Helix Energy Solns Gr (NYSE:HLX) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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Summary
Helix Energy Solns Gr reported first quarter 2026 revenue of $288 million, a gross profit of $9 million, and a net loss of $13 million. Adjusted EBITDA was $32 million, with operating cash flow of $62 million and free cash flow of $59 million.
The company announced a strategic merger with Hornbeck Offshore, forming a premier integrated offshore services company. This all-stock transaction is expected to close in the second half of 2026, with Helix shareholders owning 45% and Hornbeck shareholders 55% of the combined entity.
Management maintains 2026 revenue guidance between $1.2 billion to $1.4 billion and expects continued strong cash flow generation. The merger is anticipated to generate $75 million or more in annual synergies within three years.
Operational highlights include strong utilization of the Q4000 vessel and successful workover of the Thunderhawk Field. The company also noted positive market developments due to oil supply disruptions and increased regulatory enforcement in the North Sea.
The combined company will have a diversified fleet and customer base, with significant exposure to the defense sector and renewable markets, aiming for substantial growth and shareholder value creation.
Full Transcript
OPERATOR
Good morning and welcome to today's conference call to discuss the combination of Helix Energy Solutions Group and Hornbeck Offshore as well as Helix's first quarter 2026 results. Please note this event is being recorded at this time. All participants are in listen only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. After today's presentation there will be a question and answer session. To ask a question, you may press Star and one on a touchtone phone. To withdraw your question, please press Star and two. You can find today's investor presentation as well as the press release regarding the transaction at each company's investor relations website. The press Release regarding Helix's first quarter 2026 results can be found at Helix investor Relations website as well as the earning presentation. I would now like to turn the call over to Eric Steffel, Executive Vice President and Chief Financial Officer at Helix. Please go ahead.
Eric Steffel (Executive Vice President and Chief Financial Officer)
Thank you and good morning. As highlighted, any forward looking statements we make during today's conference call are given in the context of today only and are subject to important risks. As discussed in the presentation. Actual results and events could differ materially from those discussed here. Please also refer to the additional information discussed on this slide as well as in our SEC filings. I'll now turn to a brief overview of Helix's first quarter 2026 results. Helix's team delivered another well executed quarter safety and efficiently providing our customers with world class service. Our first quarter results reflect expected seasonal levels during the winter in the North Sea and Gulf of America shelf impacting our well intervention robotics and shallow water abandonment segments and they reflect the cost of the successful workover of Thunderhawk Field. Revenues for the first quarter were 288 million with a gross profit of 9 million resulting in a net loss of 13 million. Adjusted EBITDA for the quarter was 32 million with operating cash flow of 62 million resulting in free cash flow of 59 million. Highlights for the quarter include strong utilization on the Q4000, performing well, intervention work at improved rates, the successful workover and recommencement of production of our Thunderhawk Field, a return to a two vessel market in the North Sea with the Seawell reactivation and return to operations, good utilization expected in 2026 and strong cash flow generation of 59 million. As I shared earlier with that, our cash position and liquidity remained strong with 501 million of cash and $612 million of liquidity at the end of the quarter. Overall, our first quarter results were as expected, perhaps even marginally better than expected. The current macro environment remains uncertain, but we are seeing some positive developments in the markets we serve. Oil supply disruptions, increased commodity prices and increased regulatory enforcement in the North Sea are providing positive catalysts that may drive increased activity by our customers for the balance of 25 and into 26 and into 27. We also expect momentum to continue to build in the offshore market with the results we delivered in Q1 and supported by our backlog in several key contracts. We are maintaining our guidance for 2026 revenue of 1.2 billion to 1.4 billion in line with 2025 EBITDA of 230 to 290 million impacted by the Thunderhawk workover in Q1 and the upcoming CQX1 docking capex of 70 million to 80 million, primarily a mix of Tory maintenance on our vessels and intervention systems and fleet renewal by Robotics ROV's free cash flow of 100 to 160 million. We expect continued meaningful free cash flow generation with variability driven by ultimate working capital movements. Key forecast drivers for our annual guidance include second half utilization on the Q4000 and Q7000 late season north Sea intervention market, strong markets for our robotics fleets and the stable shallow water abandonment segment. Our quarterly financial performance in 2026 is expected to follow the same cadence as previous year's results, with the second and third quarters being our most active quarters and the first and fourth quarters impacted by winter weather. Our balance sheet is strong $310 million of funded debt, $501 million of cash and the strong cash flow generation expected in 2026. If you have any questions on our quarterly results, our outlook for 2026, please feel free to reach out to our team directly. With that, we will transition to the transaction announcement portion of the call. For that I am joined by Bill Transier, Helix's Chairman of the Board Scotty Sparks, Helix's Executive Vice President and Chief Operating Officer Todd Hornbeck, Hornbeck's Chairman, President and Chief Executive Officer. Also joining us for the question and answer portion of the call will be Jim Hart, Hornbeck's Executive Vice President and Chief Financial Officer and Potter Adam Hornbeck, Senior Vice President of Finance. Now, before I kick it over to Bill, I do want to note we have slides supporting the following information on each company's investor relations website, so please feel free to refer to those as we go through the call with that Bill over to you.
Bill Transier (Chairman of the Board)
Thanks Eric. By combining Helix and Hornbeck, we're bringing together two two market leaders and establishing a premier integrated offshore services company poised to create value for current shareholders of both Hornbeck and Helix. There are many compelling benefits to this combination. First, the strategic combination will create a recognized leader in offshore operations with a diversified and expanded high specification fleet of specialty vessels supported by subsea robotics, well intervention and technical service capabilities including transient subsea pipelines and cables. Also, the combined company will provide innovative and integrated subsea and marine transportation solutions to customers across deepwater energy, defense and renewables, thereby expanding service offerings. Moving forward. Further, combining Helix's well intervention and robotic vessels with Hornbeck specialty and ultra high specification offshore support vessels will allow us to offer a complementary end to end service offering that will materially expand the combined company's ability to meet a broader share of customers deepwater needs spanning the offshore cycle. All of this in combination with the significant annual revenue and cost synergies the transaction is expected to generate of 75 million or more within three years following the close make for a strong combination rationale. We'll dig deeper into the strategic and financial benefits shortly and I do want to cover the terms of the transaction in more detail too. First, I would be remiss if I didn't take the opportunity to acknowledge Owen Kraft, Helix's President and Chief Executive Office, for the significant role he has held in building Helix into what it is today. Owen announced last year his plan to retire from Helix. I'm sure you saw his quote in the press release reiterating his support for the transaction. He has agreed to support Todd through the close of the deal and will remain available thereafter as needed. He, along with the entire executive management team are committed to getting this combination across the line. With that, I'll turn to the highlights of the transactions. This is structured as an all stock transaction which will allow shareholders from both sides to participate in the significant upside potential of the combined company. The terms of the agreement, which are outlined in the press release we issued this morning, have been approved by the boards of Directors of both companies at closing, which we expect to occur in the second half of 2026. Subject to approval by Helix shareholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions, Helix shareholders will own approximately 45% of the combined company and Hornbeck shareholders will have approximately 55% ownership. I will note the parties representing a significant majority of the ownership of Hornbeck, including Ares Management Funds, have delivered written consents approving the transaction. Through this combination we will bring together two best in class teams with aligned cultures. Following the close, Todd Hornbeck will serve as President and Chief Executive Officer of the combined company the combined company's Board of Directors will combine seven directors, three of whom will be from Helix and four from Hornbeck, including Todd. I will serve as Chairman of the Combined companies Board. Post closing, the combined company will operate under the Hornbeck Offshore Services name and trade on the New York Stock Exchange and the ticker symbol HOS with the Helix brand to be retained for well intervention services. The combined company's headquarters will be in Houston, Texas and Covington, Louisiana. I also want to touch on why we're stronger and more competitive together as a combined company. In 2025, Helix had revenue and EBITDA of 1.3 billion and $272 million respectively, with more than $500 million in cash at the end of the first quarter. When you include Hornbeck's 2025 annual results, the combined company will increase revenue and EBITDA by 56% and 106% respectively. As well, we will have incremental growth drivers of two new build MPSVs and 23 vessels that will be available for reactivation. In summary, we believe this unique combination is a compelling opportunity to enhance value for Helix's shareholders and deliver sustainable long term growth. Now Todd will provide you an overview of Hornbeck. Thank you Bill. Let me start by sharing some background on Hornbeck. We're one of the preeminent market leading providers of ultra high spec marine logistics services to a broad range of offshore energy infrastructure and defense customers. We have a leading deepwater high and ultra high spec fleet with geographic Footprint across the U.S. gulf of America, Mexico, the Caribbean, Guyana, Suriname and Brazil. Our focus at the end of the day is tailored logistics solutions that address a broad spectrum of unique customer life of field requirements and we have proven operational capabilities and unwavering commitments to safety and risk management as Helix does as well, We've also included key highlights of the company by the numbers including approximately 71 vessels in our current fleet with two NPSVs under construction and expected to deliver in 2027 giving us a pro forma fleet of 73 vessels with a fair market value of 2.8 billion. We generated adjusted EBITDA of 288 million and an adjusted EBITDA margin of 40% for fiscal year 2025. I'd also like to note that if you have any additional questions about Hornbeck as a company and our financials, you can find that information in the appendix section of this presentation. We're also confident that this transaction maximizes value, provides the best long term prospects to deliver superior returns for our combined investors. We are pleased that all stock, this is an all stock consideration will allow Helix and Hornbeck investors to participate in the upside of this combination. With that, I'll turn it over to Scotty Sparks, Helix's Executive Vice President and Chief Operating Officer, to walk you through the combined company's global presence and complementary business offerings.
Scotty Sparks (Executive Vice President and Chief Operating Officer)
Thank you Todd. Another important benefit of this transaction is the geographical alignment of our two companies. Helix Global presence in West Africa, Asia Pacific and the North Sea regions as well as the United States and Brazil and Hornbeck's concentration in the Americas including Brazil and Mexico creates a combined global footprint spanning the key offshore basins worldwide. The combined company's footprint will include cabotage protected markets, will have direct access to leading offshore customers enabling the delivery of premier deep water services through technologically advanced vessels. This global presence translates into a diversified revenue stream with approximately half of the combined company's revenue expected to come from the United States, followed by Brazil and then the North Sea region. We also want to share more information on our combined customer base and how we expect to serve customers. As a combined company we provide essential services to many of the key organizations and companies that fuel the global economy. We see the integration of complementary service offerings increasing our combined company's relevance with customers and creating unique cross selling opportunities that will drive growth and improve margins. Further, the combined fleet of vessels and specialty equipment will enable comprehensive suites of combined services as a one stop shop for customers while enhancing profitability through asset optimization and enhanced scale. Both companies have high quality blue chip customers with whom we have developed strong in depth relationships. Among our customers are global market leading companies operating at the forefront of innovation in their respective fields. We are looking forward to delivering an enhanced offering of integrated solutions to our splendid customer base. I'll now turn it back to Todd to talk for our World crusted water fleet and are soon to be leading position in the design industry.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Thank you Scotty. Now we mentioned a moment ago that together Helix and Hornbeck will have a fleet of high quality deep water high spec vessels. The combined company will focus on drill, intervention, subsea and specialty services, robotics, ring transportation and emerging technologies to support the deepwater energy, defense and renewables markets. The combined company will have the highest specification fleet of specialty vessels designed to support deepwater life of fuel services globally. It will be the only company capable of providing riser based well intervention, subsea operations and IRM and surface vessel logistics support. Additionally, we are combining Helix market leading position in subsea trenching a pipeline and cable with Hornbeck's leading position in providing support to offshore energy development. It's also important to note that the combined company will have increased exposure to the defense industry through a cutting edge fleet supporting military operations and related capabilities. Together, Helix and Hornbeck will have operations that provide multiple types of defense services. This includes surplus and subsea vessels, vessel management and emerging technologies such as marine economy and artificial intelligence. These capabilities, along with advantages like trusted relationship with key officials and decades of experience in the industry will position the combined company extremely well to increase revenue and defense customers. Now I'd like to transition to a central element of growth transactions, the combined company scale and growth platform and the significant synergy potential. We're confident that the combined company will be poised for future growth and shareholder value creation with a strong balance sheet, low leverage and a significant cash at the closing to advance the combined Company's value driven strategy. Importantly, this financial strength and projected substantial free cash flow generation will provide significant flexibility for organic growth and investments in the business or other strategic M and A to increase long term shareholder value creation. The combined company scale life of field business is expected to mitigate through cycle earnings volatility while also enabling flexible global asset deployment where the demand is strongest, as you'll see in the slide deck. Another key part of why we're so confident in this combined Company's strong financial profile going forward is the significant synergies opportunities this transaction presents. Specifically, we expect to realize 75 million or more in annual cost and revenue synergies just within three years following the transaction. The synergies are expected to result from combined and integrated service offerings as well as expanded service offered to existing customers, driving revenue pull through. We also the scale of the combined Company's fleet will enable asset optimization, reducing reliance on third party vessel charters and delivering efficiencies across maintenance, procurement and operations. In short, we expect to operate more efficiently and benefit from growth opportunities post closing. I'd now like to turn it back to Bill to close us out. I'll wrap things up by reiterating that we believe this transaction represents an incredibly exciting opportunity for Helix and Hornbeck as well as both company shareholders and other stakeholders. By bringing these two leaders together, we will create an even stronger combined company designed to innovate, execute with scale and grow. I'd also like to take a moment just to thank the talented teams of both Helix and Hornbeck. This transaction reflects their continued hard work and dedication and we would not have been able to reach this milestone without their efforts. I know I speak for the leadership teams of both companies when I say we are grateful for your many contributions. Thank you for joining us today. I'll now open the floor to questions. Operator will take our first question now.
OPERATOR
Thank you. At this time, I would like to remind everyone, in order to ask a question, please press then the number one on your telephone keypad. We will just pause. We will pause for just a moment to compile the Q&A roster. And your first question comes from the line of Keith Beckman with Pickering Energy Partners. Your line is open.
Keith Beckman (Analyst at Pickering Energy Partners)
Hey, thanks for taking my question and congratulations, guys. Thank you. Thank you. So I just wanted to, I wanted to ask first, could you break down the 75 million of synergies a little bit better and then maybe, you know, that's over three years. What do you kind of expect the initial capture to be? Maybe within the first six months to a year or so?
Todd Hornbeck (Chairman, President and Chief Executive Officer)
I think the capture will be revenue synergies and being able to combine these assets together to offer a comprehensive offering to the customers that should increase utilization across the board from ROVs, the supply vessels, the subsea construction vessels, and well, intervention. So that combination and offering life-of-field services to be able to take the full field development or full field decommissioning is a real added value to the customer base. The crossover services that we pull together as one company provides some very good revenue synergies. But then there's also the size of the fleet provides good cost synergies with procurement and engineering and all those things as we create a much bigger fleet on a global basis. Awesome. Thanks.
Keith Beckman (Analyst at Pickering Energy Partners)
And then my second question was just kind of, you know, obviously Hornbeck has had an advantage in kind of cabotage protected markets on a lot of those Offshore Supply Vessels (OSVs) in the Americas. Now with the merger of the two companies, is there any plan over time to move some of the vessels outside of cabotage markets and potentially go outside of the Americas, maybe West Africa, et cetera? Just any thoughts on that at all?
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Our plan is we're planning to be a growth company and we're planning to continue to grow every segment of the business, but we're planning to relocate the assets where they're most valuable to the company and returns for the company. So we do have assets that can move across the globe and some of the largest and best assets in the industry, and we're planning to move where the business is.
Keith Beckman (Analyst at Pickering Energy Partners)
Awesome. Really appreciate you guys taking my questions. And congratulations again. Thank you. Thanks.
OPERATOR
Your next question comes from the line of Ben Summers with btig. Your line is open.
Ben Summers (Analyst at BTIG)
Good morning and congrats on the Announcement. So my first question is just on the 2 billion of backlog that you guys mentioned in the presentation. Just kind of curious around the duration of this backlog and any color you can give on just the makeup across now the various business lines.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
So from Helix reports, their backlog and ours is close to a billion dollars covering a significant portion of year and into next year. So the Helix portion of it is about a billion.
Jim Hart (Executive Vice President and Chief Financial Officer)
Yep. Hornbeck's about a billion as well. And you know that includes our long term contracts with the military and specialty vessels as well. As you know, we've been primarily a shorter term player because of the type of assets we have been able to own. Shorter term contracts. He got a lot better returns. But this is the biggest backlog we've had I think in our history. Showing you where the market's going and a lot of opportunity also in our fleet to turn and market those vessels as well.
Ben Summers (Analyst at BTIG)
Awesome. Thank you. Super helpful. And I know you guys mentioned it had been the prepared remarks, but just kind of on the strong balance sheet of the combined company, I guess kind of any color on what you're seeing in the market and then kind of just detailing a bit more on the potential growth opportunities or creation of shareholder value from that strong balance sheet.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Yes, I think we've got a superior balance sheet. A lot of cash on the balance sheet. Like I said, we're going to grow all the divisions between the ROV subsea group and well, intervention and supply vessels. So we're looking forward to growing it to be, you know, an international player worldwide. Not just our main focus right now or has been in with the company is about 50% of revenue coming out of the U.S. gulf or the America Gulf of America. But we see great opportunities of growth in Brazil, the whole South America, northern flank of South America with Colombia and Guyana and Suriname and that whole region also West Africa showing great signs of opportunity as well. So with this balance sheet we should be able to really move the company forward with a lot of opportunities, whether they're organic or acquisitions as well. Great. Thank you guys and congrats again. Thanks. Thank you.
OPERATOR
Your next question comes from the line of James Schumann with TD Cowan. Your line is open.
James Schumann (Analyst at TD Cowen)
Thanks. Good morning. Okay, so the 75 million of synergies. Can you provide details on Did you say what the split was between revenue and cost synergies there and then?
Todd Hornbeck (Chairman, President and Chief Executive Officer)
No, we haven't. We're going to have more of that in the merger proxy statement, but the majority of it probably would be from revenue synergies and, and cost efficiencies by putting the companies together and streamlining our services. Look, the companies don't overlap that much in services. That's what makes this combination such a strong combination putting together. Because where we didn't have robotics and all the tooling and whatnot, we had the MPSVs, a heavy iron. Helix has all that. Well, we were not in, well intervention or decommission that when you're in that business as well, they need supply vessels, MPSVs and all the things that we have. So we don't overlap a lot. So that's what's great about this. We're going to be able to build all of that and retool the business model to be able to grow in all of those areas whilst we will be able to do is offer a very good bundled service. So if you take a deep water field decommissioning program, we have the Helix assets that can do all the deep-water Plug and Abandonment (P&A) and the well work. Now we have the construction assets to take away the subsea infrastructure. We have the supply boats to support the subsea infrastructure take away and the wells P and A work. We can offer that to one client, take away their procurement costs and give them one contract. So that's quite compelling. There will always be some procurement companies out there that won't like that. But there'll be a bunch of oil oil companies out there that see the cost benefits of one contract and one service.
James Schumann (Analyst at TD Cowen)
Okay, great, thank you. And I haven't covered Offshore Supply Vessels (OSVs) in 12 or 13 years. Can you help me? What's the capital intensity of this business now just in terms of capex to
Todd Hornbeck (Chairman, President and Chief Executive Officer)
sales, I'll tell you on the OSV side we're strictly deep water, ultra deep water with the largest PSVs in the world. So a lot of them are cabotage protected in the US but we have a big presence, you know, in Brazil and Mexico and the whole South America right now. The market is basically at equilibrium by the second half of this year just with the demand that's coming from the additional rigs coming online. We see that market getting very tight and a lot of revenue growth there. Our day rate expansion, expansion there as well. With the subsea construction market, you know how many trees and installations that are going in deep water over the next several years. Those vessels also work very, very well in the subsea construction area and also in renewables and the defense market. Our defense market is really looking good and you know why? Just read the paper. And they like the large PSP fees to accommodate that Business. And you have vessels bring back into the market too? It won't cost you really minor capital. Minor capital, yeah. We've got 23 vessels that we can reactivate as this market goes under, supplied, whether it's renewables, defense or drilling support or subsequent support. And those are vessels that have been preserved and in good shape and very low cost to reactivate to put in the market.
James Schumann (Analyst at TD Cowen)
Thanks. Because I was just going to ask about the two new MPSVs that you have. What the capital requirements are left on those. Are they substantial or can you say
Todd Hornbeck (Chairman, President and Chief Executive Officer)
we really don't have any capital requirements to talk about. Very much left. We have about 50 million, I think left to spend on those vessels for delivery, but very low cost entry for those vessels. Unique nature. They'll be the largest MPSVs in the US flag fleet. And we're really excited about the robotics and the subsea infrastructure and everything that Helix is doing and folding that into that program. So defense markets, renewable markets and in deep water subsea construction markets are really anxious to get the hands on those vessels. When those vessels hit in 27, they're going to be the highest spec Jones act vessels. And then we'll be combining Helix Robotics into those vessels as well. So be quite unique and ultra high spec vessels for the Jones Act Gulf of America fleet.
James Schumann (Analyst at TD Cowen)
Great. Thanks a lot, gentlemen. Appreciate it. Congrats. All right, thank you. Thank you
OPERATOR
again. If you would like to ask a question, press Star, then the number one on your telephone keypad. And our next question comes from the line of Don Christ with Johnson Rice. Your line is open.
Don Christ (Analyst at Johnson Rice)
Morning, guys. And I'll echo my sentiments about the good deal. Congrats. Since I cover Helix and have for a while. Scotty, can you give a global overview and kind of talk about demand like you normally do on a, on an earnings call? I know there's been a lot of rig contracts let recently that soaked up a lot of white space. And can you just kind of walk around the world and tell us how that is influencing activity for the, you know, Q4000 and well, enhancer and Seawell going forward throughout the rest of the year? Sure, yeah.
Scotty Sparks (Executive Vice President and Chief Operating Officer)
Good morning, Don. So, firstly, North Sea, as you know, last year we had some headwinds against us and had to stack one of the vessels. I'm happy to report now that we have both vessels out actively working and we're expecting good utilization for the monohulls in the North Sea. We're seeing high demand for decommissioning in the North Sea and starting to see a slight improvement. In rates. So that dip that went with our splashed area is behind us. I'd like to think in America we're seeing more production enhancement activity. We have the Q5000 out currently working for Shell. The Q4000 is out working for Oxy and Oxy and others are looking to add more wells because obviously increase in the price of oil is looking to further enhance activity. The Q7000 has recently finished up with Shell in Brazil. Sorry, we'll finish up at the end of this month and then we're very close to taking that vessel to Nigeria again and that's looking good. Very close to being contracted. And then we expect to take that vessel back to Brazil where there's high levels of activity and good tendering activity for that vessel. The two Siem Helix 1 and Sea Helix 1 and Siem Helix 2 are on the long term contracts in Brazil. So our well intervention segment looks very good at the moment with improving activity and increasing rates going forward. The robotics side is very busy. As you know, our trenching side of the company is very, very active. High utilization, very much increased rates, increasing rates year over year. We have work booked out in 2627 on trenching work booked out all the way to 2030 and bid accident activity and a very good pipeline of activity out to 2032 on the trenching side. And then the robotics business is strengthened and bringing these two companies together. There's good opportunities for putting ROVs with high class vessels in the Gulf of America. So very confident by the end of this year we'll have no ROVs available to the market. We might have to look at starting to place capital to increase spend on growth activity.
Don Christ (Analyst at Johnson Rice)
I appreciate that. And can you just comment on day rates? I know day rates for offshore drilling have been kind of flat on these contract renewals, but are you seeing any urgency from customers seeing white space go away and urgency in contracting given recent events in the Middle east and oil price running up?
Scotty Sparks (Executive Vice President and Chief Operating Officer)
We talk about this each quarter, Don, and I would say it's relatively flat at the moment in the Gulf, we are seeing increased rig activity that will lead into end of 2627 to increased rates. We have definitely seen an increase in rates and better activity in the North Sea and we're stable and locked into long term contracts in Brazil. So it's definitely increased and better environment than where we were two or three quarters ago.
Don Christ (Analyst at Johnson Rice)
Okay, I appreciate that. And Todd, just one for you. Any changes in the market in Mexico? I know you've had a presence there for a while, but not really worked for the government down there, but any improvement down there that can soak up any of the boats that came back to the US side of the Gulf of America going back to Mexico anytime soon?
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Well, as you know, we've got a large component of Mexican flag vessels in Mexico and that's a Capitas protected market. And yes, there's been upside. Even though the turmoil with Pemex that unfolded over the last few years, we were not levered to that company. So Woodside just started the Trion project and we have four long term contracts with Woodside and that has started in earnest now in February. So that will go for many years. We also have a 10 year commitment for all the marine support for supply vessels for the next 10 years. So for that development of that field. What we're seeing in Mexico though is a little bit of change in tone with bringing IOCs back into the country. You know, couple of years ago under AMLO they really wanted to get all the IOCs out and all the foreign companies out of Mexico. That's turned around. It looks like we're seeing green shoots starting to happen that other IOCs are interested in doing structures like Woodside had done there. So it looks promising. I think over the next couple of years we're going to see some growth in Mexico. Mexico is Mexico. So we've been down there a long time and done very well in that market.
Don Christ (Analyst at Johnson Rice)
I appreciate the caller. Congrats again guys. Thank you. Thank you.
OPERATOR
And your next question comes from the line of Josh Jane with Daniel or Daniel Energy Partners. Your line is open.
Josh Jane (Analyst at Daniel Energy Partners)
Good morning. Thanks for taking my question first one for me. Todd, maybe you could just go into a bit more detail on the your views on OSP supply and demand. Ultimately you mentioned some vessels going back to work. Maybe you could just elaborate on your views on the market. Not only in the markets that you serve, but just opportunities elsewhere. It would just be good to hear your views today.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Yeah, I think the market on the big look, we're just really focused on the above 4000 deadweight class all the way to 6000. So ultra deep deep waters where our bread and butter is. And that market is traded very thinly now. A lot of capacity is term contracted because Petrobras soaked up a lot of tonnage as we know. And with the rigs in the second half of the year coming back online, we see that marketing tightening. Our rates are, you know, I can say leading ED rates are in the mid-40s, you know, but they're kind of all over the Board because it's been a little sloppy with the white space, but our rates seem to held up very well. The second half of the year is where we really see the growth opportunity and the market getting really, really tight for the supply and demand imbalance. But the subsea construction market, the renewables market, and our defense market is doing extremely well. So we're still, we're servicing a lot of that market. With the PSVs today on our total revenue, about 70% of our revenue is coming from the specialty business, not from the drill bit. So that's a testament of the type of equipment that we have.
Josh Jane (Analyst at Daniel Energy Partners)
And then on the ROV side, it was alluded to a little bit in the last answer, but is this transaction. I know Helix has been a bit conservative to spend capital, but when we think about the tightness of the ROV business, is this the type of transaction that has the potential, just given the tightness of that market, to accelerate capital spending sort of over the next few years? And then could you update us on lead times for ROVs today? That's my final question. Thanks.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
I think Scotty can answer the lead times, but you're correct, that market is very tight. But I think there's opportunities there besides, you can always build ROV and that takes. He'll tell you how long that takes and what the cost is. But I think there may be opportunities out there now that we put this together of ROV opportunities and other opportunities in the company to do some acquisitive and grow our platform.
Scotty Sparks (Executive Vice President and Chief Operating Officer)
I think one of the good sides of the ROV business is we can scale up very quickly. So to build a new ROV right now is a six month lead time. And if we did a batch builder every month after, we can have another rov. So we can scale up the ROV business very quickly. There's also, you know, Hornbeck at this time, they hire ROVs in and now will be an internal cost to Hornbeck. So we can scale up very quickly and bring the two services together.
Todd Hornbeck (Chairman, President and Chief Executive Officer)
Yeah. If we can't find adequate equipment out there on the ROV side and the tooling side, we can be in the market very, very quickly with what Scotty's saying. So it'll happen one way or the other, won't it? Yeah.
Scotty Sparks (Executive Vice President and Chief Operating Officer)
We're also seeing an increased demand for ROV activity in the renewables business in Taiwan and the APAC region as well. So there's a lot of growth potential in the ROV side. The robotics side. We also have some plans. We as a robotics company, have never been an IRM company. And as we bring these two companies together, we're definitely going to build an IRN division, which leads to further growth as well. Understood.
Josh Jane (Analyst at Daniel Energy Partners)
Congrats on the transaction. Thanks for taking my questions. Thank you. Thank you.
OPERATOR
And your next question comes from the line of James Shroom with TD Cowan. Your line is open.
James Shroom (Analyst at TD Cowen)
Hey, thanks. The Hornbeck net debt. Did I calculate that right? Is that around 480 million? Yes. No, no. That's a gross debt.
Jim Hart (Executive Vice President and Chief Financial Officer)
That's gross. It's about James. Jim, what is it? That's gross debt. Our cash is under, you know, between 75 and 100, you know, 80, 90, something like that. And the 440 is gross debt.
James Shroom (Analyst at TD Cowen)
The 4. I said 480. So what do you have? What's your net debt? Is it 380 or what's the net debt?
Jim Hart (Executive Vice President and Chief Financial Officer)
Yeah, around 380.
James Shroom (Analyst at TD Cowen)
And then maybe just one for the Helix team. I mean, how do you position this for your shareholders? Why is this a good deal for the Helix shareholders?
Bill Transier (Chairman of the Board)
This is Bill. I take that on. First of all, if you can't tell the enthusiasm of these two guys across the table been talking about their combined businesses, it represents a really kind of a unique opportunity for these companies to come together and do more than they could on. On a standalone basis. And I think that's what Helix has been looking at for quite a while, is it was a good company. Well run like Cornbeck, good capital structure, but it was only so big and the ability to kind of build scale, reduce cost of capital and do some of the things that Scotty and Todd are talking about in terms of growing the. The business. It just makes for a better outcome going forward. A real growth company that can deliver significant shareholder value going down the road. So I look at that as the compelling reasons why, and we're excited about it.
James Shroom (Analyst at TD Cowen)
Okay, thanks a lot, guys. Appreciate it. Thank you. Thank you.
OPERATOR
Thank you. I'm not showing any further questions in the queue. I will now turn back over to the company for closing remarks. Thank you for joining us today. We appreciate your interest in today's call that highlighted the exciting opportunity that the combination of Helix and Hornbeck creates for our investors and customers. Thank you, ladies and gentlemen. That concludes today's call. Thank you all for joining. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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