Helix Reports Fourth Quarter and Full Year 2012 Results

  Helix Reports Fourth Quarter and Full Year 2012 Results

Business Wire

HOUSTON -- February 20, 2013

Helix Energy Solutions Group, Inc. (NYSE: HLX) reported a net loss of $171.6
million, or $(1.64) per diluted share, for the fourth quarter of 2012 compared
with net income of $16.8 million, or $0.16 per diluted share, for the same
period in 2011, and net income of $14.9 million, or $0.14 per diluted share,
in the third quarter of 2012. Net loss for the year ended December 31, 2012
was $46.3 million, or $(0.44) per diluted share, compared with net income of
$129.9 million, or $1.23 per diluted share, for the year ended December 31,
2011.

Fourth quarter 2012 results were impacted by the following items:

  *An impairment charge of $157.8 million related to the pending sale of the
    Caesar and related mobile pipelay equipment.
  *An impairment charge of $138.6 million related to the February 2013 sale
    of our oil and gas business (included in discontinued operations).
  *Net realized loss of $3.3 million ($10.5 million loss in continuing
    operations and $7.2 million gain in discontinued operations) due to the
    discontinuance of hedge accounting on our commodity contracts as a result
    of the sale of our oil and gas business.

The above three items resulted in an after-tax impact of $(1.87) per diluted
share – $(1.05) per diluted share continuing operations and $(0.82) per
diluted share discontinued operations.

Fourth quarter 2012 highlights included:

  *In October, entered into an agreement to sell the Caesar, Express, and
    related equipment for $238 million. Express closing is expected in May and
    Caesar closing is expected in July.
  *In December, we entered into an agreement to sell our wholly-owned U.S.
    oil and gas subsidiary, Energy Resource Technology GOM, Inc. (ERT). The
    sale closed on February 6, 2013 for $620 million in cash plus future
    overriding royalties.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “The
divestiture of our oil and gas business and the pending sale of our pipelay
vessels represent watershed events in the development of Helix. We are better
positioned to advance our strategy of growing our Well Intervention and
Robotics businesses.”

Summary of Results
(in thousands, except per share amounts and percentages, unaudited)

                Quarter Ended                                  Year Ended
                   12/31/2012     12/31/2011    9/30/2012       12/31/2012     12/31/2011
Revenues           $ 201,696        $ 200,113       $ 217,110       $ 846,109        $ 702,000
                                                                                     
Gross Profit
(Loss)
Operating          $ 49,026         $ 32,837        $ 62,513        $ 227,050        $ 156,247
                     24       %       16      %       29      %       27       %       22      %
Contracting
Services            (157,951 )      (6,564  )      (4,594  )      (177,135 )      (6,564  )
Impairments
^(1)
Total              $ (108,925 )     $ 26,273        $ 57,919        $ 49,915         $ 149,683
                                                                                     
Net Income
(Loss)
Applicable
to Common
Shareholders
Income
(Loss) from
continuing         $ (99,679  )     $ 17,487        $ 10,362        $ (70,018  )     $ 34,718
operations
^(2)
Income
(Loss) from
discontinued        (71,888  )      (734    )      4,503         23,684         95,221  
operations
^(3)
Total              $ (171,567 )     $ 16,753       $ 14,865       $ (46,334  )     $ 129,939 
                                                                                     
Diluted
Earnings
(Loss) Per
Share
Income
(Loss) from        $ (0.95    )     $ 0.17          $ 0.10          $ (0.67    )     $ 0.33
continuing
operations
Income
(Loss) from        $ (0.69    )     $ (0.01   )     $ 0.04         $ 0.23          $ 0.90    
discontinued
operations
Total              $ (1.64    )     $ 0.16         $ 0.14         $ (0.44    )     $ 1.23    
                                                                                     
Adjusted
EBITDA from        $ 47,699         $ 34,467        $ 62,895        $ 233,612        $ 178,953
continuing
operations
Adjusted
EBITDAX from        65,528         131,134       64,539        367,216        489,709 
discontinued
operations
Adjusted           $ 113,227       $ 165,601      $ 127,434      $ 600,828       $ 668,662 
EBITDAX ^(4)
                                                                                     
Note: Footnotes appear at end of press release.


Segment Information, Operational and Financial Highlights
(in thousands, unaudited)

                               Three Months Ended
                                  12/31/2012     12/31/2011    9/30/2012
Continuing Operations:
Revenues:
Contracting Services              $ 224,201        $ 205,378       $ 221,491
Production Facilities               20,082           19,359          20,024
Intercompany Eliminations          (42,587  )      (24,624 )      (24,405 )
Total                             $ 201,696       $ 200,113      $ 217,110 
                                                                   
Income (Loss) from
Operations:
Contracting Services              $ 39,433         $ 32,383        $ 50,539
Production Facilities               9,971            9,545           10,180
Loss on sale of asset ^(1)          (543     )       -               (12,933 )
Contracting Services                (157,951 )       (6,564  )       (4,594  )
Impairments ^(2)
Corporate/Other                     (31,551  )       (35,948 )       (23,015 )
Intercompany Eliminations          (4,995   )      550           39      
Total                             $ (145,636 )     $ (34     )     $ 20,216  
Equity in Earnings of             $ 887           $ 5,772        $ 1,392   
Equity Investments
                                                                   
Discontinued Operations
(Oil and Gas):
Revenues                          $ 110,089        $ 196,072       $ 119,124
Income (Loss) from                $ (103,611 )     $ 6,820         $ 15,159
Operations ^(3)
                                                                   
Note: Footnotes appear at end of press release.


Contracting Services

  *Well Intervention revenues increased in the fourth quarter of 2012
    compared to the third quarter of 2012 due to higher overall vessel
    utilization of the fleet. The Well Enhancer returned to service early
    October after a 52 day regulatory dry dock. Vessel utilization in the
    North Sea was 91% in the fourth quarter of 2012 compared to 72% in the
    third quarter of 2012. Vessel utilization in the Gulf of Mexico (Q4000)
    was 100% in both the third and fourth quarters of 2012. On a combined
    basis, vessel utilization increased to 94% in the fourth quarter of 2012
    compared to 81% in the third quarter of 2012.
  *Robotics revenues decreased in the fourth quarter of 2012 compared to the
    third quarter of 2012 as a result of a decrease in utilization across all
    assets in the fourth quarter. Chartered vessel utilization in the fourth
    quarter of 2012 was 87% compared to 98% in the third quarter of 2012. The
    utilization decrease was primarily due to the mobilization of vessels from
    the Gulf of Mexico to the North Sea.
  *Subsea Construction revenues decreased in the fourth quarter of 2012
    compared to the third quarter of 2012 due to low utilization of the
    Express as a result of customer permitting issues in the Gulf of Mexico
    resulting in delays that pushed the scheduled work into the first quarter
    of 2013. The Caesar worked the entire fourth quarter of 2012 offshore
    Mexico on an accommodations project. On a combined basis, Subsea
    Construction vessel utilization decreased to 78% in the fourth quarter of
    2012 from 93% in the third quarter of 2012.

Oil and Gas (Discontinued Operations)

  *Oil and Gas revenues decreased in the fourth quarter of 2012 compared to
    the third quarter of 2012 primarily due to decreased oil production.
  *Production in the fourth quarter of 2012 totaled 1.4 million barrels of
    oil equivalent (MMboe) compared to 1.5 MMboe in the third quarter of 2012.
  *The average price realized for oil, including the effects of settled oil
    hedge contracts, totaled $99.32 per barrel in the fourth quarter of 2012
    compared to $98.57 per barrel in the third quarter of 2012. For natural
    gas and natural gas liquids, including the effect of settled natural gas
    hedge contracts, we realized $3.38 per thousand cubic feet of gas
    equivalent (Mcfe) in the fourth quarter of 2012 compared to $5.69 per Mcfe
    in the third quarter of 2012. The differential in our realized gas prices
    between the third and fourth quarters of 2012 was due to the fact that we
    discontinued hedge accounting on our commodity contracts in December as a
    result of the sale of ERT.
  *On February 6, 2013 we sold ERT, our former oil and gas subsidiary, for
    $620 million purchase price plus future overriding royalties.

Other Expenses

  *Selling, general and administrative expenses were 12.7% of revenue in the
    fourth quarter of 2012, 11.4% in the third quarter of 2012 and 13.1% in
    the fourth quarter of 2011. Spending levels primarily remained flat, while
    revenues decreased in the fourth quarter of 2012 compared to the third
    quarter of 2012.
  *Net interest expense and other increased to $11.9 million in the fourth
    quarter of 2012 from $9.2 million in the third quarter of 2012. Net
    interest expense decreased slightly to $10.8 million in the fourth quarter
    of 2012 compared to $11.3 million in the third quarter of 2012 due to an
    increase in capitalized interest over the same period. We realized foreign
    currency losses of $1.1 million in the fourth quarter of 2012 compared to
    gains of $2.1 million in the third quarter of 2012.

Financial Condition and Liquidity

  *Consolidated net debt at December 31, 2012 decreased to $582 million from
    $589 million as of September 30, 2012. Our total liquidity at December 31,
    2012 was approximately $0.9 billion, consisting of cash on hand of $437
    million and revolver availability of $488 million. Net debt to book
    capitalization as of December 31, 2012 was 29%. (Net debt to book
    capitalization is a non-GAAP measure. See reconciliation attached hereto.)
    Following the sale of ERT, on February 7, 2013 we repaid $318.4 million of
    debt under our Credit Agreement ($293.9 million of our term loans and
    $24.5 million of our revolver).
  *We incurred capital expenditures (including capitalized interest) totaling
    $157 million in both the third and fourth quarter of 2012, compared to $46
    million in the fourth quarter of 2011. For the years ended December 31,
    2012 and 2011, capital expenditures incurred totaled $497 million and $229
    million, respectively.

Footnotes to “Summary of Results”:
          
                  Fourth quarter 2012 asset impairment charge of $157.8
                  million related to the pending sale of the Caesar and
                  related mobile pipelay equipment. Third quarter 2012 asset
                  impairment charge of $4.4 million associated with certain
          (1)     held-for-sale well intervention assets in Australia. Second
                  quarter 2012 asset impairment charge related to decision to
                  “cold stack” the Subsea Construction vessel, Intrepid, which
                  was subsequently sold in the third quarter of 2012. Fourth
                  quarter 2011 $6.6 million impairment charge related to our
                  well intervention equipment in Australia.
                  
                  Fourth quarter 2012 included impact of $157.8 million asset
          (2)     impairment charge related to the pending sale of the Caesar
                  and related mobile pipelay equipment.
                  
                  Fourth quarter 2012 included $138.6 million asset impairment
                  charge related to the February 2013 sale of our oil and gas
          (3)     business. Fourth quarter 2011 included impairments primarily
                  associated with the reduction in carrying values of certain
                  oil and gas properties due to year end revisions in
                  reserves.
                  
          (4)     Non-GAAP measure. See reconciliation attached hereto.
                  
Footnotes to “Segment Information, Operational and Financial Highlights”:
                  
          (1)     Subsea construction vessel, Intrepid, sold in September
                  resulting in pre-tax loss on disposal of $12.9 million.
                  
                  Fourth quarter 2012 asset impairment charge of $157.8
                  million related to the pending sale of the Caesar and
                  related mobile pipelay equipment. Third quarter 2012 asset
          (2)     impairment charge of $4.4 million associated with certain
                  held-for-sale well intervention assets in Australia. Fourth
                  quarter 2011 $6.6 million impairment charge related to our
                  well intervention equipment in Australia.
                  
                  Fourth quarter 2012 included $138.6 million asset impairment
                  charge related to February 2013 the sale of our oil and gas
          (3)     business. Fourth quarter 2011 included impairments primarily
                  associated with the reduction in carrying values of certain
                  oil and gas properties due to year end revisions in
                  reserves.
                  

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly
conference call to review its fourth quarter 2012 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 21, 2013, 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 800-757-8529 for persons in the United States and
+1-212-231-2921 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 key life of field services
to the energy market. For more information about Helix, please visit our
website at www.HelixESG.com.

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. 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;
the timing of the closing of our pipelay vessel sales; future operations
expenditures; 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; delays, costs and difficulties
related to the pipelay vessel sales; operating hazards and delays; employee
management issues; uncertainties inherent in the exploration for and
development of oil and gas; 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.

HELIX ENERGY SOLUTIONS GROUP, INC.
                                                          
Comparative Condensed Consolidated Statements of Operations
                                                             
                     Three Months Ended Dec. 31,      Twelve Months Ended Dec. 31,
(in thousands,
except per           2012             2011            2012             2011
share data)
                     (unaudited)                      (unaudited)
                                                                       
                                                                       
Revenues             $ 201,696        $ 200,113       $ 846,109        $ 702,000
                                                                       
Cost of sales:
Contracting            152,670          167,276         619,059          545,753
services
Contracting
services              157,951        6,564         177,135        6,564   
impairments
                       310,621          173,840         796,194          552,317
                                                                       
Gross profit           (108,925 )       26,273          49,915           149,683
(loss)
Loss on sale           (543     )       -               (13,476  )       (6      )
of assets, net
Non-hedge loss
on commodity           (10,507  )       -               (10,507  )       -
derivative
contracts
Selling,
general and           (25,661  )      (26,307 )      (94,415  )      (86,637 )
administrative
expenses
Income (loss)
from                   (145,636 )       (34     )       (68,483  )       63,040
operations
Equity in
earnings of            887              5,772           8,434            22,215
investments
Other than
temporary loss         -                (10,563 )       -                (10,563 )
on investment
Net interest
expense and           (11,876  )      (11,385 )      (65,912  )      (73,642 )
other
Income (loss)
before income          (156,625 )       (16,210 )       (125,961 )       1,050
taxes
Income tax
provision             (57,753  )      (34,451 )      (59,158  )      (36,806 )
(benefit)
Income (loss)
from                   (98,872  )       18,241          (66,803  )       37,856
continuing
operations
Discontinued
operations,           (71,888  )      (734    )      23,684         95,221  
net of tax
Net income
(loss),
including              (170,760 )       17,507          (43,119  )       133,077
noncontrolling
interests
Net income
applicable to         (800     )      (744    )      (3,178   )      (3,098  )
noncontrolling
interests
Net income
(loss)                 (171,560 )       16,763          (46,297  )       129,979
applicable to
Helix
Preferred
stock                 (7       )      (10     )      (37      )      (40     )
dividends
Net income
(loss)
applicable to        $ (171,567 )     $ 16,753       $ (46,334  )     $ 129,939 
Helix common
shareholders
                                                                       
Weighted Avg.
Common Shares
Outstanding:
Basic                 104,412        104,267       104,449        104,528 
Diluted               104,412        104,697       104,449        104,953 
                                                                       
Basic earnings
(loss) per
share of
common stock:
Continuing           $ (0.95    )     $ 0.17          $ (0.67    )     $ 0.33
operations
Discontinued          (0.69    )      (0.01   )      0.23           0.90    
operations
Net income
(loss) per           $ (1.64    )     $ 0.16         $ (0.44    )     $ 1.23    
share of
common stock
                                                                       
Diluted
earnings
(loss) per
share of
common stock:
Continuing           $ (0.95    )     $ 0.17          $ (0.67    )     $ 0.33
operations
Discontinued          (0.69    )      (0.01   )      0.23           0.90    
operations
Net income
(loss) per           $ (1.64    )     $ 0.16         $ (0.44    )     $ 1.23    
share of
common stock
                                                                       


Comparative Condensed Consolidated Balance Sheets
                                                                               
ASSETS                                                     LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands)        Dec. 31,      Dec. 31,       (in             Dec. 31,      Dec. 31,
                         2012            2011              thousands)        2012            2011
                         (unaudited)                                         (unaudited)
Current Assets:                                            Current
                                                           Liabilities:
      Cash and                                             Accounts
      equivalents        $ 437,100       $ 546,463         payable           $ 92,398        $ 73,919
      (1)
      Accounts             186,073         185,274         Accrued             161,514         146,112
      receivable                                           liabilities
      Other                                                Income tax
      current              96,934          93,584          payable             -               1,293
      assets
      C-A of                                               Current mat
      discontinued         84,000          118,921         of L-T debt         16,607          7,877
      operations                                           (1)
                                                           C-L of
                                              discontinued     182,527      166,975
                                                           operations
Total Current              804,107         944,242         Total Current       453,046         396,176
Assets                                                     Liabilities
                                                                                             
                                                                                             
                                                                                             
                                                           Long-term           1,002,621       1,147,444
                                                           debt (1)
Property &                 1,485,875       1,459,669       Deferred            359,237         417,610
Equipment                                                  income taxes
                                                           Other
Equity investments         167,599         175,656         long-term           5,025           9,367
                                                           liabilities
                                                           N-C
                                                           liabilities
Goodwill                   62,935          62,215          of                  147,237         161,209
                                                           discontinued
                                                           operations
                                                           Convertible
Other assets, net          49,837          35,166          preferred           -               1,000
                                                           stock (1)
N-C assets of                                              Shareholders'
discontinued           816,227      905,399      equity (1)       1,419,414    1,449,541
operations
                                                           Total
Total Assets          $ 3,386,580   $ 3,582,347    Liabilities &   $ 3,386,580   $ 3,582,347
                                                           Equity
                                                                                             
      Net debt to book capitalization - 29% at December 31, 2012. Calculated as total debt less cash and
(1)   equivalents ($582,128) divided by sum of total net debt, convertible preferred stock and
      shareholders' equity ($2,001,542).
      

Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three and Twelve Months Ended December 31, 2012
                                                                     
                                                                         
Earnings
Release:
                                                                                     
Reconciliation From Net Income from Continuing Operations to Adjusted EBITDAX:
                                                                                     
                                                                                     
                     4Q12            4Q11            3Q12            2012            2011
                     (in thousands)
                                                                                     
Net income
(loss) from          $ (98,872 )     $ 18,241        $ 11,172        $ (66,803 )     $ 37,856
continuing
operations
Adjustments:
Income tax
provision              (57,753 )       (34,451 )       1,270           (59,158 )       (36,806 )
(benefit)
Net interest
expense and            11,876          11,385          9,166           65,912          73,642
other
Depreciation
and                    25,016          23,148          24,797          97,201          91,188
amortization
Asset
impairment            157,951       17,127        4,594         177,135       17,127  
charges
EBITDA                38,218        35,450        50,999        214,287       183,007 
Adjustments:
Noncontrolling         (1,039  )       (983    )       (1,037  )       (4,128  )       (4,060  )
interest
Loss on
commodity              9,977           -               -               9,977           -
derivative
contracts
Loss on sale          543           -             12,933        13,476        6       
of assets
Adjusted
EBITDA from           47,699        34,467        62,895        233,612       178,953 
continuing
operations
                                                                                     
Adjusted
EBITDAX from          65,528        131,134       64,539        367,216       489,709 
discontinued
operations
Adjusted             $ 113,227      $ 165,601      $ 127,434      $ 600,828      $ 668,662 
EBITDAX


We calculate adjusted EBITDAX as earnings before net interest expense, taxes,
depreciation and amortization, and exploration expense. 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, 2012
                                        
                                        
Earnings Release:
                                            
Reconciliation of significant items:
                                            
                                            
                                            4Q12
                                            (in thousands, except earnings per
                                            share data)
                                            
Nonrecurring items in continuing
operations:
Caesar and related mobile pipelay           $         157,765
impairment
Commodity derivative contract                         10,507
ineffectiveness
Tax benefit of the above                             (58,895         )
Nonrecurring items in continuing            $         109,377         
operations, net:
                                            
Diluted shares                                       104,412         
Net after income tax effect per share       $         1.05            
                                            
                                            
Nonrecurring items in discontinued
operations:
Oil and gas impairment                      $         138,628
Commodity derivative contract                         (7,247          )
ineffectiveness
Tax benefit of the above                             (45,983         )
Nonrecurring items in discontinued          $         85,398          
operations, net:
                                            
Diluted shares                                       104,412         
Net after income tax effect per share       $         0.82            

Contact:

Helix Energy Solutions Group, Inc.
Terrence Jamerson, 281-618-0400
Director, Finance & Investor Relations
 
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