Helix Energy Solutions Group, Inc. (HLX) NYSE Recommendation: BUY Price (10/3/14): $21.55

Company Overview  Founded in 1960  Headquartered in Houston, Texas  President and CEO: Owen Kratz  Sub-industry: Oil & Gas Services & Equipment  Market Cap: 2.28 Billion  Areas of operation: North Sea, Asia Pacific, Gulf of Mexico, and West Africa

Investment Thesis  Helix is at the turning point of their company strategy to restructure by divesting in subsea construction and paying down a large amount of debt  The core of the business moving forward is increasing, and their capex expenditure is focused on a smaller area of the business improving margins and capacity  Significant cost advantage and mobility give companies an incentive to work with them to maximize rig efficiency  The Deepwater economics suggest an increase in capex in the years to come  Strong commitment from the EU on off-shore wind farming  2 billion dollar back log and a new 4 year deal with options to extend with Petrobras and BP

Four Areas of Business 1. Well intervention 2. Robotics (ROVs) 3. Subsea Construction 4. Production Facilities

Well Intervention  Engineer, manage and conduct well construction, intervention and asset retirement operations in depths from 200 to 10,000 feet  Q4000 – multi-service semi-submersible vessel set a series of well intervention “firsts” in increasingly deeper water without the use a traditional rig  Significant cost and mobility advantage  Increasing demand for subsea tree installations  Deal signed with Petrobras and BP  Q5000 delivered in 2015 and Q7000 in 2016

Robotics (ROV)  Marine construction increasingly moving to deeper waters  Fleet: 51 ROV’s, 4 trenching system, and 2 ROV drills  New five year deal inked with McDermott  Offshore alternative energy is increasing in demand (Northern European wind farming) and was 9% of revenue in 2013 with significant upside potential for 2014 and beyond

Subsea Construction  Sold equipment and operations in pipe lay in 2013 and January 2014  Focus on well intervention and robotics

Production Facilities  Own the HP I floating production unit contracted out until at the very least Dec 31, 2016  Own significant interest in Independence Hub platform & Deepwater Gateway  Formerly its own segment Oil and Gas but now is not the focus of the core business for Helix  CGA contract agreement sign 2011 for HFRS containment

Risk and Customers Risks  Oil and Natural Gas prices  Weather  Government Regulation  Damage and Upgrade Cycle Major Customers  Shell  Petrobras  British Petroleum  McDermott  Over 65 customers, none of whom represent more than 10% of revenues

Top-Down  Energy sector as a whole has taken a major hit  Oil prices continue to slide  Deepwater Capex is projected to rise significantly in the next decade  With Capex on the rise companies look to helix to provide well intervention services at a significant cost advantage  Eurozone Regulation attempting to make 35% of its electrical from alternatives, and 12% of that from off-shore wind farming

Deepwater Capex Projections

Key Ratios  P/E:  Current Ratio: 3.18  Since 2009 Cut there total debt by more than half  Debt/Equity: 0.3  ROE: 12.77%  ROA: 7.52%  Profit Margin: 19.34%  Debt-to-Assets: 40%

Comparables Key StatisticsHLXOIISPM.MIOISEXHTDWCKHIndustry MKT Cap2.27B6.76B6.92B3.22B2.82B1.90B1.48B-- P/E PEG(5 yr expected) P/S P/B Profit Margin19.34%11.36%2.37%11.07%3.75%10.35%5.47%6.98% EPS ROE12.77%19.74%6.88%14.19%3.25%5.80%5.54%15.51%

Chart Compared to NYMEX Brent Crude

First Two Quarters of 2014

Weighed Average Cost of Capital (WACC)

Discounted Cash Flow Analysis