Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. (Operator instructions) our first question comes from the line of John Keller from Johnson Rice and Company. Please go ahead.
John Keller – Johnson Rice & Company
Hey guys, congratulations on the new Sakhalin award. Looks like you guys are starting to gain some traction – more traction in that type of work. I am just curious as to get an idea of the type of scope or how broad that market can be going forward. How much can we sort of expect the growth to be or prospective growth in the Project Management Engineering side of the business.
Dave Mannon
John, this is Dave Mannon. We believe that the market for project management services could become a material part of our Parker EBITDA and net income in going forward. And we are approaching it in that fashion. So I think we’ve systematically identified specific areas to target, one was Alaska, the other one was our Sakhalin, continuing Sakhalin work. But we think there is other areas that we can leverage our technological leadership and provide services to E&P companies.
John Keller – Johnson Rice & Company
Okay, and I guess this one is more of a -- I guess theoretical or philosophical question for you. When you look at these projects an presuming everything tends to be pretty unique in its nature, project by project, how do you go about pricing the work or getting compensated for any of the risk that you are taking in this type of work?
Dave Mannon
Sure. The FEED part of the work is usually compensated in the – in cost plus nature, and there is – it’s really just engineering time and design time involved. So as far as the risk aspect there isn’t any. In the EPCI part where we construct the piece of equipment once again it’s on a – it’s either on a cost plus or it’s on a lump sum basis as far as our profit is concerned. And then it’s on a time and materials basis on the cost. And – for example, in the BP specifically contract, we do have some incentive in those contracts to incentivise us to perform on schedule. As far as risk, we don’t have any financial risk involved in those projects. Once it rolls into the O&M side much like we have over on the Yastreb and also Orlan and we operate the rig much like it was our own rig. So we do have risk associated with down time. But the fundamental concept in these rigs is for us to be an integral part in the selection of our equipment and the actual way – also the way the rig is designed so that we are comfortable in operating the rig on a risk-adjusted basis.
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