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): May 5, 2009
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 May 5, 2009, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its first quarter results of operation for the period ended March 31, 2009. 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 May 5, 2009, Helix issued a press release announcing its first quarter results of operation for the period ended March 31, 2009. In addition, on May 6, 2009, 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 First Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials will also be posted beginning on May 5, 2009 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 May 5, 2009 reporting financial results for the first quarter of 2009. | |
99.2
|
First 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: May 5, 2009
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 May 5, 2009 reporting financial results for the first quarter of 2009. | |
99.2
|
First Quarter Earnings Conference Call Presentation. |
Exhibit 99.1
|
PRESSRELEASE www.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
|
09-011 | |||||
Date: May 5, 2009
|
Contact: Title: |
Tony Tripodo Chief Financial Officer |
Helix Reports First Quarter 2009 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $53.5 million
or $0.50 per diluted share, for the first quarter of 2009 compared with net income of $73.1
million, or $0.77 per diluted share, for the same period in 2008, and a net loss of $861.2 million,
or $(9.48) per diluted share, in the fourth quarter of 2008.
First quarter 2009 results included the following items:
| • | Non-cash charges related to our convertible preferred stock, which reduced our net
income applicable to common stock, totaling $53.4 million. |
||
| • | $73.5 million from the reversal of prior years’ accruals associated with disputed oil
and gas royalties, based on a favorable court decision in early 2009. |
||
| • | $54.6 million in unrealized gains associated with mark-to-market accounting treatment
for our remaining 2009 natural gas hedges, which will be cash settled over the remainder of
the year. |
The impact of these three items in the first quarter, net of income taxes, was $0.28 per share.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “Helix’s Contracting Services
business recorded a much improved increase in gross margins to 20% from the fourth quarter level of
15% as we continue to focus on operational efficiencies. Our Contracting Services business realized
lower revenues in the first quarter compared to the fourth quarter due to a combination of factors,
including seasonal declines, scheduled vessel maintenance, and lower vessel capacity and
utilization. We were able to increase our oil and gas production nicely in the first quarter as
production totaled 11.9 billion cubic feet of natural gas equivalent (Bcfe) as compared to 6.4 Bcfe
in the fourth quarter of 2008. Furthermore, we exited the quarter at average daily production rate
approximating pre-Ike levels after adjusting for the sale of Bass Lite and East Cameron 316.
Nonetheless, a significant amount of production from our Noonan gas field remains curtailed as a
result of delays on certain hurricane-related pipeline repairs. Our focus continues to be on
balance sheet management and as a result, our net debt balances decreased by $48 million in the
first quarter.”
Summary of Results (1)
(in thousands, except per share amounts and percentages, unaudited)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2009 | 2008 | 2008 | ||||||||||
Revenues |
$ | 570,975 | $ | 441,769 | $ | 534,439 | ||||||
Gross Profit: |
||||||||||||
Operating |
$ | 161,686 | $ | 137,194 | $ | 85,142 | ||||||
| 28 | % | 31 | % | 16 | % | |||||||
Oil and Gas Impairments |
— | (16,723 | ) | (192,620 | ) | |||||||
Exploration Expense |
(476 | ) | (1,888 | ) | (27,072 | ) | ||||||
Total |
$ | 161,210 | $ | 118,583 | $ | (134,550 | ) | |||||
Goodwill and Other Intangible Impairments |
— | — | $ | (704,311 | ) | |||||||
Net Income (Loss) Applicable to Common Shareholders |
$ | 53,450 | $ | 73,084 | $ | (861,154 | ) | |||||
Diluted Earnings (Loss) Per Share |
$ | 0.50 | $ | 0.77 | $ | (9.48 | ) | |||||
Adjusted EBITDAX (2) |
$ | 267,042 | $ | 238,764 | $ | 118,100 | ||||||
| (1) | Results of Helix RDS Limited, our former reservoir consulting business,
included as discontinued operations for all periods presented in our comparative
condensed consolidated statements of operations. |
|
| (2) | Non-GAAP measure. See reconciliation attached hereto. |
Fourth quarter 2008 results from continuing operations included non-cash, pre-tax charges of $896.9
million ($9.14 per diluted share), including $704.3 million ($7.76 per diluted share) associated
with a reduction in the carrying value of goodwill and $192.6 million ($1.38 per diluted share)
related to reductions in the carrying values of certain oil and gas properties. Furthermore, we
incurred non-cash, pre-tax exploration charges of $26.6 million ($0.19 per diluted share) primarily
related to two suspended exploratory wells drilled in prior years that were no longer considered
economical to develop. Finally, we recorded a $6.7 million pre-tax loss ($0.05 per diluted share)
associated with the sale of our interest in the Bass Lite field located in Atwater Valley Block 426
in December 2008.
First quarter 2008 results included oil and gas impairments of $16.7 million ($0.11 per diluted
share) related primarily to the unsuccessful Devil’s Island development well.
Segment Information, Operational and Financial Highlights (1)
(in thousands, unaudited)
(in thousands, unaudited)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2009 | 2008 | 2008 | ||||||||||
Revenues: |
||||||||||||
Contracting Services |
$ | 230,855 | $ | 174,718 | $ | 293,135 | ||||||
Shelf Contracting |
207,053 | 144,571 | 261,656 | |||||||||
Oil and Gas (2) |
160,181 | 171,051 | 46,022 | |||||||||
Intercompany Eliminations |
(27,114 | ) | (48,571 | ) | (66,374 | ) | ||||||
Total |
$ | 570,975 | $ | 441,769 | $ | 534,439 | ||||||
Income loss from Operations: |
||||||||||||
Contracting Services |
$ | 29,229 | $ | 20,181 | $ | 29,035 | ||||||
Shelf Contracting |
20,932 | 7,548 | 69,946 | |||||||||
Production Facilities |
(134 | ) | (138 | ) | (285 | ) | ||||||
Oil and Gas (2) |
71,050 | 128,528 | (55,878 | ) | ||||||||
Gain on Oil and Gas Derivative
Commodity Contracts |
74,609 | — | 18,894 | |||||||||
Oil and Gas Impairments |
— | (16,723 | ) | (192,620 | ) | |||||||
Exploration Expense |
(476 | ) | (1,888 | ) | (27,072 | ) | ||||||
Goodwill and Other Intangible
Impairments |
— | — | (704,311 | ) | ||||||||
Intercompany Eliminations |
(290 | ) | (3,980 | ) | (4,317 | ) | ||||||
Total |
$ | 194,920 | $ | 133,528 | $ | (866,608 | ) | |||||
Equity in Earnings of Equity Investments |
$ | 7,503 | $ | 10,816 | $ | 6,132 | ||||||
| (1) | Results of Helix RDS Limited, our former reservoir consulting business, are
included as discontinued operations for all periods presented in our comparative
condensed consolidated statements of operations. |
|
| (2) | Included $73.5 million from the reversal of prior years’ accruals associated
with disputed oil and gas royalties based on favorable court decision in the first
quarter of 2009. |
Contracting Services
| • | Subsea construction revenues decreased in the first quarter of 2009 compared with the
fourth quarter of 2008 due to lower capacity and utilization for our vessels under long
term charters (79% compared with 86%). In addition, our robotics business also experienced
lower asset utilization (64% compared with 80%) in the first quarter of 2009 compared with
the fourth quarter of 2008. |
||
| • | Our well operations business experienced decreased revenues in the first quarter of
2009 compared with the fourth quarter of 2008 primarily related to downtime associated with
scheduled maintenance and thruster upgrades for the Q4000. |
||
| • | Gross profit margins for Contracting Services increased in the first quarter of 2009
over the fourth quarter of 2008 due primarily to improved performance on international
construction projects. |
||
| • | On April 27th we closed the sale of Helix RDS Limited to Baker Hughes for
$25 million. Accordingly, the Helix RDS Limited results are reflected as discontinued
operations in our
comparative condensed consolidated statements of operations. In the first quarter of 2009,
Helix RDS’ operating results was a loss of $0.02 per share. |
Shelf Contracting (Cal Dive)
| • | Cal Dive’s operating results decreased in the first quarter of 2009 compared with the
fourth quarter of 2008 due to normal seasonal factors as well as vessel downtime related to
scheduled regulatory drydock activity and maintenance. Results for the first of quarter
2009 improved over the first quarter of 2008 due to increased vessel utilization as a
result of increased international diving activity and demand for hurricane related
services. |
Oil and Gas
| • | Oil and Gas revenues for the first quarter of 2009 of $160 million were substantially
higher than the fourth quarter of 2008 due primarily to increased production levels as well
as the reversal of accrued royalties previously mentioned. Production in the first quarter
of 2009 totaled 11.9 Bcfe compared with 6.4 Bcfe in the fourth quarter of 2008. The
average prices realized for our gas sales volumes, including the effect of hedge contracts,
totaled $5.35 per thousand cubic feet of gas (Mcf) in the first quarter of 2009 compared
with $6.32 per Mcf in the fourth quarter of 2008. For our oil sales volumes, including the
effects of hedge contracts, we realized $57.82 per barrel in the first quarter of 2009
compared with $49.08 per barrel in the fourth quarter of 2008. A number of our fields
continue to experience shut-in or curtailed production reflecting the delay by third
parties in making certain repairs to their hurricane damaged pipelines and infrastructure.
As a result of these continued delays, our remaining 2009 natural gas derivative contracts
no longer qualify for hedge accounting treatment and are recorded on a mark-to market basis
through earnings. Our first quarter operating results included a total of $74.6 million of
gains associated with our natural gas derivative contracts, including $54.6 million of
unrealized gains that will be cash settled over the remainder of 2009 in accordance with
the original terms of the contracts. Our remaining 2009 crude oil derivative contracts
continue to qualify for hedge accounting treatment. |
| • | Presently our oil and gas production approximates 140 million cubic feet of natural gas
equivalent per day (MMcfe/d), which equals pre-Hurricane Ike production rates, adjusting
for the sale of our interest in the Bass Lite and East Cameron 316 fields. |
| • | In the first quarter of 2009, the Company sold its interest in its East Cameron 316
field for total gross proceeds of $18 million. The Company recorded a $0.7 million gain on
the sale. In the first and second quarters of 2008, the Company sold a 30% working interest
in its Bushwood discoveries in two separate transactions for total cash consideration of
approximately $183 million, an obligation of the purchasers to pay their 30% share of all
related future capital expenditures and an obligation to pay up to an additional $20
million based on reaching production milestones. The first transaction for 20% closed
March 31, 2008 and resulted in a gain of $61.1 million in the first quarter of 2008. The
second transaction for 10% closed on April 23, 2008 and resulted in a gain of $30.5 million
in the second quarter of 2008. |
Other Expenses
| • | Selling, general and administrative expenses were 7.2% of revenue in the first quarter
of 2009, 7.5% in the fourth quarter of 2008, and 9.2% in the first quarter of 2008, after
adjusting for severance costs related to the resignation of our former CEO. The
improvement over the fourth quarter reflects our focused effort to reduce spending in light
of the continued weak economic environment. |
| • | Net interest expense and other decreased to $22.2 million in the first quarter of 2009
from $28.0 million in the fourth quarter of 2008 due primarily to $3.7 million of lower net
hedging losses and $4.2 million of lower realized foreign exchange losses. Further, net
interest expense decreased to $22.0 million in the first quarter of 2009 compared with
$24.3 million in the fourth quarter of 2008 due primarily to both lower levels of gross
debt and interest rates. |
Financial Condition and Liquidity
| • | Consolidated net debt at March 31, 2009 decreased to $1.76 billion from $1.80 billion
as of December 31, 2008. In the first quarter, we repaid $100 million under our Helix
revolving credit facility. Total debt associated with our Cal Dive consolidated subsidiary,
which is non-recourse to Helix, totaled $395 million ($315 million as of December 31,
2008). Net debt to book capitalization as of March 31, 2009 was 51%. (Net debt to book
capitalization is a non-GAAP measure. See reconciliation attached hereto.) |
| • | We incurred capital expenditures for the first quarter of 2009 totaling $61 million,
compared with $136 million in the fourth quarter of 2008 and $256 million in the first
quarter of 2008. Incurred capital expenditures exclude Cal Dive. |
| • | In the first quarter of 2009, the holder of the Company’s convertible preferred stock
redeemed $30 million of the total outstanding amount of $55 million. In satisfaction of
such redemption, the Company issued the holder 5,938,776 shares of Helix common stock. This
resulted in a non-cash charge of approximately $29.3 million which reflected the value
associated with the additional 3,974,718 shares delivered over the original 1,964,058
shares that were contractually required to be issued upon conversion. Further, the original
agreement with the holder required an election in the event the volume weighted average
price (“VWAP”) of Helix’s common stock on any future date was less than a certain minimum
price ($2.767 per share). The VWAP was below the minimum price on February 25, 2009, at
which time the Company elected to reset the conversion price on the remaining balance ($25
million) to $2.767. As a result of the price reset, the holder’s sole right is to convert
the preferred shares into 9,035,056 shares of Helix common stock and the Company is no
longer permitted to pay dividends in Helix common stock. Following the reset of the minimum
price to $2.767 per share, the Company recorded a second non-cash charge totaling $24.1
million in the first quarter of 2009. |
* * * * *
Further details are provided in the presentation for Helix’s quarterly conference call (see the
Investor Relations page of www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Daylight
Time on Wednesday, May 6, 2009, 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 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 and equivalents
on hand. Net debt to book capitalization is calculated by dividing net debt by the sum of net
debt, convertible preferred stock and shareholders’ equity. 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.
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, 2008. 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
Comparative Condensed Consolidated Statements of Operations
| Three Months Ended Mar. 31, | ||||||||
| (in thousands, except per share data) | 2009 | 2008 | ||||||
| (unaudited) | ||||||||
Net revenues: |
||||||||
Contracting services |
$ | 410,794 | $ | 270,718 | ||||
Oil and gas |
160,181 | 171,051 | ||||||
| 570,975 | 441,769 | |||||||
Cost of sales: |
||||||||
Contracting services |
325,698 | 213,514 | ||||||
Oil and gas |
84,067 | 109,672 | ||||||
| 409,765 | 323,186 | |||||||
Gross profit |
161,210 | 118,583 | ||||||
Gain on oil and gas derivative commodity contracts |
74,609 | — | ||||||
Gain on sale of assets, net |
454 | 61,113 | ||||||
Selling and administrative expenses |
41,353 | 46,168 | ||||||
Income from operations |
194,920 | 133,528 | ||||||
Equity in earnings of investments |
7,503 | 10,816 | ||||||
Net interest expense and other |
22,195 | 28,001 | ||||||
Income before income taxes |
180,228 | 116,343 | ||||||
Provision of income taxes |
64,919 | 42,700 | ||||||
Income from continuing operations |
115,309 | 73,643 | ||||||
Discontinued operations, net of tax |
(2,554 | ) | 559 | |||||
Net income |
112,755 | 74,202 | ||||||
Less net income applicable to noncontrolling interests |
5,553 | 237 | ||||||
Preferred stock dividends |
313 | 881 | ||||||
Preferred stock beneficial conversion charges |
53,439 | — | ||||||
Net income applicable to common shareholders |
$ | 53,450 | $ | 73,084 | ||||
Weighted Avg. Common Shares Outstanding: |
||||||||
Basic |
95,052 | 90,413 | ||||||
Diluted |
105,863 | 95,086 | ||||||
Basic earnings per share of common stock: |
||||||||
Continuing operations |
$ | 0.58 | $ | 0.80 | ||||
Discontinued operations |
$ | (0.03 | ) | — | ||||
Net income per common share |
$ | 0.55 | $ | 0.80 | ||||
Diluted earnings per share of common stock: |
||||||||
Continuing operations |
$ | 0.52 | $ | 0.77 | ||||
Discontinued operations |
$ | (0.02 | ) | — | ||||
Net income per common share |
$ | 0.50 | $ | 0.77 | ||||
Comparative Condensed Consolidated Balance Sheets
| (in thousands) | Mar. 31, 2009 | Dec. 31, 2008 | ||||||
| (unaudited) | ||||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and equivalents |
$ | 248,272 | $ | 221,852 | ||||
Accounts receivable |
496,812 | 545,106 | ||||||
Other current assets |
220,735 | 193,065 | ||||||
Total Current Assets |
965,819 | 960,023 | ||||||
Net Property & Equipment: |
||||||||
Contracting Services |
1,923,622 | 1,876,795 | ||||||
Oil and Gas |
1,495,728 | 1,541,648 | ||||||
Equity investments |
194,087 | 196,660 | ||||||
Goodwill |
365,641 | 366,218 | ||||||
Other assets, net |
117,791 | 125,722 | ||||||
Total Assets |
$ | 5,062,688 | $ | 5,067,066 | ||||
LIABILITIES & SHAREHOLDERS’ EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 271,969 | $ | 344,807 | ||||
Accrued liabilities |
215,704 | 234,451 | ||||||
Income taxes payable |
26,921 | — | ||||||
Current mat of L-T debt (1) |
93,644 | 93,540 | ||||||
Total Current Liabilities |
608,238 | 672,798 | ||||||
Long-term debt (1) (2) |
1,912,357 | 1,933,686 | ||||||
Deferred income taxes |
655,796 | 614,064 | ||||||
Decommissioning liabilities |
196,836 | 194,665 | ||||||
Other long-term liabilities |
10,065 | 83,077 | ||||||
Convertible preferred stock (1) |
25,000 | 55,000 | ||||||
Shareholders’ equity (1) |
1,654,396 | 1,513,776 | ||||||
Total Liabilities & Equity |
$ | 5,062,688 | $ | 5,067,066 | ||||
| (1) | Net debt to book capitalization — 51% at March 31, 2009. Calculated as total debt less cash and
equivalents ($1,757,729) divided by sum of total net debt, convertible preferred stock and
shareholders’ equity ($3,437,125). |
|
| (2) | Reflects impact of retrospective adoption of accounting standard which required bifurcation of
Helix’s convertible senior notes between debt and equity components. Impact on March 31, 2009 and
December 31, 2008 was a reduction in debt totaling $32.9 million and $34.8 million, respectively. |
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three Months Ended March 31, 2009
Reconciliation of Non GAAP Measures
Three Months Ended March 31, 2009
Earnings Release:
Reconciliation From Net Income to Adjusted EBITDAX:
| 1Q09 | 1Q08 | 4Q08 | ||||||||||
| (in thousands) | ||||||||||||
Net (loss) income applicable to common shareholders |
$ | 53,450 | $ | 73,084 | $ | (861,154 | ) | |||||
Non-cash impairment and other unusual items |
— | 16,723 | 907,608 | |||||||||
Preferred stock dividends |
53,752 | 881 | 550 | |||||||||
Income tax provision (benefit) |
64,794 | 42,849 | (67,117 | ) | ||||||||
Net interest expense and other |
20,593 | 25,161 | 31,842 | |||||||||
Depreciation and amortization |
73,977 | 78,178 | 79,299 | |||||||||
Exploration expense |
476 | 1,888 | 27,072 | |||||||||
Adjusted EBITDAX |
$ | 267,042 | $ | 238,764 | $ | 118,100 | ||||||
We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and
amortization, and exploration expense. Further, we reduce adjusted EBITDAX for the minority
interest in Cal Dive that we do not own. These non-GAAP measures are useful to investors and other
internal and external users of our financial statements in evaluating our operating performance
because they are widely used by investors in our industry to measure a company’s operating
performance without regard to items which can vary substantially from company to company and help
investors meaningfully compare our results from period to period. Adjusted EBITDAX should not be
considered in isolation or as a substitute for, but instead is supplemental to, income from
operations, net income or other income data prepared in accordance with GAAP. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative to our reported results
prepared in accordance with GAAP. Users of this financial information should consider the types of
events and transactions which are excluded.
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three Months Ended March 31, 2009
Reconciliation of Non GAAP Measures
Three Months Ended March 31, 2009
Earnings Release:
Reconciliation of non-cash impairments and other unusual items:
| 1Q09 | 1Q08 | 4Q08 | ||||||||||
| (in thousands) | (in thousands) | (in thousands) | ||||||||||
Other charges: |
||||||||||||
Reversal of disputed oil and gas royalties |
(73,549 | ) | — | — | ||||||||
Unrealized gains on 2009 natural gas hedges |
(54,635 | ) | — | — | ||||||||
Tax provision associated with above |
44,864 | — | — | |||||||||
| (83,320 | ) | — | — | |||||||||
Non-cash charges related to convertible preferred stock |
53,439 | — | — | |||||||||
Other income, net: |
$ | (29,881 | ) | $ | — | $ | — | |||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | (0.28 | ) | $ | — | $ | — | |||||
Non-cash goodwill and other intangible impairments: |
||||||||||||
Goodwill and other intangible impairments |
$ | — | $ | — | $ | 704,311 | ||||||
Non-cash goodwill and other intangible impairments, net: |
$ | — | $ | — | $ | 704,311 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | — | $ | 7.76 | ||||||
Non-cash property impairments: |
||||||||||||
Property impairments |
— | 16,723 | 192,620 | |||||||||
Tax provision on property impairments |
— | (5,853 | ) | (67,417 | ) | |||||||
Non-cash property impairments, net: |
$ | — | $ | 10,870 | $ | 125,203 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | 0.11 | $ | 1.38 | ||||||
Non-cash impairments and other unusual items: |
||||||||||||
Exploration expense |
$ | — | $ | — | $ | 27,072 | ||||||
Tax provision on exploration expense |
— | — | (9,475 | ) | ||||||||
Non-cash impairments, net: |
$ | — | $ | — | $ | 17,597 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | — | $ | 0.19 | ||||||
Non-cash impairments and other unusual items: |
||||||||||||
Suspended exploratory wells |
$ | — | $ | — | $ | 18,579 | ||||||
Tax provision on suspended exploratory wells |
— | — | (6,503 | ) | ||||||||
Non-cash impairments, net: |
$ | — | $ | — | $ | 12,076 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | — | $ | 0.13 | ||||||
Non-cash impairments and other unusual items: |
||||||||||||
Unproved properties |
$ | — | $ | — | $ | 8,023 | ||||||
Tax provision on unproved properties |
— | — | (2,808 | ) | ||||||||
Non-cash impairments, net: |
$ | — | $ | — | $ | 5,215 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | — | $ | 0.06 | ||||||
Bass Lite sale
|
||||||||||||
Bass Lite sale |
$ | — | $ | — | $ | 6,734 | ||||||
Tax provision on Bass Lite sale |
— | — | (2,357 | ) | ||||||||
Non-cash impairments, net: |
$ | — | $ | — | $ | 4,377 | ||||||
Diluted shares |
105,863 | 95,086 | 90,802 | |||||||||
Per share |
$ | — | $ | — | $ | 0.05 | ||||||
Exhibit 99.2
| First Quarter 2009 Earnings Conference Call May 5, 2009 |
| 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, 2008 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 2008 Form 10-K. Forward-Looking Statements |
| Executive Summary Summary of Q1 2009 Results (pg. 4) 2009 Outlook (pg. 6) Liquidity and Capital Resources (pg. 7) Operational Highlights by Segment Contracting Services (pg. 11) Oil & Gas (pg. 19) Non-GAAP Reconciliations (pg. 23) Questions & Answers Presentation Outline Technician servicing Canyon Offshore ROV |
| Highlights (A) ($ in millions, except per share data) Executive Summary Results of Helix RDS classified as discontinued operations. Reflects reversal of $73.5 million previously disputed accrued royalties. After $53 million of non-cash charges related to convertible preferred stock. See non GAAP reconciliation on slides 24-25. |
| First quarter results included the following matters resulting in an after tax net impact of $0.28 per share: Non-cash dividends related to convertible preferred stock totaling $53.4 million $73.5 million gain from MMS royalties reversal in early 2009 based on favorable court decision $54.6 million in mark-to-market gains on natural gas hedges Net debt balance decreased by $48 million in first quarter ($97 million on a Helix stand alone basis) Repurchase of 13.6 million Cal Dive shares by Cal Dive for proceeds of $86 million Gulf of Mexico Q1 exit production rate restored to near pre-Ike levels Oil and gas production totaled 11.9 Bcfe for Q1 2009 versus 6.4 Bcfe in Q4 2008 Avg realized price for oil $57.82 / bbl ($49.08 / bbl in Q4 2008) Avg realized price for gas $5.35 / Mcf ($6.32 / Mcf in Q4 2008) Executive Summary |
| Helix expects to further reduce net debt in 2009, exclusive of asset sales Capital expenditures of approximately $300 million $175 million relates to completion of three major vessel projects (Well Enhancer, Caesar and Helix Producer I) Most of remaining CAPEX is maintenance 2009 planned CAPEX spread evenly over the year 2009 oil and gas production levels expected to be between 45 - 55 Bcfe 2009 Outlook* *All estimates and commentary exclusive of Cal Dive Helix Well Ops' Intervention Riser System |
| $100 million paid down on revolver in Q1 $159 million of additional borrowing capacity under revolving credit facility (as of 5/4/2009) Net debt position expected to decrease further by 12/31/2009 Monetization of non-core assets would add additional liquidity and increase net debt reduction (A) Reflects impact of retrospective adoption of accounting standard which required bifurcation of Helix's convertible senior notes between debt and equity components. Impact on first quarter 2009 and fourth quarter 2008 was reduction in debt totaling $32.9 million and $34.8 million, respectively. Liquidity and Capital Resources* *All amounts, estimates and commentary exclusive of Cal Dive Helix Stand Alone* Caesar undergoing conversion in China |
| Approximately 80% of estimated remaining 2009 oil and gas production hedged (see detailed schedule on slide 22 for current hedge positions) Company is focused on efforts to monetize non-core assets and businesses Helix RDS, reservoir consulting group, sold for $25 million on April 27, 2009 Oil and gas assets East Cameron 316 sale in February 2009 ($18 million) Cal Dive (51% owned subsidiary) Sold 13.6 million shares of Cal Dive common stock to Cal Dive for gross proceeds of $86 million in January 2009 Monetization of some or all non-core assets would accelerate debt reduction and bolster liquidity Liquidity and Capital Resources |
| Company is in compliance as of 3/31/2009, and based on current forecasts expects to be in compliance throughout 2009 Liquidity and Capital Resources Covenant Test Explanation Collateral Coverage Ratio > 1.75 : 1 Basket of collateral to Senior Secured Debt Fixed Charge Coverage Ratio > 2.75 : 1 Consolidated EBITDA (incl. Cal Dive %) to consolidated interest charges Consolidated Leverage Ratio < 3.5 : 1 Consolidated EBITDA (incl. Cal Dive %) to consolidated debt Key Credit Facility Covenants |
| Credit Facilities, Commitments and Amortization $420 Million Revolving Credit Facility - committed facility through June 2011. No required amortization. $159 million available as of 5/4/09. $418 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 convert prior to that date if certain stock price triggers are met ($38.56). $121 Million MARAD - Original 25 year term; matures February 2027. $4.3 million principal payments annually. Liquidity and Capital Resources* *Amounts exclusive of Cal Dive |
| Canyon Offshore ROV spread mobilizing for ENI Pegasus project in the Gulf of Mexico Operational Highlights- Contracting Services |
| Subsea Construction Intrepid worked in GOM for ENI and Anadarko Express, REM Forza and Olympic Canyon working on Reliance Industries KGD6 project and were instrumental in achieving first gas on April 1. Helix installed the following structures: 30 umbilicals from 30 meters to 7 kilometers in length 11 suction piles 10 subsea structures Fabricated and installed 21 out of 56 rigid jumpers, from 6 to 24 inches in diameter Contracting Services 24-inch deepwater jumper being installed by Express on Reliance KGD6 Project offshore India |
| Robotics Island Pioneer worked on various trenching projects in the North Sea in January and February before going into dry-dock in March. Vessel departed to India late March for trenching job for Reliance Industries Olympic Triton and Northern Canyon enjoyed decent utilization on deepwater projects in the Gulf of Mexico Olympic Canyon continued to operate in the Bay of Bengal under long term charter Seacor Canyon didn't contribute in the first quarter but is currently working for client in Southeast Asia on 50 day project. Contracting Services Olympic Triton ROV support vessel |
| Well Ops Q4000 was out of service for nearly one month to install new thruster (leftover work from 2008 marine upgrades) and worked in the other months for Shell on well intervention projects and for ENI on the Longhorn project Seawell had a successful quarter in the North Sea after a slow start Contracting Services Q4000 installing ENI Longhorn manifold |
| ($ in millions, except percentages) Contracting Services (A) Results of Helix RDS classified as discontinued operations. See non-GAAP reconciliation on slides 24-25. Amounts are prior to intercompany eliminations. Includes corporate and operational support overheads. Amounts primarily represent equity in earnings of Marco Polo and Independence Hub investments. |
| Revenue and Gross Profit by Division ($ in millions) Contracting Services (A) Results of Helix RDS classified as discontinued operations. Amounts are before intercompany eliminations. See non-GAAP reconciliation on slides 24-25. Includes corporate and operational support overheads. |
| Contracting Services |
| Assets Under Construction Contracting Services Caesar Conversion in progress in COSCO shipyard Transits to Gulf of Mexico following conversion and sea trials scheduled for fourth quarter 2009 Well Enhancer Vessel has been delivered by shipyard Tower installation and commissioning complete SIL stack and control systems are undergoing systems integration test Remaining outfitting and commissioning work includes deck skidding systems, dive systems and mezzanine decks/tankage Vessel safety case has been accepted by UK Health & Safety Helix Producer I Vessel en route to Gulf of Mexico for topside production equipment installation |
| Phoenix field development Operational Highlights- Oil and Gas |
| Financial Highlights Oil & Gas Reflects reversal of $73.5 million previously disputed accrued royalties. Includes UK production of 0.1 Bcfe in Q1 2009 and 0.2 Bcfe in Q1 2008. Including hedge impact. |
| Operating Costs ($ in millions, except per Mcfe data) Oil & Gas Includes accretion expense. Fourth quarter 2008 DD&A rate negatively impacted by two near end of life producing fields with high depletion rates. Excludes exploration expenses of $0.5, $1.9 and $27.0 million, and abandonment of $0.7, $0.7 and $6.0 million for the quarters ended March 31, 2009, March 31, 2008 and December 31, 2008, respectively. Includes hurricane related repairs of $12.7, $0.2 and $20.2 million, net of insurance recoveries of $3.1, $0 and $4.3 million, for the quarters ended March 31, 2009, March 31, 2008 and December 31, 2008, respectively. |
| Summary of Apr 2009-Dec 2010 Hedging Positions |
| Caesar undergoing conversion in China Non GAAP Reconciliations |
| Adjusted EBITDAX ($ in millions) Non GAAP Reconciliations |
| Revenue and Gross Profit As Reported ($ in millions) Non GAAP Reconciliations |
| Helix Energy Solutions |