Press Releases
Third quarter 2009 results included the following items on a pre-tax basis:
-
A
$17.9 million gain from the sale of 23.2 million shares ofCal Dive common stock. -
A
$10.4 million charge associated with a weather derivative contract entered into inJuly 2009 to mitigate against possible losses during the 2009 hurricane season. The derivative contract was purchased in lieu of traditional windstorm insurance coverage. The third quarter charge of$10.4 million was$7.1 million higher than if the cost of the weather derivative contract was charged to expense evenly over a twelve month period similar to a traditional insurance premium.
The net impact of these two items in the third quarter, after income
taxes, was
In addition, third quarter 2009 results excluded approximately
Third quarter 2008 results included a pre-tax impairment charge 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 | Nine Months Ended | |||||||||||||||||||
September 30 | June 30 | September 30 | ||||||||||||||||||
2009 | 2008 | 2009 | 2009 | 2008 | ||||||||||||||||
Revenues | $ | 216,025 | $ | 607,736 | $ | 494,639 | $ | 1,281,639 | $ | 1,579,635 | ||||||||||
Gross Profit: | ||||||||||||||||||||
Operating (3) | $ | 5,058 | $ | 207,599 | $ | 200,312 | $ | 367,056 | $ | 535,650 | ||||||||||
2 | % | 34 | % | 40 | % | 29 | % | 34 | % | |||||||||||
Oil and Gas Impairments (4), (5) |
(1,537 | ) | (6,874 | ) | (63,073 | ) | (64,610 | ) | (23,902 | ) | ||||||||||
Exploration Expense |
(904 | ) | (1,645 | ) | (1,483 | ) | (2,863 | ) | (5,007 | ) | ||||||||||
Total | $ | 2,617 | $ | 199,080 | $ | 135,756 | $ | 299,583 | $ | 506,741 | ||||||||||
Net Income Applicable to Common Shareholders | $ | 3,895 | $ | 59,297 | $ | 100,219 | $ | 157,564 | $ | 222,032 | ||||||||||
Diluted Earnings Per Share | $ | 0.04 | $ | 0.63 | $ | 0.94 | $ | 1.48 | $ | 2.34 | ||||||||||
Adjusted EBITDAX (6) | $ | 38,306 | $ | 159,023 | $ | 147,909 | $ | 431,520 | $ | 519,933 |
(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) | Results of Cal Dive, our former Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%. Our remaining interest was accounted for under the equity method of accounting through September 23, 2009. Subsequent to September 23, 2009 our investment in Cal Dive was accounted for as an available for sale security. |
(3) | Included $10.4 million of expense related to a weather derivative contract and $5.1 million of hurricane-related costs in the third quarter of 2009. Second quarter of 2009 included insurance recoveries of $102.6 million offset by hurricane-related costs of $8.1 million. |
(4) |
Second quarter 2009 oil and gas impairments included $51.5 million of additional asset retirement and impairment costs resulting from Hurricane Ike. Third quarter 2008 oil and gas impairments included $6.7 million related to our deepwater Tiger field damaged by Hurricane Ike. |
(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. |
(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 | ||||||||||||
September 30, | June 30, | |||||||||||
2009 | 2008 | 2009 | ||||||||||
Revenues: |
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Contracting Services | $ | 175,091 | $ | 276,131 | $ | 239,476 | ||||||
Shelf Contracting (2) | - | 278,709 | 197,656 | |||||||||
Production Facilities | 5,888 | - | 5,472 | |||||||||
Oil and Gas (3) | 63,715 | 134,619 | 89,992 | |||||||||
Intercompany Eliminations | (28,669 | ) | (81,723 | ) | (37,957 | ) | ||||||
Total | $ | 216,025 | $ | 607,736 | $ | 494,639 | ||||||
Income (Loss) from Operations: |
||||||||||||
Contracting Services | $ | 10,132 | $ | 57,235 | $ | 23,383 | ||||||
Shelf Contracting (2) | - | 72,719 | 38,145 | |||||||||
Production Facilities | (1,388 | ) | (140 | ) | (1,018 | ) | ||||||
Oil and Gas (3) | (23,599 | ) | 42,717 | 103,380 | ||||||||
Gain on Oil and Gas Derivative Commodity Contracts | 4,598 | 2,705 | 4,121 | |||||||||
Oil and Gas Impairments (4), (5) | (1,537 | ) | (6,874 | ) | (63,073 | ) | ||||||
Exploration Expense | (904 | ) | (1,645 | ) | (1,483 | ) | ||||||
Intercompany Eliminations | (1,971 | ) | (13,494 | ) | (1,631 | ) | ||||||
Total | $ | (14,669 | ) | $ | 153,223 | $ | 101,824 | |||||
Equity in Earnings of Equity Investments | $ | 13,385 | $ | 8,751 | $ | 6,264 |
(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. |
(2) |
Results of Cal Dive, our former Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%. Our remaining interest was accounted for under the equity method of accounting through September 23, 2009. Subsequent to September 23, 2009 our investment in Cal Dive was accounted for as an available for sale security. |
(3) |
Included $10.4 million of expense related to a weather derivative contract and $5.1 million of hurricane-related costs in the third quarter of 2009. Included insurance recoveries of $97.7 million offset by hurricane-related costs of $7.4 million in the second quarter of 2009. Third quarter 2008 results included $2.3 million of hurricane-related costs. |
(4) |
Second quarter 2009 oil and gas impairments included $51.5 million of additional asset retirement and impairment costs resulting from Hurricane Ike. Third quarter 2008 oil and gas impairments included $6.7 million related to our deepwater Tiger field damaged by Hurricane Ike. |
(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 Construction revenues decreased from the second quarter of 2009 as activity associated with a significant international pipelay construction contract was substantially completed in the early part of the third quarter. Further, our Express pipelay vessel experienced out of service days related to a regulatory drydock and subsequent transit to theGulf of Mexico . Utilization for our construction vessels (both owned and chartered) decreased in the third quarter of 2009 compared with the second quarter of 2009 (77% compared with 88%). Robotics asset utilization in the third quarter of 2009 was comparable to that of the second quarter of 2009. - Our well operations business experienced decreased revenues in the third quarter of 2009 compared with the second quarter of 2009 due to decreased utilization (92% compared with 98%). Further, the Q4000 was contracted at significantly lower day rates for much of the third quarter.
- Gross profit margins for Contracting Services decreased in the third quarter of 2009 over the second quarter of 2009 due primarily to lower vessel utilization and lower day rates for the Q4000.
Shelf Contracting (
-
As a result of our de-consolidation of Cal Dive’s operating results in
June 2009 , we accounted for our interest for most of the third quarter as an equity method investment. Our share of Cal Dive’s earnings for the third quarter totaled$7.2 million . In September, we sold a total of 23.2 million shares ofCal Dive common stock in a secondary offering, which reduced our remaining ownership interest inCal Dive to approximately 0.5%. We account for our remaining interest inCal Dive as an investment available for sale.
Oil and Gas
-
Oil and Gas revenues of
$63.7 million for the third quarter of 2009 were lower than the second quarter of 2009 due primarily to lower oil production and lower realized oil prices. Production in the third quarter of 2009 totaled 9.8 Bcfe compared with 12.4 Bcfe in the second quarter of 2009. The average prices realized for our gas sales volumes, including the effect of settled natural gas hedge contracts, totaled$8.02 per thousand cubic feet of gas (Mcf) in the third quarter of 2009 compared with$7.62 per Mcf in the second quarter of 2009. For our oil sales volumes, including the effects of settled hedge contracts, we realized$68.86 per barrel in the third quarter of 2009 compared with$72.29 per barrel in the second quarter of 2009. -
The Company’s oil and gas production rate at
September 30, 2009 approximated 103 million cubic feet of natural gas equivalent per day (MMcfe/d). Production continues to be constrained due to mechanical issues in certain fields and continuing repairs to a third party pipeline related to the Noonan gas field. The third party pipeline operator has informed its customers that repairs to this key pipeline is expected to be completed by the end ofNovember 2009 . - In addition, to date we have entered into additional oil and gas hedge contracts for approximately 25 Bcf of natural gas and 2.5 million barrels of oil to cover a portion of our forecasted production for 2010.
Other Expenses
-
Selling, general and administrative expenses were 10.1% of revenue in
the third quarter of 2009, 8.0% in the second quarter of 2009, and
8.0% in the third quarter of 2008. Although, the percentage increase
was driven by lower third quarter revenues, total selling, general and
administrative expenses decreased
$1.7 million compared to the second quarter of 2009 (excluding Cal Dive’s expenses in the second quarter of 2009). -
Net interest expense and other increased to
$10.3 million in the third quarter of 2009 from$7.5 million in the second quarter of 2009. The increase was due to$3.1 million of net hedging losses related to our foreign currency contracts and realized foreign exchange losses compared with net gains of$8.2 million in the second quarter. Net interest expense decreased to$7.3 million in the third quarter of 2009 compared with$15.6 million in the second quarter of 2009 as a result of lower debt levels.
Financial Condition and Liquidity
-
Consolidated net debt at
September 30, 2009 decreased to$950 million from$1.10 billion as ofJune 30, 2009 . We had no borrowings under our revolver and our availability was$370 million (including$50 million of outstanding letters of credit) atSeptember 30, 2009 . Together with cash on hand of$411 million and our revolver availability, our total liquidity was approximately$781 million atSeptember 30, 2009 . Net debt to book capitalization as ofSeptember 30, 2009 was 39%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.) -
On
October 9, 2009 , we extended the term of our revolving credit facility fromJuly 1, 2011 toNovember 30, 2012 . In addition, our lenders agreed to amend certain restrictive covenants related to asset sales, and furthermore, increased the amount of capacity under the revolving credit facility to$435 million throughJune 2011 , decreasing to$407 million fromJuly 2011 throughNovember 2012 . The revolving credit facility’s accordion feature was also increased to allow for a potential increase in the maximum size of the facility from$450 million to $550 million . TheJuly 1, 2013 maturity date of our senior secured term loan under the credit agreement remains unchanged. Lastly, borrowings under the amended revolving credit facility will bear interest based on current market rates. -
We incurred capital expenditures (including capitalized interest)
totaling
$87 million in the third quarter of 2009, compared with$57 million in the second quarter of 2009 and$165 million in the third quarter of 2008. For the nine months endedSeptember 30, 2009 , capital expenditures totaled$209 million and we anticipate total capital spending in 2009 of approximately$340 million to $360 million . These amounts exclude allCal Dive capital expenditures in the periods noted.
Further details are provided in the presentation for Helix’s quarterly
conference call to review its thirds quarter results (see the “Investor
Relations” page of Helix’s website, 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. | ||||||||||||||||||||
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Comparative Condensed Consolidated Statements of Operations | ||||||||||||||||||||
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||||||
(in thousands, except per share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
Net revenues: | ||||||||||||||||||||
Contracting services | $ | 152,310 | $ | 473,117 | $ | 967,751 | $ | 1,079,804 | ||||||||||||
Oil and gas | 63,715 | 134,619 | 313,888 | 499,831 | ||||||||||||||||
216,025 | 607,736 | 1,281,639 | 1,579,635 | |||||||||||||||||
Cost of sales: | ||||||||||||||||||||
Contracting services | 127,402 | 318,451 | 765,602 | 777,206 | ||||||||||||||||
Oil and gas | 86,006 | 90,205 | 216,454 | 295,688 | ||||||||||||||||
213,408 | 408,656 | 982,056 | 1,072,894 | |||||||||||||||||
Gross profit | 2,617 | 199,080 | 299,583 | 506,741 | ||||||||||||||||
Gain on oil and gas derivative commodity contracts | 4,598 | 2,705 | 83,328 | 2,705 | ||||||||||||||||
Gain on sale of assets, net | - | (23 | ) | 1,773 | 79,893 | |||||||||||||||
Selling and administrative expenses | 21,884 | 48,539 | 102,609 | 136,953 | ||||||||||||||||
Income (loss) from operations | (14,669 | ) | 153,223 | 282,075 | 452,386 | |||||||||||||||
Equity in earnings of investments | 13,385 | 8,751 | 27,152 | 25,722 | ||||||||||||||||
Gain on subsidiary equity transaction | 17,901 | - | 77,343 | - | ||||||||||||||||
Net interest expense and other | 10,306 | 28,298 | 39,969 | 76,914 | ||||||||||||||||
Income before income taxes | 6,311 | 133,676 | 346,601 | 401,194 | ||||||||||||||||
Provision of income taxes | 4,468 | 54,165 | 126,196 | 151,638 | ||||||||||||||||
Income from continuing operations | 1,843 | 79,511 | 220,405 | 249,556 | ||||||||||||||||
Income (loss) from discontinued operations, net of tax | 3,021 | (93 | ) | 10,303 | 1,671 | |||||||||||||||
Net income, including noncontrolling interests | 4,864 | 79,418 | 230,708 | 251,227 | ||||||||||||||||
Net income applicable to noncontrolling interests | 844 | 19,240 | 19,017 | 26,553 | ||||||||||||||||
Net income applicable to Helix | 4,020 | 60,178 | 211,691 | 224,674 | ||||||||||||||||
Preferred stock dividends | 125 | 881 | 688 | 2,642 | ||||||||||||||||
Preferred stock beneficial conversion charges | - | - | 53,439 | - | ||||||||||||||||
Net income applicable to Helix common shareholders | $ | 3,895 | $ | 59,297 | $ | 157,564 | $ | 222,032 | ||||||||||||
Weighted Avg. Common Shares Outstanding: | ||||||||||||||||||||
Basic | 101,282 | 90,725 | 97,831 | 90,598 | ||||||||||||||||
Diluted | 101,334 | 94,583 | 105,868 | 95,096 | ||||||||||||||||
Basic earnings per share of common stock: | ||||||||||||||||||||
Net income from continuing operations | $ | 0.01 | $ | 0.65 | $ | 1.49 | $ | 2.40 | ||||||||||||
Net income from discontinued operations | $ | 0.03 | $ | 0.00 | $ | 0.10 | $ | 0.02 | ||||||||||||
Net income per share of common stock | $ | 0.04 | $ | 0.65 | $ | 1.59 | $ | 2.42 | ||||||||||||
Diluted earnings per share of common stock: | ||||||||||||||||||||
Net income from continuing operations | $ | 0.01 | $ | 0.63 | $ | 1.38 | $ | 2.32 | ||||||||||||
Net income from discontinued operations | $ | 0.03 | $ | 0.00 | $ | 0.10 | $ | 0.02 | ||||||||||||
Net income per share of common stock | $ | 0.04 | $ | 0.63 | $ | 1.48 | $ | 2.34 |
Comparative Condensed Consolidated Balance Sheets | |||||||||||||||||||||
ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||||
(in thousands) | Sept. 30, 2009 | Dec. 31, 2008 | (in thousands) |
Sept. 30, 2009 |
Dec. 31, 2008 | ||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
Current Assets: | Current Liabilities: | ||||||||||||||||||||
Cash and equivalents | $ | 410,506 | $ | 223,613 | Accounts payable | $ | 177,117 | $ | 344,807 | ||||||||||||
Accounts receivable | 224,701 | 545,106 | Accrued liabilities | 198,876 | 234,451 | ||||||||||||||||
Other current assets | 130,546 | 191,304 | Income taxes payable | 108,213 | - | ||||||||||||||||
Current mat of L-T debt (1) | 13,136 | 93,540 | |||||||||||||||||||
Total Current Assets | 765,753 | 960,023 | Total Current Liabilities | 497,342 | 672,798 | ||||||||||||||||
Net Property & Equipment: | Long-term debt (1) (2) | 1,347,395 | 1,933,686 | ||||||||||||||||||
Contracting Services | 1,401,534 | 1,876,795 | Deferred income taxes | 456,728 | 615,504 | ||||||||||||||||
Oil and Gas | 1,454,798 | 1,541,648 | Decommissioning liabilities | 177,924 | 194,665 | ||||||||||||||||
Equity investments | 191,475 | 196,660 | Other long-term liabilities | 10,148 | 81,637 | ||||||||||||||||
Goodwill | 78,220 | 366,218 | Convertible preferred stock (1) | 6,000 | 55,000 | ||||||||||||||||
Other assets, net | 79,310 | 125,722 | Shareholders' equity (1) | 1,475,553 | 1,513,776 | ||||||||||||||||
Total Assets | $ | 3,971,090 | $ | 5,067,066 | Total Liabilities & Equity | $ | 3,971,090 | $ | 5,067,066 |
(1) |
Net debt to book capitalization - 39% at September 30, 2009. Calculated as total debt less cash and equivalents ($950,025) divided by sum of total net debt, convertible preferred stock and shareholders' equity ($2,431,578). |
(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 September 30, 2009 and December 31, 2008 was a reduction in debt totaling $28.9 million and $34.8 million, respectively. |
Helix Energy Solutions Group, Inc. | |||||||||||||||||||||||
Reconciliation of Non GAAP Measures | |||||||||||||||||||||||
Three and Nine Months Ended September 30, 2009 | |||||||||||||||||||||||
Earnings Release: |
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Reconciliation From Net Income to Adjusted EBITDAX: |
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3Q09 | 3Q08 | 2Q09 | 2009 | 2008 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net income applicable to common shareholders | $ | 3,895 | $ | 59,297 | $ | 100,219 | $ | 157,564 | $ | 222,032 | |||||||||||||
Non-cash impairment | 533 | 6,874 | 19,261 | 19,794 | 23,902 | ||||||||||||||||||
(Gain) loss on asset sales | (17,869 | ) | 23 | (69,569 | ) | (87,892 | ) | (79,893 | ) | ||||||||||||||
Preferred stock dividends | 125 | 881 | 250 | 54,127 | 2,642 | ||||||||||||||||||
Income tax provision (benefit) | 1,415 | 39,325 | 50,072 | 116,281 | 134,253 | ||||||||||||||||||
Net interest expense and other | 10,192 | 25,992 | 5,776 | 36,561 | 69,650 | ||||||||||||||||||
Depreciation and amortization | 46,315 | 70,275 | 68,221 | 188,513 | 226,748 | ||||||||||||||||||
Exploration expense | 904 | 1,645 | 1,483 | 2,863 | 5,007 | ||||||||||||||||||
Adjusted EBITDAX (including Cal Dive) | $ | 45,510 | $ | 204,312 | $ | 175,713 | $ | 487,811 | $ | 604,341 | |||||||||||||
Less: Previously reported contribution from Cal Dive | $ | (7,204 | ) | $ | (45,289 | ) | $ | (27,804 | ) | $ | (56,291 | ) | $ | (84,408 | ) | ||||||||
Adjusted EBITDAX | $ | 38,306 | $ | 159,023 | $ | 147,909 | $ | 431,520 | $ | 519,933 |
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 Months Ended September 30, 2009 | ||||||
Earnings Release: |
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Reconciliation of unusual items: |
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3Q09 | ||||||
(in thousands) | ||||||
Other charges: | ||||||
Gain on sale of Cal Dive | $ | 17,901 | ||||
Weather derivative contract | (7,084 | ) | ||||
Tax provision associated with above | (3,805 | ) | ||||
Other income, net | 7,012 | |||||
Diluted shares | 101,334 | |||||
Per share | $ | 0.07 |
Source:
Helix Energy Solutions Group, Inc.
Tony Tripodo, Chief Financial
Officer, 281-618-0400