What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-26 · 128 added, 62 removed, 224 unchanged (46% of the section changed)

11 unchanged sentences

● statements regarding energy transition and energy security;

● statements regarding our ability to identify, effect and integrate acquisitions, joint ventures or other transactions and any subsequently identified legacy issues with respect thereto;

● statements regarding our ability to identify, effect and integrate mergers, acquisitions, joint ventures or other transactions and any subsequently identified legacy issues with respect thereto;

● statements regarding the acquisition, construction, completion, upgrades to or maintenance and/or regulatory certification of vessels, systems or equipment and any anticipated costs or downtime related thereto;

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Our operations service the life cycle of an oil and gas field and provide P&A and decommissioning services at the end of the life of a field as required by governmental regulations.

We believe that we have a competitive advantage in performing these services efficiently.

We believe that our well intervention vessels have a competitive advantage in performing these services efficiently and with our suite of shallow water assets and capabilities, we are the only provider of full-field decommissioning services in the Gulf of Mexico shelf.

The demand for P&A services should grow over the mid- to long-term as the subsea tree base expands, as government regulations continue to place stronger emphasis on decommissioning aged wells worldwide (including subsea trees as well as mature dry tree wells in the shallow waters of the Gulf of Mexico), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

In 2024, despite a backdrop of a somewhat uncertain macro environment globally, we expect to experience another strong year of performance driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market.

The demand for shallow water decommissioning services in the Gulf of Mexico is expected to soften in the near term but should grow over the mid- to long-term.

In 2024, we expect to experience another strong year of performance driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market.

We expect the demand for shallow water decommissioning services in the Gulf of Mexico to remain soft in the near term but should grow over the mid- to long-term.

Our backlog is represented by signed contracts.

As of March 31, 2024, our consolidated backlog totaled approximately $997 million, of which $663 million is expected to be performed over the remainder of 2024.

Our various contracts with Shell globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with ExxonMobil globally, and our agreement for the HP I in the Gulf of Mexico represented approximately 65% of our total backlog as of March 31, 2024.

As of June 30, 2024, our consolidated backlog totaled approximately $873 million, of which $443 million is expected to be performed over the remainder of 2024.

Our various contracts with Shell, ExxonMobil and Subsea 7 globally, our contracts with Trident Energy and Petrobras in Brazil, and our agreement for the HP I in the Gulf of Mexico represented approximately 73% of our total backlog as of June 30, 2024.

Backlog is not necessarily a reliable indicator of revenues derived from our contracts as services are often added but may sometimes be subtracted;

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Three Months Ended

Income tax benefit

Six Months Ended

Income tax provision

Net interest expense

Other (income) expense, net

Other expense, net

Depreciation and amortization

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The reconciliation of our cash flows from operating activities to Free Cash Flow is as follows (in thousands):

Three Months Ended

Six Months Ended

Cash flows from operating activities

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Cash and cash equivalents

Comparison of Three Months Ended March 31, 2024 and 2023

Comparison of Three Months Ended June 30, 2024 and 2023

We have four reportable business segments:

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(2) Represents the average utilization rate, which is calculated by dividing the total number of days the vessels, Robotics assets or Shallow Water Abandonment systems generated revenues by the total number of calendar days in the applicable period.

Utilization rates of chartered Robotics vessels during the three-month periods ended March 31, 2024 and 2023 included 91 spot vessel days at full utilization and 13 spot vessel days at 81% utilization, respectively.

Utilization rates of chartered Robotics vessels during the three-month periods ended June 30, 2024 and 2023 included 91 and 113 spot vessel days, respectively, at near full utilization.

(3) Consists of ROVs, trenchers and IROV boulder grabs.

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Net Revenues.

Our consolidated net revenues for the three-month period ended March 31, 2024 increased by 18% as compared to the same period in 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Our Well Intervention revenues increased by 52% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher revenues on the Q7000 and the Q5000 and higher rates and utilization on the Seawell , offset in part by lower utilization on the Well Enhancer .

The Q7000 had full utilization during the first quarter 2024 whereas the vessel was transiting from West Africa to Asia Pacific and undergoing regulatory and project related dockings during the first quarter 2023, and utilization increased on the Q5000 during the first quarter 2024 as the vessel underwent a regulatory docking during the first quarter 2023.

The Seawell benefitted from being on contract during the entire first quarter 2024 in the western Mediterranean as compared to having had lower seasonal utilization and rates in the North Sea during the first quarter 2023.

The Well Enhancer in the North Sea had lower utilization as compared to the prior year period as the vessel underwent a 54-day scheduled dry dock during the first quarter 2024.

Our Robotics revenues increased by 2% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities during the first quarter 2024.

Chartered vessel days increased to 333 days during the first quarter 2024 as compared to 295 days during the first quarter 2023, although chartered vessel days in the first quarter 2024 included approximately 64 days of standby utilization at reduced rates.

ROV and trencher utilization increased to 58% in the first quarter 2024 from 56% during the first quarter 2023 and included 85 days of integrated vessel trenching in the first quarter 2024 as compared to 66 days in the first quarter 2023.

Our Shallow Water Abandonment revenues decreased by 46% for the three-month period ended March 31, 2024 as compared to the same period in 2023.

The decrease in revenues is due to lower activity levels that are reflective of the variable nature of operator spending as well as higher customer concentrations in the Gulf of Mexico shelf market, resulting in lower vessel and system utilization during the first quarter 2024 as compared to the first quarter 2023.

Overall vessel utilization was 41% during the first quarter 2024 as compared to 58% during the first quarter 2023.

P&A systems and CT systems achieved 626 days of utilization, or 26% on 26 systems, during the first quarter 2024 as compared to 1,277 days of utilization, or 68% on 21 systems, during the first quarter 2023.

Our Production Facilities revenues increased by 16% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production as the Thunder Hawk wells were shut in for planned maintenance during the first quarter 2023.

Our consolidated net revenues for the three-month period ended June 30, 2024 increased by 18% as compared to the same period in 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Our Well Intervention revenues increased by 46% for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher utilization and rates in the Gulf of Mexico, higher rates on the Seawell and higher revenues on the Q7000 .

Both the Q4000 and the Q5000 generated higher day rates in the Gulf of Mexico during the second quarter 2024.

The Q4000 had higher utilization during the second quarter 2024 as the vessel spent most of the second quarter 2023 on its regulatory dry dock.

The Seawell benefitted from being contracted in the western Mediterranean at higher rates during most of the second quarter 2024.The Q7000 had a full quarter of utilization during the second quarter 2024 whereas the vessel recognized revenues over approximately 27 days during the second quarter 2023 following its paid transit and mobilization to the Asia Pacific region, a period during which revenues were deferred and not recognized.

Our Robotics revenues increased by 16% for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities during the second quarter 2024.

Chartered vessel days increased to 528 days during the second quarter 2024 as compared to 435 days during the second quarter 2023.

ROV and trencher utilization increased to 76% in the second quarter 2024 from 58% during the second quarter 2023 and included 232 days of integrated vessel trenching in the second quarter 2024 as compared to 194 days in the second quarter 2023.

Our Shallow Water Abandonment revenues decreased by 33% for the three-month period ended June 30, 2024 as compared to the same period in 2023.

The decrease in revenues was due to lower activity levels and an overall softer Gulf of Mexico shelf market in 2024, resulting in lower vessel and system utilization during the second quarter 2024 as compared to the second quarter 2023.

Overall vessel utilization was 58% during the second quarter 2024 as compared to 78% during the second quarter 2023.

P&A systems and CT systems achieved 632 days of utilization, or 27% on 26 systems, during the second quarter 2024 as compared to 1,554 days of utilization, or 81% on 21 systems, during the second quarter 2023.

Our Production Facilities revenues increased by 10% for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production during the second quarter 2024 whereas both the Droshky and Thunder Hawk wells were shut in for planned maintenance during portions of the second quarter 2023.

Gross Profit (Loss).

Our consolidated gross profit increased by $4.4 million for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention and Robotics business segments, offset in part by losses from our Shallow Water Abandonment and Production Facilities segments.

Our Well Intervention segment had a gross profit of $23.1 million for the three-month period ended March 31, 2024 as compared to a gross loss of $4.4 million for the same period in 2023, primarily reflecting higher segment revenues.

Our Robotics gross profit increased by $1.2 million for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher revenues due to increased activities.

Our Shallow Water Abandonment segment had a gross loss of $9.8 million for the three-month period ended March 31, 2024 as compared to a gross profit of $7.5 million for the same period in 2023, primarily reflecting lower segment revenues.

Our Production Facilities segment had a gross loss of $1.3 million for the three-month period ended March 31, 2024 as compared to a gross profit of $5.8 million for the same period in 2023, primarily reflecting well workover costs of approximately $8.6 million related to the Thunder Hawk wells during the first quarter 2024.

Our consolidated gross profit increased by $20.1 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention, Robotics and Production Facilities business segments, offset in part by a reduction in profit from our Shallow Water Abandonment segment.

Our Well Intervention segment gross profit increased by $26.6 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher segment revenues and increased activity levels.

Our Robotics gross profit increased by $11.4 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues and higher profit margin projects during the second quarter 2024.

Our Shallow Water Abandonment gross profit decreased by $19.3 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting lower segment revenues.

Our Production Facilities gross profit increased by $1.2 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher segment revenues.

Change in Fair Value of Contingent Consideration.

The change in fair value of contingent consideration in the first quarter 2023 reflected an improvement in Helix Alliance’s results during the first quarter.

The change in fair value of contingent consideration in the second quarter 2023 reflected an improvement in Helix Alliance’s results during the quarter.

We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $21.0 million for the three-month period ended March 31, 2024 as compared to $19.6 million for the same period in 2023, primarily reflecting an increase in professional fees, third party services and office-related costs.

Our selling, general and administrative expenses were $22.3 million for the three-month period ended June 30, 2024 as compared to $24.0 million for the same period in 2023, primarily reflecting lower employee compensation costs.

Net Interest Expense.

Our net interest expense totaled $5.5 million for the three-month period ended March 31, 2024 as compared to $4.2 million for the same period in 2023, primarily reflecting interest expense on our 2029 Notes, offset in part by higher interest income on our invested cash reserves (Note 5).

Losses Related to Convertible Senior Notes.

The $20.9 million loss for the three-month period ended March 31, 2024 was associated with the retirement of our 2026 Notes (Note 5).

Other Income (Expense), Net.

Net other expense was $2.2 million for the three-month period ended March 31, 2024 as compared to net other income of $3.4 million for the same period in 2023, primarily reflecting foreign currency losses related to the depreciation of the British pound primarily on U.S.

Our net interest expense totaled $5.9 million for the three-month period ended June 30, 2024 as compared to $4.2 million for the same period in 2023, primarily reflecting interest expense on our 2029 Notes, offset in part by higher interest income on our invested cash reserves (Note 5).

Other Expense, Net.

Net other expense was $0.4 million for the three-month period ended June 30, 2024 as compared to net other expense of $5.7 million for the same period in 2023.

Net other expense during the second quarter 2023 primarily reflected an $11.7 million foreign currency loss related to the devaluation of the Nigerian naira on our naira cash holdings, offset in part by foreign currency gains due to the strengthening of the British pound primarily on U.S.

dollar denominated intercompany debt in our U.K.

Income Tax Benefit.

Income tax benefit was $1.7 million for the three-month period ended March 31, 2024 as compared to $2.0 million for the same period in 2023.

The effective tax rates for the three-month periods ended March 31, 2024 and 2023 were 6.1% and 28.1%, respectively.

The decrease in effective tax rates was primarily attributable to the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event and reported in the current quarter (Note 6).

Income Tax Provision.

Income tax provision was $14.7 million for the three-month period ended June 30, 2024 as compared to $3.3 million for the same period in 2023.

The effective tax rates for the three-month periods ended June 30, 2024 and 2023 were 31.3% and 31.8%, respectively.

The increase in income tax expense was primarily attributable to higher net income.

Comparison of Six Months Ended June 30, 2024 and 2023

We have four reportable business segments:

Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities.

All material intercompany transactions between the segments have been eliminated in our condensed consolidated financial statements, including our condensed consolidated results of operations.

The following table details various financial and operational highlights for the periods presented (dollars in thousands):

Six Months Ended

Net revenues —

Well Intervention

Shallow Water Abandonment

Production Facilities

Intercompany eliminations

Gross profit (loss) —

Well Intervention

Shallow Water Abandonment

Production Facilities

Corporate, eliminations and other

Gross margin —

Well Intervention

Shallow Water Abandonment

Production Facilities

Total company

Number of vessels, Robotics assets or Shallow Water Abandonment systems (1) / Utilization (2)

Well Intervention vessels

Robotics assets (3)

Chartered Robotics vessels

Shallow Water Abandonment vessels (4)

Shallow Water Abandonment systems (5)

(1) Represents the number of vessels, Robotics assets or Shallow Water Abandonment systems as of the end of the period, including spot vessels and those under term charters, and excluding acquired vessels prior to their in-service dates, vessels managed on behalf of third parties and vessels or assets disposed of and/or taken out of service.

Utilization rates of chartered Robotics vessels during the six-month periods ended June 30, 2024 and 2023 included 182 and 126 spot vessel days, respectively, at near full utilization.

(3) Consists of ROVs, trenchers and IROV boulder grabs.

(4) Consists of liftboats, OSVs, DSVs, a heavy lift derrick barge and a crew boat.

(5) Consists of P&A and CT systems.

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments.

Intercompany segment revenues are as follows (in thousands):

Six Months Ended

Well Intervention

Shallow Water Abandonment

Net Revenues.

Our consolidated net revenues for the six-month period ended June 30, 2024 increased by 18% as compared to the same period in 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Our Well Intervention revenues increased by 49% for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues on the Q7000 and higher rates and utilization on the Seawell , the Q4000 and the Q5000 , offset in part by lower utilization on the Well Enhancer .

The Q7000 had full utilization during the six-month period ended June 30, 2024 whereas the vessel spent most of the six-month period ended June 30, 2023 on regulatory and project-related dockings and paid transit and mobilization to Asia Pacific.

The Seawell benefitted from being contracted in the western Mediterranean at higher rates during most of the six-month period ended June 30, 2024 as compared to having had lower utilization and rates during the same period in 2023.

Utilization increased on the Q4000 and the Q5000 during the six-month period ended June 30, 2024 as both vessels underwent their regulatory dry docks during the six-month period ended June 30, 2023.

Gulf of Mexico day rates also improved during the year over year periods.

The Well Enhancer in the North Sea had lower utilization as compared to the prior year period as the vessel underwent a scheduled dry dock during the first quarter 2024.

Our Robotics revenues increased by 10% for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities.

Chartered vessel days increased to 861 days during the six-month period ended June 30, 2024 as compared to 730 days during the six-month period ended June 30, 2023, although chartered vessel days in the first quarter 2024 included approximately 64 days of standby utilization at reduced rates.

ROV and trencher utilization increased to 67% in the six-month period ended June 30, 2024 from 57% during the six-month period ended June 30, 2023 and included 317 days of integrated vessel trenching in 2024 as compared to 260 days in 2023.

Our Shallow Water Abandonment revenues decreased by 38% for the six-month period ended June 30, 2024 as compared to the same period in 2023.

The decrease in revenues is due to lower activity levels and an overall softer Gulf of Mexico shelf market in 2024, resulting in lower vessel and system utilization during the six-month period ended June 30, 2024 as compared to the six-month period ended June 30, 2023.

Overall vessel utilization was 49% during the six-month period ended June 30, 2024 as compared to 68% during the same period in 2023.

P&A systems and CT systems achieved 1,258 days of utilization, or 27% on 26 systems, during the six-month period ended June 30, 2024 as compared to 2,831 days of utilization, or 74% on 21 systems, during the six-month period ended June 30, 2023.

Our Production Facilities revenues increased by 13% for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production as both the Droshky and Thunder Hawk wells were shut in for planned maintenance during portions of the six-month period ended June 30, 2023.

Gross Profit (Loss).

Our consolidated gross profit increased by $24.5 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention and Robotics business segments, offset in part by losses from our Shallow Water Abandonment and Production Facilities segments.

Our Well Intervention segment gross profit increased by $54.1 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher segment revenues and increased activity levels.

Our Robotics gross profit increased by $12.5 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues and higher profit margin projects during the six-month period ended June 30, 2024.

Our Shallow Water Abandonment segment had a gross loss of $8.1 million for the six-month period ended June 30, 2024 as compared to a gross profit of $28.5 million for the same period in 2023, primarily reflecting lower segment revenues.

Our Production Facilities gross profit decreased by $5.9 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting well workover costs of approximately $8.6 million related to the Thunder Hawk wells during the first quarter 2024, offset in part by higher segment revenues.

Change in Fair Value of Contingent Consideration.

The change in fair value of contingent consideration in the six-month period ended June 30, 2023 reflected an improvement in Helix Alliance’s results during the first half 2023.

We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Net Interest Expense.

Our net interest expense totaled $11.4 million for the six-month period ended June 30, 2024 as compared to $8.4 million for the same period in 2023, primarily reflecting interest expense on our 2029 Notes, offset in part by higher interest income on our invested cash reserves (Note 5).

Losses Related to Convertible Senior Notes.

The $20.9 million loss for the six-month period ended June 30, 2024 was associated with the retirement of our 2026 Notes (Note 5).

Income Tax Provision.

Income tax provision was $13.0 million for the six-month period ended June 30, 2024 as compared to $1.3 million for the same period in 2023.

The effective tax rates for the six-month periods ended June 30, 2024 and 2023 were 68.5% and 40.1%, respectively.

The increase in effective tax rates was primarily attributable to the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event and reported in the first quarter 2024 (Note 6).

LIQUIDITY AND CAPITAL RESOURCES

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Net working capital measures short-term liquidity and is important for predicting cash flow and debt requirements.

Net working capital at March 31, 2024 and December 31, 2023 includes $85.0 million of Alliance earn-out consideration that was paid in cash on April 3, 2024.

Net working capital at December 31, 2023 included $85.0 million of Alliance earn-out consideration that was paid in cash on April 3, 2024.

Long-Term Debt

Long-term debt in the table above includes our MARAD Debt, the 2023 Notes, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.0 million at March 31, 2024 and $48.3 million at December 31, 2023, and is net of unamortized debt discount and debt issuance costs.

Long-term debt in the table above includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.0 million at June 30, 2024 and $48.3 million at December 31, 2023, and is net of unamortized debt discount and debt issuance costs.

See Note 5 for information relating to our long-term debt.

We define liquidity as cash and cash equivalents plus available capacity under our credit facility.

Our liquidity at March 31, 2024 included $323.8 million of cash and cash equivalents and $95.6 million of available borrowing capacity under the Amended ABL Facility (Note 5).

In March 2024, we settled the remaining $40.2 million aggregate principal amount of the 2026 Notes for $60.5 million in cash (excluding costs), offset in part by $4.4 million from the settlement of the remaining 2026 Capped Calls.

Our liquidity at June 30, 2024 included $275.1 million of cash and cash equivalents and $95.1 million of available borrowing capacity under the Amended ABL Facility (Note 5).

Our liquidity at December 31, 2023 included $332.2 million of cash and cash equivalents and $99.3 million of available borrowing capacity under the Amended ABL Facility.

In December 2023, we used $229.7 million of the cash proceeds from the 2029 Notes, as well as 1.5 million shares of our common stock, to repurchase $159.8 million aggregate principal amount of the 2026 Notes, offset in part by $15.6 million from the associated 2026 Capped Calls.

On April 3, 2024, we paid $85.0 million of earn-out consideration in cash to the seller in the Alliance transaction.

In the current market environment, following the settlement of the Alliance earn-out we expect strong ongoing operating performance and cash flows, continued availability on the Amended ABL Facility and reductions in Net Debt (See “Results of Operations — Non-GAAP Financial Measures” for the definition of Net Debt).

We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and service our debt and other obligations over at least the next 12 months.

In the current market environment, following the settlement of the Alliance earn-out we expect strong ongoing operating performance and cash flows and continued availability on the Amended ABL Facility.

We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and expected capital spending, service our debt and other obligations, and execute our share repurchase program over at least the next 12 months.

We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

A period of weak industry activity may make it difficult to comply with the covenants and other restrictions in our debt agreements.

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Decreases in our borrowing base may limit our ability to fully access the Amended ABL Facility.

We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

During the three-month period ended March 31, 2024, we repurchased a total of 462,585 shares of our common stock for approximately $5.0 million pursuant to the 2023 Repurchase Program.

The following table provides summary data from our condensed consolidated statements of cash flows (in thousands):

Three Months Ended

Six Months Ended

Cash provided by (used in):

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Operating Activities

The increase in our operating cash flows for the three-month period ended March 31, 2024 as compared to the same period in 2023 primarily reflects lower operating losses, higher working capital inflows and lower regulatory recertification costs for our vessels and systems.

The increase in our operating cash flows for the six-month period ended June 30, 2024 as compared to the same period in 2023 primarily reflects higher operating income, and lower regulatory recertification costs for our vessels and systems, offset in part by higher working capital outflows.

Operating cash outflows during the six-month period ended June 30, 2024 included $58.3 million of the $85.0 million earn-out payment on April 3, 2024, representing the amount in the excess of the $26.7 million fair value of earn-out consideration at the Alliance acquisition date.

Regulatory recertification spend on our vessels and systems amounted to $20.3 million and $41.3 million, respectively, during the comparable year over year periods.

Investing Activities

Cash flows used in investing activities for the three-month periods ended March 31, 2024 and 2023 reflect lower capital expenditures during the first quarter 2024.

Cash flows used in investing activities for the six-month periods ended June 30, 2024 and 2023 reflect comparable capital expenditure levels during the year over year periods.

Financing Activities

Net cash outflows from financing activities for the three-month period ended March 31, 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, $4.2 million in repurchases of our common stock under the 2023 Repurchase Program and the principal repayment of $4.3 million related to the MARAD Debt, offset in part by $4.4 million from the proportionate settlement of the 2026 Capped Calls.

Net cash outflows from financing activities for the three-month period ended March 31, 2023 primarily reflect $5.0 million in repurchases of our common stock under the 2023 Repurchase Program and the repayment of $4.1 million related to the MARAD Debt.

Net cash outflows from financing activities for the six-month period ended June 30, 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, $26.7 million of the $85.0 million earn-out payment, $10.2 million in repurchases of our common stock under the 2023 Repurchase Program and the principal repayment of $4.3 million related to the MARAD Debt, offset in part by $4.4 million from the proportionate settlement of the 2026 Capped Calls.

Net cash outflows from financing activities for the six-month period ended June 30, 2023 primarily reflect $10.1 million in repurchases of our common stock under the 2023 Repurchase Program and the repayment of $4.1 million related to the MARAD Debt.

Material Cash Requirements

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Long-term debt and other contractual commitments

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment, operating lease obligations and Alliance earn-out consideration, as of March 31, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities.

Our property and equipment commitments include contractually committed amounts to purchase and service certain property and equipment (inclusive of commitments related to regulatory recertification and dry dock as discussed below) but do not include expected capital spending that is not contractually committed as of March 31, 2024.

We acquired Helix Alliance in July 2022 for total consideration that included cash plus an earn-out to the extent Helix Alliance’s financial results exceeded certain thresholds in 2022 and 2023.

During the fourth quarter 2023, we finalized the calculation and agreed with the seller in the Alliance transaction on an $85.0 million earn-out that was paid in cash on April 3, 2024.

Accordingly, we reported $85.0 million of Alliance earn-out consideration in “Accrued liabilities” in the condensed consolidated balance sheets (Note 3).

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment and operating lease obligations, as of June 30, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities.

Interest related to debt

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Operating leases (1)

Earn-out consideration

Total cash obligations

(1) Operating leases include vessel charters and facility and equipment leases.

At March 31, 2024, our commitment related to long-term vessel charters totaled approximately $990.9 million, of which $533.3 million was related to the non-lease (services) components that are not included in operating lease liabilities in the condensed consolidated balance sheet as of March 31, 2024.

At June 30, 2024, our commitment related to long-term vessel charters totaled approximately $876.4 million, of which $437.2 million was related to the non-lease (services) components that are not included in operating lease liabilities in the condensed consolidated balance sheet as of June 30, 2024.

Other material cash requirements

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We have decommissioning obligations associated with our oil and gas properties (Note 12).

Those obligations, which are presented on a discounted basis on the condensed consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of March 31, 2024, none of which is expected to be paid during the next 12 months.

Those obligations, which are presented on a discounted basis on the condensed consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of June 30, 2024, none of which is expected to be paid during the next 12 months.

We are entitled to receive $30.0 million (undiscounted) from Marathon Oil as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis