HOUSTON, Aug. 1 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(NYSE: HLX) reported second quarter net income of $65.8 million, or
$0.70 per diluted share, excluding three non-recurring items
recorded by its majority owned subsidiary, Cal Dive International,
Inc. Including the non-recurring items, Helix reported second
quarter net income of $57.7 million, or $0.61 per diluted share.
The non-recurring items recorded by Cal Dive in the second quarter
include $11.8 million in non-cash equity losses and a related asset
impairment charge in connection with Cal Dive's investment in
Offshore Technology Solutions Limited ("OTSL"), a Trinidad and
Tobago entity in which Cal Dive owns a 40% minority interest, and a
$2.0 million cash settlement, subject to final negotiation of a
court-approved settlement agreement, to be paid for a civil claim
by the Department of Justice related to the Stolt and Torch
acquisitions in 2005. Cal Dive also reported a $1.7 million gain on
a sale of a portable saturation diving asset during the second
quarter. Summary of Results (in thousands, except per share amounts
and percentages) Second Quarter First Quarter Six Months 2007 2006
2007 2007 2006 Revenues $410,574 $305,013 $396,055 $806,629
$596,661 Gross Profit 141,765 131,692 135,615 277,380 233,958 35%
43% 34% 34% 39% Net Income 57,702 69,139 55,820 113,522 124,528 14%
23% 14% 14% 21% Diluted Earnings 0.61 0.83 0.60 1.21 1.51 Per Share
Martin Ferron, President and Chief Executive Officer of Helix,
stated, "We expected Q2 earnings to be similar to those reported
for Q1 and actually posted an improved result, even after the
negative impact of the non-recurring items described above. This
improvement was also achieved despite another very busy quarter for
marine asset maintenance, with the Intrepid and several key Cal
Dive vessels undergoing regulatory drydockings during the period.
That maintenance work is now largely behind us, except for the
planned upgrade to the Q4000, and we are anticipating a strong
second half of the year for Contracting Services. "In our Oil and
Gas business unit we had another very successful quarter with the
drill bit, going six for six with exploratory wells. This takes our
success record to 12 for 12 for the first half of the year and
improves our proven reserve base by around 140 bcfe. On the
production front we plan to bring several key shelf development
projects onstream in the second half of the year, and our deepwater
development projects remain on schedule to boost output next year.
"We have updated the assessment of the key variables that drive our
earnings for the year and this will be covered in the conference
call tomorrow. Based on our analysis we are comfortable with the
present consensus earnings estimate for 2007 of $3.26/share,
subject to no further significant deterioration in the natural gas
price. We have created very meaningful future value in our
deepwater development projects portfolio and, as set out in our
initial earnings guidance, we may monetize part of that value, in
order to reduce debt and contribute to near term earnings."
Financial Highlights * Revenues: The $105.6 million increase in
year-over-year second quarter revenues was driven primarily by an
increase in oil and gas sales of $61.0 million due primarily to the
production added from the acquisition of Remington Oil and Gas
Corporation. The remaining increase was due to improvements in
contracting services revenues due to much better market conditions.
* Margins: 35% is eight points less than the year ago quarter due
primarily to significant out of service days for Cal Dive's vessels
in regulatory drydocks (373 days in 2Q 2007 vs. 89 days in 2Q 2006)
and an increased DD&A rate for oil and gas production due to
the Remington acquisition. * SG&A: $33.4 million increased $6.0
million from the same period a year ago due primarily to increased
overhead to support our growth. This level of SG&A was 8% of
second quarter revenues, down from the 9% in the year ago quarter.
* Equity in Earnings: Net losses of $4.7 million is comprised of
the $11.8 million impairment / equity losses in Cal Dive's minority
interest in OTSL offset by $7.0 million for our share of earnings
for the quarter of Deepwater Gateway, L.L.C.'s earnings relating to
the Marco Polo facility and demand fees relating to the
Independence Hub facility. * Income Tax Provision: The Company's
effective tax rate for the quarter was 35%, compared to 34% for
last year's second quarter due primarily to the nondeductibility of
the OTSL charges and the DOJ reserve. * Balance Sheet: Total
consolidated debt as of June 30, 2007 was $1.4 billion. This
includes $140 million under Cal Dive's revolving facility which is
non-recourse to Helix. This represents 43% net debt to book
capitalization and with $735 million of adjusted EBITDAX during the
last twelve months, this represents 1.8 times trailing twelve month
adjusted EBITDAX. Further details are provided in the presentation
for Helix's quarterly conference call (see the Investor Relations
page of http://www.helixesg.com/). The call, scheduled for 9:00
a.m. Central Daylight Time on Thursday, August 2, 2007, will be
webcast live. 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. That business unit is a prospect generation,
exploration, development and production company. Employing our own
key services and methodologies, we seek to lower finding and
development costs, relative to industry norms. 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, including the Company's Annual Report on Form
10-K, as amended by our Form 10- K/A filed on June 18, 2007 ("2006
Form 10-K"), for the year ending December 31, 2006 and any
subsequent reports on Form 10-Q. We assume no obligation and do not
intend to update these forward-looking statements. HELIX ENERGY
SOLUTIONS GROUP, INC. Comparative Condensed Consolidated Statements
of Operations Three Months Ended Six Months Ended (in thousands,
except per June 30, June 30, share data) 2007 2006 2007 2006
(Unaudited) Net revenues $410,574 $305,013 $806,629 $596,661 Cost
of sales 268,809 173,321 529,249 362,703 Gross profit 141,765
131,692 277,380 233,958 Gain on sale of assets, net 5,684 16 5,684
283 Selling and administrative 33,388 27,414 63,988 48,442 Income
from operations 114,061 104,294 219,076 185,799 Equity in earnings
of investments (4,748) 4,520 1,356 10,756 Net interest expense and
other 14,286 2,983 27,298 5,440 Income before income taxes 95,027
105,831 193,134 191,115 Income tax provision 33,261 35,887 66,384
64,978 Minority interest 3,119 -- 11,338 -- Net income 58,647
69,944 115,412 126,137 Preferred stock dividends 945 805 1,890
1,609 Net income applicable to common shareholders $57,702 $69,139
$113,522 $124,528 Weighted Avg. Shares Outstanding: Basic 90,047
78,462 90,021 78,216 Diluted 95,991 83,965 95,262 83,659 Earnings
Per Share: Basic $0.64 $0.88 $1.26 $1.59 Diluted $0.61 $0.83 $1.21
$1.51 Comparative Condensed Consolidated Balance Sheets ASSETS (in
thousands) June 30, 2007 Dec. 31, 2006 (unaudited) Current Assets:
Cash and equivalents $96,390 $206,264 Short term investments 10,000
285,395 Accounts receivable 368,226 370,709 Other current assets
76,832 61,532 Total Current Assets 551,448 923,900 Net Property
& Equipment: Contracting Services 928,467 800,503 Oil and Gas
1,608,929 1,411,955 Equity investments 212,319 213,362 Goodwill
828,228 822,556 Other assets, net 137,758 117,911 Total Assets
$4,267,149 $4,290,187 LIABILITIES & SHAREHOLDERS' EQUITY (in
thousands) June 30, 2007 Dec. 31, 2006 (unaudited) Current
Liabilities: Accounts payable $268,877 $240,067 Accrued liabilities
188,148 199,650 Income taxes payable -- 147,772 Current mat of L-T
debt (1) 26,165 25,887 Total Current Liabilities 483,190 613,376
Long-term debt (1) 1,386,011 1,454,469 Deferred income taxes
476,094 436,544 Decommissioning liabilities 140,682 138,905 Other
long-term liabilities 4,231 6,143 Minority interest 73,152 59,802
Convertible preferred stock (1) 55,000 55,000 Shareholders' equity
(1) 1,648,789 1,525,948 Total Liabilities & Equity $4,267,149
$4,290,187 (1) Net debt to book capitalization - 43% at June 30,
2007. Calculated as total debt less cash and equivalents and
short-term investments $1,305,786 divided by sum of total debt less
cash and equivalents and short-term investments, convertible
preferred stock and shareholders' equity $3,009,575 Helix Energy
Solutions Group, Inc. Reconciliation of Non GAAP Measures Three and
Six Months Ended June 30, 2007 Earnings Release: Balance Sheet: "
... 1.8 times trailing twelve month adjusted EBITDAX."
Reconciliation From Net Income to Adjusted EBITDAX (excluding gain
on sale of Cal Dive IPO in 4Q06 and non-recurring items: OTSL
impairment and DOJ accrual in 2Q07): 2Q07 1Q07 4Q06 3Q06 2Q06 (in
thousands, except ratio) Net income applicable to common
shareholders $57,702 $55,820 $65,948 $57,029 69,139 Preferred stock
dividends 945 945 945 804 805 Income tax provision 30,456 28,617
34,166 31,409 35,887 Net interest expense and other 13,605 12,331
13,981 15,103 2,983 Non-cash stock compensation expense 3,546 3,267
2,797 1,910 2,251 Depreciation and amortization 71,918 67,558
61,809 63,879 34,346 Exploration expense 2,978 1,190 1,820 19,520
(330) Non-recurring items 8,602 -- -- -- -- Share of equity
investments: Depreciation 1,965 1,004 1,004 1,004 1,003 Interest
expense, net (38) (57) (70) (59) (43) Adjusted EBITDAX $191,679
$170,675 $182,400 $190,599 $146,041 Trailing Twelve Months Adjusted
EBITDAX $735,353 Net Debt at June 30, 2007 (a) $1,305,786 Ratio 1.8
We calculate adjusted EBITDAX as earnings before net interest
expense, taxes, depreciation and amortization, exploration expense,
non-cash stock compensation expense and our share of depreciation,
net interest expense and taxes from our equity investments.
Further, we reduce adjusted EBITDAX for the minority interest in
Cal Dive that we do not own. Adjusted EBITDAX margin is defined as
adjusted EBITDAX divided by net revenues. 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.
(a) Total debt less cash, cash equivalents and short term
investments DATASOURCE: Helix Energy Solutions Group, Inc. CONTACT:
Wade Pursell, Chief Financial Officer of Helix Energy Solutions
Group, Inc., +1-281-618-0400, or fax, +1-281-618-0505 Web site:
http://www.helixesg.com/
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