Radi Sultan:

All right, I think we'll go ahead and get started.  We have next up, Tidewater.  We have John Rynd, CEO, former CEO of Hercules.  Quintin, who is CFO, former CEO of GulfMark.  And we have Jason, director of Investor Relations.  I don’t know, John, if you want to make some opening remarks and we'll get into some questions.

If you look at rig activity and vessel activity , it was coming down in '14 and $100 oil, really driven by our customers' return on capital were going to straight to hell so they're making adjustments.  So, I view this as we're in the sixth year of the cycle.  A lot of people say the fifth, but maybe that's because I'm more pessimistic than others.  

But I want to touch on, and Quintin and I will touch on - we did a very, very good merger with GulfMark.  We closed in November of '14.  We are now the largest provider of OSVs in the world and you can argue that what does that bring you.  But, I think we'll show you that it brings us a lot, both from just our footprint and our scale around the world, but I think importantly, we laid out some synergy numbers when we announced the deal in November.  We're very comfortable we're going to exceed those.  We've made great strides to date.  

We've been together, what, 11 weeks or 12 weeks as a company and have made some really, really good strides on the integration.  And so hats off to the team.  They buckled down and got ready to go, and when we opened the gate, we got out of the gate and they’ve been very effective, not just at the office level, but I think also, we've already seen some good operational synergies of moving vessels in markets where maybe traditionally, GulfMark didn’t work.  Where we were shy a vessel, we've been able to move in some vessels.  So that's already - we're going to show the benefits of that.

So, I think the balance sheet is in great shape.  The fleet is in great shape.  We just need a little help from “mother market”.  So you can go to the next slide if you want to.  I don’t think we're going to be making any forward-looking statements today, but just in case we are, I think we all know the risk and uncertainties in our business.  So here's the overview.  Again, Tidewater was founded in 1955.  You can see our vessel fleet at 264 is the largest.  I think as important, you look at the average age at 8.7 years.  It's one of the youngest fleets in the business.  The stock - as all equities - got hit in the fourth quarter.  It's gone down from -- I think we peaked at around $36 a share as an all-time high -- back down to $20.  So our market cap is now sub $1 billion.  

So we've got again the great balance sheet.  Things are good.  We just need some help in the market.  Because right now, we're in control of our margins.  The market is not, i.e. we can't really push rates dramatically.  So we've got to take care of expanding our margins by being smart about what we do, watch our costs, and just be very diligent.

Next slide.  Again, safety.  I get the sense a lot of investors kind of start checking their iPhones when all the service companies start talking about their safety performance.  But, I think if you're not safe, you're ultimately not going to be in business.  And I think we have a moral obligation as a company to provide a safe workforce for our employees.  We want them to go out and come home every two weeks, every month, wherever they are.  And it is a differentiator with certain clients.  If you have a bad track record, they're probably not going to hire you.  So I think, again, it's core to what we do every day.  

Let's touch on the merger with GulfMark.  It was an all equity transaction.  Again, we closed in the 15th.  We've already talked a little bit about integration.  We've already consolidated all but one of our offices around the world and that's Norway.  And there's some regulatory drivers on that that we couldn’t move as fast as we could around the world.  So we've moved GulfMark Houston into Tidewater Houston.  We've moved Tidewater Aberdeen into GulfMark Aberdeen, consolidated Trinidad, consolidated Mexico, consolidated Singapore, and we're in the throes of, again, driving the integration.  

The key timeline on the integration, and really, I think the key that's going to drive a lot of our efficiencies and cost, is our ERP system.  And we're migrating to the GulfMark ERP system, to SAP.  And that's targeted to go live as one system October 1st.  We've already had some small wins, which was the driver of the team.  So I mean that's obviously a lot of work.  The work right now is focused.  We've got to get the 10-K filed and then we can move to the next step.  So that's our target.  We've got to get that filed and you can imagine putting two companies together.  We are together as one for 45 days.  It's not an off-the-shelf K.  So it's taken a lot of work, a lot of late hours.  

So with that, I think from there, we can turn it over if you want to do Q&A with Quintin and I (inaudible).

Radi Sultan:

I think we want to just kick it off and get both of your perspectives on sort of any key competitive advantages that you’ve noticed now that you’ve had the deal closed for a few months.  Both Quintin, your perspective going from GulfMark, and John from Tidewater.  If there's any sort of key competitive advantages you’ve noticed in your customer conversations, activities, et cetera.

Quintin Kneen:

Well, I'll tell you, the week leading up to the closing of the deal, I got more inbounds from majors and super majors trying to lock up boats for long-term rates before the combination.  To me, I was just tickled by it.  Of course, I didn’t commit to anything until I handed them over to John.  But customers notice the strength of the combined company.  It's not just the balance sheet.  It's not just the reputation for quality, but it's the strength of the fleet and the diversity of locations.  And I've certainly noticed a difference since the merger date on that.

And I think what we're going to see efficiencies that we heretofore did not experience at Tidewater, again, on the ERP system.  It's really going to streamline just getting the numbers out,

getting the data to the field, getting the data to us to enable us to make better, quicker, more well informed decisions.

Radi Sultan:

And then I know, Quintin, you mentioned strength of the balance sheet pro forma.  Obviously, financial health is sort of a big issue in the boat market today.  Have you seen customers more willing to work with you guys because you have a stronger balance sheet?  Has that been an advantage in winning work today?

Quintin Kneen:

Definitely for contracts where the customer is putting money up front.  So one of the things that the team at Tidewater is looking to do is shape the industry in a way where customers are participating in the cost up front to either mobilize the vessels or pay for a portion of the dry docks.  And they're willing to do that with a company like Tidewater, but they're not going to spend $1 million, $1.5 million in participating in the mobilization and the dry dock of a vessel that's key to their operations for a company that may in fact not be able to live up to the tenant of the contract itself, (inaudible) contract.

John Rynd:

Yes, we -- I'm sorry, I didn’t mean.

Quintin Kneen:

Go ahead, John.  

But just reiterate, we're the counterparty for you on a multiyear contract.  We've continued to invest in new equipment.  We continue to train our people.  I mean we're your long-term partners.  So just kind of that pound that message home.

Radi Sultan:

And do you think customers are willing to pay a little bit more for a counterparty that doesn’t have as much counterparty risk as opposed to some of your more financially distressed peers that have been very aggressive on bidding?

And so I think, to his point, more willing to deal with us because they know that they're going to put money into a vessel and they’ve obviously got a specific program that's got tenure to it.  They want to know that the vessel owner is going to be there with them side by side.  

Radi Sultan:

And if we could just take a step back and look at sort of your market outlook in each of the key regions.  Obviously, GulfMark was a powerhouse in the North Sea.  If you could just sort of talk about your outlook for each of the key major regions you guys operate in, which is pretty much everywhere.

too bearish.  But when I look out and see the oversupply, it's hard not to be bearish.  And then you have the dislocation i n commodity prices that we experienced in the fourth quarter.  It has to give you some pause for concern.

But saying that, we have seen no material change in our customers' behavior year-to-date.  Not going up.  Not going down, but kind of consistent.  I use this example.  There were three programs that we were focused on late in the fourth quarter that I thought when the oil price collapsed, were going to put those programs at risk, various geographies around the world, some remote locations.  You figure they're just going to take a pause.  That has not happened.

So if you look around the world, obviously, the Middle East, Aramco is still growing their rig fleet, which requires PSVs or towing supplies to go with those rigs.  That market has demand growth, albeit no rate movement because of the oversupply situation.  So you're still rate challenged there.

I think right now for us, Nigeria has been a bright spot.  From an activity standpoint, they're bringing rigs in.  The challenge there is just Nigeria.  It's just a challenging place to work.  Angola has been very steady for us last year.  Looks to be very steady this year.  West Africa, the other countries in West Africa where we operate, business is okay for us.  We just have a heavy special survey year with those particular assets.  So the performance financially is not going to be that good.  The Med is holding up fairly well.  Mexico is holding up.

We had to reprice, if you remember going at the end of the second quarter, early third quarter last year, we repriced about eight vessels down significantly, just market dynamics.  But the team there has done a very good job of reducing their cost as well.  So the margins there are still very healthy.  I think Mexico does have some upside potential.  They're talking a big game about picking up 16 jack-ups.  We're going to take a wait and see if they just logistically can handle all that.  I think Brazil will muddle through this year.  We've moved one vessel in and we're mobilizing a second vessel into Brazil.  I think that's more of a '20 event, but with some upside there.

The North Sea, again, you know, with their dominant position, you add our seven vessels, we're tied with Solstad as being the largest provider in the region between the U.K. and Norway.  That market is doing fair, kind of what you'd expect through the winter months.  We've been able to mobilize two vessels out of there during the winter months and we redeployed them elsewhere in the world.  Ultimately, if the market allows us, we'll bring them back in the summer months.  

Obviously, Thailand has been a very -- you (to Quintin Kneen) all had two vessels.  We had three vessels.  Same client.  We've been able to grow that relationship with incremental vessel and potentially one more.  So that started to kind of hold its own where we were both independently thinking, do we need to get out of there?  Now, I think we've got enough scale maybe that we say we're going to hang around for a while.

And the U.S. Gulf of Mexico, I think this morning we may be down to just the one vessel idle.  We've run 100% over the last -- in January.  It's holding its own.  The rates are moving modestly.  I would say rate movement is kind of modest everywhere in the world.  You're picking your spots.  You're getting $100 there, $200 there.  But as Quintin talked about, we're trying around the margin to improve our margin, i.e. getting the mobs paid for, some of the mobs paid for.  Get some fuel paid for where historically in this down cycle, like if you were at David's, with the leverage in the contracting, it's all on our customer's side.  We're trying to slowly push that thing where we could pick up some dollars around the margin.  Did I miss anything?

Quintin Kneen:

No, I actually think you got the world covered nicely.  The only thing I would add to that is this is going to be an unusually high special survey year for the industry and for Tidewater and GulfMark

as a combined company.  And so it's going to be really interesting to see how the operators push thr ough that.

Earlier in the downturn, this is really - there were intermediate surveys and there were some UWILDs and other requirements that people would have to go through in order to keep boats operational.  But those are of relatively little expense.  We're hitting the wall of special surveys and we're getting into the fifth year or sixth year of the downturn.  But essentially, people have kicked the can as far as they can go from a vessel certification standpoint.  So obviously, with the strong balance sheet that Tidewater has, we're not going to have any issue performing any dry dock or special survey that we think is appropriate for the business.  That can't be said for others.  

And so it will be interesting to see if we shake some business loose from other competitors as we go through 2019.  

Radi Sultan:

Do you think that's a catalyst for potentially seeing stronger market utilization if some of your competitors can't afford to pony up the cost for the special survey that actually causes some tightness maybe in certain regions in particular?

Quintin Kneen:

Yes, that's what I think.  And it's not just the special survey costs.  What we're starting to see is utilization, as John mentioned, has crept up -- just it's inching up throughout the world over the past few years.  No one is getting rate, but they're getting a little bit more utilization.  And that's beginning to put wage pressure on the mariners and so as a result -- or on the companies paying the mariner wages.

So what we're seeing around the world is the first parts of wage pressure inflation, which obviously, we want to push through to our customers to the extent possible.  But that pressure with the pressure of the special surveys, there's going to be a revealing moment as we go through 2019 on how many operators can continue to push through this downturn.  

Radi Sultan:

And have you seen any trends in sort of the labor pool in terms of the broader OSV industry?  I mean whether it's U.S., West Africa, Brazil, have you seen any incremental wage pressure in any region in particular or is that just broader market?

Quintin Kneen:

You know, we first saw it in the North Sea last year because the North Sea had a pop in activity.  Unfortunately, people weren’t as disciplined and they brought a lot of vessels out in the North Sea in the first half of '18.  And in order to put those boats to work, they had to hire a bunch of mariners.  Most of them got taken out of existing boats in the industry.  And we saw about a 22% turnover in the mariner fleet and some of the, like, the chief engineers and some of the spots in the North Sea.

Now, we're starting to see it in other places of the world as well.  So yes, it's starting to creep in but it's another indication that the continuing improvement in utilization, although small, are starting to happen in fact.

Radi Sultan:

And actually, if we could just drill down in the Gulf of Mexico for a minute, obviously, being Jones Act compliant comes with a lot of restrictions.  I'm curious, pro forma, post- the deal close, you obviously have less leverage in the Gulf of Mexico now.  I'm curious how you guys balance sort of the pros and cons of remaining Jones Act compliant.

Quintin Kneen:

Well, I'll tell you, you know, I'll give it a shot because a lot of it has to do with the capital structure side and then there's the governance piece as well that I'll toss over to John.  But, we're still working through the fact that both companies on emergence from Chapter 11 had to issue Jones

Act warrants, which are a very tradable ins trument, but it's an unknown instrument to most investors.  And so it's hard to get an appetite for them and they don’t trade very well.

I think the team at Tidewater does an excellent job in finding U.S. citizens homes for those particular Jones Act warrants and converting those into regular wage shares, and that process is continuing.  But, it does restrict you from a capital structure perspective in issuing shares in the international market.  And it does reduce the flow a little bit for the foreign holders themselves because they can't - it's difficult for them to trade with another foreign investor even at this time.  

Radi Sultan:

And then the only pro being that you can work in the Gulf of Mexico given it's obviously not one of the strongest regions today.

Radi Sultan:

And then just in terms of what's driving demand today.  The mix between production and construction versus drilling, are you seeing any trends there regionally or by customer?  And how do you see that changing going forward?

Radi Sultan:

And then I know you probably don’t want to hear this just given that you just closed GulfMark.  How are you guys thinking about M&A, whether it's you guys, or your competitors?  I mean several of your financially distressed peers tried to get involved in some M&A.  I'm curious how you see that going forward, both you and for the space as a whole?  

And then from a fleet standpoint, we want it to be equal or accretive to our fleet.  We don't want to take on a heavy stacked fleet or a ten-year old or greater fleet.  We'd like to be in a position to kind of target specific assets in specific locations.  So it almost leads you -- I mean we're keeping our ear to the ground very closely on corporate type M&A opportunities.  Don't take that the wrong way, but I think then, there's also -- the other piece of it is individual asset acquisitions.  And I

think that there's multiple opportunities there as the distressed owners, the banks are going, all right, th is is year five, or year six, and '19 doesn’t look much better.  So there could be those opportunities.

And then, for us, again, for our scale, we're able to just plug those in; we buy an asset and plug it into West Africa, plug it into the Med with little to no incremental overhead.  

Quintin Kneen:

And I would say, consistent with John's opening remarks on the integration and so forth, we're truly building a best-in-class shorebased infrastructure and I feel very confident from the work that I've done previously with GulfMark and the task that we have ahead of us at Tidewater that there's a lot of great things that we can do.  But, we will have the scalability to tack on acquisitions and I don’t care if it's a 20-boat fleet or a 2-boat fleet, with no incremental G&A spend.  And that to me is a real important part of developing this shorebased infrastructure as we go through 2019.  

Radi Sultan:

And then how do you think about in terms of single asset acquisition.  You’ve actually seen some of the sort of larger PSVs actually trade at pretty decent prices.  I'm curious how you're thinking about financing in terms of if you were to pick up two or three boats.  I mean what's your go-to in terms of how you finance any of those single asset acquisitions?

Qui ntin Kneen:

Unfortunately, with the pullback in equity prices, we’re not really excited to use equity.  But, as John pointed out, keeping the balance sheet healthy is also very important.  So there's a weighing that goes on in that process.  Some of the deals that Tidewater completed right after the integration or the merger with GulfMark were done at really low values.  We could easily use cash to do them.  But, I think if we did anything more significant, we'd have to get the right equity value in place.

Radi Sultan:

And I'm curious for the industry more broadly, sort of consolidation as a theme, I mean is that something you expect to see more of and do you expect that to sort of change the competitive landscape there in any of the regions you work in?

Quintin Kneen:

That's right and from a capital structure standpoint, I would say that consistent with John's comments earlier, we're not here to bail anybody else's problems out, especially from an overleveraged standpoint.  There's a lot of people that have to take a haircut before these boats free up, and we have the patience and the ability to withstand it.  

Radi Sultan:

And then in terms of contract structure, have you seen this mixed shift in terms of spot versus term, integrated services offered versus not?  I mean have you seen any sort of themes on that front?

So we're seeing it kind of creep in from the IOCs.  But, no real integrated services yet.  Now, what some of our vessels do, there's a lot of obviously P&A work or stimulation work that has to go on and they can do it from the back of the vessel.  But, you'll be working with a Halliburton or

Schlumberger.  Because we've got a hand ful of boats working for both of those around the world doing some sort of integrated projects.  We're just the platform that they do that from.  We don't get involved in it.

Radi Sultan:

And then actually, you mentioned NOCs focusing more on term.  Have you seen any particular themes around customer class?  So IOCs more want to do spot versus term?  Any sort of (inaudible)?

Radi Sultan:

And then last one before we open up to questions.  I wanted to touch on Brazil because on the rig side at least that seems to be sort of the sleeping giant in terms of deepwater rig demand.  I'm curious on the boat side, I mean obviously, there's a lot of competition down in Brazil.  Curious how you're thinking about that as we head into end of '19, early '20 when some of the Petrobras contracts start to get awarded.

So like, for us, we're out of Brazilian flag vessels.  So that's going to be the challenge.  I mean there's a system where you can use your existing tonnage to get a non-Brazilian flag in, but you can eat through that tonnage pretty quick and so then you're out.  So, I think we've kind of kept our eye open on some of the local players down there that have tonnage.  Are they willing to sell and could that for us to get it, but it's just been a challenging environment down there, and I think the good news potentially is with Petrobras backing away and letting the IOCs operate, it will become a more normal market.

Obviously, I think the change in government from what we hear talking to our clients here and down there, they're very pleased at this point with the change in government.  So, I think, again, it's going to be a puzzle we're going to have to try to figure out as we go forward.  Yes, but we're working down there now, thankfully, for Equinor and Shell, along with Petrobras.  So we've already been able to put a vessel or two to work for the IOCs.

Radi Sultan:

And I'm curious actually, you mentioned the change in Presidents.  We also had a change in President in Mexico as well and there was a lot of concern around how that would potentially affect the offshore industry as a whole.  I'm curious, have you noticed anything on that front?  Are your customers being more shy, more sort of wait, see how this round of legislation plays out before they make any significant investments?  Have you seen that?  

But for us being there, with Pemex getting more capital dollars potentially that's fine with us because Pemex is a key client.  So I mean, you know, it's -- we don't care.  As long as it's green, we don’t care who's giving it to us.

Radi Sultan:

Questions, anyone?  No.  We've seen on the offshore rig side in particular this sort of increase in MSA agreements, JVs, alliances.  Is that something we can see in the boat industry or is it such a commoditized, apples, to apples, to apples business that you think there's need?

But yes, I mean you’ve got many -- I mean.

Quintin Kneen:

Similar to John, I mean, there's certain areas of the world where you have to have a joint venture partner and the creep that we've seen over the last few years as the industry has tightened up is they're putting more pressure on companies to make those more legitimate joint ventures and give control to the local joint venture partner.  And that just makes it more challenging for an international company, especially with governance requirements and other oversight requirements.

So I think that when you see that Transocean, their decision to scrap that vessel, we've been scrapping 15-year-old vessels, but it's just kind of are people going to wake up and go, it may be eight years old, but it may never work again.  Because if you think about it, some of these eight year old vessels, they’ve been stacked half their life.  And if you think this cycle is a five-year down cycle, and they have a 20-year life, look at how five of that 20 years they’ve been sitting idle.

So not to get off on my own bully pulpit or whatever, but I think the next round, if we get into a cycle to build again, which we will, your economics have to change.  You built a $600 million drill ship with a 20-year life and I'm sure you had your initial contract in (inaudible) but you ran the economics the remaining 15 years of that asset's life at some midcycle rate and then had some residual value at the end of it.  And that drove your returns in the low teens probably.

Well, if this thing plays out again, and same thing with our vessels.  A $50 million vessel that it may last ten years. Well, my incremental day rate coming out of a shipyard in this next cycle, you can argue may have to be double truly to get the proper economic return.

Radi Sultan:

And it's interesting you mention Transocean and you guys it seems like are sort of the only well capitalized players that can afford to scrap, right.  If you're going through a restructuring, obviously, it's more challenging.  Do you think once we get this sort of wave of restructuring in the OSV industry that we see another wave of the scrapping after that?

Are we going to put 300 rigs to work in the next five years?  I don’t know.

Radi Sultan:

Probably not.

Radi Sultan:

Do steel prices and scrapping values impact that decision at all for scrapping?

Radi Sultan:

Okay.  Perfect.  We're out of time.  Thank you, gentlemen.  

John Rynd:

Thank you.