# LETTER TO SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_OII_2019/NYSE_OII_2019.mmd` · pages 2-8_

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LETTER TO SHAREHOLDERS

2019 marked a year of positive inflection for Oceanering. For the first year since 2014, we saw increases in revenue, consolidated adjusted operating results, and adjusted EBITDA. 2019 was also the first year since 2015 in which we generated a year-over-year improvement in free cash flow. It was encouraging to see higher activity levels and stabilized pricing in our energy-focused businesses, which support the competitiveness of the global offshore energy markets. Despite the prolonged downturn in these offshore energy markets over the last five years, Oceanering has maintained its competitive position by leading innovative efforts to perform offshore tasks more efficiently and at a lower cost, while enhancing the safety of our employees and customers. It is also important to emphasize that many of these innovations help to reduce greenhouse gas emissions, enabling our customers to advance their own sustainability goals.

We are pleased with the following notable achievements accomplished during 2019:

- We successfully deployed our Liberty \( ^{™} \)  remotely operated vehicle (ROV) system to provide a resident, battery-powered ROV that supports subsea inspection, maintenance and repair activities;

- We developed and deployed iSurus \( ^{™} \) , a work-class ROV designed to service the offshore renewables market, and capable of working in high-current conditions, thereby helping customers to reduce on-site vessel time for their projects;

- We developed and initiated testing on Freedom \( ^{™} \) , our next-generation hybrid ROV/AUV [automated underwater vehicle], which is scheduled to have its first commercial application in 2020;

- We increased ROV days on hire by 12%, with year-over-year increases in both drill-support and vessel-support days;

- We successfully performed our first significant multi-well deepwater, riserless light-well intervention campaign for a unit of BP in Angola, and secured a contract for a new multi-well campaign for that customer in 2020;

- We secured a substantial increase in bookings in our Subsea Products segment, highlighted by the subsea umbilical and hardware awards for Total's Mozambique Project and ONGC's KG-DWN-98/2 Project, allowing us to achieve a book-to-bill ratio in the segment of 1.5 for the year;

- We took delivery of our environmentally efficient, deepwater, Jones Act-compliant, multi-service vessel MSV Ocean Evolution \( ^{™} \)  during the second quarter, and experienced good customer acceptance and activity during the second half of the year;

- We achieved or modestly beat our financial goals, by generating 165 million of adjusted EBITDA and 9.9 million of positive free cash flow, and increased our balance sheet cash position by 19.4 million to 374 million at December 31, 2019; and

- We enhanced our Environmental, Social and Governance (ESG) disclosures by adding a "Sustainability" section to our website, oceanering.com. I am pleased to report that since 2017, MSCI's ESG rating for Oceanering has improved from BBB to A.
Coming into the year, many macro industry projections pointed to offshore activity increasing again in 2020. This optimism underpinned our expectations for higher activity and meaningful improvement in our financial results. The early 2020 stock market volatility, brought on by the coronavirus pandemic and the failure of OPEC and Russia to agree to crude oil production quotas, will likely impact our operations. We are monitoring the situation closely and will proactively manage our businesses in an effort to minimize negative impacts.

Regardless of market events, we remain sharply focused on improving our financial position. We are committed to sustaining positive free cash flow in 2020. We expect not only to be well positioned to meet our financial obligations through 2020, but also to have the flexibility to act on market opportunities. In addition, we are continuing our efforts to define incremental strategies and actions to better position our businesses for profitability. We expect to provide specifics on progress during the second quarter of 2020.

Our management and employees have not lost their passion to innovate and adapt our businesses to compete successfully in this environment. It is an honor to be leading this great group of talented people and I thank them for their significant contributions to these efforts. I realize we have much work ahead to adapt and evolve our businesses for further success. I am excited for the challenge and confident about our prospects for 2020.

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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