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): October 29, 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 October 29, 2008, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its third quarter results of operation for the period ended September 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 October 29, 2008, Helix issued a press release announcing its third quarter results of operation for the period ended September 30, 2008. In addition, on October 30, 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 Third Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials will also be posted beginning on October 29, 2008 in the Presentations section under Investor Relations 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 October 29, 2008 reporting financial results for the third quarter of 2008. | |
99.2
|
Third 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: October 29, 2008
HELIX ENERGY SOLUTIONS GROUP, INC.
By: /s/ Anthony Tripodo
Anthony Tripodo
Executive Vice President and Chief Financial Officer
Index to Exhibits
Exhibit No.
|
Description | |
99.1
|
Press Release of Helix Energy Solutions Group, Inc. dated October 29, 2008 reporting financial results for the third quarter of 2008. | |
99.2
|
Third 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 08-019 Contact: Tony Tripodo Date: October 29, 2008 Title: Chief Financial Officer |
Helix Reports Quarter 3 Results and Updates 2008 Outlook
HOUSTON, TX — Helix Energy Solutions (NYSE: HLX) reported third quarter net income of $60.6
million, or $0.65 per diluted share. This compares to net income of $82.8 million, or $0.88 per
diluted share, reported for the third quarter of 2007, and net income of $90.9 million, or $0.96
per diluted share, in the second quarter of 2008. Net income for the nine months ended September
30, 2008 was $225.8 million, or $2.40 per diluted share, compared to $196.4 million, or $2.07 per
diluted share, for the nine months ended September 30, 2007. Net income for the third quarter of
2008 was negatively impacted by shut in oil and gas production resulting from both Hurricanes
Gustav and Ike. Third quarter oil and gas production amounted to 10.5 bcfe, which was 4.4 bcfe
lower than production for the second quarter of 2008. In addition to the decline in oil and gas
production related to the hurricanes, the Company recorded an impairment charge of $6.7 million
pre-tax related to oil and gas production in the Tiger field that will be abandoned as a result of
damage caused by Hurricane Ike.
The Company realized pre-tax gains on asset sales of oil and gas properties of approximately $19
million in the second quarter of 2008 and $80 million in the nine months ending September 30, 2008.
Excluding the impact of these gains, earnings per share for the second quarter of 2008 and nine
months ending September 30, 2008 would have been $0.86* and $1.88*, respectively. Likewise, net
income for the third quarter of 2007 reflected a pre-tax gain from the sale of a 30% interest in
the Phoenix oil and gas field of $19 million, or $0.13 of earnings per share.
Summary of Results
(in thousands, except per share amounts and percentages, unaudited)
| Quarter Ended | Nine Months Ended | |||||||||||||||||||
| September 30 | June 30 | September 30 | ||||||||||||||||||
| 2008 | 2007 | 2008 | 2008 | 2007 | ||||||||||||||||
Revenues |
$ | 616,216 | $ | 460,573 | $ | 540,494 | $ | 1,607,447 | $ | 1,267,202 | ||||||||||
Gross Profit |
200,825 | 166,318 | 192,414 | 514,118 | 443,698 | |||||||||||||||
| 33 | % | 36 | % | 36 | % | 32 | % | 35 | % | |||||||||||
Net Income |
60,587 | 82,828 | 90,902 | 225,824 | 196,350 | |||||||||||||||
Diluted Earnings
per Share |
$ | 0.65 | $ | 0.88 | $ | 0.96 | $ | 2.40 | $ | 2.07 | ||||||||||
Adjusted EBITDAX* |
$ | 201,584 | $ | 222,410 | $ | 241,181 | $ | 681,529 | $ | 575,077 | ||||||||||
| * | Non-GAAP measure. See reconciliation attached hereto. |
Owen Kratz, President and Chief Executive Officer of Helix, stated, “During the third quarter, we
achieved record quarterly revenues and gross profit, led by strong performance from both our
Contracting Services segment as well as our Shelf Contracting Services segment (Cal Dive), which
offset the deferred production resulting from the back-to-back disruptions caused by Hurricanes
Gustav and Ike. However, these strong operating results did not translate into a corresponding
record for earnings per share due to higher minority interest elimination resulting from Cal Dive’s
strong performance and the fact that we did not realize any gains for oil and gas property sales,
as we had in the first two quarters of 2008.
Our near term efforts are focused on restoring our oil and gas production, managing our balance
sheet as well as our ongoing capital projects.”
Segment Information, Operational and Financial Highlights
(in thousands, unaudited)
(in thousands, unaudited)
| Quarter Ended | ||||||||||||
| September 30 | June 30 | |||||||||||
| 2008 | 2007 | 2008 | ||||||||||
Revenues: |
||||||||||||
Contracting Services |
$ | 284,671 | $ | 192,331 | $ | 228,351 | ||||||
Shelf Contracting |
278,709 | 176,928 | 171,970 | |||||||||
Oil and Gas |
134,619 | 141,821 | 194,161 | |||||||||
Intercompany Elim. |
(81,783 | ) | (50,507 | ) | (53,988 | ) | ||||||
Total |
$ | 616,216 | $ | 460,573 | $ | 540,494 | ||||||
Income from Operations: |
||||||||||||
Contracting Services |
$ | 56,845 | $ | 43,697 | $ | 37,993 | ||||||
Shelf Contracting |
72,719 | 56,993 | 29,498 | |||||||||
Production Facilities &
Equity Investments |
(140 | ) | (182 | ) | (156 | ) | ||||||
Oil and Gas (1) |
34,198 | 51,443 | 104,202 | |||||||||
Intercompany Elim. |
(13,520 | ) | (7,078 | ) | (4,241 | ) | ||||||
Total |
$ | 150,102 | $ | 144,873 | $ | 167,296 | ||||||
Equity in earnings of equity
investments |
$ | 8,886 | $ | 7,889 | $ | 6,155 | ||||||
| (1) | Q3, 2007 included a pre-tax gain on the sale of a 30% working interest in the Phoenix
field of $19 million. Q2, 2008 included a pre-tax gain of $19 million on sales of oil and
gas properties. |
Contracting Services
| • | Deepwater construction revenues in the third quarter of 2008 benefitted from high asset
utilization compared to prior periods, combined with high utilization of our robotics
assets. |
||
| • | Revenues from well intervention operations increased in the third quarter as compared
to the second quarter of 2008 due mainly to having the Q4000 available for a full quarter
at high utilization levels after completing its capital upgrades near the end of the second
quarter. |
||
| • | Gross profit margins for the Company’s Contracting Services segment improved from the
second quarter mainly as a result of higher asset utilization. |
Shelf Contracting
| • | Shelf Contracting (Cal Dive) revenues, gross profit and net income increased
significantly compared to the second quarter of 2008 as a result of seasonal improvement in
demand for its vessels and higher vessel utilization. |
||
| • | Higher demand rates for Cal Dive’s vessels are allowing the Shelf Contracting segment
to realize higher contracting rates, particularly for its surface diving vessels. |
Oil and Gas
| • | Oil and Gas revenues for the three months ended September 30, 2008 decreased
significantly compared to the second quarter of 2008 primarily as a result of production
shut in from Hurricanes Gustav and Ike. Production for the third quarter of 2008 fell to
10.5 bcfe compared to 14.9 bcfe for the second quarter of 2008. |
||
| • | As disclosed in the Company’s press release of September 23, 2008, nearly all the
Company’s oil and gas production was shut in as a result of Hurricane Ike. As of Monday,
October 27, production had been restored to a level of approximately 30% of pre-Hurricane
Ike levels of approximately 160 mmcfe/day. Further, the Company’s ability to restore
production is subject, for the most part, to the repair and restoration of third party
pipelines and onshore production facilities, a matter largely out of the Company’s control.
Based on present estimates of when these pipelines and assets will become operational
again, the Company anticipates reaching pre-Hurricane Ike production levels by the end of
December. Based on these estimates, the Company expects fourth quarter, 2008 production
to be in the range of 7.5 to 8.0 bcfe with production in the first quarter of 2009 expected
to surpass second quarter, 2008 levels as a result of incremental production anticipated
from the Noonan gas discovery. Again, these forecasted production rates are subject to
estimated dates for the operational restoration of third party pipelines and onshore
processing facilities, a matter largely beyond the Company’s control. |
Other Expenses
| • | Selling, general and administrative expenses for the quarter were 8.2% of revenue,
compared to 8.1% in the second quarter of 2008. |
||
| • | Net interest expense and other increased to $23.5 million in the third quarter of 2008,
up from $18.7 million in the second quarter. The increase in other expense was primarily
due to higher foreign exchange losses recorded during the quarter as a result of the
strengthening of the U.S. dollar. |
Financial Condition and Liquidity
| • | Consolidated net debt at September 30, 2008 increased to $1.87 billion from $1.84
billion as of June 30, 2008. $335 million of 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 September 30, 2008 was 47%. (Net debt to book capitalization
is a non-GAAP measure. See reconciliation attached hereto.) |
||
| • | As of September 30, 2008, the Company had borrowings and L/Cs outstanding
under its revolving credit facility totaling $198.5 million, with $221.5 million available
to be drawn under the facility. In order to ensure adequate and readily available
liquidity, the Company drew $175 million under the facility during the month of October.
The Company expects to utilize a portion of this additional drawdown during the fourth
quarter in order to fund its ongoing capital program as well as to fund operations in light
of reduced oil and gas production levels. |
||
| • | Year-to-date capital expenditures (excluding $71 million related to Cal Dive) through
September 30, 2008 totaled $658 million. Helix’s projected capital expenditures for 2008
(excluding Cal Dive) will range from $800 to $850 million. |
||
| • | In light of the impacts to the Company from decreased oil and gas revenues due to
hurricane related shut in, the Company has taken the following actions to bolster its
financial condition and liquidity: |
| • | Hedged an additional amount of expected 2009 oil and gas production (see quarterly
conference call presentation for more details) in order to protect more of the
Company’s expected 2009 cash flow. |
||
| • | Reduced the planned level of 2008 capital expenditures. The previously
disclosed range of $800 to $850 million is lower than the $875 to $925 million range
previously forecasted after the second quarter of 2008. We have also reduced planned
capital spending for 2009 and now expect 2009 capital spending to be approximately
half of 2008 levels. |
||
| • | Drew down the previously mentioned $175 million on its revolving credit
facilities. Based on the Company’s current financial projections, assumptions on
commodity prices and expected restoration levels of oil and gas production, the
Company expects that the remaining capacity in its revolving credit facility will be
sufficient to fund operations and capital spending without having to seek additional
financial capital. |
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, October 30, 2008, will be webcast live. If you wish to dial in to the call the
telephone number is 800 475 0212 (Domestic) or 1-312-470-7004 (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 reservoir development solutions and other contracting services to the energy
market as well as to its own oil and gas business unit. Helix’s contracting services segment
utilizes its vessels and offshore equipment that when applied with its methodologies reduce finding
and development costs and cover the complete lifecycle of an offshore oil and gas field. Helix’s
oil and gas segment engages in prospect generation, exploration, development and production
activities. Helix operates primarily in the Gulf of Mexico, North Sea, Asia Pacific and Middle
East Regions.
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. 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. 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 of net debt, preferred stock and shareholders’ equity. 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 Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| (in thousands, except per share data) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Net revenues: |
||||||||||||||||
Contracting services |
$ | 481,597 | $ | 318,752 | $ | 1,107,616 | $ | 852,332 | ||||||||
Oil and gas |
134,619 | 141,821 | 499,831 | 414,870 | ||||||||||||
| 616,216 | 460,573 | 1,607,447 | 1,267,202 | |||||||||||||
Cost of sales: |
||||||||||||||||
Contracting services |
325,186 | 196,027 | 797,641 | 556,546 | ||||||||||||
Oil and gas |
90,205 | 98,228 | 295,688 | 266,958 | ||||||||||||
| 415,391 | 294,255 | 1,093,329 | 823,504 | |||||||||||||
Gross profit |
200,825 | 166,318 | 514,118 | 443,698 | ||||||||||||
Gain on sale of assets, net |
(23 | ) | 20,701 | 79,893 | 26,385 | |||||||||||
Selling and administrative expenses |
50,700 | 42,146 | 142,405 | 106,134 | ||||||||||||
Income from operations |
150,102 | 144,873 | 451,606 | 363,949 | ||||||||||||
Equity in earnings of investments |
8,886 | 7,889 | 25,964 | 9,245 | ||||||||||||
Net interest expense and other |
23,464 | 13,467 | 68,178 | 40,765 | ||||||||||||
Income before income taxes |
135,524 | 139,295 | 409,392 | 332,429 | ||||||||||||
Provision for income taxes |
54,816 | 45,327 | 154,373 | 111,711 | ||||||||||||
Minority interest |
19,240 | 10,195 | 26,553 | 21,533 | ||||||||||||
Net income |
61,468 | 83,773 | 228,466 | 199,185 | ||||||||||||
Preferred stock dividends |
881 | 945 | 2,642 | 2,835 | ||||||||||||
Net income applicable to common shareholders |
$ | 60,587 | $ | 82,828 | $ | 225,824 | $ | 196,350 | ||||||||
Weighted Avg. Common Shares Outstanding: |
||||||||||||||||
Basic |
90,725 | 90,111 | 90,598 | 90,051 | ||||||||||||
Diluted |
94,779 | 95,649 | 95,266 | 96,087 | ||||||||||||
Earnings Per Common Share: |
||||||||||||||||
Basic |
$ | 0.67 | $ | 0.92 | $ | 2.49 | $ | 2.18 | ||||||||
Diluted |
$ | 0.65 | $ | 0.88 | $ | 2.40 | $ | 2.07 | ||||||||
Comparative Condensed Consolidated Balance Sheets
ASSETS
| (in thousands) | Sept. 30, 2008 | Dec. 31, 2007 | ||||||
| (unaudited) | ||||||||
Current Assets: |
||||||||
Cash and equivalents |
$ | 35,761 | $ | 89,555 | ||||
Accounts receivable |
576,876 | 512,132 | ||||||
Other current assets |
148,378 | 125,582 | ||||||
Total Current Assets |
761,015 | 727,269 | ||||||
Net Property & Equipment: |
||||||||
Contracting Services |
1,822,045 | 1,507,463 | ||||||
Oil and Gas |
1,785,625 | 1,737,225 | ||||||
Equity investments |
206,805 | 213,429 | ||||||
Goodwill |
1,077,411 | 1,089,758 | ||||||
Other assets, net |
166,593 | 177,209 | ||||||
Total Assets |
$ | 5,819,494 | $ | 5,452,353 | ||||
LIABILITIES & SHAREHOLDERS’ EQUITY
| (in thousands) | Sept. 30, 2008 | Dec. 31, 2007 | ||||||
| (unaudited) | ||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 344,088 | $ | 382,767 | ||||
Accrued liabilities |
213,555 | 221,366 | ||||||
Current mat of L-T debt (1) |
93,540 | 74,846 | ||||||
Total Current Liabilities |
651,183 | 678,979 | ||||||
Long-term debt (1) |
1,815,083 | 1,725,541 | ||||||
Deferred income taxes |
669,620 | 625,508 | ||||||
Decommissioning liabilities |
185,306 | 193,650 | ||||||
Other long-term liabilities |
74,532 | 63,183 | ||||||
Minority interest |
296,248 | 263,926 | ||||||
Convertible preferred stock (1) |
55,000 | 55,000 | ||||||
Shareholders’ equity (1) |
2,072,522 | 1,846,566 | ||||||
Total Liabilities & Equity |
$ | 5,819,494 | $ | 5,452,353 | ||||
| (1) | Net debt to book capitalization — 47% at September 30, 2008. Calculated
as total debt less cash and equivalents ($1,872,862) divided by sum of total
net debt, convertible preferred stock and shareholders’ equity ($4,000,384). |
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three and Nine Months Ended September 30, 2008
Reconciliation of Non GAAP Measures
Three and Nine Months Ended September 30, 2008
Earnings Release:
Reconciliation From Net Income to Adjusted EBITDAX:
| 3Q08 | 3Q07 | 2Q08 | 2008 | 2007 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Net income applicable to common shareholders |
$ | 60,587 | $ | 82,828 | $ | 90,902 | $ | 225,824 | $ | 196,350 | ||||||||||
Non-cash impairment and other unusual items |
— | — | — | — | 8,602 | |||||||||||||||
Preferred stock dividends |
881 | 945 | 880 | 2,642 | 2,835 | |||||||||||||||
Income tax provision |
40,019 | 40,626 | 52,753 | 136,295 | 99,699 | |||||||||||||||
Net interest expense and other |
21,303 | 12,971 | 16,572 | 61,111 | 38,907 | |||||||||||||||
Depreciation and amortization |
77,149 | 83,564 | 78,600 | 250,650 | 223,040 | |||||||||||||||
Exploration expense |
1,645 | 1,476 | 1,474 | 5,007 | 5,644 | |||||||||||||||
Adjusted EBITDAX |
$ | 201,584 | $ | 222,410 | $ | 241,181 | $ | 681,529 | $ | 575,077 | ||||||||||
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
Nine Months Ended September 30, 2008
Reconciliation of Non GAAP Measures
Nine Months Ended September 30, 2008
Earnings Release:
Reconciliation from Net Income to Net Income Before Gain On Asset Sales Of Oil & Gas Properties, Net:
| 2008 | 2Q08 | |||||||
| (in thousands) | (in thousands) | |||||||
Net income |
$ | 228,466 | $ | 91,782 | ||||
Less: gain on asset sales of oil & gas properties, net of taxes (below) |
(48,981 | ) | (9,258 | ) | ||||
Net income before gain on asset sales of oil & gas properties, net |
$ | 179,485 | $ | 82,524 | ||||
Diluted shares |
95,266 | 95,928 | ||||||
EPS before gain on asset sales of oil & gas properties, net |
$ | 1.88 | $ | 0.86 | ||||
Gain on asset sales of oil & gas properties |
$ | 79,707 | $ | 18,595 | ||||
Tax expense |
30,726 | 9,337 | ||||||
Gain on asset sales of oil & gas properties, net of taxes |
$ | 48,981 | $ | 9,258 | ||||
Exhibit 99.2
| Third Quarter Earnings Conference Call October 30, 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 |
| Executive Summary Summary of Results 2008 Outlook Update Production & Hurricane Recovery Liquidity and Capital Resources Operational Highlights by Segment Contracting Services Oil & Gas Questions & Answers Well Ops' Intervention Riser System recovers a tubing head spool with tubing in one recovery trip Presentation Outline |
| Highlights ($ in millions, except per share data) Executive Summary |
| Highlights of the Quarter Record quarterly revenues and gross profit Continued strong demand and utilization for Helix Contracting Services (Well Operations, Subsea Construction and Robotics) Shelf Contracting (Cal Dive) posts stronger quarter/higher asset utilization Noonan pipeline was completed and commissioned, with first production achieved prior to Hurricane Gustav Production disruptions from Hurricanes Gustav and Ike negatively impacted revenue and profit for the quarter Many third-party facilities damaged as a result of Hurricane Ike Production, as of 10/27/2008, at 30% of pre-Ike levels Production in Q4 expected to range from 7.5 to 8.0 bcfe Pre-hurricane level production expected to be restored by the end of 2008 Executive Summary |
| 2008 Outlook Update ($ in millions, except per share data) Production shut-ins resulting from Hurricanes Ike and Gustav negatively impact production by 15 bcfe. (4.5 bcfe in Q3, remainder in Q4) Market pressure on commodity prices results in lower realized price expectations compared to $120 / $9 assumptions previously used. Improvement in Contracting Services due to strong performance in the Well Intervention, Robotics, Pipelay and Shelf Contracting. |
| Production impact from Hurricanes Ike and Gustav was ~4.5 Bcfe for Q3, and expected to be ~15 Bcfe for the full year Onshore processing and damaged third party pipelines are the primary delay in restoring production, but we expect most of these should be resolved by December Expected exit rate at the end of December is 160+ mmcfe / day 2009 production is expected to be approximately 55 - 75 Bcfe Preliminary infrastructure damage assessments have been completed, final loss and repair estimates are in process Inspection and repair work commenced in Q3 No damage to major deepwater developments (Noonan, Gunnison, Bass Lite) Significant infrastructure damage was avoided, with the exception of some shelf platforms Initial damage estimates for all infrastructure expected to fall within Helix insurance caps, with a deductible of $6 million Production & Hurricane Recovery Updates |
| Helix has sufficient liquidity available on hand and available under its revolver During October, we drew on our revolver ($175 million) to ensure liquidity was available during this temporary period of reduced cashflow from shut- in production $44 million of additional capacity remains available to be drawn under the revolver Planned capital expenditures have been reduced for the remainder of 2008 for items not required for the current operation of our business 2009 planned capital expenditures will include only completion of major projects and limited new exploration drilling Additional commodity hedges were put in place to minimize cashflow risk in 2009 Liquidity and Capital Resources |
| Credit Facilities, Commitments and Amortization $420 Million Revolving Credit Facility - committed facility through June 2011. No required amortization $420 Million Term Loan B - committed facility through June 2013. $4.3 million amortization annually $550 Million High Yield Notes - Interest only until maturity (2016) or called by Helix. First Helix call date is 2012 $300 Million Convertible Notes - Interest only until put by noteholders, or called by Helix. First put/call date is 2012, although noteholders have the right to put prior to that if certain stock price triggers are met MARAD - 25 year term, $4 million principal payments annually Helix projects continued compliance with key covenants Liquidity and Capital Resources |
| Canyon Offshore i-Trencher ROV deploys from Island Pioneer in the North Sea, September 2008 Operational Highlights by Segment |
| ($ in millions, except percentages) Contracting Services |
| Revenue and Gross Profit by Division ($ in millions) Contracting Services |
| Contracting Services |
| Helix Contracting Services The Intrepid completed the ERT Noonan project, and commenced an extensive campaign for ENI on their Pegasus and Longhorn projects The MSV Express continued to work offshore India on the Reliance KGD6 project The Helix-chartered vessel REM Forza was mobilized to the Reliance project in India Canyon had another strong quarter with six active vessels under contract during the quarter working in the North Sea, India, GOM, USA East Coast, Papua New Guinea, Tonga and Australia Canyon's i-Trencher began work in the North Sea The Seawell and the Q4000 had high utilization and excellent project execution Q4000 Intervention Riser System in operation Contracting Services |
| Shelf Contracting (Cal Dive) High utilization and margins during the quarter Significant backlog generated during the quarter as a result of hurricanes Ike and Gustav See separate earnings release and conference call for this majority owned subsidiary Production Facilities Independence Hub platform shut in for hurricanes Gustav and Ike, and returned to operational status two days after hurricane Ike Marco Polo was shut-in after hurricane Ike due to downstream pipeline problems but has recently been restored to partial production Contracting Services |
| Financial Highlights Production shut-ins resulting from Hurricanes Gustav and Ike reduced quarterly production by approximately 4.5 bcfe Noonan production expected to recommence in Q4, reaching peak production of an estimated 60 mmcfe, net to Helix, during Q1 2009 Oil & Gas |
| Operating Costs ($ in millions, except per Mcfe data) Oil & Gas |
| (Oct 2008 - December 2009) Summary of 2008-2009 Hedging Positions |
| Adjusted EBITDAX ($ in millions) Non GAAP Reconciliations |
| Revenue and Gross Profit As Reported ($ in millions) Non GAAP Reconciliations |
| Updated 2008 Outlook - Adjusted EBITDAX ($ in millions) Non GAAP Reconciliations |
| Prior 2008 Outlook - Adjusted EBITDAX ($ in millions) Non GAAP Reconciliations |
| Helix Energy Solutions |