What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-24 · 331 added, 325 removed, 822 unchanged (44% of the section changed)

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of property and equipment impairment triggering events

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We compared the Company’s historical forecasts to actual results by asset group to assess the Company’s ability to accurately forecast.

Fair value measurement of contingent consideration and property and equipment acquired in the Alliance acquisition

As discussed in Note 3 to the consolidated financial statements, on July 1, 2022, the Company acquired the Alliance group of companies (Alliance) in a business combination for total purchase consideration of $145.7 million, including contingent consideration related to the post-closing earn-out consideration.

In connection with the transaction, the purchase price consideration was allocated to the assets acquired and liabilities assumed of Alliance based upon their fair values as of the acquisition date, primarily comprised of property and equipment which the Company estimated the fair value to be approximately $117.3 million.

The acquisition date fair value of the contingent consideration was approximately $26.7 million and year end fair value was approximately $42.8 million.

We identified the evaluation of the fair value measurement of the contingent consideration and the property and equipment acquired in the Alliance acquisition, including the subsequent fair value measurement of the contingent consideration, as a critical audit matter.

Specifically, there was complex auditor judgment involved in evaluating (1) the weighted average cost of capital and the expected gross profit assumptions used to estimate the fair value of the contingent consideration which was sensitive to changes in those assumptions and (2) the estimated replacement cost and economic obsolescence assumptions used to determine the fair value of the property and equipment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s acquisition-date and year-end valuation process, including controls related to the determination of the assumptions listed above.

We evaluated the reasonableness of the Company’s forecasted gross profit as of the acquisition date and year-end for the period of the contingent consideration by comparing the forecast to (1) Alliance’s historical gross profit trends, (2) Alliance’s actual performance subsequent to the acquisition, and (3) external economic and market data.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating:

● the weighted average cost of capital assumption by independently developing a range of rates using publicly available market interest rate data

● the Company’s assumptions over the estimated replacement cost including economic obsolescence applied by comparing selected trends and data with leading industry sources.

We have served as the Company’s auditor since 2016.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 23, 2023 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired the Alliance group of companies during 2022, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, the Alliance group of companies’ internal control over financial reporting associated with approximately 8.7% of total assets and 14.3% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the Alliance group of companies.

Basis for Opinion

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Operating lease right-of-use assets

Deferred recertification and dry dock costs, net

Other assets, net

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Commitments and contingencies

Redeemable noncontrolling interests

Shareholders’ equity:

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Total shareholders’ equity

Total liabilities, redeemable noncontrolling interests and shareholders’ equity

Total liabilities and shareholders’ equity

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

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Goodwill impairment

Acquisition and integration costs

Change in fair value of contingent consideration

Selling, general and administrative expenses

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Net income (loss)

Deferred gain from sale leaseback transaction in retained earnings upon adoption of ASU No.

Foreign currency translation adjustments

Unrealized gain on hedges, net of tax

Issuance of redeemable noncontrolling interests

Accretion of redeemable noncontrolling interests

Activity in company stock plans, net and other

Share-based compensation

Balance, December 31, 2019

Net income (loss)

Credit losses recognized in retained earnings upon adoption of ASU No.

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Balance, December 31, 2021

Foreign currency translation adjustments

Activity in company stock plans, net and other

Share-based compensation

Balance, December 31, 2022

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

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Unrealized foreign currency (gain) loss

Change in fair value of contingent consideration

Changes in operating assets and liabilities:

Accounts receivable, net

Income tax receivable, net of income tax payable

Other current assets

Income tax payable, net of income tax receivable

Accounts payable and accrued liabilities

Deferred recertification and dry dock costs, net

Net cash provided by operating activities

Cash flows from investing activities:

Alliance acquisition, net of cash acquired

Capital expenditures

STL acquisition, net

Distribution from equity investment, net

Proceeds from sale of assets

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Repayment of convertible senior notes

Proceeds from Term Loan

Repayment of Term Loan

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and its subsidiaries (“Helix” or the “Company”).

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.

Traditionally, our services have covered the lifecycle of an offshore oil or gas field.

In recent years, we have seen an increasing demand for our services from the offshore renewable energy market.

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

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

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention, robotics and full-field decommissioning operations.

Our services are centered toward and well positioned to facilitate global energy transition by maximizing production of remaining oil and gas reserves, supporting renewable energy developments and decommissioning end-of-life oil and gas fields.

We provide a range of services to the oil and gas and renewable energy markets primarily in the Gulf of Mexico, U.S.

East Coast, Brazil, North Sea, Asia Pacific and West Africa regions.

We have expanded our service capabilities to the Gulf of Mexico shelf with the acquisition of the Alliance group of companies (collectively “Alliance”) on July 1, 2022.

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 Operations

Our services are segregated into three reportable business segments:

Well Intervention, Robotics and Production Facilities (Note 15).

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 14).

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 Helix 1 and the Siem Helix 2 .

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, 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.

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 trenching, seabed clearance, offshore construction 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 includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under long-term charter as well as spot vessels as needed.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), the Helix Fast Response System (the “HFRS”), and our ownership of oil and gas properties.

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

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries predominantly in the Gulf of Mexico shelf, including offshore oilfield 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 and plug and abandonment (“P&A”) and coiled tubing systems.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), the Helix Fast Response System (the “HFRS”), and our ownership of mature oil and gas properties.

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

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We classify cash as restricted when there are legal or contractual restrictions for its withdrawal.

Our restricted cash as of December 31, 2021 consisted of $ 71.1 million pledged as collateral for a letter of credit for a temporary importation permit for work offshore Nigeria and $ 2.5 million pledged toward our asset-based credit agreement (the “ABL Facility”).

Our restricted cash as of December 31, 2022 consisted of $ 2.5 million pledged toward our asset-based credit agreement (the “ABL Facility”).

These cash pledges increase the availability under the ABL Facility.

We had no restricted cash as of December 31, 2020.

Accounts Receivable and Allowance for Credit Losses

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Uncollectible receivables are written off when a settlement is reached for an amount that is less than the outstanding historical balance or when we have determined that the balance will not be collected (Note 18).

Business Combinations

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

The purchase price consideration is allocated to the assets acquired and liabilities assumed based upon estimates 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 income approach, cost approach and other applicable valuation techniques.

The fair value of property, plant and equipment acquired from the acquisition was estimated primarily by applying the cost approach.

The key assumptions of the cost approach include replacement cost new, physical deterioration, functional and economic obsolescence and economic useful life.

The fair value of intangible assets acquired from the acquisition was estimated primarily by applying the income approach.

The key assumptions of the income approach include revenue projections, royalty rates and economic useful life.

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

The purchase price allocation is subject to revision to reflect new information obtained about facts and circumstances that existed at the acquisition date.

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

Contingent consideration payable in cash, which is included in “Other non-current liabilities” in the accompanying consolidated balance sheet (Note 4), is initially measured at fair value and included as part of the purchase price and subsequently measured at fair value at the end of each reporting period with changes in value reported in earnings until the liability is settled.

Acquisition and integration costs consist of legal and professional fees as well as costs incurred to integrate the acquiree’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 consolidated statements of operations.

Also presented separately are the changes in fair value of the contingent earn-out consideration (Note 19).

Property and Equipment

Property and equipment is recorded at historical cost, net of accumulated depreciation.

Property and equipment is depreciated on a straight-line basis over its estimated useful life.

Property and equipment (including oil and gas properties) acquired separately from a business combination is recorded initially at cost and subsequently depreciated on a straight-line basis over its estimated useful life.

The cost of improvements is capitalized whereas the cost of repairs and maintenance is expensed as incurred.

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Equity Investment

With respect to our investment accounted for using the equity method of accounting, losses in excess of the carrying amount of our equity investment are recognized when (i) we guaranteed the obligations of the investee, (ii) we are otherwise committed to provide further financial support for the investee, or (iii) it is anticipated that the investee’s return to profitability is imminent.

Losses in excess of the carrying amount of our equity investment are presented as a liability in the consolidated balance sheets.

We have a 20 % ownership interest in Independence Hub, LLC (“Independence Hub”), which is included in our Production Facilities segment.

We account for our ownership interest in Independence Hub 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.

Leases with a term greater than one year are recognized in the consolidated balance sheet as right-of-use (“ROU”) assets and lease liabilities.

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Deferred Recertification and Dry Dock Costs

Our vessels and certain well intervention assets are required by regulation to be periodically recertified.

Our vessels and systems are required by regulation to be periodically recertified.

Recertification costs for a vessel are typically incurred while the vessel is in dry dock.

We defer and amortize recertification costs, including vessel dry dock costs, over the period that the certification applies, which generally ranges from 24 to 60 months if the appropriate permitting is obtained.

A recertification process, including vessel dry dock, typically lasts between one to three months , a period during which a vessel or other asset is idle and generally not available to earn revenue.

Major replacements and improvements that extend the economic useful life or functional operating capability of a vessel or other asset are capitalized and depreciated over the asset’s remaining economic useful life.

We expense routine repairs and maintenance costs as they are incurred.

As of December 31, 2021 and 2020, deferred recertification and dry dock costs, which were included within “Other assets, net” in the accompanying consolidated balance sheets (Note 3), totaled $ 16.3 million and $ 21.5 million (net of accumulated amortization of $ 23.6 million and $ 21.8 million), respectively.

A recertification process, including vessel dry dock, typically lasts between one to three months , a period during which a vessel or system is idle and generally not available to earn revenue.

Major replacements and improvements that extend the economic useful life or functional operating capability of a vessel or system are capitalized and depreciated over the asset’s remaining economic useful life.

Routine repairs and maintenance costs are expensed as incurred.

During the years ended December 31, 2022, 2021 and 2020, amortization expense related to deferred recertification and dry dock costs was $ 14.0 million, $ 14.6 million and $ 14.3 million, respectively.

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We may also perform down-hole intervention work and provide certain engineering services.

We generate revenue in our Robotics segment by operating ROVs and trenchers to provide subsea construction and IRM services to oil and gas companies as well as subsea trenching and burial of pipelines and cables as well as seabed clearing for the oil and gas and the renewable energy markets.

We generate revenue in our Robotics segment by operating ROVs and trenchers to provide subsea trenching and burial of pipelines and cables as well as seabed clearing for the oil and gas and the renewable energy markets and to provide offshore construction and IRM services to oil and gas companies.

We also provide integrated robotic services by supplying vessels that deploy ROVs and trenchers.

Our Production Facilities segment generates revenue by supplying vessels, personnel and equipment for oil and natural gas processing, well control response services, and oil and gas production from owned properties.

We generate revenue in our Production Facilities segment by supplying vessels, personnel and equipment for oil and natural gas processing, well control response services, and oil and gas production from owned properties.

We generate revenue in our new Shallow Water Abandonment segment by providing decommissioning and intervention services with P&A and coiled tubing systems and personnel;

by providing marine access to offshore facilities with liftboats, OSVs and the crew boat in order to perform decommissioning, intervention, diving and other work scopes;

and by providing diving and platform decommissioning services with DSVs and personnel and with the heavy lift barge.

Our revenues are derived from short-term and long-term service contracts with customers.

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A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized.

We consider the undistributed earnings of our non-U.S.

subsidiaries to be permanently reinvested.

We provide for uncertain tax positions and related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by local taxing authorities.

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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.

Compensation cost for performance share unit (“PSU”) awards that have a service condition and a market condition and are accounted for as equity awards, 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.

Compensation cost for PSUs that have a service condition and a performance condition and are accounted for as equity awards is initially measured based on the grant date fair value.

For performance share unit (“PSU”) awards 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.

Compensation cost for restricted stock unit (“RSU”) awards, which are accounted for as liability awards, is 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.

Compensation cost for restricted stock unit (“RSU”) awards, which are accounted for as liability awards, is measured at their estimated fair value based on the closing share price of our common stock as of 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.

Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure plug and abandonment (“P&A”) and other decommissioning activities associated with our oil and gas properties.

Asset retirement obligations (“AROs”) are recorded initially 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.

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dollar subsidiaries are translated into U.S.

dollars using the exchange rate in effect, and the resulting translation adjustments are included in other comprehensive income (loss) (“OCI”).

For transactions denominated in a currency other than a subsidiary’s functional currency, the effects of changes in exchange rates are reported in other income or expense in the consolidated statements of operations.

For the years ended December 31, 2021, 2020 and 2019, our foreign currency transaction gains (losses) totaled $( 1.5 ) million, $ 4.6 million and $ 1.5 million, respectively.

These realized amounts are exclusive of any gains or losses from our foreign currency exchange derivative contracts.

Derivative Instruments and Hedging Activities

Our business is exposed to market risks associated with interest rates and foreign currency exchange rates.

Our risk management activities involve the use of derivative financial instruments to mitigate the impact of market risk exposure related to variable interest rates and foreign currency exchange rates.

To reduce the impact of these risks on earnings and increase the predictability of our cash flows, from time to time we enter into derivative contracts, including interest rate swaps and foreign currency exchange contracts.

Interest rate and foreign currency derivative instruments are reflected in the consolidated balance sheets at fair value.

The capped call transactions (the “2026 Capped Calls”) we entered into in connection with the issuance of our Convertible Senior Notes Due 2026 (the “2026 Notes”) are recorded in shareholders’ equity and are not accounted for as derivatives (Note 8).

We engage solely in cash flow hedges.

Cash flow hedges are entered into to hedge the variability of cash flows related to a forecasted transaction or to be received or paid related to a recognized asset or liability.

Changes in the fair value of derivative instruments that are designated as cash flow hedges are reported in OCI.

These changes are subsequently reclassified into earnings when the hedged transactions affect earnings.

Changes in the fair value of interest rate and foreign currency derivative instruments that are not designated as or do not qualify for hedge accounting are recorded immediately in earnings.

We formally document all relationships between hedging instruments and the related hedged items, as well as our risk management objectives, strategies for undertaking various hedge transactions and our methods for assessing and testing correlation and hedge ineffectiveness.

All hedging instruments are linked to the hedged asset, liability, firm commitment or forecasted transaction.

We also assess, both at the inception of the hedge and on an ongoing basis, whether the derivative instruments that are designated as hedging instruments are highly effective in offsetting changes in cash flows of the hedged items.

We discontinue hedge accounting if we determine that a derivative is no longer highly effective as a hedge, or if it is probable that a hedged transaction will not occur.

If hedge accounting is discontinued because it is probable the hedged transaction will not occur, gains or losses on the hedging instruments are reclassified from accumulated OCI into earnings immediately.

dollars using the exchange rate in effect at the end of the reporting period, and the resulting translation adjustments are included in other comprehensive income (loss) (“OCI”).

For transactions denominated in a currency other than a subsidiary’s functional currency, the effects of changes in exchange rates are reported in “Other income (expense), net” in the consolidated statements of operations.

Foreign currency gains or losses from the remeasurement of monetary assets and liabilities as well as unsettled foreign currency transactions, including intercompany transactions that are not of a long-term investment nature, are also recognized as a component of “Other income (expense), net.” For the years ended December 31, 2022, 2021 and 2020, our foreign currency transaction gains (losses) totaled $( 23.4 ) million, $( 1.5 ) million and $ 4.6 million, respectively.

Earnings Per Share

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The percentages of consolidated revenue from major customers (those representing 10% or more of our consolidated revenues) are as follows:

2022 — Shell ( 15 %);

2021 — Petrobras ( 23 %) and Shell ( 17 %);

2020 — Petrobras ( 28 %) and BP ( 17 %);

and 2019 — Petrobras ( 29 %), BP ( 15 %) and Shell ( 13 %).

and 2020 — Petrobras ( 28 %) and BP ( 17 %).

Most of the concentration of revenues are in our Well Intervention segment.

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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 described in Note 20.

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

Market Approach.

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

Cost Approach.

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

Income Approach.

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).

New Accounting Standards

New accounting standards adopted

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases (Topic 842)” (“ASC 842”).

Our adoption of ASC 842 as of January 1, 2019 resulted in the recognition of operating lease liabilities of $ 259.0 million and corresponding ROU assets of $ 253.4 million (net of existing prepaid/deferred rent balances).

In addition, we reclassified the remaining deferred gain of $ 4.6 million (net of deferred taxes of $ 0.9 million) on a 2016 sale and leaseback transaction to retained earnings.

See Note 6 for additional information regarding our leases.

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments.

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2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, this ASU removes from GAAP the requirement to separate certain convertible instruments, such as our Convertible Senior Notes Due 2022 (the “2022 Notes”), Convertible Senior Notes Due 2023 (the “2023 Notes”) and the 2026 Notes (Note 8), into liability and equity components.

Among other changes, this ASU removes from GAAP the requirement to separate certain convertible instruments, such as our Convertible Senior Notes Due 2022 (the “2022 Notes”), Convertible Senior Notes Due 2023 (the “2023 Notes”) and Convertible Senior Notes Due 2026 (the “2026 Notes”) (Note 7), into liability and equity components.

Consequently, those convertible instruments will be accounted for in their entirety as liabilities measured at their amortized cost.

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We do not expect any other recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

Note 3 — Business Combinations

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.

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 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 July 1, 2022 (in thousands):

As Originally

Adjustments (1)

Cash consideration

Contingent consideration

Total fair value of consideration transferred

Assets acquired:

Cash and cash equivalents

Accounts receivable (2)

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) Adjustments to the preliminary purchase price allocation stem mainly from additional information obtained in between the closing of the Alliance acquisition on July 1, 2022 and December 31, 2022 about facts and circumstances that existed as of the acquisition date.

(2) 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 expected to be collected .

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 in conjunction with the acquisition, 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 differ 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):

Year Ended December 31,

STL Acquisition

In May 2019, we acquired a 70 % controlling interest in STL, a subsea engineering firm based in Aberdeen, Scotland.

The acquisition resulted in goodwill of $ 6.9 million.

Oil prices as well as energy and energy services valuations experienced significant decline during the first quarter 2020 and as a result, we impaired all of our goodwill, which consisted entirely of goodwill attributable to STL.

In June 2021, we acquired the remaining 30 % interest in STL, which had been recognized as temporary equity.

STL is included in our Well Intervention segment and its revenue and earnings are immaterial to our consolidated results.

The changes in the carrying amount of goodwill are as follows (in thousands):

Well Intervention

Balance at December 31, 2019

Impairment loss

Foreign currency adjustments

Balance at December 31, 2020

Note 4 — Details of Certain Accounts

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

Income tax receivable

Contract assets (Note 11)

Deferred costs (Note 11)

Income tax receivable (Note 9)

Other receivable (Note 16)

Other receivable (1)

Total other current assets

(1) Represents agreed-upon amounts that we are entitled to receive from Marathon Oil Corporation (“Marathon Oil”) for remaining P&A work to be performed by us on Droshky oil and gas properties we acquired from Marathon Oil in 2019;

classified as current as the P&A work was expected to be performed within 12 months from December 31, 2021.

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

Deferred recertification and dry dock costs, net (Note 2)

Prepaid charter (1)

Deferred costs (Note 11)

Charter deposit (1)

Other receivable (2)

Intangible assets with finite lives, net

Total other assets, net

(1) This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term.

(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.

(2) Represents agreed-upon amounts that we are entitled to receive from Marathon Oil;

reclassified to non-current as we expect the remaining P&A work to be performed beyond 12 months from December 31, 2022.

Accrued liabilities consist of the following (in thousands):

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Accrued interest

Investee losses in excess of investment (Note 5)

Income tax payable

Deferred revenue (Note 11)

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Deferred revenue (Note 11)

Asset retirement obligations (Note 15)

Contingent consideration (Note 19)

Total other non-current liabilities

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ROVs and trenchers

Machinery, equipment and leasehold improvements

5 to 10 years

Machinery, equipment, buildings and other

5 to 39 years

Total property and equipment

Note 5 — Equity Method Investments

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

Independence Hub owns the “Independence Hub” platform, which is nearing the completion of its decommissioning.

The remaining liability balances for our share of Independence Hub’s estimated obligations, net of remaining working capital, were $ 0.8 million and $ 1.5 million at December 31, 2021 and 2020, respectively.

Note 6 — 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 year ended December 31, 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 16).

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

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

Note 7 — Business Combinations and Goodwill

Oil prices as well as energy and energy services valuations experienced significant decline during the first quarter 2020 due to the COVID-19 pandemic and the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”).

As a result, we impaired all of our goodwill, which consisted entirely of goodwill attributable to the acquisition in May 2019 of a 70 % controlling interest in STL, a subsea engineering firm based in Aberdeen, Scotland.

In June 2021, we acquired the remaining 30 % noncontrolling interest in STL.

These redeemable noncontrolling interests had been recognized as temporary equity.

STL is included in our Well Intervention segment and its revenue and earnings are immaterial to our consolidated results.

The changes in the carrying amount of goodwill are as follows (in thousands):

Well Intervention

Balance at December 31, 2019

Impairment loss

Foreign currency adjustments

Balance at December 31, 2020

Note 7 — Long-Term Debt

Long-term debt consists of the following (in thousands):

Term Loan (repaid September 2021) (1)

Nordea Q5000 Loan (matured January 2021) (2)

2022 Notes (mature May 2022)

2022 Notes (matured May 2022)

2023 Notes (mature September 2023)

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MARAD Debt (matures February 2027)

Unamortized debt discounts (3)

Unamortized debt issuance costs

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Long-term debt

(1) The Term Loan was fully repaid in September 2021 concurrent with our entering into the ABL Facility.

(2) The Nordea Q5000 Loan was fully repaid upon maturity in January 2021.

(3) As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there are no longer any debt discounts associated with the 2022 Notes, the 2023 Notes and the 2026 Notes (Note 2) .

Credit Agreement

On September 30, 2021, we entered into 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 a $ 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 December 31, 2021, we had no borrowings under the ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 51.1 million, net of $ 1.9 million of letters of credit issued under that facility.

As of December 31, 2022, we had no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 98.1 million, net of $ 1.9 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.

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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.

The 2022 Notes bear interest at a coupon interest rate of 4.25 % per annum payable semi-annually in arrears on November 1 and May 1 of each year until maturity.

The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased by us.

The 2022 Notes are convertible by their holders at any time beginning February 1, 2022 at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal, which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $ 13.89 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 February 1, 2022, holders of the 2022 Notes were able to convert their notes if the closing price of our common stock exceeded 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 2022 Notes was 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 2022 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 30.5887 shares of our common stock per $1,000 principal amount.

Prior to November 1, 2019, the 2022 Notes were not redeemable.

On or after November 1, 2019, we may redeem all or any portion of the 2022 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 2022 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2022 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 2022 Notes).

The indenture governing the 2022 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 subsidiary, the principal amount of the 2022 Notes together with any accrued interest will become immediately due and payable.

The 2022 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

The unamortized debt discount and debt issuance costs were being accreted to interest expense through the maturity date of the 2022 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2022 Notes totaled $ 1.5 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2022 Notes (Note 2).

As of December 31, 2021, unamortized debt issuance costs related to the 2022 Notes were $ 0.1 million.

The effective interest rate for the 2022 Notes prior to the adoption of ASU No.

2020-06 was 7.3 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 4.8 %.

For the year ended December 31, 2021, total interest expense related to the 2022 Notes was $ 1.7 million, with coupon interest expense of $ 1.5 million and the amortization of issuance costs of $ 0.2 million.

For the years ended December 31, 2020 and 2019, total interest expense related to the 2022 Notes was $ 6.6 million and $ 8.9 million, respectively, with coupon interest expense of $ 3.9 million and $ 5.3 million, respectively, and the amortization of debt discount and issuance costs of $ 2.7 million and $ 3.6 million, respectively.

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.

We fully redeemed the $ 35 million remaining principal amount of the 2022 Notes plus accrued interest by delivering cash upon maturity as of May 1, 2022.

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

For the years ended December 31, 2022 and 2021, total interest expense related to the 2022 Notes was $ 0.6 million and $ 1.7 million, respectively, primarily from coupon interest expense.

As a result of our adoption of ASU No.

2020-06, there were no longer any debt discounts to amortize in 2022 and 2021 (Note 2).

During 2020, we repurchased $ 90 million in aggregate principal amount of the 2022 Notes, and for the year ended December 31, 2020, total interest expense related to the 2022 Notes was $ 6.6 million, with coupon interest expense of $ 3.9 million and the amortization of debt discount and issuance costs of $ 2.7 million.

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.

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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 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 was 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).

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.

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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 2023 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

The unamortized debt discount and debt issuance costs were being accreted to interest expense through the maturity date of the 2023 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2023 Notes totaled $ 3.1 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2023 Notes (Note 2).

As of December 31, 2021, unamortized debt issuance costs related to the 2023 Notes were $ 0.3 million.

The effective interest rate for the 2023 Notes prior to the adoption of ASU No.

2020-06 was 7.8 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 4.8 %.

For the year ended December 31, 2021, total interest expense related to the 2023 Notes was $ 1.4 million, with coupon interest expense of $ 1.2 million and the amortization of issuance costs of $ 0.2 million.

For the years ended December 31, 2020 and 2019, total interest expense related to the 2023 Notes was $ 6.6 million and $ 8.9 million, respectively, with coupon interest expense of $ 3.7 million and $ 5.2 million, respectively, and the amortization of debt discount and issuance costs of $ 2.9 million and $ 3.7 million, respectively.

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

For each of the years ended December 31, 2022 and 2021, total interest expense related to the 2023 Notes was $ 1.4 million primarily from coupon interest expense.

As a result of our adoption of ASU No.

2020-06, there were no longer any debt discounts to amortize in 2022 and 2021 (Note 2).

During 2020, we repurchased $ 95 million in aggregate principal amount of the 2023 Notes, and for the year ended December 31, 2020, total interest expense related to the 2023 Notes was $ 6.6 million, with coupon interest expense of $ 3.7 million and the amortization of debt discount and issuance costs of $ 2.9 million.

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 on February 15, 2021 until maturity.

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Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

In order to reduce the potential dilution of the 2026 Notes to shareholders’ equity, we entered into the 2026 Capped Calls in August 2020 concurrent with the 2026 Notes offering (Note 10).

In order to reduce the potential dilution of the 2026 Notes to shareholders’ equity, we entered into capped call transactions (the “2026 Capped Calls”) in August 2020 concurrent with the 2026 Notes offering (Note 9).

The 2026 Capped Calls effectively increase the conversion price of the 2026 Notes to approximately $ 8.42 per share.

However, the 2026 Capped Calls are separate transactions from the 2026 Notes and do not change the holders’ rights under the 2026 Notes, and holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls.

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 was 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).

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.

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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 2026 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs.

The unamortized debt discount and debt issuance costs were being accreted to interest expense through the maturity date of the 2026 Notes.

As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2026 Notes totaled $ 47.3 million.

As a result of the adoption of ASU No.

2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2026 Notes (Note 2).

As of December 31, 2021, unamortized debt issuance costs related to the 2026 Notes were $ 5.9 million.

The effective interest rate for the 2026 Notes prior to the adoption of ASU No.

2020-06 was 12.4 %.

The effective interest rate subsequent to the adoption of ASU No.

2020-06 decreased to 7.6 %.

For the year ended December 31, 2021, total interest expense related to the 2026 Notes was $ 14.7 million, with coupon interest expense of $ 13.5 million and the amortization of debt issuance costs of $ 1.2 million.

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

For the years ended December 31, 2022 and 2021, total interest expense related to the 2026 Notes was $ 14.8 million and $ 14.7 million, respectively, with coupon interest expense of $ 13.5 million each, and the amortization of debt issuance costs of $ 1.3 million and $ 1.2 million, respectively.

As a result of our adoption of ASU No.

2020-06, there were no longer any debt discounts to amortize in 2022 and 2021 (Note 2).

For the year ended December 31, 2020, total interest expense related to the 2026 Notes was $ 7.5 million, with coupon interest expense of $ 5.1 million and the amortization of debt discount and issuance costs of $ 2.4 million.

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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 MARAD Debt is payable in equal semi-annual installments through 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.

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.

As of December 31, 2020, the remaining principal amount of the Nordea Q5000 Loan was $ 53.6 million, which we repaid in January 2021.

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

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 December 31, 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, 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.

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.

In accordance with the ABL Facility, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including a springing fixed charge coverage ratio and minimum liquidity 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 December 31, 2021, we were in compliance with these covenants.

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.

Scheduled maturities of our long-term debt outstanding as of December 31, 2022 are as follows (in thousands):

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Four to five years

Over five years

Unamortized debt issuance costs (1)

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(1) Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.

See Note 2 for accounting changes as a result of the adoption of ASU No.

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

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Net interest expense

(1) The significant reduction in capitalized interest was attributable to the conclusion of our planned major capital commitments following the completion of the Q7000 in 2020.

Note 8 — Income Taxes

We are a U.S.-based multinational corporation subject to taxation in multiple jurisdictions.

We believe that our deferred tax assets and liabilities for all jurisdictions are reasonable and fairly presented.

Tax laws in each jurisdiction, as well as their interactions, are complex and their interpretation requires significant judgment.

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 consolidated financial statements.

Components of income tax provision (benefit) reflected in the consolidated statements of operations consist of the following (in thousands):

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Subsidiary restructuring

Valuation allowance release (net of U.S.

Change in valuation allowance

Non-deductible expenses

Income tax provision (benefit)

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S.

income tax regulations.

The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year.

Under the CARES Act, we recognized a $ 7.6 million net tax benefit for the year ended December 31, 2020, consisting of an $ 18.9 million current tax benefit (refund claim) and an $ 11.3 million deferred tax expense (reduction in U.S.

During the year ended December 31, 2022, the $ 8.1 million increase in valuation allowance was predominantly driven by current year activity and the related change in unrealizable net deferred tax assets.

During the year ended December 31, 2021, we released a non-U.S.

valuation allowance of $ 5.0 million for deferred tax assets as it is more likely than not that they will be fully utilized.

On March 27, 2020, the U.S.

Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted, extending the U.S.

tax loss carryback period from three years to five years .

As a result, we recognized a $ 7.6 million net tax benefit for the year ended December 31, 2020, consisting of an $ 18.9 million current tax benefit (refund received) and an $ 11.3 million deferred tax expense (reduction in U.S.

net operating loss).

The refund was received in full during 2021.

During the year ended December 31, 2020, we migrated two of our foreign subsidiaries into our U.S.

Also during the year ended December 31, 2020, we migrated two of our foreign subsidiaries into our U.S.

consolidated tax group.

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branch profits tax and a net deferred tax benefit of $ 8.3 million was recognized.

During the year ended December 31, 2021, we released a non-U.S.

valuation allowance of $ 6.4 million ($ 5.0 million net of U.S.

federal tax benefit) for deferred tax assets as it is more likely than not that they will be fully utilized.

Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes.

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Deferred tax liabilities:

Debt discounts on 2022 Notes, 2023 Notes and 2026 Notes

Prepaid and other

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At December 31, 2022, our non-U.S.

net operating losses totaled $ 71.0 million, and do not expire under local tax law.

net operating losses totaled $ 69.7 million, which do not expire under local tax law.

At December 31, 2022, we had accumulated undistributed earnings generated by our non-U.S.

subsidiaries without operations in the U.S.

of approximately $ 62.9 million.

subsidiaries of approximately $ 78.9 million, which management intends to indefinitely reinvest in our international operations.

Due to the enactment of the U.S.

Tax Cuts and Jobs Act (the “2017 Tax Act”), repatriations of foreign earnings will generally be free of U.S.

Tax Cuts and Jobs Act, repatriations of foreign earnings will generally be free of U.S.

federal tax but may be subject to changes in future tax legislation that may result in taxation.

Management intends to indefinitely reinvest these earnings to fund our international operations.

In addition, we expect future U.S.

cash generation will be sufficient to meet future U.S.

Due to complexities in the tax laws and the manner of repatriation, it is not practicable to calculate the deferred income taxes associated with these undistributed earnings.

As of December 31, 2021, we had unrecognized tax benefits of $ 0.1 million related to uncertain tax positions, which, if recognized, would affect the annual effective tax rate.

It is not practicable to calculate deferred income taxes associated with these undistributed earnings given the complexities in tax laws and the manner and timing of repatriation.

At December 31, 2022, we had unrecognized tax benefits of $ 0.1 million related to uncertain tax positions, which, if recognized, would have an insignificant effect on the annual effective tax rate.

Due to the expiration of the statute of limitations as well as effective settlements in 2021 we released the full $ 0.6 million reserve related to uncertain tax positions recorded in 2020.

We account for tax-related interest in interest expense and tax penalties in selling, general and administrative expenses.

We did not record any interest related to these positions in 2021 as the amount was immaterial.

However, no interest has been recorded for these positions as the amount was immaterial.

We file tax returns in the U.S.

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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 consolidated balance sheet.

Note 11 — Stock Buyback Program

Our Board of Directors (our “Board”) has granted us the authority to repurchase shares of our common stock in an amount equal to any equity issued to our employees, officers and directors under our share-based compensation plans, including share-based awards under our existing long-term incentive plans and shares issued to our employees under our Employee Stock Purchase Plan (the “ESPP”) (Note 14).

We may continue to make repurchases pursuant to this authority from time to time as additional equity is issued under our stock-based plans depending on prevailing market conditions and other factors.

As described in an announced plan, all repurchases may be commenced or suspended at any time as determined by management.

We have not purchased any shares available under this program since 2015.

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 consolidated balance sheets are not recognized as either asset or liability at fair value.

Note 10 — Share Repurchase Programs

Our Board of Directors (our “Board”) previously granted us the authority to repurchase shares of our common stock in an amount equal to any equity issued to our employees, officers and directors under our share-based compensation plans, including share-based awards under our existing long-term incentive plans and shares issued to our employees under our Employee Stock Purchase Plan (the “ESPP”) (Note 13).

As of December 31, 2022, 9,547,027 shares of our common stock were available for repurchase under the program.

Concurrent with the authorization of a new share repurchase program as discussed below, our Board revoked the prior authorization relating to this repurchase program.

On February 20, 2023, we announced that our Board authorized a new share repurchase program under which we are authorized to repurchase up to $ 200 million issued and outstanding shares of our common stock.

The repurchase program has no set expiration date.

Repurchases under the program would be made through open market purchases in compliance with Rule 10b-18 under the Exchange Act, privately negotiated transactions or plans, instructions or contracts established under Rule 10b5-1 under the Exchange Act.

The manner, timing and amount of any purchase will be determined by management based on an evaluation of market conditions, stock price, liquidity and other factors.

The program does not obligate us to acquire any particular amount of common stock and may be modified or superseded at any time at our discretion.

The purchase of shares by us under the program is at our discretion and subject to prevailing financial and market conditions.

Any repurchased shares are expected to be cancelled.

No repurchases have been made pursuant to this program at the time of this filing.

Note 11 — Revenue from Contracts with Customers

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

Shallow Water

Year ended December 31, 2022

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Performance Obligations

As of December 31, 2021, $ 348.2 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 245.9 million, $ 102.1 million and $ 0.2 million in 2022 , 2023 and 2024 , respectively.

As of December 31, 2022, $ 846.7 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 532.6 million and $ 314.1 million in 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 December 31, 2022.

For the years ended December 31, 2022, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were $ 1.0 million, which resulted from the retrospective application of certain contractual adjustments.

For the years ended December 31, 2021 and 2020, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were immaterial.

For the year ended December 31, 2019, revenues recognized from performance obligations satisfied (or partially satisfied) in previous years were $ 2.1 million, which resulted from the recognition of previously constrained variable consideration for contractual adjustments related to withholding taxes in Brazil.

Contract Fulfillment Costs

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Note 12 — Earnings Per Share

The computations of the numerator (income) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying consolidated statements of operations are as follows (in thousands):

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 consolidated statements of operations are as follows (in thousands):

Year Ended December 31,

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Net income (loss) available to common shareholders, diluted

We had a net loss for the year ended December 31, 2021.

We had net losses for the years ended December 31, 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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Employee Stock Purchase Plan

On May 15, 2019, our shareholders approved an amendment to and restatement of the ESPP to:

(i) increase the shares authorized for issuance by 1.5 million shares and (ii) delegate to an internal administrator the authority to establish the maximum shares purchasable during a purchase period.

As of December 31, 2022, 1.4 million shares were available for issuance under the ESPP.

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The Compensation Committee may grant stock options, restricted stock, RSUs, PSUs and cash awards.

Awards that have been granted to employees under the 2005 Incentive Plan have a vesting period of three years (or 33 % per year) with the exception of PSUs, which vest 100 % on the third anniversary date of the grant.

On May 15, 2019, our shareholders approved an amendment to and restatement of the 2005 Incentive Plan to:

(i) authorize 7.0 million additional shares for issuance pursuant to our equity incentive compensation strategy, (ii) establish a maximum award limit applicable to independent members of our Board under the 2005 Incentive Plan, (iii) require, subject to certain exceptions, that all awards under the 2005 Incentive Plan have a minimum vesting or restriction period of one year and (iv) remove certain requirements with respect to performance-based compensation under Section 162(m) of the Internal Revenue Code that were repealed by the 2017 Tax Act.

Awards that have been granted to employees under the 2005 Incentive Plan have a vesting period of three years (or 33 % per year) with the exception of PSUs, which vest in amounts in accordance with their terms on the third anniversary date of the grant.

The 2005 Incentive Plan currently has 17.3 million shares authorized for issuance, which includes a maximum of 2.0 million shares that may be granted as incentive stock options.

As of December 31, 2021, there were 5.6 million shares available for issuance under the 2005 Incentive Plan and no incentive stock options are currently outstanding.

As of December 31, 2022, there were approximately 4.0 million shares available for issuance under the 2005 Incentive Plan and no incentive stock options are currently outstanding.

The following grants of share-based awards were made in 2022 under the 2005 Incentive Plan:

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100 % on January 1, 2024

July 23, 2021 (2)

September 22, 2022 (3)

Restricted stock

100 % on July 23, 2022

100 % on September 22, 2023

October 1, 2022 (2)

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(1) Reflects grants to our executive officers.

(2) Reflects grants to certain independent members of our Board.

In January 2022, we granted our executive officers 1,065,705 RSUs and 1,065,705 PSUs under the 2005 Incentive Plan.

(2) Reflects grants to certain independent members of 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.

In January 2023, we granted certain officers 506,436 RSUs and 489,498 PSUs under the 2005 Incentive Plan.

The grant date fair value of the RSUs was $ 7.38 per unit or $ 3.7 million.

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Our 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 contain a service condition and a market condition.

PSUs granted in 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and are initially accounted for as equity awards.

The PSUs granted in 2021 consist of two components:

(i) 50 % based on the performance of our common stock against peer group companies, which contains a service condition and a market condition, and (ii) 50 % based on cumulative total Free Cash Flow, which contains a service condition and a performance condition.

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 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.

The maximum payout at vesting of our PSUs is 200 % of the original PSU awards and the minimum payout is zero .

The following table summarizes information about our equity PSU awards:

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 .

The following table summarizes information about our PSU awards:

Year Ended December 31,

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Fair Value (1)

Equity PSU awards outstanding at beginning of year

Equity PSU awards outstanding at end of year

PSU awards outstanding at beginning of year

PSU awards outstanding at end of year

(1) Represents the weighted average grant date fair value.

For the years ended December 31, 2021, 2020 and 2019, $ 4.1 million, $ 4.0 million and $ 5.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

Future compensation cost associated with unvested equity PSU awards at December 31, 2021 totaled approximately $ 3.9 million.

The weighted average vesting period related to unvested equity PSUs at December 31, 2021 was approximately 0.9 year.

In January 2022, 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.

In January 2021, 368,038 equity PSUs granted in 2018 vested at 200 %, representing 736,075 shares of our common stock with a total market value of $ 3.1 million.

In January 2020, 589,335 equity PSUs granted in 2017 vested at 200 %, representing 1,178,670 shares of our common stock with a total market value of $ 11.4 million.

RSUs granted in 2021 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.

Compensation cost recognized for the year ended December 31, 2021 was $ 0.5 million, which reflects the value of RSUs that were granted in 2021 and paid out in January 2022.

For the years ended December 31, 2022, 2021 and 2020, $ 4.8 million, $ 4.1 million and $ 4.0 million, respectively, were recognized as share-based compensation related to PSUs.

Future compensation cost associated with unvested PSU awards at December 31, 2022 totaled approximately $ 5.2 million.

The weighted average vesting period related to unvested PSUs at December 31, 2022 was approximately 1.4 year.

In January 2023, 369,938 PSUs granted in 2020 vested at 77 %, representing 285,778 shares of our common stock with a total market value of $ 3.6 million.

In January 2022, 559,150 PSUs granted in 2019 vested at 157 %, representing 876,469 shares of our common stock with a total market value of $ 3.2 million.

In January 2021, 368,038 PSUs granted in 2018 vested at 200 %, representing 736,075 shares of our common stock with a total market value of $ 3.1 million.

Our RSUs granted beginning 2021 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.

The following table summarizes information about our RSU awards:

Year Ended December 31,

Fair Value (1)

RSU awards outstanding at beginning of year

RSU awards outstanding at end of year

(1) Represents the weighted average grant date fair value, which is based on the quoted closing market price of our common stock on the trading day prior to the date of grant.

Compensation cost recognized for the years ended December 31, 2022 and 2021 was $ 3.7 million and $ 0.5 million, respectively, which is reflected in the liability balance at December 31, 2022 and 2021 for the fair value of RSUs that vested in January 2023 and 2022, respectively.

Future compensation cost based on the fair value of unvested RSUs at December 31, 2022 totaled approximately $ 6.4 million.

The weighted average vesting period related to unvested RSUs at December 31, 2022 was approximately 1.8 years.

In 2022, 2021 and 2020, we granted $ 5.5 million, $ 3.5 million and $ 4.7 million, respectively, of fixed value cash awards to select management employees under the 2005 Incentive Plan.

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Note 14 — Business Segment Information

We have three reportable business segments:

Through the second quarter 2022, we have 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, which includes the assets, liabilities and operating results of Helix Alliance.

All material intercompany transactions between the segments have been eliminated.

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 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, with expansion into Asia Pacific.

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.

Our Robotics segment provides trenching, seabed clearance, offshore construction 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 includes ROVs, trenchers and robotics support vessels under long-term charter as well as spot vessels as needed.

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

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oilfield 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 and P&A and coiled tubing systems.

Our Production Facilities segment includes the HP I , the HFRS and our ownership of oil and gas properties (Note 15).

All material intercompany transactions between the segments have been eliminated.

We evaluate our performance based on operating income of each reportable segment.

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Goodwill impairment (1)

Change in fair value of contingent consideration

Corporate, eliminations and other

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Well Intervention

(1) Amount for the year ended December 31, 2019 included $ 27.5 million associated with the P&A work on our oil and gas properties in our Production Facilities segment (Note 16).

Revenues by individually significant geographic location are as follows (in thousands):

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(1) Includes the Q7000 and certain other assets that are based in the U.K.

but are currently operating in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

(2) Includes the equipment on the Siem Helix 1 chartered vessel and certain other assets that are based in Brazil but are currently operating in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

but have operated in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

(2) Includes the equipment on the Siem Helix 1 chartered vessel and certain other assets that are based in Brazil but are have operated in West Africa and may also operate in the North Sea, Asia Pacific and other regions.

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

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Well Intervention

Shallow Water Abandonment

Production Facilities

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Note 15 — Asset Retirement Obligations

Our 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 AROs relate to mature offshore oil and gas properties that we acquired with the intention to perform decommissioning work at the end of their life cycles.

In August 2022, we made an asset acquisition from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, for all of MP GOM’s 62.5 % interest in the Thunder Hawk Field, in exchange for the assumption of MP GOM’s abandonment obligations (initially estimated at $ 23.6 million).

Our AROs also include P&A costs associated with our Droshky oil and gas properties (Note 4).

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

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Liability incurred during the period

Liability settled during the period

Revisions in estimates

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Note 16 — Commitments and Contingencies and Other Matters

We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix 1 and Siem Helix 2 vessels, which historically have been used in connection with our contracts with Petrobras to perform well intervention work offshore Brazil.

The initial term of the charter agreements with Siem is for seven years , with options to extend.

The Siem Helix 1 charter expires June 2023 and the Siem Helix 2 charter expires February 2024.

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 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.

In January 2023, we entered into a three-year charter agreement for the Glomar Wave in the North Sea with options to extend.

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 and cash flows.

We are involved in various legal proceedings, some involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act.

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 and 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).

In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.

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 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 have further appealed this matter and continue to vigorously defend these lawsuits.

Notwithstanding that we believe we retain valid defenses, at this time we have established a liability for probable losses in certain of these matters.

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

We appealed one such lawsuit to the United States Supreme Court, which issued a ruling adverse to us in the first quarter 2023 that is likely to have implications for similar lawsuits in which we are involved.

We previously established a liability in each of the cases impacted by the Supreme Court ruling, and the ultimate liability to us could be more or less than the liability established.

In a separate lawsuit, during the third quarter 2022 the United States Court of Appeals for the Fifth Circuit issued an adverse ruling that may also have implications for other similar lawsuits 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 each of 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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Year Ended December 31,

Interest paid, net of interest capitalized

Interest paid

Income taxes paid (1)

(1) Exclusive of income tax refunds.

During the year ended December 31, 2021, we received $ 18.9 million in refunds related to the CARES Act.

During the years ended December 31, 2022 and 2021, we received refunds related to the CARES Act of $ 1.1 million and $ 18.9 million, respectively.

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

As of December 31, 2022 and 2021, these non-cash capital additions totaled $ 0.4 million and $ 0.3 million, respectively.

Non-cash investing activities for the year ended December 31, 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 18 — Allowance Accounts

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Balance at December 31, 2019

Additions (1)

Additions (reductions) (1)

Adjustments (2)

Balance at December 31, 2020

Reductions (1)

Additions (reductions) (1)

Write-offs (3)

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Balance at December 31, 2021

(1) Additions (reductions) in allowance for credit losses reflect credit loss reserves during the respective years, including a $ 1.7 million credit loss reserve in 2020 related to a receivable in our Robotics segment.

Additions (reductions) (1)

Adjustments (5)

Balance at December 31, 2022

(1) Additions (reductions) in allowance for credit losses reflect credit loss reserves (releases) during the respective years, including a $ 1.7 million credit loss reserve in 2020 related to a receivable in our Robotics segment.

Additions during 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 adjustment in allowance for credit losses reflects provision for current expected credit losses upon the adoption of ASU No.

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(4) The decrease in valuation allowance primarily relates to the valuation allowance release for certain of our U.K.

(5) The increase in valuation allowance relates to current year activity and the related change in unrealizable net deferred tax assets.

See Note 2 for a detailed discussion regarding our accounting policy on accounts receivable and allowance for credit losses as well as the adoption of ASU No.

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Note 19 — Fair Value Measurements

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

Market Approach.

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

Cost Approach.

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

Income Approach.

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 December 31, 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.

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 8.0 % at December 31, 2022.

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

Balance at July 1,

Change in fair value

Balance at December 31,

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

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December 31, 2021

Value (2) (3)

Term Loan (repaid September 2021) (4)

Nordea Q5000 Loan (matured January 2021) (5)

MARAD Debt (matures February 2027)

2022 Notes (mature May 2022)

2022 Notes (matured May 2022)

2023 Notes (mature September 2023)

2026 Notes (mature February 2026)

(1) Principal amount includes current maturities and excludes any related unamortized debt discount and debt issuance costs.

(1) Principal amount includes current maturities and excludes any related unamortized debt issuance costs.

See Note 7 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 Term Loan, the Nordea Q5000 Loan and 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.

(3) The principal amount and estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes are for the entire instrument inclusive of the conversion feature, which had been accounted for in shareholders’ equity through December 31, 2020.

(4) The Term Loan was fully repaid in September 2021 concurrent with our entering into the ABL Facility (Note 8).

(5) The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 8).

Note 21 — Derivative Instruments and Hedging Activities

In June 2015, we entered into interest rate swap contracts to fix the interest rate on $ 187.5 million of the Nordea Q5000 Loan (Note 8).

These swap contracts expired in April 2020.

Our interest rate swap contracts qualified for cash flow hedge accounting treatment.

In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the Grand Canyon II and Grand Canyon III charter payments denominated in the Norwegian kroner through July 2019 and February 2020, respectively.

A portion of our foreign currency exchange contracts qualified for hedge accounting treatment.

We had no derivative instruments as of December 31, 2021 and 2020.

The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our consolidated statements of operations for the years ended December 31, 2020 and 2019 (in thousands):

Unrealized Loss Recognized in OCI

Year Ended December 31,

Foreign exchange contracts

Interest rate swaps

Location of Gain (Loss)

Gain (Loss) Reclassified from

Reclassified from

Accumulated OCI into Earnings

Accumulated OCI into

Year Ended December 31,

Foreign exchange contracts

Cost of sales

Interest rate swaps

Net interest expense

The following table presents the impact that derivative instruments not designated as hedging instruments had on our consolidated statements of operations for the years ended December 31, 2020 and 2019 (in thousands):

Loss Recognized in Earnings

Location of Loss

Year Ended December 31,

Recognized in Earnings

Foreign exchange contracts

Other income (expense), net

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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data