Earnings Call Transcript - HLX Q4 2025

Operator, Operator

Good morning, and welcome to the Helix Energy Solutions Fourth Quarter and Full Year 2025 Earnings Conference Call. I am Frans, and I'll be the operator assisting you today. I would now like to turn the call over to Brent Arriaga, Vice President of Finance and Accounting. Please go ahead.

Brent Arriaga, Vice President of Finance and Accounting

Good morning, everyone, and thank you for joining us today on our conference call, where we will be reviewing our fourth quarter and full year 2025 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Erik Staffeldt, our CFO; Ken Neikirk, our General Counsel; Daniel Stuart, our Vice President, Commercial; and myself. Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release and slides can be accessed under the News and Events tab. Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken?

Kenneth Neikirk, General Counsel

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or industry trends, or business or financial results. All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual and future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions, and factors, including those set forth in Slide 2 of our presentation and in our most recently filed annual report on Form 10-K, our quarterly reports on Form 10-Q, and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference call. Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations, along with this presentation, the earnings press release, our annual report on Form 10-K, and a replay of this broadcast, will be available under the Investors section of our website at www.helixesg.com. Please remember that information on this conference call speaks only as of today, February 24, 2026, and therefore, you are advised that any time-sensitive information may no longer be accurate as of any replay of this call. Scott?

Scott Sparks, COO

Thanks, Ken. Good morning, everyone. Thank you for joining our call today. We hope everybody is doing well. This morning, we will review our fourth quarter and full year 2025 results, financial performance, and operations. We'll provide our view of the current market and provide guidance for 2026. Our teams offshore and onshore safely delivered another well-executed quarter. The fourth quarter turned out to be much stronger than we anticipated even with some segments being in a softer market condition and returning to winter seasonal conditions that usually drive down utilization. In terms of earnings, the fourth quarter was our highest fourth quarter since 2013, so congratulations to our teams. Moving on to the presentation, Slides 5, 6, and 7 provide a high-level summary of our results and key highlights for the quarter and for the year. As mentioned, our fourth quarter results were better than expected despite the continued low-cost stacking of the Seawell and lower utilization for the Q4000 in the Gulf of America. Revenues for the fourth quarter were $334 million, with a gross profit of $51 million and a net income of $8 million. Adjusted EBITDA was $74 million for the quarter, and we had positive operating cash flow of $113 million, resulting in positive free cash flow of $107 million. Highlights for the quarter include improved results in the Gulf of America shelf with good late-season utilization, including work in the Epic Hedron late into December. The successful transition of the Sea Helix 1 to its 3-year Petrobras contracts and securing a multi-year P&A contract in the North Sea that should enable both vessels in the region to be utilized in 2026, bringing the Seawell out of stacking. The year ended with revenues of $1.3 billion, with a gross profit of $159 million and a net income of $31 million, generating an adjusted EBITDA of $272 million, and we had positive operating cash flow of $137 million, resulting in positive free cash flow of $120 million. Our cash and liquidity remain strong with increased cash and cash equivalents of $445 million and increased liquidity of $554 million at year-end. Highlights for the year include a strong year in the Robotics segment, working 6 trenches, 7 vessels, and 3 boulder grabs with market conditions allowing for further increased rates. Three vessels on long-term contracts in Brazil, the SH1 and SH2 both finished the year under 3-year contracts with Petrobras at higher rates, and the Q7000 is on a 400-day contract with Shell, and significant year-over-year improvement for the shallow water abandonment results. Over to Slide 9. Slide 9 provides a more detailed review of our segment results and segment utilization. In the fourth quarter, we continued to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, the Gulf of America, and the U.S. East Coast. Slide 10 provides further detail of our Well Intervention segment. In the Gulf of America, the Q5000 achieved high utilization, completing work on a multi-well campaign for Shell and then commenced work on a 2-scope program for BP. The Q4000 had some gaps in the schedule in Q4, working on lower-rate RV decommissioning projects for Murphy for a good portion of the quarter and returned to contracted works at well intervention level rates last month. In the North Sea, the Well Enhancer had 70% utilization during the quarter, working for 2 customers. The Seawell remained on warm stacked for the quarter, and we reactivated the vessel in January and commenced work earlier this month. In Q4, the Q7000 completed work on numerous wells for Shell on the 400-day decommissioning campaign in Brazil with 100% utilization. The SH1 had 61% utilization during the quarter. The vessel completed decommissioning contract for Trident and then completed inspections and acceptance prior to commencing its 3-year Petrobras contract. The SH2 had a very strong quarter with 100% utilization for Petrobras. The stand-alone 15K IRS was on hire in Brazil contracted to SLB in the quarter, achieving 75% utilization in the quarter prior to returning to the U.S. Moving to Slide 11. Slide 11 provides further detail of our Robotics business. Robotics had another strong quarter and a very good year. The business performed at high standards, operating 6 vessels during the quarter, working between trenching, ROV support, and site survey work on renewables and oil and gas-related projects globally. Robotics worked 4 vessels on renewables-related projects during the quarter and had strong vessel utilization overall, with 2 vessels working on trenching projects and 2 vessels working on site clearance. 5 trenches and 2 IROV boulder grabs were utilized during the quarter. We operated 2 vessel trenching spreads in Europe, including the GC Free and the North Sea enabler. The Glomar Wave and the Trym support vessels worked on renewable site clearance projects utilizing the IROV boulder grabs in Europe. We returned the Glomar Wave to its owners in late December following the expiration of its charter and replaced the vessel with the high-spec vessel, the Patriot in January. The Shelia Bordelon line completed ROV works in the Gulf of America, where she is currently undertaking ROV support works prior to being scheduled to head back to the U.S. East Coast. Also in renewables, the T1400-1 trencher completed work on a longer-term contract from a client-provided vessel off Taiwan and the T-1400-2 works from a client-provided vessel for a longer-term contract in the Mediterranean, which has now been extended to the end of Q1 2027. The GC II in the Asia Pacific region performed oil and gas support work offshore Malaysia during the quarter. Our renewables and trenching outlook continues to remain very robust with numerous sizable contracted works in 2026 through 2030 and a solid pipeline of tender activity as far out as 2032 with improving rates year-over-year. Slide 12 provides detail of our shallow water abandonment business. Q4 is usually seasonally low in terms of utilization for the shallow water abandonment business. However, in Q4, the Hedron heavy lift barge worked well into December with 92% utilization. The dive boats completed 54% utilization and the lift boats 53% utilization. P&A spreads worked offshore totaling 538 days of utilization and the coil tubing systems at 83 days of utilization. In summary, whilst the year was softer than expected at the start, we finished relatively strong. We're encouraged by our strong Robotics and Brazil segments and see improving market conditions in the later half of 2026 and into 2027. I would like to thank our employees for their efforts, delivering again safely at a high level of execution, producing one of our best years in regards to MPT, and our safety statistics continue to remain among our best on record. Before I turn the call over, I would be remiss if I did not address the announcement we made in December when Owen, our long-time CEO, announced his intent to retire. Our Board is focused on selecting the next CEO for Helix, following a long-established succession plan, working with outside advisers and Owen. We, the management team, the Board and Owen are committed to business continuity in a smooth transition. We are grateful that we can benefit from Owen's expertise and perspective during this transition as Helix is well positioned with a strong balance sheet that affords opportunities for future growth. On a personal note, I've worked with Owen for over 25 years. He has been a pioneer in intervention, providing leadership and vision to build Helix and drive long-term value creation. On behalf of the Helix family, thank you, Owen. To continue our call, I'll now turn the call over to Brent.

Brent Arriaga, Vice President of Finance and Accounting

Thanks, Scotty. Moving to Slide 14, it highlights our key balance sheet metrics as of December 31. At year-end, we had $445 million in cash and $554 million in liquidity, which includes the availability on our ABL facility. Our total funded debt stood at $315 million, and we reported negative net debt of $137 million at year-end. Our balance sheet remains strong, and we expect to keep increasing our cash reserves as we plan to generate significant free cash flow in 2026 with minimal debt repayments due between now and 2029. I'll now hand the call over to Erik to discuss our outlook.

Erik Staffeldt, CFO

Thank you, Brent. We are pleased with the strong finish to 2025 delivered by our team. Our operating season extended deep into the fourth quarter before the winter season slowdown. As we enter 2026, we see conflicting signals. We have a strong backlog for the year and a base level of activity in our markets, which remain supportive and constructive. However, we also have a market that lacks conviction or direction. The macroeconomic challenges create an uncertain environment, influenced by geopolitics, regional conflicts, and conflicting supply and demand dynamics. Despite these challenges, momentum is building as producers indicate plans for expanding operations and activity in late 2026 or early 2027. The global renewables market continues to be strong. Our outlook remains positive despite these near-term challenges. Our forecast for 2026 is backed by contracts for several key well intervention assets and trenching contracts in our Robotics segment. However, our outlook for 2026 is affected by two distinct events that are expected to lead to a year-over-year EBITDA reduction of about $40 million. Earlier this month, we successfully completed the workover of the Thunder Hawk Field, which incurred an estimated cost of $16 million and will impact our first quarter results. In mid-2026, the Sea Helix 1 is scheduled for its 10-year recertification, impacting our results by more than $20 million. Excluding these events, and despite the continuation of various macro challenges from 2025 into 2026, we see an overall environment that is an improvement over 2025. We are providing guidance on key financial metrics from our 2026 forecast. We expect revenue to range from $1.2 billion to $1.4 billion, aligning with 2025 levels. EBITDA is expected to be between $230 million and $290 million, as previously mentioned, reflecting the impact of the Thunder Hawk workover and the Sea Helix 1 docking. Our capital expenditure is projected to be between $70 million and $80 million, focused on regulatory maintenance of our vessels and intervention systems as well as fleet renewal of our robotics ROVs. We anticipate free cash flow generation to be between $100 million and $160 million, with variability linked to working capital movements. These ranges include key assumptions and estimates, and any significant variations could lead to results falling outside these ranges. Key drivers for our annual guidance include second half utilization of the Q4000 and Q7000, recovery in the North Sea well intervention market, robust markets for our robotics fleet, and a stable shallow water abandonment segment. Our guidance highlights strong EBITDA margins and consistent free cash flow generation, as evidenced on our slides which illustrate healthy cash conversion rates and attractive yields. Our quarterly results will be influenced by seasonal weather patterns in the North Sea and U.S. Gulf Shelf, particularly in the first and fourth quarters. Additionally, the Thunder Hawk workover and timing of our vessel maintenance will cause quarterly variances. We expect our financial performance in 2026 to follow last year's pattern, with the second and third quarters being our most active, while the first and fourth quarters face winter weather constraints. With seasonal impacts and anticipated front-loaded capital spending, our free cash flow generation will likely skew towards the latter half of the year. Moving to specific segments, the U.S. Gulf of America remains mixed for Well Intervention. The Q5000 has good contract coverage but needs additional work to fill its Q3 schedule. The Q4000 begins the year with contracted work extending into Q2, while the second half of 2026 remains open. Utilization of the Q4000 will be a key focus for us in 2026. We observe a recovery in the U.K. North Sea well intervention market, although with some lower margin work. We have secured nearly 400 days of work in the area with additional prospects. The Seawell has been reactivated and is currently in operation. We expect good utilization for the Seawell this year, with the well enhancer season commencing in March. We are encouraged by the current market activity and anticipate a solid multi-year recovery. The Q7000 is engaged in Brazil working on a Shell project, and we are exploring short-term opportunities for the vessel in Brazil and West Africa. Utilization of the Q7000 is also a critical area of focus for us this year. The Sea Helix 1 and Siem Helix 2 are contracted to work for Petrobras throughout the year. The Sea Helix 1 will undergo its scheduled 10-year docking midyear, significantly affecting our 2026 outlook. Moving to the robotics segment, the trenching market continues to showcase strength for Helix, especially in Europe. In 2025, we secured important trenching contracts in the North Sea which form the basis of a strong outlook. Bidding activity remains very active. However, the APAC market is likely to be softer in 2026, with planned trenching projects in Taiwan and relocating the GC2 to the North Sea for additional trenching work. In the North Sea, we expect strong trenching utilization for the Grand Canyon III, Horizon Enabler, and GC II in 2026. The GC III will dock in Q1, while the GC II will transit to the North Sea in Q2. Our site clearance vessels are forecasted for good utilization. The T-1400-2 has a confirmed contract for a project in the Mediterranean. In the U.S., the utilization of the Shelia Bordelon line is expected to vary with a mix of work in the U.S. Gulf Coast and East Coast. Regarding production facilities, the HP I is contracted for the rest of 2026, recently extended through June 2027, with no expected changes. We anticipate variability in production as the Droshky field continues to deplete, and the successful workover of Thunder Hawk is expected to yield production in Q2. The workover expense of $60 million will affect our Q1 outcomes. Moving on to the Alliance, we expect a traditional seasonal impact in our shallow water abandonment segment, particularly in Q1 and Q4, with results driven by the length of the favorable weather season. Improvements in the marine offshore sector are noted, along with increased competition in energy services, diving, and heavy lift. We expect the Marine Offshore business to maintain good utilization across up to 7 liftboats, although there will be some variability and seasonality affecting OSVs and crew boats. The Energy Services sector is expected to show good utilization of 4 to 7 P&A spreads and 1 to 2 coiled tubing units. There will be seasonal variations in the diving and heavy lift segment; the Hedron is currently undergoing docking and is anticipated to stay idle with limited winter opportunities, followed by an active season in Q2 and Q3. Our CapEx profile for 2026 is significantly influenced by dry docks and vessel maintenance schedules. The Hedron's docking is underway, and Sea Helix 1 is scheduled for a 45-day docking midyear. Our CapEx range for 2026 is projected to be between $70 million and $80 million, with most spending focused on maintenance and project-related matters primarily funded by operating cash flow. Reviewing our balance sheet, our funded debt of $315 million is expected to decrease by $10 million in 2026, in line with scheduled principal payments on our MAR debt. We also plan to continue our share repurchase program, targeting to use 25% of free cash flow.

Owen Kratz, CEO

Thanks, Erik. 2025 has been softer than 2024, with impact on both rates and utilization over revenue down 5% and EBITDA down 10%. However, this is better than expected and better than our revised guidance following the unexpected collapse of work in the U.K. The Gulf of America intervention results were impacted as a result of accelerating the timing of the Q4000 dry dock from 2026 into 2025. We did this to take advantage of what could be a stronger year in 2026 versus the softer second half of '25. The rest of the company showed flat to marginal improved results over expectations in our other segments, highlighted by much improved results in shallow water abandonment and Droshky production. However, Thunder Hawk remains offline for the entire year as partners decided to defer the required intervention until 2026. On the production side, there are some positive developments. Droshky continues to produce much better than expected. The Thunder Hawk intervention completed in February with successful results. The host facility operated by others is experiencing issues that don't allow us to immediately start production, but production is expected to start in early April. Absorbing the cost of the intervention and the slower-than-desired start-up will see EBITDA negatively affected for 2025, but it's a good intervention result with positive future impacts. All in all, it was not a bad performance for the year, allowing us to beat our revised guidance of $255 million of EBITDA, which was set following the unexpected shutdown of activity in the North Sea. Going into 2026, we anticipate the macroeconomic outlook to remain somewhat weak due to ongoing uncertainties. We expect the North Sea to become more active, primarily driven by decommissioning efforts. We have reactivated the Seawell and are optimistic about improvements in the market. Additionally, we foresee a slight improvement in the U.S. well operations segment. However, these expected gains will be counterbalanced by the Q7000 results as it shifts between contracts. In Brazil, we have a 5-year special survey dry dock scheduled for the SH1, which will significantly affect well operations as the SH1 will be out of service for about 45 days. We expect robotics to maintain strong performance with clear prospects for sustained results. In shallow water abandonment, we have anticipated a significant increase in decommissioning activity by 2027. For 2026, we predict greater competitive pressure as contractors prepare for the improving market in 2027. As a result, we foresee a flat to slight decline in results compared to 2025. Performance of production facilities should remain steady throughout 2026. There are some variables to consider, but we could see overall results in 2026 being similar to those in 2025 as we prepare for what we believe will be a much stronger 2027 across the board. Just a note on our guidance for 2026. We're expensing the Thunder Hawk intervention, and we have a 5-year special survey dry dock on the SH1 scheduled for 45 days out of service, as Erik had mentioned. Combined, these 2 events represent $40 million of EBITDA. You can do the math, with this highlights how strong and improving our core business is, and we anticipate a strengthening of the market into and through 2027. We have a lot of cash on the balance sheet and more to come. It should be time to put some of this cash to work. We exit 2025 with the strong balance sheet, as mentioned, with negative net debt and a significant cash position. Helix financial strength continues as we expect another year of strong free cash flow generation, leading to a potential cash balance approaching $600 million by the end of 2026. The market continues to be a bit soft with uncertainties. These 2 events combined create conditions that mean 2026 could be a year to consider meaningful M&A activities or capital investments, which could positively impact the company's shareholder value. We remain a market leader in intervention, decommissioning, and robotics. We continue to demonstrate our resilience, our ability to deliver results even in a challenging market environment, and we're well positioned for the future.

Erik Staffeldt, CFO

Thanks, Owen. Operator, at this time, we'll take any questions.

Operator, Operator

And your first question comes from Jim Rollyson from Raymond James.

Connor Jensen, Analyst

This is Connor Jensen for Jim at Raymond James. I was curious about the significant cash on the balance sheet and the expected increase in free cash flow in 2026. Could you discuss your preference for utilizing that cash for share repurchases versus mergers and acquisitions? Additionally, how does the M&A market appear right now, and are there any actionable opportunities available?

Owen Kratz, CEO

There are actionable opportunities. Right now, I'd say that the Board management, myself, are all collaborating on looking at all the options. Of course, I think with my retirement and a new CEO coming in, there needs to be some buy-in and participation with the new CEO. So I think right now, all I can say is that there are opportunities and they're being assessed.

Connor Jensen, Analyst

Got it. Makes sense. And then you noted you reactivated the Seawell and expect strong utilization there. I was just wondering how the North Sea market was looking at this point and what you're hearing from operators there after the weaker activity this year or last year?

Scott Sparks, COO

We are seeing much better activity in 2026 than we did in 2025. In 2025, there's a lot of mergers of oil companies that put a lot of things on hold. There has been a sizable change towards decommissioning. We've landed a couple of large sized decommissioning projects. And so we're seeing this year that both the Seawell and the Well Enhancer will have very active seasons. And we're also already starting to see activity into 2027. So it's definitely an improved market, that's certainly a swing towards decommissioning over production enhancement.

Operator, Operator

And your next question comes from James Schumm from TD Cowen.

James Schumm, Analyst

First, I just want to say, Owen, I just want to wish you the best in retirement. Thank you for all the support over the last several years. You'll be missed, and I hope to see you again soon. And then just maybe on the robotics revenue guidance, it's about flat year-over-year. Can you talk about some of the components of that? For example, is the oil and gas portion up, down or flat? Is offshore wind up this year? And then I thought trenching activity was supposed to be higher or stronger in 2026, but perhaps you could give some color there as well.

Scott Sparks, COO

Yes, sure. So we expect the oil and gas side for robotics to remain flat. If anything, it will go down from moving the GC II from the Asia market to the North Sea for the trenching contract for the NKT announcement that we put out there. So trenching is going to increase. Rates are increasing on the trenching side, but there's a lot of moving parts. The GC II is going to come up from APAC and establish itself in the North Sea. Then we have to swap out trenches from the enabler to the GC2, and then put the T1400-1 from originally working in Taiwan last year back to the North Sea and put that on the Enabler. So there's quite a few moving parts of inter-regional transitions and then mobilization to various vessels that should set us up very well for '27 onwards. But it's still going to be a very good year in trenching and rates are improving year-over-year, and we've got a very solid outlook for Trenching.

James Schumm, Analyst

Okay. Regarding Q1, I think it's important to set clear expectations to avoid fluctuations in your stock in April. The consensus shows $47 million of EBITDA. Should we consider the two issues that weren't anticipated? I’m not sure we can simply deduct $40 million from $47 million, which would result in only $7 million of EBITDA for the first quarter. Can you provide any guidance to help us establish more realistic expectations?

Erik Staffeldt, CFO

Thank you for the question, Jim. We want to emphasize that the workover expense we incurred will be reflected in Q1, which is estimated to be around $16 million. The Sea Helix 1 is currently anticipated to occur in Q2, though it might extend slightly into Q3, but it is certainly not a Q1 event. It is reasonable to incorporate the Thunder Hawk workover impact into Q1 projections. Historically, Q1 is our lowest quarter from a seasonal perspective, and this year we have the added effect of the Thunder Hawk workover. This is the appropriate way to model and assess expectations for Q1.

Operator, Operator

And your next question comes from Josh Jayne from Daniel Energy Partners.

Joshua Jayne, Analyst

First question is just on the Q7000. The slide deck highlights additional opportunities in Brazil, but also that you could see some potential utilization gaps. Could you just elaborate what you're expecting from that asset in the back half of the year? And then also just speak generally to the intervention market today in Brazil, that would be helpful.

Scott Sparks, COO

The intervention market in Brazil is our strongest market. There's the most activity. We have the 2 long-term contracts with the SH I and SH II for Petrobras, both coming into this year with 3-year contracts. And those contracts have options for Petrobras to extend and there are better rates than we had previously. So Brazil is looking good. The Q7000 is currently contracted into April, May time frame with Shell. And then we're looking at opportunities within Brazil. There's a few smaller clients there that have some of our work, but if that work doesn't come to fruition, we're probably going to send the vessel to Africa. We're very close to a larger contract for a good client in Nigeria. And so we've got targets in Brazil and targets in West Africa. There's also the potential for opening up Angola. We've never really worked in Angola and we've had quite a bit of bid opportunity in Angola in recent times. So I think Q7000 will be utilized. There may be some gaps in schedule, but it will probably bounce between Africa and Brazil in the coming years.

Joshua Jayne, Analyst

I believe towards the end of your prepared remarks, you mentioned the increased competitiveness in the Well Intervention segment. Regarding the utilized assets, how much of the current situation do you think is influenced by a more competitive environment versus operators reallocating some of their capital expenditures towards exploration instead of well intervention activities? Could you provide more insight on this and discuss the potential for recovery in 2027 after a downturn this year?

Owen Kratz, CEO

Just to clarify, the comment I made about increased competition was specifically intended to address the shallow water market. Yes, that's expected to remain soft in 2026; however, we anticipate a strong 2027. As a result, we will see more competitors entering the market, and competition will be quite intense as everyone positions for the upcoming year.

Scott Sparks, COO

Competition on the Well Intervention side is generally minimal. We compete mostly against rig white space. So we're seeing some rig white space in the Gulf, for instance, and that's given us a flatter look at the Q4000 for this year. But I think everybody knows going into the latter part of 2026 and 2027, the drillers are expecting to have high utilization, and therefore, operators will switch their white space intervention work from rigs and hope back to us guys, and that should lead to a better 2027.

Joshua Jayne, Analyst

So just one last follow-up on that point. Given that backdrop, is it fair to say that the outlook for Q4 is probably better in '27 than it is in '26? Is that fair?

Scott Sparks, COO

Yes. I think the Q4, for instance, we have a good first half of the year. We've got some white space in the second half of the year. We may end up chasing decommissioning work like we did in the latter part of 2025 for the Q4, but in 2027, we should see a more solid year.

Operator, Operator

And your next question comes from John Basler from Basler Capital.

John Basler, Analyst

I'm just curious what types of gaps in your portfolio would you be looking to address or scale to be gained through M&A?

Owen Kratz, CEO

There are quite a few opportunities. I wouldn't refer to them as gaps. Strategically looking ahead, we find ourselves at a pivotal moment. Since we began building the company after the 2008 financial crisis, our focus has been on developing a robust fleet that positions us as leaders in Well Intervention, which we see as the most critical tool for the post-PDP segment of the market. Having achieved that and spent the COVID years reducing debt and reinforcing our balance sheet, we now have a strong financial position. The next phase of growth involves enhancing the value of our assets by expanding our capabilities to evolve into a solutions provider rather than just a commodity service provider. Additionally, there are still opportunities for geographic expansion. Therefore, we are exploring several pathways forward.

John Basler, Analyst

And if I could ask one more. Is there any metrics or scenarios that you would look to, to determine whether you would revisit a strategic review as opposed to M&A?

Owen Kratz, CEO

I'm not sure I understand it.

Erik Staffeldt, CFO

I think from our strategy, I think we have positioned the company to obviously, to have a strong balance sheet and are well positioned from, you could say, a standpoint of M&A or capital investment. I think the Board and management team has been open to either direction. I think having the strong balance sheet and strong performance over the last several years has really positioned us for this. I think we see the benefit of, as Owen mentioned, adding different solutions and geographic expansion, but we also understand the benefits associated with scale. So I think from that standpoint, I think we're open to both.

Operator, Operator

And your next question comes from James Schumm from TD Cowen.

James Schumm, Analyst

Can you provide an overview of the out-of-service time, specifically the dry dock days for 2025 and 2026, along with any scheduled plans for 2027? I'm not asking for guidance for 2027, but I'm curious if we will face a similar challenge for SH II in 2027 given the SH I headwind. What should we be aware of today regarding potential headwinds or tailwinds for next year?

Erik Staffeldt, CFO

Yes. I think you'll find most of the information on our '25 already in our results there, but we had the Q7000, the Q5000, and the Q4000 at different times in '25 dry dock. As we look at '26, the assets that are impacting our results specifically, and that means being out of service during potential revenue generating, really, this year is the SH I, an example of the Hedron is in dock right now, but absent being in the dock, it still wouldn't be working because of the winter weather. So that is negatively impacting us in '26. I don't recall if there's another one in '26 that is negatively impacting us. As we look at '27, we do have the SH II that will be out of service right now that's expected to be early in '27 from a document standpoint. And I think I'd have to get back to you on any other of the larger assets that would have a docking later in '27. But the SH II will have one early in '27.

Scott Sparks, COO

The Seawell and the Well Enhancer will have some time in '27, but it will be in the off-season. So again, it will not affect our EBITDA generation. It will be in the early part of the year.

Operator, Operator

And your next question comes from Ben Sommers from BTIG.

Benjamin Sommers, Analyst

So sorry if I missed this earlier, but just kind of thinking about the expected improving market environment kind of late '26, early '27. Just kind of any thoughts around potential pricing for well intervention work and then maybe specific basins that you think could really maybe see a market improvement and maybe be able to push pricing for some of that work?

Scott Sparks, COO

Yes, as we approach 2027, I previously mentioned that we anticipate high utilization for the drillers. If that happens, their rates will rise. Typically, we lag behind the drilling rates, but as they go up, we generally see a slight increase as well. I expect to see improved rates in the U.S. Gulf of Mexico. In the North Sea, we should experience more decommissioning work, which may lead to slightly better rates. However, I don't foresee a significant increase in rates in the North Sea since we don't closely follow the drilling market there. Additionally, regarding the Q7000, if it's deployed in Brazil, we might achieve higher rates, but if we need to work in Nigeria or Angola or Equatorial Guinea, we'll have to assess the market conditions. Overall, it's likely to be a mixed situation, but I am optimistic about slight improvements.

Benjamin Sommers, Analyst

Awesome. And then just kind of on the Gulf there. Just kind of curious what you see in terms of like near-term utilization. Obviously, we have some pockets for the Q5000 Q4000 this year. So just kind of curious for any more color there and kind of the '26 outlook for that market?

Scott Sparks, COO

Yes. So the Q5000 is pretty well taken care of for the first half of the year, and we have some gaps in Q3 but then a solid Q4 for the Q5000. The first half of the year for the Q4000 is looking relatively good. And then like I said, it gets a bit lumpy up there; there are 2 or 3 intervention jobs that we're chasing for the Q4000 in the second half of the year, but then we might have to start going back to decommissioning work or some construction work. But it's early days for the year, but certainly, we have some space to fill on the Q4000 in the second half of the year.

Operator, Operator

There are no further questions at this time. And now I'll give back the floor to the company for the closing remarks. Please go ahead.

Erik Staffeldt, CFO

Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2026 call in April. Thank you.