EXHIBIT 99.1
(CAL DIVE INTERNATIONAL, INC. LOGO) PRESS RELEASE
www.caldive.com
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Cal Dive International, Inc. o 400 N. Sam Houston Parkway E., Suite 400 o
Houston, TX 77060-3500 o 281-618-0400 o Fax: 281-618-0505
FOR IMMEDIATE RELEASE 03-007
CONTACT: JIM NELSON
DATE: MAY 1, 2003 TITLE: VICE CHAIRMAN
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CAL DIVE REPORTS FIRST QUARTER EARNINGS OF 16 CENTS
HOUSTON, TX - Cal Dive International, Inc. (Nasdaq: CDIS) reported first quarter
net income of $6.0 million or $0.16 per diluted share. Adoption of SFAS No. 143,
Accounting for Asset Retirement Obligations, added $530,000 or one cent to first
quarter 2003 results. A year ago net income was $3.0 million or $0.09 per
diluted share. First quarter revenues of $88.9 million increased 65% over the
year ago quarter as the company is completing a $750 million, three-year capital
expansion plan.
Owen Kratz, Chairman and Chief Executive Officer of Cal Dive, stated, "The
countercyclical hedge provided by our strategic integration of subsea
contracting and oil & gas operations was particularly evident in first quarter
results. Earnings associated with last year's mature property acquisitions
carried the current quarter in contrast to a year ago when CDI contracting
operations provided 60% of our profitability. Our Deepwater initiatives at
Gunnison and Marco Polo remain on a schedule to come on line early next year.
The visibility and stability provided by our oil and gas business provided the
funding to expand our contracting revenues by 120% in just the last three
years."
Mr. Kratz continued, "Offshore construction is a cyclical business. The Cal Dive
management team picked its way through the industry downturns in 1987, 1992 and
2000. In contrast to those earlier periods, today we have strong commodity
prices and a diversified asset base designed to weather the downdrafts. We are
satisfied with our position in the market and look forward to reaping the
harvest of our aggressive capital program."
Cal Dive International, Inc. is an energy service company specializing in well
operations and subsea construction. CDI operates a fleet of technically advanced
marine construction vessels and robotics worldwide and conducts salvage
operations in the Gulf of Mexico. Energy Resource Technology, Inc., a wholly
owned subsidiary, acquires and operates mature and non-core offshore oil and gas
properties.
Certain statements in this press release are "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are neither statements of historical fact nor
guarantees of future performance or events. Forward-looking statements involve
risks and assumptions that could cause actual results to vary materially from
those predicted. Among other things, these include unexpected delays and
operational issues associated with turnkey projects, the price of crude oil and
natural gas, weather conditions in offshore markets, changes in site conditions
and capital expenditures by customers. For a more complete discussion of these
risk factors, see our Annual Report on Form 10-K/A for the year ended December
31, 2002, filed with the Securities and Exchange Commission. The Company
strongly encourages readers to note that some or all of the assumptions upon
which such forward-looking statements are based are beyond the company's ability
to control or estimate precisely and may in some cases be subject to rapid and
material change.
2003 FIRST QUARTER REPORT
May 1, 2003
TO OUR SHAREHOLDERS:
Earnings doubled our performance a year ago and our guidance for the first
quarter as marine contracting results were close to what we expected, enabling
significantly improved oil and gas income to flow through to the bottom line.
Despite that performance, our stock is trading at only 60% of its price a year
ago as investors question the outlook for offshore construction generally and
specifically whether Cal Dive can earn a decent return on its newly acquired
contracting assets. Our decision to invest $450 million in Deepwater assets
flows from a four-pronged strategy: (i) assemble a world class DP fleet to
establish credibility as a significant Deepwater contractor, (ii) add DP vessels
and services which target niche markets in addition to construction while
avoiding the risks of EPIC contracting, (iii) use these assets to establish a
first-in position in the emerging well operations market, and (iv) expand
life-of-field services on the OCS and in the North Sea. Each vessel and business
acquired was identified as an essential building block to sustain long term
growth. Our contracting businesses are expected to provide approximately 30% of
2003 profitability even in a depressed market, a contribution which is expected
to accelerate in 2004 and 2005 given our utilization leverage and weighting
toward late-cycle services. In the interim, our oil and gas operations continue
to perform at exceptional levels - the 43% return on invested capital in the
first quarter far exceeds those of most E&P companies and marine contractors. We
are confident that our asset base and business model will enable Cal Dive to
emerge from the current marine construction downcycle as one of the strongest
offshore players.
FINANCIAL HIGHLIGHTS
Net income that is 7% of a rapidly expanding revenue base distinguishes Cal Dive
from other offshore contractors and the uncertainties of the U.S. economy.
<Table>
<Caption>
FIRST QUARTER
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2003 2002 INCREASE
------------ ------------ ------------
REVENUES $ 88,900,000 $ 53,928,000 65%
NET INCOME 6,038,000 3,001,000 101%
DILUTED EARNINGS PER SHARE 0.16 0.09 78%
</Table>
* REVENUES: An increase of $35 million reflects significantly higher oil and
gas prices and production ($25 million) with the balance due to the
addition of new Deepwater contracting assets.
* MARGINS: 22% is nearly identical to the year-ago period even though lower
returns from our Canyon robotics subsidiary and losses incurred in our
North Sea operations caused contracting gross profit to decline by $6.7
million.
* SG&A: Overhead was in line with guidance, adding two points to operating
margins; i.e. SG&A as a percent of revenues was 10% versus 12% a year ago.
* LIQUIDITY: EBITDA of $26.3 million was 136% better than the cash
generation of last year's first quarter. The EBITDA margin was just under
30% versus 21% in Q1 of 2002.
OPERATIONAL HIGHLIGHTS
* DEEPWATER CONTRACTING: Achieved excellent utility of 77% even though we
increased the size of our GOM Deepwater construction fleet from three DP
vessels a year ago to five currently. Our ability to work vessels offshore
Mexico and Trinidad as well as on the OCS produced gross profit margins of
16%, more than double 2002 margins for the DP group. The UNCLE JOHN and
WITCH QUEEN were both deployed in Mexican waters at full utility while the
MYSTIC VIKING transited to Trinidad during the quarter to respond to an
emergency pipeline leak. The INTREPID had a respectable 72 days of
utilization while continuing to impress customers with her versatility and
the best station-keeping footprint in our fleet. During the quarter she
installed small diameter pipe and umbilicals, set a manifold and then
served as the work platform for a unique salvage job. The ECLIPSE also
worked 70 days with virtually all of that performing saturation diving
services on the OCS. While CANYON revenues of $9.3 million were not too
far off the $11 million generated in Q1 a year ago, gross profit declined
by $3.0 million due to the loss of the telecom burial work and to low
utility (45%) of the two robotic support vessels, the MERLIN in the GOM
and the NORTHERN CANYON in the North Sea.
* WELL OPERATIONS: The North Sea also proved a challenging environment for
our Well Ops subsidiary as the SEAWELL achieved only 27 days of utility
and encountered unanticipated site conditions on a project which involved
plugging and abandoning four suspended wells. The net result was a loss of
just under $3.0 million for the quarter. On a brighter note we have a
solid backlog of work for the second quarter and expect that the SEAWELL
will perform an all time record of well ops projects in 2003. Back in the
U.S.A., the Q4000 operated at a small loss on utilization of 64 days as we
offered introductory rates to expose the vessel to a broad range of
customers. Following January's successful Troika work, the vessel
installed jumpers at Falcon, an isolation sleeve at Pardner and performed
several P&A projects before mobilizing to Gunnison late in the quarter. At
Gunnison our flagship vessel is installing the mooring piles, the first
time such work has been conducted from anything other than a heavy lift
barge. The piles are 84 inches in diameter, 210 feet long and weigh 130
tons each.
* SHELF CONTRACTING: AQUATICA delivered almost exactly the same level of
revenue and earnings as Q1 last year in a considerably more competitive
market. Our shallow water services which target life-of-field services
provide insulation from the volatility of new marine construction
activity. However, the realities of winter weather and a soft Shelf
construction market were more noticeable in the 54% utilization and lower
returns from our saturation and anchored diving vessels. During the
quarter we sold two of our smaller utility vessels at roughly breakeven
and stacked the MR. SONNY.
* OIL & GAS: Significantly improved ERT revenues and profitability were
driven by a 135% increase in production and commodity prices that on
average were up 55% over year ago levels. Production of 6.8 BCFe compared
to 2.9 BCFe in the year ago quarter with oil representing 42% of the
volumes produced vs. 34% in 2002. Virtually all of the improvement is a
result of the four significant property acquisitions completed last year.
The average commodity price received, net of hedges in place, was $5.22
per mcf of natural gas and $28.67 per barrel of oil in contrast to
$2.55/mcf and $20.50/bbl a year ago. In March ERT acquired Exxon/Mobil's
interests in four fields we purchased last year from Williams. This $3.0
million acquisition also enabled ERT to take over as operator at Brazos
453. The only blemish on the quarter was that delayed well work resulted
in 61% of first quarter natural gas volumes being sold at the hedged price
of $4.21. That well work is now in full swing with ERT operating two jack
up rigs and one platform rig. This well exploitation work should get our
hedged volumes back to the 50% level targeted.
* ACCOUNTING CHANGE: The cumulative effect of the adoption of SFAS No. 143,
Accounting for Asset Retirement Obligations, added one cent to first
quarter earnings. Much of the decommissioning obligation which CDI
historically recorded on the face of our balance sheet is not scheduled
until 2011. Because the new accounting standard requires that the
liability be recorded on a discounted basis, adoption of SFAS 143 reduced
the decommissioning obligation and related investment in oil and gas
properties by approximately $25 million.
* FORECAST: The accompanying appendix estimates second quarter diluted
earnings per share in a range of 17 to 25 cents. Given that historically
55% to 65% of contracting revenues come in the second half of the year, we
reiterate our full-year earnings guidance of $1.00 to $1.20.
Respectfully submitted,
<Table>
/s/ OWEN E. KRATZ /s/ MARTIN R. FERRON /s/ S. JAMES NELSON, JR. /s/ A. WADE PURSELL
Owen E. Kratz Martin R. Ferron S. James Nelson, Jr. A. Wade Pursell
Chairman President Vice Chairman Chief Financial Officer
Chief Executive Officer Chief Operating Officer
</Table>
APPENDIX
DISCLOSURE OF SECOND QUARTER 2003 ESTIMATES
This narrative sets forth current estimates of operating and financial
data for the quarter ending June 30, 2003. These estimates and all of
the assumptions upon which these estimates are based constitute FORWARD
LOOKING STATEMENTS within the meaning of Section 27 A of the Securities
Act of 1933, Section 21 E of the Securities Exchange Act of 1934 and
the Private Securities Litigation Reform Act of 1995. Although we
believe that these forward looking statements are based on reasonable
assumptions, a number of factors could affect the future results of the
Company or the offshore oilfield industry generally, and could cause
actual results to differ materially from those estimated. Those factors
are set forth in more detail in our 2002 Form 10-K/A Annual Report
filed with the Securities and Exchange Commission, to which the reader
is referred.
SECOND QUARTER
o VESSEL AVAILABILITY: Stronger than expected first quarter
utilization delayed the scheduled regulatory inspections of the
MYSTIC VIKING and MERLIN, both of which were completed during
April. We may also elect to complete the U.S. Coast Guard
inspection of the CAL DIVER I during this quarter in advance of
the November expiration of her current certificate.
o CONTRACTING REVENUES: Expected in a range of $60 million to $70
million with the improvement over the first quarter due
principally to Well Ops UK and the Seawell backlog.
o COMMODITY PRICE HEDGES: We have hedged roughly half of our oil
production at prices ranging from $26.50 to $26.82 per barrel and
approximately 50% of natural gas volumes at an average of
approximately $4.30 per mcf.
o OIL AND GAS PRODUCTION: 6.5 to 7.0 BCFe, in line with the first
quarter as results from the current well exploitation program are
expected to come on line in the third quarter.
o SG&A: Should run between $8.2 million and $8.7 million.
o INTEREST EXPENSE: Net interest and other is expected to range from
$1.3 to $1.6 million.
o TAX RATE: 36% is above our historical 35% statutory rate due to a
higher provision for foreign income taxes.
o SHARES OUTSTANDING: 37.5 million to 39 million fully diluted
shares after giving recognition to the shares subject to
conversion as a result of the convertible preferred stock issued
in January.
o EPS: Diluted earnings per share are projected in a range of 17 to
25 cents.
o PRODUCTION FACILITIES: The GUNNISON spar is on schedule for
transit from Finland at the end of May with the Cal Dive subsea
hookup scheduled for Q4. Similarly, the hull of the MARCO POLO
tension-leg platform is scheduled to set sail from South Korea
around the end of June with the facility expected to be installed
near year-end.
o RETURN ON CAPITAL: The calculation of capital invested in our oil
and gas business is as follows: beginning ERT equity ($67.4
million) plus decommissioning liability ($67.4 million) less the
amount of the liability pre-funded by cash advances to the parent
($38.2 million) yields an invested capital base of $96.6 million.
ERT's first quarter net (after tax) income (before interest
income/expense) of $10.3 million when annualized for four quarters
results in a return of $41.6 million or 42.6% of its capital of
$96.6 million.
CAL DIVE INTERNATIONAL, INC.
COMPARATIVE CONSOLIDATED STATEMENTS OF OPERATIONS
<Table>
<Caption>
Three Months Ended March 31,
----------------------------
(000's omitted, except per share data) 2003 2002
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Net Revenues:
Marine Contracting $ 54,229 $ 44,370
Oil and Gas Production 34,671 9,558
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Total Revenues 88,900 53,928
Cost of Sales:
Marine Contracting 54,243 37,690
Oil and Gas Production 15,461 5,120
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Gross Profit 19,196 11,118
Selling and Administrative 8,953 6,306
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Income from Operations 10,243 4,812
Interest Expense, net & Other 1,101 196
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Income Before Income Taxes 9,142 4,616
Income Tax Provision 3,291 1,615
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Income Before Change in Accounting Principle 5,851 3,001
Cumulative Effect of Change in Accounting Principle, net 530 0
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Net Income 6,381 3,001
Preferred Stock Dividends and Accretion 343 0
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Net Income Applicable to Common Shareholders $ 6,038 $ 3,001
======== ========
Other Financial Data:
Income from Operations $ 10,243 $ 4,812
Depreciation and Amortization:
Marine Contracting 7,825 4,308
Oil and Gas Production (including accretion) 8,203 2,005
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EBITDA (1) $ 26,271 $ 11,125
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Weighted Avg. Shares Outstanding:
Basic 37,553 32,648
Diluted 37,601 32,932
======== ========
Net Income per Common Share
Basic:
Net Income Before Change in Accounting Principle $ 0.15 $ 0.09
Cumulative Effect Of Change in Accounting Principle $ 0.01 $ 0.00
-------- --------
Net Income Applicable to Common Shareholders $ 0.16 $ 0.09
======== ========
Diluted:
Net Income Before Change in Accounting Principle $ 0.15 $ 0.09
Cumulative Effect Of Change in Accounting Principle $ 0.01 $ 0.00
-------- --------
Net Income Applicable to Common Shareholders $ 0.16 $ 0.09
======== ========
</Table>
(1) The Company calculates EBITDA as earnings before net interest expense,
taxes, depreciation and amortization. EBITDA is a supplemental financial
measurement used by CDI and investors in the marine construction industry
in the evaluation of its business due to the measurement being similar to
operating cash flow.
COMPARATIVE CONSOLIDATED BALANCE SHEETS
ASSETS
<Table>
<Caption>
(000'S omitted) March 31, 2003 Dec. 31, 2002
- --------------- -------------- -------------
Current Assets:
Cash and cash equivalents $ 2,432 $ 2,506
Accounts receivable 89,853 75,418
Other current assets 29,717 28,266
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Total Current Assets 122,002 106,190
Net Property & Equipment
Subsea and salvage 425,576 418,056
Oil and Gas 154,570 178,295
Goodwill 79,069 79,758
Other Assets 90,569 84,733
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Total Assets $ 871,786 $ 867,032
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</Table>
LIABILITIES & SHAREHOLDERS' EQUITY
<Table>
<Caption>
March 31, 2003 Dec. 31, 2002
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Current Liabilities:
Accounts payable $ 62,554 $ 62,798
Accrued liabilities 35,812 34,790
Current Mat of L-T Debt 4,291 4,201
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Total Current Liabilities 102,657 101,789
Long-Term Debt 214,934 223,576
Deferred Income Taxes 108,374 102,230
Decommissioning Liabilities 68,235 92,420
Redeemable Stock & Other 9,518 9,500
Convertible Preferred Stock 24,213 0
Shareholders' Equity 343,855 337,517
-------------- -------------
Total Liabilities & Equity $ 871,786 $ 867,032
============== =============
</Table>