27/02/2025 - Helix Energy Solutions Group Inc.: Annual Report for Fiscal Year Ending December 31, 2024 (Form 10-K)

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

The following management's discussion and analysis should be read in conjunction with our historical consolidated financial statements located in Item 8. Financial Statements and Supplementary Data of this Annual Report. Any reference to Notes in the following management's discussion and analysis refers to the Notes to Consolidated Financial Statements located in Item 8. Financial Statements and Supplementary Data of this Annual Report. The results of operations reported and summarized below are not necessarily indicative of future operating results. This discussion also contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth under Item 1A. Risk Factors and located earlier in this Annual Report.

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 decommissioning operations. We operate through our four business segments: Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities. Our services are key in supporting a global energy transition by maximizing production of existing oil and gas reserves, decommissioning end-of-life oil and gas fields and supporting renewable energy developments.

Industry Influences and Market Environment

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the level of spending of offshore energy companies on operational activities and capital projects. The performance of our business is largely affected by the prevailing market prices for oil and natural gas, which are impacted by domestic and global economic conditions, hydrocarbon production and capacity, geopolitical issues, weather, global health, and various other factors. Demand for decommissioning is affected by commodity prices as well as governmental regulations and political forces globally.

Oil prices continue to be volatile but have generally remained robust during 2024. Global demand for oil continues to experience growth albeit at slower rates, and although we believe the current oil and gas pricing warrants continued customer spending for the industry, higher levels of economic and industry uncertainty may temper such customer spending. Factors that could threaten the current commodity price environment persist, including regional conflicts, governmental regulations, geopolitical instability and uncertainty, unrest in the Middle East, OPEC+ decisions, the global economy and the demand for oil and gas in China in particular, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy. We expect these factors will continue to contribute to commodity price volatility with the potential to temper customer spending for oil and gas projects.

We maximize production of existing 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.

In the current market environment, we continue to see oil and gas companies invest in long-cycle offshore exploration projects in addition to maintain and/or increase production from their existing reserves. As production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells in addition to their exploration activities.

Once end-of-life oil and gas wells have depleted their production, we decommission wells and infrastructure in our Well Intervention and Shallow Water Abandonment segments. Our operations service the life cycle of an oil and gas field and provide P&A and decommissioning services at the end of the life of a field as required by governmental regulations. We believe that our well intervention vessels have a competitive advantage in performing these services efficiently and with our suite of shallow water assets and capabilities, we are the only provider capable of providing all facets of decommissioning services in the U.S. Gulf Coast shelf. The demand for P&A services should grow over the mid- to long-term as the subsea tree base expands, as government regulations continue to place stronger emphasis on decommissioning aged wells worldwide (including subsea trees as well as mature dry tree wells in the shallow waters of the U.S. Gulf Coast), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

We support the energy transition to renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, primarily including subsea cable trenching and burial as well as seabed clearance and preparation services. Demand for our services in the renewable energy market is affected by various factors, including the pace of consumer shift towards renewable energy sources, global electricity demand, technological advancements that increase the generation and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water and other regions, and government subsidies for renewable energy projects and/or other governmental regulations supporting or restricting renewable energy developments, for instance, the 2025 Wind Energy Ban. We expect growth in our renewables services as the global energy market continues offshore renewable energy developments.

Business Activity Summary

During 2024, our operating results improved significantly as we continued to execute on our energy transition strategy with significant improvements in utilization and rates in our Well Intervention and Robotics segments. During 2024, we also executed significant new contracts on the strength of the market and the demand for our services. These contracts added significant backlog and will provide strong utilization for our vessels and equipment over multiple years. Notable contracts include:

●

Six-month contract with options on the Q4000in Nigeria, which commenced in the fourth quarter 2024;

●

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

●

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

●

Two-year contract with Shell in the U.S. Gulf Coast on the Q5000for a minimum of 175 days per year;

●

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

●

Extension of our contract with Shell in Brazil on the Q7000to a minimum of 400 days.

​

During 2024, we extended the charters on the Siem Helix 1, the Siem Helix 2, the Grand Canyon II and the Shelia Bordelon. We also entered in or extended various facility leases across all regions.

We completed the redemption of the Convertible Senior Notes due 2026 (the "2026 Notes") during the first quarter 2024. In August 2024, we extended the maturity of the Amended ABL Facility to August 2029 and increased the letter of credit basket size in order to facilitate increased bonding needs on the Q4000 Nigeria campaign and various windfarm projects. We maintain our capital allocation policy of maintaining low levels of Net Debt, maintaining our existing assets, investing in targeted acquisitions that complement and further our strategy, and using Free Cash Flow to return cash to shareholders through share repurchases (See "Results of Operations - Non-GAAP Financial Measures" below for definitions of Net Debt and Free Cash Flow).

Backlog

Our backlog is represented by signed contracts. As of December 31, 2024, our consolidated backlog totaled $1.4 billion, of which $681 million is expected to be performed in 2025. As of December 31, 2024, our various contracts with Shell and ExxonMobil globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with Talos in the U.S. Gulf Coast represented approximately 90% of our total backlog. As of December 31, 2023, our consolidated backlog totaled $850 million. 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.

Outlook

In 2025, we expect to continue our strong performance, supported by new contracting in 2024 at improved rates that increased backlog and driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market. We expect the demand for shallow water decommissioning services in the U.S. Gulf Coast to improve as oil and gas properties revert to former owners due to bankruptcies, who are expected to address their decommissioning obligations.

RESULTS OF OPERATIONS

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 U.S. generally accepted accounting principles ("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 evaluate our operating performance and financial condition based on EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt. EBITDA, Adjusted EBITDA, 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, 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, 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, Free Cash Flow and Net Debt differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA, 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 data prepared in accordance with GAAP.

We define EBITDA as earnings before income taxes, net interest expense, gains and losses on equity investments, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses related to convertible senior notes, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from asset sales and insurance recoveries (related to property and equipment), if any. Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents. In the following reconciliations, we provide amounts as reflected in the consolidated financial statements unless otherwise noted.

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

​

​	​	​	​	​	​	​	​	​	​
​		Year Ended December 31,
​	​	2024			2023			2022
Net income (loss)	​	$	55,637	​	$	(10,838)	​	$	(87,784)
Adjustments:	​			​			​
Income tax provision	​		26,427	​		18,352	​		12,603
Net interest expense	​		22,629	​		17,338	​		18,950
Other expense, net	​		3,922	​		3,590	​		23,330
Depreciation and amortization	​		173,292	​		164,116	​		142,686
Gain on equity investment	​		-	​		-	​		(8,262)
EBITDA	​		281,907	​		192,558	​		101,523
Adjustments:	​			​			​
(Gain) loss on disposition of assets, net	​		479	​		(367)	​		-
Acquisition and integration costs	​	​	-	​	​	540	​	​	2,664
Change in fair value of contingent consideration	​	​	-	​	​	42,246	​	​	16,054
General provision (release) for current expected credit losses	​		(161)	​		1,149	​		781
Losses related to convertible senior notes	​		20,922	​		37,277	​		-
Adjusted EBITDA	​	$	303,147	​	$	273,403	​	$	121,022

​

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

​

​	​	​	​	​	​	​	​	​	​
​		Year Ended December 31,
​		2024			2023			2022
Cash flows from operating activities	​	$	186,028	​	$	152,457	​	$	51,108
Less: Capital expenditures, net of proceeds from asset sales and insurance recoveries	​		(22,840)	​		(18,659)	​		(33,504)
Free Cash Flow	​	$	163,188	​	$	133,798	​	$	17,604

​

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

​

​	​	​	​	​	​	​
​		December 31,
​		2024			2023
Long-term debt including current maturities	​	$	315,157	​	$	361,722
Less: Cash and cash equivalents	​		(368,030)	​		(332,191)
Net Debt	​	$	(52,873)	​	$	29,531

​

Comparison of Years Ended December 31, 2024 and 2023

We have four reportable business segments: Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities. All material intercompany transactions between the segments have been eliminated in our consolidated financial statements, including our consolidated results of operations. The following table details various financial and operational highlights for the periods presented (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended December 31,

​

Increase/(Decrease)

​

2024

2023

Amount

Percent

Net revenues -

​

​

​

​

Well Intervention

​

$

829,862

​

$

707,718

​

$

122,144

17

%

Robotics

​

297,678

​

257,875

​

39,803

15

%

Shallow Water Abandonment

​

186,979

​

274,954

​

(87,975)

(32)

%

Production Facilities

​

88,709

​

87,885

​

824

1

%

Intercompany eliminations

​

(44,668)

​

(38,704)

​

(5,964)

​

​

​

​

$

1,358,560

​

$

1,289,728

​

$

68,832

5

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross profit (loss) -

​

​

​

​

Well Intervention

​

$

110,612

​

$

47,164

​

$

63,448

135

%

Robotics

​

88,287

​

60,618

​

27,669

46

%

Shallow Water Abandonment

​

(777)

​

71,261

​

(72,038)

(101)

%

Production Facilities

​

23,766

​

23,494

​

272

1

%

Corporate, eliminations and other

​

(2,324)

​

(2,181)

​

(143)

​

​

​

$

219,564

​

$

200,356

​

$

19,208

10

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross margin -

​

​

​

​

Well Intervention

​

13

%

7

%

​

Robotics

​

30

%

24

%

​

Shallow Water Abandonment

​

(0)

%

26

%

​

Production Facilities

​

27

%

27

%

​

Total company

​

16

%

16

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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

​

​

​

​

Well Intervention vessels

​

7 / 90

%

7 / 88

%

​

Robotics assets (3)

​

47 / 69

%

46 / 62

%

​

Chartered Robotics vessels

​

6 / 92

%

6 / 96

%

​

Shallow Water Abandonment vessels (4)

​

20 / 60

%

20 / 74

%

​

Shallow Water Abandonment systems (5)

​

26 / 24

%

26 / 70

%

​

(1)

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

(2)

Represents the average utilization rate, which is calculated by dividing the total number of days the vessels, Robotics assets or Shallow Water Abandonment systems generated revenues by the total number of calendar days in the applicable period. Utilization rates of chartered Robotics vessels in 2024 and 2023 included 371 and 310 spot vessel days, respectively, at near full utilization.

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

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

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

​

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

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,					​	Increase/
​		2024			2023			(Decrease)
Well Intervention	​	$	6,390	​	$	3,353	​	$	3,037
Robotics	​		38,039	​		35,263	​		2,776
Shallow Water Abandonment	​		239	​		88	​		151
​	​	$	44,668	​	$	38,704	​	$	5,964

​

Net Revenues. Our consolidated net revenues increased by 5% in 2024 as compared to 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Our Well Intervention revenues increased by 17% in 2024 as compared to 2023, primarily reflecting higher overall utilization and rates. Utilization increased on the Q4000 and the Q5000 during 2024 as both vessels underwent their regulatory dry docks in 2023. The Q7000 had higher utilization and higher integrated project rates during 2024 as compared to 2023. The Seawell's contract in the western Mediterranean, which completed in June 2024, has provided higher rates and utilization during 2024 as compared to 2023. The Well Enhancer in the North Sea had lower utilization as compared to the prior year as the vessel underwent a scheduled dry dock during the first quarter 2024 and both vessels saw a fourth quarter seasonal slowdown in 2024 whereas the vessels were nearly fully utilized in 2023. Our North Sea revenues also included a contract cancellation fee of approximately $14 million related to work that had been scheduled for 2025. The Siem Helix 1 had higher revenues during 2024 as compared to 2023 due to Trident contract extensions with higher rates. The Siem Helix 2 had lower utilization during 2024 as the vessel commenced its unpaid vessel acceptance period at the end of December 2024 on its new contract with Petrobras.

Our Robotics revenues increased by 15% in 2024 as compared to 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities. Chartered vessel activity increased to 1,901 days during 2024 as compared to 1,699 days during 2023, although chartered vessel days in 2024 included approximately 64 days of standby utilization at reduced rates. Overall ROV and trencher utilization increased to 69% in 2024 from 62% during 2023 and included 835 days of integrated vessel trenching in 2024 as compared to 807 days in 2023.

Our Shallow Water Abandonment revenues in 2024 decreased by 32% in 2024 as compared to 2023. The decrease in revenues was due to lower activity levels and an overall softer U.S. Gulf Coast shelf market in 2024, resulting in lower vessel and system utilization during 2024 as compared to 2023. Overall vessel utilization was 60% during 2024 as compared to 74% during 2023. P&A systems and CT systems achieved 2,281 days of utilization, or 24%, during 2024 as compared to 5,748 days of utilization, or 70%, during 2023.

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

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

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

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

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

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

Change in Fair Value of Contingent Consideration. The change in fair value of contingent consideration reflects an improvement in Helix Alliance's results during 2023. We entered into an agreement and set the final earnout during the fourth quarter 2023, which was paid on April 3, 2024 (Note 3).

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

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

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

Other Expense, Net. Net other expense was $3.9 million in 2024 as compared to $3.6 million in 2023. Net other expense during 2024 primarily reflects a $2.4 million increase in the value of incentive credits granted to the seller of P&A equipment acquired in 2023 (Note 4) and foreign currency losses due to the weakening of the British pound and Brazilian real in 2024. Net other expense during 2023 primarily reflects foreign currency losses related to the devaluation of the Nigerian naira on our naira cash holdings, offset in part by foreign currency gains due to the strengthening of the British pound in 2023.

Income Tax Provision. Income tax provision was $26.4 million for 2024 as compared to $18.4 million for 2023. The effective tax rates for 2024 and 2023 were 32.2% and 244.2%, respectively. These variances were primarily attributable to the increase in income before taxes as well as the earnings mix between our higher and lower tax rate jurisdictions.

Comparison of Years Ended December 31, 2023 and 2022

Various financial and operational highlights for the years ended December 31, 2023 and 2022 were previously presented in our 2023 Annual Report on Form 10-K.

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):

​

​	​	​	​	​	​	​
​	​	December 31,
​		2024			2023
Net working capital	​	$	405,266	​	$	249,223
Long-term debt (excluding current maturities)	​		305,971	​		313,430
Liquidity	​		429,586	​		431,471

​

Net Working Capital

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents, current maturities of long-term debt and current operating lease liabilities. Net working capital measures short-term liquidity and is important for predicting cash flow and debt requirements. Net working capital at December 31, 2023 included $85.0 million of Alliance earnout consideration that was paid in cash on April 3, 2024.

Long-Term Debt

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.2 million and $48.3 million, respectively, at December 31, 2024 and 2023. For information relating to our long-term debt, see Note 7 to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report.

Liquidity

We define liquidity as cash and cash equivalents plus available capacity under our credit facility, but excluding cash pledged as collateral toward the Amended ABL Facility. Our liquidity at December 31, 2024 included $368.0 million of cash and cash equivalents and $66.6 million of available borrowing capacity under the Amended ABL Facility (Note 7) and excluded $5.0 million of pledged cash. Our liquidity at December 31, 2023 included $332.2 million of cash and cash equivalents and $99.3 million of available borrowing capacity under the Amended ABL Facility. The reduction in availability on the facility at December 31,2024 was attributable to higher letter of credit usage in order to support the Nigeria project on the Q4000.

In the current market environment, we expect strong ongoing operating performance and cash flows. We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and expected capital spending, service our debt and other obligations, and execute our share repurchase program over at least the next 12 months. Although we expect lower levels of availability on the Amended ABL Facility while the Q4000 performs work in Nigeria due to fewer eligible receivables and higher letter of credit usage, we currently do not anticipate borrowing under the Amended ABL Facility and expect to only use the facility for the issuance of letters of credit.

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

Cash Flows

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

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2024			2023		​	2022
Cash provided by (used in):		​			​	​	​	​
Operating activities	​	$	186,028	​	$	152,457	​	$	51,108
Investing activities	​		(22,840)	​		(18,659)	​	​	(138,289)
Financing activities	​		(125,310)	​		25,109	​	​	(44,844)

​

Operating Activities

The increase in our operating cash flows for 2024 as compared to 2023 primarily reflects higher operating income, lower regulatory recertification costs for our vessels and systems and working capital inflows. Operating cash outflows during 2024 included net interest expense and taxes paid of $25.4 million and $14.1 million, respectively. Operating cash outflows during 2024 also included $58.3 million of the $85.0 million earnout payment on April 3, 2024, representing the amount in the excess of the $26.7 million initial fair value of earnout consideration at the Alliance acquisition date. Regulatory recertification spend on our vessels and systems amounted to $35.4 million and $62.5 million, respectively, during the comparable year over year periods.

Investing Activities

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

Financing Activities

Net cash outflows from financing activities for 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, $26.7 million of the $85.0 million earnout payment, the principal repayment of $8.7 million related to the MARAD Debt and $29.6 million in repurchases of our common stock under the 2023 Repurchase Program. These outflows were offset in part by $4.4 million of cash inflows from the proportionate settlement of the 2026 Capped Calls.

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

Material Cash Requirements

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

Long-term debt and other contractual commitments

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment and operating lease obligations, as of December 31, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities. Our property and equipment commitments include contractually committed amounts to purchase and service certain property and equipment (inclusive of commitments related to regulatory recertification and dry dock as discussed below) but do not include expected capital spending that is not contractually committed as of December 31, 2024.

​

​	​	​	​	​	​	​	​	​	​
​		Total			Short-Term			Long-Term
MARAD debt	​	$	23,831	​	$	9,186	​	$	14,645
2029 Notes	​		300,000	​		-	​		300,000
Interest related to debt	​		124,627	​		31,038	​		93,589
Property and equipment	​		13,842	​		13,842	​		-
Operating leases (1)	​		870,984	​		154,324	​		716,660
Total cash obligations	​	$	1,333,284	​	$	208,390	​	$	1,124,894

(1)

Operating leases include vessel charters and facility and equipment leases, including commitments related to leases executed but not yet commenced. At December 31, 2024, our commitment related to long-term vessel charters totaled approximately $835.5 million, of which $434.3 million was related to the non-lease (services) components that are not included in operating lease liabilities in the consolidated balance sheet as of December 31, 2024.

​

Other material cash requirements

Other material cash requirements include the following:

Decommissioning. We have decommissioning obligations associated with our oil and gas properties (Note 15). Those obligations, which are presented on a discounted basis on the consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of December 31, 2024, none of which is expected to be paid during the next 12 months. We are entitled to receive $30.0 million (undiscounted) from Marathon Oil Corporation as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Regulatory certification and dry dock. Our vessels and systems are subject to certain regulatory recertification requirements that must be satisfied in order for the vessels and systems to operate. Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months. Although the amount and timing of these costs may vary and are dependent on the timing of the certification renewal period, they generally range between $0.2 million to $15.0 million per vessel and $0.5 million to $5.0 million per system.

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

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our discussion and analysis of our financial condition and results of operations, as reflected in the consolidated financial statements and related footnotes included in Item 8. Financial Statements and Supplementary Data of this Annual Report, 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. We believe that the most critical accounting estimates are described below. See Note 2 to our consolidated financial statements for a detailed discussion on the application of our accounting policies.

Property and Equipment

We review our property and equipment for impairment indicators at least quarterly or whenever changes in facts and circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. We evaluate impairment indicators considering the nature of the asset or asset group, the future economic benefits of the asset or asset group, historical and estimated future profitability measures, and other external market conditions or factors that may be present. We often estimate future earnings and cash flows of our assets to corroborate our determination of whether impairment indicators exist. If impairment indicators suggest that the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred by estimating undiscounted cash flows of the asset and comparing those cash flows to the asset's carrying value. If the undiscounted cash flows are less than the asset's carrying value (i.e., the asset is unrecoverable), impairment, if any, is recognized for the difference between the asset's carrying value and its estimated fair value. The expected future cash flows used for the assessment of recoverability are based on judgmental assessments of operating costs, project margins and capital project spending, considering information available at the date of review. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is typically determined based on the present values of expected future cash flows using discount rates believed to be consistent with those used by principal market participants or based on a multiple of operating cash flows validated with historical market transactions of similar assets where possible.

The review of property and equipment for impairment indicators, the projection of future cash flows of property and equipment, and the estimated fair value of any property and equipment that may be deemed unrecoverable involve significant judgment and estimation by our management. Changes to those judgments and estimations could require us to recognize impairment charges in the future.

New Accounting Standards

For discussion on the potential impact of new accounting standards issued but not yet adopted, see Note 2 to our consolidated financial statements.

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