This Form 10-Q includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements concern management's expectations, strategic objectives, business
prospects, anticipated economic performance and financial condition and other
similar matters and involve significant known and unknown risks, uncertainties
and other important factors that could cause the actual results, performance or
achievements of results to differ materially from any future results,
performance or achievements discussed or implied by such forward-looking
statements. Certain of these risks, uncertainties and other important factors
are discussed in the Risk Factors and Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Company's 2021 Annual
Report on Form 10-K and this Quarterly Report on Form 10-Q. However, it should
be understood that it is not possible to identify or predict all such risks,
uncertainties and factors, and others may arise from time to time. All of these
forward-looking statements constitute the Company's cautionary statements under
the Private Securities Litigation Reform Act of 1995. The words "anticipate,"
"estimate," "expect," "project," "intend," "believe," "plan," "target,"
"forecast" and similar expressions are intended to identify forward-looking
statements Forward looking statements speak only as of the date of the document
in which they are made. The Company disclaims any obligation or undertaking to
provide any updates or revisions to any forward-looking statement to reflect any
change in the Company's expectations or any change in events, conditions or
circumstances on which the forward-looking statement is based. It is advisable,
however, to consult any further disclosures the Company makes on related
subjects in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with the
Overview
The following Management's Discussion and Analysis (the "MD&A") is intended to help the reader understand the Company's financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the 2021 Annual Report.
The Company provides global marine and support transportation services to
offshore energy facilities worldwide. As of
The Company and its joint ventures operate and manage a diverse fleet of
offshore support vessels that (i) deliver cargo and personnel to offshore
installations including wind farms, (ii) handle anchors and mooring equipment
required to tether rigs to the seabed, and assist in placing them on location
and moving them between regions, (iii) provide construction, well work-over,
maintenance and decommissioning support and (iv) carry and launch equipment used
underwater in drilling and well installation, maintenance, inspection and
repair. Additionally, the Company's vessels provide accommodations for
technicians and specialists. The Company operates its fleet in four principal
geographic regions: the
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Offshore oil and natural gas market conditions are highly volatile. Prices
deteriorated beginning in the second half of 2014 and continued to deteriorate
when oil prices hit a thirteen-year low of less than
The Company's operations and financial results were adversely affected by the COVID-19 pandemic as a result of decreased demand for the Company's services and the increase in costs due to operational changes enacted to enhance crew and on-shore employee health and safety. While business has rebounded from the lows caused by the COVID-19 pandemic, the Company continues to closely monitor the dynamics related to the COVID-19 pandemic so that it may adjust its operations if necessary.
Certain macro drivers somewhat independent of oil and natural gas prices may support the Company's business, including: (i) underspending by oil and gas producers during the recent industry downturn leading to pent up demand for maintenance and growth capital expenditures; and (ii) improved extraction technologies. While we expect that alternative forms of energy will continue to grow and add to the world's energy mix especially as governments, supranational groups and various other parties focus on climate change causes and concerns, the Company believes that for the foreseeable future demand for gasoline and oil will be sustained, as will demand for electricity from natural gas. Some alternative forms of energy such as offshore wind facilities have the potential to support, in part, the Company's business. Low oil prices and the subsequent decline in offshore exploration have forced many operators in the industry to restructure or liquidate assets. The Company continues to closely monitor the delivery of newly built offshore support vessels to the industry-wide fleet, which in the recent past contributed to an oversaturated market, thereby further lowering the demand for the Company's existing offshore support vessel fleet. A continuation of (i) low customer exploration and drilling activity levels, and (ii) continued excess supply of offshore support vessels whether from laid up fleets or newly built vessels could, in isolation or together, have a material adverse effect on the Company's business, financial position, results of operations, cash flows and growth prospects.
The Company adheres to a strategy of cold-stacking vessels (removing from active
service) during periods of weak utilization in order to reduce the daily running
costs of operating the fleet, primarily personnel, repairs and maintenance
costs, as well as to defer some drydocking costs into future periods. The
Company considers various factors in determining which vessels to cold-stack,
including upcoming dates for regulatory vessel inspections and related docking
requirements. The Company may maintain class certification on certain
cold-stacked vessels, thereby incurring some drydocking costs while
cold-stacked. Cold-stacked vessels are returned to active service when market
conditions improve, or management anticipates improvement, typically leading to
increased costs for drydocking, personnel, repair and maintenance in the periods
immediately preceding the vessels' return to active service. Depending on market
conditions, vessels with similar characteristics and capabilities may be rotated
between active service and cold-stack. On an ongoing basis, the Company reviews
its cold-stacked vessels to determine if any should be designated as retired and
removed from service based on the vessel's physical condition, the expected
costs to reactivate and restore class certification, if any, and its viability
to operate within current and projected market conditions. As of
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Recent Developments
In connection with the consummation of the Merger, the Company issued an
aggregate of 1,567,935 shares of common stock of the Company, par value
(i) 531,872 shares of Common Stock as consideration for the Merger paid toOSV Partners I's limited partners (other than the Company and its subsidiaries), and (ii) 1,036,063 shares of Common Stock as payment to settle all amounts and other obligations outstanding under the Subordinated PIK Loan Agreement, datedSeptember 28, 2018 (as amended onDecember 22, 2021 , the "PIK Loan Agreement") and paid to the former lenders thereunder (all of whom were limited partners of OSV Partners I).
In connection with the Merger, the Company and SEACOR Offshore OSV assumed and
guaranteed approximately
As a result of the Merger, the five 201', 1,900 tons deadweight capacity, PSVs
owned by OSV Partners I are now 100% owned by the Company, bringing the
Company's owned PSV fleet to 20. Of the five PSVs previously owned by OSV
Partners I, three are
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