three years is a post to an annual shareholder authorization is due to the fact that Luxembourg requires an EGM for this resolution and we want to avoid the bureaucracy of an EGM every year. Also the statutes required 50% of shares in issue represented in the meetings. So please assure that you send in your proxies. As you're all well aware, it is a new day in the market environment of our industry Subsea 7 is taking measures to adjust the cost base of the company to the expected lower activity level. They remain committed to remain a leader in this industry. With that I hand over to our Chief Executive Officer, Jean Cahuzac.

Thank you, Kristian and good afternoon, everyone. I would start by summarizing the main elements of our full year and fourth quarter 2014 performance before handing over to Ricardo who will cover the financials in more details. I will then conclude with some observation from the market and the outlook for business in 2015 before opening up the line for your questions. Let's look first at the highlights on Slide 5. We have had a good year with good underlying financial performance. Revenue of $6.9 billion and EBITDA of $1.4 billion was driven by high levels of activity in all four of our territories as we completed several sizable and complex projects. Life of Field activity remains steady as clients continue to value our efficient and safe service delivery. We achieved 82% vessel utilization with strong operational execution. In the seasonal, it's lower fourth quarter, utilization was 68% compared to 80% in the same quarter in 2013 and we use this quieter period to carry out regular maintenance on vessels. Our fleet renewal program is on track and the first six of our of six new vessels in the Seven Waves successfully started operation ahead of schedule in May under our long-term PSLV contract with Petrobras. Moving now to the financial highlights on Slide 6. We generated almost $300 million adjusted EBITDA on $1.4 billion revenue in the fourth quarter giving a 21% margin. This was driven by good progress on projects including Guará-Lula where we completed the offshore phase enabling a further $16 million reduction to the full-life project loss provision taking in the previous year. As a result, adjusted diluted earnings per share were $0.61 up from $0.23 in 2013. The goodwill on our balance sheet resulting from the combination in 2011 was impaired by $1.2 billion in the quarter due to the change in near-term outlook for the oil service industry resulting from the lower oil price. This non-cash, non-recurring impairment charge is excluded from our adjusted EBITDA and adjusted earnings per share. For the full year, our revenue and adjusted EBITDA reached record levels. With positive contribution from each of the four territories, in each of the four quarters. Lower tax and interest charges and a reduction in weighted average shares converted into full year adjusted diluted earnings per share of $2.32. Reflecting challenges facing the oil industry in the near to middle-term and in order to preserve our financial flexibility, so that we can benefit from opportunities we may arise in the downturn, the Board has decided not to recommend a dividend in respect of 2014. Returning to operational performance on Slide 7. We have made significant progress on several large and technical rich project this year demonstrating our expertise in managing and executing complex project worldwide. I wish to take a moment to talk about some of the key ones in a little more detail. As I mention earlier, we successfully completed the offshore phase of Guará-Lula offshore Brazil in the fourth quarter, with last of 27 risers that we installed in December. On the low risk final commissioning what is left to complete in 2015. The project demonstrated successfully the application of new technology with our innovative cost effective riser design and new corrosion resistant pipe. Petrobras is very satisfied with the final results. Setting aside the overall financial outcome, we are proud of the turnover achieved by the project team in 2014 enabling the release of $100 million for vision through the year, as the project has been substantially de-risked. Significant progress was made on the Gorgon Heavy Lift and Tie-in project for Chevron offshore Australia. This project included some of the heaviest and deeper Subsea list in our company history enabled by the capability and versatility of our fleet and the ability of Sapura 3000, Skandi Acergy and Rockwater 2. In the North Sea, the Knarr project progress also well, in the fourth quarter with bundle fabrication and installation in the year. Overall 2014 was a robust year operational in the North Sea with good progression on several contracts. Offshore Nigeria with a first intelligent phase was successfully completed in Erha North and fabrication is continuing at our joint venture. Our Life of Field business with its day-rate frame agreements remain steady supported by our competitive offering and strong reputation for safe and reliable delivery. Our joint venture Seaway Heavy Lifting and SupraAcergy return to more moderate level or activity down from the high levels experienced in 2013. Turning to our backlog on Slide 8. We ended the year with $8.2 billion secure orders in our backlog done from record levels at the start of the year reflecting the deterioration in market conditions compounded by the collapse in oil price. In the first half of the year, we secured several larger and medium-sized contracts including offshore UK and above our project offshore Ivory Coast. In the third and fourth quarter, we are seeing clients more tightly control project growth at a number of contract rewards to the industry were differed as market conditions became steady worse. The strengthening of the US Dollar resulted in a foreign exchange impact of our backlog $400 million in the year. $4.1 billion of our order backlog is for execution in 2015 giving us a solid base for this year's revenue. Further out, our backlog is predominantly supported by long-term day rate contracts including PLSVs we have with Petrobras. We do remain active on a number of significant tender and are confident in our competitive position for the timing of newer work to the market remain highly uncertain. I will talk more about the market and outlook afterwards later on. First, I'll hand over to Ricardo to talk about financial performance in more details.

Thank you, Jean and good afternoon, everyone. Let's first look at the income statement highlighted on Slide 10. Fourth quarter revenue was $1.4 billion taking the full year to $6.9 billion, 9% higher than in 2013 reflecting higher activity levels particularly in the first three quarters. Full year adjusted EBITDA of $1.4 billion included a $100 million reduction in the full life project loss recognized on the Guará-Lula project. As Jean mentioned, we recognized the partial impairment to goodwill in the fourth quarter relating to the combination in 2011, in response to the lower price environment and consequent change in market outlook. This $1.2 billion non-cash charge does not impact our adjusted EBITDA, but affects our net operating income and net income figures as well as our earnings per share. Excluding the impairment we generated net operating income of $930 million net income of $802 million and diluted earnings per share of $2.32. Our reported annual net operating loss of $254 million included $89 million in asset impairment charges taken in the fourth quarter relating primarily to Seven Borealis and some mobile equipment. The income from joint ventures was down in the year and notably low in the fourth quarter as a result of lower activity levels particularly for Seaway Heavy Lifting following a downturn in offshore wind farm installation project. After adding annual net finance income as $1 million and other gains and losses mainly comprising foreign exchange gains of $24 million. We reported a loss before taxes of $230 million. The $152 million tax charge for the year was equivalent to an effective tax rate of 16% after excluding the impact of the goodwill impairment on which no tax and leases available. This was an improvement on our guidance for the full year of 26% to 28% benefitting from the reduction of the full life loss on Guará-Lula, which had no tax effect revisions in the forecast tax rate and adjustments related to prior years. Net loss for the year was $381 million resulting in a diluted loss per share of $1.02. I will now turn to Slide 11 and territories operational performance in the fourth quarter. All four territories were profitable in the quarter on adjusted basis excluding the goodwill impairment charge. With underlying margin growth in the Brazil and North Sea and Canada territories and the Africa Gulf of Mexico and Mediterranean territory offsetting margin declines in Asia Pacific and Middle East. Taking each territory in turn, Africa Gulf of Mexico and Mediterranean generated $511 million in the quarter with adjusted net operating income of $64 million. There was a good level of activity in the period, although vessel utilization was lower than the fourth quarter in the prior year and we continue to experience some timing delays on the Lianzi project offshore Angola. Offshore Mexico, the Line 67 project for Pemex made significant progress despite some operational challenges. In Brazil revenue increased slightly in the fourth quarter to $209 million from $206 million in the fourth quarter of 2013. Our fleet of PLSVs had high levels of utilization except for Seven Mar which was in drydock during the quarter. The offshore phase of the Guará-Lula North East project was successfully completed adjusted net operating income of $35 million which included a $16 million reduction in the full life project loss previously recognized on Guará-Lula. This compares favourably with a net operating loss of $13 million reported in the fourth quarter of 2013. Asia Pacific and Middle East delivered revenue of $217 million, an increase of $57 million on the prior year quarter largely due to higher levels of activity on the Gorgon Heavy Lift and Tie in project offshore Australia. Adjusted net operating income was $22 million more than the level of the prior year period despite relatively low margin recognition of the Gorgon project. The North Sea and the Canada territory generated revenue f $459 million compared to $544 million from the prior year period. While adjusted net operating income amounted to $85 million, which was $22 million higher than in the fourth quarter 2013. The decrease in revenue mainly reflected lower vessel utilization, a trend which is continued into the first months of 2015. The increase in adjusted net operating was driven by good project execution due to the successful commercial close out of certain projects. Although not shown on this slide, net operating losses incurred by the corporate segment were $105 million including asset impairment charges totalling $80 million. The partial impairments of Seven Borealis a rigid pipelay and heavy construction vessel was the result of our regular review of the carrying values of all our vessels having regard to their age, marketability and technical specifications. Slide 12 summarizes 2014 full year performance excluding the goodwill impairment and highlights the underlying profitability of our activities in all our territories. The increase in group revenue year-on-year was primarily due to higher activity levels in APME and Brazil. I would like to take a moment on Slide 13 to reflect on our cost base in 2014. Subsea 7 is a people led business with differentiation driven by our expertise and experience in project management and technology. It is therefore unsurprising that people are a significant part of our cost base. We do have some flexibility here with around a third of our workforce on non-permanent employment contract. Furthermore, the long lead time and projects allows us to implement cost reductions in certain onshore locations to better match market conditions. That said, it is important to retain our expertise through the cycle to support continued excellent execution and to position ourselves to win new orders when the market picks up. The versatility and capability of our fleet enables us to execute complex projects worldwide. We had 39 vessels operating at the year end. Around the quarter of the fleet was contract on long-term day rate work including Seven PLSVs with Petrobras. Although the cost per vessels are marginally fixed. We do have some flexibility with around the third of fleet charters with renewal base starting from the end of this year. I'll talk more about our fleet replacement program in a moment, but it is worth noting that when the five remaining vessels is currently under construction are delivered. Three of them are going straight onto long-term contracts in Brazil and the other two are expected to replace existing capacity. Our depreciation and amortization charge excluding impairments in 2014 was $421 million most of which relates to our fleet. This charge is expected to increase in 2015 as we complete our vessel replacement program. Although the increase will be mitigated if we dispose of older owned vessels. In 2014, procurement and other related project cost came to $2.8 billion excluding the cost of the vessels and people. This cost is very quite significantly depending on the profile of the work and activity levels in the period. There are other costs not included in the capital because I've just mentioned and we continue to take a proactive approach to cost optimization across all our operations worldwide. As reflected on the summary balance sheet on Slide 14, we ended the quarter with a cash and cash equivalent balance of $573 million. Total borrowings stood at $578 million driven down during the year by the maturity of the $275 million in October, 2014 and the repurchase of $82 million par value of the 2017 convertible for a total of $76 million in cash. We take a conservative stunt to financial leverage consistent with an investment grade rating. A key priority for us is to maintain our balance sheet strength which is particularly important in the down cycle. A major benefit of a strong balance sheet is that it supports investing activities through the cycle allowing us to take a long-term view regarding our fleet renewal program and also consider any strategic investment opportunities when they arrive. Our liquidity position is satisfactory. We negotiated a new revolving credit facility during 2014 on terms that reflected investment grade quality of our financial position. This facility extends to September 2019 and was undrawn at the end of the year. We no longer have any assets held for sale on the balance sheet and they declassify the net assets of Sonomac [ph] following the failure to satisfy sale conditions that were outside our control. We have represent comparatives when necessary to reflected and the impacts on profitability for 2014 was insignificant. I will now turn to Slide 15 which provides an overview of cash flow over the year. Net cash generated from operating activity totalled $1.5 billion with $361 million generated in the fourth quarter. Net operating assets decreased by $268 million in the year as our continued focus on working capital resulted in significant improvement in receivables. Net cash used in investing activities amounted to $828 million which included $861 million of capital expenditure largely in relation to the construction of the remaining five vessels in our fleet enhancement program. Net cash used in financing activities amounted to $720 million which included the 2013 cash dividend of $195 million paid in July, $166 million on repurchasing 10.5 million shares and convertible bond repurchase and redemption totalling $337 million. We ended the year with net debt of $6 million. The board's decision not to recommend a dividend in respect of 2014 was taken after assessing the various near term challenges facing our industry and the consequent importance of preserving liquidity. Financial flexibility is both prudent that positions us for value adding opportunities should they arrive. Nevertheless we have a good track record of returning cash to shareholders and using our capital to reduce potential shareholders value. Since the combination, we have returned over $1 billion to our shareholders through our dividend and share buyback program. Furthermore, in November, 2014 we cancelled 19.6 million treasury share. The impact of our anti-dilutive measures is reflected in the significant reductions since last year in the weighted average number of shares used in determining adjusted diluted EPS for the quarter. Our $200 million share repurchase program remains in place and while we will be cautious in our management of liquidity to the extent we generate excess cash. We will utilize the program to return the good cash to our shareholders. Moving onto Slide 16, investing in new vessels is important to the long-term versatility and flexibility of our fleet. Our current renewal program is on schedule and within our cost target. We've spent $544 million on the program in 2014 load and guided as a result of the timing of certain milestone payments around the year end. This is reflected in our 2015, 2016 revised guidance with no impact on the total cost or duration of the overall program. Before I hand back to Jean to update you on our strategy and outlook. I'd like to talk about our new guidance, which is summarized on Slide 17. We have a solid backlog of $4.1 billion for 2015 and this underpins our revenue expectation. The environment for new orders is challenging, but nevertheless there is activity and we are positioned competitively. As a result, we expect 2015 revenue to decrease significantly compared to the record level achieved in 2014. And although, we continue to make good progress implementing cost efficiency measures, we also expect our adjusted EBITDA margin to decrease. Administrative expenses in 2015 are expected to be in the range of $280 million to $300 million, 5% to 10% lower year on year. We expect net finance cost of around $5 million to $10 million due to lower levels of debt and increased levels of capitalized interest during vessel construction and we expect depreciation in 2015 to be around $420 million to $440 million higher than the charge incurred in 2014 largely due to the forecast progression of the fleet renewal program. This forecast does not include any reduction resulting from potential asset disposal. The effective tax rate is expected to be in the rage of 28% to 31%. Largely as a result of changes in the geographical mix of our project and capital expenditure is expected to be slightly higher than in 2014 within the range of $900 million to $950 million and includes $700 million for the newbuild vessel program in addition to a basic level of ongoing sustaining CapEx of between $200 million and $250 million. I will now pass it back to Jean.

Thank you, Ricardo. Let's turn now to Slide 19. I'd like briefly to remind you what it makes Subsea 7 a global industry leader. It's our vision to be acknowledged of the leading strategic partner in the seabed to surpass offshore energy industry. Which is by living our values safety, integrity, innovation, performance and collaboration? In challenging times such as we're seeing today, these values are all the more important as our clients are looking for partner, who can execute cost effective technical solution that will safely deliver complex projects at a lower cost. We are differentiated as a Tier-1 supplier by the expertise and experience of our people and our innovative technology. Our versatile fleet and flexible fleet and offshore asset base enable us to highly capable of delivering top quality Subsea services for our clients on a wide range of projects worldwide. Moving to Slide 20, we refocused our business at the start of this year implementing a new organizational structure comprising two business unit. So Northern Hemisphere and Life of Field business unit and the Southern Hemisphere and Global Project Center business unit. We have several strong drivers of these changes. So new structure includes direct reporting client to me for strategy and technology helping us to optimize our technical and operational know how one of our key differentiators. It will drive a more focused project management and service delivery and announce competitiveness through a much channel allocation of our resources and capabilities. So global project centers will enable us to optimize our management of large complex, technology rich projects and improve our flexibility in how we manage them for our clients therefore allowing us to reduce cost. We are a leading Life of Field operator. The organizational challenge will then us lead us to take a global approach which will drive expansion in new geographies grow our market share. Last but not least, this structure will help us to be cost effective which is important at all times, but particularly so in today's challenging market environment. We have provided 2014 quarterly results under the new segments in appendix of this presentation. So let's turn to Slide 21. I would like to offer some comments on the market condition we're experiencing today. In late 2013, we identified the softening of the market as our clients look to reduce the cost of new field developments. This strength continued throughout 2014 and accelerating in the second half of the year as the oil price fell to around half its level at the peak. This fall in the oil price has introduced a new period of uncertainty for the Subsea sector and our ability to help our clients find cost effective solutions is key to winning new work. I want to reassure you that we have not changed our attitude to risk. We will continue to take a rigorous approach we are evaluating and acceptable project risk profile and although the same degree of contingency as we would in the better market environment. We are not anticipating a near term improvement and our plans for the near medium term as based on this assumption. That said, as a long-term fundamentals for the development of deepwater oil and gas reserve remain intact and will protect our cost strengths to say differentiated and drive our performance when the market environment improves. Slide 22 shows some of the area of focus that enable us to help our clients to reduce the cost of field development. Working with clients to standardize specification and deliver fit for purpose solution can and will significantly reduce cost. This broader collaborative approach will benefit will our clients and [indiscernible] and into the long-term. As laid out on Slide 23, we have already taken action on our cost base. We identify the softening our the market in late 2013 since that time, we have taken decision to reduce our headcount in Brazil and Norway and to the result we have around 500 fewer people in these two locations combined. This along with other restructuring efforts worldwide has reduced our overall headcount to around 13,000 people by year end from 40,000 in 2013. We will continue to adapt our organization on the country by country basis to suit lower levels of activity triggered by the lower oil price environment. We have also conducted and in depth review of our fleet. Identifying opportunities to reduce capacity by up to 10 vessels over to two year period, while maintaining overall capability. This can be achieved by releasing some of the vessels that are nearing their lease renewal dates and retiring some of the old vessel that are ageing and can be replaced by vessel from our fleet renewal program and existing capacity from third parties, when the markets picks up. We will continue to drive efficiency through internal processes supported by the benefits derived from our segmental organizational structure. As we look ahead, we need to retain sufficient capability to execute existing work and win new award. With this in mind, we will maintain our core expertise to enable us to outperform through the cycle and grow strongly when activity levels picks up. In the meantime, we remain committed to implement the necessary cost reduction measures and efficiency improvement to protect our business through the down term and preserve competitiveness. Moving onto the near term outlook on Slide 24. We continue to see tendering activity for new contracts and there are some major projects that we expect to be awarding in the market this year. However, the timing of awards to the market remain highly uncertain and we continue to see delay to final investment decision driven by the present low and volatile oil price. We are competitive in position and confident that our expertise and experience puts in a good place to win awards when they're functioned. As I said before, we will not sacrifice our risk profile to achieve this. Life of Field activity has been steady and there is no change to the outlook. Our reputation for safe and reliable execution is a competitive advantage and our new organizational structure will help us to expand this offering into new geographies. The outlook for conventional shallow water activities is moderate with a certain [indiscernible] offshore Nigeria still expected to be awarded later this year. Finally, the outlook of our just two joint ventures SapuraAcergy and Seaway Heavy Lifting, we mentioned it. So to summarize on Page 25, we delivered good operational and underlining financial results in 2014. This was a results of excellent project execution and careful cost management against and increasingly challenging market backdrop. In the fourth quarter, we reported an adjusted EBITDA margin of 21% which led to adjusted EPS for the quarter up to $0.61. The decline in order backlog of $8.2 billion were affected deteriorating industry environment. We have over $4 billion of work in our backlog for 2015 providing a solid base for our revenue this year. A substantial proportion of the multi-year activity is related to high quality day-rate contracts in Brazil and the North Sea, which should deliver a long-term steady financial contribution. We have been quick to take action in identifying and executing cost reduction measure and we will continue to focus on better matching our cost profile to the expected activity levels with maintaining our core expertise and experience. We look forward to working even more closely with our clients and with industry to help lower the overall cost of field development. In conclusion, the present challenge that our sector is facing does not diminish our belief that we're well positioned in the market segments with long-term fundamentals remains intact and now Ricardo, John and I will be pleased to answer your questions.

[Operator Instructions] our first question comes from Fiona MacLean of Merrill Lynch. Go ahead, madam your line is open.

It's Fiona MacLean here at Merrill Lynch. I had a couple of questions please. Can you talk about Life of Field is having some growth opportunities and particularly on a geographical basis? Could you talk a little bit further about that and how do you see that developing over this year and next year? Could you fire line also on the Lianzi projects and can you just expand on what exactly is happening there in terms of timings and things? And then the last question, are you willing to - a value on the amount of cost you're expecting to be saving over the next couple of years?

Thank you, Fiona. First on the Life of Field opportunities, Subsea 7 is the leader in Life of Field in North Europe and we see opportunities to extend this business further outside of North Europe based on our capabilities, the flexibility of our fleet and our expertise. What we are seeing into the market is that while operators are looking at optimizing the cash that they spend on the CapEx program. I mean we feel, there is still a steady activity on the OpEx side as they have to maintain production and do the maintenance of their field. So we foresee some opportunities medium to long-term outside of the North Sea and to expand our business, that's one of the reason why we've changed our organization to be more effective to capture opportunities. Regarding the Lianzi project, I'm going to ask John to give you an update.

Yes, so Fiona as we flagged in the last call. We see that Angola has challenges with issuing the visas for offshore and onshore cruise. We are working on the project, we're offshore laying pipe as well as doing our top size two separate contracts we have there, but there's an ongoing challenge to get visas renewed which is causing us some slight delays in the work that we're actually doing on the project at the moment, but all the activities are moving ahead although we have the daily challenges of managing or rather erratic delivery of visas to us.

Okay, great.

And regarding your question on cost. We're focusing in three main areas is to address the size of our organization country by country to adapt to the evolution of the market and based on the level of activity. As we mentioned before in the presentation adjusting the fleet to this level of activity and we have some flexibility with the chartered vessel that we have to address the size of the fleet. And also an overall reduction of cost through simplification, fleet for purpose solution and I would say continuing to develop a culture of cost culture and cost cutting that we started a few years ago. All that will result in significant and material reduction of cost. It's difficult to give you an absolute value because it all depends on the timing of the projects and the timing of the project award. But I can reinsure you, that we're ready and we will act quickly and diligently as soon as we have a better idea of what's happening in each of the country and you've seen that, we've already acted in Norway and in Brazil and that's the top priority of the whole organization.

Okay, thanks very much. That's it from me.

Our next question comes from Mick Pickup of Barclays. Go ahead sir, your line is open.

Good afternoon, everyone. It's Mickey. Couple of questions, if I may? Jean, I'm sure you've had plenty of neglect [ph] this clients just asking for straight cost cutting across the board and unless you said obviously collaboration is a way forward, do you think there actually is a willingness to listen from your clients and a genuine change going on there and I wonder, if you could just give us a few examples of what you can do for them?

I mean clearly I think, what we are seeing today from all our clients from small operators to large IOCs, is focusing on the needs to lower the cost of their development. I would say their approach varies, it depends on the type of operation they have, but what is very clear is that all of them are looking for what we can propose is to have an early engagement with them to proper solutions to using in a different way and in a simpler way and to give you some examples. One of the thing that we're working on with clients is standardization. How can we learn from our worldwide operation to propose more standard solutions, more fit for purpose solution and help them to develop their specific project. So there is not a seasonal bullet, but I think it's there are a lot of things that we can propose the credibility that we have through our expertise and the size of our organization and the versatility and the agility of the reorganization I would say is a plus. So good progress, but it's a long journey that we have to do together.

Okay and second question. Can I just ask about the PLSV contract? It's obviously it's an important part of our base for the next few years. Have you had any comments from Petrobras about those contracts are they happy as they stand?

The feedback that we have from Petrobras is quite positive, they're very happy with our execution and we have not seen any change in the approach of Petrobras regarding our PLSV contracts. Both the ongoing contracts and the new vessel which will be delivered in near future.

Okay, thanks Jean. Cheers.

Our next question comes from Phillip Lindsay of HSBC. Go ahead sir your line is open.

Two questions please. First one related to the suspension of the dividend. I mean you're hinting that you're keen to look at opportunities that the down term might present, but you also said that you've got plans that divested up to 10 vessels, I suppose won't get refund that you might not want too much more offshore construction exposure. So perhaps you can just talk us through the strategic direction that you may wish to take the business in long-term? And then, second question just sort of following some of the press stories around TEN in Ghana, what are the risks there for you given the maritime dispute between the Ivory Coast and Ghana, can you quantify the remaining backlog that you've got on the project and maybe how this might impact your guidance in the event to the material delay on that one?

Let me address firstly the TEN project and I will come back on our overall strategy on the vessels and where we want to go. I mean regarding the TEN projects. It's the story that you've seen I mean between Ivory Coast and Ghana, I mean it's not a new story. It's something which has been around since 2013, if I'm not wrong. From the information that we have, the TEN project will continue as planned and I mean to give you an example. I mean we're presently getting ready to do a offshore operation with Borealis in August 2015. There is no change, we haven't seen any change there and today it's not something that I have on my radar screen as a material risk. It seems kind of strange, but it's not there. Regarding the strategy on the vessel. I just want to clarify your point, when we're saying that we have flexibility that vessels. I mean that includes chartered vessels which if we're up to really, the plan to restart a vessel would allow to limit the cost of resetting or restarting the vessel etc would not generate additional cash in terms of sales or disposal of assets. So that's one of the thing that and you have the list of the vessels in the presentation, the one which are chartered and the other one. Regarding our long-term strategy. It's important that we keep the core expertise that we have on the people side, but also that we have the right enablers to execute the project and take opportunities when the market and we have that with high end our vessel. So we have the way to rebound, when the market picks up even if we are to really, after we release TEN vessel to actually have access to the fleet that we need to go back to the gross [ph] mode. In terms of, working with the clients earlier. It's happening now around the world and it's not any one or two clients. I would say, we are doing this with numerous clients all around the world in a very productive way.

Okay, maybe just one final quick one on Gorgon. Not recognizing much margin on the project, what does that leads to dispute on the decline, can you elaborate on that please?

John, do you want to?

Yes, so Gorgon is a complex piece of work with a mixture of reimbursable day-rate and lump sum allowance in the contract. We are making substantial progress through it. There are number of elements in discussion with our clients at the moment, but overall the actual work is going well for us. I think we delivered on time for the client and we will go through series of dialogs in the next six months to the client to get off on [indiscernible] for that project.

All right, thanks.

Our next question comes from Haakon Amundsen of ABG. Go ahead, sir your line is open.

And just a question on the value of scope expansion or a smaller unannounced contract, does the Q4 level represent kind of tough market and enhance something we should expect going forward or is the volume likely to deteriorate further? That's my first question and then a second question in general on the day-rate charters you have, are there any material attempts from clients to renegotiate this for lower rates and what's your position to potentially lower those rates in exchange for longer contract for example or other benefits?

John, you want to answer?

Yes, on your second question. Our recent award of the Shell contract is an example there, where we work with our clients we have renewed our diving vessel for further two years. There is been no major change in our terms of conditions for that vessel. However our clients have different requirement for its ROVSV. So by having the size of fleet, we could do, we could offer a different format for our client, which we did and you saw that in the recent announcement we had with Shell. So I think one of the important things to remember with Subsea, we can offer our clients different types of capabilities at different times in their cycles. If we look at our relationship with Shell we worked with those guys for over 30 years and we have adapted and changed with them. So I think the key message here is, we are working with dialogs with our clients as they change their requirements, but we have the capability to offer different requirements for our client's different times.

Regarding the acquisition on the unannounced project award. I would add two comments. I mean first, Q4 was impacted by seasonal effect in the North Sea like every year and it's likely to be the base in 2015 too, not a surprise there. We're also seeing a less discretionary work being awarded un-existing contract around the world and that's driven by the present low price of oil, while our clients optimize in cash, actually looking at what they could delay to some extent. So that explains why we're seeing in the second part of 2014 less discretionary work awarded to us on existing contract. Price of oil is a driver of that, I mean it doesn't reflect anything else.

Okay, thank you and just a final question, if I may. If you could comment on the working capital level and the movement in cash flow for working capital that we could expect in 2015?

Ricardo?

Yes, Haakon I think as I indicated my comments on 2014,we had, we saw the benefits of improving working capital and part of this is due to our efforts to improve the collection of receivables and the effect, that we just manage very proactively on investments in working capital. Going forward the working capital picture is unlikely to maintain that positive trend. I think in 2015, we could envisage pressures on working capital perhaps from the perspective of client needs and also because when you're working with negative working capital and you're looking potentially at lower levels of activity there is a risk that the negative working capital position, while still remaining negative may diminish which is effectively, a liquidity out flow. So we're not expecting maintain the same levels of or the same progression in terms of working capital as we achieved in 2014.

Having said that, I mean we're not expecting a drastic deterioration either. I mean, we've done a very good job that the whole organization I think has done a very good job in managing cash and managing working capital. So it remains a focus and but again I mean it's in different environment, we need to continue to focus on that and we will.

Okay, thank you.

Our next question comes from Rob Pulleyn of Morgan Stanley. Go ahead sir, your line is open.

Just a couple from myself. Following on from one earlier. In light of your comment in the release about looking for opportunities the balance sheet strength and the color from Kristian at the start of the conference call. May we sort of assume from that you will be looking for something reasonably asset light and does that represent a change in philosophy from Subsea 7's sort of historic basis, whereby you being shall we say more in different to how companies and your clients want to actually do projects and perhaps this is reflection on sort of silent types that you need to be in much earlier. Could you give little bit more color around whether we're looking at that change in philosophy or not? And then secondly just a couple of housekeeping questions. In terms of PLSV which obviously are a very stable form of cash flow and would you be willing to give us how much is the 2015 execution and then finally, on the comment following on from the comment on working capital. Small working capital outflows this year, would you prepare to have a stab at the end of 2015? Thank you very much.

I'm going to answer the first.

Do you want me to take the strategic question, first?

Yes, go ahead there.

Good. I would not say that there is a change in our strategy. We want to be prudent, I think Ricardo outlined described our review with regard to dividend and return to capital to shareholders very efficiently and complete. It's a question there being prudent and one of the questions here, whether we were planning to dispose 10 vessels. I think Jean said, we're not planning to sell 10 vessels. We are air marking flexibility in our fleet to adjust if the market were to change dramatically and stay down longer than we think, then we have that flexibility and that's what we have been focusing on, is the overall cost structure of the company and of course the fleet is part of that. The reality is that, none of us can determine with any high degree of certainty the length and depths of this downturn and we want to be prudent in planning for the worse and hoping for something better and we also want to have enough liquidity and a strong enough balance sheet to take advantage of the opportunities that normally arise and are likely to present themselves in the downturn. So that's our thinking, over to you. Jean.

Yes and maybe to just add one comment to your comment, Kristian is. We have the flexibility if we were to decide to do so to release the number of vessel, but that by no means would prevent us to provide all the technical solution that our client named. We are going to keep us in line with our strategy our capabilities to be able to deliver of the right solutions whatever the technology required is from flexible pipe to rigid pipe to heavy construction. So the free strategy haven't changed in this area, either. Ricardo?

Yes, Rob and I just wanted to address your question on the PLSV's. As we've indicated, we have approximately $2.8 billion of PLSV related revenue in our backlog at the end of the year. This is not the only backlog in relation to Brazil because we have smaller projects that we're wrapping us as well as activity in I-Tech which is long-term, but as we continue to build our presence with the arrival of new vessels in Brazil. We would envisage activity in the order of $400 million to $500 million in the year 2015, with a continued upward trend in 2016. So I hope that answers your questions on PLSV. As far as net debt is concerned. I mean clearly we have a range of cash flow projections, but I don't want to commit to a particular figure because it's a function of a number of variables, timings of capital expenditures, timing of operating cash flows as a result of activity in the year and also it's dependent on to an extent on what may happen to our working capital profile, but what I do want to assure well, is that we have already access to the financing institutions in the capital markets and our intent is to maintain a balance sheet and liquidity profile that is what you would expect from a company that has a position that is consistent with an investment grade rating.

Okay, thank you gentlemen.

Our next question comes from Frederik Lunde of Carnegie. Go ahead, sir. Your line is open.

I was wondering, could you give us a color on what vessels you're considering selling or releasing and also if you see rig [ph] values give or take reflecting market values and if those numbers are significant compared to the total balance sheet and also if you could give us an comments on the share buyback program which is being fairly quite to this year?

Thanks, Frederik. I mean regarding the fleet and what we are saying that we highlighted the flexibility and that we have to adjust start of the fleet to match the level of activity. We haven't taken decision on the one vessel basis for each of the vessel, so we'll see how it goes. So we have this flexibility, we'll manage with this flexibility which obviously good to have.

But I believe, rig [ph] market value, if you're to sales goes presumably old vessels in 2015?

I think first of all, we don't want to be too specific about any decision that we may make in the course of 2015 with regard to the disposal of either chartered or owned vessels. I think that would be commercially sensitive to do so. I think what we can say is that, we're not in a position or we're far from being in a position where we have to be concerned about a distressed disposal of asset. So with that in mind, we are pretty comfortable with the valuations that we have for our assets on balance sheet.

All right, it doesn't say buyback program. Could you comment on based on that?

As I commented earlier in the call. Our share repurchase program is still in place. It's a $200 million envelope approved by the Board and it is valid until July, 2015. We have acquired $50 million so far under that program and we have maintained that program and intend to maintain the program till it's validity date and we will execute share repurchase under that program to the extent that our liquidity and potentially excess cash position allows us to do so.

I was just going to complete that answer regarded to say that, you're right that we have not executed that program as quickly as we've done in previous programs and that is because we want to be a bit more opportunistic with regard to the pricing of the buyback.

Thanks. So just final question in terms of what you see in terms of overall bidding activity and the size of those projects because I would assume smaller projects maybe ideal in terms of filling up capacity for 2016, while bigger contracts would and they require more capacity in say 2017, 2018 and potentially leading a gap in the backlog for next year. How do you see the type of projects that are being bid out there and the poor built of the lying capacity to projects?

Well, we still see a fair amount of projects, small, medium and large-sized. What we remains is a uncertainty on the timing of this award of the project. So the project are there, the question is when will the client push the button and actually activate this project, but we are today bidding and discussing with our clients all size of projects uncertainty of timing overall to the market remain. So it's difficult to answer.

Okay, thank you.

Our next question comes from Asad Farid of Berenberg Bank. Go ahead sir, your line is open.

I've three inter related questions. First, can you explain the sharp quarterly volatility in your operating margins for Brazil? Your operating margins fell to 17% in the fourth quarter from 35% to third quarter like this was despite project execution in Guará-Lula projects being the same two quarters and secondly how long was the Seven Mar vessel in dry docking in the fourth quarter of the year and what's the slam dunk time and can you give some color on PLSV vessels, which are going to go into dry docking in 2015. And lastly, can you potentially delay the delivery of the DSV and the construction vessels, which you're constructing right now into 2016 or 2017 is that possible, if the market outlook further deteriorates and your backlog countries to decline in 2015?

Thanks for your question. I mean to answer your last question, first. We don't see the need today to delay the delivery of these vessels from the way we see the market. The second, sorry I think there is some noise on the - yes. So I mean, today we don't see reasons to delay the delivery of the vessels, we believe that we'll have utilization regarding the results in Brazil, Q4 has seen drydock of, which was planned drydock of Seven Mar having an impact on the results, but I mean that's not abnormal, and that's something that we continue to see in the years to go, to tell you when it's going to happen on every quarter I mean that's the discussion we have in Petrobras to meet their schedule. So there are different option, but nothing abnormal there. Q4 was impacted by a planned drydock on the Seven Mar. I think, I propose that we take one more question before we close.

The final question comes from Mukhtar Garadaghi of Citigroup. Go ahead, sir. Your line is open.

Just a couple of [indiscernible] related questions from me. In terms of the back end of 2015, what are the kind of the major attendance do you see out there with reasonable probability of being awarded and how are you guys positioned on them, just referring to things like in DALO where you had discussions with the clients? And just related to that, just for your major assets like Borealis what's the utilization schedule look like for like 2015 and 2016 and will these vessels remain profitable, if they forced to execute on sort of smaller OpEx related projects. Thank you very much.

I mean, first we're not commenting on 2016 and it's too early. So I will not comment on 2016 at this stage. Regarding the list of projects that we see, they are the same as the list is the same as the project that we have identified last quarter. The question is when will be this project awarded. So we are still working on all of the same tenders, but we don't really know when this project will be awarded, so there is no change there. Projects are still there, the big question is when will it happen is difficult to answer to this question. Regarding the utilization of the vessel, I mean it all depends on the timing of the projects and what will happen. We mentioned that for 2015, we have a good base for the backlog to be executed in 2015 and that we made our comments based on these backlog for 2015, as I said before we'll talk about 2016 later on.

Okay, thank you very much.

And I think, I would like to close the call on that and thank everybody for your question and looking forward for the next communication at the end of Q1. Thank you.

This now concludes the conference. Thank you for attending. You may now disconnect your lines.