Press Releases
Second quarter 2009 results included the following items on a pre-tax basis:
-
A
$59.4 million gain from sale of 24.2 million shares ofCal Dive common stock, reducing our remaining interest inCal Dive to approximately 26%. -
A
$43.0 million net gain associated with insurance recoveries in connection with damage caused by Hurricane Ike inSeptember 2008 , which reflected net proceeds of$102.6 million , offset by hurricane-related expenses, impairments and additional asset retirement costs. SinceSeptember 2008 , the Company has incurred expenses related to Hurricane Ike totaling$138.9 million offset by$128.2 million of insurance recoveries, resulting in a loss of$10.7 million . The Company expects to utilize the remaining insurance proceeds over the near term to complete repairs and necessary abandonment operations for certain fields. -
A reduction of
$11.5 million in the carrying values of certain oil and gas properties due primarily to reserve revisions. -
An
$8.8 million gain from the sale of Helix RDS, our former reservoir consulting business.
The impact of these four items in the second quarter, net of income
taxes, was
In addition, second quarter results excluded
Second quarter 2008 results included pre-tax gains of
Summary of Results (1) (2) |
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(in thousands, except per share amounts and percentages, unaudited) |
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Quarter Ended |
Six Months Ended |
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June 30 |
March 31 |
June 30 |
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2009 |
2008 |
2009 |
2009 |
2008 |
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Revenues(3) | $ | 494,639 | $ | 530,130 | $ | 570,975 | $ | 1,065,614 | $ | 971,899 | ||||||||||
Gross Profit: | ||||||||||||||||||||
Operating (3) | $ | 200,312 | $ | 190,857 | $ | 161,686 | $ | 361,998 | $ | 328,051 | ||||||||||
40 | % | 36 | % | 28 | % | 34 | % | 34 | % | |||||||||||
Oil and Gas Impairments (4), (5) |
(63,073 | ) | (305 | ) | - | (63,073 | ) | (17,028 | ) | |||||||||||
Exploration Expense |
(1,483 | ) | (1,474 | ) | (476 | ) | (1,959 | ) | (3,362 | ) | ||||||||||
Total | $ | 135,756 | $ | 189,078 | $ | 161,210 | $ | 296,966 | $ | 307,661 | ||||||||||
Net Income Applicable to Common Shareholders |
$ | 100,219 | $ | 89,651 | $ | 53,450 | $ | 153,669 | $ | 162,735 | ||||||||||
Diluted Earnings Per Share | $ | 0.94 | $ | 0.93 | $ | 0.50 | $ | 1.44 | $ | 1.70 | ||||||||||
Adjusted EBITDAX (6) |
$ | 147,909 | $ | 196,204 | $ | 245,305 | $ | 393,214 | $ | 360,910 | ||||||||||
(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. |
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(2) Results of Cal Dive, our Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%; thereafter, our remaining interest is accounted for under the equity method of accounting. |
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(3) Included insurance recoveries of $102.6 million offset by hurricane-related costs of $8.1 million in the second quarter of 2009. Included $73.5 million from the reversal of prior years’ accruals associated with disputed oil and gas royalties based on a favorable court decision in the first quarter of 2009. |
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(4) Second quarter 2009 oil and gas impairments included $51.5 million of additional asset retirement and impairment costs resulting from Hurricane Ike. |
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(5) Second quarter 2009 oil and gas impairments included $11.5 million in the reduction of the carrying values of certain oil and gas properties due to reserve revisions. First quarter 2008 results included oil and gas impairments related primarily to the unsuccessful Devil’s Island development well. |
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(6) Non-GAAP measure. See reconciliation attached hereto. |
Segment Information, Operational and Financial Highlights (1) |
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(in thousands, unaudited) |
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Three Months Ended |
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June 30, |
March 31, |
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2009 |
2008 |
2009 |
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Revenues: |
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Contracting Services | $ | 239,476 | $ | 217,943 | $ | 230,855 | ||||||
Shelf Contracting (2) | 197,656 | 171,970 | 207,053 | |||||||||
Production Facilities | 5,472 | - | - | |||||||||
Oil and Gas (3) | 89,992 | 194,161 | 160,181 | |||||||||
Intercompany Eliminations | (37,957 | ) | (53,944 | ) | (27,114 | ) | ||||||
Total |
$ | 494,639 | $ | 530,130 | $ | 570,975 | ||||||
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Income (Loss) from Operations: |
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Contracting Services | $ | 23,383 | $ | 36,312 | $ | 29,229 | ||||||
Shelf Contracting (2) | 38,145 | 29,498 | 20,932 | |||||||||
Production Facilities | (1,018 | ) | (156 | ) | (134 | ) | ||||||
Oil and Gas (3) | 103,380 | 105,981 | 71,050 | |||||||||
Gain on Oil and Gas Derivative Commodity Contracts | 4,121 | - | 74,609 | |||||||||
Oil and Gas Impairments (4), (5) | (63,073 | ) | (305 | ) | - | |||||||
Exploration Expense | (1,483 | ) | (1,474 | ) | (476 | ) | ||||||
Intercompany Eliminations | (1,631 | ) | (4,221 | ) | (290 | ) | ||||||
Total | $ | 101,824 | $ | 165,635 | $ | 194,920 | ||||||
Equity in Earnings of Equity Investments | $ | 6,264 | $ | 6,155 | $ | 7,503 | ||||||
(1) Results of Helix RDS Limited, our former reservoir consulting business, were included as discontinued operations for all periods presented in our comparative condensed consolidated statements of operations. |
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(2) Results of Cal Dive, our Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%; thereafter, our remaining interest is accounted for under the equity method of accounting. |
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(3) Included insurance recoveries of $97.7 million offset by hurricane-related costs of $7.4 million in the second quarter of 2009. Included $73.5 million from the reversal of prior years’ accruals associated with disputed oil and gas royalties based on a favorable court decision in the first quarter of 2009. |
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(4) Second quarter 2009 oil and gas impairments included $51.5 million of additional asset retirement and impairment costs resulting from Hurricane Ike. |
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(5) Second quarter 2009 included $11.5 million in the reduction of the carrying values of certain oil and gas properties due to reserve revisions. |
Contracting Services
- Subsea revenues decreased in the second quarter of 2009 compared with the first quarter of 2009 due primarily to timing of revenue recognition criteria on certain international pipelay construction contracts, offset by increased revenues associated with our robotics business. Utilization for our construction vessels (both owned and chartered) and for our robotics assets increased in the second quarter of 2009 compared with the first quarter of 2009.
- Our well operations business experienced increased revenues in the second quarter of 2009 compared with the first quarter of 2009 due to improved utilization (98% compared with 76%). The Q4000 operated at nearly full utilization in the second quarter of 2009 compared with lower utilization in the first quarter of 2009 due to downtime associated with scheduled maintenance and thruster upgrades.
- Gross profit margins for Contracting Services decreased in the second quarter of 2009 over the first quarter of 2009 due primarily to termination costs recorded on a cancelled international construction project as a result of delays in the delivery of the Caesar.
-
In April, we closed the sale of
Helix RDS Limited for$25 million . Accordingly, theHelix RDS Limited results were reflected as discontinued operations in our comparative condensed consolidated statements of operations. The Company recognized a pre-tax gain of$8.8 million on the sale.
Shelf Contracting (
-
Cal Dive’s operating results increased in the second quarter of 2009
compared with the first quarter of 2009 due to normal seasonal factors
as well as less vessel downtime related to scheduled regulatory
drydock activity and maintenance. Results for the second of quarter
2009 improved over the second quarter of 2008 due to increased new
construction, and repair and salvage work in the
Gulf of Mexico , and new pipelay activity inChina andMexico . Our revenues associated withCal Dive decreased from the first quarter of 2009 as a result of the de-consolidation in earlyJune 2009 .
Oil and Gas
-
Excluding the reversal of accrued royalties of
$73.5 million in the first quarter of 2009, Oil and Gas revenues for the second quarter of 2009 of$90.0 million were slightly higher than the first quarter of 2009 due primarily to higher realized oil prices and slightly higher production levels. Production in the second quarter of 2009 totaled 12.4 Bcfe compared with 11.9 Bcfe in the first quarter of 2009. The average prices realized for our gas sales volumes, including the effect of settled natural gas hedge contracts, totaled$7.62 per thousand cubic feet of gas (Mcf) in the second quarter of 2009 compared with$6.26 per Mcf in the first quarter of 2009. For our oil sales volumes, including the effects of settled hedge contracts, we realized$72.29 per barrel in the second quarter of 2009 compared with$57.82 per barrel in the first quarter of 2009. -
The Company’s oil and gas production rate at
June 30, 2009 approximated 140 million cubic feet of natural gas equivalent per day (MMcfe/d), but has recently fallen below that level due to mechanical issues in certain fields. Production should increase as third party pipeline repairs related to the Noonan gas field are completed during the third quarter. - In addition, to date we have entered into additional oil and gas hedge contracts for approximately 23.0 Bcf of natural gas and 1.5 million barrels of oil, to cover a portion of our forecasted production for 2010.
Other Expenses
-
Selling, general and administrative expenses were 8.0% of revenue in
the second quarter of 2009, 7.2% in the first quarter of 2009, and
8.0% in the second quarter of 2008. The increase in the second quarter
of 2009 was primarily due to an allowance for doubtful receivables of
$3.4 million recorded byCal Dive . Excluding theCal Dive receivable allowance, our rate as a percent of revenue in the second quarter was 7.3%. -
Net interest expense and other decreased to
$7.5 million in the second quarter of 2009 from$22.2 million in the first quarter of 2009 due to lower interest expense as a result of lower levels of debt,$4.4 million of increased net hedging gains related to our foreign currency contracts, and$4.2 million of increased realized foreign exchange gains. Further, net interest expense decreased to$15.6 million in the second quarter of 2009 compared with$22.0 million in the first quarter of 2009.
Financial Condition and Liquidity
-
Consolidated net debt at
June 30, 2009 decreased to$1.10 billion from$1.76 billion as ofMarch 31, 2009 . In the second quarter, we repaid all remaining borrowings under our revolving credit facility, which totaled$249.5 million atMarch 31, 2009 , and with the de-consolidation ofCal Dive ,$375 million of additional non-recourse debt is no longer reflected in our balance sheet. Our revolver availability atJune 30, 2009 was$408 million (including$12 million of outstanding letters of credit). Together with cash on hand of$262 million and our revolver availability, our total liquidity was approximately$670 million atJune 30, 2009 . Net debt to book capitalization as ofJune 30, 2009 was 42%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.) -
We incurred capital expenditures totaling
$50.7 million in the second quarter of 2009, compared with$61 million in the first quarter of 2009 and$263.6 million in the second quarter of 2008. These amounts excluded allCal Dive capital expenditures in the periods noted.
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 do not include earnings from our
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 June 30, |
Six Months Ended June 30, |
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(in thousands, except per share data) | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Net revenues: | |||||||||||||||||||||
Contracting services | $ | 404,647 | $ | 335,969 | $ | 815,441 | $ | 606,687 | |||||||||||||
Oil and gas | 89,992 | 194,161 | 250,173 | 365,212 | |||||||||||||||||
494,639 | 530,130 | 1,065,614 | 971,899 | ||||||||||||||||||
Cost of sales: | |||||||||||||||||||||
Contracting services | 312,502 | 245,241 | 638,200 | 458,755 | |||||||||||||||||
Oil and gas | 46,381 | 95,811 | 130,448 | 205,483 | |||||||||||||||||
358,883 | 341,052 | 768,648 | 664,238 | ||||||||||||||||||
Gross profit | 135,756 | 189,078 | 296,966 | 307,661 | |||||||||||||||||
Gain on oil and gas derivative commodity contracts | 4,121 | - | 78,730 | - | |||||||||||||||||
Gain on sale of assets, net | 1,319 | 18,803 | 1,773 | 79,916 | |||||||||||||||||
Selling and administrative expenses | 39,372 | 42,246 | 80,725 | 88,414 | |||||||||||||||||
Income from operations | 101,824 | 165,635 | 296,744 | 299,163 | |||||||||||||||||
Equity in earnings of investments | 6,264 | 6,155 | 13,767 | 16,971 | |||||||||||||||||
Gain on subsidiary equity transaction | 59,442 | - | 59,442 | - | |||||||||||||||||
Net interest expense and other | 7,468 | 20,615 | 29,663 | 48,616 | |||||||||||||||||
Income before income taxes | 160,062 | 151,175 | 340,290 | 267,518 | |||||||||||||||||
Provision of income taxes | 56,809 | 54,773 | 121,728 | 97,473 | |||||||||||||||||
Income from continuing operations | 103,253 | 96,402 | 218,562 | 170,045 | |||||||||||||||||
Income from discontinued operations, net of tax | 9,836 | 1,205 | 7,282 | 1,764 | |||||||||||||||||
Net income, including noncontrolling interests | 113,089 | 97,607 | 225,844 | 171,809 | |||||||||||||||||
Net income applicable to noncontrolling interests | 12,620 | 7,076 | 18,173 | 7,313 | |||||||||||||||||
Net income applicable to Helix | 100,469 | 90,531 | 207,671 | 164,496 | |||||||||||||||||
Preferred stock dividends | 250 | 880 | 563 | 1,761 | |||||||||||||||||
Preferred stock beneficial conversion charges | - | - | 53,439 | - | |||||||||||||||||
Net income applicable to Helix common shareholders | $ | 100,219 | $ | 89,651 | $ | 153,669 | $ | 162,735 | |||||||||||||
Weighted Avg. Common Shares Outstanding: | |||||||||||||||||||||
Basic | 96,936 | 90,519 | 96,077 | 90,511 | |||||||||||||||||
Diluted | 105,995 | 95,718 | 106,000 | 95,492 | |||||||||||||||||
Basic earnings per share of common stock: | |||||||||||||||||||||
Net income from continuing operations | $ | 0.92 | $ | 0.97 | $ | 1.50 | $ | 1.75 | |||||||||||||
Net income from discontinued operations | $ | 0.10 | $ | 0.01 | $ | 0.08 | $ | 0.02 | |||||||||||||
Net income per share of common stock | $ | 1.02 | $ | 0.98 | $ | 1.58 | $ | 1.77 | |||||||||||||
Diluted earnings per share of common stock: | |||||||||||||||||||||
Net income from continuing operations | $ | 0.85 | $ | 0.92 | $ | 1.37 | $ | 1.68 | |||||||||||||
Net income from discontinued operations | $ | 0.09 | $ | 0.01 | $ | 0.07 | $ | 0.02 | |||||||||||||
Net income per share of common stock | $ | 0.94 | $ | 0.93 | $ | 1.44 | $ | 1.70 | |||||||||||||
Comparative Condensed Consolidated Balance Sheets | |||||||||||||||||||||
ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||||
(in thousands) | Jun. 30, 2009 | Dec. 31, 2008 | (in thousands) | Jun. 30, 2009 | Dec. 31, 2008 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Current Assets: | Current Liabilities: | ||||||||||||||||||||
Cash and equivalents | $ | 261,930 | $ | 223,613 | Accounts payable | $ | 165,342 | $ | 344,807 | ||||||||||||
Accounts receivable | 266,289 | 545,106 | Accrued liabilities | 221,738 | 234,451 | ||||||||||||||||
Other current assets | 120,972 | 191,304 | Income taxes payable | 77,914 | - | ||||||||||||||||
Current mat of L-T debt (1) | 13,730 | 93,540 | |||||||||||||||||||
Total Current Assets |
649,191 |
960,023 |
Total Current Liabilities |
478,724 | 672,798 | ||||||||||||||||
Net Property & Equipment: | Long-term debt (1) (2) | 1,348,713 | 1,933,686 | ||||||||||||||||||
Contracting Services | 1,369,367 | 1,876,795 | Deferred income taxes | 513,248 | 615,504 | ||||||||||||||||
Oil and Gas | 1,453,849 | 1,541,648 | Decommissioning liabilities | 181,096 | 194,665 | ||||||||||||||||
Equity investments | 393,405 | 196,660 | Other long-term liabilities | 9,336 | 81,637 | ||||||||||||||||
Goodwill | 77,515 | 366,218 | Convertible preferred stock (1) | 25,000 | 55,000 | ||||||||||||||||
Other assets, net | 79,810 | 125,722 | Shareholders' equity (1) | 1,467,020 | 1,513,776 | ||||||||||||||||
Total Assets | $ | 4,023,137 | $ | 5,067,066 | Total Liabilities & Equity | $ | 4,023,137 | $ | 5,067,066 | ||||||||||||
(1) |
Net debt to book capitalization - 42% at June 30, 2009. Calculated as total debt less cash and equivalents ($1,100,513) divided by sum of total net debt, convertible preferred stock and shareholders' equity ($2,592,533). |
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(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 June 30, 2009 and December 31, 2008 was a reduction in debt totaling $30.9 million and $34.8 million, respectively. |
Helix Energy Solutions Group, Inc. | |||||||||||||||||||||||
Reconciliation of Non GAAP Measures | |||||||||||||||||||||||
Three and Six Months Ended June 30, 2009 | |||||||||||||||||||||||
Earnings Release: |
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Reconciliation From Net Income to Adjusted EBITDAX: |
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2Q09 |
2Q08 |
1Q09 |
2009 |
2008 |
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(in thousands) | |||||||||||||||||||||||
Net income applicable to common shareholders | $ | 100,219 | $ | 89,651 | $ | 53,450 | $ | 153,669 | $ | 162,735 | |||||||||||||
Non-cash impairment | 19,261 | 305 | - | 19,261 | 17,028 | ||||||||||||||||||
Gain on asset sales | (69,569 | ) | (18,803 | ) | (454 | ) | (70,023 | ) | (79,916 | ) | |||||||||||||
Preferred stock dividends | 250 | 880 | 53,752 | 54,002 | 1,761 | ||||||||||||||||||
Income tax provision | 50,072 | 52,079 | 64,794 | 114,866 | 94,928 | ||||||||||||||||||
Net interest expense and other | 5,776 | 18,497 | 20,593 | 26,369 | 43,658 | ||||||||||||||||||
Depreciation and amortization | 68,221 | 78,295 | 73,977 | 142,198 | 156,473 | ||||||||||||||||||
Exploration expense | 1,483 | 1,474 | 476 | 1,959 | 3,362 | ||||||||||||||||||
Adjusted EBITDAX (including Cal Dive) | $ | 175,713 | $ | 222,378 | $ | 266,588 | $ | 442,301 | $ | 400,029 | |||||||||||||
Less: Previously reported contribution from Cal Dive | $ | (27,804 | ) | $ | (26,174 | ) | $ | (21,283 | ) | $ | (49,087 | ) | $ | (39,119 | ) | ||||||||
Adjusted EBITDAX | $ | 147,909 | $ | 196,204 | $ | 245,305 | $ | 393,214 | $ | 360,910 | |||||||||||||
We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, and exploration expense. Further, we do not include earnings from our interest in Cal Dive in any periods presented in our adjusted EBITDAX calculation. 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 and Six Months Ended June 30, 2009 | ||||||||||
Earnings Release: |
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Reconciliation of unusual items: |
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2Q09 |
2Q08 |
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(in thousands) | (in thousands) | |||||||||
Other charges: | ||||||||||
Gain on asset sales | $ | 68,250 | 18,595 | |||||||
Insurance gains | 42,969 | - | ||||||||
Oil and gas property impairments | (11,524 | ) | - | |||||||
Tax provision associated with above | (32,265 | ) | (9,337 | ) | ||||||
Other income, net | 67,430 | 9,258 | ||||||||
Diluted shares | 105,995 | 95,718 | ||||||||
Per share | $ | 0.63 | $ | 0.10 |
Source:
Helix Energy Solutions
Tony Tripodo, 281-618-0400
Chief
Financial Officer