HOS Conference Call today. Great question was asked. Brain Surgeon might be a new USCG endorsement...
Will Thompson, Barclays Capital - Analyst asks:
And then you mentioned the labor, obviously it's preliminary to be talking about bringing back mariners and engineers, but some of these guys it takes longer to become a mariner than it is to become a brain surgeon. So can you help us understand, when we do see green shoots in the recovery, getting those guys to come back into your workforce, and how challenging that might be and what might then mean for cost inflation?
Todd Hornbeck, Hornbeck Offshore Services, Inc. - Chairman, President & CEO says:
Yes, it's correct. It just depends on how long the downturn is. As you know, whether it's our type of equipment with the high-end vessels or the drill ships or the semi-submersibles, we are all in the same boat, excuse the pun, but getting qualified mariners for all of that equipment will take some lead time.
During the upcycle we did pack the pipeline with a lot of qualified mariners, did a lot of training, this is still a great industry to come back to when it kicks back up again. But it is at a price and it is at a cost. And that is why I think longer term right now, the oil industry is really pushing down on the backs of the service companies to get costs down but there's only so much cost we can really go down. Two thirds of our daily costs are crew, and that is indicative throughout the industry. And if we shut it down, and then we have to get these highly complemented -- like you said, brain surgeons -- back, it is not going to be cheap. That cost structure will go back up as the green shoots start and the industry comes back.
In the interim it makes absolutely no sense for companies to keep equipment in the market to subsidize the industry and just burn all of their cash, because that is what is happening today. I think a lot more equipment needs to be stacked throughout the industry, not just in the Gulf of Mexico but worldwide.