Hurricanes Slash Helix's Earnings in Third Quarter
Helix has reported third quarter net income of $60.6 million, or $0.65 per diluted share. This compares to net income of $82.8 million, or $0.88 per diluted share, reported for the third quarter of 2007, and net income of $90.9 million, or $0.96 per diluted share, in the second quarter of 2008. Net income for the nine months ended September 30, 2008 was $225.8 million, or $2.40 per diluted share, compared to $196.4 million, or $2.07 per diluted share, for the nine months ended September 30, 2007. Net income for the third quarter of 2008 was negatively impacted by shut in oil and gas production resulting from both Hurricanes Gustav and Ike.
Third quarter oil and gas production amounted to 10.5 bcfe, which was 4.4 bcfe lower than production for the second quarter of 2008. In addition to the decline in oil and gas production related to the hurricanes, the Company recorded an impairment charge of $6.7 million pre-tax related to oil and gas production in the Tiger field that will be abandoned as a result of damage caused by Hurricane Ike.
The Company realized pre-tax gains on asset sales of oil and gas properties of approximately $19 million in the second quarter of 2008 and $80 million in the nine months ending September 30, 2008. Excluding the impact of these gains, earnings per share for the second quarter of 2008 and nine months ending September 30, 2008 would have been $0.86(a) and $1.88(a), respectively. Likewise, net income for the third quarter of 2007 reflected a pre-tax gain from the sale of a 30% interest in the Phoenix oil and gas field of $19 million, or $0.13 of earnings per share.
Owen Kratz, President and Chief Executive Officer of Helix, stated, "During the third quarter, we achieved record quarterly revenues and gross profit, led by strong performance from both our Contracting Services segment as well as our Shelf Contracting Services segment (Cal Dive), which offset the deferred production resulting from the back-to-back disruptions caused by Hurricanes Gustav and Ike. However, these strong operating results did not translate into a corresponding record for earnings per share due to higher minority interest elimination resulting from Cal Dive's strong performance and the fact that we did not realize any gains for oil and gas property sales, as we had in the first two quarters of 2008.
"Our near term efforts are focused on restoring our oil and gas production, managing our balance sheet as well as our ongoing capital projects."
Oil and Gas
Oil and Gas revenues for the three months ended September 30, 2008 decreased significantly compared to the second quarter of 2008 primarily as a result of production shut in from Hurricanes Gustav and Ike. Production for the third quarter of 2008 fell to 10.5 bcfe compared to 14.9 bcfe for the second quarter of 2008.
As disclosed in the Company's press release of September 23, 2008, nearly all the Company's oil and gas production was shut in as a result of Hurricane Ike.
As of Monday, October 27, production had been restored to a level of approximately 30% of pre-Hurricane Ike levels of approximately 160 mmcfe/day. Further, the Company's ability to restore production is subject, for the most part, to the repair and restoration of third party pipelines and onshore production facilities, a matter largely out of the Company's control.
Based on present estimates of when these pipelines and assets will become operational again, the Company anticipates reaching pre-Hurricane Ike production levels by the end of December. Based on these estimates, the Company expects fourth quarter, 2008 production to be in the range of 7.5 to 8.0 bcfe with production in the first quarter of 2009 expected to surpass second quarter, 2008 levels as a result of incremental production anticipated from the Noonan gas discovery. Again, these forecasted production rates are subject to estimated dates for the operational restoration of third party pipelines and onshore processing facilities, a matter largely beyond the Company's control.
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