UNITED STATES
|
SECURITIES AND EXCHANGE COMMISSION
|
WASHINGTON, D.C. 20549
|
[X]
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended March 31, 2011
|
||
or
|
||
[ ]
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from__________ to__________
|
Minnesota
(State or other jurisdiction
of incorporation or organization)
|
|
95–3409686
(I.R.S. Employer
Identification No.)
|
|
||
400 North Sam Houston Parkway East
Suite 400
Houston, Texas
(Address of principal executive offices)
|
77060
(Zip Code)
|
Yes
|
[ √ ]
|
No
|
[ ]
|
Yes
|
[ √ ]
|
No
|
[ ]
|
Large accelerated filer
|
[ √ ]
|
Accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
Yes
|
[ ]
|
No
|
[ √ ]
|
PART I.
|
FINANCIAL INFORMATION
|
PAGE
|
||
Item 1.
|
Financial Statements:
|
|||
|
1
|
|||
|
|
2
|
||
|
3
|
|||
|
4
|
|||
Item 2.
|
|
|
27
|
|
Item 3.
|
40
|
|||
Item 4.
|
40
|
|||
PART II.
|
OTHER INFORMATION
|
|||
Item 1.
|
|
40
|
||
Item 2.
|
41
|
|||
Item 6.
|
|
41
|
||
|
42
|
|||
|
43
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
440,531
|
$
|
391,085
|
||||
Accounts receivable —
Trade, net of allowance for uncollectible accounts
of $4,445 and $4,527, respectively
|
190,859
|
177,293
|
||||||
Unbilled revenue
|
21,959
|
33,712
|
||||||
Costs in excess of billing
|
434
|
15,699
|
||||||
Other current assets
|
113,829
|
123,065
|
||||||
Total current assets
|
767,612
|
740,854
|
||||||
Property and equipment
|
4,535,834
|
4,486,077
|
||||||
Less — accumulated depreciation
|
(2,046,613
|
)
|
(1,958,997
|
)
|
||||
2,489,221
|
2,527,080
|
|||||||
Other assets:
|
||||||||
Equity investments
|
186,831
|
187,031
|
||||||
Goodwill
|
62,956
|
62,494
|
||||||
Other assets, net
|
70,449
|
74,561
|
||||||
$
|
3,577,069
|
$
|
3,592,020
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
126,364
|
$
|
159,381
|
||||
Accrued liabilities
|
199,479
|
198,237
|
||||||
Current maturities of long-term debt
|
9,638
|
10,179
|
||||||
Total current liabilities
|
335,481
|
367,797
|
||||||
Long-term debt
|
1,346,469
|
1,347,753
|
||||||
Deferred income taxes
|
415,312
|
413,639
|
||||||
Asset retirement obligations
|
168,014
|
170,410
|
||||||
Other long-term liabilities
|
5,301
|
5,777
|
||||||
Total liabilities
|
2,270,577
|
2,305,376
|
||||||
Convertible preferred stock
|
1,000
|
1,000
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock, no par, 240,000 shares authorized,
106,012 and 105,592 shares issued, respectively
|
908,632
|
906,957
|
||||||
Retained earnings
|
418,562
|
392,705
|
||||||
Accumulated other comprehensive loss
|
(47,510
|
)
|
(39,058
|
)
|
||||
Total controlling interest shareholders’ equity
|
1,279,684
|
1,260,604
|
||||||
Noncontrolling interests
|
25,808
|
25,040
|
||||||
Total equity
|
1,305,492
|
1,285,644
|
||||||
$
|
3,577,069
|
$
|
3,592,020
|
|||||
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Net revenues:
|
||||||||
Contracting services
|
$
|
122,748
|
$
|
110,855
|
||||
Oil and gas
|
168,859
|
90,715
|
||||||
291,607
|
201,570
|
|||||||
Cost of sales:
|
||||||||
Contracting services
|
106,907
|
86,248
|
||||||
Oil and gas
|
107,624
|
89,466
|
||||||
214,531
|
175,714
|
|||||||
Gross profit
|
77,076
|
25,856
|
||||||
Gain on sale or acquisition of assets, net
|
16
|
6,247
|
||||||
Selling, general and administrative expenses
|
(24,981
|
)
|
(40,501
|
)
|
||||
Income (loss) from operations
|
52,111
|
(8,398
|
)
|
|||||
Equity in earnings of investments
|
5,650
|
5,055
|
||||||
Net interest expense
|
(24,236
|
)
|
(15,635
|
)
|
||||
Other income (expense)
|
2,660
|
(5,585
|
)
|
|||||
Income (loss) before income taxes
|
36,185
|
(24,563
|
)
|
|||||
Provision (benefit) for income taxes
|
9,550
|
(7,561
|
)
|
|||||
Net income (loss), including noncontrolling interests
|
26,635
|
(17,002
|
)
|
|||||
Less net income applicable to noncontrolling interests
|
(768
|
)
|
(829
|
)
|
||||
Net income (loss) applicable to Helix
|
25,867
|
(17,831
|
)
|
|||||
Preferred stock dividends
|
(10
|
)
|
(60
|
)
|
||||
Net income (loss) applicable to Helix common shareholders
|
$
|
25,857
|
$
|
(17,891
|
)
|
|||
Earnings (loss) per share of common stock:
|
||||||||
Basic
|
$
|
0.24
|
$
|
(0.17
|
)
|
|||
Diluted
|
$
|
0.24
|
$
|
(0.17
|
)
|
|||
Weighted average common shares outstanding:
|
||||||||
Basic
|
104,471
|
103,090
|
||||||
Diluted
|
104,903
|
103,090
|
||||||
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss), including noncontrolling interests
|
$
|
26,635
|
$
|
(17,002
|
)
|
|||
Adjustments to reconcile net income (loss), including
noncontrolling interests to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
92,143
|
60,827
|
||||||
Asset impairment charge and dry hole expense
|
—
|
11,292
|
||||||
Amortization of deferred financing costs
|
1,981
|
1,726
|
||||||
Stock compensation expense
|
2,953
|
2,488
|
||||||
Amortization of debt discount
|
2,207
|
2,068
|
||||||
Deferred income taxes
|
9,329
|
(2,110
|
)
|
|||||
Excess tax benefit from stock-based compensation
|
969
|
1,842
|
||||||
Gain on investment in Cal Dive common stock
|
(753
|
)
|
—
|
|||||
Gain on sale or acquisition of assets
|
(16
|
) |
(6,247
|
)
|
||||
Unrealized (gain) loss on derivative contracts
|
(318
|
)
|
3,001
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
(381
|
)
|
(23,823
|
)
|
||||
Other current assets
|
18,869
|
30,780
|
||||||
Income tax payable
|
(2,338
|
)
|
(9,513
|
)
|
||||
Accounts payable and accrued liabilities
|
(58,747
|
)
|
(22,027
|
)
|
||||
Oil and gas asset retirement costs
|
(8,160
|
)
|
(12,541
|
)
|
||||
Other noncurrent, net
|
692
|
(2,324
|
)
|
|||||
Net cash provided by operating activities
|
85,065 |
18,437
|
||||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(34,488
|
)
|
(68,428
|
)
|
||||
Distributions from equity investments, net
|
480
|
965
|
||||||
Proceeds from sale of Cal Dive common stock
|
3,588
|
—
|
||||||
Decrease (increase) in restricted cash
|
613
|
|
(4
|
)
|
||||
Net cash used in investing activities
|
(29,807
|
)
|
(67,467
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment of Helix Term Loan
|
(1,082
|
)
|
(1,082
|
)
|
||||
Repayment of MARAD borrowings
|
(2,294
|
)
|
(2,403
|
)
|
||||
Loan notes repayment
|
(660
|
)
|
(711
|
)
|
||||
Deferred financing costs
|
—
|
(2,789
|
)
|
|||||
Preferred stock dividends paid
|
(10
|
)
|
(60
|
)
|
||||
Repurchases of common stock
|
(927
|
)
|
(976
|
)
|
||||
Excess tax benefit from stock-based compensation
|
(969
|
)
|
(1,842
|
)
|
||||
Exercise of stock options, net
|
600
|
—
|
||||||
Net cash used in financing activities
|
(5,342
|
)
|
(9,863
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(470
|
)
|
398
|
|||||
Net increase (decrease) in cash and cash equivalents
|
49,446
|
(58,495
|
)
|
|||||
Cash and cash equivalents:
|
||||||||
Balance, beginning of year
|
391,085
|
270,673
|
||||||
Balance, end of period
|
$
|
440,531
|
$
|
212,178
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Other receivables
|
$ | 4,674 | $ | 1,247 | ||||
Prepaid insurance
|
6,602 | 12,375 | ||||||
Other prepaids
|
12,076 | 11,623 | ||||||
Spare parts inventory
|
23,742 | 25,333 | ||||||
Current deferred tax assets
|
46,789 | 49,200 | ||||||
Hedging assets
|
3,466 | 5,472 | ||||||
Gas imbalance
|
5,900 | 6,001 | ||||||
Income tax receivable
|
7,497 | 6,099 | ||||||
Investment held for sale (a)
|
— | 2,835 | ||||||
Other
|
3,083 | 2,880 | ||||||
$ | 113,829 | $ | 123,065 |
a.
|
In the first quarter of 2011, we sold our remaining 500,000 shares of Cal Dive common stock. These sales transactions resulted in net proceeds of approximately $3.6 million and a pre-tax gain of $0.8 million. In the fourth quarter of 2010, we had recognized a $2.2 million other than temporary loss on our investment in Cal Dive common shares (see Notes 2 and 3 of our 2010 Form 10-K for additional information regarding our former Investment in Cal Dive common stock)
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Restricted cash
|
$ | 34,726 | $ | 35,339 | ||||
Deferred drydock expenses, net
|
9,478 | 11,086 | ||||||
Deferred financing costs, net
|
23,812 | 25,697 | ||||||
Intangible assets with finite lives, net
|
628 | 636 | ||||||
Other
|
1,805 | 1,803 | ||||||
$ | 70,449 | $ | 74,561 |
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Accrued payroll and related benefits
|
$ | 26,023 | $ | 38,026 | ||||
Royalties payable
|
18,817 | 15,008 | ||||||
Current asset retirement obligations
|
64,398 | 64,526 | ||||||
Unearned revenue
|
9,594 | 4,094 | ||||||
Billing in excess of cost
|
5,842 | 3,869 | ||||||
Accrued interest
|
15,248 | 27,308 | ||||||
Hedge liability
|
45,022 | 30,606 | ||||||
Other
|
14,535 | 14,800 | ||||||
$ | 199,479 | $ | 198,237 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Delay rental and geological and geophysical costs
|
$
|
355
|
$
|
346
|
||||
Dry hole expense
|
(9
|
)
|
(180
|
)
|
||||
Total exploration expense
|
$
|
346
|
$
|
166
|
Asset retirement obligation at December 31, 2010
|
$
|
234,936
|
||
Liability incurred during the period
|
511
|
|||
Liability settled during the period
|
(7,328
|
)
|
||
Revision in estimated cash flows
|
507
|
|||
Accretion expense (included in depreciation and amortization)
|
3,786
|
|||
Asset retirement obligations at March 31, 2011
|
$
|
232,412
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Interest paid, net of capitalized interest
|
$
|
32,093
|
$
|
23,737
|
||||
Income taxes paid
|
$
|
3,785
|
$
|
4,357
|
·
|
Deepwater Gateway, L.L.C. In June 2002, we, along with Enterprise Products Partners L.P. (”Enterprise”), formed Deepwater Gateway, each with a 50% interest, to design, construct, install, own and operate a tension leg platform (“TLP”) production hub primarily for Anadarko Petroleum Corporation's Marco Polo field in the Deepwater Gulf of Mexico. Our investment in Deepwater Gateway totaled $99.0 million and $99.8 million as of March 31, 2011 and December 31, 2010, respectively (including capitalized interest of $1.5 million at both March 31, 2011 and December 31, 2010). Our net distributions from Deepwater Gateway totaled $1.8 million in the first quarter of 2011.
|
·
|
Independence Hub, LLC. In December 2004, we acquired a 20% interest in Independence Hub, an affiliate of Enterprise. Independence Hub owns the "Independence Hub" platform located in Mississippi Canyon Block 920 in a water depth of 8,000 feet. First production through the facility commenced in July 2007. Our investment in Independence Hub was $82.1 million and $82.4 million as of March 31, 2011 and December 31, 2010, respectively (including capitalized interest of $5.2 million at March 31, 2011 and December 31, 2010). Our net distributions from Independence Hub totaled $4.4 million in the first quarter of 2011.
|
·
|
Clough Helix JV. In February 2010, we announced the formation of the Clough Helix JV with Australian-based engineering and construction company, Clough Projects Australia Pty Ltd (“Clough”), to provide a range of subsea services to offshore operators in the Asia Pacific region. The Clough Helix JV combines our well intervention equipment with Clough’s 12-man saturation diving system, which are deployed from the 118 meter long DP2 multiservice vessel, Normand Clough. In the first quarter of 2011, the Clough Helix JV commenced an approximate six to nine month day rate project located offshore China. Our 50% share of the earnings from the Clough Helix JV totaled $0.4 million for the three-month period ended March 31, 2011 as compared to a $1.4 million loss in the first quarter of 2010. The loss in the first quarter of 2010 primarily represented the mobilization costs of transporting the Normand Clough from the Gulf of Mexico to Singapore. Our investment in the Clough Helix JV was $5.7 million at March 31, 2011 and $4.9 million at December 31, 2010.
|
Helix Term Loan
|
Helix Revolving Loans
|
Senior Unsecured Notes
|
Convertible Senior Notes (1)
|
MARAD Debt
|
Other(2)
|
Total
|
||||||||||||||||
Less than one year
|
$
|
4,326
|
$
|
─
|
$
|
─
|
$
|
─
|
$
|
4,759
|
$
|
553
|
$
|
9,638
|
||||||||
One to two years
|
4,326
|
─
|
─
|
─
|
4,997
|
─
|
9,323
|
|||||||||||||||
Two to three years
|
400,707
|
─
|
─
|
─
|
5,247
|
─
|
405,954
|
|||||||||||||||
Three to four years
|
─
|
─
|
─
|
─
|
5,508
|
─
|
5,508
|
|||||||||||||||
Four to five years
|
─
|
─
|
550,000
|
─
|
5,783
|
─
|
555,783
|
|||||||||||||||
Over five years
|
─
|
─
|
─
|
300,000
|
86,222
|
─
|
386,222
|
|||||||||||||||
Total debt
|
409,359
|
─
|
550,000
|
300,000
|
112,516
|
553
|
1,372,428
|
|||||||||||||||
Current maturities
|
(4,326
|
)
|
─
|
─
|
─
|
(4,759
|
)
|
(553
|
)
|
(9,638
|
)
|
|||||||||||
Long-term debt, less
current maturities
|
$
|
405,033
|
$
|
─
|
$
|
550,000
|
$
|
300,000
|
$
|
107,757
|
$
|
─
|
$
|
1,362,790
|
||||||||
Unamortized debt discount (3)
|
─
|
─
|
─
|
(16,321
|
)
|
─
|
─
|
(16,321
|
)
|
|||||||||||||
Long-term debt
|
$
|
405,033
|
$
|
─
|
$
|
550,000
|
$
|
283,679
|
$
|
107,757
|
$
|
─
|
$
|
1,346,469
|
(1)
|
Beginning in December 2012, the holders may require us to repurchase the notes or we may at our own option elect to repurchase notes. Notes will mature in March 2025.
|
(2)
|
Represents the balance of the loan provided by Kommandor RØMØ to Kommandor LLC as of March 31, 2011.
|
(3)
|
The notes will increase to the $300 million face amount through accretion of non-cash interest charges through 2012.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Interest expense
|
$
|
24,767
|
$
|
24,349
|
||||
Interest income
|
(476
|
)
|
(198
|
)
|
||||
Capitalized interest
|
(55
|
)
|
(8,516
|
)
|
||||
Interest expense, net
|
$
|
24,236
|
$
|
15,635
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Net income (loss), including noncontrolling interests
|
$
|
26,635
|
$
|
(17,002
|
)
|
|||
Other accumulated comprehensive income (loss),
net of tax
|
||||||||
Foreign currency translation gain (loss)
|
2,115
|
(10,702
|
)
|
|||||
Unrealized (loss) gain on hedges, net
|
(10,567
|
)
|
14,040
|
|||||
Unrealized loss on investment available for sale
|
—
|
(75
|
)
|
|||||
Total accumulated comprehensive income (loss)
|
$
|
18,183
|
$
|
(13,739
|
)
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Cumulative foreign currency translation adjustment
|
$
|
(20,147
|
)
|
$
|
(22,262
|
)
|
||
Unrealized loss on hedges, net
|
(27,363
|
)
|
(16,796
|
)
|
||||
Accumulated other comprehensive loss
|
$
|
(47,510
|
)
|
$
|
(39,058
|
)
|
Three Months Ended
|
Three Months Ended
|
|||||||||||||||
March 31, 2011
|
March 31, 2010
|
|||||||||||||||
Income
|
Shares
|
Income
|
Shares
|
|||||||||||||
Basic:
|
||||||||||||||||
Net income (loss) applicable to common shareholders
|
$
|
25,857
|
$
|
(17,891
|
)
|
|||||||||||
Less: Undistributed net income allocable to participating securities
|
(338
|
)
|
─
|
|||||||||||||
Net income (loss) applicable to common shareholders
|
$
|
25,519
|
104,471
|
$
|
(17,891
|
)
|
103,090
|
Three Months Ended
March 31, 2011
|
Three Months Ended
March 31, 2010
|
|||||||||||||||
Income
|
Shares
|
Income
|
Shares
|
|||||||||||||
Diluted:
|
||||||||||||||||
Net income (loss) per common share - Basic
|
$
|
25,519
|
104,471
|
$
|
(17,891
|
)
|
103,090 | |||||||||
Effect of dilutive securities:
|
||||||||||||||||
Stock options
|
─
|
71
|
─
|
─
|
||||||||||||
Undistributed earnings reallocated to participating securities
|
1
|
─
|
||||||||||||||
Convertible Senior Notes
|
─
|
─
|
─
|
─
|
||||||||||||
Convertible preferred stock
|
10
|
361
|
─
|
─
|
||||||||||||
Net income (loss) per common share - Diluted
|
$
|
25,530
|
104,903
|
$
|
(17,891
|
)
|
103,090
|
|||||||||
Diluted shares (as reported)
|
103,090
|
|||
Stock options
|
194
|
|||
Convertible preferred stock
|
2,168
|
|||
Total
|
105,452
|
Date of Grant
|
Shares
|
Market Value Per Share
|
Vesting Period
|
||||||
January 4, 2011
|
475,804 | $ | 12.14 |
20% per year over five years
|
|||||
January 4, 2011
|
4,427 | 12.14 |
100% on January 1, 2013
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Revenues ─
|
||||||||
Contracting Services
|
$
|
131,537
|
$
|
154,200
|
||||
Production Facilities
|
15,570
|
1,320
|
||||||
Oil and Gas
|
168,859
|
90,715
|
||||||
Intercompany elimination
|
(24,359
|
)
|
(44,665
|
)
|
||||
Total
|
$
|
291,607
|
$
|
201,570
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Income (loss) from operations ─
|
||||||||
Contracting Services
|
$
|
3,266
|
$
|
27,486
|
||||
Production Facilities(1)
|
5,956
|
(37
|
)
|
|||||
Oil and Gas
|
53,240
|
(664
|
)
|
|||||
Corporate (2)
|
(10,441
|
)
|
(22,878
|
)
|
||||
Intercompany elimination
|
90
|
(12,305
|
)
|
|||||
Total
|
$
|
52,111
|
$
|
(8,398
|
)
|
|||
Equity in earnings of equity investments
|
$
|
5,650
|
$
|
5,055
|
(1)
|
In April 2009, Kommandor LLC commenced leasing the HP I to us under terms of a charter arrangement following the completion of the initial conversion of the vessel (Note 8 of our 2010 Form 10-K). The HP I was certified as a floating oil and gas production unit in June 2010 following the completion of installation of oil and gas processing facilities on the vessel.
|
(2)
|
Includes $13.8 million settlement of third party claim against us in March 2010 (Note 14).
|
March 31,
2011
|
December 31,
2010
|
|||||||
(in thousands)
|
||||||||
Identifiable Assets ─
|
||||||||
Contracting Services
|
$
|
1,853,349
|
$
|
1,856,016
|
||||
Production Facilities
|
514,086
|
512,990
|
||||||
Oil and Gas
|
1,209,634
|
1,223,014
|
||||||
Total
|
$
|
3,577,069
|
$
|
3,592,020
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Contracting Services
|
$
|
12,869
|
|
$
|
43,741 | |||
Production Facilities
|
11,490
|
|
924
|
|||||
Total
|
$
|
24,359
|
|
$
|
44,665
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Contracting Services
|
$
|
(24
|
)
|
$
|
11,442
|
|||
Production Facilities
|
(66
|
)
|
880
|
|||||
Total
|
$
|
(90
|
)
|
$
|
12,322
|
•
|
Level 1. Observable inputs such as quoted prices in active markets;
|
|
•
|
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
•
|
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
(a)
|
Market Approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
|
(b)
|
Cost Approach. Amount that would be required to replace the service capacity of an asset (replacement cost).
|
(c)
|
Income Approach. Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).
|
Level 1
|
Level 2 (1)
|
Level 3
|
Total
|
Valuation Technique
|
||||||||||||||||
Assets:
|
||||||||||||||||||||
Natural gas contracts
|
$
|
–
|
$
|
2,983
|
$
|
–
|
$
|
2,983
|
(c)
|
|||||||||||
Foreign currency forwards
|
–
|
584
|
–
|
584
|
(c)
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Oil contracts
|
–
|
43,481
|
–
|
43,481
|
(c)
|
|||||||||||||||
Fair value of long term debt(2)
|
1,289,897
|
118,254
|
–
|
1,408,151
|
(a), (b)
|
|||||||||||||||
Natural gas contracts
|
–
|
529
|
–
|
529
|
(c)
|
|||||||||||||||
Interest rate swaps
|
–
|
1,541
|
–
|
1,541
|
(c)
|
|||||||||||||||
Total net liability
|
$
|
1,289,897
|
$
|
160,238
|
$
|
–
|
$
|
1,450,135
|
(1)
|
Unless otherwise indicated, the fair value of our Level 2 derivative instruments reflects our best estimate and is based upon exchange or over-the-counter quotations whenever they are available. Quoted valuations may not be available due to location differences or terms that extend beyond the period for which quotations are available. Where quotes are not available, we utilize other valuation techniques or models to estimate market values. These modeling techniques require us to make estimations of future prices, price correlation and market volatility and liquidity. Our actual results may differ from our estimates, and these differences can be positive or negative.
|
(2)
|
See Note 7 for additional information regarding our long term debt. The fair value of our long term debt at March 31, 2011 is as follows:
|
Fair Value
|
Carrying Value
|
|||||||
Term Loan (matures July 2013)
|
$ | 407,599 | $ | 409,359 | ||||
Revolving Credit Facility (matures November 2012)
|
─
|
─
|
||||||
Convertible Senior Notes (matures March 2025)
|
300,120 | 283,679 | ||||||
Senior Unsecured Notes (matures January 2016)
|
581,625 | 550,000 | ||||||
MARAD Debt (matures February 2027) (a)
|
118,254 | 112,516 | ||||||
Loan Notes(b)
|
553 | 553 | ||||||
Total
|
$ | 1,408,151 | $ | 1,356,107 | ||||
(a)
|
The estimated fair value of all debt, other than MARAD Debt and Loan Notes, was determined using level 1 inputs using the market approach. The fair value of the MARAD debt was determined using a third party evaluation of the remaining average life and outstanding principal balance of the MARAD indebtedness as compared to other governmental obligations in the market place with similar terms. The fair value of the MARAD debt was estimated using level 2 fair value inputs using the cost approach.
|
(b)
|
The carrying value of the loan notes approximates fair value as the maturity of the notes is current.
|
Production Period
|
Instrument Type
|
Average
Monthly Volumes
|
Weighted Average
Price
|
|||
Crude Oil:
|
(per barrel)
|
|||||
April 2011 — December 2011
|
Swap
|
|
192.2 MBbl
|
$82.35
|
||
April 2011 — December 2011
|
Collar
|
11.1 MBbl
|
$95.00 - $124.00
|
|||
Natural Gas:
|
(per Mcf)
|
|||||
April 2011 — December 2011
|
Swap
|
825 Mmcf
|
$4.99
|
|||
January 2012 — December 2012
|
Swap
|
250 Mmcf
|
$4.77
|
As of March 31, 2011
|
As of December 31, 2010
|
|||||||||
Balance Sheet
Location
|
Fair Value
|
Balance Sheet
Location
|
Fair Value
|
|||||||
(in thousands)
|
||||||||||
Asset Derivatives:
|
||||||||||
Natural gas contracts
|
Other current assets
|
$ | 2,983 |
Other current assets
|
$ | 5,324 | ||||
$ | 2,983 | $ | 5,324 |
As of March 31, 2011
|
As of December 31, 2010
|
|||||||||
Balance Sheet
Location
|
Fair Value
|
Balance Sheet
Location
|
Fair Value
|
|||||||
(in thousands)
|
||||||||||
Liability Derivatives:
|
||||||||||
Oil contracts
|
Accrued liabilities
|
$ | 43,481 |
Accrued liabilities
|
$ | 28,855 | ||||
Interest rate swaps
|
Accrued liabilities
|
1,541 |
Accrued liabilities
|
1,751 | ||||||
Gas contracts
|
Other long-term liabilities
|
529 |
Accrued liabilities
|
913 | ||||||
Interest rate swaps
|
Other long-term liabilities
|
— |
Accrued liabilities
|
115 | ||||||
$ | 45,551 | $ | 31,634 |
As of March 31, 2011
|
As of December 31, 2010
|
|||||||||
Balance Sheet
Location
|
Fair Value
|
Balance Sheet
Location
|
Fair Value
|
|||||||
(in thousands)
|
||||||||||
Asset Derivatives:
|
||||||||||
Foreign exchange forwards
|
Other current assets
|
$ | 483 |
Other current assets
|
$ | 148 | ||||
Foreign exchange forwards
|
Other assets, net
|
101 |
Other assets, net
|
42 | ||||||
$ | 584 | $ | 190 | |||||||
Liability Derivatives:
|
$ | — | $ | — |
Gain (Loss) Recognized in Accumulated OCI
on Derivatives
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Oil and natural gas commodity contracts
|
$
|
(10,778
|
)
|
$
|
14,630
|
|||
Foreign exchange forwards
|
—
|
—
|
||||||
Interest rate swaps
|
211
|
(590
|
)
|
|||||
$
|
(10,567
|
)
|
$
|
14,040
|
Location of Gain (Loss) Reclassified from Accumulated OCI into Income
|
Gain (Loss) Recognized from Accumulated OCI into Income
|
||||||||
2011
|
2010
|
||||||||
(in thousands)
|
|||||||||
Oil and natural gas commodity contracts
|
Oil and gas revenue
|
$
|
(6,325
|
)
|
$
|
802
|
|||
Interest rate swaps
|
Net interest expense
|
(480
|
)
|
(418
|
)
|
||||
$
|
(6,805
|
)
|
$
|
384
|
|||||
Location of Gain (Loss) Recognized in Income on Derivatives
|
Gain (Loss) Recognized in Income on Derivatives
|
||||||||
2011
|
2010
|
||||||||
(in thousands)
|
|||||||||
Foreign exchange forwards
|
Other expense
|
$
|
608
|
$
|
(2,907
|
)
|
|||
$
|
608
|
$
|
(2,907
|
)
|
|||||
As of March 31, 2011
|
||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
||||||||||||
ASSETS
|
||||||||||||||||
Current assets:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
425,514
|
$
|
2,473
|
$
|
12,544
|
$
|
—
|
$
|
440,531
|
||||||
Accounts receivable, net
|
62,735
|
106,559
|
21,565
|
—
|
190,859
|
|||||||||||
Unbilled revenue
|
1,547
|
—
|
20,846
|
—
|
22,393
|
|||||||||||
Income taxes receivable
|
46,442
|
—
|
12,167
|
(51,112
|
)
|
7,497
|
||||||||||
Other current assets
|
44,066
|
56,385
|
10,268
|
(4,387
|
)
|
106,332
|
||||||||||
Total current assets
|
580,304
|
165,417
|
77,390
|
(55,499
|
)
|
767,612
|
||||||||||
Intercompany
|
4,447
|
287,466
|
(188,963
|
)
|
(102,950
|
)
|
—
|
|||||||||
Property and equipment, net
|
219,598
|
1,565,045
|
709,591
|
(5,013
|
)
|
2,489,221
|
||||||||||
Other assets:
|
||||||||||||||||
Equity investments in unconsolidated affiliates
|
—
|
—
|
186,831
|
—
|
186,831
|
|||||||||||
Equity investments
|
1,954,489
|
24,237
|
—
|
(1,978,726
|
)
|
—
|
||||||||||
Goodwill
|
—
|
45,107
|
17,849
|
—
|
62,956
|
|||||||||||
Other assets, net
|
42,135
|
37,198
|
20,808
|
(29,692
|
)
|
70,449
|
||||||||||
Due from subsidiaries/parent
|
90,965
|
184,967
|
—
|
(275,932
|
)
|
—
|
||||||||||
$
|
2,891,938
|
$
|
2,309,437
|
$
|
823,506
|
$
|
(2,447,812
|
)
|
$
|
3,577,069
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||||||||||
Current liabilities:
|
||||||||||||||||
Accounts payable
|
$
|
33,137
|
$
|
69,424
|
$
|
23,803
|
$
|
—
|
$
|
126,364
|
||||||
Accrued liabilities
|
45,094
|
124,574
|
29,811
|
—
|
199,479
|
|||||||||||
Income taxes payable
|
—
|
67,543
|
—
|
(67,543
|
)
|
—
|
||||||||||
Current maturities of long-term debt
|
4,326
|
—
|
9,169
|
(3,857
|
)
|
9,638
|
||||||||||
Total current liabilities
|
82,557
|
261,541
|
62,783
|
(71,400
|
)
|
335,481
|
||||||||||
Long-term debt
|
1,238,712
|
—
|
107,757
|
—
|
1,346,469
|
|||||||||||
Deferred income taxes
|
199,200
|
124,072
|
97,964
|
(5,924
|
)
|
415,312
|
||||||||||
Asset retirement obligations
|
—
|
168,014
|
—
|
—
|
168,014
|
|||||||||||
Other long-term liabilities
|
1,319
|
3,341
|
641
|
—
|
5,301
|
|||||||||||
Due to parent
|
—
|
—
|
116,451
|
(116,451
|
)
|
—
|
||||||||||
Total liabilities
|
1,521,788
|
556,968
|
385,596
|
(193,775
|
)
|
2,270,577
|
||||||||||
Convertible preferred stock
|
1,000
|
—
|
—
|
—
|
1,000
|
|||||||||||
Total equity
|
1,369,150
|
1,752,469
|
437,910
|
(2,254,037
|
)
|
1,305,492
|
||||||||||
$
|
2,891,938
|
$
|
2,309,437
|
$
|
823,506
|
$
|
(2,447,812
|
)
|
$
|
3,577,069
|
||||||
As of December 31, 2010
|
|||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
|||||||||||||
ASSETS
|
|||||||||||||||||
Current assets:
|
|||||||||||||||||
Cash and cash equivalents
|
$
|
376,434
|
$
|
3,294
|
$
|
11,357
|
$
|
—
|
$
|
391,085
|
|||||||
Accounts receivable, net
|
61,846
|
91,659
|
23,788
|
—
|
177,293
|
||||||||||||
Unbilled revenue
|
11,990
|
—
|
37,421
|
—
|
49,411
|
||||||||||||
Income taxes receivable
|
19,334
|
—
|
7,195
|
(20,430
|
)
|
6,099
|
|||||||||||
Other current assets
|
63,306
|
49,557
|
12,889
|
(8,786
|
)
|
116,966
|
|||||||||||
Total current assets
|
532,910
|
144,510
|
92,650
|
(29,216
|
)
|
740,854
|
|||||||||||
Intercompany
|
1,906
|
263,920
|
(171,513
|
)
|
(94,313
|
)
|
—
|
||||||||||
Property and equipment, net
|
217,153
|
1,605,906
|
709,082
|
(5,061
|
)
|
2,527,080
|
|||||||||||
Other assets:
|
|||||||||||||||||
Equity investments in unconsolidated affiliates
|
—
|
—
|
187,031
|
—
|
187,031
|
||||||||||||
Equity investments in affiliates
|
1,998,289
|
29,899
|
—
|
(2,028,188
|
)
|
—
|
|||||||||||
Goodwill, net
|
—
|
45,107
|
17,387
|
—
|
62,494
|
||||||||||||
Other assets, net
|
43,971
|
38,324
|
21,900
|
(29,634
|
)
|
74,561
|
|||||||||||
Due from subsidiaries/parent
|
95,398
|
105,434
|
—
|
(200,832
|
)
|
—
|
|||||||||||
$
|
2,889,627
|
$
|
2,233,100
|
$
|
856,537
|
$
|
(2,387,244
|
)
|
$
|
3,592,020
|
|||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||
Current liabilities:
|
|||||||||||||||||
Accounts payable
|
$
|
60,308
|
$
|
56,107
|
$
|
42,966
|
$
|
—
|
$
|
159,381
|
|||||||
Accrued liabilities
|
58,074
|
107,874
|
32,289
|
—
|
198,237
|
||||||||||||
Income taxes payable
|
—
|
36,678
|
—
|
(36,678
|
)
|
—
|
|||||||||||
Current maturities of long-term debt
|
4,326
|
—
|
14,301
|
(8,448
|
)
|
10,179
|
|||||||||||
Total current liabilities
|
122,708
|
200,659
|
89,556
|
(45,126
|
)
|
367,797
|
|||||||||||
Long-term debt
|
1,237,587
|
—
|
110,166
|
—
|
1,347,753
|
||||||||||||
Deferred income taxes
|
185,453
|
135,101
|
98,968
|
(5,883
|
)
|
413,639
|
|||||||||||
Asset retirement obligations
|
—
|
170,410
|
—
|
—
|
170,410
|
||||||||||||
Other long-term liabilities
|
1,421
|
3,691
|
665
|
—
|
5,777
|
||||||||||||
Due to parent
|
—
|
—
|
120,884
|
(120,884
|
)
|
—
|
|||||||||||
Total liabilities
|
1,547,169
|
509,861
|
420,239
|
(171,893
|
)
|
2,305,376
|
|||||||||||
Convertible preferred stock
|
1,000
|
—
|
—
|
—
|
1,000
|
||||||||||||
Total equity
|
1,341,458
|
1,723,239
|
436,298
|
(2,215,351
|
)
|
1,285,644
|
|||||||||||
$
|
2,889,627
|
$
|
2,233,100
|
$
|
856,537
|
$
|
(2,387,244
|
)
|
$
|
3,592,020
|
|||||||
Three Months Ended March 31, 2011
|
||||||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
||||||||||||||||
Net revenues
|
$ | 15,582 | $ | 242,042 | $ | 57,876 | $ | (23,893 | ) | $ | 291,607 | |||||||||
Cost of sales
|
16,593 | 165,231 | 56,278 | (23,571 | ) | 214,531 | ||||||||||||||
Gross profit
|
(1,011 | ) | 76,811 | 1,598 | (322 | ) | 77,076 | |||||||||||||
Gain on sale or acquisition of assets
|
16 | — | — | — | 16 | |||||||||||||||
Selling, general and administrative expenses
|
(11,186 | ) | (10,036 | ) | (4,154 | ) | 395 | (24,981 | ) | |||||||||||
Income (loss) from operations
|
(12,181 | ) | 66,775 | (2,556 | ) | 73 | 52,111 | |||||||||||||
Equity in earnings of investments
|
48,107 | (5,662 | ) | 5,650 | (42,445 | ) | 5,650 | |||||||||||||
Net interest expense and other
|
(17,284 | ) | (4,709 | ) | 417 | — | (21,576 | ) | ||||||||||||
Income (loss) before income taxes
|
18,642 | 56,404 | 3,511 | (42,372 | ) | 36,185 | ||||||||||||||
Provision (benefit) for income taxes
|
(7,173 | ) | 21,741 | (5,041 | ) | 23 | 9,550 | |||||||||||||
Net income (loss) applicable to Helix
|
25,815 | 34,663 | 8,552 | (42,395 | ) | 26,635 | ||||||||||||||
Less:net income applicable to noncontrolling interests
|
— | — | — | (768 | ) | (768 | ) | |||||||||||||
Preferred stock dividends
|
(10 | ) | — | — | — | (10 | ) | |||||||||||||
Net income (loss) applicable to Helix common shareholders
|
$ | 25,805 | $ | 34,663 | $ | 8,552 | $ | (43,163 | ) | $ | 25,857 | |||||||||
Three Months Ended March 31, 2010
|
||||||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
||||||||||||||||
Net revenues
|
$ | 21,022 | $ | 169,723 | $ | 44,972 | $ | (34,147 | ) | $ | 201,570 | |||||||||
Cost of sales
|
13,334 | 140,042 | 49,957 | (27,619 | ) | 175,714 | ||||||||||||||
Gross profit
|
7,688 | 29,681 | (4,985 | ) | (6,528 | ) | 25,856 | |||||||||||||
Gain on sale or acquisition of assets
|
— | 287 | 5,960 | — | 6,247 | |||||||||||||||
Selling, general and administrative expenses
|
(23,875 | ) | (10,081 | ) | (7,045 | ) | 500 | (40,501 | ) | |||||||||||
Income (loss) from operations
|
(16,187 | ) | 19,887 | (6,070 | ) | (6,028 | ) | (8,398 | ) | |||||||||||
Equity in earnings of investments
|
4,868 | (507 | ) | 5,055 | (4,361 | ) | 5,055 | |||||||||||||
Net interest expense and other
|
(7,389 | ) | (7,566 | ) | (6,265 | ) | — | (21,220 | ) | |||||||||||
Income (loss) before income taxes
|
(18,708 | ) | 11,814 | (7,280 | ) | (10,389 | ) | (24,563 | ) | |||||||||||
Provision (benefit) for income taxes
|
(4,796 | ) | 4,215 | (4,871 | ) | (2,109 | ) | (7,561 | ) | |||||||||||
Net income (loss) applicable to Helix
|
(13,912 | ) | 7,599 | (2,409 | ) | (8,280 | ) | (17,002 | ) | |||||||||||
Less:net income applicable to noncontrolling interests
|
— | — | — | (829 | ) | (829 | ) | |||||||||||||
Preferred stock dividends
|
(60 | ) | — | — | — | (60 | ) | |||||||||||||
Net income (loss) applicable to Helix common shareholders
|
$ | (13,972 | ) | $ | 7,599 | $ | (2,409 | ) | $ | (9,109 | ) | $ | (17,891 | ) | ||||||
Three Months Ended March 31, 2011
|
|||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
|||||||||||||
Cash flow from operating activities:
|
|||||||||||||||||
Net income (loss), including noncontrolling interests
|
$
|
25,815
|
$
|
34,663
|
$
|
8,552
|
$
|
(42,395
|
)
|
$
|
26,635
|
||||||
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
|
|||||||||||||||||
Equity in earnings of affiliates
|
(48,107
|
)
|
5,662
|
—
|
42,445
|
—
|
|||||||||||
Other adjustments
|
(16,484
|
)
|
74,174
|
4,644
|
(3,904
|
)
|
58,430
|
||||||||||
Net cash provided by (used in) operating
|
|||||||||||||||||
activities
|
(38,776
|
)
|
114,499
|
13,196
|
(3,854
|
)
|
85,065
|
||||||||||
Cash flows from investing activities:
|
|||||||||||||||||
Capital expenditures
|
(7,143
|
)
|
(18,200
|
)
|
(9,145
|
)
|
—
|
(34,488
|
)
|
||||||||
Distributions from equity investments, net
|
—
|
—
|
480
|
—
|
480
|
||||||||||||
Proceeds from sale of Cal Dive common stock
|
3,588
|
—
|
—
|
—
|
3,588
|
||||||||||||
Deceases in restricted cash
|
—
|
613
|
|
—
|
—
|
613
|
|
||||||||||
Net cash used in investing activities
|
(3,555
|
)
|
(17,587
|
)
|
(8,665
|
)
|
—
|
(29,807
|
)
|
||||||||
Cash flows from financing activities:
|
|||||||||||||||||
Repayments of debt
|
(1,082
|
)
|
—
|
(2,954
|
)
|
—
|
(4,036
|
)
|
|||||||||
Preferred stock dividends paid and other
|
(10
|
)
|
—
|
—
|
—
|
(10
|
)
|
||||||||||
Repurchases of common stock
|
(927
|
)
|
—
|
—
|
—
|
(927
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
(969
|
)
|
—
|
—
|
—
|
(969
|
)
|
||||||||||
Exercise of stock options, net
|
600
|
—
|
—
|
—
|
600
|
||||||||||||
Intercompany financing
|
93,799
|
(97,733
|
)
|
80
|
3,854
|
—
|
|||||||||||
Net cash provided by (used in) financing activities
|
91,411
|
(97,733
|
)
|
(2,874
|
)
|
3,854
|
(5,342
|
)
|
|||||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
—
|
(470
|
)
|
—
|
(470
|
)
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
49,080
|
(821
|
)
|
1,187
|
—
|
49,446
|
|||||||||||
Cash and cash equivalents:
|
|||||||||||||||||
Balance, beginning of year
|
376,434
|
3,294
|
11,357
|
—
|
391,085
|
||||||||||||
Balance, end of year
|
$
|
425,514
|
$
|
2,473
|
$
|
12,544
|
$
|
—
|
$
|
440,531
|
|||||||
Three Months Ended March 31, 2010
|
||||||||||||||||
Helix
|
Guarantors
|
Non-Guarantors
|
Consolidating Entries
|
Consolidated
|
||||||||||||
Cash flow from operating activities:
|
||||||||||||||||
Net income (loss), including noncontrolling interests
|
$
|
(13,912
|
)
|
$
|
7,599
|
$
|
(2,409
|
)
|
$
|
(8,280
|
)
|
$
|
(17,002
|
)
|
||
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
|
||||||||||||||||
Equity in earnings of affiliates
|
(4,868
|
)
|
507
|
—
|
4,361
|
—
|
||||||||||
Other adjustments
|
(111
|
)
|
42,640
|
(1,210
|
)
|
(5,880
|
)
|
35,439
|
||||||||
Net cash provided by (used in) operating
|
||||||||||||||||
activities
|
(18,891
|
)
|
50,746
|
(3,619
|
)
|
(9,799
|
)
|
18,437
|
||||||||
Cash flows from investing activities:
|
||||||||||||||||
Capital expenditures
|
(29,067
|
)
|
(34,501
|
)
|
(4,860
|
)
|
—
|
(68,428
|
)
|
|||||||
Distributions from equity investments, net
|
—
|
—
|
965
|
—
|
965
|
|||||||||||
Increases in restricted cash
|
—
|
(4
|
)
|
—
|
—
|
(4
|
)
|
|||||||||
Net cash used in investing activities
|
(29,067
|
)
|
(34,505
|
)
|
(3,895
|
)
|
—
|
(67,467
|
)
|
|||||||
Cash flows from financing activities:
|
||||||||||||||||
Repayments of debt
|
(1,082
|
)
|
—
|
(3,114
|
)
|
—
|
(4,196
|
)
|
||||||||
Deferred financing costs
|
(2,789
|
)
|
—
|
—
|
—
|
(2,789
|
)
|
|||||||||
Preferred stock dividends paid
|
(60
|
)
|
—
|
—
|
—
|
(60
|
)
|
|||||||||
Repurchase of common stock
|
(976
|
)
|
—
|
—
|
(976
|
)
|
||||||||||
Excess tax benefit from stock-based compensation
|
(1,842
|
)
|
—
|
—
|
—
|
(1,842
|
)
|
|||||||||
Intercompany financing
|
(6,434
|
)
|
(15,163
|
)
|
11,798
|
9,799
|
—
|
|||||||||
Net cash provided by (used in) financing activities
|
(13,183
|
)
|
(15,163
|
)
|
8,684
|
9,799
|
(9,863
|
)
|
||||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
—
|
398
|
—
|
398
|
|||||||||||
Net increase (decrease) in cash and cash equivalents
|
(61,141
|
)
|
1,078
|
1,568
|
—
|
(58,495
|
)
|
|||||||||
Cash and cash equivalents:
|
||||||||||||||||
Balance, beginning of year
|
258,742
|
2,522
|
9,409
|
—
|
270,673
|
|||||||||||
Balance, end of year
|
$
|
197,601
|
$
|
3,600
|
$
|
10,977
|
$
|
—
|
$
|
212,178
|
||||||
•
|
statements regarding our business strategy, including the potential sale of assets and/or other investments in our subsidiaries and facilities, or any other business plans, forecasts or objectives, any or all of which is subject to change;
|
||
•
|
statements regarding our anticipated production volumes, results of exploration, exploitation, development, acquisition or operations expenditures, and current or prospective reserve levels with respect to any oil and gas property or well;
|
||
•
|
statements related to commodity prices for oil and gas or with respect to the supply of and demand for oil and gas;
|
||
•
|
statements relating to our proposed exploration, development and/or production of oil and gas properties, prospects or other interests and any anticipated costs related thereto;
|
||
•
|
statements related to environmental risks, exploration and development risks, or drilling and operating risks;
|
||
•
|
statements regarding projections of revenues, gross margin, expenses, earnings or losses, working capital or other financial items;
|
||
•
|
statements regarding any financing transactions or arrangements, or ability to enter into such transactions;
|
||
•
|
statements regarding anticipated legislative, governmental, regulatory, administrative or other public body actions, requirements, permits or decisions;
|
||
•
|
statements regarding the collectability of our trade receivables;
|
||
•
|
statements regarding anticipated developments, industry trends, performance or industry ranking;
|
||
•
|
statements regarding general economic or political conditions, whether international, national or in the regional and local market areas in which we do business;
|
||
•
|
statements related to our ability to retain key members of our senior management and key employees;
|
||
•
|
statements related to the underlying assumptions related to any projection or forward-looking statement; and
|
||
•
|
any other statements that relate to non-historical or future information.
|
•
|
impact of the weak economic conditions and the future impact of such conditions on the oil and gas industry and the demand for our services;
|
||
•
|
uncertainties inherent in the development and production of oil and gas and in estimating reserves;
|
||
•
|
the geographic concentration of our oil and gas operations;
|
||
•
|
the effect of new regulations on the offshore Gulf of Mexico oil and gas operations;
|
||
•
|
uncertainties regarding our ability to replace depletion;
|
||
•
|
unexpected future capital expenditures (including the amount and nature thereof);
|
||
|
•
|
impact of oil and gas price fluctuations and the cyclical nature of the oil and gas industry;
|
|
|
•
|
the effects of indebtedness, which could adversely restrict our ability to operate, could make us vulnerable to general adverse economic and industry conditions, could place us at a competitive disadvantage compared to our competitors that have less debt and could have other adverse consequences to us;
|
|
|
•
|
the effectiveness of our hedging activities;
|
|
|
•
|
the results of our continuing efforts to control or reduce costs, and improve performance;
|
|
|
•
|
the success of our risk management activities;
|
|
|
•
|
the effects of competition;
|
|
|
•
|
the availability (or lack thereof) of capital (including any financing) to fund our business strategy and/or operations and the terms of any such financing;
|
|
|
•
|
the impact of current and future laws and governmental regulations including tax and accounting developments;
|
|
|
•
|
the effect of adverse weather conditions or other risks associated with marine operations;
|
|
|
•
|
the effect of environmental liabilities that are not covered by an effective indemnity or insurance;
|
|
|
•
|
the potential impact of a loss of one or more key employees; and
|
|
|
•
|
the impact of general, market, industry or business conditions.
|
•
|
worldwide economic activity, including available access to global capital and capital markets;
|
||
•
|
demand for oil and natural gas, especially in the United States, Europe, China and India;
|
||
•
|
economic and political conditions in the Middle East and other oil-producing regions;
|
||
•
|
the effect of new regulations on the offshore Gulf of Mexico oil and gas operations;
|
||
•
|
actions taken by the Organization of Petroleum Exporting Countries (“OPEC”) ;
|
||
•
|
the availability and discovery rate of new oil and natural gas reserves in offshore areas;
|
||
•
|
the cost of offshore exploration for and production and transportation of oil and gas;
|
||
•
|
the ability of oil and natural gas companies to generate funds or otherwise obtain external capital for exploration, development and production operations;
|
||
•
|
the sale and expiration dates of offshore leases in the United States and overseas;
|
||
•
|
technological advances affecting energy exploration production transportation and consumption;
|
||
•
|
weather conditions;
|
||
•
|
environmental and other governmental regulations; and
|
||
•
|
tax policies.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
Income (loss), including noncontrolling interests
|
$
|
26,635
|
$
|
(17,002
|
)
|
|||
Adjustments:
|
||||||||
Income tax provision (benefit)
|
9,550
|
(7,561
|
)
|
|||||
Net interest expense and other
|
21,576
|
21,220
|
||||||
Depreciation, depletion and amortization expense
|
92,143
|
60,827
|
||||||
Asset impairment charges
|
—
|
11,112
|
||||||
Exploration expenses
|
346
|
166
|
||||||
EBITDAX
|
150,250
|
68,762
|
||||||
Adjustments:
|
||||||||
Non-controlling interest Kommandor LLC
|
(1,015
|
)
|
(1,095
|
)
|
||||
Discontinued operations
|
—
|
(15
|
)
|
|||||
Gain on sales of assets
|
(16
|
)
|
(6,247
|
)
|
||||
ADJUSTED EBITDAX
|
$
|
149,219
|
$
|
61,405
|
Three Months Ended
|
||||||||||
March 31,
|
Increase/
|
|||||||||
2011
|
2010
|
(Decrease)
|
||||||||
Revenues (in thousands) –
|
||||||||||
Contracting Services
|
$
|
131,537
|
$
|
154,200
|
$
|
(22,663
|
)
|
|||
Production Facilities
|
15,570
|
1,320
|
14,250
|
|||||||
Oil and Gas
|
168,859
|
90,715
|
78,144
|
|||||||
Intercompany elimination
|
(24,359
|
)
|
(44,665
|
)
|
20,306
|
|||||
$
|
291,607
|
$
|
201,570
|
$
|
90,037
|
|||||
Gross profit (in thousands) –
|
||||||||||
Contracting Services
|
$
|
10,512
|
$
|
37,622
|
$
|
(27,110
|
)
|
|||
Production Facilities
|
6,136
|
21
|
6,115
|
|||||||
Oil and Gas
|
61,235
|
1,249
|
59,986
|
|||||||
Corporate
|
(897
|
)
|
(714
|
)
|
(183
|
)
|
||||
Intercompany elimination
|
90
|
(12,322
|
)
|
12,412
|
||||||
$
|
77,076
|
$
|
25,856
|
$
|
51,220
|
|||||
Gross Margin –
|
||||||||||
Contracting Services
|
8
|
%
|
24
|
%
|
(16)pts
|
|||||
Production Facilities
|
39
|
%
|
─
|
%
|
39 pts
|
|||||
Oil and Gas
|
36
|
%
|
1
|
%
|
35 pts
|
|||||
Total company
|
26
|
%
|
13
|
%
|
13 pts
|
|||||
Number of vessels(1)/ Utilization(2) –
|
||||||||||
Contracting Services:
|
||||||||||
Construction vessels
|
8/44
|
%
|
7/83
|
%
|
||||||
Well operations
|
3/77
|
%
|
3/60
|
%
|
||||||
ROVs
|
46/49
|
%
|
47/59
|
%
|
||||||
(1)
|
Represents number of vessels as of the end of the period excluding acquired vessels prior to their in-service dates, vessels taken out of service prior to their disposition and vessels jointly owned with a third party.
|
(2)
|
Average vessel utilization rate is calculated by dividing the total number of days the vessels in this category generated revenues by the total number of calendar days in the applicable period.
|
Three Months Ended
|
||||||||||||
March 31,
|
Increase/
|
|||||||||||
2011
|
2010
|
(Decrease)
|
||||||||||
Contracting Services
|
$
|
12,869
|
$
|
43,741
|
$
|
(30,872
|
)
|
|||||
Production Facilities
|
11,490
|
924
|
10,566
|
|||||||||
$
|
24,359
|
$
|
44,665
|
$
|
(20,306
|
)
|
||||||
Three Months Ended
|
||||||||||||
March 31,
|
Increase/
|
|||||||||||
2011
|
2010
|
(Decrease)
|
||||||||||
Contracting Services
|
$
|
(24
|
)
|
$
|
11,442
|
$
|
(11,466
|
)
|
||||
Production Facilities
|
(66
|
)
|
880
|
(946
|
)
|
|||||||
$
|
(90
|
)
|
$
|
12,322
|
$
|
(12,412
|
)
|
|||||
Three Months Ended
|
||||||||||||
March 31,
|
Increase/
|
|||||||||||
2011
|
2010
|
(Decrease)
|
||||||||||
Oil and Gas information–
|
||||||||||||
Oil production volume (MBbls)
|
1,501
|
655
|
846
|
|||||||||
Oil sales revenue (in thousands)
|
$
|
135,836
|
$
|
47,008
|
$
|
88,828
|
||||||
Average oil sales price per Bbl (excluding hedges)
|
$
|
96.95
|
$
|
75.69
|
$
|
21.26
|
||||||
Average realized oil price per Bbl (including hedges)
|
$
|
90.49
|
$
|
71.82
|
$
|
18.67
|
||||||
Increase in oil sales revenue due to:
|
||||||||||||
Change in prices (in thousands)
|
$
|
12,225
|
||||||||||
Change in production volume (in thousands)
|
76,603
|
|||||||||||
Total increase in oil sales revenue (in thousands)
|
$
|
88,828
|
||||||||||
Gas production volume (MMcf)
|
5,402
|
7,343
|
(1,941
|
)
|
||||||||
Gas sales revenue (in thousands)
|
$
|
31,161
|
$
|
42,185
|
$
|
(11,024
|
)
|
|||||
Average gas sales price per mcf (excluding hedges)
|
$
|
5.14
|
$
|
5.29
|
$
|
(0.15
|
)
|
|||||
Average realized gas price per mcf (including hedges)
|
$
|
5.77
|
$
|
5.75
|
$
|
0.02
|
||||||
Increase (decrease) in gas sales revenue due to:
|
||||||||||||
Change in prices (in thousands)
|
$
|
168
|
||||||||||
Change in production volume (in thousands)
|
(11,192
|
)
|
||||||||||
Total decrease in gas sales revenue (in thousands)
|
$
|
(11,024
|
)
|
|||||||||
Total production (MMcfe)
|
14,409
|
11,270
|
3,139
|
|||||||||
Price per Mcfe
|
$
|
11.59
|
$
|
7.91
|
$
|
3.68
|
||||||
Oil and Gas revenue information (in thousands)–
|
||||||||||||
Oil and gas sales revenue
|
$
|
166,997
|
$
|
89,193
|
$
|
77,804
|
||||||
Other revenues(1)
|
1,862
|
1,522
|
340
|
|||||||||
$
|
168,859
|
$
|
90,715
|
$
|
78,144
|
|||||||
(1)
|
Other revenues include fees earned under our process handling agreements.
|
Three Months Ended March 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Total
|
Per Mcfe
|
Total
|
Per Mcfe
|
|||||||||||||
(in thousands, except per Mcfe amounts)
|
||||||||||||||||
Oil and gas operating expenses(1):
|
||||||||||||||||
Direct operating expenses(2)
|
$
|
30,660
|
$
|
2.13
|
$
|
14,523
|
$
|
1.29
|
||||||||
Workover
|
2,568
|
0.18
|
11,613
|
1.03
|
||||||||||||
Transportation
|
2,411
|
0.17
|
1,293
|
0.11
|
||||||||||||
Repairs and maintenance
|
2,267
|
0.16
|
1,808
|
0.16
|
||||||||||||
Overhead and company labor
|
3,317
|
0.23
|
1,925
|
0.17
|
||||||||||||
|
$
|
41,223
|
$
|
2.87
|
$
|
31,162
|
$
|
2.76
|
||||||||
Depletion expense
|
$
|
65,713
|
$
|
4.56
|
$
|
40,205
|
$
|
3.57
|
||||||||
Abandonment
|
158
|
0.01
|
765
|
0.07
|
||||||||||||
Accretion expense
|
3,786
|
0.26
|
4,003
|
0.36
|
||||||||||||
Net hurricane (reimbursements) costs
|
(3,602
|
)
|
(0.25
|
)
|
2,055
|
0.18
|
||||||||||
Impairment
|
—
|
—
|
11,112
|
0.99
|
||||||||||||
66,055
|
4.58
|
58,140
|
5.17
|
|||||||||||||
Total
|
$
|
107,278
|
$
|
7.45
|
$
|
89,302
|
$
|
7.93
|
(1)
|
Excludes exploration expense of $0.3 million and $0.2 million for the three-month periods ended March 31, 2011 and 2010, respectively. Exploration expense is not a component of lease operating expense.
|
(2)
|
Includes production taxes.
|
March 31,
2011
|
December 31, 2010
|
|||||||
(in thousands)
|
||||||||
Net working capital
|
$ | 432,131 | $ | 373,057 | ||||
Long-term debt(1)
|
1,346,469 | 1,347,753 | ||||||
Liquidity(2)
|
836,681 | 787,296 |
(1)
|
Long-term debt does not include the current maturities portion of the long-term debt as such amount is included in net working capital. It is also net of unamortized debt discount on our Convertible Senior Notes (Note 7).
|
(2)
|
Liquidity, as defined by us, is equal to cash and cash equivalents plus available capacity under our revolving credit facility.
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Term Loan (matures July 2013)
|
$ | 409,359 | $ | 410,441 | ||||
Revolving Credit Facility (matures November 2012)
|
─
|
─
|
||||||
Convertible Senior Notes (matures March 2025) (1)
|
283,679 | 281,472 | ||||||
Senior Unsecured Notes (matures January 2016)
|
550,000 | 550,000 | ||||||
MARAD Debt (matures February 2027)
|
112,516 | 114,811 | ||||||
Loan Notes(2)
|
553 | 1,208 | ||||||
Total
|
$ | 1,356,107 | $ | 1,357,932 | ||||
(1)
|
This amount is net of the unamortized debt discount of $16.3 million and $18.5 million, respectively. The notes will increase to $300 million face amount through accretion of non-cash interest charges through 2012. Notes may be redeemed by the holders beginning in December 2012 (Note 7).
|
(2)
|
Assumed to be current, represents the loan provided by Kommandor RØMØ to Kommandor LLC.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Net cash provided by (used in):
|
||||||||
Operating activities
|
$
|
85,065
|
$
|
18,437
|
||||
Investing activities
|
$
|
(29,807
|
)
|
$
|
(67,467
|
)
|
||
Financing activities
|
$
|
(5,342
|
)
|
$
|
(9,863
|
)
|
Three Months Ended
|
|||||||
March 31,
|
|||||||
2011
|
2010
|
||||||
(in thousands)
|
|||||||
Capital expenditures:
|
|||||||
Contracting Services
|
$
|
(15,016
|
)
|
$
|
(14,978
|
)
|
|
Production Facilities
|
(6,638
|
)
|
(29,325
|
)
|
|||
Oil and Gas
|
(12,834
|
)
|
(24,125
|
)
|
|||
Distributions from equity investments, net(1)
|
480
|
965
|
|||||
Sales of shares of Cal Dive common stock
|
3,588
|
─
|
|||||
Decrease (increase) in restricted cash
|
613
|
|
(4
|
)
|
|||
Cash (used in) provided by investing activities
|
$
|
(29,807
|
)
|
$
|
(67,467
|
)
|
(1)
|
Distributions from equity investments are net of undistributed equity earnings from our equity investments. Gross distributions from our equity investments are detailed below.
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
Deepwater Gateway
|
$
|
1,750
|
$
|
2,250
|
||||
Independence Hub
|
4,380
|
4,900
|
||||||
Other
|
─
|
268
|
||||||
Total
|
$
|
6,130
|
$
|
7,418
|
Total (1)
|
Less Than 1 year
|
1-3 Years
|
3-5 Years
|
More Than 5 Years
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Convertible Senior Notes(2)
|
$
|
300,000
|
$
|
─
|
$
|
─
|
$
|
─
|
$
|
300,000
|
||||||||||
Senior Unsecured Notes
|
550,000
|
─
|
─
|
550,000
|
─
|
|||||||||||||||
Term Loan
|
409,359
|
4,326
|
405,033
|
─
|
─
|
|||||||||||||||
MARAD debt
|
112,516
|
4,759
|
10,244
|
11,291
|
86,222
|
|||||||||||||||
Revolving Credit Facility(3)
|
─
|
─
|
─
|
─
|
─
|
|||||||||||||||
Loan notes
|
553
|
553
|
─
|
─
|
─
|
|||||||||||||||
Interest related to long-term debt
|
473,751
|
84,262
|
151,132
|
123,845
|
114,512
|
|||||||||||||||
Drilling and development costs
|
57,607
|
57,607
|
─
|
─
|
─
|
|||||||||||||||
Property and equipment
|
24,231
|
24,231
|
─
|
─
|
─
|
|||||||||||||||
Operating leases(4)
|
75,547
|
59,586
|
14,046
|
1,915
|
─
|
|||||||||||||||
Total cash obligations
|
$
|
2,003,564
|
$
|
235,324
|
$
|
580,455
|
$
|
687,051
|
$
|
500,734
|
(1)
|
Excludes unsecured letters of credit outstanding at March 31, 2011 totaling $38.8 million. These letters of credit primarily guarantee various contract bidding, insurance activities and shipyard commitments.
|
(2)
|
Contractual maturity in 2025 (Notes can be redeemed by us or we may be required to purchase them beginning in December 2012). Notes can be converted prior to stated maturity if closing sale price of Helix’s common stock for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds 120% of the closing price on that 30th trading day (i.e. $38.56 per share) and under certain triggering events as specified in the indenture governing the Convertible Senior Notes. Upon the occurrence of a triggering event, to the extent we do not have alternative long-term financing secured to cover the conversion, the Convertible Senior Notes would be classified as a current liability in the accompanying balance sheet. At March 31, 2011, the conversion trigger was not met.
|
(3)
|
Our Revolver will mature on November 30, 2012.
|
(4)
|
Operating leases included facility leases and vessel charter leases. Vessel charter lease commitments at March 31, 2011 were approximately $64.2 million.
|
Production Period
|
Instrument Type
|
Average
Monthly Volumes
|
Weighted Average
Price
|
|||
Crude Oil:
|
(per barrel)
|
|||||
April 2011 — December 2011
|
Swap
|
192.2 MBbl
|
$ | 82.35 | ||
April 2011 — December 2011
|
Collar
|
11.1 MBbl
|
$ | 95.00 - $124.00 | ||
Natural Gas:
|
(per Mcf)
|
|||||
April 2011 — December 2011
|
Swap
|
825 Mmcf
|
$ | 4.99 | ||
January 2012 — December 2012
|
Swap
|
250 Mmcf
|
$ | 4.77 |
(a)
|
Evaluation of disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the fiscal quarter ended March 31, 2011. Based on this evaluation, the principal executive officer and the principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the fiscal quarter ended March 31, 2011 to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.
|
(b)
|
Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act, in the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Resulting impacts on internal controls over financial reporting were evaluated and determined not to be significant for the fiscal quarter ended March 31, 2011.
|
Period
|
(a) Total number
of shares
purchased
|
(b) Average
price paid
per share
|
(c) Total number
of shares
purchased as
part of publicly
announced
program
|
(d) Maximum
value of shares
that may yet be
purchased under
the program
|
||||||
January 1 to January 31, 2011(1)
|
75,131
|
$
|
12.07
|
─
|
475,804(2)
|
|||||
February 1 to February 28, 2011(1)
|
1,246
|
14.91
|
─
|
─
|
||||||
March 1 to March 31, 2011(1)
|
─
|
─
|
─
|
─
|
||||||
76,377
|
$
|
12.11
|
─
|
─
|
(1)
|
Represents shares subject to restricted share awards withheld to satisfy tax obligations arising upon the vesting of restricted shares.
|
(2)
|
In January 2011, we issued this amount of restricted shares to certain of our employees (Note 11). Under the terms of our stock repurchase program, these grants increase the amount of shares available for repurchase. For additional information regarding our stock repurchase program see Note 14 of the 2010 Form 10-K.
|
|
HELIX ENERGY SOLUTIONS GROUP, INC.
(Registrant)
|
|
Date: April 27, 2011
|
By:
|
/s/ Owen Kratz
|
Owen Kratz
President and Chief Executive Officer
(Principal Executive Officer)
|
||
|
||
Date: April 27, 2011
|
By:
|
/s/ Anthony Tripodo
|
|
Anthony Tripodo
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
3.1
|
2005 Amended and Restated Articles of Incorporation, as amended, of registrant, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by registrant with the Securities and Exchange Commission on March 1, 2006.
|
|
3.2
|
Second Amended and Restated By-Laws of Helix, as amended, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by the registrant with the Securities and Exchange Commission on September 28, 2006.
|
|
10.1
|
Separation and Release Agreement by and between Helix Energy Solutions Group, Inc and Bart H. Heijermans dated January 21, 2011, incorporated by reference to Exhibit 10.1 to the January 24, 2011 Form 8-K.
|
|
15.1
|
||
31.1
|
||
31.2
|
||
32.1
|
||
99.1
|
||
(1) Filed herewith
|
||
(2) Furnished herewith
|
||