Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 20222023

or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to__________

Commission File Number: 001-32936

Graphic

HELIX ENERGY SOLUTIONS GROUP, INC.

(Exact name of registrant as specified in its charter)

Minnesota

   

95-3409686

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3505 West Sam Houston Parkway North

Suite 400

Houston Texas

77043

(Address of principal executive offices)

(Zip Code)

(281) 618–0400

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

   

Trading Symbol(s)

   

Name of each exchange on which registered

Common Stock, no par value

HLX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No

As of April 22, 2022, 151,651,38420, 2023, 151,501,179 shares of common stock were outstanding.

Table of Contents

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION

PAGE

Item 1.

Financial Statements:

3

Condensed Consolidated Balance Sheets – March 31, 20222023 (Unaudited) and December 31, 20212022

3

Condensed Consolidated Statements of Operations (Unaudited) – Three months ended March 31, 20222023 and 20212022

4

Condensed Consolidated Statements of Comprehensive Income (Loss)Loss (Unaudited) – Three months ended March 31, 20222023 and 20212022

5

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Three months ended March 31, 20222023 and 20212022

6

Condensed Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, 20222023 and 20212022

7

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2325

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

3236

Item 4.

Controls and Procedures

3337

PART II.

OTHER INFORMATION

3338

Item 1.

Legal Proceedings

3338

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

3338

Item 3.

Defaults Upon Senior Securities

38

Item 4.

Mine Safety Disclosures

38

Item 5.

Other Information

38

Item 6.

Exhibits

3439

Signatures

3540

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31, 

December 31, 

    

2022

    

2021

(Unaudited)

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

229,744

$

253,515

Restricted cash

 

72,934

 

73,612

Accounts receivable, net of allowance for credit losses of $1,351 and $1,477, respectively

 

141,778

 

144,137

Other current assets

 

59,274

 

58,274

Total current assets

 

503,730

 

529,538

Property and equipment

 

2,916,214

 

2,938,154

Less accumulated depreciation

 

(1,306,162)

 

(1,280,509)

Property and equipment, net

 

1,610,052

 

1,657,645

Operating lease right-of-use assets

 

150,894

 

104,190

Other assets, net

 

42,694

 

34,655

Total assets

$

2,307,370

$

2,326,028

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

97,531

$

87,959

Accrued liabilities

 

74,873

 

91,712

Current maturities of long-term debt

 

43,117

 

42,873

Current operating lease liabilities

 

41,464

 

55,739

Total current liabilities

 

256,985

 

278,283

Long-term debt

 

258,496

 

262,137

Operating lease liabilities

 

112,507

 

50,198

Deferred tax liabilities

 

86,244

 

86,966

Other non-current liabilities

 

392

 

975

Total liabilities

 

714,624

 

678,559

Commitments and contingencies

Shareholders’ equity:

 

  

 

  

Common stock, 0 par, 240,000 shares authorized, 151,637 and 151,124 shares issued, respectively

 

1,292,935

 

1,292,479

Retained earnings

 

369,041

 

411,072

Accumulated other comprehensive loss

 

(69,230)

 

(56,082)

Total shareholders’ equity

 

1,592,746

 

1,647,469

Total liabilities and shareholders’ equity

$

2,307,370

$

2,326,028

March 31, 

December 31, 

    

2023

    

2022

(Unaudited)

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

166,674

$

186,604

Restricted cash

 

2,508

 

2,507

Accounts receivable, net of allowance for credit losses of $2,418 and $2,277, respectively

 

216,946

 

212,779

Other current assets

 

63,228

 

58,699

Total current assets

 

449,356

 

460,589

Property and equipment

 

3,036,579

 

3,016,312

Less accumulated depreciation

 

(1,410,428)

 

(1,374,697)

Property and equipment, net

 

1,626,151

 

1,641,615

Operating lease right-of-use assets

 

191,051

 

197,849

Deferred recertification and dry dock costs, net

53,697

38,778

Other assets, net

 

49,079

 

50,507

Total assets

$

2,369,334

$

2,389,338

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

134,363

$

135,267

Accrued liabilities

 

60,811

 

73,574

Current maturities of long-term debt

 

38,452

 

38,200

Current operating lease liabilities

 

54,407

 

50,914

Total current liabilities

 

288,033

 

297,955

Long-term debt

 

222,008

 

225,875

Operating lease liabilities

 

145,186

 

154,686

Deferred tax liabilities

 

97,577

 

98,883

Other non-current liabilities

 

100,810

 

95,230

Total liabilities

 

853,614

 

872,629

Commitments and contingencies

Shareholders’ equity:

 

  

 

  

Common stock, no par, 240,000 shares authorized, 151,494 and 151,935 shares issued, respectively

 

1,294,484

 

1,298,740

Retained earnings

 

318,123

 

323,288

Accumulated other comprehensive loss

 

(96,887)

 

(105,319)

Total shareholders’ equity

 

1,515,720

 

1,516,709

Total liabilities and shareholders’ equity

$

2,369,334

$

2,389,338

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

Three Months Ended

March 31, 

    

2022

    

2021

Net revenues

$

150,125

$

163,415

Cost of sales

 

168,734

 

148,791

Gross profit (loss)

 

(18,609)

 

14,624

Selling, general and administrative expenses

 

(14,368)

 

(15,179)

Loss from operations

 

(32,977)

 

(555)

Net interest expense

 

(5,174)

 

(6,053)

Other income (expense), net

 

(3,881)

 

1,617

Royalty income and other

 

2,141

 

2,057

Loss before income taxes

 

(39,891)

 

(2,934)

Income tax provision

 

2,140

 

116

Net loss

 

(42,031)

 

(3,050)

Net loss attributable to redeemable noncontrolling interests

 

 

(172)

Net loss attributable to common shareholders

$

(42,031)

$

(2,878)

Loss per share of common stock:

 

  

 

  

Basic

$

(0.28)

$

(0.02)

Diluted

$

(0.28)

$

(0.02)

Weighted average common shares outstanding:

 

  

 

  

Basic

 

151,142

 

149,935

Diluted

 

151,142

 

149,935

Three Months Ended

March 31, 

    

2023

    

2022

Net revenues

$

250,084

$

150,125

Cost of sales

 

234,900

 

168,734

Gross profit (loss)

 

15,184

 

(18,609)

Gain on disposition of assets, net

 

367

 

Acquisition and integration costs

(231)

Change in fair value of contingent consideration

(3,992)

Selling, general and administrative expenses

 

(19,631)

 

(14,368)

Loss from operations

 

(8,303)

 

(32,977)

Net interest expense

 

(4,187)

 

(5,174)

Other income (expense), net

 

3,444

 

(3,881)

Royalty income and other

 

1,863

 

2,141

Loss before income taxes

 

(7,183)

 

(39,891)

Income tax provision (benefit)

 

(2,018)

 

2,140

Net loss

$

(5,165)

$

(42,031)

Loss per share of common stock:

 

  

 

  

Basic

$

(0.03)

$

(0.28)

Diluted

$

(0.03)

$

(0.28)

Weighted average common shares outstanding:

 

  

 

  

Basic

 

151,764

 

151,142

Diluted

 

151,764

 

151,142

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS

(UNAUDITED)

(in thousands)

Three Months Ended

Three Months Ended

March 31, 

March 31, 

2022

    

2021

2023

    

2022

Net loss

$

(42,031)

 

$

(3,050)

$

(5,165)

 

$

(42,031)

Other comprehensive income (loss), net of tax:

 

  

 

  

 

  

 

  

Foreign currency translation gain (loss)

 

(13,148)

 

4,613

 

8,432

 

(13,148)

Other comprehensive income (loss), net of tax

 

(13,148)

 

4,613

 

8,432

 

(13,148)

Comprehensive income (loss)

 

(55,179)

 

1,563

Less comprehensive loss attributable to redeemable noncontrolling interests:

 

  

 

  

Net loss

 

 

(172)

Foreign currency translation gain

 

 

36

Comprehensive loss attributable to redeemable noncontrolling interests

 

 

(136)

Comprehensive income (loss) attributable to common shareholders

$

(55,179)

 

$

1,699

Comprehensive loss

$

3,267

 

$

(55,179)

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

Accumulated

 

Accumulated

Other

Total

Redeemable

Other

Total

Common Stock

Retained

Comprehensive

Shareholders’

Noncontrolling

Common Stock

Retained

Comprehensive

Shareholders’

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

    

Interests

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

Balance, December 31, 2021

 

151,124

$

1,292,479

$

411,072

$

(56,082)

$

1,647,469

 

$

Balance, December 31, 2022

 

151,935

$

1,298,740

$

323,288

$

(105,319)

$

1,516,709

Net loss

 

 

 

(42,031)

 

 

(42,031)

 

 

 

 

(5,165)

 

 

(5,165)

Foreign currency translation adjustments

 

 

 

 

(13,148)

 

(13,148)

 

 

 

 

 

8,432

 

8,432

Repurchases of common stock

 

(660)

 

(5,006)

 

 

 

(5,006)

Activity in company stock plans, net and other

 

513

 

(1,178)

 

 

 

(1,178)

 

 

219

 

(742)

 

 

 

(742)

Share-based compensation

 

 

1,634

 

 

 

1,634

 

 

 

1,492

 

 

 

1,492

Balance, March 31, 2022

 

151,637

$

1,292,935

$

369,041

$

(69,230)

$

1,592,746

 

$

Balance, March 31, 2023

 

151,494

$

1,294,484

$

318,123

$

(96,887)

$

1,515,720

Accumulated

 

Accumulated

Other

Total

Redeemable

Other

Total

Common Stock

Retained

Comprehensive

Shareholders’

Noncontrolling

Common Stock

Retained

Comprehensive

Shareholders’

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

    

Interests

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

Balance, December 31, 2020

 

150,341

$

1,327,592

$

464,524

$

(51,620)

$

1,740,496

 

$

3,855

Balance, December 31, 2021

 

151,124

$

1,292,479

$

411,072

$

(56,082)

$

1,647,469

Net loss

 

 

 

(2,878)

 

 

(2,878)

 

(172)

 

 

 

(42,031)

 

 

(42,031)

Cumulative-effect adjustments upon adoption of ASU No. 2020-06

 

 

(41,456)

 

6,682

 

 

(34,774)

 

Foreign currency translation adjustments

 

 

 

 

4,613

 

4,613

 

36

 

 

 

 

(13,148)

 

(13,148)

Accretion of redeemable noncontrolling interests

 

 

 

(241)

 

 

(241)

 

241

Activity in company stock plans, net and other

 

374

 

(1,600)

 

 

 

(1,600)

 

 

513

 

(1,178)

 

 

 

(1,178)

Share-based compensation

 

 

1,844

 

 

 

1,844

 

 

 

1,634

 

 

 

1,634

Balance, March 31, 2021

 

150,715

$

1,286,380

$

468,087

$

(47,007)

$

1,707,460

 

$

3,960

Balance, March 31, 2022

 

151,637

$

1,292,935

$

369,041

$

(69,230)

$

1,592,746

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Three Months Ended

March 31, 

    

2022

    

2021

Cash flows from operating activities:

 

  

  

Net loss

$

(42,031)

$

(3,050)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

  

Depreciation and amortization

 

33,488

 

34,566

Amortization of debt issuance costs

 

590

 

810

Share-based compensation

 

1,672

 

1,904

Deferred income taxes

 

(722)

 

(892)

Unrealized foreign currency (gain) loss

 

2,603

 

(951)

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable, net

 

906

 

(463)

Income tax receivable

1,230

6,256

Other current assets

(534)

9,361

Accounts payable and accrued liabilities

 

(4,646)

 

(4,881)

Other, net

 

(9,969)

 

(2,791)

Net cash provided by (used in) operating activities

 

(17,413)

 

39,869

Cash flows from investing activities:

 

  

 

  

Capital expenditures

 

(623)

 

(1,329)

Net cash used in investing activities

 

(623)

 

(1,329)

Cash flows from financing activities:

 

  

 

  

Repayment of Term Loan

 

 

(875)

Repayment of Nordea Q5000 Loan

 

 

(53,572)

Repayment of MARAD Debt

 

(3,920)

 

(3,734)

Debt issuance costs

 

(136)

 

(43)

Payments related to tax withholding for share-based compensation

 

(1,525)

 

(1,878)

Proceeds from issuance of ESPP shares

 

173

 

217

Net cash used in financing activities

 

(5,408)

 

(59,885)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

(1,005)

 

406

Net decrease in cash and cash equivalents and restricted cash

 

(24,449)

 

(20,939)

Cash and cash equivalents and restricted cash:

 

  

 

  

Balance, beginning of year

 

327,127

 

291,320

Balance, end of period

$

302,678

$

270,381

Three Months Ended

March 31, 

    

2023

    

2022

Cash flows from operating activities:

 

  

  

Net loss

$

(5,165)

$

(42,031)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

  

Depreciation and amortization

 

37,537

 

33,488

Amortization of debt issuance costs

 

596

 

590

Share-based compensation

 

1,575

 

1,672

Deferred income taxes

 

(1,306)

 

(722)

Gain on disposition of assets, net

 

(367)

 

Unrealized foreign currency (gain) loss

 

(3,333)

 

2,603

Change in fair value of contingent consideration

3,992

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable, net

 

(2,484)

 

906

Income tax receivable, net of income tax payable

(2,419)

1,230

Other current assets

(1,961)

(534)

Accounts payable and accrued liabilities

 

(18,036)

 

(9,411)

Deferred recertification and dry dock costs, net

(17,154)

(5,508)

Other, net

 

3,133

 

304

Net cash used in operating activities

 

(5,392)

 

(17,413)

Cash flows from investing activities:

 

  

 

  

Capital expenditures

 

(6,665)

 

(623)

Proceeds from sale of assets

365

Net cash used in investing activities

 

(6,300)

 

(623)

Cash flows from financing activities:

 

  

 

  

Repayment of MARAD Debt

 

(4,116)

 

(3,920)

Debt issuance costs

 

 

(136)

Repurchases of common stock

(4,983)

Payments related to tax withholding for share-based compensation

 

(564)

 

(1,525)

Proceeds from issuance of ESPP shares

 

239

 

173

Net cash used in financing activities

 

(9,424)

 

(5,408)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

1,187

 

(1,005)

Net decrease in cash and cash equivalents and restricted cash

 

(19,929)

 

(24,449)

Cash and cash equivalents and restricted cash:

 

  

 

  

Balance, beginning of year

 

189,111

 

327,127

Balance, end of period

$

169,182

$

302,678

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 — Basis of Presentation and New Accounting Standards

The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements in U.S. dollars have been prepared pursuant toin accordance with instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S. dollars and are consistent in all material respects with those applied in our 2021 Annual Report on Form 10-K (our “2021 Form 10-K”). The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures. Actual results may differ from our estimates. We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income (loss),loss, statements of shareholders’ equity and statements of cash flows, as applicable. The operating results for the three-month period ended March 31, 20222023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023. Our balance sheet as of December 31, 20212022 included herein has been derived from the audited balance sheet as of December 31, 20212022 included in our 20212022 Annual Report on Form 10-K.10-K (our “2022 Form 10-K”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our 20212022 Form 10-K.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.

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

Note 2 — Company Overview

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention, robotics and roboticsfull-field decommissioning operations. Traditionally, ourOur services have covered the lifecycle of an offshore oil or gas field. In recent years, we have seen an increasing demandare centered on a three-legged business model well positioned for our services from the offshore renewablea global energy market. transition:

Production maximization — our assets and methodologies are specifically designed to efficiently enhance and extend the lives of existing oil and gas reserves; we also offer an alternative to take over end-of-life reserves in preparation for their abandonment;
Renewable energy support — we are an established global leader in jet trenching and continue to seek to provide specialty support services to offshore wind farm developments, including boulder removal and unexploded ordnance clearance; and
Decommissioning — we have historical success as a full-field abandonment contractor and believe that regulatory push for plug and abandonment (“P&A”) and transition to renewable energy will facilitate the continued growth of the abandonment market.

We provide services primarily in deepwater in the Gulf of Mexico, U.S. East Coast, Brazil, North Sea, Asia Pacific and West Africa regions. We have expanded our service capabilities to the Gulf of Mexico shelf with the acquisition of Alliance group of companies (collectively “Alliance”) on July 1, 2022 (Note 3), which we have re-branded as Helix Alliance. Our North Sea operations and our Gulf of Mexico shelf operations related to Helix Alliance are usually subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into 3four reportable business segments: Well Intervention, Robotics, Shallow Water Abandonment, which was formed in the third quarter 2022 comprising the Helix Alliance business (Note 12), and Production Facilities (Note 10).Facilities.

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Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby avoiding drilling new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and gas. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and 2two chartered monohull vessels, the Siem Helix 1 and the Siem Helix 2. Our well intervention equipment includes intervention systems such as intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance, offshore construction and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy. Additionally, our Roboticsrobotics services are used in and complement our well intervention services. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers, the IROV boulder grab and robotics support vessels under term charters as well as spot vessels as needed.

8

TableOur Shallow Water Abandonment segment provides services in support of Contentsthe upstream and midstream ‎industries predominantly in the Gulf of Mexico shelf, including offshore oilfield decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services. Our Shallow Water Abandonment segment includes a diversified fleet of marine assets including liftboats, offshore supply vessels (“OSVs”), dive support vessels (“DSVs”), a heavy lift derrick barge, a crew boat, P&A systems and coiled tubing systems.

Our Production Facilities segment includes the Helix Producer I (the “HP I”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), which combines the HP I, the Q4000 and the Q5000 with certain well control equipment that can be deployed to respond to a well control incident, and our ownership of mature oil and gas properties. All of our current Production Facilities activities are located in the Gulf of Mexico.

Note 3 — Alliance Acquisition

On July 1, 2022, we completed our acquisition of Alliance. The Alliance acquisition extends our energy transition strategy by adding shallow water capabilities into what we expect to be a growing offshore decommissioning market.

The aggregate preliminary purchase price of the Alliance acquisition was $145.7 million, consisting of $119.0 million with cash on hand and the estimated fair value of $26.7 million of contingent consideration related to the post-closing earn-out consideration. The earn-out is payable in 2024 to the seller in the Alliance transaction in either cash or shares of our common stock pursuant to the terms of an Equity Purchase Agreement (the “Equity Purchase Agreement”) dated May 16, 2022. The earn-out is not capped and is calculated based on certain financial metrics of the Helix Alliance business for 2022 and 2023 relative to amounts as set forth in the Equity Purchase Agreement.

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We had finalized the purchase price allocation as of March  31, 2023 and there were no changes as compared to the amounts recorded at December 31, 2022. The following table summarizes the final purchase consideration and the final purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

July 1, 2022

Cash consideration

$

118,961

Contingent consideration

 

26,700

Total fair value of consideration transferred

$

145,661

Assets acquired:

Cash and cash equivalents

$

6,336

Accounts receivable

43,378

Other current assets

6,077

Property and equipment

117,321

Operating lease right-of-use assets

1,205

Intangible assets

1,500

Other assets

 

2,133

Total assets acquired

177,950

Liabilities assumed:

Accounts payable

20,480

Accrued liabilities

3,073

Operating lease liabilities

 

1,205

Deferred tax liabilities

 

7,531

Total liabilities assumed

 

32,289

Net assets acquired

$

145,661

The pro forma summary below presents the results of operations as if the Alliance acquisition had occurred on January 1, 2022 and includes transaction accounting adjustments such as incremental depreciation and amortization expense from acquired tangible and intangible assets, elimination of interest expense on Alliance’s long-term debt that was paid off in conjunction with the acquisition, and tax-related effects. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may differ significantly from this pro forma financial information. The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations. The unaudited pro forma summary is provided for illustrative purposes only and does not purport to represent Helix’s actual consolidated results of operations had the acquisition been completed as of the date presented, nor should it be considered indicative of Helix’s future consolidated results of operations.

The following table summarizes the pro forma results of Helix and Alliance (in thousands):

Three Months Ended

March 31, 

    

2022

Revenues

$

177,621

Net loss

(41,709)

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Note 34 — Details of Certain Accounts

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

March 31, 

December 31, 

March 31, 

December 31, 

    

2022

    

2021

    

2023

    

2022

Contract assets (Note 7)

$

166

 

$

639

Prepaids

 

16,806

 

18,228

$

21,365

 

$

26,609

Deferred costs (Note 7)

 

5,993

 

2,967

Income tax receivable

 

68

 

1,116

1,093

Other receivable (Note 11)

 

29,522

 

28,805

Contract assets (Note 9)

712

6,295

Deferred costs (Note 9)

 

27,505

 

13,969

Other

 

6,719

 

6,519

 

12,553

 

11,826

Total other current assets

$

59,274

 

$

58,274

$

63,228

 

$

58,699

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

March 31, 

December 31, 

March 31, 

December 31, 

    

2022

    

2021

    

2023

    

2022

Deferred recertification and dry dock costs, net

$

24,163

 

$

16,291

Deferred costs (Note 7)

 

222

 

381

Prepaid charter (1)

 

12,544

 

12,544

$

12,544

 

$

12,544

Deferred costs (Note 9)

4,526

 

6,432

Other receivable (2)

 

25,422

 

24,827

Intangible assets with finite lives, net

 

3,339

 

3,472

 

4,386

 

4,465

Other

 

2,426

 

1,967

 

2,201

 

2,239

Total other assets, net

$

42,694

 

$

34,655

$

49,079

 

$

50,507

(1)Represents prepayments to the owner of the Siem Helix 1 and the Siem Helix 2 to offset certain payment obligations associated with the vessels at the end of their respective charter term.
(2)Represents agreed-upon amounts that we are entitled to receive from Marathon Oil Corporation (“Marathon Oil”) for remaining P&A work to be performed by us on Droshky oil and gas properties we acquired from Marathon Oil in 2019.

Accrued liabilities consist of the following (in thousands):

March 31, 

December 31, 

March 31, 

December 31, 

    

2022

    

2021

    

2023

    

2022

Accrued payroll and related benefits

$

19,661

 

$

28,657

$

29,877

 

$

41,339

Accrued interest

2,761

6,746

2,081

6,306

Deferred revenue (Note 7)

 

5,559

 

8,272

Asset retirement obligations (Note 11)

 

30,399

 

29,658

Income tax payable

 

 

479

Deferred revenue (Note 9)

 

11,555

 

9,961

Other

 

16,493

 

18,379

 

17,298

 

15,489

Total accrued liabilities

$

74,873

 

$

91,712

$

60,811

 

$

73,574

Other non-current liabilities consist of the following (in thousands):

March 31, 

December 31, 

March 31, 

December 31, 

    

2022

    

2021

    

2023

    

2022

Deferred revenue (Note 7)

$

191

 

$

476

Asset retirement obligations (Note 13)

$

53,124

 

$

51,956

Contingent consideration (Note 17)

46,746

42,754

Other

 

201

 

499

 

940

 

520

Total other non-current liabilities

$

392

 

$

975

$

100,810

 

$

95,230

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Note 45 — Leases

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. Our operating lease additions during the three-month period ended March 31, 2023 are primarily related to the vessel charter for the Glomar Wave (Note 14). Our operating lease additions during the three-month period ended March 31, 2022 are primarily related to the charter extensions for the Siem Helix1 and the Siem Helix2. We also sublease some of our facilities under non-cancelable sublease agreements.

The following table details the components of our lease cost (in thousands):

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Operating lease cost

$

14,462

 

$

16,216

$

17,006

 

$

14,462

Variable lease cost

 

4,922

 

3,484

 

4,910

 

4,922

Short-term lease cost

 

5,438

 

1,732

 

6,977

 

5,438

Sublease income

 

(249)

 

(349)

 

(331)

 

(249)

Net lease cost

$

24,573

 

$

21,083

$

28,562

 

$

24,573

Maturities of our operating lease liabilities as of March 31, 20222023 are as follows (in thousands):

    

    

Facilities and

    

    

    

Facilities and

    

    

Vessels

    

Equipment

    

Total

    

Vessels

    

Equipment

    

Total

Less than one year

$

42,951

$

5,441

 

$

48,392

$

60,932

$

6,688

 

$

67,620

One to two years

 

37,056

 

4,752

 

41,808

 

60,058

 

5,517

 

65,575

Two to three years

 

38,279

 

4,297

 

42,576

 

36,690

 

1,974

 

38,664

Three to four years

 

17,155

 

1,712

 

18,867

 

39,169

 

979

 

40,148

Four to five years

 

21,124

 

1,044

 

22,168

 

15,845

 

979

 

16,824

Over five years

 

 

3,812

 

3,812

 

791

 

2,597

 

3,388

Total lease payments

$

156,565

$

21,058

 

$

177,623

$

213,485

$

18,734

 

$

232,219

Less: imputed interest

 

(20,297)

 

(3,355)

 

(23,652)

 

(30,177)

 

(2,449)

 

(32,626)

Total operating lease liabilities

$

136,268

$

17,703

 

$

153,971

$

183,308

$

16,285

 

$

199,593

Current operating lease liabilities

$

36,843

$

4,621

 

$

41,464

$

48,466

$

5,941

 

$

54,407

Non-current operating lease liabilities

 

99,425

 

13,082

 

112,507

 

134,842

 

10,344

 

145,186

Total operating lease liabilities

$

136,268

$

17,703

 

$

153,971

$

183,308

$

16,285

 

$

199,593

Maturities of our operating lease liabilities as of December 31, 20212022 are as follows (in thousands):

    

    

Facilities and

    

    

    

Facilities and

    

    

Vessels

    

Equipment

    

Total

    

Vessels

    

Equipment

    

Total

Less than one year

$

55,573

$

5,601

 

$

61,174

$

58,063

$

6,603

 

$

64,666

One to two years

 

34,580

 

4,844

 

39,424

 

55,515

 

5,697

 

61,212

Two to three years

 

2,470

 

4,514

 

6,984

 

43,400

 

2,797

 

46,197

Three to four years

 

 

2,462

 

2,462

 

35,200

 

959

 

36,159

Four to five years

 

 

1,074

 

1,074

 

26,244

 

959

 

27,203

Over five years

 

 

4,193

 

4,193

 

3,041

 

2,783

 

5,824

Total lease payments

$

92,623

$

22,688

 

$

115,311

$

221,463

$

19,798

 

$

241,261

Less: imputed interest

 

(5,633)

 

(3,741)

 

(9,374)

 

(32,986)

 

(2,675)

 

(35,661)

Total operating lease liabilities

$

86,990

$

18,947

 

$

105,937

$

188,477

$

17,123

 

$

205,600

Current operating lease liabilities

$

51,035

$

4,704

 

$

55,739

$

45,131

$

5,783

 

$

50,914

Non-current operating lease liabilities

 

35,955

 

14,243

 

50,198

 

143,346

 

11,340

 

154,686

Total operating lease liabilities

$

86,990

$

18,947

 

$

105,937

$

188,477

$

17,123

 

$

205,600

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The following table presents the weighted average remaining lease term and discount rate:

March 31, 

December 31, 

March 31, 

December 31, 

    

2022

2021

    

2023

2022

Weighted average remaining lease term

 

4.0

years

2.4

years

 

3.8

years

4.0

years

Weighted average discount rate

 

6.99

%  

7.57

%

 

7.91

%  

7.84

%

The following table presents other information related to our operating leases (in thousands):

Three Months Ended

March 31, 

    

2022

    

2021

Cash paid for operating lease liabilities

$

16,010

 

$

16,502

Right-of-use assets obtained in exchange for new operating lease obligations (1)

 

60,699

 

113

(1)Amount in 2022 primarily relates to the charter extensions for the Siem Helix1 and the Siem Helix2 (Note 12).

Three Months Ended

March 31, 

    

2023

    

2022

Cash paid for operating lease liabilities

$

16,184

 

$

16,010

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

 

6,070

 

60,699

Note 56 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of March 31, 20222023 are as follows (in thousands):

2022

2023

2026

MARAD

 

2023

2026

MARAD

 

    

Notes

    

Notes

    

Notes

    

Debt

    

Total

    

Notes

    

Notes

    

Debt

    

Total

Less than one year

$

35,000

$

$

$

8,133

 

$

43,133

$

30,000

$

$

8,539

 

$

38,539

One to two years

 

 

30,000

 

 

8,539

 

38,539

 

 

 

8,965

 

8,965

Two to three years

 

 

 

 

8,965

 

8,965

 

 

200,000

 

9,412

 

209,412

Three to four years

 

 

 

200,000

 

9,412

 

209,412

 

 

 

9,881

 

9,881

Four to five years

 

 

 

 

9,881

 

9,881

Gross debt

 

35,000

 

30,000

 

200,000

 

44,930

 

309,930

 

30,000

 

200,000

 

36,797

 

266,797

Unamortized debt issuance costs (1)

 

(16)

 

(270)

 

(5,592)

 

(2,439)

 

(8,317)

 

(87)

 

(4,299)

 

(1,951)

 

(6,337)

Total debt

 

34,984

 

29,730

 

194,408

 

42,491

 

301,613

 

29,913

 

195,701

 

34,846

 

260,460

Less current maturities

 

(34,984)

 

 

 

(8,133)

 

(43,117)

 

(29,913)

 

 

(8,539)

 

(38,452)

Long-term debt

$

$

29,730

$

194,408

$

34,358

 

$

258,496

$

$

195,701

$

26,307

 

$

222,008

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

Below is a summary of certain components of our indebtedness:

Credit Agreement

On September 30, 2021 we entered into an asset-based credit agreement (the “ABL Facility”) with Bank of America, N.A. (“Bank of America”), Wells Fargo Bank, N.A. and Zions Bancorporation.Bancorporation and on July 1, 2022 we entered into a first amendment to the credit agreement (collectively, the “Amended ABL Facility”). The Amended ABL Facility provides for an $80a $100 million asset-based revolving credit facility, which matures on September 30, 2026, with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $50 million. The Amended ABL Facility also permits us to request an increase of the facility by up to $70$50 million, subject to certain conditions.

Commitments under the Amended ABL Facility are comprised of separate U.S. and U.K. revolving credit facility commitments of $45$65 million and $35 million, respectively. The Amended ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S. and U.K. customer accounts receivable and cash, and provides for a $10 million sub-limit for the issuance of letters of credit. As of March 31, 2022,2023, we had 0no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $41.2$80.0 million, net of $2.3$6.9 million of letters of credit issued under that facility.

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We and certain of our U.S. and U.K. subsidiaries including Helix Alliance are the initialcurrent borrowers under the Amended ABL Facility, whose obligations under the Amended ABL Facility are guaranteed by those borrowers and certain other U.S. and U.K. subsidiaries, excluding Cal Dive I – Title XI, Inc. (“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries. Other subsidiaries may be added as guarantors of the facility in the future. The Amended ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S. borrowers and guarantors, and by substantially all of the assets of the U.K. borrowers and guarantors.

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U.S. borrowings under the Amended ABL Facility initially bear interest at the LIBORTerm SOFR (also known as CME Term SOFR as administered by CME Group, Inc.) rate plus a margin of 1.50% to 2.00% or at a base rate plus a margin of 0.50% to 1.00%. U.K. borrowings under the Amended ABL Facility denominated in U.S. dollars initially bear interest at the LIBORTerm SOFR rate with SOFR adjustment of 0.10% and U.K. borrowings denominated in the British pound initially bear interest at the SONIA daily rate, each plus a margin of 1.50% to 2.00%. We also pay a commitment fee of 0.375% to 0.50% per annum on the unused portion of the facility. Beginning on the earlier of June 30, 2023, cessation of LIBOR or an earlier opt-in election, LIBOR will be replaced by either SOFR or term SOFR plus a margin of 0.114% to 0.428% or an alternate benchmark rate.

The Amended ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions. The Amended ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding. The Amended ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10% of the borrowing base or $8$10 million. The Amended ABL Facility also requires us to maintain a pro forma minimum excess availability of $16$20 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

2022 Notesnotes and for any portion of the Alliance earnout payment to be made in cash.

The Amended ABL Facility also (i) limits the amount of permitted debt for the deferred purchase price of property not to exceed $50 million, (ii) establishes an excess availability requirement for the portion of any post-closing earn-out consideration related to our acquisition of Alliance that will be paid in cash (Note 3), and (iii) provides for potential pricing adjustments based on specific metrics and performance targets determined by us and Bank of America, as agent with respect to the Amended ABL Facility, related to environmental, social and governance (“ESG”) changes implemented by us in our business.

Convertible Senior Notes Due 2022 (“2022 Notes”)

We fully redeemed the $35 million remaining principal amount of the 2022 Notes bearplus accrued interest at a coupon interest rate of 4.25% per annum payable semi-annually in arrears on November 1 and May 1 of each year until maturity. The 2022 Notes matureby delivering cash upon maturity on May 1, 2022 unless earlier converted, redeemed or repurchased by us. The 2022 Notes are convertible by their holders at any time beginning February 1, 2022 at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount, which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $13.89 per share of common stock. On March 28, 2022, we elected to satisfy our conversion obligation by delivering cash.

2022. The effective interest rate for the 2022 Notes iswas 4.8%. For each of the three-month periodsperiod ended March 31, 2022, and 2021, total interest expense related to the 2022 Notes was $0.4 million, primarily from coupon interest expense.

Convertible Senior Notes Due 2023 Notes(“2023 Notes”)

The 2023 Notes bear interest at a coupon interest rate of 4.125% per annum payable semi-annually in arrears on March 15 and September 15 of each year until maturity. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased by us. The 2023 Notes are convertible by their holders at any time beginning March 15, 2023 at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount, which currently represents 3,168,399 potentially convertible shares at an initial conversion price of approximately $9.47 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

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Prior to March 15, 2023, holders of the 2023 Notes may convert their notes if the closing price of our common stock exceeds 130% of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2023 Notes is equal to or less than 97% of the conversion value of the notes during the 5 consecutive business days immediately after any 10 consecutive trading day period (trading price condition). Holders of the 2023 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount.

Prior to March 15, 2021, the 2023 Notes were not redeemable. On or after March 15, 2021, weWe may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption. Any redemption would be payable in cash equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2023 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2023 Notes).

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Table of Contents

The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2023 Notes together with any accrued interest will become immediately due and payable.

The effective interest rate for the 2023 Notes is 4.8%. For each of the three-month periods ended March 31, 20222023 and 2021,2022, total interest expense related to the 2023 Notes was $0.4 million, with coupon interest expense of $0.3 million and the amortization of debt issuance costs of $0.1 million.

Convertible Senior Notes Due 2026 Notes(“2026 Notes”)

The 2026 Notes bear interest at a coupon interest rate of 6.75% per annum payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2021 until maturity. The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased by us. The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which currently represents 28,675,900 potentially convertible shares at an initial conversion price of approximately $6.97 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to November 17, 2025, holders of the 2026 Notes may convert their notes if the closing price of our common stock exceeds 130% of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2026 Notes is equal to or less than 97% of the conversion value of the notes during the 5five consecutive business days immediately after any 10ten consecutive trading day period (trading price condition). Holders of the 2026 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 64.5207 shares of our common stock per $1,000 principal amount.

Prior to August 15, 2023, the 2026 Notes are not redeemable. On or after August 15, 2023, we may redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption. Any redemption would be payable in cash equal to 100% of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2026 Notes).

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The indenture governing the 2026 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2026 Notes together with any accrued interest will become immediately due and payable.

The effective interest rate for the 2026 Notes is 7.6%. For each of the three-month periods ended March 31, 20222023 and 2021,2022, total interest expense related to the 2026 Notes was $3.7 million, with coupon interest expense of $3.4 million and the amortization of debt issuance costs of $0.3 million.

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2026 Capped Calls

In connection with the 2026 Notes offering, we entered into capped call transactions (the “2026 Capped Calls”) with three separate option counterparties. The 2026 Capped Calls are for an aggregate of 28,675,900 shares of our common stock, which corresponds to the shares into which the 2026 Notes are initially convertible. The capped call shares are subject to certain anti-dilution adjustments. Each capped call option has an initial strike price of approximately $6.97 per share, which corresponds to the initial conversion price of the 2026 Notes, and an initial cap price of approximately $8.42 per share. The strike and cap prices are subject to certain adjustments. The 2026 Capped Calls are intended to offset some or all of the potential dilution to Helix common shares caused by any conversion of the 2026 Notes up to the cap price. The 2026 Capped Calls can be settled in either net shares or cash at our option in components commencing December 15, 2025 and ending February 12, 2026, which could be extended under certain circumstances.

The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting Helix, including a merger, tender offer, nationalization, insolvency or delisting. In addition, certain events may result in a termination of the 2026 Capped Calls, including changes in law, insolvency filings and hedging disruptions. The 2026 Capped Calls are recorded at their aggregate cost of $10.6 million as a reduction to common stock in the shareholders’ equity section of our condensed consolidated balance sheets.

MARAD Debt

In 2005, Helix’s subsidiary CDI – Title XI issued its U.S. Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”). The MARAD Debt is guaranteed by the U.S. government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration (“MARAD”). The obligation of CDI Title XI to reimburse MARAD in the event CDI Title XI fails to repay the MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. In addition, we have agreed to bareboat charter the Q4000 from CDI Title XI for so long as the MARAD Debt remains outstanding. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93%. The agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt are typical for U.S. government-guaranteed ship financing transactions, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

Other

We previously had a credit agreement with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000. The loan was secured by the Q5000 and its charter earnings. In January 2021, we repaid the remaining principal amount of $53.6 million.

We previously had another credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America. The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $175 million and had a maturity date of December 31, 2021. Concurrent with our entering into the ABL Facility, the Credit Agreement was terminated. The $28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility. We had 0 borrowings under the Revolving Credit Facility.

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Table of Contents

In accordance with the Amended ABL Facility, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including minimum liquidity and a springing fixed charge coverage ratio and minimum liquidity(applicable under certain conditions that are currently not applicable) with respect to the Amended ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt. As of March 31, 2022,2023, we were in compliance with these covenants.

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

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Interest expense

$

5,307

 

$

6,112

$

4,869

 

$

5,307

Interest income

 

(133)

 

(59)

 

(682)

 

(133)

Net interest expense

$

5,174

 

$

6,053

$

4,187

 

$

5,174

Note 67 — Income Taxes

We operate in multiple jurisdictions with complex tax laws subject to interpretation and judgment. We believe that our application of such laws and the tax impact thereof are reasonable and fairly presented in our condensed consolidated financial statements.

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For the three-month periods ended March 31, 20222023 and 2021,2022, we recognized income tax (benefit) expense of $2.1$(2.0) million and $0.1$2.1 million, respectively, resulting in effective tax rates of (5.4)%28.1% and (4.0)(5.4)%, respectively. These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized. The effective tax rate for the three-month period ended March 31, 2023 was higher than the U.S. statutory rate primarily due to certain non-deductible expenses and non-creditable foreign income taxes. For both periods,the three-month period ended March 31, 2022, our aggregate tax expense was greater than the aggregate tax benefit of our losses, resulting in negative effective tax rates. The effective tax rate for the three-month period ended March 31, 2022 was significantly lower than the U.S. statutory rate primarily due to non-creditable foreign income and deemed profit taxes, as well as unbenefitedlosses without tax losses.benefits.

Note 8 — Share Repurchase Programs

On February 20, 2023, we announced that our Board of Directors (our “Board”) authorized a new share repurchase program (the “2023 Repurchase Program”) under which we are authorized to repurchase up to $200 million issued and outstanding shares of our common stock. Concurrent with the authorization of the 2023 Repurchase Program, our Board revoked the prior authorization to repurchase shares of our common stock in an amount equal to any equity issued to our employees, officers and directors under our share-based compensation plans, including share-based awards under our existing long-term incentive plans and shares issued to our employees under our Employee Stock Purchase Plan (Note 11).

The 2023 Repurchase Program has no set expiration date. Repurchases under the 2023 Repurchase Program are expected to be made through open market purchases in compliance with Rule 10b-18 under the Exchange Act, privately negotiated transactions or plans, instructions or contracts established under Rule 10b5-1 under the Exchange Act. The manner, timing and amount of any purchase will be determined by management based on an evaluation of market conditions, stock price, liquidity and other factors. The 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. The purchase of shares by us under the 2023 Repurchase Program is at our discretion and subject to prevailing financial and market conditions. Any repurchased shares are expected to be cancelled. During the three-month period ended March 31, 2023, we repurchased a total of 660,000 shares of our common stock for approximately $5.0 million or an average of $7.55 per share pursuant to the 2023 Repurchase Program.

Note 79 — Revenue from Contracts with Customers

Disaggregation of Revenue

Our revenues are primarily derived from short-term and long-term service contracts with customers. Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts). We record revenues net of taxes collected from customers and remitted to governmental authorities. Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration. The following table provides information about disaggregated revenue by contract duration (in thousands):

Well

Production

Intercompany

Total

Well

Shallow Water

Production

Intercompany

Total

    

Intervention

    

Robotics

    

Abandonment

    

Facilities

    

Eliminations

    

Revenue

Three months ended March 31, 2023

Three months ended March 31, 2023

 

  

 

  

 

  

 

  

Short-term

$

77,767

$

35,205

$

49,381

$

$

$

162,353

Long-term

 

64,671

 

14,017

 

 

20,905

 

(11,862)

 

87,731

Total

$

142,438

$

49,222

$

49,381

$

20,905

$

(11,862)

$

250,084

    

Intervention

    

Robotics

    

Facilities

    

Eliminations

    

Revenue

Three months ended March 31, 2022

 

  

 

  

 

  

 

  

 

  

Three months ended March 31, 2022

 

  

 

  

 

  

 

  

Short-term

$

91,346

$

21,137

$

$

(635)

$

111,848

$

91,346

$

21,137

$

$

$

(635)

$

111,848

Long-term

 

15,021

 

16,214

 

18,294

 

(11,252)

 

38,277

 

15,021

 

16,214

 

 

18,294

 

(11,252)

 

38,277

Total

$

106,367

$

37,351

$

18,294

$

(11,887)

$

150,125

$

106,367

$

37,351

$

$

18,294

$

(11,887)

$

150,125

Three months ended March 31, 2021

 

  

 

  

 

  

 

  

 

  

Short-term

$

49,217

$

9,407

$

$

$

58,624

Long-term

 

84,551

 

12,749

 

16,447

 

(8,956)

 

104,791

Total

$

133,768

$

22,156

$

16,447

$

(8,956)

$

163,415

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Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional.

Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance. Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 3)4). Contract assets were $0.2$0.7 million atas of March 31, 20222023 and $0.6$6.3 million atas of December 31, 2021.2022. We had 0no credit losses on our contract assets for the three-month periods ended March 31, 20222023 and 2021.2022.

Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer. Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) amounts billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 3)4). Contract liabilities totaled $5.7$11.6 million atas of March 31, 20222023 and $8.7$10.0 million atas of December 31, 2021.2022. Revenue recognized for the three-month periods ended March 31, 2023 and 2022 and 2021 included $4.3$3.9 million and $2.5$4.3 million, respectively, that were included in the contract liability balance at the beginning of each period.

We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.

Performance Obligations

As of March 31, 2022, $548.12023, $920.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $263.4$554.3 million, $203.4$363.6 million and $81.3$2.5 million in 2022, 2023 and , 2024 and 2025, respectively. These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees. These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at March 31, 2022.2023.

For the three-month periods ended March 31, 20222023 and 2021,2022, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

Contract fulfillment costs consist of costs incurred in fulfilling a contract with a customer. Our contract fulfillment costs primarily relate to costs incurred for mobilization of personnel and equipment at the beginning of a contract and costs incurred for demobilization at the end of a contract. Mobilization costs are deferred and amortized ratably over the contract term (including anticipated contract extensions) based on the pattern of the provision of services to which the contract fulfillment costs relate. Demobilization costs are recognized when incurred at the end of the contract. Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 3)4). Our deferred contract costs totaled $6.2$32.0 million atas of March 31, 20222023 and $3.3$20.4 million atas of December 31, 2021.2022. For the three-month periods ended March 31, 20222023 and 2021,2022, we recorded $4.6$4.7 million and $10.4$4.6 million, respectively, related to amortization of these deferred contract costs. There were no associated impairment losses for any period presented.

For additional information regarding revenue recognition, see Notes 2 and 1211 to our 20212022 Form 10-K.

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Note 810 — Earnings Per Share

We have shares of restricted stock issued and outstanding that are currently unvested. Because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock, we are required to compute basic and diluted earnings per share (“EPS”) under the two-class method in periods in which we have earnings. Under the two-class method, net income or loss attributable to common shareholders for each period is allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed. For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses.

Basic EPS is computed by dividing net income or loss available to common shareholders by the weighted average shares of our common stock outstanding. The calculation of diluted EPS is similar to that for basic EPS, except that the denominator includes dilutive common stock equivalents and the numerator excludes the effects of dilutive common stock equivalents, if any. The computations of the numerator (earnings or loss) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands):

Three Months Ended

Three Months Ended

Three Months Ended

Three Months Ended

March 31, 2022

March 31, 2021

March 31, 2023

March 31, 2022

    

Income

    

Shares

    

Income

    

Shares

    

Income

    

Shares

    

Income

    

Shares

Basic and Diluted:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Net loss attributable to common shareholders

$

(42,031)

 

$

(2,878)

 

  

$

(5,165)

 

$

(42,031)

 

  

Less: Accretion of redeemable noncontrolling interests

 

 

(241)

 

  

Net loss available to common shareholders

$

(42,031)

151,142

$

(3,119)

 

149,935

$

(5,165)

151,764

$

(42,031)

 

151,142

We had net losses for the three-month periods ended March 31, 20222023 and 2021.2022. Accordingly, our diluted EPS calculation for these periods excluded any assumed exercise or conversion of common stock equivalents. These common stock equivalents were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable periods. Shares that otherwise would have been included in the diluted per share calculations assuming we had earnings are as follows (in thousands):

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Diluted shares (as reported)

 

151,142

 

149,935

 

151,764

 

151,142

Share-based awards

 

953

 

1,093

 

2,740

 

953

Total

 

152,095

 

151,028

 

154,504

 

152,095

The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2026 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

2022 Notes

 

2,435

 

2,519

2,435

2023 Notes

 

3,168

 

3,168

 

3,168

 

3,168

2026 Notes

 

28,676

 

28,676

 

28,676

 

28,676

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Note 911 — Employee Benefit Plans

Long-Term Incentive Plan

As of March 31, 2022,2023, there were 4.23.5 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”). During the three-month period ended March 31, 2022,2023, the following grants of share-based awards were made under the 2005 Incentive Plan:

Grant Date

Grant Date

Fair Value

Fair Value

Date of Grant

    

Award Type

    

Shares/Units

    

Per Share/Unit

    

Vesting Period

    

Award Type

    

Shares/Units

    

Per Share/Unit

    

Vesting Period

January 1, 2022 (1)

 

RSU

 

1,065,705

$

3.12

 

33% per year over three years

January 4, 2022 (1)

 

PSU

 

1,065,705

$

4.25

 

100% on January 4, 2025

January 4, 2022 (2)

 

Restricted stock

 

15,775

$

3.12

 

100% on January 1, 2024

January 1, 2023 (1)

 

RSU

 

506,436

$

7.38

 

33% per year over three years

January 3, 2023 (1)

 

PSU

 

489,498

$

9.26

 

100% on December 31, 2025

January 1, 2023 (2)

 

Restricted stock

 

9,210

$

7.38

 

100% on January 1, 2025

(1)Reflects grants to our executive officers.
(2)Reflects grants to certain independent members of our Board of Directors (our “Board”) who have elected to take their quarterly fees in stock in lieu of cash.

Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis. Forfeitures are recognized as they occur. NaNNo restricted stock awards have been granted to our executive officers or other employees in 2022.since 2020. For the three-month periods ended March 31, 2023 and 2022, and 2021, $0.6$0.3 million and $0.8$0.6 million, respectively, were recognized as share-based compensation related to restricted stock.

Our performance share units (“PSUs”) that were granted prior to 2021 are to be settled solely in shares of our common stock and are accounted for as equity awards. Those PSUs, which contain a service and a market condition, are based on the performance of our common stock against peer group companies. Our PSUs granted beginning 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee of our Board and have been accounted for as equity awards. Those PSUs consist of 2two components: (i) 50% based on the performance of our common stock against peer group companies, which component contains a service and a market condition, and (ii) 50% based on cumulative total Free Cash Flow, which component contains a service and a performance condition. Free Cash Flow is calculated as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. Our PSUs cliff vest at the end of a three-year period with the maximum amount of the award being 200% of the original PSU awards and the minimum amount being 0.zero.

For PSUs that havewith a service and a market condition andthat are accounted for as equity awards, compensation cost is measured based on the grant date estimated fair value determined using a Monte Carlo simulation model and subsequently recognized over the vesting period on a straight-line basis. For PSUs that havewith a service and a performance condition andthat are accounted for as equity awards, compensation cost is initially measured based on the grant date fair value. Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition. For the three-month periods ended March 31, 2023 and 2022, and 2021, $1.1$1.2 million and $1.0$1.1 million, respectively, were recognized as share-based compensation related to equity PSUs. In January 2022,2023, based on the performance of our common stock price as compared to our performance peer group over a three-year period, 559,150 equity369,938 PSUs granted in 20192020 vested at 157%77%, representing 876,469285,778 shares of our common stock with a total market value of $3.2$3.6 million.

Our restricted stock units (“RSUs”) granted beginning 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and have been accounted for as liability awards. Liability RSUs are measured at their estimated fair value atbased on the closing share price of our common stock as of each balance sheet date, and subsequent changes in the fair value of the awards are recognized in earnings for the portion of the award for which the requisite service period has elapsed. Cumulative compensation cost for vested liability RSUs equals the actual payout value upon vesting. For the three-month periods ended March 31, 2023 and 2022, and 2021, $0.6$1.2 million and $0.2$0.6 million, respectively, were recognized as compensation cost.

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In 20222023 and 2021,2022, we granted fixed-value cash awards of $5.0$6.0 million and $3.5$5.5 million, respectively, to select management employees under the 2005 Incentive Plan. The value of these cash awards is recognized on a straight-line basis over a vesting period of three years. Compensation cost of $1.0 million was recognized for each ofFor the three-month periods ended March 31, 2023 and 2022, $1.2 million and 2021.$1.0 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

We sponsor a defined contribution 401(k) retirement plan.plan (the “401(k) Plan”). Our discretionary contributions are in the form of cash and consist of a 50% match of each participant’s contribution up to 5% of the participant’s salary. Our discretionary contributions were suspended for 2021 and re-activated beginning January 2022. For the three-month periodperiods ended March 31, 2023 and 2022, we made $0.6 million and $0.4 million, respectively, in contributions to the 401(k) plan.Plan.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”). As of March 31, 2022, 1.52023, 1.3 million shares were available for issuance under the ESPP. The ESPP currently has a purchase limit of 260 shares per employee per purchase period.

For more information regarding our employee benefit plans, including the 2005 Incentive Plan and the ESPP, see Note 1413 to our 20212022 Form 10-K.

Note 1012 — Business Segment Information

We have 3Through the second quarter 2022, we had three reportable business segments: Well Intervention, Robotics and Production Facilities. Beginning in the third quarter 2022 as a result of the Alliance acquisition (Note 3), we formed a new reportable business segment: Shallow Water Abandonment, which includes the assets, liabilities and operating results of Helix Alliance. All material intercompany transactions between the segments have been eliminated.

Our U.S., U.K. and Brazil well interventionWell Intervention operating segments are aggregated into the Well Intervention segment for financial reporting purposes. Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.globally. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and the Siem Helix 1 and Siem Helix 2 chartered vessels. Our well intervention equipment includes intervention systems, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance, offshore construction and IRM services to both the oil and gas and the renewable energy markets globally. Additionally, our Robotics services are used in and complement our well intervention services. Our Robotics segment includes ROVs, trenchers, the IROV boulder grab and robotics support vessels under term charters as well as spot vessels as needed. We offer our ROVs, trenchers and the IROV on a stand-alone basis or on an integrated basis with chartered robotics support vessels.

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oilfield decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services. Our Shallow Water Abandonment segment operates a diversified fleet of marine assets including liftboats, OSVs, DSVs, a heavy lift derrick barge, a crew boat and P&A and coiled tubing systems.

Our Production Facilities segment includes the HP I, the HFRS and our ownership of oil and gas properties (Note 11)13). All material intercompany transactions between the segments have been eliminated.

We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands):

Three Months Ended

March 31, 

2022

    

2021

Net revenues —

  

 

  

Well Intervention

$

106,367

$

133,768

Robotics

 

37,351

 

22,156

Production Facilities

 

18,294

 

16,447

Intercompany eliminations

 

(11,887)

 

(8,956)

Total

$

150,125

$

163,415

Income (loss) from operations —

 

  

 

  

Well Intervention

$

(31,758)

$

5,243

Robotics

 

1,480

 

(2,934)

Production Facilities

 

5,851

 

6,514

Segment operating income (loss)

 

(24,427)

 

8,823

Corporate, eliminations and other

 

(8,550)

 

(9,378)

Total

$

(32,977)

$

(555)

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Table of Contents

We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands):

Three Months Ended

March 31, 

2023

    

2022

Net revenues —

  

 

  

Well Intervention

$

142,438

$

106,367

Robotics

 

49,222

 

37,351

Shallow Water Abandonment

49,381

Production Facilities

 

20,905

 

18,294

Intercompany eliminations

 

(11,862)

 

(11,887)

Total

$

250,084

$

150,125

Income (loss) from operations —

 

  

 

  

Well Intervention

$

(8,143)

$

(31,758)

Robotics

 

5,094

 

1,480

Shallow Water Abandonment

6,822

Production Facilities

 

5,157

 

5,851

Segment operating income (loss)

 

8,930

 

(24,427)

Change in fair value of contingent consideration

(3,992)

Corporate, eliminations and other

 

(13,241)

 

(8,550)

Total

$

(8,303)

$

(32,977)

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments. Intercompany segment revenues are as follows (in thousands):

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Well Intervention

$

3,850

$

2,587

$

4,469

$

3,850

Robotics

 

8,037

 

6,369

 

7,393

 

8,037

Total

$

11,887

$

8,956

$

11,862

$

11,887

Segment assets are comprised of all assets attributable to each reportable segment. Corporate and other includes all assets not directly identifiable with our business segments.segments, most notably the majority of our cash and cash equivalents. The following table reflects total assets by reportable segment (in thousands):

March 31, 

December 31,

March 31, 

December 31, 

    

2022

    

2021

    

2023

    

2022

Well Intervention

$

2,026,522

$

2,012,214

$

1,795,612

$

1,796,269

Robotics

 

87,575

 

96,249

 

183,986

 

192,694

Shallow Water Abandonment

205,544

206,944

Production Facilities

 

115,977

 

119,004

 

128,262

 

136,382

Corporate and other

 

77,296

 

98,561

 

55,930

 

57,049

Total

$

2,307,370

$

2,326,028

$

2,369,334

$

2,389,338

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Note 1113 — Asset Retirement Obligations

AssetOur asset retirement obligations (“AROs”) relate to mature offshore oil and gas properties that we acquired with the intention to perform decommissioning work at the end of their life cycles. AROs are recorded initially at fair value and consist of estimated costs for subsea infrastructure decommissioning and plug and abandonment (“P&A”)&A activities associated with our oil and gas properties. The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate. After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense. An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

In August 2022, we made an asset acquisition from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, for all of MP GOM’s 62.5% interest in the Thunder Hawk Field, in exchange for the assumption of MP GOM’s abandonment obligations (initially estimated at $23.6 million). Our AROs relate toalso include P&A costs associated with our Droshky oil and gas properties that we acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019. In connection with assuming the P&A obligations related to those assets, we are entitled to receive agreed-upon amounts from Marathon Oil as the P&A work is completed.(Note 4). The following table describes the changes in our AROs (in thousands):

    

2022

    

2021

    

2023

    

2022

AROs at January 1,

$

29,658

$

30,913

$

51,956

$

29,658

Accretion expense

 

741

 

48

 

1,168

 

741

AROs at March 31,

$

30,399

$

30,961

$

53,124

$

30,399

Note 1214 — Commitments and Contingencies and Other Matters

Commitments

In January 2023, we entered into a three-year charter agreement for the Glomar Wave in the North Sea with options to extend. We have long-term charter agreements with Siem Offshore AS for the Siem Helix 1 and Siem Helix 2 vessels. During the first quarter 2022, the charter agreements for the Siem Helix1 and the Siem Helix2 were extended tovessels expiring in February 2025 and February 2027, respectively, with further options to extend. We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels. The expiration date of the Grand Canyon II charter was extended tovessels expiring in December 2022,2027 and May 2028, respectively, with an optionoptions to renew. TheWe also have a time charter agreement for the Grand Canyon IIIShelia Bordelon charter expires May 2023. Duringin the first quarter 2022, we executedGulf of Mexico through June 2024 and a short-term time charter agreementsagreement for the Horizon Enabler in the North Sea and the Shelia Bordelon in the Gulf of Mexico.Sea.

Contingencies and Claims

Our contingent consideration liability resulting from the Alliance acquisition is subject to risk, through the remainder of the contingency period, which ends on December 31, 2023, as a result of changes in our probability weighted discounted cash flow model, which is based on internal forecasts, and changes in weighted average discount rate, which is derived from market data.

We believe that there are currently no other contingencies that would have a material adverse effect on our financial position, results of operations or cash flows.

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Litigation

We are involved in various legal proceedings, some involving claims for personal injury under the General Maritime Laws of the United States and the Merchant Marine Act of 1920 (commonly referred to as the Jones Act.Act). In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.

We are currently involved in several lawsuits filed by current and former offshore employees seeking overtime compensation. These suits are brought as collective actions and are in various stages of litigation.litigation in federal district courts. We appealed one such lawsuit to the United States Supreme Court, which issued a ruling adverse to us in the first quarter 2023 that is likely to have implications for similar lawsuits in which we are involved. In one sucha separate lawsuit, during the third quarter 20212022 the United States Court of Appeals for the Fifth Circuit issued aan adverse ruling adverse to us that may also have implications for some of the other casessimilar lawsuits in which we are involved, as well as the way offshore personnel are compensated throughout our industry.involved. We further appealed that matter and continue to vigorously defend these lawsuits. Notwithstandinglawsuits, and notwithstanding that we believe we retain valid defenses, we have established a liability for probable losses in certaineach of these matters. The final outcome of these matters remains uncertain, and the ultimate liability to us could be more or less than the liability established.

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Note 1315 — Statement of Cash Flow Information

We define cash and cash equivalents as cash and all highly liquid financial instruments with original maturities of three months or less. We classify cash as restricted when there are legal or contractual restrictions for its withdrawal. The following table provides supplemental cash flow information (in thousands):

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Interest paid

$

8,708

$

9,397

$

8,498

$

8,708

Income taxes paid(1)

 

2,736

 

1,790

 

1,708

 

2,736

(1)Exclusive of any income tax refunds.

Our capital additions include the acquisition of property and equipment for which payment has not been made. These non-cash capital additions totaled $0.3$0.2 million at March 31, 20222023 and $0.3 million at December 31, 2021.2022.

Note 1416 — Allowance for Credit Losses

We estimate current expected credit losses on our accounts receivable at each reporting date based on our credit loss history, adjusted for current factors including global economic and business conditions, offshore energy industry and market conditions, customer mix, contract payment terms and past due accounts receivable.

The following table sets forth the activity in our allowance for credit losses (in thousands):

    

2022

    

2021

    

2023

    

2022

Balance at January 1,

$

1,477

$

3,469

$

2,277

$

1,477

Additions (reductions) (1)

 

(126)

 

7

 

141

 

(126)

Write-offs (2)

(1,811)

Balance at March 31,

$

1,351

$

1,665

$

2,418

$

1,351

(1)Additions (reductions) in allowance for credit losses reflect credit loss reserves (releases) during the respective periods.
(2)The write-offs of allowance for credit losses reflect certain receivables related to our Robotics segment that were previously reserved and subsequently deemed to be uncollectible.

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Note 1517 — Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value accounting rules establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

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

(a)Market Approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
(b)Cost Approach. Amount that would be required to replace the service capacity of an asset (replacement cost).
(c)Income Approach. Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).

Our financial instruments include cash and cash equivalents, receivables, accounts payable and long-term debt. The carrying amount of cash and cash equivalents, trade and other current receivables as well as accounts payable approximates fair value due to the short-term nature of these instruments.

The following table sets forth our assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value at March 31, 2023

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities:

 

  

 

  

 

  

 

  

Contingent consideration

 

 

 

46,746

 

46,746

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Contingent consideration liability related to the Alliance acquisition (Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period. The fair value of the estimated contingent consideration is determined based on our evaluation of the probability and amount of earnout that may be achieved based on expected future performance of Helix Alliance. The Monte Carlo simulation model is used to calculate the estimated earnout payment, which is then discounted to present value based on the expected payment date of the contingent consideration. The changes in the fair value of contingent consideration are as follows (in thousands):

    

2023

Balance at January 1,

$

42,754

Change in fair value

3,992

Balance at March 31, 

$

46,746

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

March 31, 2022

December 31, 2021

March 31, 2023

December 31, 2022

Principal

Fair

Principal

Fair

Principal

Fair

Principal

Fair

    

Amount (1)

    

Value (2)

    

Amount (1)

    

Value (2)

    

Amount (1)

    

Value (2)

    

Amount (1)

    

Value (2)

MARAD Debt (matures February 2027)

$

44,930

$

46,688

$

48,850

$

52,481

$

36,797

$

36,888

$

40,913

$

40,940

2022 Notes (mature May 2022)

 

35,000

 

35,022

 

35,000

 

34,794

2023 Notes (mature September 2023)

 

30,000

 

29,693

 

30,000

 

29,054

 

30,000

 

30,590

 

30,000

 

31,149

2026 Notes (mature February 2026)

 

200,000

 

226,816

 

200,000

 

200,562

 

200,000

 

274,287

 

200,000

 

277,014

Total debt

$

309,930

$

338,219

$

313,850

$

316,891

$

266,797

$

341,765

$

270,913

$

349,103

(1)Principal amount includes current maturities and excludes any related unamortized debt issuance costs. See Note 56 for additional disclosures on our long-term debt.
(2)The estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach. The fair value of the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS AND ASSUMPTIONS

This Quarterly Report on Form 10-Q contains or incorporates by reference various statements that contain forward-looking information regarding Helix and represent our current expectations or forecasts of future events. This forward-looking information is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995 as set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements included herein or incorporated by reference herein that are predictive in nature, that depend upon or refer to future events or conditions, or that use terms and phrases such as “achieve,” “anticipate,” “believe,” “estimate,” “budget,” “expect,” “forecast,” “plan,” “project,” “propose,” “strategy,” “predict,” “envision,” “hope,” “intend,” “will,” “continue,” “may,” “potential,” “should,” “could” and similar terms and phrases are forward-looking statements although not all forward-looking statements contain such identifying words. Included in forward-looking statements are, among other things:

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, capitalfuture operations expenditures or other financial items;
statements regarding our backlog and commercial contracts and rates thereunder;
statements regarding our ability to enter into and/or perform commercial contracts, including the scope, timing and outcome of those contracts;
statements regarding the spot market, the continuation of our current backlog, visibility and future utilization, our spending and cost reduction plansmanagement efforts and our ability to manage changes, and the COVID-19 pandemic and oil price volatility and their respective effects and results on the foregoing as well as our protocols and plans;

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statements regarding energy transition and energy security;
statements regarding our ability to identify, effect and integrate acquisitions, joint ventures or other transactions;
statements regarding the acquisition, construction, completion, upgrades to or maintenance of vessels, systems or equipment and any anticipated costs or downtime related thereto;
statements regarding any financing transactions or arrangements, or our ability to enter into such transactions or arrangements;
statements regarding potential legislative, governmental, regulatory, administrative or other public body actions, requirements, permits or decisions;
statements regarding our trade receivables and their collectability;
statements regarding potential developments, industry trends, performance or industry ranking;
statements regarding our Environmental, Social and Governance (“ESG”)ESG initiatives and the successes thereon or regarding our environmental efforts, including greenhouse gas emissions targets;
statements regarding global, market or investor sentiment with respect to fossil fuels;
statements regarding our existing activities in, and future expansion into, the offshore renewable energy market;
statements regarding general economic or political conditions, whether international, national or in the regional or local markets in which we do business;
statements regarding our human capital resources, including our ability to retain our senior management and other key employees;
statements regarding our share repurchase authorization or program;
statements regarding the underlying assumptions related to any projection or forward-looking statement; and
any other statements that relate to non-historical or future information.

Although we believe that the expectations reflected in our forward-looking statements are reasonable and are based on reasonable assumptions, they do involve risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include:

the impact of domestic and global economic conditions and the future impact of such conditions on the offshore energy industry and the demand for our services;
the general impact of oil and gas price volatility and the cyclical nature of the oil and gas market;
the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto;
the potential effects of regional tensions that have escalated or may escalate, including into conflicts or wars, and their impact on the global economy, oil and gas market, our operations, international trade, or our ability to do business with certain parties or in certain regions, and any governmental sanctions resulting therefrom;
the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto;

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the results of corporate initiatives such as alliances, partnerships, joint ventures, mergers, acquisitions, divestitures and restructurings, or the determination not to pursue or effect such initiatives;
the results of acquired properties;
the impact of inflation and our ability to recoup rising costs in the rates we charge to our customers;
the impact of our ability to secure and realize backlog, including any potential cancellation, deferral or modification of our work or contracts by our customers;
the ability to effectively bid, renew and perform our contracts, including the impact of equipment problems or failure;
the impact of the imposition by our customers of rate reductions, fines and penalties with respect to our operating assets;
the performance of contracts by suppliers, customers and partners;
unexpected future capitaloperations expenditures, including the amount and nature thereof;
the effectiveness and timing of our vessel and/or system upgrades, regulatory recertificationcertification and inspection as well as major maintenance items;
operating hazards, including unexpected delays in the delivery, chartering or customer acceptance, and terms of acceptance, of our assets;
the effect of adverse weather conditions and/or other risks associated with marine operations;
the effects of our indebtedness, our ability to comply with debt covenants and our ability to reduce capital commitments;

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the results of our continuing efforts to control costs and improve performance;
the success of our risk management activities, including with respect to our cybersecurity initiatives;
the effects of competition;
the availability of capital (including any financing) to fund our business strategy and/or operations;
the effectiveness of our ESG initiatives and disclosures;
the impact of current and future laws and governmental regulations and how they will be interpreted or enforced, including related to fossil fuel production and litigation and similar claims in which we may be involved;
the future impact of international activity and trade agreements on our business, operations and financial condition;
the effect of adverse weather conditions and/or other risks associated with marine operations;
the impact of foreign currency exchange controls, potential illiquidity of those currencies and exchange rate fluctuations;
the effectiveness of ourany future hedging activities;
the potential impact of a negative event related to our human capital resources, including a loss of one or more key employees;
the impact of general, market, industry or business conditions; and
the impact of inflation andfactors generally described in Item 1A. Risk Factors in our ability to recoup rising costs in the rates we charge to our customers.2022 Form 10-K.

Our actual results could also differ materially from those anticipated in any forward-looking statements as a result of a variety of factors, including those described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20212022 Form 10-K. Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

We caution you not to place undue reliance on forward-looking statements. Forward-looking statements are only as of the date they are made, and other than as required under the securities laws, we assume no obligation to update or revise forward-looking statements, all of which are expressly qualified by the statements in this section, or provide reasons why actual results may differ. All forward-looking statements, express or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We urge you to carefully review and consider the disclosures made in this Quarterly Report and our reports filed with the SEC and incorporated by reference in our 20212022 Form 10-K that attempt to advise interested parties of the risks and factors that may affect our business.

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EXECUTIVE SUMMARY

Our Business

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 roboticsfull-field decommissioning operations. TheOur services we offer to theare centered on a three-legged business model well positioned for a global energy transition by maximizing production of remaining oil and gas market cover the lifecycle of an offshore oil or gas field, and the services we offer to thereserves, supporting renewable energy market are currently focused on offshore wind farm projects, including trenchingdevelopments and cable burialdecommissioning end-of-life oil and seabed clearance operations.gas fields. Our well intervention fleet includes seven purpose-built well intervention vessels and 1012 intervention systems. Our robotics equipment includes 4039 work-class ROVs, seven trenchers and four trenchers.the IROV boulder grab. We charter robotics support vessels on both long-term, short-term, flexible and spot bases to facilitate our ROV and trenching operations. Our well intervention and robotics operations are geographically dispersed throughout the world. Our Production Facilities segment includes the HP I, the HFRS and our ownership of oil and gas properties.properties including the recently acquired interest in the Thunder Hawk Field. On July 1, 2022, we completed our acquisition of Alliance and formed a new reporting segment in the third quarter 2022 comprised of the Helix Alliance business. Our new Shallow Water Abandonment segment includes nine liftboats, six OSVs, three DSVs, one heavy lift derrick barge, one crew boat, 15 marketable P&A systems (with the ability to scale up to 20 systems) and six coiled tubing systems.

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Economic Outlook and Industry Influences

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. 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.

Oil and gas prices experienced recentreached ten-year highs during the first quartermiddle of 2022 as globaland have since experienced moderate declines and volatility. Global demand continuedfor oil continues to recover from COVID-19 related restrictions andas supply washas been disrupted by regional conflicts. The increases inWe expect oil prices as well aswill remain robust for the outlook for higher sustained oil prices,near term, which should lead to higher customer spending for the industry. However, despite the current strong commodity price environment, there are broadremain headwinds to commodity price stability. The headwinds includestability, including those regional conflicts, high inflation ongoingand in particular governments’ and central banks’ efforts to control inflation, which may taper economic growth, COVID-related uncertainties, various governmental and customer ESG initiatives and continued shifting of resource allocation to renewable energy.energy, and most recently wavering market confidence in light of turmoil within the banking industry. We expect thisthese factors will continue to contribute to commodity price volatility and maywith the potential to temper customer spending for oil and gas projects.

We maximize production of remaining oil and gas reserves for our customers primarily in our Well Intervention segment. Historically, drilling rigs have been the asset class used for offshore well intervention work, and rig day rates are a pricing indicator for our services. 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.

The COVID-19 pandemic resulted in new market dynamics and challenges to us, including contributing significantly to oil and gas price volatility and increased costs related to our supply chain, logistics and human capital resources. While the full impact of the COVID-19 pandemic, including the duration of its impact on economic activity, remains unknown, we expect such impact may continue into the foreseeable future, including affecting our customers’ willingness to commit to future spending, limiting access to and use of capital, disrupting supply chains and increasing costs, and negatively affecting human capital resources.

Over the near-term, aswith the current high commodity price environment we expect oil and gas companies evaluate their budgetary spend allocations, we expect they may be weighted towards short-cycle production enhancement of existing wells rather thanto invest in new long-cycle exploration projects asin addition to maintaining and/or increasing production from their remaining reserves. As historically production enhancement through well intervention is less expensive per incremental barrel of oil than exploration. Over the longer term,exploration, we continue to expect oil and gas companies to increasinglycontinue to focus on optimizing production of their existing subsea wells. Moreover, as the subsea tree base expands and ages and customers shift resources to renewable energy, the demand for P&A services should persist. Our well intervention and robotics operations service the lifecycle of an oil and gas field and provide P&A services at the end of the life of a field as required by governmental regulations, and we believe that we have a competitive advantage in performing these services efficiently.

We expect the fundamentals for our business will remain favorable over the longer term as the need to prolong well life in oil and gas production and safely decommission end of life wells areis the primary driversdriver of demand for our production enhancement services. This expectation is based on multiple factors, including (1) maintaining the optimal production of a well through enhancement is fundamental to maximizing the overall economics of well production; (2) our services offer commercially viable alternatives for reducing the finding and development costs of reserves as compared to new drilling; and (3) extending the production of offshore wells not only maximizes a well’s production economics but also enables the financial benefit of delaying P&A costs, which can be substantial.

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We support the energy transition to renewables 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 production and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water, and government subsidies for renewable energy projects. We expect growth in our renewables services as the energy market transitions to continued renewable energy developments.

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. As the subsea tree base expands and ages and customers shift resources to renewable energy, the demand for P&A services should persist. Our operations service the life cycle of an oil and gas field and provide P&A services at the end of the life of a field as required by governmental regulations, and we believe that we have a competitive advantage in performing these services efficiently.

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We are subject to the effects of changing prices. Inflation rates have been relatively low and stable over the previous three decades; however, ininflation rates have risen significantly since 2021 due in part to supply chain disruptions and the effects of the COVID-19 pandemic, inflation rates began to rise significantly and remained high through the first quarter 2022.pandemic. Although we aremay be able to reduce some ofmitigate our exposure to price increases through the rates we charge, we bear the costs of operating and maintaining our assets, including labor and material costs as well as recertification and dry dock costs. While the cost outlook is not certain, we believe that we can manage these inflationary pressures by introducing appropriate sales price adjustments and by actively pursuing internal cost reductionmanagement efforts. However, competitive market pressures may affect our ability to recoup these price increases through the rates we charge, which may result in reductions in our operating margins and cash flows in the future. The recent high inflation rates seen in various major economies have caused concerns for central banks’ tightening of monetary policies. These concerns have contributed to stock market volatility as well as higher interest rates, which, combined with ongoing regional conflicts and unrest and continuedpotential COVID-related disruptions throughout the globe, could provide a strained macroeconomic outlook and in turn affect energy markets.

The COVID-19 pandemic resulted in unprecedented market dynamics and challenges to us, including contributing significantly to oil and gas price volatility and increased costs related to our supply chain, logistics and human capital resources. While the peak of the COVID-19 pandemic has largely subsided, we could experience a resurgence of the COVID-19 or new pandemic that could significantly impact economic activity, our customers’ willingness to commit to future spending, access to and use of capital, supply chains, inflation and human capital resources.

Backlog

We define backlog as firm commitments represented by signed contracts. As of March 31, 2022,2023, our consolidated backlog totaled $548approximately $920 million, of which $263$554 million is expected to be performed over the remainder of 2022.2023. Our contractvarious contracts with Shell globally, our contracts with Trident Energy Do Brasil LTDA. to provide P&A services offshoreand Petrobras in Brazil, our contracts with the Siem Helix1 chartered vessel, our contract with Petróleo Brasileiro S.A. (“Petrobras”) to provide well intervention services offshore Brazil with the Siem Helix2 chartered vessel, our well intervention contract with Shell Offshore Inc. for the Q5000Repsol globally and our fixed fee agreement for the HP I in the Gulf of Mexico represented approximately 58%64% of our total backlog as of March 31, 2022.2023. Backlog is not necessarily a reliable indicator of revenues derived from our contracts as services are often added but may sometimes be subtracted; contracts may be renegotiated, deferred, canceled and in many cases modified while in progress; and reduced rates, fines and penalties may be imposed by our customers. Furthermore, our contracts are in certain cases cancelable without penalty. If there are cancellation fees, the amount of those fees can be substantially less than amounts reflected in backlog.

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined by the SEC as a numerical measure of a company’s historical or future performance, financial position or cash flows that includes or excludes amounts from the most directly comparable measure under GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, our reported results prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions that are excluded from these measures.

We measureevaluate our operating performance and financial condition based on EBITDA, Adjusted EBITDA, and Free Cash Flow.Flow and Net Debt. EBITDA, Adjusted EBITDA, and Free Cash Flow and Net Debt are non-GAAP financial measures that are commonly used but are not recognized accounting terms under GAAP. We use EBITDA, Adjusted EBITDA, and Free Cash Flow and Net Debt to monitor and facilitate internal evaluation of the performance of our business operations, to facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial and strategic planning decisions regarding future investments and acquisitions, to plan and evaluate operating budgets, and in certain cases, to report our results to the holders of our debt as required by our debt covenants. We believe that our measures of EBITDA, Adjusted EBITDA, and Free Cash Flow and Net Debt provide useful information to the public regarding our operating performance and ability to service debt and fund capital expenditures and may help our investors understand and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA, Adjusted EBITDA, and Free Cash Flow and Net Debt differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA, and Free Cash Flow and Net Debt should not be considered in isolation or as a substitute for, but instead are supplemental to, income from operations, net income, cash flows from operating activities, or other income or cash flow data prepared in accordance with GAAP.

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We define EBITDA as earnings before income taxes, net interest expense, gain or loss on extinguishment of long-term debt, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets and non-cash gains and losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets, acquisition and integration costs, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any. In addition, we include realized losses from foreign currency exchange contracts not designated as hedging instruments, which are excluded from EBITDA as a component of net other income or expense. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash. In the following reconciliation,reconciliations, we provide amounts as reflected in the condensed consolidated financial statements unless otherwise noted.

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

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Net loss

$

(42,031)

$

(3,050)

$

(5,165)

$

(42,031)

Adjustments:

 

  

 

  

 

  

 

  

Income tax provision

 

2,140

 

116

Income tax provision (benefit)

 

(2,018)

 

2,140

Net interest expense

 

5,174

 

6,053

 

4,187

 

5,174

Other (income) expense, net

 

3,881

 

(1,617)

 

(3,444)

 

3,881

Depreciation and amortization

 

33,488

 

34,566

 

37,537

 

33,488

EBITDA

 

2,652

 

36,068

 

31,097

 

2,652

Adjustments:

 

  

 

  

 

  

 

  

Gain on disposition of assets, net

 

(367)

 

Acquisition and integration costs

231

Change in fair value of contingent consideration

3,992

General provision (release) for current expected credit losses

 

(126)

 

100

 

141

 

(126)

Adjusted EBITDA

$

2,526

$

36,168

$

35,094

$

2,526

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

Three Months Ended

Three Months Ended

March 31, 

March 31, 

    

2022

    

2021

    

2023

    

2022

Cash flows from operating activities

$

(17,413)

$

39,869

$

(5,392)

$

(17,413)

Less: Capital expenditures, net of proceeds from sale of assets

 

(623)

 

(1,329)

 

(6,300)

 

(623)

Free Cash Flow

$

(18,036)

$

38,540

$

(11,692)

$

(18,036)

The reconciliation of our long-term debt to Net Debt is as follows (in thousands):

March 31, 

December 31, 

    

2023

    

2022

Long-term debt including current maturities

$

260,460

$

264,075

Less: Cash and cash equivalents and restricted cash

 

(169,182)

 

(189,111)

Net Debt

$

91,278

$

74,964

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Comparison of Three Months Ended March 31, 20222023 and 20212022

We have threefour 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):

Three Months Ended

Increase/

 

Three Months Ended

Increase/

 

March 31, 

(Decrease)

 

March 31, 

(Decrease)

 

    

2022

    

2021

    

Amount

    

Percent

 

    

2023

    

2022

    

Amount

    

Percent

 

Net revenues —

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Well Intervention

$

106,367

$

133,768

$

(27,401)

 

(20)

%

$

142,438

$

106,367

$

36,071

 

34

%

Robotics

 

37,351

 

22,156

 

15,195

 

69

%

 

49,222

 

37,351

 

11,871

 

32

%

Shallow Water Abandonment

49,381

49,381

100

%

Production Facilities

 

18,294

 

16,447

 

1,847

 

11

%

 

20,905

 

18,294

 

2,611

 

14

%

Intercompany eliminations

 

(11,887)

 

(8,956)

 

(2,931)

 

  

 

(11,862)

 

(11,887)

 

25

 

  

$

150,125

$

163,415

$

(13,290)

 

(8)

%

$

250,084

$

150,125

$

99,959

 

67

%

Gross profit (loss) —

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Well Intervention

$

(28,446)

$

8,726

$

(37,172)

 

(426)

%

$

(4,362)

$

(28,446)

$

24,084

 

85

%

Robotics

 

3,520

 

(933)

 

4,453

 

477

%

 

7,007

 

3,520

 

3,487

 

99

%

Shallow Water Abandonment

7,498

7,498

100

%

Production Facilities

 

6,609

 

7,213

 

(604)

 

(8)

%

 

5,783

 

6,609

 

(826)

 

(12)

%

Corporate, eliminations and other

 

(292)

 

(382)

 

90

 

  

 

(742)

 

(292)

 

(450)

 

  

$

(18,609)

$

14,624

$

(33,233)

 

(227)

%

$

15,184

$

(18,609)

$

33,793

 

182

%

Gross margin —

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Well Intervention

 

(27)

%  

 

7

%  

 

  

 

 

(3)

%  

 

(27)

%  

 

  

 

Robotics

 

9

%  

 

(4)

%  

 

  

 

  

 

14

%  

 

9

%  

 

  

 

  

Shallow Water Abandonment

 

15

%  

 

%  

 

  

 

  

Production Facilities

 

36

%  

 

44

%  

 

  

 

  

 

28

%  

 

36

%  

 

  

 

  

Total company

 

(12)

%  

 

9

%  

 

  

 

  

 

6

%  

 

(12)

%  

 

  

 

  

Number of vessels or robotics assets (1) / Utilization (2)

 

  

 

  

 

  

 

  

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

 

  

 

  

 

  

 

  

Well Intervention vessels

 

7 / 67

%  

 

7 / 70

%  

 

  

 

  

 

7 / 80

%  

 

7 / 67

%  

 

  

 

  

Robotics assets (3)

 

45 / 35

%  

 

47 / 24

%  

 

  

 

  

 

46 / 56

%  

 

45 / 35

%  

 

  

 

  

Chartered robotics vessels

 

5 / 90

%  

 

3 / 90

%  

 

  

 

  

Chartered Robotics vessels

 

5 / 91

%  

 

5 / 90

%  

 

  

 

  

Shallow Water Abandonment vessels (4)

 

20 / 58

%  

 

— / —

%  

 

  

 

  

Shallow Water Abandonment systems (5)

 

21 / 68

%  

 

— / —

%  

 

  

 

  

(1)Represents the number of vessels, Robotics assets or robotics assetsmarketable 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 robotics assetsmarketable Shallow Water Abandonment systems generated revenues by the total number of calendar days in the applicable period. Utilization rates of chartered roboticsRobotics vessels during the three-month periods ended March 31, 2023 and 2022 and 2021 included 136 and three13 spot vessel days respectively,at 81% utilization and 136 spot vessel days at near full utilization.utilization, respectively.
(3)Consists of ROVs, trenchers and trenchers.the IROV boulder grab.
(4)Consists of liftboats, OSVs, DSVs, a heavy lift derrick barge and a crew boat.
(5)Consists of marketable P&A and coiled tubing systems.

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Intercompany segment amounts are derived primarily from equipment and services provided to other business segments. Intercompany segment revenues are as follows (in thousands):

Three Months Ended

Three Months Ended

March 31, 

Increase/

March 31, 

Increase/

    

2022

    

2021

    

(Decrease)

    

2023

    

2022

    

(Decrease)

Well Intervention

$

3,850

$

2,587

$

1,263

$

4,469

$

3,850

$

619

Robotics

 

8,037

 

6,369

 

1,668

 

7,393

 

8,037

 

(644)

$

11,887

$

8,956

$

2,931

$

11,862

$

11,887

$

(25)

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Table of Contents

Net Revenues. Our consolidated net revenues for the three-month period ended March 31, 2022 decreased2023 increased by 8%67% as compared to the same period in 2021,2022, reflecting lower revenues from our Well Intervention segment, offset in part by higher revenues fromacross our Robotics and Production Facilitiesbusiness segments.

Our Well Intervention revenues decreasedincreased by 20%34% for the three-month period ended March 31, 20222023 as compared to the same period in 2021,2022, primarily reflecting lower rates and vesselhigher utilization in Brazil and the North Sea and higher rates in the Gulf of Mexico and Brazil, offset in part by higher utilizationlower revenue on the Q7000. Revenues in West Africa. Our Brazil operations were on legacy contract ratesthe North Sea improved with Petrobras with near fullstrong winter season activity, generating 81% utilization during the first quarter 2021. However, during2023 as compared to the first quarter 2022, which generated 13% utilization. Revenues in the Gulf of Mexico benefitted from an improved day rate environment year over year, and revenues in Brazil increased primarily due to higher rates as both the Siem Helix 1 and the Siem Helix 2 operatedcommenced long-term contracts with improved rates at lower rates under the extended contract with Petrobras and incurred 23 days off contract during its five-year regulatory inspection, and the Siem Helix 1 was operating on a short-term accommodations project offshore Ghana at lower rates. The Q7000 was fully utilized in West Africa duringend of 2022. During the first quarter 2022 as compared2023, the Q7000 had 53 days of dry dock during which it generated no revenue and 37 days of paid transit and mobilization to 67% utilized during the first quarter 2021. Gulf of MexicoAsia Pacific for which all revenues were nominally changed from the prior year, with the Q5000’s higher-margin work on the legacy BP contract during the first quarter 2021 replaced by higher cost integrated projects during the first quarter 2022.have been deferred.

Our Robotics revenues increased by 69%32% for the three-month period ended March 31, 20222023 as compared to the same period in 2021,2022, primarily reflecting higher vesselROV and ROV activities. Charteredtrenching activities, offset in part by fewer vessel days year over year. ROV and trencher utilization increased to 56% in the first quarter 2023 from 35% during the first quarter 2022 and included 66 days of integrated vessel trenching in both periods as well as 90 days of stand-alone trencher activities during the first quarter 2023. While chartered vessel utilization remained relatively flat at 91% during the first quarter 2023 as compared to 90% during the first quarter 2022, chartered vessel days decreased to 295 days as compared to 323 days primarily due to fewer spot vessel days during the first quarter 2022 as compared to 165 days during the first quarter 2021, although vessel utilization was flat at 90% during both periods. Vessel days during the first quarter 2022 included 136 spot vessel days2023 performing seabed clearance work in the North Sea as compared to three spot vessel days during the first quarter 2021. ROV and trencher utilization increased to 35% in the first quarter 2022 from 24% during the first quarter 2021, although trenching days decreased to 66 days during the first quarter 2022 as compared to 72 days during the first quarter 2021.Sea.

Our Production FacilitiesShallow Water Abandonment revenues increased by 11% for the three-month period ended March 31, 2023 reflected revenues generated by Helix Alliance as a result of the Alliance acquisition on July 1, 2022 (Note 3) with 58% utilization across 20 vessels and 1,277 days of utilization across marketable P&A and coiled tubing systems during the quarter.

Our Production Facilities revenues for the three-month period ended March 31, 2023 increased by 14% as compared to the same period in 2021,2022, primarily reflecting higher oil and gas prices.production with the contribution from our interest in the Thunder Hawk Field acquired during the third quarter 2022 and improved rates on our HP I production contract.

Gross Profit (Loss). Our consolidated gross lossprofit was $18.6$15.2 million for the three-month period ended March 31, 20222023 as compared to consolidated gross profitloss of $14.6$18.6 million for the same period in 2021,2022, primarily reflecting decreasedincreased profitability in our Well Intervention and Production FacilitiesRobotics segments offset in part by increased profitability in our Roboticsas well as the addition of Shallow Water Abandonment segment.

Our Well Intervention segment hadgross loss for the three-month period ended March 31, 2023 was $4.4 million as compared to a gross loss of $28.4 million for the three-month period ended March 31, 2022 as compared to a gross profit of $8.7 million for the same period in 2021,2022, primarily reflecting lowerhigher segment revenues as well as lower margins in the Gulf of Mexico due to higher integrated project costs.revenues.

Our Robotics segment had a gross profit ofincreased by $3.5 million for the three-month period ended March 31, 20222023 as compared to a gross loss of $0.9 million for the same period in 2021,2022, primarily reflecting higher revenues due to increased ROV activity and atrenching activities.

Our Shallow Water Abandonment gross profit for the three-month period ended March 31, 2023 reflected results from Helix Alliance.

Our Production Facilities gross profit decreased by $0.8 million for the three-month period ended March 31, 2023 as compared to the same period in 2022, primarily reflecting higher numberoil and gas operating costs following the Thunder Hawk Field acquisition as compared to the same period in 2022.

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Table of vessel days.Contents

Acquisition and Integration Costs. Our acquisition and integration costs were $0.2 million for the three-month period ended March 31, 2023, reflecting Alliance acquisition related costs incurred during the first quarter 2023.

Change in Fair Value of Contingent Consideration. The $4.0 million change in fair value of contingent consideration for the three-month period ended March 31, 2023 reflected an increase in the estimated earn-out consideration payable to the seller in the Alliance transaction in 2024 primarily due to an improved outlook for Helix Alliance’s 2023 results (Notes 3 and 17).

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $14.4$19.6 million for the three-month period ended March 31, 20222023 as compared to $15.2$14.4 million for the same period in 2021,2022, primarily reflecting lowerhigher employee incentive compensation costs.

Net Interest Expense. Our net interest expense totaled $4.2 million for the three-month period ended March 31, 2023 as compared to $5.2 million for the same period in 2022, primarily reflecting the increase in interest income and the repayment of certain indebtedness (Note 6).

Other Income (Expense), Net. Net other expenseincome was $3.9$3.4 million for the three-month period ended March 31, 2023 as compared to net other expense of $3.9 million for the same period in 2022 primarily due to foreign currency transaction lossesgains (losses) reflecting the weakening of the British pound. Net other income was $1.6 million for the same period in 2021 primarily due to foreign currency transaction gains reflecting the strengthening (weakening) of the British pound.

Income Tax Provision.Provision (Benefit). Income tax provisionbenefit was $2.1$2.0 million for the three-month period ended March 31, 20222023 as compared to $0.1an income tax provision of $2.1 million for the same period in 2021.2022. The effective tax rates for the three-month periods ended March 31, 2023 and 2022 were 28.1% and 2021 were (5.4)% and (4.0)%, respectively. These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized (Note 6)7).

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Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Financial Condition and Liquidity

The following table presents certain information useful in the analysis of our financial condition and liquidity (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Net working capital

$

246,745

$

251,255

Long-term debt (1)

 

258,496

 

262,137

Liquidity

 

270,983

 

304,660

(1)Long-term debt is net of unamortized debt issuance costs. Current maturities of our long-term debt of $43.1 million and $42.9 million, respectively, are excluded from long-term debt. See Note 5 for information relating to our long-term debt.

March 31, 

December 31, 

    

2023

    

2022

Net working capital

$

161,323

$

162,634

Long-term debt

 

222,008

 

225,875

Liquidity

 

246,722

 

284,729

Net Working Capital

Net working capital is equal to current assets minus current liabilities. Itliabilities and includes current maturities of long-term debt. Net working capital measures short-term liquidity and operational efficiency and is important for predicting cash flow and debt requirements. Our

Long-Term Debt

Long-term debt in the table above is net working capital includesof unamortized debt issuance costs and excludes current maturities of $38.5 million at March 31, 2023 and $38.2 million at December 31, 2022. See Note 6 for information relating to our long-term debt.

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Table of Contents

Liquidity

We define liquidity as cash and cash equivalents, excluding restricted cash, plus available capacity under our credit facility. Our liquidity at March 31, 20222023 included $229.7$166.7 million of cash and cash equivalents and $41.2$80.0 million of available borrowing capacity under the Amended ABL Facility (Note 5)6) and excluded $72.9$2.5 million of restricted cash primarily related to a short-term project related letter of credit, the restriction from which is expected to be released upon completion of the project.cash. Our liquidity at December 31, 20212022 included $253.5$186.6 million of cash and cash equivalents and $51.1$98.1 million of available borrowing capacity under the Amended ABL Facility and excluded $73.6$2.5 million of short-term project related restricted cash. As of March 31, 2023, we had approximately $27.8 million in Nigerian Naira, which is subject to currency exchange controls established by the Central Bank of Nigeria. Those exchange controls have to date restricted our ability to convert our Nigerian Naira into U.S. dollars.

The COVID-19 pandemic impactedDuring 2022, we saw an improvement in the markets we serve as evidenced by increases in our operationsrevenues and gross profit. We expect continued improvements in our revenues. We responded by deferring or reducing planned capital expendituresoperating performance, increases in our cash position and operating costs duringhigh availability on the past two years. This spending is expected to return with our outlook of increased activity. Furthermore, we have convertible debt instruments and other term debt maturities during 2022 that we intend to settle in cash.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 service our debt over at least the next 12 months.

An ongoingA period of weak or continued decreases in, 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. At March 31, 2022, our available borrowing capacity under the ABL Facility was $41.2 million, net of $2.3 million of letters of credit issued under that facility. We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

On February 20, 2023, we announced that our Board authorized a new share repurchase program under which we are authorized to repurchase up to $200 million issued and outstanding shares of our common stock. The 2023 Repurchase Program has no set expiration date. Repurchases under the 2023 Repurchase Program are expected to be made through open market purchases in compliance with Rule 10b-18 under the Exchange Act, privately negotiated transactions or plans, instructions or contracts established under Rule 10b5-1 under the Exchange Act. The manner, timing and amount of any purchase will be determined by management based on an evaluation of market conditions, stock price, liquidity and other factors. The 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. The purchase of shares by us under the 2023 Repurchase Program is at our discretion and subject to prevailing financial and market conditions. Any repurchased shares are expected to be cancelled. During the three-month period ended March 31, 2023, we repurchased a total of 660,000 shares of our common stock for approximately $5.0 million pursuant to the 2023 Repurchase Program.

Cash Flows

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

Three Months Ended

March 31, 

    

2022

    

2021

Cash provided by (used in):

 

  

 

Operating activities

$

(17,413)

$

39,869

Investing activities

 

(623)

 

(1,329)

Financing activities

 

(5,408)

 

(59,885)

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Table of Contents

Three Months Ended

March 31, 

    

2023

    

2022

Cash provided by (used in):

 

  

 

Operating activities

$

(5,392)

$

(17,413)

Investing activities

 

(6,300)

 

(623)

Financing activities

 

(9,424)

 

(5,408)

Operating Activities

The decrease in our operating cash flowsoutflows for the three-month period ended March 31, 20222023 as compared to the same period in 20212022 primarily reflects lowerhigher earnings, offset in part by higher regulatory recertification costs for our vessels and systems and negative changes in nethigher working capital. Operating cash flows for the three-month periods ended March 31, 2022capital outflows. Regulatory recertification spend on our vessels and 2021 included the receipt of $1.1systems amounted to $17.2 million and $6.6$5.5 million, respectively, in income tax refunds related toduring the U.S. Coronavirus Aid, Relief, and Economic Security Act.comparable year over year periods.

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Table of Contents

Investing Activities

Cash flows used in investing activities for the three-month periods ended March 31, 2023 and 2022 and 2021 reflect the deferral or reduction of our plannedhigher capital expenditures as our response to the adverse impact to our operations as a result of the COVID-19 pandemic.increased activity levels.

Financing Activities

Net cash outflows from financing activities for the three-month period ended March 31, 2023 primarily reflect the $5.0 million repurchase of our common stock under the 2023 Repurchase Program and the principal repayment of $4.1 million related to the MARAD Debt. Net cash outflows from financing activities for the three-month period ended March 31, 2022 primarily reflect the principal repayment of $3.9 million related to the MARAD Debt (Note 5)6). Net cash outflows from financing activities for the three-month period ended March 31, 2021 primarily reflect the repayment of $58.2 million related to our indebtedness, including the final maturity of $53.6 million of the Nordea Q5000 Loan.

Material Cash Requirements

Our material cash requirements include our obligations to repay our long-term debt, satisfy other contractual cash commitments and fund other obligations.obligations, including the payment of the Alliance earn-out consideration to the seller in the Alliance transaction.

Long-term debt and other contractual commitments

The following table summarizes 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, 20222023 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 (in thousands). 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, 2022.2023. Our 2022 Notes, 2023 Notes and 2026 Notes have certain early redemption and conversion features that could affect the timing and amount of any cash requirements. Although upon conversion these notes are able to be settled in either cash or shares, we intend to settle their principal amounts in cash (Note 5)6).

    

Total

    

Short-Term

    

Long-Term

    

Total

    

Short-Term

    

Long-Term

MARAD debt

$

44,930

$

8,133

$

36,797

$

36,797

$

8,539

$

28,258

2022 Notes

 

35,000

 

35,000

 

2023 Notes

 

30,000

 

 

30,000

 

30,000

 

30,000

 

2026 Notes

 

200,000

 

 

200,000

 

200,000

 

 

200,000

Interest related to debt

 

62,148

 

17,362

 

44,786

 

45,058

 

16,207

 

28,851

Property and equipment

 

9,125

 

9,125

 

 

13,631

 

13,631

 

Operating leases (1)

 

308,370

 

99,767

 

208,603

 

395,212

 

126,475

 

268,737

Earn-out consideration (2)

 

46,746

 

 

46,746

Total cash obligations

$

689,573

$

169,387

$

520,186

$

767,444

$

194,852

$

572,592

(1)Operating leases include vessel charters and facility and equipment leases. At March 31, 2022,2023, our commitment related to long-term vessel charters totaled approximately $268.4$361.2 million, of which $111.8$147.7 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, 2022.2023.
(2)As part of the Alliance acquisition, we are required to make the earn-out payment to the seller in the Alliance transaction in 2024 in the event the Helix Alliance business achieves certain financial metrics in 2022 and 2023 (Note 3). Amount reflects the estimated fair value of the earn-out as of March 31, 2023 although the final earn-out payable is not capped.

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Other material cash requirements

Other material cash requirements include the following:

Decommissioning. We have decommissioning obligations associated with our oil and gas properties (Note 11)13). Those obligations, which are presented on a discounted basis on the condensed consolidated balance sheets, approximate $31.0$45.0 million (undiscounted) for Thunder Hawk Field oil and gas properties and $33.5 million (undiscounted) for Droshky oil and gas properties as of March 31, 2022 and are all2023, none of which is expected to be paid during the next 12 months. We are entitled to receive certain amounts$30.0 million (undiscounted) from Marathon Oil Corporation as thesecertain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Regulatory recertification and dry dock. Our Well Intervention vessels and intervention systems are subject to certain regulatory recertification requirements that must be satisfied in order for the vessels and intervention systems to operate. Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months. TheseAlthough the amount and timing of these costs canmay vary and are dependent on the timing of the certification renewal period, they generally range between $3.0 million to $15.0 million per vessel and $0.5 million to $5.0 million per intervention system. The timing of these costs can vary.

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.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our discussion and analysis of our financial condition and results of operations, as reflected in the condensed consolidated financial statements and related footnotes, are prepared in conformity with GAAP. As such, we are required to make certain estimates, judgments and assumptions that have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience, available information and various other assumptions we believe to be reasonable under the circumstances. These estimates involve a significant level of estimation uncertainty and may change over time as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. For information regarding our critical accounting estimates, see our “Critical Accounting Estimates” as disclosed in our 20212022 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2022,a multi-national organization, we were exposedare subject to market risks associated with foreign currency exchange rates. We had no exposure torates, interest rate risk as we had no outstanding debt subject to floating rates.rates and commodity prices.

Foreign Currency Exchange Rate Risk. Because we operate in various regions around the world, we conduct a portion of our business in currencies other than the U.S. dollar. As such, our earnings are impacted by movements in foreign currency exchange rates when (i) transactions are denominated in currencies other than the functional currency of the relevant Helix entity or (ii) the functional currency of our subsidiaries is not the U.S. dollar. In order to mitigate the effects of exchange rate risk in areas outside the U.S., we endeavor to pay a portion of our expenses in local currencies to partially offset revenues that are denominated in the same local currencies. In addition, a substantial portion of our contracts are denominated, and provide for collections from our customers, in U.S. dollars.

Assets and liabilities of our subsidiaries that do not have the U.S. dollar as their functional currency are translated using the exchange rates in effect at the balance sheet date, resultingand changes in the exchange rates can result in translation adjustments that are reflected in “Accumulated other comprehensive loss” in the shareholders’ equity section of our condensed consolidated balance sheets. For the three-month period ended March 31, 2022,2023, we recorded foreign currency translation lossesgains of $13.1$8.4 million to accumulated other comprehensive loss. Deferred taxes have not been provided on foreign currency translation adjustments as our non-U.S.the related undistributed earnings are permanently reinvested.

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When currencies other than the functional currency are to be paid or received, the resulting transaction gain or loss associated with changes in the applicable foreign currency exchange rate is recognized in the condensed consolidated statements of operations as a component of “Other income (expense), net.” Foreign currency gains or losses from the remeasurement of monetary assets and liabilities as well as unsettled foreign currency transactions, including intercompany transactions that are not of a long-term investment nature, are also recognized as a component of “Other income (expense), net.” For the three-month period ended March 31, 2022,2023, we recorded foreign currency transaction lossesgains of $3.9$3.4 million, primarily related to U.S. dollar denominated intercompany debt in our subsidiariesU.K. entities.

Interest Rate Risk. In order to maintain a cost-effective capital structure, we borrow funds using a mix of fixed and variable rate debt. For variable rate debt, changes in interest rates could affect our future interest expense and cash flows. Alternatively for fixed rate debt, changes in interest rates may not affect our interest expense, but could result in changes in the U.K.fair value of the debt instrument prior to maturity. We currently have no exposure to interest rate risks as we have no outstanding debt subject to floating rates. However, we may be at risk upon refinancing our debt.

Commodity Price Risk. We are exposed to market price risks related to oil and natural gas with respect to offshore oil and gas production in our Production Facilities business. Prices are volatile and unpredictable and are dependent on many factors beyond our control. See Item 1A.Risk Factors in our 2022 Form 10-K for a list of factors affecting oil and gas prices.

Item 4. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2022.2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 20222023 to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.

As disclosed in Note (3) to the unaudited condensed consolidated financial statements, we acquired Alliance on July 1, 2022. Helix Alliance’s total revenues constituted approximately 19.7% of total consolidated revenues as shown on our condensed consolidated statement of operations for the three-month period ended March 31, 2023. Helix Alliance’s total assets constituted approximately 8.7% of total consolidated assets as shown on our condensed consolidated balance sheet as of March 31, 2023. We excluded Helix Alliance’s disclosure controls and procedures that are subsumed by its internal control over financial reporting from the scope of management's assessment of the effectiveness of our disclosure controls and procedures. This exclusion is in accordance with the guidance issued by the Staff of the Securities and Exchange Commission that an assessment of recent business combinations may be omitted from management's assessment of internal control over financial reporting for one year following the acquisition. We are in the process of implementing financial reporting controls and procedures at Helix Alliance as part of our ongoing integration activities. Helix Alliance currently maintains separate accounting systems and is expected to convert to Helix’s accounting systems no later than June 30, 2023. The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q were prepared using information obtained from these separate accounting systems.

(b)  Changes in internal control over financial reporting. ThereExcept as described above, there have been no changes in our internal control over financial reporting that occurred during the quarterthree-month period ended March 31, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item 1, Note 12 — Litigation to the Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes during the period ended March 31, 2023 in our “Risk Factors” as discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

(c)

(c)

(d)

Total number

(d)

Total number

Approximate dollar

of shares

Maximum

of shares

value of shares

(a)

(b)

purchased as

number of shares

(a)

(b)

purchased as

that may yet be

Total number

Average

part of publicly

that may yet be

Total number

Average

part of publicly

purchased under the

of shares

price paid

announced

purchased under

of shares

price paid

announced plans

plans or programs (3)

Period

    

purchased (1)

    

per share

    

program

    

the program (2)

    

purchased (1)

    

per share

    

or programs (2)

    

(in thousands)

January 1 to January 31, 2022

 

488,718

$

3.12

 

 

9,183,183

February 1 to February 28, 2022

 

 

 

 

9,183,183

March 1 to March 31, 2022

 

 

 

 

9,183,183

January 1 to January 31, 2023

 

187,733

$

7.38

 

 

$

200,000

February 1 to February 28, 2023

 

 

 

 

200,000

March 1 to March 31, 2023

 

660,000

 

7.55

 

660,000

 

195,017

 

488,718

$

3.12

 

 

847,733

$

7.51

 

660,000

(1)IncludesShares purchased in January 2023 relate to shares forfeited in satisfaction of tax obligations upon vesting of share-based awards under our existing long-term incentive plans. Shares purchased in March 2023 relate to repurchases made in open-market transactions pursuant to the 2023 Repurchase Program as described in footnote (3) below.
(2)UnderRepresents shares repurchased under the terms2023 Repurchase Program.
(3)On February 20, 2023, we announced that our Board authorized a new share repurchase program under which we are authorized to repurchase up to $200 million issued and outstanding shares of our stock repurchase program, we maycommon stock. The 2023 Repurchase Program has no set expiration date. Concurrent with the authorization of the 2023 Repurchase Program, our Board revoked the prior authorization to repurchase shares of our common stock in an amount equal to any equity granted to our employees, officers and directors under our share-based compensation plans, including share-based awards under our existing long-term incentive plansplans. See Note 8 to this Quarterly Report on Form 10-Q and shares issuedNote 10 to our employees under our Employee Stock Purchase Plan (Note 9), and such shares increase the number of shares available2022 Annual Report on Form 10-K for repurchase. For additional information regarding our stockshare repurchase program, see Note 11 to our 2021 Form 10-K.programs.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number

    

Description

    

Filed or Furnished Herewith or Incorporated by Reference from the Following Documents (Registration or File Number)

3.1

2005 Amended and Restated Articles of Incorporation, as amended, of Helix Energy Solutions Group, Inc.

Exhibit 3.1 to the Current Report on Form 8-K filed on March 1, 2006 (000-22739)

3.2

Second Amended and Restated By-Laws of Helix Energy Solutions Group, Inc., as amended.

Exhibit 3.1 to the Current Report on Form 8-K filed on September 28, 2006 (001-32936)

4.1

Letter Agreement, dated as of January 25, 2023, to Loan, Security and Guaranty Agreement, among Helix Energy Solutions Group, Inc., Helix Well Ops Inc., Helix Robotics Solutions, Inc., Deepwater Abandonment Alternatives, Inc., Helix Well Ops (U.K.) Limited and Helix Robotics Solutions Limited as borrowers, the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as agent and security trustee for the lenders.

Exhibit 4.32 to the Annual Report on Form 10-K filed on February 24, 2023 (001-32936)

31.1

Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Owen Kratz, Chief Executive Officer.

Filed herewith

31.2

Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Erik Staffeldt, Chief Financial Officer.

Filed herewith

32.1

Certification of Helix’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.

Furnished herewith

101.INS

XBRL Instance Document.

The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    

HELIX ENERGY SOLUTIONS GROUP, INC.

(Registrant)

Date: April 27, 202226, 2023

By:

/s/ Owen Kratz

Owen Kratz

President and Chief Executive Officer

(Principal Executive Officer)

Date: April 27, 202226, 2023

By:

/s/ Erik Staffeldt

Erik Staffeldt

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

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