# LETTER TO SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_HLX_2020/NYSE_HLX_2020.mmd` · pages 3-9_

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LETTER TO SHAREHOLDERS
Owen Kratz, President and Chief Executive Officer

## Dear Shareholders,

Going into 2020, we were expecting the market recovery that began in 2019 to continue. Instead, the entire world was turned upside down by a global pandemic that persists even today. It has been a difficult year for many people, and more than anything I hope you and your families are staying safe and healthy through these difficult times.

It's fair to say the ongoing COVID-19 pandemic colored nearly everything we did in 2020. Operationally we implemented numerous health and safety protocols, including personnel isolation and health screenings prior to travel and crew changes, a rigorous testing regime for all offshore personnel, mandatory face coverings, social distancing, deep cleanings of our onshore facilities and offshore assets, immediate quarantine and definitive response protocols, and working remotely for office-based positions. Financially, we withdrew our annual guidance early on in the pandemic, recognizing that the full-year outlook was simply no longer possible to predict at that time.

We are world leaders in what we do, but we recognize there's always room to grow, evolve and learn more. This pandemic has tested our team in a manner in which no other event has previously. With our execution in 2020, we proved a lot about ourselves:

We proved that we are strong. With measures in place to protect our personnel, those partners with whom we work and their collective families, in 2020 we managed to avoid major operational downtime related to the pandemic. The market was uncertain and our results were down overall, with the largest impact being felt in our North Sea well intervention business with two vessels stacked for a majority of the year. But elsewhere we delivered results largely in line with pre-COVID expectations. We generated approximately $80 million of free cash flow, something we're proud of in this environment. Like many others we got knocked back in 2020, but around the world our people rose to the challenge and showed our resiliency.

We proved that we are prudent. In the third quarter we refinanced a significant portion of our near-term debt and pushed it out to 2026, which allows us to strengthen our liquidity position and maintain flexibility to manage our near-term debt obligations and a sustained downturn. In 2020 we reduced our overall net debt by approximately $85 million, as we continue to de-lever our balance sheet. More recently we fully paid off our loan on the Q5000. In 2019 we completed the Q7000 build, representing our last legacy project in our capital expansion program, and in 2020 we were able to lower our costs and improve our efficiencies. As with our operations groups, financially we believe we have responded appropriately to this environment and have positioned ourselves well for the path forward.

We proved that we are evolving. There is a transition occurring in the energy sector. The market's focus on green energy has been emerging for some time now, and in 2020 that trend continued to grow. This evolution is impacting E&P companies' budgets, but it should provide opportunities for smaller producers or even our own continued oil and gas production ownership efforts. Also, as the level of activity for offshore renewable energy projects such as wind farms has increased, so has the need for reliable services and related equipment. In 2020 our robotics segment derived significant revenues from offshore renewable energy contracts, performing services like subsea power cable burial and seabed clearing, and we believe over the long term we're positioned to continue to grow our renewables offerings. The world is changing in many ways, and Helix is showing we are ready and able to evolve as well.

Along with an energy transition, there can be no doubt that calls for corporate sustainability are resonating throughout the world, and with good reason. At our core, Helix provides sustainable services. We recognize our need to be good corporate citizens and the important role we play as a steward of the people, communities and environments we serve. Fundamentally, Helix's business model offers our customers a variety of sustainable solutions, including: via production enhancement which allows producers to defer and decrease their reliance on drilling; decommissioning whereby end-of-life wells are plugged and abandoned in a safe and environmentally proper manner; and through the renewables markets our robotics segment serves. We're proud to stand on call as a first responder in the Gulf of Mexico with our Helix Fast

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Response System, which helps mitigate and remediate the environmental risks associated with offshore drilling and production operations. We know our ability to deliver Environmental, Social and Governance successes represents a principal component in creating long-term value for our shareholders, and we continue to implement and improve our ESG initiatives and disclosures throughout our business.

Looking ahead to 2021 we are still facing many challenges. Vaccines are being rolled out, but the pandemic's impact on the market endures, and no one can definitively say how quickly a recovery may occur, if at all, in the coming year. Historically the demand for our services has tracked the budgets of producers, and although we are constantly diversifying and would benefit from a recovery, our work volume may suffer nonetheless. We believe we've built strong relationships with our customers in the Gulf of Mexico and Brazil, but the pandemic did not help our prospects of extending long-term contracts. Any producer that could support a long-term contract is also currently dealing with the same uncertainties that face our entire sector, so we are anticipating a return to an entirely spot market, at more current market rates. This will put pressure on utilization for our vessel fleet, and we will need to rise to the occasion once again.
Where there are challenges, there is opportunity. We stepped up and delivered in 2020 in a variety of ways, but this coming year we will likely see even more adversity. As the world responds and recovers to the pandemic, the markets should improve, although we don't expect meaningful recovery will happen until at least 2022. For 2021, our focus will be to continue our diversification with more renewables projects, expand and strengthen our well intervention service offerings, and add production deals. Our balance sheet is strong, we'll continue to prudently manage our expenditures, and we have a plan in place to keep lowering our debt. We're still mired in a pandemic the likes of which none of us has ever seen, and our market's cyclicality is on full display. But we believe Helix is well positioned to weather this storm, with great leverage to macro and market recoveries. Our Helix family has proven itself to be strong, prudent and evolving as we face these challenges together. We are still navigating the present, and look forward to what the future brings.

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Owen Kratz
President and Chief Executive Officer
Helix Energy Solutions Group, Inc.

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