What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-25 · 99 added, 85 removed, 217 unchanged (46% of the section changed)

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Market and Industry Risks

The ongoing COVID-19 pandemic could continue to disrupt our operations and adversely impact our business and financial results.

In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic.

The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations in efforts to control the spread of COVID-19 such as shelter-in-place orders, quarantines, executive orders and similar restrictions.

As of December 31, 2020, efforts to contain COVID-19 have not succeeded in many regions, and the global pandemic remains ongoing.

Furthermore, although vaccines have been identified, their efficacy and rollout pose logistical and other challenges, and new strains of coronavirus have been identified that may be more contagious, more severe, and for which vaccinations may not be effective.

As a result the global economy has been marked by significant slowdown and uncertainty, which led to a precipitous decline in oil prices in response to demand concerns, as further discussed throughout these Risk Factors.

These events have resulted in significantly weaker outlook for oil producers and by extension oilfield service companies, including reduced operating and capital budgets as well as market confidence in overall industry viability.

We are not currently able to predict the duration or severity of the spread of COVID-19 or the responses thereto, and if economic and industry conditions do not improve, these events will continue to adversely impact our financial condition and results of operations.

The spread of COVID-19 to one or more of our locations, including our vessels, could significantly impact our operations.

We have implemented various protocols for both onshore and offshore personnel in efforts to limit the impact of COVID-19, however those may not prove fully successful.

The spread of COVID-19 to our onshore workforce could prevent us from supporting our offshore operations, we may experience reduced productivity as our onshore personnel work remotely, and any spread to our key management personnel may disrupt our business.

Any outbreak on our vessels may result in the vessel, or some or all of a vessel crew (including customer crew), being quarantined and therefore impede the vessel's ability to generate revenue.

We have experienced several instances of COVID-19 among our offshore crew, and although to date we have managed to minimize operational disruption, there can be no guarantee that will remain the case.

We have experienced challenges in connection with our offshore crew changes due to health and travel restrictions related to COVID-19, and those challenges and/or restrictions may continue or worsen.

Our business is adversely affected by low oil and gas prices, which occur in a cyclical oil and gas market that is currently experiencing significant volatility.

Our business is adversely affected by low oil and gas prices, which occur in a cyclical oil and gas market that continues to experience volatility.

Our services are substantially dependent upon the condition of the oil and gas market, and in particular, the willingness of oil and gas companies to make capital and other expenditures for offshore exploration, development, drilling and production operations.

Although our services are used for other operations during the entire lifecycle of a well, when industry conditions are unfavorable such as the current environment, oil and gas companies will likely continue to reduce their budgets for expenditures on all types of operations, and will defer certain activities to the extent possible.

Although our services are used for other operations during the entire lifecycle of a well, when industry conditions are unfavorable, oil and gas companies typically reduce their budgets for expenditures on all types of operations and defer certain activities to the extent possible.

The price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”) during the first quarter 2020 and global storage considerations significantly contributed to the slowdown and uncertainty in the global economy.

The confluence of these events along with the continued impact of COVID-19 has resulted in a significantly weaker outlook for oil producers and by extension oilfield service companies, including reduced operating and capital budgets as well as market confidence in overall industry viability.

We are not currently able to predict the duration or severity of the continued oil price volatility or the responses thereto, and if economic and industry conditions do not improve, these events will continue to adversely impact our financial condition and results of operations.

The ongoing COVID-19 pandemic has caused uncertainty and volatility in oil prices, which has led to reduced operating and capital spending by our oil and gas production customers.

Continued oil and gas volatility and the responses thereto will continue to adversely impact our financial condition and results of operations.

The levels of both capital and operating expenditures largely depend on the prevailing view of future oil and gas prices, which is influenced by numerous factors, including:

• worldwide economic activity and general economic and business conditions, including access to global capital and capital markets;

● worldwide economic activity and general economic and business conditions, including the interest rate environment and cost of capital as well as access to capital and capital markets;

● the global supply and demand for oil and natural gas;

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● the level of excess production capacity;

• the ability of oil and gas companies to generate funds or otherwise obtain external capital for capital projects and production operations;

● the ability of oil and gas companies to generate funds or otherwise obtain capital for capital projects and production operations;

● the environmental and social sustainability of the oil and gas sector and the perception thereof, including within the investing community;

● the sale and expiration dates of offshore leases globally;

• governmental restrictions on oil and gas leases, including executive actions taken with respect to permitting in connection with oil and gas leases on federal land announced in January 2021;

● technological advances affecting energy exploration, production, transportation and consumption;

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● weather conditions, natural disasters, and epidemic and pandemic diseases, including the ongoing COVID-19 pandemic;

• laws, regulations and policies directly related to the industries in which we provide services, and their interpretation and enforcement;

● laws, regulations and policies directly related to the industries in which we provide services, including restrictions on oil and gas leases, and their interpretation and enforcement;

● environmental and other governmental regulations;

● tax laws, regulations and policies.

A prolonged period of low level of activity by offshore oil and gas operators may continue to adversely affect demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general, all of which could lead to an even greater surplus of available vessels or similar assets and therefore increasingly downward pressure on the rates we can charge for our services.

Given that our business is adversely affected by low oil prices, especially the willingness of oil and gas companies to make capital and other expenditures for offshore exploration, development, drilling and production operations, the persistence of current conditions would negatively impact those companies’ willingness and ability to make those expenditures.

A prolonged period of low level of activity by offshore oil and gas operators may continue to adversely affect demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general, all of which could lead to lower utilization of available vessels or similar assets and correspondingly downward pressure on the rates we can charge for our services.

Given that our business is adversely affected by low oil prices, especially the willingness of oil and gas companies to make capital and other expenditures for offshore exploration, development, drilling and production operations, the persistence of such conditions would negatively impact those companies’ willingness and ability to make those expenditures.

Additionally, our customers, in reaction to negative market conditions, may continue to seek to negotiate contracts at lower rates, both during and at the expiration of the term of our contracts, to cancel earlier work and shift it to later periods, or to cancel their contracts with us even if cancellation involves their paying a cancellation fee.

The extent of the impact of these conditions on our results of operations and cash flows depends on the length and severity of an unfavorable industry environment and the potential decreased demand for our services.

The ongoing COVID-19 pandemic could continue to disrupt our operations and adversely impact our business and financial results.

In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic.

The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations such as shelter-in-place orders, quarantines, travel bans and similar restrictions in efforts to control its spread.

As of December 31, 2021, despite the rollout of vaccines and the successes of mitigation efforts, the global pandemic remains ongoing.

New strains of coronavirus have arisen and may continue to be identified that may be more contagious, more severe, and for which vaccinations may not be effective.

although vaccines have been identified, their efficacy and rollout pose logistical and other challenges.

The pandemic resulted in the global economy experiencing a significant slowdown and uncertainty in 2020, which led to a precipitous decline in oil prices in response to demand concerns, as further discussed throughout these Risk Factors.

These events resulted in reduced operating and capital spending by oil and gas producers.

Although the oil and gas market has recovered since 2020, we expect that the ongoing nature of the pandemic will continue to create market disruption and uncertainty that may undermine the confidence in overall industry viability.

We are currently unable to predict the duration or severity of the ongoing pandemic or the responses thereto, and these events may continue to adversely impact our financial condition and results of operations.

The spread of COVID-19 to one or more of our locations, including our vessels, could significantly impact our operations.

We have implemented various protocols for both onshore and offshore personnel in efforts to limit the impact of COVID-19, however those may not prove fully successful.

Any outbreak on our vessels may result in the vessel, or some or all of a vessel crew (including customer crew), being quarantined and therefore impede the vessel’s ability to generate revenue.

We have experienced several instances of COVID-19 among our offshore crew, and although to date we have managed to avoid major operational disruptions, there can be no guarantee that will remain the case.

We have experienced challenges in connection with our offshore crew changes due to health and travel restrictions related to COVID-19, and those challenges and/or restrictions may continue or worsen.

Further, we have been and may continue to be impacted by a decline in the available offshore workforce, whether due to the spread of COVID-19, considerations related to our protocols, attrition from our industry, or a combination of the foregoing.

We are subject to the effects of changing prices.

Inflation rates have been relatively low and stable over the previous three decades;

however, in 2021 due in part to supply chain disruptions and the effects of the COVID-19 pandemic, inflation rates began to rise significantly.

We bear the costs of operating and maintaining our assets, including labor and material costs as well as recertification and dry dock costs.

Although we are able to reduce some of our exposure to price increases through the rates we charge, competitive market pressures may affect our ability to pass along price adjustments, which may result in reductions in our operating margins and cash flows in the future .

Business and Operational Risks

The majority of our current backlog is concentrated in a small number of long-term contracts that we may fail to renew or replace.

Although historically our service contracts were of relatively short duration, over recent years we have entered into longer term contracts, including the five-year contract with BP for work in the Gulf of Mexico, the two four-year contracts with Petrobras for well intervention services offshore Brazil and the seven-year contract for the HP I .

As of December 31, 2020, the BP contract, the Petrobras contracts and the contract for the HP I represented approximately 69% of our total backlog.

Any cancellation, termination or breach of those contracts would have a larger impact on our operating results and financial condition than of our shorter term contracts.

In addition, the BP contract and the Petrobras contracts expire in 2021 and the contract for the HP I expires in 2023.

Our ability to extend, renew or replace these contracts when they expire or obtain new contracts as alternatives, and the terms of any such contracts, will depend on various factors, including market conditions and the specific needs of our customers.

Given the historically cyclical nature of the oil and gas market, we may not be able to extend, renew or replace the contracts or we may be required to extend, renew or replace expiring contracts or obtain new contracts at rates that are below our existing contract rates, or that have other terms that are less favorable to us than our existing contracts.

Failure to extend, renew or replace expiring contracts or secure new contracts at comparable rates and with favorable terms could have a material adverse effect on our financial position, results of operations and cash flows.

Our current backlog may not be ultimately realized for various reasons, and our contracts may be terminated early.

Our backlog may not be ultimately realized for various reasons, and our contracts may be terminated early.

As of December 31, 2021, backlog for our services supported by written agreements or contracts totaled $348 million, of which $246 million is expected to be performed in 2022.

We may incur capital costs, we may charter vessels for the purpose of performing these contracts, and/or we may forgo or not seek other contracting opportunities in light of these contracts.

We may not be able to perform under our contracts for various reasons giving our customers certain contractual rights under their contracts with us, which ultimately could include termination of a contract.

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The repudiation, early cancellation, termination or renegotiation of our contracts by our customers could have a material adverse effect on our financial position, results of operations and cash flows.

Furthermore, we may incur capital costs, we may charter vessels for the purpose of performing these contracts, and/or we may forgo or not seek other contracting opportunities in light of these contracts.

A large portion of our current backlog is concentrated in a small number of long-term contracts that we may fail to renew or replace.

Although historically our service contracts were of relatively short duration, over the past few years we performed a number of long-term contracts, including the five-year contract with BP for work in the Gulf of Mexico, the four-year contracts with Petrobras for well intervention services offshore Brazil and the seven-year contract for the HP I .

We completed the contracts with BP and with Petrobras for the Siem Helix 1 during 2021 and extended the contract with Petrobras for the Siem Helix 2 at reduced rates for one year until December 2022.

As of December 31, 2021, the Petrobras contract for the Siem Helix 2 and the contract for the HP I represented approximately 44% of our total backlog.

Any cancellation, termination or breach of those contracts would have a larger impact on our operating results and financial condition than of our shorter-term contracts.

Furthermore, our ability to extend, renew or replace our long-term contracts when they expire or obtain new contracts as alternatives, and the terms of any such contracts, will continue to depend on various factors, including market conditions and the specific needs of our customers.

Given the historically cyclical nature of the oil and gas market, as we have experienced, we may not be able to extend, renew or replace the contracts or we may be required to extend, renew or replace expiring contracts or obtain new contracts at rates that are below our existing contract rates, or that have other terms that are less favorable to us than our existing contracts.

Our operations involve numerous risks, which could result in our inability or failure to perform operationally under our contracts and result in reduced revenues, contractual penalties and/or contract termination.

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Continued industry uncertainty and domestic and global economic conditions, including the financial condition of our customers, lenders, insurers and other financial institutions generally, could jeopardize the ability of such parties to perform their obligations to us, including obligations to pay amounts owed to us.

In the event one or more of our customers is adversely affected by the ongoing COVID-19 pandemic or otherwise by the current market environment, our business with them may be affected.

In this current uncertain environment, we may face an increased risk of customers deferring work, declining to commit to new work, asserting claims of force majeure and/or terminating contracts, or our customers’, subcontractors’ or partners’ inability to make payments or remain solvent.

In the event one or more of our customers is adversely affected by the ongoing COVID-19 pandemic or otherwise, our business with them may be affected.

We may face an increased risk of customers deferring work, declining to commit to new work, asserting claims of force majeure and/or terminating contracts, or our customers’, subcontractors’ or partners’ inability to make payments or remain solvent.

Although we assess the creditworthiness of our counterparties, a variety of conditions and factors could lead to changes in a counterparty’s liquidity and increase our exposure to credit risk and bad debts.

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We may own assets with ongoing costs that cannot be recouped if the assets are not under contract, and time chartering vessels requires us to make ongoing payments regardless of utilization of and revenue generation from those vessels.

We own vessels and equipment for which there are ongoing costs, including maintenance, manning, insurance and depreciation.

We own vessels, systems and other equipment for which there are ongoing costs, including maintenance, manning, insurance and depreciation.

We may also construct assets without first obtaining service contracts covering the cost of those assets.

Our failure to secure contracts for vessels or other assets could materially adversely affect our financial position, results of operations and cash flows.

Further, we charter our ROV support vessels under time charter agreements.

We also have entered into long-term charter agreements for the Siem Helix 1 and Siem Helix 2 vessels to perform work under our contracts with Petrobras.

Further, we charter our robotics support vessels under time charter agreements.

We also have entered into long-term charter agreements for the Siem Helix 1 and Siem Helix 2 vessels.

Should our contracts with customers be canceled, terminated or breached and/or if we do not secure work for the chartered vessels, we are still required to make charter payments.

Making those payments absent revenue generation could have a material adverse effect on our financial position, results of operations and cash flows.

Asset upgrade, modification, refurbishment, repair, dry dock and construction projects, and customer contractual acceptance of vessels and equipment, are subject to risks, including delays, cost overruns, loss of revenue and failure to commence or maintain contracts.

We incur significant upgrade, modification, refurbishment, repair and dry dock expenditures on our existing fleet from time to time.

We also construct or make capital improvements to other pieces of equipment.

Asset upgrade, modification, refurbishment, repair, dry dock and construction projects, and customer contractual acceptance of vessels, systems and other equipment, are subject to risks, including delays, cost overruns, loss of revenue and failure to commence or maintain contracts.

We incur significant upgrade, modification, refurbishment, repair and dry dock expenditures on our fleet from time to time.

We also construct or make capital improvements to other assets.

While some of these capital projects are planned, some are unplanned.

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Actual capital expenditures could materially exceed our estimated or planned capital expenditures.

Moreover, assets undergoing upgrades, modifications, refurbishment, repair or dry docks may not earn revenue during the period they are out of service.

Moreover, assets undergoing upgrades, modifications, refurbishments, repairs or dry docks may not earn revenue during the period they are out of service.

Any significant period of such unplanned activity for our assets could have a material adverse effect on our financial position, results of operations and cash flows.

In addition, delays in the delivery of vessels and other assets being constructed or undergoing upgrades, modifications, refurbishment, repair, or dry docks may result in delay in customer acceptance and/or contract commencement, resulting in a loss of revenue and cash flow to us, and may cause our customers to seek to terminate or shorten the terms of their contracts with us and/or seek damages under applicable contract terms.

In addition, delays in the delivery of vessels and other assets being constructed or undergoing upgrades, modifications, refurbishments, repairs, or dry docks may result in delay in customer acceptance and/or contract commencement, resulting in a loss of revenue and cash flow to us, and may cause our customers to seek to terminate or shorten the terms of their contracts with us and/or seek damages under applicable contract terms.

In the event of termination or modification of a contract due to late delivery, we may not be able to secure a replacement contract on favorable terms, if at all, which could have a material adverse effect on our business, financial position, results of operations and cash flows.

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An oversupply of offshore drilling rigs coupled with a significant slowdown in industry activities results in increased competition from drilling rigs as well as substantially lower rates on work that is being performed.

Several of our competitors are substantially larger and have greater financial and other resources to better withstand a prolonged period of difficult industry conditions.

In order to compete for customers, these larger competitors may undercut us substantially by reducing rates to levels we are unable to withstand.

Several of our competitors are larger and have greater financial and other resources to better withstand a prolonged period of difficult industry conditions.

In order to compete for customers, these larger competitors may undercut us by reducing rates to levels we are unable to withstand.

Further, certain other companies may seek to compete with us by hiring vessels of opportunity from which to deploy modular systems and/or be willing to take on additional risks.

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The actual or perceived lack of sustainability of the oil and gas sector, or our failure to adequately implement and communicate ESG initiatives that demonstrate our own sustainability, may adversely affect our business.

Sustainability and ESG initiatives have become an increasingly important factor in assessing a company’s outlook, as investors look to identify factors that they believe inform a company’s ability to create long-term value.

Sustainability and ESG initiatives remain increasingly important factors in assessing a company’s outlook, as investors look to identify factors that they believe inform a company’s ability to create long-term value.

We understand we have an important role to play as a steward of the people, communities and environments we serve, and we regularly look for ways to emphasize and improve our own ESG record.

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Our industry is highly technical.

We utilize and rely on a variety of advanced assets and other tools, such as our vessels, DP systems, IRSs, SILs, ROAM, ROVs and ROVDrill, to provide customers with services designed to meet the technological challenges of their subsea activities worldwide.

We utilize and rely on a variety of advanced assets and other tools, such as our vessels, DP systems, intervention systems, ROVs and trenchers, to provide customers with services designed to meet the technological challenges of their subsea activities worldwide.

In some instances we hold intellectual property (“IP”) rights related to our business.

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Marine operations conducted in the North Sea are seasonal and depend, in part, on weather conditions.

Historically, we have enjoyed our highest North Sea vessel utilization rates during the summer and fall when weather conditions are favorable for offshore operations, and we typically have experienced our lowest North Sea utilization rates in the first quarter.

Historically, we have enjoyed our highest North Sea vessel utilization rates during the summer and fall when weather conditions are more favorable for offshore operations, and we typically have experienced our lowest North Sea utilization rates in the first quarter.

As is common in our industry, we may bear the risk of delays caused by adverse weather conditions.

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Damage caused by high winds and turbulent seas could potentially cause us to adjust service operations or curtail operations for significant periods of time until damage can be assessed and repaired.

Moreover, even if we do not experience direct damage from any of these weather conditions, we may experience disruptions in our operations because customers may adjust their offshore activities due to damage to their assets, platforms, pipelines and other related facilities.

Moreover, even if we do not experience direct damage from any of these weather conditions, we may experience disruptions in our operations if our personnel is adversely impacted, or because customers may adjust their offshore activities due to damage to their assets, platforms, pipelines and other related facilities.

The operation of marine vessels is risky, and we do not have insurance coverage for all risks.

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A successful liability claim for which we are not fully insured could have a material adverse effect on our financial position, results of operations and cash flows.

Moreover, we cannot make assurances that we will be able to maintain adequate insurance in the future at rates that we consider reasonable.

Moreover, we can provide no assurance that we will be able to maintain adequate insurance in the future at rates that we consider reasonable.

In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage.

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Our oil and gas operations involve a high degree of operational, contractual and financial risk, particularly risk of personal injury, damage, loss of equipment and environmental incidents.

In January 2019 we began owning oil and gas properties as part of our strategy to secure utilization for our vessels and other equipment.

Engaging in oil and gas production and transportation operations subjects us to certain risks inherent in the operation of oil and gas wells, including but not limited to uncontrolled flows of oil, gas, brine or well fluids into the environment;

In January 2019 we began owning oil and gas properties as part of our strategy to secure utilization for our vessels, systems and other equipment.

Engaging in oil and gas production and transportation operations subjects us to certain risks inherent in the ownership and operation of oil and gas wells, including but not limited to uncontrolled flows of oil, gas, brine or well fluids into the environment;

pipeline or other facility ruptures;

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Some of these laws are difficult to interpret, making compliance uncertain, and others increase the cost of doing business, which may make it difficult for us in some cases to be competitive.

The combination of such laws with the local requirements and logistics necessitated by the ongoing COVID-19 pandemic have further increased the challenges of doing business in these countries.

In addition, laws and policies of the U.S.

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Financial and Liquidity Risks

Our indebtedness and the terms of our indebtedness could impair our financial condition and our ability to fulfill our debt obligations.

As of December 31, 2020, we had $349.6 million of consolidated indebtedness outstanding.

Our indebtedness and the terms of our indebtedness could impair our financial condition and our ability to fulfill our debt obligations or otherwise limit our business and financial activities.

As of December 31, 2021, we had consolidated indebtedness of $305 million.

The level of indebtedness may have an adverse effect on our future operations, including:

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● limiting our ability to expand our business through capital expenditures or pursuit of acquisition opportunities due to negative covenants in credit facilities that place limitations on the types and amounts of investments that we may make;

• limiting our ability to use, or post security for, bonds or similar instruments required under the laws of certain jurisdictions with respect to, among other things, the temporary importation of vessels and equipment and the decommissioning of offshore oil and gas properties;

• limiting our ability to use proceeds from asset sales for purposes other than debt repayment (except in certain circumstances where proceeds may be reinvested under criteria set forth in our credit agreements).

● limiting our ability to use, or post security for, bonds or similar instruments required under the laws of certain jurisdictions with respect to, among other things, the temporary importation of vessels, systems and other equipment and the decommissioning of offshore oil and gas properties;

● limiting our ability to sell assets or use proceeds from certain asset sales for purposes other than debt repayment.

A prolonged period of weak economic or industry conditions and other events beyond our control may make it increasingly difficult to comply with our covenants and other restrictions in agreements governing our debt.

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Because we are a global company, our international operations are exposed to foreign currency exchange rate risks on all contracts denominated in foreign currencies.

For some of our international contracts, a portion of the revenue and local expenses is incurred in local currencies and we are at risk of changes in the exchange rates between the U.S.

For some of our international contracts, a portion of the revenue and local expenses is incurred in local currencies and we may be at risk of changes in the exchange rates between the U.S.

dollar and such currencies.

In some instances, we may receive payments in currencies that are not easily traded and may be illiquid.

We may receive payments in a currency that is not easily traded and may be illiquid, unable to be hedged, or subject to exchange controls that limit the currency’s ability to be converted into a more liquid currency, and we may be at risk of devaluation until such time as the currency may be able to be converted or spent.

As of December 31, 2021, we had approximately $10.5 million in Nigerian Naira, which is subject to currency exchange controls established by the Central Bank of Nigeria.

Those exchange controls limit our ability to convert our Nigerian Naira into U.S.

The reporting currency for our consolidated financial statements is the U.S.

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It is also possible that these laws and regulations in the future may add significantly to our capital and operating costs or those of our customers or otherwise directly or indirectly affect our operations.

In January 2021, the U.S.

Department of the Interior issued Order No.

3395, “Temporary Suspension of Delegated Authority” (“Order No.

3395 suspends for 60 days the authority of the Department of Bureaus and Offices to, among other things, issue any fossil fuel authorization including a lease, contract, or other agreement or drilling permit.

3395 does not limit existing operations under valid leases or apply to authorizations necessary to avoid conditions that may threaten human health or safety or avoid adverse impact to public land or mineral resources.

The interpretation or enforcement of Order No.

3395 or similar regulation may directly impede our operations or ability to service our customers’ needs.

Such regulations could also result in offshore drilling rigs being diverted to well intervention work, which may create more competition for the services we offer.

Such regulations may also affect oil and gas prices, which could impact the demand for our services.

Such impediments, competition or reduction in activity could have a material adverse effect on our operations, competitive position, results of operations and cash flows.

On December 20, 2019, CBP finalized a new set of rulings (the “2019 CBP Rulings”) that (i) restrict the scope of items that may be transported aboard non-coastwise qualified vessels on the OCS and (ii) establish rules regarding incidental vessel movements related to offshore lifting operations.

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On January 1, 2021, the National Defense Authorization Act for fiscal year 2021 came into force which, among other things, extended federal law, including the Jones Act, to U.S.

offshore wind farm projects.

This law could potentially make it more difficult and/or costly to provide for U.S.

renewables customers the services that we currently provide for renewables customers in the North Sea.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations are issued or applied.

In 2017 the U.S.

enacted significant tax reform, and certain provisions of the new law may ultimately adversely affect us.

Certain members of the EU are undergoing significant changes to their tax systems, which may have an adverse effect on us.

In addition, risks of substantial costs and liabilities related to environmental compliance issues are inherent in our operations.

offshore wind farm projects, making it more difficult and/or costly to provide for U.S.

renewables customers the services that we currently provide for renewables customers in the North Sea and Asia Pacific.

Risks of substantial costs and liabilities related to environmental compliance issues are inherent in our operations.

Our operations are subject to extensive federal, state, local and international laws and regulations relating to the generation, storage, handling, emission, transportation and discharge of materials into the environment.

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Our insurance policies and the contractual indemnity protections we seek to obtain from our counterparties, assuming they are obtained, may not be sufficient or effective to protect us under all circumstances or against all risk involving compliance with environmental laws and regulations.

As a multi-national organization, we are subject to taxation in multiple jurisdictions.

Tax laws are dynamic and continue to evolve as new legislation is enacted and interpretive guidance issued.

Additionally, the EU and organizations such as the Organization for Economic Co-operation and Development continue to promote increased disclosure and transparency, which may increase our overall compliance costs or have other adverse effects on us.

Enhanced regulations for deepwater offshore drilling may reduce the need for our services.

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Moreover, if our assets are not redeployed such that we can provide our services at profitable rates, our business, financial condition, results of operations and cash flows would be materially adversely affected.

In January 2021, the U.S.

Department of the Interior issued Order No.

3395, “Temporary Suspension of Delegated Authority” (“Order 3395”), suspending the authority of the Department of Interior’s Bureaus and Offices to, among other things, issue any fossil fuel authorization including a lease, contract, or other agreement or drilling permit, and thereafter President Biden signed Executive Order 14008 (“EO 14008” and together with Order 3395, the “Orders”) which, among other things, established a moratorium on new oil and gas leasing of public lands and offshore waters pending the completion of a comprehensive review and reconsideration of federal oil and gas permitting and

lease practices.

While certain portions of the Orders have subsequently been challenged in the court system and the ultimate interpretation and enforcement of the Orders remains uncertain at this time, they appear reflective of a broader regulatory agenda that may pose additional challenges for the industries we serve.

The Orders and other similar regulation may directly impede our operations or ability to service our customers’ needs.

Such regulations could also result in offshore drilling rigs being diverted to well intervention work, which may create more competition for the services we offer.

Such regulations may also affect oil and gas prices, which could impact the demand for our services.

Such impediments, competition or reduction in activity could have a material adverse effect on our operations, competitive position, results of operations and cash flows.

We cannot predict with any certainty the substance or effect of any new or additional regulations in the U.S.

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The loss of the services of one or more of our key employees, or our failure to attract and retain other highly qualified personnel in the future, could disrupt our operations and adversely affect our financial results.

Our industry has lost a significant number of experienced professionals over the years due to its cyclical nature.

Our industry has lost a significant number of experienced professionals over the years due to its cyclical nature, including recently in connection with industry downturn, the effects of the ongoing COVID-19 pandemic, and a decline in sentiment towards fossil fuels.

Many companies, including us, have had employee layoffs as a result of reduced business activities in an industry downturn.

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We rely on our information technology infrastructure and management information systems to operate and record almost every aspect of our business.

Similar to other companies, we may be subject to cybersecurity breaches caused by, among other things, illegal hacking, insider threats, computer viruses, phishing, malware, ransomware, or acts of vandalism or terrorism.

Furthermore, we may also experience increased cybersecurity risk as our onshore personnel continue to work remotely in an effort to limit the impact of COVID-19 at our locations.

Although we continue to refine our procedures, educate our employees and implement tools and security measures to protect against such cybersecurity risks, there can be no assurance that these measures will prevent or detect every type of attempt or attack.

In addition, a cyberattack or security breach could go undetected for an extended period of time.

A breach or failure of our information technology systems or networks, critical third-party systems on which we rely, or those of our customers or vendors, could result in an interruption in our operations, disruption to certain systems that are used to operate our vessels or ROVs, unplanned capital expenditures, unauthorized publication of our confidential business or proprietary information, unauthorized release of customer or employee data, theft or misappropriation of funds, violation of privacy or other laws, and exposure to litigation.

Any such breach could have a material adverse effect on our business, reputation, financial position, results of operations and cash flows.

This may include confidential or personal information belonging to us, our employees, customers, suppliers, or others.

Similar to other companies, our systems and networks, and those of third parties with whom we do business, may be subject to cybersecurity breaches caused by, among other things, illegal hacking, insider threats, computer viruses, phishing, malware, ransomware, or acts of vandalism or terrorism, or those perpetrated by criminals or nation-state actors.

Furthermore, we may also experience increased cybersecurity risk as some of our onshore personnel continue to work remotely as a result of the ongoing COVID-19 pandemic.

In addition to our own systems and networks, we use third-party service providers to process certain data or information on our behalf.

Due to applicable laws and regulations, we may be held responsible for cybersecurity incidents attributed to our service providers to the extent it relates to information we share with them.

Although we seek to require that these service providers implement and maintain reasonable security measures, we cannot control third parties and cannot guarantee that a security breach will not occur in their systems or networks.

Despite our efforts to continually refine our procedures, educate our employees, and implement tools and security measures to protect against such cybersecurity risks, there can be no assurance that these measures will prevent unauthorized access or detect every type of attempt or attack.

Our potential future upgrades, refinements, tools and measures may not be completely effective or result in the anticipated improvements, if at all, and may cause disruptions in our business operations.

In addition, a cyberattack or security breach could go undetected for an extended period of time, and the ensuing investigation of the incident would take time to complete.

During that period, we would not necessarily know the impact to our systems or networks, costs and actions required to fully remediate and our initial remediation efforts may not be successful, and the errors or actions could be repeated before they are fully contained and remediated.

A breach or failure of our systems or networks, critical third-party systems on which we rely, or those of our customers or vendors, could result in an interruption in our operations, disruption to certain systems that are used to operate our vessels or other assets, unplanned capital expenditures, unauthorized publication of our confidential business or proprietary information, unauthorized release of customer, employee or third party data, theft or misappropriation of funds, violation of privacy or other laws, and exposure to litigation or indemnity claims including resulting from customer-imposed cybersecurity controls or other related contractual obligations.

There could also be increased costs to detect, prevent, respond, or recover from cybersecurity incidents.

Any such breach, or our delay or failure to make adequate or timely disclosures to the public, regulatory or law enforcement agencies or affected individuals following such an event, could have a material adverse effect on our business, reputation, financial position, results of operations and cash flows, and cause reputational damage.

Certain provisions of our corporate documents, financial arrangements and Minnesota law may discourage a third party from making a takeover proposal.

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We are also subject to certain anti-takeover provisions of the Minnesota Business Corporation Act.

We have employment arrangements with all of our executive officers that could require cash payments, terms in certain of our convertible senior notes that could increase the applicable conversion rate and covenants in our Credit Facility that could put in breach, in the event of a “change of control.” Any or all of these provisions or factors may discourage a takeover proposal or tender offer not approved by management and our Board and could result in shareholders who may wish to participate in such a proposal or tender offer receiving less in return for their shares than otherwise might be available in the event of a takeover attempt.

We have employment arrangements with all of our executive officers that could require cash payments, terms in our convertible senior notes that could increase the applicable conversion rate and covenants in our asset-based credit agreement (the “ABL Facility”) that could put in breach, in the event of a “change of control.” Any or all of these provisions or factors may discourage a takeover proposal or tender offer not approved by management and our Board and could result in shareholders who may wish to participate in such a proposal or tender offer receiving less in return for their shares than otherwise might be available in the event of a takeover attempt.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors