Isabel Green - Director, Investor Relations Jean Cahuzac - Chief Executive Officer Ricardo Rosa - Chief Financial Officer John Evans - Chief Operating Officer

Fiona MacLean - Merrill Lynch Phillip Lindsay - HSBC Amy Wong - UBS Christyan Malek - Nomura International Mukhtar Garadaghi - Citi Group James Evans - Exane BNP Paribas Rob Pulleyn - Morgan Stanley Haley Mayers - Barclays Capital Michael Rae - Redburn Partners Andrew Dobbing - SEB Frederik Lunde - Carnegie David Farrell - Macquarie Securities Morten Nystrom - Nordea Bank

Hello and welcome to the Subsea 7 Q3 2015 Results Call. [Operator Instructions] Today I'm pleased to present, Isabel Green, Director of Investor Relations. Please begin.

Welcome, everyone to our conference call and webcast covering the third quarter 2015. Here with me on the call are Jean Cahuzac our Chief Executive Officer, Ricardo Rosa, our Chief Financial Officer and John Evans, our Chief Operating Officer. The full press release of the results can be found on the Investor Relations section of our website along with the presentation slides that we'll be referring to on today's call. In a moment, I'll hand over to Jean 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 hand the call over to Jean.

Thank you, Isabel. Good afternoon, everyone and welcome to our third quarter conference call. In a moment, I will summarize the key financial and operational highlights before handing over to Ricardo. Who'll cover our financial results in more detail? I will conclude with an update on how we're achieving lower development cost for our clients and overview on the outlook for our business. As usual, there will be time to take your questions at the end of the call. So let's look at the third quarter highlights on Slide 4. Subsea 7 has delivered another quarter of good results driven by excellent project execution in both hemispheres. These results were achieved in a business environment, which remains very challenging as our clients continue to delay [ph] new awards and to limit discretionary work. Revenue was $1.2 billion in the quarter, significantly lower than the previous year reflecting the reduced workload and market conditions. Adjusted EBITDA was $351 million were reflecting good execution and cost management discipline. This included a $36 million charge related to our cost reduction and resizing program, that we told you about last quarter. The adjusted EBITDA margin of 29%, what helps by positive contribution from projects in the final stage of execution? You should not expect that to maintain the margin at this level going forward. Diluted earnings per share of $0.46 was adversely impacted by our decision to scrap Seven Polaris, resulting in an associated impairment charge of $36 million in the quarter. We ended the period with a net cash position of $104 million, due to good progress on projects, effective cost control and our continued focus on managing working capital. This combined with our $850 million unutilized credit facilities, puts us in a solid financial position which is particularly important given the uncertain outlook. Global vessel utilization was 74% down from 91% in the third quarter last year. This fall was in line with our expectation. We have begun to stack vessels in accordance with our plan to adapt to the present market downturn. Our active fleet today compresses of 33 vessels down from 39 at the end of the second quarter. To be clear, our reported utilization rates includes the stacked vessels. We booked $1.1 billion of new awards and escalation in the quarter. Taking our order backlog at the end of September to $6.7 billion. Market uncertainties make the prediction of future order intake on a quarter-per-quarter basis very difficult. The outlook remains challenging as the timing of new awards to the market is uncertain. But we have been proactive in facing up to the challenges and our initiatives positioned us well to improve our competitiveness and threaten our capabilities through the cycle. I'll turn now to Slide 5, to talk about our operational performance. Our people both offshore and onshore are doing a great job. Excellent project execution continues to drive good results and has delivered high levels of performance, with safety being the priority at all times. In fact in September, we achieved a whole month with not a single reportable incident on any of our vessels or in any of our onshore facilities and offices. Looking at the Northern Hemisphere and Life of Field business in more detail. Several projects made significant progress in the quarter. In the UK, the Montrose and Catcher projects completed offshore activities for 2015. And the Mariner project made good progress with high levels of offshore activity supported from our offices in both Stavanger and Aberdeen. In Norway, the Aasta Hansteen project completed all major fabrication and on the Gullfaks project we completed trenching. In the Gulf of Mexico, the Heidelberg project was successfully completed and work commenced on the Stones project for Shell. Life of Field activity remained low particularly in the North Sea. In the Southern Hemisphere and Global Project business unit Seven Borealis commenced pipelay activity on the 10 project in Ghana and the Exxon's Erha North project in Nigeria was substantially completed with first order achieved in September. The Lianzi SURF and Topside project in Angola are almost complete with umbilicals installed and flowlines prepared on schedule. In Brazil, our seven PLSVs on contract with Petrobras reported another quarter of high utilization. I'm aware that there has been some speculation that 350 ton class international vessel operating in Brazil could be at risk of being blocked by Brazil flag alternatives. We are monitoring this risk closely. I would also like to give you an update on our 550 ton class new PLSV Seven Rio. In April this year, we signed a two-year contract for Seven Seas with Petrobras. However, this vessel had already been allocated to work on the Stones Projects in the Gulf of Mexico. We agreed with Petrobras earlier this year, that in order to make Seven Seas available the new-build Seven Rio would work on the Stones project before mobilizing to Brazil to start her five-year PLSV contract. Towards the end of the quarter, Seven Rio joined our fleet and she will transit to Brazil once the work in the Gulf of Mexico has been completed. Moving to Slide 6, to look at our backlog. We ended the third quarter with an order backlog of $6.7 billion after taking account of an adverse foreign exchange movement of approximately $400 million resulting from Dollar strengthening. New awards and escalation for the third quarter totaled $1.1 billion. Key awards included the first phase of West Nile Delta domestic gas project for BP and that's offshore Egypt. This contract is the largest we have been awarded in 2015 at a value of approximately $500 million and significantly strengthens our presence in Egypt. In October, we announced the second smaller contract in Egypt, for the East Nile Delta project for Pharaonic Petroleum Company. The Pharaonic project is not included in our backlog announced today, but the award was confirmed after the quarter close. Subsea 7 has experienced, expertise and technology that enable us to submit cost effective and highly competitive tenders. We have strong client relationship with a high degree of trust and collaboration which facilitates new way of working and early engagements. Our alliance have got off to a good start. Although, it's early based we have already engaged in a series of studies for clients through our alliance with one Subsea including paid FEED work. We're also working on a number of project with our engineering alliance partners KBR and Granherne. I will talk more about the market and outlook later, but first I'll handle over to Ricardo to talk about financial performance in more detail.

Thank you, Jean and good afternoon, everyone. Let's first look at the income statement highlights on Slide 8. Third quarter revenue of $1.2 billion was down 37% from the prior year period. Which reflected lower offshore activity levels in both business units compared to 2014? Adjusted EBITDA was $351 million for the period and included $36 million in charges relating to the implementation of the cost reduction and resizing program. The adjusted EBITDA margin was 29%, up 7 percentage points from the prior period and reflected good execution and positive contributions from projects that were nearing completion over completed in the quarter. Net income of $145 million included a $36 million impairment charge relating to our heavy construction vessel Seven Polaris, which will be scrapped. Diluted earnings per share of $0.46 reflected the progress we've made on anti-dilutive measures with 347 million weighted average shares in issue compared to 373 million in the prior year period. Slide 9 looked at the income statement in more detail. Administrative expenses of $89 million were $3 million higher than the prior year quarter. As lower personnel costs were largely offset by $23 million in resizing charges. The remaining $13 million in resizing charges were included in operating expenses. Net operating income was $214 million after deducting the $36 million for the impairment of Seven Polaris and included a $33 million contribution from joint ventures and associates. This primarily related to Seaway Heavy lifting, which had high levels of offshore activity in the quarter. There was a net foreign exchange gain of $23 million from functional currency movements reported within other gains and losses. The tax charge for the quarter was $96 million, an effective tax rate of 40%. The increase in the rate was impart attributable to the relatively low tax benefit associated with the resizing charges and the Seven Polaris impairment. In addition to non-cash adjustments to deferred tax. Moving onto Slide 10, let's look at the results of each business unit. Activity levels in both hemispheres were significantly down in the prior year period. The North Hemisphere and Life of Field business unit generated revenue of $510 million and net operating income of $80 million in the quarter down 46% and 18% respectively compared to 2014. This reflected reduced activity levels and lower vessel utilization particularly in the North Sea partly offset by savings generated through our cost reduction program. In the Southern Hemisphere and Global Projects business unit. Third quarter revenue was $670 million and net operating income was $185 million down 30% and 12% respectively on the prior year period. The 28% net operating income margin reflected successful completion of certain projects. This included among others the Gorgon heavy Lift and Tie-ins project offshore Australia as well as significant progress in executing the offshore phase of the TEN project offshore Ghana and good operability of the PLSVs in Brazil. A $51 million third quarter net operating loss reported in our corporate segment included a $36 million in resizing charges and the $36 million impairment charge of Seven Polaris, partly offset by the improved contribution from Seaway Heavy lifting compared with 2014. I now turn to Slide 11, which provides an overview of cash flow for the nine months to September, 2015. Net cash of $104 million at the end of September represented an improvement of $255 million on the position at the end of the second quarter. $409 million in net cash was generated from operating activities in the period. In part due to the levels of profitability achieved and impart due to a net $96 million increase in net operating liability, mainly as a result of reduced client receivables. Over the nine month period, net cash generated from operating activities was $628 million despite a $99 million decrease in net operating liabilities. As we've previously highlighted, we expect a partial reversal of our negative working capital position in line with declining lump sum contracting activity. To-date this year, we've mitigated the impact of this reversal through a continued tight management of working capital. Nevertheless, our negative net working capital position will continue to diminish as a result of lower activity and we've factored this into our liquidity projections. Net cash flow used to-date in investing activities included $548 million of capital expenditure most of which related to the construction of the vessels in our new-build program. Net cash used in financing activities amounted to $33 million and primarily related to repurchases of our convertible bonds at favorable market rates. We did not repurchase any shares in the quarter, but in line with our emphasis on actively managing shareholder equity. We cancelled 4.8 million shares which had been held in treasury. Our financial position remained secured underpinned by a strong liquidity profile. We have cash and cash equivalents of $657 million at 30 September and over $850 million in undrawn credit facilities negotiated on favorable terms. Our borrowings of $553 million at quarter end related to the amount outstanding on our 2017 convertible bond, net of its equity component and with net accumulative repurchases totalling $117 million at par value. An additional $10 million in bond repurchases were executed at market rates in October. As shown on Slide 12, investment in our new build program was $419 million in the first nine months including $157 million in the third quarter. A forecast spend in the fourth quarter is $156 million with $265 million forecast for 2016. Some of the payment milestones have been rephased compared to previous guidance. But overall, the expenditure remains on track to complete in 2016 with a total program spend of less than $2 billion. I turn now to Slide 13. Construction of the new-build vessels is progressing well. Seven Rio joined our fleet in September, Seven Sun and Seven Cruzeiro which are also being constructed to serve long-term contracts with Petrobras in Brazil. Our forecast to be delivered to us by the Dutch shipyard in the second and fourth quarters of 2016 respectively. Our vessels are under construction in Korea, Seven Kestrel and Seven Arctic are expected to be delivered in the first half of 2016. Slide 14, sets out our financial guidance. In 2015, we continue to expect revenue to be significantly below the record level reported last year. Reflecting the results year-to-date, we now expect our EBITDA percentage margin to increase. Administrative expense is expected to be in the range of $310 million to $330 million and includes a $40 million resizing charges recognized in this cost line. Our net finance income is expected to be between $5 million and $10 million, an improvement on previous guidance many as the results of our improved cash position. Depreciation and amortization for the full year is guided to be between $410 million and $430 million excluding impairment charge. Our effective tax rate range has been raised from 31% to 33%, we previously guided and is now 33% to 35%. This revised range reflects the impact of the tax treatment to the estimated $140 million charge in relation to the cost reduction and resizing program as well as the impairment charge relating to Seven Polaris. Finally, our CapEx guidance for the year has been updated to reflect the revised phasing of the new-build program and lower sustaining expenditures. Looking ahead to next year, we expect the environment to remain challenging with lower levels of offshore activity and fewer projects progressing to their offshore phase. With fewer large projects reaching completion in 2016, it is unlikely that the financial benefits of good execution, risk mitigation and commercial close outs will be as significant as we've seen so far in 2015. Our cost reduction program is on track to deliver approximately $550 million on annual cost saving, but we do not expect this fully to compensate for the declining activity. And the result, our guidance for 2016 is for both revenue and adjusted EBITDA percentage margin to decrease significantly compared to 2015. I will now pass it back to Jean to comment further on our continuing cost reduction measures. Our initiatives in response to the current market and our outlook.

Thank you, Ricardo. Moving to Slide 16, we have taken a number of steps to ensure Subsea 7 can develop and strengthen through the downturn and we're ready to take the opportunity to grow when market activity recovers. We were early to recognize the pressure on project returns for our clients and started to reorganize and downsize our capacity in 2014. With a result that, when the oil price half last year, we had already embarked on the changes necessary to lower our cost. The new organization structure that we implemented at the beginning of this year is delivering results and supported a cost reduction and resizing program that we announced in May. We are working more closely than ever with our clients and suppliers to identify better way of working. Our alliance with KBR and Granherne and OneSubsea are opening up new opportunities for us with clients and we're already seeing tangible results. Along with early engagements, technology is a key element in our drive to lower the cost of development and we remain committed to investing in new technology. We have a substantial intellectual property portfolio and one as the larger than more recent groups of patterns in the SURF and Life of Field market. In October, we were proud to be presented with Distinguished Achievement award by OTC Brazil recognizing the technological innovation in inherent in our Supported Riser solution that was used on the Guara-Lula project. This measures along with our simplified processes and fit-for-purpose approach, are enabling projects to proceed in a lower price environment. And affirming our position as a leading provider as Subsea services for our clients. Turning to Slide 17 to give a more detail updates on our cost savings plan. We are reducing our capacity in line with lower levels of market activity. The changes we are making are on track to complete early in 2016 and we will deliver annualized savings of approximately $550 million. Our headcount resizings applied to our offshore and onshore people, globally at all levels of seniority. But we are still retaining the expertise and experience that makes us a preferred partner of our clients. Our future sizing has made significant progress this quarter with our active fleet reduce to 33 vessels down from 39 at the end of June. We have returned one of our charter vessels and we have stacked six owned vessels including Seven Polaris, which will be scrapped. We expect to complete the plan 12 vessel reduction by early 2016, with three more chartered vessels going back to their owners and two more, owned vessels to be stacked after they've completed the project, they're currently working on. What has it done? And what the remaining four new vessels have delivered, we'll have an active fleet of 32 containing some of the most capable and high performing vessels in our sector. Turning now to Slide 18. Our line objective to lower the project cost are changing the way, we're working with our client. We're engaging earlier, collaborating more and being increasingly open with each other. This will drive solutions and facilitate project sanction at lower oil prices. Subsea 7 has a reputation for being fair, open and straightforward. It has enabled us to forge new relationships and in the case of some our independent clients, this has led to long-term agreements to provide supports on an exclusive or preferred supplier basis. This collaboration brings mutual benefits. We're working more closely together to drive down cost and develop better solution from the concept engineering phase and our long-term agreements mean that we'll execute this projects, when the time comes. We have been working this way with Centrica in UK for some time and at the end of October, we signed a further agreement with Centrica in Norway. We're commencing FEED work for Centrica Butch [ph] project with our alliance partner Granherne and are confident that our solution will enable Centrica to achieve FID in due course. We have signed a similar arrangement with Premier last week. It covers early phase engineering and CapEx, OpEx and decommissioning activities in the UK, Southern Atlantic and Norway. With more, we also have an agreement to opt together on their North Sea requirement. Our agreements to work closely with our clients in this way, are only possible because of their high level of trust and transparency between us. Which is something that has been built over years of working together and we're privilege and proud to be able to partner with our clients, in this way. To sum up on Slide 19, I would like to offer some comments on the outlook. The market remained depressed a result of sustained low oil price. The tendering activity is competitive and the timing of new awards to market continues to be uncertain. In the Northern Hemisphere there are few short-term new opportunities in the North Sea and it has been particularly impacted by the down turn due to the structurally high development cost. This has also impacted our Life of Field business as clients hold back on non-urgent maintenance expenditure. The outlook is better in Gulf of Mexico with active tendering there including Mad Dog 2 and Hopkins mostly probably expected to be awarded to market next year. In the Southern Hemisphere, the timing of last project awards is still very difficult to predict, but the number of project I expected to progress in 2016. These are mostly gas projects particularly for domestic markets, as these are less effective by the oil price. And together, we have listed some of the active market opportunities which include Bonga South West, Coral FLNG, Rotan, Golfinho, Vashishta and West Nile Delta phase 2. So to conclude, times are challenging but we're acting on what we can control. I strongly believe that the initiatives that we started to take as early as 2014 combined with our proactive cost reduction measures will allow us to navigate through the downturn while building a stronger company for when the business environment improves. We're concentrating on finding cost effective solutions, which enable our clients to progress with deepwater field development. We have already identified significant savings and with collaboration with our clients and suppliers, we can deliver more. As we have shown in our results today. We are focused on constantly on safety, executing projects well and maintaining our secure financial position. Finally another important point in the current business environment. We remain discipline to maintain the risk-right profile when bidding for new projects. With that, I would like to open the call for questions.

[Operator Instructions] our first question is from the line of Fiona MacLean at Merrill Lynch. Please go ahead, your line is now open.

I have a couple of questions to start with. First of all, your balance sheet is incredibly strong, especially given where we are in this downturn. I'd like to focus on the outstanding convertible bond that is due in 2017. Ricardo, could I get your thoughts on how that bond is going to evolve over the next couple of years and what your thoughts are? Will you just repay it or will you look to refinance it? And my second question is around your joint ventures. Seaway was very strong in the last quarter. I was hoping to get some clarity on exactly what that JV has been doing over the last few months. And if you can provide any clarity around what the various joint ventures are going to be working on in 2016. Thank you.

Thank you, Fiona. So I'll let Ricardo answer to the first question and then John Evans will cover SHL and joint ventures.

With regard to your question on the convertible bond and you all have no doubt noticed that we have been purchasing on a relatively regular basis. Bonds that have come available on the market at the relatively favorable market prices and we look effectively to see what the yield to maturity is, as compared to coupon on the bond. And to the extent that liquidity allows us, we will continue to do this. As you know, we have very much strategy of avoiding further dilution to our shareholders. And our liquidity projections and our liquidity management targets redemption of the bond and with no necessary replacement audit by a similar instrument. The reason that we're looking to repurchase earlier than planned is that, the bond represents a relatively large balloon payment in 2017. And it is our strategy, where possible or to the extent possible smooth that repayment of profile.

Thank you, Ricardo. I'll cover off with Seaway Heavy lifting, Fiona. We have a mixture of renewable work and oil and gas work in the Seaway Heavy lift portfolio. In quarter three, we worked down in Venezuela for the Eni on the Perla project and we completed a project in the Former Soviet Union for a client there, which again took assets over the North Sea. We also completed some work for Gaz de France in Cygnus field. Moving into next year, the portfolio swings back more towards the renewable based portfolio due to the lack of oil and gas work coming into the North Sea at that time.

Okay, that's very clear. Thank you.

We now open the line of Phillip Lindsay at HSBC. Please go ahead, your line is open.

Two questions, please. The first one is just really about the current contractual negotiations that you're having. So, presumably your customers are trying to force harsher terms and conditions onto the supply chain. And I'm sure in desperation we'll see some players drop the level of contingency that they're prepared to bid with. But, clearly, if the industry buckles on some of this, there's potential for a lot of turbulence in terms of P&L in the future. So what's the current state of play there? And how are your customers and your competitors behaving? That's the first question. The second one, changing tack. It's just about some of these collaborations. So we've seen a rival collaboration Four Seas [ph] bag a few FEEDS. We know you're working on something with Aker in Equatorial Guinea. But just interested to hear how your collaboration with OneSubsea and KBR is going in terms of firm leads and firm prospects. I know you've got some early stage stuff, but what are your expectations for something more concrete or something more substantial appearing in your backlog, say, in the next 12 months or so? Thanks.

I will take the first question on the contract strategy and will let John comment on the alliance. I just want to mention, the alliances. We have a very good start. We're seeing a lot of interest, but John will elaborate a bit more on that. Regarding the way, we look at bidding the project. I would say the approach is discipline, discipline. Yes, we're under pressure on the margins and that's expected in the current business environment. So there's pressure on margins more on small project than large project, but it's however pressure on all project, margins. But what is important in this business environment is to remain discipline in terms of risk management. We haven't change our approach in terms of contingency evaluation and we're accepting terms and conditions which can be accepted and won't go beyond. So we're not changing the way, we operate our risk profile in today. We manage our risk profile into the environment and I think it's absolutely key to continue to execute in the way you've seen us executing in Q3. Regarding the alliance, John do you want to comment?

Yes, thank you. Good afternoon. Phil. As Jean says, we've seen keen interest from our clients from both alliances as you've seen in the announcement with how Centrica Norway work. Our partner Granherne will work with us on the FEED work for that field and hopefully, if that project moves ahead through FID we would expect hopefully to pull that out work into Subsea 7. So there are certain examples, there where we are working with our clients, reengineering the fields, looking at the whole picture from their view point and then taking that work hopefully into FID. On the OneSubsea, we have a lot of interest from clients on that. And at the moment, we're doing some paid and unpaid studies associated with that type of work. So again, it's early days in that relationship. But good feedback from our clients and a lot of interest in what we're doing.

All right, thanks.

Our next question is from the line of Amy Wong at UBS. Please do go ahead, your line is open.

I had a couple of questions, please. The first one is on your PLSV fleet in Brazil. I appreciate that you're flagging some risk or some chatter in the market about a potential Brazilian flag vessel displacing international vessels. But outside of that, can you give us some insight into some of the ongoing charters you have with Petrobras and if there are any negotiations with them to use any form of renegotiation, reduction or blend and extend strategy on the PLSV fleet? And then, my second question is fairly simple, just on 2016. Knowing what you know about the geographical mix, the tentative geographical mix of profits, can we get some guidance for the tax rate, please? Thank you.

I will take the first one. I mean, we don't have presently commercial discussion with Petrobras on renegotiation of existing contracts. We obviously monitoring the situation of the market in Brazil very closely as you can imagine, but that's where we are. Regarding the tax, Ricardo?

Yes, Amy. I think, on that we've highlighted the impact that the resizing charge on the Polaris impairment had this quarter and effectively on full year 2015. We haven't provided specific guidance on 2016 effective tax rate and it would be premature to do so. As a general comment though, I would remind you that. Our effective tax rate is, the aggregate of the taxes that we pay in the various jurisdictions where we operate and obviously the tax burden varies from jurisdiction to jurisdiction. So it is effective by the movement in levels of activity across this jurisdiction. I think the, what you need to bear in mind that out there certain jurisdictions particularly in Africa, where the tax charge is linked to revenue as opposed to taxable income and this does have an impact on our effective tax rate in periods of relatively low PBT.

All right, then. Thank you very much. I'll turn it over.

Next question is over the line Christyan Malek at Nomura International. Please go ahead, your line is open.

Just two questions, please. First of all, in terms of just - I guess you're not going quantify where Subsea margins could move to next year. But in terms of your pricing strategy, given the point was raised earlier that it would become more competitive, or already has been, how will you manage the risk versus price on projects going forward? And, I guess, if you tied it against potentially risking lower utilizations, what is the order of priority there? So it's utilization versus risk and then, within that, price. And the second question, just coming back to the PLSVs, in terms of the contract terms that are being - are they being renegotiated or cancelled with Petrobras, some of the contracts that you've signed earlier on? Or are Petrobras willing to commit to the full life of the contract? Thank you.

I think, to answer your question. Which I think referred to the new-build. There is no indication and venue [ph] change of the approach Petrobras on the fact that these contracts are firm are five years. Regarding the price on the project, the way we look at the price of project. We're doing two things, we're looking at solutions with clients and suppliers to make more projects signed and that's what we referred to with early engagement, finding a way of working, introducing technology when it makes sense on project to lower the cost of the project, so that we can actually have more projects coming to market and some of them coming to us. So we are working in this area. The second thing which make me, I mean confidence that we achieved already significant reduction of our internal cost through the cost cutting, through the reorganization, the different way of working. So we're more competitive than we were maybe some time ago in this business environment, which is positive. As we've mentioned before, part of the project cost includes contingencies and the factor of provision for risk and we haven't changed our course there. But as you mentioned it, there is pressure on margins and then it's a question of tactic depending upon the timing of the project, the duration of the project, the level of competition that we have and we can go to the position of being very aggressive. It's a question of filling of slots between two contracts for utilization. When you talk about longer term projects, we expect to have a certain level of revenue, which is justified by the length of the project and when it will take place. So there's no silver bullet, which says there's one recipe it's practical. But when you look at, what we have achieved over the last couple of months I would say, since beginning of the year. I think we're very competitive acceptable delivery of risk, lower margin because that's what the market dictates, but I'm pleased with what the team has achieved for the recent through last months.

Okay. We'll now go on to the line of Mukhtar Garadaghi of Citi Group. Please go ahead, your line is open.

A few from me. For some of the projects and some of the tenders that have been ongoing for some time, just thinking about Bonga and maybe East Africa and even Indonesia, how are you seeing the cost in terms of the scale of deflation over the last let's say, 12 months to 18 months? How much smaller are these projects becoming, just thinking about your scope? My second question, just in terms of your performance this quarter. Could you quantify the one-off benefits from the project completions that you were getting? Just to understand the normalized level of profitability for this level of revenues. And finally, just a quick one for Ricardo. How much working capital deterioration could we expect over the short term? Thanks.

Thank you, I will take the first question. Let Ricardo answer on the last two. When you look at top at the cost of project and particularly the last projects. What we are able to achieve today through the engagement that we refer to before, is actually do the same amount of work for less? If you take very large project, if you take project like Bonga. I mean, our scope has not necessary is being reduced in the discussion that we had with the operator. What we have done is found ways to, do it at a lower price for the operator. So innovation, engineering and association with suppliers. For these projects to go ahead. However, there are all those factors, which question which needs to be raised, which is the overall scope of the projects like the FPSO, what are the agreement in terms of local content with the government etc. So we're playing our part, they're all the cards which need to be put on the table for this projects to go to FID. And there is no one answer for all the project. It depends on the project, the project that is. But I'm very encouraged with what we can achieve on what we can control in terms of cost reduction, with our clients and our partner and suppliers.

Sorry, Jean and just on this. When you're saying your scope haven't reduced. So a potential award size, on SURF on a given project like in Bonga for example two Subsea hasn't gone down, sort of return expected on this award?

No, the technical scope hasn't changed. We'll do the same for less. So we'll, the cost are lower because we have more effective solution on the standardization on the engineering side, etc. So we can actually deliver to the clients the same scope, technical scope for a lower price. But what I meant by that is that, the amount of work to be done has not been reduced. We can do it for lower price. And then you have the margin side, which has to be adjusted to the market, but I mean the work is, so in fact.

On way of maybe looking at it, is the input and outputs are clearly from our clients and we've been in the discussion about the input and output, they're achieve up their field and how we achieve the point from point A to point B are the discussions as well as John's making clear here.

Turning to the question of working capital and the level of deterioration that we would expect. I mean this is because it's only variable that go into working capital. The issues of timing, of milestones and milestone payments, timing of supply in millions and payment to suppliers, progress during a particular period. It's very - it's a complex task to model, with a high level of precision, where working capital is going to end up, at the end of the particular quarter. So we make medium term trends. And I think for 2015, we had indicated that in previous occasion that we can expect working capital to deteriorate more than $300 million in 2015. To-date, you've seen a deterioration of approximately $100 million, at one point we were already above $200 million. So I hesitate to give you a precise figure. Other than those reference points that I've mentioned. What I would say is that, we are very conscious of importance of managing working capital well and we're very focused on ensuring from collection of our monies from our clients. In addition to that, we have a back stock in the form of our liquidities structure, which includes a revolving credit facility of $500 million. Though, I wouldn't expect to draw down fully on that revolving credit facility. But if we have an adverse movement that liquidity instrument is available to us, at very, very short notice.

Without coming back to working capital. I think one of the things, which we've been focusing on through the whole organization is the focus on cash management. Not spending cash when we don't need to do it, cost but also working with our client and our supplier to optimize the flow of cash. So it's one of the priority and we're seeing, we're seeing progress in this area. Which is reflected in some of the numbers?

Thank you. We now go to the line of James Evans at Exane BNP Paribas. Please go ahead, your line is open.

Just a quick couple from me. Obviously some good success on the collaborative relationships with E&Ps. Do you expect to see more of these types of agreements over the next six to nine months sort of theme of collaboration spreads? And secondly, maybe a slightly more technical one for Ricardo more cost-driven one. Obviously in your backlog we've seen a lot of negative FX impact to it over the last 12 months to 15 months of about 15% to 20%. What's happened to your cost base because of this FX effect over the last, say, since 2014? Thanks.

To answer, first thanks for your question. To answer about your question. The keyword in this partnership is collaboration and the solution that we put in place is tailored to each clients, who may have different approach, but there is not one model, which fits all but we have demonstrated that we can adapt to the optimum solution with a number of clients and we'll do more in the future.

Picking up James on your question regarding the FX impact on our backlog. First comment, I'd make of course is the backlog is only one side of the story. It's projected future activity, so it's not had a direct impact on our financial statements to-date. Now we've all seen the strengthening of the dollar against virtually all currencies in the past 12 months and that inevitably goes impacted affects our backlog to the extent that it's a multi-currency backlog. From an economic standpoint, our strategy is to hedge organically our revenues and our cost. So to the extent that our revenues come down in dollar terms or our projected revenues come down in dollar terms. You can assume that our projected cost will come down in equal measures. So that the economic impact net is minimal to neutral.

Okay, thanks very much.

We now to the line of Rob Pulleyn at Morgan Stanley. Please do go ahead, your line is open.

Just back on the PLSVs in Brazil, if I may? Could you please add, a little bit more color on how demand supply picture is for these types of vessels i.e. does Petrobras have enough work for all of the PLSVs there/contracted. And so the second part of the question is, if I can here. Is the specification of your new PLSVs different and does that matter versus the two Brazilian flagged vessels which we understand the rolling off? Thank you very much.

Yes, I mean there is no doubt that Petrobras has a very healthy volume of activity for the PLSVs in the years to come. But as every oil company today, Petrobras is also managing their cash and we don't really have an exact figures on how they're managing this cash-prioritizing in project, but flexible figures passed installations, maintenance work on these flexible part installation on flexible pipe. I mean is absolutely key for Petrobras. So there's no doubt in my mind that in the future and the activity will remain quite high on the PLSV side. What Petrobras will do short term. I mean, we'll see. Regarding the new-built, they're 550 tons new-builds vessels, the tension of towers is 550 ton. And the locally build PLSV are 300, 350 tons and therefore cannot replace the 550 tons for the activity.

Okay, that's pretty clear. So there may be some movement in the PLSV fleet with older vessels making wave for those Brazilian flagged vessels but on a like-for-like capability your new-builds that seems less of threat, is that a fair conclusion?

I think it's a fair assumption at this stage.

Okay, that was very helpful. Jean. I'll turn it over. Thank you.

We now over the line of Haley Mayers at Barclays. Please go ahead, your line is open.

Just very quickly, if the utilization on the fleet including the stack vessels is 74. Am I to take does that means that the underlying active fleet was mid-90s utilization? And then, also I suppose knowing what you do about 2016, how do you expect that utilization to change based on that $2.8 billion backlog for 2016 execution. And then just lastly, falling on from that. How would you, how do you think about specific metrics that you're watching in order to adjust capacity further than you already have in terms of utilization?

Ricardo, you want to start to answer?

Yes, will do. Haley good afternoon. We have, calculated our vessel utilization percentage for Q3 on a consistent with prior quarters and prior financial years. And we believe that consistency is an important feature in our communication with our investors. So we haven't specifically called out the impact of vessels that today have stacked. We believe that there is however sufficient information in what we issue that you and other analyst and investors can make a good guess. We are considering for future quarters, the possibility of including an additional metrics that carves out deactivated vessels I should say on a long-term that are i.e. cold stack. As far as utilization, going forward is concerned. For that, I handover to John, on that place.

Yes, thank you Ricardo. Good afternoon, Haley. Yes, we went through a process earlier this year, which we've communicated to the market resizing our fleet and that resizing was around what we saw in our future, has being the workload that we would have. So the aim has been is to tailor the capability of our fleet and the sizing of our fleet to what we foresee coming in 2016. And that's the way we've approached it. So we have released back with charter owners as well as stacked vessels that may in the waters left. We're working to book - to work in the next couple of years in the markets. So that's the way we've approached it and that's the model, we're trying to follow.

For the active fleet, I mean you can expect as usual that utilization will vary during the different quarters and will be lower during the prior than the summer, as we've seen in the past.

Thank you and just following on from that, if I may? Given that you came out with your resizing earlier in the year and markets changed since then. Si there anything that we should know regarding that expectation around utilization versus your previous plan?

Very difficult to predict, what will exactly happen next year. Things can change, either way very, very quickly and we'll adapt to any change.

Okay, thank you all.

We will now open the line of Michael Rae at Redburn Partners. Please go ahead, your line is open.

The first one is, just to ask to Mukhtar's question again, which is, can you give any color on how big the influence of project closeouts was in 3Q and is it, very roughly right to think of as being aligned with the working capital move to $90 million quarter-on-quarter. And then the second question, bit of a boring one. But can you give me a steer on where depreciation will be next year. Because it only depend a bit on when the new-builds actually enter the fleet, but as a figure of roughly $470 million ball park, correct? Thanks.

On the first question, as we've always done, we're not commenting on project on specific project or a specific project. The only thing I can say is, that Q3 results is the combination of excellent execution and timing of the projects and I think you have the list of the project, which have been completed or close to completion during the quarter. But I don't want to comment on project-by-project basis. Ricardo, on second point.

Michael, I'm afraid that as far as 2016 is concerned we've not provided any guidance we think it's premature and we'll do so in the next quarter.

Okay, that's understood. Thank you.

We now open the line of Andrew Dobbing at SEB. Please go ahead, your line is open.

A quick question on project progress. You've got quite a lot of North Sea projects that are executing at the moment. Is it fair to assume we're not going to see much progress on those projects between now and the end of the winter season in Q1, I guess, the end of Q1 next year? That's the first question. And secondly, I've noticed that just a small thing, but progression has gone backwards on the Lianzi Topside project. I think it was 85% in the end of Q2. It's gone down to 80%. It's only a small issue but I'd be curious to understand what was happening there. Thank you.

So two things, as we mentioned in John's narrative. The large big projects in the North Sea have concluded for the season. We've completed the bulk of our work in the season and as we expect to go into a quieter period in Q4 and Q1, which is we expect in the North Sea. On Lianzi, we've had some more work from our clients to extend some of the top sides modification that we do into quarter four and potentially into the very first part of quarter one, which therefore means is the size of the contract is changing, therefore the POC is adjusted.

So I guess, that would account for some of the non-announced orders in Q3?

As part of it, yes.

Okay, one more question if you've got time. Can you give us any idea you kind of split US Dollar, Real split on your PLSV contracts. It will be quite useful to understand that in modelling that kind of revenue outlook for the PLSV contribution going forward?

Andrew, I mean that question is pretty granular. However, what I would say is that the split of contract such as ours, have been effectively established by regulation in Brazil and in general, they're in the order of 35% to 65% [indiscernible] and I repeat, what I mentioned earlier that we are, we target from a hedging perspective to match our non-US revenues with our non-US costs. So from an economic exposure perspective, we're in pretty good shape.

So that's a 35%, 65% of the day rate is in Real.

That's what I said, yes. 35% of a 100%.

Okay, fantastic. Thank you very much.

We now open the line of Frederik Lunde at Carnegie. Please go ahead, your line is open.

Thanks. Very good operations this quarter. I'm just wondering what happened to the test drill in the Arctic. It seemed to be delayed by about a quarter. Is that something that you have initiated or is it the yard and do you look at further delays?

John, can you give you a brief update?

Yes, what we're doing there is just trying to make sure the timing of these vessels coming into fleet ties and whether we want to put them to work. So we're working with the yard on just fine tuning the timing there for the record.

Very good and one more question from me on the guidance and what are you trying to tell us? Seeing a significant decline, so I mean it's very vague wording?

Its [indiscernible] to give more precision in 2016, I would just say that, 2016 consensus the way we read it, it's consistent with our comment.

Thanks.

Okay, we're now open the line of David Farrell at Macquarie Securities. David, please go ahead.

Firstly, well obviously fairly successful in winning order intake during 3Q. And you said during the Q&A that, in some part that was down to being more cost competitive due to the cost cuttings, that you brought through. Your two major peers are a bit behind you in that regard. But do you expect them to win more going forward as they bring to their cost cutting initiatives and become more cost competitive. And then secondly in terms of the Life of Field in the North Sea. In your projections looking into 2016, do you expect that to come back?

Regarding that the project that we won, I mean I mentioned two points. I mentioned cost - we're more cost competitive because of cost reduction. I will let our competitors answer your question and see what they can achieve in the future. I don't want to, I want to stress another point. However, there is pressure on margin in this business. I'm not saying that the cost reduction compensate for everything. Regarding the second question, sorry I missed it.

The Life of Field, how you expect prior to 2016.

I mean it's a bit early for 2016. We've seen reduction of activity in 2015, the future will tell what happened in North Sea in 2016. What is sure that fields need to be maintained? So although their activity has been going down. I mean there is a limit in the reduction which can be done while continuing to maintain production and the safety of operations.

Okay, thank you.

I think we can take one more question.

Okay, in that case final question is from the line of Morten Nystrom at Nordea. Please go ahead, your line is open.

All my questions have been answered. But I didn't quite catch your answer on Frederik's question regarding your 2016 comments in the report. If you could just and also the link between your expectations of the consensus, if you could just repeat that will be helpful. Thank you.

No, what we're saying is, that we're not giving guidance for 2016 more than what we've given in the announcement. We'll - it's, as every year it's too early in Q3, for us to give a more precise guidance on 2016. What I mentioned is that, 2016 consensus we believe is consistent with our confidence. The way we read 2016 consensus, it seems to be consistent with our comments in terms of reduction of results.

Thank you.

Okay ,that was the final question in the queue for today. So gentlemen may I please the call back to you for any final comments.

I just would like thank everybody for participating to this call and looking forward to meeting with you in the future and for the next earning call. Thank you.

This now concludes today's call. Thank you very much for attending. You may own disconnect.