Helix Energy Solutions Group, Inc. Stock

Good morning, and welcome to today's conference call to discuss the combination of Helix Energy Solutions and Hornbeck Offshore as well as Helix's First Quarter 2026 results. Please note this event is being recorded. [Operator Instructions] You can find today's investor presentation as well as the press release regarding the transaction at each company's Investor Relations website. The press release regarding Helix's First Quarter 2026 Results can be found at Helix's Investor Relations website as well as the earnings presentation.

I would now like to turn the call over to Erik Staffeldt, Executive Vice President and Chief Financial Officer at Helix. Please go ahead.

Thank you, and good morning. As highlighted, any forward-looking statements we make during today's conference call are given in the context of today only and are subject to important risks as discussed in the presentation. Actual results and events could differ materially from those discussed here. Please also refer to the additional information discussed on this slide as well as in our SEC filings.

I'll now turn to a brief overview of Helix's first quarter 2026 results. Helix's team delivered another well-executed quarter, safety and efficiently providing our customers with world-class service. Our first quarter results reflect expected seasonal levels during the winter in the North Sea and Gulf of America shelf, impacting our well intervention, Robotics and Shallow Water Abandonment segments, and they reflect the cost of the successful workover of Thunder Hawk field. Revenues for the first quarter were $288 million with a gross profit of $9 million, resulting in a net loss of $13 million. Adjusted EBITDA for the quarter was $32 million with operating cash flow of $62 million, resulting in free cash flow of $59 million.

Highlights for the quarter include strong utilization on the Q4000 performing low intervention work at improved rates, the successful workover and recommencement of production of our Thunder Hawk field. A return to a 2-vessel market in the North Sea with the Seawell reactivation and return to operations, good utilization expected in 2026 and strong cash flow generation of $59 million, as I shared earlier. With that, our cash position and liquidity remains strong with $501 million of cash and $612 million of liquidity at the end of the quarter. Overall, our first quarter results were as expected, perhaps even marginally better than expected. The current macro environment remains uncertain, but we are seeing some positive developments in the markets we serve.

Our comply disruptions, increased commodity prices and increased regulatory enforcement in the North Sea are providing positive catalysts that may drive increased activity by our customers for the balance of '26 and into '27. We also expect momentum to continue to build in the offshore market. With the results we delivered in Q1 and supported by our backlog in several key contracts, we are maintaining our guidance for 2026, revenue of $1.2 billion to $1.4 billion in line with 2025. EBITDA of $230 million to $290 million, impacted by the Thunder Hawk workover in Q1 and the upcoming Sea Helix 1 docking. CapEx of $70 million to $80 million, primarily a mix of regulatory maintenance on our vessels and intervention systems and fleet renewal by robotics ROVs. Free cash flow of $100 million to $160 million, we expect continued meaningful free cash flow generation with variability driven by ultimate working capital movements.

Key forecast drivers for our annual guidance include second half utilization on the Q4000 and Q7000, late-season North Sea intervention market, strong markets for our Robotics fleet and the stable Shallow Water Abandonment segment. Our quarterly financial performance in 2026 is expected to follow the same cadence as previous year's results with the second and third quarters being our most active quarters and the first and fourth quarters impacted by winter weather. Our balance sheet is strong, $310 million of funded debt, $501 million of cash and a strong cash flow generation expected in 2026. If you have any questions on our quarterly results, our outlook for 2026, please feel free to reach out to our team directly.

We will transition to the transaction announcement portion of the call. With that, I am joined by [ Bill Transier ], Helix's Chairman of the Board; Scotty Sparks, Helix's Executive Vice President and Chief Operating Officer; Todd Hornbeck, Hornbeck's Chairman, President and Chief Executive Officer. Also joining us for the question-and-answer portion of the call will be Jim Harp, Hornbeck's Executive Vice President and Chief Financial Officer; and [ Potter Adam ], Hornbeck's Senior Vice President of Finance. Now before I kick it over to Bill, I do want to note, we have slides supporting the following information on each company's Investor Relations website. So please feel free to refer to those as we go through the call.

With that, Bill, over to you.

Thanks, Erik. By combining Helix and Hornbeck, we are bringing together 2 market leaders and establishing a premier integrated offshore services company poised to create value for current shareholders of both Hornbeck and Helix. There are many compelling benefits to this combination.

First, the strategic combination will create a recognized leader in offshore operations with a diversified and expanded high-specification fleet of specialty vessels supported by Subsea robotics, well intervention and technical service capabilities, including transient Subsea pipelines and cables. Also, the combined company will provide innovative and integrated subsea and marine transportation solutions to customers across deepwater energy, defense and renewables, thereby expanding service offerings moving forward.

Further, combining Helix's well intervention and robotic vessels with Hornbeck specialty and ultra-high specification offshore support vessels will allow us to offer a complementary end-to-end service offering that will materially expand the combined company's ability to meet a broader share of customers' deepwater needs spanning the offshore cycle. All of this, in combination with the significant annual revenue and cost synergies, the transaction is expected to generate of $75 million or more within 3 years following the close, make for a strong combination rationale.

We'll dig deeper into the strategic and financial benefits shortly, and I do want to cover the terms of the transaction in more detail, too. First, I would be remiss if I didn't take the opportunity to acknowledge Owen Kratz, Helix's President and Chief Executive Officer. For the significant role he has held in building Helix into what it is today. I want to announced last year his plan to retire from Helix. I'm sure you saw his quote in the press release reiterating his support for the transaction. He has agreed to support Todd through the close of the deal and will remain available thereafter as needed. He, along with the entire executive management team are committed to getting this combination across the line.

With that, I'll turn to the highlights of the transaction. This is structured as an all-stock transaction, which will allow shareholders from both sides to participate in the significant upside potential of the combined company. The terms of the agreement, which are outlined in the press release we issued this morning have been approved by the Boards of Directors of both companies. At closing, which we expect to occur in the second half of 2026 subject to approval by Helix shareholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions. Helix shareholders will own approximately 45% of the combined company, and Hornbeck shareholders will have approximately 55% ownership.

I will note the parties representing a significant majority of the ownership of Hornbeck, including [ Ares ] management funds, have delivered written consent approving the transaction. Through this combination, we will bring together 2 best-in-class teams with aligned cultures. Following the close, Todd Hornbeck will serve as President and Chief Executive Officer of the combined company. The combined company's Board of Directors will confide 7 directors, 3 of whom will be from Helix and 4 from Hornbeck, including Todd. I will serve as Chairman of the combined company's Board. Post closing, the combined company will operate under the Hornbeck Offshore Services name and trade on the New York Stock Exchange, and the ticker symbol HOS with the Helix brand to be retained for well intervention services. The combined company's headquarters will be in Houston, Texas and Covington, Louisiana.

I also want to touch on why we're stronger and more competitive together as a combined company. In 2025, Helix had revenue and EBITDA of $1.3 billion and $272 million, respectively, with more than $500 million in cash at the end of the first quarter. When you include Hornbeck's 2025 annual results, the combined company will increase revenue and EBITDA by 56% and 106%, respectively. As well, we will have incremental growth drivers of 2 newbuild [ MPSVs ] and 23 vessels that will be available for reactivation. In summary, we believe this unique combination is a compelling opportunity to enhance value for Helix's shareholders and deliver sustainable long-term growth.

Now Todd will provide you an overview of the Hornbeck.

Thank you, Bill. Let me start by sharing some background on Hornbeck. We're one of the preeminent market-leading providers of ultra high-spec marine logistics services to a broad range of offshore energy, infrastructure and defense customers. We have a leading deepwater high and ultra high-spec fleet with geographic footprint across the U.S., North of America, Mexico, the Caribbean, Guyana, Suriname and Brazil. Our focus at the end of the day is tailored logistics solutions that address a broad spectrum of unique customer life of field requirements and we have proven operational capabilities and our unwavering commitments to safety and risk management as Helix does as well.

We've also included key highlights of the company by the numbers, including approximately 71 vessels in our current fleet with 2 [ MPSPs ] under construction and expected to deliver in 2027 and giving us a pro forma fleet of 73 vessels with a fair market value of $2.8 billion. We generated adjusted EBITDA of $288 million and an adjusted EBITDA margin of 40% for fiscal year 2025. I'd also like to note that if you have any additional questions about Hornbeck as a company, in our financials, you can find that information in the appendix section of this presentation. We're also confident that this transaction maximizes value provides the best long-term prospects to deliver superior returns for our combined investors. We are pleased that all stock -- this is an all-stock consideration will allow Helix and Hornbeck investors to participate in the upside of this combination.

With that, I'll turn it over to Scotty Sparks, Helix's Executive Vice President and Chief Operating Officer, to walk you through the combined company's global presence and complementary business offerings.

Thank you, Todd. Another important benefit of this transaction is the geographical alignment of our 2 companies. Helix's credible presence in West Africa, Asia Pacific and the North Sea regions as well as the United States and Brazil and Hornbeck's [ concentration ] in the Americas, including Brazil and Mexico, creates a combined global footprint spanning the key offshore basins worldwide. The combined company's footprint will include capital protected markets will have direct access to leading offshore customers, enabling the delivery of premier deepwater services through a technologically advanced asset. This global presence translates to a diversified revenue stream with approximately half of the combined company's revenue expected to come from the United States, followed by Brazil and in the North Sea region.

We also want to share more information on our combined customer base and how we expect to serve customers as a combined company. We provide essential services to many of the key organizations and companies that fuel the global economy. We see the integration of complementary service offerings, increasing our combined company's relevance with customers and creating unique cross-selling opportunities that will drive growth and improved margins.

Further, the combined fleet of vessels and specialty equipment will enable comprehensive suites of combined services as a one-stop shop for customers while enhancing profitability through asset optimization and enhanced scale. Those companies have high-quality blue chip customers with him, we have developed strong in-depth relationships. Among our customers are global market-leading companies operating at the forefront of innovation in their respective fields. We are looking forward to delivering an enhanced offering of integrated solutions to our expanded customer base.

On the outset, i'll turn it back to Todd talk for our world-class water fleet and seems to be a leading position in the [indiscernible] industry.

Thank you, Scotty. Now we mentioned a moment ago that together, Helix and Hornbeck will have a fleet of high-quality deepwater high-spec vessels. The combined company will focus on drill intervention, subsea and specialty services, robotics, ring transportation and emerging technologies to support the deepwater energy, defense and renewables markets. The combined company will have the highest specification fleet of specialty vessels designed to support deepwater life of field services globally. It will be the only company capable of providing [ riser-based ] well invention, subsea operations and IRM and surface vessel logistics support. Additionally, we are combining Helix's market leading position in subsea trenching of pipeline and cable with Hornbeck's leading position in providing support to offshore energy development.

It's also important to note that the combined company will have increased exposure to the defense industry through a cutting-edge fleet supporting military operations and related capabilities. Together, Helix and Hornbeck will have operations that provide multiple types of defense services. This includes [ Circus ] and subsea vessels, vessel management and emerging technologies such as marine autonomy and artificial intelligence. These capabilities, along with advantages like trusted relationship with key officials and decades of experience in the industry will position the combined company extremely well to increase revenue and defense customers.

Now I'd like to transition to an essential element of growth transactions that combined company's scale and growth platform and the significant synergy potential. We're confident that the combined company will be poised for future growth and shareholder value creation with a strong balance sheet, low leverage and a significant cash at the closing to advance the combined company's value-driven strategy. Importantly, this financial strength and projected substantial free cash flow generation will provide significant flexibility organic growth and investments in the business or other strategic M&A to increase long-term shareholder value creation. The combined company scale life-of-field business is expected to mitigate through cycle earnings volatility while also enabling flexible global asset deployment where the demand is strongest.

As you'll see in the slide deck, another key part of why we're so confident in this combined company's strong financial profile going forward is significant synergies opportunities this transaction presents. Specifically, we expect to realize $75 million or more in annual cost and revenue synergies just within 3 years following the transaction. The synergies are expected to result from combined and integrated service offerings as well as expanded service offer to existing customers, driving revenue pull-through, we also -- the scale of the combined company's fleet will enable asset optimization, reducing reliance on third-party vessel charters and delivering efficiencies across maintenance, procurement and operations. In short, we expect to operate more efficiently and benefit from growth opportunities post closing.

I'd now like to turn it back to Bill to close it out.

I'll wrap things up by reiterating that we believe this transaction represents an incredibly exciting opportunity for Helix and Hornbeck as well as both companies, shareholders and other stakeholders. By bringing these 2 leaders together, we will create an even stronger combined company designed to innovate, execute with scale and grow. I'd also like to take a moment just to thank the talented teams of both Helix and Hornbeck. This transaction reflects their continued hard work and dedication, and we would not have been able to reach this milestone without their efforts. I know I speak for the leadership teams of both companies when I say we are grateful for your many contributions.

Thank you for joining us today. I'll now open the floor to questions. Operator, we'll take our first question now.

[Operator Instructions] And your first question comes from the line of [ Keith Bachman ] with Pickering Energy Partners.

Congratulations, guys. So I just wanted to I wanted to ask first, could you bucket the $75 million of synergies a little bit better? And then maybe that's over 3 years. What do you kind of expect the initial capture to be maybe within the first 6 months to 1year or so?

I think the capture will be revenue synergies and being able to combine these assets together to offer a full plentiful offering to the customers that should increase utilization across the board from ROVs and supply vessels, the subsea construction vessels and well intervention. So that combination and offering life of field services to be able to take to the full field development or full field decommissioning is a real added value to the customer base.

The crossover services that we've pulled together as one company provides some very good revenue synergies, but then there's also the size of the fleet provides good cost synergies on procurement and engineering and all those things as we create a much bigger fleet on a global basis.

And then my second question, which is kind of -- obviously, Hornbeck has had an advantage in kind of cabotage protected markets on a lot of the OSVs in the Americas. Now with the merger of the 2 companies, I mean, is there any plan over time to move some of the vessels outside of [ Cabotage ] markets and potentially go outside of the Americas, maybe West Africa, et cetera. Just any thoughts on that at all?

Our plan is we're going to be a growth company, and we plan to continue to grow every segment of the business. But we're going to move the assets where they're most valuable to the company and returns for the company. So we do have assets that can move across the globe and some of the largest and best assets in the industry, and we're going to move where the business is.

Congratulations again.

Your next question comes from the line of [ Ben Summers ] with BTIG.

Congrats on the announcement. So my first question is just on the $2 billion of backlog that you guys mentioned in the presentation. Just kind of curious around the duration of this backlog. And then any color you can give on just the makeup across now the various business lines.

So from -- Helix reports their backlog close to $1 billion, covering a significant portion this year and into next year. So the Helix portion of it is about $1 billion.

Hornbeck is about $1 billion as well. And that includes our long-term contracts with the military and the specialty vessels as well. As you know, we've been primarily a shorter-term player because of the type of assets that we have been able to -- on shorter-term contracts, you got a lot better returns. But this is the biggest backlog we've had, I think, in our history, showing you where the market is going and a lot of opportunity also in our fleet to turn and mark-to-market those vessels as well.

Awesome. Super helpful. And then I know you guys mentioned it in the prepared remarks, but just kind of on the strong balance sheet of the combined company. I guess kind of any color on what you're seeing in the market and then kind of just detailing a bit more on the potential growth opportunities or creation of shareholder value from that strong balance sheet?

Yes, I think we've got a superior balance sheet. A lot of cash on the balance sheet. Like I said, we're going to grow all the divisions between the ROV Subsea group and well intervention and supply vessels. So we're looking forward to grow on it to be an international player worldwide, not just -- our main focus is right now or has been with the company is about 50% of revenue coming out of the U.S. Gulf or the America -- Gulf of America, but we see great opportunities of growth in Brazil. The whole South America Northern flank of South America with Colombia and Guyana and Surinam of that whole region. Also West Africa is showing great signs of opportunity as well. So with this balance sheet, we should be able to really move the company forward with a lot of opportunities whether they're organic or acquisitions as well.

Congrats again.

Your next question comes from the line of James Schumm with TD Cowen.

The $75 million of synergies, can you -- did you say what the split was between revenue and cost synergies there? And then...

No, we haven't. We're going to have more of that in the merger proxy, but the majority of it probably would be from revenue synergies and cost efficiencies by putting the companies together and streamlining our services. But the company is -- that much in services. That's what makes this combination such a strong combination putting together because where we didn't have robotics and all the tooling and whatnot, we had the MPSVs [ heavy iron ], Helix has all that, where we were not in well intervention or decommissioning that when you're in that business as well, they need supply vessels, MPSVs and all the things that we have. So we don't overlap a lot. So that's what's great about this. We're going to be able to build all of that and retool the business model to be able to grow in all of those areas.

What we will be able to do is offer a very good bundled service. So if you take a deepwater field decommissioning program, we have the Helix assets that can do all the deepwater P&A and the well work. Now we have the construction assets to take away the subsea infrastructure. We have the supply boats to support the subsea infrastructure takeaway and the wells P&A work. We can offer that to 1 client take away their procurement costs and give them 1 contract. So that's quite compelling. There will always be some oil procurement companies out there that won't like that, but there will be a bunch of oil companies out there that see the cost benefits of 1 contract and 1 service.

Okay. Great. And I haven't covered OSVs in 12 or 13 years. Can you help me -- what's the capital intensity of this business now just in terms of CapEx to sales?

I'll tell you, the -- on the OSV side, we're strictly deepwater, ultra-deepwater with the largest [ PSVs ] in the world. So a lot of them are [ capitas ] protected in the U.S. We have a big presence in Brazil and Mexico and the whole South America. Right now, the market is basically an equilibrium by the second half of this year just with the demand that's coming from the additional rigs coming online, we see that market getting very tight and a lot of revenue growth there or day rate expansion there as well. With the subsea construction market, and you know how many trees and installations that are going in, in deepwater over the next several years. Those vessels also work very, very well in the subsea construction area and also in renewables in the defense market. Our defense market is really looking good. And you know why I just read the paper, and they like the large PSVs to accommodate that business.

And you have vessels to bring back into the market too. Yes, it won't cost you really minor capital.

So minor capital, yes, we've got 23 vessels that we can reactivate as this market goes under supplied. Whether it's renewables, defense or drilling support or subsea support. And those are vessels that have been preserved and in good shape and very low cost to reactivate to put in the market.

And because I was just going to ask about the 2 new MPSVs that you have, like what the capital requirements are left on those? Are they substantial? Or can you say?

We really don't have any capital requirements to talk about very much left. We have about $50 million, I think, left to spend on those vessels for delivery, but very low cost entry for those vessels, unique nature. They'll be the largest in MPSVs in the U.S. life fleet. And we're really excited about the robotics and the subsea infrastructure and on all everything that Helix is doing and folding that into that program. So defense markets, renewable markets and deepwater subsea construction markets are really anxious to get those [ pans ] of those vessels.

When those vessels sit in '27, they're going to be the highest spec Jones Act vessels, and then we'll be combining Helix robotics into those vessels as well. So it'll be quite unique and ultra high-spec vessels for the Jones Act Gulf of America fleet.

Congrats.

[Operator Instructions] And our next question comes from the line of Don Crist with Johnson Rice.

I'll echo my sentiments for a good deal. Congrats. Since I cover Helix and have for a while, Scotty, can you walk around the world and kind of talk about demand like you normally do on an earnings call. I know there's been a lot of of rig contracts let recently that soaked up a lot of white space. And can you just kind of walk around the world and tell us how that is influencing activity for the 4,000 in Well Enhancer and Seawell going forward throughout the rest of the year?

Sure. So firstly, the North Sea, as you know, last year, we had some headwinds against us and had to stack one of the vessels. I'm happy to report now that we have both vessels are actively working, and we're expecting good utilization for the manholes in the North Sea. We're seeing high demand for decommissioning in the North Sea and starting to see a slight improvement in rates. So that debt that went with our [ past ] area is behind us, I got to think.

In the America, we're seeing more production enhancement activity. We have the Q5000 out currently working for Shell, the Q4000 out working for [ Oxy ] and Oxy and others are looking to add more wells because of the obviously increase in the price of oil is looking to February enhancement activity. The Q7000 has recently finished up with Shell in Brazil. Sorry, we'll finish up at the end of this month. And then we're very close to taking that vessel to Nigeria again and that's looking good, very close to being contracted. And then we expect to take that vessel back to Brazil where there's high levels of activity and good tendering activity for that vessel. The 2 Sea Helix 1 and Sea Helix 2 are under long-term contracts in Brazil. So our 1 intervention segment looks very good at the moment, we're improving activity and increasing rates going forward.

The robotics side is very busy. As you know, our Trenching side of the company is very, very active, high utilization, very much increased rates, increasing rates year-over-year. We have work booked out in '26, '27 on Trenching, work booked out all the way to 2030 in bid activity and a very good pipeline of activity out to 2032 on the Trenching side. And then the robotics business is strengthened and bringing these 2 companies together, there's good opportunities for putting ROVs with high-class vessels in the Gulf of America. So very confident by the end of this year, we'll have no ROVs available to the market. We might have to look at starting to place capital to increase spend on growth activity.

I appreciate that. And can you just comment on day rates? I know day rates for the offshore drillers have been kind of flat on these contract renewals, but are you seeing any urgency from customers seeing white space go away and urgency and contracting given recent events in the Middle East and oil price running up?

We talk about this each quarter, Don, and I would say it's relatively flat at the moment in the Gulf. We are seeing increased rig activity that will lead into end of '26 '27 to increased rates. We have definitely seen an increase in rates and better activity in the North Sea and we're stable and locked into long-term contracts in Brazil. So it's definitely increased and better environment than where we were 2 or 3 quarters ago.

Okay. I appreciate that. And Todd, just one for you. Any changes in Mexico? I know you've had a presence there for a while, but not really worked for the government down there. But any improvement down there that can soak up any of the boats that came back to the U.S. side of the Gulf of America going back to Mexico anytime soon?

Well, as you know, we've got a large component of Mexican flag vessels in Mexico, and that's a [ cap ] test protected market. And yes, there's been upside even though the turmoil with with [ Pemex ] that unfolded over the last few years, we were not levered to that company. So [ Woodside ] just started the [ Triumph ] project, and we have 4 long-term contracts with [ Woodside ], and that has started in earnest now in February. So that will go for many years. We also have a 10-year commitment for all their marine support for supply vessels for the next 10 years. So for that development of that field.

What we're seeing in Mexico, though is a little bit of a change in tone with bringing IOCs back into the country. A couple of years ago under [ Amwell ] they really wanted to get all the IOCs out and all the foreign companies out of Mexico. That's turned around. It looks like we're seeing a green shoots starting to happen at other IOCs are interested in doing structures like [ Woodside ] had done there. So it looks promising. I think over the next couple of years, we're going to see some growth in Mexico. Mexico is Mexico. So we've been down there a long time and done very well in that market.

Congrats again, guys.

Your next question comes from the line of Josh Jayne with Daniel Energy Partners.

First one for me, Todd, maybe you could just go into a bit more detail on the your views on OSV supply and demand. Ultimately, you mentioned some vessels going back to work. Maybe you could just elaborate on your views on the market, not only in the markets that you serve, but just opportunities elsewhere. It would just be good to hear your views today.

Yes. I think the market -- on the big -- look, we're just really focused on above 4,000 deadweight class all the way to 6,000. So ultra-deepwater is where our bread and butter is and that market has traded very thinly now. A lot of capacity is term contracted because Petrobras soaked up a lot of tonnage as we know. And with the rigs in the second half of the year coming back online, we see that marketing tightening. Our rates are, I can say, leading [ age ] rates are in the mid-40s, but they're kind of all over the board because it's been a little [ slope ] with the white space but our rigs seem to held up very well. The second half of the year is where we really see the growth opportunity in the market getting really, really tight for the supply-demand imbalance. But the subsea construction market, the renewables market and our defense market is doing extremely well. So we're servicing a lot of that market with the PSVs today. On our total revenue, about 70% of our revenues come from the specialty business, not from the drill bit. So that's a testament of the type of equipment that we have.

And then on the ROV side, it was alluded to a little bit in the last answer, but is this transaction -- I know Helix has been a bit conservative to spend capital. But when we think about the tightness of the ROV business, is this the type of transaction that has the potential, just given the tightness of that market to accelerate capital spending sort of over the next few years? And then could you update us on lead times for for ROVs today? That's my final question.

I think, Scotty, he can answer the lead times, but you're correct. That market is very tight. But I think there's opportunities there besides, you can always build ROVs, and that takes -- he'll tell you how long that takes and what the cost is. But I think there may be opportunities out there now that we've put this together of ROV opportunities and other opportunities in the company and do some acquisitive and grow our platform.

I think one of the good side of the ROV business is we can scale up very quickly. And so to build a new ROV right now is a 6-month lead time. And if we did a batch build, every month after we can have another ROV. So we can scale up the ROV business very quickly. There's also, Hornbeck at this time, they hire ROVs in and now will be an internal cost to Hornbeck. So we can scale up very quickly and bring the 2 services together.

Yes. If we can't find adequate equipment out there on the ROV side and the tooling side, we can be in the market very, very quickly with what Scott is saying. So it will happen one way or the other on it.

Yes. And we're also seeing an increased demand for ROV activity in the renewables business in Taiwan and the APAC region as well. So there's lot of growth potential on the ROV side, the robotics side. We also have some plans. We have, as a robotics company, have never been an IRM company. And as we bring these 2 companies together, we're definitely going to build an IRM division, which leads to further growth as well.

Congrats on the transaction.

And your next question comes from the line of James Shumm with TD Cowen.

Just the Hornbeck net debt, did I calculate that right? Is that around $480 million?

No, that's the gross debt. That's gross debt. Our cash is under -- between 75 and 180, 90, something like that. And the 440 is close debt.

I said 480. So what do you have -- what's your net debt? Is it 380? Or what's the net debt? .

Yes, around 380.

Okay. And then maybe just one for the Helix guys. I mean how do you position this for your shareholders? Like why is this a good deal for the Helix shareholders

This is Bill. I'll take that on. First of all, if you can't sell the enthusiasm of these 2 guys across the table have been talking about their combined businesses, it represents a really kind of a unique opportunity for these companies to come together and do more than they could on a stand-alone basis. And I think that's what Helix has been looking at for quite a while, is it was a good company, well run, like Hornbeck, good capital structure, but it was only so big and the ability to kind of build scale, reduce cost of capital and do some of the things that Scotty are talking about in terms of growing the business, this makes for a better outcome going forward, a real growth company that can deliver significant shareholder value going down the road. So I look at that as the compelling reasons why. And we're excited about it.

I'm not showing any further questions in the queue. I will now turn it back over to the company for closing remarks.

Thank you for joining us today. We appreciate your interest in today's call that highlighted the exciting opportunity that the combination of Helix and Hornbeck creates for our investors and customers. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome to the Helix Energy Solutions Fourth Quarter and Full Year 2025 Earnings Conference Call. I am Frans, and I'll be the operator assisting you today. [Operator Instructions]

I would now like to turn the call over to Brent Arriaga, Vice President of Finance and Accounting. Please go ahead.

Good morning, everyone, and thank you for joining us today on our conference call, where we will be reviewing our fourth quarter and full year 2025 earnings release.

Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO; Ken Neikirk, our General Counsel; Daniel Stuart, our Vice President, Commercial; and myself.

Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release and slides can be accessed under the News and Events tab.

Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken?

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends or business or financial results.

All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Our actual and future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions and factors, including those set forth in Slide 2 of our presentation and our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference call.

Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10-K and a replay of this broadcast will be available under the -- for the Investors section of our website at www.helixesg.com.

Please remember that information on this conference call speaks only as of today, February 24, 2026, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. Scott?

Thanks, Ken. Good morning, everyone. Thank you for joining our call today. We hope everybody is doing well. This morning, we will review our fourth quarter and full year 2025 results, financial performance and operations. We'll provide our view of the current market and provide guidance for 2026.

Our teams offshore and onshore safely delivered another well-executed quarter. The fourth quarter turned out to be much stronger than we anticipated even with some segments being in a softer market condition and return into winter seasonal conditions that usually drive down utilization. In terms of earnings, the fourth quarter was our highest fourth quarter since 2013, so congratulations to our teams.

Moving on to the presentation, Slides 5, 6 and 7 provide a high-level summary of our results and key highlights for the quarter and for the year. As mentioned, our fourth quarter results were better than expected despite the continued low cost stacking of the Seawell and lower utilization for the Q4000 in the Gulf of America.

Revenues for the fourth quarter were $334 million, with a gross profit of $51 million and a net income of $8 million. Adjusted EBITDA was $74 million for the quarter, and we had positive operating cash flow of $113 million, resulting in positive free cash flow of $107 million.

Highlights for the quarter include improved results in the Gulf of America shelf with good late-season utilization, including work in the Epic Hedron late into December. The successful transition of the Sea Helix 1 to its 3-year Petrobras contracts and securing a multiyear P&A contract in the North Sea that should enable both vessels in the region to be utilized in 2026, bringing the Seawell out of stacking.

The year ended with revenues of $1.3 billion with a gross profit of $159 million and a net income of $31 million, generating an adjusted EBITDA of $272 million, and we had positive operating cash flow of $137 million, resulting in positive free cash flow of $120 million.

Our cash and liquidity remains strong with increased cash and cash equivalents of $445 million and increased liquidity of $554 million at year-end. Highlights for the year include: a strong year in the Robotics segment work in all 6 treasures, 7 vessels and free bolder reps with market conditions allowing for further increased rigs.

Free vessels on long-term contracts in Brazil, the SH1 and SH2 both finished the year and the 3-year contracts with Petrobras at higher rates and the Q7000 is on a 400-day contract with Shell, and significant year-over-year improvement for the shallow water and abandonment results.

Over to Slide 9. Slide 9 provides a more detailed review of our segment results and segment utilization. In the fourth quarter, we continued to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, the Gulf of America and the U.S. East Coast.

Slide 10 provides further detail of our Well intervention segment. In the Gulf of America, the Q5000 achieved high utilization completing work on a multi-well campaign for Shell and then commenced work on a 2 scope program for BP. The Q4000 had some gaps in the schedule in Q4, working on lower rates RV decommissioning projects for Murphy for a good portion of the quarter and returned to contracted works at intervention level rates last month.

In the North Sea, the Well Enhancer had 70% utilization during the quarter, working for 2 customers. The Seawell remained on a stacked for the quarter, and we reactivated the vessel in January and commenced work earlier this month. In Q4, the Q7000 completed work on numerous wells for Shell on the 400-day decommissioning campaign in Brazil with 100% utilization. SH1 had 61% utilization during the quarter. The vessel completed decommissioning contract for Trident and then completed inspections and acceptance prior to commencing its 3-year Petrobras contract. The SH2 had a very strong quarter with 100% utilization for Petrobras.

The stand-alone 15K IRS was on hire in Brazil contracted to SMB in the quarter, achieving 75% utilization in the quarter prior to returning to the USA.

Moving to Slide 11. Slide 11 provides further detail of our Robotics business. Robotics had another strong quarter and a very good year. The business performed at high standards, operating 6 vessels during the quarter, working between trenching, ROV support and site survey work on renewables and oil and gas-related projects globally. Robotics worked 4 vessels and renewables-related projects during the quarter and had strong vessel utilization overall, with 2 vessels working on trenching projects and 2 vessels working on site clearance, 5 trenches and 2 IROV boulder grabs were utilized during the quarter. We operated 2 vessel trenching spreads in Europe, including the GC II and the North Sea Enabler. The Glomar Wave and the trim support vessels worked on renewable site clearance projects utilizing the IROV boulder grabs in Europe.

We returned the Glomar Wave to its owners in late December, following its expiration of its charter replaced the vessel with the highest spec vessel, the Patriot's in January. The Shelia Bordelon completed ROE works in the Gulf of America, where it is currently undertaking ROV support works prior to being scheduled to head back to the U.S. East Coast.

Also in renewables, the T1400-1 trencher complete work on a longer-term contract from a client provided vessel of Taiwan and the T1400-2 works from a client provided vessel for longer-term contract in the Mediterranean, which has now been extended to the end of Q1 2027. The GC II in the Asia Pacific region performed Oil and Gas supports work offshore Malaysia during the quarter.

Our renewables and trenching outlook continues to remain very robust with numerous sizable contracted works in 2026 through 2030 with a solid pipeline of tender activity as far out as 2032 with an improving rates year-over-year.

Slide 12 provides detail of our shallow water abandonment business. Q4 is usually seasonally low in terms of utilization for the shallow water abandonment business. However, in Q4, the Hedron heavy lift barge worked well into December with 92% utilization. The diving support completed 54% utilization and the liftboats 53% utilization.

P&A spreads working offshore totaling 538 days of utilization and the core tubing systems at 83 days of utilization. In summary, whilst the year was softer than expected at the start, we finished relatively strong. We are encouraged by our strong robotics in Brazil segment and see improving market conditions in the later half of 2026 and into 2027.

I would like to thank our employees for their efforts, delivering again safely at a high level of execution, producing one of our best years in regards of MPT and our safety statistics continue to remain among our best on record.

Before I turn the call over, I would be remiss if I did not address the announcement we made in December where on our long time CEO announced his intent to retire. Our Board is focused on selecting the next CEO for Helix, following a long-established succession plan, working with outside advisers and Owen. We, the management team, the Board and Owen are committed to business continuity and a smooth transition. We are grateful that we can benefit from our expertise and perspective during this transition as Helix is well positioned with a strong balance sheet that affords opportunities for future growth.

On a personal note, I've worked with Owen for over 25 years. He has been a pioneer in intervention providing leadership and vision to build Helix and drive long-term value creation. On behalf of Helix family, thank you, Owen.

To continue our call, I will now turn the call over to Brent.

Thanks, Scott. Moving to Slide 14, it outlines our key balance sheet metrics as of December 31. At year-end, we had $445 million of cash and liquidity, $554 million, including the availability on our ABL facility. Our total funded debt was $315 million, and we had negative net debt of $137 million at year-end.

Our cash -- our balance sheet remains strong, but we expect to continue adding to our war chest of cash as we anticipate generating meaningful free cash flow in 2026 with minimal debt repayment obligations between now and 2029.

We I'll now turn the call over to Erik for a discussion on our outlook.

Thanks, Brent. We are pleased with the strong finish to 2025 delivered by our team. Our operating season extended deep into the fourth quarter before the winter season slowdown. As we enter 2026, we see conflicting signals. We have a strong backlog for the year and a base level of activity in our markets, which remain supportive and constructive. However, we also have a market that last conviction or direction.

The macroeconomics allow an uncertain environment to persist, driven by geopolitics, regional conflicts and conflicted supply and demand and pricing dynamics. Despite these challenges, momentum is building as producers signal, expanding operations and activity in late '26 or early '27. The global renewables market continues to be robust. Our outlook remains positive despite these near-term headwinds.

As we provide our outlook for '26, this is supported by contracts for several of our key well intervention assets entrenching contracts in our Robotics segment. Our outlook for '26 is impacted by 2 distinct events causing year-over-year EBITDA reductions in the range of $40 million. Earlier this month, we completed the successful workover of the Thunder Hawk Field at an estimated cost of $16 million. This will impact our Q1 results. Midyear '26, the Sea Helix 1 is scheduled to perform its 10-year recertification, impacting our results by more than $20 million. Absent these events and despite the fact that various macro challenges from '25 continue into '26, we nonetheless see an environment that is better than '25. We are providing guidance of certain key financial metrics from our '26 forecast, revenue of $1.2 billion to $1.4 billion, revenues in line with 2025, EBITDA of $230 million to $290 million, as mentioned, impacted by Thunder Hawk workover in the Sea Helix 1 docking, CapEx of $70 million to $80 million, our 2026 spending plans are primarily a mix of regulatory maintenance on our vessels and intervention systems and fleet renewal of our robotics ROVs.

Free cash flow, $100 million to $160 million, continued meaningful free cash flow generation with variability driven by ultimate working capital movements. These ranges include some key assumptions and estimates. Any significant variation from these assumptions and estimates could cause our results to fall outside the ranges provided.

Key drivers, forecast drivers for our annual guidance include second half utilization on the Q4000 and Q7000, recovery of the North Sea well intervention market, strong markets for our Robotics fleet and a stable shallow water abandonment segment.

Overall, as shown on Slide 16, our guidance highlights our reliable EBITDA margins and free cash flow generation. This slide highlights our consistent and healthy cash conversion rates and attractive yields. Our quarterly results will continue to be impacted by seasonal weather in the North Sea and U.S. Gulf shelf primarily in first and fourth quarters. In addition, the Thunder Hawk workover of our vessel maintenance period will cause variances between quarters.

Our quarterly financial performance in '26 is expected to follow the same cadence as our previous year's results. The second and third quarter have been our most active quarter in the first and fourth quarters impacted by winter weather. With seasonal quarterly impacts and capital spending expected to be front loaded, the timing of our free cash flow generation is likely skewed to the second half of the year.

Providing key assumptions by segment and region starting on Slide 18. First, with our Well Intervention segment. The U.S. Gulf of America continues to be a mixed bag. The Q5000 has good contract coverage with white space to fill in her Q3 schedule. The Q4000 is starting the year with contracted work into Q2 with white space in the second half of '26. Utilization on the Q4000 is one of our key areas of focus for '26.

We're seeing a nice rebound in the U.K. North Sea well intervention market albeit with some lower margin work. We have secured almost 400 days of work in the region with several additional opportunities. The Seawell has been reactivated and certainly working. We expect good utilization for the Seawell this year. The Well Enhancer season is expected to start in March. We are pleased with the recent level of activity in the market and are expecting a solid multiyear recovery.

The Q7000 is currently in Brazil completing this project for Shell, short-term opportunities for the vessel in Brazil and West Africa are being developed. Utilization of Q7000 is another one of our key areas of focus this year. The Sea Helix 1 and Siem Helix 2 are contracted to work for Petrobras throughout the year. The Sea Helix will has the scheduled 10-year docking midyear with a significant impact to our '26 outlook.

Moving to robotics. The robotics trenching market continues to be a bright spot for Helix specifically in Europe. In 2025, we announced multiple significant trenching contracts in the North Sea that form a foundation of our strong outlook. Bidding activity has been and continues to be extremely active. The APAC market is expected to be softer in '26 with plans to complete trenching projects in Taiwan and relocate the GC II to the North Sea for trenching projects there.

In the North Sea, the Grand Canyon III Horizon enabler and GC II are expected to have strong trench utilization in '26 and -- the GC III does have a document in Q1, and the GC II has the transit to the North Sea in Q2. The site clearance vessels are forecasted to have good utilization. The T1400-2 is contracted for the year on a project in the Mediterranean. In the U.S., the Shelia Bordelon utilization will likely be lumpy with the forecasted combination of work in the U.S. Gulf Coast and U.S. East Coast.

Moving on to production facilities, the HP1 is on contract for the balance of '26 recently extended in June of '27 with no current expected change. We expect variability with production as Droshky field continues to deplete and the successful Thunder Hawk field workover expected to result in [indiscernible] reduction in Q2. The workover expense of $60 million will impact our Q1 results.

Continuing to Alliance, we are expecting to have a traditional seasonality in our shallow water abandonment segment with greater impacts during Q1 and Q4. Once again, we believe results will be ultimately driven by the length of the good weather season. We're seeing improvements in marine offshore and increased competition in the energy services diving and heavy lift.

We expect the marine offshore business to maintain good utilization of up to 7 liftboats, with some variability and seasonality on the OSPs and crew boats. The energy sources should have good utilization for 4 to 7 P&A spreads and 1 to 2 coiled tubing units. There is seasonality in diving and heavy lift business that [indiscernible] is currently completing its docking and is expected to remain idle with limited winter opportunities, after which we do expect an active season during Q2 and Q3.

Moving to Slide 19. Our CapEx profile for '26 is heavily replaced by dry docks and maintenance periods on our vessels. The Hedron is currently comparing -- completing a docking. The Sea Helix 1 has a 45-day docking scheduled midyear. Our CapEx range for '26 is currently $70 million to $80 million. The majority of our CapEx continues to be maintenance and project-related which primarily falls into our operating cash flow.

Reviewing our balance sheet, our funded debt of $315 million is expected to decrease by $10 million in '26 with scheduled principal payments on our MARAD debt. We expect to continue our share repurchase program with the target repurchases of 25% of free cash flow.

At this time, I'll turn the call back to Owen for a discussion on our outlook and beyond and for closing comments. Owen?

Thanks, Erik. 2025 has been softer than 2024, with impact on both rates and utilization over revenue down 5% and EBITDA down 10%. However, this is better than expected and better than our revised guidance following the unexpected collapse of work in the U.K.

The Gulf of America intervention results were impacted as a result of accelerating the timing of the Q4000 dry dock from 2026 into 2025. We did this to take advantage of what could be a stronger year in 2026 versus the softer second half of '25. The rest of the company showed flat to marginal improved results over expectations in our other segments highlighted by much improved results in shallow water abandonment and Drosky reduction. However, Thunder Hawk remains off-line for the entire year as partners of decided to defer the required intervention until 2026.

On the production side, there are some positive developments. Drosky continues to produce much better than expected. The Thunder Hawk intervention completed in February with successful results. The host facility operated by others is experiences -- experiencing issues that don't allow us to immediately start production, but production is expected to start in early April.

Absorbing the cost of intervention in the slower than desired startup will see EBITDA negatively affected for 2025, but it's a good intervention result with positive future impacts. All in all, it was not a bad performance for the year, allowing us to meet our revised guidance of $255 million of EBITDA, which was set following the undirected shutdown of activity in the North Sea.

Going forward into 2026, we expect the macro outlook to continue to be on the soft side with ongoing uncertainties. We expect the North Sea to start to become more active led by decommissioning activities, we've reactivated the Seawell and expect market improvements. Likewise, we expect to have a well operations U.S. business to marginally improve. These expected improvements will be offset by Q7000 results as it transits -- transitions between contracts. In Brazil, we have a 5-year special survey drydock do on the SH1 therefore, we expect well operations in Brazil -- we expect operations in Brazil, the results being meaningfully impacted as we see the SA service and unavailable for approximately 45 days.

Robotics should continue to show strong performance with long visibility on sustainable strong results. In shallow water abandonment, we have expected for a while that decommissioning should increase markedly to 2027. In 2026, we expect increased competitive pressures as contractors positioned for the expected improved market of '27. Therefore, we are expecting a flat to marginal drop in results compared to 2025.

Production facilities HP-1 performance should continue unabated for 2026. There are a few give and takes, but we could see a full year in 2026 with similar overall results since 2025 as we get set for what we anticipate will be a stronger 2027 all around.

Just a note on our guidance for 2026. We're expensing the Thunder Hawk intervention, and we have a 5-year special survey dry dock on the SH1 scheduled for 45 days out of service, as Erik mentioned. Combined, these 2 events represent $40 million of EBITDA. You can do the math, the -- this highlights how strong in improving our core businesses, and we anticipate a strengthening of the market into and through 2027.

We have a lot of cash on the balance sheet and more to come. It should be time to put some of this cash to work. We exit 2025 with the strong balance sheet, as mentioned, with negative net debt and a significant cash position. Helix financial strength continues as we expect another year of strong free cash flow generation, leading to a potential cash balance approaching $600 million by the end of 2026.

The market continues to be a bit soft with uncertainties. These 2 events combined create conditions that mean 2026 could be a year to consider meaningful M&A activities or capital investments which could positively impact the company's shareholder value. We remain a market leader in intervention, decom and robotics. We continue to demonstrate our resilience, our ability to deliver results even in a challenging market environment, and we're well positioned for the future.

And with that, I'll hand it back to you, Erik.

Thanks, Owen. Operator, at this time, we'll take any questions. .

[Operator Instructions] And your first question comes from Jim Rollyson from Raymond James.

This is Connor Jensen for Jim at Raymond James. I was just wondering kind of as you mentioned, a lot of cash on the balance sheet, more free cash flow expected in 2026. Maybe just talk about your preference of using that for repurchases versus M&A? And then if there's -- how the M&A market is looking at this time and if there's any actionable opportunities out there?

There are actionable opportunities. Right now, I'd say that the Board management, myself, are all collaborating on looking at all the options. Of course, I think with my retirement and a new CEO coming in, there needs to be some buy-in and participation with the new CEO. So I think right now, all I can say is that there are opportunities and they're being assessed.

Got it. Makes sense. And then you noted you reactivated the and expect strong utilization there. I was just wondering how the North Sea market was looking at this point and what you're hearing from operators there after the weaker activity this year or last year?

We are seeing much better activity in 2026 than we did in 2025. In 2025, there's a lot of mergers of oil companies that put of operators that put a lot of things on hold. There has been a sizable change towards decommissioning. We've landed a couple of large size decommissioning projects. And so we're seeing this year that both the Seawell and the Well Enhancer will have very active seasons. And we're also already starting to see activity into 2027. So it's definitely an improved market, that's certainly a swing towards decommissioning over production enhancement.

And your next question comes from James Schumm from TD Cowen.

First, I just want to say, Owen, I just want to wish you the best in retirement. Thank you for all the support over the last several years. You'll be missed, and I hope to see you again soon. And then just maybe on the robotics revenue guidance, it's about flat year-over-year. Can you talk about some of the components of that? For example, is the oil and gas portion up, down or flat? Is offshore wind up this year? And then I thought trenching activity was supposed to be higher or stronger in 2026, but perhaps you could give some color there as well.

Yes, sure. So we expect the oil and gas side for robotics to remain flat. If anything, it will go down from moving the GC II from the Asian market to the -- see the North Sea fully trenching contract for the NKT announcement that we put out there. So trenching is going to increase. Rates are increasing on the trenching side. But there's a lot of moving parts. The GC II is going to come up from APAC and establish North Sea. Then we have to swap out trenches from the enabler to the GC II and then put the T1400-1 from originally working in Taiwan last year back to the North Sea and put that onto the enabler. So there's quite a few moving parts of interregional transitions and then mobilization to various vessels that should set us up very well for '27 onwards. There's still going to be a very good year in trenching and rates are improving year-over-year and got a very solid outlook for trenching.

Okay. And then maybe just on Q1, I think maybe it would be a good idea to sort of level set expectations so your stock doesn't get whipsawed in April. The consensus, I show $47 million of I mean should we think about -- I don't think anybody had modeled those 2 issues. I mean I don't know if we can just haircut $40 million from $47 million, that would be only $7 million of EBITDA in the first quarter. Is there any help you can give to us to get some sort of, I don't know, reasonable expectations?

Yes. Thanks for the question, Jim. I think we tried to highlight that the impact of the workover expense that we incurred will be a Q1 event, and that's the estimated $16 million. So that is a Q1 event. The Sea Helix 1 right now, we expect that to be a Q2 event. It could slip a little bit into Q3, but it's definitely not a Q1 event. But I think modeling the impact of the Thunder Hawk workover into the Q1 is appropriate.

I think when you look at our historical performance the last several years, Q1 is our lowest quarter, naturally from a seasonal standpoint. And of course, we have the -- now this year, the impact of the Thunder Hawk. So that's the right way to model and think about Q1.

And your next question comes from Josh Jayne from Daniel Energy Partners.

First question is just on the Q7000. The slide deck highlights additional opportunities in Brazil, but also you could see some potential utilization gaps. Could you just elaborate what you're expecting from that asset in the back half of the year? And then also just speak generally to the intervention market today in Brazil, that would be helpful?

The intervention market in Brazil is our strongest market. There's the most activity. We have the 2 long-term contracts with the SH1 and SH2 for Petrobras, both coming into this year with 3-year contracts. And those contracts have options for Petrobras to extend and there are better rates than we had previously. So Brazil is looking good.

The Q7000 is currently contracted into April, May time frame with Shell. And then we're looking at opportunities within Brazil. There's a few smaller clients there that have some our work, but if that work doesn't come to fruition, we're probably going to send the vessel to Africa. We're very close to a larger contract for a good client in Nigeria. And so we've got targets in Brazil and targets in West Africa. There's also potential for opening up Angola. We've never really worked in Angola and we've had quite a bit of bid opportunity in Angola in recent times. So I think Q7000 will be utilized. There may be some gaps in schedule, but it will probably bounce between Africa and Brazil in the coming years.

And I think in Owen's -- towards the end of the prepared remarks, Owen, you talked about, I guess, a little bit more of a competitive nature within the Well Intervention segment. For the assets that have gotten utilization, how much of this is do you think, driven by a bit more competitive environment versus potential operators shifting some of their CapEx programs more towards exploration instead of well intervention type activities. Could you elaborate that a little bit more and how you potentially could see a recovery in 2027 after well this year?

Just to clarify, and then I'll turn it back over. The comment that I made about the competitive -- increased competition was specifically meant to address the shallow water market. Yes, that's going to continue to be soft for '26 with -- we anticipate strong 2027, as a result, there's more competitors coming into the market and competition will be pretty stiff as everyone positions for the next year.

Competition on the Well Intervention side is generally minimal. We compete mostly against rig white space. So we're seeing some rig white space in the Gulf, for instance, and that's given us a flatter look at the Q4000 for this year. But I think everybody knows going into the latter part of 2026 and 2027, the drillers are expecting to have high utilization, and therefore, operators will switch their white space intervention work from rigs and hope back to our guys, and that should lead to a better 2027, so.

So just one last follow-up on that point. So is that -- just given that backdrop, is it fair to say that the outlook for example, for the Q4 is probably better in '27 than it is in '26. Is that fair?

Yes. I think the Q4, for instance, we have a good first half of the year. We've got some white space in the second half of the year. We may end up chasing decommissioning work like we did in the latter part of 2025 for the Q4 but 2027, we should see a more solid year.

[Operator Instructions] And your next question comes from John Basler from Basler Capital. .

I'm just curious what types of gaps in your portfolio would you be looking to address or scale to be gained through M&A?

Well, there's quite a few. I wouldn't call them gaps. I think strategically, looking forward, we're sort of at a crossroads here, where for the -- since we started -- basically started building the company following the OA financial collapse. The focus has been on building out a fundamental fleet that puts us in a leadership role for Well Intervention, which we consider the most essential tool for the post PDP section of the market. Having done that, we completed that, spent the COVID years and focused on paying down the debt and strengthening the balance sheet again to the point now where we have a very strong balance sheet.

Now the next phase of growth will be to increase the value received on our assets by increasing our capabilities to become more and more of a solutions provider rather than simply a commoditized service provider, that would be one direction. I think there's still some geographic expansion for us to look at. So there's a number of pathways that we're looking at here.

And if I could ask one more. Is there any metrics or scenarios that you would look to, to determine whether you would revisit a strategic review as opposed to M&A?

I'm not sure I understand it.

I think from our strategy, I think we have positioned the company to obviously, to have a strong balance sheet and are well positioned from, you could say, a standpoint of M&A or capital investment. I think the Board and management team has been open to either direction. I think having the strong balance sheet and strong performance over the last several years has really positioned us for this. I think we see the benefit of, as Owen mentioned, adding different solutions and geographic expansion, but we also understand the benefits associated with scale. So I think from that standpoint, I think we're open to all. .

And your next question comes from James Schumm from TD Cowen.

Just one more for me. Can you give us a sense of the out-of-service time like dry docks out of service days for 2025, 2026 and then what you have sort of scheduled for 2027. And I'm not looking for 2027 guidance or anything, but I'm just trying to get a sense of -- you've got this SH1 headwind, do we have a similar headwind in -- for the SH2 in 2027? Just what are the things that -- as we sit here today, we know that there's some potential headwinds or tailwinds for next year.

Yes. I think you'll find most of the information on our '25 already in our results there, but we had the Q7000, the Q5000 and the Q4000 at different times in '25 drydock. As we look at '26, the assets that are impacting our results specifically, and that means being out of service during potential revenue generating, really, this year is the SH1, an example of the Hedron is in dock right now, but absent being in the dock, it still wouldn't be working because of the winter weather. So that is negatively impacting us in '26. I don't recall if there's another one in '26 that is negatively impacting us.

As we look at '27, we do have the SH2 that will be out of service right now that's expected to be early in '27 from a document standpoint. And I think I'd have to get back to you on any other of the larger assets that would have a docking later in '27. But the SH2 will have one early in '27.

The Seawell and the Well Enhancer will have some time in '27, but it will be in the off-season. So again, it will not affect our EBITDA generation. It will be in the early part of the year.

And your next question comes from Ben Sommers from BTIG. .

So sorry if I missed this earlier, but just kind of thinking about the expected improving market environment kind of late '26, early '27. Just kind of any thoughts around potential pricing for well intervention work and then maybe specific basins that you think could really maybe see a market improvement and maybe be able to push pricing for some of that work?

Yes. I think as we go into '27, I mentioned earlier that we believe that the drillers will have high utilization. And if that's the case, then their rates will increase we usually fall behind the drilling rates, but as they increase, we tend to increase slightly as well. So I think we'll see improved rates in the U.S. Gulf of Mexico.

And when then the North Sea, we should see more decommissioning work that should lead to slightly improved rates. So I don't think there'll be a big jump in rates in the North Sea because we don't really follow the drilling market in North Sea. And then obviously -- and then it's where can we take the Q7000 if it's in Brazil, probably have higher rates if we have to chose work in Nigeria or Angola Equator Guinea, we'll have to see what the market conditions allow for. So it's going to be a bit of a mixed bag, but I'd like to think slightly improved.

Awesome. And then just kind of on the Gulf there. Just kind of curious what you see in terms of like near-term utilization. Obviously, we have some pockets for the Q5000 Q4000 this year. So just kind of curious for any more color there and kind of the '26 outlook for that market?

Yes. So the Q5000 is pretty well taken care of for the first half of the year, and we have some gaps in Q3 but then a solid Q4 for the Q5000. The first half of the year for the Q4000 is looking relatively good. And then like I said, it gets a bit lumpy up there, there's 2 or 3 intervention jobs that we're chasing for the Q4000 in the second half of the year, but then we might have to start going back to decommissioning work course some construction work. But it's early days for the year, but certainly, we have some space to fill on the Q4000 in the second half of the year. .

There are no further questions at this time. And now I'll give back the floor to the company for the closing remarks. Please go ahead.

Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2026 call in April. Thank you.

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" BTIG, LLC, Research Division

" TD Cowen, Research Division

" Raymond James & Associates, Inc., Research Division

" Daniel Energy Partners, LLC[ id="-1" name="Operator" /> Ladies and gentlemen, thank you for standing by. Hello. My name is Dustin, and I will be your conference operator today. At this time, I would like to welcome you to the Third Quarter 2025 Helix Energy Solutions Group Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Brent Ariaga.

Please go ahead. Good morning, everyone, and thanks for joining us today on our conference call, where we will be reviewing our third quarter 2025 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO; Ken Neikirk, our General Counsel; Daniel Stewart, our Vice President, Commercial; and myself.

Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release and slides can be accessed under the News and Events tab.

Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken?

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends or business or financial results. All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions and factors, including those set forth in Slide 2 of our presentation and our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference call.

Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10-K and a replay of this broadcast will be available under the -- for the Investors section of our website at www.helixesg.com. Please remember that information on this conference call speaks only as of today, October 23, 2025, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. Scott?

Thanks, Ken, and good morning, everyone. Thank you for joining our call today, and we hope everybody is doing well. This morning, we will review our third quarter highlights, financial performance and operations. We'll provide our view of the current market and update our guidance for the remainder of 2025. Our teams offshore and onshore safely delivered another well-executed quarter. Our safety statistics continue to remain among our best on record.

Moving on to the presentation. Slides 6 and 7 provide a high-level summary of our results and key highlights for the quarter. Our third quarter results were better than expected, producing our highest quarter results since 2014 despite the continued low-cost stacking of the Seawell and the lower utilization of the Q4000 in the Gulf of America. Revenues in the third quarter were $377 million, with a gross profit of $66 million and a net income of $22 million compared to $302 million in revenue, $15 million in gross profit and a net loss of $3 million in Q2.

Adjusted EBITDA was $104 million for the quarter, and we had positive operating cash flow of $24 million, resulting in positive free cash flow of $23 million. Year-to-date, we have generated revenues of $957 million, gross profit of $109 million and a net income of $23 million with adjusted EBITDA of $198 million. Our cash and liquidity remains strong with increased cash and cash equivalents of $338 million and increased liquidity of $430 million at quarter end.

Highlights for the quarter, Brazil operating 3 vessels with strong utilization, all 6 trenches and all 3 IROV Boulder grabs working in the quarter, improved results in Gulf of America Shelf following a later start to the season, execution of a 3-year contract with a minimum 150-day commitment for the key units in the Gulf of America and our entry into a 4-year agreement with NKT for the installation, operation, project engineering and maintenance of the T3600 designed to be the world's most powerful subsea trencher to be operated from one of our trench and support vessels.

Over to Slide 9. Slide 9 provides a more detailed review of our segment results and segment utilization. In the third quarter, we continue to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, the Gulf of America and the U.S. East Coast.

Slide 10 provides further detail of our Well Intervention segment. The Q5000 achieved high utilization working in the Gulf of America in Q3. The vessel is currently working on a multi-well program for Shell and should be highly utilized for the remainder of 2025. The Q4000 completed a multi-well P&A campaign in the Gulf of America. And then due to gaps in its schedule, we pulled forward the 2026 planned regulatory docking into 2025 to facilitate a cleaner runway in 2026.

During this period of a softer Gulf of America market, we are experiencing some gaps within the schedule in Q4 with lower rate ROV decommissioning projects for a good portion of the remainder of the year prior to returning to contracted works at well intervention level rates in January of 2026. In the North Sea, the Well Enhancer had 100% utilization during the quarter, working for 4 customers. Due to the well-known market turmoil in the North Sea, the Seawell remained warm stacked and is expected to remain warm stacked at a low cost base for the remainder of 2025.

In Q3, the Q7000 completed work on numerous wells for Shell on the 400-day decommissioning campaign in Brazil with 100% utilization. The SH1 had 98% utilization working for Trident and the vessel has now completed the Trident contract and is currently undergoing inspections and acceptance prior to commencing its 3-year Petrobras contract. ESH II had a very strong quarter with 100% utilization for Petrobras. And the stand-alone 15K IRS system was on hire in Brazil contracted to SLB for the quarter, achieving 100% utilization.

Moving to Slide 11. Slide 11 provides further detail of our Robotics business. Robotics had a strong quarter. The business performed at high standards, operating 7 vessels during the quarter, working between trenching, ROV support and site survey work on renewables and oil and gas-related projects globally. Robotics worked 6 vessels on renewables-related projects within the quarter and had strong vessel utilization overall with 3 vessels working on trenching projects and 3 vessels working on site clearance. All 6 trenches and all 3 IROV boulder grabs were utilized. We operated 3 vessel trenching spreads in Europe, including the GCIII and the North Sea Enabler with jet trenches and the JD Assister with the i-Plough.

The Glomar Wave and the Trym support vessel were working on renewables site clearance utilizing the IROV boulder grabs in Europe. The Shelia Bordelon completed renewables works on the U.S. East Coast, utilizing our third IROV boulder grab prior to transitioning back to the Gulf of America, where she is currently undertaking ROV support works. Also in renewables, we have the T1400-1 trencher working on a longer-term contract from a third-party client-provided vessel of Taiwan and the T-1400-2 working from a third-party client provided vessel for a longer-term contract in the Mediterranean.

The GCII in the Asia Pacific region performed oil and gas support work offshore Thailand during the quarter. Our renewables and trenching outlook remain very robust with numerous sizable contracted works in 2025 and 2026 through to 2030 with a solid pipeline of tender activity as far out as 2032.

Slide 12 provides detail of our shallow water abandonment business. In Q3, activity levels increased with 100% utilization for the Hedron heavy lift barge and strong utilization for the die vessels and liftboats. In Q3, we had a higher number of P&A spreads working offshore, totaling 790 days of utilization compared to 614 days in Q2. Whilst 2025 continues to be a soft year on the Gulf of America shelf, we continue to believe in the long-term outlook for this segment as well as our agent customers look to reduce their decommissioning obligations.

So in summary, whilst we have seen a softer-than-expected U.K. intervention market and some gaps in the latter half of the year for the Q4000, we are encouraged by our strong Robotics and Brazil segments. We expected Q3 to be a very strong quarter, and it was. We executed it well, producing our highest resulting quarter since 2014. I'd like to thank our employees for their efforts, delivering again safely at a high level of execution and for again securing a further backlog and long-term contracts.

I'll now turn the call over to Brent.

Thanks, Scotty. Moving to Slide 14. It outlines our debt instruments and key balance sheet metrics as of September 30. At quarter end, we had $338 million of cash and availability under the ABL facility of $94 million with resulting liquidity of $430 million. Our funded debt was $315 million, and we had negative net debt of $31 million at quarter end. Our balance sheet is strong and is expected to strengthen further as we anticipate generating meaningful free cash flow in the fourth quarter and have minimal debt obligations between now and 2029.

I'll now turn the call over to Erik for a discussion on our outlook.

Thanks, Brent. Our team performed well in the quarter. It's been a challenging year, but our Q3 results provide a glimpse into our earnings potential even with 2 of our larger assets negatively impacting results. As we enter Q4, we do expect seasonal impacts to our operations, particularly in the North Sea, Gulf of America Shelf and APAC.

That said, we are tightening our guidance on certain key financial metrics in our forecast. Revenues of $1.23 billion to $1.29 billion. EBITDA, $240 million to $270 million. We have narrowed our EBITDA guidance. Our new range reflects our year-to-date actual results and the expected variability that comes with the winter season during the fourth quarter.

Free cash flow a range of $100 million to $140 million. The range continues to reflect the variability in working capital, specifically timing of accounts receivable with 2 of our blue-chip customers. We expect to have this resolved by early 2026. From capital expenditures, we are maintaining our forecast at $70 million to $80 million.

Our spend continues to be a mix of regulatory maintenance on our vessels and fleet renewal of our robotics ROVs. Our spend is committed, but deliveries may slip into 2026. These range involves some key assumptions and estimates and any significant variation from these assumptions and estimates could cause results to fall outside these ranges.

As discussed, our fourth quarter results will be impacted by the winter seasonal weather in the Northern Hemisphere. The variability in our fourth quarter guidance range is dependent on the length and extent of operations working into the season, namely in the North Sea well Intervention and Robotics business in our Asia Pac robotics operations and in the Gulf of America shelf.

Providing some key assumptions for the remainder of the year by segment and region, starting on Slide 16. In Gulf of America, the Q5000 is contracted through the remainder of the year with expected strong utilization. The Q4000 will have gaps in its schedule as it looks to perform lower revenue ROV support work prior to resuming well intervention work in January. In the U.K. North Sea, the Well Enhancer has work into November with the extent of the season being weather dependent. The Seawell continues in warm stack.

In Brazil, the Q7000 continues working for Shell into Q2 2026. The Siem Helix 2 continues working for Petrobras. The Siem Helix 1 completed its work for Trident. The vessel is currently mobilizing for Petrobras with work expected to start this quarter.

Moving to our Robotics segment. Our Robotics segment will be affected by seasonality with activity levels in the North Sea and APAC expected to diminish in the winter months. In the APAC region, the Grand Canyon II is providing ROV support and hydraulic stimulation offshore Thailand and Malaysia with expected strong utilization.

In the North Sea, the Grand Canyon II and the North Sea Enabler are performing trenching projects and are expected to remain utilized for the remainder of the year. The Glomar Wave is forecasted to remain on-site clearance operations into December. In the U.S., the Shelia Bordelon is back in the Gulf, providing ROV support into November with potential for further work.

Moving to production facilities. The HP I is on contract for the balance of '25 with no expected change. We do have expected variability with production as the Drosky field continues to deplete and the Thunder Hawk field is still shut in. Continuing with shallow water abandonment, we expect the business to decline in line with the winter weather arrival in the Gulf of America. Our outlook range includes variability depending on the timing and extent of the winter season. Shelf decommissioning is a call-off business, but given customers' needs and continued reversion of properties through bankruptcies, long term, we believe in the solid foundation for this market.

Slide 17, reviewing our balance sheet. Our funded debt stands at $315 million with no significant maturities. Our year-to-date share repurchase spend stands at $30 million, in line with our stated target of minimum 25% of our expected free cash flow with 4.6 million shares acquired.

At this time, I'll turn the call back to Owen for a discussion on our outlook beyond 2025 and for closing comments. Owen?

Thanks, Eric. Let me begin with a few macro observations and thoughts where Helix is positioned in the current market. We all know the oil and gas market is cyclical. It's actually composed of a series of cycles depending on market segment and region. Exploration and drilling cycle is the start of the offshore oil and gas investment cycle, usually beginning at a time of high commodity prices or a perceived supply-demand imbalance. This was our market environment as markets rebounded post COVID. The exploration and drilling cycle is followed by the development cycle during which subsea construction services do well.

The development cycle usually starts about 2 years or more after the drilling cycle. This is where I believe we're at now. Drilling is currently showing softness with some support from consolidation, fleet rationalization and a remarkable degree of capital discipline relative to past cycles. The subsea construction market is currently strong. As production from drilling and development comes on and/or commodity prices soften, CapEx budgets typically get cut. Remaining dollars freed up get directed to providing OpEx, well intervention gets added to remediation spending and the production enhancement cycle begins.

Without getting into regional differences, we feel the industry is currently in the early but strong development cycle. As a consequence, vessel charter rates and asset values are elevated and production enhancement is flat. Abandonment is almost a separate event and is currently increasing due to regulatory pressure, the mature nature of reserves and excess backlog built up with concern over carried liabilities. Bringing this all together, we believe we're in a trough, but at the cusp of an up cycle. As the market progresses, it will move into the production enhancement cycle where we stand to benefit. As we navigate this trough, we've had 3 challenged areas of our business in 2025.

Number one, the U.K. North Sea, driven by government tax and regulatory policy combined with M&A consolidations, most spending in the U.K. North Sea came to an abrupt slowdown in early 2025. While we believe 2026 will be marginally better and allow us to reinstate our second vessel, rates will be competitive and work will still be slow. By 2027, we anticipate significant abandonment work will begin as producers leaving the region will be forced to do the work and remaining producers will seek to lessen liabilities.

Number two, the Q4000. In 2026, work visibility in the Gulf of America is better than what occurred going into 2025 as 2025 work was getting deferred into 2026. We do anticipate that deferrals or cancellations could again occur. So we're planning to hedge utilization risk by again considering a West Africa campaign for at least part of 2026 for the Q4000, although we have work already contracted in the Gulf of Mexico for Q1.

We -- as Scotty mentioned, we accelerated a drydock that was planned for 2026 forward into the softer market of 2025, which should allow for greater availability and flexibility on where she's deployed. This should improve well ops U.S. results year-over-year. By 2027, we expect Gulf of America demand to increase from both production enhancement and abandonment.

Third area, we continue to believe the shallow water abandonment in the Gulf of Mexico will be a large market. For 2025, we rightsized the business and are delivering improved results. It's anticipated that 2026 will be a better year, but still a slow year with more work but at reduced rates as competition for the work remains stiff. Indications are that volume of work from boomerang properties out of the bankruptcies will build into 2027, creating a strong market.

The performance of our Robotics group has been a positive this year. We're seeing rates improve modestly and visibility on work remains strong, and we continue to establish ourselves as a global leader in trenching as we also support construction and wind farm projects. Even with all these challenges of 2025, we nonetheless delivered our highest quarter EBITDA since 2014, and we're still on track to deliver meaningful free cash flow. So while we acknowledge our results for 2025 will fall short of our expectations that we had coming into the year, we still see the earnings potential in our business.

The challenge for us going into 2026 will be to manage the pressure we're getting from to reduce rates while facing rising supply chain and labor costs. We need to maintain our focus on managing our costs. With strong subsea construction and robotics markets, we're seeing upward pressure on support material and labor costs. Emphasis next year will be on savings in our OpEx and marine costs. We believe there's a meaningful opportunity in this area. In addition, we can expect further improved EBITDA contributions from Q7 if we're successful in keeping it working in Brazil without the noise of another transit from region to region at higher rates.

On the downside, next year, we do have both SH vessels in Brazil due for their 5-year special surveys, this out-of service costs will meaningfully impact some of the anticipated improvements. By how much will be determined as we evaluate cost and timing during our budgeting process. Beyond this, we have a strong balance sheet with negative net debt and significant cash. We're in a position to opportunistically consider growth by acquisition. We remain a market leader in intervention, decom and robotics. Through the cycles, we're demonstrating our resilience, our ability to deliver results even in a challenging market environment and our positioning for the future.

Back to you, Erik.

Thanks, Owen. Operator, at this time, we'll take any questions.[ id="-1" name="Operator" /> [Operator Instructions] Our first question comes from the line of Greg Lewis from BTIG.

Owen, congrats on a great quarter. This was really good to see. It kind of shows the potential with the company. I did have a question around the Q4000. You talked about some of the challenges that it faced in 2025, decisions from customers to defer cancel. You highlighted the good visibility in Q1. What should we be looking forward thinking about in terms of -- I think there's a lot of optimism around the outlook for 2026. But I think one of the concerns is, could we see a little bit of a repeat of customers pushing some work right? So just kind of how are you thinking about maybe mid-'26 in terms of what's going to drive those decisions to get that work going or potentially delaying in another quarter or 2?

Well, I'll start and let Scotty add some color to it. But there's always a potential that in this volatile market right now, there's always a potential that producers will change their planned spending. Going in through a budgeting process, we speak primarily with the operating groups to identify the work and start to build our schedule for the following year.

But during that budgeting process, it's possible that corporate gets involved and modifies those plans. We don't always see that. We got caught short this year, and we're sort of still prepared. We sort of figured that the Gulf of America might be soft in 2025. So we took a contract that was supposed to be a 6-month contract in West Africa. That work actually got shortened a little bit. So we wound up coming back to the Gulf a little earlier only to face the budgeting decisions to defer work out of 2025, and that's what sort of caught us up. We just did -- admittedly, we didn't see it coming.

Looking forward into 2026, it's a similar situation, but I think the visibility of the work is stronger in '26 than it was going into 2025. The work has been deferred once. So that sort of lessens the possibility that it would be deferred twice. But as I said in my remarks, you can never rule it out, but that's why we're also looking at hedging that risk by entertaining another campaign to West Africa this year.

Yes. I'll add to that. Thanks, Owen. We have a sizable contract to kick off in -- very early in January that will get us going for a good start of the year. And then we are at high-level discussions with many operators about works into 2026 in the Gulf of America. One of the reasons we brought forward the regulatory dry docking from '26 into '25 is if we do take a West Africa campaign, it would be very difficult to do the docking in the Africa region.

And we're also starting to have discussions about potential works in Guyana as well. So a few other workplaces have opened up for us, and we're looking at regional options as well. And you have to also remember, we're not a rig. You never hear of rigs going off and doing construction or decommissioning support work. We're quite a versatile unit. All those rates are lower, we can go off and do other works if the well intervention work doesn't come to us.

Yes, that was super helpful. I did have a follow-up around shallow water abandonment. Clearly, I think we share your views that it's going to be a better market over time. But I did want -- if you could elaborate a little bit. You mentioned that kind of your expectations for '26 is that we are going to see a pickup in activity, but maybe at reduced rates. And just kind of curious if you could maybe elaborate on that comment.

Yes. 2023 was a better year as Apache really absorbed all of the available capacity in the market. That drove rates and utilization to all-time highs. In '24, when they exited the market, the competition did add capacity. So that sort of exacerbated the situation, and we went into a period where there's actually excess supply over demand. We think that's continued through '25. We didn't adjust well in '24 to it. We were expecting a quicker rebound, but there were provisions allowed for producers to defer their work up to 3 years. So that sort of kept the work from rebounding as quickly as we thought it would.

Going into next year, we do -- we are seeing an increase in the volume of work, although the competition has added capacity. So I think 2026 will continue to be a highly competitive year on margin, but utilization should be strong for us. And then going into 2027, that's when the hiatus sort of starts to expire and we see the shallow water abandonment market actually returning to what I would call a normal state following these boomerang properties, so a much stronger market by 2027.

Okay. And so just so I understand, it sounded like despite maybe some of the softness in the last year or 2 in SWA, you did have some competitors that maybe -- did they add capacity? Or did they -- was it moved to the U.S.? Or was it just incremental stuff that they built into the market?

No, it was incremental spreads that were actually fabricated and put into the market. The big bottleneck in that market is actually the people. So whoever has the work sort of gets the people. We came up short in 2024. And because of our competition bidding lower rates, the people sort of moved away from us. Throughout this year, we've been very successful in getting the people to come back to us, and we've increased our utilization, of course, by cutting rates. So I think we're pretty well positioned going into next year to be a strong competitor in the market.

[ id="-1" name="Operator" /> Our next question comes from the line of James Schumm from TD Cowen.

I was hoping maybe you could help me with the bridge to fourth quarter from third quarter in Subsea Robotics. So I guess it looks like you'll have some Q4 seasonality. But it looks like the vessels will all be utilized in some -- at some level, but maybe the vessel days will be a bit lower. And then if I'm reading your slides correctly, I think you had like all 6 trenchers going in the third quarter, but you only have 4 in the fourth quarter. Is that right? Like how just -- or maybe just speak at a high level, like what kind of a drop we're looking sequentially for Subsea Robotics?

So we did have 6 trenches working in the third quarter. We will drop down to eventually 4 trenches in the fourth quarter. The trencher that's currently working in Taiwan, that will get seasonal, once the weather kicks in, that will get demobilized. However, we are expecting work in Taiwan again for T1400-1 next year. The North Sea trenches, they should be relatively busy through the quarter. But again, you will start getting affected by seasonal weather, which will bring down rates. And then the i-Plough that was on the JD Assister, that project has come to a close in Q3. So that will not be utilized in Q4.

Scotty, when you said it will bring down rates, did you mean bring down utilization? Or do rates also soften in the fourth quarter?

Generally, when we're trenching, we have an operational full rate and then there's a lower weather rate. We still get paid for weather, but it'll at a lower rates. So there'll be less trenches utilized. And as the weather kicks in, there'll be some lower rate coming in.

Understood. Understood. Guys, in the North Sea, I think there were 2 large tenders. Is there an update there? Were you unsuccessful? Or we just haven't heard anything? Or what's the update there?

We're very active on both of those tenders. One of them, there's a lot of technical clarifications going on. And the other one, I'd say we're in quite a good position for. We're just not in a position yet to bring that out to the market, but it's in a good place. I think that next year will be turning into activating the Seawell again at some point. We don't know if it will be a full year or a partial year, but it's looking more and more likely we will activate the Seawell in 2026. We just don't know for what length of time yet.

Okay. Yes. That's -- okay. That's where I was going with that. And just lastly, a quick clarification. The well intervention, the new contract that you announced 150 days minimum. Is that a grand total of 150 days over 3 years? Or is it 150 days annually?

No, the minimum commitment over the 3 years is 150 days. However, in 2026, we're kicking off with that contract with quite -- that's the sizable work for the kick off for the Q4000.

[ id="-1" name="Operator" /> Our next question comes from the line of Connor Jensen from Raymond James.

Like everyone else had great quarter here. So really strong showing for robotics in 3Q and reading the forward commentary. It looks like that should continue to be solid going forward. Just wondering if you could give a high-level overview next year, what you're thinking about 2026 robotics versus what we saw in 2025?

I think we should see a strong year in robotics for 2026. It should be at least be on par with what we have for 2025. We're expecting a strong trenching season in the Mediterranean, the North Sea and in Taiwan. The site clearance market is looking quite robust for next year as well. So I expect to at least be on par, if not better, as we go into 2026. Our trenching rates will certainly have some very large contracts in place at better rates in 2025. So it should be another good year for robotics.

Got it. That's helpful. And then any update on the chemical treatment success for Thunder Hawk? I saw you don't anticipate any revenues in 2025, but wondering if you still expect to receive some benefit in 2026 without having to do an intervention?

We've seen some positive developments on that front that leads us to question whether or not an intervention will actually be necessary, but it's still early days, and we don't know. We have plans that are already submitted into BSEE for what the various optionality of work going forward to get it back online. Our anticipation, though, is that we should have it back online at least by some point in the first quarter.

[ id="-1" name="Operator" /> [Operator Instructions] Our next question comes from the line of Josh Jayne from Daniel Energy Partners.

First question, you noted rising supply chain costs moving forward into 2026. Where are you seeing the most pressure? And could you just talk about how you're mitigating those increases?

We're seeing rising cost pressures across the board actually, it began with labor costs. They went up for this year. I don't see any reprieve from the labor costs, but also on the materials and supply side and delivery through the supply chain, we're seeing escalating costs. So those are areas where we're going to really be focusing on trying to mitigate the cost. And that's just working with our suppliers, maybe consolidating our supplier base and just putting a little pressure on achieving a little bit of a margin gain there.

Okay. And then I wanted to talk about pricing for well intervention. So although deepwater rig rates have come down for incremental contracts from where we were sort of last summer, there's still a gap between where your assets can work and sort of seventh gen drilling assets. So I'm curious if you've seen any change in pricing discussions you're having on the intervention side? Or is securing backlog just more at this point about stacking programs on top of one rather than really a price-led discussion?

It is also a price-led discussion. We have seen downward pressure on our rates similar to what the drillers have experienced in the marketplace. Having said that, we are also able to tier our rates. So we have well intervention rates. We have rates for carrying out construction support projects and ROV support projects during times of lower utilization of well intervention and similar, but we have seen downward pressure.

We do have backlog in Brazil on longer-term contracts and for the Q5000 as well at set rates similar to and better to what we have in this year. And it's also a bit of a regional play. Sort of we might have a softness for the Q4000, the Q5000 is tight, but then the rates in the North Sea will be dependent on whether or not we can activate the second vessel. So you might see a bit of rate pressure there trying to get the second vessel into the market.

Understood. And then maybe just lastly, could you just speak in general to the market in Brazil, continue to be highly utilized there? And just maybe your thoughts over the next couple of years about that market and the success that you've been having?

Yes. I mean we have to see in Helix 1 and 2, both on the Petrobras contracts, they're going to be for 3 years plus options. The Q7000 is on a good contract with Shell. We would hope that there's some extensions there. But then we're also starting to see quite a bit of interest in the Brazil market for the Q7000 with Shell. I would say Brazil in general, not just for us, but for the rigs, is the most buoyant market out there at this time. So we're quite confident of keeping our position.

[ id="-1" name="Operator" /> There are no further questions. I will now turn the call back over to Erik Staffeldt for closing remarks.

Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our fourth quarter 2025 call in February. Thank you.

[ id="-1" name="Operator" /> The meeting has now concluded. Thank you all for joining. You may now disconnect.