HOUSTON, July 3 /PRNewswire-FirstCall/ -- Helix Energy Solutions Group,
Inc. (Nasdaq: HELX) today announced that it has completed its acquisition
of Remington Oil & Gas following approval by Remington's stockholders last
week.
As a result of the merger, each share of Remington common stock has
been converted into the right to receive $27.00 in cash and 0.436 shares of
Helix common stock. Information regarding exchange of share certificates
will be sent to Remington stockholders as soon as practicable.
To fund the cash portion of the merger consideration Helix entered into
an $835 million Senior Secured Term B facility which amortizes 1% per year
with a balloon payment due at the end of seven years. Interest floats at
LIBOR plus 200 and the facility is prepayable without penalty. Helix also
terminated its existing $150 million revolver and entered into a new Senior
Secured $300 million five year revolver.
Earnings Guidance
As a result of this acquisition and the continued strength of the
Contracting Services businesses we are increasing our estimated 2006
earnings to a range of $3.20 to $3.70 per diluted share. In addition, we
estimate 2007 earnings will be between $4.00 to $5.50 per diluted share.
See attached "Key Variables" for general range of assumptions embedded in
the earnings estimates.
Transfer to New York Stock Exchange
Beginning the morning of Tuesday, July 18th, 2006, Helix will transfer
its listing from the NASDAQ and begin trading on the New York Stock
Exchange under the ticker symbol HLX.
Stock Buyback Program
The Company's Board of Directors has authorized the Company to
discretionarily purchase up to $50 million of Helix common stock in the
open market.
Owen Kratz, Chairman and Chief Executive Officer, stated, "We are
extremely pleased to have closed the Remington transaction, which is
immediately accretive to earnings and provides a pipeline of high quality
prospects to help fuel future growth. Due to the acquisition and further
strengthening of the market for our contracting services we are increasing
our earnings guidance for 2006 to a range with a mid-point 23% higher than
that of our original estimate. Also, we are anticipating between 15 - 60%
of earnings growth next year.
"We should generate over $1.5 billion of operating cash flow from now
until the end of 2007, which will allow us to pursue exciting growth
opportunities in the contracting services segment; enhance reserves and
production; and reduce debt, as well as fund share repurchases.
"With respect to the NYSE transfer this is a move we have contemplated
for some time. With the name change earlier this year and the closing of
the Remington acquisition, a NYSE listed company, the timing is right. We
are greatly appreciative of the support we have received from NASDAQ;
however, we believe that this is the right move at the right time for our
company and shareholders."
Further details will be provided in a presentation and conference call
on Tuesday, July 11th at 9:00 am Central Daylight Time. The call will be
webcast live and can be accessed, along with the presentation, at the
Investor Relations page of http://www.HelixESG.com. A replay will be available
from the Audio Archives page.
Helix Energy Solutions 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.
For more information, go to http://www.HelixESG.com.
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 anticipated results (financial or otherwise) of the merger of
Remington Oil and Gas Corporation into a wholly-owned subsidiary of Helix;
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 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. 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.
Key Variables
2006 2007
Contracting Services: Low High Low High
Revenues (millions) $900 $1,000 $1,000 $1,100
EBITDA Margins (1) 35 % 40 % 35 % 40%
Production Facilities:
Equity in Earnings (millions) $20 $24 $45 $55
Oil & Gas:
Oil Price (per bbl) $60.00 $70.00 $55.00 Strip ($72.64)
Natural Gas Price (per mcf) $5.00 $7.00 $6.00 Strip ($9.18)
Production (BcFe) 57 62.5 90.5 109.5
Corporate:
SG&A % of Revenue 9 % 8 % 10 % 8%
Effective Tax Rate 35 % 34 % 35 % 34%
Average Shares Outstanding
(millions) 91 90 98 96
CAPEX (millions) (2) $960 $1,000 $625 $1,000
(1) See GAAP reconciliation at http://www.HelixESG.com.
(2) Does not include Remington acquisition amount.
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Press Release - July 3, 2006
Contracting Services EBITDA
Margins: 2006 2007
Low High Low High
(in thousands, except percentages)
Income from operations $252,000 $337,000 $272,000 $363,000
Plus: Equity in earnings of
investment 4,000 4,000 5,000 5,000
Plus: Depreciation and
amortization 63,000 63,000 77,000 77,000
EBITDA $319,000 $404,000 $354,000 $445,000
Revenues $900,000 $1,000,000 $1,000,000 $1,100,000
EBITDA Margin (EBITDA
/Revenues) 35% 40% 35% 40%
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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