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What changed in TIDEWATER INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TIDEWATER INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+434 added−441 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in TIDEWATER INC's 2023 10-K

434 paragraphs added · 441 removed · 296 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

96 edited+25 added−20 removed30 unchanged
Biggest changeAlthough these projects are generally less susceptible to short-term fluctuations in commodity prices, deepwater exploration and development projects are generally more costly than other onshore and offshore exploration and development. We expect offshore windfarm developments to increase over the coming years, and believe these developments may provide additional opportunities for a certain cross-section of our larger vessels.
Biggest changeWe expect offshore windfarm developments to increase over the coming years and believe these developments may provide additional opportunities for a certain cross-section of our larger vessels. These projects generally require fewer but more highly specialized vessels. Our revenues are derived primarily from vessel time charter or similar contracts ranging in duration from a few months to several years.
Our mission includes providing our services to our customers with the highest level of operational performance, while complying with all laws and regulations, respecting the environment and local communities in which we work and ensuring the safety of our people.
Our mission includes providing services to our customers with the highest level of operational performance, while complying with all laws and regulations, respecting the environment and local communities in which we work and ensuring the safety of our people.
During the second half of 2022, we completed two common stock public offerings to facilitate the redemption of the SPO Acquisition Warrants, including an offering for 4,048,000 shares at $17.85 per share completed on August 12, 2022, and an offering for 3,987,914 shares at $30.25 per share completed on November 10, 2022 (the Offerings).
During the second half of 2022, we completed two common stock public offerings to facilitate the SPO Acquisition Warrants redemption, including an offering for 4,048,000 shares at $17.85 per share completed on August 12, 2022, and an offering for 3,987,914 shares at $30.25 per share completed on November 10, 2022 (Offerings).
We believe that the size, age, diversity and geographic distribution of a vessel operator’s fleet, economies of scale and experience level in the many areas of the world are competitive advantages in our industry.
We believe that the size, age, diversity and geographic distribution of a vessel operator’s fleet, economies of scale and experience level in many areas of the world are competitive advantages in our industry.
These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and natural gas prices; industry overcapacity; limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; the resolution of pending legal proceedings; and other risks and uncertainties detailed in this Form 10-K and other filings we make with the SEC.
These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: fluctuations in worldwide energy demand and oil and gas prices; industry overcapacity; limited capital resources available to replenish our asset base as needed, including through acquisitions or vessel construction, and to fund our capital expenditure needs; uncertainty of global financial market conditions and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all; changes in decisions and capital spending by customers in the energy industry and the industry expectations for offshore exploration, field development and production; consolidation of our customer base; loss of a major customer; changing customer demands for vessel specifications, which may make some of our older vessels technologically obsolete for certain customer projects or in certain markets; rapid technological changes; delays and other problems associated with vessel maintenance; the continued availability of qualified personnel and our ability to attract and retain them; the operating risks normally incident to our lines of business, including the potential impact of liquidated counterparties; our ability to comply with covenants in our indentures and other debt instruments; acts of terrorism and piracy; the impact of regional or global public health crises or pandemics; the impact of potential information technology, cybersecurity or data security breaches; integration of acquired businesses and entry into new lines of business; disagreements with our joint venture partners; natural disasters or significant weather conditions; unsettled political conditions, war, civil unrest and governmental actions, such as expropriation or enforcement of customs or other laws that are not well developed or consistently enforced; the risks associated with our international operations, including local content, local currency or similar requirements especially in higher political risk countries where we operate; interest rate and foreign currency fluctuations; labor changes proposed by international conventions; increased regulatory burdens and oversight; changes in laws governing the taxation of foreign source income; retention of skilled workers; our participation in industry wide, multi-employer, defined pension plans; enforcement of laws related to the environment, labor and foreign corrupt practices; increased global concern, regulation and scrutiny regarding climate change; increased stockholder activism; the potential liability for remedial actions or assessments under existing or future environmental regulations or litigation; the effects of asserted and unasserted claims and the extent of available insurance coverage; the resolution of pending legal proceedings; and other risks and uncertainties detailed in this Form 10-K and other filings we make with the SEC.
Platform Supply Vessels (PSV) PSVs generally have cargo carrying capacities, both below deck (liquid mud tanks and dry bulk tanks) and above deck. Most of our PSVs are outfitted with dynamic positioning capabilities, which allow the vessels to maintain an absolute or relative position when mooring to an offshore installation, rig or another vessel is deemed unsafe, impractical or undesirable.
Platform Supply Vessels PSVs generally have cargo carrying capacities, both below deck (liquid mud tanks and dry bulk tanks) and above deck. Most of our PSVs are outfitted with dynamic positioning capabilities, which allow the vessels to maintain an absolute or relative position when mooring to an offshore installation or rig or another vessel is deemed unsafe, impractical or undesirable.
For further discussion of ESG risks and considerations see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K. 12 Reporting Segments Prior to 2022, we managed our business through four segments including the Americas, Middle East/Asia Pacific, Europe/Mediterranean, and West Africa.
For further discussion of ESG risks and considerations see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K. Reporting Segments Prior to 2022, we managed our business through four segments including the Americas, Middle East/Asia Pacific, Europe/Mediterranean, and West Africa.
Department of Transportation’s Office of Pipeline Safety, the U.S. Bureau of Safety and Environmental Enforcement and certain individual states, regulate vessels and other structures in accordance with the requirements of federal and state law. 8 Little uniformity among the regulations issued by these agencies exists at this time, which increases our compliance costs and risk of non-compliance.
Department of Transportation’s Office of Pipeline Safety, the U.S. Bureau of Safety and Environmental Enforcement and certain individual states, regulate vessels and other structures in accordance with the requirements of federal and state law. At this time, little uniformity exists among the regulations issued by these agencies, which increases our compliance costs and risk of non-compliance.
While it is normal for our customer base to change over time as our vessel time charter contracts turn over, the unexpected loss of any of our significant customers could, at least in the short term, have a material adverse effect on our vessel utilization and our results of operations. Competition We have numerous competitors of all sizes.
While it is normal for our customer base to change over time as our vessel time charter contracts turn over, the unexpected loss of any significant customer could, at least in the short term, have a material adverse effect on our vessel utilization and our results of operations. Competition We have numerous competitors of all sizes.
Occupational Safety and Health Compliance In the U.S., we are subject to the Occupational Safety and Health Act (OSHA) and other similar laws and regulations, which establish workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures.
Occupational Safety and Health Regulations In the U.S., we are subject to the Occupational Safety and Health Act (OSHA) and other similar laws and regulations, which establish workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures.
While we believe that we should 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 given the markets in which we operate. For further discussion of our risks see “Risk Factors” in Item 1A of this Form 10-K.
While we believe we should be able to maintain adequate insurance at rates considered commercially acceptable, we cannot guarantee that such insurance will continue to be available at commercially acceptable rates given the markets in which we operate. For further discussion of our risks see “Risk Factors” in Item 1A of this Form 10-K.
Existing U.S. environmental laws and regulations to which we are subject include, but are not limited to: ● the Clean Air Act, which restricts the emission of air pollutants from many sources and imposes various preconstruction, operational, monitoring and reporting requirements, and that the EPA has relied upon as the authority for adopting climate change regulatory initiatives relating to greenhouse gas emissions; ● the Clean Water Act, which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the U.S.; ● the Oil Pollution Act of 1990, which subjects owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to liability for removal costs and damages arising from an oil spill in waters of the United States; ● the Comprehensive Environmental Response, Compensation and Liability Act of 1980, which imposes liability on generators, transporters, and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; and ● U.S.
Existing U.S. environmental laws and regulations to which we are subject include, but are not limited to: ● the Clean Air Act, which restricts the emission of air pollutants from many sources and imposes various preconstruction, operational, monitoring and reporting requirements, and that the EPA has relied upon as the authority for adopting climate change regulatory initiatives relating to greenhouse gas emissions; ● the Clean Water Act, which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the U.S.; 9 Table of Contents ● the Oil Pollution Act of 1990, which subjects owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to liability for removal costs and damages arising from an oil spill in waters of the United States; ● the Comprehensive Environmental Response, Compensation and Liability Act of 1980, which imposes liability on generators, transporters, and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur; and ● U.S.
We are committed to racial equality and fostering a culture of diversity and inclusion throughout our organization, a commitment that both starts with, and is reflected in, our board of directors. We have made diversity and inclusion an important part of our hiring and retention efforts.
We are committed to racial equality and fostering a culture of diversity and inclusion throughout our organization, a commitment that both starts with, and is reflected in, our Board. We have made diversity and inclusion an important part of our hiring and retention efforts.
We satisfy these requirements through appropriate insurance coverage, as discussed below in “Risk Management.” Moreover, environmental laws and regulations also can affect the resale value or significantly reduce the useful lives of our vessels, require a reduction in carrying capacity, ship modifications or operational changes or restrictions (and related increased operating costs) or retirement of service, lead to decreased availability or higher cost of insurance coverage for environmental matters or result in the denial of access to, or detention in, certain jurisdictional waters or ports.
We generally satisfy these requirements through appropriate insurance coverage, as discussed below in “Risk Management.” Moreover, environmental laws and regulations can affect the resale value or significantly reduce the useful lives of our vessels, require a reduction in carrying capacity, ship modifications or operational changes or restrictions (and related increased operating costs) or retirement of service, lead to decreased availability or higher cost of insurance coverage for environmental matters or result in the denial of access to, or detention in, certain jurisdictional waters or ports.
Inclusion and Diversity We embrace the diversity of our team members, stakeholders and customers, including their unique backgrounds, experiences, thoughts and talents. Everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business.
We embrace the diversity of our team members, stakeholders and customers, including their unique backgrounds, experiences, thoughts and talents. Everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business.
Our vessels and associated services support all phases of offshore crude oil and natural gas (also referred to as oil and gas) exploration, field development and production, as well as windfarm development and maintenance.
Our vessels and associated services support all phases of offshore crude oil and natural gas (also referred to as oil and gas) exploration activities, field development, production and maintenance, as well as windfarm development and maintenance.
In certain places in this Form 10-K, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information. 14 Table of Contents
In certain places in this Form 10-K, we may refer to reports published by third parties that purport to describe trends or developments in energy production and drilling and exploration activity and we specifically disclaim any responsibility for the accuracy and completeness of such information and have undertaken no steps to update or independently verify such information. 15 Table of Contents
Although commodity prices have recovered from historic lows seen in 2020, our customers have generally lowered their capital expenditure programs considering market volatility and competing priorities, including returning capital to shareholders and investing in alternative energy sources. In addition, we derive a significant amount of revenue from a relatively small number of customers.
Although commodity prices have recovered from historic lows seen in 2020, our customers have generally lowered their capital expenditure programs considering market volatility and competing priorities, including returning capital to stockholders and investing in alternative energy sources. In addition, we derive a significant amount of revenue from a relatively small number of customers.
Any such event may lead to a reduction in revenues or increased costs. Our vessels are generally insured for their estimated market value against damage or loss, including war, acts of terrorism, and pollution risks, but we do not directly or fully insure for business interruption.
Any such event may lead to a reduction in revenues, increased costs or reputational harm. Our vessels are generally insured for their estimated market value against damage or loss, including war, acts of terrorism and pollution risks, but we do not directly or fully insure for business interruption.
Acquisition of Swire Pacific Offshore Holdings Limited On April 22, 2022, Tidewater acquired all of the issued and outstanding shares of Swire Pacific Offshore Holdings Limited (SPO), pursuant to a Share Purchase Agreement with Banyan Overseas Limited (Banyan) for a total consideration of $215.5 million, consisting of (i) $61.6 million in cash paid at closing less a subsequent receipt of an $8.8 million post-closing working capital refund; and (ii) 8,100,000 warrants, exercisable at $0.001 per share for one share of our common stock (SPO Acquisition Warrants).
Acquisition of Swire Pacific Offshore Holdings Limited (SPO Acquisition) On April 22, 2022, we acquired all of the issued and outstanding shares of Swire Pacific Offshore Holdings Limited (SPO), pursuant to a Share Purchase Agreement (SPA Agreement) with Banyan Overseas Limited (Banyan) for a total consideration of $215.5 million, consisting of (i) $61.6 million in cash paid at closing less a subsequent receipt of an $8.8 million post-closing working capital refund; and (ii) 8,100,000 warrants, exercisable at $0.001 per share for one share of our common stock (SPO Acquisition Warrants).
In addition, the ability to demonstrate a strong record for safety and efficiency, and attract and retain qualified and skilled personnel, are important competitive factors.
In addition, a strong record for safety and efficiency and the ability to attract and retain qualified and skilled personnel, are important competitive factors.
Environmental laws and regulations are subject to change, however, and may impose increasingly strict requirements, and, as such, we cannot estimate the ultimate cost of complying with such potential changes to environmental laws and regulations. In addition, a wide range of governmental regulatory agencies, including the U.S. Coast Guard (USCG), the U.S. Environmental Protection Agency (EPA), the U.S.
Environmental laws and regulations are subject to change, however, and may impose increasingly strict requirements, and, as such, we cannot estimate the ultimate cost of complying with such potential changes to environmental laws and regulations. In addition, a wide range of governmental regulatory agencies, including the USCG, the U.S. Environmental Protection Agency (EPA), the U.S.
We are also involved in various legal proceedings that relate to other environmental matters. The amount of ultimate liability, if any, with respect to these proceedings is not expected to have a material adverse effect on our financial position, results of operations, or cash flows.
From time to time, we are also involved in various legal proceedings that relate to other environmental matters. The amount of ultimate liability, if any, with respect to these proceedings is not expected to have a material adverse effect on our financial position, results of operations, or cash flows.
We comply with the International Ship and Port Facility Security (ISPS) Code, an amendment to the Safety of Life at Sea (SOLAS) Convention (1974/1988), and further mandated in the Maritime Transportation and Security Act of 2002 to align United States regulations with those of the ISPS Code and SOLAS.
We comply with the International Maritime Organization’s (IMO) International Ship and Port Facility Security (ISPS) Code, an amendment to the Safety of Life at Sea (SOLAS) Convention (1974/1988), and further mandated in the Maritime Transportation and Security Act of 2002 to align United States regulations with those of the ISPS Code and SOLAS.
In connection with the acquisition of SPO, we split our Middle East/Asia Pacific segment into an Asia Pacific segment and a Middle East segment, resulting in the five segments. Our reporting segments and corresponding disclosures have been adjusted to reflect each of the five segments for all periods presented.
In connection with the acquisition of SPO in April 2022, we split our Middle East/Asia Pacific segment into an Asia Pacific segment and a Middle East segment, resulting in the five segments. Our reporting segments and corresponding disclosures have been adjusted to reflect each of the five segments for all periods presented.
Large AHTS vessels are equipped to tow drilling rigs and other marine equipment, as well as to set anchors for the positioning and mooring of drilling rigs that generally do not have dynamic positioning capabilities. As of December 31, 2022, we operated 11 large AHTS vessels.
Large AHTS vessels are equipped to tow drilling rigs and other marine equipment, as well as to set anchors for the positioning and mooring of drilling rigs that generally do not have dynamic positioning capabilities. As of December 31, 2023, we operated 11 large AHTS vessels.
Department of the Interior regulations, which govern crude oil and natural gas operations on federal lands and waters and impose obligations for establishing financial assurances for decommissioning activities, liabilities for pollution cleanup costs resulting from operations, and potential liabilities for pollution damages.
Department of the Interior regulations, which govern oil and gas operations on federal lands and waters and impose obligations for establishing financial assurances for decommissioning activities, liabilities for pollution cleanup costs resulting from operations, and potential liabilities for pollution damages.
The International Maritime Organization designates the waters off North America as an Emission Control Area, meaning that vessels operating in the U.S. must use fuel with a sulfur content no greater than 0.1%. Directives have been issued designed to reduce the emission of nitrogen oxides and sulfur oxides.
The IMO Organization designates the waters off North America as an Emission Control Area, meaning that vessels operating in the U.S. must use fuel with a sulfur content no greater than 0.1%. Directives have been issued designed to reduce the emission of nitrogen oxides and sulfur oxides.
Corporate Information Tidewater was founded in 1956 and is incorporated under the laws of the State of Delaware. Our worldwide headquarters and principal executive offices are located at 842 West Sam Houston Parkway North, Suite 400, Houston, Texas 77024. Available Information Tidewater maintains a website at www.tdw.com.
Corporate Information Tidewater was founded in 1956 and is incorporated under the laws of the State of Delaware. Our worldwide headquarters and principal executive offices are located at 842 West Sam Houston Parkway North, Suite 400, Houston, Texas 77024. 13 Table of Contents Available Information Tidewater maintains a website at www.tdw.com.
These vessels can work in shallow waters along the coast or on the continental shelf or in intermediate depths offshore. As of December 31, 2022, we operated 21 medium AHTS vessels. ● Large AHTS class. Generally, this vessel class includes AHTS vessels with over 16,000 BHP. These vessels primarily work in deepwater.
These vessels can work in shallow waters along the coast or on the continental shelf or in intermediate depths further offshore. As of December 31, 2023, we operated 21 medium AHTS vessels. ● Large AHTS class. Generally, this vessel class includes AHTS vessels with over 16,000 BHP. These vessels primarily work in deepwater.
We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level. We are an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.
We strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level and in every operating theater. We are an equal opportunity employer, with qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.
Although the U.S. is not a party to the MLC, U.S. flag vessels operating internationally must comply with the MLC when calling on a port in a country that is a party to the MLC.
Although the U.S. is not a party to the MLC, U.S. flagged vessels operating internationally must comply with the MLC when calling on a port in a country that is a party to the MLC.
Unless expressly noted, the information appearing on our website or any other website is not incorporated by reference into this Form 10-K and should not be considered part of this Form 10-K or any other filing Tidewater makes with the SEC. 13 FORWARD-LOOKING STATEMENTS Certain of the statements included in this Form 10-K constitute forward-looking statements within the meaning of the U.S.
Unless expressly noted, the information appearing on our website or any other website is not incorporated by reference into this Form 10-K and should not be considered part of this Form 10-K or any other filing Tidewater makes with the SEC. 14 Table of Contents FORWARD-LOOKING STATEMENTS Certain of the statements included in this Form 10-K constitute forward-looking statements within the meaning of the U.S.
Government Regulation We are subject to various United States (U.S.) federal, state and local statutes and regulations governing the ownership, operation and maintenance of vessels. Our U.S. flagged vessels are subject to the jurisdiction of the U.S. Coast Guard, the U.S. Customs and Border Protection, and the U.S. Maritime Administration.
Government Regulation We are subject to various U.S. federal, state and local statutes and regulations governing the ownership, operation and maintenance of vessels. Our U.S. flagged vessels are subject to the jurisdiction of the U.S. Coast Guard (USCG), the U.S. Customs and Border Protection, and the U.S. Maritime Administration.
We also are subject to international laws and conventions and the laws of international jurisdictions where we operate. 7 Under the citizenship provisions of the Jones Act, we would not be permitted to engage in the U.S. coastwise trade if more than 25% of our outstanding shares of common stock are owned by non-U.S.
We also are subject to international laws and conventions and the laws of international jurisdictions where we operate. Under the citizenship provisions of the Jones Act, we would not be permitted to engage in the U.S. coastwise trade if more than 25% of our outstanding shares of common stock are owned by non-U.S. Citizens (as defined by the Jones Act).
These can impact both the fuel and the engines that may be used onboard vessels. For further discussion of regulatory risks related to climate change see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.
These can impact both the fuel and the engines that may be used onboard vessels. For further discussion of regulatory risks related to climate change see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K (Form 10K).
We are not a party to any union contract in the U.S. but through several subsidiaries, we are subject to union agreements covering local nationals in several countries other than the U.S., most heavily in the North Sea with UK and Norwegian mariners. Culture and Engagement Our employees and our culture are critical to our long-term success.
We are not a party to any union contract in the U.S. but through several subsidiaries, we are subject to union agreements covering local nationals in several countries other than the U.S., most heavily in the North Sea with United Kingdom (U.K.) and Norwegian mariners. Culture and Engagement Our employees and our culture are critical to our long-term success.
As of closing, SPO and its wholly owned subsidiaries owned 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. On June 24, 2022, we amended the Share Purchase Agreement (SPA Amendment) to allow Banyan to surrender SPO Acquisition Warrants to satisfy any indemnity liabilities.
As of closing, SPO and its wholly owned subsidiaries owned 50 offshore support vessels operating primarily in West Africa, Southeast Asia and the Middle East. On June 24, 2022, we amended the SPA Agreement to allow Banyan to surrender the SPO Acquisition Warrants to satisfy indemnity liabilities.
Our services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover and production activities; offshore construction and seismic and subsea support; geotechnical survey support for windfarm construction, and a variety of other specialized services such as pipe and cable laying.
Our services include towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, production activities, field abandonment, dismantlement and restoration activities; offshore construction and seismic and subsea support; geotechnical survey support for windfarm construction, and a variety of other specialized services such as pipe and cable laying.
Our U.S. flagged AHTS vessels, PSVs and other vessels are required to undergo periodic inspections generally twice within every five-year period pursuant to U.S. Coast Guard regulations.
Our U.S. flagged AHTS vessels, PSVs and other vessels are required to undergo periodic inspections generally twice within every five-year period pursuant to USCG regulations.
Environmental Compliance During the ordinary course of business, our operations are subject to a wide variety of environmental laws and regulations that govern the discharge of oil, oil products and other pollutants into navigable waters. Violations of these laws may result in civil and criminal penalties, fines, injunctions and other sanctions.
Environmental Regulations During the ordinary course of business, our operations are subject to a wide variety of environmental laws and regulations, including without limitation, those that govern the discharge of oil, oil products and other pollutants into navigable waters. Violations of these laws may result in civil and criminal penalties, fines, injunctions and other sanctions.
Vessels registered under flags other than the United States are subject to similar regulations and are governed by the laws of the applicable international jurisdictions and the rules and requirements of various classification societies, such as the American Bureau of Shipping.
Vessels registered under other flag states are subject to similar regulations and are governed by the laws of the applicable international jurisdictions and the rules and requirements of various classification societies, such as the American Bureau of Shipping.
Governance Our Board believes the purpose of corporate governance is to maximize stockholder value in a manner consistent with legal requirements and the highest standards of integrity. The Board has adopted and adheres to corporate governance practices, which the Board and management believe promote this purpose, are sound, and represent best practices.
Governance Our Board believes the primary purpose of corporate governance is to maximize stockholder value in a manner consistent with legal requirements while operating with the highest standards of integrity. The Board has adopted and adheres to corporate governance practices, which the Board and management believe promote this purpose and represent best practices.
Our senior leadership team believes in and promotes Tidewater’s culture through our “7 Cs”: ● Capability ● Collaboration ● Commitment ● Communication ● Compassion ● Compliance ● Courage We focus on creating an environment where our colleagues feel respected, valued, and can contribute to their fullest potential.
Our senior leadership team believes in and promotes Tidewater’s culture through our “7 Cs”: ● Capability ● Collaboration ● Commitment ● Communication ● Compassion ● Compliance ● Courage We strive to create an environment where our colleagues feel respected, valued, and can contribute to their fullest potential.
Environment Energy Transition Climate change concerns have precipitated a call from governments and other entities to transition from fossil fuels for energy production and power transportation. The primary offender in climate change is considered to be carbon emissions.
Environment Climate change concerns have precipitated a call from governments and other entities to transition away from fossil fuels for energy production and power transportation. The primary driver of climate change is considered to be carbon emissions.
In addition, once a U.S. built vessel is registered under a non-U.S. flag, it cannot thereafter engage in U.S. coastwise trade. Therefore, our non-U.S. flagged vessels must operate outside of the U.S. coastwise trade zone.
U.S. law requires that vessels engaged in the U.S. coastwise trade must be built in the U.S. and registered under U.S. flag. In addition, once a U.S. built vessel is registered under a non-U.S. flag, it cannot thereafter engage in U.S. coastwise trade. Therefore, our non-U.S. flagged vessels must operate outside of the U.S. coastwise trade zone.
Generally, this vessel class includes AHTS vessels that have up to 8,000 brake horsepower (BHP). These vessels typically work in shallow waters along the coast or on the continental shelf. As of December 31, 2022, we operated 25 small AHTS vessels. ● Medium AHTS class. Generally, this vessel class includes AHTS vessels that have between 8,000 and 16,000 BHP.
These vessels typically work in shallow waters along the coast or on the continental shelf. As of December 31, 2023, we operated 22 small AHTS vessels. ● Medium AHTS class. Generally, this vessel class includes AHTS vessels that have between 8,000 and 16,000 BHP.
In the Americas region, we benefit from cabotage which includes rules and restrictions promulgated thereunder by the Merchant Marine Act of 1920 and the Shipping Act, 1916, as amended (collectively, the Jones Act), which limit vessels that can operate in the GOM and other offshore regions within U.S. territorial waters, to those owned by companies that qualify as U.S. citizens.
For example, in the Americas region, we benefit from the rules and restrictions promulgated thereunder by the Merchant Marine Act of 1920 and the Shipping Act, 1916, as amended (collectively, the Jones Act), which limits vessels that can operate in the United States (U.S.) Gulf Of Mexico (GOM) and other offshore regions within U.S. territorial waters to those owned by companies that qualify as U.S. citizens.
Our Director of Health, Safety, Environment and Security (HSE) Management is involved in numerous proactive efforts to prevent accidents and injuries from occurring. The HSE Director also reviews all incidents that occur, focusing on lessons that can be learned from such incidents and opportunities to incorporate such lessons into our on-going safety-related training.
Our Health, Safety, Environment and Security (HSE) organization is involved in numerous proactive efforts to prevent accidents and injuries from occurring, and reviews, with our senior leaders all incidents that occur, focusing on lessons that can be learned from such incidents and opportunities to incorporate such lessons into our on-going safety-related training.
We manage our operations through the following five geographically aligned reporting segments: ● Americas ● Asia Pacific ● Middle East ● Europe/Mediterranean ● West Africa Each reporting segment is managed by a senior executive who reports directly to our Chief Executive Officer, the chief operating decision maker. Our vessels routinely move between geographic regions.
We manage our operations through the following five geographically aligned reporting segments: ● Americas ● Asia Pacific ● Middle East ● Europe/Mediterranean ● West Africa Each reporting segment is overseen by a managing director, who is a senior company executive reporting directly to our Chief Executive Officer, the chief operating decision maker.
Many of our PSVs also have oil recovery, firefighting, standby rescue and/or other specialized equipment. As of December 31, 2022, we operated 104 PSVs throughout our service regions. ● Large PSVs. Generally, this vessel class includes PSVs that have greater than 900 square meters of deck space. As of December 31, 2022, we operated 43 large PSVs. ● Medium PSVs.
Many of our PSVs also have oil recovery, firefighting, standby rescue and/or other specialized equipment. The Solstad Acquisition added 37 PSVs to our fleet. As of December 31, 2023, we operated 141 PSVs throughout our service regions. ● Large PSVs. Generally, this vessel class includes PSVs that have greater than 900 square meters of deck space.
Our principal customers include large, international integrated and independent oil and natural gas exploration, field development and production companies (IOCs); mid-sized and smaller independent exploration and production (E&P) companies; foreign government-owned or government-controlled organizations that explore for, develop and produce oil and natural gas (NOCs); offshore drilling contractors; and other companies that provide various services to the offshore energy industry, including, among other things, offshore construction companies, windfarm development companies, diving companies and well stimulation companies. 4 Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet.
Our principal customers include large, international integrated and independent oil and gas exploration, field development and production companies (IOCs); mid-sized and smaller independent exploration and production (E&P) companies; foreign government-owned or government-controlled organizations that explore for, develop and produce oil and gas (NOCs); offshore drilling contractors; and other companies that provide various services to the offshore energy industry, including, among other things, offshore construction companies, windfarm development companies, diving companies and well stimulation companies.
We maintain certification of our vessels to MLC requirements, perform maintenance and repairs at shipyards, and make port calls during ocean voyages in accordance with the MLC based on the dates of enforcement by countries in which we operate.
Since its initial entry into force on August 20, 2013, 90 countries have ratified the MLC. We maintain certification of our vessels to MLC requirements, perform maintenance and repairs at shipyards, and make port calls during ocean voyages in accordance with the MLC based on the dates of enforcement by countries in which we operate.
Revenues are derived primarily from vessel time charter or similar contracts ranging in duration from a few months to several years, and to a lesser extent, from vessel time charter contracts on a “spot” basis, which are short-term agreements ranging from one day to several months where we provide offshore marine services to customers for specific short-term jobs.
To a lesser extent, we derive revenue from vessel time charter contracts on a “spot” basis, which are short-term agreements ranging from one day to several months where we provide offshore marine services to customers for specific short-term jobs.
We have not experienced a loss in excess of insurance policy limits; however, there is no assurance that our liability coverage will be adequate to cover claims that may arise.
We believe that our insurance coverage is adequate. To date, we have not experienced an insured loss in excess of our policy limits; however, we cannot provide any assurance that our liability coverage will be adequate to cover claims that may arise.
The Offerings resulted in net proceeds (after expenses) of approximately $187.8 million that we used to redeem 8,035,914 SPO Acquisition Warrants, which we subsequently cancelled. As a result, no SPO Acquisition Warrants remained outstanding as of December 31, 2022. Vessel Classifications Our primary vessel classifications include Anchor Handling Towing Supply Vessels (AHTS) and Platform Supply Vessels (PSVs).
The Offerings resulted in net proceeds (after expenses) of approximately $187.8 million that we used to redeem 8,035,914 SPO Acquisition Warrants, which we subsequently cancelled. As a result, no SPO Acquisition Warrants remained outstanding as of December 31, 2022.
The principal competitive factors for the offshore support vessel service industry are the quality, suitability and technical capabilities of vessels, the availability of vessels and related equipment, the price and quality of service, and the legal ability to provide the service in the applicable region.
The principal competitive factors for the OSV service industry include (i) the quality, suitability and technical capabilities of vessels; (ii) the availability of vessels and related equipment; (iii) the price and quality of service; and (iv) the legal ability to provide the service in the applicable region.
We conduct our business through domestic and international subsidiaries, as well as through joint ventures that we may or may not control (generally where required to satisfy local ownership or local content requirements).
Our vessels routinely move between geographic regions as our customers complete projects and new projects arise. We conduct our business through domestic and international subsidiaries, as well as through joint ventures that we may or may not control (generally where required to satisfy local ownership or local content requirements).
Social and Human Capital Management Employees and Labor Relations As of December 31, 2022, we employed approximately 6,300 employees worldwide with over 90% of our fleet operating internationally in more than 30 countries.
Social and Human Capital Management Employees and Labor Relations As of December 31, 2023, we had a global workforce of approximately 7,300 individuals worldwide with over 90% of our workforce operating internationally in more than 30 countries.
With a wide range of power, sizes and capacities, these vessels are also well-suited for general offshore support services, drilling rig support functions and cargo transport assignments. 5 As of December 31, 2022, we operated 57 AHTS vessels throughout our service regions. ● Small AHTS class.
With a wide range of power, sizes and capacities, these vessels are also well-suited for general offshore support services, drilling rig support functions and cargo transport assignments. As of December 31, 2023, we operated 54 AHTS vessels throughout our service regions. ● Small AHTS class. Generally, this vessel class includes AHTS vessels that have up to 8,000 brake horsepower (BHP).
International Labour Organization’s Maritime Labour Convention The International Labour Organization's Maritime Labour Convention, 2006 (the MLC) mandates globally, among other things, seafarer living and working conditions (accommodations, wages, conditions of employment, health and other benefits) aboard ships that are engaged in commercial activities. Since its initial entry into force on August 20, 2013, 90 countries have ratified the MLC.
Regulatory and Compliance International Labour Organization’s Maritime Labour Convention The International Labour Organization's Maritime Labour Convention, 2006 (MLC) mandates globally, among other things, seafarer living and working conditions (accommodations, wages, conditions of employment, health and other benefits) aboard ships that are engaged in commercial activities.
Of the total 191 vessels (which includes eight vessels held for sale) that we owned or operated at December 31, 2022, 180 vessels were registered under flags other than the United States and 11 were registered under the U.S. flag. All our offshore vessels are subject to either United States or international safety and classification standards or sometimes both.
Of the total 217 vessels that we owned at December 31, 2023, 208 vessels were registered under flags other than the U. S. and nine were registered under the U.S. flag. All our offshore vessels are subject to either U.S. or international safety and classification standards or sometimes both.
Our customers’ business activity, in turn, is largely dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves.
Our customers’ offshore business activity, in turn, is largely 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 both onshore and offshore. 4 Table of Contents Depending on vessel capabilities and availability, our vessels operate in the shallow, intermediate and deepwater offshore markets.
In April 2021, we published our inaugural sustainability report (Sustainability Report) for the year ended December 31, 2020, which included disclosures in accordance with the Taskforce on Climate-Related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI) reporting standards, and the Sustainability Accounting Standards Board (SASB) Marine Transportation standards.
In March 2023, we published our latest sustainability report (Sustainability Report) for the year ended December 31, 2022, which can be found on our website at www.tdw.com and includes disclosures in accordance with the Taskforce on Climate-Related Financial Disclosures (TCFD), the 2021 Global Reporting Initiative (GRI) reporting standards, and the 2018 Sustainability Accounting Standards Board (SASB) for Marine Transportation.
For the year ended December 31, 2022, our five largest customers accounted for approximately 35.8%, while our ten largest customers accounted for approximately 51.2% of our total revenues. 6 The following table discloses our customers that accounted for 10% or more of total revenues: Years Ended December 31, December 31, December 31, 2022 2021 2020 Chevron Corporation 12.3 % 15.7 % 14.3 % Saudi Aramco * 11.8 % 11.5 % * Less than 10% of total revenues.
The following table discloses our customers that accounted for 10% or more of total revenues: Years Ended December 31, December 31, December 31, 2023 2022 2021 Eni S.p.A 10.3 % * * Chevron Corporation * 12.3 % 15.7 % Saudi Aramco * * 11.8 % * Less than 10% of total revenues.
Based on the latest information available to us, less than 24% of our outstanding common stock was owned by non-U.S. Citizens as of December 31, 2022. Our vessel operations in the GOM are considered coastwise trade. U.S. law requires that vessels engaged in the U.S. coastwise trade must be built in the U.S. and registered under U.S. flag.
Based on the latest information available to us, we believe less than 24% of our outstanding common stock was owned by non-U.S. Citizens as of December 31, 2023. 8 Table of Contents Our vessel operations in the GOM are considered coastwise trade.
Under the indemnification provisions of the Share Purchase Agreement (SPA) and the SPA Amendment, Banyan requested that we allow them to settle approximately $1.4 million in indemnified liabilities by surrendering the equivalent value in SPO Acquisition Warrants.
Under the indemnification provisions of the amended SPA Agreement, Banyan requested that we allow them to settle approximately $1.4 million in indemnified liabilities by surrendering the equivalent value in SPO Acquisition Warrants. We granted Banyan’s request, and during 2022, settled the agreed upon indemnification liabilities in exchange for the surrender of 64,086 SPO Acquisition Warrants that we subsequently cancelled.
In addition, our website includes the company’s Corporate Governance Guidelines, Code of Ethics and Business Conduct, and additional policies as well as the charters of the audit, compensation and other standing committees of the Board of Directors.
In addition, you can access via our website Tidewater’s governing formation documents, Corporate Governance Guidelines, Code of Ethics and Business Conduct, charters of the standing committees of the Board, as well as other governing policies.
The base rate of hire for a term contract is generally a fixed rate, though some charter arrangements allow us to recover specific additional costs.
The base rate of hire for a term contract is generally a fixed rate, though some longer-term contracts have rate escalation clauses. In addition, many charter arrangements allow us to recover specific limited additional costs, such as fuel expenses, while on hire.
Management communicates frequently with company personnel to promote safety and instill safe work habits using company media directed at, and regular training of, both our mariners and shore-based personnel. We dedicate personnel and resources to ensure safe operations and regulatory compliance.
In addition, our leaders communicate frequently with company personnel to promote safety and instill safe work habits using company media directed at, and regular training of, both our seamen and shore-based personnel.
We have numerous competitors in all areas in which we operate, and our ability to compete in the 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.
We have numerous competitors in all areas in which we operate, and our ability to compete in the 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. 7 Table of Contents Our diverse, mobile asset base and the wide geographic distribution of our assets generally enable us to respond relatively quickly to changes in market conditions and to provide a broad range of vessel services to customers around the world.
Also, in certain foreign countries, preferences given to vessels owned by local companies may be mandated by local law or by national oil companies. We have attempted to mitigate such preferences through affiliations with local companies.
At the same time, in certain foreign countries, we encounter preferences given to vessels owned by local companies that may be mandated by local law or by national oil companies, which we generally attempt to mitigate through affiliations with local companies or other legal alternatives.
Our chief operating officer, who also serves as our chief human resource officer (CHRO), has primary responsibility for our human capital management strategy, including attracting, developing, engaging and retaining those talented employees. The CHRO is also responsible for the design of employee compensation and benefits programs in addition to promoting diversity and inclusion throughout the company.
Our chief operating officer, who also serves as our chief human resource officer (CHRO), has primary responsibility for our human capital management strategy, including attracting, developing, engaging and retaining talented employees.
Our Board, along with the ESG Committee, monitors and provides oversight over our ESG policies, programs, and practices regarding corporate responsibility and sustainability and plays an active role in overseeing our human capital management efforts. Our Compensation Committee provides oversight of our social strategy, executive compensation and benefits, policies, programs, and initiatives.
Our Board, along with the Safety & Sustainability Committee, monitors and provides oversight over our ESG policies, programs and practices regarding corporate responsibility and sustainability. Our Compensation & Human Capital Committee oversees our human capital management efforts, such as diversity, equity and inclusion initiatives, and our employee compensation and benefits policies and programs.
We expect the tugs to be completed in 2023 and the crew boats to be completed in 2024. Customers and Contracting Demand for our services depends substantially on our customers’ strategy and allocation of capital spending related to offshore exploration, development and production of oil and gas reserves.
As of December 31, 2023, we operated 22 vessels classified as other. Customers and Contracting Demand for our services depends substantially on our customers’ strategies and allocation of capital spending related to offshore exploration, development and production of oil and gas reserves.
The Board periodically reviews these governance practices, applicable law, the rules and listing standards of the NYSE and SEC regulations, as well as best practices suggested by recognized governance authorities. We are committed to transparently reporting on ESG factors that may be relevant to us.
The Board periodically reviews these governance practices, applicable law, the rules and listing standards of the New York Stock Exchange (NYSE) and SEC regulations, as well as best practices suggested by recognized governance authorities.
We currently maintain war risk coverage on our entire fleet. We seek to secure appropriate insurance coverage at competitive rates. We carefully monitor claims and actively participate in claims estimates and adjustments. We believe that our insurance coverage is adequate.
The resulting economic, political and social uncertainties, including the potential for future terrorist acts and war, could cause the premiums charged for our insurance coverage to increase. We currently maintain war risk coverage on our entire fleet. We seek to secure appropriate insurance coverage at competitive rates. We carefully monitor claims and actively participate in claims estimates and adjustments.
However, demand for offshore marine vessels typically increases in the GOM in connection with repair and remediation work that follows any hurricane damage to offshore oil and gas infrastructure. Our vessels that operate offshore in India, other areas in Southeast Asia and the Western Pacific are impacted by the monsoon season, which occurs across the region from November to April.
However, demand for offshore marine vessels typically increases in the GOM in connection with repair and remediation work that follows any hurricane damage to offshore oil and gas infrastructure.
Further acts of terrorism may be directed against the U.S. domestically or abroad, and such acts of terrorism could be directed against properties and personnel of U.S. headquartered companies such as ours. The resulting economic, political and social uncertainties, including the potential for future terrorist acts and war, could cause the premiums charged for the insurance coverage to increase.
Further acts of terrorism may be directed against the U.S. or U.S. citizens domestically or abroad, and such acts of terrorism could be directed against properties and personnel of U.S. headquartered companies such as ours.
Generally, this vessel class includes PSVs that have between 500 and 900 square meters of deck space. As of December 31, 2022, we operated 61 medium PSVs. Other Vessels Our other vessels class includes crew boats, utility vessels and offshore tugs.
The Solstad Acquisition added 28 Large PSVs to our fleet. As of December 31, 2023, we operated 69 Large PSVs. ● Medium PSVs. Generally, this vessel class includes PSVs that have between 500 and 900 square meters of deck space. The Solstad Acquisition added nine Medium PSVs to our fleet.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePrior downturns in the oil and gas industry have resulted in lower expenditures by our customers and reduced demand for our services, which has in the past had, and may in the future have, a material adverse effect on our financial condition, results of operations and cash flows. ● Factors associated with global climate change, including evolving and increasing regulations, increasing global concern and stakeholder scrutiny about climate change, and increasing frequency and/or severity of adverse weather conditions could adversely affect our business, reputation, results of operations and financial position. ● Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows. ● In connection with implementing our business strategy, we face risks associated with identifying acquisition targets, integrating any acquisitions or mergers and growing the business from the acquisition. ● We derive a significant amount of revenue from a relatively small number of 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. ● The rise in production of unconventional crude oil and natural gas resources could increase supply without a commensurate growth in demand which would negatively impact oil and natural gas prices. ● Maintaining our current fleet and acquiring vessels required for additional future growth require significant capital. ● We may not be able to renew or replace expiring contracts for our vessels. ● 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 additional losses or impairment charges related to our vessels. ● We may not be able to sell vessels to improve our cash flow and liquidity 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.
Biggest changeDownturns 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. ● Factors associated with global climate change, including evolving and increasing regulations, increasing global concern and stakeholder scrutiny about climate change, and increasing frequency and/or severity of adverse weather events or conditions could adversely affect our business, reputation, results of operations and financial position. ● Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows. ● In connection with implementing our business strategy, we face risks associated with identifying acquisition targets, integrating any acquisitions or mergers and growing the business from the acquisition. ● 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. ● The rise in production of unconventional oil and gas resources could increase supply without a commensurate growth in demand which could negatively impact oil and gas prices. ● Maintaining our current fleet and acquiring vessels required for additional future growth require significant capital. ● We may not be able to renew or replace expiring contracts for our vessels. ● 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 additional losses or impairment charges related to our vessels. ● We may not be able to sell vessels to improve our cash flow and liquidity 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. 16 Table of Contents Risks Relating to Our International and Foreign Operations ● We operate throughout the world and are exposed to risks inherent in doing business in countries other than the U.S., including risks associated with foreign corrupt practices laws, acts of piracy, war, terrorist attacks and international hostilities. ● Global or regional public health crises and other catastrophic events could reduce economic activity resulting in lower commodity prices and could affect our crew rotations and entry into ports. ● We may have disruptions or disagreements with our foreign joint venture partners, which could lead to an unwinding of the joint venture. ● Our international operations expose us to currency devaluation and fluctuation risk.
Any of these factors, in whole or in part, could materially and adversely affect our business, prospects, financial condition, results of operations, stock price and cash flows. These could also be affected by additional factors that apply to all companies generally which are not specifically mentioned below.
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.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
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 natural 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 natural 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 oil and natural gas producing countries, including the impact of armed hostilities involving one or more oil and gas producing nations; ● 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.
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.
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; 24 ● 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 disadvantage against less leveraged competitors.
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 disadvantage against less leveraged competitors.
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. 29 Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control.
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. Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control.
War or risk of war or any such attack, such as the current conflict in the Ukraine, 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 natural gas exploration, development and production and the demand for our services.
War or risk of war or any such attack, such as the current conflict in the Ukraine, 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.
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, natural gas and power industries and restrict their future growth.
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.
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 natural gas prices and a more generalized concern about the overall future prospects of the industry.
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.
We operate in the U.S. and globally through various subsidiaries which 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 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.
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 where the decline of the oil and natural gas market significantly impacted our operations and overall effective tax rate.
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 where the decline of the oil and gas market significantly impacted our operations and overall effective tax rate.
Any changes in laws, regulations or standards imposing additional requirements or restrictions, or any violation of such laws, regulations or standards, could adversely affect our financial condition, results of operations or cash flows. Changes in U.S. and international tax laws and policies could adversely affect our financial results.
Any changes in laws, regulations or standards imposing additional requirements or restrictions, or any violation of such laws, regulations or standards, could adversely affect our financial condition, results of operations or cash flows. Changes and developments in U.S. and international tax laws and policies could adversely affect our financial results.
These provisions provide for, among other things: ● the ability of our Board of Directors 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 of Directors; ● 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.
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; 32 Table of Contents ● 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.
A prolonged period of low crude oil and natural 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. Maintaining our current fleet size and configuration and acquiring vessels required for additional future growth requires significant capital.
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. Maintaining our current fleet size and configuration and acquiring vessels required for additional future growth requires significant capital.
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. GOM employees.
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 GOM employees.
Our Amended and Restated Certificate of Incorporation permits our Board of Directors to issue preferred stock, which could have rights and preferences senior to those of our common stock.
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.
Our Amended and Restated Certificate of Incorporation permits our Board of Directors to issue preferred stock which could have rights and preferences senior to those of our common stock.
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.
Any actual or anticipated declines in oil and gas prices have 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.
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.
Our Amended and Restated Certificate of Incorporation and Second Amended and Restated By-Laws authorize our Board of Directors to establish rules, policies and procedures, including procedures with respect to the transfer of shares, to ensure compliance with the Jones Act. 28 To provide a reasonable margin for compliance with the Jones Act, our Board of Directors has determined that, all non-U.S.
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.
Summary of Risk Factors Below is a summary of some of the principal risks and uncertainties that could materially adversely affect our business, financial condition, and results of operations. You should read this summary together with the more detailed description of each risk factor contained below.
Summary of Risk Factors 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.
A delisting of our common stock, Series A Warrants, Series B Warrants, or GLF Equity Warrants may materially impair our stockholders’ and warrant holders’ ability to buy and sell our common stock, Series A Warrants, Series B Warrants, or GLF Equity Warrants and could have an adverse effect on the market price of, and the efficiency of, the trading market for these securities.
A delisting of our common stock or GLF Equity Warrants may materially impair our stockholders’ and warrant holders’ ability to buy and sell our common stock or GLF Equity Warrants and could have an adverse effect on the market price of, and the efficiency of, the trading market for these securities.
Fundamentally, the crude oil and natural 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.
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.
In addition, valuations supporting our acquisitions and strategic investments could change rapidly given the global economic climate. 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, or that they will be achieved in our estimated timeframe.
In addition, valuations supporting our acquisitions and strategic investments could change rapidly with changes in the global economic climate. 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, or that they will be achieved in our estimated timeframe.
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.
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. 26 Table of Contents Risks Related to Our Indebtedness We may not be able to generate sufficient cash flow to meet our debt service and other obligations.
Risks Relating to Information Technology and Cybersecurity ● Cybersecurity attacks on any of our facilities, or those of third parties, may result in potential liability or reputational damage or otherwise adversely affect our business. Risks Relating to Our Securities ● Our common stock is subject to restriction on foreign ownership by non-U.S.
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. Risks Relating to Our Securities ● Our common stock is subject to restrictions on foreign ownership by non-U.S.
Prolonged increases in the worldwide supply of crude oil and natural gas, whether from conventional or unconventional sources, without a commensurate growth in demand for crude oil and natural gas may depress crude oil and natural gas prices.
Prolonged increases in the worldwide supply of oil and gas, whether from conventional or unconventional sources, without a commensurate growth in demand for oil and gas may depress oil and gas prices.
As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.
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. Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.
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.
General Risk Factors 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.
We have substantial operations in Brazil, Mexico, Guyana, the North Sea (including United Kingdom (U.K.) and Norway), Southeast Asia, Saudi Arabia, Egypt, Angola and throughout the west coast of Africa, which generate a large portion of our revenue.
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.
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. The market price of our securities is subject to volatility.
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. 31 Table of Contents The market price of our securities is subject to volatility.
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.
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.
The Board of Directors 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 by us to our stockholders, and such other factors as the Board of Directors may deem relevant.
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.
These effects have had, and may in the future have, a material adverse effect on our financial condition, results of operations and cash flows.
These effects have had, and in the future may have, material adverse effects on our financial condition, results of operations and cash flows.
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.
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. 22 Table of Contents W e may not be able to renew or replace expiring contracts for our vessels.
However, at this time, we are unable to determine the extent to which climate change may lead to increased weather hazards affecting our operations. 18 Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
However, at this time, we are unable to determine the extent to which climate change may lead to increased weather hazards affecting our operations. 20 Table of Contents Failure to effectively and timely address the energy transition could adversely affect our business, results of operations and cash flows.
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 during the period they are out of service.
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.
In addition, the restrictions contained in the Bond Terms and the Credit Facility Agreement, including a substantial make whole premium applicable to a voluntary prepayment of obligations under the Bond Terms, 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 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.
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 criminal penalties 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.
Any failure to comply with the FCPA or other anti-bribery legislation could subject us to civil and criminal penalties 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.
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.
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.
However, any long-term material adverse effect on the crude oil and natural gas industry may adversely affect our financial condition, results of operations and cash flows. Risks Related to Information Technology and Cybersecurity Cybersecurity attacks on any of our facilities, or those of third parties, may result in potential liability or reputational damage or otherwise adversely affect our business.
However, any long-term material adverse effect on the oil and gas industry may adversely affect our financial condition, results of operations and cash flows. 30 Table of Contents 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.
There may be a limited trading market for our New Creditor Warrants and GLF Creditor Warrants. ● You may have difficulty trading and obtaining quotations for New Creditor Warrants and GLF Creditor Warrants. ● The exercise price of our Series A Warrants, Series B Warrants and GLF Equity Warrants may never be greater than our stock price (be in the money), and unexercised warrants may expire with limited or no value.
There may be a limited trading market for our New Creditor Warrants and GLF Creditor Warrants. ● You may have difficulty trading and obtaining quotations for New Creditor Warrants and GLF Creditor Warrants. ● Our stock price may never exceed the exercise price of our GLF Equity Warrants (be in the money), and unexercised warrants may expire with limited or no value.
Risks Relating to Our Indebtedness ● We may not be able to generate sufficient cash flow to meet our debt service and other obligations. ● Restrictive debt covenants may restrict our ability to raise capital and pursue our business strategies. ● The amount of our debt could have significant consequences for our operations and future prospects. ● We may not be able to obtain debt financing if and when needed with favorable terms, if at all.
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. ● The amount of our debt could have significant consequences for our operations and future prospects. ● We may not be able to obtain debt financing if and when needed with favorable terms, if at all.
We may not be able to sell vessels to improve our cash flow and liquidity 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. We may seek to sell some of our vessels to provide liquidity and improve our cash flow.
We may not be able to sell vessels to improve our cash flow and liquidity 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.
Prior downturns in the oil and gas industry have resulted in lower expenditures by our customers and reduced demand for our services, which has in the past had, and may in the future have, a material adverse effect on our financial condition, results of operations and cash flows.
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.
Additionally, shares of common stock were reserved for issuance under the 2021 Stock Incentive Plan, 2017 Stock Incentive Plan and Legacy GulfMark Stock Incentive Plan, respectively, as equity-based awards to employees, directors and certain other persons.
Additionally, shares of our common stock have been reserved for issuance under our 2021 Stock Incentive Plan, 2017 Stock Incentive Plan and Legacy GulfMark Stock Incentive Plan, respectively, as equity-based awards to employees, directors and certain other persons.
Lastly, new laws and regulations related to climate change discussed below 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, which would require significant additional capital expenditures.
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.
There may not be sufficient activity in the market to sell our vessels, and we may not be able to identify buyers with access to financing or to complete any such sales.
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.
We operate in many parts of the world where governmental corruption is present and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices and impact our business. There may be changes to complex and developing laws and regulations to which we are subject that would increase our cost of compliance and operational risk.
We operate in many parts of the world where governmental corruption is present and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices and impact our business. Changes to applicable laws or regulations, including any developing laws and regulations, to which we are subject may increase our cost of compliance and operational risk.
If a default occurs and is continuing, the secured parties and the lenders under the Bond Terms and Credit Facility Agreement may elect to declare all borrowings thereunder outstanding, together with accrued interest and other fees, to be immediately due and payable.
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 Bond Terms and Credit Facility Agreement will also have the right to foreclose on the collateral pledged to them, including the vessels, to secure the indebtedness.
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.
The terms for our 8.50% Senior Secured Bonds due in 2026 (the Bond Terms) and the Super Senior Revolving Credit Facility Agreement with DNB Bank ASA, New York Branch, as Facility Agent, Nordic Trustee AS, as Security Trustee, and certain other institutions (the Credit Facility Agreement) contain certain restrictive covenants.
The terms for our 8.50% Senior Secured Bonds due in 2026, the Senior Secured Term Loan, 10.375% Senior Unsecured Notes due July 2028 and the Super Senior Revolving Credit Facility Agreement due in 2026 with DNB Bank ASA, New York Branch, as Facility Agent, Nordic Trustee AS, as Security Trustee, and certain other institutions (the Credit Facility Agreement) contain certain restrictive covenants.
In locations in which we are required to do so, we have union workers subject to collective bargaining agreements, which are subject to periodic negotiation. These negotiations could result in higher personnel expenses, other increased costs, or increased operational restrictions.
We may be subject to additional unionization efforts, new collective bargaining agreements or work stoppages. In locations in which we are required to do so, we have union workers subject to collective bargaining agreements, which are subject to periodic negotiation. These negotiations could result in higher personnel expenses, other increased costs, or increased operational restrictions.
The increased number of employees relying on remote access to our information systems due to the COVID-19 pandemic increases our exposure to potential cybersecurity breaches. Third-party systems on which we rely could also suffer such attacks or operational system failures.
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. Third-party systems on which we rely could also suffer such attacks or operational system failures.
Failure to manage these acquisition and business integration risks could materially and adversely affect our business, results of operations and financial condition. We derive a significant amount of revenue from a relatively small number of customers.
Failure to manage these acquisition and business integration risks could materially and adversely affect our business, results of operations and financial condition. 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.
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 Bond Terms and the Credit Facility Agreement.
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.
Any future determination to pay cash dividends or other distributions on our common stock will be at the sole discretion of our Board of Directors, subject to any restrictions in our financing agreements and, if we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends thereafter at any time.
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 and, 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.
These investors may be seeking enhanced ESG disclosures or may implement policies that discourage investment in the hydrocarbon industry. Organizations that provide information to institutional and retail investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
These investors may seek enhanced ESG disclosures or implement policies that discourage investment in the hydrocarbon industry. Organizations that provide information to institutional and retail investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Bribery Act the United Nations Convention Against Corruption 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.
The FCPA and similar anti-bribery laws in other jurisdictions, including the U.K. Bribery Act the United Nations Convention Against Corruption 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.
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. 31 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.
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, 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. 32 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
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.
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.
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. 27 Table of Contents We may not be able to obtain debt or equity financing if and when needed with favorable terms, if at all.
During 2022, EU member states reached an agreement to implement a 15% global minimum tax following the OECD’s Pillar Two model rules. Other tax jurisdictions in which we operate have indicated they will also adopt laws that align with these proposed guidelines. As these and other tax laws and related regulations change, our financial results could be materially impacted.
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. Several other tax jurisdictions in which we operate have indicated they will also adopt laws that align with these proposed guidelines.
In those circumstances, the amount of backlog could be reduced and the conversion of backlog into revenue could be impaired. 20 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.
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.
As long as our stock price is below the strike price of each of the Series A Warrants, Series B Warrants and GLF Equity Warrants ($57.06 per share for Series A Warrants, $62.28 per share for Series B Warrants and $100.00 per share for the GLF Equity Warrants), these warrants will have limited economic value, and they may expire with limited or no value.
As long as our stock price is below the $100 per share strike price of the GLF Equity Warrants, these warrants will have limited economic value, and they may expire with limited or no value.
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. 22 We may have disruptions or disagreements with our foreign joint venture partners, which could lead to an unwinding of the joint venture.
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.
The market price of our common stock could be subject to wide fluctuations in response to, and the level of trading that develops with our common stock may be affected by, numerous factors beyond our control such as, our limited trading history subsequent to our emergence from bankruptcy, the fact that on occasion our securities may be thinly traded, the lack of comparable historical financial information due to our adoption of fresh start accounting, 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.
The market price of our common stock could be subject to wide fluctuations in response to, 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.
The rise in production of unconventional crude oil and natural gas resources in North America, and the commissioning of several new large Liquefied Natural Gas (LNG) export facilities around the world have in the past and could in the future result to an over-supplied natural gas market.
The rise in production of unconventional oil and gas resources in North America, and the commissioning of several new large Liquefied Natural Gas (LNG) export facilities around the world have in the past and could in the future result in an over-supplied gas market. Production from unconventional resources has increased as drilling efficiencies have improved, lowering the costs of extraction.
Some of these events could be the result of (or exacerbated by) mechanical failure or navigation or operational errors. 21 These hazards could result in personal injury and loss of life, severe damage 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.
These hazards could result in personal injury and loss of life, severe damage 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.
General Risks Factors ● The COVID-19 pandemic and resulting adverse economic conditions have had, and may continue to have, a material adverse effect on our financial condition, results of operations and cash flows. ● Uncertain economic conditions may lead our customers to postpone capital spending or jeopardize our customers’ or other counterparties’ ability to perform their obligations. ● Severe weather events, including extreme weather conditions associated with climate change, have in the past and may in the future adversely affect our operations and financial results. ● Activist stockholders could divert the attention of our management team and/or negatively affect our business . 16 Table of Contents 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.
General Risks Factors ● Uncertain economic conditions may lead our customers to postpone capital spending or jeopardize our customers’ or other counterparties’ ability to perform their obligations. ● Severe weather events, including extreme weather conditions associated with climate change, have in the past and may in the future adversely affect our operations and financial results. 18 Table of Contents 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.
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.
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.
Citizen stockholders. ● The market price of our securities is subject to volatility. ● Because we currently have no plans to pay cash dividends or other distributions on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it. ● Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements. ● Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control. ● The exercise of outstanding warrants or the issuance of stock-based awards may dilute our common stock.
As a result, you may not receive a return on investment unless you sell your common stock for a price greater than that which you paid for it. ● Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements. ● Certain provisions and limitations on foreign ownership in our organizational documents could delay or prevent a change of control. 17 Table of Contents ● The exercise of outstanding warrants or the issuance of stock-based awards may dilute our common stock.
In addition, the transition of the global energy sector from primarily a fossil fuel-based system to include more renewable energy sources could affect our customers’ levels of expenditures.
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.
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 monitor the currency exchange risks associated with all contracts not denominated in U.S. dollars.
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.
Our business has been, and in the future will be, affected by severe weather events in areas where we operate, which could materially affect our operations and financial results.
Severe weather events, including extreme weather conditions associated with climate change, have in the past and may in the future adversely affect our operations and financial results. Our business has been, and in the future will be, affected by severe weather events in areas where we operate, which could materially affect our operations and financial results.
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.
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.
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. 26 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.
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.
Further, the terms of such warrants may be amended. ● We may not be able to maintain a listing of our common stock, Series A Warrants, Series B Warrants and GLF Equity Warrants on the NYSE or NYSE American.
Further, the terms of such warrants may be amended. ● We may not be able to maintain a listing of our common stock on the NYSE or our GLF Equity Warrants on the NYSE American. ● Activist stockholders could divert the attention of our management team and/or negatively affect our business .
We may not be able to maintain a listing of our common stock, Series A Warrants, Series B Warrants and GLF Equity Warrants on the NYSE or NYSE American . We must meet certain financial and liquidity criteria to maintain the listing of our securities on the NYSE or NYSE American, as applicable.
We must meet certain financial and liquidity criteria to maintain the listing of our common stock on the NYSE and our GLF Equity Warrants on the NYSE American. If we fail to meet any of the applicable listing standards, our common stock or GLF Equity Warrants may be delisted.
Compliance with such laws and regulations may require installation of costly equipment, increased manning or operational changes. Some environmental laws may, in certain circumstances, impose strict liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault.
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.
If any tax authority successfully challenges 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.
If any tax authority successfully challenges 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. 29 Table of Contents Changes in environmental regulations, including climate change and greenhouse gas restrictions, and evolving environmental expectations may reduce demand for hydrocarbons, increase our compliance costs, harm our reputation and adversely affect our financial results.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS See the relevant portions of “Note (12) - Commitments and Contingencies”, in the accompanying Consolidated Financial Statements for information with respect to this Item 3. Legal Proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS See the relevant portions of “Note (12) - Commitments and Contingencies”, in the accompanying Consolidated Financial Statements for information with respect to this Item 3. Legal Proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndexed returns December 31, December 31, December 31, December 31, December 31, December 31, Company name/Index 2017 2018 2019 2020 2021 2022 Tidewater Inc. 100 78 79 35 44 151 Russell 2000 100 89 112 134 154 122 PHLX Oil Service sector 100 55 54 32 38 62 Dow Jones U.S.
Biggest changeIndexed returns December 31, December 31, December 31, December 31, December 31, December 31, Company name/Index 2018 2019 2020 2021 2022 2023 Tidewater Inc. 100 101 45 56 193 377 Russell 2000 100 126 151 173 138 161 PHLX Oil Service sector 100 99 58 70 112 114 Dow Jones U.S.
The analysis assumes the investment of $100 on December 31, 2017 in Tidewater common stock, and in each of the Russell 2000, the PHLX Oil Service Sector and the US Oil Equipment & Services, as well as the reinvestment of dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year.
The analysis assumes the investment of $100 on December 31, 2018 in Tidewater common stock, and in each of the Russell 2000, the PHLX Oil Service Sector and the US Oil Equipment & Services, as well as the reinvestment of dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year.
The principal market for Tidewater’s common stock is the New York Stock Exchange (NYSE), where it is traded under the symbol “TDW.” 34 Table of Contents Performance Graph The following graph and table compare the cumulative total return on Tidewater’s common stock to the cumulative total returns of the Russell 2000 Stock Index, the PHLX Oil Service Sector Index, and the Dow Jones U.S.
The principal market for Tidewater’s common stock is the New York Stock Exchange (NYSE), where it is traded under the symbol “TDW.” 36 Table of Contents Performance Graph The following graph and table compare the cumulative total return on Tidewater’s common stock to the cumulative total returns of the Russell 2000 Stock Index, the PHLX Oil Service Sector Index, and the Dow Jones U.S.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES As of February 15, 2022, we had 361 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES As of February 15, 2024, we had 328 stockholders of record.
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Oil Equipment & Services 100 58 62 38 47 78 35 ITEM 6. [RESERVED]
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Oil Equipment & Services 100 108 66 82 136 140 37 Table of Contents Share Repurchases In November 2023, our Board of Directors approved a $35.0 million share repurchase program.
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The following table sets forth the value of the common stock repurchased, along with number of shares repurchased, and average price paid per share for the three months ended December 31, 2023.
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Maximum Dollar Value of Shares Total Total Number of that May Yet Be Number of Average Shares Purchased Purchased Shares Price Paid as Part of Publicly Under Plans or Repurchased Per Share Announced Plans Programs (1)(2) Period (1 ) (2 ) or Programs (1) (in thousands) October 1, 2023 - October 31, 2023 — — — — November 1, 2023 - November 30, 2023 354,962 $ 58.09 354,962 $ 14,381 December 1, 2023 - December 31, 2023 235,537 61.10 235,537 — Total 590,499 590,499 (1) On November 5, 2023, our Board of Directors approved a $35.0 million share repurchase program to occur, if at all, on or before March 1, 2024.
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On December 18, 2023, we announced the completion of this repurchase program. All shares repurchased were subsequently retired. (2) All share repurchases were made using cash resources and repurchased through our agents that complied with Rule 10b-18 of the Exchange Act.
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See Note 10 – Stock Based Compensations and Incentive Plans in the Consolidated Financial Statements in Item 8 of this Form 10K for disclosure of the shares of common stock reserved for issuance under our stock compensation plans.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(In Thousands) Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Vessel operating profit (loss): Americas $ 12,016 2 % $ (11,270 ) (3 )% $ 4,944 1 % Asia Pacific 3,726 0 % 4,896 2 % 2,076 1 % Middle East (1,093 ) 0 % (6,070 ) (2 )% (8,011 ) (2 )% Europe/Mediterranean 18,844 3 % (16,968 ) (5 )% (8,629 ) (2 )% West Africa 43,112 7 % (16,985 ) (5 )% (27,508 ) (7 )% 76,605 12 % (46,397 ) (13 )% (37,128 ) (9 )% Other operating profit 4,150 1 % 7,233 2 % 7,458 2 % 80,755 13 % (39,164 ) (11 )% (29,670 ) (7 )% Corporate expenses (A) (50,807 ) (9 )% (33,571 ) (9 )% (32,256 ) (8 )% Corporate depreciation (2,776 ) 0 % (3,337 ) (1 )% (3,377 ) (1 )% Gain (loss) on asset dispositions, net 250 0 % (2,901 ) (1 )% 7,591 2 % Long-lived asset impairments and other (714 ) 0 % (15,643 ) (4 )% (74,109 ) (19 )% Affiliate credit loss impairment expense — 0 % (400 ) 0 % (52,981 ) (13 )% Affiliate guarantee obligation — 0 % — 0 % (2,000 ) (1 )% Operating income (loss) 26,708 4 % (95,016 ) (26 )% (186,802 ) (47 )% Foreign exchange loss (2,827 ) 0 % (369 ) 0 % (5,245 ) (1 )% Equity in net earnings (losses) of unconsolidated companies (221 ) 0 % (3,322 ) (1 )% 164 0 % Dividend income from unconsolidated company — 0 % — 0 % 17,150 4 % Interest income and other, net 5,397 1 % 1,605 0 % 1,228 0 % Loss on warrants (14,175 ) (2 )% — 0 % — 0 % Loss on early extinguishment of debt — 0 % (11,100 ) (2 )% — 0 % Interest and other debt costs (17,189 ) (3 )% (15,583 ) (4 )% (24,156 ) (6 )% Loss before income taxes $ (2,307 ) 0 % $ (123,785 ) (33 )% $ (197,661 ) (50 )% (A) Included in corporate expenses for the years ended December 31, 2022, 2021 and 2020, are $16.5 million, $0.1 million, and $1.5 million respectively, of acquisition, restructuring and integration related costs. 42 Table of Contents Years Ended December 31, 2022 and 2021 Our total revenues for the years ended December 31, 2022 and December 31, 2021 were $647.7 million and $371.0 million, respectively.
Biggest changeDepreciation and amortization expense: o Increase primarily due to additional vessels and significantly increased drydock activity. 49 Table of Contents Years Ended December 31, 2022 and 2021 Year Ended December 31, (In Thousands except for statistics) 2022 2021 Change % Change Total revenue $ 647,684 $ 371,033 $ 276,651 75 % Costs and expenses: Vessel operating costs 397,301 261,814 (135,487 ) (52 )% Costs of other operating revenues 2,130 2,231 101 5 % General and administrative 101,921 68,516 (33,405 ) (49 )% Depreciation and amortization 119,160 114,544 (4,616 ) (4 )% (Gain) loss on asset dispositions, net (250 ) 2,901 3,151 109 % Affiliate credit loss impairment expense — 400 400 100 % Long-lived asset impairments and other 714 15,643 14,929 95 % Total costs and expenses 620,976 466,049 (154,927 ) (33 )% Other income (expense): Foreign exchange loss (2,827 ) (369 ) (2,458 ) (666 )% Equity in net losses of unconsolidated companies (221 ) (3,322 ) 3,101 93 % Interest income and other, net 5,397 1,605 3,792 236 % Loss on warrants (14,175 ) — (14,175 ) (100 )% Loss on early extinguishment of debt — (11,100 ) 11,100 100 % Interest and other debt costs, net (17,189 ) (15,583 ) (1,606 ) (10 )% Total other expense (29,015 ) (28,769 ) (246 ) (1 )% Loss before income taxes (2,307 ) (123,785 ) 121,478 98 % Income tax expense 19,886 5,875 (14,011 ) (238 )% Net loss $ (22,193 ) $ (129,660 ) $ 107,467 83 % Select operating statistics: Utilization 75.4 % 59.6 % 15.8 % Active utilization 82.8 % 80.1 % 2.7 % Average vessel day rates $ 12,754 $ 10,335 $ 2,419 23.4 % Vessel operating cost per active day $ 6,480 $ 5,681 $ (799 ) (14.1 )% Average total vessels 182 161 21 Average stacked vessels (16 ) (42 ) 26 Average active vessels 166 119 47 Revenue: o Increase primarily due to the addition of 50 vessels to our fleet with the SPO Acquisition effective April 22, 2022, and the increased demand for vessels, resulting in increased average day rates, as the industry and our customers recovered from the pandemic. o SPO vessels added approximately $150.0 million to our 2022 revenues with the remaining increase in revenue attributable to the legacy company fleet reactivating vessels, higher day rates and higher utilization throughout the year.
During the second half of 2022, we completed two common stock public offerings to facilitate the redemption of the SPO acquisition warrants, including an offering for 4,048,000 shares at $17.85 per share completed on August 12, 2022, and an offering for 3,987,914 shares at $30.25 per share completed on November 10, 2022 (the Offerings).
During the second half of 2022, we completed two common stock public offerings to facilitate the redemption of the SPO Acquisition Warrants, including an offering for 4,048,000 shares at $17.85 per share completed on August 12, 2022, and an offering for 3,987,914 shares at $30.25 per share completed on November 10, 2022 (Offerings).
When economically practical marketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are considered to be in service and are included in the calculation of our utilization statistics.
When economically practical marketing opportunities arise, the stacked vessels can be returned to active service by performing any necessary maintenance on the vessel and either rehiring or returning fleet personnel to operate the vessel. Although not currently fulfilling charters, stacked vessels are considered in service and included in the calculation of our utilization statistics.
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. 36 Operating costs consist primarily of crew costs, repair and maintenance costs, insurance costs, fuel, lube oil and supplies costs and other vessel operating costs.
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.
The carrying value of our net deferred tax assets is based on our present belief that we will be unable to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets, based on estimates and assumptions.
The carrying value of our net deferred tax assets is based on our present belief that we will be unable to generate sufficient future taxable income in certain tax jurisdictions to utilize such deferred tax assets, based on current estimates and assumptions.
Offshore oil and gas exploration and development activities generally require higher oil or natural gas prices to justify the much higher expenditure levels of offshore activities compared to onshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile.
Offshore oil and gas exploration and development activities generally require higher oil or gas prices to justify the much higher expenditure levels of offshore activities compared to onshore activities. Prices are subject to significant uncertainty and, as a result, are extremely volatile.
Results of Operations We manage and measure our business performance primarily based on five distinct geographic operating segments: Americas, Asia Pacific, Middle East, Europe/Mediterranean and West Africa. This section of this Form 10-K generally discusses 2022, 2021 and 2020 items and year-to-year comparisons between 2022 and 2021 and between 2021 and 2020.
Results of Operations We manage and measure our business performance primarily based on five distinct geographic operating segments: Americas, Asia Pacific, Middle East, Europe/Mediterranean and West Africa. This section of this Form 10-K generally discusses 2023, 2022 and 2021 items and year-to-year comparisons between 2023 and 2022 and between 2022 and 2021.
Our customers’ business activity, in turn, is dependent on current and expected crude oil and natural gas prices, which fluctuate depending on expected future levels of supply and demand for crude oil and natural gas, and on estimates of the cost to find, develop and produce crude oil and natural gas reserves.
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.
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.
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.
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 deemed to be sufficient to fund the cash needs of our U.S. operations.
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.
As consideration for the acquisition, we paid $42.0 million in cash and issued 8,100,000 warrants, each of which is exercisable at $0.001 per share for one share of our common stock (SPO acquisition warrants).
As consideration for the acquisition, we paid $42.0 million in cash and issued 8,100,000 warrants, each exercisable at $0.001 per share for one share of our common stock (SPO Acquisition Warrants).
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. 54 Table of Contents
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. 64 Table of Contents
General and administrative expenses for the year ended December 31, 2022 increased compared to the year ended December 31, 2021 primarily due to higher general and administrative costs associated with the Singapore and Dubai offices and professional fees and transaction costs (including severance costs) related to the SPO acquisition, which totaled $18.8 million for the year ended December 31, 2022.
General and administrative expenses for the year ended December 31, 2022 increased compared to the year ended December 31, 2021, primarily due to higher personnel costs associated with the addition of the Singapore and Dubai offices and professional fees and transaction costs (including severance costs) related to the SPO Acquisition, which totaled $18.8 million for the year ended December 31, 2022.
We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and they are no longer considered stacked when they are returned to active service, sold or otherwise disposed.
We reduce operating costs by stacking vessels when management does not foresee opportunities to profitably or strategically operate the vessels in the near future. Vessels are stacked when market conditions warrant and are not considered stacked when they return to active service, are sold or otherwise disposed.
During 2022, we recorded a $0.5 million reversal of previously recorded impairment charges for assets held for sale that were reclassified back to the active fleet and we recorded $1.2 million in impairment for certain obsolete marine service parts and supplies inventory. During 2021, we recorded $15.6 million of impairment expense primarily related to assets held for sale.
Long-lived asset impairment and other expense: o In 2022, we recorded: - a $0.5 million reversal of previously recorded impairment charges for assets held for sale that were reclassified back to the active fleet; and - $1.2 million in impairment for certain obsolete marine service parts and supplies inventory. o During 2021, we recorded $15.6 million of impairment expense primarily related to assets held for sale.
Liquidity, Capital Resources and Other Matters As of December 31, 2022, we had $168.0 million in cash and cash equivalents (including restricted cash), including amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences.
Liquidity, Capital Resources and Other Matters As of December 31, 2023, we had $278.0 million in cash and cash equivalents, which includes restricted cash and amounts held by foreign subsidiaries, the majority of which is available to us without adverse tax consequences.
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.
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 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.
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. Acquisitions On July 5, 2023, we completed the Solstad Acquisition.
We currently intend that earnings by our foreign subsidiaries will be indefinitely reinvested in foreign jurisdictions in order to fund strategic initiatives (such as investment, expansion and acquisitions), fund working capital requirements and repay debt (both third-party and intercompany) of our foreign subsidiaries in the normal course of business.
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 debt of our foreign subsidiaries in the normal course of business.
Over the past several years, oil and natural gas commodity pricing has been affected by a global pandemic (COVID-19 is discussed below) which included lock downs by major oil consuming nations, a war in eastern Europe between Russia and Ukraine, OPEC production quotas, capital discipline within the major oil and gas companies, and increased activism related to the oil and gas sector responsibility for climate change.
Over the past several years, oil and gas commodity pricing has been affected by a global pandemic, which included lock downs by major oil consuming nations, a war in eastern Europe between Russia and Ukraine, OPEC+ production quotas, capital discipline within the major oil and gas companies, inflationary economies of major consuming nations and increased activism related to the perceived responsibility of the oil and gas sector for climate change.
During 2021, we recorded an $11.1 million loss on early extinguishment of debt consisting of make whole premiums and other related costs resulting from the extinguishment of our Senior Secured Notes and Troms offshore debt.
Loss on early extinguishment of debt: o During 2021, we recorded a loss on early extinguishment of debt consisting of make whole premiums and other related costs resulting from the extinguishment of our Senior Secured Notes and Troms offshore debt.
Management estimates the fair value of each vessel in an asset group considered Level 3, as defined by ASC 820, Fair Value Measurements and Disclosures, 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.
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 are currently in compliance and anticipate being able to maintain ongoing compliance with these two financial covenants. We believe cash and cash equivalents, availability under our RCF and future net cash provided by operating activities, provide us with sufficient liquidity to meet our liquidity requirements.
We are currently in compliance and anticipate maintaining ongoing compliance with these financial covenants. We believe cash and cash equivalents, availability under our RCF and future net cash provided by operating activities, will provide us with sufficient liquidity to fund our obligations and meet our liquidity requirements.
We will in all circumstances attempt to achieve maximum value for our vessels, but 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.
Our value ranges depend on our expectation of the ultimate disposition of the vessel. 63 Table of Contents We will in all circumstances attempt to achieve maximum value for our vessels, but 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.
Each of our five operating segments is managed by a senior executive reporting directly to 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.
Each reporting segment is overseen by a managing director, who is a senior company executive reporting directly to 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.
Share Repurchases No shares were repurchased during the years ended December 31, 2022, 2021 and 2020. Please refer to Note (11) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements. Dividends There were no dividends declared during the years ended December 31, 2022, 2021 and 2020. Please refer to Note (11) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.
Also refer to Note (11) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements. Dividends There were no dividends declared during the years ended December 31, 2023, 2022 and 2021. Please refer to Note (11) - “Stockholders’ Equity” to the accompanying Consolidated Financial Statements.
We estimate the net realizable value using various methodologies including third party appraisals, sales comparisons, sales agreements and scrap 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 estimate the net realizable value for assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and scrap yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions.
These foreign exchange losses were primarily the result of the revaluation of various foreign currency balances due to a strengthening of the US Dollar against the Norwegian Kroner, Brazilian Real, Angola Kwanza, British Pound and Euro.
Foreign exchange losses: o In 2022 and 2021, our foreign exchange losses were primarily the result of the revaluation of various foreign currency balances due to a strengthening of the U.S. Dollar against the Norwegian Kroner, Brazilian Real, Angola Kwanza, British Pound and Euro.
In addition, our income tax expense was $19.9 million in the year ended December 31, 2022 compared with an income tax expense of $5.9 million in the year ended December 31, 2021 primarily because the year ended December 31, 2021 benefitted from a NOL carryback for a tax refund under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 43 Table of Contents Americas Segment Operations.
Our income tax expense in the year ended December 31, 2022 increased primarily because the year ended December 31, 2021 benefitted from a NOL carryback for a tax refund under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 51 Table of Contents Americas Segment Operations.
Business Combination On April 22, 2022 (the “Acquisition Date”) we completed our business combination with SPO. Assets acquired and liabilities assumed in the business combination have been recorded at their estimated fair values as of the Acquisition Date under the acquisition method of accounting. The estimated fair values of certain assets and liabilities require judgments and assumptions.
These estimated fair values require the use of judgments and assumptions. On April 22, 2022, we completed the SPO Acquisition. Assets acquired and liabilities assumed in the business combination were recorded at their estimated fair values as of the closing date under the acquisition method of accounting.
We had 13, 27 and 35 stacked vessels including 8, 18 and 23 vessels, respectively, classified as assets held for sale in our fleet as of December 31, 2022, December 31, 2021 and December 31, 2020, respectively. During 2022, we sold 12 vessels that had been designated as held for sale and two vessels from our active fleet.
We had two, 13 and 27 stacked vessels including vessels classified as assets held for sale in our fleet as of December 31, 2023, December 31, 2022 and December 31, 2021, respectively. During 2023, we sold or recycled eight vessels that had been designated as held for sale and sold seven vessels from our active fleet.
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, 2022 December 31, 2021 December 31, 2020 Personnel $ 48,907 8 % $ 35,985 10 % $ 36,851 9 % Office and property 22,689 4 % 12,371 3 % 13,483 3 % Professional services 21,964 3 % 14,308 4 % 15,262 4 % Other 6,336 1 % 5,507 1 % 6,344 2 % Restructuring charges (A) 2,025 0 % 345 0 % 1,507 0 % $ 101,921 16 % $ 68,516 18 % $ 73,447 18 % 48 Table of Contents Segment and corporate general and administrative expenses and the related percentage of total general and administrative expenses were as follows: (In Thousands) Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Vessel operations: Continuing operations $ 49,274 48 % $ 34,675 51 % $ 41,190 56 % Restructuring charges (A) 1,840 2 % 270 0 % — 0 % Total vessel operations 51,114 50 % 34,945 51 % 41,190 56 % Corporate: Continuing operations 50,622 50 % 33,496 49 % 30,750 42 % Restructuring charges (A) 185 0 % 75 0 % 1,507 2 % Total corporate 50,807 50 % 33,571 49 % 32,257 44 % Total $ 101,921 100 % $ 68,516 100 % $ 73,447 100 % (A) Restructuring charges for the years ended December 31, 2022 and 2021 include $2.0 million and $0.3 million, respectively, of severance and termination benefits.
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, 2023 December 31, 2022 December 31, 2021 Personnel $ 50,343 5 % $ 48,907 8 % $ 35,985 10 % Office and property 20,998 2 % 22,689 4 % 12,371 3 % Professional services 16,498 2 % 21,964 3 % 14,308 4 % Other 6,354 1 % 6,336 1 % 5,507 1 % Restructuring charges (A) 1,090 0 % 2,025 0 % 345 0 % $ 95,283 9 % $ 101,921 16 % $ 68,516 18 % 58 Table of Contents 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, 2023 December 31, 2022 December 31, 2021 Vessel operations: Continuing operations $ 50,785 53 % $ 49,274 48 % $ 34,675 51 % Restructuring charges (A) 1,065 1 % 1,840 2 % 270 0 % Total vessel operations 51,850 54 % 51,114 50 % 34,945 51 % Corporate: Continuing operations 43,408 46 % 50,622 50 % 33,496 49 % Restructuring charges (A) 25 0 % 185 0 % 75 0 % Total corporate 43,433 46 % 50,807 50 % 33,571 49 % Total $ 95,283 100 % $ 101,921 100 % $ 68,516 100 % (A) Restructuring charges for the years ended December 31, 2023, 2022 and 2021 include $1.1 million, $2.0 million and $0.3 million, respectively, of severance and termination benefits.
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. 52 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.
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.
As is the case with the numerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers.
Our revenues, net earnings and cash flows from operations are largely dependent upon the activity level of our offshore marine vessel fleet. As is the case with the numerous other vessel operators in our industry, our business activity is largely dependent on the level of exploration, field development and production activity of our customers.
One of the vessel sales in 2021 was to a third-party operator, Jackson Offshore, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the chairman of our Board of Directors.
For the year ended December 31, 2021, we sold 19 vessels and other assets. o One of the vessel sales in 2021 was to a third-party operator, Jackson Offshore, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the former chairman of our Board of Directors.
We also designated three vessels to assets held for sale and reactivated one vessel from assets held for sale into the active fleet in 2022.
During 2022, we sold or recycled 12 vessels that had been designated as held for sale and sold two vessels from our active fleet. We also designated three vessels to assets held for sale and reactivated one vessel from assets held for sale into the active fleet in 2022.
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.
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.
Investing Activities Net cash provided by investing activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2022 December 31, 2021 Proceeds from sales of assets $ 13,568 $ 34,010 Acquisitions, net of cash acquired (20,740 ) — Additions to properties and equipment (16,637 ) (8,951 ) Net cash provided by investing activities $ (23,809 ) $ 25,059 Net cash used in investing activities for the year ended December 31, 2022, was $23.8 million, reflecting proceeds of $13.6 million related to the disposal of 14 vessels.
Investing Activities Net cash used in investing activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2023 December 31, 2022 Proceeds from asset dispositions $ 15,506 $ 13,568 Acquisitions, net of cash acquired (594,191 ) (20,740 ) Additions to properties and equipment (31,588 ) (16,637 ) Net cash used in investing activities $ (610,273 ) $ (23,809 ) Net cash used in investing activities for the year ended December 31, 2023, was $610.3 million, reflecting proceeds of $15.5 million related to the disposal of 15 vessels.
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 We are one of the most experienced international operators in the offshore energy industry with a history spanning over 65 years.
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.
In addition, we determine our effective tax rate by estimating our permanent differences resulting from differing treatment of items for tax and accounting purposes. 53 Table of Contents 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.
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.
The number of vessels disposed by segment are as follows: Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Number of vessels disposed by segment: Americas 4 7 13 Asia Pacific 2 2 10 Middle East 1 2 3 Europe/Mediterranean 2 2 13 West Africa 5 6 17 Total 14 19 56 Vessel Commitments In the fourth quarter of 2022, we contracted to build two Alucat crew boats for the African market.
The number of vessels disposed by segment were as follows: Year Ended Year Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Number of vessels disposed by segment: Americas 1 4 7 Asia Pacific 1 2 2 Middle East 1 1 2 Europe/Mediterranean — 2 2 West Africa 12 5 6 Total 15 14 19 Vessel Commitments We contracted to build two ocean-going tugs for the Africa market that were completed and delivered in 2023 and cost approximately $6.0 million each.
We have a $25.0 million revolving credit facility (RCF) which matures in 2026. No amounts have been drawn on this facility. As of December 31, 2022, we had $175.0 million of long-term debt on our consolidated balance sheet of which none is due until late 2026.
In addition to our cash on hand, we also have a $25.0 million revolving credit facility (RCF) that matures in 2026. No amounts have been drawn on this facility. As of December 31, 2023, we had $751.7 million of debt on our consolidated balance sheet, $103.1 million of which is due in the next twelve months.
Net cash used by operating activities for the year ended December 31, 2021, of $15.0 million reflects a net loss of $129.7 million, non-cash impairments of $16.0 million, non-cash depreciation and amortization of $114.5 million, a net loss on asset dispositions of $2.9 million, stock-based compensation expense of $5.6 million, and loss on debt extinguishment of $11.1 million.
Net cash used by operating activities for the year ended December 31, 2022, of $40.2 million reflects a net loss of $22.2 million, non-cash impairments of $0.7 million, non-cash depreciation and amortization of $119.2 million, stock-based compensation expense of $7.4 million, and loss on warrants of $14.2 million.
In previous years, we sought opportunities to dispose of our older vessels when market conditions warranted and opportunities would arise. As a result, vessel dispositions would vary from year to year, and gains (losses) on sales of assets would also fluctuate significantly from period to period.
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.
Net cash provided by operating activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2022 December 31, 2021 Net loss $ (22,193 ) $ (129,660 ) Depreciation and amortization 83,522 73,223 Amortization of deferred drydocking and survey costs 35,638 41,321 Amortization of debt premiums and discounts 1,679 3,171 Provision (benefit) for deferred income taxes 36 (1,287 ) Gain (loss) on asset dispositions, net (250 ) 2,901 Gain on bargain purchase (1,300 ) — Affiliate credit loss impairment expense — 400 Long-lived asset impairments and other 714 15,643 Loss on warrants 14,175 — Loss on debt extinguishment — 11,100 Stock based compensation expense 7,372 5,638 Deferred drydocking and survey costs (56,000 ) (27,282 ) Changes in operating assets and liabilities, net of effects of business acquisition (23,167 ) 19,838 Net cash provided by operating activities $ 40,226 $ 15,006 50 Table of Contents Net cash provided by operating activities for the year ended December 31, 2022, of $40.2 million reflects a net loss of $22.2 million, non-cash impairments of $0.7 million, non-cash depreciation and amortization of $119.2 million, stock-based compensation expense of $7.4 million, and loss on warrants of $14.2 million.
Net cash provided by operating activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2023 December 31, 2022 Net income (loss) $ 95,621 $ (22,193 ) Depreciation and amortization 128,777 83,522 Amortization of deferred drydocking and survey costs 51,554 35,638 Amortization of debt premiums and discounts 4,619 1,679 Amortization of below market contracts (3,800 ) — Provision for deferred income taxes 92 36 Gain on asset dispositions, net (8,701 ) (250 ) Gain on pension settlement (2,313 ) — Gain on bargain purchase — (1,300 ) Long-lived asset impairments and other — 714 Loss on warrants — 14,175 Stock based compensation expense 10,755 7,372 Deferred drydocking and survey costs (97,378 ) (56,000 ) Changes in operating assets and liabilities, net of effects of business acquisition (74,521 ) (23,167 ) Net cash provided by operating activities $ 104,705 $ 40,226 60 Table of Contents Net cash provided by operating activities for the year ended December 31, 2023, of $104.7 million reflects net income of $95.6 million, non-cash depreciation and amortization of $180.3 million and stock-based compensation expense of $10.8 million.
Our business is directly impacted by the level of activity in worldwide offshore oil and natural gas exploration, development and production, which in turn is influenced by trends in oil and natural gas prices and the condition of the energy markets and, in particular, the willingness of energy companies to spend on operational activities and capital projects.
Energy prices are expected to remain volatile due to ongoing geopolitical conflicts, global inflationary trends and associated actions from central banks as well as uncertainties surrounding the growth rates expected in key world economies. 40 Table of Contents 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 operational activities and capital projects.
Additions to property and equipment were comprised of $9.0 million, primarily for the down payment on two tugboats, upgrades to our existing fleet and continued enhancements to our current enterprise software system.
Acquisitions included $594.2 million for the purchase of 37 vessels from Solstad. Additions to property and equipment were comprised of $31.6 million, primarily for the down payment on six Alucat crew boats, upgrades to our existing fleet and continued enhancements to our current enterprise software system.
Acquisitions included $19.7 million for the purchase of SPO and $1.0 million to acquire the 51% equity interest in Sonatide owned by our former joint venture partner.
Net cash used in investing activities for the year ended December 31, 2022, was $23.8 million, reflecting proceeds of $13.6 million related to the disposal of 14 vessels. Acquisitions included $19.7 million for the purchase of SPO and $1.0 million to acquire the 51% equity interest in Sonatide owned by our former joint venture partner.
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 natural gas exploration, field development and production companies. We routinely review and evaluate our accounts receivable balances for collectability.
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.
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.
Recent events include escalation of the Israeli/Palestinian conflict which has also resulted in increased disruption of shipping in the Middle East due to military action from surrounding states. 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.
The following tables present vessel revenue and operating costs by segment, total vessel revenue and operating costs, and the related segment and total vessel revenue and operating costs as a percentage of segment and total vessel revenues for our owned and operated vessel fleet: (In Thousands) Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Vessel revenues: Americas $ 146,871 23 % $ 102,151 28 % $ 126,676 33 % Asia Pacific 64,231 10 % 18,142 5 % 14,348 4 % Middle East 110,375 17 % 84,395 24 % 82,785 21 % Europe/Mediterranean 129,578 20 % 80,914 22 % 83,602 22 % West Africa 190,349 30 % 75,967 21 % 78,763 20 % Total $ 641,404 100 % $ 361,569 100 % $ 386,174 100 % 39 (In Thousands) Year Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Vessel operating costs: Americas: Crew costs $ 56,767 39 % $ 41,341 40 % $ 51,830 41 % Repair and maintenance 12,706 9 % 10,344 10 % 7,198 6 % Insurance 1,439 1 % 550 1 % 1,672 1 % Fuel, lube and supplies 9,655 7 % 7,773 8 % 7,564 6 % Other 13,442 9 % 12,307 12 % 9,421 7 % 94,009 65 % 72,315 71 % 77,685 61 % Asia Pacific: Crew costs $ 29,433 46 % $ 3,409 19 % $ 3,285 23 % Repair and maintenance 3,077 5 % 1,712 9 % 1,024 7 % Insurance 516 1 % 105 1 % 312 2 % Fuel, lube and supplies 4,139 6 % 992 5 % 452 3 % Other 5,081 8 % 1,729 10 % 1,672 12 % 42,246 66 % 7,947 44 % 6,745 47 % Middle East: Crew costs $ 44,944 41 % $ 35,800 42 % $ 35,976 43 % Repair and maintenance 12,210 11 % 9,669 11 % 9,042 11 % Insurance 1,412 1 % (29 ) (0 )% 2,032 2 % Fuel, lube and supplies 10,531 10 % 5,132 6 % 7,325 9 % Other 9,015 8 % 10,423 12 % 8,025 10 % 78,112 71 % 60,995 72 % 62,400 75 % Europe/Mediterranean: Crew costs $ 49,709 38 % $ 41,317 51 % $ 37,534 45 % Repair and maintenance 9,239 7 % 9,233 11 % 6,421 7 % Insurance 1,442 1 % 414 1 % 1,596 2 % Fuel, lube and supplies 6,026 5 % 3,405 4 % 3,324 4 % Other 8,426 7 % 7,355 9 % 6,557 8 % 74,842 58 % 61,724 76 % 55,432 65 % West Africa: Crew costs $ 61,511 32 % $ 26,304 34 % $ 27,999 36 % Repair and maintenance 14,024 8 % 10,012 13 % 7,528 9 % Insurance 1,956 1 % 775 1 % 1,583 2 % Fuel, lube and supplies 13,378 7 % 8,255 11 % 10,448 13 % Other 17,223 9 % 13,487 18 % 18,960 24 % 108,092 57 % 58,833 77 % 66,518 84 % Total: Crew costs $ 242,364 38 % $ 148,171 41 % $ 156,624 41 % Repair and maintenance 51,256 8 % 40,970 11 % 31,213 8 % Insurance 6,765 1 % 1,815 1 % 7,195 2 % Fuel, lube and supplies 43,729 7 % 25,557 7 % 29,113 7 % Other 53,187 8 % 45,301 12 % 44,635 12 % Total vessel operating costs $ 397,301 62 % $ 261,814 72 % $ 268,780 70 % 40 Table of Contents The following tables present vessel operations general and administrative expenses by segment and in total; and the related segment vessel operations general and administrative expenses as a percentage of segment and total vessel revenues.
(In Thousands) Year Ended Year Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Vessel operating costs: Americas: Crew costs $ 86,328 36 % $ 56,767 39 % $ 41,341 40 % Repair and maintenance 17,295 7 % 12,706 9 % 10,344 10 % Insurance 1,891 1 % 1,439 1 % 550 1 % Fuel, lube and supplies 13,175 6 % 9,655 7 % 7,773 8 % Other 19,232 8 % 13,442 9 % 12,307 12 % 137,921 58 % 94,009 65 % 72,315 71 % Asia Pacific: Crew costs $ 41,940 34 % $ 29,433 46 % $ 3,409 19 % Repair and maintenance 9,212 8 % 3,077 5 % 1,712 9 % Insurance 794 1 % 516 1 % 105 1 % Fuel, lube and supplies 5,251 4 % 4,139 6 % 992 5 % Other 7,751 6 % 5,081 8 % 1,729 10 % 64,948 53 % 42,246 66 % 7,947 44 % Middle East: Crew costs $ 53,416 39 % $ 44,944 41 % $ 35,800 42 % Repair and maintenance 16,187 12 % 12,210 11 % 9,669 11 % Insurance 1,784 1 % 1,412 1 % (29 ) (0 )% Fuel, lube and supplies 12,092 9 % 10,531 10 % 5,132 6 % Other 17,127 13 % 9,015 8 % 10,423 12 % 100,606 74 % 78,112 71 % 60,995 72 % Europe/Mediterranean: Crew costs $ 78,613 34 % $ 49,709 38 % $ 41,317 51 % Repair and maintenance 17,029 8 % 9,239 7 % 9,233 11 % Insurance 2,218 1 % 1,442 1 % 414 1 % Fuel, lube and supplies 11,697 5 % 6,026 5 % 3,405 4 % Other 13,758 6 % 8,426 7 % 7,355 9 % 123,315 54 % 74,842 58 % 61,724 76 % West Africa: Crew costs $ 69,176 25 % $ 61,511 32 % $ 26,304 34 % Repair and maintenance 18,993 7 % 14,024 8 % 10,012 13 % Insurance 2,610 1 % 1,956 1 % 775 1 % Fuel, lube and supplies 18,333 7 % 13,378 7 % 8,255 11 % Other 20,613 7 % 17,223 9 % 13,487 18 % 129,725 47 % 108,092 57 % 58,833 77 % Total: Crew costs $ 329,473 33 % $ 242,364 38 % $ 148,171 41 % Repair and maintenance 78,716 8 % 51,256 8 % 40,970 11 % Insurance 9,297 1 % 6,765 1 % 1,815 1 % Fuel, lube and supplies 60,548 6 % 43,729 7 % 25,557 7 % Other 78,481 8 % 53,187 8 % 45,301 12 % Total vessel operating costs $ 556,515 56 % $ 397,301 62 % $ 261,814 72 % 57 Table of Contents Stacked Vessels and Vessel Dispositions We consider a vessel to be stacked if the vessel crew is furloughed or substantially reduced and limited maintenance is performed on the vessel.
The net gain (loss) on asset dispositions for the year ended December 31, 2021 totaled $2.9 million of net losses, primarily from the sale of 19 vessels and other assets.
Gain (loss) on asset dispositions, net: o For the year ended December 31, 2022, we sold 14 vessels and other assets.
The Senior Secured Bonds due November 2026 (the 2026 Notes) contain two financial covenants: (i) a minimum free liquidity test of the obligors (as defined) equal to the greater of $20.0 million or 10% of net interest bearing debt, and (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries.
However, we expect during 2024, to generate sufficient operating income from the Solstad Vessels to meet the corresponding increase in our debt obligations. 59 Table of Contents The Senior Secured Notes, the Senior Secured Term Loan and the revolving credit facility contain a combination of the following three financial covenants: (i) a minimum free liquidity test (as defined) equal to the greater of $20.0 million or 10% of net interest-bearing debt; (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries; and (iii) an interest coverage ratio of not less than 2:1.
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. We consider the valuation approach for our assets held for sale to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be recycled or sold.
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 recycles.
Our vessels and associated vessel services provide support for all phases of offshore oil and natural gas exploration, field development and production as well as windfarm development and maintenance.
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, field development and production as well as windfarm development and maintenance.
Expected credit losses are recorded on the initial recognition of our primary financial assets, which are trade accounts receivable and contract assets. We also have net receivable balances related to joint ventures in which we own less than 50%. We review and evaluate these receivables for collectability in a similar manner as we evaluate trade receivables.
Expected credit losses are recorded on the initial recognition of our primary financial assets, which are trade accounts receivable and contract assets.
Financing Activities Net cash used in financing activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2022 December 31, 2021 Proceeds from stock offering $ 187,832 $ — Repurchase of SPO acquisition warrants (187,832 ) — Issuance of long-term debt — 172,375 Principal payments on long-term debt — (198,918 ) Debt extinguishment premium — (7,781 ) Debt issuance and modification costs (393 ) (5,737 ) Tax on share-based awards (2,323 ) (953 ) Net cash used in financing activities $ (2,716 ) $ (41,014 ) Financing activities for the year ended December 31, 2022, used $2.7 million of cash, including $0.3 million of debt issuance and modification costs related to our 2026 notes and $2.3 million in taxes paid on share-based awards.
Financing Activities Net cash provided by (used in) financing activities is as follows: (In Thousands) Year Ended Year Ended December 31, 2023 December 31, 2022 Exercise of warrants $ 111,483 $ — Proceeds from stock offering — 187,832 Repurchase of SPO Acquisition Warrants — (187,832 ) Issuance of long-term debt 575,000 — Principal payments on long-term debt (13,677 ) — Purchase of common stock (35,025 ) — Acquisition of non-controlling interest in a majority owned subsidiary (1,427 ) — Debt issuance costs (14,758 ) (393 ) Tax on share-based awards (6,040 ) (2,323 ) Net cash provided by (used in) financing activities $ 615,556 $ (2,716 ) Financing activities for the year ended December 31, 2023, provided $615.6 million of cash.
Most of our vessels were sold to buyers with whom we do not compete in the offshore energy industry. We continue to employ that strategy, but to a lesser extent. 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.
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.
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.
At December 31, 2023, we owned 217 vessels with an average age of 11.8 years available to serve the global offshore energy industry. 39 Table of Contents 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.
Interest expense and other debt costs increased by $1.6 million in the year ended December 31, 2022 compared to the year ended December 31, 2021 because of higher interest rates on our outstanding debt and slightly higher levels of outstanding debt in 2022.
Interest expense: o Increase primarily due to higher interest rates on our outstanding debt and slightly higher levels of outstanding debt in 2022.
We are of the opinion that the underlying fundamentals, particularly energy source supply and demand, will support a multi-year increase in offshore upstream development spending. Our outlook expectations are based on the market as we see it today and subject to changing conditions in and impacting our industry.
We are of the opinion that the underlying fundamentals, particularly energy source supply and demand, will support a multi-year increase in offshore upstream development spending. Segment Changes In conjunction with the acquisition of SPO in April 2022, the previous Middle East/Asia Pacific segment was split into the Middle East segment and the Asia Pacific segment.
The increase is primarily due to increased general and administrative costs associated with the Singapore and Dubai offices acquired in the SPO acquisition and professional fees and transaction costs (including severance costs) primarily related to the SPO acquisition, which totaled $18.8 million for the year ended December 31, 2022.
Depreciation and amortization: o Increase primarily due to the addition of 50 vessels to our fleet with the SPO Acquisition effective April 22, 2022, partially offset by lower amortization of deferred drydocking costs as a result of the timing of drydocks. o In addition, we sold vessels and transferred vessels from the active fleet to assets held for sale, which reduced depreciation and drydock amortization costs. 50 Table of Contents General and administrative costs: o The increase is primarily due to the addition of the Singapore and Dubai offices with the SPO Acquisition. o In addition, we had professional fees and transaction costs primarily related to the SPO Acquisition which totaled $18.8 million for the year ended December 31, 2022.
We expect to use the net proceeds from the sale of the securities covered by these offerings for general corporate purposes, which may include repayment or refinancing of indebtedness, working capital, capital expenditures, investments, acquisitions and other business opportunities. Please refer to Note (4) - “Debt” to the accompanying Consolidated Financial Statements for further details on our indebtedness.
A key component of our growth strategy is expanding our business and fleets through acquisitions, joint ventures and other strategic transactions. We would expect to use net proceeds from any sale of our securities for general corporate purposes, including capital expenditures, investments, acquisitions, repayment or refinancing of indebtedness, and other business opportunities.
The revenue increase was partially offset by a $21.7 million increase in operating costs largely due to higher vessel personnel costs resulting from the higher active vessel count. In addition, depreciation and amortization, and general and administrative costs, were $0.9 million lower and $0.7 million higher, respectively, than prior year. Asia Pacific Segment Operations .
Vessel operating costs: o Increase primarily due to the additional active vessels due primarily to reactivations in 2022. General and administrative expense: o Marginal increase primarily due to higher personnel costs. Depreciation and amortization expense: o Decrease primarily due to lower depreciation from a decrease in total vessels. 52 Table of Contents Asia Pacific Segment Operations .
Crude oil and natural gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand. In particular, the oil price is significantly influenced by actions of the Organization of Petroleum Exporting Countries, or OPEC.
This activity includes improving demand for floating drilling rigs, which also directly impacts our industry. Oil and gas prices are affected by a host of geopolitical and economic forces, including the fundamental principles of supply and demand.
During the year ended December 31, 2022, we recognized foreign exchange losses of $2.8 million and for the year ended December 31, 2021, we recognized losses of $0.4 million. These foreign exchange losses were primarily the result of the revaluation of various foreign currency balances due to a strengthening of the U.S.
Foreign exchange losses: o In 2023 and 2022, our foreign exchange losses were primarily the result of the settlement and revaluation of various foreign currency balances due to a strengthening of the U.S. Dollar against the Norwegian Kroner, Brazilian Real, Angola Kwanza, British Pound and Euro.
General and administrative expenses for the year ended December 31, 2021 decreased compared to the prior year primarily as a result of our continuing efforts to reduce overhead costs.
General and administrative expenses for the year ended December 31, 2023 decreased compared to the year ended December 31, 2022 primarily due to lower office and property costs and one time transaction costs resulting from the SPO Acquisition.
Financing activities also included $5.7 million of debt issuance and modification costs related to our new 2026 notes and costs to modify our Troms offshore debt. Legal Proceedings We are named defendants or parties in certain lawsuits, claims or proceedings incidental to or arising in the ordinary course of business.
We also received $187.8 million in proceeds from two offerings of our common stock. These proceeds were used to repurchase the outstanding SPO Acquisition Warrants issued in connection with the SPO Acquisition. Legal Proceedings We are named defendants or parties in certain lawsuits, claims or proceedings incidental to or arising in the ordinary course of business.
The $135.5 million increase is primarily due to an increase in vessel activity in 2022 as a result of the acquisition of 50 additional vessels from SPO and also as a result of our continued recovery from the low vessel utilization levels caused by the pandemic and increased activity as higher crude oil prices has resulted in more activity from our customers.
Vessel operating costs: o Increase primarily due to the addition of 50 vessels to our fleet with the SPO Acquisition effective April 22, 2022, and the increased demand for vessels resulting in greater activity and higher operating costs, as the industry and our customers recovered from the COVID-19 pandemic.
Removed
At December 31, 2022, we owned 191 vessels with an average age of 11.7 years (excluding 1 joint venture vessel, but including five stacked active vessels and eight vessels designated for sale) available to serve the global energy industry. The average age of our 183 active vessels at December 31, 2022 is 11.4 years.
Added
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.
Removed
Industry Conditions and Outlook Our outlook for the oil and gas sector is generally positive after several years of low commodity prices and underinvestment in offshore activities by the major oil and gas producers. Recently, we have seen increased global demand for hydrocarbons combined with a diminishing global supply of vessels.
Added
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.
Removed
The Russian invasion of Ukraine and the related economic sanctions have highlighted the criticality of energy reliability and security across Europe and the U.S. Due to these and other factors, oil prices have increased materially over the past two years and in June of 2022 reached a new ten-year high.
Added
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.
Removed
Energy prices in 2023 are expected to continue the volatility experienced in the last few years due to ongoing geopolitical conflicts, the continued relaxation of worldwide restrictions put in place during the recent pandemic, generalized price level increases and related interest rate adjustments from the world's central banks to address these increases, and uncertainties about the rate of growth in key world economies.
Added
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.
Removed
There has been recent pressure from certain shareholders and other stakeholders, including governmental entities, on our customers related to environmental, social and governance (ESG) factors. Many of our large international customers have indicated changes in their future business plans to achieve a lower environmental impact.
Added
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.
Removed
Our customers have also responded to pressure to return capital to shareholders and are increasingly shifting capital allocation from primarily new oil and gas production and reserve additions to a mix of returns to shareholders, new oil and gas project development and renewable energy source development.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe fair value of spot derivatives approximates the carrying value due to the short-term nature of these instruments, and as a result, no gains or losses are recognized. The accounting for gains or losses on forward contracts is dependent on the nature of the risk being hedged and the effectiveness of the hedge.
Biggest changeWe may enter into spot derivative financial instruments that settle within two business days. The fair value of spot derivatives approximates the carrying value due to the short-term nature of these instruments, and as a result, no gains or losses are recognized.
In addition, we attempt to minimize the financial impact of these risks by matching the currency of our operating costs with the currency of the revenue streams when considered appropriate. We continually monitor the currency exchange risks associated with all contracts not denominated in U.S. dollars. 55 Table of Contents
In addition, we attempt to minimize the financial impact of these risks by matching the currency of our operating costs with the currency of the revenue streams when considered appropriate. We continually monitor the currency exchange risks associated with all contracts not denominated in U.S. dollars. 65 Table of Contents
We had no derivative instruments as of December 31, 2022 and 2021. Other Due to our international operations, we are exposed to foreign currency exchange rate fluctuations and exchange rate risks on all charter hire contracts denominated in foreign currencies.
We had no derivative instruments as of December 31, 2023 and 2022. Other Due to our international operations, we are exposed to foreign currency exchange rate fluctuations and exchange rate risks on all charter hire contracts denominated in foreign currencies.
Our financial instruments that are exposed to interest rate risk are our cash equivalents. Due to the short duration and conservative nature of the cash equivalent investment portfolio, we do not expect any material loss with respect to our investments. The book value for cash equivalents is considered to be representative of its fair value.
Our financial instruments that are exposed to interest rate risk include our cash equivalents and Senior Secured Term Loan. Due to the short duration and conservative nature of the cash equivalent investment portfolio, we do not expect any material loss with respect to our investments. The book value for cash equivalents is considered to be representative of its fair value.
The following table discloses how the estimated fair value of our respective Senior Secured Bonds, as of December 31, 2022, would change with a 100 basis-point increase or decrease in market interest rates.
Senior Secured and Senior Unsecured Debt Please refer to Note (4) - “Debt” to the accompanying Consolidated Financial Statements for a discussion on our outstanding debt. The following table discloses how the estimated fair value of our outstanding debt, as of December 31, 2023, would change with a 100 basis-point increase or decrease in market interest rates.
We may enter into spot and forward derivative financial instruments as a hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. Spot derivative financial instruments are short-term in nature and settle within two business days.
We may also enter into forward derivative financial instruments as a hedge against foreign currency denominated assets and liabilities, currency commitments, or to lock in desired interest rates. The accounting for gains or losses on forward contracts is dependent on the nature of the risk being hedged and the effectiveness of the hedge.
(In Thousands) Outstanding Estimated 100 Basis 100 Basis Value Fair Value Point Increase Point Decrease Total $175,000 $177,300 $171,848 $183,251 Foreign Exchange Risk Our financial instruments that can be affected by foreign currency exchange rate fluctuations consist primarily of cash and cash equivalents, trade receivables, trade payables and debt denominated in currencies other than the U.S. dollar.
(In Millions) Outstanding Estimated 100 Basis 100 Basis Value Fair Value Point Increase Point Decrease 8.50% Senior Secured Notes due November 2026 $175.0 $181.7 $176.7 $185.9 10.375% Senior Unsecured Notes due July 2028 250.0 260.2 249.3 267.7 Senior Secured Term Loan 312.5 313.7 309.3 318.2 Foreign Exchange Risk Our financial instruments that can be affected by foreign currency exchange rate fluctuations consist primarily of cash and cash equivalents, trade receivables, trade payables and debt denominated in currencies other than the U.S. dollar.
Removed
Senior Secured Bonds Please refer to Note (4) - “Debt” to the accompanying Consolidated Financial Statements for a discussion on our outstanding debt. Because the terms on the Senior Secured Bonds due November 2026 bear interest at fixed rates, interest expense would not be impacted by changes in market interest rates.

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