What changed in this filing

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Item 1. Financial Statements

2022-10-26 compared with 2022-07-27 · 242 added, 145 removed, 506 unchanged (43% of the section changed)

4 unchanged sentences

(in thousands)

September 30,

Current assets:

36 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

Gross profit (loss)

Loss on disposition of assets, net

Gain (loss) on disposition of assets, net

Acquisition and integration costs

Change in fair value of contingent consideration

Selling, general and administrative expenses

Loss from operations

Income (loss) from operations

Equity in earnings of investment

Net interest expense

Other income (expense), net

Loss on extinguishment of long-term debt

Other expense, net

Royalty income and other

1 unchanged sentence

Income tax provision (benefit)

Net income (loss) attributable to redeemable noncontrolling interests

Net loss attributable to redeemable noncontrolling interests

Net loss attributable to common shareholders

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Three Months Ended

Six Months Ended

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)

Other comprehensive income (loss), net of tax

Nine Months Ended

September 30,

Other comprehensive loss, net of tax:

Foreign currency translation loss

Other comprehensive loss, net of tax

Comprehensive loss

Less comprehensive income (loss) attributable to redeemable noncontrolling interests:

Net income (loss)

Less comprehensive loss attributable to redeemable noncontrolling interests:

Foreign currency translation gain

Comprehensive income (loss) attributable to redeemable noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive loss attributable to common shareholders

7 unchanged sentences

Noncontrolling

Balance, March 31, 2022

Balance, June 30, 2022

Foreign currency translation adjustments

1 unchanged sentence

Share-based compensation

Balance, June 30, 2022

Balance, September 30, 2022

Comprehensive

1 unchanged sentence

Noncontrolling

Balance, March 31, 2021

Net income (loss)

Balance, June 30, 2021

Foreign currency translation adjustments

Accretion of redeemable noncontrolling interests

Acquisition of redeemable noncontrolling interests

Activity in company stock plans, net and other

Share-based compensation

Balance, June 30, 2021

Balance, September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

10 unchanged sentences

Share-based compensation

Balance, June 30, 2022

Balance, September 30, 2022

Comprehensive

8 unchanged sentences

Share-based compensation

Balance, June 30, 2021

Balance, September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

4 unchanged sentences

Loss on disposition of assets, net

Unrealized foreign currency (gain) loss

Loss on extinguishment of long-term debt

Unrealized foreign currency loss

Change in fair value of contingent consideration

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable and accrued liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Alliance acquisition, net of cash acquired

Capital expenditures

1 unchanged sentence

Proceeds from sale of assets

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

25 unchanged sentences

generally accepted accounting principles (“GAAP”).

On July 1, 2022, we completed our acquisition of all of the equity interests of the Alliance group of companies (collectively “Alliance”).

The condensed consolidated financial statements prior to July 1, 2022 reflect only the historical results of Helix.

The condensed consolidated financial statements since the completion of the Alliance acquisition have included the results of Helix Alliance using the acquisition method of accounting.

See Note 3 for additional information regarding the Alliance acquisition.

The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures.

Actual results may differ from our estimates.

We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income (loss), statements of shareholders’ equity and statements of cash flows, as applicable.

The operating results for the three- and six-month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of shareholders’ equity and statements of cash flows, as applicable.

The operating results for the three- and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Our balance sheet as of December 31, 2021 included herein has been derived from the audited balance sheet as of December 31, 2021 included in our 2021 Annual Report on Form 10-K (our “2021 Form 10-K”).

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We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions.

On July 1, 2022, we completed the acquisition of the Alliance group of companies (collectively “Alliance”), expanding our service capabilities to shallow waters in the Gulf of Mexico.

Our North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months.

Our services are segregated into three reportable business segments:

Well Intervention, Robotics and Production Facilities (Note 10).

We have expanded our service capabilities to shallow waters in the Gulf of Mexico with the Alliance acquisition on July 1, 2022 (Note 3).

Our North Sea operations and our Gulf of Mexico shelf operations related to our Alliance acquisition are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months.

Our services are segregated into four reportable business segments:

Well Intervention, Robotics, Production Facilities and our new reporting segment, Shallow Water Abandonment, which was formed in the third quarter 2022 comprising the Helix Alliance business (Note 11).

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby avoiding drilling new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and gas.

3 unchanged sentences

Additionally, our Robotics services are used in and complement our well intervention services.

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under term charters as well as spot vessels as needed.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), which combines the HP I , the Q4000 and the Q5000 with certain well control equipment that can be deployed to respond to a well control incident, and our ownership of oil and gas properties.

Our Robotics segment mainly includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under term charters as well as spot vessels as needed.

We also have a 20 % ownership interest in Independence Hub, LLC (“Independence Hub”) that we account for using the equity method of accounting.

In May 2022, we received a net cash distribution of $ 7.8 million from the sale of the “Independence Hub” platform owned by Independence Hub.

In August 2022, we acquired from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, all of MP GOM’s 62.5 % interest in Mississippi Canyon Block 734, comprised of three wells and related subsea infrastructure (collectively known as the Thunder Hawk Field), in exchange for the assumption of MP GOM’s abandonment obligations (Note 12).

All of our current Production Facilities activities are located in the Gulf of Mexico.

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oil field decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.

Our Shallow Water Abandonment segment includes a diversified fleet of marine assets including liftboats, offshore supply vessels (“OSVs”), dive support vessels (“DSVs”), a heavy lift derrick barge, a crew boat, P&A systems, coiled tubing systems and other miscellaneous assets.

Note 3 — Alliance Acquisition

On July 1, 2022, we completed our acquisition of all of the equity interests of Alliance.

The Alliance acquisition extends our energy transition strategy by adding shallow-water capabilities into what we expect to be a growing offshore decommissioning market.

The aggregate preliminary purchase price of the Alliance acquisition was $ 145.7 million, consisting of $ 119.0 million with cash on hand and the estimated fair value of $ 26.7 million of contingent consideration related to the post-closing earn-out consideration.

The earn-out is payable in 2024 to the seller in the Alliance transaction in either cash or shares of our common stock pursuant to the terms of the Equity Purchase Agreement (the “Equity Purchase Agreement”) dated May 16, 2022 by and among Helix Alliance Decom, LLC, the seller and Helix.

The earn-out is not capped and is calculated based on certain financial metrics of the Helix Alliance business for 2022 and 2023 relative to amounts as set forth in the Equity Purchase Agreement.

The Alliance acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

The purchase price consideration has been allocated to the assets acquired and liabilities assumed of Alliance based upon preliminary estimate of their fair values as of the acquisition date.

Fair values of the assets acquired and liabilities assumed are measured in accordance with ASC Topic 820, Fair Value Measurement, using discounted cash flows and other applicable valuation techniques.

For certain assets and liabilities, those fair values are consistent with historical carrying values.

The following table summarizes the purchase consideration and the preliminary purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash consideration

Contingent consideration

Total fair value of consideration transferred

Assets acquired:

Cash and cash equivalents

Accounts receivable (1)

Other current assets

Property and equipment

Operating lease right-of-use assets

Intangible assets

Total assets acquired

Liabilities assumed:

Accounts payable

Accrued liabilities

Operating lease liabilities

Deferred tax liabilities

Total liabilities assumed

Net assets acquired

(1) The gross contractual accounts receivable totaled $ 44.2 million .

The fair value of accounts receivable reflects our best estimate at the acquisition date of contractual cash flows not expected to be collected.

The purchase price allocation is subject to revision as acquisition-date fair value analyses are completed and if additional information about facts and circumstances that existed at the acquisition date becomes available.

The purchase price consideration, as well as the estimated fair values of the assets acquired and liabilities assumed, will be finalized as soon as practicable, but no later than one year from the closing of the Alliance acquisition.

Acquisition and integration costs consist of legal and professional fees as well as costs incurred to integrate Alliance’s operations and systems and to align its financial processes and procedures with those of Helix.

Those costs are expensed as incurred and are presented separately from “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations.

Also presented separately are the changes in fair value of the contingent earn-out consideration (Note 16).

The pro forma summary below presents the results of operations as if the Alliance acquisition had occurred on January 1, 2021 and includes transaction accounting adjustments such as incremental depreciation and amortization expense from acquired tangible and intangible assets, elimination of interest expense on Alliance’s long-term debt that was paid off, acquisition and integration cost accruals, and tax-related effects.

The pro forma summary uses estimates and assumptions based on information available at the time.

Management believes the estimates and assumptions to be reasonable;

however, actual results may have differed significantly from this pro forma financial information.

The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations.

The unaudited pro forma summary is provided for illustrative purposes only and does not purport to represent Helix’s actual consolidated results of operations had the acquisition been completed as of the date presented, nor should it be considered indicative of Helix’s future consolidated results of operations.

The following table summarizes the pro forma results of Helix and Alliance (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Note 4 — Details of Certain Accounts

Other current assets consist of the following (in thousands):

September 30,

Contract assets (Note 8)

4 unchanged sentences

Other assets, net consist of the following (in thousands):

September 30,

Deferred recertification and dry dock costs, net

5 unchanged sentences

Accrued liabilities consist of the following (in thousands):

September 30,

Accrued payroll and related benefits

5 unchanged sentences

Other non-current liabilities consist of the following (in thousands):

September 30,

Deferred revenue (Note 8)

Asset retirement obligations (Note 12)

Contingent consideration (Note 16)

Total other non-current liabilities

1 unchanged sentence

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031.

The majority of the increases in our operating leases during the nine-month period ended September 30, 2022 are related to the vessel charter extensions for the Siem Helix 1 , the Siem Helix 2 , the Grand Canyon II , the Grand Canyon III and the Shelia Bordelon (Note 13).

We also sublease some of our facilities under non-cancelable sublease agreements.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost

3 unchanged sentences

Net lease cost

Maturities of our operating lease liabilities as of June 30, 2022 are as follows (in thousands):

Maturities of our operating lease liabilities as of September 30, 2022 are as follows (in thousands):

Facilities and

26 unchanged sentences

The following table presents the weighted average remaining lease term and discount rate:

September 30,

Weighted average remaining lease term

1 unchanged sentence

The following table presents other information related to our operating leases (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Cash paid for operating lease liabilities

Right-of-use assets obtained in exchange for new operating lease obligations

(1) Amount in 2022 primarily relates to the charter extensions for the Siem Helix 1 and the Siem Helix 2 (Note 12).

Note 6 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of June 30, 2022 are as follows (in thousands):

Scheduled maturities of our long-term debt outstanding as of September 30, 2022 are as follows (in thousands):

Less than one year

9 unchanged sentences

Credit Agreement

On September 30, 2021, we entered into an asset-based credit agreement (the “ABL Facility”) with Bank of America, N.A.

On September 30, 2021 we entered into an asset-based credit agreement with Bank of America, N.A.

(“Bank of America”), Wells Fargo Bank, N.A.

and Zions Bancorporation.

The ABL Facility provides for an $ 80 million asset-based revolving credit facility, which matures on September 30, 2026 , with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 50 million.

The ABL Facility also permits us to request an increase of the facility by up to $ 70 million, subject to certain conditions.

Commitments under the ABL Facility are comprised of separate U.S.

and Zions Bancorporation and on July 1, 2022 we entered into a first amendment to the credit agreement (collectively, the “Amended ABL Facility”).

The Amended ABL Facility provides for an $ 100 million asset-based revolving credit facility, which matures on September 30, 2026 , with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 50 million.

The Amended ABL Facility also permits us to request an increase of the facility by up to $ 50 million, subject to certain conditions.

Commitments under the Amended ABL Facility are comprised of separate U.S.

revolving credit facility commitments of $ 65 million and $ 35 million, respectively.

The ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S.

The Amended ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S.

customer accounts receivable and cash, and provides for a $ 10 million sub-limit for the issuance of letters of credit.

As of June 30, 2022, we had no borrowings under the ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 60.3 million, net of $ 2.3 million of letters of credit issued under that facility.

As of September 30, 2022, we had no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 81.8 million, net of $ 2.2 million of letters of credit issued under that facility.

We and certain of our U.S.

subsidiaries are the initial borrowers under the ABL Facility, whose obligations under the ABL Facility are guaranteed by those borrowers and certain other U.S.

subsidiaries including Helix Alliance are the current borrowers under the Amended ABL Facility, whose obligations under the Amended ABL Facility are guaranteed by those borrowers and certain other U.S.

subsidiaries, excluding Cal Dive I – Title XI, Inc.

1 unchanged sentence

Other subsidiaries may be added as guarantors of the facility in the future.

The ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S.

The Amended ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S.

borrowers and guarantors, and by substantially all of the assets of the U.K.

borrowers and guarantors.

borrowings under the ABL Facility initially bear interest at the LIBOR rate plus a margin of 1.50 % to 2.00 % or at a base rate plus a margin of 0.50 % to 1.00 %.

borrowings under the ABL Facility denominated in U.S.

dollars initially bear interest at the LIBOR rate and U.K.

borrowings denominated in the British pound initially bear interest at the SONIA daily rate, each plus a margin of 1.50 % to 2.00 %.

borrowings under the Amended ABL Facility bear interest at the Term SOFR (also known as CME Term SOFR as administered by CME Group, Inc.) rate plus a margin of 1.50 % to 2.00 % or at a base rate plus a margin of 0.50 % to 1.00 %.

borrowings under the Amended ABL Facility denominated in U.S.

dollars bear interest at the Term SOFR rate with SOFR adjustment of 0.10 % and U.K.

borrowings denominated in the British pound bear interest at the SONIA daily rate, each plus a margin of 1.50 % to 2.00 %.

We also pay a commitment fee of 0.375 % to 0.50 % per annum on the unused portion of the facility.

Beginning on the earlier of June 30, 2023, cessation of LIBOR or an earlier opt-in election, LIBOR will be replaced by either SOFR or term SOFR plus a margin of 0.114 % to 0.428 % or an alternate benchmark rate.

The ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions.

The ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding.

The ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10 % of the borrowing base or $ 8 million.

The ABL Facility also requires us to maintain a pro forma minimum excess availability of $ 16 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

On July 1, 2022, we entered into a first amendment to the ABL Facility to (i) increase the asset-based revolving credit facility from $ 80 million to $ 100 million, (ii) replace LIBOR with Term SOFR (also known as CME Term SOFR), as administered by CME Group Inc., and make certain conforming changes therewith, (iii) increase the amount of permitted debt for the deferred purchase price of property from $ 25 million to $ 50 million, (iv) increase the fixed coverage charge ratio trigger from $ 8 million to $ 10 million, (v) increase the excess availability requirements prior to the maturity of our outstanding convertible senior notes from $ 16 million to $ 20 million, (vi) establish an excess availability requirement for the portion of any post-closing earn-out consideration related to our acquisition of all of the equity interests of Alliance that will be paid in cash (Note 16), and (vii) provide for potential pricing adjustments based on specific metrics and performance targets determined by us and Bank of America, as agent with respect to the ABL Facility, related to environmental, social and governance (“ESG”) changes implemented by us in our business.

The Amended ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions.

The Amended ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding.

The Amended ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10 % of the borrowing base or $ 10 million.

The Amended ABL Facility also requires us to maintain a pro forma minimum excess availability of $ 20 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

The Amended ABL Facility also (i) limits the amount of permitted debt for the deferred purchase price of property not to exceed $ 50 million, (ii) establishes an excess availability requirement for the portion of any post-closing earn-out consideration related to our acquisition of Alliance that will be paid in cash (Note 3), and (iii) provides for potential pricing adjustments based on specific metrics and performance targets determined by us and Bank of America, as agent with respect to the Amended ABL Facility, related to environmental, social and governance (“ESG”) changes implemented by us in our business.

Convertible Senior Notes Due 2022 (“2022 Notes”)

1 unchanged sentence

The effective interest rate for the 2022 Notes was 4.8 %.

For the three- and six month periods ended June 30, 2022, total interest expense related to the 2022 Notes was $ 0.1 million and $ 0.6 million, respectively, primarily from coupon interest expense.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2022 Notes was $ 0.4 million and $ 0.8 million, respectively, with coupon interest expense of $ 0.4 million and $ 0.7 million, respectively, and the amortization of issuance costs of $ 0.1 million for the six-month period ended June 30, 2021.

For the nine month periods ended September 30, 2022, total interest expense related to the 2022 Notes was $ 0.6 million, primarily from coupon interest expense.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2022 Notes was $ 0.4 million and $ 1.3 million, respectively, with coupon interest expense of $ 0.4 million and $ 1.1 million, respectively, and the amortization of issuance costs of $ 0.2 million for the nine-month period ended September 30, 2021.

Convertible Senior Notes Due 2023 (“2023 Notes”)

13 unchanged sentences

The effective interest rate for the 2023 Notes is 4.8 %.

For the three- and six-month periods ended June 30, 2022, total interest expense related to the 2023 Notes was $ 0.3 million and $ 0.7 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.6 million, respectively, and the amortization of debt issuance costs of $ 0.1 million for the six-month period ended June 30, 2022.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2023 Notes was $ 0.3 million and $ 0.7 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.6 million, respectively, and the amortization of issuance costs of $ 0.1 million for the six-month period ended June 30, 2021.

For the three- and nine-month periods ended September 30, 2022, total interest expense related to the 2023 Notes was $ 0.4 million and $ 1.1 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.9 million, respectively, and the amortization of debt issuance costs of $ 0.1 million for the nine-month period ended September 30, 2022.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2023 Notes was $ 0.3 million and $ 1.0 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.9 million, respectively, and the amortization of issuance costs of $ 0.1 million for the nine-month period ended September 30, 2021.

Convertible Senior Notes Due 2026 (“2026 Notes”)

13 unchanged sentences

The effective interest rate for the 2026 Notes is 7.6 %.

For the three- and six-month periods ended June 30, 2022, total interest expense related to the 2026 Notes was $ 3.7 million and $ 7.4 million, respectively, with coupon interest expense of $ 3.4 million and $ 6.8 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.6 million, respectively.

For the three- and six-month periods ended June 30, 2021, total interest expense related to the 2026 Notes was $ 3.7 million and $ 7.3 million, respectively, with coupon interest expense of $ 3.4 million and $ 6.7 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.6 million, respectively.

For the three- and nine-month periods ended September 30, 2022, total interest expense related to the 2026 Notes was $ 3.7 million and $ 11.1 million, respectively, with coupon interest expense of $ 3.4 million and $ 10.1 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 1.0 million, respectively.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2026 Notes was $ 3.7 million and $ 11.0 million, respectively, with coupon interest expense of $ 3.4 million and $ 10.1 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.9 million, respectively.

2026 Capped Calls

18 unchanged sentences

government-guaranteed ship financing transactions, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

In accordance with the Amended ABL Facility, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including minimum liquidity and a springing fixed charge coverage ratio (applicable under certain conditions that are currently not applicable) with respect to the Amended ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt.

As of September 30, 2022, we were in compliance with these covenants.

We previously had a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America.

5 unchanged sentences

In January 2021, we repaid the remaining principal amount of $ 53.6 million.

In accordance with the ABL Facility, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including minimum liquidity and a springing fixed charge coverage ratio (applicable under certain conditions that are currently not applicable) with respect to the ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt.

As of June 30, 2022, we were in compliance with these covenants.

The following table details the components of our net interest expense (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest expense

4 unchanged sentences

We believe that our application of such laws and the tax impact thereof are reasonable and fairly presented in our condensed consolidated financial statements.

For the three- and six-month periods ended June 30, 2022, we recognized income tax expense of $ 1.4 million and $ 3.6 million, respectively, resulting in effective tax rates of ( 5.1 )% and ( 5.2 )%, respectively.

For the three- and six-month periods ended June 30, 2021, we recognized income tax benefit of $ 2.0 million and $ 1.9 million, respectively, resulting in effective tax rates of 12.6 % and 10.0 %, respectively.

For the three- and nine-month periods ended September 30, 2022, we recognized income tax expense of $ 6.5 million and $ 10.1 million, respectively, resulting in effective tax rates of ( 53.0 )% and ( 12.5 )%, respectively.

For these periods our aggregate tax expense was greater than the aggregate tax benefit of our losses primarily due to non-creditable foreign income and deemed profit taxes as well as unbenefited tax losses, resulting in negative effective tax rates.

Furthermore, our mix of earnings was impacted by the acquisition of Alliance, resulting in increased U.S.

earnings and tax expense as compared to the same periods in 2021.

For the three- and nine-month periods ended September 30, 2021, we recognized income tax benefit of $ 1.1 million and $ 2.9 million, respectively, resulting in effective tax rates of 5.3 % and 7.5 %, respectively.

These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized.

For the three- and six-month periods ended June 30, 2022, our aggregate tax expense was greater than the aggregate tax benefit of our losses, resulting in negative effective tax rates.

The effective tax rates in those periods were significantly lower than the U.S.

statutory rate primarily due to non-creditable foreign income and deemed profit taxes, as well as unbenefited tax losses.

Note 8 — Revenue from Contracts with Customers

6 unchanged sentences

The following table provides information about disaggregated revenue by contract duration (in thousands):

Three months ended June 30, 2022

Three months ended June 30, 2021

Six months ended June 30, 2022

Six months ended June 30, 2021

Shallow Water

Three months ended September 30, 2022

Three months ended September 30, 2021

Nine months ended September 30, 2022

Nine months ended September 30, 2021

Contract Balances

3 unchanged sentences

Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 4).

Contract assets were $ 9.1 million at June 30, 2022 and $ 0.6 million at December 31, 2021.

We had no credit losses on our contract assets for the three- and six-month periods ended June 30, 2022 and 2021.

Contract assets were $ 0.7 million at September 30, 2022 and $ 0.6 million at December 31, 2021.

We had no credit losses on our contract assets for the three- and nine-month periods ended September 30, 2022 and 2021.

Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer.

1 unchanged sentence

Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 4).

Contract liabilities totaled $ 6.4 million at June 30, 2022 and $ 8.7 million at December 31, 2021.

Revenue recognized for the three- and six-month periods ended June 30, 2022 included $ 3.5 million and $ 5.8 million, respectively, that were included in the contract liability balance at the beginning of each period.

Revenue recognized for the three- and six-month periods ended June 30, 2021 included $ 4.2 million and $ 5.4 million, respectively, that were included in the contract liability balance at the beginning of each period.

Contract liabilities totaled $ 20.8 million at September 30, 2022 and $ 8.7 million at December 31, 2021.

Revenue recognized for the three- and nine-month periods ended September 30, 2022 included $ 2.7 million and $ 7.0 million, respectively, that were included in the contract liability balance at the beginning of each period.

Revenue recognized for the three- and nine-month periods ended September 30, 2021 included $ 4.0 million and $ 6.7 million, respectively, that were included in the contract liability balance at the beginning of each period.

We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.

Performance Obligations

As of June 30, 2022, $ 551.5 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 232.4 million, $ 233.5 million and $ 85.6 million in 2022 , 2023 and 2024 , respectively.

As of September 30, 2022, $ 758.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 162.0 million, $ 426.4 million and $ 170.0 million in 2022 , 2023 and 2024 , respectively.

These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees.

These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at June 30, 2022.

For the three- and six-month periods ended June 30, 2022 and 2021, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For the three- and nine-month periods ended September 30, 2022 and 2021, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

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Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 4).

Our deferred contract costs totaled $ 8.7 million at June 30, 2022 and $ 3.3 million at December 31, 2021.

For the three- and six-month periods ended June 30, 2022, we recorded $ 6.6 million and $ 11.2 million, respectively, related to amortization of these deferred contract costs.

For the three- and six-month periods ended June 30, 2021, we recorded $ 9.5 million and $ 19.9 million, respectively, related to amortization of these deferred contract costs.

Our deferred contract costs totaled $ 18.5 million at September 30, 2022 and $ 3.3 million at December 31, 2021.

For the three- and nine-month periods ended September 30, 2022, we recorded $ 8.5 million and $ 19.7 million, respectively, related to amortization of these deferred contract costs.

For the three- and nine-month periods ended September 30, 2021, we recorded $ 11.7 million and $ 31.6 million, respectively, related to amortization of these deferred contract costs.

There were no associated impairment losses for any period presented.

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Three Months Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Basic and Diluted:

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Net loss available to common shareholders

Six Months Ended

June 30, 2022

June 30, 2021

Nine Months Ended

September 30, 2022

September 30, 2021

Basic and Diluted:

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Net loss available to common shareholders

We had net losses for the three- and six-month periods ended June 30, 2022 and 2021.

We had net losses for the three- and nine-month periods ended September 30, 2022 and 2021.

Accordingly, our diluted EPS calculation for these periods excluded any assumed exercise or conversion of common stock equivalents.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Diluted shares (as reported)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Note 10 — Employee Benefit Plans

Long-Term Incentive Plan

As of June 30, 2022, there were 4.2 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the six-month period ended June 30, 2022, the following grants of share-based awards were made under the 2005 Incentive Plan:

As of September 30, 2022, there were 4.1 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the nine-month period ended September 30, 2022, the following grants of share-based awards were made under the 2005 Incentive Plan:

Date of Grant

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100 % on January 1, 2024

July 1, 2022 (2)

Restricted stock

100 % on January 1, 2024

September 22, 2022 (3)

Restricted stock

100 % on September 22, 2023

(1) Reflects grants to our executive officers.

(2) Reflects grants to certain independent members of our Board of Directors (our “Board”) who have elected to take their quarterly fees in stock in lieu of cash, of which 8,013 shares granted on January 4, 2022 and 5,230 shares granted on April 1, 2022 vested upon the approval of our Board’s Compensation Committee in connection with the departure of an independent director during the second quarter 2022.

(3) Reflects restricted stock grants made to two new independent members of our Board in connection with their appointment to our Board.

Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis.

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No restricted stock awards have been granted to our executive officers or other employees in 2022.

For the three- and six-month periods ended June 30, 2022, $ 0.8 million and $ 1.4 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and six-month periods ended June 30, 2021, $ 0.9 million and $ 1.7 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and nine-month periods ended September 30, 2022, $ 0.5 million and $ 1.9 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and nine-month periods ended September 30, 2021, $ 0.8 million and $ 2.5 million, respectively, were recognized as share-based compensation related to restricted stock.

Our performance share units (“PSUs”) that were granted prior to 2021 are to be settled solely in shares of our common stock and are accounted for as equity awards.

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Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition.

For the three- and six-month periods ended June 30, 2022, $ 1.1 million and $ 2.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and six-month periods ended June 30, 2021, $ 1.0 million and $ 2.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and nine-month periods ended September 30, 2022, $ 1.5 million and $ 3.6 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

In January 2022, based on the performance of our common stock price as compared to our performance peer group over a three-year period, 559,150 equity PSUs granted in 2019 vested at 157 %, representing 876,469 shares of our common stock with a total market value of $ 3.2 million.

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Cumulative compensation cost for vested liability RSUs equals the actual payout value upon vesting.

For the three- and six-month periods ended June 30, 2022, $ 0.2 million and $ 0.8 million, respectively, were recognized as compensation cost.

For the three- and six-month periods ended June 30, 2021, $ 0.2 million and $ 0.4 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2022, $ 0.7 million and $ 1.5 million, respectively, were recognized as compensation cost.

Compensation cost recognized for the three-month period ended September 30, 2021 was minimal.

For the nine-month period ended September 30, 2021, $ 0.4 million was recognized as compensation cost.

In 2022 and 2021, we granted fixed-value cash awards of $ 5.4 million and $ 3.5 million, respectively, to select management employees under the 2005 Incentive Plan.

The value of these cash awards is recognized on a straight-line basis over a vesting period of three years .

For the three- and six-month periods ended June 30, 2022, $ 1.1 million and $ 2.1 million, respectively, were recognized as compensation cost.

For the three- and six-month periods ended June 30, 2021, $ 1.0 million and $ 2.0 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2022, $ 1.1 million and $ 3.2 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.0 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

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Our discretionary contributions were suspended for 2021 and re-activated beginning January 2022.

For the three- and six-month periods ended June 30, 2022, we made $ 0.4 million and $ 0.8 million, respectively, in contributions to the 401(k) plan.

For the three- and nine-month periods ended September 30, 2022, we made $ 0.4 million and $ 1.1 million, respectively, in contributions to the 401(k) plan.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”).

As of June 30, 2022, 1.4 million shares were available for issuance under the ESPP.

As of September 30, 2022, 1.4 million shares were available for issuance under the ESPP.

The ESPP currently has a purchase limit of 260 shares per employee per purchase period.

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Note 11 — Business Segment Information

We have three reportable business segments:

Through the second quarter 2022, we had three reportable business segments:

Well Intervention, Robotics and Production Facilities.

Beginning in the third quarter 2022 as a result of the Alliance acquisition (Note 3), we formed a new reportable business segment:

Shallow Water Abandonment.

Our U.S., U.K.

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Additionally, our Robotics services are used in and complement our well intervention services.

Our Robotics segment includes ROVs, trenchers and robotics support vessels under term charters as well as spot vessels as needed.

Our Robotics segment mainly includes ROVs, trenchers and robotics support vessels under term charters as well as spot vessels as needed.

Our Production Facilities segment includes the HP I , the HFRS and our ownership of oil and gas properties (Note 12).

Our Shallow Water Abandonment segment operates a diversified fleet of marine assets including liftboats, OSVs, DSVs, a heavy lift derrick barge, a crew boat, P&A systems, coiled tubing systems and other miscellaneous assets.

All material intercompany transactions between the segments have been eliminated.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net revenues —

Well Intervention

Shallow Water Abandonment

Production Facilities

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Well Intervention

Shallow Water Abandonment

Segment assets are comprised of all assets attributable to each reportable segment.

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The following table reflects total assets by reportable segment (in thousands):

September 30,

Well Intervention

Shallow Water Abandonment

Production Facilities

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An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

Our AROs relate to our Droshky oil and gas properties that we acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.

Our existing AROs relate to our Droshky oil and gas properties that we acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.

In connection with assuming the P&A obligations related to those assets, we are entitled to receive agreed-upon amounts from Marathon Oil as the P&A work is completed.

Our ARO additions in the third quarter 2022 and a corresponding asset of $ 23.6 million relate to MP GOM’s 62.5 % interest in the Thunder Hawk Field that we acquired in August 2022 (Note 2).

The following table describes the changes in our AROs (in thousands):

AROs at January 1,

Liability incurred during the period

Revisions in estimates

Accretion expense

AROs at June 30,

AROs at September 30,

Note 13 — Commitments and Contingencies and Other Matters

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During the first quarter 2022, the charter agreements for the Siem Helix 1 and the Siem Helix 2 were extended to February 2025 and February 2027, respectively, with further options to extend.

We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels.

The expiration date of the Grand Canyon II charter was extended to December 2022, with an option to renew.

The Grand Canyon III charter expires May 2023.

We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels, which were extended during the third quarter 2022 to December 2027 and May 2028, respectively, with further options to renew.

During the first quarter 2022, we executed short-term time charter agreements for the Horizon Enabler in the North Sea and the Shelia Bordelon in the Gulf of Mexico.

During the third quarter 2022, the charter agreement for the Shelia Bordelon was extended to June 2024.

Contingencies and Claims

We believe that there are currently no contingencies that would have a material adverse effect on our financial position, results of operations or cash flows.

Our contingent consideration liability resulting from the Alliance acquisition is subject to risk as a result of changes in our probability weighted discounted cash flow model, which is based on internal forecasts, and changes in weighted average discount rate, which is derived from market data.

We believe that there are currently no other contingencies that would have a material adverse effect on our financial position, results of operations or cash flows.

We are involved in various legal proceedings, some involving claims under the General Maritime Laws of the United States and the Merchant Marine Act of 1920 (commonly referred to as the Jones Act).

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These suits are brought as collective actions and are in various stages of litigation.

In one such lawsuit, during the third quarter 2021 the United States Court of Appeals for the Fifth Circuit issued a ruling adverse to us that may also have implications for some of the other cases in which we are involved, as well as the way offshore personnel are compensated throughout our industry.

We further appealed that matter and in May 2022, the United States Supreme Court granted our petition for a writ of certiorari.

In one such lawsuit, during the third quarter 2021 the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) issued a ruling adverse to us that may have implications for some of the other cases in which we are involved, as well as the way offshore personnel are compensated throughout our industry.

We further appealed that matter to the United States Supreme Court, which heard oral arguments in October 2022.

In another such lawsuit, during the third quarter 2022 the Fifth Circuit issued a separate adverse ruling that may also have implications for some of the other cases in which we are involved.

We continue to vigorously defend these lawsuits.

Notwithstanding that we believe we retain valid defenses, we have established a liability in certain of these matters.

Notwithstanding that we believe we retain valid defenses, we have established a liability in these matters.

The final outcome of these matters remains uncertain, and the ultimate liability to us could be more or less than the liability established.

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The following table provides supplemental cash flow information (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Interest paid

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Our capital additions include the acquisition of property and equipment for which payment has not been made.

These non-cash capital additions totaled $ 0.3 million at June 30, 2022 and December 31, 2021.

These non-cash capital additions totaled $ 0.3 million at September 30, 2022 and December 31, 2021.

Non-cash investing activities for the nine-month period ended September 30, 2022 also included $ 26.7 million in estimated fair value of contingent earn-out consideration as of July 1, 2022, the date of the Alliance acquisition (Note 3).

Note 15 — Allowance for Credit Losses

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Write-offs (2)

Balance at June 30,

Balance at September 30,

(1) Additions (reductions) in allowance for credit losses reflect credit loss reserves (releases) during the respective periods.

Additions during the third quarter 2022 primarily reflected adjustments to the allowance for credit losses due to increases in our expected credit losses as a result of the Alliance acquisition.

(2) The write-offs of allowance for credit losses reflect certain receivables related to our Robotics segment that were previously reserved and subsequently deemed to be uncollectible.

Note 16 — Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value accounting rules establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Observable inputs such as quoted prices in active markets;

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of three valuation approaches as follows:

(a) Market Approach.

Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

(b) Cost Approach.

Amount that would be required to replace the service capacity of an asset (replacement cost).

Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).

Our financial instruments include cash and cash equivalents, receivables, accounts payable and long-term debt.

The carrying amount of cash and cash equivalents, trade and other current receivables as well as accounts payable approximates fair value due to the short-term nature of these instruments.

The following table sets forth our assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value at September 30, 2022

Contingent consideration

Contingent consideration liability related to the Alliance acquisition (Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period and changes in its estimated fair value are recorded in earnings until the liability is settled.

The fair value of the estimated contingent consideration is determined based on our evaluation of the probability and amount of earnout that may be achieved based on expected future performance of Helix Alliance.

The Monte Carlo simulation model is used to calculate the estimated earnout payment, which is then discounted to present value based on the expected payment date of the contingent consideration.

The weighted-average volatility was 47.5 % and the weighted average discount rate was estimated to be 9.2 % at September 30, 2022.

The changes in the fair value of contingent consideration are as follows:

Balance at July 1,

Change in fair value

Balance at September 30,

The principal amount and estimated fair value of our long-term debt are as follows (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

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The fair value of the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.

Note 16 — Subsequent Events

Alliance Acquisition

On July 1, 2022, we completed our acquisition of all of the equity interests of Alliance for approximately $ 120 million cash at closing plus post-closing earn-out consideration payable in 2024 in the event the Alliance business achieves certain financial metrics in 2022 and 2023.

Alliance provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oil field decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.

The acquisition extends our energy transition strategy by adding shallow-water capabilities into what we expect to be a growing offshore decommissioning market.

Due to the recent timing of the acquisition, the initial accounting for the Alliance acquisition is incomplete, and we are not able to disclose certain information relating to the acquisition, including the preliminary fair value of the contingent earn-out consideration, assets acquired and liabilities assumed.

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-Q

Item 1. Financial Statements