Attached files
Changing the way you
succeed.
February 24,
2010
Fourth
Quarter 2009 Conference Call
1
Changing the way you
succeed.
Forward-Looking
Statements
2
This
presentation contains forward-looking statements within the meaning of Section
27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. All such statements, other than statements of
historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, any projections of financial items; future production volumes, results of exploration,
exploitation, development, acquisition and operations expenditures, and prospective reserve levels of properties or
wells; any statements of the plans, strategies and objectives of management for future operations; any statements
concerning developments, performance or industry rankings; and any statements of assumptions underlying any of
the foregoing. These statements involve certain assumptions we made based on our experience and perception of
historical trends, current conditions, expected future developments and other factors we believe are reasonable and
appropriate under the circumstances. The forward-looking statements are subject to a number of known and
unknown risks, uncertainties and other factors that could cause our actual results to differ materially. The risks,
uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and
partners; employee management issues; uncertainties inherent in the exploration for and development of oil and gas
and in estimating reserves; complexities of global political and economic developments; geologic risks, volatility of oil
and gas prices 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 ended December 31, 2008
and subsequent quarterly reports on Form 10-Q. You should not place undue reliance on these forward-looking
statements which speak only as of the date of this presentation and the associated press release. We assume no
obligation or duty and do not intend to update these forward-looking statements except as required by the securities
laws.
1933 and Section 21E of the Securities Exchange Act of 1934. All such statements, other than statements of
historical fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, any projections of financial items; future production volumes, results of exploration,
exploitation, development, acquisition and operations expenditures, and prospective reserve levels of properties or
wells; any statements of the plans, strategies and objectives of management for future operations; any statements
concerning developments, performance or industry rankings; and any statements of assumptions underlying any of
the foregoing. These statements involve certain assumptions we made based on our experience and perception of
historical trends, current conditions, expected future developments and other factors we believe are reasonable and
appropriate under the circumstances. The forward-looking statements are subject to a number of known and
unknown risks, uncertainties and other factors that could cause our actual results to differ materially. The risks,
uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and
partners; employee management issues; uncertainties inherent in the exploration for and development of oil and gas
and in estimating reserves; complexities of global political and economic developments; geologic risks, volatility of oil
and gas prices 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 ended December 31, 2008
and subsequent quarterly reports on Form 10-Q. You should not place undue reliance on these forward-looking
statements which speak only as of the date of this presentation and the associated press release. We assume no
obligation or duty and do not intend to update these forward-looking statements except as required by the securities
laws.
References
to quantities of oil or gas may include amounts we believe will ultimately be
produced, but that are not
classified as “proved reserves” under SEC definitions. Statements of oil and gas reserves are estimates based on
assumptions and may be imprecise. Investors are urged to consider closely the disclosure regarding reserves in our
2008 Form 10-K.
classified as “proved reserves” under SEC definitions. Statements of oil and gas reserves are estimates based on
assumptions and may be imprecise. Investors are urged to consider closely the disclosure regarding reserves in our
2008 Form 10-K.
Changing the way you
succeed.
Presentation
Outline
3
• Executive
Summary
Summary of Q4 2009
Results (pg. 4)
Liquidity and
Capital Resources (pg. 8)
2010 Outlook
(pg.
9)
• Operational
Highlights by Segment
Contracting Services
(pg.
13)
Oil & Gas
(pg.
21)
• Non-GAAP
Reconciliations (pg.
26)
• Questions
& Answers
Phoenix
Project DTS buoy loadout
Changing the way you
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Executive
Summary
4
($ in
millions, except per share data)
(A) Results of Cal Dive,
our former Shelf Contracting business, were consolidated through June 10, 2009,
at which time our ownership interest dropped below 50%; thereafter, our
remaining
interest was accounted for under the equity method of accounting until September 23, 2009, when we reduced our holdings with the sale of the substantial majority of our remaining interest
in Cal Dive. First half revenues from our Shelf Contracting business totaled $405 million.
interest was accounted for under the equity method of accounting until September 23, 2009, when we reduced our holdings with the sale of the substantial majority of our remaining interest
in Cal Dive. First half revenues from our Shelf Contracting business totaled $405 million.
(B) See non-GAAP
reconciliations on slides 25-27.
(C) Excludes Cal Dive
contribution in all periods presented.
Changing the way you
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Executive
Summary
5
Fourth
quarter results reflect the following matters on a pre-tax basis:
• $55.9 million of
“non-cash” impairment charges due to reserve-related revisions on
oil and gas properties
oil and gas properties
• $22.6 million of
other “non-cash” charges primarily due to the write-off of the
book value associated with certain exploration leases
book value associated with certain exploration leases
• Q4 results excluded
realized hedge gains of approximately $15 million for natural
gas hedge mark-to-market adjustments previously recognized as unrealized gains in
the first three quarters of 2009
gas hedge mark-to-market adjustments previously recognized as unrealized gains in
the first three quarters of 2009
The
after-tax effect of the above two items on EPS totaled $0.49 per
diluted
share.
share.
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Executive
Summary
6
• Contracting
Services
• Continued weak
activity levels in general
• Subsea Construction
capacity diverted to internal oil and gas field development
projects - as a result, significant intercompany eliminations
projects - as a result, significant intercompany eliminations
• Well
Enhancer entered fleet in
Q4
• Oil and
Gas
• Continued delay in
start up of transmission line for Noonan gas (January 2010
start up vs. mid-Q4 expectation) reduced expected Q4 production
start up vs. mid-Q4 expectation) reduced expected Q4 production
• Exit year end
production rate of 94 Mmcfe/d
• Current production
rate of 145 Mmcfe/d
• Danny oil production
start-up in early February, 2010
• Noonan gas rates ≈37
Mmcf/d
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Executive
Summary
7
• Oil and gas
production totaled 9.7 Bcfe for Q4 2009 versus 9.8 Bcfe in Q3 2009;
43.8
Bcfe in total for 2009
Bcfe in total for 2009
• Avg
realized price for oil of $71.48 / bbl ($68.86 / bbl in Q3 2009), including
effect of
settled hedges
settled hedges
• Avg
realized price for gas of $7.97/ Mcf ($8.02 / Mcf in Q3 2009), including
the
effect of settled hedges
effect of settled hedges
• Balance
sheet remains strong
• Net
debt balance decreased by $713 million in 2009
• Liquidity*
of $657 million at year end
• Credit
facility covenants in compliance
• Q4 2009: Credit
facility extended to November 2012 along with increased
commitments of $435 million through June 2011
commitments of $435 million through June 2011
• Q1 2010: Additional
amendments put into place revising leverage ratio and
adding additional senior secured leverage covenant ratio
adding additional senior secured leverage covenant ratio
*Liquidity is equal
to cash and cash equivalents ($271 million), plus available capacity under our
revolving credit facility ($386 million).
Changing the way you
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Significant
Balance Sheet Improvements
8
Debt
(A)
Liquidity
(B)
of $657 million at 12/31/09
(A)
Includes impact of debt discount under our Convertible Senior
Notes.
(B)
Defined as available revolver capacity ($386 million) plus cash ($271
million).
Changing the way you
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2010
Outlook
9
• Contracting Services
demand in 1H 2010 will continue to be soft, with a rebound
anticipated in 2H 2010
anticipated in 2H 2010
• Contracting Services
asset utilization on Danny oil pipeline and Phoenix field
development will continue to impact financial results in Q1
development will continue to impact financial results in Q1
• Capital expenditures
of approximately $200 million planned for 2010
• $85 million relates
to completion of major vessel projects
• Oil and Gas capital
expenditures of approximately $86 million, excluding P&A of
approximately $61 million
approximately $61 million
• Improved liquidity
and debt levels (see slide 8)
•Expect to reduce net
debt levels further by 12/31/2010
•Expect to increase
liquidity further by 12/31/2010
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2010
Outlook
10
|
Broad
Metrics
|
2010
Higher End
|
2010
Lower End
|
2009
|
|
Production
Range
|
60
Bcfe
|
50
Bcfe
|
44
Bcfe
|
|
EBITDA
|
$550
million
|
$450
million
|
$490
million
|
|
CAPEX
|
$200
million
|
$200
million
|
$328 million
(A)
|
|
Commodity
Price
Deck |
2010
Higher End
|
2010
Lower End
|
2009
(B)
|
|
|
Hedged
|
Oil
|
$74.75 /
bbl
|
$74.59 /
bbl
|
$67.11 /
bbl
|
|
Gas
|
$5.87 /
mcf
|
$6.00 /
mcf
|
$7.75 /
mcf
|
|
(A) Inclusive of
capitalized interest of $48 million.
(B) Including effect
of settled
natural gas hedge contracts.
Changing the way you
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2010
Outlook
11
|
Key
Oil and Gas
Assumptions |
Production
Rates
|
||
|
2010 Higher
End
|
2010 Lower
End
|
2009
|
|
|
Noonan
gas
(well performance) |
55
Mmcfe/d
by March 1, 2010 |
35
Mmcfe/d
all year |
20
Mmcfe/d
|
|
Phoenix
expected
start-up |
Mid-
Q2
>70
Mmcfe/d
|
Mid-year
>70 Mmcfe/d |
0
|
|
Hurricanes
|
No
Significant
Disruption |
Significant
Disruption
|
Lingering
2008
Hurricane Effects |
Note:
2009 year end reserve estimate reductions for Noonan gas wells to increase
DD&A rates in 2010 vs. prior expectations
Changing the way you
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Caesar
departing
for sea trials, Nantong, China
12
Operations
Highlights
Highlights
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13
Caesar
superintendent
inspecting pipelay stinger
inspecting pipelay stinger
Contracting
Services
Subsea
Construction
• High utilization,
but significant portion used for internal E&P
development
development
• Express
installed the
36-mile Danny pipe-in-pipe (8x12
-inch) in the GOM for Helix Oil & Gas
-inch) in the GOM for Helix Oil & Gas
• Intrepid
worked
on Helix Phoenix project and various
other projects as DSV
other projects as DSV
• Caesar
in
transit to GOM from China in 4Q2009 (arrived in
Ingleside on 1/31/2010)
Ingleside on 1/31/2010)
• Initial internal
project to install 7 mile, 12-inch gas
pipeline on OCS in Gulf of Mexico in April 2010
pipeline on OCS in Gulf of Mexico in April 2010
• Awarded 46 mile,
20-inch gas pipeline installation
project in Gulf of Mexico for summer 2010
project in Gulf of Mexico for summer 2010
• Outlook
for 2010 expected to improve by mid year
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14
Olympic
Triton underway to begin
Anadarko Jubilee project in Ghana
Anadarko Jubilee project in Ghana
Contracting
Services
ROV
- Robotics
• Seasonal low
utilization
• Island
Pioneer with deepwater
trenching spread
transiting from North Sea to GOM and Olympic Triton
transiting from GOM to Ghana
transiting from North Sea to GOM and Olympic Triton
transiting from GOM to Ghana
• Olympic
Canyon continues to operate
for Reliance
offshore India on long term IRM contract
offshore India on long term IRM contract
• Northern
Canyon (North Sea) and
Seacor
Canyon (SEA)
were idle for the majority of the quarter
were idle for the majority of the quarter
• Northern
Canyon
charter not extended
• Outlook
for 2010 is improving
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15
Testing
WOAPAC’s Subsea Intervention
Lubricator System
Lubricator System
Contracting
Services
Well
Operations
North
America
• Q4000
installed production
buoy for Phoenix field
• Started 100-day
deepwater well Intervention / P&A campaign for Shell
• Outlook
for 2010 looks positive
North
Sea
• Seasonal low
utilization
• Seawell worked for BP,
Total and Talisman in the NorthSea . Vessel
dry-dock in January / February 2010
dry-dock in January / February 2010
• Well
Enhancer worked approx. 53
days in the quarter for Nexen and
Shell with good operating performance
Shell with good operating performance
• Outlook
for 2010 expected to improve by end of Q1
Asia
Pacific
• Operations
still
being impacted by refurbishment of the Subsea
Intervention Lubricator and Vessel Deployment System
Intervention Lubricator and Vessel Deployment System
• Entered into JV with
Clough Ltd. to provide subsea services in the
Asia Pacific region, using the Normand Clough vessel
Asia Pacific region, using the Normand Clough vessel
• Outlook
for 2010 is expected to improve
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16
Caesar
in Ingleside
Marine
Capital Projects
HPI
in Ingleside
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17
Phoenix
Green Canyon Block 237
• DTS Buoy has been
installed
• Subsea flowlines,
export pipelines and
umbilicals have been installed
umbilicals have been installed
• Intrepid in DSV mode
to pull-in the flexible
risers and umbilicals through DTS buoy late
February / early March
risers and umbilicals through DTS buoy late
February / early March
• Production scheduled
to start mid-year
Helix
Producer I (HPI)
• Vessel installation
and hook-up of topside
modules, flare boom, external thrusters and
turret completed
modules, flare boom, external thrusters and
turret completed
• Commissioning of
topside processing plant
ongoing
ongoing
• Incline test
successfully completed
• US Coast Guard
Systems acceptance is
ongoing
ongoing
• Expect the vessel to
depart for sea trials
late 1Q 2010
late 1Q 2010
DTS
Buoy being installed by Q4000
Helix
Producer I
HPI
at Kiewit’s yard
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18
($
in millions, except percentages)
(A) Results of Cal Dive,
our former Shelf Contracting business, were consolidated through June 10, 2009,
at which time our ownership interest dropped below 50%; thereafter, our
remaining interest was accounted for under the equity method of accounting until September 23, 2009, when we reduced our holdings with the sale of the substantial majority of our
remaining interest in Cal Dive.
remaining interest was accounted for under the equity method of accounting until September 23, 2009, when we reduced our holdings with the sale of the substantial majority of our
remaining interest in Cal Dive.
(B) See non-GAAP
reconciliation on slides 25-27. Amounts
are prior to intercompany eliminations.
(C) Includes corporate
and operational support overheads.
(D) Amounts primarily
represent equity in earnings of Marco Polo and Independence Hub investments and
equity in earnings from Cal Dive from June 11 through September 23,
2009.
Contracting
Services
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Revenue
and Gross Profit by Division ($ in millions)
19
(A) Amounts are before
intercompany eliminations. See
non-GAAP reconciliation on slides 25-27.
Contracting
Services
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Contracting
Services
20
(A) Includes
vessels on long-term charters.
* Utilization
includes internal work.
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21
(A) Impairments related
to
reduction in carrying values
of certain oil and gas
properties due to reserve
revisions, including $29.9
million of hurricane-related
impairments in Q4 2008.
reduction in carrying values
of certain oil and gas
properties due to reserve
revisions, including $29.9
million of hurricane-related
impairments in Q4 2008.
(B) Includes $20.1 and
$8.0
million of impairment charges
associated with certain
exploration leases for the
quarters ended December
31, 2009 and December 31,
2008, respectively.
million of impairment charges
associated with certain
exploration leases for the
quarters ended December
31, 2009 and December 31,
2008, respectively.
(C) Including effect of
settled
hedges and MTM derivative
contracts.
hedges and MTM derivative
contracts.
Oil
& Gas
Changing the way you
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Oil
& Gas
22
(A) Included accretion
expense.
(B) Excluded
hurricane-related repairs of $0.6, $15.9 and $5.1 million, net of insurance
recoveries, for the quarters ended December 31, 2009, December 31, 2008
and September 30, 2009, respectively.
and September 30, 2009, respectively.
(C) Included $2.5 and
$10.4 million related to a weather derivative contract for the quarters ended
December 31, 2009 and September 30, 2009, respectively.
Excluded exploration expenses of $21.5, $27.1 and $0.9 million, and abandonment of $0.0, $6.0 and $2.9 million for the quarters ended December 31, 2009,
December 31, 2008 and September 30, 2009, respectively.
Excluded exploration expenses of $21.5, $27.1 and $0.9 million, and abandonment of $0.0, $6.0 and $2.9 million for the quarters ended December 31, 2009,
December 31, 2008 and September 30, 2009, respectively.
Operating
Costs
($
in millions, except per Mcfe data)
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Oil
& Gas - Reserve Report Highlights
23
|
|
Proved
Developed
|
Proved
Undeveloped
|
Total
|
|
Total
Reserves
(Bcfe)
|
214
|
364
|
578
|
|
Shelf
|
112
|
125
|
237
|
|
Deepwater
|
102
|
239
|
341
|
|
Oil
(mmbbls) |
15
|
15
|
30
|
|
Gas
(Bcf) |
125
|
274
|
399
|
|
SEC Case
PV-10
(pre-tax, in millions) |
$546
|
$746
|
$1,292
|
|
PV-10
Forward Strip Price* (pre-tax, in millions) |
$1,129
|
$1,574
|
$2,703
|
At
December 31, 2009
* Based
on NYMEX Henry Hub gas and WTI oil forward strip prices at December 31,
2009.
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Summary
of Jan - Dec 2010 Hedging Positions*
24
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25
Non-GAAP
Reconciliations
Reconciliations
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Non
GAAP Reconciliations
26
Adjusted EBITDAX
($
in millions)
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 former
interest in Cal Dive in any periods presented in our adjusted
EBITDAX calculation. 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
EBITDAX calculation. 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.
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.
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Revenue
and Gross Profit As Reported ($ in millions)
27
Non
GAAP Reconciliations
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