UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2008
Helix Energy Solutions Group,
Inc.
(Exact name of registrant as
specified in its charter)
| Minnesota | 001-32936 | 95-3409686 | ||
| (State or other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 400 North Sam Houston Parkway
East, Suite 400 Houston, Texas |
77060 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: 281-618-0400
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 30, 2008, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its second quarter results of operation for the period ended June 30, 2008. Attached hereto as Exhibit 99.1, and incorporated by reference herein, is the press release.
This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, and such information is not incorporated by reference into any registration statements or other document filed under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, regardless of the general incorporation language contained in such filing, except as shall be expressly set forth by specific reference to this filing.
Item 7.01 Regulation FD Disclosure.
On July 30, 2008, Helix issued a press release announcing its second quarter results of operation for the period ended June 30, 2008. In addition, on July 31, 2008, Helix is making a presentation (with slides) to analysts and investors regarding its financial and operating results. Attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein are the press release and the slides for the Second Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials will also be posted in the Investor Relations section of Helix’s website, www.HelixESG.com.
This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, and such information is not incorporated by reference into any registration statements or other document filed under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, regardless of the general incorporation language contained in such filing, except as shall be expressly set forth by specific reference to this filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
|
Number
|
Description | |
| 99.1 | Press Release of Helix Energy Solutions Group, Inc. dated July 30, 2008 reporting financial results for the second quarter of 2008. |
|
| 99.2 | Second Quarter Earnings Conference Call Presentation.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Date: July 30, 2008
|
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HELIX ENERGY SOLUTIONS GROUP, INC. | |||
|
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By: | /s/ Anthony Tripodo | ||
|
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Anthony Tripodo Executive Vice President and Chief Financial Officer |
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Index to Exhibits
|
Exhibit No.
|
Description | |
| 99.1 | Press Release of Helix Energy Solutions Group,
Inc. dated July 30, 2008 reporting financial results for the second
quarter of 2008. |
|
| 99.2 | Second Quarter Earnings Conference Call Presentation. |
Exhibit 99.1
| PRESSRELEASEwww.HelixESG.com Helix Energy Solutions Group, Inc. · 400 N. Sam Houston Parkway E., Suite 400 · Houston, TX 77060-3500 · 281-618-0400 · fax: 281-618-0505 For Immediate Release 08-014 Contact: Tony Tripodo Date: July 30, 2008 Title: Chief Financial Officer |
Helix Reports Record Quarterly Revenue and Gross Profit,
Provides 2008 Outlook Update
Provides 2008 Outlook Update
HOUSTON, TX — Helix Energy Solutions (NYSE: HLX) reported second quarter net income of $90.9
million, or $0.96 per diluted share. This compares to net income of $57.7 million, or $0.61 per
diluted share, reported for the second quarter of 2007, and net income of $74.3 million, or $0.79
per diluted share, in the first quarter of 2008. Net income for the six months ended June 30, 2008
was $165.2 million, or $1.75 per diluted share, compared to $113.5 million, or $1.21 per diluted
share, for the six months ended June 30, 2007.
The Company realized pre-tax gains of approximately $19 million on asset sales of oil and gas
properties during the quarter, which compares to approximately $61 million of asset sale gains
recorded in the first quarter of 2008. Excluding the impact of these gains, earnings per share for
the second and first quarters of 2008 would have been $0.86 and $0.37, respectively. Net income for
the second quarter of 2007 was negatively impacted by three non-recurring items recorded by Helix’s
majority owned subsidiary, Cal Dive International, Inc. Excluding these items, net income for the
second quarter of 2007 was $65.8 million, or $0.70 per share.
Summary of Results
(in thousands, except per share amounts and percentages)
(in thousands, except per share amounts and percentages)
| Quarter Ended | Six Months Ended | |||||||||||||||||||
| June 30 | March 31 | June 30 | ||||||||||||||||||
| 2008 | 2007 | 2008 | 2008 | 2007 | ||||||||||||||||
Revenues |
$ | 540,494 | $ | 410,574 | $ | 450,737 | $ | 991,231 | $ | 806,629 | ||||||||||
Gross Profit |
192,414 | 141,765 | 120,879 | 313,293 | 277,380 | |||||||||||||||
| 36 | % | 35 | % | 27 | % | 32 | % | 34 | % | |||||||||||
Net Income |
90,902 | 57,702 | 74,335 | 165,237 | 113,522 | |||||||||||||||
Diluted Earnings
per Share |
$ | 0.96 | $ | 0.61 | $ | 0.79 | $ | 1.75 | $ | 1.21 | ||||||||||
Adjusted EBITDAX* |
$ | 241,181 | $ | 186,206 | $ | 238,764 | $ | 479,945 | $ | 352,667 | ||||||||||
| * | Non-GAAP measure. See reconciliation attached hereto. |
Owen Kratz, President and Chief Executive Officer of Helix, stated, “During the second quarter, we
achieved record quarterly revenues and gross profit, with quarterly revenue increases across all of
our segments. Continued strong demand for our specialty deepwater assets, along with seasonal
upswing in our shelf contracting business, resulted in improvements in revenue and operating income
over the prior quarter. Our oil and gas operations benefited from a favorable commodity price
environment during the quarter which offset minor production declines.
During the quarter we continued to focus on the execution of our strategic plan, completing the
sale of an additional 10% working interest in our Bushwood field, completing the sale of all of our
onshore oil and gas properties, and returning the Q4000 to service. Our major capital initiatives
are continuing to progress and we expect to begin to realize the benefits of these investments
starting in the third quarter with first production at Bushwood.”
Segment Information, Operational and Financial Highlights
(in thousands, Unaudited)
(in thousands, Unaudited)
| Quarter Ended | ||||||||||||
| June 30 | March 31 | |||||||||||
| 2008 | 2007 | 2008 | ||||||||||
Revenues: |
||||||||||||
Contracting Services |
$ | 228,351 | $ | 154,719 | $ | 183,789 | ||||||
Shelf Contracting |
171,970 | 135,258 | 144,571 | |||||||||
Oil and Gas |
194,161 | 142,082 | 171,051 | |||||||||
Intercompany Elim. |
(53,988 | ) | (21,485 | ) | (48,674 | ) | ||||||
Total |
$ | 540,494 | $ | 410,574 | $ | 450,737 | ||||||
Income from Operations: |
||||||||||||
Contracting Services |
$ | 37,993 | $ | 31,987 | $ | 20,911 | ||||||
Shelf Contracting |
29,498 | 36,142 | 7,548 | |||||||||
Production Facilities &
Equity Investments |
(156 | ) | (145 | ) | (138 | ) | ||||||
Oil and Gas (1) |
104,202 | 48,685 | 109,917 | |||||||||
Intercompany Elim. |
(4,241 | ) | (2,608 | ) | (4,030 | ) | ||||||
Total |
$ | 167,296 | $ | 114,061 | $ | 134,208 | ||||||
Equity in earnings of equity
investments (2) |
$ | 6,155 | $ | 7,045 | $ | 10,923 | ||||||
| (1) | Included pre-tax gains on sales of assets of $18.6 million and $61.1 million for the
three months ended June 30, 2008 and March 31, 2008, respectively. |
|
| (2) | Equity in earnings of equity investments for the three months ended June 30, 2007
excluded the impact of a $11.8 million loss recorded by our Cal Dive subsidiary related to
the impairment of its 40% equity investment in Offshore Technology Solutions Limited. |
Contracting Services
| • | Contracting Services revenues and operating income for the three months ended June 30,
2008 increased from the first quarter of 2008 as a result of strong performance from our
robotics subsidiary (Canyon) which had 6 vessels under charter during the second quarter,
as well as significantly higher utilization from the Seawell. |
||
| • | Contracting Services revenues and operating income for the three months ended June 30,
2008 increased from the second quarter of 2007 as a result of the increased assets in
service, and an
increase in utilization of our deepwater pipelay assets. These increases offset the
declines in well operations as a result of the Q4000 being out of service for the majority
of the second quarter of 2008. |
| • | Gross profit margins for the Contracting Services segment declined compared to the
second quarter of 2007 as a result of the Q4000 drydock and lower margins on international
deepwater pipelay projects during the quarter. |
Shelf Contracting
| • | Shelf Contracting revenues, gross profit and net income increased significantly
compared to first quarter as a result of seasonal improvement in demand for its vessels,
with nearly all assets deployed at the end of the second quarter. |
||
| • | Shelf Contracting revenues for the quarter ended June 30, 2008 were higher than the
second quarter of 2007 as a result of vessel additions from the Horizon acquisition in
December 2007, partially offset by lower utilization resulting from harsh weather
conditions in the Gulf of Mexico. Gross profit margins were down compared to the second
quarter of 2007 due to unplanned maintenance downtime on two vessels, combined with slower
than expected demand due to weather conditions as described above. |
Oil and Gas
| • | Oil and Gas revenues for the three months ended June 30, 2008 increased significantly
compared to the first quarter of 2008 and the second quarter of 2007 primarily as a result
of higher realized commodity prices. |
||
| • | During the quarter, the Company realized a pre-tax gain of approximately $19 million
from oil and gas property sales, comprised of a gain from the sale of an additional 10%
working interest in its Bushwood field and certain other shelf properties, partially offset
by a loss from the disposition of all of the Company’s onshore oil and gas properties.
Gains in the first quarter of 2008 totaled approximately $61 million. |
||
| • | Production for the three months ended June 30, 2008 was 14.9 Bcfe, compared to 15.8
Bcfe in the second quarter of 2007. The year-over-year production declines were a result
of the loss of production at the Tiger deepwater field in late 2007, along with a natural
decline in shelf production as a result of a reduction in capital allocated to shelf
exploration. |
Other Expenses
| • | Selling, general and administrative expenses for the quarter were 8.1% of revenue,
compared to 10.6% in the first quarter of 2008, and 8.1% for the quarter ended June 30,
2007. The improvement over the first quarter was a result of achieving operating leverage
on higher revenues across all segments. Total SG&A expenses are higher compared to prior
year primarily as a result of the Horizon acquisition by Cal Dive in December 2007. |
||
| • | Net interest expense and other increased $4.4 million in second quarter 2008 compared
to the prior year period due to overall higher levels of indebtedness as a result of our
Senior Unsecured Notes and Cal Dive’s term loan, which both closed in December 2007. |
Financial Condition
| • | Consolidated net debt at June 30, 2008 increased to $1.84 billion from $1.71 billion as
of March 31, 2008. $344.5 million of our total indebtedness relates to Cal Dive’s
borrowings under its senior credit facilities, which are non-recourse to Helix. Net debt
to book capitalization as of June 30, 2008 was 47%. (Net debt to book capitalization is a
non-GAAP measure. See reconciliation attached hereto.) |
||
| • | During the quarter the Company increased available capacity under its revolving credit
facility to $420 million from $300 million. As of June 30, 2008, the Company
had borrowings and L/Cs outstanding under the facility totaling $143.8 million, with $276.2
million available to be drawn under the facility. |
| • | Year-to-date capital expenditures (excluding $41 million related to Cal Dive) total
$514 million. Helix’s projected capital expenditures for 2008 (excluding Cal Dive) will
range from $875 to $925 million. |
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 9:00 a.m. Central Daylight
Time on Thursday, July 31, 2008, will be webcast live. If you wish to dial in to the call the
telephone number is 800 475 0212 (Domestic) or 1-210-234-0002 (International). The pass code is
Tripodo. A replay will be available from the Audio Archives page on our website.
Helix Energy Solutions, headquartered in Houston, Texas, is an international offshore energy
company that provides development solutions and other key life of field services to the open energy
market as well as to our own oil and gas business unit.
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 Cal Dive
that we do not own. Net debt is calculated as the sum of financial debt less cash on hand. Net
debt to book capitalization is calculated by dividing net debt by the sum net debt, preferred stock
and stockholders’ equity. These non-GAAP measures are useful to investors and other internal and
external user 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.
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 Securities and Exchange Commission
(“SEC”), including the company’s Annual Report on Form 10-K for the year ending December 31, 2007.
We assume no obligation and do not intend to update these forward-looking statements.
HELIX ENERGY SOLUTIONS GROUP, INC.
Comparative Condensed Consolidated Statements of Operations
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (in thousands, except per share data) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Net revenues: |
||||||||||||||||
Contracting services |
$ | 346,333 | $ | 268,492 | $ | 626,019 | $ | 533,580 | ||||||||
Oil and gas |
194,161 | 142,082 | 365,212 | 273,049 | ||||||||||||
| 540,494 | 410,574 | 991,231 | 806,629 | |||||||||||||
Cost of sales: |
||||||||||||||||
Contracting services |
252,269 | 182,464 | 472,455 | 360,519 | ||||||||||||
Oil and gas |
95,811 | 86,345 | 205,483 | 168,730 | ||||||||||||
| 348,080 | 268,809 | 677,938 | 529,249 | |||||||||||||
Gross profit |
192,414 | 141,765 | 313,293 | 277,380 | ||||||||||||
Gain on sale of assets, net |
18,803 | 5,684 | 79,916 | 5,684 | ||||||||||||
Selling and administrative expenses |
43,921 | 33,388 | 91,705 | 63,988 | ||||||||||||
Income from operations |
167,296 | 114,061 | 301,504 | 219,076 | ||||||||||||
Equity in earnings of investments |
6,155 | (4,748 | ) | 17,078 | 1,356 | |||||||||||
Net interest expense and other |
18,668 | 14,286 | 44,714 | 27,298 | ||||||||||||
Income before income taxes |
154,783 | 95,027 | 273,868 | 193,134 | ||||||||||||
Provision for income taxes |
55,925 | 33,261 | 99,557 | 66,384 | ||||||||||||
Minority interest |
7,076 | 3,119 | 7,313 | 11,338 | ||||||||||||
Net income |
91,782 | 58,647 | 166,998 | 115,412 | ||||||||||||
Preferred stock dividends |
880 | 945 | 1,761 | 1,890 | ||||||||||||
Net income applicable to common shareholders |
$ | 90,902 | $ | 57,702 | $ | 165,237 | $ | 113,522 | ||||||||
Weighted Avg. Common Shares Outstanding: |
||||||||||||||||
Basic |
90,519 | 90,047 | 90,511 | 90,021 | ||||||||||||
Diluted |
95,928 | 95,991 | 95,652 | 95,262 | ||||||||||||
Earnings Per Common Share: |
||||||||||||||||
Basic |
$ | 1.00 | $ | 0.64 | $ | 1.83 | $ | 1.26 | ||||||||
Diluted |
$ | 0.96 | $ | 0.61 | $ | 1.75 | $ | 1.21 | ||||||||
Comparative Condensed Consolidated Balance Sheets
| ASSETS | ||||||||
| (in thousands) | Jun. 30, 2008 | Dec. 31, 2007 | ||||||
| (unaudited) | ||||||||
Current Assets: |
||||||||
Cash and equivalents |
$ | 23,148 | $ | 89,555 | ||||
Short term investments |
— | — | ||||||
Accounts receivable |
512,737 | 512,132 | ||||||
Other current assets |
162,199 | 125,582 | ||||||
Total Current Assets |
698,084 | 727,269 | ||||||
Net Property & Equipment: |
||||||||
Contracting Services |
1,791,090 | 1,507,463 | ||||||
Oil and Gas |
1,744,962 | 1,737,225 | ||||||
Equity investments |
202,501 | 213,429 | ||||||
Goodwill |
1,084,711 | 1,089,758 | ||||||
Other assets, net |
213,097 | 177,209 | ||||||
Total Assets |
$ | 5,734,445 | $ | 5,452,353 | ||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
| (in thousands) | Jun. 30, 2008 | Dec. 31, 2007 | ||||||
| (unaudited) | ||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 324,961 | $ | 382,767 | ||||
Accrued liabilities |
246,567 | 221,366 | ||||||
Income taxes payable |
95,688 | — | ||||||
Current mat of L-T debt (1) |
163,656 | 74,846 | ||||||
Total Current Liabilities |
830,872 | 678,979 | ||||||
Long-term debt (1) |
1,697,797 | 1,725,541 | ||||||
Deferred income taxes |
599,458 | 625,508 | ||||||
Decommissioning liabilities |
185,828 | 193,650 | ||||||
Other long-term liabilities |
68,550 | 63,183 | ||||||
Minority interest |
275,121 | 263,926 | ||||||
Convertible preferred stock (1) |
55,000 | 55,000 | ||||||
Shareholders’ equity (1) |
2,021,819 | 1,846,566 | ||||||
Total Liabilities & Equity |
$ | 5,734,445 | $ | 5,452,353 | ||||
| (1) | Net debt book capitalization — 47% at June 30, 2008. Calculated as total debt less
cash and equivalents ($1,838,305) divided by sum of total debt, convertible preferred
stock and stockholders’ equity ($3,915,124). |
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three and Six Months Ended June 30, 2008
Reconciliation of Non GAAP Measures
Three and Six Months Ended June 30, 2008
Earnings Release:
Reconciliation From Net Income to Adjusted EBITDAX:
| 2Q08 | 2Q07 | 1Q08 | 2008 | 2007 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Net income applicable to common shareholders |
$ | 90,902 | $ | 57,702 | $ | 74,335 | $ | 165,237 | $ | 113,522 | ||||||||||
Non-cash impairment and other unusual items |
— | 8,602 | — | — | 8,602 | |||||||||||||||
Preferred stock dividends |
880 | 945 | 881 | 1,761 | 1,890 | |||||||||||||||
Income tax provision |
52,753 | 30,456 | 43,523 | 96,276 | 59,073 | |||||||||||||||
Net interest expense and other |
16,572 | 13,605 | 23,236 | 39,808 | 25,936 | |||||||||||||||
Depreciation and amortization |
78,600 | 71,918 | 94,901 | 173,501 | 139,476 | |||||||||||||||
Exploration expense |
1,474 | 2,978 | 1,888 | 3,362 | 4,168 | |||||||||||||||
Adjusted EBITDAX |
$ | 241,181 | $ | 186,206 | $ | 238,764 | $ | 479,945 | $ | 352,667 | ||||||||||
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.
Exhibit 99.2
| Second Quarter Earnings Conference Call July 31, 2008 |
| This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All such 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 statements concerning developments, performance or industry rankings; and any statements of assumptions underlying any of the foregoing. Although we believe that the expectations set forth in these forward-looking statements are reasonable, they do involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. 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 Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K for the year ended December 31, 2007 and subsequent quarterly reports on Form 10-Q. You should not place undue reliance on these forward-looking statements which speak only as of the date of this presentation and the associated press release. We assume no obligation or duty and do not intend to update these forward-looking statements except as required by the securities laws. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Statements of proved reserves are only estimates and may be imprecise. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include not only proved reserves but also other categories of reserves that the SEC's guidelines strictly prohibit the Company from including in filings with the SEC. Investors are urged to consider closely the disclosure in the Company's 2007 Form 10-K. Forward-Looking Statements |
| Presentation Outline Executive Summary Summary of Results Strategy Update 2008 Outlook Update Operational Highlights by Segment Contracting Services Oil & Gas Questions & Answers Umbilical reels on the MSV Express |
| Executive Summary Highlights ($ in millions, except per share data) |
| Executive Summary Highlights of the Quarter Record revenues and gross profit based on strong performance across all business segments. Consolidated revenues, gross profit and net income increased 20%, 59% and 23% respectively compared to the 1st quarter of 2008. Helix Contracting Services revenues increased 24% on strong performance from our Well Operations and Robotics divisions. Shelf Contracting revenues increased 19% on improved seasonal demand. Oil and Gas revenues increased 13% on higher average realized commodity prices of $105.48 per barrel and $10.36 per mcf. Closed the sale of an additional 10% interest in Bushwood and sold all onshore oil and gas properties, generating combined gross proceeds of $108 million and a pre-tax gain of approximately $19 million. Well Enhancer hull launched on schedule at Merwede Shipyard. Q4000 returned to service in June. |
| 2008 Objectives Sell down interests in Oil & Gas properties to capture value while mitigating risk, reduce intercompany profit deferral and fund capital program. Completed sale of 10% working interest in Bushwood in April. Total proceeds of approximately $181 million received for 30% working interest sold to date. Completed sale of non-core onshore properties for proceeds of approximately $47 million. Management will continue to evaluate potential asset sales based on commodity price environment and time to first production; however, no further sales are assumed in our 2008 guidance update. Complete new services assets and deepwater developments. Q4000 marine and drilling upgrades completed and vessel returned to service in June. Caesar pipelay vessel conversion to be completed in Q4 at an increased but market competitive cost. Helix Producer I conversion expected to be completed during Q2 2009. Noonan development projected to be on time with first production expected in Q3. Phoenix development delayed due to HPI conversion. First production targeted for July 2009. Danny development delayed due to Caesar conversion. First production targeted for June 2009. Outperform guidance. See 2008 Earnings Outlook Update. Strategy Update |
| 2008 Outlook Update ($ in millions, except per share data) Guidance reaffirmed as improvements in commodity prices offset lower property sales and weakness in shelf contracting Shelf contracting lowered to middle of revised DVR guidance range Earnings contribution from Caesar deferred to 2009 Annual production guidance remains unchanged |
| OPERATIONAL HIGHLIGHTS BY SEGMENT Launch of the MSV Well Enhancer in Rotterdam on May 31, 2008 |
| Contracting Services ($ in millions, except percentages) |
| Contracting Services Continued |
| Contracting Services Commentary Helix Contracting Services The Intrepid completed the Anadarko Powerplay pipe-in-pipe project and commenced installation of the Noonan flowline. The MSV Express continues working offshore India on the Reliance KGD6 project. Olympic Triton installed the first segment of the Noonan umbilical. Canyon had another strong quarter with six active vessels under contract during the quarter working in the North Sea, West Africa, India, GOM, Malaysia and Australia. Canyon executed a framework agreement with Statoil for trenching services offshore Norway. The Seawell had full utilization and excellent project execution. The Q4000 returned to work in June after extensive seatrials. Subsea manifold being installed by Express Q4000 Intervention Riser System in operation |
| Shelf Contracting (Cal Dive) Utilization and margins improved due to more traditional seasonality. See separate earnings release and conference call for this majority owned subsidiary. Production Facilities Independence Hub platform shut in on April 9, 2008 as the result of a leak in the Independence Trail gas export pipeline. Delay of production restart until June resulted in loss in equity in earnings of approximately $2 million for the quarter. Contracting Services Commentary |
| Oil & Gas Financial Highlights Comments Significant growth in revenue and gross profit due to favorable commodity price environment Production of 14.9 Bcfe in line with expectations; down from prior periods due to reduction in capital allocated to shelf exploration Net gains on sale of property during the quarter total $18.6 million |
| Oil & Gas Operating Costs ($ in millions, except per Mcfe data) |
| Summary of 2008 - 2009 Hedging Positions (July 2008 - December 2009) |
| Non GAAP Reconciliations Adjusted EBITDAX ($ in millions) |
| Non GAAP Reconciliations Revenue and Gross Profit As Reported ($ in millions) |
| Non GAAP Reconciliations 2008 Outlook Update - Adjusted EBITDAX ($ in millions) |
| Non GAAP Reconciliations 2008 Initial Outlook - Adjusted EBITDAX ($ in millions) |
| Contracting Services - World Class fleet and Capabilities Robotics (Canyon Offshore) 42 ROVs 5 trenchers 2000 HP i- trencher 2 ROV drill units Portable pipelay system (2008; under construction) Long term charters DP2 Northern Canyon DP2 Olympic Canyon DP2 Olympic Triton DP2 Island Pioneer DP2 Seacor Canyon Short term charters On an opportunistic basis to serve spot market Production Facilities Marco Polo TLP (50% interest) Independence Hub (20% interest) Helix Producer I (2009; under conversion) Deepwater Construction MSV DP2 Intrepid (reeled pipelay vessel) MSV DP2 Express (reeled pipelay vessel) DP2 Caesar (S-Lay vessel) (2008; under conversion) Reservoir Engineering and Well Technology Services Helix RDS Well Operations (Well ops) MSV DP2 Seawell MSV DP2 Q4000 MSV DP2 Well Enhancer (2009; under construction) 3 SILs 1 IRS 1 VDS Tooling (AXE, CIT) Shelf Contracting Cal Dive (~58% interest) |
| Thank You |