Helix Energy Solutions Group Inc. ( HLX)

Q2 2011 Earnings Call

July 26, 2011 10:00 AM ET


Stephen Powers – Director, Finance and IR

Alisa Johnson – EVP, General Counsel and Corporate Secretary

Tony Tripodo – EVP and CFO

Cliff Chamblee – President, Canyon Offshore

Johnny Edwards – EVP, Oil and Gas

Lloyd Hajdik – SVP, Finance and Chief Accounting Officer

Owen Kratz – President and CEO


Jim Rollyson – Raymond James

Roger Read – Morgan Keegan

Joe Gibney – Capital One

Martin Malloy – Johnson Rice

Michael Moreno – Stephens Incorporated



Ladies and gentlemen, thank you for standing by. Welcome to the review of the second quarter 2011 results and the 2011 outlook with investors conference call. (Operator Instructions) As a reminder, this conference is being recorded Tuesday, July 26, 2011.

I would now like to turn the conference over to Stephen Powers, Director of Finance and Investor Relations. Please go ahead, sir.

Stephen Powers

Thank you. Good morning, everyone, and thanks for joining us today. Here with me this morning is Owen Kratz, our CEO; Tony Tripodo, our Chief Financial Officer; Cliff Chamblee, EVP of Contracting Services; Johnny Edwards, Executive Vice President of Oil & Gas; Alisa Johnson, our General Counsel and Lloyd Hajdik, Senior VP of Finance.

A special introduction to the investment community is Cliff Chamblee, who may be new to the position of Executive Vice President of Contracting Services, but a very familiar hand around Helix. He has been with the company since 1997, most recently serving as President of our successful Robotics business Canyon Offshore.

Hopefully you’ve had a chance and you’ve had an opportunity to review our press release and the related slide presentation release last night. If you do not have a copy of these materials, both can be accessed through the investor relations page on our Web site at www.helixesg.com. The press release can be accessed under the press releases 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?

Alisa Johnson

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 the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2 and in our annual report on Form 10-K for the year ended December 31, 2010.

Also during this call, certain non-GAAP financial disclosures may be made. And in accordance with SEC rules, 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 and the earnings press release, our annual report and the replay of this broadcast are available on our Web site.


Tony Tripodo

All right. Good morning, everyone. Moving on to Slide 5, which summarize the second quarter results. We reported a nice increase in earnings and EBITDA for quarter two with earnings of $0.39 and EBITDA rise to $276 million, up from the $149 million in the prior quarter.

Quarter two’s revenues increased 30% over quarter one primarily related to a sharp increase in our Well Intervention and Robotics businesses. Oil and gas revenues grew slightly over quarter one as higher realized oil prices offset the expected natural decline in production. Looking back to a year ago, Q2’s ‘11 represented a sharp increase in earnings, revenues and EBITDA mainly driven by higher oil production and higher oil prices.

Over to Slides 6 and 7, in addition to the nice uptick in earnings, the company’s financial condition continues to strengthen. In quarter two we repaid a $109 million of our term loan and at the same time upsized our revolving credit facility to $600 million. We also extended the maturity of our remaining term loan and the credit facility to July 15 and under certain circumstances the maturity will fall to 2016. Along with cash on hand, the $414 million at June 30 and available credit facility, our total liquidity at June 30 increased nicely to $965 million.

Our oil and gas production in the second quarter averaged a 139 million cubic feet equivalent a day. While lower than the 160 million cubic feet equivalent in the first quarter due to natural decline rates, production exceeded our own expectations due to better than expected well performance in the Phoenix field. Total production in the second quarter managed (inaudible) cubic feet equivalent.

The Little Burn well was successfully completed in late-May. Production of this well in the Phoenix field through the Helix Producer I commenced on a sustained basis in the last few days, slightly delayed due to the need to secure regulatory approvals for scheduled downtime on the third party operated export pipeline servicing the Phoenix field. Our overall production levels to July 24 averaged just a 114 million cubic feet equivalent a day due to the pipeline downtime serving the Phoenix field for approximately 10 days.

However, the pipeline is now back in service and with Phoenix ramping back up, we expected to exit July with a production rate of approximately 155 million cubic feet equivalent a day.

I will now turn the call over to Cliff for an in-depth discussion of our Contracting Services results.

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