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» Global Industries Ltd. Q2 2010 Earnings Call Transcript
Now, I will turn it over to our Chief Executive Officer, Mr. John Reed. John.John Reed Thanks Andy. Good morning and welcome to our call. Before I turn it back over to Andy for financial results and AJ to go through operating results, I want to update you regarding market developments. As has been our practice over last several quarters, we have described our tender activity using two categories, namely bids in-house and outstanding, and bids expected in the next 90 days. Bids in-house and outstanding at the end of Q2 are $3.4 billion versus $3 billion at the end of Q1. Bids expected in the next 90 days are $1.8 billion versus $3.3 billion at the end of Q1. I would caution that while this decrease looks large we maintain consistent tracking of our statistics and continue to monitor our 90-day look ahead window. However, if we look ahead an additional 30 days or 120 days in total, we have in addition identified approximately $2 billion of bids expected. I only point this out as it reinforces the inherent lumpiness of our business and that quarterly statistics may not give the entire picture. Further, we have recently reviewed all our tenders that are currently in play and believe we are well-positioned in many and are hopeful that our backlog at the end of the year will be significantly higher than it was entering the year. Bid margins will likely remain at historic lows, however, with the exception of line 58 and 59 we have experienced margin improvements of approximately 3 percentage points over as-bid margins and all projects in excess of $5 million in value since our 2010 focus on project execution excellence. Turning to our specific market areas, the Gulf of Mexico continues to be hampered by the permitting process. Our installation schedules for awarded work have been pushed to the right by lack of permits in several cases involving both installation projects as well as removal projects. Although summer work season activity has picked up somewhat we expect that the overall slow pace will continue for the foreseeable future.
We are now entering the offshore execution phase of our first deepwater/SURF project Who Dat for LLOG. The project is located in 3,000 foot water depth and includes flexibles, rigids, export line, subsea manifolds and jumpers, and requires four of our floating assets for the offshore installation. Our enhanced engineering and project management capabilities will be fully utilized to give us the best opportunity for a safe and timely completion.Now, looking to Mexico, PEMEX activity is set to accelerate with bid activity ramping up now and expected to continue through 2012. we anticipate a bid volume in excess of $1 billion for work expected to be completed in 2012. one of these projects is line 56 57 which we were awarded on July 22. offshore execution utilizing the G1200 will begin in November this year and the scope of work consists of installation of two pipelines plus significant diving activities. Turning to Brazil, we entered into a memorandum of understanding [Outabreck] Oil & Gas to jointly participate in the rigid pipe lay and other subsea projects of interest to both companies in Brazil, the rest of Latin America and Angola. Global brings state of the art assets and expertise in pipe laying and subsea construction to pair with Outabreck's project management, supply chain management, fabrication and local content in Brazil. Outabreck is $32 billion company and is an established name in the market with historical relationships with Petrobras and Sonogal, and a focus on the growing subsea activities in Brazil and beyond. We believe the strengths that our combined companies can offer significantly enhances our ability to serve our clients and win projects in those regions. As mentioned last quarter, we have now opened an office in Perth, Australia, to establish ourselves in that growing market. We are actively bidding for work in 2012, '13 and '14.
In Asia-Pacific, we continue to work on our Petronas 2012 scope of work now with our new 40% partner Puncak Oil & Gas. The scope of this year's campaign has increased with the award of work KPOC and New Field with a combined value of $40 million.Read the rest of this transcript for free on seekingalpha.com