UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

~~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, ~~2020~~2021



☐		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

~~001-32936~~

HELIX ENERGY SOLUTIONS GROUP, INC.

(Exact name of registrant as specified in its charter)


Minnesota			95-3409686
~~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
HoustonTexas	~~Texas~~		77043
(Address of principal executive offices)		(Zip Code)

(281) 618–0400

(~~Registrant's~~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	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 ☑þ No

As of April ~~17, 2020, 150,005,466~~22, 2021, 150,723,988 shares of common stock were outstanding.

Table of Contents

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	PAGE
~~PART I.~~	~~FINANCIAL INFORMATION~~	~~PAGE~~
Item 1.	Financial Statements:	3
~~Item 1.~~	~~Financial Statements:~~

	Condensed Consolidated Balance Sheets – March 31, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	3

	Condensed Consolidated Statements of Operations (Unaudited) – Three months ended March 31, ~~2020~~2021 and ~~2019~~2020	4

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ (Unaudited) – Three months ended March 31, ~~2020~~2021 and ~~2019~~2020	5

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Three months ended March 31, ~~2020~~2021 and ~~2019~~2020	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, ~~2020~~2021 and ~~2019~~2020	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29 26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40 37

Item 4.	Controls and Procedures	40 38

PART II.	OTHER INFORMATION	38

Item 1.	Legal Proceedings	41 38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42 38

Item 6.	Exhibits	42 39

	Signatures	43 40

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31,
2020 December 31,
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 159,351
$ 208,431
Restricted cash 52,374
54,130
Accounts receivable, net of allowance for credit losses of $1,371 and $0, respectively 147,120
125,457
Other current assets 71,755
50,450
Total current assets 430,600
438,468
Property and equipment 2,880,657
2,922,274
Less accumulated depreciation (1,070,733 ) (1,049,637 )
Property and equipment, net 1,809,924
1,872,637
Operating lease right-of-use assets 187,553
201,118
Other assets, net 86,074
84,508
Total assets $ 2,514,151
$ 2,596,731

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 90,425
$ 69,055
Accrued liabilities 45,227
62,389
Current maturities of long-term debt 90,837
99,731
Current operating lease liabilities 53,063
53,785
Total current liabilities 279,552
284,960
Long-term debt 303,584
306,122
Operating lease liabilities 137,411
151,827
Deferred tax liabilities 104,930
112,132
Other non-current liabilities 36,286
38,644
Total liabilities 861,763
893,685
Redeemable noncontrolling interests 3,323
3,455
Shareholders’ equity:

Common stock, no par, 240,000 shares authorized, 149,962 and 148,888 shares issued, respectively 1,316,401
1,318,961
Retained earnings 430,726
445,370
Accumulated other comprehensive loss (98,062 ) (64,740 )
Total shareholders’ equity
1,649,065
1,699,591
Total liabilities, redeemable noncontrolling interests and shareholders’ equity
$ 2,514,151
$ 2,596,731


	March 31,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	204,802	$	291,320
Restricted cash		65,579		—
Accounts receivable, net of allowance for credit losses of $1,665 and $3,469, respectively		132,314		132,233
Other current assets		86,242		102,092
Total current assets		488,937		525,645
Property and equipment		2,956,804		2,948,907
Less accumulated depreciation		(1,197,712)		(1,165,943)
Property and equipment, net		1,759,092		1,782,964
Operating lease right-of-use assets		136,210		149,656
Other assets, net		37,510		40,013
Total assets	$	2,421,749	$	2,498,278

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	55,148	$	50,022
Accrued liabilities		76,486		87,035
Current maturities of long-term debt		36,478		90,651
Current operating lease liabilities		50,321		51,599
Total current liabilities		218,433		279,307
Long-term debt		299,560		258,912
Operating lease liabilities		88,576		101,009
Deferred tax liabilities		100,655		110,821
Other non-current liabilities		3,105		3,878
Total liabilities		710,329		753,927
Redeemable noncontrolling interests		3,960		3,855
Shareholders’ equity:
Common stock, 0 par, 240,000 shares authorized, 150,715 and 150,341 shares issued, respectively		1,286,380		1,327,592
Retained earnings		468,087		464,524
Accumulated other comprehensive loss		(47,007)		(51,620)
Total shareholders’ equity		1,707,460		1,740,496
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	2,421,749	$	2,498,278

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

Table of Contents

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2021		2020
Net revenues	$	163,415	$	181,021
Cost of sales		148,791		179,011
Gross profit		14,624		2,010
Goodwill impairment		—		(6,689)
Selling, general and administrative expenses		(15,179)		(16,348)
Loss from operations		(555)		(21,027)
Net interest expense		(6,053)		(5,746)
Other income (expense), net		1,617		(10,427)
Royalty income and other		2,057		2,179
Loss before income taxes		(2,934)		(35,021)
Income tax provision (benefit)		116		(21,093)
Net loss		(3,050)		(13,928)
Net loss attributable to redeemable noncontrolling interests		(172)		(1,990)
Net loss attributable to common shareholders	$	(2,878)	$	(11,938)

Loss per share of common stock:
Basic	$	(0.02)	$	(0.09)
Diluted	$	(0.02)	$	(0.09)

Weighted average common shares outstanding:
Basic		149,935		148,863
Diluted		149,935		148,863

Three Months Ended
March 31,
2020 2019

Net revenues $ 181,021
$ 166,823
Cost of sales 179,011
150,569
Gross profit 2,010
16,254
Goodwill impairment (6,689 ) —
Selling, general and administrative expenses (16,348 ) (15,985 )
Income (loss) from operations (21,027 ) 269
Equity in losses of investment (20 ) (40 )
Net interest expense (5,746 ) (2,098 )
Other income (expense), net (10,427 ) 1,166
Royalty income and other 2,199
2,345
Income (loss) before income taxes (35,021 ) 1,642
Income tax provision (benefit) (21,093 ) 324
Net income (loss) (13,928 ) 1,318
Net loss attributable to redeemable noncontrolling interests (1,990 ) —
Net income (loss) attributable to common shareholders $ (11,938 ) $ 1,318

Earnings (loss) per share of common stock:
Basic $ (0.09 ) $ 0.01
Diluted $ (0.09 ) $ 0.01

Weighted average common shares outstanding:
Basic 148,863
147,421
Diluted 148,863
147,751

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

Table of Contents

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(UNAUDITED)

(in thousands)

Three Months Ended
March 31,
2020 2019

Net income (loss) $ (13,928 ) $ 1,318
Other comprehensive income (loss), net of tax:
Net unrealized loss on hedges arising during the period (96 ) (149 )
Reclassifications to net (income) loss 427
1,846
Income taxes on hedges (66 ) (342 )
Net change in hedges, net of tax 265
1,355
Foreign currency translation gain (loss) (33,587 ) 2,802
Other comprehensive income (loss), net of tax (33,322 ) 4,157
Comprehensive income (loss) (47,250 ) 5,475
Less comprehensive loss attributable to redeemable noncontrolling interests:
Net loss (1,990 ) —
Foreign currency translation loss (228 ) —
Comprehensive loss attributable to redeemable noncontrolling interests (2,218 ) —
Comprehensive income (loss) attributable to common shareholders $ (45,032 ) $ 5,475


	Three Months Ended
	March 31,
	2021		2020
Net loss	$	(3,050)	$	(13,928)
Other comprehensive income (loss), net of tax:
Net unrealized loss on hedges arising during the period		—		(96)
Reclassifications into earnings		—		427
Income taxes on hedges		—		(66)
Net change in hedges, net of tax		—		265
Foreign currency translation gain (loss)		4,613		(33,587)
Other comprehensive income (loss), net of tax		4,613		(33,322)
Comprehensive income (loss)		1,563		(47,250)
Less comprehensive loss attributable to redeemable noncontrolling interests:
Net loss		(172)		(1,990)
Foreign currency translation gain (loss)		36		(228)
Comprehensive loss attributable to redeemable noncontrolling interests		(136)		(2,218)
Comprehensive income (loss) attributable to common shareholders	$	1,699	$	(45,032)

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

Table of Contents

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

Common Stock
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Shareholders’
Equity

Redeemable
Noncontrolling
Interests
Shares Amount

Balance, December 31, 2019 148,888
$ 1,318,961
$ 445,370
$ (64,740 ) $ 1,699,591
$ 3,455
Net loss —
—
(11,938 ) —
(11,938 ) (1,990 )
Expected credit losses recognized in retained earnings upon adoption of ASU 2016-13 —
—
(620 ) —
(620 ) —
Foreign currency translation adjustments —
—
—
(33,587 ) (33,587 ) (228 )
Unrealized gain on hedges, net of tax —
—
—
265
265
—
Accretion of redeemable noncontrolling interests —
—
(2,086 ) —
(2,086 ) 2,086
Activity in company stock plans, net and other 1,074
(4,730 ) —
—
(4,730 ) —
Share-based compensation —
2,170
—
—
2,170
—
Balance, March 31, 2020 149,962
$ 1,316,401
$ 430,726
$ (98,062 ) $ 1,649,065
$ 3,323

Common Stock
Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Shareholders’
Equity

Redeemable
Noncontrolling
Interests
Shares Amount

Balance, December 31, 2018 148,203
$ 1,308,709
$ 383,034
$ (73,964 ) $ 1,617,779
$ —
Net income —
—
1,318
—
1,318
—
Reclassification of deferred gain from sale and leaseback transaction to retained earnings —
—
4,560
—
4,560
—
Foreign currency translation adjustments —
—
—
2,802
2,802
—
Unrealized gain on hedges, net of tax —
—
—
1,355
1,355
—
Activity in company stock plans, net and other 582
(659 ) —
—
(659 ) —
Share-based compensation —
2,688
—
—
2,688
—
Balance, March 31, 2019 148,785
$ 1,310,738
$ 388,912
$ (69,807 ) $ 1,629,843
$ —


						Accumulated
						Other		Total		Redeemable
	Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling
	Shares	Amount		Earnings		Loss		Equity		Interests
Balance, December 31, 2020	150,341	$	1,327,592	$	464,524	$	(51,620)	$	1,740,496	$	3,855
Net loss	—		—		(2,878)		—		(2,878)		(172)
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
Accretion of redeemable noncontrolling interests	—		—		(241)		—		(241)		241
Activity in company stock plans, net and other	374		(1,600)		—		—		(1,600)		—
Share-based compensation	—		1,844		—		—		1,844		—
Balance, March 31, 2021	150,715	$	1,286,380	$	468,087	$	(47,007)	$	1,707,460	$	3,960


						Accumulated
						Other		Total		Redeemable
	Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling
	Shares	Amount		Earnings		Loss		Equity		Interests
Balance, December 31, 2019	148,888	$	1,318,961	$	445,370	$	(64,740)	$	1,699,591	$	3,455
Net loss	—		—		(11,938)		—		(11,938)		(1,990)
Credit losses recognized in retained earnings upon adoption of ASU No. 2016-13	—		—		(620)		—		(620)		—
Foreign currency translation adjustments	—		—		—		(33,587)		(33,587)		(228)
Unrealized gain on hedges, net of tax	—		—		—		265		265		—
Accretion of redeemable noncontrolling interests	—		—		(2,086)		—		(2,086)		2,086
Activity in company stock plans, net and other	1,074		(4,730)		—		—		(4,730)		—
Share-based compensation	—		2,170		—		—		2,170		—
Balance, March 31, 2020	149,962	$	1,316,401	$	430,726	$	(98,062)	$	1,649,065	$	3,323

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

Table of Contents

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(3,050)	$	(13,928)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		34,566		31,598
Goodwill impairment		—		6,689
Amortization of debt discounts		—		1,633
Amortization of debt issuance costs		810		833
Share-based compensation		1,904		2,259
Deferred income taxes		(892)		(6,517)
Unrealized gain on derivative contracts, net		—		(601)
Unrealized foreign currency (gain) loss		(951)		9,237
Changes in operating assets and liabilities:
Accounts receivable, net		(463)		(25,375)
Income tax receivable		6,256		(17,033)
Other current assets		9,361		(5,475)
Accounts payable and accrued liabilities		(4,881)		15,563
Other, net		(2,791)		(16,105)
Net cash provided by (used in) operating activities		39,869		(17,222)

Cash flows from investing activities:
Capital expenditures		(1,329)		(12,389)
Net cash used in investing activities		(1,329)		(12,389)

Cash flows from financing activities:
Repayment of Term Loan		(875)		(875)
Repayment of Nordea Q5000 Loan		(53,572)		(8,929)
Repayment of MARAD Debt		(3,734)		(3,556)
Debt issuance costs		(43)		(212)
Payments related to tax withholding for share-based compensation		(1,878)		(5,150)
Proceeds from issuance of ESPP shares		217		331
Net cash used in financing activities		(59,885)		(18,391)

Effect of exchange rate changes on cash and cash equivalents and restricted cash		406		(2,834)
Net decrease in cash and cash equivalents and restricted cash		(20,939)		(50,836)
Cash and cash equivalents and restricted cash:
Balance, beginning of year		291,320		262,561
Balance, end of period	$	270,381	$	211,725

Three Months Ended
March 31,
2020 2019
Cash flows from operating activities:
Net income (loss) $ (13,928 ) $ 1,318
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 31,598
28,509
Goodwill impairment 6,689
—
Amortization of debt discounts 1,633
1,513
Amortization of debt issuance costs 833
902
Share-based compensation 2,259
2,719
Deferred income taxes (6,517 ) (10 )
Equity in losses of investment 20
40
Unrealized gain on derivative contracts, net (601 ) (829 )
Unrealized foreign currency (gain) loss 9,237
(1,128 )
Changes in operating assets and liabilities:
Accounts receivable, net (25,375 ) (22,584 )
Income tax receivable (17,033 ) (2,370 )
Other current assets (5,475 ) (13,129 )
Accounts payable and accrued liabilities 15,543
(15,899 )
Other, net (16,105 ) (13,298 )
Net cash used in operating activities (17,222 ) (34,246 )

Cash flows from investing activities:
Capital expenditures (12,389 ) (11,655 )
Proceeds from sale of assets —
25
Other —
(326 )
Net cash used in investing activities (12,389 ) (11,956 )

Cash flows from financing activities:
Repayment of term loans (875 ) (936 )
Repayment of Nordea Q5000 Loan (8,929 ) (8,929 )
Repayment of MARAD Debt (3,556 ) (3,387 )
Debt issuance costs (212 ) (113 )
Payments related to tax withholding for share-based compensation (5,150 ) (826 )
Proceeds from issuance of ESPP shares 331
136
Net cash used in financing activities (18,391 ) (14,055 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash (2,834 ) 821
Net decrease in cash and cash equivalents and restricted cash (50,836 ) (59,436 )
Cash and cash equivalents and restricted cash:
Balance, beginning of year 262,561
279,459
Balance, end of period $ 211,725
$ 220,023

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

Table of Contents

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 have been prepared pursuant to 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 ~~2019~~2020 Annual Report on Form 10-K (our ~~“2019~~“2020 Form 10-K”) with the exception of the impact of early adopting ~~the new credit loss accounting standard in 2020~~Accounting Standards Update (“ASU”) No. 2020-06 on a modified retrospective basis beginning January 1, 2021 (see below). 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 and statements of cash flows, as applicable. The operating results for the three-month period ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021. Our balance sheet as of December 31, ~~2019~~2020 included herein has been derived from the audited balance sheet as of December 31, ~~2019~~2020 included in our ~~2019~~2020 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual ~~audited~~ consolidated financial statements and notes thereto included in our ~~2019~~2020 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.

~~COVID-19~~

New accounting standards

In ~~March~~August 2020, the ~~World Health Organization classified~~FASB issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,” which simplifies the ~~outbreak~~accounting for certain financial instruments with characteristics of ~~COVID-19 as a pandemic. The nature of COVID-19 led~~liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, this ASU removes from GAAP the requirement to ~~worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations in efforts to control the spread of COVID-19~~separate certain convertible instruments, such as ~~shelter-in-place orders, quarantines, executive orders~~our Convertible Senior Notes Due 2022, Convertible Senior Notes Due 2023 and ~~similar restrictions. As~~Convertible Senior Notes Due 2026 (Note 5), into liability and equity components. Consequently, those convertible instruments will be accounted for in their entirety as liabilities measured at their amortized cost. We elected to early adopt ASU No. 2020-06 on a ~~result,~~modified retrospective basis beginning January 1, 2021. The adoption of this ASU increased our long-term debt and decreased our common stock by $44.1 million and $41.5 million, respectively, as we reclassified the ~~global economy has been marked~~conversion features associated with our various outstanding convertible senior notes from equity to long-term debt. The adoption of this ASU also increased our retained earnings and decreased deferred tax liabilities by ~~significant slowdown~~$6.7 million and ~~uncertainty, which has led~~$9.3 million, respectively. Subsequent to ~~a precipitous decline in oil prices in response~~its adoption, the ASU is also expected to ~~demand concerns, further exacerbated by~~reduce our interest expense as there will no longer be debt discounts to amortize associated with our outstanding convertible senior notes. Additionally, the ~~price war among members~~ASU no longer permits the treasury stock method for convertible instruments and instead requires the application of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”) during the first quarter 2020 and global storage considerations. The decline in oil prices has resulted in a significantly weaker outlook for oil and gas producers, who have begunif-converted method to ~~cut their capital and operating budgets. Our financial statements for the three-month period ended March 31, 2020 reflect~~calculate the impact of these events and current market conditions, which include namely the recognition of goodwill impairment losses (Note 6) and tax benefits resulting from the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (Note 8). The continued spread of COVID-19 or deterioration in oil prices could result in further adverse impactour convertible senior notes on ~~our results of operations, cash flows and financial position, including further asset impairments.~~

~~New accounting standards adopted~~

~~In June 2016, the Financial Accounting Standards Board (the “FASB”~~diluted earnings per share (“EPS”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Measurement of Credit Losses on Financial Instruments,” which was updated by subsequent amendments. This ASU replaces the current incurred loss model for measurement of credit losses on financial assets (including trade receivables) with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance became effective for us as of January 1, 2020 and resulted in the recognition of $0.6 million (net of deferred taxes of $0.2 million) of allowances for expected credit losses related to our accounts receivable through a cumulative effect offset to retained earnings. The new credit loss standard is expected to accelerate recognition of credit losses on our accounts receivable. See Note 17 for additional information regarding allowance for credit losses on our accounts receivable.

~~Table of Contents~~

~~New accounting standards issued but not yet effective~~

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

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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 and robotics operations. ~~We provide~~Traditionally, our services ~~and methodologies that we believe are critical to maximizing production economics. Our services cover~~have covered the lifecycle of an offshore oil or gas field. In recent years, we have seen an increasing demand for our services from the offshore renewable energy market. We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. Our ~~life of field~~North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into 3 reportable business segments: Well Intervention, Robotics and Production Facilities (Note ~~13)~~10).

Our Well Intervention segment ~~includes~~provides services enabling our ~~vessels and/~~customers to safely access offshore wells for the purpose of performing well enhancement or ~~equipment used to perform well intervention services primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.~~decommissioning operations. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and 2 chartered monohull vessels, the Siem Helix 1 and the Siem Helix 2. Our well intervention equipment includes intervention riser systems (“IRSs”) ~~and~~, subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module (“ROAM”), some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, cable trenching, seabed clearance, inspection, repair and maintenance services to both the oil and gas and the renewable energy markets globally. Our Robotics services also complement well intervention services. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and a ROVDrill, ~~which are designed to complement well intervention services~~ and ~~offshore construction to both the oil and gas and the renewable energy markets. Our Robotics segment also includes~~ 2 robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III, as well as spot vessels as ~~needed, including the~~ ~~Ross Candies, which is under a flexible charter agreement.~~

needed.

Our Production Facilities segment includes the Helix ProducerI (the “HP I”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”)~~, our ownership interest in Independence Hub, LLC (“Independence Hub”) (Note 4),~~ and our ownership of oil and gas ~~properties acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.~~properties. All of our current ~~production facilities~~Production Facilities activities are located in the Gulf of Mexico.

On May 29, 2019, we acquired a 70% controlling interest in Subsea Technologies Group Limited (“STL”), a subsea engineering firm based in Aberdeen, Scotland, for $5.1 million. The holders of the remaining 30% noncontrolling interest have the right to put their shares to us in June 2024. These redeemable noncontrolling interests were recognized as temporary equity at their estimated fair value of $3.4 million at the acquisition date. In March 2020, we recorded an impairment loss to write off the goodwill associated with the STL acquisition (Note 6). STL is included in our Well Intervention segment (Note 13) and its revenue and earnings are immaterial to our consolidated results.

Note 3 — Details of Certain Accounts

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

March 31,
2020 December 31,
2019

Contract assets (Note 10) $ 5,882
$ 740
Prepaids 13,039
12,635
Deferred costs (Note 10) 28,481
28,340
Income tax receivable 16,982
1,261
Other 7,371
7,474
Total other current assets $ 71,755
$ 50,450


	March 31,		December 31,
	2021		2020
Contract assets (Note 7)	$	360	$	2,446
Prepaids		15,289		15,904
Deferred costs (Note 7)		18,717		23,522
Income tax receivable		13,847		20,787
Other receivable (Note 11)		30,052		29,782
Other		7,977		9,651
Total other current assets	$	86,242	$	102,092

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


	March 31,		December 31,
	2021		2020
Deferred recertification and dry dock costs, net	$	19,073	$	21,464
Deferred costs (Note 7)		916		861
Charter deposit ⁽¹⁾		12,544		12,544
Intangible assets with finite lives, net		3,756		3,809
Other		1,221		1,335
Total other assets, net	$	37,510	$	40,013

March 31,
2020 December 31,
2019

Prepaids $ 694
$ 777
Deferred recertification and dry dock costs, net 30,545
16,065
Deferred costs (Note 10) 8,594
14,531
Charter deposit ⁽¹⁾
12,544
12,544
Other receivable ⁽²⁾
27,914
27,264
Goodwill (Note 6) —
7,157
Intangible assets with finite lives, net 3,680
3,847
Other 2,103
2,323
Total other assets, net $ 86,074
$ 84,508


(1)	This amount is deposited with the owner of the Siem Helix 2 to offset certain payment obligations associated with the vessel at the end of the charter term.


~~(2)~~	~~Agreed-upon amounts to be paid by Marathon Oil as the required plug and abandonment (“P&A”) work on the remaining Droshky wells is completed (Notes 7 and 14).~~

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Accrued liabilities consist of the following (in thousands):

March 31,
2020 December 31,
2019

Accrued payroll and related benefits $ 17,469
$ 31,417
Investee losses in excess of investment (Note 4) 2,673
4,069
Deferred revenue (Note 10) 11,376
11,568
Derivative liability (Note 19) 26
1,002
Other 13,683
14,333
Total accrued liabilities $ 45,227
$ 62,389


	March 31,		December 31,
	2021		2020
Accrued payroll and related benefits	$	20,327	$	24,768
Accrued interest		3,010		7,098
Deferred revenue (Note 7)		9,614		8,140
Asset retirement obligations (Note 11)		30,961		30,913
Other		12,574		16,116
Total accrued liabilities	$	76,486	$	87,035

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

March 31,
2020 December 31,
2019

Deferred revenue (Note 10) $ 5,860
$ 8,286
Asset retirement obligations (Note 14) 28,934
28,258
Other 1,492
2,100
Total other non-current liabilities $ 36,286
$ 38,644


	March 31,		December 31,
	2021		2020
Deferred revenue (Note 7)	$	1,333	$	1,869
Other		1,772		2,009
Total other non-current liabilities	$	3,105	$	3,878

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Note 4 — ~~Equity Method Investments~~

We have a 20% ownership interest in Independence Hub that we account for using the equity method of accounting. Independence Hub owns the “Independence Hub” platform, which is in the process of being decommissioned and is expected to be substantially completed within the next 12 months. We recognized a liability of $2.7 million at March 31, 2020 and $4.1 million at December 31, 2019 for our share of Independence Hub’s estimated obligations, net of remaining working capital.

~~Note 5 —~~ Leases

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. 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
March 31,
2020 2019

Operating lease cost $ 16,323
$ 18,133
Variable lease cost 3,212
3,075
Short-term lease cost 7,174
4,158
Sublease income (279 ) (353 )
Net lease cost $ 26,430
$ 25,013


	Three Months Ended
	March 31,
	2021		2020
Operating lease cost	$	16,216	$	16,323
Variable lease cost		3,484		3,212
Short-term lease cost		1,732		7,174
Sublease income		(349)		(279)
Net lease cost	$	21,083	$	26,430

Maturities of our operating lease liabilities as of March 31, ~~2020~~2021 are as follows (in thousands):


			Facilities and
	Vessels		Equipment		Total
Less than one year	$	52,620	$	5,825	$	58,445
One to two years		52,105		5,249		57,354
Two to three years		24,203		4,637		28,840
Three to four years		—		4,205		4,205
Four to five years		—		1,591		1,591
Over five years		0		3,884		3,884
Total lease payments	$	128,928	$	25,391	$	154,319
Less: imputed interest		(11,088)		(4,334)		(15,422)
Total operating lease liabilities	$	117,840	$	21,057	$	138,897

Current operating lease liabilities	$	45,598	$	4,723	$	50,321
Non-current operating lease liabilities		72,242		16,334		88,576
Total operating lease liabilities	$	117,840	$	21,057	$	138,897

Vessels Facilities and Equipment Total

Remainder of 2020 $ 44,316
$ 4,619
$ 48,935
2021 54,184
5,630
59,814
2022 52,106
5,109
57,215
2023 34,580
4,565
39,145
2024 2,470
4,299
6,769
Thereafter —
5,954
5,954
Total lease payments $ 187,656
$ 30,176
$ 217,832
Less: imputed interest (21,611 ) (5,747 ) (27,358 )
Total operating lease liabilities $ 166,045
$ 24,429
$ 190,474

Current operating lease liabilities $ 48,296
$ 4,767
$ 53,063
Non-current operating lease liabilities 117,749
19,662
137,411
Total operating lease liabilities $ 166,045
$ 24,429
$ 190,474

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Maturities of our operating lease liabilities as of December 31, ~~2019~~2020 are as follows (in thousands):

Vessels Facilities and Equipment Total

2020 $ 60,210
$ 6,610
$ 66,820
2021 54,564
5,888
60,452
2022 52,106
5,257
57,363
2023 34,580
4,622
39,202
2024 2,470
4,349
6,819
Thereafter —
6,251
6,251
Total lease payments $ 203,930
$ 32,977
$ 236,907
Less: imputed interest (24,846 ) (6,449 ) (31,295 )
Total operating lease liabilities $ 179,084
$ 26,528
$ 205,612

Current operating lease liabilities $ 48,716
$ 5,069
$ 53,785
Non-current operating lease liabilities 130,368
21,459
151,827
Total operating lease liabilities $ 179,084
$ 26,528
$ 205,612


			Facilities and
	Vessels		Equipment		Total
Less than one year	$	54,621	$	6,028	$	60,649
One to two years		52,106		5,435		57,541
Two to three years		34,580		4,649		39,229
Three to four years		2,470		4,374		6,844
Four to five years		—		2,340		2,340
Over five years		—		4,054		4,054
Total lease payments	$	143,777	$	26,880	$	170,657
Less: imputed interest		(13,352)		(4,697)		(18,049)
Total operating lease liabilities	$	130,425	$	22,183	$	152,608

Current operating lease liabilities	$	46,748	$	4,851	$	51,599
Non-current operating lease liabilities		83,677		17,332		101,009
Total operating lease liabilities	$	130,425	$	22,183	$	152,608

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

March 31, 2020 December 31, 2019

Weighted average remaining lease term 3.7 years
4.0 years
Weighted average discount rate 7.53 % 7.54 %


	March 31,		December 31,
	2021		2020
Weighted average remaining lease term	3.0	years	3.1	years
Weighted average discount rate	7.53	%	7.53	%

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

Three Months Ended
March 31,
2020 2019

Cash paid for operating lease liabilities $ 16,472
$ 17,148
ROU assets obtained in exchange for new operating lease obligations —
89

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Note 65 — ~~Goodwill~~

~~The changes in the carrying amount of goodwill are as follows (in thousands):~~

Well Intervention

Balance at December 31, 2019 $ 7,157
Impairment loss ⁽¹⁾
(6,689 )
Other adjustments ⁽²⁾
(468 )
Balance at March 31, 2020 $ —

~~(1)~~

As a result of the decline in oil prices as well as energy and energy services valuations during the three-month period ended March 31, 2020 due to the ongoing COVID-19 pandemic and the OPEC+ price war, we identified that it was more likely than not that the fair value of goodwill associated with our STL acquisition (Note2) was less than its carrying amount. Based on the result of our goodwill impairment test as of March 31, 2020, we recorded a charge to write off the carrying amount of the goodwill. The fair value of the reporting unit used to determine the impairment was estimated using a discounted cash flow approach.


~~(2)~~	~~Relates to foreign currency adjustments.~~

~~Note 7 —~~Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of March 31, ~~2020~~2021 are as follows (in thousands):


	Term		2022		2023		2026		MARAD
	Loan		Notes		Notes		Notes		Debt		Total
Less than one year	$	28,875	$	—	$	—	$	—	$	7,746	$	36,621
One to two years		—		35,000		—		—		8,133		43,133
Two to three years		—		—		30,000		—		8,539		38,539
Three to four years		—		—		—		—		8,965		8,965
Four to five years		—		—		—		200,000		9,412		209,412
Over five years		—		—		—		—		9,881		9,881
Gross debt		28,875		35,000		30,000		200,000		52,676		346,551
Unamortized debt issuance costs ⁽¹⁾		(143)		(206)		(445)		(6,792)		(2,927)		(10,513)
Total debt		28,732		34,794		29,555		193,208		49,749		336,038
Less current maturities		(28,732)		—		—		—		(7,746)		(36,478)
Long-term debt	$	—	$	34,794	$	29,555	$	193,208	$	42,003	$	299,560

Term
Loan ⁽¹⁾

2022
Notes
2023 Notes
MARAD
Debt

Nordea
Q5000
Loan
Total

Less than one year $ 3,500
$ —
$ —
$ 7,378
$ 80,357
$ 91,235
One to two years 28,875
—
—
7,746
—
36,621
Two to three years —
125,000
—
8,133
—
133,133
Three to four years —
—
125,000
8,538
—
133,538
Four to five years —
—
—
8,965
—
8,965
Over five years —
—
—
19,294
—
19,294
Gross debt 32,375
125,000
125,000
60,054
80,357
422,786
Unamortized debt discounts ⁽²⁾
—
(7,207 ) (13,700 ) —
—
(20,907 )
Unamortized debt issuance costs ⁽³⁾
(334 ) (1,103 ) (2,208 ) (3,415 ) (398 ) (7,458 )
Total debt 32,041
116,690
109,092
56,639
79,959
394,421
Less: current maturities (3,500 ) —
—
(7,378 ) (79,959 ) (90,837 )
Long-term debt $ 28,541
$ 116,690
$ 109,092
$ 49,261
$ —
$ 303,584


(1)	~~Term Loan pursuant to the Credit Agreement (as defined below) matures in December 2021.~~


~~(2)~~	~~Convertible Senior Notes due 2022 and 2023 will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022 and September 2023, respectively.~~


~~(3)~~	Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement. See Note 1 for accounting changes as a result of the adoption of ASU No. 2020-06.

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Below is a summary of certain components of our indebtedness:

Credit Agreement

~~On June 30, 2017, we entered into an Amended and Restated Credit Agreement~~

We have a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America, N.A. (“Bank of America”). ~~On June 28, 2019, we amended our existing term loan (the “Term Loan”) and revolving credit facility (the “Revolving Credit Facility”) under the Credit Agreement.~~ The Credit Agreement is comprised of a ~~$35~~Term Loan with a remaining balance of $28.9 million ~~Term Loan~~as of March 31, 2021 and a Revolving Credit Facility with a maximum availability of $175 ~~million~~million. The Credit Agreement expires and the Term Loan matures on December 31, 2021. The Revolving Credit Facility permits us to obtain letters of credit up to a sublimit of $25 million. Pursuant to the Credit Agreement, subject to existing lender participation and/or the participation of new lenders, and subject to standard conditions precedent, we may request aggregate commitments of up to $100 million with respect to an increase in the Revolving Credit Facility. As of March 31, ~~2020,~~2021, we had no0 borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled ~~$172.6~~$172.2 million, net of ~~$2.4~~$2.8 million of letters of credit issued under that facility.

Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof. The Term Loan bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin of 2.25%. The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25%. The interest rate on the Term Loan was ~~4.24%~~3.36% as of March 31, ~~2020.~~2021. Borrowings under the Revolving Credit Facility bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin ranging from 1.50% to 2.50%. Borrowings under the Revolving Credit Facility bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin ranging from 2.50% to 3.50%. A letter of credit fee is payable by us equal to the applicable margin for LIBOR rate loans multiplied by the daily amount available to be drawn under the applicable letter of credit. Margins on borrowings under the Revolving Credit Facility will vary in relation to the Consolidated Total Leverage Ratio (as defined below) as provided for in the Credit Agreement. We also pay a fixed commitment fee of 0.50% per annum on the unused portion of the Revolving Credit Facility.

The Term Loan principal is required to be repaid in quarterly installments of 2.5% of ~~the~~its aggregate principal amount, ~~of the Term Loan,~~ with a balloon payment at maturity. ~~Installment amounts~~Installments are subject to adjustment for any ~~prepayments on the Term Loan.~~prepayments. We may prepay indebtedness outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid. We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount available under the Revolving Credit Facility.

Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I -– Title XI, Inc.) and of Helix Robotics Solutions Limited and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I -– Title XI, Inc.) and of Helix Robotics Solutions Limited. In addition, these obligations are secured by pledges of up to 66% of the shares of certain foreign subsidiaries (restricted subsidiaries).

The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, ~~which~~that we consider customary for this type of transaction. The covenants include certain restrictions on our and certain of our subsidiaries’ ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, pay dividends and make capital expenditures. In addition, the Credit Agreement obligates us to meet minimum ratio requirements of EBITDA to interest charges (Consolidated Interest Coverage Ratio), funded debt to EBITDA (Consolidated Total Leverage Ratio) and secured funded debt to EBITDA (Consolidated Secured Leverage Ratio).

We may designate one or more of our new foreign subsidiaries as subsidiaries not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”). The Unrestricted Subsidiaries are not pledged as collateral under the Credit Agreement, and the debt and EBITDA of the Unrestricted Subsidiaries, with the exception of Helix Q5000 Holdings, S.à r.l. ~~(“Q5000 Holdings”)~~, a wholly owned Luxembourg subsidiary of Helix Vessel Finance S.à r.l., are not included in the calculations of our financial covenants except to the extent of any cash actually distributed by such subsidiary ofto Helix.

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In January 2019, contemporaneously with our acquisition from Marathon Oil of several wells and related infrastructure associated with the Droshky Prospect located in offshore Gulf of Mexico Green Canyon Block 244, we amended the Credit Agreement to permit the issuance of certain security to third parties for required P&A obligations and to make certain capital expenditures in connection with acquired assets (Notes 2 and 14).

Convertible Senior Notes Due 2022 (“2022 Notes”)

~~On November 1, 2016, we completed a public offering and sale of the 2022 Notes in the aggregate principal amount of $125 million.~~

The 2022 Notes bear interest at a coupon interest rate of 4.25% per annum ~~and are~~ payable semi-annually in arrears on November 1 and May 1 of each year ~~beginning on May 1, 2017.~~until maturity. The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or ~~repurchased. During certain periods and subject to certain conditions, the~~repurchased by us. The 2022 Notes are convertible by ~~the~~their holders ~~into shares of our common stock~~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~~which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $13.89 per share of common ~~stock), subject to adjustment in certain circumstances. We~~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 February 1, 2022, holders of the 2022 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 2022 Notes was 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 2022 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 ~~intention~~time remaining to ~~settle the~~maturity, of up to 30.5887 shares of our common stock per $1,000 principal ~~amount of any such future conversions in cash.~~

amount.

Prior to November 1, 2019, the 2022 Notes were not redeemable. ~~Beginning~~On or after November 1, 2019, ~~if certain conditions are met,~~ we may redeem all or any portion of the 2022 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. 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 2022 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2022 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 2022 Notes).

The indenture governing the 2022 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 subsidiary, the principal amount of the 2022 Notes together with any accrued interest will become immediately due and payable.

The 2022 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2022 Notes. As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2022 Notes totaled $1.5 million. As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2022 Notes (Note 1). As of March 31, 2021, unamortized debt issuance costs related to the 2022 Notes were $0.2 million.

The effective interest rate for the 2022 Notes prior to the adoption of ASU No. 2020-06 was 7.3%. The effective interest rate subsequent to the adoption of ASU No. 2020-06 decreased to 4.8%. For the three-month period ended March 31, 2021, total interest expense related to the 2022 Notes was $0.4 million primarily from coupon interest expense. For the three-month period ended March 31, 2020, total interest expense related to the 2022 Notes was $2.3 million, with coupon interest expense of $1.4 million and the amortization of debt discount and issuance costs of $0.9 million.

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Convertible Senior Notes Due 2023 (“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.

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 was 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, we 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 ~~price~~notice. 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” ~~(as defined in~~calculated as the ~~indenture governing the 2022 Notes).~~present value of all remaining scheduled interest payments. Holders of the ~~2022~~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” (as defined in the indenture governing the 2022 Notes).~~

~~The indenture governing the 2022 Notes contains customary terms and covenants, including that upon certain events~~change,” which includes a change of default occurring and continuing, either the trustee under the indenture or the holders of not less than 25% in aggregate principal amount then outstanding under the 2022 Notes may declare the entire principal amount of all the notes, and the interest accrued on such notes, if any, to be immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to uscontrol or a ~~significant subsidiary, the principal amount~~termination of ~~the 2022 Notes together with any accrued and unpaid interest thereon will become immediately due and payable.~~

The 2022 Notes were initially accounted for by separating the net proceeds between long-term debt and shareholders’ equity. In connection with the issuance of the 2022 Notes, we recorded a debt discount of $16.9 million ($11.0 million net of tax) as a result of separating the equity component. The effective interest rate for the 2022 Notes is 7.3% after considering the effect of the accretion of the related debt discount over the term of the 2022 Notes. Interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $2.1 million for each of the three-month periods ended March 31, 2020 and 2019. The remaining unamortized debt discount of the 2022 Notes was $7.2 million at March 31, 2020 and $8.0 million at December 31, 2019.

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

On March 20, 2018, we completed a public offering and sale of the 2023 Notes in the aggregate principal amount of $125 million. The 2023 Notes bear interest at a rate of 4.125% per annum and are payable ~~semi-annually~~ in arrears on March 15 and September 15 of each year, beginning on September 15, 2018. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased. During certain periods and subject to certain conditions, the 2023 Notes are convertible by the holders into sharestrading of our common stock at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $9.47 per share of common stock), subject to adjustment in certain circumstances. We have the right and the intention to settle the principal amount of any such future conversions in cash.

Prior to March 15, 2021, the 2023 Notes are not redeemable. On or after March 15, 2021, if certain conditions are met, we may redeem all or any portion of the 2023 Notes at a redemption price payable in cash equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” (as defined in the indenture governing the 2023 Notes). ~~Holders of the 2023 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2023 Notes).~~

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The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, ~~occurring and continuing, either the trustee under the indenture or the holders of not less than 25% in aggregate principal amount then outstanding under the 2023 Notes may declare~~ the entire principal amount of ~~all~~and any accrued interest on the notes ~~and the interest accrued on such notes, if any, to~~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 ~~and unpaid~~ interest ~~thereon~~ will become immediately due and payable.

The 2023 Notes were initially ~~accounted for by separating~~separated between the ~~net proceeds between~~equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and ~~shareholders’ equity. In connection with~~debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the ~~issuance~~maturity date of the 2023 ~~Notes, we recorded a~~Notes. As of December 31, 2020, unamortized debt discount ~~of $20.1 million ($15.9 million net of tax) as~~and debt issuance costs related to the 2023 Notes totaled $3.1 million. As a result of ~~separating~~ the ~~equity component.~~ adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2023 Notes (Note 1). As of March 31, 2021, unamortized debt issuance costs related to the 2023 Notes were $0.4 million.

The effective interest rate for the 2023 Notes isprior to the adoption of ASU No. 2020-06 was 7.8% ~~after considering~~. The effective interest rate subsequent to the ~~effect~~adoption of ASU No. 2020-06 decreased to 4.8%. For the ~~accretion of the related debt discount over the term of the 2023 Notes. Interest~~three-month period ended March 31, 2021, total interest expense ~~(including amortization of the debt discount)~~ related to the 2023 Notes ~~totaled $2.1~~was $0.4 million, ~~for each~~with coupon interest expense of $0.3 million and the amortization of issuance costs of $0.1 million. For the three-month ~~periods~~period ended March 31, 2020, ~~and 2019. The remaining unamortized debt discount of~~total interest expense related to the 2023 Notes was ~~$13.7~~$2.3 million, with coupon interest expense of $1.3 million and the amortization of debt discount and issuance costs of $1.0 million.

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Convertible Senior Notes Due 2026 (“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 was 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 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. 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).

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 2026 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2026 Notes. As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2026 Notes totaled $47.3 million. As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2026 Notes (Note 1). As of March 31, ~~2020~~2021, unamortized debt issuance costs related to the 2026 Notes were $6.8 million.

The effective interest rate for the 2026 Notes prior to the adoption of ASU No. 2020-06 was 12.4%. The effective interest rate subsequent to the adoption of ASU No. 2020-06 decreased to 7.6%. For the three-month period ended March 31, 2021, total interest expense related to the 2026 Notes was $3.7 million, with coupon interest expense of $3.4 million and ~~$14.5~~the amortization of debt issuance costs of $0.3 million.

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 separate transactions from the 2026 Notes and do not change the holders' rights under the 2026 Notes. Holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls.

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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 ~~at December 31, 2019.~~

as a reduction to common stock in the shareholders’ equity section of our consolidated balance sheet.

MARAD Debt

This U.S. government-guaranteed financing (the “MARAD Debt”), pursuant to Title XI of the Merchant Marine Act of 1936 administered by the Maritime Administration, was used to finance the construction of the Q4000. The MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93%.

~~Nordea Credit Agreement~~

~~In September 2014, Q5000 Holdings entered into~~

Other

We previously had a credit agreement (the “Nordea Credit Agreement”) with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) ~~in an~~to finance the construction of the Q5000. The loan was secured by the Q5000 and its charter earnings. As of December 31, 2020, the remaining principal amount of ~~up to $250 million. The~~the Nordea Q5000 Loan was ~~funded in~~$53.6 million, reflecting the ~~amount of $250 million in April 2015 at the time the~~ ~~Q5000~~ ~~was delivered to us. Helix Vessel Finance S.à r.l., a direct wholly owned Luxembourg subsidiary of Helix, guaranteed the Nordea Q5000 Loan. The loan is secured by the~~ ~~Q5000~~ ~~and its charter earnings as well as by a pledge of the shares of Q5000 Holdings. This indebtedness is non-recourse to Helix.~~

We amended the Nordea Q5000 Loan on March 11, 2020. Prior to the amendment, the Nordea Q5000 Loan incurred interest at a LIBOR rate plus a margin of 2.5% and was repayable in scheduled quarterly principal installments of $8.9 million with a balloon payment ~~of $80.4 million~~ on ~~April 30, 2020. The amendment increases the margin to 2.75%, maintains the existing quarterly amortization requirements, and extends~~ the final maturity toof January 31, ~~2021 with a balloon payment on that date of $53.6 million. The remaining principal~~2021. We repaid this balance ~~and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current~~ in the accompanying condensed consolidated balance sheets. We may elect to prepay indebtedness outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid. Quarterly principal installments are subject to adjustment for any prepayments on this debt.

The Nordea Credit Agreement and related loan documents include terms and conditions, including covenants and prepayment requirements, that we consider customary for this type of transaction. The covenants include restrictions on Q5000 Holdings’s ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, and pay dividends. In addition, the Nordea Credit Agreement obligates Q5000 Holdings to meet certain minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance.

~~Other~~

January 2021.

In accordance with the Credit Agreement, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt agreements, ~~and the Nordea Credit Agreement,~~ we are required to comply with certain covenants, including with respect to the Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio and a consolidated secured leverage ratio, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements. As of March 31, ~~2020,~~2021, we were in compliance with these covenants.

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


	Three Months Ended
	March 31,
	2021		2020
Interest expense	$	6,112	$	7,394
Capitalized interest		—		(1,182)
Interest income		(59)		(466)
Net interest expense	$	6,053	$	5,746

Three Months Ended
March 31,
2020 2019

Interest expense $ 7,394
$ 7,896
Interest income (466 ) (758 )
Capitalized interest (1,182 ) (5,040 )
Net interest expense $ 5,746
$ 2,098

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Note 86 — Income Taxes

We believe that our recorded deferred tax assets and liabilities are reasonable. However, tax laws and regulations are subject to interpretation, and the outcomes of tax disputes are inherently uncertain; therefore, our assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions.

For the three-month period ended March 31, 2021, our estimated annual effective tax rate, adjusted for discrete tax items, is applied to our pre-tax loss as we have determined that the use of the annual effective tax rate method is appropriate. We used the discrete effective tax rate method for recording income taxes for the three-month period ended March 31, 2020. The ~~CARES~~discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis. For the three-month period ended March 31, 2020, we believed using the discrete method was more appropriate than the annual effective tax rate method because of the high degree of uncertainty in estimating annual pretax earnings created at the time by uncertainty in future market conditions caused by the ongoing COVID-19 pandemic as well as uncertainty in the oil and gas market.

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S. income tax regulations. The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax rates applicable in the relevant carryback year. As a result of these changes, in the three-month period ended March 31, 2020 we recognized an estimated $5.8 million net tax benefit, ~~in the three-month period ended March 31, 2020,~~ consisting of a $15.9 million current tax benefit and a $10.1 million deferred tax expense. This $5.8 million net tax benefit resulted from our deferred tax assets related to our net operating losses in the U.S. being utilized at the previous higher income tax rate applicable to the carryback periods.

~~We adopted the discrete effective tax rate method for recording income taxes for~~

During the three-month period ended March 31, ~~2020. The discrete method is applied when~~2020, we migrated 2 of our foreign subsidiaries into our U.S. consolidated tax group. Subsequent to the ~~application~~migration, these subsidiaries are disregarded and no longer subject to certain branch profits taxes. Consequently, we recognized net deferred tax benefits of $8.3 million due to the ~~estimated annual effective~~reduction in the overall tax rate ~~is impractical because it is not possible to reliably estimate~~associated with these subsidiaries.

Income taxes are provided at the ~~annual effective tax rate. The discrete method treats~~U.S. statutory rate and at the ~~year-to-date period as if it were the annual period~~local statutory rate for each foreign jurisdiction and ~~determines the~~adjusted for items that are permanent differences for Federal and foreign income tax expense or benefit on that basis. We believe that the use of the discrete method is more appropriate than the annual effective tax rate method because of the current high degree of uncertainty in estimating annual pretax earnings created by uncertainty in future market conditions caused by the ongoing COVID-19 pandemic as well as uncertainty in the oil and gas market. We will re-evaluate our use of this method each quarter until such time as a return to the annualized effective tax rate method is deemed appropriate.

reporting purposes, but not for book purposes. The effective tax rates for the three-month periods ended March 31, 2021 and 2020 were (4.0)% and ~~2019 were~~ 60.2% ~~benefit and 19.7% expense,~~, respectively. The variance inwas primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as our carrying back certain net operating losses to prior periods with higher income tax rates. The effective tax rate for the three-month period ended March 31, 2021 was significantly lower than the U.S. statutory rate primarily ~~attributable~~due to non-creditable foreign taxes and offset in part by a significant portion of our current period earnings being generated in certain jurisdictions with a lower tax rate. The combination of these offsetting factors resulted in an overall tax provision and a negative tax rate for the quarter. The effective tax rate for the three-month period ended March 31, 2020 was significantly higher than the U.S. statutory rate primarily due to our recognition of discrete benefits during the period related to the restructuring of certain foreign subsidiaries and our carrying back certain net operating losses to prior periods with higher income tax rates ~~as well as the result of the consolidation of certain U.S. branch operations~~under tax law changes associated with the ~~Helix U.S. consolidated tax group.~~CARES Act whereas we had only nominal pre-tax losses.

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Income taxes are provided based on the U.S. statutory rate and at the local statutory rate for each foreign jurisdiction adjusted for items that are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes.

The primary differences between the income tax provision (benefit) at the U.S. statutory rate and our ~~effective rate are as follows:~~

Three Months Ended
March 31,
2020 2019

U.S. statutory rate 21.0 % 21.0 %
Foreign provision (3.0 ) (2.7 )
CARES Act 16.6
—
Subsidiary restructuring 23.8
—
Other 1.8
1.4
Effective rate 60.2 % 19.7 %

~~Note 9 —Shareholders’ Equity~~

~~The components of accumulated other comprehensive loss (“accumulated OCI”)~~actual income tax provision (benefit) are as follows ~~(in~~(dollars in thousands):


	Three Months Ended
	March 31,
	2021				2020
Taxes at U.S. statutory rate	$	(616)	21.0	%	$	(7,355)	21.0	%
Foreign tax provision		(938)	32.0			1,051	(3.0)
CARES Act		—	—			(5,814)	16.6
Subsidiary restructuring		—	—			(8,333)	23.8
Other		1,670	(57.0)			(642)	1.8
Income tax provision (benefit) ⁽¹⁾	$	116	(4.0)	%	$	(21,093)	60.2	%

March 31,
2020 December 31,
2019

Cumulative foreign currency translation adjustment $ (98,042 ) $ (64,455 )
Net unrealized loss on hedges, net of tax ⁽¹⁾
(20 ) (285 )
Accumulated OCI $ (98,062 ) $ (64,740 )


(1)	~~Relates to foreign currency hedges~~The negative effective tax rate for the ~~Grand Canyon III~~ ~~charter as well as interest rate hedge contracts for~~three-month period ended March 31, 2021 is due to the ~~Nordea Q5000 Loan (Note 19).~~tax benefits associated with our nominal pretax loss being smaller than our non-creditable foreign taxes.

Note 107 —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
	Intervention		Robotics		Facilities		Eliminations ⁽¹⁾		Revenue
Three months ended March 31, 2021
Short-term	$	49,217	$	9,407	$	0	$	0	$	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

Three months ended March 31, 2020
Short-term	$	82,324	$	22,441	$	0	$	0	$	104,765
Long-term		58,328		12,817		15,541		(10,430)		76,256
Total	$	140,652	$	35,258	$	15,541	$	(10,430)	$	181,021

Well Intervention Robotics Production Facilities
Intercompany Eliminations ⁽¹⁾
Total Revenue
Three months ended March 31, 2020
Short-term $ 82,324
$ 22,441
$ —
$ —
$ 104,765
Long-term ⁽²⁾
58,328
12,817
15,541
(10,430 ) 76,256
Total $ 140,652
$ 35,258
$ 15,541
$ (10,430 ) $ 181,021

Three months ended March 31, 2019
Short-term $ 29,805
$ 24,930
$ —
$ —
$ 54,735
Long-term ⁽²⁾
92,426
14,111
15,253
(9,702 ) 112,088
Total $ 122,231
$ 39,041
$ 15,253
$ (9,702 ) $ 166,823

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(1)	Intercompany revenues among our business segments are under agreements that are considered long-term.


~~(2)~~	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.

Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional. Accounts receivable that have been billed to customers are recorded as trade accounts receivable while accounts receivable that have not been billed to customers are recorded as unbilled accounts receivable.

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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). Contract assets were ~~$5.9~~$0.4 million at March 31, ~~2020~~2021 and ~~$0.7~~$2.4 million at December 31, ~~2019.~~2020. We had ~~no impairment~~0 credit losses on our contract assets for the three-month periods ended March 31, ~~2020~~2021 and ~~2019.~~

2020.

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). Contract liabilities totaled ~~$17.2~~$10.9 million at March 31, ~~2020~~2021 and ~~$19.9~~$10.0 million at December 31, ~~2019.~~2020. Revenue recognized for the three-month periods ended March 31, 2021 and 2020 ~~and 2019~~ included ~~$3.4~~$2.5 million and ~~$2.5~~$3.4 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, ~~2020, $677.7~~2021, $358.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with ~~$392.2~~$238.7 million in ~~2020, $219.5~~2021, $84.4 million in ~~2021~~2022 and ~~$66.0~~$35.3 million in ~~2022~~2023 and thereafter. 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, ~~2020.~~

2021.

For the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

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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). Our deferred contract costs totaled ~~$37.1~~$19.6 million at March 31, ~~2020~~2021 and ~~$42.9~~$24.4 million at December 31, ~~2019.~~2020. For the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, we recorded ~~$9.2~~$10.4 million and ~~$7.7~~$9.2 million, respectively, related to amortization of these deferred contract ~~costs existing at the beginning of each period.~~costs. There were no associated impairment losses for any period presented.

For additional information regarding revenue recognition, see Notes 2 and 12 to our ~~2019~~2020 Form 10-K.

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Note 118 — Earnings Per Share

We have shares of restricted stock issued and outstanding that are currently unvested. ~~Shares of restricted stock are considered participating securities because~~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~~stock, we are required to compute basic and diluted ~~earnings per share (“EPS”)~~EPS under the two-class method in periods in which we have earnings. Under the two-class method, ~~the undistributed earnings~~net income or loss attributable to common shareholders for each period ~~are~~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. ~~Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.~~ 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.

~~The presentation of basic~~

Basic EPS ~~on the face of the accompanying condensed consolidated statements of operations~~ 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 (income) 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
March 31, 2020 Three Months Ended
March 31, 2019
Income Shares Income Shares
Basic:
Net income (loss) attributable to common shareholders $ (11,938 ) $ 1,318

Less: Undistributed earnings allocated to participating securities —
(12 )
Accretion of redeemable noncontrolling interests (2,086 ) —

Net income (loss) available to common shareholders, basic $ (14,024 ) 148,863
$ 1,306
147,421

Diluted:
Net income (loss) available to common shareholders, basic $ (14,024 ) 148,863
$ 1,306
147,421
Effect of dilutive securities:
Share-based awards other than participating securities —
—
—
330
Net income (loss) available to common shareholders, diluted $ (14,024 ) 148,863
$ 1,306
147,751


	Three Months Ended			Three Months Ended
	March 31, 2021			March 31, 2020
	Income		Shares	Income		Shares
Basic and Diluted:
Net loss attributable to common shareholders	$	(2,878)		$	(11,938)
Less: Accretion of redeemable noncontrolling interests		(241)			(2,086)
Net loss available to common shareholders	$	(3,119)	149,935	$	(14,024)	148,863

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We had a net ~~loss~~losses for the three-month ~~period~~periods ended March 31, 2021 and 2020. Accordingly, our diluted EPS calculation for ~~this period~~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~~
	~~March 31, 2020~~

~~Diluted shares (as reported)~~	~~148,863~~
~~Share-based awards~~	~~722~~
~~Total~~	~~149,585~~

~~In addition, the~~


	Three Months Ended
	March 31,
	2021	2020
Diluted shares (as reported)	149,935	148,863
Share-based awards	1,093	722
Total	151,028	149,585

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


	Three Months Ended
	March 31,
	2021	2020
2022 Notes	2,519	8,997
2023 Notes	3,168	13,202
2026 Notes	28,676	—

Three Months Ended
March 31,
2020 2019

2022 Notes 8,997
8,997
2023 Notes 13,202
13,202

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Note 129 — Employee Benefit Plans

Long-Term Incentive Plan

~~We currently have 1 active long-term incentive plan: the~~

As of March 31, 2021, there were 6.0 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”). ~~As of March 31, 2020, there were 7.0 million shares of our common stock available for issuance under the 2005 Incentive Plan.~~ During the three-month period ended March 31, ~~2020,~~2021, the following grants of share-based awards were made under the 2005 Incentive Plan:


		Grant Date
		Fair Value
Date of Grant	Shares/Units	Per Share/Unit		Vesting Period
January 1, 2021 ⁽¹⁾	452,381	$	4.20	33% per year over three years
January 4, 2021 ⁽²⁾	452,381	$	5.33	100% on January 4, 2024
January 4, 2021 ⁽³⁾	14,249	$	4.20	100% on January 1, 2023

Date of Grant
Shares/
Units

Grant Date
Fair Value
Per Share/Unit
Vesting Period

January 2, 2020 ⁽¹⁾
369,938
$ 9.63
33% per year over three years
January 2, 2020 ⁽²⁾
369,938
13.15
100% on January 2, 2023
January 2, 2020 ⁽³⁾
5,679
9.63
100% on January 1, 2022


(1)	Reflects grants of restricted stock units (“RSUs”) to our executive ~~officers and select management employees.~~officers.

(2)

Reflects grants of performance share units (“PSUs”) to our executive ~~officers and select management employees. The~~officers. These PSUs ~~provide for an award~~consist of two components: (i) 50% based on the performance of our common stock ~~over a three-year period with~~and (ii) 50% based on cumulative total Free Cash Flow (“FCF”). The grant date fair value represents the ~~maximum amount~~average grant date fair value of the ~~award being 200% of the original PSU awards and the minimum amount being 0.~~two components.


(3)	Reflects grants of restricted stock 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. No restricted stock awards were granted in 2021. All outstanding unvested restricted stock awards were granted in 2020 and 2019. For the three-month periods ended March 31, 2021 and 2020, ~~and 2019, $1.1~~$0.8 million and ~~$1.3~~$1.1 million, respectively, were recognized as share-based compensation related to restricted stock.

~~Table of Contents~~

~~The estimated fair value of~~

Our existing PSUs ~~is determined using a Monte Carlo simulation model. PSUs~~that were granted prior to ~~2017 were settled in cash and accounted for as liability awards. PSUs granted beginning in 2017~~2021 are to be settled solely in shares of our common stock and ~~therefore~~ are accounted for as equity awards. Those PSUs contain a service condition and a market condition. PSUs granted in 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 are initially accounted for as equity awards. The PSUs granted in 2021 consist of 2 components: (i) 50% based on the performance of our common stock against peer group companies, which contains a service condition and a market condition, and (ii) 50% based on cumulative total FCF, which contains a service condition and a performance condition. FCF 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.

Compensation cost for PSUs that have a service condition and a market condition and are accounted for as equity awards is measured based on the ~~estimated~~ grant date estimated fair value and recognized over the vesting period on a straight-line ~~basis~~basis. The grant date estimated fair value is determined using a Monte Carlo simulation model. Compensation cost for PSUs that have a service condition and a performance condition and are accounted for as ~~an increase~~equity awards is initially measured based on the grant date fair value. Cumulative compensation cost is subsequently adjusted at the end of each reporting period to ~~equity.~~reflect the current estimation of achieving the performance condition. For the three-month periods ended March 31, 2021 and 2020, ~~and 2019, $1.1~~$1.0 million and ~~$1.3~~$1.1 million, respectively, were recognized as share-based compensation related to equity PSUs. In January ~~2020,~~2021, based on the performance of our common stock price as compared to our performance peer group over a three-year period, ~~589,335~~368,038 equity ~~PSU awards~~PSUs granted in ~~2017~~2018 vested at 200% ~~and resulted in the delivery of 1,178,670~~, representing 736,075 shares of our common stock with a total market value of ~~$11.4~~$3.1 million.

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RSUs granted in 2021 have been accounted for as liability awards. Liability RSUs are measured at their estimated fair value at 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 period ended March 31, 2021, $0.2 million was recognized as compensation cost.

In ~~2020~~2021 and ~~2019,~~2020, we granted fixed-value cash awards of ~~$4.7~~$3.4 million and ~~$4.6~~$4.7 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. For the three-month periods ended March 31, 2021 and 2020, ~~and 2019, $1.2~~$1.0 million and ~~$0.8~~$1.2 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

We sponsor a defined contribution 401(k) retirement plan. ~~Our~~We suspended our discretionary contributions ~~which were reactivated in April 2019, are in the form of cash and currently consist of a 50% match of each participant’s contribution up to 5% of the participant’s salary.~~

for an indefinite period beginning January 2021.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”). As of March 31, ~~2020, 1.9~~2021, 1.7 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 14 to our ~~2019~~2020 Form 10-K.

Note 1310 — Business Segment Information

We have 3 reportable business segments: Well Intervention, Robotics and Production Facilities. Our U.S., U.K. and Brazil well intervention operating segments are aggregated into the Well Intervention ~~business~~ segment for financial reporting purposes. Our Well Intervention ~~reportable~~ segment ~~includes~~provides services enabling our ~~vessels and/~~customers to safely access offshore wells for the purpose of performing well enhancement or ~~equipment used to perform well intervention services~~decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and the ~~chartered~~ Siem Helix 1 and Siem Helix 2 chartered vessels. Our well intervention equipment includes IRSs, SILs and ~~SILs,~~the ROAM, some of which we provide on a stand-alone basis. Our Robotics segment ~~includes ROVs, trenchers~~provides offshore construction, cable trenching, seabed clearance, inspection, repair and ~~a ROVDrill, which are designed to complement well intervention~~maintenance services ~~and offshore construction~~ to both the oil and gas and the renewable energy ~~markets.~~markets globally. Our Robotics services also complement well intervention services. Our Robotics segment ~~also~~ includes ROVs, trenchers and a ROVDrill, and 2 robotics support vessels under long-term charter, the Grand Canyon II and the Grand Canyon III, as well as spot vessels ~~including the~~ ~~Ross Candies,~~ ~~which is under a flexible charter agreement.~~as needed. Our Production Facilities segment includes the HP I, the HFRS ~~our ownership interest in Independence Hub (Note 4)~~ and our ownership of oil and gas properties (Note 2)11). All material intercompany transactions between the segments have been eliminated.

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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,
	2021		2020
Net revenues —
Well Intervention	$	133,768	$	140,652
Robotics		22,156		35,258
Production Facilities		16,447		15,541
Intercompany eliminations		(8,956)		(10,430)
Total	$	163,415	$	181,021

Income (loss) from operations —
Well Intervention	$	5,243	$	(5,692)
Robotics		(2,934)		(2,824)
Production Facilities		6,514		3,643
Segment operating income (loss)		8,823		(4,873)
Goodwill impairment ⁽¹⁾		—		(6,689)
Corporate, eliminations and other		(9,378)		(9,465)
Total	$	(555)	$	(21,027)

Three Months Ended
March 31,
2020 2019
Net revenues —
Well Intervention $ 140,652
$ 122,231
Robotics 35,258
39,041
Production Facilities 15,541
15,253
Intercompany eliminations (10,430 ) (9,702 )
Total $ 181,021
$ 166,823

Income (loss) from operations —
Well Intervention $ (5,692 ) $ 9,641
Robotics (2,824 ) (3,904 )
Production Facilities 3,643
4,405
Segment operating income (loss) (4,873 ) 10,142
Goodwill impairment ⁽¹⁾
(6,689 ) —
Corporate, eliminations and other (9,465 ) (9,873 )
Total $ (21,027 ) $ 269

(1)

~~Relates~~As a result of the decline in oil prices as well as energy and energy services valuations during the first quarter 2020 due to the COVID-19 pandemic and the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”), we impaired all of our goodwill, ~~associated with our STL~~which consisted entirely of goodwill attributable to the acquisition ~~(Note 6)~~of a controlling interest in Subsea Technologies Group Limited (“STL”).

Intercompany segment amounts are derived primarily from equipment and services provided to other business ~~segments at rates consistent with those charged to third parties.~~segments. Intercompany segment revenues are as follows (in thousands):

Three Months Ended
March 31,
2020 2019

Well Intervention $ 3,304
$ 3,225
Robotics 7,126
6,477
Total $ 10,430
$ 9,702


	Three Months Ended
	March 31,
	2021		2020
Well Intervention	$	2,587	$	3,304
Robotics		6,369		7,126
Total	$	8,956	$	10,430

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, 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,
	2021		2020
Well Intervention	$	2,081,641	$	2,134,081
Robotics		108,372		132,550
Production Facilities		134,989		129,773
Corporate and other		96,747		101,874
Total	$	2,421,749	$	2,498,278

March 31,
2020 December 31,
2019

Well Intervention $ 2,134,796
$ 2,180,180
Robotics 136,845
151,478
Production Facilities 140,079
142,624
Corporate and other 102,431
122,449
Total $ 2,514,151
$ 2,596,731

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Note 1411 — Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure plug and abandonment (“P&A&A”) activities associated with our oil and gas ~~properties, which~~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.

Our AROs relate to 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. The following table describes the changes in our AROs (both current and long-term) (in thousands):

AROs at January 1, 2020 $ 28,258
Accretion expense 676
AROs at March 31, 2020 $ 28,934


	2021		2020
AROs at January 1,	$	30,913	$	28,258
Accretion expense		48		676
AROs at March 31,	$	30,961	$	28,934

Note 1512 — Commitments and Contingencies and Other Matters

Commitments ~~Related to Our Fleet~~

We have long-term charter agreements with Siem Offshore AS (“Siem”) for the Siem Helix1 and Siem Helix2 vessels, which are currently used in connection with our contracts with Petróleo Brasileiro S.A. (“Petrobras”) to perform well intervention work offshore Brazil. The initial term of the charter agreements with Siem is for seven years, with options to extend. The Siem Helix 1 charter expires June 2023 and the Siem Helix 2 charter expires February 2024. We have ~~long-term~~time charter agreements for the Grand Canyon II and Grand Canyon III vessels for use in our robotics operations. The expiration date of the Grand Canyon IIcharter ~~agreements expire~~was extended in February 2021 from April 2021 ~~for the~~ ~~Grand Canyon II~~ ~~and in May 2023 for the~~ until December 2021, with an option to renew. The Grand Canyon III.

~~We took delivery of the~~ ~~Q7000~~ ~~in November 2019 and the vessel commenced operations in Nigeria in January 2020. With the delivery of the~~ ~~Q7000, all significant capital commitments have been completed.~~

charter expires May 2023.

Contingencies and Claims

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

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 Jones Act. In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.

Note 1613 — 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. ~~As of March 31, 2020, we had restricted cash of $52.4 million, which serves as collateral for one project-related letter of credit and is expected to be restricted for less than one year.~~ The following table provides supplemental cash flow information (in thousands):

Three Months Ended
March 31,
2020 2019

Interest paid, net of interest capitalized $ 4,785
$ 1,604
Income taxes paid 2,584
2,704

Our ~~non-cash investing activities~~capital additions include the acquisition of property and equipment for which payment has not been made. These non-cash capital additions totaled ~~$5.2~~$0.6 million at March 31, ~~2020~~2021 and ~~$10.2~~$1.6 million at December 31, ~~2019.~~2020.

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Note 1714 — Allowance for Credit Losses

We estimate current expected credit losses on our accounts receivable at each reporting date. We estimate current expected credit losses based on our credit loss history, adjusted for current factors including global economic and business conditions, ~~oil and gas~~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):


	2021		2020
Balance at January 1,	$	3,469	$	—
Additions ⁽¹⁾		7		586
Write-offs ⁽²⁾		(1,811)		—
Adjustments ⁽³⁾		—		785
Balance at March 31,	$	1,665	$	1,371

Allowance for Credit Losses

Balance at December 31, 2019 $ —
Initial adoption of ASU 2016-13 (Note 1) 785
Provision for current expected credit losses 586
Balance at March 31, 2020 $ 1,371

(1)	The additions in allowance for credit losses reflect credit loss reserves 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.

(3)	The adjustment in allowance for credit losses reflects provision for current expected credit losses upon the adoption of ASU No. 2016-13 on January 1, 2020.

Note 1815 — 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.

~~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 —~~Approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.


(b)	Cost ~~Approach —~~Approach. Amount that would be required to replace the service capacity of an asset (replacement cost).


(c)	Income ~~Approach —~~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 and derivative instruments.~~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 fair value of our derivative instruments (Note 19) reflects our best estimate and is based upon exchange or over-the-counter quotations whenever they are available. Quoted valuations may not be available due to location differences or terms that extend beyond the period for which quotations are available. Where quotes are not available, we utilize other valuation techniques or models to estimate market values. The fair value of our interest rate swaps is calculated as the discounted cash flows of the difference between the rate fixed by the hedging instrument and the LIBOR forward curve over the remaining term of the hedging instrument. The fair value of our foreign currency exchange contracts is calculated as the discounted cash flows of the difference between the fixed payment specified by the hedging instrument and the expected cash inflow of the forecasted transaction using a foreign currency forward curve. These modeling techniques require us to make estimations of future prices, price correlation, volatility and liquidity based on market data. The following tables provide additional information relating to those financial instruments measured at fair value on a recurring basis (in thousands):

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Fair Value at March 31, 2020
Level 1 Level 2 Level 3 Total
Valuation
Approach
Liabilities:
Interest rate swaps $ —
$ 26
$ —
$ 26
(c)
Total liability $ —
$ 26
$ —
$ 26

Fair Value at December 31, 2019
Level 1 Level 2 Level 3 Total
Valuation
Approach
Assets:
Interest rate swaps $ —
$ 44
$ —
$ 44
(c)

Liabilities:
Foreign exchange contracts — hedging instruments —
401
—
401
(c)
Foreign exchange contracts — non-hedging instruments —
601
—
601
(c)
Total net liability $ —
$ 958
$ —
$ 958

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


	March 31, 2021				December 31, 2020
	Principal		Fair		Principal		Fair
	Amount ⁽¹⁾		Value ^{(2) (3)}		Amount ⁽¹⁾		Value ^{(2) (3)}
Term Loan (matures December 2021)	$	28,875	$	28,622	$	29,750	$	28,969
Nordea Q5000 Loan (matured January 2021) ⁽⁴⁾		—		—		53,572		53,598
MARAD Debt (matures February 2027)		52,676		58,502		56,410		62,318
2022 Notes (mature May 2022)		35,000		34,917		35,000		33,513
2023 Notes (mature September 2023)		30,000		28,942		30,000		28,650
2026 Notes (mature February 2026)		200,000		232,674		200,000		211,383
Total debt	$	346,551	$	383,657	$	404,732	$	418,431

March 31, 2020 December 31, 2019

Principal
Amount ⁽¹⁾

Fair
Value ^{(2) (3)}

Principal
Amount ⁽¹⁾

Fair
Value ^{(2) (3)}

Term Loan (matures December 2021) $ 32,375
$ 30,797
$ 33,250
$ 32,959
Nordea Q5000 Loan (matures January 2021) ⁽⁴⁾
80,357
80,257
89,286
89,398
MARAD Debt (matures February 2027) 60,054
62,293
63,610
68,643
2022 Notes (mature May 2022) 125,000
78,594
125,000
134,225
2023 Notes (mature September 2023) 125,000
78,125
125,000
162,188
Total debt $ 422,786
$ 330,066
$ 436,146
$ 487,413


(1)	Principal amount includes current maturities and excludes ~~the~~any related unamortized debt discount and debt issuance costs. See Note 75 for additional disclosures on our long-term debt.

(2)

The estimated fair value of the 2022 Notes, the 2023 Notes and the ~~2023~~2026 Notes was determined using Level 1 fair value inputs under the market approach. The fair value of the Term Loan, the Nordea Q5000 Loan and 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.


(3)	The principal amount and estimated fair value of the 2022 Notes, the 2023 Notes and the ~~2023~~2026 Notes are for the entire instrument inclusive of the conversion feature, ~~reported~~which had been accounted for in shareholders’ ~~equity.~~equity through December 31, 2020.


(4)	The ~~maturity date of the~~ Nordea Q5000 Loan was ~~extended from April 2020 to~~fully repaid upon maturity in January 2021 ~~as a result of an amendment to the Nordea Credit Agreement in March 2020~~ (Note 7)5).

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~~Note 19 — Derivative Instruments and Hedging Activities~~

Our business is exposed to market risks associated with interest rates and foreign currency exchange rates. Our risk management activities involve the use of derivative financial instruments to mitigate the impact of market risk exposure related to variable interest rates and foreign currency exchange rates. To reduce the impact of these risks on earnings and increase the predictability of our cash flows, from time to time we enter into derivative contracts, including interest rate swaps and foreign currency exchange contracts. All derivative instruments are reflected in the accompanying condensed consolidated balance sheets at fair value.

We engage solely in cash flow hedges. Cash flow hedges are entered into to hedge the variability of cash flows related to a forecasted transaction or to be received or paid related to a recognized asset or liability. Changes in the fair value of derivative instruments that are designated as cash flow hedges are reported in OCI. These changes are subsequently reclassified into earnings when the hedged transactions affect earnings. Changes in the fair value of a derivative instrument that does not qualify for hedge accounting are recorded in earnings in the period in which the change occurs.

~~For additional information regarding our accounting for derivative instruments and hedging activities, see Notes 2 and 21 to our 2019 Form 10-K.~~

~~Interest Rate Risk~~

From time to time, we enter into interest rate swaps to stabilize cash flows related to our long-term variable interest rate debt. In June 2015, we entered into interest rate swap contracts to fix the interest rate on $187.5 million of the Nordea Q5000 Loan (Note 7). These swap contracts, which are settled monthly, began in June 2015 and extend through April 2020. Our interest rate swap contracts qualify for cash flow hedge accounting treatment. Changes in the fair value of interest rate swaps are reported in accumulated OCI (net of tax). These changes are subsequently reclassified into earnings when the anticipated interest is recognized as interest expense.

~~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. We enter into foreign currency exchange contracts from time to time to stabilize expected cash outflows related to forecasted transactions that are denominated in foreign currencies. In February 2013, we entered into foreign currency exchange contracts to hedge our foreign currency exposure associated with the ~~Grand Canyon II~~ ~~and~~ ~~Grand Canyon III~~ charter payments denominated in Norwegian kroner through July 2019 and February 2020, respectively. Changes in the fair value of foreign currency exchange contracts that qualify for hedge accounting treatment are reported in accumulated OCI (net of tax). These changes are subsequently reclassified into earnings when the forecasted payments are made. Changes in the fair value of foreign currency exchange contracts that do not qualify as cash flow hedges are recognized immediately in earnings within “Other expense, net” in the accompanying condensed consolidated statements of operations.

~~Quantitative Disclosures Relating to Derivative Instruments~~

~~The following table presents the balance sheet location and fair value of our derivative instruments that were designated as hedging instruments (in thousands):~~

March 31, 2020 December 31, 2019

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value
Asset Derivative Instruments:
Interest rate swaps Other current assets $ —
Other current assets $ 44
$ —
$ 44

Liability Derivative Instruments:
Interest rate swaps Accrued liabilities $ 26
Accrued liabilities $ —
Foreign exchange contracts Accrued liabilities —
Accrued liabilities 401
$ 26
$ 401

~~Table of Contents~~

~~The following table presents the balance sheet location and fair value of our derivative instruments that were not designated as hedging instruments (in thousands):~~

March 31, 2020 December 31, 2019

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value
Liability Derivative Instruments:
Foreign exchange contracts Accrued liabilities $ —
Accrued liabilities $ 601
$ —
$ 601

The following tables present the impact that derivative instruments designated as hedging instruments had on our accumulated OCI (net of tax) and our condensed consolidated statements of operations (in thousands):

Unrealized Loss
Recognized in OCI
Three Months Ended
March 31,
2020 2019

Foreign exchange contracts $ (54 ) $ (34 )
Interest rate swaps (42 ) (115 )
$ (96 ) $ (149 )

Location of Gain (Loss) Reclassified from
Accumulated OCI into Earnings

Gain (Loss) Reclassified from
Accumulated OCI into Earnings
Three Months Ended
March 31,
2020 2019

Foreign exchange contracts Cost of sales $ (455 ) $ (2,078 )
Interest rate swaps Net interest expense 28
232
$ (427 ) $ (1,846 )

~~The following table presents the impact that derivative instruments not designated as hedging instruments had on our condensed consolidated statements of operations (in thousands):~~

Location of Loss
Recognized in Earnings
Loss Recognized in Earnings
Three Months Ended
March 31,
2020 2019

Foreign exchange contracts Other expense, net $ (81 ) $ (40 )
$ (81 ) $ (40 )

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Item 2. Management’s Discussion and Analysis of Financial Condition andResults 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:

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

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

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statements regarding our backlog and commercial contracts and rates thereunder;

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statements regarding our ability to enter into and/or perform commercial contracts, including the scope, timing and outcome of those contracts;

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statements regarding the spot market, the continuation of our current backlog, our spending and cost reduction plans and our ability to manage changes, and the ongoing 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 the acquisition, construction, completion, upgrades to or maintenance of vessels, systems or equipment and any anticipated costs or downtime related thereto;

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statements regarding any financing transactions or arrangements, or our ability to enter into such transactions or arrangements;

~~statements regarding our business strategy and any other business plans, forecasts or objectives, any or all~~

Table of ~~which are subject to change;~~Contents

~~statements regarding projections of revenues, gross margins, expenses, earnings or losses, working capital, debt and liquidity, or other financial items;~~

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statements regarding potential legislative, governmental, regulatory, administrative or other public body actions, requirements, permits or decisions;

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statements regarding our trade receivables and their collectability;

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statements regarding potential developments, industry trends, performance or industry ranking;

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statements regarding global, market or investor sentiment with respect to fossil fuels;

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statements regarding our existing activities in, and future expansion into, the offshore renewable energy market;

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statements regarding general economic or political conditions, whether international, national or in the regional or local markets in which we do business;

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statements regarding our ability to retain our senior management and other key employees;

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statements regarding the underlying assumptions related to any projection or forward-looking statement; and

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any other statements that relate to non-historical or future information.

~~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 ongoing COVID-19 pandemic and the recent oil price decline, and their respective effects and results, our protocols and plans, the continuation of our current backlog, the spot market, our cost reduction plans and our ability to manage current changes;

~~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 general economic or political conditions, whether international, national or in the regional or local markets in which we do business;~~

~~statements regarding our ability to retain our senior management and other key employees;~~

~~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:

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the results and effects of the ongoing COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto;

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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;

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the general impact of oil and gas price volatility and the cyclical nature of the oil and gas market;

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the impact of any potential cancellation, deferral or modification of our work or contracts by our customers;

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the ability to effectively bid, renew and perform our contracts, including the impact of equipment problems or failure;

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the impact of the imposition by our customers of rate reductions, fines and penalties with respect to our operating assets;

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unexpected future capital expenditures, including the amount and nature thereof;

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the effectiveness and timing of completion of our vessel and/or system upgrades and major maintenance items;

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unexpected delays in the delivery, chartering or customer acceptance, and terms of acceptance, of our assets;

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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;

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the success of our risk management activities;

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the effects of competition;

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the availability of capital (including any financing) to fund our business strategy and/or operations;

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the impact of current and future laws and governmental regulations and how they will be interpreted or enforced;

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the future impact of U.K.’s exit from the European Union (the “EU”), known as Brexit, and related trade agreements between the U.K. and the EU on our business, operations and financial condition;

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the effect of adverse weather conditions and/or other risks associated with marine operations;

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the impact of foreign currency exchange controls, potential illiquidity of those currencies and exchange rate fluctuations;

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the effectiveness of our future hedging activities;

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the potential impact of a loss of one or more key employees; and

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the impact of general, market, industry or business conditions.

~~the results and effects of the ongoing COVID-19 pandemic and the recent oil price decline and actions by customers, suppliers and partners with respect thereto;~~

~~the impact of domestic and global economic conditions and the future impact of such conditions on the oil and gas industry and the demand for our services;~~

~~the general impact of oil and gas price fluctuations and the cyclical nature of the oil and gas industry;~~

~~the impact of any potential cancellation, deferral or modification of our work or contracts by our customers;~~

~~the ability to effectively bid 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;~~

~~unexpected future capital expenditures, including the amount and nature thereof;~~

~~the effectiveness and timing of completion of our vessel and/or system upgrades and major maintenance items;~~

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~~unexpected delays in the delivery, chartering or customer acceptance, and terms of acceptance, of our assets;~~

~~the effects of our indebtedness, our ability to comply with debt covenants and our ability to reduce capital commitments;~~

~~the results of our continuing efforts to control costs and improve performance;~~

~~the success of our risk management activities;~~

~~the effects of competition;~~

~~the availability of capital (including any financing) to fund our business strategy and/or operations;~~

~~the impact of current and future laws and governmental regulations, including tax and accounting developments, such as the U.S. Tax Cuts and Jobs Act and the CARES Act and regulations thereunder;~~

~~the impact of U.K.’s exit from the European Union, known as Brexit, on our business, operations and financial condition, which is unknown at this time;~~

~~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 our current and future hedging activities;~~

~~the potential impact of a loss of one or more key employees; and~~

~~the impact of general, market, industry or business conditions.~~

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 ~~under Item 1A. “Risk Factors”~~ in ~~this Quarterly Report, and Item 1A. “Risk Factors” and~~ Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2019~~2020 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 the 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 these 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, ~~expressed~~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 ~~2019~~2020 Form 10-K that attempt to advise interested parties of the risks and factors that may affect our business.

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 and robotics operations. ~~With~~The services we offer to the ~~delivery in November 2019~~oil and gas market cover the lifecycle of an offshore oil or gas field, and the ~~commencement of operations in January 2020 of~~services we offer to the ~~Q7000, our~~renewable energy market are currently focused on offshore wind farm projects and cable burial operations. Our well intervention fleet ~~currently~~ includes seven purpose-built well intervention vessels, six IRSs, three SILs and ~~one Riserless Open-water Abandonment Module (“ROAM”).~~the ROAM. Our robotics equipment ~~currently~~ includes 4442 work-class ROVs, four trenchers and one ROVDrill. We ~~also~~ charter ROV support vessels on both long-term and spot bases to facilitate our ROV and trenching operations. Our well intervention and ~~robotic~~robotics operations are geographically dispersed throughout the world. Our Production Facilities segment includes the HP I, the HFRS and ~~several wells~~our ownership of oil and ~~related infrastructure associated with the Droshky Prospect.~~

Our alliance with Schlumberger leverages the parties’ capabilities to provide a unique, fully integrated offering to clients, combining marine support with well access and control technologies. We and Schlumberger jointly developed a 15,000 working p.s.i. IRS, which was completed and placed into service in January 2018, and our first ROAM, which is currently available to customers.

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gas properties.

Economic Outlook and Industry Influences

Demand for our services is primarily influenced by the condition of the oil and gas ~~industry,~~ and the renewable energy markets, in particular, the willingness of ~~oil and gas~~offshore energy companies to spend on operational activities and capital projects. The performance of our business is also largely ~~dependent on~~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 several other factors, including:

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worldwide economic activity and general economic and business conditions, including access to global capital and capital markets;

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the global supply and demand for oil and natural gas;

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political and economic uncertainty and geopolitical unrest, including regional conflicts and economic and political conditions in oil-producing regions;

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actions taken by OPEC and/or OPEC+;

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the availability and discovery rate of new oil and natural gas reserves in offshore areas;

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the exploration and production of onshore shale oil and natural gas;

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the cost of offshore exploration for and production and transportation of oil and natural gas;

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the level of excess production capacity;

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the ability of oil and gas companies to generate funds or otherwise obtain external capital for capital projects and production operations;

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the environmental and social sustainability of the oil and gas sector and the perception thereof, including within the investing community;

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the sale and expiration dates of offshore leases globally;

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governmental restrictions on oil and gas leases;

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technological advances affecting energy exploration, production, transportation and consumption;

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potential acceleration of the development of alternative fuels;

~~worldwide economic activity and general economic and business conditions, including available access to global capital and capital markets;~~

~~the global supply and demand for oil and natural gas;~~

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~~political and economic uncertainty and geopolitical unrest, including regional conflicts and economic and political conditions in the Middle East and other oil-producing regions;~~

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shifts in end-customer preferences toward fuel efficiency and the use of natural gas or renewable energy alternatives;

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weather conditions, natural disasters, and epidemic and pandemic diseases, including the ongoing COVID-19 pandemic;

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laws, regulations and policies directly related to the industries in which we provide services, and their interpretation and enforcement;

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environmental and other governmental regulations; and

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domestic and international tax laws, regulations and policies.

~~actions taken by OPEC and/or OPEC+, including actions such as the oil price war during the first quarter 2020;~~

~~the availability and discovery rate of new oil and natural gas reserves in offshore areas;~~

~~the exploration and production of onshore shale oil and natural gas;~~

~~the cost of offshore exploration for and production and transportation of oil and natural gas;~~

~~the level of excess production capacity;~~

~~the ability of oil and gas companies to generate funds or otherwise obtain external capital for capital projects and production operations;~~

~~the sale and expiration dates of offshore leases globally;~~

~~technological advances affecting energy exploration, production, transportation and consumption;~~

~~potential acceleration of the development of alternative fuels;~~

~~shifts in end-customer preferences toward fuel efficiency and the use of natural gas or renewable energy alternatives;~~

~~weather conditions, natural disasters, and epidemic and pandemic diseases, including the ongoing COVID-19 pandemic;~~

~~environmental and other governmental regulations; and~~

~~domestic and international tax laws, regulations and policies.~~

Crude oil prices ~~declined significantly in 2014 and~~historically have been volatile, ~~since then. Brent crude oil prices fluctuated between $53 and $75 per barrel during 2019 before declining precipitously in the first quarter 2020 to lows below $20 per barrel~~which volatility has been exacerbated recently due to the ongoing COVID-19 pandemic as well as ~~the price war among~~actions taken by OPEC+ ~~nations during the first quarter 2020. Low~~nations. Prices have since recovered to pre-COVID-19 levels, but their stability and recovery remain uncertain. The decline in oil prices in 2020 and the volatility and uncertainty in prices have caused oil and gas operators ~~recently~~ to drastically reduce spending ~~(both~~(on both operational activities and capital ~~spending)~~projects), which has decreased the demand and rates for services provided by ~~all~~ offshore oil and gas services providers. Historically, drilling rigs have been the asset class used for offshore well intervention work, and our customers have used drilling rigs on existing long-term contracts to perform well intervention work instead of new drilling activities. ~~This rig~~Rig day rates are also a pricing indicator for our services. Rig overhang, combined with lower volumes of work ~~for~~and lower day rates quoted by drilling rig contractors, affects the utilization and/or rates we can achieve for our assets and services. Furthermore, additional volatile and uncertain macroeconomic conditions in some regions and countries around the world, such as West Africa, Brazil, China and the U.K. following Brexit, may have a direct and/or indirect impact on our existing contracts and contracting opportunities and may introduce further volatility into our operations and/or financial results.

We saw improvements in 2019 as compared to 2018 and expected to see a continued recovery as we entered 2020. Rig overhang had reduced, and customer activity and oil prices had recovered to some extent. However, that recovery has now been halted with the

The ongoing COVID-19 pandemic ~~as well as the OPEC+ price war during the first quarter 2020.~~has resulted in a new period of market weakness. While the full impact of ~~these recent events,~~the COVID-19 pandemic, including the duration of the decrease in economic activity ~~due to COVID-19~~ and the resulting impact on the demand and price of oil, isremains unknown, we expect that the impact of COVID-19 on the industry ~~may be depressed through 2021. We are seeing and expect to~~will continue to ~~see~~be felt through 2021 and possibly longer. We believe the uncertainty and other conditions of the current environment will make it more difficult for us to secure long-term contracts for our vessels and systems, as operators ~~reducing spending and deferring work, asserting claims of force majeure and/or cancelling contracts and rig contractors lowering prices, stacking rigs, furloughing employees, and recognizing losses.~~have been less willing to commit to future spending. These developments have also ~~have~~ impacted, and are expected to continue to impact, many other aspects of our industry and the global economy, including limiting access to and use of capital across various sources and markets, disrupting supply chains and increasing costs, and negatively affecting human capital resources including complicating offshore crew changes due to health and travel restrictions as well as the overall health of the global workforce.

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The COVID-19 pandemic and its effects on our industry and the ~~OPEC+ price war have resulted in a significant decrease in the price~~global economy impacted our 2020 and 2021 operating results to date. Most if not all of ~~oil and caused significant disruption and uncertainty in the~~our oil and gas ~~market. While these events did not materially impact our operating results or financial condition during the first quarter 2020, we did incur related impairment losses and our~~ customers have ~~begun to reduce~~cut their spending, which ~~we anticipate will reduce~~has reduced the demand and rates for the services offered to our ~~services at least~~oil and gas customers. We warm-stacked two of our vessels in 2020 as a result of decreased demand and government lock-downs, and the Seawell in the ~~near term and perhaps longer. Additionally, these events have created~~North Sea remains stacked to date. The COVID-19 pandemic continues to pose challenges with, and increase costs related to, our supply chain, logistics and human capital resources, including minimizing the direct impact of COVID-19 on our offshore workforce and challenges with offshore crew changes due to travel restrictions and quarantine measures. ~~While these market disruptions may be temporary, we cannot reliably estimate the duration of the COVID-19 pandemic or~~

Despite this current ~~market conditions, or the ultimate impact they will have on our financial position, results of operations and cash flows.~~

~~Although this sustained~~ period of market weakness and volatility, ~~has been exacerbated by the ongoing COVID-19 pandemic and the OPEC+ price war,~~ over the longer term we expect oil and gas companies to increasingly focus on optimizing production of their existing subsea wells. As oil and gas companies re-assess and focus their budgetary spend allocations, we expect that it may be weighted towards production enhancement activities rather than exploration projects as enhancement is less expensive per incremental barrel of oil than new exploration. Moreover, as the subsea tree base expands and ages, the demand for P&A services should persist. ~~We believe that we have a competitive advantage in performing well intervention services efficiently.~~ Our well intervention and robotics operations are intended to service the ~~life span~~lifecycle of an oil and gas field as well as to provide P&A services at the end of the life of a field as required by governmental regulations. We believe that we have a competitive advantage in performing well intervention services efficiently and we believe that fundamentals for our business 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 are primary drivers of demand for our services. This belief is based on multiple factors, including: (1) the need to extend the life of subsea wells is significant to the commercial viability of the wells as P&A costs are considered; (2) our services offer commercially viable alternatives for reducing the finding and development costs of reserves as compared to new drilling as well as extending and enhancing the commercial life of subsea wells; and (3) in past cycles, well intervention and workover have been some of the first activities to recover, and in a prolonged market downturn are important to the commercial viability of deepwater wells.

~~Backlog~~

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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.

Backlog

We provide services and methodologies that we believe are critical to maximizing production economics. Our services cover the lifecycle of an offshore oil or gas field. In addition to serving the oil and gas market, our robotics assets are contracted for the development of offshore renewable energy projects (wind farms). We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. ~~In addition to serving the oil and gas market, our Robotics assets are contracted for the development of renewable energy projects (wind farms).~~ As of March 31, ~~2020,~~2021, our consolidated backlog that is supported by written agreements or contracts totaled ~~$678~~$358 million, of which ~~$392~~$239 million is expected to be performed over the remainder of ~~2020.~~2021. The substantial majority of our backlog is associated with our Well Intervention ~~business~~ segment. As of March 31, ~~2020,~~2021, our well intervention backlog was ~~$471~~$162 million, ~~including $306 million~~all of which is expected to be performed over the remainder of ~~2020.~~2021. Our contract with BP to provide well intervention services with our Q5000 semi-submersible vessel, our agreements with Petrobras to provide well intervention services offshore Brazil with the Siem Helix 1 and Siem Helix 2 chartered vessels, and our fixed fee agreement for the HP I represent approximately ~~85%~~57% of our total backlog as of March 31, ~~2020.~~2021. Backlog is not necessarily a reliable indicator of revenues derived from these contracts as services may be added or 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 the rates we would have generated had we performed the contract.

RESULTS OF OPERATIONS

We have three reportable business segments: Well Intervention, Robotics 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.

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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 measure our operating performance based on EBITDA and free cash flow. EBITDA and free cash flow are non-GAAP financial measures that are commonly used but are not recognized accounting terms under GAAP. We use EBITDA and free cash flow 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 and free cash flow 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 differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA and free cash flow 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 and the general provision for current expected credit losses, if any. In addition, we include realized losses from foreign currency exchange contracts not designated as hedging instruments, ~~and other than temporary loss on note receivable,~~ 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. In the following reconciliation, we provide amounts as reflected in ~~our accompanying~~the condensed consolidated financial statements unless otherwise noted.

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

Three Months Ended
March 31,
2020 2019

Net income (loss) $ (13,928 ) $ 1,318
Adjustments:
Income tax provision (benefit) (21,093 ) 324
Net interest expense 5,746
2,098
Other (income) expense, net 10,427
(1,166 )
Depreciation and amortization 31,598
28,509
Goodwill impairment 6,689
—
EBITDA 19,439
31,083
Adjustments:
Provision for current expected credit losses 586
—
Realized losses from foreign exchange contracts not designated as hedging instruments (682 ) (869 )
Adjusted EBITDA $ 19,343
$ 30,214

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	Three Months Ended
	March 31,
	2021		2020
Net loss	$	(3,050)	$	(13,928)
Adjustments:
Income tax provision (benefit)		116		(21,093)
Net interest expense		6,053		5,746
Other (income) expense, net		(1,617)		10,427
Depreciation and amortization		34,566		31,598
Goodwill impairment		—		6,689
EBITDA		36,068		19,439
Adjustments:
General provision for current expected credit losses		100		586
Realized losses from foreign exchange contracts not designated as hedging instruments		—		(682)
Adjusted EBITDA	$	36,168	$	19,343

The reconciliation of our cash flows from operating activities to free cash flow is as follows (in thousands):


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities	$	39,869	$	(17,222)
Less: Capital expenditures, net of proceeds from sale of assets		(1,329)		(12,389)
Free cash flow	$	38,540	$	(29,611)

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Three Months Ended
March 31,
2020 2019

Cash flows from operating activities $ (17,222 ) $ (34,246 )
Less: Capital expenditures, net of proceeds from sale of assets (12,389 ) (11,630 )
Free cash flow $ (29,611 ) $ (45,876 )

Comparison of Three Months Ended March 31, ~~2020~~2021 and ~~2019~~

2020

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


	Three Months Ended						Increase/
	March 31,						(Decrease)
	2021			2020			Amount		Percent
Net revenues —
Well Intervention	$	133,768		$	140,652		$	(6,884)	(5)	%
Robotics		22,156			35,258			(13,102)	(37)	%
Production Facilities		16,447			15,541			906	6	%
Intercompany eliminations		(8,956)			(10,430)			1,474
	$	163,415		$	181,021		$	(17,606)	(10)	%

Gross profit (loss) —
Well Intervention	$	8,726		$	(1,256)		$	9,982	795	%
Robotics		(933)			(467)			(466)	100	%
Production Facilities		7,213			4,207			3,006	71	%
Corporate, eliminations and other		(382)			(474)			92
	$	14,624		$	2,010		$	12,614	628	%

Gross margin —
Well Intervention		7	%		(1)	%
Robotics		(4)	%		(1)	%
Production Facilities		44	%		27	%
Total company		9	%		1	%
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Number of vessels or robotics assets ⁽¹⁾ / Utilization ⁽²⁾
Well Intervention vessels		7 / 70	%		7 / 72	%
Robotics assets ⁽³⁾		47 / 24	%		49 / 34	%
Chartered robotics vessels		3 / 90	%		6 / 89	%

Three Months Ended
March 31,
Increase/
(Decrease)
2020 2019 Amount Percent
Net revenues —
Well Intervention $ 140,652
$ 122,231
$ 18,421
15 %
Robotics 35,258
39,041
(3,783 ) (10 )%
Production Facilities 15,541
15,253
288
2 %
Intercompany eliminations (10,430 ) (9,702 ) (728 )
$ 181,021
$ 166,823
$ 14,198
9 %

Gross profit (loss) —
Well Intervention $ (1,256 ) $ 13,510
$ (14,766 ) (109 )%
Robotics (467 ) (1,589 ) 1,122
71 %
Production Facilities 4,207
4,771
(564 ) (12 )%
Corporate, eliminations and other (474 ) (438 ) (36 )
$ 2,010
$ 16,254
$ (14,244 ) (88 )%

Gross margin —
Well Intervention (1)%
11%

Robotics (1)%
(4)%

Production Facilities 27%
31%

Total company 1%
10%

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

Well Intervention vessels 7/72%
6/74%

Robotics assets ⁽³⁾
49/34%
52/39%

Chartered robotics vessels 6/89%
4/88%

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(1)	Represents the number of vessels or robotics assets as of the end of the period, including spot vessels and those under ~~both short-term and~~ long-term ~~charters,~~charter, and excluding acquired vessels prior to their in-service dates 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 or robotics assets generated revenues by the total number of available calendar days in the applicable period. The average utilization rates of chartered robotics vessels during the three-month periods ended March 31, 2021 and 2020 included three and ~~2019 included~~ 272 ~~and 84~~ spot vessel days, respectively, at near full utilization.


(3)	Consists of ROVs, trenchers and ROVDrill.

Three Months Ended
March 31,
Increase/
(Decrease)
2020 2019

Well Intervention $ 3,304
$ 3,225
$ 79
Robotics 7,126
6,477
649
$ 10,430
$ 9,702
$ 728


	Three Months Ended
	March 31,				Increase/
	2021		2020		(Decrease)
Well Intervention	$	2,587	$	3,304	$	(717)
Robotics		6,369		7,126		(757)
	$	8,956	$	10,430	$	(1,474)

Net Revenues.Our ~~total~~consolidated net revenues ~~increased by 9%~~ for the three-month period ended March 31, ~~2020~~2021 decreased by 10% as compared to the same period in ~~2019, primarily~~2020, reflecting ~~higher~~lower revenues from our Well Intervention ~~business segment with the addition of the~~ ~~Q7000~~,and Robotics segments, offset in part by ~~lower~~higher revenues from our ~~Robotics business~~Production Facilities segment.

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Our Well Intervention revenues ~~increased~~decreased by ~~15%~~5% for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, primarily reflecting ~~higher revenues with~~lower vessel utilization in the ~~commencement of operations of the~~ ~~Q7000~~ ~~in Nigeria in January 2020 and higher utilization on our~~ North Sea ~~vessels. This revenue increase was partially~~and West Africa during the quarter, offset in part by ~~a reduction in vessel~~higher utilization in the Gulf of Mexico. Utilization in the Gulf of Mexico ~~with both~~during the ~~Q4000~~ ~~and the~~ ~~Q5000~~ ~~completing~~first quarter 2020 was lower due to our scheduled regulatory certification inspections ~~during~~for the ~~period.~~

Q4000 and the Q5000.

Robotics revenues decreased by ~~10%~~37% for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, primarily reflecting ~~the decrease in trenching activity and~~ a reduction in ~~ROV, trencher~~vessel days as well as decreased utilization of ROVs and ROVDrill, ~~utilization~~offset in part by an increase in trenching activities. Our results included 165 vessel days and 72 trenching days during the three-month period ended March 31, 2021 as compared to 405 vessel days and 42 trenching days during the same period in 2020.

Our Production Facilities revenues increased by 6% for the three-month period ended March 31, 2021 as compared to the same period in ~~2019.~~ 2020, primarily reflecting higher oil and gas production revenues.

Gross Profit (Loss). Our results included 42 vessel trenching days during the three months ended March 31, 2020 compared to 133 days during the same period in 2019. These reductions were partially offset by higher spot vessel utilization, which increased to 272 days from 84 days in the prior year period.

~~Our Production Facilities revenues~~consolidated gross profit increased by 2%$12.6 million for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, primarily reflecting higher ~~production revenues from the oil and gas properties that we acquired from Marathon Oil in January 2019 (Note 2).~~

~~Gross Profit (Loss).~~ ~~Our total gross profit decreased by 88% for the three-month period ended March 31, 2020 as compared to the same period in 2019 reflecting lower~~ gross profit in our Well Intervention ~~business~~and Production Facilities segments, offset in part by higher gross loss in our Robotics segment.

The gross profit related to our Well Intervention ~~business~~ segment ~~decreased~~increased by ~~109%~~$10.0 million for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, primarily reflecting ahigher revenues on the Q5000 and cost reduction ~~in vessel~~efforts associated with lower utilization in the ~~Gulf of Mexico, with both the~~ ~~Q4000~~North Sea and ~~the~~ ~~Q5000~~ ~~completing scheduled regulatory certification inspections~~West Africa during ~~the period, offset in part by the contribution from the~~ ~~Q7000~~ ~~and higher profits in the North Sea.~~

idle periods.

The gross loss related to our Robotics segment ~~decreased~~increased by ~~71%~~$0.5 million for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019,~~2020, primarily reflecting ~~a reduction in costs related to the termination of the~~ ~~Grand Canyon~~ ~~vessel charter in November 2019 and the expiration of the~~ ~~Grand Canyon II~~ ~~hedge in July 2019,~~lower revenues, offset in part by lower ~~revenues.~~

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operating costs.

The gross profit related to our Production Facilities segment ~~decreased~~increased by ~~12%~~$3.0 million for the three-month period ended March 31, ~~2020~~2021 as compared to the same period in ~~2019~~2020, primarily reflecting ~~significantly lower~~higher oil and gas production revenues and a reduction in direct ~~costs as the~~ HPI ~~vessel went into regulatory dry dock for recertification during three-month period ended March 31, 2020. The recertification costs are typically deferred and amortized.~~

costs.

Goodwill Impairment.The $6.7 million ~~impairment~~ charge ~~for~~in the three-month period ended March 31, 2020 reflects the ~~write-off~~impairment of the entire goodwill balance, ~~associated with~~which related to our acquisition of a controlling interest in STL (Note 6)10).

Selling, General and Administrative Expenses.Our selling, general and administrative expenses ~~increased by $0.4~~were $15.2 million for the three-month period ended March 31, ~~2020~~2021 as compared to $16.3 million for the same period in ~~2019. The increase was~~2020, primarily ~~attributable to the $0.6 million provision for current expected~~reflecting lower credit ~~losses as a result of the adoption of ASU No. 2016-13 in 2020 (Note 17).~~

loss reserves and lower employee compensation costs.

Net Interest Expense.Our net interest expense ~~increased by $3.6~~totaled $6.1 million for the three-month period ended March 31, ~~2020~~2021 as compared to $5.7 million for the same period in ~~2019,~~2020, primarily reflecting ~~lower~~the cessation of interest capitalization with the completion of the Q7000 in the first quarter 2020. Net interest expense for the three-month period ended March 31, 2020 excluded $1.2 million in capitalized ~~interest. Capitalized~~ interest ~~totaled $1.2~~associated with the Q7000 (Note 5).

Other Income (Expense), Net. Net other income was $1.6 million for the three-month period ended March 31, ~~2020~~2021 as compared to ~~$5.0 million for the same period in 2019 as a result of the completion of the~~ ~~Q7000~~.

~~Other Income (Expense), Net.~~ ~~We reported~~ net other expense of $10.4 million for the ~~three-month period ended March 31, 2020 as compared to net other income of $1.2 million for the~~ same period in ~~2019,~~2020, primarily reflecting foreign currency transaction ~~losses in the three-month period ended March 31, 2020 as compared to foreign currency transaction~~ gains ~~in the same period in 2019~~ due to the ~~weakening~~strengthening of the British pound.

Income Tax Provision (Benefit).Income tax ~~benefit~~provision was ~~$21.1~~$0.1 million for the three-month period ended March 31, ~~2020~~2021 as compared to an income tax ~~provision~~benefit of ~~$0.3~~$21.1 million for the same period in ~~2019.~~2020. The effective tax rates for the three-month periods ended March 31, 2021 and 2020 were (4.0)% and ~~2019 were~~ 60.2% ~~benefit and 19.7% expense,~~, respectively. The ~~variance~~decrease in the effective tax rate was primarily attributable to ~~our~~the absence of tax benefits derived from the CARES Act recorded in the same period last year, which included the carrying back of certain net operating losses to prior periods with higher income tax rates, as well as the result of the consolidation of certain U.S. branch operations with the Helix U.S. consolidated tax group and the earnings mix between our higher and lower tax rate jurisdictions (Note 8)6).

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LIQUIDITY AND CAPITAL RESOURCES

Overview

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


	March 31,		December 31,
	2021		2020
Net working capital ⁽¹⁾	$	270,504	$	246,338
Long-term debt ⁽¹⁾		299,560		258,912
Liquidity ⁽²⁾		376,992		451,532

March 31,
2020 December 31,
2019

Net working capital $ 151,048
$ 153,508
Long-term debt ⁽¹⁾
303,584
306,122
Liquidity ⁽²⁾
331,959
379,533

(1)

~~Long-term debt does not include the current~~Current maturities ~~portion~~ of our long-term debt ~~as that amount is~~of $36.5 million and $90.7 million, respectively, are included in net working ~~capital.~~capital and excluded from long-term debt. Long-term debt as of March 31, 2021 is ~~also~~net of unamortized debt issuance costs. Long-term debt as of December 31, 2020 is net of unamortized debt discounts and debt issuance costs. See Note 75 for information relating to our long-term ~~debt.~~debt, including the impact of our adoption of ASU No. 2020-06.

(2)

Liquidity, as defined by us, is equal to cash and cash equivalents, excluding restricted cash, plus available capacity under the Revolving Credit ~~Facility, which capacity is reduced by letters of credit drawn against that facility.~~Facility. Our liquidity at March 31, ~~2020~~2021 included cash and cash equivalents of ~~$159.4~~$204.8 million and ~~$172.6~~$172.2 million of available borrowing capacity under the Revolving Credit Facility (Note 7)5). Our liquidity at March 31, 2021 excluded $65.6 million of restricted cash securing a project related letter of credit (short-term), the restriction from which is expected to be released upon completion of the project. Our liquidity at December 31, ~~2019~~2020 included cash and cash equivalents of ~~$208.4~~$291.3 million and ~~$171.1~~$160.2 million of available borrowing capacity under the Revolving Credit Facility.

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The carrying ~~amount~~amounts of our long-term debt ~~including current maturities, net of unamortized debt discounts and debt issuance costs, is~~are as follows (in thousands):


	March 31,		December 31,
	2021		2020
Term Loan (matures December 2021)	$	28,732	$	29,559
Nordea Q5000 Loan (matured January 2021) ⁽¹⁾		—		53,532
MARAD Debt (matures February 2027)		49,749		53,361
2022 Notes (mature May 2022) ⁽²⁾		34,794		33,477
2023 Notes (mature September 2023) ⁽²⁾		29,555		26,922
2026 Notes (mature February 2026) ⁽²⁾		193,208		152,712
Total debt ⁽³⁾		336,038		349,563
Less current maturities		(36,478)		(90,651)
Long-term debt	$	299,560	$	258,912

March 31,
2020 December 31,
2019

Term Loan (matures December 2021) $ 32,041
$ 32,869
Nordea Q5000 Loan (matures January 2021) 79,959
89,031
MARAD Debt (matures February 2027) 56,639
60,073
2022 Notes (mature May 2022) ⁽¹⁾
116,690
115,765
2023 Notes (mature September 2023) ⁽¹⁾
109,092
108,115
Total debt $ 394,421
$ 405,853


(1)	The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 5).

(2)	As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount associated with the 2022 Notes, the 2023 Notes and the ~~2023~~2026 Notes ~~will increase to their face amounts through accretion~~(Note 1).

(3)	Amounts include current maturities and are net of ~~the~~any unamortized debt discounts ~~through May 1, 2022~~ and ~~September 15, 2023, respectively.~~debt issuance costs.

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


	Three Months Ended
	March 31,
	2021		2020
Cash provided by (used in):
Operating activities	$	39,869	$	(17,222)
Investing activities		(1,329)		(12,389)
Financing activities		(59,885)		(18,391)

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Three Months Ended
March 31,
2020 2019
Cash provided by (used in):
Operating activities $ (17,222 ) $ (34,246 )
Investing activities (12,389 ) (11,956 )
Financing activities (18,391 ) (14,055 )

Our current requirements for cash primarily reflect the need to fund our operations and capital spending for our current lines of business and to service our debt.

~~Given the~~

The ongoing COVID-19 pandemic, challenging market conditions and ~~recent market events resulting in~~ industry-wide spending cuts have impacted our revenues and we expect these events to continue to impact our results into the near future. Our operating cash flows are impacted to the extent we cannot replace those revenues or reduce costs. Despite these challenges, we remain focused on maintaining a strong balance sheet and adequate liquidity. ~~Over the near term, we plan to reduce, defer~~We have reduced, deferred or ~~cancel~~cancelled certain planned capital expenditures and ~~reduce~~reduced our overall cost ~~structures~~structure commensurate with our ~~expected~~ level of activities. In 2020, we extended our debt maturity profile with refinancing a portion of our 2022 Notes and 2023 Notes in favor of the 2026 Notes. Notwithstanding, we have at the same time continued to de-lever our balance sheet with the repayment of our Nordea Q5000 Loan in January 2021. We have reduced operating costs through various measures including warm stacking our vessels when idle. These costs should return with increases in activity. We believe that our cash on hand, internally generated cash flows and availability under the Revolving Credit Facility will be sufficient to fund our operations and service our debt over at least the next 12 months.

~~A prolonged~~

The ongoing COVID-19 pandemic and its impact on the energy and financial markets have contributed to rising yields on our existing debt as well as volatility in our stock price, both of which increase our cost of capital. The yield on the 2026 Notes is significantly higher than that of the 2022 Notes and 2023 Notes. The COVID-19 pandemic has also contributed to limited access to certain capital markets.

An ongoing period of weak, or ~~a significant decrease~~continued decreases in, industry activity may make it difficult to comply with our covenants and the other restrictions in the agreements governing our ~~debt.~~debt, and our failure to comply with these covenants and other restrictions could lead to an event of default. Current global and market conditions have increased the potential for that ~~difficulty. Furthermore, during any period~~difficulty and are expected to negatively impact the terms on which we secure a replacement of, ~~sustained weak economic activity~~or our lenders’ willingness to continue to participate in, our credit facility, which expires December 2021. Decreases in our revenues and ~~reduced~~ EBITDA, including as may be attributable to the fallout from the ongoing COVID-19 pandemic, may also limit our ability to fully access the Revolving Credit ~~Facility may be impacted.~~Facility. At March 31, ~~2020,~~2021, our available borrowing capacity under the Revolving Credit Facility, based on the applicable leverage ratio covenant, was ~~$172.6~~$172.2 million, net of ~~$2.4~~$2.8 million of letters of credit issued under that facility. We currently do not anticipate borrowing under the Revolving Credit Facility other than for the issuance of letters of credit. Our ability to comply with loan agreement covenants and other restrictions is affected by economic conditions and other events beyond our control. Our failure to comply with these covenants and other restrictions could lead to an event of default, the possible acceleration of our outstanding debt and the exercise of certain remedies by our lenders, including foreclosure against our collateral.

Operating Cash Flows

~~Total~~

Net cash flows ~~used in~~provided by operating activities ~~decreased by $17.0~~were $39.9 million for the three-month period ended March 31, ~~2020~~2021 as compared to net cash flows used by operating activities of $17.2 million for the same period in ~~2019~~2020. The $57.1 million increase in operating cash flows primarily ~~reflecting changes~~reflects lower operating loss and decreases in ~~our~~ working capital.

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Investing Activities

Capital expenditures represent cash paid principally for the acquisition, construction, completion, upgrade, modification and refurbishment of long-lived property and equipment such as dynamically positioned vessels, topside equipment and subsea systems. Capital expenditures also include interest on property and equipment under development. Significant (uses) sources of cash associated with investing activities are as follows (in thousands):

Three Months Ended
March 31,
2020 2019
Capital expenditures:
Well Intervention $ (12,263 ) $ (11,485 )
Robotics (44 ) —
Production Facilities —
(2 )
Other (82 ) (168 )
Proceeds from sale of assets —
25
Other —
(326 )
Net cash used in investing activities $ (12,389 ) $ (11,956 )


	Three Months Ended
	March 31,
	2021		2020
Capital expenditures:
Well Intervention	$	(1,259)	$	(12,263)
Robotics		—		(44)
Production Facilities		(70)		—
Other		—		(82)
Net cash used in investing activities	$	(1,329)	$	(12,389)

Our capital expenditures during the three-month period ended March 31, 2020 primarily included payments associated with the construction and completion of the Q7000 ~~(see below).~~

~~In September 2013, we entered into a contract for the construction of the~~ ~~Q7000~~, a newbuild semi-submersible well intervention vessel built to U.K. North Sea standards. Pursuant to the contract and subsequent amendments, 20% of the contract price was paid upon the signing of the contract, 20% was paid in each of 2016, 2017 and 2018, and the remaining 20% was paid upon the delivery of the vessel in November 2019. At March 31, 2020, our total investment in the ~~Q7000~~ ~~was $539.3 million, including $346.0 million of installment payments to the shipyard. The vessel~~which commenced operations in ~~Nigeria in~~ January 2020.

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Financing Activities

Cash flows from financing activities consist primarily of proceeds ~~from debt and equity transactions~~ and repayments ofrelated to our long-term debt. Net cash outflows from financing activities of $59.9 million for the three-month period ended March 31, 2021 primarily reflect the repayment of $58.2 million of scheduled maturities related to our indebtedness, including the final maturity of $53.6 million of our Nordea Q5000 Loan (Note 5). Net cash outflows from financing activities of $18.4 million for the three-month period ended March 31, 2020 primarily reflect the repayment of $13.4 million of our indebtedness (Note 7)5). ~~Net~~

Free Cash Flow

Free cash ~~outflows from financing activities of $14.1~~flow increased by $68.2 million for the three-month period ended March 31, ~~2019 primarily reflect the repayment of $13.3 million of our indebtedness.~~

~~Free Cash Flow~~

~~Free cash flow increased by $16.3 million for the three-month period ended March 31, 2020~~2021 as compared to the same period in ~~2019~~2020. The increase was primarily attributable to the increase in operating cash ~~flows.~~

flows and the decrease in capital expenditures.

Free cash flow is a non-GAAP financial measure. See “RESULTS OF OPERATIONS” above for the definition and calculation of free cash flow.

~~Outlook~~

We anticipate that our capital expenditures, including capitalized interest and regulatory certification costs for our vessels and systems, will approximate $38 million for 2020. We believe that cash on hand, internally generated cash flows and availability under the Revolving Credit Facility will provide the capital necessary to continue funding our 2020 operating needs and to meet our debt obligations due in 2020.

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Contractual Obligations and Commercial Commitments

The following table summarizes our contractual cash obligations as of March 31, ~~2020~~2021 and the scheduled years in which the obligations are contractually due (in thousands):


			Less Than						More Than
	Total ⁽¹⁾		1 Year		1-3 Years		3-5 Years		5 Years
Term Loan	$	28,875	$	28,875	$	—	$	—	$	—
MARAD debt		52,676		7,746		16,672		18,377		9,881
2022 Notes ⁽²⁾		35,000		—		35,000		—		—
2023 Notes ⁽³⁾		30,000		—		30,000		—		—
2026 Notes ⁽⁴⁾		200,000		—		—		200,000		—
Interest related to debt ⁽⁵⁾		80,319		20,126		32,621		27,285		287
Property and equipment		6,184		6,078		106		—		—
Operating leases ⁽⁶⁾		242,043		97,752		134,611		5,796		3,884
Total cash obligations	$	675,097	$	160,577	$	249,010	$	251,458	$	14,052

Total ⁽¹⁾

Less Than
1 Year
1-3 Years 3-5 Years
More Than
5 Years

Term Loan $ 32,375
$ 3,500
$ 28,875
$ —
$ —
Nordea Q5000 Loan 80,357
80,357
—
—
—
MARAD Debt 60,054
7,378
15,879
17,503
19,294
2022 Notes ⁽²⁾
125,000
—
125,000
—
—
2023 Notes ⁽³⁾
125,000
—
—
125,000
—
Interest related to debt ⁽⁴⁾
46,683
18,058
22,371
5,206
1,048
Property and equipment 5,319
5,319
—
—
—
Operating leases ⁽⁵⁾
338,310
103,400
181,871
48,029
5,010
Total cash obligations $ 813,098
$ 218,012
$ 373,996
$ 195,738
$ 25,352


(1)	Excludes unsecured letters of credit outstanding at March 31, ~~2020~~2021 totaling ~~$2.4~~$2.8 million. These letters of credit may be issued to support various obligations, such as contractual obligations, contract bidding and insurance activities.

(2)

Notes mature in May 2022. The 2022 Notes can be converted prior to their stated maturity if the closing price of our common stock for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds $18.06 per share, which is 130% of the conversion price. At March 31, 2020, the conversion trigger was not met. See Note 75 for additional information.

(3)

Notes mature in September 2023. The 2023 Notes can be converted prior to their stated maturity if the closing price of our common stock for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds $12.31 per share, which is 130% of the conversion price. At March 31, 2020, the conversion trigger was not met. See Note 75 for additional information.


(4)	Notes mature in February 2026. See Note 5 for additional information.

(5)	Interest payment obligations were calculated using stated coupon rates for fixed rate debt and interest rates applicable at March 31, ~~2020~~2021 for variable rate debt.

(6)

~~(5)~~

Operating leases include vessel charters and facility and equipment leases. At March 31, ~~2020,~~2021, our commitment related to long-term vessel charters totaled approximately ~~$299.2~~$215.8 million, of which ~~$111.5~~$86.9 million was related to the non-lease (services) components that are not included in operating lease liabilities in the condensed consolidated balance sheet as of March 31, ~~2020.~~2021.

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CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our discussion and analysis of our financial condition and results of operations, as reflected in the ~~accompanying~~ 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 affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience, available information and various other assumptions we believe to be reasonable under the circumstances. These estimates may change 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 and policies, please read our “Critical Accounting Estimates and Policies” as disclosed in our ~~2019~~2020 Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, ~~2020,~~2021, we were exposed to market risks associated with interest rates and foreign currency exchange rates.

Interest Rate Risk.As of March 31, ~~2020, $112.7~~2021, $28.9 million of our outstanding debt was subject to floating rates. The interest rate applicable to our variable rate debt may ~~continue to~~ rise, thereby increasing our interest expense and related cash outlay. In June 2015, we entered into various interest rate swap contracts to fix the interest rate on a portion of the Nordea Q5000 Loan. These swap contracts, which are settled monthly, began in June 2015 and extend through April 2020. As of March 31, 2020, the interest rate on $60.3 million of the Nordea Q5000 Loan was hedged. Debt subject to variable rates after considering hedging activities was $52.4 million. The impact of interest rate risk is estimated using a hypothetical increase in interest rates by 100 basis points for our variable rate long-term debt that is not hedged. Based on this hypothetical assumption, we would have incurred an additional $0.1 million in interest expense for the three-month period ended March 31, ~~2020.~~

2021.

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 ~~United States,~~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 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, resulting 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, ~~2020,~~2021, we recorded foreign currency translation ~~losses~~gains of ~~$33.6~~$4.6 million to accumulated other comprehensive loss. Deferred taxes have not been provided on foreign currency translation adjustments since we consider our undistributed earnings (when applicable) of our non-U.S. subsidiaries without operations in the U.S. to be permanently reinvested.

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.” For the three-month period ended March 31, ~~2020,~~2021, we ~~recognized~~recorded foreign currency transaction ~~losses~~gains of ~~$10.4~~$1.6 million, primarily related to our subsidiaries in the U.K.

~~In February 2013, we entered into various foreign currency exchange contracts to hedge our foreign currency exposure with respect to the~~ ~~Grand Canyon III~~ ~~charter payments denominated in Norwegian kroner, which were fully settled through February 2020. A portion~~Table of ~~these foreign currency exchange contracts qualified for cash flow hedge accounting treatment.~~Contents

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, ~~2020.~~2021. 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, ~~2020~~2021 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.

(b)Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2020~~2021 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 1512 to the Condensed Consolidated Financial Statements, which is incorporated herein by reference.

~~Item 1A. Risk Factors~~

~~The ongoing COVID-19 pandemic and the recent OPEC+ price war could disrupt our operations and adversely impact our business and financial results.~~

In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic. The nature of COVID-19 led to worldwide shutdowns and halting of commercial and interpersonal activity, as governments around the world imposed regulations in efforts to control the spread of COVID-19 such as shelter-in-place orders, quarantines, executive orders and similar restrictions. As a result the global economy has been marked by significant slowdown and uncertainty, which has led to a precipitous decline in oil prices in response to demand concerns, further exacerbated by the OPEC+ price war during the first quarter 2020 and global storage considerations. The confluence of these events has resulted in significantly weaker outlook for oil producers and by extension oilfield service companies, including reduced operating and capital budgets as well as market confidence in overall industry viability. We are not currently able to predict the duration or severity of the spread of COVID-19, the OPEC+ price war or the responses thereto, and if economic and industry conditions do not improve, these events will adversely impact our financial condition and results of operations.

The spread of COVID-19 to one or more of our locations, including our vessels, could significantly impact our operations. We have implemented various protocols for both onshore and offshore personnel in efforts to limit the impact of COVID-19, however those may not prove fully successful. The spread of COVID-19 to our onshore workforce could prevent us from supporting our offshore operations, we may experience reduced productivity as our onshore personnel works remotely, and any spread to our key management personnel may disrupt our business. Any outbreak on our vessels may result in the vessel, or some or all of a vessel crew (including customer crew), being quarantined and therefore impede the vessel's ability to generate revenue. We have experienced several instances of COVID-19 among our offshore crew, and although to date we have managed to minimize operational disruption, there can be no guarantee that will remain the case. We have experienced challenges in connection with our offshore crew changes due to health and travel restrictions related to COVID-19, and those challenges and/or restrictions may continue or worsen. We may also experience an increased cybersecurity risk as our onshore personnel work remotely.

Further, each of the decline in global oil demand combined with overall market uncertainty resulting from the ongoing COVID-19 pandemic, along with the recent OPEC+ price war, may continue to impact the demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general. Our business is adversely affected by low oil prices, especially the willingness of oil and gas companies to make capital and other expenditures for offshore exploration, development, drilling and production operations, and the persistence of current conditions would negatively impact those companies’ willingness and ability to make those expenditures. In the event one or more of our major customers is adversely affected by COVID-19 or otherwise the current market environment, that may impact our business with them. We may face an increased risk of customers deferring work, asserting claims of force majeure, and/or terminating contracts, or our customers’ inability to make payments or remain solvent. The current environment may make it even more difficult to comply with our covenants and other restrictions in agreements governing our debt, and a lack of confidence in our industry on the part of the financial markets may result in a lack of access to capital, any of which could lead to reduced liquidity, an event of default, the possible acceleration of our repayment of outstanding debt, the exercise of certain remedies by our lenders, or a limited ability or inability to refinance our debt.

~~Table of Contents~~

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

Issuer Purchases of Equity Securities


				(c)
				Total number	(d)
				of shares	Maximum
	(a)	(b)		purchased as	number of shares
	Total number	Average		part of publicly	that may yet be
	of shares	price paid		announced	purchased under
Period	purchased ⁽¹⁾	per share		program	the program ⁽²⁾
January 1 to January 31, 2021	447,139	$	4.43	—	7,734,655
February 1 to February 28, 2021	—		—	—	7,734,655
March 1 to March 31, 2021	—		—	—	7,734,655
	447,139	$	4.43	—

Period
(a)
Total number
of shares
purchased ⁽¹⁾

(b)
Average
price paid
per share

(c)
Total number
of shares
purchased as
part of publicly
announced
program

(d)
Maximum
number of shares
that may yet be
purchased under
the program ⁽²⁾
January 1 to January 31, 2020 534,698
$ 9.58
—
6,475,615
February 1 to February 29, 2020 —
—
—
6,475,615
March 1 to March 31, 2020 —
—
—
6,475,615
534,698
$ 9.58
—


(1)	Includes shares forfeited in satisfaction of tax obligations upon vesting of restricted shares.

(2)

Under the terms of our stock repurchase program, we may 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 plans and shares issued to our employees under our ESPP (Note ~~12)~~9), and such shares increase the number of shares available for repurchase. For additional information regarding our stock repurchase program, see Note 11 to our ~~2019~~2020 Form 10-K.

Table of Contents

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~~ 31.1	First Amendment to the Credit Agreement dated as of September 26, 2014, by and among Helix Q5000 Holdings S.à r.l., Helix Vessel Finance S.à r.l. and Nordea Bank ABP, New York Branch and the lender parties thereto.	~~Exhibit 4.1 to the Current Report on Form 8-K filed on March 12, 2020 (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.PRE~~ 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
~~101.DEF~~ 104	Cover Page Interactive Data File (formatted as inline XBRL ~~Definition Linkbase Document.~~and contained in Exhibit 101).	Filed herewith
~~101.LAB~~	~~XBRL Label Linkbase Document.~~	~~Filed herewith~~

Table of Contents

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:~~			(Registrant)

Date: April ~~24, 2020~~28, 2021		By:	/s/ Owen Kratz
				Owen Kratz
			President and Chief Executive Officer
			(Principal Executive Officer)

Date: April 28, 2021	~~April 24, 2020~~	By:	~~By:~~	/s/ Erik Staffeldt
				Erik Staffeldt
			Executive Vice President and
			Chief Financial Officer
			(Principal Financial Officer)



	March 31, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	159,351		$	208,431
Restricted cash	52,374			54,130
Accounts receivable, net of allowance for credit losses of $1,371 and $0, respectively	147,120			125,457
Other current assets	71,755			50,450
Total current assets	430,600			438,468
Property and equipment	2,880,657			2,922,274
Less accumulated depreciation	(1,070,733		)	(1,049,637		)
Property and equipment, net	1,809,924			1,872,637
Operating lease right-of-use assets	187,553			201,118
Other assets, net	86,074			84,508
Total assets	$	2,514,151		$	2,596,731

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	90,425		$	69,055
Accrued liabilities	45,227			62,389
Current maturities of long-term debt	90,837			99,731
Current operating lease liabilities	53,063			53,785
Total current liabilities	279,552			284,960
Long-term debt	303,584			306,122
Operating lease liabilities	137,411			151,827
Deferred tax liabilities	104,930			112,132
Other non-current liabilities	36,286			38,644
Total liabilities	861,763			893,685
Redeemable noncontrolling interests	3,323			3,455
Shareholders’ equity:
Common stock, no par, 240,000 shares authorized, 149,962 and 148,888 shares issued, respectively	1,316,401			1,318,961
Retained earnings	430,726			445,370
Accumulated other comprehensive loss	(98,062		)	(64,740		)
Total shareholders’ equity	1,649,065			1,699,591
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	2,514,151		$	2,596,731



	Three Months Ended March 31,
	2020			2019

Net revenues	$	181,021		$	166,823
Cost of sales	179,011			150,569
Gross profit	2,010			16,254
Goodwill impairment	(6,689		)	—
Selling, general and administrative expenses	(16,348		)	(15,985		)
Income (loss) from operations	(21,027		)	269
Equity in losses of investment	(20		)	(40		)
Net interest expense	(5,746		)	(2,098		)
Other income (expense), net	(10,427		)	1,166
Royalty income and other	2,199			2,345
Income (loss) before income taxes	(35,021		)	1,642
Income tax provision (benefit)	(21,093		)	324
Net income (loss)	(13,928		)	1,318
Net loss attributable to redeemable noncontrolling interests	(1,990		)	—
Net income (loss) attributable to common shareholders	$	(11,938	)	$	1,318

Earnings (loss) per share of common stock:
Basic	$	(0.09	)	$	0.01
Diluted	$	(0.09	)	$	0.01

Weighted average common shares outstanding:
Basic	148,863			147,421
Diluted	148,863			147,751



	Common Stock				Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Redeemable Noncontrolling Interests
	Shares	Amount			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Redeemable Noncontrolling Interests

Balance, December 31, 2019	148,888	$	1,318,961		$	445,370		$	(64,740	)	$	1,699,591		$	3,455
Net loss	—	—			(11,938		)	—			(11,938		)	(1,990		)
Expected credit losses recognized in retained earnings upon adoption of ASU 2016-13	—	—			(620		)	—			(620		)	—
Foreign currency translation adjustments	—	—			—			(33,587		)	(33,587		)	(228		)
Unrealized gain on hedges, net of tax	—	—			—			265			265			—
Accretion of redeemable noncontrolling interests	—	—			(2,086		)	—			(2,086		)	2,086
Activity in company stock plans, net and other	1,074	(4,730		)	—			—			(4,730		)	—
Share-based compensation	—	2,170			—			—			2,170			—
Balance, March 31, 2020	149,962	$	1,316,401		$	430,726		$	(98,062	)	$	1,649,065		$	3,323



	March 31, 2020		December 31, 2019

Contract assets (Note 10)	$	5,882	$	740
Prepaids	13,039		12,635
Deferred costs (Note 10)	28,481		28,340
Income tax receivable	16,982		1,261
Other	7,371		7,474
Total other current assets	$	71,755	$	50,450



	March 31, 2020		December 31, 2019

Deferred revenue (Note 10)	$	5,860	$	8,286
Asset retirement obligations (Note 14)	28,934		28,258
Other	1,492		2,100
Total other non-current liabilities	$	36,286	$	38,644



	Vessels			Facilities and Equipment			Total

Remainder of 2020	$	44,316		$	4,619		$	48,935
2021	54,184			5,630			59,814
2022	52,106			5,109			57,215
2023	34,580			4,565			39,145
2024	2,470			4,299			6,769
Thereafter	—			5,954			5,954
Total lease payments	$	187,656		$	30,176		$	217,832
Less: imputed interest	(21,611		)	(5,747		)	(27,358		)
Total operating lease liabilities	$	166,045		$	24,429		$	190,474

Current operating lease liabilities	$	48,296		$	4,767		$	53,063
Non-current operating lease liabilities	117,749			19,662			137,411
Total operating lease liabilities	$	166,045		$	24,429		$	190,474



	March 31, 2020		December 31, 2019

Weighted average remaining lease term	3.7 years		4.0 years
Weighted average discount rate	7.53	%	7.54	%



	Well Intervention

Balance at December 31, 2019	$	7,157
Impairment loss ⁽¹⁾	(6,689		)
Other adjustments ⁽²⁾	(468		)
Balance at March 31, 2020	$	—



	Term Loan ⁽¹⁾			2022 Notes			2023 Notes			MARAD Debt			Nordea Q5000 Loan			Total

Less than one year	$	3,500		$	—		$	—		$	7,378		$	80,357		$	91,235
One to two years	28,875			—			—			7,746			—			36,621
Two to three years	—			125,000			—			8,133			—			133,133
Three to four years	—			—			125,000			8,538			—			133,538
Four to five years	—			—			—			8,965			—			8,965
Over five years	—			—			—			19,294			—			19,294
Gross debt	32,375			125,000			125,000			60,054			80,357			422,786
Unamortized debt discounts ⁽²⁾	—			(7,207		)	(13,700		)	—			—			(20,907		)
Unamortized debt issuance costs ⁽³⁾	(334		)	(1,103		)	(2,208		)	(3,415		)	(398		)	(7,458		)
Total debt	32,041			116,690			109,092			56,639			79,959			394,421
Less: current maturities	(3,500		)	—			—			(7,378		)	(79,959		)	(90,837		)
Long-term debt	$	28,541		$	116,690		$	109,092		$	49,261		$	—		$	303,584



	March 31, 2020			December 31, 2019

Cumulative foreign currency translation adjustment	$	(98,042	)	$	(64,455	)
Net unrealized loss on hedges, net of tax ⁽¹⁾	(20		)	(285		)
Accumulated OCI	$	(98,062	)	$	(64,740	)



	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Income			Shares	Income			Shares
Basic:
Net income (loss) attributable to common shareholders	$	(11,938	)		$	1,318
Less: Undistributed earnings allocated to participating securities	—				(12		)
Accretion of redeemable noncontrolling interests	(2,086		)		—
Net income (loss) available to common shareholders, basic	$	(14,024	)	148,863	$	1,306		147,421


Diluted:
Net income (loss) available to common shareholders, basic	$	(14,024	)	148,863	$	1,306		147,421
Effect of dilutive securities:
Share-based awards other than participating securities	—			—	—			330
Net income (loss) available to common shareholders, diluted	$	(14,024	)	148,863	$	1,306		147,751



Date of Grant	Shares/ Units	Grant Date Fair Value Per Share/Unit		Vesting Period

January 2, 2020 ⁽¹⁾	369,938	$	9.63	33% per year over three years
January 2, 2020 ⁽²⁾	369,938	13.15		100% on January 2, 2023
January 2, 2020 ⁽³⁾	5,679	9.63		100% on January 1, 2022



AROs at January 1, 2020	$	28,258
Accretion expense	676
AROs at March 31, 2020	$	28,934



	Allowance for Credit Losses

Balance at December 31, 2019	$	—
Initial adoption of ASU 2016-13 (Note 1)	785
Provision for current expected credit losses	586
Balance at March 31, 2020	$	1,371



	Fair Value at March 31, 2020
	Level 1		Level 2		Level 3		Total		Valuation Approach
Liabilities:
Interest rate swaps	$	—	$	26	$	—	$	26	(c)
Total liability	$	—	$	26	$	—	$	26



	Fair Value at December 31, 2019
	Level 1		Level 2		Level 3		Total		Valuation Approach
Assets:
Interest rate swaps	$	—	$	44	$	—	$	44	(c)

Liabilities:
Foreign exchange contracts — hedging instruments	—		401		—		401		(c)
Foreign exchange contracts — non-hedging instruments	—		601		—		601		(c)
Total net liability	$	—	$	958	$	—	$	958



	March 31, 2020				December 31, 2019
	Principal Amount ⁽¹⁾		Fair Value ^{(2) (3)}		Principal Amount ⁽¹⁾		Fair Value ^{(2) (3)}

Term Loan (matures December 2021)	$	32,375	$	30,797	$	33,250	$	32,959
Nordea Q5000 Loan (matures January 2021) ⁽⁴⁾	80,357		80,257		89,286		89,398
MARAD Debt (matures February 2027)	60,054		62,293		63,610		68,643
2022 Notes (mature May 2022)	125,000		78,594		125,000		134,225
2023 Notes (mature September 2023)	125,000		78,125		125,000		162,188
Total debt	$	422,786	$	330,066	$	436,146	$	487,413



	March 31, 2020			December 31, 2019
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivative Instruments:
Interest rate swaps	Other current assets	$	—	Other current assets	$	44
		$	—		$	44


Liability Derivative Instruments:
Interest rate swaps	Accrued liabilities	$	26	Accrued liabilities	$	—
Foreign exchange contracts	Accrued liabilities	—		Accrued liabilities	401
		$	26		$	401



	Unrealized Loss Recognized in OCI
	Three Months Ended March 31,
	2020			2019

Foreign exchange contracts	$	(54	)	$	(34	)
Interest rate swaps	(42		)	(115		)
	$	(96	)	$	(149	)



	Location of Gain (Loss) Reclassified from Accumulated OCI into Earnings	Gain (Loss) Reclassified from Accumulated OCI into Earnings
		Three Months Ended March 31,
		2020			2019

Foreign exchange contracts	Cost of sales	$	(455	)	$	(2,078	)
Interest rate swaps	Net interest expense	28			232
		$	(427	)	$	(1,846	)



	Location of Loss Recognized in Earnings	Loss Recognized in Earnings
		Three Months Ended March 31,
		2020			2019

Foreign exchange contracts	Other expense, net	$	(81	)	$	(40	)
		$	(81	)	$	(40	)



	Three Months Ended March 31,						Increase/ (Decrease)
	2020			2019			Amount			Percent
Net revenues —
Well Intervention	$	140,652		$	122,231		$	18,421		15	%
Robotics	35,258			39,041			(3,783		)	(10	)%
Production Facilities	15,541			15,253			288			2	%
Intercompany eliminations	(10,430		)	(9,702		)	(728		)
	$	181,021		$	166,823		$	14,198		9	%

Gross profit (loss) —
Well Intervention	$	(1,256	)	$	13,510		$	(14,766	)	(109	)%
Robotics	(467		)	(1,589		)	1,122			71	%
Production Facilities	4,207			4,771			(564		)	(12	)%
Corporate, eliminations and other	(474		)	(438		)	(36		)
	$	2,010		$	16,254		$	(14,244	)	(88	)%

Gross margin —
Well Intervention	(1)%			11%
Robotics	(1)%			(4)%
Production Facilities	27%			31%
Total company	1%			10%

Number of vessels or robotics assets ⁽¹⁾ / Utilization ⁽²⁾
Well Intervention vessels	7/72%			6/74%
Robotics assets ⁽³⁾	49/34%			52/39%
Chartered robotics vessels	6/89%			4/88%



	March 31, 2020		December 31, 2019

Net working capital	$	151,048	$	153,508
Long-term debt ⁽¹⁾	303,584		306,122
Liquidity ⁽²⁾	331,959		379,533



	Total ⁽¹⁾		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years

Term Loan	$	32,375	$	3,500	$	28,875	$	—	$	—
Nordea Q5000 Loan	80,357		80,357		—		—		—
MARAD Debt	60,054		7,378		15,879		17,503		19,294
2022 Notes ⁽²⁾	125,000		—		125,000		—		—
2023 Notes ⁽³⁾	125,000		—		—		125,000		—
Interest related to debt ⁽⁴⁾	46,683		18,058		22,371		5,206		1,048
Property and equipment	5,319		5,319		—		—		—
Operating leases ⁽⁵⁾	338,310		103,400		181,871		48,029		5,010
Total cash obligations	$	813,098	$	218,012	$	373,996	$	195,738	$	25,352



Period	(a) Total number of shares purchased ⁽¹⁾	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced program	(d) Maximum number of shares that may yet be purchased under the program ⁽²⁾
January 1 to January 31, 2020	534,698	$	9.58	—	6,475,615
February 1 to February 29, 2020	—	—		—	6,475,615
March 1 to March 31, 2020	—	—		—	6,475,615
	534,698	$	9.58	—

Three Months Ended

March 31,

Cash paid for operating lease liabilities

ROU assets obtained in exchange for new operating lease obligations