Commitments and Contingencies and Other Matters

Commitments

Commitments Related to Our Fleet

In February 2013, we contracted to charter the Grand Canyon II and the Grand Canyon III for use in our robotics operations. The terms of the charters are for five years from their respective delivery dates. We took delivery of the Grand Canyon II in April 2015 and received a $4.7 million non-refundable payment from the shipyard that constructed the vessel related to the delayed delivery of the vessel. This payment is amortized as a reduction in our cost of sales over the five-year charter for the vessel. The delivery of the Grand Canyon III has been deferred until May 2016.

In September 2013, we executed a contract with the same shipyard in Singapore that constructed the Q5000. This contract is for the construction of a newbuild semi-submersible well intervention vessel, the Q7000, which is being built to North Sea standards. This $346.0 million shipyard contract represents the majority of the expected costs associated with the construction of the Q7000. Pursuant to the original terms of this contract, 20% of the contract price was paid upon the signing of the contract and the remaining 80% was to be paid upon the delivery of the vessel. Pursuant to the first amendment, we agreed to pay the shipyard incremental costs of up to $14.5 million to extend the scheduled delivery of the Q7000 from mid-2016 to July 30, 2017. We paid $7.3 million of these costs in July 2015 and the remaining costs will be paid upon the delivery of the vessel. Pursuant to the second amendment we entered into in December 2015, the remaining 80% will be paid in three installments, with 20% in June 2016, 20% upon issuance of the Completion Certificate, which is to be issued on or before December 31, 2017, and 40% upon the delivery of the vessel, which at our option can be deferred until December 30, 2018. We agreed to reimburse the shipyard for incremental costs in connection with the further deferment of the Q7000’s delivery. Incremental costs are capitalized as they are incurred during the construction of the vessel. At December 31, 2015, our total investment in the Q7000 was $112.2 million, including the $69.2 million paid to the shipyard upon signing the contract.

In February 2014, we entered into agreements with Petróleo Brasileiro S.A. (“Petrobras”) to provide well intervention services offshore Brazil. The initial term of the agreements with Petrobras is for four years with options to extend. In connection with the Petrobras agreements, we entered into charter agreements with Siem Offshore AS for two newbuild monohull vessels, the Siem Helix I, which is expected to be in service for Petrobras in the second half of 2016, and the Siem Helix II, which is expected to be in service in 2017. At December 31, 2015, our total investment in the topside equipment for the two vessels was $113.3 million. In November 2014, we paid a charter fee deposit of $12.5 million, which will be used to reduce our future charter payments.

Lease Commitments

We lease facilities and charter vessels under non-cancelable operating leases and vessel charters expiring at various dates through 2025. Future minimum rentals at December 31, 2015 are as follows (in thousands):



	Vessels		Facilities and Other		Total

2016	$	144,389	$	4,973	$	149,362
2017	160,215		4,805		165,020
2018	126,890		4,441		131,331
2019	122,004		4,460		126,464
2020	107,484		4,041		111,525
Thereafter	199,867		16,706		216,573
Total lease commitments	$	860,849	$	39,426	$	900,275

For the years ended December 31, 2015, 2014 and 2013, total rental expense was approximately $134.3 million, $147.2 million and $102.1 million, respectively.

We sublease some of our facilities under non-cancelable sublease agreements. For the years ended December 31, 2015, 2014 and 2013, total rental income was $1.4 million, $0.8 million and $0.4 million, respectively. As of December 31, 2015, the minimum rentals to be received in the future totaled $1.6 million.

In January 2016, we entered into an agreement to lease back our former office and warehouse property located in Aberdeen, Scotland for 15 years with two five-year options to extend the lease. The annual minimum lease payment is approximately $0.9 million.

Contingencies and Claims

We believe that there are currently no contingencies that would have a material adverse effect on our financial position, results of operations and cash flows. During 2015, we concluded that a potential contractual obligation to reimburse a third party for certain foreign taxes was no longer probable and thus we reversed a previous accrual in the amount of $5.2 million for this contingent liability as a reduction in our cost of sales.

Litigation

On July 31, 2015, a purported stockholder, Parviz Izadjoo, filed a class action lawsuit styled Parviz Izadjoo v. Owen Kratz and Helix Energy Solutions Group, Inc. against the Company and Owen Kratz, our President and Chief Executive Officer, in the United States District Court for the Southern District of Texas on behalf of a putative class of all purchasers of shares of our common stock between October 21, 2014, and July 21, 2015, inclusive. The lawsuit asserts violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and SEC Rule 10b-5 as to both us and Mr. Kratz, and Section 20(a) of the Exchange Act against Mr. Kratz based on alleged misrepresentations and omissions in SEC filings and other public disclosures regarding projections for 2015 dry docks of two of our vessels working in the Gulf of Mexico that allegedly caused the price at which putative class members bought stock during the proposed class period to be artificially inflated. The deadline to apply for appointment as lead plaintiff was September 29, 2015. On January 28, 2016, the judge approved a motion for the appointment of lead plaintiff and lead counsel, and the plaintiff has until March 14, 2016 to amend the complaint. We believe this lawsuit to be without merit and intend to vigorously defend against it.

We are involved in various legal proceedings, some involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act based on alleged negligence. In addition, from time to time we incur other claims, such as contract disputes, in the normal course of business.