Hornbeck Offshore Services, a U.S.-based offshore vessel operator, has announced the finalization of a settlement agreement with the surety for two Multi-Purpose Support Vessels (MPSVs) that were under construction at Gulf Island Shipyards. The legal dispute arose when Gulf Island Shipyards sued Hornbeck Offshore in 2018, alleging wrongful termination of two shipyard construction contracts related to the final two vessels in Hornbeck's fifth offshore support vessel (OSV) newbuild program.

Under the terms of the final settlement agreement with the surety, Gulf Island was required to dismiss all claims it had asserted against Hornbeck due to the termination of the construction agreements. Hornbeck, in turn, dismissed its claims against Gulf Island and the surety under the construction agreements and the surety bonds.

As part of the settlement, the surety has agreed to take over and complete the construction of the two MPSVs at a completion shipyard to be mutually agreed upon by the surety and Hornbeck. The possession of the vessels will be delivered by Gulf Island to the surety for this purpose.

Hornbeck Offshore disclosed that its remaining contractual commitments under the construction agreements taken over by the surety amount to approximately $53 million in total for the two vessels. The surety will bear all costs of construction exceeding that amount. The completion of the vessels is expected in 2025.

Todd Hornbeck, the President and CEO of Hornbeck Offshore, expressed satisfaction with the settlement, stating that the completed vessels would be the two largest and most capable MPSVs in the U.S.-flagged Jones Act registry. These vessels are anticipated to enhance the company's ability to serve a wide range of customers, including those in the oilfield, offshore wind, and military sectors.

Gulf Island Fabrication, the party that initially announced the settlement of the dispute with Hornbeck Offshore Services, also revealed that it, along with other entities, had entered into agreements related to the settlement of obligations under the performance bonds and indemnity agreements associated with the MPSV contracts. As part of this arrangement, Gulf Island will pay Zurich American Insurance Company $20.0 million, plus interest, payable in installments, starting on December 31, 2024. Gulf Island and GIS will also release possession of the MPSVs to Zurich.