Press Releases
First quarter 2009 results included the following items:
-
Non-cash charges related to our convertible preferred stock, which
reduced our net income applicable to common stock, totaling
$53.4 million . -
$73.5 million from the reversal of prior years’ accruals associated with disputed oil and gas royalties, based on a favorable court decision in early 2009. -
$54.6 million in unrealized gains associated with mark-to-market accounting treatment for our remaining 2009 natural gas hedges, which will be cash settled over the remainder of the year.
The impact of these three items in the first quarter, net of income
taxes, was
Summary of Results (1) (in thousands, except per share amounts and percentages, unaudited) |
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Three Months Ended |
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March 31, |
December 31, |
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2009 |
2008 |
2008 |
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Revenues | $ | 570,975 | $ | 441,769 | $ | 534,439 | |||||||||
Gross Profit : | |||||||||||||||
Operating | $ | 161,686 | $ | 137,194 | $ | 85,142 | |||||||||
28 | % | 31 | % | 16 | % | ||||||||||
Oil and Gas Impairments | - | (16,723 | ) | (192,620 | ) | ||||||||||
Exploration Expense | (476 | ) | (1,888 | ) | (27,072 | ) | |||||||||
Total | $ | 161,210 | $ | 118,583 | $ | (134,550 | ) | ||||||||
Goodwill and Other Intangible Impairments | - | - | $ | (704,311 | ) | ||||||||||
Net Income (Loss) Applicable to Common Shareholders | $ | 53,450 | $ | 73,084 | $ | (861,154 | ) | ||||||||
Diluted Earnings (Loss) Per Share | $ | 0.50 | $ | 0.77 | $ | (9.48 | ) | ||||||||
Adjusted EBITDAX (2) | $ | 267,042 | $ | 238,764 | $ | 118,100 |
(1) | Results of Helix RDS Limited, our former reservoir consulting business, included as discontinued operations for all periods presented in our comparative condensed consolidated statements of operations. | |
(2) | Non-GAAP measure. See reconciliation attached hereto. |
Fourth quarter 2008 results from continuing operations included
non-cash, pre-tax charges of
First quarter 2008 results included oil and gas impairments of
Segment Information, Operational and Financial Highlights (1) (in thousands, unaudited) |
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Three Months Ended |
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March 31, |
December 31, |
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2009 |
2008 |
2008 |
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Revenues: |
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Contracting Services | $ | 230,855 | $ | 174,718 | $ | 293,135 | |||||||||
Shelf Contracting | 207,053 | 144,571 | 261,656 | ||||||||||||
Oil and Gas (2) | 160,181 | 171,051 | 46,022 | ||||||||||||
Intercompany Eliminations | (27,114 | ) | (48,571 | ) | (66,374 | ) | |||||||||
Total | $ | 570,975 | $ | 441,769 | $ | 534,439 | |||||||||
Income loss from Operations: |
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Contracting Services | $ | 29,229 | $ | 20,181 | $ | 29,035 | |||||||||
Shelf Contracting | 20,932 | 7,548 | 69,946 | ||||||||||||
Production Facilities | (134 | ) | (138 | ) | (285 | ) | |||||||||
Oil and Gas (2) | 71,050 | 128,528 | (55,878 | ) | |||||||||||
Gain on Oil and Gas Derivative Commodity Contracts | 74,609 | - | 18,894 | ||||||||||||
Oil and Gas Impairments | - | (16,723 | ) | (192,620 | ) | ||||||||||
Exploration Expense | (476 | ) | (1,888 | ) | (27,072 | ) | |||||||||
Goodwill and Other Intangible Impairments | - | - | (704,311 | ) | |||||||||||
Intercompany Eliminations | (290 | ) | (3,980 | ) | (4,317 | ) | |||||||||
Total | $ | 194,920 | $ | 133,528 | $ | (866,608 | ) | ||||||||
Equity in Earnings of Equity Investments | $ | 7,503 | $ | 10,816 | $ | 6,132 |
(1) | Results of Helix RDS Limited, our former reservoir consulting business, are included as discontinued operations for all periods presented in our comparative condensed consolidated statements of operations. | |
(2) | Included $73.5 million from the reversal of prior years’ accruals associated with disputed oil and gas royalties based on favorable court decision in the first quarter of 2009. |
Contracting Services
- Subsea construction revenues decreased in the first quarter of 2009 compared with the fourth quarter of 2008 due to lower capacity and utilization for our vessels under long term charters (79% compared with 86%). In addition, our robotics business also experienced lower asset utilization (64% compared with 80%) in the first quarter of 2009 compared with the fourth quarter of 2008.
- Our well operations business experienced decreased revenues in the first quarter of 2009 compared with the fourth quarter of 2008 primarily related to downtime associated with scheduled maintenance and thruster upgrades for the Q4000.
- Gross profit margins for Contracting Services increased in the first quarter of 2009 over the fourth quarter of 2008 due primarily to improved performance on international construction projects.
-
On
April 27 th we closed the sale ofHelix RDS Limited toBaker Hughes for$25 million . Accordingly, theHelix RDS Limited results are reflected as discontinued operations in our comparative condensed consolidated statements of operations. In the first quarter of 2009, Helix RDS’ operating results was a loss of$0.02 per share.
Shelf Contracting (
- Cal Dive’s operating results decreased in the first quarter of 2009 compared with the fourth quarter of 2008 due to normal seasonal factors as well as vessel downtime related to scheduled regulatory drydock activity and maintenance. Results for the first of quarter 2009 improved over the first quarter of 2008 due to increased vessel utilization as a result of increased international diving activity and demand for hurricane related services.
Oil and Gas
-
Oil and Gas revenues for the first quarter of 2009 of
$160 million were substantially higher than the fourth quarter of 2008 due primarily to increased production levels as well as the reversal of accrued royalties previously mentioned. Production in the first quarter of 2009 totaled 11.9 Bcfe compared with 6.4 Bcfe in the fourth quarter of 2008. The average prices realized for our gas sales volumes, including the effect of hedge contracts, totaled$5.35 per thousand cubic feet of gas (Mcf) in the first quarter of 2009 compared with$6.32 per Mcf in the fourth quarter of 2008. For our oil sales volumes, including the effects of hedge contracts, we realized$57.82 per barrel in the first quarter of 2009 compared with$49.08 per barrel in the fourth quarter of 2008. A number of our fields continue to experience shut-in or curtailed production reflecting the delay by third parties in making certain repairs to their hurricane damaged pipelines and infrastructure. As a result of these continued delays, our remaining 2009 natural gas derivative contracts no longer qualify for hedge accounting treatment and are recorded on a mark-to market basis through earnings. Our first quarter operating results included a total of$74.6 million of gains associated with our natural gas derivative contracts, including$54.6 million of unrealized gains that will be cash settled over the remainder of 2009 in accordance with the original terms of the contracts. Our remaining 2009 crude oil derivative contracts continue to qualify for hedge accounting treatment. - Presently our oil and gas production approximates 140 million cubic feet of natural gas equivalent per day (MMcfe/d), which equals pre-Hurricane Ike production rates, adjusting for the sale of our interest in the Bass Lite and East Cameron 316 fields.
-
In the first quarter of 2009, the Company sold its interest in its
East Cameron 316 field for total gross proceeds of
$18 million . The Company recorded a$0.7 million gain on the sale. In the first and second quarters of 2008, the Company sold a 30% working interest in its Bushwood discoveries in two separate transactions for total cash consideration of approximately$183 million , an obligation of the purchasers to pay their 30% share of all related future capital expenditures and an obligation to pay up to an additional$20 million based on reaching production milestones. The first transaction for 20% closedMarch 31, 2008 and resulted in a gain of$61.1 million in the first quarter of 2008. The second transaction for 10% closed onApril 23, 2008 and resulted in a gain of$30.5 million in the second quarter of 2008.
Other Expenses
- Selling, general and administrative expenses were 7.2% of revenue in the first quarter of 2009, 7.5% in the fourth quarter of 2008, and 9.2% in the first quarter of 2008, after adjusting for severance costs related to the resignation of our former CEO. The improvement over the fourth quarter reflects our focused effort to reduce spending in light of the continued weak economic environment.
-
Net interest expense and other decreased to
$22.2 million in the first quarter of 2009 from$28.0 million in the fourth quarter of 2008 due primarily to$3.7 million of lower net hedging losses and$4.2 million of lower realized foreign exchange losses. Further, net interest expense decreased to$22.0 million in the first quarter of 2009 compared with$24.3 million in the fourth quarter of 2008 due primarily to both lower levels of gross debt and interest rates.
Financial Condition and Liquidity
-
Consolidated net debt at
March 31, 2009 decreased to$1.76 billion from$1.80 billion as ofDecember 31, 2008 . In the first quarter, we repaid$100 million under our Helix revolving credit facility. Total debt associated with ourCal Dive consolidated subsidiary, which is non-recourse to Helix, totaled$395 million ($315 million as ofDecember 31, 2008 ). Net debt to book capitalization as ofMarch 31, 2009 was 51%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.) -
We incurred capital expenditures for the first quarter of 2009
totaling
$61 million , compared with$136 million in the fourth quarter of 2008 and$256 million in the first quarter of 2008. Incurred capital expenditures excludeCal Dive . -
In the first quarter of 2009, the holder of the Company’s convertible
preferred stock redeemed
$30 million of the total outstanding amount of$55 million . In satisfaction of such redemption, the Company issued the holder 5,938,776 shares of Helix common stock. This resulted in a non-cash charge of approximately$29.3 million which reflected the value associated with the additional 3,974,718 shares delivered over the original 1,964,058 shares that were contractually required to be issued upon conversion. Further, the original agreement with the holder required an election in the event the volume weighted average price (“VWAP”) of Helix’s common stock on any future date was less than a certain minimum price ($2.767 per share). The VWAP was below the minimum price onFebruary 25, 2009 , at which time the Company elected to reset the conversion price on the remaining balance($25 million) to $2.767 . As a result of the price reset, the holder’s sole right is to convert the preferred shares into 9,035,056 shares of Helix common stock and the Company is no longer permitted to pay dividends in Helix common stock. Following the reset of the minimum price to$2.767 per share, the Company recorded a second non-cash charge totaling$24.1 million in the first quarter of 2009.
Further details are provided in the presentation for Helix’s quarterly
conference call (see the Investor Relations page of www.HelixESG.com).
The call, scheduled for
Management evaluates Company performance and financial condition using
certain non-GAAP metrics, primarily Adjusted EBITDAX, net debt and net
debt to book capitalization. We calculate Adjusted EBITDAX as earnings
before net interest expense, taxes, depreciation and amortization and
exploration expense. Further, we reduce Adjusted EBITDAX for the
minority interest in
This press release contains forward-looking statements that involve
risks, uncertainties and assumptions that could cause our results to
differ materially from those expressed or implied by such
forward-looking statements. All statements, other than statements of
historical fact, are statements that could be deemed "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, including, without limitation, any projections of
revenue, gross margin, expenses, earnings or losses from operations, or
other financial items; future production volumes, results of
exploration, exploitation, development, acquisition and operations
expenditures, and prospective reserve levels of property or wells; any
statements of the plans, strategies and objectives of management for
future operations; any statement concerning developments, performance or
industry rankings; any statements regarding future economic conditions
or performance; any statements of expectation or belief; and any
statements of assumptions underlying any of the foregoing. The risks,
uncertainties and assumptions referred to above include the performance
of contracts by suppliers, customers and partners; employee management
issues; complexities of global political and economic developments;
geologic risks and other risks described from time to time in our
reports filed with the
HELIX ENERGY SOLUTIONS GROUP, INC. | |||||||
Comparative Condensed Consolidated Statements of Operations | |||||||
Three Months Ended Mar. 31, | |||||||
(in thousands, except per share data) | 2009 | 2008 | |||||
(unaudited) | |||||||
Net revenues: | |||||||
Contracting services | $ | 410,794 | $ | 270,718 | |||
Oil and gas | 160,181 | 171,051 | |||||
570,975 | 441,769 | ||||||
Cost of sales: | |||||||
Contracting services | 325,698 | 213,514 | |||||
Oil and gas | 84,067 | 109,672 | |||||
409,765 | 323,186 | ||||||
Gross profit | 161,210 | 118,583 | |||||
Gain on oil and gas derivative commodity contracts | 74,609 | - | |||||
Gain on sale of assets, net | 454 | 61,113 | |||||
Selling and administrative expenses | 41,353 | 46,168 | |||||
Income from operations | 194,920 | 133,528 | |||||
Equity in earnings of investments | 7,503 | 10,816 | |||||
Net interest expense and other | 22,195 | 28,001 | |||||
Income before income taxes | 180,228 | 116,343 | |||||
Provision of income taxes | 64,919 | 42,700 | |||||
Income from continuing operations | 115,309 | 73,643 | |||||
Discontinued operations, net of tax | (2,554 | ) | 559 | ||||
Net income | 112,755 | 74,202 | |||||
Less net income applicable to noncontrolling interests | 5,553 | 237 | |||||
Preferred stock dividends | 313 | 881 | |||||
Preferred stock beneficial conversion charges | 53,439 | - | |||||
Net income applicable to common shareholders | $ | 53,450 | $ | 73,084 | |||
Weighted Avg. Common Shares Outstanding: | |||||||
Basic | 95,052 | 90,413 | |||||
Diluted | 105,863 | 95,086 | |||||
Basic earnings per share of common stock: | |||||||
Continuing operations | $ | 0.58 | $ | 0.80 | |||
Discontinued operations | ($0.03 | ) | - | ||||
Net income per common share | $ | 0.55 | $ | 0.80 | |||
Diluted earnings per share of common stock: | |||||||
Continuing operations | $ | 0.52 | $ | 0.77 | |||
Discontinued operations | ($0.02 | ) | - | ||||
Net income per common share | $ | 0.50 | $ | 0.77 |
Comparative Condensed Consolidated Balance Sheets | ||||||||||||||
ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||||
(in thousands) | Mar. 31, 2009 | Dec. 31, 2008 | (in thousands) | Mar. 31, 2009 | Dec. 31, 2008 | |||||||||
(unaudited) | (unaudited) | |||||||||||||
Current Assets: | Current Liabilities: | |||||||||||||
Cash and equivalents | $ | 248,272 | $ | 221,852 | Accounts payable | $ | 271,969 | $ | 344,807 | |||||
Accounts receivable | 496,812 | 545,106 | Accrued liabilities | 215,704 | 234,451 | |||||||||
Other current assets | 220,735 | 193,065 | Income taxes payable | 26,921 | - | |||||||||
Current mat of L-T debt (1) | 93,644 | 93,540 | ||||||||||||
Total Current Assets | 965,819 | 960,023 | Total Current Liabilities | 608,238 | 672,798 | |||||||||
Net Property & Equipment: | Long-term debt (1) (2) | 1,912,357 | 1,933,686 | |||||||||||
Contracting Services | 1,923,622 | 1,876,795 | Deferred income taxes | 655,796 | 614,064 | |||||||||
Oil and Gas | 1,495,728 | 1,541,648 | Decommissioning liabilities | 196,836 | 194,665 | |||||||||
Equity investments | 194,087 | 196,660 | Other long-term liabilities | 10,065 | 83,077 | |||||||||
Goodwill | 365,641 | 366,218 | Convertible preferred stock (1) | 25,000 | 55,000 | |||||||||
Other assets, net | 117,791 | 125,722 | Shareholders' equity (1) | 1,654,396 | 1,513,776 | |||||||||
Total Assets | $ | 5,062,688 | $ | 5,067,066 | Total Liabilities & Equity | $ | 5,062,688 | $ | 5,067,066 |
(1) |
Net debt to book capitalization - 51% at March 31, 2009. Calculated as total debt less cash and equivalents ($1,757,729) divided by sum of total net debt, convertible preferred stock and shareholders' equity ($3,437,125). |
|
(2) |
Reflects impact of retrospective adoption of accounting standard which required bifurcation of Helix's convertible senior notes between debt and equity components. Impact on March 31, 2009 and December 31, 2008 was a reduction in debt totaling $32.9 million and $34.8 million, respectively. |
Helix Energy Solutions Group, Inc. Reconciliation of Non GAAP Measures Three Months Ended March 31, 2009 |
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Earnings Release: |
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Reconciliation From Net Income to Adjusted EBITDAX: |
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1Q09 |
1Q08 |
4Q08 |
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(in thousands) | ||||||||||
Net (loss) income applicable to common shareholders | $ | 53,450 | $ | 73,084 | $ | (861,154 | ) | |||
Non-cash impairment and other unusual items | - | 16,723 | 907,608 | |||||||
Preferred stock dividends | 53,752 | 881 | 550 | |||||||
Income tax provision (benefit) | 64,794 | 42,849 | (67,117 | ) | ||||||
Net interest expense and other | 20,593 | 25,161 | 31,842 | |||||||
Depreciation and amortization | 73,977 | 78,178 | 79,299 | |||||||
Exploration expense | 476 | 1,888 | 27,072 | |||||||
Adjusted EBITDAX | $ | 267,042 | $ | 238,764 | $ | 118,100 | ||||
We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, and exploration expense. Further, we reduce adjusted EBITDAX for the minority interest in Cal Dive that we do not own. These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance because they are widely used by investors in our industry to measure a company's operating performance without regard to items which can vary substantially from company to company and help investors meaningfully compare our results from period to period. Adjusted EBITDAX should not be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income or other income data prepared in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to our reported results prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions which are excluded. |
Helix Energy Solutions Group, Inc. Reconciliation of Non GAAP Measures Three Months Ended March 31, 2009 |
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Earnings Release: |
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Reconciliation of non-cash impairments and other unusual items: |
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1Q09 |
1Q08 |
4Q08 |
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(in thousands) | (in thousands) | (in thousands) | ||||||||||
Other charges: | ||||||||||||
Reversal of disputed oil and gas royalties | (73,549 | ) | - | - | ||||||||
Unrealized gains on 2009 natural gas hedges | (54,635 | ) | - | - | ||||||||
Tax provision associated with above | 44,864 | - | - | |||||||||
(83,320 | ) | - | - | |||||||||
Non-cash charges related to convertible preferred stock | 53,439 | - | - | |||||||||
Other income, net: | $ | (29,881 | ) | $ | - | $ | - | |||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | (0.28 | ) | $ | - | $ | - | |||||
Non-cash goodwill and other intangible impairments: | ||||||||||||
Goodwill and other intangible impairments | $ | - | $ | - | $ | 704,311 | ||||||
Non-cash goodwill and other intangible impairments, net: | $ | - | $ | - | $ | 704,311 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | - | $ | 7.76 | ||||||
Non-cash property impairments: | ||||||||||||
Property impairments | - | 16,723 | 192,620 | |||||||||
Tax provision on property impairments | - | (5,853 | ) | (67,417 | ) | |||||||
Non-cash property impairments, net: | $ | - | $ | 10,870 | $ | 125,203 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | 0.11 | $ | 1.38 | ||||||
Non-cash impairments and other unusual items: | ||||||||||||
Exploration expense | $ | - | $ | - | $ | 27,072 | ||||||
Tax provision on exploration expense | - | - | (9,475 | ) | ||||||||
Non-cash impairments, net: | $ | - | $ | - | $ | 17,597 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | - | $ | 0.19 | ||||||
Non-cash impairments and other unusual items: | ||||||||||||
Suspended exploratory wells | $ | - | $ | - | $ | 18,579 | ||||||
Tax provision on suspended exploratory wells | - | - | (6,503 | ) | ||||||||
Non-cash impairments, net: | $ | - | $ | - | $ | 12,076 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | - | $ | 0.13 | ||||||
Non-cash impairments and other unusual items: | ||||||||||||
Unproved properties | $ | - | $ | - | $ | 8,023 | ||||||
Tax provision on unproved properties | - | - | (2,808 | ) | ||||||||
Non-cash impairments, net: | $ | - | $ | - | $ | 5,215 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | - | $ | 0.06 | ||||||
Bass Lite sale | ||||||||||||
Bass Lite sale | $ | - | $ | - | $ | 6,734 | ||||||
Tax provision on Bass Lite sale | - | - | (2,357 | ) | ||||||||
Non-cash impairments, net: | $ | - | $ | - | $ | 4,377 | ||||||
Diluted shares | 105,863 | 95,086 | 90,802 | |||||||||
Per share | $ | - | $ | - | $ | 0.05 |
Source:
Helix Energy Solutions, Houston
Tony Tripodo, 281-618-0400
Chief
Financial Officer