Helix Energy Solutions Group, Inc. (NYSE:HLX) reported net income of $100.2 million or $0.94 per diluted share, for the second quarter of 2009 compared with net income of $89.7 million, or $0.93 per diluted share, for the same period in 2008, and net income of $53.5 million, or $0.50 per diluted share, in the first quarter of 2009. Net income for the six months ended June 30, 2009 was $153.7 million, or $1.44 per diluted share, compared with $162.7 million, or $1.70 per diluted share, for the six months ended June 30, 2008.

Second quarter 2009 results included the following items on a pre-tax basis:

• A $59.4 million gain from sale of 24.2 million shares of Cal Dive common stock, reducing our remaining interest in Cal Dive to approximately 26%.
• A $43.0 million net gain associated with insurance recoveries in connection with damage caused by Hurricane Ike in September 2008, which reflected net proceeds of $102.6 million, offset by hurricane-related expenses, impairments and additional asset retirement costs. Since September 2008, the Company has incurred expenses related to Hurricane Ike totaling $138.9 million offset by $128.2 million of insurance recoveries, resulting in a loss of $10.7 million. The Company expects to utilize the remaining insurance proceeds over the near term to complete repairs and necessary abandonment operations for certain fields.
• A reduction of $11.5 million in the carrying values of certain oil and gas properties due primarily to reserve revisions.
• An $8.8 million gain from the sale of Helix RDS, our former reservoir consulting business.

The impact of these four items in the second quarter, net of income taxes, was $0.63 per diluted share.

In addition, second quarter results excluded $34.7 million of realized gains associated with the cash settlement of natural gas contracts that were previously recognized as an unrealized gain in the first quarter of 2009.

Second quarter 2008 results included pre-tax gains of $18.6 million, or $0.10 per diluted share, on asset sales of oil and gas properties.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “The Company made significant progress in the second quarter in both reducing debt and enhancing liquidity. In the first half of 2009, net debt decreased by $703 million from year end 2008 levels. The sell down of part of our interest in Cal Dive, generation of operating cash flows and the receipt of hurricane related insurance proceeds contributed to our improved balance sheet position. We remain focused on making further balance sheet improvements and selling down non-core assets. Our strengthened liquidity position allows us to take a measured approach in assessing divestiture alternatives while at the same time focusing on making sound investments for the long term.”

Contracting Services

• Subsea revenues decreased in the second quarter of 2009 compared with the first quarter of 2009 due primarily to timing of revenue recognition criteria on certain international pipelay construction contracts, offset by increased revenues associated with our robotics business. Utilization for our construction vessels (both owned and chartered) and for our robotics assets increased in the second quarter of 2009 compared with the first quarter of 2009.
• Our well operations business experienced increased revenues in the second quarter of 2009 compared with the first quarter of 2009 due to improved utilization (98% compared with 76%). The Q4000 operated at nearly full utilization in the second quarter of 2009 compared with lower utilization in the first quarter of 2009 due to downtime associated with scheduled maintenance and thruster upgrades.
• Gross profit margins for Contracting Services decreased in the second quarter of 2009 over the first quarter of 2009 due primarily to termination costs recorded on a cancelled international construction project as a result of delays in the delivery of the Caesar.
• In April, we closed the sale of Helix RDS Limited for $25 million. Accordingly, the Helix RDS Limited results were reflected as discontinued operations in our comparative condensed consolidated statements of operations. The Company recognized a pre-tax gain of $8.8 million on the sale.

Shelf Contracting (Cal Dive)

• Cal Dive’s operating results increased in the second quarter of 2009 compared with the first quarter of 2009 due to normal seasonal factors as well as less vessel downtime related to scheduled regulatory drydock activity and maintenance. Results for the second of quarter 2009 improved over the second quarter of 2008 due to increased new construction, and repair and salvage work in the Gulf of Mexico, and new pipelay activity in China and Mexico. Our revenues associated with Cal Dive decreased from the first quarter of 2009 as a result of the de-consolidation in early June 2009.

Oil and Gas

• Excluding the reversal of accrued royalties of $73.5 million in the first quarter of 2009, Oil and Gas revenues for the second quarter of 2009 of $90.0 million were slightly higher than the first quarter of 2009 due primarily to higher realized oil prices and slightly higher production levels. Production in the second quarter of 2009 totaled 12.4 Bcfe compared with 11.9 Bcfe in the first quarter of 2009. The average prices realized for our gas sales volumes, including the effect of settled natural gas hedge contracts, totaled $7.62 per thousand cubic feet of gas (Mcf) in the second quarter of 2009 compared with $6.26 per Mcf in the first quarter of 2009. For our oil sales volumes, including the effects of settled hedge contracts, we realized $72.29 per barrel in the second quarter of 2009 compared with $57.82 per barrel in the first quarter of 2009.
• The Company’s oil and gas production rate at June 30, 2009 approximated 140 million cubic feet of natural gas equivalent per day (MMcfe/d), but has recently fallen below that level due to mechanical issues in certain fields. Production should increase as third party pipeline repairs related to the Noonan gas field are completed during the third quarter.
• In addition, to date we have entered into additional oil and gas hedge contracts for approximately 23.0 Bcf of natural gas and 1.5 million barrels of oil, to cover a portion of our forecasted production for 2010.

Other Expenses

• Selling, general and administrative expenses were 8.0% of revenue in the second quarter of 2009, 7.2% in the first quarter of 2009, and 8.0% in the second quarter of 2008. The increase in the second quarter of 2009 was primarily due to an allowance for doubtful receivables of $3.4 million recorded by Cal Dive. Excluding the Cal Dive receivable allowance, our rate as a percent of revenue in the second quarter was 7.3%.
• Net interest expense and other decreased to $7.5 million in the second quarter of 2009 from $22.2 million in the first quarter of 2009 due to lower interest expense as a result of lower levels of debt, $4.4 million of increased net hedging gains related to our foreign currency contracts, and $4.2 million of increased realized foreign exchange gains. Further, net interest expense decreased to $15.6 million in the second quarter of 2009 compared with $22.0 million in the first quarter of 2009.

Financial Condition and Liquidity

• Consolidated net debt at June 30, 2009 decreased to $1.10 billion from $1.76 billion as of March 31, 2009. In the second quarter, we repaid all remaining borrowings under our revolving credit facility, which totaled $249.5 million at March 31, 2009, and with the de-consolidation of Cal Dive, $375 million of additional non-recourse debt is no longer reflected in our balance sheet. Our revolver availability at June 30, 2009 was $408 million (including $12 million of outstanding letters of credit). Together with cash on hand of $262 million and our revolver availability, our total liquidity was approximately $670 million at June 30, 2009. Net debt to book capitalization as of June 30, 2009 was 42%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.)
• We incurred capital expenditures totaling $50.7 million in the second quarter of 2009, compared with $61 million in the first quarter of 2009 and $263.6 million in the second quarter of 2008. These amounts excluded all Cal Dive capital expenditures in the periods noted.

Further details are provided in the presentation for Helix’s quarterly conference call (see the Investor Relations page of www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Daylight Time on Thursday, July 30, 2009, will be webcast live. If you wish to dial in to the call the telephone number is 800 475 0212 (Domestic) or 1 312 470 7004 (International). The pass code is Tripodo. A replay will be available from the Audio Archives page on our website.

Helix Energy Solutions, headquartered in Houston, Texas, is an international offshore energy company that provides development solutions and other key life of field services to the open energy market as well as to our own oil and gas business unit. That business unit is a prospect generation, exploration, development and production company. Employing our own key services and methodologies, we seek to lower finding and development costs, relative to industry norms.

Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDAX, net debt and net debt to book capitalization. We calculate Adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization and exploration expense. Further, we do not include earnings from our interest in Cal Dive in any periods presented in our Adjusted EBITDAX calculation. Net debt is calculated as the sum of financial debt less cash and equivalents on hand. Net debt to book capitalization is calculated by dividing net debt by the sum of net debt, convertible preferred stock and shareholders’ equity. These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance because they are widely used by investors in our industry to measure a company’s operating performance without regard to items which can vary substantially from company to company, and help investors meaningfully compare our results from period to period. Adjusted EBITDAX should not be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income or other income data prepared in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to our reported results prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions which are excluded.

This press release contains 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; any statements regarding future economic conditions or performance; any statements of expectation or belief; 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, 2008. We assume no obligation and do not intend to update these forward-looking statements.

Helix Energy Solutions
Tony Tripodo, 281-618-0400
Chief Financial Officer