XML 29 R18.htm IDEA: XBRL DOCUMENT v3.3.1.900
Commitments And Contingencies And Other Matters
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments And Contingencies And Other Matters
Commitments and Contingencies and Other Matters
 
Commitments 
 
We contracted to charter the Grand Canyon, Grand Canyon II and Grand Canyon III vessels for use in our robotics operations. The original term of those charters was for five years from the delivery date. We took delivery of the Grand Canyon in October 2012 and the Grand Canyon II in April 2015. Pursuant to the charter amendments in January 2016, the delivery of the Grand Canyon III was deferred until May 2016. Pursuant to the charter amendments in February 2016, in connection with charter rate reductions for the vessels, the term of the vessel charters was revised as follows: seven years from the delivery date for the Grand Canyon and Grand Canyon III charters and six years from the delivery date for the Grand Canyon II charter.
 
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 contract amendment we entered into in June 2015, 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 to defer certain payment obligations. We paid $7.3 million of these costs in July 2015 and the remaining costs were to be paid upon the delivery of the vessel. Pursuant to the second contract 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. Also pursuant to this second amendment, 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 March 31, 2016, our total investment in the Q7000 was $114.5 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. We have been in ongoing discussions with Petrobras with respect to potentially amending our contracts, in a manner that addresses Petrobras’s efforts to reduce its costs structure with many of its suppliers and is acceptable to us as well. In connection with the Petrobras agreements, we entered into charter agreements with Siem Offshore AS for two newbuild monohull vessels, the Siem Helix 1 and the Siem Helix 2. In early April 2016, a small localized fire occurred on the Siem Helix 1 which is being constructed for the vessel owner at the shipyard. We continue to evaluate the impact of the fire on the timing of the vessel’s delivery. Based on preliminary information provided to us by the shipyard we believe that no major damage to the vessel has occurred. Although we presently have no assurance regarding the outcome of our discussions with Petrobras with respect to contract amendments or the precise timing of the delivery of the vessels, we currently anticipate that the Siem Helix 1 will be in service for Petrobras in the fourth quarter of 2016 and that the Siem Helix 2 will be in service for Petrobras in 2017. At March 31, 2016, our total investment in the topside equipment for the two vessels was $125.1 million. In November 2014, we paid a charter fee deposit of $12.5 million, which will be used to reduce our future charter payments.
 
Contingencies and Claims 
 
We believe that there are currently no contingencies which would have a material adverse effect on our financial position, results of operations or cash flows.
 
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 Mr. 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 “Class Period”). 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. On January 28, 2016, the judge in the case approved a motion for the appointment of lead plaintiff and lead counsel. On March 14, 2016, the lead plaintiffs filed an amended class action complaint, adding Mr. Tripodo, our Executive Vice President and Chief Financial Officer, and Mr. Chamblee (our former Executive Vice President and Chief Operating Officer) as individual defendants, alleging the same types of claims made in the original complaint (alleged violations during the Class Period of Section 10(b) of the Exchange Act and SEC Rule 10b-5 with respect to all defendants, and Section 20(a) of the Exchange Act against the individual defendants), but asserting that the alleged misrepresentations and omissions in SEC filings and other public disclosures are related to the condition of and repairs to certain equipment aboard the Q4000 vessel. We believe this lawsuit to be without merit and intend to vigorously defend against it.
 
We are involved in various other 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.