# Dear Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_HLX_2017/NYSE_HLX_2017.mmd` · pages 3-9_

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Dear Shareholders

We operate in a highly cyclical industry that is entering its fourth year in a down cycle. For the last several years, our board of directors and management team have focused on positioning our Company to navigate the downturn, while executing our existing expansion program with a view to emerging from this cycle as a preeminent supplier of well intervention services to the offshore deepwater oil and gas industry.

Maintaining a strong balance sheet has been one of our key priorities in managing through this cycle. In addition to the transactions completed in 2016, in 2017 we successfully executed several transactions to shore up our balance sheet for what could be a relatively long time before a market recovery: In January we sold $220 million of our common stock and in June we refinanced $100 million of our term loan extending the loan to 2020. In 2017 we reduced our overall debt by $130 million. This restructuring of our balance sheet was aimed at helping to position our Company to manage through the protracted downturn in our industry, and to allow our Company to benefit once the market eventually recovers.

Operationally 2017 was a pivotal year for Helix. In April, the Siem Helix 1 monohull well intervention vessel was accepted and commenced its four-year contract with Petrobras. The acceptance process was a difficult one for our first vessel to arrive in Brazil. The vessel started its contract at agreed upon reduced rates as several items identified in the Petrobras acceptance process were resolved, most of those items having been addressed by the end of the third quarter. We applied the lessons learned during this process to our completion and preparation of the sister ship, the Siem Helix 2. We presented the vessel for acceptance in early October and the vessel was accepted and went on contract in early December. The Siem Helix 2 marks the third vessel we have completed and commenced long-term contract operations since May of 2016. The two Siem Helix vessels represent a milestone in non-rig intervention as they are the first successful monohull designs capable of deploying high pressure riser based intervention. I believe that these assets have set the foundation for

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Helix to not only manage through this down cycle, but also to benefit during an eventual market upturn.

From a business perspective, we now have six purpose-built well intervention vessels and operations in the three largest basins for offshore deepwater wells. Three of our six vessels are on long term contracts. Two of our vessels have strong utilization in the North Sea market, a market that has improved since reaching its trough in 2016. Of the two vessels in the Gulf of Mexico, the Q5000 is on long term contract while the Q4000 covers the spot market. The Q4000 has historically achieved high utilization in this market and has been the benchmark for intervention vessels.

Canyon, our robotics division, has been the hardest hit segment of our business. The downturn caught Canyon as it made long term commitments to charter vessels to

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meet the demands of the market pre-down cycle. It will take additional time for the handicap of these high cost charters to roll off, but we are already seeing the first roll off with more to follow in the coming years. Canyon's leading role in non-oil and gas trenching is beginning to upcycle. I expect that these two factors should result in significant improvement to come in our robotics business unit.

As we move into 2018, we renew our focus on operational excellence. With the completion of the Q5000, Siem Helix 1, Siem Helix 2 vessels and the 15K Intervention Riser System, all in the last 18 months, we are transitioning from being a new construction dominated organization to one focused on operational execution prepared to face the challenges of the current market. With our new assets, and by expanding our alliance offerings with Schlumberger and creatively evolving our cost effective solutions, we seek to enhance the value proposition for our customers and for our Company.

Our operating cash flow should improve in 2018, and our free cash flow should improve significantly once we complete our capital program. It is my belief that Helix is well positioned for the years ahead with or without a strong offshore recovery.

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