Filed by Remington Oil and Gas Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Helix Energy Solutions Group, Inc.
(f/k/a Cal Dive International, Inc.)
(f/k/a Cal Dive International, Inc.)
Commission File Number: 000-22739
PRESS RELEASE
FOR IMMEDIATE RELEASE
| Contact: | Steven J. Craig | |||
| Sr. Vice President | ||||
| (214) 210-2675 |
REMINGTON
OIL AND GAS ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND
FULL YEAR 2005
AND PROVIDES 2006 GUIDANCE
Dallas, TX, March 8, 2006 – Remington Oil and Gas Corporation (NYSE: REM) announced financial
results for the fourth quarter and year ended December 31, 2005.
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| ($ in thousands, except income per share) | ||||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Oil and gas revenues |
$ | 52,295 | $ | 69,281 | $ | 260,134 | $ | 233,505 | ||||||||
Other income |
$ | 8,904 | $ | 207 | $ | 10,395 | $ | 624 | ||||||||
Net income |
$ | 5,735 | $ | 19,370 | $ | 70,567 | $ | 60,996 | ||||||||
Cash flow provided by (used in) operations |
$ | (14,968 | ) | $ | 60,091 | $ | 160,819 | $ | 188,582 | |||||||
Basic net income per share |
$ | 0.20 | $ | 0.70 | $ | 2.48 | $ | 2.23 | ||||||||
Diluted income per share |
$ | 0.19 | $ | 0.67 | $ | 2.37 | $ | 2.14 | ||||||||
Production (Bcfe) |
4.6 | 10.4 | 31.1 | 38.1 | ||||||||||||
Average gas price |
$ | 11.75 | $ | 6.36 | $ | 8.31 | $ | 5.97 | ||||||||
Average oil price |
$ | 55.68 | $ | 46.20 | $ | 51.24 | $ | 39.37 | ||||||||
Oil and gas revenues for the three months ended December 31, 2005, decreased $17.0 million, or
24.5%, compared to the same period of 2004 as a result of oil and gas production declines of 76.3%
and 49.4%, respectively, due to shut-in production caused by Hurricanes Katrina and Rita which
occurred in August and September of 2005. The fall in production was partially offset by an
increase in average oil and gas prices of 20.5% and 84.7%, respectively. Oil and gas revenues for
the year ended December 31, 2005, rose $26.6 million, or 11.4%, compared to the same period of 2004
because of the increase in average oil and gas prices of 30.1% and 39.2%, respectively, offset
partially by oil and gas production contraction of 11.4% and 21.0%, respectively. Other income for
the three months and year ended December 31, 2005, includes $8.3 million related to the partial
accrual of lost production insurance payments.
Net income for the three months ended December 31, 2005, decreased $13.6 million, or 70.4%,
compared to the same period of 2004. Net income for the year ended December 31, 2005, increased
$9.6 million, or 15.7%, compared to the same period of 2004. Cash flow from operations fell $75.1
million, or 124.9%, and $27.8 million, or 14.7%, for the three months and year ended December 31,
2005, compared to the same periods in 2004, respectively.
Income taxes for the three months ended December 31, 2005, dropped $6.4 million, or 63.6%, to $3.7
million compared to the same period of 2004 due to lower income before taxes. Income taxes for the
year ended December 31, 2005, increased $6.1 million, or 18.4%, to $39.0 million compared to the
same period of 2004 due to the gain in income before taxes. Current taxes accounted for a benefit
of $3.5 million and expense of $3.4 million for the three months and year ended December 31, 2005.
The following table reflects 2005 cost guidance per Mcfe produced versus our 2005 results:
| 2005 | 2005 | |||||||
| Annual Guidance $/Mcfe | Actual $/Mcfe | |||||||
Operating Costs (LOE) |
$ | 0.65 - $0.75 | $ | 0.90 | ||||
General and Administrative (G&A) |
$ | 0.21 - $0.28 | $ | 0.49 | ||||
Interest and Financing |
$ | 0.01 - $0.02 | $ | 0.02 | ||||
Depreciation, Depletion and
Amortization (DD&A) |
$ | 2.00 – $2.15 | $ | 1.94 | ||||
LOE per Mcfe was greater than guidance due to lower production volumes, higher workover expense,
primarily on South Marsh Island 24 and hurricane related insurance deductibles recorded in the
fourth quarter of 2005. G&A per Mcfe costs were more than guidance due to decreased production as
a result of Hurricanes Katrina and Rita, and stock based compensation. Interest and Financing
costs were in line with guidance provided. DD&A per Mcfe was below guidance primarily due to
production from new lower cost properties in the Gulf of Mexico.
Dry hole expense for the year ended December 31, 2005, totaled $48.7 million, of which $25.6
million is attributable to the fourth quarter and includes South Pass 87 Aquarius and Vermilion 389
#1. Guidance for the full year was $25 to $30 million with the major over run associated with the
unsuccessful exploratory well at South Pass 87 #6. Remington utilizes the successful efforts
method of accounting which requires dry holes to be reported as an expense in the quarter they are
determined to be dry.
As of December 31, 2005, we have $23.3 million accrued as insurance receivables on the balance
sheet. Of this amount, $15.0 million represents insurance receivables for hurricane related
expenditures associated with physical damage and lost equipment from Hurricanes Katrina and Rita
and a control of well claim. The remaining $8.3 million represents an insurance receivable for
partial claim for lost production through December 31, 2005, caused by Hurricane Rita and is
included in other income on the income statement. Additional claims associated with lost
production as a result of Katrina have been made and will be recorded when finalized.
Drilling Program
Listed in the table below are wells recently drilled, currently drilling or completing, along with
wells that are scheduled to be drilled in the near term.
| Prospect | Category | W.I.% | Status/Spud Date | Operator | ||||||||||||
Offshore |
||||||||||||||||
West Cameron 383 #2 |
Exploratory | 53 | Discovery-Tested 7 MMCFE/D | Remington | ||||||||||||
Main Pass 200 #1 |
Exploratory | 50 | Discovery- Temp. Abandoned | Cimarex | ||||||||||||
East Cameron 73 # 2 |
Exploratory | 47 | Drilling @ 10,000’ | Remington | ||||||||||||
East Cameron 346 #6 |
Development | 75 | Drilling @ 7,200’ | Remington | ||||||||||||
Eugene Island 391#1 |
Exploratory | 60 | 2nd Qtr. Spud | Remington | ||||||||||||
Vermilion 250 #1 |
Development | 60 | 2nd Qtr. Spud | Remington | ||||||||||||
East Cameron 269 #1 |
Exploratory | 60 | 2nd Qtr. Spud | Remington | ||||||||||||
Production Update
Remington’s 4th quarter 2005 production averaged 50 million cubic feet of gas
equivalents per day compared to an average of 81 MMCFE/D for the third quarter 2005. During the
4th quarter 2005, the company’s production was curtailed severely principally due to
producing infrastructure damage caused by Hurricanes Katrina and Rita. By the end of the
4th quarter, the majority of our producing fields were brought back online. As of this
release, seven (7) of the Company’s fields remain shut-in primarily due to third party pipeline
infrastructure damage. Remington’s East Cameron 346 and surrounding satellite fields remain
shut-in due to problems related to damages to producing infrastructure owed by Remington and other
third parties. Repairs to the platform and facilities at East Cameron 346 are expected to be
completed soon. However, the gas export line has yet to be re-commissioned and most recent
communications with the pipeline owner indicate repairs to this line will
commence in April, 2006
with service to be restored in the late 2 nd quarter 2006. Production volumes that remain
shut-in from the East Cameron 346 account for approximately 25 to 30 net MMCFE/D to Remington. Two
additional fields in the Ship Shoal area are expected to commence production in the early
2nd quarter once repairs that are currently underway are finished on a third party owned
pipeline. These two fields are expected to come online at approximately 8-10 MMCFE/day net to the
company. Our best estimate is that all seven shut-in fields should be restored by the end of the
2nd quarter 2006.
Remington does carry business interruption insurance for most of its offshore producing fields
including East Cameron 346 and Ship Shoal 332. Because of the ongoing shut-ins the company is
experiencing, the entirety of the business interruption claim is not yet known. Rough estimates,
based on the company’s interpretation of the policy, result in an expected reimbursement from the
policy for the 1st quarter 2006 of approximately $17 million. The company’s business
interruption policy for East Cameron 346 is in effect for a total of 365 days of coverage net of
deductible.
Year-End 2005 Proved Reserves
Year-end 2005 proved reserves, as audited by Netherland, Sewell & Associates, Inc., were 18.4
million barrels of oil and 168.7 billion cubic feet of gas or 278.9 billion cubic feet of gas
equivalents. This compares with 252.1 billion cubic feet of gas equivalents at year-end 2004.
Proved developed reserves at year-end 2005 were 57.2% of the total reserves compared to 51.8%
year-end 2004. Gas accounted for 64.2% of the proved developed reserves and oil 35.8% at year-end
2005 compared to 68.5% gas and 31.5% oil at year-end 2004. Reserves increased 11% over 2004
levels, and replaced 186% of our 2005 production.
The following table reflects the capital invested and proved reserve additions for the year ended
December 31, 2005:
| (Bcfe) | ||||
Beginning Reserves |
252.1 | |||
Production |
(31.1 | ) | ||
Sale of Property |
(0.5 | ) | ||
Reserve Additions |
64.8 | |||
Reserve Revisions |
(6.4 | ) | ||
Ending Reserves |
278.9 | |||
Capital Costs (MM$)(1) |
$ | 218.0 | ||
| (1) | Includes acquisition costs, capitalized exploration and development costs and geological and geophysical costs |
2006 Guidance
Remington has agreed to a merger with Helix Energy Solutions Group, Inc. (NASDAQ: HELX) which is
expected to be consummated in the 2nd quarter of 2006. Consequently, 2006 guidance will
only cover the first two quarters of 2006. Production volumes for the 1st quarter are
expected to range between 75 and 80 MMCFE/day (6.8 to 7.2 BCFE). Production volumes for the
2nd quarter are expected to range between 90 and 100 MMCFE/day(8.2 to 9.1 BCFE) as we
restore production from the seven remaining shut in fields and bring on three new developments near
the end of the quarter. Remington has entered into the following agreements for forward sales of
production. These are forward sales of physical volumes and are not considered hedge transactions.
Oil:
|
1,000 bbls/day @ $70.00/bbl | March 2006 – February 2007 | ||
Gas:
|
20 mmbtu/day @ $9.83/mmbtu | March 2006 – August 2006 | ||
| 10 mmbtu/day @ $8.88/mmbtu | September 2006 – December 2006 | |||
| 20 mmbtu/day @ $9.72/mmbtu | January 2007 – June 2007 |
The following table reflects 2006 cost guidance per Mcfe provided for the first six months of the
year.
| 1st Half 2006 | ||||
| Guidance $/Mcfe | ||||
Operating Costs (LOE) |
$ | 0.70 - $0.80 | ||
General and Administrative (G&A) |
$ | 0.45 - $0.55 | ||
Interest and Financing |
$ | 0.01 - $0.02 | ||
Depreciation, Depletion and Amortization (DD&A) |
$ | 2.25 - $2.45 | ||
Dry hole expense is budgeted at $7.5 million per quarter for the first two quarters of 2006.
Remington Oil and Gas Corporation is an independent oil and gas exploration and production company
headquartered in Dallas, Texas, with operations concentrating in the onshore and offshore regions
of the Gulf Coast.
Statements concerning future revenues and expenses, production volumes, results of
exploration, exploitation, development, acquisition and operations expenditures, and prospective
reserve levels of prospects or wells are forward-looking statements. Prospect size and reserve
levels are often referred to as “potential” or “un-risked” reserves and are based on the Company’s
internal estimates from the volumetric calculations or analogous production. Other forward-looking
statements are based on assumptions concerning commodity prices, drilling results, recovery factors
for wells, production rates, and operating, administrative and interest costs that management
believes are reasonable based on currently available information; however, management’s assumptions
and the Company’s future performance are subject to a wide range of business, mechanical,
political, environmental, and geologic risks. There is no assurance that these goals, projections,
costs, expenses, reserve levels, and production volumes can or will be met. Further information is
available in the Company’s filings with the Securities and Exchange Commission, which are herein
incorporated by this reference. Information in this document should be reviewed in combination
with the Company’s filings with the Securities and Exchange Commission and information available on
the Company’s website at www.remoil.net.
ADDITIONAL INFORMATION:
The Company and Helix Energy Solutions Group, Inc. (“Helix ESG”) will file a proxy
statement/prospectus and other relevant documents concerning the proposed merger transaction
between the Company and Helix ESG with the Securities and Exchange Commission (“SEC”). Investors
are urged to read the proxy statement/prospectus when it becomes available and any other relevant
documents filed with the SEC because they will contain important information. You will be able to
obtain the documents free of charge at the website maintained by the SEC at www.sec.gov. In
addition, you may obtain documents filed with the SEC by the Company free of charge by requesting
them in writing from the Company or by telephone at (214) 210-2650. You may obtain documents filed
with the SEC by Helix ESG free of charge by requesting them in writing from Helix ESG or by
telephone at (281) 618-0400.
The Company and Helix ESG, and their respective directors and executive officers, may be deemed to
be participants in the solicitation of proxies from the stockholders of the Company in connection
with the merger. Information about the directors and executive officers of the Company and their
ownership of stock of the Company is set forth in the proxy statement for the Company’s 2005 Annual
Meeting of Stockholders. Information about the directors and executive officers of Helix ESG and
their ownership of Helix ESG stock is set forth in the proxy statement for Helix ESG’s 2005 Annual
Meeting of Shareholders. Investors may obtain additional information regarding the interests of
such participants by reading the proxy statement/prospectus when it becomes available.
REMINGTON OIL AND GAS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| At December 31, | ||||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 38,860 | $ | 58,659 | ||||
Accounts receivable |
66,887 | 49,582 | ||||||
Insurance receivable |
23,308 | — | ||||||
Income taxes receivable |
5,767 | — | ||||||
Prepaid expenses and other current assets |
5,466 | 5,199 | ||||||
Total current assets |
140,288 | 113,440 | ||||||
Properties |
||||||||
Oil and gas properties (successful-efforts method) |
908,437 | 744,215 | ||||||
Other properties |
3,758 | 3,145 | ||||||
Accumulated depreciation, depletion and amortization |
(468,290 | ) | (409,591 | ) | ||||
Total properties |
443,905 | 337,769 | ||||||
Other assets |
||||||||
Other assets |
1,872 | 1,905 | ||||||
Total other assets |
1,872 | 1,905 | ||||||
Total assets |
$ | 586,065 | $ | 453,114 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities |
||||||||
Accounts payable and accrued expenses |
$ | 76,561 | $ | 69,339 | ||||
Current deferred income taxes |
1,094 | — | ||||||
Total current liabilities |
77,655 | 69,339 | ||||||
Long-term liabilities |
||||||||
Asset retirement obligations |
21,375 | 16,030 | ||||||
Deferred income taxes |
82,876 | 53,785 | ||||||
Total long-term liabilities |
104,251 | 69,815 | ||||||
Total liabilities |
181,906 | 139,154 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity |
||||||||
Preferred stock, $0.01 par value, 25,000,000 shares authorized
Shares issued — none |
||||||||
Common stock, $.01 par value, 100,000,000 shares authorized,
28,790,997 shares issued and 28,756,638 shares outstanding in 2005,
27,883,698 shares issued and 27,849,339 shares outstanding in 2004 |
288 | 279 | ||||||
Additional paid-in capital |
149,234 | 132,334 | ||||||
Restricted common stock |
24,264 | 6,749 | ||||||
Unearned compensation |
(20,385 | ) | (5,593 | ) | ||||
Retained earnings |
250,758 | 180,191 | ||||||
Total stockholders’ equity |
404,159 | 313,960 | ||||||
Total liabilities and stockholders’ equity |
$ | 586,065 | $ | 453,114 | ||||
- more -
REMINGTON OIL AND GAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per-share amounts and prices)
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per-share amounts and prices)
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | 2004 | |||||||||||||
Revenues and other income |
||||||||||||||||
Gas sales |
$ | 46,783 | $ | 50,014 | $ | 184,095 | $ | 167,564 | ||||||||
Oil sales |
5,512 | 19,267 | 76,039 | 65,941 | ||||||||||||
Interest income |
580 | 150 | 1,806 | 349 | ||||||||||||
Other income |
8,324 | 57 | 8,589 | 275 | ||||||||||||
Total revenues and other income |
61,199 | 69,488 | 270,529 | 234,129 | ||||||||||||
Costs and expenses |
||||||||||||||||
Operating costs and expenses |
7,424 | 6,153 | 28,069 | 25,013 | ||||||||||||
Exploration expenses |
27,279 | 6,583 | 55,272 | 22,551 | ||||||||||||
Depreciation, depletion and amortization |
10,573 | 21,543 | 60,351 | 72,810 | ||||||||||||
Impairment of oil and gas properties |
519 | 2,468 | 1,483 | 10,876 | ||||||||||||
General and administrative |
5,891 | 3,235 | 15,182 | 8,053 | ||||||||||||
Interest and financing expense |
127 | 111 | 613 | 894 | ||||||||||||
Total costs and expenses |
51,813 | 40,093 | 160,970 | 140,197 | ||||||||||||
Income before taxes |
9,386 | 29,395 | 109,559 | 93,932 | ||||||||||||
Income tax expense |
3,651 | 10,025 | 38,992 | 32,936 | ||||||||||||
Net income |
$ | 5,735 | $ | 19,370 | $ | 70,567 | $ | 60,996 | ||||||||
Basic income per share |
$ | 0.20 | $ | 0.70 | $ | 2.48 | $ | 2.23 | ||||||||
Diluted income per share |
$ | 0.19 | $ | 0.67 | $ | 2.37 | $ | 2.14 | ||||||||
Average shares outstanding |
||||||||||||||||
Basic |
28,740 | 27,773 | 28,488 | 27,408 | ||||||||||||
Diluted |
30,086 | 28,882 | 29,722 | 28,441 | ||||||||||||
Production |
||||||||||||||||
Gas (MMcf) |
3,980 | 7,868 | 22,161 | 28,057 | ||||||||||||
Oil (MBbls) |
99 | 417 | 1,484 | 1,675 | ||||||||||||
Mcfe (1 barrel of oil is equivalent to 6 Mcf of gas) |
4,574 | 10,370 | 31,065 | 38,107 | ||||||||||||
Average prices |
||||||||||||||||
Gas |
$ | 11.75 | $ | 6.36 | $ | 8.31 | $ | 5.97 | ||||||||
Oil |
$ | 55.68 | $ | 46.20 | $ | 51.24 | $ | 39.37 | ||||||||
- more -
REMINGTON OIL AND GAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Years Ended December 31, | ||||||||
| 2005 | ||||||||
| (Unaudited) | 2004 | |||||||
Cash flow provided by operations |
||||||||
Net income |
$ | 70,567 | $ | 60,996 | ||||
Adjustments to reconcile net income |
||||||||
Depreciation, depletion, and amortization |
60,351 | 72,810 | ||||||
Deferred income tax expense |
30,185 | 25,034 | ||||||
Amortization of deferred finance charges |
155 | 183 | ||||||
Impairment of oil and gas properties |
1,483 | 10,876 | ||||||
Dry hole costs |
48,666 | 12,787 | ||||||
Net settlement for dismantlement and restoration liability |
645 | (1,712 | ) | |||||
Stock based compensation |
4,639 | 1,427 | ||||||
Tax benefit from exercise of employee stock options |
5,425 | 4,083 | ||||||
Changes in working capital |
||||||||
(Increase) in accounts receivable |
(16,793 | ) | (6,570 | ) | ||||
(Increase) in insurance receivable |
(23,308 | ) | — | |||||
(Increase) in income taxes receivable |
(5,767 | ) | — | |||||
(Increase) in prepaid expenses and other current assets |
(121 | ) | (2,360 | ) | ||||
Increase in accounts payable and accrued expenses |
(15,308 | ) | 11,028 | |||||
Net cash flow provided by operations |
160,819 | 188,582 | ||||||
Cash from investing activities |
||||||||
Payments for capital expenditures |
(189,906 | ) | (148,908 | ) | ||||
Net cash (used in) investing activities |
(189,906 | ) | (148,908 | ) | ||||
Cash from financing activities |
||||||||
Payments on notes payable and other long-term payables |
— | (18,000 | ) | |||||
Purchase common stock |
(691 | ) | (645 | ) | ||||
Commitment fee on line of credit |
(280 | ) | — | |||||
Common stock issued |
10,259 | 6,222 | ||||||
Net cash provided by (used in) financing activities |
9,288 | (12,423 | ) | |||||
Net increase (decrease) in cash and cash equivalents |
(19,799 | ) | 27,251 | |||||
Cash and cash equivalents at beginning of period |
58,659 | 31,408 | ||||||
Cash and cash equivalents at end of period |
$ | 38,860 | $ | 58,659 | ||||
Cash paid for interest |
$ | 436 | $ | 948 | ||||
Cash paid for taxes |
$ | 12,387 | $ | 580 | ||||