Bristow Group Inc.

Many energy industry observers believe that the combination of increasing long-term energy demand tied to global economic growth, geopolitical conflicts leading to energy security concerns, and a growing desire for more efficient and consistent energy sources are contributing to the shift towards deepwater and ultra-deepwater drilling. While initial costs are higher, deepwater and ultra-deepwater regions often hold vast, untapped reservoirs of oil and natural gas that can produce energy over decades while proving better returns on invested capital over their useful lives compared to onshore wells. In recent years, innovations in deepwater technology, such as advanced seismic imaging and high-pressure drilling equipment, have reduced exploratory risks and improved operational efficiency and safety, making previously inaccessible reserves viable for development. As energy exploration, development and production moves further offshore and into deeper waters, more heavy and medium helicopters and newer technology helicopters are expected to be required by our customers. In addition, markets such as Nigeria and Brazil continue to show growth and increased demand for vertical lift. We believe we are well positioned to benefit from higher pricing and improved cash flows as legacy contracts expire and are renegotiated at higher rates and on better terms for the service provider. While drilling and exploration activity is likely amidst a mid-cycle activity plateau that may persist for much of 2026, many energy analysts expect exploration activity to increase in late 2026 and beyond.

Fortunately, the dynamics that continue to support the positive outlook for our sector differ from those of other oilfield services companies in key ways. For instance, although the offshore energy market is highly cyclical with demand linked to the price of oil and gas, the impacts of short-term fluctuations in commodity prices are less severe on our primarily production-focused business. While long periods of depressed prices would have more significant impacts, we believe current prices can continue to provide the fundamentals needed for sustained growth.

During the offshore energy downturn that began in late 2014 and continued through 2021, deliveries of new helicopters for offshore operations were limited. Throughout this downturn, numerous helicopters were sold or otherwise exited the offshore market. However, the recent increase in offshore energy activity that began in 2022 is driving a constructive supply and demand balance for offshore helicopters, and the once excess available capacity has shrunk, with effective utilization levels for offshore-configured medium, super medium and heavy helicopters near 100%. A significant portion of recent offshore helicopter deliveries have been to closed-market operators and jurisdictions (e.g., China and the Middle East) that do not address the demand across our target markets and do not directly impact the markets or helicopter fleet with which we compete. In addition, militaries and governments placing orders for helicopter models that share OEM production lines with civilian aircraft have contributed to longer lead times for new builds, in some instances taking upwards of 24 months for new order deliveries. In addition to longer delivery lead times, there are fewer helicopter manufacturers building certified, relevant models for our operating segments compared to just a decade ago.

Severe supply chain challenges have also delayed parts and repairs for relevant offshore helicopter models, thereby, at times, limiting the number of aircraft that are serviceable and further tightening the overall supply. The limited available capacity in our markets at this time has resulted in significant net increases in leading-edge rates, and the current utilization levels combined with longer lead times for new builds comes at a time when we have reset only a portion of our Offshore Energy Services contracts at leading-edge rates, with approximately half set to renew in 2026. Additionally, given our sector’s late cycle exposure and the lag effect involving new projects, helicopter operators are typically contracted later amongst the late-cycle businesses servicing offshore energy exploration and production platforms, often long after rig announcements and often on longer duration contracts than other offshore equipment operators. As such, any mid-cycle lulls or downturns take longer to impact the offshore helicopter industry. As a result of the lack of spare capacity and current helicopter market tightness, customer contract lead times are also beginning to increase. Due to the current favorable environment for service providers, new offshore energy contracts have begun to include more beneficial cancellation provisions and better terms and conditions around certain operational risks. However, any further exacerbation of the supply chain issues could offset a portion of the benefits we expect to derive, primarily through the application of customer-levied penalties or lost opportunities, while relief or return to pre-pandemic supply chain conditions can positively influence our results.

Over the past few years, we have experienced growth from notable awards of Government Services contracts, and the investments we are making to grow and diversify our leading Government Services business are expected to result in attractive long-term cash flow yields for the Company well into the middle of the next decade, as the duration of our Government Services contracts generally last for ten or more years with options for extensions. Operations for the previously announced IRCG contract commenced in late 2024, and the final base transitioned as of early 2026. The transition to the previously announced UKSAR2G contract also commenced in the fourth quarter of 2024, and the last base will finish transitioning in late 2026. We expect the effects of these contract transition completions to have positive impacts on our financial results in 2026 and beyond. Any strengthening of the U.S. dollar relative to local currencies, particularly the British pound sterling and the Euro, and the impacts of penalties due to aircraft availability, primarily related to supply chain challenges that are expected to persist, could offset a portion of the benefits we expect to derive from increased activity.

Privatization of aviation services historically operated by the public sector depend heavily on governmental agencies receiving funding through budget appropriation and the desire to outsource such services. Government Services, especially the public SAR market, are continuing to evolve, and we believe further outsourcing of public SAR services and other government contract work will become available to the private sector in the future. For example, recent announcements by NATO members regarding defense spend targets and a commitment to spending 5% of their GDP on core defense and resilience initiatives by 2035, provide promising opportunities, as we believe it would be difficult to achieve these targets without some combination of private and public partnerships. We believe that we are well positioned to continue to serve the government services market as more opportunities arise.

Other Services has experienced growth in recent years from charter revenues and increased passenger activity in Australia. Performance for this market is largely tied to passenger demand in Northern and Western Australia. We believe the financial performance of this business will remain consistent, with at or near current levels of activity.