# Letter To Our Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_HLX_2018/NYSE_HLX_2018.mmd` · pages 3-9_

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Letter To Our Shareholders

OWEN KRATZ, President and Chief Executive Officer

For the last several years, our Board of Directors and management team have focused on the goals of positioning our Company to navigate the current market down cycle, completing our expansion program, and emerging as the preeminent supplier of well intervention services to the offshore deepwater oil and gas industry. As we entered 2018, with the capital expansion of our fleet largely behind us, our focus shifted squarely to executing at high levels in all areas of operations.
Our operating results in 2018 were a reflection of our commitment to operating safely and efficiently. Our Total Recordable Incident Rate (TRIR) was at the lowest level we've ever achieved. We had strong vessel utilization across all of our business lines, with strong uptime performance efficiency in excess of 97% of contracted days. Brazil marked its first full year of operating two vessels, with the high level of performance achieved by these two vessels being a positive development in 2018. Our robotics segment achieved very good utilization for its chartered vessels fleet. Trenching operations accounted for 44% of our robotics revenue in 2018. With the increase in trenching activity and reductions in our fixed cost structure, robotics once again generated positive cash returns.
Maintaining a strong balance sheet continues to be one of our priorities in managing through this cycle. In March, we refinanced $125 million of debt with the issuance of new convertible senior notes, pushing out maturities to 2023. This refinancing allowed us to maintain our low cash cost debt structure, a key component to managing our business during this down cycle. We continued to de-leverage our balance sheet, reducing our debt by $47 million. Our balance sheet is well positioned for the current condition of our industry and will allow our Company to benefit once the market recovers.

We have six purpose-built well intervention vessels operating in three of the largest basins for offshore deepwater wells. We will expand our coverage of the well intervention market with the expected introduction of the Q7000 in late 2019. We have a fleet of 46 ROVs and 5 Trenchers providing services to the oil and gas and

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renewables markets worldwide. As we move into 2019, we see the macro environment stabilizing but still not in recovery mode. While we don't see an immediate increase in activity, the market for our intervention services bodes well for improvements beyond 2019.

Our expectations are for long service periods for our two chartered vessels in Brazil. As favor returns to offshore, and especially as demand for life extension and rate improvements increases, we expect to see demand grow for our intervention services. We are already beginning to see this in the North Sea, and the Gulf of Mexico should follow as the rig market improves. The robotics segment continues to be a challenge, with trenching for the renewables market being a positive in an otherwise difficult environment. Although we expect recovery in this segment to lag the overall market, we should continue to benefit for the next several years from reductions that we have made to our cost structure, and we will continue to strive for operational excellence and cost efficiencies. As a result we should continue to see sustainable growth in this segment even without market recovery.

Looking beyond 2019, we are actively exploring opportunities to expand our services into new geographic markets, namely West Africa and Norway. With the Q7000, we will have the assets to provide worldwide well intervention services in all five major deepwater basins. We are also seeking ways to expand the scope of services that we can provide to our customers by leveraging our existing assets. We will continue our efforts to improve our operations, reduce our costs and seek opportunities to stimulate customer activity in this challenging market. Our capital expansion may be coming to an end, but we see opportunities to continue to grow and expand our business. We have sufficient capacity to accommodate further utilization demand and we do expect rate improvement over the coming years. We expect to be free cash flow positive in 2019, and strongly free cash flow positive beyond 2019 as our capital growth phase comes to an end with delivery and final payment for the Q7000. I believe that Helix is well positioned for the years ahead, with or without a strong offshore recovery.

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OWEN KRAIZ
President and Chief Executive Officer
Helix Energy Solutions Group, Inc.