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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-29 · 101 added, 123 removed, 172 unchanged (57% of the section changed)

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EXECUTIVE SUMMARY

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.

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 decommissioning operations.

We operate through our four business segments:

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Industry Influences and Market Environment

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the willingness of offshore energy companies to spend on operational activities and capital projects.

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the level of spending of offshore energy companies on operational activities and capital projects.

The performance of our business is largely affected by the prevailing market prices for oil and natural gas, which are impacted by domestic and global economic conditions, hydrocarbon production and capacity, geopolitical issues, weather, global health, and various other factors.

Demand for decommissioning, which has been an area of growth for us in recent years, is affected by commodity prices as well as governmental regulations and political forces globally.

Oil prices came down from their highs in 2022 but have remained robust during 2023.

Global demand for oil continues to experience growth, and we expect the current market conditions will maintain continued customer spending for the industry.

Despite the current commodity price environment, uncertainties to commodity price stability persist, including regional conflicts, unrest in the Middle East, OPEC+ decisions, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy.

Demand for decommissioning is affected by commodity prices as well as governmental regulations and political forces globally.

Oil prices continue to be volatile but have generally remained robust during 2024.

Global demand for oil continues to experience growth albeit at slower rates, and although we believe the current oil and gas pricing warrants continued customer spending for the industry, higher levels of economic and industry uncertainty may temper such customer spending.

Factors that could threaten the current commodity price environment persist, including regional conflicts, governmental regulations, geopolitical instability and uncertainty, unrest in the Middle East, OPEC+ decisions, the global economy and the demand for oil and gas in China in particular, 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 with the potential to temper customer spending for oil and gas projects.

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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.

We are seeing oil and gas companies continue to invest in long-cycle exploration projects in addition to maintaining and/or increasing production from their existing reserves.

As historically production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells.

We support the energy transition to renewable energy through our services in offshore wind farm developments, primarily 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.

We expect growth in our renewables services as the energy market transitions to continued renewable energy developments.

In the current market environment, we continue to see oil and gas companies invest in long-cycle offshore exploration projects in addition to maintain and/or increase production from their existing reserves.

As production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells in addition to their exploration activities.

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.

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.

The demand for P&A services should grow 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), and as customers shift resources to renewable energy.

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 U.S.

Gulf Coast 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 U.S.

Gulf Coast), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

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

We expect growth in our renewables services as the global energy market continues offshore renewable energy developments.

Business Activity Summary

During 2023, we continued to reap the benefits of our energy transition strategy with significant improvements in our results as compared to 2022.

Utilization and rates improved across all of our operating segments in 2023, benefitting from a strong oil and gas market, continued customer demand for our renewables offerings and robust decommissioning demand across the globe.

We made significant improvements in our balance sheet in 2023, extending the maturity of our debt to 2029, removing the dilution overhang associated with 22.9 million shares underlying the Convertible Senior Notes due 2026 (the “2026 Notes”) repurchased in December 2023, and simplifying our capital structure.

We maintain our capital allocation policy of maintaining low levels of Net Debt, investing in targeted acquisitions that complement and further our strategy, and using Free Cash Flow to return cash to shareholders through share repurchases (See “Results of Operations — Non-GAAP Financial Measures” below for definitions of Net Debt and Free Cash Flow).

We also executed a number of transactions during 2023 that demonstrate our commitment to our strategy and outlook for the markets we serve.

During 2023, we extended the charters on two of our robotics vessels in support of our trenching and site clearance operations.

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

In July 2023, we entered into a new agreement to extend the Horizon Enabler charter until December 2025, with further options to extend.

In September 2023, we acquired assets primarily consisting of five operable P&A systems to be used in our shallow water decommissioning operations in the Gulf of Mexico.

In November 2023, we extended the agreement for the HP 1 for one year until at least June 1, 2025.

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 Gulf of Mexico shallow water decommissioning demands are expected to experience volatility as customers balance their spending between decommissioning obligations and production needs.

During 2024, our operating results improved significantly as we continued to execute on our energy transition strategy with significant improvements in utilization and rates in our Well Intervention and Robotics segments.

During 2024, we also executed significant new contracts on the strength of the market and the demand for our services.

These contracts added significant backlog and will provide strong utilization for our vessels and equipment over multiple years.

Notable contracts include:

● Six-month contract with options on the Q4000 in Nigeria, which commenced in the fourth quarter 2024 ;

● Trident extension at improved rates on the Siem Helix 1 for one year through 2025;

● New three-year contracts with Petrobras on the Siem Helix 1 and the Siem Helix 2 at improved rates;

● Two-year contract with Shell in the U.S.

Gulf Coast on the Q5000 for a minimum of 175 days per year;

● Extension of the agreement for the HP I for one year until at least June 1, 2026 ;

● Extension of our contract with Shell in Brazil on the Q7000 to a minimum of 400 days.

During 2024, we extended the charters on the Siem Helix 1 , the Siem Helix 2 , the Grand Canyon II and the Shelia Bordelon .

We also entered in or extended various facility leases across all regions.

We completed the redemption of the Convertible Senior Notes due 2026 (the “2026 Notes”) during the first quarter 2024.

In August 2024, we extended the maturity of the Amended ABL Facility to August 2029 and increased the letter of credit basket size in order to facilitate increased bonding needs on the Q4000 Nigeria campaign and various windfarm projects.

We maintain our capital allocation policy of maintaining low levels of Net Debt, maintaining our existing assets, investing in targeted acquisitions that complement and further our strategy, and using Free Cash Flow to return cash to shareholders through share repurchases (See “Results of Operations — Non-GAAP Financial Measures” below for definitions of Net Debt and Free Cash Flow).

Our backlog is represented by signed contracts.

As of December 31, 2023, our consolidated backlog totaled $850 million, of which $700 million is expected to be performed in 2024.

As of December 31, 2023, our various contracts with Shell globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with Repsol globally, and our agreement for the HP I in the Gulf of Mexico represented approximately 55% of our total backlog.

As of December 31, 2024, our consolidated backlog totaled $1.4 billion, of which $681 million is expected to be performed in 2025.

As of December 31, 2024, our various contracts with Shell and ExxonMobil globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with Talos in the U.S.

Gulf Coast represented approximately 90% of our total backlog.

As of December 31, 2023, our consolidated backlog totaled $850 million.

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If there are cancellation fees, the amount of those fees can be substantially less than amounts reflected in backlog.

In 2025, we expect to continue our strong performance, supported by new contracting in 2024 at improved rates that increased backlog and 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 U.S.

Gulf Coast to improve as oil and gas properties revert to former owners due to bankruptcies, who are expected to address their decommissioning obligations.

RESULTS OF OPERATIONS

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Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable.

To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses on extinguishment of long-term debt, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any.

To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses related to convertible senior notes, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any.

We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from asset sales and insurance recoveries (related to property and equipment), if any.

Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash.

Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents.

In the following reconciliations, we provide amounts as reflected in the consolidated financial statements unless otherwise noted.

The reconciliation of our net loss to EBITDA and Adjusted EBITDA is as follows (in thousands):

The reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA is as follows (in thousands):

Year Ended December 31,

Income tax provision (benefit)

Net income (loss)

Income tax provision

Net interest expense

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General provision (release) for current expected credit losses

Loss on extinguishment of long-term debt

Losses related to convertible senior notes

Adjusted EBITDA

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Long-term debt including current maturities

Cash and cash equivalents and restricted cash

Cash and cash equivalents

Comparison of Years Ended December 31, 2024 and 2023

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Utilization rates of chartered Robotics vessels in 2024 and 2023 included 371 and 310 spot vessel days, respectively, at near full utilization.

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

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

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

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Net Revenues.

Our consolidated net revenues increased by 48% in 2023 as compared to 2022, reflecting the addition of Shallow Water Abandonment segment in the third quarter 2022 and higher revenues from all of our segments.

Our Well Intervention revenues increased by 40% in 2023 as compared to 2022, primarily reflecting higher vessel utilization and rates in Brazil and the North Sea and higher rates in the Gulf of Mexico.

Revenues in Brazil increased primarily due to both the Siem Helix 1 and the Siem Helix 2 working a full year on their long-term contracts with improved rates as compared to 2022.

Revenues in the North Sea and Gulf of Mexico both benefitted from improved spot rates in 2023 as compared to 2022.

Revenues on the Q7000 were also higher, despite the vessel incurring a higher number of transit and docking days in 2023 as compared to 2022, as the vessel’s operations in New Zealand were on an integrated project with higher project revenues and costs.

The increase in revenues was offset in part by lower utilization in the Gulf of Mexico due to a higher number of regulatory docking days during 2023 as compared to 2022.

Our Robotics revenues increased by 34% in 2023 as compared to 2022, primarily reflecting higher utilization and rates on vessels, ROVs and trenchers.

Chartered vessel days increased to 1,699 days during 2023 as compared to 1,401 days during 2022.

Integrated vessel trenching days increased to 807 days in 2023 as compared to 483 days in 2022.

ROV and trencher utilization increased to 62% in 2023 from 53% in 2022.

Our Shallow Water Abandonment revenues in 2023 reflect a full year of revenue generated by Helix Alliance with 74% utilization across vessels and 5,748 days, or 70%, of utilization across P&A systems and CT systems.

Our Shallow Water Abandonment revenues in 2022 reflect six months of revenue generated by Helix Alliance since July 1, 2022 (Note 3) with 73% utilization across vessels and 2,324 days, or 62%, of utilization across P&A systems and CT systems.

Our Production Facilities revenues increased by 7% in 2023 as compared to 2022, primarily reflecting higher oil and gas production volumes, offset in part by lower oil and natural gas prices during 2023 as compared to 2022.

Our consolidated net revenues increased by 5% in 2024 as compared to 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 17% in 2024 as compared to 2023, primarily reflecting higher overall utilization and rates.

Utilization increased on the Q4000 and the Q5000 during 2024 as both vessels underwent their regulatory dry docks in 2023.

The Q7000 had higher utilization and higher integrated project rates during 2024 as compared to 2023.

The Seawell ‘s contract in the western Mediterranean, which completed in June 2024, has provided higher rates and utilization during 2024 as compared to 2023.

The Well Enhancer in the North Sea had lower utilization as compared to the prior year as the vessel underwent a scheduled dry dock during the first quarter 2024 and both vessels saw a fourth quarter seasonal slowdown in 2024 whereas the vessels were nearly fully utilized in 2023.

Our North Sea revenues also included a contract cancellation fee of approximately $14 million related to work that had been scheduled for 2025.

The Siem Helix 1 had higher revenues during 2024 as compared to 2023 due to Trident contract extensions with higher rates.

The Siem Helix 2 had lower utilization during 2024 as the vessel commenced its unpaid vessel acceptance period at the end of December 2024 on its new contract with Petrobras.

Our Robotics revenues increased by 15% in 2024 as compared to 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities.

Chartered vessel activity increased to 1,901 days during 2024 as compared to 1,699 days during 2023, although chartered vessel days in 2024 included approximately 64 days of standby utilization at reduced rates.

Overall ROV and trencher utilization increased to 69% in 2024 from 62% during 2023 and included 835 days of integrated vessel trenching in 2024 as compared to 807 days in 2023.

Our Shallow Water Abandonment revenues in 2024 decreased by 32% in 2024 as compared to 2023.

The decrease in revenues was due to lower activity levels and an overall softer U.S.

Gulf Coast shelf market in 2024, resulting in lower vessel and system utilization during 2024 as compared to 2023.

Overall vessel utilization was 60% during 2024 as compared to 74% during 2023.

P&A systems and CT systems achieved 2,281 days of utilization, or 24%, during 2024 as compared to 5,748 days of utilization, or 70%, during 2023.

Our Production Facilities revenues increased slightly in 2024 as compared to 2023, primarily reflecting higher oil and gas production and lower number of shut-in days on our owned oil and gas wells, offset in part by lower rates on the HFRS, which were reduced in the second half 2024 when the Q4000 left the U.S.

Gulf Coast to execute the Nigeria project.

Gross Profit (Loss).

Our consolidated 2023 gross profit increased by $149.7 million as compared to 2022, primarily reflecting increases in our Well Intervention, Robotics and Shallow Water Abandonment segments in 2023, offset in part by lower profitability in our Production Facilities segment.

Our Well Intervention gross profit was $47.2 million in 2023 as compared to a gross loss of $40.1 million in 2022, primarily reflecting higher revenues in 2023.

Our Robotics gross profit increased by $23.1 million in 2023 as compared to 2022, primarily reflecting higher revenues in 2023 due to increased activities.

Our Shallow Water Abandonment gross profit increased by $47.3 million in 2023 as compared to 2022, primarily reflecting full year of operating results from Helix Alliance in 2023 as compared to six months of operating results from Helix Alliance following its acquisition on July 1, 2022.

Our Production Facilities gross profit decreased by $7.2 million in 2023 as compared to 2022, primarily reflecting higher oil and gas production costs and well maintenance costs, offset in part by revenue increases during 2023.

Acquisition and Integration Costs.

Our acquisition and integration costs decreased by $2.1 million in 2023 as compared to 2022, reflecting lower spend during the later stages of the Alliance integration process.

Our consolidated 2024 gross profit increased by $19.2 million as compared to 2023, primarily reflecting increased profits from our Well Intervention, Robotics and Production Facilities business segments, offset in part by losses from our Shallow Water Abandonment segment.

Our Well Intervention gross profit increased by $63.4 million in 2024 as compared to 2023, primarily reflecting higher segment revenues and increased activity levels and included a contract cancellation fee of approximately $14 million.

Our Robotics gross profit increased by $27.7 million in 2024 as compared to 2023, primarily reflecting higher revenues and higher profit margin projects during 2024.

Our Shallow Water Abandonment gross loss was $0.8 million in 2024 as compared to a gross profit of $71.3 million in 2023, primarily reflecting lower segment revenues without a commensurate cost reduction.

Our Production Facilities gross profit increased slightly in 2024 as compared to 2023, primarily reflecting higher segment revenues.

Change in Fair Value of Contingent Consideration.

The change in fair value of contingent consideration related to the Alliance acquisition reflects an increase in the value of the earn-out consideration expected to be paid in cash in April 2024 (Notes 3 and 19).

The change in fair value of contingent consideration reflects an improvement in Helix Alliance’s results during 2023.

We entered into an agreement and set the final earnout during the fourth quarter 2023, which was paid on April 3, 2024 (Note 3).

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $94.4 million in 2023 as compared to $76.8 million in 2022, primarily reflecting higher employee incentive and share-based compensation costs and the addition of Helix Alliance.

Equity in Earnings of Investment.

Equity in earnings of investment of $8.3 million in 2022 primarily reflects the gain on the sale of the “Independence Hub” platform (Note 2).

Our selling, general and administrative expenses were $91.7 million in 2024 as compared to $94.4 million in 2023, primarily reflecting a net decrease in compensation related costs offset partially by an increase in other facilities and professional fees in 2024.

Net Interest Expense.

Our net interest expense totaled $17.3 million in 2023 as compared to $19.0 million in 2022, primarily reflecting higher interest income on our invested cash reserves and the repayment of certain indebtedness, offset in part by interest expense on our $300 million Senior Notes due 2029 (the “2029 Notes”) during the fourth quarter 2023 (Note 7).

Loss on Extinguishment of Long-term Debt.

The $37.3 million loss on extinguishment of long-term debt in 2023 was primarily associated with $38.6 million inducement charges incurred from the repurchase of $159.8 million principal amount of the 2026 Notes during the fourth quarter 2023 (Note 7), offset in part by changes in fair value of the associated 2026 Capped Calls until settlement (Note 9).

Our net interest expense totaled $22.6 million in 2024 as compared to $17.3 million in 2023, primarily reflecting higher debt levels and rates on our $300 million Senior Notes due 2029 (the “2029 Notes”) in 2024 as compared to our 2026 Notes in 2023, offset in part by higher interest income on our invested cash (Note 7).

Losses Related to Convertible Senior Notes.

The losses during 2024 and 2023 were primarily associated with the retirement of our 2026 Notes (Note 7).

Other Expense, Net.

Net other expense was $3.6 million in 2023, primarily reflecting losses from the devaluation of our Nigerian naira holdings and conversion of naira into U.S.

dollars during 2023, offset in part by foreign currency gains due to the strengthening of the British pound in 2023.

Net other expense was $23.3 million in 2022, primarily reflecting foreign currency losses due to the weakening of the British pound in 2022.

Net other expense was $3.9 million in 2024 as compared to $3.6 million in 2023.

Net other expense during 2024 primarily reflects a $2.4 million increase in the value of incentive credits granted to the seller of P&A equipment acquired in 2023 (Note 4) and foreign currency losses due to the weakening of the British pound and Brazilian real in 2024.

Net other expense during 2023 primarily reflects foreign currency losses 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 in 2023.

Income Tax Provision.

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The effective tax rates for 2024 and 2023 were 32.2% and 244.2%, respectively.

These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions, non-deductible losses on the extinguishment of long-term debt as well as losses for which no financial statement benefits have been recognized (Note 8).

These variances were primarily attributable to the increase in income before taxes as well as the earnings mix between our higher and lower tax rate jurisdictions.

Comparison of Years Ended December 31, 2023 and 2022

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Net Working Capital

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents and restricted cash, current maturities of long-term debt and current operating lease liabilities.

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents, current maturities of long-term debt and current operating lease liabilities.

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

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

Long-Term Debt

Long-term debt in the table above is net of unamortized debt discount and debt issuance costs and excludes current maturities of $48.3 million and $38.2 million, respectively, at December 31, 2023 and 2022.

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.2 million and $48.3 million, respectively, at December 31, 2024 and 2023.

For information relating to our long-term debt, see Note 7 to our consolidated financial statements included in Item 8 .

Financial Statements and Supplementary Data of this Annual Report.

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

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 ABL Facility (Note 7).

In December 2023, we issued $300.0 million of the 2029 Notes with proceeds of approximately $291.1 million, net of debt discount and issuance costs.

We used a portion of the proceeds, as well as 1.5 million shares of our common stock, to repurchase $159.8 million aggregate principal amount of the 2026 Notes for approximately $229.7 million, and we unwound a proportionate amount of the associated 2026 Capped Calls for approximately $15.6 million.

In January 2024, we issued a redemption notice for the remaining $40.0 million aggregate principal amount of the 2026 Notes to be settled March 20, 2024.

Investors are permitted to convert their notes, and we will settle all conversions and/or redemptions in cash at amounts that we expect will exceed the 2026 Notes’ current carrying values.

Our liquidity at December 31, 2022 included $186.6 million of cash and cash equivalents and $98.1 million of available borrowing capacity under the ABL Facility and excluded $2.5 million of restricted cash.

The increase in cash and cash equivalents, excluding the impact of our debt refinancing activities, was primarily attributable to strong operating cash flows during 2023.

Following the slowdown triggered by the COVID-19 pandemic and beginning 2022, we have seen an improvement in the markets we serve as evidenced by increases in our revenues and gross profit.

We expect strong ongoing operating performance, increases in our cash position, high 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.

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 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 (Note 7) and excluded $5.0 million of pledged cash.

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.

The reduction in availability on the facility at December 31,2024 was attributable to higher letter of credit usage in order to support the Nigeria project on the Q4000 .

In the current market environment, we expect strong ongoing operating performance and cash flows.

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.

Although we expect lower levels of availability on the Amended ABL Facility while the Q4000 performs work in Nigeria due to fewer eligible receivables and higher letter of credit usage, 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.

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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.

In February 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 2023 Repurchase Program has no set expiration date.

Repurchases under the 2023 Repurchase Program have been made through open market purchases in compliance with Rule 10b-18 under the Exchange Act, but may also be made through 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 at its discretion based on an evaluation of market conditions, stock price, liquidity and other factors.

The 2023 Repurchase 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.

Any repurchased shares are expected to be cancelled.

During 2023, pursuant to the 2023 Repurchase Program we repurchased a total of 1,584,045 shares of our common stock for approximately $12.0 million.

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

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Operating Activities

The increase in our operating cash flows for 2023 as compared to 2022 primarily reflects higher earnings, offset in part by higher regulatory recertification costs for our vessels and systems and higher working capital outflows.

The increase in our operating cash flows for 2024 as compared to 2023 primarily reflects higher operating income, lower regulatory recertification costs for our vessels and systems and working capital inflows.

Operating cash outflows during 2024 included net interest expense and taxes paid of $25.4 million and $14.1 million, respectively.

Operating cash outflows during 2024 also included $58.3 million of the $85.0 million earnout payment on April 3, 2024, representing the amount in the excess of the $26.7 million initial fair value of earnout consideration at the Alliance acquisition date.

Regulatory recertification spend on our vessels and systems amounted to $35.4 million and $62.5 million, respectively, during the comparable year over year periods.

Investing Activities

Cash flows used in investing activities for 2023 decreased as compared to 2022.

The decrease is primarily due to the $112.6 million in net cash paid to acquire Alliance (Note 3) during 2022 as well as lower capital expenditures during 2023.

Cash flows used in investing activities for 2024 increased as compared to 2023 primarily due to higher capital expenditures with increased activity in our Robotics segment.

Financing Activities

Net cash inflows from financing activities for 2023 primarily reflect proceeds from the issuance of $300.0 million 2029 Notes and the proportionate settlement of the 2026 Capped Calls, offset in part by cash outflows of $230.7 million related to the 2026 Notes, $30.4 million related to Convertible Senior Notes due 2023, the principal repayment of $8.3 million related to the MARAD Debt and $12.0 million in repurchases of our common stock under the 2023 Repurchase Program.

Net cash outflows from financing activities for 2022 primarily reflect the repayment of $7.9 million related to the MARAD Debt and $35.0 million related to Convertible Senior Notes due 2022.

Net cash outflows from financing activities for 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 $8.7 million related to the MARAD Debt and $29.6 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.

Net cash inflows from financing activities for 2023 primarily reflect net proceeds of $292.0 million from the issuance of $300.0 million 2029 Notes and of $15.6 million from the proportionate settlement of the 2026 Capped Calls, offset in part by cash outflows of $230.7 million related to the repurchase of the 2026 Notes, $30.4 million related to the maturity of the Convertible Senior Notes due 2023, the principal repayment of $8.3 million related to the MARAD Debt and $12.0 million in repurchases of our common stock under the 2023 Repurchase Program.

Material Cash Requirements

Our material cash requirements include our obligations to repay our long-term debt, including additional funds needed to settle the conversion and/or redemption of the remaining 2026 Notes, satisfy other contractual cash commitments and fund other obligations, including the payment of the earn-out consideration to the seller in the Alliance transaction.

Our material cash requirements include our obligations to repay our long-term debt, satisfy other contractual cash commitments and fund other obligations.

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 December 31, 2023 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.

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 December 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 December 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 exceed certain thresholds in 2022 and 2023 (Note 3).

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 expected to be paid in cash in April 2024.

Accordingly, we reported $85.0 million of Alliance earn-out consideration in “Accrued liabilities” in the consolidated balance sheet as of December 31, 2023 (Note 4).

The 2026 Notes have certain early conversion and redemption features that could affect the timing and amount of any cash requirements.

On December 29, 2023, we announced that the 2026 Notes are convertible at the option of the holders from January 1, 2024 through March 31, 2024 as a result of the closing price of our common stock exceeding 130% of the conversion price for at least 20 days of the last 30 consecutive trading days in the quarter ended December 31, 2023.

The 2026 Notes are also redeemable by us when the closing price of our common stock exceeds 130% of the conversion price for at least 20 days of the last 30 consecutive trading days in a quarter.

On January 16, 2024, we issued a notice for the redemption of all remaining 2026 Notes on March 20, 2024 to be settled in cash (Note 7).

Holders can convert their 2026 Notes prior to the redemption date and any conversion thereof will be settled in cash.

The ultimate settlement amount of the 2026 Notes will depend on various factors, including the number of notes converted and the volume weighted average trading price of our common stock during the measurement period preceding their settlement.

The fair value of the 2026 Notes as of December 31, 2023 was approximately $64.1 million (Note 19).

2026 Notes (1)

Interest related to debt

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Operating leases (1)

Earn-out consideration

Total cash obligations

(1) Represents principal amount of the remaining 2026 Notes which are subject to conversion and/or redemption in 2024 and thus classified as a short-term commitment.

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

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

At December 31, 2024, our commitment related to long-term vessel charters totaled approximately $835.5 million, of which $434.3 million was related to the non-lease (services) components that are not included in operating lease liabilities in the consolidated balance sheet as of December 31, 2024 .

Subsequently, operating lease commitments increased by $559.6 million due to vessel charter extensions for the Shelia Bordelon in January 2024 and the Siem Helix 1 and the Siem Helix 2 in February 2024.

Other material cash requirements

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Those obligations, which are presented on a discounted basis on the 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 December 31, 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.

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.

Regulatory certification and dry dock.

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Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months.

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 $3.0 million to $15.0 million per Well Intervention vessel and $0.5 million to $5.0 million per system or Helix Alliance asset.

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.

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See Note 2 to our consolidated financial statements for a detailed discussion on the application of our accounting policies.

Business Acquisition

We account for business acquisitions under the acquisition method of accounting.

We determine the purchase price to be the cash and other assets transferred to the seller and the value of any liabilities, such as contingent consideration or other seller financing incurred.

The estimate of any contingent consideration and its fair value on the acquisition date and subsequent reporting periods is a significant estimate.

We allocate the purchase price of businesses we acquire to identifiable assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.

Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill.

The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed.

These estimates and assumptions may include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted average cost of capital, and the estimated useful lives.

Changes in these assumptions could affect the carrying value of these assets, the amount of future depreciation or amortization and any possible impairment charges.

We use available and relevant information to estimate fair values (including quoted market prices when available) and the nominal value of acquired assets and assumed liabilities as well as deploy various valuation techniques such as discounted cash flows.

We may engage third party specialists to assist in the fair value determination of acquired assets and liabilities, including identifiable long-lived assets and identifiable intangible assets, as well as any contingent earn-out consideration to be paid to the seller if certain future conditions are met.

The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, the estimated fair value of contingent earn-out considerations, as well as the remaining useful lives of these assets, could materially impact our financial condition or results of operations.

See Note 3 to our consolidated financial statements for further discussion on our acquisition of Alliance during 2022.

Property and Equipment

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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-K

Item 7. Management’s Discussion and Analysis