Greetings and welcome to the Hornbeck Offshore Services Third Quarter Earnings Conference Call. All lines are in listen only. Later we will conduct a question and answer session. If you require operator assistance at any time, press star zero. Today's call is being recorded. It is now my pleasure to introduce Potter Adams, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Thanks, operator, and good morning, everyone. We appreciate you joining us for Hornbeck Offshore's conference call to review our third quarter 2026 results and recent developments. We also welcome participants listening to the call over the web. Joining me on the call today is Todd Hornbeck, President and Chief Executive Officer of Hornbeck Offshore. Please note that information reported on this call speaks only as of today, November 5th, 2026, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. During today's conference call, Todd and I will make certain projections about future financial performance, liquidity, operations and events that are not statements of historical fact and thus constitute forward looking statements. These forward looking statements are subject to risk Uncertainties, and other factors that may cause such future matters, including the company's actual future performance, to be materially different from that which is projected today. You can locate additional information about factors that could cause the company's results to materially differ from those projected in the forward-looking statements in Hornbeck's SEC filings and in yesterday's press release under the investor section of the company's website. which is www.hornbeckoffshore.com or through the SEC website at www.sec.gov. The earnings call also contains references to adjusted EBITDA and adjusted free cash flow which are non-GAAP financial measures. A reconciliation of these financial measures is provided in the press release issued by the company yesterday afternoon. And finally, please note that the company uses its websites as a mean of disclosing material and other public information and for complying with disclosure obligations under SEC's Regulation FD. Such disclosures will be included on the company's website under the heading Investors. Accordingly, investors should monitor that portion of the company's website in addition to following the company's press releases, SEC filings, public conference calls, and websites. Now, I'll turn the call over to Todd.

Todd? Thanks, Potter, and good morning, everyone. We thank you for joining us. This is an important quarter for Hornbeck as it marks our first earnings call following the completion of our combination with Helix on September the 1st. The transaction brought together two organizations with complementary assets, capabilities, talent, and customer relationships. More details around the transaction can be found in the slides posted to our website. Potter will share some additional details later in his remarks. When we announced the combination in late April, we said we saw an opportunity to create a premier integrated offshore service company providing innovative marine and subsea solutions across deepwater oilfield, defense, and renewable industries. This thesis has not changed. What has changed is that we're now successfully executing it. Before we get to the results, I'd like to spend a moment discussing three key questions that we believe are most important to our shareholders. First, what exactly is the combined Hornbeck offshore? Second, how does bringing these two businesses together create significant value? And third, what should investors expect from us as we continue to integrate the businesses and allocate capital? Let me start with the first question. What is Hornbeck Offshore Services today? The combined Hornbeck is a diversified deepwater offshore services business operating across three distinct segments, marine transportation and specialty, subsea services, and well intervention. We're not simply a larger offshore vessel company. We now have a global reach, especially into additional premier energy basins around the world and participate across a considerably broader portion of the offshore lifecycle, with an emphasis on traditional and renewable energy and diversity through defense support and emerging technologies. Through our marine transportation specialty segment, we own and operate supply vessels, flotels, and other assets to support drilling, development, military, and other specialty activities. In our subsea services segment, we own and operate subsea vessels and robotics to provide inspection, repair, and maintenance, engineering, construction, and specialized project services. and through our well intervention segment, we help customers maintain, restore and extend production from existing traditional offshore infrastructure and ultimately provide decommissioning services. This full lifecycle exposure, complete with innovative technologies that we deploy, is a key part of our investment thesis. Offshore projects create demand for vessels, robotics and subsea services. Producing assets require ongoing inspection, repair, maintenance, and intervention. And as oil fields mature, customers increasingly need well intervention and ultimately decommissioning services. In addition, our well intervention fleet should benefit from higher levels of production enhancement demand and the forecast increases in utilization in day rigs for deepwater rigs. With this in mind, I also want to provide an update on our progress towards exiting the activities that are non-core to what I just outlined. Prior to closing the merger, Helix divested of its shallow water decommissioning business, and we intend to wind down the oil and gas interests, including Thunderhawk and Dworsky, that were previously acquired by Helix. We also expect to reduce our reliance on in-charter vessels over time. We've already replaced one in-charter vessel. Because several existing commitments are long-term, that transition will take some time, but the direction is clear. Given the focused portfolio we now operate, our job is to translate this full lifecycle platform into higher utilization, stronger margins, greater free cash flow, and improved returns on invested capital. Turning now to value creation, we see four primary ways that Hornbeck can deliver outsized returns. First, our diversified platform gives us greater visibility across our customers' offshore programs. That allows us to identify more opportunities, compete for a greater scope of work, and deploy a range of integrated assets and services across more projects and geographies. Second, it creates opportunities to improve asset utilization. An NPSB is more valuable when marketed as part of a broader solution, incorporating ROVs, Engineering, subsea tooling, and or intervention capabilities. Likewise, our subsea and intervention business benefit from access to owned marine assets while creating opportunities for pull-through work for a high specification OSV fleet. We have positioned the company and its assets into specific markets where we can drive integrated services. Third, by assembling more capabilities within the same organization, will retain a greater portion of the revenue, margin, and cash flow associated with the projects. And fourth, our scale allows us to eliminate redundant costs and create efficiencies across procurement, maintenance, operations, and the supply chain. In terms of what investors should expect from us as we continue to integrate the business and allocate capital, there are a few key points I'd like to highlight. One of the most important opportunities created by the combination is our integrated services. Complex offshore projects frequently require multiple service contractors with different operating schedules and commercial agreements. The timing and scope of each of those vendors needs to be harmonized, and each additional interface creates complexity and increases project risk. By bringing marine assets, ROVs, trenchers, engineering capabilities, and intervention systems together under one roof, we can simplify and optimize those interfaces and coordinate a broader scope of work around our customers' requirements. For our customers, this means simpler contracting, more coordinated scheduling, and clearer accountability for execution. For Hornbeck, it means a greater share of our customers' spending Better Asset Utilization and Less Economic Leakage to Third-Party Providers. We are already seeing the evidence that our customers value this model. This week, we announced service agreements with Shell covering operations in the U.S. Gulf of America. The contemplative scope brings together assets from all three of our operating segments, including a riser-based well intervention vessel, an intervention riser system, ROVs, project management and engineering, as well as a high specification MPSV with ROVs and technical services, and a Jones Act compliant OSV to support these operations. Operations under those agreements are scheduled to commence in 2027 for a five-year duration for the well intervention vessel and OSV. Importantly, this marks the first five-year agreement for a Q vessel in over a decade. This is even a broader illustration of the opportunity we saw in combining these two companies. Just like our North Sea Award announced in September, these shell agreements confirm that Hornbeck's unique offering and ability to bundle services is differentiating and positions us for sustainable growth and value creation. We also believe the combined businesses will create additional opportunities to grow our defense support business. We currently have several vessels chartered to the US government performing a variety of work scopes. Most recently, we successfully completed a proof of concept to demonstrate the ability to quickly retrofit autonomous capabilities into a commercial supply vessel that had been previously modified for a defense support work scope. It has been reported that this HOSS vessel is the largest vessel retrofitted with autonomy across the entire Department of Defense Commercial Fleet. Within the full spectrum of our market exposure, we currently see attractive opportunities in both subsea services and well intervention. In subsea, one area of particular interest is deep and ultra-deep water inspection, repair, and maintenance. The offshore industry has accumulated a large installed base of subsea infrastructure, and that infrastructure continues to age. At the same time, epic or major subsea contractors have accumulated record levels of contracting backlog that will create demand as that backlog moves into execution over the next several years. Operators need to inspect, repair, and maintain these assets, extend their economic lives, and support ongoing production. This creates recurring demand for vessels with large subsea cranes, ROVs, and Specialized Technical Capabilities, which is where we come in. A recent organic investment in eight additional work-class ROV systems is intended to position more of our MPSV fleet to address this opportunity by combining the vessel and sub-seat capability as these new assets deliver throughout 2027. We also believe well intervention gives us exposure to a growing part of the offshore lifecycle. As the global offshore infrastructure continues to mature, operators are increasingly focused on maximizing recovery from existing subsea infrastructure they already own. In many cases, intervention can restore or enhance production without requiring the capital and lead time associated with the new greenfield exploratory development. In addition, attractive commodity prices should drive Production Enhancement Demand and Forecasted Increases in Utilization and Rates for Deepwater Rigs to Support Offshore Drilling Campaigns, which should benefit our well intervention fleet. That makes well intervention an important strategic complement to our marine and subsea businesses and gives Hornbeck additional exposure to production and decommissioning customer spending as offshore fields continue to mature. Defense and renewables remain another attractive long-term opportunity. Hornbeck spent the last 25 years developing the U.S. flag marine platform, customer relationships, and operating capabilities required to serve the defense market. This, in combination with Helix's subsea robotics, engineering, and technical capabilities, allows the combined company to now serve a broader range of missions. Our stack fleet includes 23 Jones Act vessels and one Mexican flag vessels that uniquely afford us the ability to rapidly and efficiently respond to incremental defense requirements. Those vessels can potentially be returned to service more quickly and with less capital than a new build. We will only reactivate capacity when the commercial arrangement appropriately compensates us for the required investment and execution risk. We're also well equipped to support offshore renewable energy projects. We see indicators that our renewable customers in the North Sea have a growing backlog of projects requiring trenching and ROV services in that region, which is exactly what we're designed to do. I'd also like to touch a little bit on our organic growth strategy, which will remain focused on investments that increase the earnings capability of assets we already own or have under construction. As I mentioned, as a part of our strategy to grow our subsea services business, we will be acquiring eight work class ROV systems for approximately $56.4 million. Deliveries are expected to begin in the second quarter of 2027 and continue throughout the year with four systems designated for our 400 class ultra deepwater new builds. We also expect the first new build MPSV to become commercially available late in the third quarter of 2027 and the second in the second quarter of 2028. These highly capable assets designed for demanding subsea work were contemplated from the outset as vessels capable of supporting more technical complex services including intervention and defense work. As a combined company, our commercial opportunity for these vessels is much broader because now we can market them alongside our robotics, engineering, and subsea intervention capabilities. In closing, we believe the long-term deepwater offshore opportunity is especially attractive. But we also know that an attractive market by itself does not guarantee attractive shareholder returns. Performance and execution do. All responsibility is to operate safely, maintain asset reliability, price risk appropriately, integrate the business thoughtfully, and allocate capital when prospective returns justify the investment. If we execute consistently against those priorities, we believe we can build a company capable of creating value not simply at the top of an offshore cycle, but throughout the cycle. I want to thank all of our offshore and shore-based employees for the continued focus during a period of substantial organizational change. Our team has been working tirelessly to ensure the successful integration of these two companies, and I want to recognize their efforts and dedication. On that note, one thing I want to highlight is that we prioritize share ownership in the new company for our entire shoreside support team, not just the executives. We aim to foster a culture of ownership that is closely aligned with our investors, which we believe makes us unique among our public peers. With that, I'll turn over the call to Potter to take you through the numbers in more detail. Potter?

Thanks, Todd. Before reviewing our third quarter results, there are two important points about this transitional quarter. First, because Legacy Hornbeck is the accounting acquirer, Our third quarter results include three months of legacy Hornbeck, but only one month of legacy Helix. Accordingly, the quarter should not be viewed as a run rate quarter for the combined company. Second, the quarter includes $79 million of merger and integration costs and $41 million of accelerated stock-based compensation expense associated with the transactions. With this in mind, our fourth quarter results will be the first to include three full months of operations from all three segments and will provide a better baseline for sequential comparisons going forward. Please note, though, that the fourth quarter will reflect normal seasonality, planned dry dock and maintenance activity, project timing, mobilizations, and integration costs. Following the merger, we have 326 million total basic shares. Additional details are included in the earnings release in our forthcoming 10Q. We posted some slides to accompany the earnings release to our website yesterday. In those materials, you will find more information about the merger and certain consolidated and segment financial data, which we have adjusted to reflect results of the combined companies for the third quarter and certain historical periods for illustrative purposes. With that context, rather than discussing the as-reported results and reviewing variances, which are included in the press release we issued yesterday, I'll walk through the third quarter results on an as-adjusted basis, which reflect the full quarter contribution of both legacy companies. I'll focus on the key financial data provided in the slides and the underlying operating drivers we believe will be most useful in evaluating our performance going forward. Against that backdrop, I'll now provide a recap of our consolidated results. Third quarter revenue was $503 million. Adjusted EBITDA was $155 million, or 31% of revenue. Adjusted free cash flow was $99 million. resulting in a free cash flow conversion of 64%. As we move beyond this transitional quarter, free cash flow conversion will be an important measure of our ability to translate adjusted earnings into capital available for committed investment, balance sheet management, and other return-based opportunities. Before returning to the segment results, I wanted to emphasize that these are new reporting segments for the combined company and the historical results of Legacy Hornbeck and Legacy Helix do not match directly to the new structure. The assets, operations and related results of Legacy Hornbeck and Legacy Helix have been reassigned among the Marine Transportation, Subsea Services and Well Intervention segments. Across the three segments, we believe the most useful operating statistics for modeling the business moving forward are the number of active vessels, Average Day Rates, Utilization, and Operating Expense per Vessel Day. Together, these measures provide the clearest view of available earnings capacity, pricing, asset productivity, and the cost required to generate that revenue. Project and geographic mix will also affect quarterly results, particularly in subsea services and well interventions. But these core statistics should provide investors with a consistent starting point for evaluating segment margins and cash generation over time. We have included more information, including the vessels that make up each segment, in the slides posted to our website yesterday. Our marine transportation and specialty segment includes the OSVs, floatels, and specialty vessels from the legacy Hornbeck fleet. Since this segment only includes legacy Hornbeck vessels, its results reflect a full quarter of operations. Total revenue was $153 million and adjusted EBITDA was $68 million with an adjusted EBITDA margin of 44%. We operated an average of 38.5 active vessels during the third quarter. Average day rates were approximately $52,000. Active utilization was 77%. and the resulting effective day rate for the active fleet was approximately $39,900. Subsea Services generated $106 million of revenue and $34 million of adjusted EBITDA resulting in an adjusted EBITDA margin of 33% for the third quarter. The active fleet was 12.3 vessels and included the full quarter contribution from seven legacy Hornbeck vessels and five legacy Helix vessels and a partial quarter contribution from one vessel. Average day rates were $101,000, utilization was 78%, and effective day rates were roughly $78,500. Well intervention generated $237 million of revenue, $76 million of adjusted EBITDA, and an adjusted EBITDA margin of 32%. The average fleet count was eight for the quarter, inclusive of unchartered vessels. Utilization was 91% with an average day rate of $349,000 and an effective day rate of $316,000. Please note that the sum of the segments does not reflect the additional results from the unallocated and other segments. Shifting to backlog, as of September 30th, contracted revenue backlog was approximately $1.9 billion. including approximately $333 million expected during the remainder of 2026, $793 million during 2027, and $741 million thereafter. Our total backlog is comprised of $668 million, $431 million, and $760 million for the marine transportation, subsea services, and well intervention segments respectively. While backlog provides meaningful visibility, Ultimate realization will depend on project timing, vessel availability, and execution. Let me now turn to synergies. At announcement of the merger, we identified at least $75 million of anticipated annual revenue and cost synergies to be realized within the first three years after closing, consisting of $45 million of revenue synergies and $30 million of cost synergies. We have implemented actions representing approximately $20 million of expected annualized cost savings and expect to achieve our targeted cost synergies by the end of the first full year of combined operations. We are also targeting approximately $15 million of revenue synergies within the first year. The recently announced services agreements with Shell demonstrate the commercial opportunities created by the combined platform. and the company's ability to provide a broader suite of offshore services to its customers. Beginning with fourth quarter reporting, our goal is to provide clearer visibility into these actions and their effect on margins and free cash flow. Ultimately, the combination should be judged by measurable improvements in earnings, cash conversion and returns. I will now review some of our key balance sheet and liquidity related items for the third quarter as well as our capital allocation priorities. We ended the quarter with approximately $472 million of cash, net of $1.6 million of restricted cash. That balance reflects roughly $230 million of payments for deal-related costs, including around $90 million for professional fees and integration, approximately $17 million for the brand licensing agreement, and $58 million related to compensation due to the merger triggering a change in control for both legacy companies. We also used approximately $63 million of cash for withholding taxes related to net share settlements due to the vesting of stock previously issued under each legacy company's long-term incentive plans. Importantly, We funded those obligations with cash rather than using shares, thereby avoiding additional dilution to our shareholders. Total debt had a face value of just over $730 million, and we had no borrowings under our $125 million revolving credit facility. Including revolver capacity, total liquidity was approximately $597 million. This financial flexibility of a healthy cash balance, low financial leverage, and ample liquidity is important, and we will remain highly disciplined. Looking ahead, our capital allocation priorities remain straightforward. Maintain safe and reliable operations, fund required maintenance and recertification, and complete committed investments that enhance the earnings capability of assets we already own. Other reactivations, conversions, acquisitions, debt reduction, and potential returns of capital will be evaluated based on their potential to create accretive shareholder value. Our two U.S.-flagged Jones Act 400-class NPSVs remain on track for physical shipyard delivery during 2027. We expect approximately $74 million of remaining cash outlays related to the outfitting, engineering, and post-delivery enhancements excluding capitalized interests. We expect the first vessel to enter commercial service late in the third quarter of 2027 and the second in 2Q2028. Separately, we expect the majority of the remaining spending under our approximately $56 million ROV New Build program to occur in 2027. Turning to the market, we continue to view the long-term deepwater outlook as constructive. although near-term conditions vary by geography and service line. Activity in the Gulf of America remains measured while we continue to see attractive opportunities across several international markets including Brazil, the North Sea, and Europe. Importantly, the combined company's broader geographic and service line exposure means our investment thesis no longer depends on the activity level of any one single basin. With that context, I'll now spend a few more minutes on our guidance. Based on current backlog, customer commitments, and operating plans, we expect adjusted EBITDA of $90 million to $100 million for the fourth quarter of 2026 and $500 million to $550 million for full year 2027. The fourth quarter range reflects the first full quarter of combined operations, including normal, seasonal, and operational variability. It should not be annualized from September or viewed as a straight-line progression from the third quarter. Utilization for the fourth quarter is expected to be negatively impacted by 223 days of downtime associated with regulatory dry dockings comprised of 114, 75, and 34 days for the marine transportation, subsea services, and well intervention segments, respectively. This compares to 50 days in total for the third quarter of 2026. There are several important assumptions underlying our outlook that I want to make clear about our 2027 guidance. First, we assume no material earnings contribution from the non-core assets and activities that Todd discussed earlier. Second, 2027 will be a comparatively heavy regulatory dry dock year with scheduled downtime weighted toward the first half. We currently expect 407 days of regulatory dry dock downtime during the first quarter alone, including 148 days in marine transportation, 89 days in subsea services, and 170 days in well intervention. When operationally feasible, we intentionally schedule this work during seasonally lower activity periods. Third, the outlook includes the $20 million of cost synergies already implemented and therefore does not assume Realization of the Full Synergy Opportunity. Fourth, as I just discussed, we assume contribution from the first HOSS 400 class NPS new build beginning late in the third quarter 2027. Finally, our guidance assumes U.S. Gulf of America deepwater drilling activity remains consistent with current levels. You're not relying on a material increase in DOA rig activity to achieve the outlook. To the extent customer activity improves from current levels, that could provide additional opportunities, but our base case does not require it. Our 2027 guidance incorporates current expectations for back well conversion, vessel availability, project timing, geographic and service line mix, and normal seasonal variability. We will provide a more detailed 2027 guidance framework when we report our fourth quarter results in February. Looking ahead, our objective over the coming quarters is to establish a clear combined company baseline and demonstrate measurable progress in our results across margins, free cash flow conversion, and synergy realization. These measures connect the strategic case Todd described earlier to the financial outcomes we are accountable for delivering. With that, I'll turn the call back to the operator to entertain questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. In our first question, we'll hear from Keith Beckman with Pickering Energy Partners. Please proceed with your question.

Hey, good morning, and thanks for taking my question. You know, obviously we're a little early in the integration process here, but I just wanted to follow up around, obviously, the shell contract you guys saw earlier this week, right? But how are you, just can you unpack a little bit more how you're weaving together kind of the legacy Hornbeck and legacy Helix side of kind of cross-selling and bundling things together a little bit more for us and maybe how that looks going forward as well?

Yes, look, it's going great. It's been 60 days since we announced the merger. The teams are working great, and I think it's a big win to justify why we put these companies together within 60 days, signing a major contract for the company with a Q vessel, a supply vessel, and an MPSV, and a bundling contract. So I think that's a testament of why we put the companies together. We're getting a tremendous amount of response from our customer base since we announced about these types of opportunities that we can offer today that each individual company could not do on their own before. So now we can really focus not just on bundling, that's just one aspect, but also life of field services. So we can actually take the entire life of field, use our supply vessels, our MPSVs, robotics, engineering across all of our engineering disciplines, do stimulation work, intervention work, and then at the end, the decommissioning and take up all the jewelry and everything on the C4 in a one-stop shop. That's a very unique combination of heavy assets, tooling assets, and engineering capability that I think differentiates us from all the other service companies and really puts Hornbeck in a different We're not just an asset-owning company anymore. We're actually an execution company, an integration company as well. So very excited about that. And within 60 days, signing a major contract like that is pretty remarkable.

Awesome. That's very helpful. My second question just kind of revolves around thinking about the Gulf longer term as well. So obviously the Gulf in the near term here, there's a couple of floaters leaving, it seems. And then, you know, but maybe how are you guys thinking about that region longer term and, you know, a potential return to activity and particularly next year as well on the support vessel side? I mean, what is some of the offsetting factors? Is that some potential defense work? Just maybe how you're thinking about that longer term in the Gulf there.

Well, the Gulf has been relatively flat on rig count for the last three years, but we've expanded our margins and utilization during that time, and putting the companies together even makes it a more robust company. We're not just a Gulf of Mexico player, even though I believe in long-term basin play. It's a world-class basin for hydrocarbons. I think that will continue in the future. We operate all over the world. We're a global player now. With our defense and alternative opportunities, we can move these assets around very efficiently. Also, we don't really need the rig count to do the bundling and to the life of field services. What you've seen also is major announcements with tree installation and development in the Gulf of Mexico. that is a big portion of our business with the robotics and the MPSVs and the well intervention and stimulation assets. So I think that combination today, we can still utilize all the PSVs and everything on other projects than just turning the bit. Today, our revenue from direct drilling Whether it's exploratory or development drilling, it's very small as a percentage of revenue. That is not the story here. It's more the integrated services and all the services geographically we can do.

Awesome. I really appreciate it. I'll turn it back. Thank you.

Next, we'll move to Don Crist with Johnson Rice. Please go ahead.

Thanks for letting me in. Todd, I wanted to expand a little bit on Keith's last question. You know, specifically on the boat market, you know, the Gulf of America is exceptionally weak at the moment. Are you getting any traction in moving some of your boats, whether it be to West Africa or the Mediterranean through the relationships that Helix had on that side of the business that you may have not had from the Hornbeck side previously?

Yes, we are. We're getting a tremendous amount of inbounds to look at projects that we didn't have boots on the ground or infrastructure in West Africa and the Med and even the North Sea. So pretty exciting that we have these opportunities that if we so choose, we can move the assets. But what's really coming in is as soon as we announced our customer base, got it. They understood what we were doing. And the influx of us being able to put work packages together to do life of field services and bundling has been more robust than anything else that we've seen. While we do have a lot of opportunities in the company because of the global reach now, we can do a proper alternative analysis on what's the best, how we maximize revenue and manage risk because we can weigh all these opportunities against each other for the company. And also what's driving is what you know is our military business, our defense work. is really starting to pick up. And you can see, just read the papers every day, you know why. But that's a big portion of the company. And now with the capabilities with ROVs and robotics and some of the tooling that Helix has in its existing fleet and engineering, it opens up a wide array of opportunity for us with our defense work, domestically and abroad. So that is another play that's coming very, very strong. Pretty excited about just not only geographic reach, but all of the inbound that we're getting across the globe of looking at projects that we probably never individually, we probably wouldn't see if the companies were separated today because of the work packages and the engineering and the back office things that we can do that we couldn't do, you know, as each company independently.

I appreciate that. And one question on the comments on your scripted remarks. I think you said that you wanted to exit charter vessels. Were you referring to the CM vessels down in Brazil, or are those some other vessels that they might have had?

Well, we look at everything. Everything's on the table. You know, in chartered vessels, as you know, carry a liability, long-term contracts, and and we're a heavy asset owning company with the soft skills of the engineering and the tooling. So it's better for us to own our own equipment and manage our destiny a little bit better than relying on third parties. Number one, not just to capture the cash flow and the returns, but also when you get to a tight market, if something was to happen to a third party vessel for any reason at all, it could be pretty difficult to replace. Controlling the destiny and where we're going in the capital return and really lowering the risk. And look, you know, when you have too many unchartered vessels, in my mind, it's also a credit issue as well with the rating agencies and others. So we're also looking for the lowest cost of capital for the company over the time period. And we believe that is owning our own equipment and servicing our clients 100%.

Okay, just one more final one for me, if I could slip it in. On the M&A front, obviously, you have a really good balance sheet here, which, you know, you may have to refinance the debt and put it together here shortly. But after that, are there some attractive targets that may be in a region that you're not operating in today, whether it be Brazil or West Africa or somewhere else that look attractive today?

There's a tremendous amount of opportunities across the globe to look at. And with our company today, the integration that we've done with the two companies opens up more opportunities. But as a public company, investors naturally ask about our growth plans. What we think about it is our financial strength provides a significant flexibility to evaluate a wide range of accretive growth opportunities. But always we're going to focus on increasing shareholder value So it's got to pass the smell test with us, but I can tell you that there are opportunities around. We just have to weigh that for the risk and the returns versus keeping the capital and returning it back to the shareholders.

I appreciate the color, Todd. Thanks. We'll turn it back.

And moving on, we'll hear from James West with Mellius Research. Please go ahead.

Hey, good morning, Todd Potter. Todd, the Shell transaction, or the Shell contract, sorry, is really, really impressive. And I know that Hornbeck has a long legacy relationship with Shell. Curious as to how this came together.

the framework and is this what's the applicability of this to other contracts and has this gotten the notice of other other major oil companies uh yes across the board uh it is uh very well noticed that as you can see and you probably heard from other commentary on other calls the well intervention and stimulation market is really picking up a lot of the rigs are going back to on the drill bit and, you know, with the commodity prices where they are and where I think people believe the strip will be, you know, forward strip through the next three to five years, it looks like things are sizing up pretty well. This came together, of course, because Shell noticed that they need a long-term solution for their, not just their deepwater P&A, but the intervention work and stimulation. And when we announced the companies, it really brought Clarity. They were one of the first to call that said, oh my gosh, you can do all of the entire project for us. So that's where the supply boats come in and the MPSVs. And look, we expect to expand on that relationship. This is just the first phase. But we are getting inbounds from other major oil companies to do the exact same thing. So whether it's a bundling or whether it's life of field services, All of that is coming into focus as a one-stop shop. Very easy to contract with us because we own all the equipment. We can build a lot of efficiencies in with our customers because they're not charting from four or five different asset owning companies and trying to marry up the different agreements, the insurances, the time they have to put them on and off. We can streamline that process. We own all the equipment. We can put it on and off and reduce a tremendous amount of friction costs for them when it's needed and share in some of that savings. And that improves our utilization and margins as we build out that franchise, which I think we're probably one of the only ones with the asset collection that we have that can do true cradle-to-grave services with big assets. So pretty darn excited about it, and I think our customers get it. you know today and good things to come in the future.

And then maybe a quick follow-up for me, maybe unrelated, but in the military business, and I know you can't go into a lot of detail here, but it's become a big part of the company. Is there room to grow that further? I mean, it's a great kind of consistent cash flow business that underpins your interest expense and things like that. And so I'm curious how you're thinking about that.

Yeah, the way we think about it in the future is that, look, we've got 23 vessels that are able to go quickly to the military at a very low cost. I mean, it's like almost an internal acquisition. It's organic growth. But they've been well maintained. They were the deep water vessels of the last upcycle. And they're very adaptable to the projects that we're looking at with the military and what we know they need in the future. and as we reported, the technology that we're developing with several others on autonomy and AI is really moving that forward. So yes, there's not just an opportunity just to expand our defense services, but also not just to defuse our debt or anything, but actually a big profitable segment of the company with a tremendous amount of upside growth there. We do a lot with technology. Hornbeck Offshore has always been a technology company first and what we've done is we've developed, whether it was back in the day when we developed a very DP1, first DP1 continuous duty rating DP systems or dynamic positioning systems or DP2 or all of the other technology we've brought over the years to the market. We take that technology and then we just wrap it in a steel hull with different components to do a service. really what drives the force of the company and growth a lot of times is our technology that we're developing right now that we can use on our existing fleet and then eventually ships of the future could be a decade out or for whatever it may be with the military it may be an alternative it may be new ventures in ultra deep water complex areas to operate so we're pretty excited about the field of view not just an oil and gas business but all the other Deepwater regions of the world that have different applications that are coming to the forefront because of technology, and that's where we're at the point of the end of the stick.

Thanks, Seth. Okay.

Next one from Greg Lewis with BTIG. Please go ahead.

Hey, good morning, and thanks for taking my questions. You know, just following up on James's question around the Shell contract, you know, realizing in the past, Helix used to kind of contract with oil majors for, like, a minimum amount of utilization on an annual basis. I guess as we look at this multi-year contract, are there minimums of utilization that we should expect? And then – excuse me – Is this project-based pricing or is it more day rate across the different assets that are going to be deployed during the contract?

Well, as these contracts go, we're not at liberty to talk about the contract. We put out a press release that Shell has approved. and really in our next quarter in February, we're going to add that to the backlog. It's not added to the backlog right now, but I can tell you it's substantial and there's growth opportunities here. But yes, to answer, there are minimums with tons of growth opportunities within the minimum. So it is a major contract for backlog. So that will be included in February when we add it to the backlog. It wasn't included this time. For a contract, it is a major piece of business for us that has not just on the face of the contracts that we've already signed, but growth opportunities in other phases as well for other equipment in the company. This is just the first phase, but you're on it. It's got minimums with growth opportunities as well, but the minimums are very substantial.

Okay, super helpful for that. Thank you. And then, Potter, just as we think about the guidance, the 500 to the 550, you know, I don't know what else you get. Like, as we think about the swing factors in that, you know, just thinking about marine transportation, is that largely the driver of between the high end and the low end and then as we think about utilization, just kind of looking at slide 17 and looking at the previous, I don't know, last six quarters, is that kind of based on like a high 70% type utilization? Is it mid-high 70s? Is that kind of a fair way to start thinking about 27%?

Yeah, I mean, we outlined kind of those key assumptions in the prepared remarks, Greg. You know, one of the key things is the heavy dry dock year, and we gave you those numbers in the slide deck and on our guidance slide to show, you know, what the impact on utilization should be for those dry dock days. But really, I mean, I think when we think about upside, yes, marine transportation, we kind of outlined the Gulf of America. Should activity pick up there? We see upside from that basin. But also, as Todd pointed out, provided, you know, there is a growing well intervention market and with rig utilization tightening and day rates increasing there, that only benefits our assets in that segment. And then as we build out the IRM business in sub C, we think that there's additional opportunities there. So as we said, we're constructive on the overall macro. But in the Gulf of America, we're not relying on increased activity, but that could produce upside to our guidance if that does come to fruition.

Okay, Greg, I would also add to that is that, you know, we have a tremendous amount of operating leverage in the business. And, you know, not just from on every segment we see growth opportunities, whether it's rigs or going back to, you know, drilling rigs or doing more exploratory development drilling. or the military business with more contracts coming there or even alternatives. But what we've created here is new demand for the company by being able to bundle and do the life of field services that didn't exist for each company before. So even without demand drivers increasing, if it stayed flat, we are creating more demand for our equipment by the nature of how we're redoing the business model and the business plan. We're no longer dependent on just A drilling rig going to work or something had happened with the commodity price going up. We can stay in the environment here and still have a tremendous amount of operating leverage. So with that type of exposure and the strengths of the company they're putting together, we can really full lifecycle exposure that we didn't have before. We've got innovative technologies that we're bringing to create demand as well for our business. The market diversity geographically, opening up a tremendous amount of markets. That's opened up demand for the company without changing any of the demand profile out there. It's opened up demand for us because of putting the company's expanded geographic footprint. But I do believe the share price doesn't fully reflect the value of Haas today. So I think it's a good time to buy. I've got to just put that in there.

Sounds good. Looking forward to it, guys. Have a great day.

Okay, great. Thanks, Greg. Thank you so much.

There are no further questions at this time. I would now like to turn the floor back to Todd Hornbeck for closing remarks.

Look, I want to thank everybody for joining our call today. Before we close, I want to reiterate that Hornbeck Offshore Services today is providing a meaningful, differentiated service offering thanks to our diversified platform, asset utilization, and scale. We're confident in the value we bring to our customers and our ability to deliver long-term shareholder value. With that, thank you all for joining us. Safe sailing, and have a great rest of your day.

Thank you. This does conclude today's teleconference. We thank you for your patience, for your participation. You may now disconnect your lines at this time.