HOUSTON, May 2 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(Nasdaq: HELX) reported first quarter net income of $55.4 million, or $0.67
per diluted share. This represents more than two times last year's first
quarter results.
Included in the earnings was a $20.7 million pre-tax charge ($0.16 per
share) for the write-off of the total estimated cost to Helix for a
mechanical failure in the drilling of a well at the Tulane prospect. In
late March, mechanical difficulties were experienced drilling this well
and, after further review and analysis, we determined the wellbore would be
plugged and abandoned. Therefore, under the Company's successful efforts
method of accounting, the total estimated drilling costs to the Company
were charged to earnings in the first quarter.
Despite this first quarter charge, due primarily to the continued
strengthening of the contracting services markets, the Company raises the
lower end of its earnings guidance estimates for 2006 to a range of $2.70
-- $3.30 per diluted share.
Summary of Results
(in thousands, except per share amounts and percentages)
First Quarter Fourth Quarter
2006 2005 2005
Revenues $291,648 $159,575 $264,028
Gross Profit 102,266 51,873 95,852
35% 33% 36%
Net Income 55,389 25,411 56,006
19% 16% 21%
Diluted Earnings Per Share 0.67 0.32 0.69
Owen Kratz, Chairman and Chief Executive Officer of Helix, stated, "We
had a first quarter to be very proud of, except for the unexpected setback
in drilling the Tulane prospect. The decision to abandon the well was a
difficult one given that it was a mechanical failure as opposed to a dry
hole (the reservoir could still be there). This was one of the deals closed
in early 2005 in which we participated as a non-operator through a promote.
It is the risk of this kind of negative impact that gave rise to the
realization that we needed to be in more control and on the operator side
of these arrangements. This event clearly highlights the strategic
rationale for the pending acquisition of Remington Oil and Gas. It is a
testament to the strengths of our overall business model that we came close
to eclipsing our record earnings of Q4/05 despite the Tulane charge."
Financial Highlights
* Revenues: The $132.1 million increase in year-over-year first quarter
revenues was driven primarily by significant improvements in
Contracting Services revenues due to the introduction of newly acquired
assets and much better market conditions.
* Margins: 35% is two points better than the year ago quarter despite
the $20.7 million pre-tax charge (Tulane) taken in the first quarter of
2006. Without this charge, margins would have been 42% driven by the
improved market conditions for Contracting Services.
* SG&A: $21.0 million increased $8.2 million from the same period a year
ago due primarily to increased overhead to support the Company's
growth. This level of SG&A was 7% of first quarter revenues, compared
to 8% in the year ago quarter.
* Equity in Earnings: $6.2 million reflects our share of Deepwater
Gateway, L.L.C.'s earnings for the quarter relating to the Marco Polo
facility as well as our share of Offshore Technology Solutions
Limited's earnings which is the Trinidadian company to which we
contributed the Witch Queen.
* Income Tax Provision: The Company's effective tax rate for the quarter
was 34.1% which is less than the 36% rate in last year's first quarter
due primarily to the Company's ability to realize foreign tax credits
due to improved profitability both domestically and in foreign
jurisdictions.
* Balance Sheet: Total debt as of March 31, 2006 was $445 million. This
represents 37% debt to book capitalization and with $425 million of
EBITDA during the last twelve months, this represents 1.0 times
trailing twelve month EBITDA.
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 Wednesday,
May 3, 2006, will be webcast live. A replay will be available from the
Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an energy
services company that provides innovative solutions to the oil and gas
industry worldwide for marginal field development, alternative development
plans, field life extension and abandonment, with service lines including
diving services, shelf and deepwater construction, robotics, well
operations, well engineering and subsurface consulting services, platform
ownership and oil and gas production.
FORWARD-LOOKING STATEMENTS
This press release and attached presentation contain 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
relating to services; any statements regarding future economic conditions
or performance; any statements of expectation or belief; any statements
regarding the proposed merger of Remington Oil and Gas Corporation into a
wholly owned subsidiary of Helix or the anticipated results (financial or
otherwise) thereof; 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, 2005; and, with respect to the proposed Remington merger,
actual results could differ materially from Helix's expectations depending
on factors such as the combined company's cost of capital, the ability of
the combined company to identify and implement cost savings, synergies and
efficiencies in the time frame needed to achieve these expectations, prior
contractual commitments of the combined companies and their ability to
terminate these commitments or amend, renegotiate or settle the same, the
combined company's actual capital needs, the absence of any material
incident of property damage or other hazard that could affect the need to
effect capital expenditures, any unforeseen merger or acquisition
opportunities that could affect capital needs, the costs incurred in
implementing synergies and the factors that generally affect both Helix's
and Remington's respective businesses as further outlined in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
in each of the companies' respective Annual Reports on Form 10-K for the
year ended December 31, 2005. Actual actions that the combined company may
take may differ from time to time as the combined company may deem
necessary or advisable in the best interest of the combined company and its
shareholders to attempt to achieve the successful integration of the
companies, the synergies needed to make the transaction a financial success
and to react to the economy and the combined company's market for its
exploration and production. We assume no obligation and do not intend to
update these forward-looking statements.
ADDITIONAL INFORMATION
Helix and Remington have filed a proxy statement/prospectus and other
relevant documents concerning the proposed merger transaction with the SEC.
Investors are urged to read the proxy statement/prospectus and any other
relevant documents filed with the SEC because they contain important
information. You can obtain the documents free of charge at the website
maintained by the SEC at http://www.sec.gov . In addition, you may obtain
documents filed with the SEC by Helix free of charge by requesting them in
writing from Helix or by telephone at (281) 618-0400. You may obtain
documents filed with the SEC by Remington free of charge by requesting them
in writing from Remington or by telephone at (214) 210-2650. Helix and
Remington, and their respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies from the
stockholders of Remington in connection with the merger. Information about
the directors and executive officers of Helix and their ownership of Helix
stock is set forth in the proxy statement for Helix's 2005 Annual Meeting
of Shareholders. Information about the directors and executive officers of
Remington and their ownership of Remington stock is set forth in the Annual
Report on Form 10-K for the year ended December 31, 2005, as amended by
Form 10-K/A. Investors may obtain additional information regarding the
interests of such participants by reading the proxy statement/prospectus.
HELIX ENERGY SOLUTIONS GROUP, INC.
Comparative Condensed Consolidated Statements of Operations
Three Months Ended Mar. 31,
(000's omitted, except per
share data) 2006 2005
(unaudited)
Net Revenues $291,648 $159,575
Cost of Sales 189,382 107,702
Gross Profit 102,266 51,873
Gain on Sale of Assets, net 267 ---
Selling and Administrative 21,028 12,837
Income from Operations 81,505 39,036
Equity in Earnings of
Investments 6,236 1,729
Interest Expense, net & Other 2,457 264
Income Before Income Taxes 85,284 40,501
Income Tax Provision 29,091 14,540
Net Income 56,193 25,961
Preferred Stock Dividends 804 550
Net Income Applicable to Common
Shareholders $55,389 $25,411
Other Financial Data:
Net income applicable to
common shareholders $55,389 $25,411
Dividends on preferred stock 804 550
Income tax provision 29,091 14,540
Net interest expense and other 2,457 264
Depreciation and amortization 53,972 26,723
Share of Equity Investments:
Depreciation 1,240 1,010
Interest expense, net 99 1,383
EBITDA (A) $143,052 $69,881
Weighted Avg. Shares Outstanding:
Basic 77,969 77,143
Diluted 83,803 81,739
Earnings Per Share:
Basic $0.71 $0.33
Diluted $0.67 $0.32
(A) The Company calculates EBITDA as earnings before net interest expense,
taxes, depreciation and amortization (which includes non-cash asset
impairments) and the Company's share of depreciation, net interest
expense and taxes from its equity investments. EBITDA and EBITDA
margin (defined as EBITDA divided by net revenue) are supplemental
non-GAAP financial measurements used by the Company and investors in
the energy industry in the evaluation of its business due to the
measurements being similar to income from operations.
Comparative Condensed Consolidated Balance Sheets
ASSETS
Mar. 31, Dec. 31,
(000's omitted) 2006 2005
(unaudited)
Current Assets:
Cash and equivalents $37,833 $91,080
Accounts receivable 233,880 228,058
Other current assets 59,478 52,915
Total Current Assets 331,191 372,053
Net Property & Equipment:
Marine Contracting 618,759 524,890
Oil and Gas Production 401,066 391,472
Equity Investments 193,735 179,556
Goodwill 106,251 101,731
Other assets, net 91,849 91,162
Total Assets $1,742,851 $1,660,864
LIABILITIES & SHAREHOLDERS' EQUITY
Mar. 31, Dec. 31,
2006 2005
(unaudited)
Current Liabilities:
Accounts payable $115,314 $99,445
Accrued liabilities 126,879 145,752
Current mat of L-T debt (A) 6,438 6,468
Total Current Liabilities 248,631 251,665
Long-term debt (A) 438,256 440,703
Deferred income taxes 178,015 167,295
Decommissioning liabilities 108,875 106,317
Other long-term liabilities 9,121 10,584
Convertible preferred stock (A) 55,000 55,000
Shareholders' equity (A) 704,953 629,300
Total Liabilities & Equity $1,742,851 $1,660,864
(A) Debt to book capitalization - 37% at March 31, 2006. Calculated as
total debt ($444,694) divided by sum of total debt, convertible
preferred stock and shareholders' equity ($1,204,647).
SOURCE Helix Energy Solutions Group, Inc.
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Related links:
http://www.HelixESG.com
CONTACT:
Wade Pursell, Chief Financial Officer of
Helix Energy Solutions Group, Inc., +1-281-618-0400, or fax,
+1-281-618-0505
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