# LETTER TO SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_OII_2020/NYSE_OII_2020.mmd` · pages 2-8_

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LETTER TO SHAREHOLDERS

Before beginning my commentary to shareholders, I would like to express my sympathy to all those affected by the pandemic.

Now to my remarks. Our initial expectations for 2020 were for higher activity and meaningful improvement in our financial results. Despite the Covid-19 pandemic and the resulting degradation of the global energy market, we remained sharply focused on improving our future financial position. Through continued adherence to established COVID-19 protocols, we were able to minimize employee and customer workplace exposure while maintaining business continuity. As a result, the cost and process improvement program that enhanced the performance of our businesses enabled us to attain results within our original guidance range.

I am very proud of what we accomplished in 2020. With all of the challenges presented by the COVID-19 pandemic, including the crude oil demand destruction and resulting pricing collapse in the first half of the year, and the many challenges faced in protecting our workforce and customers, Oceanering delivered improved consolidated adjusted operating results and adjusted EBITDA as compared to 2019. Despite the headwinds of lower activity in our energy segments, consolidated 2020 adjusted operating results and EBITDA improved year over year, led by our Manufactured Products and ADTech segments. In 2020, each of our segments, with the exception of Offshore Projects Group, contributed positive adjusted operating income, and all of our segments contributed positive adjusted EBITDA.

We generated $137 million in cash flow from operations and invested $61 million on capital expenditures during the year. This resulted in delivering meaningful free cash flow during the year, with our cash balance increasing by $78 million, from $374 million at December 31, 2019 to $452 million at December 31, 2020.

In 2020, we achieved significant improvement in our IMDS business, with adjusted operating results improving substantially over 2019. Our Subsea Robotics business, a recognized leader in work class ROV services, secured contracts with projected revenues totaling more than $225 million during the fourth quarter 2020. Our ADTech business met its performance targets established at the beginning of 2020, before the COVID-19 pandemic was declared. The business also recorded several important incremental contract wins, including partnering with Dynetics to support their design of the Human Lunar Landing System for NASA; and a contract to operate and maintain the U.S. Navy's submarine rescue systems, with potential revenue up to $119 million, assuming annual renewals over a five-year period. We also maintained our commitment and focus on safety, with our team continuing to identify high-hazard tasks and developing engineered solutions to mitigate risks.

We made meaningful progress on our sustainability efforts, through various environmental, social and governance (ESG) initiatives. During 2020, we published our first sustainability report using the Sustainability Accounting Standards Board (SASB) disclosure methodology.

- From an environmental perspective, we continued to advance our capabilities as a technology delivery company and to develop clean-energy technologies to assist our customers in mitigating greenhouse gas emissions and meet their reduced emission goals. We also continued implementing measures to reduce the amount of greenhouse gases emitted from our own operations, including facility consolidations, employee remote work options, and increased recycling efforts.

- From a social perspective, we continue to explore new ways to make positive contributions in the communities where we operate, and to increase workforce diversity within our company.
- From a governance perspective, we are taking action at the board level as well. We announced the addition of two new board members and formalized our ESG reporting through our Board of Directors Nominating and Corporate Governance committee.

Coming into 2021, several industry projections pointed to continued headwinds for the offshore oil and gas market, with flattish activity as compared to 2020, due to the low level of project sanctioning over the last year, and continued uncertainty surrounding COVID-19. Recent actions by OPEC+ have been supportive of crude oil prices and provide us with some cautious optimism that activity levels could improve in the back half of this year. Regardless of the trajectory in activity levels, we are confident that the cost improvement measures and segment realignment implemented in 2020 have positioned us to succeed in the coming year. Energy transition will continue to be an important focus for us in 2021.

Our management and employees exhibited strength and resilience in their determination to perform, despite the unprecedented industry challenges of 2020. I thank this great group of talented people for their significant contributions. While we still have much work ahead to adapt and transition our businesses for further success, I am excited for the challenge and confident about our prospects for 2021.
And, to our shareholders, thank you for your continued support of Oceanering.

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Roderick A. Larson
President and Chief Executive Officer

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