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): February 23, 2011
Helix Energy Solutions Group, Inc.
(Exact name of registrant as specified in its charter)
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Minnesota
(State or other jurisdiction
of incorporation)
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001-32936
(Commission File Number)
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95-3409686
(IRS Employer Identification No.)
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400 North Sam Houston Parkway East, Suite 400
Houston, Texas
(Address of principal executive offices)
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281-618-0400
(Registrant’s telephone number, including area code)
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77060
(Zip Code)
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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 (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| 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 February 23, 2011, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its fourth quarter and year-end results of operation for the period ended December 31, 2010. Attached hereto as Exhibit 99.1, and incorporated by reference herein, is the press release.
Item 7.01 Regulation FD Disclosure.
On February 23, 2011, Helix issued a press release announcing its fourth quarter and year-end results of operation for the period ended December 31, 2010. In addition, on February 24, 2011, 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 Fourth Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials will also be posted beginning on February 24, 2011 in the Presentations section under Investor Relations of Helix’s website, www.helixesg.com.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Number Description
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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: February 23, 2011
HELIX ENERGY SOLUTIONS GROUP, INC.
By: /s/ Anthony Tripodo
Anthony Tripodo
Executive Vice President and Chief Financial Officer
Index to Exhibits
Exhibit No. Description
EXHIBIT 99.1
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PRESSRELEASE
www.HelixESG.com
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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 &#
160; 11-004
Date: February 23, 2011 Contact: Stephen Powers
Director, Finance & Investor Relations
Helix Reports Fourth Quarter and Full Year 2010 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (NYSE: HLX) reported a net loss of $49.8 million, or $(0.48) per diluted share, for the fourth quarter of 2010 compared with a net loss of $55.7 million, or $(0.53) per diluted share, for the same period in 2009, and net income of $26.2 million, or $0.25 per diluted share, in the third quarter of 2010. The net loss for the year ended December 31, 2010 was $127.1 million, or $(1.22) per diluted share, compared with net income of $101.9 million, or $0.96 per diluted share, for the year ended December 31, 2009.
Fourth quarter 2010 results included the following items:
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·
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Non-cash impairment charge of $16.7 million to write-off the carrying value of goodwill and a $7.1 million deferred tax asset valuation allowance attributable to our Southeast Asia well operations subsidiary (total of $23.9 million after-tax).
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·
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Impairment charges totaling $9.2 million primarily associated with a reduction in carrying values of certain oil and gas properties and $6.4 million related to expiring offshore leases ($10.2 million after-tax).
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·
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Loss associated with the Lufeng project offshore China of $21.4 million ($22.4 million after-tax) related to weather, downhole and mechanical issues.
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The net impact of these items in the fourth quarter, after income taxes, was $(0.54) per diluted share.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “Aside from the loss on the Lufeng project and non-cash impairment charges in the fourth quarter, we made progress in a rather challenging market. We commenced production in our Phoenix field, maintained strong utilization and margins in our well operations business, and generated incremental free cash flow as our liquidity increased to $787 million at December 31, 2010 from $700 million at September 30, 2010. Subsequent to year end, Clean Gulf Associates and 20 independent E&P operators in the Gulf of Mexico contracted with us for the Helix Fast Response System, which we believe should help restart permitting and drilling activity in the region.”
* * * * *
Summary of Results (1) (2)
(in thousands, except per share amounts and percentages, unaudited)
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Quarter Ended
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Twelve Months Ended
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|||||||||||||||||||
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December 31
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September 30
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December 31
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||||||||||||||||||
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2010
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2009
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2010
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2010
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2009
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||||||||||||||||
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Revenues
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$ | 306,337 | $ | 180,048 | $ | 392,669 | $ | 1,199,838 | $ | 1,461,687 | ||||||||||
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Gross Profit (Loss):
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||||||||||||||||||||
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Operating (3)
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$ | 31,790 | $ | 21,039 | $ | 87,891 | $ | 223,031 | $ | 388,095 | ||||||||||
| 10 | % | 12 | % | 22 | % | 19 | % | 27 | % | |||||||||||
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Oil and Gas
Impairments (4),(5)
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(9,212 | ) | (55,940 | ) | (897 | ) | (181,083 | ) | (120,550 | ) | ||||||||||
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Exploration
Expense (6)
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(6,496 | ) | (21,520 | ) | (442 | ) | (8,276 | ) | (24,383 | ) | ||||||||||
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Total
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$ | 16,082 | $ | (56,421 | ) | $ | 86,552 | $ | 33,672 | $ | 243,162 | |||||||||
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Net Income (Loss) Applicable to Common Shareholders (7)
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$ | (49,821 | ) | $ | (55,697 | ) | $ | 26,161 | $ | (127,102 | ) | $ | 101,867 | |||||||
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Diluted Earnings (Loss) Per Share
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$ | (0.48 | ) | $ | (0.53 | ) | $ | 0.25 | $ | (1.22 | ) | $ | 0.96 | |||||||
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Adjusted EBITDAX (8)
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$ | 95,310 | $ | 58,572 | $ | 143,072 | $ | 430,326 | $ | 490,092 | ||||||||||
Note: Footnotes listed at end of press release.
Fourth quarter 2009 results included the following items on a pre-tax basis:
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·
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Impairment charges of $55.9 million primarily associated with a reduction in carrying values of 12 oil and gas properties due to a revision in reserve estimates.
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·
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Non-cash exploration and other charges of $22.6 million primarily related to costs associated with offshore lease expirations.
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The net impact of these items in the fourth quarter of 2009, after income taxes, was $(0.49) per diluted share.
Segment Information, Operational and Financial Highlights (1)
(in thousands, unaudited)
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Three Months Ended
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||||||||||||
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December 31,
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September 30,
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|||||||||||
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2010
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2009
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2010
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||||||||||
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Revenues:
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||||||||||||
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Contracting Services
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$ | 185,291 | $ | 150,736 | $ | 238,531 | ||||||
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Production Facilities
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20,131 | 1,134 | 74,458 | |||||||||
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Oil and Gas
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136,502 | 71,450 | 95,566 | |||||||||
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Intercompany Eliminations
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(35,587 | ) | (43,272 | ) | (15,886 | ) | ||||||
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Total
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$ | 306,337 | $ | 180,048 | $ | 392,669 | ||||||
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Income (Loss) from Operations:
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||||||||||||
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Contracting Services
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$ | (8,148 | ) | $ | 21,593 | $ | 31,015 | |||||
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Goodwill Impairment (2)
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(16,743 | ) | - | - | ||||||||
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Production Facilities
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6,403 | (1,378 | ) | 44,520 | ||||||||
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Oil and Gas (3)
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17,048 | (3,715 | ) | (3,206 | ) | |||||||
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Gain (Loss) on Oil and Gas DerivativeCommodity Contracts
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(1,555 | ) | 6,157 | 161 | ||||||||
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Oil and Gas Impairments (4)
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(9,212 | ) | (55,940 | ) | (897 | ) | ||||||
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Exploration Expense (5)
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(6,496 | ) | (21,520 | ) | (442 | ) | ||||||
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Corporate
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(10,367 | ) | (13,895 | ) | (10,767 | ) | ||||||
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Intercompany Eliminations
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(390 | ) | (9,562 | ) | (286 | ) | ||||||
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Total
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$ | (29,460 | ) | $ | (78,260 | ) | $ | 60,098 | ||||
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Equity in Earnings of Equity Investments
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$ | 6,537 | $ | 5,177 | $ | 6,221 | ||||||
Note: Footnotes listed at end of press release.
Contracting Services
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o
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Subsea Construction and Robotics revenues decreased in the fourth quarter of 2010 compared to the third quarter of 2010 attributable to the Caesar going into the shipyard for planned maintenance and upgrades and lower ROV and chartered vessel utilization. Overall, our utilization rate for our owned and chartered construction vessels decreased to 84% in the fourth quarter of 2010 from 97% in the third quarter of 2010. Further, Robotics utilization declined to 60% in the fourth quarter of 2010 from 68% in the third quarter of 2010.
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o
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Well Operations revenues decreased in the fourth quarter of 2010 compared to the third quarter of 2010 despite higher overall utilization (90% compared to 83%). The decrease in revenues was due primarily to the reduction in scope on the Lufeng field abandonment project offshore China. The Normand Clough is now deployed by the Clough Helix joint venture on a construction project offshore China. Further, the Q4000 returned to previously contracted lower day rate work in the fourth quarter of 2010 (deferred by our response to BP Macondo).
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o
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Gross profit margins for our Contracting Services business were 1% in the fourth quarter of 2010 compared to 18% in the third quarter of 2010. Gross profit margins in the fourth quarter of 2010 were negatively impacted by the loss on the Lufeng project, the Q4000 working on previously contracted lower margin work coming off of the BP Macondo spill containment operations in the third quarter of 2010 and lower Robotics utilization.
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Production Facilities
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o
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The HP I completed its contract with BP and mobilized back to our Phoenix field in October. Production from the Phoenix field commenced on October 19, 2010.
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Oil and Gas
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o
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Oil and Gas revenues increased in the fourth quarter of 2010 compared to the third quarter of 2010 due primarily to increased oil production and higher oil prices. Production in the fourth quarter of 2010 totaled 13.7 Bcfe compared to 10.4 Bcfe in the third quarter of 2010.
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o
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The average prices realized for natural gas, including the effect of settled gas hedge contracts, totaled $6.11 per thousand cubic feet of gas (Mcf) in the fourth quarter of 2010 compared to $6.13 per Mcf in the third quarter of 2010. For oil, including the effects of settled oil hedge contracts, we realized $80.11 per barrel in the fourth quarter of 2010 compared to $73.63 per barrel in the third quarter of 2010.
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o
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Our February 2011 oil and gas production rate has averaged 162 million cubic feet of natural gas equivalent per day (MMcfe/d) through February 22, 2011, compared to an average of 149 MMcfe/d in the fourth quarter of 2010 and an average of 113 MMcfe/d in the third quarter of 2010.
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o
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We currently have oil and gas hedge contracts in place totaling 25.5 Bcfe (2.4 million barrels of oil and 11.1 Bcf of gas) in 2011 and 3.0 Bcf of gas in 2012.
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Other Expenses
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o
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Selling, general and administrative expenses were 9.9% of revenue in the fourth quarter of 2010, 6.8% in the third quarter of 2010 and 15.7% in the fourth quarter of 2009. Fourth quarter 2009 selling, general and administrative expenses were negatively impacted by increased bad debt expense and increased legal expenses.
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o
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Net interest expense and other of $21.5 million in the fourth quarter of 2010 was comparable to the $21.4 million in the third quarter of 2010. Net interest expense decreased to $23.7 million in the fourth quarter of 2010 compared with $25.5 million in the third quarter of 2010.
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Financial Condition and Liquidity
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o
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Consolidated net debt at December 31, 2010 decreased to $967 million from $1.03 billion at September 30, 2010. At December 31, 2010, we had no outstanding borrowings under our revolver. Our total liquidity at December 31, 2010 was approximately $787 million, consisting of cash on hand of $391 million and revolver availability of $396 million. Net debt to book capitalization as of December 31, 2010 was 43%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.)
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o
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As of December 31, 2010, we were in compliance with all covenants and restrictions under our various loan agreements.
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o
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We incurred capital expenditures (including capitalized interest) totaling $33 million in the fourth quarter of 2010, compared to $31 million in the third quarter of 2010 and $119 million in the fourth quarter of 2009.
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Footnotes to “Summary of Results”:
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(1)
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Results of Helix RDS Limited, our former reservoir consulting business, were included as discontinued operations for all periods presented in our comparative condensed consolidated statements of operations.
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(2)
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Results of Cal Dive, our former Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%. Our remaining interest was accounted for under the equity method of accounting through September 23, 2009. Subsequent to September 23, 2009, our investment in Cal Dive was accounted for as an available for sale security.
|
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(3)
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Fourth quarter 2010 included $2.3 million of expense related to a weather derivative contract and $0.1 million of hurricane-related costs. Third quarter 2010 included $9.4 million of expense related to a weather derivative contract and $0.9 million of hurricane-related costs. Fourth quarter 2009 included $2.5 million of expense related to a weather derivative contract and $0.6 million of hurricane-related costs.
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(4)
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Fourth quarter 2010 oil and gas impairments of $9.2 million were primarily related to a reduction in carrying value of certain oil and gas properties. Fourth quarter 2009 oil and gas impairments were attributable to a revision in estimated reserves associated with twelve fields resulting from mechanical and/or production related issues.
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(5)
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Full year 2010 impairments were comprised of the impairments described in item (4) above, $7.0 million in the first quarter of 2010 primarily resulting from a decline in natural gas prices, $4.1 million in the first quarter of 2010 for our non-domestic oil and gas property, $159.9 million in the second quarter of 2010 resulting from a significant reduction in our estimates of proved reserves, and $0.9 million in the third quarter of 2010 associated with a revised estimated asset reclamation obligation of one non-producing field. Full year 2009 impairments were comprised of the impairments described in item (4) above, $51.5 million of additional asset retirement and impairment costs resulting fro
m Hurricane Ike recorded in the second quarter of 2009 and $11.5 million of additional oil and gas property revisions following estimated reserve reductions at June 30, 2009.
|
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(6)
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Fourth quarter 2010 included $6.4 million of exploration costs associated with offshore lease expirations. Fourth quarter 2009 included $20.1 million of exploration costs associated with offshore lease expirations.
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(7)
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Twelve months ended December 31, 2010 included a payment of $17.5 million to settle litigation related to the termination of a 2007 international construction contract.
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|
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Non-GAAP measure. See reconciliation attached hereto.
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Footnotes to “Segment Information, Operational and Financial Highlights”:
|
(1)
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Results of Helix RDS Limited, our former reservoir consulting business, were included as discontinued operations for all periods presented in our comparative condensed consolidated statements of operations.
|
|
(2)
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Fourth quarter 2010 included a non-cash impairment charge of $16.7 million to reduce the carrying value of goodwill attributable to our Southeast Asia well operations subsidiary.
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(3)
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Fourth quarter 2010 included $2.3 million of expense related to a weather derivative contract and $0.1 million of hurricane-related costs. Fourth quarter 2009 included $2.5 million of expense related to a weather derivative contract and $0.6 million of hurricane-related costs. Third quarter 2010 included $9.4 million of expense related to a weather derivative contract and $0.9 million of hurricane-related costs.
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(4)
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Fourth quarter 2010 oil and gas impairments of $9.2 million were primarily related to a reduction in carrying value of certain oil and gas properties. Fourth quarter 2009 oil and gas impairments were attributable to a revision in estimated reserves associated with twelve fields resulting from mechanical and/or production related issues.
|
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(5)
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Fourth quarter 2010 included $6.4 million of exploration costs associated with offshore lease expirations. Fourth quarter 2009 included $20.1 million of exploration costs associated with offshore lease expirations.
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* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly conference call to review its fourth quarter and full year 2010 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Standard Time on Thursday, February 24, 2011, will be audio webcast live from the “Investor Relations” page of Helix’s website. Investors and other interested parties wishing to listen to the conference via telephone may join the call by dialing 800-734-8582 for persons in the United States and +1-212-231-2905 for international participants. The passcode is "Tripodo". A replay of the conference will be available under "Investor
Relations" by selecting the "Audio Archives" link from the same page beginning approximately two hours after the completion of the conference call.
Helix Energy Solutions Group, 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.
Reconciliation of Non-GAAP Financial Measures
Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDAX, net debt and net debt to book capitalization. We calculate Adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization and exploration expense. Further, we do not include earnings from our interest in Cal Dive in any periods presented in our Adjusted EBITDAX calculation. 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.
Forward-Looking Statements
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 "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of 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; 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 forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors including but not limited to the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays; employee management issues; uncertainties inherent in the exploration for and development of oil and gas and in estimating reserves; complexities of global political and economic developments; geologic risks, volatility of oil and gas prices and other risks described from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including the Company's most recently filed Annual Report on Form 10-K and in the Company’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. We assume no obligation and do not intend to update these forward-looking statements except as required by the securities laws.
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HELIX ENERGY SOLUTIONS GROUP, INC.
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|||||||||||||
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Comparative Condensed Consolidated Statements of Operations
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|||||||||||||
|
|
Three Months Ended Dec. 31,
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Twelve Months Ended Dec. 31,
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|||||||||||
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(in thousands, except per share data)
|
2010
|
2009
|
2010
|
2009
|
|||||||||
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(unaudited)
|
(unaudited)
|
||||||||||||
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Net revenues:
|
|||||||||||||
|
Contracting services
|
$ 169,835
|
$ 108,598
|
$ 774,469
|
$ 1,076,349
|
|||||||||
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Oil and gas
|
136,502
|
71,450
|
425,369
|
385,338
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|||||||||
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306,337
|
180,048
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1,199,838
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1,461,687
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||||||||||
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Cost of sales:
|
|||||||||||||
|
Contracting services
|
162,075
|
89,373
|
600,083
|
854,975
|
|||||||||
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Oil and gas
|
112,472
|
69,636
|
376,724
|
218,617
|
|||||||||
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Oil and gas impairments
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9,212
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55,940
|
181,083
|
120,550
|
|||||||||
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Exploration expense
|
6,496
|
21,520
|
8,276
|
24,383
|
|||||||||
|
290,255
|
236,469
|
1,166,166
|
1,218,525
|
||||||||||
|
Gross profit (loss)
|
16,082
|
(56,421)
|
33,672
|
243,162
|
|||||||||
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Goodwill impairment
|
(16,743)
|
-
|
(16,743)
|
-
|
|||||||||
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Gain (loss) on oil and gas derivative commodity contracts
|
(1,555)
|
6,157
|
1,088
|
89,485
|
|||||||||
|
Gain on sale of assets, net
|
3,159
|
246
|
9,405
|
2,019
|
|||||||||
|
Selling, general, and administrative expenses
|
(30,403)
|
(28,242)
|
(122,078)
|
(130,851)
|
|||||||||
|
Income (loss) from operations
|
(29,460)
|
(78,260)
|
(94,656)
|
203,815
|
|||||||||
|
Equity in earnings of equity investments
|
6,537
|
5,177
|
19,469
|
32,329
|
|||||||||
|
Gain (loss) on subsidiary equity transaction
|
(2,240)
|
-
|
(2,240)
|
77,343
|
|||||||||
|
Net interest expense and other
|
(21,498)
|
(11,526)
|
(86,280)
|
(51,495)
|
|||||||||
|
Income (loss) before income taxes
|
(46,661)
|
(84,609)
|
(163,707)
|
261,992
|
|||||||||
|
Provision for (benefit of) income taxes
|
2,364
|
(30,374)
|
(39,598)
|
95,822
|
|||||||||
|
Income (loss) from continuing operations
|
(49,025)
|
(54,235)
|
(124,109)
|
166,170
|
|||||||||
|
Discontinued operations, net of tax
|
-
|
(722)
|
(44)
|
9,581
|
|||||||||
|
Net income (loss), including noncontrolling interests
|
(49,025)
|
(54,957)
|
(124,153)
|
175,751
|
|||||||||
|
Less: net income applicable to noncontrolling interests
|
(786)
|
(680)
|
(2,835)
|
(19,697)
|
|||||||||
|
Net income (loss) applicable to Helix
|
(49,811)
|
(55,637)
|
(126,988)
|
156,054
|
|||||||||
|
Preferred stock dividends
|
(10)
|
(60)
|
(114)
|
(748)
|
|||||||||
|
Preferred stock beneficial conversion charges
|
-
|
-
|
-
|
(53,439)
|
|||||||||
|
Net income (loss) applicable to Helix common shareholders
|
$ (49,821)
|
$ (55,697)
|
$ (127,102)
|
$ 101,867
|
|||||||||
|
Weighted Avg. Common Shares Outstanding:
|
|||||||||||||
|
Basic
|
104,111
|
103,007
|
103,857
|
99,136
|
|||||||||
|
Diluted
|
104,111
|
103,007
|
103,857
|
105,720
|
|||||||||
|
Basic earnings (loss) per share of common stock:
|
|||||||||||||
|
Continuing operations
|
$ (0.48)
|
$ (0.52)
|
$ (1.22)
|
$ 0.92
|
|||||||||
|
Discontinued operations
|
-
|
(0.01)
|
-
|
0.09
|
|||||||||
|
Net income (loss) per share of common stock
|
$ (0.48)
|
$ (0.53)
|
$ (1.22)
|
$ 1.01
|
|||||||||
|
Diluted earnings (loss) per share of common stock:
|
|||||||||||||
|
Continuing operations
|
$ (0.48)
|
$ (0.52)
|
$ (1.22)
|
$ 0.87
|
|||||||||
|
Discontinued operations
|
-
|
(0.01)
|
-
|
0.09
|
|||||||||
|
Net income (loss) per share of common stock
|
$ (0.48)
|
$ (0.53)
|
$ (1.22)
|
$ 0.96
|
|||||||||
|
Comparative Condensed Consolidated Balance Sheets
|
|||||||||||||
|
ASSETS
|
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||||||
|
(in thousands)
|
Dec. 31, 2010
|
Dec. 31, 2009
|
(in thousands)
|
Dec. 31, 2010
|
Dec. 31, 2009
|
||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||
|
Current Assets:
|
Current Liabilities:
|
||||||||||||
|
Cash and equivalents
|
$ 391,085
|
$ 270,673
|
Accounts payable
|
$ 159,381
|
$ 155,457
|
||||||||
|
Accounts receivable
|
226,704
|
172,678
|
Accrued liabilities
|
198,237
|
200,607
|
||||||||
|
Other current assets
|
123,065
|
122,209
|
Current mat of L-T debt (1)
|
10,179
|
12,424
|
||||||||
|
Total Current Assets
|
740,854
|
565,560
|
Total Current Liabilities
|
367,797
|
368,488
|
||||||||
|
Net Property & Equipment:
|
Long-term debt (1)
|
1,347,753
|
1,348,315
|
||||||||||
|
Contracting Services
|
1,452,837
|
1,470,582
|
Deferred income taxes
|
413,639
|
442,607
|
||||||||
|
Oil and Gas
|
1,074,243
|
1,393,124
|
Asset retirement obligations
|
170,410
|
182,399
|
||||||||
|
Equity investments
|
187,031
|
189,411
|
Other long-term liabilities
|
5,777
|
4,262
|
||||||||
|
Goodwill
|
62,494
|
78,643
|
Convertible preferred stock (1)
|
1,000
|
6,000
|
||||||||
|
Other assets, net
|
74,561
|
82,213
|
Shareholders' equity (1)
|
1,285,644
|
1,427,462
|
||||||||
|
Total Assets
|
$ 3,592,020
|
$ 3,779,533
|
Total Liabilities & Equity
|
$ 3,592,020
|
$ 3,779,533
|
||||||||
|
(1)
|
Net debt to book capitalization - 43% at December 31, 2010. Calculated as total debt less cash and equivalents ($966,847)
|
||||||||||||
|
divided by sum of total net debt, convertible preferred stock and shareholders' equity ($2,253,491).
|
|||||||||||||
|
Helix Energy Solutions Group, Inc.
|
|||||||||
|
Reconciliation of Non GAAP Measures
|
|||||||||
|
Three and Twelve Months Ended December 31, 2010
|
|||||||||
|
Earnings Release:
|
|||||||||
|
Reconciliation From Net Income to Adjusted EBITDAX:
|
|||||||||
|
4Q10
|
4Q09
|
3Q10
|
2010
|
2009
|
|||||
|
(in thousands)
|
|||||||||
|
Net income (loss) applicable to common shareholders
|
$ (49,821)
|
$ (55,697)
|
$ 26,161
|
$ (127,102)
|
$ 101,867
|
||||
|
Non-cash impairment
|
21,549
|
52,578
|
897
|
193,420
|
72,372
|
||||
|
(Gain) loss on asset sales
|
(919)
|
198
|
(13)
|
(7,138)
|
(87,694)
|
||||
|
Preferred stock dividends
|
10
|
60
|
10
|
114
|
54,187
|
||||
|
Income tax provision (benefit)
|
2,364
|
(30,246)
|
17,965
|
(39,600)
|
86,035
|
||||
|
Net interest expense and other
|
21,484
|
11,300
|
21,385
|
86,192
|
47,861
|
||||
|
Depreciation and amortization
|
94,147
|
58,859
|
76,225
|
316,164
|
247,372
|
||||
|
Exploration expense
|
6,496
|
21,520
|
442
|
8,276
|
24,383
|
||||
|
Adjusted EBITDAX (including Cal Dive)
|
$ 95,310
|
$ 58,572
|
$ 143,072
|
$ 430,326
|
$ 546,383
|
||||
|
Less: Previously reported contribution from Cal Dive
|
$ -
|
$ -
|
$ -
|
$ -
|
$ (56,291)
|
||||
|
Adjusted EBITDAX
|
$ 95,310
|
$ 58,572
|
$ 143,072
|
$ 430,326
|
$ 490,092
|
||||
|
We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, and exploration
|
|||||||||
|
expense. Further, we do not include earnings from our interest in Cal Dive in any periods presented in our adjusted EBITDAX calculation.
|
|||||||||
|
These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating
|
|||||||||
|
our operating performance because they are widely used by investors in our industry to measure a company's operating performance
|
|||||||||
|
without regard to items which can vary substantially from company to company and help investors meaningfully
|
|||||||||
|
compare our results from period to period. Adjusted EBITDAX should not be considered in isolation or as a substitute
|
|||||||||
|
for, but instead is supplemental to, income from operations, net income or other income data prepared in
|
|||||||||
|
accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative
|
|||||||||
|
to our reported results prepared in accordance with GAAP. Users of this financial information should consider
|
|||||||||
|
the types of events and transactions which are excluded.
|
|||||||||
|
Helix Energy Solutions Group, Inc.
|
|||||||
|
Reconciliation of Non GAAP Measures
|
|||||||
|
Three Months Ended December 31, 2010
|
|||||||
|
Earnings Release:
|
|||||||
|
Reconciliation of significant items:
|
|||||||
|
4Q10
|
4Q09
|
||||||
|
(in thousands, except earnings
per share data)
|
|||||||
|
Property impairments and other charges:
|
|||||||
|
Property impairments
|
$ 9,212
|
$ 55,940
|
|||||
|
Exploration expenses
|
6,394
|
20,606
|
|||||
|
Goodwill impairment
|
16,743
|
-
|
|||||
|
Lufeng loss
|
21,431
|
-
|
|||||
|
Asset impairments and inventory charges
|
-
|
2,006
|
|||||
|
Tax provision (benefit) associated with above
|
2,755
|
(27,493)
|
|||||
|
Property impairments and other charges, net:
|
$ 56,535
|
$ 51,059
|
|||||
|
Diluted shares
|
104,111
|
103,007
|
|||||
|
Net after income tax effect per share
|
$ 0.54
|
$ 0.49
|
|||||
1
February 24, 2011
Fourth Quarter 2010 Conference Call
1
Forward-Looking Statements
2
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 “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, any projections of financial items; projections of contracting services activity; future
production volumes, results of exploration, exploitation, development, acquisition and operations expenditures, and
prospective reserve levels of properties or wells; projections of utilization; any statements of the plans, strategies and
objectives of management for future operations; any statements concerning developments; and any statements of
assumptions underlying any of the foregoing. These statements involve certain assumptions we made based on our
experience and perception of historical trends, current conditions, expected future developments and other factors
we believe are reasonable and appropriate under the circumstances. The forward-looking statements are subject to
a number of known and unknown risks, uncertainties and other factors that could cause our actual results to differ
materially. The risks, uncertainties and assumptions referred to above include the performance of contracts by
suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and
delays; employee management issues; local, national and worldwide economic conditions; uncertainties inherent in
the exploration for and development of oil and gas and in estimating reserves; complexities of global political and
economic developments; geologic risks, volatility of oil and gas prices and other risks described from time to time in
our reports filed with the Securities and Exchange Commission (“SEC”), including the Company’s most recently filed
Annual Report on Form 10-K and in the Company’s other filings with the SEC. Free copies of the reports can be
found at the SEC’s website, www.SEC.gov. 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.
1933 and Section 21E of the Securities Exchange Act of 1934. All such statements, other than statements of
historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, any projections of financial items; projections of contracting services activity; future
production volumes, results of exploration, exploitation, development, acquisition and operations expenditures, and
prospective reserve levels of properties or wells; projections of utilization; any statements of the plans, strategies and
objectives of management for future operations; any statements concerning developments; and any statements of
assumptions underlying any of the foregoing. These statements involve certain assumptions we made based on our
experience and perception of historical trends, current conditions, expected future developments and other factors
we believe are reasonable and appropriate under the circumstances. The forward-looking statements are subject to
a number of known and unknown risks, uncertainties and other factors that could cause our actual results to differ
materially. The risks, uncertainties and assumptions referred to above include the performance of contracts by
suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and
delays; employee management issues; local, national and worldwide economic conditions; uncertainties inherent in
the exploration for and development of oil and gas and in estimating reserves; complexities of global political and
economic developments; geologic risks, volatility of oil and gas prices and other risks described from time to time in
our reports filed with the Securities and Exchange Commission (“SEC”), including the Company’s most recently filed
Annual Report on Form 10-K and in the Company’s other filings with the SEC. Free copies of the reports can be
found at the SEC’s website, www.SEC.gov. 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.
References to quantities of oil or gas include amounts we believe will ultimately be produced, and may include
“proved reserves” and quantities of oil or gas that are not yet classified as “proved reserves” under SEC definitions.
Statements of oil and gas reserves are estimates based on assumptions and may be imprecise. Investors are urged
to consider closely the disclosure regarding reserves in our most recently filed Annual Report on Form 10-K and any
subsequent Quarterly Reports on Form 10-Q.
“proved reserves” and quantities of oil or gas that are not yet classified as “proved reserves” under SEC definitions.
Statements of oil and gas reserves are estimates based on assumptions and may be imprecise. Investors are urged
to consider closely the disclosure regarding reserves in our most recently filed Annual Report on Form 10-K and any
subsequent Quarterly Reports on Form 10-Q.
Presentation Outline
3
• Executive Summary
Summary of Q4 2010 Results (pg. 4)
• Operational Highlights by Segment
Contracting Services (pg. 9)
Oil & Gas (pg. 16)
• Key Balance Sheet Metrics (pg. 19)
• 2011 Outlook (pg. 21)
• Non-GAAP Reconciliations (pg. 26)
• Questions & Answers
Caesar installing EOG Toucan pipeline offshore Trinidad
4
Executive
Summary
Summary
Executive Summary
5
($ in millions, except per share data)
(A) Results of Cal Dive, our former Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%; thereafter, our remaining
interest was accounted for under the equity method of accounting until September 23, 2009, when we sold substantially all of our remaining interest in Cal Dive. Revenues from our Shelf
Contracting business totaled $404.7 million.
interest was accounted for under the equity method of accounting until September 23, 2009, when we sold substantially all of our remaining interest in Cal Dive. Revenues from our Shelf
Contracting business totaled $404.7 million.
(B) Included revenues in first quarter 2009 of $73.5 million of previously disputed Oil and Gas accrued royalties.
(C) Included a $16.7 million non-cash charge to write off goodwill associated with our Southeast Asia well operations subsidiary in fourth quarter 2010.
(D) Included a $7.1 million deferred tax asset valuation allowance associated with our Southeast Asia well operations subsidiary in fourth quarter 2010.
(E) Included a $17.5 million ($11.5 million after income taxes) charge related to settlement of litigation regarding a 2007 international construction contract in first quarter 2010 as well as a $7.1
million deferred tax asset valuation allowance associated with our Southeast Asia well operations subsidiary in fourth quarter 2010.
million deferred tax asset valuation allowance associated with our Southeast Asia well operations subsidiary in fourth quarter 2010.
(F) After $53.4 million of non-cash charges related to convertible preferred stock in first quarter 2009.
(G) See non-GAAP reconciliations on slides 27-28.
(H) EBITDAX excludes Cal Dive contribution in all periods presented.
(B)
(F)
(A)
(E)
(C)
(D)
(C)
Executive Summary
6
• Q4 2010 as reported EPS of $(0.48) per share
o Non-cash impairment charge of $16.7 million to write-off the carrying value of goodwill and a $7.1
million deferred tax asset valuation allowance attributable to our Southeast Asia well operations
subsidiary (total of $23.9 million after-tax)
million deferred tax asset valuation allowance attributable to our Southeast Asia well operations
subsidiary (total of $23.9 million after-tax)
o Impairment charges totaling $9.2 million primarily associated with a reduction in carrying values of
certain oil and gas properties and $6.4 million related to expiring offshore leases ($10.2 million
after-tax)
certain oil and gas properties and $6.4 million related to expiring offshore leases ($10.2 million
after-tax)
o Loss associated with the Lufeng project offshore China of $21.4 million ($22.4 million after-tax)
related to weather, downhole and mechanical issues
related to weather, downhole and mechanical issues
o Above three items totaled $53.8 million pre-tax ($56.5 million after-tax), or a loss of $(0.54) per
share
share
• Balance sheet continues to improve
o Cash increased to $391 million at 12/31/2010 from $325 million at 9/30/2010
o Liquidity* increased to $787 million at 12/31/2010 from $700 million at 9/30/2010
o Net debt decreased to $967 million at 12/31/2010 from $1.03 billion at 9/30/2010
• Contracting Services and Production Facilities
o Helix Producer I (HP I) began to process Phoenix field production in October
o Helix Fast Response System (HFRS) utilization agreements signed with 20 independent E&P
operators in the GOM (Q1 2011)
operators in the GOM (Q1 2011)
*Liquidity as we define it is equal to cash and cash equivalents ($391 million), plus available capacity under our revolving credit facility ($396 million).
Executive Summary
7
• Oil and Gas
o Fourth quarter average production rate of approximately 149 Mmcfe/d (51% oil)
o Phoenix production commenced on 10/19/2010 after HP I returned from BP spill containment
operations
operations
o Q1 production through February 22 averaged approximately 162 Mmcfe/d (63% oil)
§ Phoenix production averaged 72 Mmcfe/d for the same period
§ Little Burn completion permit secured (now pending rig)
• Oil and gas production totaled 13.7 Bcfe in Q4 2010 versus 10.4 Bcfe in Q3 2010
o Avg realized price for oil of $80.11 / bbl ($73.63 / bbl in Q3 2010), inclusive of hedges
o Avg realized price for gas of $6.11 / Mcf ($6.13 / Mcf in Q3 2010), inclusive of hedges
8
Operational
Highlights
Highlights
9
($ in millions, except percentages)
(A) See non-GAAP reconciliation on slides 27-28. Amounts are prior to intercompany
eliminations.
eliminations.
Contracting Services
• Gross margins adversely impacted
by losses on lump sum Lufeng field
abandonment project offshore China
($21.4 million in Q4)
by losses on lump sum Lufeng field
abandonment project offshore China
($21.4 million in Q4)
• Strong contribution from Robotics
business
business
• Caesar returned to GOM for
upgrades in December
upgrades in December
Coiled Tubing being deployed into North Sea well from Well Enhancer
10
($ in millions)
Equity in Earnings of Equity Investments
(A) Results of Cal Dive, our former Shelf Contracting business, were consolidated through June 10, 2009, at which time our ownership interest dropped below 50%; thereafter, our
remaining interest was accounted for under the equity method of accounting until September 23, 2009, when we sold substantially all of our remaining interest in Cal Dive.
remaining interest was accounted for under the equity method of accounting until September 23, 2009, when we sold substantially all of our remaining interest in Cal Dive.
11
Contracting Services - Well Ops
GOM
• Q4000 worked for Noble, Newfield and Mariner in the fourth
quarter
quarter
• Strong outlook for 2011
North Sea
• Seawell and Well Enhancer enjoyed 85% utilization in the
fourth quarter; a delay in completing the coiled tubing unit on
the Well Enhancer prevented full utilization for the quarter
fourth quarter; a delay in completing the coiled tubing unit on
the Well Enhancer prevented full utilization for the quarter
• Well Enhancer commenced coiled tubing operations
• Completed the Statoil Cat B FEED study for a new well
intervention semi-submersible for offshore Norway and are
currently bidding for the supply and services contract
intervention semi-submersible for offshore Norway and are
currently bidding for the supply and services contract
• Strong outlook anticipated for both vessels in 2011
Asia Pacific
• Deployed the Normand Clough on the CNOOC Lufeng field
abandonment contract in South China Sea
abandonment contract in South China Sea
• Project loss due to weather, downhole and mechanical
issues
issues
• Normand Clough now deployed on COOEC (offshore China)
construction work through Q3
construction work through Q3
The Compensated Coiled Tubing Lift Frame on the
Well Enhancer during its first coiled tubing operation
Well Enhancer during its first coiled tubing operation
12
Contracting Services - Robotics
• Enjoyed good utilization for five chartered
ROV support vessels
ROV support vessels
• Island Pioneer and Deep Cygnus with Canyon
trenchers T750 and iTrencher active in
GOM/North Sea with prospects for West
Africa and backlog for the iTrencher
trenchers T750 and iTrencher active in
GOM/North Sea with prospects for West
Africa and backlog for the iTrencher
• Olympic Canyon enjoyed full utilization
working on India Reliance project
working on India Reliance project
• Olympic Triton currently off hire for crane
upgrades; backlog of work when vessel
returns to service
upgrades; backlog of work when vessel
returns to service
• Generated non-oilfield revenues of $36.5
million on power cable burial projects in 2010
million on power cable burial projects in 2010
Canyon ROV working on Jubilee project offshore Ghana
13
Contracting Services - Subsea Construction
• Caesar completed EOG Toucan pipelay
operation in Trinidad; then entered shipyard
for planned maintenance and upgrades
operation in Trinidad; then entered shipyard
for planned maintenance and upgrades
• Intrepid performed pipelay operations in
Trinidad and the GOM
Trinidad and the GOM
• Express completed pipelay operations for
BP’s Calisto, Mariner’s Balboa and Newfield’s
Gladden projects in the GOM
BP’s Calisto, Mariner’s Balboa and Newfield’s
Gladden projects in the GOM
• Deep Cygnus retained on short-term charter
to perform umbilical installation for BP’s
Calisto project
to perform umbilical installation for BP’s
Calisto project
Caesar deploying pipeline for EOG Toucan project
Helix Fast Response System (HFRS)
14
• Utilizes vessels and subsea
systems proven in Macondo
spill response
systems proven in Macondo
spill response
• Interim system is ready for
deployment
deployment
• Enhanced system will capture
and process up to 55,000 bpd
in water depths to 8,000 feet
(ready in Q2 2011)
and process up to 55,000 bpd
in water depths to 8,000 feet
(ready in Q2 2011)
• 20 independent E&P
operators have signed on to
include HFRS in future drilling
permits
operators have signed on to
include HFRS in future drilling
permits
Contracting Services Utilization
15
• Express
• Caesar (in service 5/31/10)
• Island Pioneer (1)
• Deep Cygnus (1)
• Normand Fortress (1)
• Olympic Triton (thru 10/23/2010) (1)
• Well Enhancer
• Q4000
• Normand Clough (1)
• 2 ROVDrill Units
• 5 Trenchers
(1) Chartered vessels.
16
(A) Fourth quarter 2010 and 2009
impairments primarily associated
with the reduction in carrying
values of certain oil and gas
properties due to year-end
revisions in reserves.
impairments primarily associated
with the reduction in carrying
values of certain oil and gas
properties due to year-end
revisions in reserves.
(B) Primarily consisted of $6.4
million and $20.1 million of costs
associated with expiring offshore
leases in the fourth quarters of
2010 and 2009, respectively.
million and $20.1 million of costs
associated with expiring offshore
leases in the fourth quarters of
2010 and 2009, respectively.
(C) Including effect of settled hedges
and mark-to-market derivative
contracts.
and mark-to-market derivative
contracts.
Oil & Gas
Oil & Gas
17
(A) Included accretion expense.
(B) Excluded exploration expenses of $6.5, $21.5 and $0.4 million (of which $6.4, $20.1 and $0.0 million related to unproved property write-offs), and abandonment
costs of $(0.3), $0.0 and $0.2 million for the quarters ended December 31, 2010, December 31, 2009 and September 30, 2010, respectively. Included $2.3,
$2.5 and $9.4 million related to a weather derivative contract for the quarters ended December 31, 2010, December 31, 2009 and September 30, 2010,
respectively.
costs of $(0.3), $0.0 and $0.2 million for the quarters ended December 31, 2010, December 31, 2009 and September 30, 2010, respectively. Included $2.3,
$2.5 and $9.4 million related to a weather derivative contract for the quarters ended December 31, 2010, December 31, 2009 and September 30, 2010,
respectively.
Operating Costs ($ in millions, except per Mcfe data)
Oil & Gas - Reserve Report Highlights
18
|
|
Proved Developed
|
Proved Undeveloped
|
Total
|
|
Total Reserves
(Bcfe)
|
146
|
230
|
376
|
|
Shelf
|
87
|
79
|
166
|
|
Deepwater
|
59
|
151
|
210
|
|
Oil
(mmbbls) |
12
|
13
|
25
|
|
Gas
(Bcf) |
76
|
151
|
227
|
|
SEC Case PV-10
(pre-tax, in millions) |
$ 490
|
$ 840
|
$ 1,330
|
|
PV-10
Forward Strip Price* (pre-tax, in millions) |
$ 681
|
$ 1,032
|
$ 1,713
|
At December 31, 2010
* Based on NYMEX Henry Hub gas and WTI oil forward strip prices at December 31, 2010.
19
Key Balance
Sheet Metrics
Sheet Metrics
Debt and Liquidity Profile
20
Liquidity of approximately $787 million at 12/31/2010
(A) Includes impact of unamortized debt discount under our Convertible Senior Notes.
(B) Liquidity as we define it is equal to cash and cash equivalents ($391 million), plus available
capacity under our revolving credit facility ($396 million).
capacity under our revolving credit facility ($396 million).
($ amounts in millions)
21
2011 Outlook
2011 Outlook
22
|
Broad Metrics
|
2011 Forecast
|
2010 Actual
|
|
Oil and Gas
Production |
49 Bcfe
|
47 Bcfe
|
|
EBITDAX
|
$475 million
|
$430 million
|
|
CAPEX
|
$225 million
|
$179 million
|
|
Commodity
Price Deck |
2011 Forecast
|
2010 Actual
|
|
|
Hedged
|
Oil
|
$87.11 / bbl
|
$75.27 / bbl
|
|
Gas
|
$4.80/ mcf
|
$6.01 / mcf
|
|
We expect to continue to improve our liquidity position in 2011.
2011 Outlook
23
• Contracting Services
o Strong backlog for the Q4000, Well Enhancer and Seawell in 2011
o Reduced visibility for Robotics utilization in first half of 2011
o Current regulatory environment in the GOM limits short-term opportunities in Subsea
Construction and Robotics businesses
Construction and Robotics businesses
o Continued focus on trenching/cable burial business
• Production Facilities
o HP I continues Phoenix field production and upgrades for spill response capabilities
• Oil and Gas
o Forecasted 2011 overall production up slightly from 2010 levels
§ ~ 60% oil and 65% deepwater
§ Assumes no significant storm disruptions
§ Assumes Little Burn completed and producing by late Q2 (completion permit
received, rig pending)
received, rig pending)
2011 Outlook
24
• Capital Expenditures
o Contracting Services ($65 million)
§ No major vessel projects or dry docks planned for 2011
§ Completion of HFRS upgrades in Q1
§ Incremental investment in Robotics business
§ Additional capital expenditures required if awarded Statoil Cat B project
o Oil and Gas ($160 million)
§ Focus capital investment on fast payback projects funded with operating cash
flow
flow
§ Little Burn completion by late Q2 (completion permit received, rig pending)
§ Drill two wells in the 2nd half of the year (subject to permitting)
§ Kathleen in the Bushwood field
§ Wang in the Phoenix field
§ Shelf platform construction and opportunistic workovers
Summary of Hedging Positions *
25
* As of February 23, 2011
26
Non-GAAP
Reconciliations
Reconciliations
Non-GAAP Reconciliations
27
Adjusted EBITDAX ($ in millions)
We calculate Adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization and exploration expense. Further,
we do not include earnings from our interest in Cal Dive in any periods presented in our Adjusted EBITDAX calculation. These non-GAAP
measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance
because they are widely used by investors in our industry to measure a company’s operating performance without regard to items which can vary
substantially from company to company, and help investors meaningfully compare our results from period to period. Adjusted EBITDAX should not
be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income or other income data prepared
in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to our reported results
prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions which are excluded.
we do not include earnings from our interest in Cal Dive in any periods presented in our Adjusted EBITDAX calculation. These non-GAAP
measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance
because they are widely used by investors in our industry to measure a company’s operating performance without regard to items which can vary
substantially from company to company, and help investors meaningfully compare our results from period to period. Adjusted EBITDAX should not
be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income or other income data prepared
in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to our reported results
prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions which are excluded.
Revenue and Gross Profit As Reported ($ in millions)
28
Non-GAAP Reconciliations
29