Isabel Green - Investor Relation Jean Cahuzac - Chief Executive Officer Ricardo Rosa - Chief Financial Officer John Evans - Chief Operating Officer

Amy Wong - UBS Securities Robert Pulleyn - Morgan Stanley Kevin Roger - Kepler Cheuvreux Frederik Lunde - Carnegie Anne Gjøen - Handelsbanken David Farrell - Macquarie Mark Wilson - Jefferies, LLC Nicholas Green - Sanford C. Bernstein & Co. Haakon Amundsen - ABG Sundal Collier Michael Alsford - Citigroup

Hello and welcome to the Subsea 7 release of Q1 2018 Results Call. Throughout this call all participants will be in listen-only mode. And afterwards, there will be a question-and-answer session. Just to remind you, this conference call is being recorded. I will now hand the call over to Investor Relations Director, Isabel Green. Please go ahead.

Thank you and welcome everyone to our first quarter 2018 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 assumptions. Similar wording is also included in our press release. I’ll now hand the call over to Jean.

Thank you, Isabel, and good afternoon and welcome to our first quarter results conference call. I will begin with the highlights of our performance this quarter before handing over to Ricardo who will present our financial results in more detail. I will conclude with a summary of the key industry trends and our latest talks on the market outlook. We have time for questions at the end of the call. Turning first to the highlights on Slide 4. We reported revenue of $809 million, 10% lower year-on-year with fewer [indiscernible] in the period. Adjusted EBITDA of $103 million and margin of 13% reflected lower activity levels that were only partially offset by continued cost discipline and good execution. This resulted in a loss per share of $0.03. Tendering activity and awards to market continue to increase in the quarter. Our strong competitive position was affirmed with awards and escalations totaling $829 million in the quarter. This resulted in a book-to-bill higher than one and an increase in order backlog to $5.3 billion that with competitive pricing on your award. Offshore campaigns this quarter were reduced by the seasonality in the northern hemisphere. Active vessel utilization was 58% and total utilization 52%. During the quarter, we released three owned vessel for recycling, two of these were already stocked. We also return one chartered vessel at the end of this contract. We had a net cash of $730 million at the end of March. We have been using our strong financial and liquidity position to support targeted investment to grow and strengthen our business. In the quarter, we completed a strategic investment in Xodus Group, an independent early engineering contractor. We also announced the acquisition of Siem Offshore Contractors and two associated vessels, completing this transaction in April just after the quarter ended. We are making very good progress towards our planned joint-venture with Schlumberger. We remain on track for closure later this year and we will continue to provide updates to market on the joint-venture over the coming months. I’ll turn now to Slide 5, to look at some of our current project and operation in more detail. In the first quarter, pipeline activities commenced on the West Nile Delta, GFR Phase Two project with the arrival of Seven Borealis offshore Egypt in March. In Australia, the Sole project began on to our preparations for 64 kilometers of pipe that has to be installed in summer for [indiscernible] Energy. We integrated Mad Dog 2 project continued with engineering from our global product center working in hand with one Subsea 7 merger. The Oda project which we are exciting under our partnership agreement with sprit and energy progressed with fabrication at the Vigra spoolbase in Norway. Tyra project offshore Denmark completed offshore operation with Seven Borealis laying two pipelines supported by Seven Pacific. Our PLSVs remain active offshore Brazil with six vessels working under our direct contract. In April, after the quarter ended Kommandor 3000 completed this contract and we leave Brazil to the recycle. In Renewables and Heavy Lifting, we are continuing the industry fabrication on the Beatrice wind farm foundations and half of the jackets are now being installation offshore. In i-Tech Services, we continue to win and execute work, including drillship campaigns, inspection services, and pipeline repair. Moving to Slide 6, we ended the first quarter with an order backlog of $5.3 billion, slightly higher than reported at the end of 2017, as we begin to see the impact of the gradual improvement in the award activity with the good level of activity secured for 2018 and a growing base outlook for 2019. On Slide 7, the chart show the increasing awards we have announced in the first quarter of 2017 with eight announced awards in the last two quarters compared to only six in the preceding 15 months. Tendering activity has been gradually improving over the last year, and in the last six months, we have seen more awards to market. We have been winning our fair share, but the pricing remains competitive. In the first quarter, we were awarded a young [indiscernible] project offshore Norway and the Nova project by Wintershall and successfully completing the rate cost effective Maria project for them last year. The 3PDMs project offshore Saudi Arabia was awarded under the long-term agreement with Saudi Aramco. This conventional shallow water project, which we are executing in construction [indiscernible], was our first award under the LTA since acquiring SCS last year. We see future opportunities in the coming quarters. We also awarded an IRM contract in the Caspian Sea offshore, Azerbaijan. This is a region that we have not been presenting for sometime and this long-term contract will further expand the diversity of our portfolio project worldwide. Momentum has continued through the second quarter with the announcement of another two awards in April. The PUPP project offshore Nigeria is a shallow water conventional project and it’s the first new project to be awarded in this country for sometime. Local presence were the key differentiator for this project and it would be executed by NigerStar 7, our Nigerian joint venture. Alligin project offshore UK is a two well tie-back project for BP, which will use pipe-in-pipe flow line systems. Turning to Slide 9, we are confident in the long-term outlook of offshore energy. Our strategy is to develop our presence in key markets worldwide. We have already made good progress on this through counter cyclical acquisition and investment in organic growth. Before I hand over to Ricardo, I would like to have the opportunity to discuss our announcement on Monday of our interest in acquiring McDermott on its own. We see compelling industrial logic for the combination of our complementary businesses consistent with our growth strategy. We believe that together we could create long-term shareholder value through our strength and capability, highly visible synergies, and extended global reach. We have some – our interest yesterday and we want to confirm, but our proposal is still open and that even if McDermott is not in a position to engage directly at the moment, we are ready to hold discussion if circumstances should change. I will talk about the outlook later on, but first I’ll hand over to Ricardo to cover our financial results.

Thank you, Jean, and good afternoon, everyone. Let’s first look at the income statement highlights on Slide 9. First quarter revenue was $809 million, 10% lower compared to the prior year quarter with lower activity levels in all three business units. Adjusted EBITDA was $103 million, 60% lower year-on-year. As previously guided, we anticipate a significantly lower adjusted EBITDA percentage margin for the full-year compared to 2017. This is due to a reduction in offshore activity levels, fewer large projects in the final stages of completion, and lower margins on projects signed in the downturn, partially offset by continued cost discipline and risk reduction through good execution. Our first quarter EBITDA percentage margin of 13% reflected these trends and was also impacted by seasonally challenging weather that affected our activities in the North Sea. We expect the second quarter to be sequentially better than the first quarter. Net loss of $18 million included a tax credit of $12 million and resulted in a loss per share of $0.03. Slide 10 provides more detail behind the income statement. Administrative expense of $74 million increased from the prior year quarter mainly as a result of increased resources of signs of tendering and certain restructuring charges relating to acquisition made in 2017. As our guidance indicates, we expect administrative expenses to reduce in future quarters. A net loss from joint ventures in associates of $7 million resulted from the settlement of the historical payable to Subsea 7 by one of our joint venture companies and it is not expected to recur. Other gains and losses included $22 million charge related to foreign currency movements due to a 28% evaluation of the Angola against the U.S. dollar and dollar weakness against European currencies in the quarter. We reported a tax credit of $12 million in the quarter, which included certain discrete items. Excluding these, the underlying effective tax rate was 26% in line with our guidance for the full-year. Slide 11, shows the revenue in net operating income by business unit. In our SURF and Conventional business unit, first quarter revenue $584 million was down 3% on the same quarter in the prior year. Our fleet of PLSVs offshore Brazil achieved high levels of utilization and good progress was made on most projects. Tie-backs in the U.S. Gulf of Mexico and OCTP SURF in Ghana neared completion and Hasbah and 4 Decks projects, offshore Saudi Arabia will close to 50% complete. SURF net operating income of $13 million were significantly lower compared to the prior year quarter. The lower profitability reflected fewer project in the final stages of completion underlying margin pressure driven by lower pricing of new awards and lower offshore activity levels which were exacerbated by the seasonally challenging weather in the North Sea. i-Tech Services revenue was $52 million down 32% compared to the prior year period with lower levels of ROV support and Inspection, Repair and Maintenance activities, reflecting the market environment and clients reduced investments in preventive maintenance. Net operating loss was $4 million for the quarter. Renewables and Heavy Lifting generated revenue of $173 million compared to $220 million in the prior year period. Revenue was generated mostly from the Beatrice and Borkum II wind farm projects. The net operating loss of $4 million was partly due as expected to the slower progress on foundation installation offshore UK during the winter months. Slide 12 summarizes our cash position and the main cash flows reported in the quarter. Our financial and liquidity positions remained strong. At the end of March, we have $1 billion in cash and debt of $277 million. In addition, we have continued access to non-utilize revolving credit facility of $656 million. In the first quarter, we generated $6 million in cash from operations. Adjusted EBITDA of $103 million was partly offset by a $60 million decrease in net operating liabilities due to the timing of payments on certain large projects and by $23 million paying tax. We expect working capital moments for the full-year to be broadly neutral, although volatilities anticipated on a quarter-by-quarter basis. Our capital expenditure in the quarter was $78 million including $19 million in our new-build reel-lay vessel, which the first deal commenced in the quarter. We invested $24 million in acquisitions, mostly related to the investment and the majority stack of Xodus, which is enhanced our early engineering capability. Xodus will be operated as an independent company and being equity accounted for will not be consolidated in our financial statement. Slide 13, shows we have established priorities for available cash. Firstly, will continue to invest and strengthening and growing our business. Secondly, we will maintain an investment grade credit profile. And lastly, we will return any surplus cash to shareholders through special dividends and share buybacks. In addition to the investments made in the first quarter, we have reported some material post balance sheet items. In start of April, we have spent about $8 million on the repurchase of 675,000 share under the authority of our existing repurchase program. Our activity was driven by our liquidity position and outlook accompanied by a dip in our share price during the period of market volatility. On the April 10, we completed the acquisition of Siem Offshore Contractors or SOC and the two related vessels, for an initial cash consideration of approximately $170 million. SOC will be consolidated in the group financial statements as a wholly-owned subsidiary. On April 17, the shareholders approved a NOK 5.00 special dividend, which will be paid in May with the cash outflow of approximately $210 million. Including this dividend, Subsea 7 will return close to $1.5 billion to shareholders since the combination in 2011. Slide 14, sets out on our guidance, which has been updated to reflect the acquisition in April of SOC. We continue to expect revenue in 2018 to be broadly inline with the revenue reported last year and adjusted EBITDA percentage margin to be significantly lower. Administrative expenses is now expected to be between $260 million and $280 million, $10 million higher than previously guided, partly due to restructuring costs and increase tendering activity. Net finance cost guidance is unchanged and is expected to be no more than $5 million. Depreciation and amortization is forecast to be between $420 million and $440 million, increased by $10 million and increased the charges related to the recently acquired vessels. Our full-year tax guidance is unchanged with the effective tax rate forecast between 25% and 27%, in line with the underlying rate for the first quarter. Capital expenditure for the year is still expected to be between $250 million and $300 million and includes approximately $115 million to be spent on the new reel-lay vessel. I will now pass it back to John.

Thank you, Ricardo. Let’s now turn to Slide 15. Subsea 7 is especially offshore contractor to the energy industry. Our expertise and experience includes project managing, engineering, planning, and executing project in all the major offshore energy location. We have a wide range offshore capabilities including pipe-lay and construction in addition to diving, heavy lifting and ROV services. We have strategic partner through our clients on renewable energy development as well as oil and gas field. Our track recorder safe and reliable execution supports long-term collaborative relationships. We have enabling and cost effective technology, which unlocks projects that might otherwise in practical or to expensive to execute. Despite the [indiscernible] assets and help us to win work. Projects are certain attributes that can impact the duration complexity, scale and value of our overalls such as water desk, region, market conditions, scope and technology to then the few. For instance of projects in the remote location with challenging seabed photography and conditions may be more costly even is the land of – line or number of Christmas trees are relatively low. Likewise an – project with high proportion of procurement and fabrication will be significantly larger in size then transport and installation project, although the vessel offshore campaigns at be similar. We have over 150 jobs and projects in our backlog today, some small and some large, so diversity of this work and the scale of our worldwide operations enable us to schedule our onshore and offshore operation efficiency, maximizing our prodigality and enabling us to tender more effectively. When we did on new work, each project risk and value and contribution is the set independently, but the sequential impact on our portfolio is also important and influence our decision on the level of acceptable margin. The rate pricing of newer walls remain challenging that we look ahead to recovery in offshore oil and gas activity, we expect this to improve. Turning to Slide 16, these two charts illustrate the market trend for oil and gas activity. Capital expenditure approvals by our clients reached through in 2016. In 2017, we took a first signs of recovery as low operating cost and higher oil price encouraged project sanction. Looking ahead, we continue to expect earlier recovery in market activity with around 71% of non-sanctioned offshore resources breakeven at $50 to $60 oil price. These forecasts are encouraging and are backed up the conversation we are having with our clients, who are keen to capture our benefits from lower price supply chain and supplier availability at this point in the cycle. Moving on to Slide 17, I would conclude with our view of the outlook for market awards by business units. Starting with the SURF and Conventional outlook, we continue to see positive momentum on tenders for last – development, including the Mamba and Golfinho project offshore Mozambique, the Gorgon Phase II projects offshore Australia, and the 98-2 project offshore India. The 98-2 project has invited tenders of an integrated SURF and SPS basis and we are building these together with one Subsea. In the North Sea, we have seen a good level of activity mostly on tie-back projects, some of which can be enabled by our pipeline bundled solution and also hit it by technology. For lost marketing share are likely to include the – projects both offshore UK. Offshore Brazil, and that’s for the first Libra projects know as – have just been issued to market. This project required – captions revise a technology, due to the pre-salt water desk and – the projection. The outlook for West Africa is slowly starting to improve. The Zinia project offshore Angola is expected to be awarded to market soon and our recent award of conventional project offshore Nigeria is encouraging. Conventional project tendering activity is also going well in the Middle East, in Saudi Arabia where we benefit from an LTA and also in Qatar. Renewables and heavy lifting tendering is ongoing from transport and installation activity for both renewables and oil and gas as well as EPIC wind farm project, offshore Europe, Taiwan and the U.S. For i-Tech Services, tendering is focused on IRM activity in the North Sea and the Gulf of Mexico, as well as ROV support for drillings in the North Sea and Asia. To summarize, as we look ahead, we remain confident in gradual market recovery. Pricing our new award is competitive that I am confident that our cost discipline enabling technology and strong relationship with clients and partner will help us to achieve at least our fair share of markets award. Ricardo, John and I will open the call and take your questions.

[Operator Instructions] And the first question is from the line of Amy Wong of UBS. Please go ahead. Your line is open.

Good afternoon. I had a couple of questions please. The first one relates to your bidding strategies, good to see orders turning to corner here. Are you starting to build some cost inflation into your tendering when you are looking at 2019 and 2020? And then my second question relates to your dividend, Subsea 7's always had a shareholder friendly capital return policy, but as you are looking into a bid acquisition, can you give us some idea whether you would consider formalizing a dividend policy to give your shareholders a bit more guidance there? Thank you.

Thank you, Amy. Regarding the bidding strategy, I think what we have shown in the – through the years is that Subsea 7 takes a very prudent approach when actually tendering the jobs, and we haven’t trend that. So obviously when the market shows a gradual recovery, making some assumption in terms of cost inflation is part of this present approach and when we did jobs for the long-term that’s what we take into account. Ricardo, you want to take and talk about the results?

Yes, good afternoon Amy. As you know Subsea 7 traditionally has always indicated that all relevant distribution are special dividend distributions. We have not as the company committed ourselves to regular policy of regular dividend. And do this because we have essentially three priorities. The first one is to – convenient to reinvest in the business to growth. We want to maintain a investment grade credit profile, which we believe – provides us with a profile that is attracted to our clients and gives us certain competitive advantage as a result. And lastly, we will return cash to shareholders. So each year, we evaluate our cash returns in the light of first two priorities, and we do that bearing in mind that we do operate in a volatile industry.

Okay. Thank you very much. I’ll hand it over.

And next question is from the line of Robert Pulleyn, Morgan Stanley. Please go ahead. Your line is now open.

Thank you, gentlemen. Lots of questions, but I’ll limited to three. So the first one if I can regarding the margin is, we’re all trying to interpret exactly what significantly lower means 2018. So the margins in the first quarter seasonally week at $12.7 million. Is that indicative for the year or should we see a seasonal pickup in which case consensus 18%, does it okay, of course that would imply the rest – the remaining nine months of the year would be about 19.5. And the second question is that your sales and others have highlighted for the downturn. The McDermott has been quite aggressive and it’s bidding. So how comes of allow you with that backlog as you approach them for obviously this combination and also in terms of working capital, the working capital is increased from 2% of sales were run about 12% you comfortable with the balance sheet risk there. I mean and finally if I can just end on the Slide just I am talked to Slide 16, it shows some pretty fantastic expectations for market activity, yes, the sanctions year-to-date by last April, pretty thin. Could you may be talk to why the volume of sanctions in that opportunity set is not larger? Thank you very much.

Yes, lot of questions there Robert. Let me try to answer. I mean regarding our guidance, we haven’t changed our guidance to what recommended to before. We are not happy with consensus we would say it. And we think that Q2 – Q3 will be better than Q1 and we see some seasonal effect in Q4, so no surprises there. Regarding our position for McDermott, as you can imagine I cannot commence in detail at this stage that’s where we are. I would just say that we know the business pretty well. We know what we believe that we know what not the amortize has been doing and in about project that we did it ourselves. I can tell you that the combination of the two company allows to execute the project by mitigating the rates can size of what we are doing. We bring some efficiency there. I cannot comment on financial results of McDermott at this stage. Regarding the timing of project awards to the market, we are definitely seeing an improvement there. In the future, we have more visibility about the timing, more tenders and we expect more projects to be awarded to market in the quarters to come.

Okay, thank you very much for the rest. And just on the Slide to follow-up, why haven’t the awards thus far have been higher where about the third of the way through the year, another opportunity says not really be [indiscernible] is this something oil companies, your customers are waiting for?

I think the timing of the award is someone say inline with our expectation.

Okay. Well, that’s all I have. Thank you.

We don’t surprise…

Yes, thanks so much.

The next question is from the line of Kevin Roger from Kepler. Please go ahead. Your line is now open.

Hey, good afternoon, everyone. Three questions on my side. The first one is related to the i-Tech Services business because this is largely based on day rate basis. We are seen over the past two quarters and net operating income margins inclusive to minus 7%. How should we think about the next quarter of the space on the day rate and you should have quite good visibility on that? The second question is rated to the provision, we had strong increase this quarter by around $100 million, if you can explain it please? And last one on the Beatrice project if you have some of bit for us 82 the discussion on the extra cost that you will recognize in Q4 with the clients?

Yes, I will take the question on i-Tech, Ricardo will take question on provision and John will answer on Beatrice. Regarding the i-Tech Services, I mean we are seeing additional volume of activity, but there is pressure on margins which have been therefore for a while, but more activity, but still pressure on margins. Just as a reminder, we have announced the intention to create the joint venture with one Subsea Schlumberger, which is going to bring i-Tech services and IRM on both sides the one Subsea on other side to the next level driven by technology and stuff. So i-Tech business is challenging today, is one of the business line of Subsea 7 which for me is quite permitting on the medium to long-term through the joint venture with Schlumberger, so I see future there.

With regard to provision Kevin, will effect from the January 1 this year, we implemented IRFS 15. And as result of that, we have reclassified under the contract provisions of approximately $90 million from current contract liabilities to other provisions in the balance sheet. All of this we’ve discussed at reasonable length in 2017 annual report and we also refer to it in note three of this quarters financial statements. So you need to know more about that, I suggest you have a look there.

And Kevin just on Beatrice, so we are halfway through the offshore jacket installation, so just over 44 of them are been installed. As you might have seen in the fabricated it had some financial difficulties in quarter for Bayfab in UK now as new ownership that has been secured. So we feel pretty comfortable that their work is going well. The other two fabricators are doing okay for us. Coming to your question regarding the discussion about the duration about the resequencing of the work that to is underway, but I do expect that to take quite a few months for us to reach conclusion with the clients latest on that one.

Okay, very clear. Thanks a lot.

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

Thank you and congratulations on – successful strategic developments last year. And on that note, I’m not sure you can answer this, but you expect to make any moves before the AGM on McDermott next week or is that the next events to that fair…

Well, I think as you can imagine, we are not communicating on our strategy there. I think we expect the rational of the proposal. I think that’s all I can say. I would say that Subsea 7 proprieties to invest on new business, but at the same time we are very cautious on the investment that we make, we make investment during that time.

Great. And also can I just have some more clarity on assets you will put into the joint venture at Schlumberger?

In fact the assets, I mean we are putting the ROV on the i-Tech services, but the Subsea 7 vessels stay with the parent company, stay with Subsea 7 and really charted to the Life of Field vessels, to the Life of Field business which one of it. So it’s an asset light joint venture and we keep control of our fleet which give us more flexibility and make me feel more comfortable.

Great. Thank you and good luck.

Thank you.

The next question is from the line of Anne Gjøen from Handelsbanken. Please go ahead. Your line is now open. Anne Gjøen: Thank you. I get a couple of questions. Firstly, when it comes to seasonal quarterly difference for the rest of 2018. Could you indicate for example how much you expect vessel utilization to increase within second and third quarter compared to what we have seen so far? And secondly, when it comes to the corporate segment, is it possible to give some indication over fair run rate over time in corporate EBIT? Thank you.

John, you want to take the first question?

Yes. So what we are seeing in the market today is a return to the seasonality we saw five or six years ago where the North Sea was relatively quiet in quarter one and quarter four, it’s the reason we straight forward the weather conditions are particular extreme in those periods, and therefore then clients are not looking for their work to be performed during the high point in the market we work right the way through those periods, and clients were prepared to pay the additional cost to get their first production on along as faster. Our aim is that we will see in quarter two and quarter three, our active fleet will be back to also a reasonable level of utilization in line with previous percentages for actively fleet utilization. But then we expect to see again the North Sea market going relatively quiet in quarter four. So that's what we really see in terms of seasonality. Ricardo?

Yes. Good afternoon. I forgot your question on the corporate segment. The way you should think about it is that in general the impact on the consolidated groups results would be virtually nil. However, in corporate we do tend to – we do have the results of the discontinued joint ventures – to the extent that there is movement there it will be reflected in corporate. In an addition, if we have unusual restructuring charges, we will occasionally – we would normally take those charges at corporate level along with any impairments of good will. I think that helps you in future modeling. Anne Gjøen: Thank you.

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

Hi, there. Two questions from me. John you talked significantly about pricing pressure in your prepared remarks. Obviously, the second quarter, third quarter margins will be up, but do you think that – the old awards roll off in 2018, we should really think about continued margin decreases into 2019, and if that’s the case what can you do to offset that from a kind of corporate angel in terms of cost savings? My second question relates to the phasing of work. It looks like about 44% of what you want in the first quarter is obviously for execution in 2018. Is that kind of history backlog coverage levels that we kind of used to forecast revenue going forward? Is that changing, so they actually less workout front because actually more the work is happening in the next couple of months of the projects that you are in?

Yes. I need to comment on the pricing pressure and I’ll let John comment on your second question. I think what we are seeing today is what we were expecting to see last year in gradual increase of activity, increase of the number of tenders. You need to reach a certain level before you actually see a change on the margin for the short to medium term jobs. So I think regarding the pricing pressure, we still see it today in particular probably short to medium term jobs. When we look at the longer term job, we actually take into account our view on an improved market in the future, and that's how we price a job. Our jobs today where we grow on the regular margins and in some cash objective to optimize the fleet utilization in particular during the winter period in the North Sea.

I guess answering your question about the type of projects we get. If you look at where we are today are against consensus as a sort of testing place. We're about 90% covered ratings, so we feel reasonably comfortable with our rating and we’re about a third covered for 2019. I guess the mixture of work EPCI contracts generally have a much longer running periods because we are responsible for engineering procurement as well as the execution of the work. So those projects will be more towards 2020 execution. Some of the transport and installed contracts where the materials and engineering are already being done will be on a shorter themes and therefore will be more likely to be done in 2019. So it's the type of projects that mean with in – terms of execution period.

I did it on someone, but it was cost savings. I think we – today to point where we have reduced the size of organization decided to the foreseeing operation. We kept the expertise and that’s absolutely key for me. The cost saving will be through given further optimization in the way we work to lower the cost of the project and that we have an impact on the bottom line. Efficiency and different working in particularly in partnership with some of our clients will trigger cost savings in the way we get the project and therefore how the impact on the bottom line, that’s where I said.

Okay. And just quick final question. In terms of McDermott [indiscernible]. Have you been surprised about how attractive decline McDermott offering is? So it’s kind of one of the strategy periods to take out one of your key competitors from an integrated perspective and really leave it to yourselves and [indiscernible] market?

In the way we look at this combination is how to improve our business and be more efficient, I mean there is well and doing that to taking competitors after the market. We are building something which is more efficient and therefore bring additional advantage. I think we need to move to next question.

And next question is from the line of Mark Wilson from Jefferies. Please go ahead Mark. Your line is now open.

Hi, good morning, gentlemen. I want some interest this morning on the market outlook slide you show on the Slide 16. So I’d like to ask your section on that profile given the oil sitting at $75 a barrels, would you think those projection miss in terms of the dollar amount of sanctioned project that can come. I mean compared to 2011, 2013, the idea of – the amount of sanctioned being higher than that. Do you feel projections missed the cost inflation that is coming true and given the high number it shows on our projection with a higher than $60 projector. Thank you.

Yes, I think what the reason and when we show the slides was actually to show the breakeven point for this project to be sanction and we are completely unable to predict the preserve oil, but what we are seeing here is that $50/$50 we see a significant number of project which can be sanction and I think the sanction today reflect the oil price journey and confident that the operator have on the evolution of the oil price and I think the decision of the operator today are based on the prudent approach on oil price that can be side compared with the scenario obviously.

Okay, thanks for that comment. And then just small point just to check the Siem Offshore acquisition spend that is outside of the CapEx guidance for this year?

That is correct, Mark.

Okay, thank you.

And next question is from the line of [indiscernible]. Please go ahead. Your line is now open.

Hi, there. Thanks very much to couple less for me. First of all is there any impact from the proposed and McDermott acquisition on the one Subsea joint venture and maybe more extremely have the expression of opinion to you on this, whether you can say which way is? And secondly maybe following on from Rob’s question, on the outlook for contract work your bidding on the moment is this more 2019, 2020 longer-term EPCI opportunities or – are there still near-term opportunities coming across the work.

I think on the second questions is both

Okay.

And we re seeing both short-term and longer-terms projects opportunities in line with our expectation. Regarding the impact of marketable combination if it was to happen and the Conventional was a shallow water is not part of the joint venture no Subsea operation there and everything as it is comfortable with we had agreed in the past with [indiscernible]. So if any impact positive that’s no….

Okay, have they reached this at all?

We’re not discussion that with anybody there?

Okay, thank you very much.

And next question is from the line of Nick Green from Bernstein. Please go ahead. Your line is now open.

Good afternoon. Thanks for taking my question. John you said a few minutes ago, we make investments when it make sense. And clearly the McDermott proposal would appear to be a trade off. The trade off between fairly materially margin dilutive acquisition in return for a larger order – geographical diversity. Can you please set out why that’s a good trade off for your investors? The second question relates to Brazil. It would appear to be that you’ve invited to bid in the narrow to SURF tender from Petrobras, now you had said after [indiscernible] that you weren’t keen on doing lump-sum projects in Brazil ever gain actually on the terms. Can you just clarify for us, are you willing to be bidding in Brazil on a lump-sum contract basis or would do you retain your previous position which is you wouldn’t enter that market on that basis again? Thank you.

I’m going to start with Brazil. I mean we have seen an improvement from the terms and conditions with Petrobras, we are comfortable with that. If we have to evaluate on the given project that the commercial – the operational rates and the commercial rates was not acceptable we will not bid, but today we see things going in the right direction with open discussion with Petrobas. We will not increase our risk profile in Brazil in the future, but we believe that with our risk profile we can renew work there. Regarding the McDermott, I don’t want this call to become a McDermott discussion. What we are saying is that when we look at the potential acquisition, what we start to look at is, is it in line with our long-term strategy. And we have different way to achieve the strategy. You are seeing that we have been successfully starting in Saudi Arabia and in the Middle East that’s one route. The combination with McDermott we believe could be an advantage for bolster shareholders group and that’s why we took something that we have been proposing and considering, but I can't elaborate more at this stage on the numbers. I think it's not really the time at this stage of discussions. I think we need to move to next question.

And next question is from the line of Haakon Amundsen, ABG. Please go ahead. Your line is now open.

Two questions for me please. First of all, I’m just wondering if there is anything in your backlog in terms of terms that has changed which give you more weather risk or more exposure to the seasonality, for example what we saw in Q1. And secondly, if it's possible on the McDermott potential combination, is the entire McDermott business portfolio what you would consider kind of core growth for Subsea 7? Or are there areas which you would not characterize as a core for Subsea 7? Thanks.

I think to think about McDermott, and again I don't want to elaborate too much on this possible combination. What we are talking about – what we would be talking about if it was to materialize would be only the McDermott business not the CB&I acquisition if it was to happen that will not allow us to go ahead. Regarding the backlog, I think one of – one of thing I'm very confident with that during the downturn we've kept our prudent approach and maintaining the right risk on every job. We haven't changed our philosophy and we evaluate this risk of solid weather on a project by project basis in a prudent way. I don't see that our risk profile has increased. And I think we can take the last question.

And the final question comes from the line of Michael Alsford from Citi. Please go ahead. Your line is open.

Thank you. I've just got two questions to finish up please. Just firstly following up I guess on Ricardo’s comments on the balance sheet and maintaining an investment grade to credit rating. I guess before McDermott view that you would always stay with the very healthy net cash position on the balance sheet and now unclear. So I’m just wondering absence McDermott, where would you – you would be comfortable running that the kind of the balance sheet type of this medium term should we say is just still be a decent net cash position or actually could we see even moving towards a more net debt position. I guess I’m just thinking in the context of potential returns to shareholders. And then just secondly on utilization, I was – apologies I’ve missed it. But I just wonder whether you can give us a bit of indication, fleet utilization with 58% in 1Q and could you give us some sense to where we should see that coming into second quarter and third quarter? I’m just trying to understand what was seasonal and what was more environment? Thank you.

Michael, I’ll on the first question for you. With regards – we are as you know indicated beyond the strong net cash position at the moment, and I guess the way we look at it, we have a certain amount of cash that we need for operating our business – working capital if you well. And proportion as well which we allocate for strategic opportunity, as I indicated earlier main priorities, reinvesting the business for growth. I do want to clarify, we don’t have a credit rating, such we have an investment grade profile and that investment grade profile would allow us should be want to raise additional debt whereas not in anyway on the matter. And nothing claim by that that I am not in claim by that we intend to raise debt in the short-term for the perks is returning cash to shareholders. As I indicated earlier, it is the – it’s one of our three top priorities, but it is third and we didn’t have any plans to change that approach. And regarding your question, regarding utilization, I think I answered the question to you earlier – I’ll repeat again. Quarter one and quarter four, we expect to see the effects of North Sea seasonality coming into our fleet utilization. We do expect quarter two and quarter three to beginning back to more of the average utilization for our active fleet and we’re seeing that take place today.

Okay.

Thank you.

Thank you. End of Q&A

So with that, thanks everybody to for the participation to this call and looking forward to talk to you again at the next earning call. Again at the end of Q1, we are on track of where we want to go and I’m – that’s all I have to say at this stage. I think it’s working well. Thank you.

And this now concludes the conference call. Thank you all for attending. You may now disconnect your lines.