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Helix Reports Fourth Quarter and Full Year 2010 Results

February 23, 2011

HOUSTON, Feb. 23, 2011 /PRNewswire/ — 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.

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Fourth quarter 2010 results included the following items:

  • 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).
  • 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).
  • Loss associated with the Lufeng project offshore China of $21.4 million ($22.4 million after-tax) related to weather, downhole and mechanical issues.

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)
                                Quarter Ended
                                -------------
                          December 31      September 30
                          -----------      ------------
                          2010       2009          2010
                          ----       ----          ----
    Revenues          $306,337   $180,048      $392,669

    Gross Profit
     (Loss):
      Operating (3)    $31,790    $21,039       $87,891
                            10%        12%           22%
      Oil and Gas       (9,212)   (55,940)         (897)
        Impairments
         (4),(5)

      Exploration       (6,496)   (21,520)         (442)
       Expense (6)      ------    -------          ----
    Total              $16,082   $(56,421)      $86,552

    Net Income
     (Loss)
     Applicable to
     Common
     Shareholders
     (7)              $(49,821)  $(55,697)      $26,161

    Diluted
     Earnings
     (Loss) Per
     Share              $(0.48)    $(0.53)        $0.25

    Adjusted
     EBITDAX (8)       $95,310    $58,572      $143,072


                          Twelve Months
                              Ended
                            -------------
                          December 31
                          -----------
                           2010        2009
                           ----        ----
    Revenues         $1,199,838  $1,461,687

    Gross Profit
     (Loss):
      Operating (3)    $223,031    $388,095
                             19%         27%
      Oil and Gas      (181,083)   (120,550)
        Impairments
         (4),(5)

      Exploration        (8,276)    (24,383)
       Expense (6)       ------     -------
    Total               $33,672    $243,162

    Net Income
     (Loss)
     Applicable to
     Common
     Shareholders
     (7)              $(127,102)   $101,867

    Diluted
     Earnings
     (Loss) Per
     Share               $(1.22)      $0.96

    Adjusted
     EBITDAX (8)       $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:

  • 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.
  • Non-cash exploration and other charges of $22.6 million primarily related to costs associated with offshore lease expirations.

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)
                                               Three Months Ended
                                               ------------------
                                         December 31,           September 30,
                                         ------------           -------------
                                         2010          2009             2010
                                         ----          ----             ----
    Revenues:
    ---------
      Contracting Services           $185,291      $150,736         $238,531
      Production Facilities            20,131         1,134           74,458
      Oil and Gas                     136,502        71,450           95,566
      Intercompany Eliminations       (35,587)      (43,272)         (15,886)
                                      -------       -------          -------
        Total                        $306,337      $180,048         $392,669
                                     ========      ========         ========

    Income (Loss) from Operations:
    ------------------------------
      Contracting Services            $(8,148)      $21,593          $31,015
      Goodwill Impairment (2)         (16,743)            -                -
      Production Facilities             6,403        (1,378)          44,520
      Oil and Gas (3)                  17,048        (3,715)          (3,206)
      Gain (Loss) on Oil and Gas
       Derivative          Commodity
       Contracts                       (1,555)        6,157              161
      Oil and Gas Impairments (4)      (9,212)      (55,940)            (897)
      Exploration Expense (5)          (6,496)      (21,520)            (442)
      Corporate                       (10,367)      (13,895)         (10,767)
      Intercompany Eliminations          (390)       (9,562)            (286)
                                         ----        ------             ----
        Total                        $(29,460)     $(78,260)         $60,098
                                     ========      ========          =======
    Equity in Earnings of Equity
     Investments                       $6,537        $5,177           $6,221
                                       ======        ======           ======
    Note: Footnotes listed at end of press release.

Contracting Services

  • 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.
  • 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).
  • 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.

Production Facilities

  • 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.

Oil and Gas

  • 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.
  • 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.
  • 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.
  • 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.

Other Expenses

  • 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.
  • 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.

Financial Condition and Liquidity

  • 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.)
  • As of December 31, 2010, we were in compliance with all covenants and restrictions under our various loan agreements.
  • 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.


    Footnotes to "Summary of Results":

           Results of Helix RDS Limited, our former reservoir
           consulting business, were included as discontinued
           operations for all periods presented in our comparative
    (1)    condensed consolidated statements of operations.
           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
    (2)    security.
           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
    (3)    contract and $0.6 million of hurricane-related costs.
           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
    (4)    and/or production related issues.
           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 from Hurricane Ike recorded in the
           second quarter of 2009 and $11.5 million of additional
           oil and gas property revisions following estimated
    (5)    reserve reductions at June 30, 2009.
           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
    (6)    expirations.
           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
    (7)    contract.
    (8)   Non-GAAP measure.  See reconciliation attached hereto.


    Footnotes to "Segment Information, Operational and Financial
     Highlights":

           Results of Helix RDS Limited, our former reservoir
           consulting business, were included as discontinued
           operations for all periods presented in our comparative
    (1)    condensed consolidated statements of operations.
           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
    (2)    operations subsidiary.
           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
    (3)    contract and $0.9 million of hurricane-related costs.
           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
    (4)    and/or production related issues.
           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
    (5)    expirations.

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.

                 HELIX ENERGY SOLUTIONS GROUP, INC.

     Comparative Condensed Consolidated Statements of Operations
     -----------------------------------------------------------
                                             Three Months Ended Dec.
                                                        31,
     (in thousands, except per share
      data)                                         2010           2009
     -------------------------------                ----           ----
                                                   (unaudited)

     Net revenues:
       Contracting services                     $169,835       $108,598
       Oil and gas                             136,502         71,450
                                               -------         ------
                                               306,337        180,048
     Cost of sales:
       Contracting services                    162,075         89,373
       Oil and gas                             112,472         69,636
       Oil and gas impairments                   9,212         55,940
       Exploration expense                       6,496         21,520
                                                 -----         ------
                                               290,255        236,469

     Gross profit (loss)                        16,082        (56,421)
       Goodwill impairment                     (16,743)             -
       Gain (loss) on oil and gas derivative
        commodity contracts                     (1,555)         6,157
       Gain on sale of assets, net               3,159            246
       Selling, general, and
        administrative expenses                (30,403)       (28,242)
                                               -------        -------
     Income (loss) from operations             (29,460)       (78,260)
       Equity in earnings of equity
        investments                              6,537          5,177
       Gain (loss) on subsidiary equity
        transaction                             (2,240)             -
       Net interest expense and other          (21,498)       (11,526)
                                               -------        -------
     Income (loss) before income
      taxes                                    (46,661)       (84,609)
       Provision for (benefit of)
        income taxes                             2,364        (30,374)
                                                 -----        -------
     Income (loss) from continuing
      operations                               (49,025)       (54,235)
       Discontinued operations, net of
        tax                                          -           (722)
                                                   ---           ----
     Net income (loss), including
      noncontrolling interests                 (49,025)       (54,957)
       Less: net income applicable to
        noncontrolling interests                  (786)          (680)
                                                  ----           ----
     Net income (loss) applicable to
      Helix                                    (49,811)       (55,637)
       Preferred stock dividends                   (10)           (60)
       Preferred stock beneficial conversion
        charges                                      -              -
                                                   ---            ---
     Net income (loss) applicable to Helix
      common shareholders                     $(49,821)      $(55,697)
                                              ========       ========

     Weighted Avg. Common Shares
      Outstanding:
       Basic                                   104,111        103,007
                                               =======        =======
       Diluted                                 104,111        103,007
                                               =======        =======

     Basic earnings (loss) per share
      of common stock:
       Continuing operations                    $(0.48)        $(0.52)
       Discontinued operations                       -          (0.01)
                                                   ---          -----
       Net income (loss) per share of
        common stock                            $(0.48)        $(0.53)
                                                ======         ======

     Diluted earnings (loss) per share of
      common stock:
       Continuing operations                    $(0.48)        $(0.52)
       Discontinued operations                       -          (0.01)
                                                   ---          -----
       Net income (loss) per share of
        common stock                            $(0.48)        $(0.53)
                                                ======         ======


                                                 Twelve Months Ended
                                                       Dec. 31,
     (in thousands, except per share
      data)                                           2010            2009
     -------------------------------                  ----            ----
                                             (unaudited)

     Net revenues:
       Contracting services                       $774,469      $1,076,349
       Oil and gas                               425,369         385,338
                                                 -------         -------
                                               1,199,838       1,461,687
     Cost of sales:
       Contracting services                      600,083         854,975
       Oil and gas                               376,724         218,617
       Oil and gas impairments                   181,083         120,550
       Exploration expense                         8,276          24,383
                                                   -----          ------
                                               1,166,166       1,218,525

     Gross profit (loss)                          33,672         243,162
       Goodwill impairment                       (16,743)              -
       Gain (loss) on oil and gas derivative
        commodity contracts                        1,088          89,485
       Gain on sale of assets, net                 9,405           2,019
       Selling, general, and
        administrative expenses                 (122,078)       (130,851)
                                                --------        --------
     Income (loss) from operations               (94,656)        203,815
       Equity in earnings of equity
        investments                               19,469          32,329
       Gain (loss) on subsidiary equity
        transaction                               (2,240)         77,343
       Net interest expense and other            (86,280)        (51,495)
                                                 -------         -------
     Income (loss) before income
      taxes                                     (163,707)        261,992
       Provision for (benefit of)
        income taxes                             (39,598)         95,822
                                                 -------          ------
     Income (loss) from continuing
      operations                                (124,109)        166,170
       Discontinued operations, net of
        tax                                          (44)          9,581
                                                     ---           -----
     Net income (loss), including
      noncontrolling interests                  (124,153)        175,751
       Less: net income applicable to
        noncontrolling interests                  (2,835)        (19,697)
                                                  ------         -------
     Net income (loss) applicable to
      Helix                                     (126,988)        156,054
       Preferred stock dividends                    (114)           (748)
       Preferred stock beneficial conversion
        charges                                        -         (53,439)
                                                     ---         -------
     Net income (loss) applicable to Helix
      common shareholders                      $(127,102)       $101,867
                                               =========        ========

     Weighted Avg. Common Shares
      Outstanding:
       Basic                                     103,857          99,136
                                                 =======          ======
       Diluted                                   103,857         105,720
                                                 =======         =======

     Basic earnings (loss) per share
      of common stock:
       Continuing operations                      $(1.22)          $0.92
       Discontinued operations                         -            0.09
                                                     ---            ----
       Net income (loss) per share of
        common stock                              $(1.22)          $1.01
                                                  ======           =====

     Diluted earnings (loss) per share of
      common stock:
       Continuing operations                      $(1.22)          $0.87
       Discontinued operations                         -            0.09
                                                     ---            ----
       Net income (loss) per share of
        common stock                              $(1.22)          $0.96
                                                  ======           =====


    Comparative Condensed Consolidated Balance Sheets
     -------------------------------------------------

    ASSETS
                                 Dec. 31,         Dec. 31,
    (in thousands)                2010             2009
    --------------              ---------        ---------
                               (unaudited)
    Current Assets:
          Cash and equivalents    $391,085         $270,673
          Accounts receivable      226,704          172,678
          Other current assets     123,065          122,209
                                   -------          -------
    Total Current Assets           740,854          565,560

    Net Property & Equipment:
          Contracting Services   1,452,837        1,470,582
         Oil and Gas             1,074,243        1,393,124
    Equity investments             187,031          189,411
    Goodwill                        62,494           78,643
    Other assets, net               74,561           82,213
                                    ------           ------
    Total Assets                $3,592,020       $3,779,533
    ============                ==========       ==========

    LIABILITIES & SHAREHOLDERS' EQUITY
                                     Dec. 31,         Dec. 31,
    (in thousands)                     2010             2009
                  --------------      ---------        ---------
                                     (unaudited)
        Current Liabilities:
             Accounts payable          $159,381        $155,457
             Accrued liabilities        198,237         200,607
             Current mat of L-T debt (1) 10,179          12,424
             -----------------           ------          ------
      Total Current Liabilities         367,797         368,488

     Long-term debt (1)               1,347,753       1,348,315
     Deferred income taxes              413,639         442,607
      Asset retirement obligations      170,410         182,399
      Other long-term liabilities         5,777           4,262
      Convertible preferred stock (1)     1,000           6,000
     Shareholders' equity (1)         1,285,644       1,427,462
     ------------------------         ---------       ---------
      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
                                                   ----          ----
                                             (in thousands)

    Net income (loss) applicable to common
     shareholders                                  $(49,821)    $(55,697)
    Non-cash impairment                              21,549       52,578
    (Gain) loss on asset sales                         (919)         198
    Preferred stock dividends                            10           60
    Income tax provision (benefit)                    2,364      (30,246)
    Net interest expense and other                   21,484       11,300
    Depreciation and amortization                    94,147       58,859
    Exploration expense                               6,496       21,520
                                                      -----       ------

    Adjusted EBITDAX (including Cal Dive)           $95,310      $58,572
                                                    =======      =======

    Less: Previously reported contribution
     from Cal Dive                                       $-           $-

    Adjusted EBITDAX                                $95,310      $58,572
                                                    =======      =======


    Earnings Release:
    -----------------

    Reconciliation From Net Income to
     Adjusted EBITDAX:
    ---------------------------------

                                                   3Q10             2010
                                                   ----             ----
                                             (in thousands)

    Net income (loss) applicable to common
     shareholders                                   $26,161    $(127,102)
    Non-cash impairment                                 897      193,420
    (Gain) loss on asset sales                          (13)      (7,138)
    Preferred stock dividends                            10          114
    Income tax provision (benefit)                   17,965      (39,600)
    Net interest expense and other                   21,385       86,192
    Depreciation and amortization                    76,225      316,164
    Exploration expense                                 442        8,276
                                                        ---        -----

    Adjusted EBITDAX (including Cal Dive)          $143,072     $430,326
                                                   ========     ========

    Less: Previously reported contribution
     from Cal Dive                                       $-           $-

    Adjusted EBITDAX                               $143,072     $430,326
                                                   ========     ========


    Earnings Release:
    -----------------

    Reconciliation From Net Income to
     Adjusted EBITDAX:
    ---------------------------------

                                                       2009
                                                       ----
                                             (in thousands)

    Net income (loss) applicable to common
     shareholders                                  $101,867
    Non-cash impairment                              72,372
    (Gain) loss on asset sales                      (87,694)
    Preferred stock dividends                        54,187
    Income tax provision (benefit)                   86,035
    Net interest expense and other                   47,861
    Depreciation and amortization                   247,372
    Exploration expense                              24,383
                                                     ------

    Adjusted EBITDAX (including Cal Dive)          $546,383
                                                   ========

    Less: Previously reported contribution
     from Cal Dive                                 $(56,291)

    Adjusted EBITDAX                               $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
    ---------------------------              -----                 -----

SOURCE Helix Energy Solutions Group, Inc.


Source: newswire