USA: Helix Reports USD 41.3 Million Net Income for 2011 Second Quarter

Helix Energy Solutions Group, Inc. reported net income of $41.3 million, or $0.39 per diluted share, for the second quarter of 2011 compared with a net loss of $85.6 million, or $(0.82) per diluted share, for the same period in 2010, and net income of $25.9 million, or $0.24 per diluted share, in the first quarter of 2011.

The net income for the six months ended June 30, 2011 was $67.2 million, or $0.63 per diluted share, compared with a net loss of $103.4 million, or $(1.00) per diluted share, for the six months ended June 30, 2010.

 Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our Contracting Services segment rebounded nicely in the second quarter, allowing us to follow a good first quarter with an even better one. Both our Well Intervention and Robotics businesses saw a sharp increase in activity and performance levels while our pipelay business continued to lag due to a weak Gulf of Mexico business environment. During the second quarter, we repaid $111 million of debt while increasing the size and extending the maturity of our credit facility, an indicator of the continued strengthening of our balance sheet.”

Contracting Services

Subsea Construction and Robotics revenues increased in the second quarter of 2011 compared to the first quarter of 2011 primarily due to increased chartered vessel utilization in their Robotics division for ROV support operations and increased utilization in their trenching business. Overall their utilization rate for their owned and chartered vessels increased to 71% in the second quarter of 2011 from 48% in the first quarter of 2011. ROV and trenching utilization increased to 54% in the second quarter of 2011 compared to 49% in the first quarter of 2011.

Well Intervention revenues increased in the second quarter of 2011 due primarily to increased utilization of their vessels in both the North Sea and the Gulf of Mexico. Vessel utilization in the North Sea increased to 87% in the second quarter of 2011 from 68% in the first quarter of 2011. Vessel utilization in the Gulf of Mexico increased to 93% in the second quarter of 2011 from 88% in the first quarter of 2011. On a combined basis, vessel utilization increased to 89% in the second quarter of 2011 compared to 77% in the first quarter of 2011.

Production Facilities

The Helix Producer I (HP I) continued its deployment on the Phoenix field throughout the second quarter of 2011.

The first quarterly retainer fee due for our deepwater spill containment system, the Helix Fast Response System (HFRS), was received in the second quarter of 2011. There are currently 24 independent operators participating in a spill response consortium that centers on the HFRS.

Oil and Gas

Oil and Gas revenues increased in the second quarter of 2011 compared to the first quarter of 2011 due primarily to increased commodity prices partially offset by lower oil and gas production. Production in the second quarter of 2011 totaled 12.7 Bcfe compared to 14.4 Bcfe in the first quarter of 2011.

The average price realized for oil, including the effects of settled oil hedge contracts, totaled $101.43 per barrel in the second quarter of 2011 compared to $90.49 per barrel in the first quarter of 2011. For natural gas and natural gas liquids (NGLs), including the effect of settled natural gas hedge contracts, Helix realized $6.17 per thousand cubic feet of gas (Mcf) in the second quarter of 2011 compared to $5.77 per Mcf in the first quarter of 2011.

Helix recorded $22.7 million in oil and gas impairment charges in the second quarter of 2011 primarily associated with six of our Gulf of Mexico oil and gas properties and our only non-domestic (UK) oil and gas property. The impairment charges primarily reflect a premature end of these fields’ production lives either through actual depletion or as a result of capital allocation decisions affecting third party operated fields.

As a result of better than expected production rates at our Phoenix field, Helix revised our proved reserve estimates resulting in a favorable adjustment to DD&A rates in the second quarter of 2011 (net of adjustments in other fields) of approximately $9.2 million.

The Little Burn well was completed successfully in late May and was brought into production through the HP I in the last few days.

Our July 2011 oil and gas production rate has averaged approximately 114 million cubic feet of natural gas equivalent per day (MMcfe/d) through July 24, 2011, compared to an average of 139 MMcfe/d in the second quarter of 2011 and an average of 160 MMcfe/d in the first quarter of 2011. Production from the Phoenix field was impacted for a portion of July due to scheduled downtime of a third party pipeline servicing our Phoenix field. As the Phoenix field is brought back into production along with the Little Burn well, Helix expects its oil and gas production rate to approximate 155 MMcfe/d in late July.

Helix currently have oil and gas hedge contracts in place totaling 13.5 Bcfe (1.5 million barrels of oil and 4.4 Bcf of gas) for the remainder of 2011 (July through December) and 17.0 Bcfe (2.0 million barrels of oil and 5.0 Bcf of gas) in 2012.

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Source: helixesg, July 26, 2011