Helix Reports Second Quarter Results

HOUSTON, Aug. 1  /PRNewswire-FirstCall/ -- Helix Energy Solutions (NYSE: HLX) reported second quarter net income of $65.8 million, or $0.70 per diluted share, excluding three non-recurring items recorded by its majority owned subsidiary, Cal Dive International, Inc.  Including the non-recurring items, Helix reported second quarter net income of $57.7 million, or $0.61 per diluted share.

The non-recurring items recorded by Cal Dive in the second quarter include $11.8 million in non-cash equity losses and a related asset impairment charge in connection with Cal Dive's investment in Offshore Technology Solutions Limited ("OTSL"), a Trinidad and Tobago entity in which Cal Dive owns a 40% minority interest, and a $2.0 million cash settlement, subject to final negotiation of a court-approved settlement agreement, to be paid for a civil claim by the Department of Justice related to the Stolt and Torch acquisitions in 2005.  Cal Dive also reported a $1.7 million gain on a sale of a portable saturation diving asset during the second quarter.

                            Summary of Results
         (in thousands, except per share amounts and percentages)

                        Second Quarter    First Quarter     Six Months
                         2007      2006        2007      2007       2006

  Revenues            $410,574  $305,013     $396,055  $806,629   $596,661

  Gross Profit         141,765   131,692      135,615   277,380    233,958
                            35%       43%          34%       34%        39%

  Net Income            57,702    69,139       55,820   113,522    124,528
                            14%       23%          14%       14%        21%

  Diluted Earnings        0.61      0.83         0.60      1.21       1.51
  Per Share




Martin Ferron, President and Chief Executive Officer of Helix, stated, "We expected Q2 earnings to be similar to those reported for Q1 and actually posted an improved result, even after the negative impact of the non-recurring items described above.  This improvement was also achieved despite another very busy quarter for marine asset maintenance, with the Intrepid and several key Cal Dive vessels undergoing regulatory drydockings during the period. That maintenance work is now largely behind us, except for the planned upgrade to the Q4000, and we are anticipating a strong second half of the year for Contracting Services.

"In our Oil and Gas business unit we had another very successful quarter with the drill bit, going six for six with exploratory wells.  This takes our success record to 12 for 12 for the first half of the year and improves our proven reserve base by around 140 bcfe.  On the production front we plan to bring several key shelf development projects onstream in the second half of the year, and our deepwater development projects remain on schedule to boost output next year.

"We have updated the assessment of the key variables that drive our earnings for the year and this will be covered in the conference call tomorrow.  Based on our analysis we are comfortable with the present consensus earnings estimate for 2007 of $3.26/share, subject to no further significant deterioration in the natural gas price.  We have created very meaningful future value in our deepwater development projects portfolio and, as set out in our initial earnings guidance, we may monetize part of that value, in order to reduce debt and contribute to near term earnings."

  Financial Highlights
   *  Revenues:  The $105.6 million increase in year-over-year second
      quarter revenues was driven primarily by an increase in oil and gas
      sales of $61.0 million due primarily to the production added from the
      acquisition of Remington Oil and Gas Corporation.  The remaining
      increase was due to improvements in contracting services revenues due
      to much better market conditions.
   *  Margins:  35% is eight points less than the year ago quarter due
      primarily to significant out of service days for Cal Dive's vessels in
      regulatory drydocks (373 days in 2Q 2007 vs. 89 days in 2Q 2006) and
      an increased DD&A rate for oil and gas production due to the Remington
      acquisition.
   *  SG&A:  $33.4 million increased $6.0 million from the same period a
      year ago due primarily to increased overhead to support our growth.
      This level of SG&A was 8% of second quarter revenues, down from the 9%
      in the year ago quarter.
   *  Equity in Earnings:  Net losses of $4.7 million is comprised of the
      $11.8 million impairment / equity losses in Cal Dive's minority
      interest in OTSL offset by $7.0 million for our share of earnings for
      the quarter of Deepwater Gateway, L.L.C.'s earnings relating to the
      Marco Polo facility and demand fees relating to the Independence Hub
      facility.
   *  Income Tax Provision:  The Company's effective tax rate for the
      quarter was 35%, compared to 34% for last year's second quarter due
      primarily to the nondeductibility of the OTSL charges and the DOJ
      reserve.
   *  Balance Sheet:  Total consolidated debt as of June 30, 2007 was $1.4
      billion.  This includes $140 million under Cal Dive's revolving
      facility which is non-recourse to Helix.  This represents 43% net debt
      to book capitalization and with $735 million of adjusted EBITDAX
      during the last twelve months, this represents 1.8 times trailing
      twelve month adjusted EBITDAX.



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 Thursday, August 2, 2007, will be webcast live. 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.

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, including the Company's Annual Report on Form 10-K, as amended by our Form 10- K/A filed on June 18, 2007 ("2006 Form 10-K"), for the year ending December 31, 2006 and any subsequent reports on Form 10-Q. We assume no obligation and do not intend to update these forward-looking statements.

                      HELIX ENERGY SOLUTIONS GROUP, INC.

         Comparative Condensed Consolidated Statements of Operations

                                     Three Months Ended   Six Months Ended
  (in thousands, except per               June 30,            June 30,
   share data)                         2007      2006      2007      2006
                                                  (Unaudited)

     Net revenues                    $410,574  $305,013  $806,629  $596,661
     Cost of sales                    268,809   173,321   529,249   362,703
     Gross profit                     141,765   131,692   277,380   233,958
       Gain on sale of assets, net      5,684        16     5,684       283
       Selling and administrative      33,388    27,414    63,988    48,442
     Income from operations           114,061   104,294   219,076   185,799
       Equity in earnings of
        investments                    (4,748)    4,520     1,356    10,756
       Net interest expense and
        other                          14,286     2,983    27,298     5,440
     Income before income taxes        95,027   105,831   193,134   191,115
       Income tax provision            33,261    35,887    66,384    64,978
       Minority interest                3,119        --    11,338        --
     Net income                        58,647    69,944   115,412   126,137
       Preferred stock dividends          945       805     1,890     1,609
     Net income applicable to common
      shareholders                    $57,702   $69,139  $113,522  $124,528

     Weighted Avg. Shares
      Outstanding:
       Basic                           90,047    78,462    90,021    78,216
       Diluted                         95,991    83,965    95,262    83,659

     Earnings Per Share:
       Basic                            $0.64     $0.88     $1.26     $1.59
       Diluted                          $0.61     $0.83     $1.21     $1.51


              Comparative Condensed Consolidated Balance Sheets

  ASSETS
  (in thousands)                              June 30, 2007    Dec. 31, 2006
                                               (unaudited)
  Current Assets:
          Cash and equivalents                    $96,390          $206,264
          Short term investments                   10,000           285,395
          Accounts receivable                     368,226           370,709
          Other current assets                     76,832            61,532
  Total Current Assets                            551,448           923,900


  Net Property & Equipment:
          Contracting Services                    928,467           800,503
          Oil and Gas                           1,608,929         1,411,955
  Equity investments                              212,319           213,362
  Goodwill                                        828,228           822,556
  Other assets, net                               137,758           117,911
  Total Assets                                 $4,267,149        $4,290,187

  LIABILITIES & SHAREHOLDERS' EQUITY
  (in thousands)                              June 30, 2007    Dec. 31, 2006
                                               (unaudited)
  Current Liabilities:
       Accounts payable                          $268,877          $240,067
       Accrued liabilities                        188,148           199,650
       Income taxes payable                            --           147,772
       Current mat of L-T debt (1)                 26,165            25,887
  Total Current Liabilities                       483,190           613,376

  Long-term debt (1)                            1,386,011         1,454,469
  Deferred income taxes                           476,094           436,544
  Decommissioning liabilities                     140,682           138,905
  Other long-term liabilities                       4,231             6,143
  Minority interest                                73,152            59,802
  Convertible preferred stock (1)                  55,000            55,000
  Shareholders' equity (1)                      1,648,789         1,525,948
  Total Liabilities & Equity                   $4,267,149        $4,290,187

  (1)  Net debt to book capitalization - 43% at June 30, 2007.  Calculated
       as total debt less cash and equivalents and short-term investments
       $1,305,786 divided by sum of total debt less cash and equivalents and
       short-term investments, convertible preferred stock and shareholders'
       equity $3,009,575


                      Helix Energy Solutions Group, Inc.
                     Reconciliation of Non GAAP Measures
                   Three and Six Months Ended June 30, 2007


  Earnings Release:

  Balance Sheet:   " ... 1.8 times trailing twelve month adjusted EBITDAX."

  Reconciliation From Net Income to Adjusted EBITDAX (excluding gain on sale
  of Cal Dive IPO in 4Q06 and non-recurring items:
   OTSL impairment and DOJ accrual in 2Q07):

                            2Q07       1Q07      4Q06      3Q06      2Q06
                               (in thousands, except ratio)

  Net income applicable
   to common
   shareholders             $57,702   $55,820   $65,948   $57,029    69,139
  Preferred stock
   dividends                    945       945       945       804       805
  Income tax provision       30,456    28,617    34,166    31,409    35,887
  Net interest expense
   and other                 13,605    12,331    13,981    15,103     2,983
  Non-cash stock
   compensation expense       3,546     3,267     2,797     1,910     2,251
  Depreciation and
   amortization              71,918    67,558    61,809    63,879    34,346
  Exploration expense         2,978     1,190     1,820    19,520      (330)
  Non-recurring items         8,602        --        --        --        --
  Share of equity
   investments:
    Depreciation              1,965     1,004     1,004     1,004     1,003
    Interest expense, net       (38)      (57)      (70)      (59)      (43)

  Adjusted EBITDAX         $191,679  $170,675  $182,400  $190,599  $146,041

   Trailing Twelve
    Months Adjusted
    EBITDAX                $735,353

   Net Debt at June 30,
    2007 (a)             $1,305,786

      Ratio                     1.8

   We calculate adjusted EBITDAX as earnings before net interest expense,
   taxes, depreciation and amortization, exploration expense, non-cash stock
   compensation expense and our share of depreciation, net interest expense
   and taxes from our equity investments. Further, we reduce adjusted
   EBITDAX for the minority interest in Cal Dive that we do not own.
   Adjusted EBITDAX margin is defined as adjusted EBITDAX divided by net
   revenues.  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.


   (a)  Total debt less cash, cash equivalents and short term investments


DATASOURCE: Helix Energy Solutions Group, Inc.



CONTACT:  Wade Pursell, Chief Financial Officer of Helix Energy Solutions

Group, Inc., [phone], or fax, [phone]



Web site:  http://www.helixesg.com/

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