What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-24 compared with 2025-04-24 · 140 added, 74 removed, 214 unchanged (50% of the section changed)

6 unchanged sentences

● statements regarding our business strategy, corporate initiatives and any other business plans, forecasts or objectives, any or all of which are subject to change;

● statements regarding projections of revenues, gross margins, expenses, earnings or losses, working capital, debt and liquidity, cash flows, future operations expenditures or other financial items;

● statements regarding projections of revenues, gross margins, expenses, earnings or losses, capital spending, share repurchases, working capital, debt and liquidity, cash flows, future operations expenditures or other financial items;

● statements regarding our backlog and commercial contracts and rates thereunder;

60 unchanged sentences

Our Well Intervention segment includes seven purpose-built well intervention vessels and 12 intervention systems.

Our Robotics segment includes 39 work-class ROVs, six trenchers, two IROV boulder grabs, and robotics support vessels chartered on long-term, short-term, flexible and spot bases to facilitate our ROV and trenching operations.

Our Robotics segment includes 39 work-class ROVs, six trenchers, three IROV boulder grabs, and robotics support vessels chartered on long-term, short-term and flexible bases to facilitate our ROV and trenching operations.

Our Shallow Water Abandonment segment includes nine liftboats, six OSVs, three DSVs, one heavy lift derrick barge, one crew boat, 20 P&A systems and six CT systems.

6 unchanged sentences

Our customers have used drilling rigs on existing long-term contracts (rig overhang) to perform well intervention work instead of new drilling activities.

Current volumes of work, rig utilization rates, the day rates quoted by drilling rig contractors and existing rig overhang affect the utilization and/or rates we can achieve for our assets and services.

Once end-of-life oil and gas wells have depleted their production, we decommission wells and infrastructure in our Well Intervention and Shallow Water Abandonment segments.

1 unchanged sentence

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 capable of providing all facets of decommissioning services in the Gulf of America shelf.

We support the energy transition to renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, including subsea cable trenching and burial as well as seabed clearance and preparation services.

We support renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, including subsea cable trenching and burial as well as seabed clearance and preparation services.

Demand for our services in the renewable energy market is affected by various factors, including the pace of consumer shift towards renewable energy sources, global electricity demand, technological advancements that increase the generation and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water and other regions, and government subsidies for renewable energy projects and/or other governmental regulations supporting or restricting renewable energy developments.

Current Market Environment

Commodity prices continued to be volatile during the first quarter 2025.

Commodity prices continued to be volatile during the first half 2025 due to domestic and geopolitical events and uncertainties.

Oil prices dropped precipitously into the low $60s in early April 2025 following the U.S.

government’s enactment of record tariffs levied globally and the announcement of significant increases in oil production by members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”).

These events follow increasing regulatory actions in the U.K., where the British government has enacted the Energy Profits Levy (windfall tax) and other changes that have significantly increased our customers’ costs in that region.

Furthermore, there have been recent merger announcements of operators in the U.K.

Pending mergers historically result in reductions in spending during the merger process.

The production increases, tariffs and resulting trade wars are expected to result in slower economic growth and substantially increase the risk of a recession, both of which would reduce global demand for oil, putting further pressure on commodity prices, which is likely to result in lower customer spending for the industry.

Additionally, the industry continues to be threatened by decisions from OPEC+, governmental regulations and changes thereto, geopolitical instability and uncertainty, regional conflicts, unrest in the Middle East, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy.

Oil prices recovered in June 2025 only to fall sharply once again following the escalation of the conflict between Israel and Iran.

Reduced global demand places further pressure on commodity prices, which is likely to result in lower customer spending for the industry.

Additionally, the industry continues to be threatened by decisions from OPEC+, governmental regulations and changes thereto, including the ongoing effects of the U.K.

government’s Energy Profits Levy (windfall tax), geopolitical instability and uncertainty, regional conflicts, unrest in the Middle East, customer spending declines following mergers in the U.K.

North Sea, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy.

We expect these factors will continue to contribute to commodity price volatility and may prolong existing lower commodity prices with the potential to temper customer spending for offshore oil and gas projects.

The international wind market continues to be robust, with continued activity and sanctioned work primarily in Europe and Asia Pacific.

windfarm activity is expected to decline following the 2025 Wind Energy Ban, a Presidential Memorandum issued in the U.S.

wind farm activity is expected to decline following the 2025 Wind Energy Ban, a Presidential Memorandum issued in the U.S.

in January 2025 temporarily withdrawing wind energy leasing in the U.S.

Outer Continental Shelf.

Following the production increases announced by OPEC+ and the tariffs announced by the U.S.

government in early April as described above, we anticipate more uncertainty and expect a more challenging spot market for Well Intervention and Shallow Water Abandonment in 2025, although our performance should be supported by our backlog from new contracting at improved rates and by increasing demand for our decommissioning services internationally, which should grow over mid- to long-term as the subsea tree base expands, as customers reduce their decommissioning obligations, and as customers shift resources to renewable energy.

We expect the demand for shallow water decommissioning services in the Gulf of America to improve over the mid- to long-term as oil and gas properties revert to former owners due to bankruptcies, who are expected to address their decommissioning obligations.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law.

We are in the process of evaluating the impact of the OBBBA legislation on our company.

We anticipate more uncertainty and expect a more challenging spot market for Well Intervention and Shallow Water Abandonment during the remainder of 2025, although our performance should be supported by our backlog from new contracting at improved rates and by increasing demand for our decommissioning services internationally, which should grow over mid- to long-term as the subsea tree base expands, as customers reduce their decommissioning obligations, and as customers shift resources to renewable energy.

We expect the demand for shallow water decommissioning services in the Gulf of America to improve over time as former owners address their decommissioning obligations related to oil and gas properties that have reverted to them following bankruptcies.

We expect growth in our renewables services as the global demand for energy increases and the international energy market continues offshore renewable energy developments.

Our backlog is represented by signed contracts.

As of March 31, 2025, our consolidated backlog totaled approximately $1.4 billion, of which $592 million is expected to be performed over the remainder of 2025.

Our various contracts with Shell and Subsea 7 globally, our contracts with Trident Energy and Petrobras in Brazil, and our contracts with Talos in the Gulf of America represented approximately 86% of our total backlog as of March 31, 2025.

As of June 30, 2025, our consolidated backlog totaled approximately $1.3 billion, of which $425 million is expected to be performed over the remainder of 2025.

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

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Three Months Ended

Six Months Ended

Net income (loss)

1 unchanged sentence

Net interest expense

Other expense, net

Other (income) expense, net

Depreciation and amortization

Loss on disposition of assets, net

General release of current expected credit losses

General provision for (release of) current expected credit losses

Losses related to convertible senior notes

1 unchanged sentence

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

4 unchanged sentences

Cash and cash equivalents

Comparison of Three Months Ended March 31, 2025 and 2024

Comparison of Three Months Ended June 30, 2025 and 2024

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):

All material intercompany transactions between the segments have been eliminated in our condensed consolidated financial statements.

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

Three Months Ended

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(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.

(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 rate of chartered Robotics vessels during the three-month period ended March 31, 2024 included 91 spot vessel days at full utilization.

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

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Three Months Ended

Shallow Water Abandonment

Net Revenues.

Our consolidated net revenues for the three-month period ended June 30, 2025 decreased by 17% as compared to the same period in 2024, primarily reflecting lower revenues in our Well Intervention and Production Facilities business segments, offset in part by higher revenues in our Robotics segment.

Our Well Intervention revenues decreased by 28% for the three-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower utilization on the Seawell and in the Gulf of America, offset in part by higher rates in Brazil during the second quarter 2025.

Revenues decreased on the Seawell , which was warm-stacked during the second quarter 2025 as compared to being fully utilized during the second quarter 2024.

Revenues were lower on the Gulf of America vessels due to fewer operational days on the Q4000 , which incurred higher transit and demobilization days, and due to lower utilization on the Q5000 , which underwent an approximate 57-day planned regulatory dry dock during the second quarter 2025.

Revenues in Brazil increased during the second quarter 2025 as the Siem Helix 1 and the Siem Helix 2 operated at higher contractual rates as compared to the second quarter 2024.

Our Robotics revenues increased by 5% for the three-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting increased chartered vessel and site clearance activities, offset in part by a reduction in ROV and trencher utilization.

The second quarter 2025 included 537 chartered vessel days, which included 190 days of site clearance operations using three IROV boulder grabs, as compared to 528 chartered vessel days (including 91 spot vessel days at full utilization), which included 78 days of site clearance operations using two IROV boulder grabs, during the second quarter 2024.

The second quarter 2025 also included 91 days of trenching on a third-party vessel, whereas there was no trenching on a third-party vessel during the second quarter 2024.

Integrated vessel trenching decreased to 157 days during the second quarter 2025 as compared to 232 days during the second quarter 2024, and ROV utilization decreased to 64% during the second quarter 2025 as compared to 80% during the second quarter 2024.

Our Shallow Water Abandonment revenues were down slightly for the three-month period ended June 30, 2025 as compared to the same period in 2024, reflecting lower overall rates on our vessels and P&A systems as well as weaker contract performance during the second quarter 2025, almost entirely offset by higher system and vessel utilization.

Overall vessel utilization was 60% during the second quarter 2025 as compared to 58% during the second quarter 2024.

Utilization on P&A systems and CT systems increased to 798 days, or 34%, during the second quarter 2025 as compared to 632 days, or 27%, during the second quarter 2024.

Our Production Facilities revenues decreased by 33% for the three-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower oil and gas production and prices during the second quarter 2025.

The Thunder Hawk wells remained shut in for the entire second quarter 2025 and the Droshky wells were shut in for approximately one month, whereas both fields had a full quarter of production during the second quarter 2024.

Additionally, oil prices were approximately $15 per barrel lower during the second quarter 2025 as compared to the second quarter 2024.

Gross Profit (Loss).

Our consolidated gross profit decreased by $60.5 million for the three-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower profitability from our Well Intervention, Robotics and Production Facilities business segments.

Our Well Intervention segment had a gross loss of $12.3 million for the three-month period ended June 30, 2025 as compared to a gross profit of $33.6 million for the same period in 2024, primarily reflecting lower revenues, offset in part by lower vessel costs from stacking the Seawell and cost deferrals on the Q5000 docking during the second quarter 2025.

Our Robotics gross profit decreased by $9.2 million for the three-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting higher vessel costs and lower margins during the second quarter 2025.

Our Shallow Water Abandonment gross profit was slightly lower for the three-month period ended June 30, 2025 as compared to the same period in 2024 primarily due to lower revenues during the second quarter 2025.

Our Production Facilities gross profit decreased by $5.1 million for the three-month period ended June 30, 2025 as compared to the same period in 2024 primarily due to the lower revenues, offset in part by lower production-related costs during the second quarter 2025.

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $18.1 million for the three-month period ended June 30, 2025 as compared to $22.3 million for the same period in 2024, primarily reflecting lower employee compensation costs.

Other Income (Expense), Net.

Net other income was $0.4 million for the three-month period ended June 30, 2025 as compared to net other expense of $0.4 million for the same period in 2024, primarily reflecting net foreign currency gains and losses, respectively, related to the British pound on our U.K.

subsidiaries’ foreign currency positions.

Income Tax Provision (Benefit).

Income tax benefit was $6.0 million for the three-month period ended June 30, 2025 as compared to income tax provision of $14.7 million for the same period in 2024.

The effective tax rate for the second quarter 2025 was impacted by certain non-U.S.

discrete items and the jurisdictional mix of earnings.

The effective rate for the second quarter 2024 was impacted by certain non-deductible expenses and non-creditable foreign income taxes.

Comparison of Six Months Ended June 30, 2025 and 2024

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.

The following table details our 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)

(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 three-month period ended March 31, 2025 decreased by 6% as compared to the same period in 2024, reflecting lower revenues in our Well Intervention, Shallow Water Abandonment and Production Facilities business segments, offset in part by higher revenues in our Robotics segment.

Our Well Intervention revenues decreased by 6% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower utilization on the Seawell and the Q7000 , offset in part by higher rates during the first quarter 2025.

Revenues decreased on the Seawell , which was idle during the first quarter 2025 as compared to being nearly fully utilized operating in the western Mediterranean during the first quarter 2024.

Revenues on the Q7000 were lower due to the vessel recognizing only six days of revenue in Brazil during the first quarter 2025 as compared to being fully utilized in Australia during the first quarter 2024.

Our consolidated net revenues for the six-month period ended June 30, 2025 decreased by 12% as compared to the same period in 2024, reflecting lower revenues in our Well Intervention, Shallow Water Abandonment and Production Facilities business segments, offset in part by higher revenues in our Robotics segment.

Our Well Intervention revenues decreased by 17% for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower utilization on the Seawell , the Q5000 and the Q7000 , offset in part by higher rates on the Q4000 and in Brazil during the six-month period ended June 30, 2025.

Revenues decreased on the Seawell , which was idle during the first quarter 2025 and warm-stacked during the second quarter 2025 as compared to being nearly fully utilized during the six-month period ended June 30, 2024.

Utilization on the Q5000 was lower as the vessel underwent an approximate 57-day planned regulatory dry dock during the second quarter 2025.

The Q7000 completed its mobilization and regulatory docking and commenced its 400-day contract in Brazil at the end of March 2025.

During the first quarter 2025, the Q4000 generated higher integrated project revenues while the Q5000 worked at higher contracted rates as compared to the first quarter 2024.

Additionally during the first quarter 2025, the Siem Helix 1 operated at higher rates on its contract extension with Trident as compared to the first quarter 2024 and the Siem Helix 2 operated at higher rates on its new contract with Petrobras that commenced early January 2025.

Our Robotics revenues increased by 1% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting increased trenching activities, offset in part by a reduction in other ROV and vessel utilization.

The first quarter 2025 included 135 integrated vessel trenching days and 90 days of trenching on a third-party vessel as compared to 85 integrated vessel trenching days during the first quarter 2024.

Chartered vessel activity decreased to 244 days during the first quarter 2025 as compared to 333 days during the first quarter 2024.

Overall ROV and trencher utilization decreased to 51% during the first quarter 2025 from 58% during the first quarter 2024.

Our Shallow Water Abandonment revenues decreased by 37% for the three-month period ended March 31, 2025 as compared to the same period in 2024 due to lower vessel and system utilization.

Overall vessel utilization was 30% during the first quarter 2025 as compared to 41% during the first quarter 2024.

P&A systems and CT systems utilization decreased to 264 days, or 11%, during the first quarter 2025 as compared to 626 days, or 26%, during the first quarter 2024.

Our Production Facilities revenues decreased by 18% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower oil and gas production and prices during the first quarter 2025.

Oil and gas production during the first quarter 2025 did not include production from the Thunder Hawk wells, which were active during the first quarter 2024 but have been shut-in since the third quarter 2024.

During the six-month period ended June 30, 2025, the Q4000 completed its Nigeria campaign at higher integrated project rates and transited back to the Gulf of America.

Revenues in Brazil increased as the Siem Helix 1 and the Siem Helix 2 operated at higher contractual rates during the six-month period ended June 30, 2025.

Our Robotics revenues increased by 4% for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting higher chartered vessel rate and increased site clearance activities, offset in part by a reduction in chartered vessel and ROV utilization.

The six-month period ended June 30, 2025 included 781 chartered vessel days, which included 211 days of site clearance operations using three IROV boulder grabs, as compared to 861 chartered vessel days (including 182 spot vessel days at full utilization), which included 168 days of site clearance operations using two IROV boulder grabs, during the six-month period ended June 30, 2024.

The six-month period ended June 30, 2025 also included 181 days of trenching on a third-party vessel, whereas there was no trenching on a third-party vessel during the six-month period ended June 30, 2024.

Integrated vessel trenching declined to 292 days during the second quarter 2025 as compared to 317 days during the second quarter 2024, and ROV utilization decreased to 59% during the second quarter 2025 as compared to 70% during the second quarter 2024.

Our Shallow Water Abandonment revenues decreased by 13% for the six-month period ended June 30, 2025 as compared to the same period in 2024 primarily due to lower utilization and overall rates on our vessels and systems.

Overall vessel utilization was 45% during the six-month period ended June 30, 2025 as compared to 49% during the same period in 2024.

Utilization on P&A systems and CT systems decreased to 1,062 days, or 23%, during the six-month period ended June 30, 2025 as compared to 1,258 days, or 27%, during the six-month period ended June 30, 2024.

Our Production Facilities revenues decreased by 25% for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower oil and gas production and prices during the six-month period ended June 30, 2025.

The Thunder Hawk wells remained shut in for the entire six-month period in 2025 and the Droshky wells were shut in for approximately one month in the second quarter 2025, whereas both fields had a full six months of production in 2024.

Gross Profit (Loss).

Our consolidated gross profit increased by $8.0 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting increased profitability from our Well Intervention and Production Facilities business segments, offset in part by reduced profitability from our Shallow Water Abandonment segment.

Our Well Intervention segment gross profit increased by $1.2 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower idle vessel costs in the North Sea and cost deferrals on the Q7000 during its mobilization and regulatory docking, offset in part by lower revenues during the first quarter 2025.

Our Robotics gross profit remained relatively flat for the three-month period ended March 31, 2025 as compared to the same period in 2024.

Our Shallow Water Abandonment gross loss increased by $1.8 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower revenues, offset in part by lower costs during the first quarter 2025.

Our Production Facilities had a gross profit of $7.5 million for the three-month period ended March 31, 2025 as compared to a gross loss of $1.3 million for the same period in 2024 primarily due to the incurrence of well workover costs related to the Thunder Hawk wells during the first quarter 2024.

Our consolidated gross profit decreased by $52.6 million for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting reduced profitability from our Well Intervention, Robotics and Shallow Water Abandonment business segments, offset in part by increased profitability from our Production Facilities segment.

Our Well Intervention segment gross profit decreased by $44.7 million for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower revenues, offset in part by lower idle vessel costs in the North Sea, cost deferrals on the Q7000 during its mobilization and regulatory docking during the first quarter 2025 and cost deferrals on the Q5000 docking during the second quarter 2025.

Our Robotics gross profit decreased by $9.4 million for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting higher vessel costs and lower margins during the second quarter 2025.

Our Shallow Water Abandonment gross loss increased by $2.0 million for the six-month period ended June 30, 2025 as compared to the same period in 2024, primarily reflecting lower revenues, offset in part by lower costs during the six-month period ended June 30, 2025.

Our Production Facilities gross profit increased by $3.6 million for the six-month period ended June 30, 2025 as compared to the same period in 2024 primarily due to the incurrence of well workover costs related to the Thunder Hawk wells during the first quarter 2024.

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $19.4 million for the three-month period ended March 31, 2025 as compared to $20.7 million for the same period in 2024, primarily reflecting lower employee compensation costs.

Our selling, general and administrative expenses were $37.5 million for the six-month period ended June 30, 2025 as compared to $43.0 million for the same period in 2024, primarily reflecting lower employee compensation costs.

Net Interest Expense.

Our net interest expense totaled $5.7 million for the three-month period ended March 31, 2025 as compared to $5.5 million for the same period in 2024, primarily reflecting lower interest income on our invested cash (Note 5).

Our net interest expense totaled $11.6 million for the six-month period ended June 30, 2025 as compared to $11.4 million for the same period in 2024, primarily reflecting lower interest income on our invested cash (Note 5).

Losses Related to Convertible Senior Notes.

The losses during the three-month period ended March 31, 2024 were associated with the redemption of our 2026 Notes (Note 5).

Other Expense, Net.

Net other expense was $0.4 million for the three-month period ended March 31, 2025 as compared to $2.2 million for the same period in 2024.

Net other expense during the first quarter 2025 primarily reflects foreign currency losses related to the appreciation of the British pound on net cash balances denominated in U.S.

dollar in our U.K.

Net other expense during the first quarter 2024 primarily reflects foreign currency losses related to the depreciation of the British pound primarily on U.S.

dollar denominated intercompany debt in our U.K.

The losses during the six-month period ended June 30, 2024 were associated with the redemption of our 2026 Notes (Note 5).

Other Income (Expense), Net.

Net other income was $0.1 million for the six-month period ended June 30, 2025 as compared to net other expense of $2.6 million for the same period in 2024, primarily reflecting net foreign currency gains and losses, respectively, related to the British pound on our U.K.

subsidiaries’ foreign currency positions.

Income Tax Provision (Benefit).

Income tax provision was $0.5 million for the three-month period ended March 31, 2025 as compared to income tax benefit of $1.7 million for the same period in 2024.

The effective tax rate for the three-month period ended March 31, 2025 was impacted by a discrete non-U.S.

The effective rate for the three-month period ended March 31, 2024 was impacted by the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event.

Income tax benefit was $5.5 million for the six-month period ended June 30, 2025 as compared to income tax provision of $13.0 million for the same period in 2024.

The effective tax rate for the six-month period ended June 30, 2025 was impacted by certain non-U.S.

discrete items and the jurisdictional mix of earnings.

The effective rate for the six-month period ended June 30, 2024 was impacted by the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event.

LIQUIDITY AND CAPITAL RESOURCES

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Long-Term Debt

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes our MARAD Debt and the 2029 Notes and excludes current maturities of $9.4 million at March 31, 2025 and $9.2 million at December 31, 2024.

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes the 2029 Notes and the MARAD Debt, excluding current maturities of $9.4 million at June 30, 2025 and $9.2 million at December 31, 2024.

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, but excluding cash pledged as collateral toward the Amended ABL Facility.

Our liquidity at March 31, 2025 included $370.0 million of cash and cash equivalents and $62.7 million of available borrowing capacity under the Amended ABL Facility (Note 5) and excluded $28.0 million of pledged cash.

Our liquidity at June 30, 2025 included $319.7 million of cash and cash equivalents and $70.5 million of available borrowing capacity under the Amended ABL Facility (Note 5) and excluded $15.3 million of pledged cash.

Our liquidity at December 31, 2024 included $368.0 million of cash and cash equivalents and $66.6 million of available borrowing capacity under the Amended ABL Facility and excluded $5.0 million of pledged cash.

The reduction in availability on the facility was primarily attributable to higher letter of credit usage in order to support the Nigeria project on the Q4000 .

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 expect availability on the Amended ABL Facility to increase following the completion of the Q4000 Nigeria campaign.

We currently do not anticipate borrowing under the Amended ABL Facility and expect to only use the facility 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.

Our failure to comply with the covenants and other restrictions could lead to an event of default.

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 except for the issuance of letters of credit.

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):

3 unchanged sentences

Operating Activities

Our operating cash flows for the three-month period ended March 31, 2025 decreased despite higher earnings as compared to the same period in 2024, primarily reflecting higher regulatory recertification costs on our vessels and systems and lower working capital inflows.

Our operating cash flows for the six-month period ended June 30, 2025 decreased as compared to the same period in 2024 despite the absence of an earnout payment, primarily reflecting lower earnings, higher regulatory recertification costs on our vessels and systems and 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 earnout payment on April 3, 2024.

Regulatory recertification spending on our vessels and systems was $33.9 million and $20.3 million, respectively, during the comparable year over year periods.

Investing Activities

Cash flows used in investing activities for the three-month period ended March 31, 2025 increased slightly as compared to the same period in 2024 primarily due to higher capital expenditures.

Cash flows used in investing activities for the six-month period ended June 30, 2025 increased slightly as compared to the same period in 2024 primarily due to higher capital expenditures.

Financing Activities

Net cash outflows from financing activities for the three-month period ended March 31, 2025 primarily reflect the principal repayment of $4.5 million related to the MARAD Debt and payments in satisfaction of tax obligations upon vesting of share-based awards.

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, the principal repayment of $4.3 million related to the MARAD Debt and $4.2 million in repurchases of our common stock under the 2023 Repurchase Program.

Net cash outflows from financing activities for the six-month period ended June 30, 2025 primarily reflect the repurchases of $30.2 million in our common stock under the 2023 Repurchase Program (including $0.2 million of excise tax paid), principal repayment of $4.5 million related to the MARAD Debt and payments in satisfaction of tax obligations upon vesting of share-based awards.

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 earnout payment, the principal repayment of $4.3 million related to the MARAD Debt and $10.2 million in repurchases of our common stock under the 2023 Repurchase Program.

These outflows were offset in part by $4.4 million of cash inflows from the proportionate settlement of the 2026 Capped Calls.

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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 and operating lease obligations, as of March 31, 2025 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, 2025.

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, 2025 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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(1) Operating leases include vessel charters and facility and equipment leases, including commitments related to leases executed but not yet commenced.

At March 31, 2025, our commitment related to long-term vessel charters totaled approximately $804.9 million, of which $409.3 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, 2025.

At June 30, 2025, our commitment related to long-term vessel charters that have commenced totaled approximately $768.3 million, of which $390.9 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, 2025.

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, 2025, 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, 2025, 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 Corporation as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

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Although the amount and timing of these costs may vary and are dependent on the timing of the certification renewal period, they generally range between $0.2 million to $15.0 million per vessel and $0.5 million to $5.0 million per system.

We expect the sources of funds to satisfy our material cash requirements to primarily come from our ongoing operations and existing cash on hand, but may also come from availability under the Amended ABL Facility and access to capital markets.

We expect the sources of funds to satisfy our material cash requirements to come from our ongoing operations and existing cash on hand.

Although not currently expected, we also have availability under the Amended ABL Facility and access to capital markets.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

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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