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

Phillip Lindsay - Credit Suisse Michael Alsford - Citigroup Amy Wong - UBS David Farrell - Macquarie Group Limited Robert Pulleyn - Morgan Stanley Andrew Dobbing - Danske Bank Anne Gjøen - Handelsbanken Capital Markets Kévin Roger - Kepler Cheuvreux Frederik Lunde - Carnegie Jordan Patel - Sanford C. Bernstein & Co. Michael Rae - Redburn Ltd

Hello and welcome to the Subsea 7 Second Quarter Results Call. For the first part of this call, all participants will be in a listen-only mode. And afterwards, there will be a question-and-answer session. Please note that this call is being recorded. Today I'm pleased to present, Isabel Green, Head of Investor Relations. Please begin your meeting.

Welcome, everyone, to our second quarter 2017 results conference call. With me on the call today are Jean Cahuzac, our Chief Executive Officer; Ricardo Rosa, our Chief Financial Officer; and John Evans, our Chief Operating Officer. The results press release is available to download on our website, along with the presentation slides that we'll be referring to on today's call. Turning to Slide 2, I must remind you that this call may include forward-looking statements that reflect our current views and are subject to risks, uncertainties and assumption. Similar wording is also included in our press release. I'll now turn over the call to Jean.

Thank you, Isabel. Good afternoon and welcome to our second quarter results conference call. I will start with the highlights of our second quarter performance and an overview of our recent operation activity. Ricardo will review our financial results in more detail. I will conclude with an update on the progress of our strategic initiatives and our views on the market outlook. We will then answer your questions. Starting on Slide 4, I'm very pleased with our strong quarter operational and financial performance. Revenue was $1 billion and we generated adjusted EBITDA of $340 million. The performance continued the trend from prior quarters with good project execution and cost discipline. Our high percentage margin is partly a reflection of the mix of activity at its point as a cycle. Our strong balance sheet has enabled us to capture opportunities and invest in growing and strengthening our business. We acquired SHL in the first quarter and ECS in the second. At quarter end, we had $825 million net cash. We reduced our revolving credit facility to $656 million. This facility remains undrawn. Our liquidity position therefore remains strong. Our new-build vessels, Seven Arctic and Seven Kestrel, commenced activities in April as per plan. Active vessel utilization was 77% and total vessel utilization 68%. We have to increase tendering activity, although the short-term market remains challenging. We continue to believe that the increase in awards to market will be gradual. New awards and escalations totaled $141 million during the quarter. This added to the $856 million from ECS took our order backlog to $5.7 billion and changed from the position at the end of March. Turning to Slide 5, which shows a selection of our activity in the quarter, our SURF and Conventional projects have progressed very well. We have substantially completed the West Nile Delta Phase One project, Offshore Egypt, in the Taurus and Libra fields. The West Nile Delta Phase Two GFR project has commenced fabrication. And on this slide you can see Seven Antares mobilizing for the pipe-laying operations. In the North Sea on the Maria project, Seven Oceans completed pipe-lay operation and Seven Arctic shown here is toward spools and protective structure. Also in the North Sea, the Western Isles, Catcher and Culzean projects progressed well. In the Gulf of Mexico on the U.S. side, the Coulomb project was completed. The Stampede project progressed with pipelay and celebrated a safety milestone of 1000 day without any recordable injury or high-potential incident. Offshore Brazil, our fleet of PSLVs continues to operate efficiently for Petrobras. And on July 1, Seven Waves resumed work following repair of its lay tower. Renewables and Heavy Lifting activity increased compared to the prior year with significant progress on the Beatrice wind farm project and several substation installations. The Beatrice picture shows 5 of the 84 jackets in one of the fabrication yard. To give you an idea of the scale of this constriction, each of them weighs approximately 1,200 tons and stands 80 meters tall. i-Tech Services have progressed with EPRS project of INPEX and Chevron. The U.S. chartered vessel Harvey Intervention has commenced work for the new IMR contract in the U.S. Gulf of Mexico for Shell. The spot market has been subdued again this summer, although our clients look to minimize discretionary work and conserve cash. Moving on to Slide 6, our order backlog at the end of June was $5.7 billion in line with the backlog position at the end of the first quarter. This included $1.4 billion of work related to the long-term contracts for PSLVs offshore Brazil. We have $2 billion of work due to be executed in the second half of 2017 supporting our guidance for an increase in revenue this year compared to 2016. Our order backlog to be executed in 2018 was $2.4 billion at the end of June, covering approximately two-third of next year's consensus revenue expectation. There were no announced awards in the quarter. Unannounced order intakes total $141 million, with several smaller projects awarded as well as escalations on existing contracts. The acquisition of ECS added $856 million to our backlog. We think, this included five projects, three of which are located offshore Saudi Arabia. After the quarter ended, contract extension were signed in Brazil for three of our PSLVs, adding a further $250 million to our order backlog for 2019 onwards. I will now hand over to Ricardo, to discuss our financial performance.

Thanks, Jean, and good afternoon, everyone. Let's first look at the income statement highlights on Slide 7. Second quarter revenue of $1 billion was up 6% from the prior-year period. This reflected increased revenue from the Renewables and Heavy Lifting business unit, which included fully consolidated results for SHL, following its acquisition in March. Revenue from SURF and i-Tech was lower year-on-year as clients continue to minimize non-essential expenditure. Adjusted EBITDA was $340 million. In the comparative prior year period, the adjusted EBITDA was $280 million, but this included a $53 million restructuring charge. Excluding the one-off charge taken in 2016, adjusted EBITDA was 2% higher year-on-year. Adjusted EBITDA margin of 33% reflected a contribution from projects nearing completion, good execution and continued discipline in our costs. Diluted earnings per share was $0.43, 8% higher than the prior year period. Now, let's turn to Slide 8 to look at the income statement in more detail. Net operating income was $235 million. This included $11 million loss from the share of net income from associates and joint ventures, compared to net income of $27 million in the prior year period. The loss reflected an impairment recognized on the pipelay vessel Normand Oceanic, which is owned by an equity account to joint venture. The joint venture net income reported last year was mostly from SHL, which was equity accounted of the time. A $27 million loss was reported within other gains and losses, of which $23 million related to foreign exchange losses due to functional currency movements. In the prior year period there was a gain of $23 million. Taxation of $60 million was equivalent to an effective tax rate of 29%. Net income was $146 million, 7% higher year-on-year. Slide 9 shows the revenue and net operating income by business unit. SURF and Conventional revenue of $614 million was down 29% on the prior year quarter due to lower activity levels, reflecting where the industry is in the cycle. Net operating income was $163 million, down 14% year-on-year. i-Tech Services revenue was $83 million, 11% lower compared to the prior year. Net operating income was $11 million, or 15% lower. Compared to the first quarter, Inspection, Maintenance and Repair activity increased a seasonal work resumed in the North Sea. However, activity was lower than the prior year as claims restricted IMR work worldwide to the minimum required amount. Renewables and Heavy Lifting revenue was $325 million, mostly related to the Beatrice project, which began offshore operations in April. Work is progressed well, was approximately half of the piles installed and jacket installation due to commence in August. Net operating income was $53 million, both revenue and net operating income benefitted from the full consolidation of SHL following its acquisition in March this year. Now I'll turn to Slide 10, on June 29, we acquired certain businesses of ECS from Chapter 11. The total consideration was $55 million. In the second quarter, we paid out $38 million, but received $8 million of this back in cash held by ECS, resulting in a net disbursement of $30 million, $17 million remain to the paid out in the third quarter. We provided $25 million debtor-in-possession financing to ECS during the Chapter 11 process. As part of the acquisition this was settled in full. The ECS businesses are consolidated from the date of acquisition within our SURF and Conventional business unit. Provisional purchase price accounting or PPA, has resulted in the provisional recognition of net assets of $48 million. Mostly comprising working capital balances related to projects. The $8 million excess of consideration of provisional fair value of assets acquired has been allocated to other intangibles, pending completion of the PPA exercise. No vessels were acquired and no debt was assumed. The purchase price accounting review will be completed in the second half of the year. As Jean mentioned earlier, $856 million of ECS is order backlog with added of the result of the acquisition, approximately $300 million of this is to be executed in the remainder of 2017, and approximately $450 million in 2018. Finally, in an associated transaction also in the June 29, we acquired from ECS, the Ingleside spoolbase in Texas, USA. The consideration for this was $16 million, and this is accounted for as an asset purchase and has been classified in property, plant and equipment. The addition of this owned spoolbase of Ingleside gives us a secure and permanent presence in the Gulf of Mexico. Moving on now to Slide 11, which illustrates our cash movements in the quarter. Cash and equivalents was $1.5 billion at the end of June, a reduction of $398 million on the position at the end of March. We decreased our borrowings by paying down $133 million of debt, previously held by SHL, and spending $55 million in the quarter on convertible bond repurchases. Our dividend of NOK 5 of the share was paid in April, equivalent to $191 million. We reported working capital related outflows of $270 million in the quarter, with our net operating liability is decreasing, a trend that we have been expecting. The large decrease this quarter was mainly attributable to progress on projects in the North Sea and Egypt. It was also impacted by progress on the Beatrice project, which had relatively large upfront payments for procurement in prior periods that we paid out to our suppliers in the second quarter. Although there will be some volatility on our net operating liability position in the second half of 2017, driven mainly by the execution of the Beatrice project. We do not expect such significant shifts as we have seen in the first half. Our financial and liquidity positions remain strong. At the end of June, we had borrowings of $650 million, we reduced our revolving credit facility from $750 million to $656 million cancelling the $94 million that was to mature in 2019, and retaining the remainder, which will mature in 2021. The facility remained unutilized. Slide 12, shows our progress on capital allocation. Firstly, we are investing to grow and strengthen our business. Our targeted approaches increased our presence in the Renewables market and accelerated our growth strategy for the Middle East. We've also invested in our modern and flexible fleet maintained a leading position in development of new technology. Secondly, we are committed to maintaining an investment-grade credit profile. We have regularly paid down debt and currently have robust net cash position. Thirdly, we are returning surplus cash to shareholders by means of a special dividend and share repurchases. Since 2011, we have returned over $1.2 billion including a special dividend equivalent to almost $200 million paid in the second quarter of 2017. Today, we have announced the extension of our $200 million share buyback program to July 2019. We have already repurchased $57 million under this program in prior year, but $143 million remains available for repurchases in the coming two years. Turning to Slide 13, I will conclude with our updated guidance. We have updated our guidance to include the addition of ECS and to reflect our year-to-date performance. We now expect 2017 revenue to be higher than in 2016. We have not changed our guidance for adjusted EBITDA percentage margin, which is still expected to be lower than the record 32% reported last year. Our administrative expenses are expected to be between $220 million and $240 million, raised from $210 million to $230 million previously guided, and it reflects the consolidation of both the SHL and ECS businesses. Our net finance cost is now expected to be between $5 million and $10 million, as we have reduced our debt. Our depreciation and amortization expense is still forecast to be between $410 million and $430 million. And our effective tax rate is still anticipated to be between 28% and 33% for the full year. Finally, capital expenditure is expected to be between $160 million and $180 million. This CapEx relates to the maintenance of our existing fleet and onshore assets including the Ingleside Spoolbase, it does not include any forecast capital investments in potential growth opportunity. With that, I will now pass you back to Jean.

Thank you, Ricardo. Now let's turn to Slide 14, which shows some of our key achievements in the beginning of 2015. We have delivered well through to the downturn. We have achieved this by identifying the challenges of a lower oil price and taking strategic decision to strengthen our position. By acting fairly and focusing our attention on our differentiators, we were able to reduce capacity quickly. This reduced our operating costs, helped us doing more work and protected our earnings. We also improved our service offering. We maintain our technology and new-build vessel investment program. This kept us at the forefront of new cost effective solutions based on new technology, such as trace heated flowlines for extended tie-backs. We formed alliance with leading industry providers to extend our capability to include early engineering and integrated solution. Our alliances with KBR/Granherne and with OneSubsea, have been instrumental in certain project awards. Client engagement is now well established for these alliances and they have become an integral part of our service offering. Similarly, as our successful relationship with Aker BP have shown, a number of independent clients have engaged with us using a partnership approach. Our latest strategic move has been to diversify our business by expanding our presence in certain market. This will have Subsea 7 to be more resilient in future cycles and enhance our revenue generating potential. In the first quarter, we acquired the remaining 50% of SHL, doubling our exposure to the fast growing offshore wind market. In the second quarter, we acquired certain business at ECS, accelerating our plan to develop our presence in the Middle East. I shall talk more about ECS in a moment. Looking forward, investing in differentiated capability continues to be a strategic priority. We need to ensure we have the right capability to win and execute work efficiently and effectively. This could include investing in new technology and developing our fleet capability to fully service the changing needs of the market. Slide 15, summarizes our acquisition of ECS from Chapter 11. ECS was a competitor with a strong conventional business in Saudi Arabia and strong capability for last project in certain geography. It was placed under Chapter 11 in February 2017. On June 29, ECS' proposed plan of reorganization was approved by the U.S. Bankruptcy Court. Subsea 7 acquired certain ECS businesses, and as a result, get long-term agreement in consortium with Larsen & Toubro for work in Saudi Arabia. We also consolidated substantial backlog, mostly for execution in 2017 and 2018. As a result, approximately 850 people have joined our organization. To its existing operational commitments, we have chartered two ECS vessels. The Lewek Constellation on the short-term charter and Lewek Champion on the mid-tier charter. We didn't acquire any old vessels owned by ECS. In our view, the technical specification of Lewek Constellation will now have fulfilled our new technology implementation, such as larger diameter Pipe-in-Pipe or electrically heated pipes. Moving on to Slide 16, and our plan for the Middle East, as clients in the Middle East region increase capital expenditure on conventional projects, we hope to increase our presence in the region. We initiated an organic growth strategy to penetrate the Saudi Arabia market through a long-term agreement with Saudi Aramco and we are making steady progress to achieve this goal. And we were making steady progress to achieve this goal. The opportunity presented by the ECS acquisition accelerated our strategy and replaced our earlier plans. Our LTA is held in consortium with Larsen & Toubro. In addition to the engineering and project management we both provide, we supply the fabrication that is necessary for projects in this country and we provide the installation capability. Larsen & Toubro just supplies - Larsen & Toubro supplies the fabrication that is necessary for the project and we provide installation capability. We have three projects today that we are executing in Saudi Arabia, with a combined backlog of approximately $750 million, most of which will be executed in 2017 and 2018. Tendering under the LTA ceased for ECS while it was in Chapter 11, but we have already been invited by Saudi Aramco to tender on new awards now that the acquisition has been completed. We aim to grow our presence in Saudi Arabia and win a fair share of the level work under the LTA, which continues through 2021 before needing to be renewed. Slide 17 illustrates the market outlook. So far this year, we have seen an increase in offshore project being functioned. We have also experienced an increase in tendering activity in part due to earlier engagements as our clients adopt way of working that support lower cost solutions. Our clients have lowered the breakevens for their portfolio of projects. And the recent oil price uncertainty does not appear to have materially impacted their development plan. We continue to see trends towards long tieback and phase field developments. For offshore to be competitive at $50 or less, our sector needs to remain focused and disciplined. For us, this means early engagement, deepening our alliance offering, as well as pushing the benefits of our latest technology and better ways of working. We also need to anticipate our clients' requirement of the future, so that we can develop new technology and invest in our capability to stay ahead of the competition. Finally, to conclude, on Slide 18 we give a review on the outlook for our business unit. In SURF and Conventional, we continue and still expect - to continue to see and still expect a gradual market recovery with an increase in awards by first half of 2018. This is supported by the conversation we had with our clients. We have listed on this slide, some of the larger project tenders that are active today and could be awarded late this year in 2017 or in 2018. We have seen an increase in tenders for work in the Norwegian sector of the North Sea. Active tenders include Wintershall Skarfjell project, Statoil Snorre project and Aker BP Snadd project. Active tenders in Africa includes the Tortue, a relatively large gas development offshore Mauritania and Senegal for BP; the Mamba project for Eni, offshore Mozambique; and Total Zinia project, offshore Angola. In Brazil, the Statoil Peregrino project has been settled. And the award to market is expected later this year. KG-D6 offshore India has been functioned by Reliance. Tenders have been submitted and the market is waiting for news of awards. We tendered this last project in consortium with TechnipFMC, combining our capacity in this region and sharing the risk. Here again, this contract to be awarded later this year. Tenders have been submitted for the Gorgon Phase 2 project offshore Australia. This project could be awarded before the end of next year. Our i-Tech Services business unit is focused on IMR tenders in the North Sea and the U.S. Gulf of Mexico, where we are seeing some signs of activities starting to increase. The spot market however is still weak and expected to remain so for the rest of the year. The outlook for Renewables and Heavy Lifting is steady. Oil and gas heavy lifting is predominately located in the Middle East and Egypt. Decommissioning is focused in the North Sea. There are a number of wind farm tenders in progress. Most of the renewables activity is in European waters, but we also see opportunities emerging in Taiwan. And so, on Slide 19, we can move to Q&A. Ricardo, John and I are ready to take any questions that you may have.

Thank you. [Operator Instructions] The first question comes from the line of Phillip Lindsay from Credit Suisse. Please go ahead. Your line is now open.

Yes, good afternoon, guys. Another decent quarter. As you indicated, Jean, I think you said you got two-thirds of market expectations in the bag for 2018, and then clearly not a bad place to be at the midpoint of 2017. And I totally understand the outlook in terms of gradual pick up in SURF awards into the first half of next year. My question is really - for the bulk of work that you're chasing, when do you envisage offshore campaign taking place? Should we be thinking beyond 2018 or can you sort of ramp up faster on some of the smaller awards?

Well, I would say, it all depends on the type of project and the geographical area. When you talk about some relatively simple project, a small size project, Wintershall project in the North Sea, we could be seeing activity in the late 2018. When you talk about the larger project, we are talking about operation in 2019. But I would not under estimate with the level of tendering that we have today also additional scope of work on existing contract.

Okay. Well, that's helpful. Thank you. And then, second question on Renewables, clearly, percentage of completion accelerated on Beatrice during Q2 and the SHL vessels were well utilized. Presumably, that continues in Q3. But for Q4, your current rate of progress, how should we think about utilization of those vessels? And then just as a follow-up to that broader Renewables question, perhaps just an update on business development prospects, and any confidence you can give us on timing of Renewables being sanctioned? Thank you.

I am going to let John give you some information on Beatrice and how we see the division of project. But before he does it, I think Beatrice is a very good example of how we've been able to adopt our way of working from the oil and gas to Beatrice. I mean, the execution of Beatrice is very, very good, and it's fully in line with what we are achieving in oil and gas. John, you want to answer the question?

Yes. So, Phil, to give you more - a bit more detail here. We are still installing the piles, so Beatrice's 84 jackets, which have four piles at least. So the Stanislav Yudin has been installed in those in quarter two. We will continue to do that in quarter three and into quarter four. The Oleg Strashnov of it, just completed Zo [ph]. We've done some lifting in Egypt for Zo [ph] project last month, then she comes back into the North Sea. And we do as Ricardo said to start the jacket installation work in August with the Oleg and she will work for the best part of this year doing jacket installation in Q3 and Q4. Jean and I recently visited one of the fabrication yards in the UK, that's building these jackets. And we are recently pleased with the progress in all the jacket fabrication. So it's fitting into place as we expected. Looking more generally into Renewables space, there are some opportunities for T&I projects in Europe, which we are currently bidding. But Taiwan is also showing signs of one or two potential shallow water projects, which are very similar to the ones we see in Europe where Taiwan is looking at potentials of doing offshore wind farms there. So at the moment, we are positioning SHL for opportunities in Taiwan, which we expect into the market quite soon.

We also see, John, some opportunities at the lifting operation in Middle East.

Correct.

Which has been an area where SHL has traditionally been successful, but with a stronger presence that we have in Middle East, I mean, I think, we are positioning ourselves as a company to take more opportunities also for SHL there.

Okay. Excellent. Well done, guys. Thank you.

The next question comes from the line of Michael Alsford from Citi. Please go ahead. Your line is now open.

Thanks for taking my questions. So I've just got a couple as well, please. Just firstly, on sort of capital allocation and capital structure, I just - obviously, net cash of just over $100 million at the half year. I just wondered to see whether you felt that that was the appropriate sort base level of net cash to think about or whether you feel that the business has got excess cash that can be perhaps distributed quickly back to shareholders through further special or as you mentioned the availability of the buyback? That was my first question. And then just secondly, you mentioned working capital and it was a big outflow in the first half. You are saying that it's going to be as big in the second half, but I was just wondering whether you can give a little bit more or help to quantify a little bit more, because you have $400 million of outflow in the first half was pretty material. So how should we think about that into the second half? Thank you.

Ricardo, you want to take the question?

Yes. Good morning, Michael. As far as the allocation of capital is concerned in the associated net cash, I mean, we don't see any change in the policy that I articulated in my prepared remarks. We feel that with this prolonged downturn and given the challenges and uncertainties that still remain ahead, we think it's important to maintain a very strong balance sheet, and clear and robust liquidity position. And I talked about on an investment-grade profile. We also want to train liquidity to execute on our first priority, which is to reinvest in - or continue reinvesting in growing the business. We have the flexibility with our liquidity position to seize opportunities as they arise. We have announced and paid a dividend this year. And I think our track record in returning cash to shareholders has been good, certainly since the merger in 2011. And it's something that remains constantly under review. So we don't see - at this point to change the approach that we have articulated in various contacts with investors. As far as the net working capital is concerned, yes, you're absolutely right, we've seen effectively a reversal of our net operating liability position both in the first quarter and the second quarter, which has meant that effectively operating cash generation in both quarters has been relatively low. If you remember in Q1, it was about $65 million, this quarter it's about $30 million. But it's - first of all it's still positive, and I think it's been driven - I know it's been driven by two main factors. The first is the completion of various major projects. As you know, most projects maintain a net liability position during execution, but in the closeout phase, what you see is an unwinding of that net liability position as it - as the project completes. In the last six months, we've seen a number of projects closeout both in the North Sea and Egypt, and obviously this is have an impact on our NOL, our net operating liability position. The second driver has been the acquisition of SHL. When we consolidated SHL on March 10, it had a significant net liability position that related to payments were to be performed. In Q2, as I think Phillip highlighted, we progressed significantly on the execution of Beatrice, with the fabrication of piles and jackets. And this is a significant means to our net liability position. So really those are the two main drivers that we have. Going forward, we are expecting the net operating liability position to stabilize. Although there will be a possibility of some volatility in the short-term, in part due to the impact of Beatrice, and in part to the integration of ECS activity. Nevertheless, our liquidity position remains solid and the reversal that we've seen has not caused - not been a cause for alarm on our side.

Understood, thank you very much.

The next question comes from the line of Amy Wong from UBS. Please go ahead. Your line is now open.

Hi, good afternoon. Two questions for me, please. The first one relates to your strategy of acquiring ECS and getting access to the Middle East. Could you perhaps talk about, and as a result of that you highlighted that you didn't really acquire many - any vessels at all. Could you comment on your own asset base and perhaps how appropriate it is in terms of matching the need of what is required in the Saudi Arabia? And then my second question relates to your comment on the tendering pipeline, perhaps that would be happy to give us a size of that tendering pipeline, how that has changed since the beginning of the year? Thanks.

Thank you, Amy. I mean, regarding the acquisition of ECS, I mean, the first thing as I mentioned before, it's something that is in line with the strategies that we defined some time ago. I mean, we identified the plus - increasing our presence in the Middle East is a low cost operation with steady activity and for growing activity with the present price of oil. ECS gave us the opportunity to - the acquisition of ECS gave us the opportunity to accelerate this move, and strengthen our position. Regarding the assets, I mean, you quite frankly, as we mentioned, we didn't acquire assets, which belong to ECS. And we are today in a situation where we believe that we will be able to develop and got activity in the area using our own assets, the Champion - sorry, using our own asset, which is the Antares and Naga [ph], which are very suitable for this part of the world, as well as the chartered vessel to execute the project. Your second question, I think, was on the tendering and how we see the tendering pipeline? I think, it's clear today that we are definitely saying an increase on tendering, which is in line with our view of the gradual improvement at the market. In fact, our organization is very active on tendering all around the world from Brazil to North Sea, and other part of the world. We are seeing a number of interest from the clients to additional work in particular in tiebacks, and maintaining production or developing production on existing infrastructure. That has not slowed down. And when we talk to clients about the recent oil price evolution, I mean, the last couple of weeks and the oil price went down, they were a quite clear that it didn't unchanged their view on, what they need to do. And in fact, a number of operators are telling us today that they will use this down cycle period to develop more - to do more work, because of the low cost of the market.

Can I just follow-up on the second answer there. And just give us a little bit quantify the splits of the activity increase like in terms of perhaps volume, whether as vessel days or kilometers of pipe laid. How has that evolved over the last six months?

Difficult to answer your question, I think the evolution as we said before, I mean the gradual. And I would say over the last six year - six months, we have seen the normal trends of increased activity in the summer period in the North Sea, increased activity on smaller projects. In terms of the larger projects as we mentioned before, we see increase of activity on 2019 forward. I would say on the last project, when you look at which one we think we come to market first. There are little around the world. I mean, it's Peregrino in Brazil. In Brazil, it's Libra Phase 1, which likely to go ahead now early 2018, with [indiscernible] in the last quarter of 2017. In Gorgon Phase 2 in Australia, it's Tortue in Mauritania. It's Mamba Golfinho and that could go on with the list, without ignoring Snorre in Norway, which is also a project, which we are hopeful opportunities to company like Subsea 7. So tiebacks remain them core of the increased activity. And then, there are some larger projects, which are coming to the market in 2018, but some of them that I mentioned will be late 2017 too. So it's gradual improvement. Timing remains sometimes to be uncertain, but haven't changed my view on what we said over the last two quarters.

Great. Thanks for the color. I'll turn over.

The next question comes from the line of David Farrell from Macquarie. Please go ahead. Your line is now open.

Hi, there. I've got a question on the Renewables business, please. We've seen a fair bit of M&A in that space over the recent few months from the supplier size. I think, the number three pile installer, just the number two kind of turbine installer, Saipem yesterday talking about moving from being contractor to a full EPCI contractor. Can you trying to just kind of what the strategy is there for SHL Subsea 7 over the next few years. We're going to see some inorganic activity, or we're going to see you, is deploying your balance sheet to build new vessels to kind of compete with new players or more competitive players?

We are not talking about building new vessels at this stage in the Renewables. But as you can imagine, we are looking at how to grow this business. We see this business for growing market. And when we look at any opportunity, which will come to actually go in the direction, and that also includes change in the commercial model, and in the vertical integration of the business. We are promoting Renewables similar approach that we have in oil and gas by getting involved with partners all over the whole chain of Renewables. So I would say it's - we will take the same approach in Renewables that we'll take in oil and gas. Our balance sheet in order to take opportunities as they were to become available and we are going to grow the business over time.

Okay, thanks. And as a follow-up, I see on the list of opportunities, [indiscernible] listed there, is that because you're not tendering for it, or as it being awarded to someone else?

No, [indiscernible] just come out into the market literally in the last few weeks. So we will be bidding that for certain.

Okay. Thank you.

The next question comes from the line of Rob Pulleyn from Morgan Stanley. Please go ahead. Your line is now open.

Hi, thanks. Good afternoon, everyone. So a few questions, if I may. The first one, if I may ask, I mean, does the purchase of backlog through the ECS deal, which by the way, I see as a very small piece of business, but does the purchase of backlog. And the approach to diversification by getting exposure to the low-cost Middle East oil represent concerns over the core deepwater business and the activity therein, obviously notwithstanding many of the questions, which you've already been asked on that strategically that seems obviously a step out of what you've historically focused upon? Secondly - second and thirdly, some housekeeping questions. Could you give us a little bit of an idea of how much the 850 people added through ECS is going to impact the headcount costs versus what you had in 2016? And also on Beatrice, you talked about the progress. Are we right in thinking that the bulk of the procurement is probably over the 50% mark and the rest of the procurement will be completed this year as regards to jackets? Thank you.

Thank you for the question. I will take the first question on ECS and let John answer on the ECS personnel to funds that we have for integration and also the Beatrice question. The acquisition of the ECS, I mean, first, I would say it is within our core business. We have always been Conventional in Africa, and very successful in Conventional in Africa. So in fact, the business we are moving in is a business that we know pretty well. And we know how to manage the risk and execute the project in probably half these projects. We are seeing today potential in the Middle East at present price of oil, and how we see the price of oil evolution but that by no means, means that we are focused anything that we were in the past on the deepwater. We still see opportunity in deepwater. I would say growing this leg in Middle East will allow us to have more balance portfolio, and develop the business further. So it's not a change of strategy by any mean. It's a more balanced portfolio.

And Rob, the two questions on the people for us the bringing in the ECS skill set of Saudi Aramco experience is good for us. We have the right people working on those projects, so intend to keep the people deployed on ECS some of work that we've inherited. And they will become part of Subsea 7 teams working globally for us. In terms of Beatrice, you are correct, the bulk of the procurement and the bulk of that fabrication should be complete by the year end 2017. And 2018, then we'll be concentrating on the remaining installation of the jackets as well as the 180 kilometers worth of infielder rate cables that we have to install. So your judgment of that is right in terms of the split.

I would also add one comment on the people from ECS, I mean, what we are seeing is very good people like executing project very well. And taking into account, so gradual recovery of the market that we see, I think, it's we see a number of them being very welcome to join Subsea 7 for the new project that we'll see in front of us in 2018 and 2019.

Okay. Thank you very much. I'm sorry, John, just to clarify on the people, more interested in the people costs within your split of operating cost last year was about $1 billion. I was wondering, how much the addition of 850 heads would increase that sort of people cost budget for 2017 in terms of housekeeping? Thanks.

It's roughly similar, I think, it's a way of looking at it, Rob, same skill set as we have today is roughly similar.

You're thinking of offshore and onshore people, and as John said, it should be a proportional increase.

Okay. Thank you very much. I'll turn it over.

The next question comes from Andrew Dobbing from Danske Bank. Please go ahead. Your line is now open.

Yes, hi, good morning or good afternoon. A couple of questions. First, just a follow-on, on the people that you are bringing in from ECS. Can you give us a rough split between onshore and offshore for those 850 people? And secondly, this is Conventional work, and I think, at least my understanding is Conventional work tends to be lower margin, because they tends to be a lot more procurement on it. But in this case, your scope of work is really just transport and installation. So on the back of that, should we think that it's just better margin that might be typical for Conventional work that you've been doing in West Africa for example? Thank you.

I think, when you look at the margin, you've got to relate to Middle East margin. And you can see that with some of our competitors in the place. I think what is interesting also in this business is that we are expecting to grow the volume of activity. And to a large extent, last part of the backlog is at the extreme. So it's a press also in the balance portfolio that we have. Regarding the headcount, we have around 450 people offshore and 860 people altogether total. So that's mostly in Middle East and in the other operation in Africa and Gulf of Mexico, both two contracts which will be completed in 2018.

So it is fair to reinforce - it is fair to assume there is not a lot of procurement on that backlog that you've inherited from the EMAS business.

It's limited…

It's mostly transport, installation work, more than might be typical for a conventional project.

There is a limited pipe coating to be done. So, yes, pipe coating is in our contract to be done and then the rest if transport and install.

Okay, fantastic, thank you.

Yes, as a reminder, I mean, we're in consortium with Larsen & Toubro, who are actually responsible for managing the fabrication.

Of the jackets.

Of the jackets et cetera so the procurement is on their side to a large extent.

Exactly, perfect. Thank you very much.

The next question comes from Anne Gjøen from Handelsbanken. Please go ahead. Your line is now open. Anne Gjøen: Thank you. In this prolonged down-cycle, do you still see interesting possibilities for making acquisition as your balance sheet is still strong? Or is it at current stage more important for you to do even more positioning when it comes to partnership? Is that kind of important even more most important at the current stage?

Well, that's I think is both. But I think the priority is clearly to continue to identify opportunities to growth the business. And also to make sure that we continue to invest on technology and have the right resources and fleets to implement the technology in the future. So I think the - I think we said it in previous call. I see the downturn as in fact an opportunity for Subsea 7 to be a stronger company for when we operate the market itself. And the actions that we've taken since 2015 make me confident that we'll achieve that. Our balance sheet gives us opportunities. But again, we are prudent, we are confident in our investment and we will do investment only when it makes sense. It's not growth for growth, it's profitable growth for the shareholders. Anne Gjøen: Thank you.

The next question comes from the line of Kévin Roger from Kepler Cheuvreux. Please go ahead. Your line is now open. Kévin Roger: Hi, good afternoon. One quick question please on the depreciation and amortization, is it possible for you to split it behind the SURF and the Renewable business, please? And coming back on the Beatrice project, clearly this quarter, we have an EBITDA rather stable in the SURF and Conventional and also in the i-Tech Services business line. But it's mostly the Renewable segment that is, well, above the Q1. As your activity Q3 and Q4 on the Beatrice project would remain rather the same than in Q2, can we expect the same kind of earnings on the Beatrice project for the Q2 and Q3 compared to - Q3 and Q4 compared to Q2, please?

Ricardo?

Yes, Kévin, with regards to D&A, we provide information on consolidated EBITDA for the group and we also provide net operating income by business unit. And it's at the yearend that we provide some more detail on depreciation by business unit. So we do provide that information, but not on an interim basis. Kévin Roger: Okay.

This being said, I can give you some indicative guidance that the - the very significant majority of our D&A still relates to SURF and i-Tech Services. And on that, I hand over the commentary on Renewables to John.

Yes, on Q1 the assets were not operational. They were waiting for the summer season to open up, hence the reason the margin in Q1 was what it was and that was expected and that was planned. We expect the asset base to go to work again in Q2 and Q3 with partial operations in Q4. So we would expect to see Q3 being roughly similar to where we're at, at the moment. The thing to remember is that it's the profile of relationship between procurement, fabrication and offshore installation of boost around on this project at different phases by quarter. So it's not an easy one to interpolate a straight line from one quarter to the next. But coming back to your question, it won't be a repeat of quarter one.

And one last comment on that, Kevin, as I'm sure you're aware. In Q1 the results of SHL were not consolidated. And we picked up 50% of the results of SHL on an equity accounted basis. It's from Q2 onwards that we are fully consolidating the activity of SHL and renewables. Kévin Roger: Yeah, yes, absolutely, and just a follow-up on the GNS. So we can assess that the acquisition of ECS and SHL does not really change the profile of your T&I compared to last year.

That's right. Kévin Roger: Okay. Thanks.

The next question comes from the line of Frederik Lunde from Carnegie. Please go ahead. Your line is now open.

Hi, congratulations. I think it's the 12th consecutive major earnings that you report in the downturn, which is quite impressive.

Thank you, Frederik.

Thank you, Frederik.

Just curious, on Slide 21, you highlight the progression on the projects and you currently have six projects at roughly 90% completion. Could you give some color on how that's going to impact Q3 and possibly Q4 as well?

Slide 21, sorry, John?

So these are primarily the first three - first five of the six projects, they are primarily North Sea projects, which are coming to a close as we get different fields on line. So for example, Clair Ridge is one of BP's main producers which will come online in the next six months, catcher assembly for Premier, Western Isles for Dana and Aasta Hansteen. So we expect those projects to be at the level of reasonable level completion as we get to the end of the year. With then our traditional interfaces between the top sites contractors or the FPSO contractors in the final hook-up and commissioning activities with our clients, which tends to be driven by different timescale to the one that we normally control. So those pointer assets are called in by the client to suit their final commissioning needs, Frederik. So you're right, the bulk of them will be complete at that point. How we complete them and when we finally complete them will be driven other windows.

Great. So given what you just said, I guess, there is a reason, there is quite a good likelihood that you could end up with fairly strong margins also in the second half of the year depending on operational success, is that fair?

It's fair to say, yeah, it will be dependent on how those completed windows take place for us and also the discussions we have with our clients on the final account settlements we have on these projects. And sometimes they take time to get the final account settled. But it's reasonable to say that those projects will have an opportunity at least of having discussions with our clients on the final account.

Great. And finally just on the scope expansion potential on your current backlog. Could you give some more flavor on what are the trigger points for clients to increase scope. Is it oil prices, is it reservoir characteristics, or is it just operational performance or other factors?

I think it's the combination of all that. I mean, what we've seen is a very low investment on the non-essential CapEx by the clients overall, I mean, through the downturn. The priority of the clients today is to maintain production on the existing infrastructure. And we see here again, I mean, some gradual improvements to actually extend some of the work of the project. But it will gradual too. I mean, it's not a V-shape recovery that we are foreseeing. And that's why we give the guidance that we give.

Super. I'm looking forward to resume share buybacks and good luck in the future.

Thank you. We can take two more questions.

The next question is from Jordan Patel from Bernstein. Please go ahead. Your line is now open.

Good afternoon, everyone. Two questions for me, please, and I'll take them separately if that's okay. The first is about Petrobras PLSVs and Brazil. So could you give us little bit of color around the contract extensions and particularly the timing of the award? To our understanding, there is no additional phases of work which have been sanctioned, nor have any other PSLVs have been cancelled or rescheduled. So could you give us a little bit of further insight really as to why Petrobras has done this now and most curiously around the unchanged day rates? Thank you

Well, I think I would put first in the context of what we've been saying for a while, is that we were confident that the new-build PLSVs were not a threat, and we're not under threat. I think when you look at the PLSV contract extension and the timing, it's a reflection of several factors. And that's what discussion we had with Petrobras, which includes timing of the new-build startups and they all been delivered within window, but we actually discuss with them the window of the startup and release of some lower tonnage vessels that you've seen last year. Something which cannot be underestimated is the relationship with Petrobras and the performance of our operation. So I think altogether we've been able to define with Petrobras, a solution which is a win-win for both sides and we are quite pleased that Petrobras agrees to keep the same rates and the same terms and conditions as the original contract which as you know inflated our index of inflation and everything that you need for this type of contract. So I think both sides are pleased with the outcome.

Yeah, makes sense. My second question is on guidance. Looking at results, looking at the state of players we are now, it seems like we're not dissimilar position to midyear last year. And last year we saw a strong 1H 2016 beat. Your guidance was no change to - was not updated, your guidance were down margins year on year, implied a very tough second half. In actuality, you produced pretty decent second half, ended up beating guidance. If I look at 1H 2017 fins and guidance today, we seem to be in a relatively similar position. It doesn't seem impossible to me, particularly mindful of how many product set to complete that you'll beat that guidance. The question I have is clearly very open-ended one, but it's really how can we be confident in guidance? How can we be confident that there are operational factors within the business that will drive the unwind? Any color you could give on that would be appreciated.

Yes, this is Jean. Just one comment and then I will let Ricardo elaborate a bit more. When we look at 2018 that we are looking at - we are making a number of assumption. And based on our confidence, the first very important point is that I'm quite confident that we will continue to execute the project in an excellent manner in 2018 and onwards. And that's obviously absolutely key and explains to some extent the result of the past. Regarding the - what we see are the future, I mean, a number of projects are coming to an end. The project that we signed in 2016 and 2017 are being project where we've seen pressure on margins and we've been talking about that in previous earning call. So the market today is seeing in 2018 a bit more of a challenge. And I think we are having a similar view. I mean, 2018 will be different from 2017 and we have given some guidance on 2017. Talking about 2017, I think we are confident that we will continue to deliver good results and we give a guidance of slightly lower margin in 2017 than 2016. But I still expect good results.

Let me see if I can just add on what Jean has been saying, I mean, I would emphasize that we have adjusted guidance already once this year at the revenue level and at the EBITDA percentage margin. And I want to emphasize to that we are talking about EBITDA percentage margins here. We had a record margin in 2016. And based on the mix of projects that we are executing this year, we don't see the company obtaining that margin percentage in 2017. Bear in mind that the Beatrice project really kicked off this year. And we highlighted on a number of occasions that there is a significant proportion of procurement within that project, which tends to flatten or reduce margins. On top of that, we've already discussed the integration of ECS and its activities in the Middle East. So when you factor those two elements into the trend that Jean has already talked about, of all the projects rolling off and being replaced by one, so there's been one in a tougher environment in the cycle. I think our guidance makes sense.

Yes, I understand, understand. I think the integration of ECS to me was the key moving part, which has enabled this to stay still. But thanks for the comments, much appreciated.

Okay. Good. I think we can take one last question.

The next question comes from Michael Rae from Redburn. Please go ahead. Your line is now open.

Yeah, hi there, thanks for squeezing me in. Just two quick ones. The first is can you give us an update on the acceptance of the integrated procurement model among your customers? Is there enough evidence emerging to suggest that that's the way forward for the industry? Or are you finding that in your conversations customers are still open to both approaches? And then the second one, just briefly on Slide 18, it looks like you don't sort of categorize these renewable opportunities in the same way as the SURF projects. So I'm just wondering, when you talk about these projects in Europe and Taiwan, can you give a rough steer on the potential size of some of those? Are there any that would kind of creep into large or very large category that use to label the SURF prospects? Thanks.

Yeah, I will take the first question and John will address the renewable question. We clearly see a momentum today in our alliance with OneSubsea, OneSubsea Schlumberger and more interacts from the clients on this vertical integration. I think we also demonstrated with the success on project awards to the alliance of a multi-dimension, the Mad Dog, and the Taka [ph] project, that in fact the alliance was working very well. So it's - I would say it's a trend which has started. We see more and more of this project in the future. And a number of operators are quite interested to consider this alliance as a base case or options for their future work. So I'm quite encouraged from what we've seen. When the market picks up we will see more of these project. Regarding the renewable, John?

Yeah, Michael, on the renewables in Taiwan, they're obviously experimenting and understanding how to make an offshore wind industry work for them. So the fields are generally smaller, the wind farms are generally smaller. And we're looking at one which will be an EPIC and one which will be a T&I project, so nowhere near the scale of Beatrice there. In the North Sea at the moment, they generally are transport and install type projects that we are bidding at the moment. And as we said at the very start with Beatrice, there are half-a-dozen Beatrice per year in the industry. And we'd expect to see a Beatrice once every two to three years in terms of size and scale, because that's by far one of the largest EPIC projects in the North Sea at the moment. So, again, it's about the different countries that we work in, in Germany, in Denmark, in Holland and in UK. And the timing at which the different wind parks are awarded. And then which choices clients make. Some clients go for transport and install, and manage the projects themselves. Other clients then go for an EPIC approach, where they try to package a number of the elements together into packages such as we see on Beatrice.

There are also two large project in France for a 124-turbine installation which are likely to go to function in 2018. And we'll see what direction it goes in terms of project model and commercial model that, that's two large project for 2018, which will awarded to market in my opinion.

Okay. That's great.

With that, I think we have to close. We'd like to thank everybody for participating to this Q2 earning call and looking forward to discussing with you at the next earning call. Thank you.

This concludes our conference call. Thank you for attending. You may now disconnect.