TechnipFMC plc (FTI) Earnings Call Transcript & Summary

Welcome to the second session of the day 2 of UBS' Global Energy Conference. I'm Amy Wong, U.S. and European Oilfield Services analyst here at UBS. I'm delighted to introduce our next speaker, Douglas Pferdehirt, Chairman and Chief Executive Officer of TechnipFMC. Doug is a familiar face at these events. He's a veteran of the oil and energy services industry, having spent many years in senior executive positions, including Schlumberger and of course, FMC Technologies before it merged with Technip to create TechnipFMC. So today's format is a short introduction from Doug, followed by a fireside chat Q&A format. [Operator Instructions] And with that, I will turn it over to Doug.

Thank you very much, Amy, and thank you to UBS for allowing TechnipFMC to participate in this conference. And specifically, Amy, thank you for conducting this fireside chat and us being able to have this conversation. As we talked previously, I'm thrilled to hear that you and your loved ones remain well and in positive spirits. And I hope to all of you that are dialing in, that it's the same for you and your loved ones, and thank you for your interest in this session and in TechnipFMC. I'll keep my opening comments relatively brief because I know Amy will drive an interesting an enlightening conversation, so I'll just keep my comments to a minimum. TechnipFMC was formed to drive real change in the industry. We realized that there needed to be a fundamental change in the way that subsea projects are developed offshore. As a result of the creation of the company in 2017, a new commercial model was implemented that is exclusive to our company, which is called iEPCI, or integrated engineering procurement, construction and installation. As a result of that, we have had a meaningful shift in our position in the market. We always were the leader, but it is by a much larger extent because of the success of this new model. We've stayed steadfast on our commitment to the development -- to development of technology and innovation. And with that, we have a generation of subsea equipment that is available to the market that is unmatched, which has also obviously led to our success. As we look forward, we are as excited about the traditional energy space as we are in the new energy space, and we believe that the offshore will continue to play a meaningful role in the total energy mix, either traditional or new, and as the subsea architects and the company that is -- has the history and the credibility to put in place the architecture required, be it for traditional or new energies, we believe we are well-positioned, both currently and for the future. With that, I'll turn it back to you, Amy.

Thanks, Doug, for that introduction. It really sets up well for a lot of the questions that I have, and I will -- I actually really want to get to your Deep Purple technology. But let's start with your traditional oil and gas business first, traditional energy business, right, because it is the larger part -- largest part of your business. And starting with Subsea, you are -- you were -- you are very confident about the recovery in order intake into the rest of this year and into 2022 as well, making -- taking the view that it's going to grow year-on-year. So what gives you that confidence right now to put it out there?

Sure. And Amy, I would say it was unique that we -- both in the middle of the pandemic last year, called the inflection in inbound for our Subsea business, which I don't believe any other company has been able to do yet, but we called that back in the middle of the pandemic. And we're off to a great start, with the Q1 inbound being at $1.5 billion of a plus $4 billion target for the full year. And we said that 2022 would exceed 2021, as you pointed out. What gives us that confidence, Amy, it's really -- the answer is simple. To get there was very complicated and took a series of bold moves on behalf of our company. Be it the simple answer is visibility. We simply have visibility that the rest of the subsea industry does not have. We have access to projects that the rest of the industry does not have access to. We got there because we continue to innovate. We came out with our Subsea 2.0 technology. We got there because we had the courage to complete a merger. Following initially what was a joint venture or an alliance, we consummated the relationship on the 17th of January 2017, creating the only fully integrated subsea company. As a result of that and supported by our very strong subsea services base, which is supported by over 50% of the world's subsea infrastructure, is TechnipFMC, which obviously is inspected to repair, to maintain on an OEM-type model. When you put those 3 together, and a strong support by a group of customers that we call our alliance partners, but what you end up is we have access to a proprietary market that is largely direct awarded to our company that the others simply don't have access to. Without that visibility, Amy, it would have been difficult for me to make the statements that I've made regarding 2021 and 2022. With that visibility, we are extremely confident.

Right. So I think that's very clear. I think there's clear commercial advantages from your end when you can bid, i.e. PCI projects, it improves economics. So that's the part you can control. If I flip it around over to your customers' perspective, can you give us some insight what they're thinking? Because I think oil prices are just so volatile right now. And how are your clients kind of making FIDs in this environment? And how does that tie back to your strategy?

Yes. I don't think it's changed -- I don't think there's -- it has fundamentally changed, Amy. I mean if you just look at the basics that drive the investment decisions, it starts with reservoir quality, first and foremost, and I strongly believe that the best reservoir quality is offshore, has been and continues to be offshore. The second is they look for a stable regulatory environment. I would say that the majority of the offshore regions offer the most stable regulatory environment that we have currently in the oil and gas sector. And then finally, they look for project returns upside. What do I mean by that? They obviously go through a very exhaustive exercise at doing their own internal economics and analysis. But then with TechnipFMC, they bring us in very early in the process, and we get involved in the pre-FEED and FEED stage. And when we're doing our integrated projects, we do a proprietary integrated FEED that's based on reaching a project economics hurdle rate, and then that turns into a direct award for the execution or what I previously described as iEPCI. When they're looking at the upside, they want to know that they're working with a company versus companies, with a company that really has all of the capability and credibility and a delivery track record to ensure that, that project is delivered on schedule or ahead versus what has historically happened offshore, which is schedule creep. And schedule creep in the delay of first oil has a hugely negative impact on the project returns. So when we introduced the iEPCI model and said, by going integrated, we can reduce the cycle time or accelerate time to first oil significantly and then since 2017 have proven it over and over again on all of our iEPCI projects that we meet that schedule and often beat that schedule or further improve the project returns, and that's the upside. When you go through the traditional tendering process and you're managing the multiple interfaces of the multiple contractors, you don't -- historically, history has proven you don't get that same result. So that's the project upside. And I think that's what's really driving it. And there's -- even going comparing offshore to onshore, there is increased confidence in the ability to be able to deliver these projects and again, take advantage of these very high-quality reservoirs offshore.

Got you. I mean I think that's a major reason why clients choose you because they can bank on you guys delivering some of that project upside. Flipping that around a little bit and think about then your profitability of your Subsea division and the margins. I mean, if you kind of go back to pre-2017, you had EBITDA margins almost 20% or so. I mean, thinking about through pandemic, as we normalize, has anything structurally changed in the subsea market that could prevent you from getting back to those types of margins?

So Amy, you always do a good job of raising the bar. What -- I had the question presented to me on the conference call, quarterly conference call, and it was asking if we could get back to the 13%, 14% range, and I indicated that we certainly have that ambition. But let's just kind of freight -- let's just kind of break it down and understand where we are right now. A couple of very material things have occurred. One, we delivered a solid operational performance in Subsea in 2020 in the middle of the pandemic, beating our guidance, meeting or exceeding our guidance, and raised guidance for 2021. We got off to a very strong start in Q1, clearly exceeding the consensus for our Subsea EBITDA margins, by the way, as -- and revenue as well. More importantly, if there was 1 thing I would take away from this discussion, Amy, on this question is, in February, I went further and I said that our backlog margins had inflected. So if you build out that scenario, Amy, middle of COVID 2020, we say inbound has inflected when, quite frankly, if you didn't have the visibility we have -- well, you couldn't, and that's why others have not been able to. Then in early in 2021, I say the backlog margins have inflected. So that says that not only is our inbound growing, but it's contributing positively to the backlog margins. So then it comes down to execution to turn that into, obviously, to turn that into operating margins. We have confidence in our capability to execute. I certainly have a huge degree of confidence with our -- in our organization. And as you stated earlier, our customers have a high degree of confidence in us as a company to be able to deliver on these projects. So there's always headwinds. But that's -- it's our job to manage those headwinds, but we're feeling a lot of tailwind right now. And just as a leadership team, Amy, we often talk about complacency and that we will never become complacent and that could be in terms of technology development, that could be in terms of our ESG objectives, that could be in terms of our operating margins. But Amy, we're not here to run this for the status quo. We're here to continue to grow and to continue to grow our margins, and we believe we're taking the right steps and have a strong recipe and now a proven recipe. And it's not over yet, there's more to come both in terms of technology innovation as well as commercial model innovation.

Got you. I think 1 thing that always amazes investors is when you start talking about your Subsea technology, Subsea 1.0, 2.0, hybrid flexibles. It's always improving, and I think you started alluding to that in your previous answer as well. So I always like talking about pipe, so I'm actually just quite clear, yes? Where are you guys are on the hybrid flexible pipe? Where are you guys are in the certification process? When could we see some commercial product? And how important is that product to you?

Very important, Amy. So thanks for the question, by the way. Very important. Always has been one of the key differentiators, not only of our product offering, but of our subsea system offering. There are simply things we can do that the other SPS companies cannot do because they don't have flexible pipe. So it's interesting, very interesting, is we're the only subsea company that has flexible pipe. Now there are other flexible pipe manufacturers, 2 to be exact, but they don't have the subsea capability that we have. So when we think about our subsea architecture, yes, we think about flexible pipe first because we believe flexible pipe creates optionality for our clients that can significantly decrease their total development costs. When things are rigid, they cannot move. So the well bore has to be drilled exactly, exactly where it was intended to be drilled. And the industry is pretty good at doing that. But sometimes, after they drill the pilot hole, they may decide, for certain stability reasons or whatever, to shift the well. And if they just shift the well slightly, it completely throws off the subsea infrastructure and cost the clients significant variation orders in terms to basically redo all of these rigid connections. So the ability to be able to use flexible pipe and to be able to be -- not only be able to move the wellbores, but to be able to adapt and change the architecture both originally and throughout the life of the project and be able to reuse the equipment like Petrobras does in Brazil, is simply brilliant. And so it's very important to us. We continue to be the market leader in flexible pipe. We're very proud of our position. We continue to be the primary supplier in Brazil and specifically to Petrobras. And we've been working hand-in-hand with Petrobras from -- since the time the industry recognized the particular challenge we were having on some of the pre-salt flexible riser systems, again, not on all the flexible pipe, but on a small subset, which is called stress corrosion cracking. It's been well studied, both at academia level, within our companies and between our research centers, we've been working collaboratively. It's well understood. We know the pathway to the solution. And as you pointed out, we are well into the qualification. I will tell you this, Amy. I think -- there's a lot of question right now, I think, still being asked by the investment community, will rigid ever return, will flexible ever return and replace the market penetration that the rigid has had? And again, it's only on certain riser systems, not all whole architecture. There's still a significant amount of flexible pipe being manufactured and deployed in Brazil. But I -- that question has always lingered. Is this a structural change? I think people are going to be surprised at how quickly they're going to find out that is not a structural change and that there will be flexible riser solutions, and we will be a leading provider.

Thanks for that color on the pipes. Another question related to the -- to technology. In terms of -- you pioneered the iEPCI model and making -- actually making a lot of the subsea barrels, the offshore barrels a lot more short cycle. So the question is, are there more step changes to come on that front, do you think?

Sure. So the first will be the convergence of the iEPCI model and the Subsea 2.0 technology because we really haven't converged the 2 of those together. We announced a very significant greenfield development called Limbayong for Petronas, which will be a full greenfield application of Subsea 2.0 plus iEPCI. That's why we were awarded the project. Petronas is a leading developer of technology, and they strongly support technology development. We've had a technology collaboration alliance with them for years. They understood what we were doing. And when they launched their very first deepwater, not offshore, but very first deepwater development, they chose TechnipFMC because we're the only ones who had that unique combination. So there'll be more to come there, Amy, in terms of the convergence between the 2. The next big step change will be around all-electric. And you'll hear from different parts of the industry, well, electric is not new, it's been out there. So let me describe a little bit about the state of the industry when it comes to all-electric systems. So today, the predominant mechanism that is used to activate boughs in the subsea is hydraulics. It's been around in the industry a very long time. It's tried, it's proven, et cetera. The industry has always been a little bit reluctant to move to electric just because it's new and it's different. Now I will point out, the aviation industry, which we're all comfortable with, moved from hydraulic controls to electric controls quite some time ago. But as an industry, we remained a little bit reluctant to make that change. In the meantime, TechnipFMC has deployed over 500 electric actuators, the mechanism that moves the valve, over 500 electric activators, or actuators that are in the water today. I may have this number slightly wrong, Amy, but not by much. I think the total industry has just over 500, call it 550. So in other words, we have 90-plus percent of all of the electric actuation that's in the subsea environment today. More importantly, we have the only subsea electric tree in the industry today. So it's called TRL readiness, which is the technical readiness level. So the industry is 1, 2, 3, et cetera. And you qualify a component, you qualify the system, you qualify it in a lab, you qualify it under the water until you get to the highest level of technical readiness level. So we're there. We're the only company who's there. It couldn't come at a better time. It has a lot of positive attributes, first and foremost, greenhouse gas reduction. When you're using hydraulic actuation, there's something on the top of the water that is powering that hydraulic distribution unit in those pumps to be able to push that fluid down and to be able to activate all of those wellbores. That's eliminated in an all-electric system. The umbilical itself becomes much more simplified. And most importantly -- well, most importantly, it's the greenhouse gas reduction, but also very interestingly is it significantly expands our market set for brownfield opportunities or tieback opportunities. So one of the limitations, and it's not the only limitation, but certainly one of the technical limitations, to how far away from the host facility you can tie back a well is how far you can push the hydraulic fluid because we're pushing it down a very small diameter line, a very small diameter line, so the friction pressure is tremendous. So tens of thousands of PSI just to push it, because remember, you could be 5,000 to 10,000 feet below the water column, just -- the water column below the surface just to start and then the step out from the host facility. And the electric system, as we all know, doesn't have that limitation. We can transfer electricity over very long transmission lines. So it greatly simplifies it. In our estimate, it will quadruple the size of the opportunities that we can tie back to an existing host facility. Really important, Amy, because from a client's perspective, they don't have to go through the capital expenditure of building a new host. And many, not all, but many of the existing host facilities are only operating at 60% of nameplate capacity, so they can certainly take the incremental production. So we're excited for a multitude of reasons, but we believe all-electric will actually -- even though we were surprised that -- not surprised, excited about the level of the adoption of Subsea 2.0 technology, we think now all electric will go -- will be another step change.

That's super helpful. And clearly, your message is resonating with our audience because I'm getting questions incoming on this. So can you clarify, with the electrification theme of the equipment on the seabed, is that going to trigger, you think, just on the kind of CapEx cycle? Or is there going to be a replacement cycle for the stuff that's already out there as well?

So I asked that question often to my own team. There's -- the technical answer is yes, it could be -- you could replace. Operationally, it would have to be discussed. I think we'll see, Amy, instead of necessarily going and replacing a electrical hydraulic system with a pure electric system, when we do the tiebacks that I was talking about or the next greenfield development, certainly, we think we'll go all electric. So you can tie back an all-electric 4-well 1-manifold tie back to the host, coupled with all around electric over hydraulic systems. But changing out those systems, there may not be a strong enough economic benefit to the client to do so.

You're absolutely -- yes, I agree. And if I had to interpret this investor's question, it's -- they're thinking along the lines of clients needing to offset their Scope 1, Scope 2 emissions. So when does it start to make economic sense to actually start? Is there a normal replacement cycle anyways? So we'll keep our eyes on this space, and I think it's really exciting to think about the opportunity there on the electrification side. Yes. A shorter-term question has popped in about the important summer installation season, especially in the Northern Hemisphere. What are you guys seeing in there? How is the spot market looking like? Any comments you can make on that?

Yes. I think, first and foremost, as you know, we're a very large broad company, and we're not a vessel company. We do own vessels, the vessels are important, particularly to our iEPCI projects, because it goes all the way from the engineering, the original concept studies, to the engineering, to the design, to the manufacturing, to the installation, the commissioning and then a 25-year life-of-field service contract. So the vessels play an important role in that, but they're just part of the company. So I just want to make that point very, very loud and very clear. We have an asset-light strategy. We're likely to have fewer vessels than more vessels, which is interesting because we're growing our market share. How do we do that? We partner really, really well. We partner really, really well. And there's companies that own vessels that have capability that we don't, and we're really happy to work with them and we've done that and we will continue to do that in a very open and collaborative way. And I think that's the way the industry has to start to think. The industry has to start to think differently. If everybody tries to have the most of an asset and the largest of an asset, that does not end well. We've seen that in the frac industry, we've seen that in the offshore drilling industry, we've seen that in the offshore seismic acquisition industry. It just does not end well. We don't have that mentality, and we have not had that mentality since we formed TechnipFMC. So we'll continue to make sure that we have the very best assets to support our differentiated business model. And we will work closely with others where we need capacity to support. So as far as the overall, we don't really talk about utilization, it's my point, Amy. But obviously, our Q1 numbers were stronger than people anticipated. Remember, we had $8 billion of inbound in 2019, $8 billion, 50% of which was iEPCI. We said at the time, you got to build the equipment before you can install the equipment, and building it takes 12 to 18 months. So if you kind of map that out, we're not worried about our vessel utilization activities because we have all of that iEPCI flowing through, which is high quality because we don't bid on a day rate basis. When we bid an iEPCI -- we're not bidding an iEPCI, but direct imported. So it's not a day rate like in a competitive market so we can be very selective. We see that flowing through now. In addition, you may have read that Petrobras did go out to tender on some additional, very sophisticated vessels for their market. And we are very happy with the results of that is all I can say at this time. So the combination of those 2 things, when you think about our company, you shouldn't be focused or thinking about vessel utilization. That's not how we're going to create value. You should be thinking about the iEPCI, the Subsea 2.0, the all-electric, the amount of direct awards to our company, I think those are the things that will create the greatest value.

Okay. One more question on your Subsea oil and gas business, which is if you look at your tendering pipeline, there were a lot of large greenfield projects that were there before 2014 that still have not been awarded to the market until this day. Obviously, couple of oil price downturns got in the way. But what's your view on whether these projects ever come back and what will it take for them to come back? You think Africa, maybe?

No, no, it's a great question. Some simply will never go forward. I mean if you look at the work that's been done, there's been a ton of exploration work that's been done. There's over 350 offshore developments that have been proven, but not yet developed. Some will probably never get to the economical hurdle rate or the geographical location, whatever it may be, some of those just simply won't get developed. But look, I won't -- maybe bullish is too strong of a word, but let me say it this way, I think there's going to -- I think people are going to be very surprised at the level of greenfield FIDs in subsea. There's just a lot of work going on right now. And again, it goes back to the quality of the reservoir, the project economics and the stability of the regulatory environment. And there's just some really good projects out there that I think will continue to see greenfield FIDs really -- I would -- in most of the deepwater basins around the world. So I think people will be surprised by the upside on greenfield FIDs.

Got you. Okay. Switching gears a little bit. I'm going to stay in the offshore because your tie just keeps reminding me I have to ask you about Deep Purple. I mean I'm super about Deep Purple because here in the U.K., there is a lot of talk about integrated energy systems, and the pictures I see here looks exactly what you guys are describing in a Deep Purple project. So talk about it a bit, give us -- are you working on any mandates right now? When do you think you'll get an order for Deep Purple? Will it be more like a pilot? Or will it be a fully commercial project? Talk us through what we can expect from that.

This is an exciting area for us. The very simple answer is yes to all of the above, but let me give you some additional color. When we think about our -- what created -- when we created TechnipFMC, we had a recipe that just has significantly transformed the industry, transformed our position in the industry, as we talked about earlier. We don't believe we have to come up with something different for the new energy space. We believe that same, relatively simple, but by the way, hard to do, and it takes courage, and we were the only one that has the courage to do it, to create that. So that's really based on 3 factors. That's based on partnering very well because I don't believe any 1 company is going to have the answer to any 1 of the new energies, let alone an integrated energy system. So you have to partner very well. You have to be a company that people are confident that if they partner with you, you're going to live up to your obligations and that you're going to treat them with respect. That's what we do. The second area is you have to be differentiated. Why go out with a vessel and just lay electric cable? I mean that -- there's nothing differentiating there. So we want to differentiate with our products. It's why we always had a product business around our assets, be it flexible pipe, as an example. The vessels, the majority of the vessels in our fleet, are there to deploy flexible pipe. So they're an integral part of the delivery system, but it's around the differentiation of the flexible pipe, not the differentiation of a boat. That's not where you get the differentiation. So it's the technology, it's the partnering, and then it's exactly what you said. It's -- we come from an integrated culture as TechnipFMC. Everything we do, we think about integration, integration, integration. We get picked on a lot because we put a little i in front of everything, but it's because that's the culture of the company. Our engineers think that way. So as an example, we're focused on 4 pillars. We're focused on wind, wave, hydrogen and carbon transportation systems. And when we think about them, we don't think about them independently. But the people that work in wind only think about wind and want wind to be the winner. The people who think about wave, likewise. The people think about hydrogen, likewise. We want everybody to win. We are the architect. We will put in place the new energy infrastructure architecture to allow any one of those or all of those to win. We don't have a favorite, we want all of those to succeed and to accelerate because that's what the world needs. And we are a key enabler to making that happen. We fundamentally believe it will happen offshore. We strongly believe that versus onshore. We think there are serious social and environmental limitations to try to reach the scale that would be required onshore. This will go offshore. So when we go offshore, Amy, what's unique about our company is we think from the seabed to the top of the water column. Whereas others think about how do I take this thing, let's just start with the turbine, how do I take this turbine and how do I put it in water? They're really -- it makes them nervous. It's not what they do for a living. They make big turbines. Big turbines have an incredible moment in terms of the physics of the turbine, and it needs to be on a really stable structure. They're really not that stable. So the structure needs to support the moment of the turbine, so fine. I go and I build a big structure, and I put it on the seabed, and then I put a turbine on top of that. The problem is you're limited by water depth, the problem is you're causing quite a disturbance to the seabed, and the problem is you're dealing with something that's just offshore and visible from the 40% of the world's population that lives very close to the coast line. So as we go further offshore, we remove some of those social issues. We can address properly the environmental issues, and now we can introduce the water column in the seabed, which no one else is really focused on because, again, we think from the seabed up. So when we think about wind, we think about offshore floating wind with wave integrated. Why wouldn't you integrate wave? Well, I can tell you why, because turbine guys don't like wave. They see wave as a competitor. And wave guys don't like turbines. They see turbines as a competitor. We don't play like that. We just -- it's the culture of our company. We just want everybody to win. So we'll integrate the 2 together. And there's no reason not to put a wave generation technology on every offshore floating wind turbine, we're developing the technology ourselves, and we're developing in partnership with others. We will have the technology that will be used and will be integrated on offshore floating wind. Then you have a system that could have output of up to 30% incremental output capacity with very little additional capital cost. So your economics improved dramatically. But the wind guys will get there on their own because again, they want to build a bigger blade. They want to build a bigger turbine. That's not always the answer. Sometimes simplicity is the answer. Now we went a step further because we have no limitation. You have to understand, Amy, our daily commute to work. We don't see land. There's no land around us. All we see is water. I mean that's -- we live in the middle of the oceans all around the world. So we don't think -- well, what -- how do I connect this back to the shore? We just live out there. Well, if you live out there and you generate electricity out there, and let's just use the example of wind and wave, you have to be able to store it, okay? So there's crazy ideas about huge tankers, full of batteries, crazy. Crazy. Economically, environmental damage, it make -- terrible ideas. We're going to put it on the seabed. But to put it on the seabed, we're going to convert it to hydrogen. So that's the Deep Purple as you mentioned, Amy, it's the ability to be able to take wind and wave, convert it to the hydrogen and have the hydrogen stored on the seabed in a very safe and economical manner. We have the only hydrogen compliant solution. Where are we along this journey? Yes, in the pilot project. Yes, we are talking to clients about actual projects to be sanctioned. So I think, again, this is a space that will develop. Always difficult, Amy, to say how quickly it will develop. I think anybody who's going to predict -- definitively predict when wind or wave or hydrogen. I just think that's not credible. We have to be realistic. We don't know exactly when, but it could happen sooner than people anticipate. But again, we just want to be in a position, wind, wave, hydrogen that we're well positioned, and we can integrate those together. That's how we create differentiation. We're building very strong partnerships, 2 new partnerships just this last quarter, 1 with Magnora for offshore wind, 1 with Bombora for offshore wave technology, and we'll continue to build those out. We announced 2 previously that we were working on as well. I won't have time for carbon transport system because it's really important. The world's got to capture the carbon, absolutely. We know who the generators are. They should be and, I believe, will step up and do this sequestration. So we're not really playing in the sequestration space, not that we couldn't, but it's not that we really bring differentiation there, and we're not the ones emitting the carbon. So those big carbon emitters will sequester it. You have to put it somewhere. I truly believe that 'not in my backyard' will apply. People are not going to want carbon stored below where they live or close to where they live. The best place to put it is offshore, the best place to put it is under the salt domes. We know the salt domes have phenomenal ceiling mechanisms. We know where they are. We can image them now because we have the seismic technology to be able to image them, which we didn't previously, that's why the pre-salt in Brazil was found decades later because the seismic imaging technology wasn't there. It is today. We can put it in place. We can assure it stays in place, but you're going to need a carbon transportation system to take it from shore to offshore to be able to be injected. And we will have the industry's only compliant -- fully compliant carbon transportation system from shore, all the way to the seabed.

If I'm hearing you correctly, does that mean it's laying pipe to...

Sure. That would be part of it, yes.

Yes, okay.

So it's more than that, it's pipe, it's monitoring, it's all the subsea infrastructure that you'll need to be able to do the injection because what's very different -- in oil production well, just to give 1 example, Amy, in an oil production well, we design for a very long lifetime. We do the same for a carbon injection system. But what people haven't really figured out yet is on an oil well, the time -- the amount of time you cycle the valves are frequent, but not that often. It's normally in the open position. It's normally producing. Carbon injection system, you're going to inject -- inject, seal, inject. it's going to be very intermittent. So it's a very different requirement and a very difficult technical qualification. We've been working on this for 4.5 years. We're qualified. It will take people a long time to get qualified. You can't just take a traditional oil valve and apply it in a CO2 transportation system.

Sure. On your partnership with Magnora, can you talk a bit more about the scope you're taking? And getting an investor incoming as well is why partner with someone like Magnora and not a larger offshore wind operator?

Sure. As mentioned earlier, we partner well and we partner with multiple people. In traditional energy, we don't only have 1 partner, as you know. We have very large IOCs who have partnered with us for over 2 decades on an exclusive basis. And we have many, many other players who have partnered with us for a long time or some more recent companies who have partnered with us for their inaugural subsea developments that we're very proud of as well. So we partner well. We don't partner exclusively. We try to make -- as I said earlier, we feel a moral obligation to drive this forward, to enable this to accelerate. To do that, we're not going to keep it and hold it for only 1, we're going to share it, if you will. We're very excited about our relationship with Magnora and are optimistic about the future that it could bring. And we will partner and be open to partnering with others. And as I mentioned, we had already announced some other potential offshore floating wind developments in other parts of the world where we are partnering with other people already. So big or small, Amy, we're talking to them all, and we'll be ready and happy to work with them.

Got you. Sounds like another keep your eye on the space type kind of. A couple -- we have a few minutes left, and I do want to cover a couple more things. Firstly, going back to traditional energy business, you got the surface and you talk about bringing that subsea solution into your surface business and was going to create a lot of opportunities there. So can you talk a bit about your client acceptance for that?

Sure. So let me just start with bringing everybody -- kind of rebaselining everybody where we are. In our Surface Technologies business, it is -- 70% of it is outside of the U.S. and very stable and growing. It is more of a subsea model. It's projects, smaller projects, but it's project-based. We have a backlog. The backlog maybe isn't as prolific because it's on a shorter time frame, normally 9 to 12 months. But it's more of a subsea model, it's absolutely technology-driven. Our differentiation there is it's all based on the technology, obviously, service support, et cetera, but technology makes a big difference. The U.S. market has become highly commoditized in terms of the product offering. There's really no technology differentiation, I'm sad to say, between us and our competitors. So it really comes down to the leanest operating model, a lot of low-cost country supply, manufacturing, in some cases, actually assembly and test. We still do that in the U.S., but not everyone does. So yes, it's really about getting as lean and mean as you can. And from everything we've talked about up to this point, I think it's pretty clear we're not a commodity company. That just -- there's companies who do it really well, by the way. We're just not -- it's not in our DNA. You can't be thinking about innovation, technology and integration every single day and win in a commodity-type business. So we're trying to bring some of that innovation and integration and technology into the surface space. I would say in terms of iComplete, we've been very happy. That is the digital offering. So today, there's many -- each service company has its own digital offering. Some are quite good, and some are relatively immature. But nobody has gone out and said, "Hey, look, we're going to play it all together. We're going to make it all work together so that we could have a fully digital environment. Making things a lot safer, removing people from the red zone, but also allowing a much more efficient operation." That's what we call iComplete. It's been accepted in all the U.S. major basins. Last count, which we said back on the quarterly call, so it's higher than that now was, I think, 10 major clients, and it continues to grow and expand. Very important for us because it allows us to take that commoditized offering, put a differentiation, digital offering on top of it and create greater value for ourselves and for our clients. iProduction is where we actually go in and redesign the surface infrastructure like we've done in subsea, but in this case, very much focused on greenhouse gas reduction. So we want to be able to offer to the industry a solution that removes 50% of the future greenhouse gases that are being emitted today. That would require basically 3 things: monitoring, measurement and then would actually be -- have to be able to go in and be able to put in place the mechanisms to be able to ensure that we don't have those greenhouse gas emissions. I would say the market acceptance has been not as robust as we would have expected, but we did go through a pandemic. We were only really introducing this back in 2019. I'm very proud of the team we have working on it. I believe that we can be very successful. And clearly, for our customers to meet their stated ambitions, is going to be very important. Much of which we will be capturing -- or not capturing, but eliminating, is methane releases. And methane releases are very -- have a very significant impact, much more so than some of the other traditional greenhouse gas emissions that we often talk about. So I think we have something that's unique. There's a big market there. So the potential is there, Amy. The market acceptance, it's going to cost more. It's going to cost more. But if you're committed to doing things differently, you can have a very interesting -- you can make a big progress along the -- again, the reduction of future greenhouse gas emissions. It's all on a digital application. There's no intervention. Everything is managed externally, so it has a lot of social benefits as well.

Got you. All right. I can't believe we are at the end of the session. So I don't know if you want to just take a moment just to have any closing remarks.

Wow, I think you've covered a lot. No, Amy, I don't want to waste everybody's time. There's a lot more we're real proud of what we've accomplished which - when it's laid out. I think we have a winning recipe. We've proven in subsea. Our clients have clearly stated that this is what they want. We believe that could be applied to new energies where you got to market well, you got to bring innovation. You can't just bring assets, you got to bring innovation and technology. We believe we're the company to do that, and we're going to work really, really closely with people to drive this and accelerate it because we think that's what the world needs to do.

Got it. Thank you very much for that, Doug. And we'll end it here to let our audience run and get a glass of water before the next session starts at 10:00, and that will be with Chesapeake. Thank you very much, Doug, for your time.

Stay well and stay healthy.