Helix Energy Solutions Group, Inc. (HLX
Q4 2011 Earnings Call
February 23, 2012 10:00 a.m. ET
Tony Tripodo – CFO
Alisia Johnson – General Counsel
Owen Kratz – CEO
Alisa Johnson – General Counsel
Cliff Chamblee – EVP, Contracting Services
Johnny Edwards, EVP, Oil and Gas
Lloyd Hajdik – SVP, Finance
Terrance Jamerson - IR
Marshall Adkins – Raymond James
Michael Marino – Stephens Incorporated
Martin Malloy – Johnson Rice & Co.
Joe Gibney – Capital One
Anthony Google - Upstream
Previous Statements by HLX
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Ladies and gentlemen, thank you for standing by and welcome to the review of Fourth Quarter 2011 Results and 2012 Outlook with Investors Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct the question-and-answer session. (Operator Instructions).
As a remainder this conference is being recorded, Thursday, February 23, 2012.
It is now like to turn the conference over to Mr. Tony Tripodo, please go ahead.
Good morning everyone and thanks for joining us today. Joining me today is Owen Kratz our CEO; Cliff Chamblee, Executive Vice President, Contracting Services; Johnny Edwards, Executive Vice President of Oil and Gas; Alisa Johnson, our General Counsel; Lloyd Hajdik, our Senior VP of Finance. And at this time I’d also like to introduce Terrance Jamerson. He’s coming over from Canyon, our Robotics business unit to assume the Investor Relations responsibility from Stephen Powers. Stephen is actually swapping positions with Terrence, and has transferred to Canyon. Terrence has been with the Helix organization for four-plus years. And at the end of this call, I’ll have Terrence supply you his contact information and particulars.
Hopefully, you’ve had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release can be accessed under the press release’s tab and the slide presentation can be accessed by clicking on today’s webcast icon.
Before we begin our prepared remarks, Alisa Johnson will make a statement regarding forward-looking information. Alisa?
During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical fact, are forward-looking statements and are made under Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual futures results may differ materially from our projections and forward-looking statement due to a number and variety of factors including those set forth in slide two and in our annual report on Form 10-K for the year ended December 31st, 2010, and in subsequent Form 10-Qs.
Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation, along with this presentation, the earnings press release, our annual report and replay of this broadcast are available on our website. Owen Kratz, will now make some opening remarks.
Good morning everybody, we’ll start with slide five, which is the high level summary of fourth quarter results. Quarter four’s revenues increased from $372 million in Q3 to $396 million. The increase is attributable to our Oil and Gas segment, a factor of both higher production and higher oil prices.
As we previously signaled, our Contracting Services revenue declined in Q4 due in part to the transfer of the well enhancer to West Africa. However, we expect contracting service revenue to return to Q3 levels in the first quarter of 2012.
In addition to the good operating results, we continue to generate a significant amount of cash flow with $166 million of EBITDA in Q4.
Moving to Slides 6 and 7, quarter four’s EPS is $0.16. However, backing out the impairment charges and other items noted in our press release, our Q4 EPS would have been $0.66. Much of the impairment’s related to declining economics and natural gas fields.
Utilization remained high in our well intervention business at 98%. However, accounting convention required us to defer the mobilization revenues for the well enhancer until Q1 of this year. We did achieve 100% utilization for our two reel pipelay asset; albeit that no profit contribution. The outlook for the Contracting Services business is definitely looking up.
Given that both our production and reserves are now more heavily weighted to oil, we’re transitioning our reporting format to speak in terms of barrels of oil equivalence versus cubic feet of gas equivalent. Our Oil and Gas production in the fourth quarter averaged 24,000 barrels of oil equivalent, up from 21,000 barrels of oil equivalent in Q3.
Quarter three’s production was impacted by tropical storm activity and production from our Phoenix field continues to outperform our expectations.
Again, much of our oil production is sold at Louisiana light sweet prices, which is at a significant premium to the West Texas intermediate prices. We sold our oil production at an average price of nearly $111 a barrel in Q4.
The entire – for the entire year, our oil and gas production amounted to 8.7 million barrels equivalent or in bcfe equivalent 52.2 bcfe. Tony?
Yes, continuing on Slide 7, from a balance sheet and cash flow perspective, quarter four was very good for Helix. Our cash balances increased by $171 million, from $375 million at the end of Q3, to $546 million at year-end.