HELIX ENERGY SOLUTIONS GROUP INC 10-Q

Item 1. Financial Statements HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 ​ ​ (Unaudited) ​ ​ ​ ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 162,268 ​ $ 253,515 Restricted cash ​ 2,506 ​ 73,612 Accounts receivable, net of allowance for credit losses of $ 2,187 and $ 1,477 , respectively ​ 228,043 ​ 144,137 Other current assets ​ 83,301 ​ 58,274 Total current assets ​ 476,118 ​ 529,538 Property and equipment ​ 2,945,654 ​ 2,938,154 Less accumulated depreciation ​ ( 1,337,814 ) ​ ( 1,280,509 ) Property and equipment, net ​ 1,607,840 ​ 1,657,645 Operating lease right-of-use assets ​ 209,351 ​ 104,190 Other assets, net ​ 62,188 ​ 34,655 Total assets ​ $ 2,355,497 ​ $ 2,326,028 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 131,898 ​ $ 87,959 Accrued liabilities ​ 112,321 ​ 91,712 Current maturities of long-term debt ​ 38,154 ​ 42,873 Current operating lease liabilities ​ 48,102 ​ 55,739 Total current liabilities ​ 330,475 ​ 278,283 Long-term debt ​ 225,427 ​ 262,137 Operating lease liabilities ​ 166,916 ​ 50,198 Deferred tax liabilities ​ 97,373 ​ 86,966 Other non-current liabilities ​ 53,452 ​ 975 Total liabilities ​ 873,643 ​ 678,559 Commitments and contingencies ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ Common stock, no par, 240,000 shares authorized, 151,808 and 151,124 shares issued, respectively ​ 1,297,296 ​ 1,292,479 Retained earnings ​ 320,579 ​ 411,072 Accumulated other comprehensive loss ​ ( 136,021 ) ​ ( 56,082 ) Total shareholders’ equity ​ 1,481,854 ​ 1,647,469 Total liabilities and shareholders’ equity ​ $ 2,355,497 ​ $ 2,326,028 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 3 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Net revenues ​ $ 272,547 ​ $ 180,716 ​ $ 585,284 ​ $ 506,072 Cost of sales ​ 233,332 ​ 177,716 ​ 566,032 ​ 485,318 Gross profit ​ 39,215 ​ 3,000 ​ 19,252 ​ 20,754 Gain (loss) on disposition of assets, net ​ — ​ 15 ​ — ​ ( 631 ) Acquisition and integration costs ​ ​ ( 762 ) ​ ​ — ​ ​ ( 2,349 ) ​ ​ — Change in fair value of contingent consideration ​ ​ ( 2,664 ) ​ ​ — ​ ​ ( 2,664 ) ​ ​ — Selling, general and administrative expenses ​ ( 23,563 ) ​ ( 13,346 ) ​ ( 53,966 ) ​ ( 41,950 ) Income (loss) from operations ​ 12,226 ​ ( 10,331 ) ​ ( 39,727 ) ​ ( 21,827 ) Equity in earnings of investment ​ 78 ​ — ​ 8,262 ​ — Net interest expense ​ ( 4,644 ) ​ ( 5,928 ) ​ ( 14,617 ) ​ ( 17,900 ) Loss on extinguishment of long-term debt ​ — ​ ( 124 ) ​ — ​ ( 124 ) Other expense, net ​ ( 20,271 ) ​ ( 4,015 ) ​ ( 37,623 ) ​ ( 1,438 ) Royalty income and other ​ 348 ​ 297 ​ 3,286 ​ 2,603 Loss before income taxes ​ ( 12,263 ) ​ ( 20,101 ) ​ ( 80,419 ) ​ ( 38,686 ) Income tax provision (benefit) ​ 6,500 ​ ( 1,058 ) ​ 10,074 ​ ( 2,910 ) Net loss ​ ( 18,763 ) ​ ( 19,043 ) ​ ( 90,493 ) ​ ( 35,776 ) Net loss attributable to redeemable noncontrolling interests ​ — ​ — ​ — ​ ( 146 ) Net loss attributable to common shareholders ​ $ ( 18,763 ) ​ $ ( 19,043 ) ​ $ ( 90,493 ) ​ $ ( 35,630 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share of common stock: ​ ​ ​ ​ Basic ​ $ ( 0.12 ) ​ $ ( 0.13 ) ​ $ ( 0.60 ) ​ $ ( 0.24 ) Diluted ​ $ ( 0.12 ) ​ $ ( 0.13 ) ​ $ ( 0.60 ) ​ $ ( 0.24 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding: ​ ​ ​ ​ Basic ​ 151,331 ​ 150,088 ​ 151,226 ​ 150,018 Diluted ​ 151,331 ​ 150,088 ​ 151,226 ​ 150,018 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ 2022 2021 Net loss ​ $ ( 18,763 ) ​ $ ( 19,043 ) ​ $ ( 90,493 ) $ ( 35,776 ) Other comprehensive loss, net of tax: ​ ​ ​ ​ Foreign currency translation loss ​ ( 33,453 ) ​ ( 13,447 ) ​ ( 79,939 ) ​ ( 6,478 ) Other comprehensive loss, net of tax ​ ( 33,453 ) ​ ( 13,447 ) ​ ( 79,939 ) ​ ( 6,478 ) Comprehensive loss ​ ( 52,216 ) ​ ( 32,490 ) ​ ( 170,432 ) ​ ( 42,254 ) Less comprehensive loss attributable to redeemable noncontrolling interests: ​ ​ ​ ​ Net loss ​ — ​ — ​ — ​ ( 146 ) Foreign currency translation gain ​ — ​ — ​ — ​ 48 Comprehensive loss attributable to redeemable noncontrolling interests ​ — ​ — ​ — ​ ( 98 ) Comprehensive loss attributable to common shareholders ​ $ ( 52,216 ) ​ $ ( 32,490 ) ​ $ ( 170,432 ) $ ( 42,156 ) ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ Redeemable ​ ​ Common Stock ​ Retained ​ Comprehensive ​ Shareholders’ ​ Noncontrolling ​ Shares Amount Earnings Loss Equity Interests Balance, June 30, 2022 151,714 ​ $ 1,295,016 ​ $ 339,342 ​ $ ( 102,568 ) ​ $ 1,531,790 $ — Net loss — ​ — ​ ( 18,763 ) ​ — ​ ( 18,763 ) ​ — Foreign currency translation adjustments — ​ — ​ — ​ ( 33,453 ) ​ ( 33,453 ) ​ — Activity in company stock plans, net and other 94 ​ 274 ​ — ​ — ​ 274 ​ — Share-based compensation — ​ 2,006 ​ — ​ — ​ 2,006 ​ — Balance, September 30, 2022 151,808 ​ $ 1,297,296 ​ $ 320,579 ​ $ ( 136,021 ) ​ $ 1,481,854 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ Redeemable ​ ​ Common Stock ​ Retained ​ Comprehensive ​ Shareholders’ ​ Noncontrolling ​ Shares Amount Earnings Loss Equity Interests Balance, June 30, 2021 150,787 ​ $ 1,288,603 ​ $ 456,108 ​ $ ( 44,651 ) ​ $ 1,700,060 $ — Net loss — ​ — ​ ( 19,043 ) ​ — ​ ( 19,043 ) ​ — Foreign currency translation adjustments — ​ — ​ — ​ ( 13,447 ) ​ ( 13,447 ) ​ — Activity in company stock plans, net and other 89 ​ 262 ​ — ​ — ​ 262 ​ — Share-based compensation — ​ 1,832 ​ — ​ — ​ 1,832 ​ — Balance, September 30, 2021 150,876 ​ $ 1,290,697 ​ $ 437,065 ​ $ ( 58,098 ) ​ $ 1,669,664 $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ Redeemable ​ ​ Common Stock ​ Retained ​ Comprehensive ​ Shareholders’ ​ Noncontrolling ​ Shares Amount Earnings Loss Equity Interests Balance, December 31, 2021 151,124 ​ $ 1,292,479 ​ $ 411,072 ​ $ ( 56,082 ) ​ $ 1,647,469 $ — Net loss — ​ — ​ ( 90,493 ) ​ — ​ ( 90,493 ) ​ — Foreign currency translation adjustments — ​ — ​ — ​ ( 79,939 ) ​ ( 79,939 ) ​ — Activity in company stock plans, net and other 684 ​ ( 673 ) ​ — ​ — ​ ( 673 ) ​ — Share-based compensation — ​ 5,490 ​ — ​ — ​ 5,490 ​ — Balance, September 30, 2022 151,808 ​ $ 1,297,296 ​ $ 320,579 ​ $ ( 136,021 ) ​ $ 1,481,854 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ Redeemable ​ ​ Common Stock ​ Retained ​ Comprehensive ​ Shareholders’ ​ Noncontrolling ​ Shares Amount Earnings Loss Equity Interests Balance, December 31, 2020 150,341 ​ $ 1,327,592 ​ $ 464,524 ​ $ ( 51,620 ) ​ $ 1,740,496 $ 3,855 Net loss — ​ — ​ ( 35,630 ) ​ — ​ ( 35,630 ) ​ ( 146 ) Cumulative-effect adjustments upon adoption of ASU No. 2020-06 — ​ ( 41,456 ) ​ 6,682 ​ — ​ ( 34,774 ) ​ — Foreign currency translation adjustments — ​ — ​ — ​ ( 6,478 ) ​ ( 6,478 ) ​ 48 Accretion of redeemable noncontrolling interests — ​ — ​ 1,489 ​ — ​ 1,489 ​ ( 1,489 ) Acquisition of redeemable noncontrolling interests ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,268 ) Activity in company stock plans, net and other 535 ​ ( 1,052 ) ​ — ​ — ​ ( 1,052 ) ​ — Share-based compensation — ​ 5,613 ​ — ​ — ​ 5,613 ​ — Balance, September 30, 2021 150,876 ​ $ 1,290,697 ​ $ 437,065 ​ $ ( 58,098 ) ​ $ 1,669,664 $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2022 2021 Cash flows from operating activities: ​ ​ ​ Net loss ​ $ ( 90,493 ) ​ $ ( 35,776 ) Adjustments to reconcile net loss to net cash provided by operating activities: ​ ​ ​ Depreciation and amortization ​ 102,590 ​ 106,226 Amortization of debt issuance costs ​ 1,744 ​ 2,596 Share-based compensation ​ 5,630 ​ 5,783 Deferred income taxes ​ 2,876 ​ ( 10,375 ) Equity in earnings of investment ​ ( 8,262 ) ​ — Loss on disposition of assets, net ​ — ​ 631 Loss on extinguishment of long-term debt ​ — ​ 124 Unrealized foreign currency loss ​ 38,374 ​ 2,041 Change in fair value of contingent consideration ​ ​ 2,664 ​ ​ — Changes in operating assets and liabilities: ​ ​ Accounts receivable, net ​ ( 50,268 ) ​ ( 6,631 ) Other current assets ​ ​ ( 19,888 ) ​ ​ 16,604 Income tax payable, net of income tax receivable ​ 1,818 ​ 20,912 Accounts payable and accrued liabilities ​ 47,266 ​ 28,577 Other, net ​ ( 32,655 ) ​ ( 9,460 ) Net cash provided by operating activities ​ 1,396 ​ 121,252 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ Alliance acquisition, net of cash acquired ​ ( 112,625 ) ​ — Capital expenditures ​ ( 4,990 ) ​ ( 7,386 ) Distribution from equity investment, net ​ 7,840 ​ — Proceeds from sale of assets ​ ​ — ​ ​ 51 Net cash used in investing activities ​ ( 109,775 ) ​ ( 7,335 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ Repayment of convertible senior notes ​ ( 35,000 ) ​ — Repayment of Term Loan ​ — ​ ( 29,826 ) Repayment of Nordea Q5000 Loan ​ — ​ ( 53,572 ) Repayment of MARAD Debt ​ ( 7,937 ) ​ ( 7,560 ) Debt issuance costs ​ ( 550 ) ​ ( 1,209 ) Acquisition of redeemable noncontrolling interests ​ ​ — ​ ​ ( 2,268 ) Payments related to tax withholding for share-based compensation ​ ( 1,525 ) ​ ( 1,878 ) Proceeds from issuance of ESPP shares ​ 575 ​ 654 Net cash used in financing activities ​ ( 44,437 ) ​ ( 95,659 ) ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents and restricted cash ​ ( 9,537 ) ​ ( 747 ) Net increase (decrease) in cash and cash equivalents and restricted cash ​ ( 162,353 ) ​ 17,511 Cash and cash equivalents and restricted cash: ​ ​ Balance, beginning of year ​ 327,127 ​ 291,320 Balance, end of period ​ $ 164,774 ​ $ 308,831 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ​ Note 1 — Basis of Presentation and New Accounting Standards The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements in U.S. dollars have been prepared in accordance with instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. 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 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”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our 2021 Form 10-K. Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format. We do not expect any recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective. ​ Note 2 — Company Overview We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations. Our services are centered on a three-legged business model: ● Production maximization — our assets and methodologies are specifically designed to efficiently enhance and extend the lives of existing oil and gas reserves; we also offer an alternative to take over end-of-life reserves in preparation for their abandonment; ● Decommissioning — we have historical success as a full-field abandonment contractor and believe that regulatory push for plug and abandonment (“P&A”) and transition to renewable energy will facilitate the continued growth of abandonment backlog; and ● Renewable energy support — we are an established global leader in jet trenching and continue to seek to provide specialty support services to offshore wind farm developments, including boulder removal and unexploded ordnance clearance. 9 Table of Contents We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. 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. Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and two chartered monohull vessels, the Siem H elix 1 and the Siem Helix 2 . Our well intervention equipment includes intervention systems such as intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module, some of which we provide on a stand-alone basis. Our Robotics segment provides offshore construction, trenching, seabed clearance, and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy. Additionally, our Robotics services are used in and complement our well intervention services. Our Robotics segment mainly 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 Droshky oil and gas properties. 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. 10 Table of Contents 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): ​ ​ ​ ​ ​ ​ ​ July 1, 2022 Cash consideration ​ $ 118,961 Contingent consideration ​ 26,700 Total fair value of consideration transferred ​ $ 145,661 ​ ​ ​ ​ Assets acquired: ​ ​ ​ Cash and cash equivalents ​ $ 6,336 Accounts receivable (1) ​ ​ 43,378 Other current assets ​ ​ 4,879 Property and equipment ​ ​ 118,619 Operating lease right-of-use assets ​ ​ 1,205 Intangible assets ​ ​ 1,400 Other assets ​ 2,133 Total assets acquired ​ $ 177,950 Liabilities assumed: ​ ​ ​ Accounts payable ​ $ 20,480 Accrued liabilities ​ ​ 3,073 Operating lease liabilities ​ 1,205 Deferred tax liabilities ​ 7,531 Total liabilities assumed ​ 32,289 Net assets acquired ​ $ 145,661 (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. 11 Table of Contents The following table summarizes the pro forma results of Helix and Alliance (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Revenues ​ $ 272,547 ​ $ 228,574 ​ $ 665,021 $ 591,179 Net loss ​ ( 18,763 ) ​ ( 8,828 ) ​ ( 81,069 ) ​ ( 29,620 ) ​ ​ Note 4 — Details of Certain Accounts Other current assets consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Contract assets (Note 8) ​ $ 746 $ 639 Prepaids ​ 30,371 ​ 18,228 Deferred costs (Note 8) ​ 13,634 ​ 2,967 Income tax receivable ​ — ​ 1,116 Other receivable (Note 12) ​ 30,052 ​ 28,805 Other ​ 8,498 ​ 6,519 Total other current assets ​ $ 83,301 $ 58,274 ​ Other assets, net consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Deferred recertification and dry dock costs, net ​ $ 37,732 $ 16,291 Deferred costs (Note 8) ​ 4,873 ​ 381 Prepaid charter (1) ​ 12,544 ​ 12,544 Intangible assets with finite lives, net ​ 4,335 ​ 3,472 Other ​ 2,704 ​ 1,967 Total other assets, net ​ $ 62,188 $ 34,655 (1) Represents prepayments to the owner of the Siem Helix 1 and the Siem Helix 2 to offset certain payment obligations associated with the vessels at the end of their respective charter term. Accrued liabilities consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Accrued payroll and related benefits ​ $ 39,548 $ 28,657 Accrued interest ​ ​ 2,116 ​ ​ 6,746 Income tax payable ​ 1,614 ​ — Deferred revenue (Note 8) ​ 20,840 ​ 8,272 Asset retirement obligations (Note 12) ​ 30,961 ​ 29,658 Other ​ 17,242 ​ 18,379 Total accrued liabilities ​ $ 112,321 $ 91,712 ​ Other non-current liabilities consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Deferred revenue (Note 8) ​ $ — $ 476 Asset retirement obligations (Note 12) ​ 23,763 ​ — Contingent consideration (Note 16) ​ ​ 29,364 ​ ​ — Other ​ 325 ​ 499 Total other non-current liabilities ​ $ 53,452 $ 975 ​ ​ 12 Table of Contents Note 5 — Leases 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. The following table details the components of our lease cost (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Operating lease cost ​ $ 16,088 ​ $ 14,336 ​ $ 44,348 $ 45,391 Variable lease cost ​ 4,488 ​ 4,298 ​ 14,035 ​ 11,417 Short-term lease cost ​ 9,112 ​ 6,258 ​ 22,121 ​ 13,233 Sublease income ​ ( 300 ) ​ ( 289 ) ​ ( 930 ) ​ ( 967 ) Net lease cost ​ $ 29,388 ​ $ 24,603 ​ $ 79,574 $ 69,074 ​ Maturities of our operating lease liabilities as of September 30, 2022 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Facilities and ​ ​ ​ Vessels Equipment Total Less than one year ​ $ 56,405 ​ $ 6,334 $ 62,739 One to two years ​ 57,040 ​ 5,753 ​ 62,793 Two to three years ​ 47,724 ​ 3,390 ​ 51,114 Three to four years ​ 35,200 ​ 867 ​ 36,067 Four to five years ​ 30,569 ​ 885 ​ 31,454 Over five years ​ 7,589 ​ 2,790 ​ 10,379 Total lease payments ​ $ 234,527 ​ $ 20,019 $ 254,546 Less: imputed interest ​ ( 36,767 ) ​ ( 2,761 ) ​ ( 39,528 ) Total operating lease liabilities ​ $ 197,760 ​ $ 17,258 $ 215,018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current operating lease liabilities ​ $ 42,621 ​ $ 5,481 $ 48,102 Non-current operating lease liabilities ​ 155,139 ​ 11,777 ​ 166,916 Total operating lease liabilities ​ $ 197,760 ​ $ 17,258 $ 215,018 ​ Maturities of our operating lease liabilities as of December 31, 2021 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Facilities and ​ ​ ​ Vessels Equipment Total Less than one year ​ $ 55,573 ​ $ 5,601 $ 61,174 One to two years ​ 34,580 ​ 4,844 ​ 39,424 Two to three years ​ 2,470 ​ 4,514 ​ 6,984 Three to four years ​ — ​ 2,462 ​ 2,462 Four to five years ​ — ​ 1,074 ​ 1,074 Over five years ​ — ​ 4,193 ​ 4,193 Total lease payments ​ $ 92,623 ​ $ 22,688 $ 115,311 Less: imputed interest ​ ( 5,633 ) ​ ( 3,741 ) ​ ( 9,374 ) Total operating lease liabilities ​ $ 86,990 ​ $ 18,947 $ 105,937 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current operating lease liabilities ​ $ 51,035 ​ $ 4,704 $ 55,739 Non-current operating lease liabilities ​ 35,955 ​ 14,243 ​ 50,198 Total operating lease liabilities ​ $ 86,990 ​ $ 18,947 $ 105,937 ​ 13 Table of Contents The following table presents the weighted average remaining lease term and discount rate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 ​ 2021 Weighted average remaining lease term 4.2 years ​ 2.4 years Weighted average discount rate 7.83 % ​ 7.57 % ​ The following table presents other information related to our operating leases (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2022 2021 Cash paid for operating lease liabilities ​ $ 43,342 $ 46,141 Right-of-use assets obtained in exchange for new operating lease obligations ​ 143,357 ​ 5,975 ​ ​ Note 6 — Long-Term Debt Scheduled maturities of our long-term debt outstanding as of September 30, 2022 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2026 ​ MARAD ​ ​ ​ Notes Notes Debt Total Less than one year ​ $ 30,000 ​ $ — ​ $ 8,333 $ 38,333 One to two years ​ — ​ — ​ 8,749 ​ 8,749 Two to three years ​ — ​ — ​ 9,186 ​ 9,186 Three to four years ​ — ​ 200,000 ​ 9,644 ​ 209,644 Four to five years ​ — ​ — ​ 5,001 ​ 5,001 Gross debt ​ 30,000 ​ 200,000 ​ 40,913 ​ 270,913 Unamortized debt issuance costs (1) ​ ( 179 ) ​ ( 4,958 ) ​ ( 2,195 ) ​ ( 7,332 ) Total debt ​ 29,821 ​ 195,042 ​ 38,718 ​ 263,581 Less current maturities ​ ( 29,821 ) ​ — ​ ( 8,333 ) ​ ( 38,154 ) Long-term debt ​ $ — ​ $ 195,042 ​ $ 30,385 $ 225,427 (1) Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement. Below is a summary of certain components of our indebtedness: Credit Agreement 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 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. and U.K. revolving credit facility commitments of $ 65 million and $ 35 million, respectively. The Amended ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S. and U.K. customer accounts receivable and cash, and provides for a $ 10 million sub-limit for the issuance of letters of credit. 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. 14 Table of Contents We and certain of our U.S. and U.K. 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. and U.K. subsidiaries, excluding Cal Dive I – Title XI, Inc. (“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries. Other subsidiaries may be added as guarantors of the facility in the future. 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. U.S. 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 %. U.K. 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. 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”) We fully redeemed the $ 35 million remaining principal amount of the 2022 Notes plus accrued interest by delivering cash upon maturity on May 1, 2022. The effective interest rate for the 2022 Notes was 4.8 %. 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”) The 2023 Notes bear interest at a coupon interest rate of 4.125 % per annum payable semi-annually in arrears on March 15 and September 15 of each year until maturity. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased by us. The 2023 Notes are convertible by their holders at any time beginning March 15, 2023 at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount, which currently represents 3,168,399 potentially convertible shares at an initial conversion price of approximately $ 9.47 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof. 15 Table of Contents Prior to March 15, 2023, holders of the 2023 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2023 Notes is equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition). Holders of the 2023 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount. Prior to March 15, 2021, the 2023 Notes were not redeemable. On or after March 15, 2021, we may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Any redemption would be payable in cash equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2023 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2023 Notes). The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2023 Notes together with any accrued interest will become immediately due and payable. The effective interest rate for the 2023 Notes is 4.8 %. 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”) The 2026 Notes bear interest at a coupon interest rate of 6.75 % per annum payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2021 until maturity. The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased by us. The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which currently represents 28,675,900 potentially convertible shares at an initial conversion price of approximately $ 6.97 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof. Prior to November 17, 2025, holders of the 2026 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2026 Notes is equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition). Holders of the 2026 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 64.5207 shares of our common stock per $1,000 principal amount. 16 Table of Contents Prior to August 15, 2023, the 2026 Notes are not redeemable. On or after August 15, 2023, we may redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Any redemption would be payable in cash equal to 100 % of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2026 Notes). The indenture governing the 2026 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2026 Notes together with any accrued interest will become immediately due and payable. The effective interest rate for the 2026 Notes is 7.6 %. 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 In connection with the 2026 Notes offering, we entered into capped call transactions (the “2026 Capped Calls”) with three separate option counterparties. The 2026 Capped Calls are for an aggregate of 28,675,900 shares of our common stock, which corresponds to the shares into which the 2026 Notes are initially convertible. The capped call shares are subject to certain anti-dilution adjustments. Each capped call option has an initial strike price of approximately $ 6.97 per share, which corresponds to the initial conversion price of the 2026 Notes, and an initial cap price of approximately $ 8.42 per share. The strike and cap prices are subject to certain adjustments. The 2026 Capped Calls are intended to offset some or all of the potential dilution to Helix common shares caused by any conversion of the 2026 Notes up to the cap price. The 2026 Capped Calls can be settled in either net shares or cash at our option in components commencing December 15, 2025 and ending February 12, 2026, which could be extended under certain circumstances. The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting Helix, including a merger, tender offer, nationalization, insolvency or delisting. In addition, certain events may result in a termination of the 2026 Capped Calls, including changes in law, insolvency filings and hedging disruptions. The 2026 Capped Calls are recorded at their aggregate cost of $ 10.6 million as a reduction to common stock in the shareholders’ equity section of our condensed consolidated balance sheets. MARAD Debt In 2005, Helix’s subsidiary CDI – Title XI issued its U.S. Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”). The MARAD Debt is guaranteed by the U.S. government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration (“MARAD”). The obligation of CDI Title XI to reimburse MARAD in the event CDI Title XI fails to repay the MARAD Debt is collateralized by the Q4000 and is guaranteed 50 % by us. In addition, we have agreed to bareboat charter the Q4000 from CDI Title XI for so long as the MARAD Debt remains outstanding. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93 %. The agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt are typical for U.S. 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. 17 Table of Contents Other 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. The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $ 175 million and had a maturity date of December 31, 2021. Concurrent with our entering into the ABL Facility on September 30, 2021, the Credit Agreement was terminated, the $ 28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility. We had no borrowings under the Revolving Credit Facility. We previously had a credit agreement with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000 . The loan was secured by the Q5000 and its charter earnings. In January 2021, we repaid the remaining principal amount of $ 53.6 million. The following table details the components of our net interest expense (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Interest expense ​ $ 4,923 ​ $ 6,097 ​ $ 15,264 $ 18,152 Interest income ​ ( 279 ) ​ ( 169 ) ​ ( 647 ) ​ ( 252 ) Net interest expense ​ $ 4,644 ​ $ 5,928 ​ $ 14,617 $ 17,900 ​ ​ Note 7 — Income Taxes We operate in multiple jurisdictions with complex tax laws subject to interpretation and judgment. 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 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. ​ 18 Table of Contents Note 8 — Revenue from Contracts with Customers Disaggregation of Revenue Our revenues are primarily derived from short-term and long-term service contracts with customers. Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts). We record revenues net of taxes collected from customers and remitted to governmental authorities. Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration. The following table provides information about disaggregated revenue by contract duration (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Well ​ ​ ​ Shallow Water ​ Production ​ Intercompany ​ Total ​ Intervention Robotics Abandonment Facilities Eliminations Revenue Three months ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ Short-term ​ $ 111,378 ​ $ 26,695 ​ $ 67,401 ​ $ — ​ $ ( 135 ) ​ $ 205,339 Long-term ​ 32,547 ​ 29,487 ​ — ​ 18,448 ​ ( 13,274 ) ​ 67,208 Total ​ $ 143,925 ​ $ 56,182 ​ $ 67,401 ​ $ 18,448 ​ $ ( 13,409 ) ​ $ 272,547 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ Short-term ​ $ 92,954 ​ $ 30,186 ​ $ — ​ $ — ​ $ — ​ $ 123,140 Long-term ​ 38,360 ​ 12,437 ​ — ​ 18,552 ​ ( 11,773 ) ​ 57,576 Total ​ $ 131,314 ​ $ 42,623 ​ $ — ​ $ 18,552 ​ $ ( 11,773 ) ​ $ 180,716 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ Short-term ​ $ 288,772 ​ $ 73,684 ​ $ 67,401 ​ $ — ​ $ ( 770 ) ​ $ 429,087 Long-term ​ 67,811 ​ 69,699 ​ — ​ 54,420 ​ ( 35,733 ) ​ 156,197 Total ​ $ 356,583 ​ $ 143,383 ​ $ 67,401 ​ $ 54,420 ​ $ ( 36,503 ) ​ $ 585,284 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ Short-term ​ $ 218,840 ​ $ 60,605 ​ $ — ​ $ — ​ $ — ​ $ 279,445 Long-term ​ 178,547 ​ 35,825 ​ — ​ 49,217 ​ ( 36,962 ) ​ 226,627 Total ​ $ 397,387 ​ $ 96,430 ​ $ — ​ $ 49,217 ​ $ ( 36,962 ) ​ $ 506,072 ​ Contract Balances Accounts receivable are recognized when our right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance. Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 4). 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. 19 Table of Contents 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. Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) amounts billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. 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 $ 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 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 September 30, 2022. 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 Contract fulfillment costs consist of costs incurred in fulfilling a contract with a customer. Our contract fulfillment costs primarily relate to costs incurred for mobilization of personnel and equipment at the beginning of a contract and costs incurred for demobilization at the end of a contract. Mobilization costs are deferred and amortized ratably over the contract term (including anticipated contract extensions) based on the pattern of the provision of services to which the contract fulfillment costs relate. Demobilization costs are recognized when incurred at the end of the contract. 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 $ 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. For additional information regarding revenue recognition, see Notes 2 and 12 to our 2021 Form 10-K. ​ 20 Table of Contents Note 9 — Earnings Per Share We have shares of restricted stock issued and outstanding that are currently unvested. Because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock, we are required to compute basic and diluted earnings per share (“EPS”) under the two-class method in periods in which we have earnings. Under the two-class method, net income or loss attributable to common shareholders for each period is allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed. For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses. Basic EPS is computed by dividing net income or loss available to common shareholders by the weighted average shares of our common stock outstanding. The calculation of diluted EPS is similar to that for basic EPS, except that the denominator includes dilutive common stock equivalents and the numerator excludes the effects of dilutive common stock equivalents, if any. The computations of the numerator (earnings or loss) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Three Months Ended ​ ​ September 30, 2022 ​ September 30, 2021 ​ Income Shares Income Shares Basic and Diluted: ​ ​ Net loss attributable to common shareholders ​ $ ( 18,763 ) ​ ​ $ ( 19,043 ) Net loss available to common shareholders ​ $ ( 18,763 ) ​ 151,331 ​ $ ( 19,043 ) 150,088 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ Nine Months Ended ​ ​ September 30, 2022 ​ September 30, 2021 ​ Income Shares Income Shares Basic and Diluted: ​ ​ Net loss attributable to common shareholders ​ $ ( 90,493 ) ​ ​ $ ( 35,630 ) Less: Accretion of redeemable noncontrolling interests ​ — ​ ​ ​ ( 241 ) Net loss available to common shareholders ​ $ ( 90,493 ) ​ 151,226 ​ $ ( 35,871 ) 150,018 ​ 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. These common stock equivalents were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable periods. Shares that otherwise would have been included in the diluted per share calculations assuming we had earnings are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Diluted shares (as reported) 151,331 150,088 151,226 150,018 Share-based awards 1,471 1,384 1,332 1,306 Total 152,802 151,472 152,558 151,324 ​ The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2026 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 2022 Notes ​ — ​ 2,519 ​ 803 ​ 2,519 2023 Notes 3,168 3,168 3,168 3,168 2026 Notes 28,676 28,676 28,676 28,676 ​ ​ 21 Table of Contents Note 10 — Employee Benefit Plans Long-Term 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grant Date ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ Date of Grant Award Type Shares/Units Per Share/Unit Vesting Period January 1, 2022 (1) RSU 1,065,705 ​ $ 3.12 33 % per year over three years January 4, 2022 (1) PSU 1,065,705 ​ $ 4.25 100 % on January 4, 2025 January 4, 2022 (2) Restricted stock 15,775 ​ $ 3.12 100 % on January 1, 2024 April 1, 2022 (2) Restricted stock 14,710 ​ $ 4.78 100 % on January 1, 2024 July 1, 2022 (2) Restricted stock 14,867 ​ $ 3.10 100 % on January 1, 2024 September 22, 2022 (3) Restricted stock 19,328 ​ $ 4.38 100 % 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. Forfeitures are recognized as they occur. No restricted stock awards have been granted to our executive officers or other employees in 2022. 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. Those PSUs, which contain a service and a market condition, are based on the performance of our common stock against peer group companies. Our PSUs granted beginning 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee of our Board and have been accounted for as equity awards. Those PSUs consist of two components: (i) 50 % based on the performance of our common stock against peer group companies, which component contains a service and a market condition, and (ii) 50 % based on cumulative total Free Cash Flow, which component contains a service and a performance condition. Free Cash Flow is calculated as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. Our PSUs cliff vest at the end of a three-year period with the maximum amount of the award being 200 % of the original PSU awards and the minimum amount being zero . For PSUs that have a service and a market condition and are accounted for as equity awards, compensation cost is measured based on the grant date estimated fair value determined using a Monte Carlo simulation model and subsequently recognized over the vesting period on a straight-line basis. For PSUs that have a service and a performance condition and are accounted for as equity awards, compensation cost is initially measured based on the grant date fair value. 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 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. 22 Table of Contents Our restricted stock units (“RSUs”) may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and have been accounted for as liability awards. Liability RSUs are measured at their estimated fair value at each balance sheet date, and subsequent changes in the fair value of the awards are recognized in earnings for the portion of the award for which the requisite service period has elapsed. Cumulative compensation cost for vested liability RSUs equals the actual payout value upon vesting. 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 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 We sponsor a defined contribution 401(k) retirement plan. Our discretionary contributions are in the form of cash and consist of a 50 % match of each participant’s contribution up to 5 % of the participant’s salary. Our discretionary contributions were suspended for 2021 and re-activated beginning January 2022. 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 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. For more information regarding our employee benefit plans, including the 2005 Incentive Plan and the ESPP, see Note 14 to our 2021 Form 10-K. ​ Note 11 — Business Segment Information 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. and Brazil Well Intervention operating segments are aggregated into the Well Intervention segment for financial reporting purposes. Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa. Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and the Siem Helix 1 and Siem Helix 2 chartered vessels. Our well intervention equipment includes intervention systems, some of which we provide on a stand-alone basis. Our Robotics segment provides offshore construction, trenching, seabed clearance and IRM services to both the oil and gas and the renewable energy markets globally. Additionally, our Robotics services are used in and complement our well intervention services. 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 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 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. 23 Table of Contents We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ 2022 2021 Net revenues — ​ ​ ​ ​ ​ Well Intervention ​ $ 143,925 ​ $ 131,314 ​ $ 356,583 ​ $ 397,387 Robotics ​ 56,182 ​ 42,623 ​ 143,383 ​ 96,430 Shallow Water Abandonment ​ ​ 67,401 ​ ​ — ​ ​ 67,401 ​ ​ — Production Facilities ​ 18,448 ​ 18,552 ​ 54,420 ​ 49,217 Intercompany eliminations ​ ( 13,409 ) ​ ( 11,773 ) ​ ( 36,503 ) ​ ( 36,962 ) Total ​ $ 272,547 ​ $ 180,716 ​ $ 585,284 ​ $ 506,072 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations — ​ ​ ​ ​ ​ Well Intervention ​ $ ( 1,304 ) ​ $ ( 13,343 ) ​ $ ( 55,610 ) ​ $ ( 14,819 ) Robotics ​ 11,708 ​ 4,936 ​ 22,854 ​ 2,257 Shallow Water Abandonment ​ ​ 16,320 ​ ​ — ​ ​ 16,320 ​ ​ — Production Facilities ​ 6,068 ​ 5,089 ​ 17,964 ​ 16,285 Segment operating income (loss) ​ 32,792 ​ ( 3,318 ) ​ 1,528 ​ 3,723 Corporate, eliminations and other ​ ( 20,566 ) ​ ( 7,013 ) ​ ( 41,255 ) ​ ( 25,550 ) Total ​ $ 12,226 ​ $ ( 10,331 ) ​ $ ( 39,727 ) ​ $ ( 21,827 ) ​ Intercompany segment amounts are derived primarily from equipment and services provided to other business segments. Intercompany segment revenues are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Well Intervention ​ $ 4,303 ​ $ 4,267 ​ $ 12,046 ​ $ 17,060 Robotics ​ 8,971 ​ 7,506 ​ 24,322 ​ 19,902 Shallow Water Abandonment ​ 135 ​ — ​ 135 ​ — Total ​ $ 13,409 ​ $ 11,773 ​ $ 36,503 ​ $ 36,962 ​ Segment assets are comprised of all assets attributable to each reportable segment. Corporate and other includes all assets not directly identifiable with our business segments. The following table reflects total assets by reportable segment (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Well Intervention ​ $ 1,769,705 ​ $ 2,012,214 Robotics ​ 172,521 ​ 96,249 Shallow Water Abandonment ​ ​ 200,987 ​ ​ — Production Facilities ​ 138,921 ​ 119,004 Corporate and other ​ 73,363 ​ 98,561 Total ​ $ 2,355,497 ​ $ 2,326,028 ​ ​ 24 Table of Contents Note 12 — Asset Retirement Obligations Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure decommissioning and P&A activities associated with our oil and gas properties. The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate. After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense. An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations. 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 AROs at January 1, ​ $ 29,658 ​ $ 30,913 Liability incurred during the period ​ ​ 23,601 ​ ​ — Revisions in estimates ​ — ​ ( 2,631 ) Accretion expense ​ 1,465 ​ 736 AROs at September 30, ​ $ 54,724 ​ $ 29,018 ​ ​ Note 13 — Commitments and Contingencies and Other Matters Commitments We have long-term charter agreements with Siem Offshore AS for the Siem Helix 1 and Siem Helix 2 vessels. 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, 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 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. Litigation 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). In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business. 25 Table of Contents We are currently involved in several lawsuits filed by current and former offshore employees seeking overtime compensation. 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 (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 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. ​ Note 14 — Statement of Cash Flow Information We define cash and cash equivalents as cash and all highly liquid financial instruments with original maturities of three months or less. We classify cash as restricted when there are legal or contractual restrictions for its withdrawal. The following table provides supplemental cash flow information (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2022 2021 Interest paid ​ $ 18,143 ​ $ 19,945 Income taxes paid ​ 6,631 ​ 6,771 ​ 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 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 We estimate current expected credit losses on our accounts receivable at each reporting date based on our credit loss history, adjusted for current factors including global economic and business conditions, offshore energy industry and market conditions, customer mix, contract payment terms and past due accounts receivable. The following table sets forth the activity in our allowance for credit losses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Balance at January 1, ​ $ 1,477 ​ $ 3,469 Additions (reductions) (1) ​ 710 ​ ( 213 ) Write-offs (2) ​ ​ — ​ ​ ( 1,846 ) Balance at September 30, ​ $ 2,187 ​ $ 1,410 (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. ​ 26 Table of Contents Note 16 — Fair Value Measurements 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 ​ Level 1 Level 2 Level 3 Total Liabilities: ​ ​ ​ ​ Contingent consideration ​ — ​ — ​ 29,364 ​ 29,364 ​ 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: ​ ​ ​ ​ ​ ​ 2022 Balance at July 1, ​ $ 26,700 Change in fair value ​ ​ 2,664 Balance at September 30, ​ $ 29,364 ​ The principal amount and estimated fair value of our long-term debt are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ December 31, 2021 ​ ​ Principal ​ Fair ​ Principal ​ Fair ​ Amount (1) Value (2) Amount (1) Value (2) MARAD Debt (matures February 2027) ​ $ 40,913 ​ $ 40,496 ​ $ 48,850 ​ $ 52,481 2022 Notes (matured May 2022) ​ — ​ — ​ 35,000 ​ 34,794 2023 Notes (mature September 2023) ​ 30,000 ​ 29,504 ​ 30,000 ​ 29,054 2026 Notes (mature February 2026) ​ 200,000 ​ 205,754 ​ 200,000 ​ 200,562 Total debt ​ $ 270,913 ​ $ 275,754 ​ $ 313,850 ​ $ 316,891 (1) Principal amount includes current maturities and excludes any related unamortized debt issuance costs. See Note 6 for additional disclosures on our long-term debt. (2) The estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach. 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. ​ ​ 27 Table of Contents