HOUSTON, May 2 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(NASDAQ:HELX) reported first quarter net income of $55.4 million,
or $0.67 per diluted share. This represents more than two times
last year's first quarter results. Included in the earnings was a
$20.7 million pre-tax charge ($0.16 per share) for the write-off of
the total estimated cost to Helix for a mechanical failure in the
drilling of a well at the Tulane prospect. In late March,
mechanical difficulties were experienced drilling this well and,
after further review and analysis, we determined the wellbore would
be plugged and abandoned. Therefore, under the Company's successful
efforts method of accounting, the total estimated drilling costs to
the Company were charged to earnings in the first quarter. Despite
this first quarter charge, due primarily to the continued
strengthening of the contracting services markets, the Company
raises the lower end of its earnings guidance estimates for 2006 to
a range of $2.70 -- $3.30 per diluted share. Summary of Results (in
thousands, except per share amounts and percentages) First Quarter
Fourth Quarter 2006 2005 2005 Revenues $291,648 $159,575 $264,028
Gross Profit 102,266 51,873 95,852 35% 33% 36% Net Income 55,389
25,411 56,006 19% 16% 21% Diluted Earnings Per Share 0.67 0.32 0.69
Owen Kratz, Chairman and Chief Executive Officer of Helix, stated,
"We had a first quarter to be very proud of, except for the
unexpected setback in drilling the Tulane prospect. The decision to
abandon the well was a difficult one given that it was a mechanical
failure as opposed to a dry hole (the reservoir could still be
there). This was one of the deals closed in early 2005 in which we
participated as a non-operator through a promote. It is the risk of
this kind of negative impact that gave rise to the realization that
we needed to be in more control and on the operator side of these
arrangements. This event clearly highlights the strategic rationale
for the pending acquisition of Remington Oil and Gas. It is a
testament to the strengths of our overall business model that we
came close to eclipsing our record earnings of Q4/05 despite the
Tulane charge." Financial Highlights * Revenues: The $132.1 million
increase in year-over-year first quarter revenues was driven
primarily by significant improvements in Contracting Services
revenues due to the introduction of newly acquired assets and much
better market conditions. * Margins: 35% is two points better than
the year ago quarter despite the $20.7 million pre-tax charge
(Tulane) taken in the first quarter of 2006. Without this charge,
margins would have been 42% driven by the improved market
conditions for Contracting Services. * SG&A: $21.0 million
increased $8.2 million from the same period a year ago due
primarily to increased overhead to support the Company's growth.
This level of SG&A was 7% of first quarter revenues, compared
to 8% in the year ago quarter. * Equity in Earnings: $6.2 million
reflects our share of Deepwater Gateway, L.L.C.'s earnings for the
quarter relating to the Marco Polo facility as well as our share of
Offshore Technology Solutions Limited's earnings which is the
Trinidadian company to which we contributed the Witch Queen. *
Income Tax Provision: The Company's effective tax rate for the
quarter was 34.1% which is less than the 36% rate in last year's
first quarter due primarily to the Company's ability to realize
foreign tax credits due to improved profitability both domestically
and in foreign jurisdictions. * Balance Sheet: Total debt as of
March 31, 2006 was $445 million. This represents 37% debt to book
capitalization and with $425 million of EBITDA during the last
twelve months, this represents 1.0 times trailing twelve month
EBITDA. Further details are provided in the presentation for
Helix's quarterly conference call (see the Investor Relations page
of http://www.helixesg.com/ ). The call, scheduled for 9:00 a.m.
Central Daylight Time on Wednesday, May 3, 2006, will be webcast
live. A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an
energy services company that provides innovative solutions to the
oil and gas industry worldwide for marginal field development,
alternative development plans, field life extension and
abandonment, with service lines including diving services, shelf
and deepwater construction, robotics, well operations, well
engineering and subsurface consulting services, platform ownership
and oil and gas production. FORWARD-LOOKING STATEMENTS This press
release and attached presentation contain forward-looking
statements that involve risks, uncertainties and assumptions that
could cause our results to differ materially from those expressed
or implied by such forward-looking statements. All statements,
other than statements of historical fact, are statements that could
be deemed "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including,
without limitation, any projections of revenue, gross margin,
expenses, earnings or losses from operations, or other financial
items; future production volumes, results of exploration,
exploitation, development, acquisition and operations expenditures,
and prospective reserve levels of property or wells; any statements
of the plans, strategies and objectives of management for future
operations; any statement concerning developments, performance or
industry rankings relating to services; any statements regarding
future economic conditions or performance; any statements of
expectation or belief; any statements regarding the proposed merger
of Remington Oil and Gas Corporation into a wholly owned subsidiary
of Helix or the anticipated results (financial or otherwise)
thereof; and any statements of assumptions underlying any of the
foregoing. The risks, uncertainties and assumptions referred to
above include the performance of contracts by suppliers, customers
and partners; employee management issues; complexities of global
political and economic developments, geologic risks and other risks
described from time to time in our reports filed with the
Securities and Exchange Commission ("SEC"), including the Company's
Annual Report on Form 10- K for the year ending December 31, 2005;
and, with respect to the proposed Remington merger, actual results
could differ materially from Helix's expectations depending on
factors such as the combined company's cost of capital, the ability
of the combined company to identify and implement cost savings,
synergies and efficiencies in the time frame needed to achieve
these expectations, prior contractual commitments of the combined
companies and their ability to terminate these commitments or
amend, renegotiate or settle the same, the combined company's
actual capital needs, the absence of any material incident of
property damage or other hazard that could affect the need to
effect capital expenditures, any unforeseen merger or acquisition
opportunities that could affect capital needs, the costs incurred
in implementing synergies and the factors that generally affect
both Helix's and Remington's respective businesses as further
outlined in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in each of the companies'
respective Annual Reports on Form 10-K for the year ended December
31, 2005. Actual actions that the combined company may take may
differ from time to time as the combined company may deem necessary
or advisable in the best interest of the combined company and its
shareholders to attempt to achieve the successful integration of
the companies, the synergies needed to make the transaction a
financial success and to react to the economy and the combined
company's market for its exploration and production. We assume no
obligation and do not intend to update these forward-looking
statements. ADDITIONAL INFORMATION Helix and Remington have filed a
proxy statement/prospectus and other relevant documents concerning
the proposed merger transaction with the SEC. Investors are urged
to read the proxy statement/prospectus and any other relevant
documents filed with the SEC because they contain important
information. You can obtain the documents free of charge at the
website maintained by the SEC at http://www.sec.gov/ . In addition,
you may obtain documents filed with the SEC by Helix free of charge
by requesting them in writing from Helix or by telephone at (281)
618-0400. You may obtain documents filed with the SEC by Remington
free of charge by requesting them in writing from Remington or by
telephone at (214) 210-2650. Helix and Remington, and their
respective directors and executive officers, may be deemed to be
participants in the solicitation of proxies from the stockholders
of Remington in connection with the merger. Information about the
directors and executive officers of Helix and their ownership of
Helix stock is set forth in the proxy statement for Helix's 2005
Annual Meeting of Shareholders. Information about the directors and
executive officers of Remington and their ownership of Remington
stock is set forth in the Annual Report on Form 10-K for the year
ended December 31, 2005, as amended by Form 10-K/A. Investors may
obtain additional information regarding the interests of such
participants by reading the proxy statement/prospectus. HELIX
ENERGY SOLUTIONS GROUP, INC. Comparative Condensed Consolidated
Statements of Operations Three Months Ended Mar. 31, (000's
omitted, except per share data) 2006 2005 (unaudited) Net Revenues
$291,648 $159,575 Cost of Sales 189,382 107,702 Gross Profit
102,266 51,873 Gain on Sale of Assets, net 267 --- Selling and
Administrative 21,028 12,837 Income from Operations 81,505 39,036
Equity in Earnings of Investments 6,236 1,729 Interest Expense, net
& Other 2,457 264 Income Before Income Taxes 85,284 40,501
Income Tax Provision 29,091 14,540 Net Income 56,193 25,961
Preferred Stock Dividends 804 550 Net Income Applicable to Common
Shareholders $55,389 $25,411 Other Financial Data: Net income
applicable to common shareholders $55,389 $25,411 Dividends on
preferred stock 804 550 Income tax provision 29,091 14,540 Net
interest expense and other 2,457 264 Depreciation and amortization
53,972 26,723 Share of Equity Investments: Depreciation 1,240 1,010
Interest expense, net 99 1,383 EBITDA (A) $143,052 $69,881 Weighted
Avg. Shares Outstanding: Basic 77,969 77,143 Diluted 83,803 81,739
Earnings Per Share: Basic $0.71 $0.33 Diluted $0.67 $0.32 (A) The
Company calculates EBITDA as earnings before net interest expense,
taxes, depreciation and amortization (which includes non-cash asset
impairments) and the Company's share of depreciation, net interest
expense and taxes from its equity investments. EBITDA and EBITDA
margin (defined as EBITDA divided by net revenue) are supplemental
non-GAAP financial measurements used by the Company and investors
in the energy industry in the evaluation of its business due to the
measurements being similar to income from operations. Comparative
Condensed Consolidated Balance Sheets ASSETS Mar. 31, Dec. 31,
(000's omitted) 2006 2005 (unaudited) Current Assets: Cash and
equivalents $37,833 $91,080 Accounts receivable 233,880 228,058
Other current assets 59,478 52,915 Total Current Assets 331,191
372,053 Net Property & Equipment: Marine Contracting 618,759
524,890 Oil and Gas Production 401,066 391,472 Equity Investments
193,735 179,556 Goodwill 106,251 101,731 Other assets, net 91,849
91,162 Total Assets $1,742,851 $1,660,864 LIABILITIES &
SHAREHOLDERS' EQUITY Mar. 31, Dec. 31, 2006 2005 (unaudited)
Current Liabilities: Accounts payable $115,314 $99,445 Accrued
liabilities 126,879 145,752 Current mat of L-T debt (A) 6,438 6,468
Total Current Liabilities 248,631 251,665 Long-term debt (A)
438,256 440,703 Deferred income taxes 178,015 167,295
Decommissioning liabilities 108,875 106,317 Other long-term
liabilities 9,121 10,584 Convertible preferred stock (A) 55,000
55,000 Shareholders' equity (A) 704,953 629,300 Total Liabilities
& Equity $1,742,851 $1,660,864 (A) Debt to book capitalization
- 37% at March 31, 2006. Calculated as total debt ($444,694)
divided by sum of total debt, convertible preferred stock and
shareholders' equity ($1,204,647). DATASOURCE: Helix Energy
Solutions Group, Inc. CONTACT: Wade Pursell, Chief Financial
Officer of Helix Energy Solutions Group, Inc., +1-281-618-0400, or
fax, +1-281-618-0505 Web site: http://www.helixesg.com/
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