Insiders ranked by realized 90-day signed return on their open-market trades at Tidewater Inc. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.04pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.00pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.07pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+3
conflict+3
conflicts+2
absence+2
unable+1
Positive rising
satisfy+2
successfully+1
effective+1
satisfaction+1
Risk Factors (Item 1A)
14,340 words
ITEM 1A. RISK FACTORS
The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-K. The following information should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and related notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
Our business, financial condition and operating results can be affected by several factors, whether currently known or unknown, including but not limited to those described below. Any of these factors could, directly or indirectly, cause our actual financial condition and operating results to vary materially from those anticipated, projected or assumed in the forward-looking statements. Any of these factors, in whole or in part, could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and stock price. These could also be affected by additional factors that apply to all companies generally which are not specifically mentioned below. The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
idle+4
bad+2
antitrust+2
late+2
restructuring+1
Positive rising
benefit+4
gains+2
gain+1
improved+1
MD&A (Item 7)
11,266 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying Consolidated Financial Statements included in Item 8 of this Form 10-K. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Our future results of operations could differ materially from our historical results or those anticipated in our forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Item 1A and elsewhere in this Form 10-K. With respect to this section, the cautionary language applicable to such forward-looking statements described under “Forward-Looking Statements” found before Item 1 of this Form 10-K is incorporated by reference into this Item 7.
EXECUTIVE SUMMARY AND CURRENT BUSINESS OUTLOOK
Tidewater
We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years. Our vessels and associated vessel services provide support for all phases of offshore oil and gas exploration, development and production as well as windfarm development and maintenance. These services include towing and anchor handling for mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; providing offshore construction and seismic and subsea support; delivering geotechnical survey support for windfarm construction, and offering a variety of other specialized services such as pipe laying and cable laying. In addition, we believe we have the broadest geographic operating footprint in the offshore vessel industry. Our global operating footprint allows us to react quickly to changing local market conditions and to be responsive to the changing requirements of the many customers with which we believe we have relationships.
Below is a summary of some of the principal risks and uncertainties that could materially adversely affect our business, financial condition, results of operations and future prospects. You should read this summary together with the more detailed description of each risk factor contained below.
Risks Relating to Our Business and Industry
Demand for our services is substantially dependent on the level of capital spending by our customers. Downturns in the oil and gas industry have often resulted in lower expenditures by our customers and reduced demand for our services, which in the past has, and in the future may have, material adverse effects on our financial condition, results of operations and cash flows.
A rise in production of oil and gas resources could increase supply without a commensurate growth in demand which could negatively impact oil and gas prices.
Factors associated with climate change and sustainability matters, including evolving regulations, varied and expansive scope of standards, rating criteria, our sustainability disclosures, and the perception and expectations of the public and our stakeholders could adversely affect our business, reputation, results of operations and financial position.
At certain locations where we operate, severe weather events, including conditions believed to be associated with climate change, have in the past and may in the future adversely affect our operations and financial results.
Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
As we implement our business strategy, we face risks associated with identifying acquisition targets, integrating any acquisitions or mergers and growing the business from the acquisition, including the timing, completion and anticipated benefits of the proposed acquisition of the Wilson Companies, and our ability to finance any such acquisitions.
We derive a significant amount of revenue from a relatively small number of customers.
We may not be able to collect amounts owed to us by our customers.
Our customer base has undergone consolidation and additional consolidation is possible.
The high level of competition in the offshore marine service industry could negatively impact pricing for our services.
Maintaining our current fleet and acquiring vessels required for additional future growth requires significant capital.
We may not be able to renew or replace expiring contracts for our vessels.
Our ability to raise capital in the future through debt or equity financing may be limited, which could make us unable to fund our capital requirements or business operations or potentially dilute existing stockholders.
Early termination of contracts on our vessels could have an adverse effect on our operations and our backlog may not be converted to actual operating results for any future period.
We may record impairment charges or other losses related to our vessels.
We may not be able to sell vessels because we may be unable to locate buyers with access to financing or to complete any sales on acceptable terms or within a reasonable timeframe.
An increase in vessel supply without a corresponding increase in the working offshore rig count could lead to a decline in the charter day rates we can charge and negatively impact our revenue.
Our insurance coverage and contractual indemnity protections may not be sufficient to protect us under all circumstances or against all risks.
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Risks Relating to Our International and Foreign Operations
We operate in various regions throughout the world and are exposed to many risks inherent in doing business outside the U.S., including risks associated with foreign corrupt practices laws, acts of piracy, war, terrorist attacks and international hostilities.
Disruptions or disagreements with our foreign joint venture partners could lead to an unwinding of the joint venture.
Our international operations expose us to currency devaluation, exchange and conversion risk.
Risks Relating to Our Human Capital
Failure to attract and retain qualified personnel could impede our operations.
We may be subject to additional unionization efforts, new collective bargaining agreements or work stoppages.
Our participation in industry-wide, multi-employer defined benefit pension plans expose us to potential future losses.
Certain of our employees are covered by federal laws that may subject us to job-related claims in addition to those provided by state laws.
Risks Relating to Our Indebtedness
We may not be able to generate sufficient cash flow to meet our debt service and other obligations.
Restrictive covenants in our debt agreements may restrict our ability to raise capital, make distributions on our stock or pursue our other business strategies, which may have significant consequences for our operations and future prospects.
Risks Relating to Governmental Regulation
With our extensive international operations, we are subject to certain compliance risks under the Foreign Corrupt Practices Act, the United Kingdom Bribery Act or similar worldwide anti-bribery laws.
Changes to applicable laws or regulations, including any developing laws and regulations, may increase our compliance costs and operational risk.
Changes and developments in U.S. and international tax laws and policies could adversely affect our financial results.
Changes in environmental regulations and evolving environmental expectations may reduce demand for hydrocarbons, increase our compliance costs, harm our reputation and adversely affect our financial results.
Risks Relating to Information Technology and Cybersecurity
Cybersecurity attacks on any of our vessels, facilities, or those of third parties, may result in potential liability or reputational damage or otherwise adversely affect our business.
Artificial Intelligence presents risks and challenges that can impact our business.
Risks Relating to Our Securities
Our common stock is subject to restrictions on foreign ownership and possible required divestiture by non-U.S. Citizen stockholders.
The market price of our securities is subject to volatility.
We do not currently pay cash dividends, so realizing a return on your investment depends on selling your common stock for a price greater than what you paid.
Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control.
The issuance of stock-based awards may dilute our common stock.
Activist stockholders could divert the attention of our management team and/or negatively affect our business .
General Risks Factor
Uncertain economic conditions may lead our customers to postpone capital spending or jeopardize our customers’ or other counterparties’ ability to perform their obligations.
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Risk Factors
Risks Relating to Our Business and Industry
Demand for our services is substantially dependent on the level of capital spending by our customers. Downturns in the oil and gas industry have often resulted in lower expenditures by our customers and reduced demand for our services, which in the past has, and in the future may have, material adverse effects on our financial condition, results of operations and cash flows.
Demand for our services depends substantially on the capital spending of our customers for offshore exploration, development and production of oil and gas reserves. These expenditures are generally dependent on our customers’ views of future demand for oil and gas and future oil and gas prices, as well as our customers’ ability to access capital. In addition, the transition of the global energy sector from primarily a fossil fuel-based system to include more renewable energy sources could impact the allocation of our customers’ capital expenditures to offshore oil and gas projects.
Fundamentally, the oil and gas industry is a commodity business impacted by changes in prices, which in turn depend on local, regional, and global events or conditions that affect supply and demand for oil and gas products. Actual or anticipated declines in oil and gas prices have often in the past resulted in lower capital expenditures, project modifications, delays or cancellations by our customers, which has historically led to lower demand for our services, delays in payment of, or nonpayment of, amounts that are owed to us. These effects have had, and in the future may have, material adverse effects on our financial condition, results of operations and cash flows.
Historically, oil and gas prices have experienced significant volatility and can be affected by a variety of factors, including:
domestic and foreign supply of and demand for hydrocarbons, which are affected by general worldwide economic and business conditions;
the cost of exploring for, developing, producing and delivering oil and gas;
the level of oil and gas exploration and production activity;
the level of excess production capacity;
the level of oil and gas inventories;
the price and quantity of imports of foreign oil and gas, including the ability or willingness of the Organization of Petroleum Exporting Countries (OPEC) and the expanded alliance known as OPEC+ to set, maintain or change production levels for oil;
political and economic uncertainty and geopolitical unrest;
the expected rates of decline in offshore production from existing and prospective wells and the discovery rates of new offshore oil and gas reserves;
governmental laws, policies, regulations and subsidies, including initiatives to promote renewable energy sources;
public pressure on, and legislative and regulatory interest within, federal, state and local governments to stop, significantly limit or regulate oil or gas production;
extreme weather conditions, natural disasters, and global or regional public health crises, such as pandemics and epidemics, and other catastrophic events;
incidents resulting from operating hazards inherent in offshore drilling, such as oil spills;
political, military and economic instability and social unrest in or near oil and gas producing nations, including the impact of armed hostilities involving one or more oil and gas producing nations or nations near such oil and gas production;
advances in exploration, development and production technologies or in technologies affecting energy consumption;
the price and availability of, and public sentiment regarding, alternative fuel and energy sources;
speculation as to the future price of oil and gas and the speculative trading of oil and gas futures contracts;
uncertainty in capital and commodities markets; and
domestic and foreign tax policies, including those regarding tariffs and duties.
The oil and gas industry has historically experienced periodic downturns, resulting in diminished demand for our services and downward pressure on the charter rates and prices that we are able to charge. Sustained market uncertainty can also result in lower demand for our services. Moreover, higher commodity prices will not necessarily translate into increased demand for offshore support services or sustained higher pricing for offshore support vessel services, in part because customer demand is often driven by capital expenditure programs focused on future commodity price expectations and not solely on current prices, along with customer opportunities to invest in onshore conventional and unconventional oil and gas production.
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Many of our customers' capital expenditure programs are lower than expected given current commodity prices and supply and demand dynamics. The amounts previously allocated to capital expenditures have been re-allocated to several competing priorities, including returning capital to stockholders and investing in alternative energy sources. A significant industry downturn, sustained market uncertainty, or increased availability of economical alternative energy sources could reduce demand for our services, which could adversely affect our business, financial condition, results of operations, and cash flows.
A rise in production of oil and gas resources could increase supply without a commensurate growth in demand which could negatively impact oil and gas prices.
A rise in production of oil and gas resources, as in the past, could in the future result in over-supplied oil and gas market. Production has increased as drilling efficiencies have improved, lowering the costs of extraction.
Prolonged increases in the worldwide supply of oil and gas without a commensurate growth in demand for oil and gas may depress oil and gas prices. A prolonged period of low oil and gas prices would likely have a negative impact on development plans of exploration and production companies, which in turn, may result in a decrease in demand for our offshore support vessel services.
Factors associated with climate change and sustainability matters, including evolving regulations, varied and expansive scope of standards, rating criteria, our sustainability disclosures, and the perception and expectations of the public and our stakeholders could adversely affect our business, reputation, results of operations and financial position.
Certain regulators, investors, and other stakeholders have focused on climate change and other sustainability matters within the energy industry. We communicate our sustainability performance, initiatives, goals and other matters in our annual Sustainability Report. Any sustainability-related initiatives could be difficult to achieve and costly to implement, and we may be unable to economically develop or deploy technologies to achieve our goals, if at all. In addition, we could be criticized for the timing, scope or nature of these initiatives or goals, having such initiatives or goals, or for any revisions to them. The standards for tracking and reporting on climate-related and other sustainability matters are relatively new, have not been harmonized and continue to evolve. Further, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and definitions, assumptions, data sources and estimates or measurements that are subject to change in the future, including through rulemaking or guidance. There are multiple proposed or recently adopted changes to various GHG reporting regulations and protocols, including from the GHG Protocol, the European Union (EU) Corporate Sustainability Reporting Directive and the standards of the International Sustainability Standards Board. As the nature, scope and complexity of sustainability reporting, calculation methodologies, voluntary reporting standards and disclosure requirements expand, change and diverge, we will likely incur additional costs to control, assess, report and assure our sustainability performance. We could also be penalized or criticized for the accuracy, adequacy, or completeness of such disclosures. Our actual or perceived failure to report accurately or achieve our sustainability-related initiatives or goals could negatively impact our reputation, result in sustainability-focused investors not purchasing and holding our stock, or otherwise materially harm our business.
There also have been efforts in the investment community, including investment advisers, financial institutions and certain sovereign wealth, pension and endowment funds, as well as political actors and other stakeholders, promoting divestment of fossil fuel equities, reducing access to capital markets and pressuring lenders to limit funding or increase the cost of lending to companies in the fossil fuel industry. Additionally, institutional lenders who provide financing to oil and gas companies have become more attentive to sustainable lending practices, and some of them may substantially reduce, or elect not to provide, funding for oil and gas companies. Customers also may evaluate our sustainability practices or require that we adopt certain sustainability policies as a condition of awarding contracts. Such environmental initiatives aimed at limiting climate change and reducing air emissions or use of natural resources generally could adversely affect our business activities, operations and ability to access capital, cause the market value of our securities to decrease or our cost of capital to increase, and adversely affect our reputation. At the same time, stakeholders and regulators have increasingly expressed or pursued divergent and evolving views, legislation and investment expectations with respect to sustainability, including the enactment or proposal of “anti-climate change” legislation or policies. We may also face negative impacts from consumers who do not support climate-related initiatives or concerns and may be unable to satisfy all of our stakeholders on these matters.
Finally, increasing attention to climate change and related risks, as well as other sustainability matters, has resulted in an increased possibility of government investigations or claims and additional private litigationagainst companies in the oil and gas industry which could increase our costs or otherwise adversely affect our business or results of operations.
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For example, the Paris Climate Accord, the Kyoto Protocol, the European Union Emission Trading System, the United Kingdom’s Carbon Reduction Commitment, the International Maritime Organization’s MARPOL Annex VI amendments, and, in the U.S., the Regional Greenhouse Gas Initiative, the Western Regional Climate Action Initiative, and other various state programs, may require, or could result in future legislation and regulatory measures that require, significant equipment and fleet modifications, operational changes, taxes, or purchase of emission credits to reduce emission of greenhouse gases from our operations, which may result in substantial capital expenditures and compliance, operating, maintenance and remediation costs. In addition, government and private parties have increasingly filed lawsuits or initiated regulatory action allegingmisrepresentation regarding climate change, sustainability and other related matters and practices or a failure or lack of diligence to meet sustainability or climate-related goals. Such legislation and lawsuits present a high degree of uncertainty regarding the extent to which energy companies face an increased risk of liability stemming from climate change or sustainability disclosures and practices.
At certain locations where we operate, severe weather events, including conditions believed to be associated with climate change, have in the past and may in the future adversely affect our operations and financial results.
Certain areas of the world where we operate, such as the US Gulf, the Caribbean, the North Sea, and Asia Pacific, experience significant weather events, typically on a seasonal basis, manifesting as an unnamed wind event or of a magnitude that places it in a category of tropical cyclone, hurricane, typhoon, or extratropical cyclone. While such weather events are tracked, the actual course, speed, and/or severity of any one event could ultimately be unexpected and lead to an unanticipated encounter and or impact, exposing our assets and personnel to extreme wind and sea conditions that could result in limits or restrictions on our ability to operate, injuries or loss of life, damage to or a loss of our assets and equipment, liabilities or claims, operational delays for recovery and repair, impacts on customer and vendor contracts, regulatory fines and penalties, and/or uninsuredlosses, which could adversely affect our business and financial performance. Moreover, a potential result of climate change is more frequent or more severe weather events. Particularly severe weather events affecting platforms or structures may result in a suspension of activities. In addition, acute or chronic physical impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall, and hurricane-strength winds may damage our vessels or facilities. To the extent such weather events become more frequent or more severe, the risks associated with severe weather events could intensify.
Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
Our long-term success depends on our ability to effectively navigate the energy transition, which will require adapting our vessels and technology portfolio to potentially changing government requirements and customer preferences, as well as engaging with our customers to develop solutions to support their oil and gas operations through this transition. If the energy transition landscape progresses faster or differently than anticipated, demand for our services could be adversely affected. Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our results of operations, liquidity and access to capital or the market for our securities could be adversely impacted.
As we implement our business strategy, we face risks associated with identifying acquisition targets, integrating any acquisitions or mergers and growing the business from the acquisition, and our ability to finance any such acquisitions.
Mergers and acquisitions have historically been and continue to be a key element of our business strategy. The success of this strategy is dependent upon our ability to identify appropriate acquisition targets, negotiate transactions on favorable terms, finance transactions, complete transactions, and successfully integrate them into our existing business. Subject to the terms of our indebtedness, we may finance future acquisitions with cash from operations, additional indebtedness, and/or by issuing additional equity or debt securities. In addition, we could face financial risks associated with incurring additional indebtedness such as reducing our liquidity, limiting our access to financing markets, and increasing the amount of service on our debt. Such additional debt service requirements may impose a significant burden on our results of operations and financial condition, and any equity issuance could have a dilutive impact on our stockholders. See “Risks Related to Our Indebtedness” below. We cannot be certain that we will be able to successfully consolidate the operations and assets of any acquired business with our own business. Acquisitions may not perform as expected.
These types of significant transactions may present other material risks and uncertainties, including distraction of management from current operations, insufficient revenue to offset liabilities assumed, potential loss of significant revenue and income streams, unexpected expenses, inadequate return of capital, regulatory or compliance issues, triggering of certain covenants in our debt instruments and other unidentified issues not discovered in due diligence. In addition, valuations supporting our acquisitions and strategic investments could change rapidly with changes in the global economic climate.
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There can be no assurance that we will realize the anticipated synergies or cost savings related to acquisitions, including, but not limited to, revenue growth and operational efficiencies, within our estimated timeframe or at all. We may not be able to successfully integrate and streamline overlapping functions from future acquisitions, and integration may be more costly to accomplish than we expect. Moreover, our management may not be able to effectively manage a substantially larger business or successfully operate a new line of business. Failure to manage these acquisition and business integration risks could materially and adversely affect our business, results of operations and financial condition.
The foregoing risks apply to the timing, completion and anticipated benefits of the proposed acquisition of the Wilson Companies, which may be delayed or not occur at all, may divert management ’ s attention, or may result in legal proceedings, any of which could negatively impact our operating results and ongoing business. Moreover, if we complete the Wilson Transaction, we may be unable to integrate the operations and business successfully.
On February 22, 2026, we entered into a Sale and Purchase Agreement (Agreement) to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The acquisition and related agreements (Wilson Transaction) is subject to the satisfaction (or, where permitted, waiver) of certain conditions set forth in the Agreement, including, among others, (i) the approval of the Brazilian antitrust authority, (ii) the consent of the lenders to the Wilson Companies’ to the change of control, (iii) the absence of any final and non-appealable order from an applicable governmental body that prohibits the transaction or makes the consummation of the transaction illegal, (iv) the delivery of certain financial statements to us to allow the Company to satisfy its reporting obligations with the SEC, and (v) the absence of a Material Adverse Effect as defined in the Agreement. Therefore, the Wilson Transaction may not be completed or may not be completed as timely as expected, and we may be required to pay a termination fee in certain circumstances, as further described in the Agreement.
Furthermore, failure to complete the Wilson Transaction could adversely affect our business and the market price of our common shares in a number of ways, including to the extent that the current market price of our shares reflects an assumption that the acquisition will be consummated. We also have expended, and continue to expend, significant management time and resources in an effort to complete the acquisition, which may have a negative impact on our ongoing business and operations. The Wilson Transaction may lead to litigationagainst the parties or their directors and officers, which could be distracting to management and may, in the future, require us to incur significant costs.
If we complete the Wilson Transaction, we may face difficulties integrating the Wilson Companies, including, among other factors:
complexities associated with managing the larger, more complex, integrated business, including difficulty addressing possible differences in operational philosophies and the challenge of integrating complex systems, technology, networks and other assets of the two companies in a seamless manner;
integrating personnel from the two companies while maintaining focus on providing consistent, high-quality services;
potential unknown liabilities and unforeseen expenses, delays or regulatory conditions;
loss of key employees; and
integrating relationships with customers, vendors and business partners.
Any of these issues could reduce our earnings or otherwise adversely affect our business and financial results after the close of this acquisition
We derive a significant amount of revenue from a relatively small number of customers.
Our top ten largest customers account for a significant percentage of our total revenues. While it is normal for our customer base to change over time as our time charter contracts expire and are replaced, our results of operations, financial condition and cash flows could be materially adversely affected if one or more of these customers were to (i) interrupt or curtail their activities generally or with us, (ii) terminate their contracts with us, (iii) fail to renew existing contracts with us, or (iv) refuse to award us new contracts. Additionally, certain of our customers are increasingly focusing their business strategy on renewable energy projects and away from oil and natural gas exploration and production, which could materially and adversely affect our business, results of operations and financial condition.
We may not be able to collect amounts owed to us by our customers.
We typically grant our customers credit on a short-term basis and do not typically collateralize receivables due from customers.
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In addition, a few of our international customers are state-controlled and, as a result, our receivables may be subject to local political priorities out of our control. We estimate uncollectible accounts based primarily on our judgment using historical losses, current economic conditions and individual evaluations of each customer as evidence supporting the receivables valuations stated on our financial statements. However, our estimates may not be accurate and receivables due from customers reflected in our financial statements may not be paid in a timely manner or collectible. The inability or unwillingness of our customers to fulfill their contractual commitments to us may have a material adverse effect on our current and future business, financial position, results of operations, and cash flows.
Our customer base has undergone consolidation and additional consolidation is possible.
Consolidation is common in the oil and gas industry and likely to continue in the future. Consolidation reduces the number of potential customers that may need our services, and may negatively affect exploration, development and production activity as consolidated companies focus, at least initially, on increasing efficiency and reducing costs and may delay or abandon exploration activity with less promise. Such activity could adversely affect demand for our offshore services.
The high level of competition in the offshore marine service industry could negatively impact pricing for our services.
We operate in a highly competitive industry, which could depress charter and utilization rates and adversely affect our financial performance. We compete for business with our competitors based on price; reputation for quality service; quality, suitability and technical capabilities of our vessels; availability of vessels; safety and efficiency; cost of mobilizing vessels between markets; and national flag preference.
In addition, competition in international markets may be adversely affected by regulations requiring, among other things, local construction, flagging, ownership or control of vessels, the awarding of contracts to local contractors, the employment of local citizens and/or the purchase of supplies from local vendors.
Maintaining our current fleet size and configuration and acquiring vessels required for additional future growth requires significant capital.
Expenditures required for the repair, certification and maintenance of a vessel, some of which may be unplanned, typically increase with vessel age and because of inflationary pressures, particularly in an active market. Additionally, stacked vessels are not maintained with the same diligence as our marketed fleet. Depending on the length of time the vessels are stacked, we may incur additional costs to return these vessels to active service. These costs are difficult to estimate and may be substantial. These expenditures may increase to a level at which they are not economically justifiable and, therefore, to maintain our current fleet size we may seek to construct or acquire additional vessels.
Also, customers may prefer modern vessels over older vessels, especially in weaker markets. The cost of repairing and/or upgrading existing vessels or adding a new vessel to our fleet can be substantial. Moreover, while our vessels are undergoing repair, upgrade or maintenance, they may not earn a day rate. Lastly, new laws and regulations related to climate change and the increased scrutiny of greenhouse gas emissions may require us to undertake upgrades or overhauls to our vessels and their power generation systems to ensure compliance, or to contract to build new vessels that conform to these specifications, which would require significant additional capital expenditures.
While we expect our cash on hand, cash flow from operations and borrowings under new debt facilities to be adequate to fund our future potential purchases of additional vessels, our ability to pay these amounts is dependent upon the success of our operations. We can give no assurance that we will have sufficient capital resources to build or acquire the vessels required to expand or to maintain our current fleet size and vessel configuration.
W e may not be able to renew or replace expiring contracts for our vessels.
Our ability to renew or replace expiring contracts or obtain new contracts, and the terms of any such contracts, will depend on various factors, including market conditions and the specific needs of our customers. Given the highly competitive and historically cyclical nature of our industry, we may not be able to renew or replace the contracts or we may be required to renew or replace expiring contracts or obtain new contracts at rates that are below, and potentially substantially below, existing day rates, or that have terms that are less favorable to us than the terms of our existing contracts, or we may be unable to secure contracts for these vessels. This could have a material adverse effect on our financial condition, results of operations and cash flows.
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Our ability to raise capital in the future through debt or equity financing may be limited, which could make us unable to fund our capital requirements or business operations or potentially dilute existing stockholders.
Our business and operations may generate less cash than we anticipate, potentially impairing our ability to make capital expenditures to maintain our fleet and other assets in suitable operating condition. If our cash flows from operating activities are insufficient to fund capital expenditures, we would need to reduce our expenditures or increase our cash flows through debt or equity issuances, alternative financings or selling assets. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. Any limitations in our ability to finance future capital expenditures may limit our ability to respond to changes in customer preferences, technological change and other market conditions, which may diminish our competitive position in our industry.
In addition, if commodity prices decline or the outlook for investment in offshore exploration, development and production materially declines, our access to credit and debt markets may be limited or more costly if lenders look to reduce their loan exposure to the energy sector, impose increased lending standards, increase borrowing costs and collateral requirements or refuse to extend new credit or amend existing credit facilities in the energy and energy services sectors. These challenges may be exacerbated by regulatory pressures on financial institutions to respond quickly and decisively to credit risks in distressed industries, potentially limiting our financial flexibility and increasing the cost of capital.
If we issue additional equity securities, existing stockholders will experience dilution. Our Amended and Restated Certificate of Incorporation permits our Board to issue preferred stock, which could have rights and preferences senior to those of our common stock. Since future securities offerings depend on market conditions and other factors beyond our control, we cannot predict their timing, amount or nature. Thus, our security holders bear the risk of our future securities offerings reducing the market price of our common stock or other securities, diluting their interest or being subject to rights and preferences senior to their own.
Early termination of contracts on our vessels could have an adverse effect on our operations and our backlog may not be converted to actual operating results for any future period.
Most of the long-term contracts for our vessels and many of our contracts with governmental entities and national oil companies contain early termination options in favor of the customer, in some cases permitting termination for any reason. Although some of these contracts have early termination remedies in our favor or other provisions designed to discourage early termination, we cannot assure you that our customers would not choose to exercise their termination rights despite such remedies or the threat of litigation with us.
Moreover, many of the contracts for our vessels have a term of one year or less and can be terminated with 90 days or less notice. Unless such vessels can be placed under contract with other customers, any termination could temporarily disrupt our business or otherwise adversely affect our financial condition and results of operations. We might not be able to replace such business or replace it on economically equivalent terms. In those circumstances, the amount of backlog could be reduced and the conversion of backlog into revenue could be impaired.
Additionally, depressed commodity prices, adverse changes in credit markets, economic downturns, changes in strategy or other factors beyond our control cause our customers to seek to renegotiate the terms of our existing contracts, terminate our contracts without justification or repudiate or otherwise fail to perform their obligations under our contracts. In any case, an early termination of a contract may result in one or more of our vessels being idle for an extended period. Each of these results could have a material adverse effect on our financial condition, results of operations and cash flows.
We may record impairment charges or other losses related to our vessels.
We review the vessels in our active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. In the past, we have realized impairment charges with respect to our long-lived assets. If offshore oil and gas industry conditions deteriorate, we could be subject to additional long-lived asset impairments in future periods.
An impairmentloss on our property and equipment exists when the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any impairmentloss recognized represents the excess of the asset’s carrying value over the estimated fair value. As part of this analysis, we make assumptions and estimates regarding future market conditions. To the extent actual results do not meet our estimated assumptions, we may take an impairmentloss in the future. Additionally, there can be no assurance that we will not have to take additional impairment charges in the future with depressed market conditions.
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We may not be able to sell vessels because we may be unable to locate buyers with access to financing or to complete any sales on acceptable terms or within a reasonable timeframe.
From time to time, we may seek to sell some of our vessels for various reasons. Sufficient demand and market activity may not exist to sell our vessels, and we may not be able to identify buyers with access to financing or to complete any such sales. Even if we can locate appropriate buyers for our vessels, any sales may occur on significantly less favorable terms than the terms that might be available in a more liquid market or at other times in the business cycle.
An increase in vessel supply without a corresponding increase in the working offshore rig count could lead to a decline in the charter day rates we can charge and negatively impact our revenue .
Excess offshore support vessel capacity usually exerts downward pressure on charter day rates. Excess capacity can occur when newly constructed vessels enter the worldwide offshore support vessel market and when vessels migrate between markets. An increase in vessel capacity without a corresponding increase in the working offshore rig count could lead to a decline in the charter day rates we can charge and adversely affect our business, results of operations and financial condition. In addition, the provisions of U.S. shipping laws restricting engagement of U.S. coastwise trade to vessels controlled by U.S. citizens may from time to time be circumvented by foreign competitors that seek to engage in trade reserved for vessels controlled by U.S. citizens and otherwise qualifying for coastwise trade. A repeal, suspension or significant modification of U.S. shipping laws, or the administrative erosion of their benefits, permitting vessels that are either foreign-flagged, foreign-built, foreign-owned, foreign-controlled or foreign-operated to engage in the U.S. coastwise trade, could also result in excess vessel capacity and increased competition, especially for our vessels that operate in North America.
Our insurance coverage and contractual indemnity protections may not be sufficient to protect us under all circumstances or against all risks .
Our operations are subject to the hazards inherent in the offshore oilfield business. These include blowouts, explosions, fires, collisions, capsizings, sinkings, groundings and severe weather conditions. Some of these events could be the result of (or exacerbated by) mechanical failure or navigation or operational errors.
These hazards could result in personal injury and loss of life, severedamage to or destruction of property and equipment (including to the property and equipment of third parties), pollution or environmental damage and suspension of operations, increased costs and loss of business. Damages arising from such occurrences may result in lawsuits alleging large claims, and we may incur substantial liabilities or losses as a result of these hazards.
Although we carry prudent levels of liability insurance to address these hazards and generally our vessels are insured for their estimated market value againstdamage or loss, including war, terrorism acts and pollution risks, our insurance programs are subject to deductibles and certain exclusions, and our coverage may not be sufficient to protect us under all circumstances or against all risks.
Further, while we believe we will be able to maintain adequate insurance in the future at rates considered commercially acceptable, we cannot guarantee that such insurance will continue to be available at commercially acceptable rates. We also include in our contracts indemnity obligations that require customers or suppliers to hold us harmless from some of these risks. Our contracts, however, are individually negotiated, and the levels of indemnity and allocation of liabilities may vary depending on market conditions, particular customer requirements and other factors existing at the time a contract is negotiated. Additionally, the enforceability of indemnification provisions in our contracts may be limited or prohibited by applicable law or may not be enforced by courts having jurisdiction. The occurrence of a significant event not fully insured or indemnified against or the failure of a customer or supplier to meet its indemnification obligations to us could have a material adverse effect on our results of operations and financial condition and cash flows.
Risks Relating to Our International and Foreign Operations
We operate in various regions throughout the world and are exposed to many risks inherent in doing business outside the U.S., including risks associated with foreign corrupt practices laws, a cts of piracy, war, terrorist attacks and international hostilities.
We have substantial operations in Brazil, Mexico, Guyana, the North Sea (including U.K. and Norway), Southeast Asia, Australia, Saudi Arabia, Egypt, Angola and throughout the west coast of Africa, which generate a large portion of our revenue.
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Our customary risks of operating internationally include, but are not limited to, political, military, social and economic instability within the host country; possible vessel seizures or expropriation of assets and other governmental actions by the host country, including trade or economic sanctions and enforcement of customs, immigration or other laws that are not well developed or consistently enforced; foreign government regulations that favor or require the awarding of contracts to local competitors; risks associated with failing to comply with the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Modern Slavery Act, the U.K. Bribery Act, the E.U. General Data Protection Regulation (GDPR), export laws and other similar laws applicable to our operations in international markets; an inability to recruit, retain or obtain work visas for workers of international operations; deprivation of contract rights; difficulties or delays in collecting customer and other accounts receivable; changing taxation policies; fluctuations in currency exchange rates; foreign currency revaluations and devaluations; restrictions on converting foreign currencies into U.S. dollars; expatriating customer and other payments made in jurisdictions outside of the U.S.; civil unrest, acts of terrorism, war or other armed conflict (further described below); and import/export quotas and restrictions or other trade barriers, most of which are beyond our control.
We are also subject to risks relating to war, sabotage, piracy, kidnappings and terrorism or any similar risk that may put our personnel at risk and adversely affect our operations in unpredictable ways, including changes in the insurance markets as a result of war, sabotage, piracy or kidnappings, disruptions of fuel supplies and markets, particularly oil, and the possibility that infrastructure facilities, including pipelines, production facilities, refineries, electric generation, transmission and distribution facilities, offshore rigs and vessels, and communications infrastructures, could be direct targets of, or indirect casualties of, an act of war, piracy, sabotage or terrorism. War or risk of war or any such attack, such as the current conflict in Iran, and the international response to such events may also have an adverse effect on the economy, which could adversely affect activity in offshore oil and gas exploration, development and production and the demand for our services. The recent military conflict in Iran could result in missile or drone attacks, the mining of sea lanes, blockades, seizure or detention of vessels and will likely disrupt our ability to operate in and around the Persian Gulf, the Strait of Hormuz and adjacent regional waters, which could materially adversely affect our business, results of operations, cash flows and financial condition. Insurance coverage can be difficult to obtain in areas of pirate, terrorist or other hostile attacks resulting in increased costs that could continue to increase. We periodically evaluate the need to maintain this insurance coverage as it applies to our fleet. As a result of the recent military conflict in Iran, the risk of marine insurers canceling war-risk coverage for vessels operating near Iranian waters has risen sharply, likely resulting in increased costs and forced rerouting. Instability in the financial markets as a result of war, sabotage, piracy, and terrorism, as well as the international response to such events such as trade and investment sanctions, could also adversely affect our ability to raise capital and could also adversely affect the oil, gas and power industries and restrict their future growth. The increase in the level of these criminal or terrorist acts, war and international hostilities over the last several years has been well-publicized. As a marine services company that operates in offshore, coastal or tidal waters in challenging areas, we are particularly vulnerable to these kinds of unlawful activities.
Although we take what we consider to be prudent measures to protect our personnel and assets in markets that present these risks, including solicitation of advice from third-party experts, we have confronted these kinds of incidents in the past, and there can be no assurance we will not be subjected to them in the future.
Disruptions or disagreements with our foreign joint venture partners, could lead to an unwinding of the joint venture.
We operate in several foreign areas through joint ventures with local companies, in some cases due to local laws requiring local company ownership. While the joint venture partner may provide local knowledge and experience, these joint ventures often limit our ability to control the assets and operations devoted to the joint venture, and occasions may arise when we do not agree with the business objectives of our joint venture partner, or other factors may arise that make continuing the relationship unwise or untenable.
Any disagreement with our partner or discontinuation of the joint venture could disrupt the joint venture operations or put the joint venture assets at risk. If we are unable to resolve issues with a joint venture partner, we may decide to terminate the joint venture and either locate a different partner and continue to work in the area or seek opportunities for our assets in another market.
The unwinding of an existing joint venture could be challenging, and the loss of revenue related to the termination or unwinding of a joint venture and costs related to the sourcing of a new partner or the mobilization of assets to another market could adversely affect our financial condition, results of operations or cash flows.
Our international operations expose us to currency devaluation, exchange and conversion risk.
Our international operations are exposed to foreign currency exchange rate risks on all charter hire contracts denominated in foreign currencies. For some of our international contracts, a portion of the revenue and local expenses is incurred in local currencies, which subjects us to risk of changes in the exchange rates between the U.S. dollar and foreign currencies.
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In some instances, we receive payments in currencies that are not easily traded, difficult to convert into U.S. dollars or may be illiquid. In 2025, we entered into foreign currency derivative contracts designed to mitigate exposure to Euro based currencies primarily in certain African countries. Gains and losses from the revaluation of our monetary assets and liabilities denominated in currencies other than the U.S. dollar are included in our Consolidated Income Statements.Foreign currency fluctuations may cause the U.S. dollar value of our non-U.S. results of operations and net assets to vary with exchange rate fluctuations. This could have a negative impact on our results of operations and financial position. In addition, fluctuations in currencies relative to currencies in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations. To minimize the financial impact of these items, we attempt to contract a significant majority of our services in U.S. dollars and, when feasible, we attempt to avoid maintaining large, non-U.S. dollar-denominated cash balances. In addition, we attempt to minimize the financial impact of these risks by matching the currency of our operating costs with the currency of revenue streams when considered appropriate. We actively monitor the currency exchange risks associated with our contracts not denominated in U.S. dollars.
Risks Related to Human Capital
Failure to attract and retain qualified personnel could impede our operations .
Our future success depends on our ability to recruit, train, retain and pay qualified personnel. We require highly-skilled personnel to operate our vessels and to provide our services. Competition for the personnel necessary for our business intensifies as offshore oil and gas exploration and production activity increases; technology evolves and customer demands change. In addition, our industry has lost a significant number of experienced professionals over the years due to its cyclical nature, which is attributable, among other reasons, to the volatility levels of oil and gas prices and a more generalized concern about the overall future prospects of the industry. As a result, in periods of high utilization, or in markets impacted by global and/or regional conflicts, such as the current conflicts in Europe and the Middle East, competition to find and retain qualified offshore employees becomes more challenging, particularly with respect to certain technical and engineering positions, including marine officers, which in turn increases our costs and may have other material adverse effects on our operations.
We cannot guarantee success in attracting and retaining qualified personnel to crew our vessels in the future. We have faced and may continue to face difficulties attracting, hiring and retaining highly-skilled personnel with appropriate qualifications, particularly for our newer vessels, and may not be able to fill open positions. To attract top talent, we have had to offer, and believe we will need to continue to offer, attractive compensation and benefits packages before we can validate the productivity of those employees. As we experience increased demand for our services, we may increase, and expect to continue to increase, our employee compensation levels in response to competition, as necessary. In addition, the pressures of inflation have increased our costs of labor over the past year or so and will likely continue to do so. Many of the companies with which we compete for personnel have greater financial and other resources than we do and may be able to absorb the increasing costs of labor more easily. If we fail to retain key personnel and hire, train and retain qualified employees, we may not be able to compete effectively and may have increased incident rates as well as regulatory and other compliance failures, which could have a material adverse effect on our business, financial position, results of operations and cash flows.
We may be subject to additional unionization efforts, new collective bargaining agreements or work stoppages.
In certain locations, we employ unionized workers subject to collective bargaining agreements that require periodic negotiation. These negotiations could result in higher personnel expenses, other increased costs, or increased operational restrictions.
Disputes over the terms of these agreements or our potential inability to negotiate acceptable contracts with the unions that represent our employees under these agreements could result in strikes, work stoppages or other slowdowns by the affected workers. Further, efforts have been made from time to time to unionize other portions of our workforce, including our U.S. Gulf employees. Additional unionization efforts, new collective bargaining agreements or work stoppages could materially increase our costs and operating restrictions, disrupt our operations, reduce our revenues, adversely affect our business, financial condition and results of operations, or limit our flexibility.
Our participation in industry-wide, multi-employer, defined benefit pension plans expose us to potential future losses.
Certain of our subsidiaries are participating employers in two industry-wide, multi-employer defined benefit pension plans in the U.K. Among other risks associated with multi-employer plans, contributions and unfunded obligations of the multi-employer plan are shared by the plan participants. As a result, we may inherit unfunded obligations if other plan participants withdraw from the plan or cease to participate, and if we withdraw from participation in one or both plans, we may be required to pay the plan an amount based on our allocable share of the underfunded status of the plan.
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Depending on the results of future actuarial valuations, it is possible that the plans could experience further deficits that will require funding from us, which would negatively impact our financial position, results of operations and cash flows.
Certain of our employees are covered by federal laws that may subject us to job-related claims in addition to those provided by state laws.
Certain of our employees are covered by provisions of the Jones Act, the Death on the High Seas Act and general maritime law. These laws preempt state workers’ compensation laws and permit these employees and their representatives to pursue actions against employers for job-related incidents in federal courts based on tort theories. Because we are not generally protected by the damage limits imposed by state workers’ compensation statutes for these types of claims, we may have greater exposure for any claims made by these employees.
Risks Related to Our Indebtedness
We may not be able to generate sufficient cash flow to meet our debt service and other obligations.
Our ability to service our debts and to fund our operations depends on our ability to maintain sufficient cash flows. Our ability to generate cash in the future, to a large extent, is subject to conditions in the oil and gas industry, including commodity prices, demand for our services and the prices we can charge for our services, general economic and financial conditions, competition in the markets in which we operate, the impact of legislative and regulatory actions on how we conduct our business and other factors, all of which are beyond our control.
Lower levels of offshore exploration and development activity and spending by our customers globally directly and significantly have impacted, and may continue to impact, our financial performance, financial condition and financial outlook.
Restrictive covenants in our debt agreements may restrict our ability to raise capital, make distributions on our stock or pursue our other business strategies, which may have significant consequences for our operations and future prospects.
The terms for our 9.125% Senior Notes due July 2030 (2030 Notes) and the $250 million senior secured revolving credit facility (Revolving Credit Facility) contain certain restrictive covenants.
These covenants could have important consequences for our strategy and operations, including:
limiting our ability to incur indebtedness to provide funds for investments or capital expenditures, acquisitions, debt service requirements, general corporate purposes, dividends, and to make other distributions or repurchase or redeem our stock;
restricting us from undertaking consolidations, mergers, sales, or other dispositions of all or substantially all our assets;
requiring us to dedicate a substantial portion of our cash flow from operations to make required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures, such as investing in new vessels, and other general business activities;
requiring that we pledge substantial collateral, including vessels, which may limit flexibility in operating our business and restrict our ability to sell assets;
limiting management’s flexibility in operating our business, including planning for, or reacting to, changes in our business and the industry in which we operate;
diminishing our ability to withstand a downturn in our business or worsening of macroeconomic or industry conditions; and
placing us at a competitive disadvantageagainst less leveraged competitors.
Our debt agreements impose certain financial covenants, including requirements to maintain minimum liquidity and collateral valuation levels and a debt coverage ratio. If we fail to meet or comply with these financial covenants, it could result in a default under the debt agreements. If a default occurs and is continuing, the secured parties and the lenders under the debt agreements may elect to declare all borrowings thereunder outstanding, together with accrued interest and other fees, to be immediately due and payable. If we are unable to repay our indebtedness when due or declared due, the secured parties and the lenders under the debt agreements will also have the right to foreclose on the collateral pledged to them, including the vessels, to secure the indebtedness. If such indebtedness were to be accelerated, our assets may not be sufficient to repay in full our secured indebtedness. Please refer to Note (4) - “Debt” to our accompanying Consolidated Financial Statements for additional information on the debt agreements.
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The restrictive covenants under our debt agreements may limit our ability to take advantage of business opportunities. In addition, the restrictions contained in our debt agreements, including a substantial make whole premium applicable to a voluntary prepayment of obligations, may also limit our ability to plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans and adversely affect our ability to finance our operations, refinance, enter into acquisitions, execute our business strategy, make capital expenditures, effectively compete with companies that are not similarly restricted or engage in other business activities that would be in our interest. In the future, we may also incur additional debt obligations that might subject us to additional and different restrictive covenants that could further affect our financial and operational flexibility. We cannot assure you that we will be granted waivers or amendments to these agreements if requested to obtain financial or operational flexibility or if for any reason we are unable to comply with these agreements, or that we will be able to refinance our debt on acceptable terms or at all.
Risks Relating to Governmental Regulation
With our extensive international operations, we are subject to certain compliance risks under the Foreign Corrupt Practices Act, the United Kingdom Bribery Act or similar worldwide anti-bribery laws.
Our global operations require us to comply with several complex U.S. and international laws and regulations, including those involving anti-bribery and, anti-corruption. The FCPA and similar anti-bribery laws in other jurisdictions, including the U.K. Bribery Act the United Nations Convention AgainstCorruption and the Brazil Clean Company Act, generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business or obtaining an improper business benefit. We have adopted proactive procedures to promote compliance with the FCPA and other anti-bribery legislation. Any failure to comply with the FCPA or other anti-bribery legislation could subject us to civil and criminalpenalties or other fines or sanctions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of vessels or other assets, which could have a material adverse impact on our business, financial condition and results of operation. Moreover, we may be held liable for actions taken by local partners or agents in violation of applicable anti-bribery laws, even though these partners or agents may themselves not be subject to such laws. Operating in regions where governmental corruption is prevalent presents additional challenges, as strict compliance may conflict with local customs and business practices. Any determination that we have violated applicable anti-bribery laws in countries in which we do business could have a material adverse effect on our business and business reputation, as well as our results of operations, and cash flows.
Changes to applicable laws or regulations, including any developing laws and regulations, may increase our compliance costs and operational risk.
Our operations are subject to many complex and burdensome laws and regulations. Stringent federal, state, local and foreign laws and regulations relating to several aspects of our business, including anti-bribery and anti-corruption laws, import and export controls, environmental protection, worker health and safety, labor and employment, taxation, antitrust and fair competition, data privacy protections, securities regulations and other regulatory and legal requirements that significantly affect our operations. Many aspects of the marine industry are subject to extensive governmental regulation by the U.S. Coast Guard, the U.S. Customs and Border Protection, and their foreign equivalents; as well as to standards imposed by private industry organizations such as the American Bureau of Shipping, the Oil Companies International Marine Forum, and the International Marine Contractors Association. Compliance with these laws and regulations may involve significant costs or require changes in our business practices that could result in reduced revenue and profitability. Non-compliance could also result in significant fines, damages, and other criminal sanctions against us, our officers or our employees, prohibitions or additional requirements on the conduct of our business and damage our reputation.
Further, many of the countries in which we operate have laws, regulations and enforcement systems that are less well developed than the laws, regulations and enforcement systems of the U.S., and the requirements of these systems are not always readily discernible even to experienced and proactive participants. These countries’ laws can be unclear, and the application and enforcement of these laws and regulations can be unpredictable and subject to frequent change or reinterpretation. Sometimes governments may apply such changes or reinterpretations with retroactive effect, and may impose associated taxes, fees, fines or penalties based on that reinterpretation or retroactive effect. While we endeavor to comply with applicable laws and regulations, our compliance efforts might not always be wholly successful, and failure to comply may result in administrative and civil penalties, criminal sanctions, imposition of remedial obligations or the suspension or termination of our operations. These laws and regulations may expose us to liability for the conduct of, or conditions caused by, others, including charterers or third-party agents. Changes in legal requirements or regulatory interpretations could significantly increase our compliance costs, adversely affecting our financial condition, results of operations or cash flows, especially if we are unable to pass these costs on to our customers.
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Changes and developments in U.S. and international tax laws and policies could adversely affect our financial results.
We operate in the U.S. and globally through various subsidiaries that are subject to applicable tax laws, treaties or regulations within and between the jurisdictions in which we conduct our business, including laws or policies directed toward companies organized in jurisdictions with low tax rates, which may change and are subject to interpretation. We determine our income tax expense based on our interpretation of the applicable tax laws and regulations in effect in each jurisdiction for the period during which we operate and earn income. Trade discussions and arrangements between the U.S. and various of its trading partners are fluid, and existing and future trade agreements are, and are expected to continue to be, subject to a number of uncertainties, including the imposition of new tariffs or adjustments and changes to the products covered by existing tariffs. Any decision by the U.S. government to adopt actions such as border taxes on imports, an increase in customs duties or tariffs, or the renegotiation of U.S. trade agreements, or any other action that could have a negative impact on international trade, including corresponding actions taken by other countries in response to U.S. governmental actions, could cause an impact on the plans and operations of our customers. A material change in the tax laws, tax treaties, regulations or accounting principles, or interpretation thereof, in one or more countries in which we conduct business, or in which we are incorporated or a resident of, could result in a higher effective tax rate on our worldwide earnings, and such change could be significant to our financial results.
In addition, our overall effective tax rate could be adversely and suddenly affected by lower than anticipated earnings in countries with lower statutory rates and higher than anticipated earnings in countries with higher statutory rates, or by changes in the valuation of our deferred tax assets and liabilities. Moreover, our worldwide operations may change in the future such that the mix of our income and losses recognized in the various jurisdictions could change. Any such changes could reduce our ability to utilize tax benefits, such as foreign tax credits, and could result in an increase in our effective tax rate and tax expense.
Most of our revenues and net income are generated by our operations outside of the U.S. Our effective tax rate has historically averaged approximately 30% until recent years when the decline of the oil and gas market significantly impacted our operations and overall effective tax rate.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). We continue to monitor the impact of the Tax Act on our ongoing operations. The impact of the Tax Act on our financial position in future periods could be adversely impacted by, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, or any changes in accounting standards for income taxes or related interpretations in response to the Tax Act. Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are evolving as a result of the Base Erosion and Profit Shifting reporting requirements (BEPS) recommended by the G8, G20 and Organization for Economic Cooperation and Development (OECD). During 2023 and 2022, EU member states and several countries, reached an agreement to implement a 15% global minimum tax following the OECD’s Pillar Two model rules. The situation with regard to Pillar Two continues to evolve. Several tax jurisdictions have since enacted legislation to implement Pillar Two rules. Others have indicated they will do so in the near future, and some have yet to make an announcement on the topic. As these and other tax laws and related regulations change, our financial results could be materially impacted. Given the unpredictability of these possible changes and their potential interdependency, it is very difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results.
In addition, our income tax returns are subject to review and examination by the U.S. Internal Revenue Service and other tax authorities where tax returns are filed. We routinely evaluate the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for taxes. We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax authority successfullychallenges our operational structure or intercompany transfer pricing policies, or if the terms of certain income tax treaties were to be interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase, and our financial condition and results of operations could be materially and adversely affected.
Changes in environmental regulations and evolving environmental expectations may reduce demand for hydrocarbons, increase our compliance costs, harm our reputation and adversely affect our financial results.
Our operations, and those of our customers, are subject to federal, state, local and international laws and regulations that control the discharge of pollutants into the environment or otherwise relate to environmental protection. Some environmental laws may, in certain circumstances, impose strict liability for remediation of spills and the release of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault.
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Governments have in the past and may continue to pass laws or regulations encouraging or mandating the use of alternative energy sources such as wind power and solar energy. These regulations could reduce demand for oil and gas and as a result, reduce demand for the services we provide our customers.
Compliance with new or changing environmental, emission controls or other climate-change related laws or regulations may require us to (i) alter our vessel operations or maintenance program, (ii) install new equipment, (iii) pay taxes or purchase allowances related to our greenhouse gas emissions, and/or (iv) administer and manage a greenhouse gas emissions program. Any of the foregoing would likely increase our operating costs and our capital spending, which may also impact our revenues due to vessel downtime.
We consider and integrate into our strategy, planning and risk management processes climate change-related issues and the impact of the energy transition. They may also be factored into the company’s long-term supply, demand, and energy price forecasts. However, any of these climate-change related developments, requirements or initiatives could have a material adverse effect on our future business, financial position, results of operations and cash flows.
Risks Related to Information Technology and Cybersecurity
Cybersecurity attacks on any of our vessels, facilities, or those of third parties, may result in potential liability or reputational damage or otherwise adversely affect our business.
Many of our business and operational processes are heavily dependent on traditional and emerging technology systems, some of which are managed by us and some of which are managed by third-party service and equipment providers, to conduct day-to-day operations, improve safety and efficiency and lower costs. We use computerized systems to help run our financial and operations functions, including the processing of payment transactions, storing confidential records and conducting vessel operations, which may subject our business to increased risks. If any of our financial, operational, or other technology systems fail or have other significant shortcomings, our financial results could be adversely affected. Our financial results could also be adversely affected if an employee or other third party causes our operational systems to fail, either as a result of inadvertenterror or by deliberately tampering with or manipulating our operational systems. In addition, dependence upon automated systems, including those on board our vessels, may further increase the risk of operational system flaws, and employee or other tampering or manipulation of those systems will result in losses that are difficult to detect.
Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools (including the use of emerging technologies, such as AI, machine learning, generative AI and large language models) that circumvent controls, evade detection and even remove forensic evidence of the infiltration. Geopolitical tensions or conflicts, such as the Russia-Ukraine conflict and the conflicts in the Middle East, may further heighten the risk of cybersecurity threats. The use of artificial intelligence by us or by third-party service providers may create new cybersecurity vulnerabilities, including those which may not be recognized at the time, and malicious actors may employ AI to aid in launching more sophisticated and effective cyber-attacks. These incidents may include, but are not limited to, installation of malicious software, installation of ransomware, phishing, credential attacks, unauthorized access to data and other advanced and sophisticated cybersecurity breaches and threats, including threats that increasingly target critical operations technologies and process control networks.
There can be no assurance that our cybersecurity risk management program, processes, or systems we have designed to prevent or limit the effects of cyber incidents or attacks will be sufficient to prevent or detect material consequences arising from such incidents or attacks, or to avoid a material adverse impact on our systems after such incidents or attacks do occur. Even if we successfullydefend our own digital technologies and services, we also rely on providers of third-party products, services, and networks, with whom we may share data and services, and who may be unable to effectively defend their digital technologies and services against attack.
Any cybersecurity attacks that affect our facilities or operations, our customers or any financial data could have a material adverse effect on our business. In addition, cyber-attacks on our customer and employee data may result in a financial loss, loss of proprietary information or customer and vendor data, and may negatively impact our reputation. We also have an increased number of employees relying on remote access to our information systems, which correspondingly increases our exposure to potential cybersecurity breaches. Any of these occurrences could disrupt our business, result in potential liability or reputational damage or otherwise have an adverse effect on our business, operations and financial results.
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In addition, laws and regulations governing cybersecurity, data privacy and the unauthorized disclosure of confidential or protected information, including GDPR, legislation in certain U.S. states and the SEC rules regarding cybersecurity, pose increasingly complex compliance challenges and potentially elevate costs. Any failure to comply with these laws and regulations could result in reputational harm and significant compliance costs, penalties and legal liability.
We have experienced, and expect to continue to experience, cyber intrusions and attacks to our information systems and our operational technology. To our knowledge, none of these incidents or attacks have (i) resulted in a material cybersecurity intrusion or data breach, (ii) had a material financial impact or (iii) led to any governmental fines or penalties.
While we currently maintain cybersecurity insurance, such insurance may not be sufficient in type or amount to cover us againstclaims related to cybersecurity breaches or attacks, failures or other data security-related incidents, and we cannot be certain that cyber insurance will continue to be available to us on economically reasonable terms, or at all, or that an insurer will not deny coverage as to any future claim. Although we have experienced, and expect to continue to experience, cyber intrusions and attacks to our information systems and our operational technology; to our knowledge, none of these incidents or attacks have (i) resulted in a material cybersecurity intrusion or data breach, (ii) had a material financial impact or (iii) led to any governmental fines or penalties. A significant cyberattack or successful assertion of any large claimsagainst us that exceed our available coverage or are denied coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could materially and adversely affect our financial condition, results of operations and cash flows.
Artificial Intelligence presents risks and challenges that can impact our business.
AI presents risks and challenges that could impact our business, including breaches of privacy or security incidents related to the use of AI. We are in the early stages of integrating AI tools into our systems, and we expect our third-party service providers as well as our competitors to also develop or use such tools. Over time, AI may become more important to our operations or to our future growth. We can provide no assurance that we will realize any desired or anticipated benefits, and we may face challenges properly implementing this technology. Additionally, we or our AI service providers may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection, compliance, and transparency, among others, which could inhibit our ability or that of our service providers’ to maintain an adequate level of functionality or service. The AI tools used by us or by our service providers could produce inaccurate or unexpected results or behaviors that could harm our business, customers or reputation. While AI systems may enhance productivity, they could also lead to the displacement of certain jobs or roles, which if true, could create social and organizational challenges. Our competitors or other third parties may incorporate AI in their business operations more quickly or more successfully than we do, which may negatively impact our ability to compete effectively. Additionally, the complex and rapidly evolving landscape around AI may expose us to claims, inquiries, demands and proceedings by private parties and global regulatory authorities and subject us to legal liability as well as reputational harm. New laws and regulations are being adopted in various jurisdictions globally, and existing laws and regulations may be interpreted in ways that would affect our business operations and the way in which we use AI. Any of these outcomes could impair our ability to compete effectively, damage our reputation, result in the loss of our or our customers’ property or information and/or materially adversely affect our financial position, operating results or cash flows.
Risks Related to Our Securities
Our common stock is subject to restrictions on foreign ownership and possible required divestiture by non-U.S. Citizen stockholders.
Some of our operations are conducted in the U.S. coastwise trade and are governed by the U.S. federal law commonly known as the Jones Act. The Jones Act restricts waterborne transportation of goods and passengers between points in the U.S. to vessels owned and controlled by “U.S. Citizens” as defined thereunder. We could lose the privilege of owning and operating vessels in the Jones Act trade if non-U.S. Citizens were to own or control, in the aggregate, more than 25% of our common stock. Such loss could have a material adverse effect on our results of operations.
Our Amended and Restated Certificate of Incorporation and Second Amended and Restated By-Laws authorize our Board to establish rules, policies and procedures, including procedures with respect to the transfer of shares, to ensure compliance with the Jones Act. To provide a reasonable margin for compliance with the Jones Act, our Board has determined that, all non-U.S. Citizens in the aggregate may own up to 24% of the outstanding shares of common stock and any individual non-U.S. Citizen may own up to 4.9% of the outstanding shares of common stock .
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If our ownership by non-U.S. Citizens reaches the 24% threshold, we will be unable to issue or allow the transfer of any shares of our common stock to non-U.S. Citizens. Any purported transfer of our common stock in violation of these ownership provisions will be null and void, and thus an ineffective transfer of such common stock, including any voting, dividend or other rights associated therewith. The existence and enforcement of these requirements could have an adverse impact on the liquidity or market value of our equity securities if U.S. Citizens were unable to transfer our shares to non-U.S. Citizens. Furthermore, under certain circumstances, this ownership requirement could discourage, delay or prevent a change of control or potentially complicate any acquisition with assets or ownership held outside the U.S.
The market price of our securities is subject to volatility.
The market price of our common stock has experienced and could continue to experience significant volatility. These fluctuations and the level of trading that develops with our common stock may be affected by, numerous factors beyond our control such as, actual or anticipated variations in our operating results and cash flow, business conditions in our markets and the general state of the securities markets and the market for energy-related stocks, as well as general economic and market conditions and other factors that may affect our future results, including those described in this Form 10-K.
We do not currently pay cash dividends, so realizing a return on your investment depends on selling your common stock for a price greater than what you paid.
We currently do not pay cash dividends on our common stock. However, we do from time to time, as approved by our Board, repurchase outstanding common shares in the open market. Any future determination to pay cash dividends, implement additional stock repurchase plans or make other distributions on our common stock will be at the sole discretion of our Board, subject to any restrictions in our debt agreements. If we elect to implement such distribution or repurchase plans in the future, we may reduce or discontinue such plans entirely thereafter at any time. The Board may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, agreements governing any existing and future indebtedness we or our subsidiaries may incur and other contractual, legal, tax and regulatory restrictions and implications on the payment of dividends, repurchases of common stock or other distributions by us to our stockholders, and such other factors as the Board may deem relevant. As a result, you may not receive a return on investment in our common stock unless you sell our common stock for a price greater than you paid for it.
Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control.
Certain provisions of our Amended and Restated Certificate of Incorporation and our Second Amended and Restated By-Laws and Delaware law could delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that our stockholders may deem advantageous, including those attempts that might result in a premium over the market price for the shares held by our stockholders or negatively affect the trading price of our common stock and other securities.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire. These provisions provide for, among other things:
the ability of our Board to issue, and determine the rights, powers and preferences of, one or more series of preferred stock;
advance notice for nominations of directors by stockholders and for stockholders to present matters for consideration at our annual meetings;
limitations on convening special stockholder meetings;
the prohibition on stockholders to act by written consent;
supermajority vote of stockholders to amend certain provisions of the certificate of incorporation;
limitations on expanding the size of the Board;
the availability for issuance of additional shares of common stock; and
restrictions on the ability of any natural person or entity that does not satisfy the citizenship requirements of the U.S. maritime laws to own, in the aggregate, more than 24% of the outstanding shares of our common stock.
In addition, the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.
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The issuance of stock-based awards may dilute our stockholders.
Shares of our common stock have been reserved for issuance under our 2021 Stock Incentive Plan as equity-based awards to employees, directors and certain other persons. The exercise or vesting of equity awards, including any options, restricted stock units or other stock-based awards that we may grant in the future, and the exercise of warrants and the subsequent sale of shares of common stock issued thereby, could have an adverse effect on the market for our common stock, including the price that an investor could obtain for their shares. Investors may experience dilution in the value of their investment upon the exercise of any outstanding warrants or the exercise or vesting of any equity awards granted under our stock incentive plans.
Please refer to Note (9) - “Stock-Based Compensation and Incentive Plans” and Note (10) - “Stockholders’ Equity” in the accompanying Consolidated Financial Statements for additional discussion of our outstanding warrants and stock-based awards.
Activist stockholders could divert the attention of our management team and/or negatively affect our business.
Activist stockholders could advocate for changes to our corporate governance, operational practices and strategic direction, which could have an adverse effect on our reputation, business and future operations. In recent years, publicly traded companies have been increasingly subject to demands from activist stockholders advocating for changes to corporate governance practices, such as executive compensation practices, sustainability issues, or for certain corporate actions or reorganizations. There can be no assurances that activist stockholders will not publicly advocate for us to make certain corporate governance changes or engage in certain corporate actions. Responding to challenges from activist stockholders, such as proxy contests, media campaigns or other activities, could be costly and time consuming and could have an adverse effect on our reputation and divert the attention and resources of management and our Board, which could have an adverse effect on our business and operational results. Additionally, stockholder activism could create uncertainty about future strategic direction, resulting in loss of future business opportunities, which could adversely affect our business, future operations, profitability and our ability to attract and retain qualified personnel.
General Risk Factor
Uncertain economic conditions may lead our customers to postpone capital spending or jeopardize our customers’ or other counterparties’ ability to perform their obligations.
Uncertainty about future global economic market conditions makes it challenging to forecast operating results and to make decisions about future investments. The success of our business is both directly and indirectly dependent upon conditions in the global financial and credit markets that are outside of our control and difficult to predict. Uncertain economic conditions may lead our customers to postpone capital spending in response to tighter credit markets and reductions in our customers’ income or asset values. Similarly, when lenders and institutional investors reduce, and in some cases, cease to provide funding to corporate and other industrial borrowers, the liquidity and financial condition of the company and our customers can be adversely impacted.
These factors may also adversely affect our liquidity and financial condition. Factors such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers and economic sanctions or other restrictions imposed by the U.S. or other countries, commodity prices, currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts, security operations, and seaborne refugee issues) can have a material negative effect on our business, revenues and profitability. Additionally, continued uncertain industry conditions could jeopardize the ability of certain of our counterparties, including our customers, insurers and financial institutions, to perform their obligations.
Although we assess the creditworthiness of our counterparties, a prolonged period of difficult industry conditions could lead to changes in a counterparty’s liquidity and increase our exposure to credit risk and bad debts. In addition, we may offer extended payment terms to our customers in order to secure contracts. These circumstances may lead to more frequent collection issues. Our financial results and liquidity could be adversely affected.
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On February 22, 2026, we entered into a definitive agreement to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The Wilson Companies own 22 platform supply vessels operating in Brazil. We will pay the Wilson Sellers an aggregate cash purchase price of $500.0 million on a debt free, cash free basis, subject to adjustments, including a reduction for the assumption of the Wilson Companies’ debt which was approximately $261.0 million as of September 30, 2025. The final debt amount will be determined upon completion of this transaction. The transaction is subject to customary closing conditions, including approval from the Brazilian Antitrust Authority and the consent of the lenders to the Wilson Companies, and is expected to close late in the second quarter of 2026.
In the fourth quarter of 2025, we completed a strategic internal restructuring of our vessel ownership (Vessel Realignment) to consolidate a significant portion of the fleet into a single, wholly owned U.S. entity. As a result, we recognized a one-time, non-cash deferred tax benefit in the Consolidated Income Statement for the year ended December 31, 2025.
On July 7, 2025, we issued $650.0 million in 9.125% Senior Notes that mature in July 2030 (2030 Notes). With the proceeds of the offering, we redeemed most of our outstanding debt as of June 30, 2025, including accrued interest and early redemption premiums. Also on July 7, 2025, we executed the $250.0 million Revolving Credit Facility that replaced our previous $25.0 million credit facility. As of the date of this filing, no amounts have been drawn under the Revolving Credit Facility.
On March 7, 2023, we entered into an Agreement for the Sale and Purchase of Vessels, Charter Parties and Other Assets, which was amended on June 30, 2023 (the Acquisition Agreement), with certain subsidiaries of Solstad Offshore ASA, a Norwegian public limited company (collectively, the Sellers), pursuant to which we agreed to acquire from the Sellers (the Solstad Acquisition): (i) 37 platform supply vessels owned by the Sellers (the Solstad Vessels); and (ii) the charter parties governing certain of the Solstad Vessels. At closing, these vessels operated primarily in the North Sea, Australia and Brazil. On July 5, 2023, we completed the Solstad Acquisition for an aggregate cash purchase price of approximately $594.2 million, consisting of the $577.0 million base purchase price plus an initial $3.0 million purchase price adjustment; $3.2 million for working capital items comprised of fuel and lubricants; and $11.0 million in estimated transaction costs, consisting primarily of advisory and legal fees. The purchase price was funded through a combination of cash on hand and net proceeds from both the Senior Secured Term Loan and the 10.375% Senior Unsecured Notes due July 2028.
Prior to August 1, 2023, we had outstanding Series A Warrants, with an exercise price of $57.06 and Series B Warrants, with an exercise price of $62.28, both with an expiration date of July 31, 2023. During July 2023, an aggregate of approximately 2.0 million Series A Warrants and Series B Warrants were exercised, and we issued 1.9 million shares of common stock in exchange for $111.5 million in cash proceeds. All remaining unexercised Series A Warrants and Series B Warrants, approximately 3.1 million in the aggregate, expired according to their terms on July 31, 2023.
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At December 31, 2025, we owned 208 vessels with an average age of 13.1 years available to serve the global offshore energy industry.
MD&A Objective and Principal Factors That Drive Our Results, Cash Flows and Liquidity
Our MD&A is designed to provide information about our financial condition and results of operations from management’s perspective.
Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. Our business activity is largely dependent on the level of oil and gas exploration, development and production activity of our customers. Our customers’ business activity, in turn, is dependent on current and expected oil and gas prices, which fluctuate depending on expected future levels of supply and demand for oil and gas, and on estimates of the cost to find, develop and produce oil and gas reserves. Our objective throughout MD&A is to discuss how these factors affected our historical results and, where applicable, how we expect these factors to impact our future results and future liquidity.
Our revenues are driven primarily by our active fleet size, active vessel utilization and day rates. Because a sizeable portion of our operating and depreciation costs do not change proportionally with changes in revenue, our operating profit is largely dependent on revenue levels.
Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs. Fleet size, fleet composition, geographic areas of operation, supply and demand for marine personnel, and local labor requirements are the major factors impacting overall crew costs in all segments. In addition, our newer, more technologically sophisticated vessels generally require a greater number of specially trained, more highly compensated fleet personnel than our older, smaller and less sophisticated vessels. Crew costs may increase if competition for skilled personnel intensifies.
Costs related to the recertification of vessels are deferred and amortized over a 30-month period on a straight-line basis. Maintenance costs incurred at the time of the recertification drydocking not related to the recertification of the vessel are expensed as incurred. Costs related to vessel improvements that either extend the vessel’s useful life or increase the vessel’s functionality are capitalized and depreciated.
Insurance costs are dependent on a variety of factors, including our safety record and pricing in the insurance markets, and can fluctuate over time. Our vessels are generally insured for up to their estimated fair market value in order to cover damage or loss. We also purchase coverage for potential liabilities stemming from third-party losses and cybersecurity breaches with limits that we believe are reasonable for our business and operations, but do not generally purchase business interruption insurance or similar coverage. During the past three years, we have not incurred any material costs, fines or penalties due to a direct or third-party vendor cybersecurity breach. Insurance limits are reviewed annually, and third-party coverage is purchased based on the expected scope of ongoing operations and the cost of third-party coverage.
Fuel and lube costs can fluctuate in any given period depending on the number and distance of vessel mobilizations, the number of active vessels off-hire, drydockings, and changes in fuel prices. Generally, our customers are responsible for fuel costs when our vessels are on-hire, and we are responsible for fuel costs when our vessels are off-hire or in drydock. We also incur vessel operating costs aggregated as “other” vessel operating costs. These costs consist of brokers’ commissions, training costs, satellite communication fees, agent fees, port fees, freight and other miscellaneous costs.
We discuss our liquidity in terms of cash on hand and cash flow that we generate from our operations. Our primary sources of capital have been our cash on hand, internally generated funds including operating cash flow, vessel sales and long-term debt financing. From time to time, we also issue stock or stock-based financial instruments either in the open market or as currency in acquisitions. This ability is impacted by existing market conditions.
Industry Conditions and Outlook
Our business is exposed to numerous macro factors that influence our outlook and expectations. Our outlook and expectations described herein are based solely on the market as we see it today, and therefore, subject to various changing conditions that impact the oil and gas industry.
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Our outlook is largely driven by expectations for the worldwide demand for hydrocarbons, and expectations surrounding the demand for and the global supply of vessels that support the offshore energy industry. Our business is directly impacted by the level of activity in worldwide offshore oil and gas exploration, development and production, which in turn is influenced by trends in oil and gas prices and the condition of the energy markets, and in particular, the willingness of energy companies to spend on offshore operational activities and capital projects. This activity includes demand for offshore drilling rigs, which also directly impacts our industry. Oil and gas prices are affected by geopolitical and economic forces, including the fundamental principles of supply and demand. Offshore oil and gas exploration and development activities generally require higher oil or gas prices to justify the expenditure levels of offshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile.
Over the past several years, oil and gas commodity pricing and the overall supply of and demand for oil and gas have been affected by (i) a global pandemic, which included lock downs by major oil consuming nations; (ii) ongoing global conflicts, notably in eastern Europe between Russia and Ukraine, in Venezuela, and numerous conflicts in the Middle East; (iii) Organization of Petroleum Exporting Countries Plus (OPEC+) production quotas, market share expectations and pricing considerations; (iv) resource growth in non-OPEC+ nations; (v) a capital allocation focus on returning capital to shareholders within the major oil and gas companies, thereby limiting funds previously available for resource development; (vi) economies of and monetary policies in major consuming nations; (vii) increased activism related to the perceived responsibility of the oil and gas sector for climate change; and (viii) U.S. trade policies that include substantial tariffs, causing increased market uncertainty and volatility. These factors have at various times caused or exacerbated significant swings in oil and gas pricing, which in turn has affected the capital budgets of oil and gas companies. Despite the volatility in spot oil prices seen in recent years, our customers tend to consider less volatile medium and long-term prices in making offshore investment decisions. In the medium term, we continue to see positive upstream investment momentum in both the international and domestic markets. We believe these markets are driven by resilient long-cycle offshore developments, production capacity expansions and increased resource exploitation activities. However, sustained oil prices in the low $60s per barrel may delay some drilling projects initially expected to commence in 2026.
Results of Operations
Each of our five operating segments is led by senior management, the results are reviewed and resources are allocated by our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the results of each of the operating segments for resource allocation and performance evaluation.
Total vessel utilization is calculated on all vessels in service (which includes stacked vessels, vessels held for sale and vessels in drydock or down for repair). Active utilization is calculated on all owned and bareboat chartered vessels except vessels held for sale and stacked vessels. Vessel utilization rates are calculated by dividing the number of days a vessel works during a reporting period by the number of days the vessel is available to work in the reporting period. We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is performed on the vessel. Although not currently fulfilling charters, stacked vessels are considered in service and included in the calculation of our utilization statistics but excluded in the calculation of our active utilization statistics. We had eight stacked vessels at December 31, 2025 and one stacked vessel at December 31, 2024.
Vessel day rates are determined by the demand created largely through the level of offshore exploration, development and production spending by energy companies relative to the supply of offshore support vessels. Specifications of available equipment and the scope of service provided may also influence vessel day rates. Average day rates are calculated by dividing the revenue a vessel earns during a reporting period by the number of days the vessel worked in the reporting period. Vessel operating cost per active days is calculated based on total available days less stacked days.
Total vessels in service may also include vessels not owned by us and under bareboat charter agreements. We had three in 2023, 2024 and at the beginning of 2025, but one of the vessels was purchased by us in the third quarter of 2025 and is included in our owned vessel count. We gave notice to acquire both of the remaining vessels under bareboat charter, reclassifying them as finance leases, also now included in our owned vessel count. These vessels were included in all vessel statistics whether or not owned.
This section of this Form 10-K generally discusses activity in the years 2025, 2024 and 2023 and year-to-year comparisons between 2025 and 2024 and between 2024 and 2023.
The results of operations tables included below for the total company and the individual segments disclose financial results supplemented with vessel utilization and average day rates.
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Years Ended December 31, 2025 and 2024
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Total revenue
Costs and expenses:
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
Costs of other operating revenues
General and administrative
Depreciation and amortization
Gain on asset dispositions, net
Total costs and expenses
Other income (expense):
Foreign exchange gain (loss)
Interest income and other, net
Loss on early extinguishment of debt
Interest and other debt costs, net
Total other expense
Income before income taxes
Income tax expense (benefit)
Net income
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Revenue:
Increase primarily driven by higher average day rates partially offset by lower utilization and lower vessel count.
Slight decrease in active utilization primarily due to higher idle time between contracts offset by reduced drydock and repair days.
Vessel operating costs:
Decrease primarily due to lower crew costs in Asia Pacific and Americas segments; and lower fuel and supplies costs in Americas and Europe/Mediterranean segments. These cost reductions were partially offset by higher repair costs in the West Africa segment.
General and administrative:
Increase primarily due to higher personnel costs, higher stock compensation and charges associated with a transition and separation agreement. We also incurred higher professional fees in 2025 compared to 2024. In 2024, we had a significant recovery of bad debt expense that did not recur in 2025.
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Depreciation and amortization:
Increase primarily due to higher amortization of drydock costs.
Gain on asset dispositions, net:
During 2025, we sold 12 vessels for approximately $17.6 million in proceeds and recognized a net gain of $13.6 million on the dispositions. During 2024, we sold or recycled six vessels and other assets.
Interest income and other, net:
Increase primarily due to a Brazil legal case recovery, which included an interest component.
Loss on early extinguishment of debt:
Increase primarily due to the early redemption premiums incurred and the write off of unamortized debt issuance costs in conjunction with the redemption of the Senior Secured Term Loan, the 10.375% Senior Unsecured Notes due July 2028 and the 8.5% Senior Secured Notes due November 2026.
Interest expense:
Decrease primarily due to lower average debt levels and interest rates in 2025 compared to 2024 as a result of significant principal payments made in the latter part of 2024 and during the first six months of 2025.
Foreign exchange gains/losses:
Our foreign exchange gains in 2025 and losses in 2024 were primarily the result of the settlement and revaluation of various foreign currency balances due to a weakening/strengthening of the U.S. Dollar against the Central African CFA Franc, West African CFA Franc, Norwegian Kroner, Brazilian Real, Angola Kwanza, British Pound and Euro.
Income tax expense:
We are subject to taxes on our income in many jurisdictions worldwide and our actual tax expense can vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax jurisdictions. Our tax benefit for 2025 is primarily related to the effect of the Vessel Realignment and release of valuation allowance against certain U.S. deferred tax assets, reduced by the impact from Pillar Two taxes and taxes on our operations in foreign countries. Tax expense for 2024 is mainly attributable to taxes on our operations in foreign countries.
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Americas Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues:
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher average day rates and the almost 1% increase in active utilization.
Active vessels decreased primarily due to stacking two vessels in 2025.
Vessel operating costs:
Decrease primarily due to lower crew costs associated with lower activity in Mexico, reduced manning levels resulting from higher idle and stacked days, and the sale of a vessel in 2025. We also experienced lower fuel costs in 2025 due to lower drydock days. These decreases were partially offset by an increase due to a legal claim accrual.
General and administrative expense:
Increase primarily due to a credit to bad debt expense in 2024.
Depreciation and amortization expense:
Increase primarily due to higher amortization of drydock costs.
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Asia Pacific Segment Operations .
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Decrease primarily driven by a lower vessel count in Australia and lower utilization, partially offset by higher average day rates.
Active utilization decreased primarily due to higher idle days between contracts.
Vessel operating costs:
Decrease primarily due to lower crew costs resulting from a lower proportion of vessels working in Australia where operating costs are significantly higher.
General and administrative expense:
Increase primarily due to higher personnel costs.
Depreciation and amortization expense:
Increase primarily due to higher amortization due to increased drydock activity partially offset by a decrease in depreciation due to fewer vessels operating in the segment.
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Middle East Segment Operations .
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher day rates, partially offset by lower utilization.
Utilization decreased primarily due to higher drydock days.
Vessel operating costs:
Decrease primarily due to lower mobilization and training costs partially offset by higher repair costs.
General and administrative expense:
No significant variances.
Depreciation and amortization expense:
Increase primarily due to higher amortization of drydock costs in 2025.
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Europe/Mediterranean Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher utilization and higher average day rates that was partially offset by a lower vessel count.
Active utilization increased due to lower drydock and repair days.
Vessel operating costs:
Increase primarily due to higher crew costs associated with higher payroll tax expense. We also incurred higher other costs resulting from unplanned charges incidental to vessels being down for repair and higher training costs. Fuel costs decreased due to lower drydock and repair days.
General and administrative expense:
Increase primarily due to higher personnel costs and professional fees.
Depreciation and amortization expense:
Increase due to higher amortization of drydock costs.
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West Africa Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Decrease primarily driven by a lower vessel count and lower utilization because of increased idle and stacked days partially offset by higher average day rates.
We took delivery of six new crew boats in 2025 and stacked some older crew boats, nine of which were sold.
Vessel operating costs:
Increase primarily due to higher repair costs and increased repair days; higher fuel costs associated with increased idle and stacked days; and higher other costs associated with a relief vessel engaged as a substitute for another vessel in drydock.
General and administrative expense:
Increase due to higher personnel costs and professional fees and a credit to bad debt expense in 2024.
Depreciation and amortization expense:
Increase primarily due to higher amortization of drydock costs.
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Years Ended December 31, 2024 and 2023
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Total revenue
Costs and expenses:
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
Costs of other operating revenues
General and administrative
Depreciation and amortization
Gain on asset dispositions, net
Total costs and expenses
Other income (expense):
Foreign exchange loss
Equity in net earnings of unconsolidated companies
Interest income and other, net
Interest and other debt costs, net
Total other expense
Income before income taxes
Income tax expense
Net income
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Revenue:
Increase primarily driven by higher average day rates and the full year effect of the Solstad Acquisition, which added 37 vessels to our fleet on July 5, 2023.
The Solstad vessels added $269.3 million to revenue in 2024 and $115.1 million in 2023, contributing $154.2 million to the revenue variance.
Slight decrease in active utilization due to higher idle time between contracts and increased drydock days.
Vessel operating costs:
Increase primarily due to the additional active vessels in our fleet from the Solstad Acquisition, coupled with higher overall crew costs and higher repair costs associated with slightly higher repair days. In addition, there was higher other operating costs associated with increased brokerage commissions due to higher revenues; higher contract fines and penalties due to extended delayed drydocks; higher training costs; and increased amortization of mobilization costs.
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General and administrative:
Increase primarily due to higher salaries and benefits due to additions in corporate and segment personnel and higher professional fees. This increase was partially offset by lower bad debt and transaction costs.
Depreciation and amortization:
Increase primarily due to depreciation and amortization of drydock costs related to the additional vessels acquired in the Solstad Acquisition.
Gain on asset dispositions, net:
During 2024, we sold or recycled six vessels and other assets. During 2023, we sold or recycled 15 vessels and other assets. We recognized significantly higher gains per vessel sold in 2024 due to a more favorable market for vessel sales.
Interest expense:
Increase primarily due to the addition of $575.0 million in long term debt, bearing interest of approximately 10.0%, to fund the Solstad vessel acquisition effective July 5, 2023.
Interest income and other, net:
Interest income and other consists primarily of interest received on invested balances.
During 2023, we recorded a $1.1 million charge resulting from a reduction in certain indemnification assets related to assumed tax liabilities acquired from Swire Pacific Offshore Holdings Limited (SPO) that were adjusted to reflect the expiration of the statute of limitations. This charge was offset by a corresponding decrease in income tax expense, which resulted in no impact on net income.
During 2023, we recognized a $2.3 million settlement gain from our pension plan as we significantly reduced the number of plan participants and related pension liabilities.
Foreign exchange losses:
In 2024 and 2023, we experienced foreign currency exchange losses. The 2024 losses were significant due to a strengthening of the U.S. Dollar against the Mexican Peso, Norwegian Kroner, Brazilian Real, Australian Dollar and certain African currencies.
Income tax expense:
We are subject to taxes on our income in many jurisdictions worldwide and our actual tax expense can vary disproportionally to overall net income due to the mix of profits and losses in these foreign tax jurisdictions. Our tax expense for 2024 and 2023 is mainly attributable to taxes on our operations in foreign countries.
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Americas Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher average day rates that was partially offset by lower utilization largely resulting from substantially higher drydock days.
Solstad Acquisition added four vessels in 2024 and six vessels during the last six months in 2023 and contributed $19.2 million to the revenue variance.
Active vessels decreased primarily due to vessel transfers to other segments.
Vessel operating costs:
Increase primarily due to higher repairs from substantially higher routine repairs performed while the vessels were in drydock. Crew costs increased due to the addition of Solstad Acquisition vessels. Certain contract fines and penalties related to delayed drydocks increased other operating costs.
General and administrative expense:
Decrease primarily due to higher bad debt expense in 2023.
Depreciation and amortization expense:
Increase primarily due to higher drydock activity that was partially offset by lower depreciation resulting from the lower vessel count.
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Asia Pacific Segment Operations .
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher average day rates; the full year effect of the Solstad Acquisition; and the larger proportion of vessels working in Australia where average day rates are higher.
Solstad Acquisition added four vessels in 2024 and during the last six months of 2023 and contributed $18.7 million to the revenue variance.
Active utilization decreased due to higher drydock days and higher idle days between contracts.
Active vessels increased primarily due to the Solstad vessel acquisitions.
Vessel operating costs:
Increase primarily due to the additional active vessels and by the increased proportion of vessels working in Australia where crew costs are higher.
General and administrative expense:
Increase primarily due to higher personnel costs.
Depreciation and amortization expense:
Increase primarily due to additional vessels and higher drydock activity.
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Middle East Segment Operations .
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit (loss)
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher average day rates and higher active utilization largely due to substantially fewer mobilization days in 2024.
Vessel operating costs:
Increase primarily due to the accelerated amortization of deferred mobilization costs due to cancelled contracts; higher repair costs due to an increase in vessel repair days; and increased training costs.
General and administrative expense:
Increase primarily due to higher personnel costs.
Depreciation and amortization expense:
Increase primarily due to higher drydock activity and higher depreciation due to additional equipment on several vessels.
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Europe/Mediterranean Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by higher average day rates and an increase in active vessels in the area resulting primarily from the Solstad Acquisition.
Solstad Acquisition added 26 vessels in 2024 and 24 vessels during the last six months of 2023 and contributed $86.4 million to the revenue variance.
Active utilization decreased due to higher drydock days and increased idle time between contracts.
Active vessels increased primarily due to the Solstad vessel acquisition.
Vessel operating costs:
Increase primarily due to the additional vessels in the segment.
Solstad Vessels added $86.7 million and $37.8 million to operating costs in 2024 and 2023, respectively.
General and administrative expense:
Increase primarily due to higher personnel costs as a result of the addition of onshore personnel from the Solstad Acquisition.
Depreciation and amortization expense:
Increase primarily due to the significant depreciation associated with the additional vessels acquired from Solstad plus higher amortization related to an increase in drydock activity.
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West Africa Segment Operations.
Year Ended December 31,
(In Thousands except for statistics)
Change
% Change
Vessel revenues
Vessel operating costs:
Crew costs
Repair and maintenance
Insurance
Fuel, lube and supplies
Other
Total vessel operating costs
General and administrative expense
Depreciation and amortization
Vessel operating profit
Select operating statistics:
Utilization
Active utilization
Average vessel day rates
Vessel operating cost per active day
Average total vessels
Average stacked vessels
Average active vessels
Vessel revenue:
Increase primarily driven by the increase in average day rates.
Solstad Acquisition added three vessels in 2024 and 2023, respectively, and contributed $29.3 million to the revenue increase.
Active utilization decreased due to higher idle time between contracts.
Vessel operating costs:
Increase primarily due to higher crew wages and a nonrecurring customs duty settlement in the second quarter of 2024.
Solstad Vessels added $8.7 million and $4.4 million to operating costs for 2024 and 2023, respectively.
General and administrative expense:
No significant variances.
Depreciation and amortization expense:
Increase primarily due to significantly increased drydock activity and higher depreciation.
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Vessel Dispositions
We seek opportunities to sell and/or recycle our older vessels when market conditions warrant and opportunities arise. Most of our vessels are sold to buyers who do not compete with us in the offshore energy industry. During 2025, we sold 12 vessels from our active fleet, nine of which were crew vessels. During 2024, we sold six vessels from our active fleet. During 2023, we sold or recycled eight vessels designated as held for sale and sold seven vessels from our active fleet. The number of vessel dispositions by segment were as follows:
Year Ended
Year Ended
Year Ended
December 31, 2025
December 31, 2024
December 31, 2023
Number of vessel dispositions by segment:
Americas
Asia Pacific
Middle East
Europe/Mediterranean
West Africa
Total
General and Administrative Expenses
Consolidated general and administrative expenses and the related percentage of each component to total revenues are as follows:
(In Thousands)
Year Ended
Year Ended
Year Ended
December 31, 2025
December 31, 2024
December 31, 2023
Personnel
Office and property
Professional services
Transaction or restructuring charges (A)
Other
General and administrative expenses for all segments and corporate, including their respective percentage of total general and administrative expenses, were as follows:
(In Thousands)
Year Ended
Year Ended
Year Ended
December 31, 2025
December 31, 2024
December 31, 2023
Vessel operations:
Continuing operations
Transaction or restructuring charges (A)
Total vessel operations
Corporate:
Continuing operations
Transaction or restructuring charges (A)
Total corporate
Total
Transaction or restructuring charges for the years ended December 31, 2025, 2024 and 2023 include $8.3 million, $0.7 million and $1.1 million, respectively, of transaction or severance and termination benefits.
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General and administrative expenses for the year ended December 31, 2025 increased compared to the year ended December 31, 2024 primarily due to higher compensation costs and professional fees. General and administrative expenses for the year ended December 31, 2024 increased compared to the year ended December 31, 2023 primarily due to higher compensation costs and professional fees.
Liquidity, Capital Resources and Other Matters
Our objective in financing our business is to maintain and preserve adequate financial resources and sufficient levels of liquidity. As of December 31, 2025, we had $581.6 million in cash and cash equivalents, and a borrowing capacity under our Revolving Credit Facility of $250.0 million for which any future borrowings would be due April 2030. On July 7, 2025, we issued $650.0 million in 9.125% Senior Notes that mature in July 2030 (2030 Notes). With the proceeds of the offering, we redeemed most of our outstanding debt as of June 30, 2025, including accrued interest and early redemption premiums. Also on July 7, 2025, we executed the $250.0 million Revolving Credit Facility that replaced our previous $25.0 million credit facility. As of the date of this filing, no amounts have been drawn under the Revolving Credit Facility.
In addition, on February 22, 2026, we entered into a definitive agreement to acquire all outstanding shares of Wilson Sons Ultratug Participações S.A and its affiliate Atlantic Offshore Services S.A. (collectively, the Wilson Companies) from Wilson Sons S.A., Ultranav International II, S.A. and Remolcadores Ultratug Limitada (collectively, the Wilson Sellers). The Wilson Companies own 22 platform supply vessels operating in Brazil. We will pay the Wilson Sellers an aggregate cash purchase price of $500.0 million on a debt free, cash free basis, subject to adjustments, including a reduction for the assumption of the Wilson Companies’ debt which was approximately $261.0 million as of September 30, 2025. The final debt amount will be determined upon completion of this transaction. The transaction is subject to customary closing conditions, including approval from the Brazilian Antitrust Authority and the consent of the lenders to the Wilson Companies, and is expected to close late in the second quarter of 2026.
We believe cash and cash equivalents and net cash provided by operating activities, supplemented with our revolving credit capacity, provides us with sufficient liquidity to fund our obligations and meet our liquidity requirements, including the acquisition of the Wilson Companies.
Our cash and cash equivalents include restricted cash and other amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences. As of December 31, 2025 approximately 24% of our cash balance held in foreign subsidiaries is awaiting U.S. dollar conversion.
We currently expect earnings by our foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay intercompany liabilities of our foreign subsidiaries in the normal course of business. Moreover, we do not currently intend to repatriate earnings of our foreign subsidiaries to the U.S. because cash generated from our domestic businesses and the repayment of intercompany liabilities from foreign subsidiaries are currently sufficient to fund the cash needs of our U.S. operations.
A key component of our growth strategy is expanding our business and fleet through acquisitions, joint ventures and other strategic transactions. We would expect to finance any strategic transactions through the sale of our securities or through debt financing.
Working capital, which includes cash on hand, was $598.9 million at December 31, 2025, and included $5.8 million of current maturities on long term debt. During the year ended December 31, 2025, we reported $333.5 million in net income and generated $379.1 million in cash flows from operating activities, which includes our interest payments and drydock costs.
During the fourth quarter of 2025, we received several overdue payments aggregating approximately $54.0 million from our primary customer in Mexico, which reduced its outstanding receivable balance to $12.4 million as of December 31, 2025. We have not historically had, and we do not expect to have, any material write-offs due to the non-collectability of our receivables.
The Revolving Credit Facility contains customary affirmative and negative covenants, representations and warranties, and events of default, along with the following three financial covenants: (i) a minimum liquidity test that the sum of consolidated cash and available commitments under the Revolving Credit Facility shall not be less than the greater of $20.0 million or 10% of net interest-bearing debt as defined in the agreement; (ii) the ratio of net interest bearing debt to consolidated earnings before depreciation and amortization, interest and other debt costs, net and income tax expense shall be equal to or less than 3 to 1; and (iii) the aggregate fair market value of the collateral vessels divided by the total outstanding debt shall be at least 2.5 to 1. We are currently in compliance and anticipate maintaining ongoing compliance with these financial covenants.
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We signed agreements for the construction of two ocean going tugs and eight crew boats, all of which have been delivered as of December 31, 2025. We entered into Facility Agreements to finance a portion of the construction and delivery costs for approximately EUR 24.9 million ($26.7 million). Each of the ten Facility Agreements bears interest at fixed rates ranging from 2.7% to 6.3% and are payable in ten equal principal semi-annual installments, with the first installment commencing approximately six months following delivery of the respective vessel. Each Facility Agreement is secured by the respective vessel, guaranteed by Tidewater as parent guarantor and has no financial covenants.
Please refer to Note (4) - “Debt” to the accompanying Consolidated Financial Statements for further details on our indebtedness.
Share Repurchases
On February 27, 2025, our Board of Directors (Board) approved a $90.3 million share repurchase program, and then on August 1, 2025, our Board approved a new $500.0 million share repurchase program. During the year ended December 31, 2025, we repurchased and retired 2,290,204 shares for approximately $90.0 million, excluding commissions and a 1% excise tax. During 2024, our Board approved several share repurchase programs aggregating $90.7 million. During the year ended December 31, 2024, we repurchased and retired 1,384,186 shares for approximately $90.7 million, excluding commissions and a 1% excise tax. On November 5, 2023, our Board approved a $35.0 million share repurchase program, pursuant to which we repurchased and retired 590,499 shares for approximately $35.0 million, excluding commissions and a 1% excise tax, during the fourth quarter of 2023. Please refer to Item 5 of this Form 10-K - Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities for additional information regarding repurchases of our common stock. Also refer to Note (10) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.
Dividends
We declared no dividends during the years ended December 31, 2025, 2024 and 2023. Please refer to Note (10) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.
Operating Activities
Net cash provided by operating activities for any period will fluctuate according to the level of business activity for the applicable period. Net cash provided by operating activities is as follows:
(In Thousands)
Year Ended
Year Ended
December 31, 2025
December 31, 2024
Net income
Depreciation and amortization
Amortization of deferred drydocking and survey costs
Amortization of debt premiums and discounts
Amortization of below market contracts
Unrealized foreign exchange loss (gain)
Deferred income taxes benefit
Gain on asset dispositions, net
Loss on debt extinguishment
Stock based compensation expense
Deferred drydocking and survey costs
Changes in operating assets and liabilities
Net cash provided by operating activities
Net cash provided by operating activities for the year ended December 31, 2025 was $379.1 million reflecting net income of $333.5 million, non-cash depreciation and amortization of $262.3 million, loss on extinguishment of debt of $27.1 million, unrealized foreign exchange gain of $23.4 million, a deferred income tax benefit of $195.8 million and stock-based compensation expense of $14.5 million. Changes in operating assets and liabilities provided $69.0 million in cash, reflecting improved receivable collections including from our primary customer in Mexico. We paid $98.6 million for regulatory drydocks in 2025.
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Net cash provided by operating activities for the year ended December 31, 2024 was $282.5 million reflecting net income of $179.3 million, non-cash depreciation and amortization of $242.8 million, unrealized foreign exchange loss of $14.3 million and stock-based compensation expense of $13.7 million. Changes in operating assets and liabilities used $17.4 million in cash, reflecting additional investments in working capital due to an increase in business activity relating to the Solstad Acquisition. We paid $133.3 million for regulatory drydocks in 2024.
Investing Activities
Net cash used in investing activities is as follows:
(In Thousands)
Year Ended
Year Ended
December 31, 2025
December 31, 2024
Proceeds from asset dispositions
Proceeds from sale of notes
Additions to properties and equipment
Net cash used in investing activities
Net cash used in investing activities for the year ended December 31, 2025 was $7.5 million, reflecting proceeds of $17.6 million related to the disposal of 12 vessels and $0.7 million related to the sale of a PEMEX note receivable. Additions to property and equipment was $25.8 million and primarily included upgrades to our existing fleet and continued enhancements to our current enterprise software system.
Net cash used in investing activities for the year ended December 31, 2024 was $0.2 million, reflecting proceeds of $19.3 million related to the disposal of six vessels and $8.1 million related to the sale of a PEMEX note receivable. Additions to property and equipment was $27.6 million and primarily included upgrades to our existing fleet and continued enhancements to our current enterprise software system.
Financing Activities
Net cash used in financing activities is as follows:
(In Thousands)
Year Ended
Year Ended
December 31, 2025
December 31, 2024
Exercise of warrants
Issuance of long-term debt
Principal payments on long-term debt
Purchase of common stock
Payments on finance leases
Debt extinguishment premium
Debt issuance costs
Share based awards reacquired to pay taxes
Net cash used in financing activities
Financing activities for the year ended December 31, 2025 used $136.0 million of cash. We received proceeds of $650.0 million from the issuance of long-term debt, made $641.9 million in principal payments on long-term debt and paid $19.6 million in debt extinguishment premiums while incurring $19.8 million of debt issuance costs. In addition, we purchased 2,290,204 shares of our common stock for $90.1 million and paid $8.1 million in taxes on behalf of our employees related to the vesting of share-based awards.
Financing activities for the year ended December 31, 2024 used $222.6 million of cash. We made $103.0 million in principal payments on long-term debt while incurring $0.2 million of debt issuance costs. In addition, we purchased 1,384,186 shares of our common stock for $90.7 million and paid $28.6 million in taxes on behalf of our employees related to the vesting of share-based awards.
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Legal Proceedings
We are named defendants or parties in certain lawsuits, claims or proceedings incidental to or arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results and cash flows. Please refer to Note (11) - “Commitments and Contingencies” to the accompanying Consolidated Financial Statements.
Application of Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures and disclosures of any contingent assets and liabilities at the date of the financial statements. We evaluate the reasonableness of these estimates and assumptions continually based on a combination of historical experience and other assumptions and information that comes to our attention that may vary the outlook for the future. Estimates and assumptions about future events and their effects are subject to uncertainty, and accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the business environment in which we operate changes. As a result, actual results may differ from estimates under different assumptions.
The significant accounting policies as described in Note (1) - “Nature of Operations and Summary of Significant Accounting Policies” to the Consolidated Financial Statements, should be read in conjunction with this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have defined a critical accounting estimate as one that is important to the portrayal of our financial condition or results of operations and requires us to make difficult, subjective or complex judgments or estimates about matters that are uncertain. We believe the following critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements are described below. There are other items within our consolidated financial statements that require estimation and judgment, but they are not deemed critical as defined above.
Receivables and Allowance for Credit Losses
In the normal course of business, we extend credit to our customers on a short-term basis. Our principal customers are major oil and gas exploration, field development and production companies. We routinely review and evaluate our accounts receivable balances for collectability. The determination of the collectability of amounts due from our customers requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current credit worthiness to determine that collectability is reasonably assured, as well as consideration of the overall business climate in which our customers operate. Expected credit losses are recorded on the initial recognition of our primary financial assets, which are trade accounts receivable and contract assets. We believe that our allowance for credit losses is adequate to cover potential bad debt losses under current conditions; however, uncertainties regarding changes in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any additional provisions for credit losses that may be required.
Impairment of Long-Lived Assets
We review the vessels in our active fleet for impairment whenever events occur or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In such evaluation, the estimated future undiscounted cash flows generated by an asset group are compared with the carrying amount of the asset group to determine if a write-down may be required. We group vessels with similar operating and marketing characteristics together for impairment testing purpose.
We estimate future cash flows based upon historical data adjusted for our best estimate of expected future market performance, which, in turn, is based on industry trends. The primary estimates and assumptions used in reviewing active vessel groups for impairment and estimating undiscounted cash flows include utilization rates, average day rates and average daily operating expenses. These estimates are based on recent actual trends in utilization, day rates and operating costs and reflect management’s best estimate of expected market conditions during the period of future cash flows. These assumptions and estimates have changed considerably in the past as market conditions have changed, and they are reasonably likely to continue to change if and when market conditions change in the future. Although we believe our assumptions and estimates are reasonable, deviations from the assumptions and estimates could produce materially different results. Management estimates may vary considerably from actual outcomes due to future adverse market conditions or poor operating results that could result in the inability to recover the current carrying value of an asset group, thereby possibly requiring an impairment charge in the future.
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As our fleet continues to age, management closely monitors the estimates and assumptions used in the impairment analysis in order to properly identify evolving trends and changes in market conditions that could impact the results of the impairment evaluation.
If an asset group fails the undiscounted cash flow test, we estimate the fair value of each asset group and compare such estimated fair value to the carrying value of each asset group in order to determine if impairment exists.
We record an impairment charge when the carrying value of an asset group exceeds its estimated fair value. We often dispose of our older vessels when market conditions warrant and opportunities arise. As a result, vessel dispositions vary from year to year, and gains (losses) on sales of assets fluctuate significantly from period to period. Most of our vessels are sold to buyers with whom we do not compete in the offshore energy industry. When circumstances warrant, we review our fleet and make decisions to remove assets that are not considered to be part of our long-term plans. In these circumstances, we will reclassify the identified vessels as held for sale and, if necessary, we will revalue these vessels to net realizable value. Management estimates the fair value of each vessel in an asset group by considering items such as the vessel’s age, length of time stacked, likelihood of a return to active service and actual recent sales of similar vessels, among others. We consider the valuation approach for our vessels to be Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures, fair value measurements due to the level of estimation involved in valuing vessels for impairment purposes or for consideration for sale or recycling. We estimate the net realizable value for assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and recycle yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions. Our value ranges depend on our expectation of the ultimate disposition of the vessel.
We will, in all circumstances, attempt to achieve maximum value for our vessels, but we also recognize that certain vessels are more likely to be recycled, especially given the time and effort required to achieve a sale and the costs incurred to maintain a vessel while searching for a buyer. We establish ranges that in many cases have scrap value as the low end of the range and an expected open market sale value at the top of the range. When there is no expectation within the range that is considered more likely than any other, we apply equal probability weighting to the low and high ends of the valuation range.
Income Taxes
The asset-liability method is used for determining our income tax provisions, under which current and deferred tax liabilities and assets are recorded in accordance with enacted tax laws and rates. Under this method, the amounts of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. In addition, we determine our effective tax rate by estimating our permanent differences resulting from differing treatment of items for tax and accounting purposes.
As a global company, we are subject to the jurisdiction of taxing authorities in the United States and by the respective tax agencies in the countries in which we operate internationally, as well as to tax agreements and treaties among these governments. Our operations in these different jurisdictions are taxed on various bases: actual income before taxes, deemed profits (which are generally determined using a percentage of revenue rather than profits) and withholding taxes based on revenue. Determination of taxable income in any tax jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of deductions, permissible revenue recognition methods under the tax law and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year. We are periodically audited by various taxing authorities in the United States and by the respective tax agencies in the countries in which we operate internationally. The tax audits generally include questions regarding the calculation of taxable income. Audit adjustments affecting permanent differences could have an impact on our effective tax rate.
The carrying value of our net deferred tax assets is based on our present belief in our ability to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets, based on current estimates and assumptions. If these estimates and related assumptions change in the future, we may be required to adjust valuation allowances against our deferred tax assets resulting in additional income tax expense or benefit in our Consolidated Income Statements. Management evaluates the realizability of the deferred tax assets and assesses the need for changes to valuation allowances on a quarterly basis. Should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.
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Deferred taxes are not provided on undistributed earnings of certain non-U.S. subsidiaries and business ventures because we consider those earnings to be permanently invested abroad.
We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions would be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that was more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The recognition and measurement of tax liabilities for uncertain tax positions in any tax jurisdiction requires the interpretation of the related tax laws and regulations as well as the use of estimates and assumptions regarding significant future events. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes during any given year.
New Accounting Pronouncements
For information regarding the effect of new accounting pronouncements, please refer to Note (1) - “Nature of Operations and Summary of Significant Accounting Policies” to the accompanying Consolidated Financial Statements.
