Delaware (State or other jurisdiction of incorporation) | 1-10945 (Commission File Number) | 95-2628227 (IRS Employer Identification No.) |
11911 FM 529 Houston, TX (Address of principal executive offices) | 77041 (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | our belief we have strong market positions; |
• | our belief we have a solid balance sheet and cash flow; |
• | our focus on return of capital to our shareholders; |
• | our belief that, longer term, deepwater is still critical to reserve replenishment; |
• | our belief that we are the leading provider of ROVs to contracted floating rigs; |
• | our belief that crude oil prices, floating contracted rig count, subsea tree installations, subsea capital and operating expense spending and subsea tree orders are demand drivers in our ROV business, with the leading driver for deepwater subsea activities being the number of operating drilling rigs; |
• | our belief we will provide ROVs and subsea tooling to Heerema Marine Contractors aboard its deepwater construction vessels and semi-submersible crane vessels on a global basis through 2020; |
• | our belief that our Subsea Products backlog for manufactured products (as opposed to services and rentals) is highly dependent on the timing of umbilical orders; |
• | our belief that the number of subsea tree installations and the growing installed base of subsea completions drive our Subsea Products and our Subsea Projects market opportunities from a development, and from an Inspection, Maintenance and Repair (or "IMR") perspective; |
• | our expectation that we will take delivery of our newbuild Jones-Act compliant multi-service support vessel, the Ocean Evolution, late in the second quarter of 2017, and that the vessel will most likely compete in the spot market in the U.S. Gulf of Mexico; |
• | our belief that we have augmented our Subsea Projects business with the acquisitions of: |
◦ | Meridian Ocean Services, which will allow us to further penetrate the underwater inspection in lieu of drydocking market; and |
◦ | C&C Technologies, now rebranded Oceaneering Survey Services, which includes state-of-the-art autonomous underwater vehicles capable of deep ocean survey mapping and pipeline inspection; |
• | our belief that having in-house survey capabilities is complementary to our existing service offerings, and should be very positive in the longer-term for Oceaneering and our customers; |
• | our belief that we have financial flexibility to not only operate through the cycle but also invest in Oceaneering's future; |
• | our organic Capex estimate range for this year of $110 million to $125 million, including $65 million of maintenance capital, and some uncompleted project Capex carried over from 2015; |
• | our belief that our 2017 organic Capex could be lower than our 2016 estimate; |
• | our priorities for uses of cash of: |
◦ | growth via organic Capex and bolt-on acquisitions; and |
◦ | returning cash to our shareholders through dividends, and, possibly, repurchasing shares; |
• | our belief that it is a matter of when, not if, deepwater activity levels begin to recover; |
• | our belief that in the near to medium term, there will be an uptick in demand for products and services to extend the producing lives of existing offshore fields and for decommissioning work; |
• | our forecast that our major oilfield segments will have lower operating income in the fourth quarter of 2016 than in the third quarter, most notably: |
◦ | ROVs on fewer working days and lower average revenue per day; |
◦ | Subsea Products on low single digit margins, primarily from pricing degradation, lower throughput in manufactured products, as well as softer demand and reduced pricing for short-cycle work in our service and rental business; |
◦ | Subsea Projects with a seasonal decrease in Gulf of Mexico diving activities, and drydocking of the Ocean Patriot; and |
◦ | Asset Integrity on a seasonal decrease in global demand and competitive pricing for inspection services; |
• | our outlook for 2017 of marginal profitability at the operating income level; |
• | our belief that Oceaneering is well-positioned to weather this difficult business climate, and that we are a strong company focused on ways to further differentiate ourselves with integrated solutions that offer greater customer value; and |
• | our belief that our liquidity and cash generating capability will enable us to maintain market position and be ready for the inevitable market recovery. |
• | worldwide demand for oil and gas; |
• | general economic and business conditions and industry trends; |
• | delays in deliveries of deepwater drilling rigs; |
• | delays in or cancellations of deepwater development activities; |
• | the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain production levels; |
• | the level of production by non-OPEC countries; |
• | the ability of oil and gas companies to generate funds for capital expenditures; |
• | contract modifications or cancellations; |
• | domestic and foreign tax policy; |
• | laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions; |
• | technological changes; |
• | the political environment of oil-producing regions; |
• | the price and availability of alternative fuels; and |
• | overall economic conditions. |
OCEANEERING INTERNATIONAL, INC. | |||
Date: | November 29, 2016 | By: | /S/ ROBERT P. MINGOIA |
Robert P. Mingoia | |||
Vice President and Treasurer |
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