Business Segments

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Business Segments

13. Business Segments

Operating segments are defined in FASB ASC Topic 280, Segment Reporting, as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

During the quarter ended March 31, 2023, the Company reorganized its structure in order to streamline operations and leadership around more focused and integrated product and service lines to align with its business strategy. To reflect the Company’s new organizational structure, the Company changed presentation of its segments in 2023 into the following three reportable business segments: Subsea Products, Subsea Services, and Well Construction. Segment operating results for the prior year comparative period have been restated to reflect this change. Previously, the Company’s operations were organized into three geographic segments.

The Company evaluates segment performance based on operating income. The accounting policies of the segments are the same as described in the summary of significant accounting policies.

Subsea Products. The Company’s Subsea Products segment designs, manufactures and sells a variety of products including subsea wellheads, connectors and surface equipment, and subsea production systems.

Subsea Services. The Company’s Subsea Services segment delivers a variety of technical services including subsea rental services, subsea rework services and subsea services shared support.

Well Construction. The Company’s Well Construction business provides products and services utilized in the construction of the wellbore such as completions, casing hardware and liner hanger systems. In July of 2023, the Company acquired Great North and includes its product, service and leasing solutions within the Well Construction segment. Great North offers pressure control and completion solutions, including customized and highly engineered wellhead products for use in heavy oil and thermal production locations, proprietary completion solutions such as the Multi-Well Frac Connector TM, as well as related installation and maintenance services.

During the year ended December 31, 2023, the Company incurred restructuring and other charges (benefit) under the 2021 global strategic plan of ($1.9) million in Well Construction and $0.4 million in Subsea Services. During the year ended December 31, 2022, the Company incurred restructuring and other charges under the 2021 global strategic plan of $2.5 million in Subsea Products. All other restructuring charges for 2023 and 2022 related to Corporate. For information with respect to this item, see “Restructuring and Other Charges,” Note 9 of Notes to the Consolidated Financial Statements.

The following tables presents selected financial data by business segment:

	Years ended December 31,
	2023			2022			2021
	(In thousands)
Revenue
Subsea products	$	198,321		$	194,252		$	168,363
Subsea services		101,264			94,186			85,875
Well construction		124,475			73,486			68,210
Total revenue	$	424,060		$	361,924		$	322,448
Depreciation and amortization
Subsea products		6,694			7,691			7,168
Subsea services		10,259			10,876			12,138
Well construction		10,511			6,374			6,541
Segment depreciation and amortization		27,464			24,941			25,847
Corporate (1)		2,860			4,480			4,534
Total depreciation and amortization	$	30,324		$	29,421		$	30,381
Operating income (loss)
Subsea products	$	8,522		$	8,917		$	(21,863	)
Subsea services		18,411			8,374			(22,370	)
Well construction		10,848			14,268			(14,577	)
Segment operating income (loss)		37,781			31,559			(58,810	)
Corporate (1)		(32,501	)		(31,105	)		(66,525	)
Total operating income (loss)	$	5,280		$	454		$	(125,335	)

(1) Corporate includes the expenses and assets of the Company’s corporate office functions, legal and other administrative expenses that are managed at a consolidated level.

The Company does not allocate assets to its reportable segments as they are not included in the review performed by the Chief Operating Decision Maker (CODM) for purposes of assessing segment performance and allocating resources. The balance sheet is reviewed on a consolidated basis and is not used in the context of segment reporting.

The following table presents the Company’s assets by geographic region:

	December 31,
	2023			2022
	(In thousands)
Long-lived assets
Western Hemisphere	$	118,181		$	528,035
Eastern Hemisphere		232,584			202,994
Asia-Pacific		51,401			53,922
Canada		79,202			-
Eliminations		(172,904	)		(565,024	)
Total long-lived assets	$	308,464		$	219,927
Assets
Western Hemisphere	$	656,333		$	1,077,232
Eastern Hemisphere		622,755			581,950
Asia-Pacific		190,687			185,285
Canada		111,362			-
Eliminations		(552,956	)		(874,516	)
Total Assets	$	1,028,181		$	969,951

The Company has substantial international operations, with $317.6 million of revenues derived from foreign sales in 2023, as compared to $239.6 million in 2022 and $205.7 million in 2021. Substantially all of the Company’s domestic revenue relates to operations in the U. S. Gulf of Mexico. Domestic revenue was $106.4 million in 2023, $122.3 million in 2022 and $116.7 million in 2021. Revenue is based on the location where services are provided and products are sold.

The Company is not dependent on any one customer or group of customers. In 2023, the Company’s top 15 customers represented approximately 59% of total revenues, and Chevron Corporation and its affiliated companies (“Chevron”) accounted for approximately 11% of total revenues. In 2022, the Company’s top 15 customers represented approximately 60% of total revenues, and Chevron accounted for approximately 10% of total revenues. In 2021, the Company’s top 15 customers represented approximately 59% of total revenue, and Chevron accounted for approximately 12% of total revenues. No other customer accounted for more than 10% of total revenues in 2023, 2022 or 2021.