Note 17 – Condensed Consolidated Guarantor and Non-Guarantor Financial Information

The payment of our obligations under the Senior Unsecured Notes is guaranteed by all of our restricted domestic subsidiaries (“Subsidiary Guarantors”) except for Cal Dive I-Title XI, Inc. Each of these Subsidiary Guarantors is included in our consolidated financial statements and has fully and unconditionally guaranteed the Senior Unsecured Notes on a joint and several basis. As a result of these guaranty arrangements, we are required to present the following condensed consolidating financial information. The accompanying guarantor financial information is presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries related primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions.

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

(Unaudited)


	As of March 31, 2012
		Helix			Guarantors		Non-Guarantors			Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents...........................	$	566,287		$	2,498	$	51,664		$	—		$	620,449
Accounts receivable, net................................		50,886			118,038		68,493			—			237,417
Unbilled revenue.............................................		5,777			228		18,571			—			24,576
Income taxes receivable.................................		86,005			—		1,586			(87,591	)		—
Other current assets.......................................		54,484			45,654		9,864			(333	)		109,669
Total current assets...................................		763,439			166,418		150,178			(87,924	)		992,111
Intercompany.......................................................		(157,195	)		340,018		(107,547	)		(75,276	)		—
Property and equipment, net..............................		227,620			1,456,602		682,200			(4,735	)		2,361,687
Other assets:
Equity investments in unconsolidated affiliates............................................................		—			—		173,440			—			173,440
Equity investments.........................................		2,019,076			39,864		—			(2,058,940	)		—
Goodwill..........................................................		—			45,107		17,560			—			62,667
Other assets, net.............................................		54,828			36,566		21,475			(37,831	)		75,038
Due from subsidiaries/parent.........................		56,189			509,701		—			(565,890	)		—
	$	2,963,957		$	2,594,276	$	937,306		$	(2,830,596	)	$	3,664,943

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable...........................................	$	42,316		$	67,950	$	35,365		$	—		$	145,631
Accrued liabilities............................................		68,627			107,284		20,903			—			196,814
Income taxes payable.....................................		—			128,808		—			(103,831	)		24,977
Current maturities of long-term debt.............		8,000			—		4,997			—			12,997
Total current liabilities...............................		118,943			304,042		61,265			(103,831	)		380,419
Long-term debt.....................................................		1,064,726			—		102,760			—			1,167,486
Deferred income taxes........................................		234,567			90,526		103,861			(5,856	)		423,098
Asset retirement obligations...............................		—			146,696		—			—			146,696
Other long-term liabilities...................................		4,163			11,803		550			—			16,516
Due to parent........................................................		—			—		89,821			(89,821	)		—
Total liabilities		1,422,399			553,067		358,257			(199,508	)		2,134,215
Convertible preferred stock................................		1,000			—		—			—			1,000
Total equity...........................................................		1,540,558			2,041,209		579,049			(2,631,088	)		1,529,728
	$	2,963,957		$	2,594,276	$	937,306		$	(2,830,596	)	$	3,664,943

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)


	As of December 31, 2011
		Helix			Guarantors		Non-Guarantors			Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents...........................	$	495,484		$	2,434	$	48,547		$	—		$	546,465
Accounts receivable, net................................		79,290			117,767		41,724			—			238,781
Unbilled revenue.............................................		10,530			155		26,690			—			37,375
Income taxes receivable.................................		80,388			—		—			(80,388	)		—
Other current assets.......................................		68,627			48,661		10,159			(5,826	)		121,621
Total current assets...................................		734,319			169,017		127,120			(86,214	)		944,242
Intercompany.......................................................		(147,187	)		315,821		(102,826	)		(65,808	)		—
Property and equipment, net..............................		230,946			1,422,326		682,899			(4,844	)		2,331,327
Other assets:
Equity investments in unconsolidated affiliates............................................................		—			—		175,656			—			175,656
Equity investments in affiliates......................		1,952,392			37,239		—			(1,989,631	)		—
Goodwill, net...................................................		—			45,107		17,108			—			62,215
Other assets, net.............................................		53,425			36,453		16,809			(37,780	)		68,907
Due from subsidiaries/parent.........................		64,655			430,496		—			(495,151	)		—
	$	2,888,550		$	2,456,459	$	916,766		$	(2,679,428	)	$	3,582,347

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable...........................................	$	39,280		$	82,750	$	25,013		$	—		$	147,043
Accrued liabilities............................................		115,921			97,692		26,350			—			239,963
Income taxes payable.....................................		—			97,692		217			(96,616	)		1,293
Current maturities of long-term debt.............		3,000			—		10,377			(5,500	)		7,877
Total current liabilities...............................		158,201			278,134		61,957			(102,116	)		396,176
Long-term debt.....................................................		1,042,155			—		105,289			—			1,147,444
Deferred income taxes........................................		231,255			88,625		103,552			(5,822	)		417,610
Decommissioning liabilities...............................		—			161,208		—			—			161,208
Other long-term liabilities...................................		4,150			4,647		571			—			9,368
Due to parent........................................................		—			—		98,285			(98,285	)		—
Total liabilities		1,435,761			532,614		369,654			(206,223	)		2,131,806
Convertible preferred stock................................		1,000			—		—			—			1,000
Total equity...........................................................		1,451,789			1,923,845		547,112			(2,473,205	)		1,449,541
	$	2,888,550		$	2,456,459	$	916,766		$	(2,679,428	)	$	3,582,347

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)


	Three Months Ended March 31, 2012
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues..........................................................	$	20,022		$	285,688		$	125,900		$	(23,683	)	$	407,927
Cost of sales..........................................................		16,621			164,593			88,445			(23,442	)		246,217
Gross profit.......................................................		3,401			121,095			37,455			(241	)		161,710
Loss on sale or acquisition of assets..................		—			(1,478	)		—			—			(1,478	)
Loss on oil and gas derivative contract..............		—			(2,339	)		—			—			(2,339	)
Selling, general and administrative expenses...		(11,272	)		(9,877	)		(4,834	)		287			(25,696	)
Income (loss) from operations.............................		(7,871	)		107,401			32,621			46			132,197
Equity in earnings of investments.....................		93,250			2,625			407			(95,875	)		407
Net interest expense and other..........................		(30,547	)		(7,210	)		(1,044	)		—			(38,801	)
Income (loss) before income taxes......................		54,832			102,816			31,984			(95,829	)		93,803
Provision (benefit) for income taxes..................		(10,874	)		34,881			3,255			15			27,277
Net income (loss) applicable to Helix .................		65,706			67,935			28,729			(95,844	)		66,526
Less: net income applicable to noncontrolling interests.............................................................		—			—			—			(789	)		(789	)
Preferred stock dividends..................................		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders.....................................................	$	65,696		$	67,935		$	28,729		$	(96,633	)	$	65,727


	Three Months Ended March 31, 2011
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues..........................................................	$	15,582		$	242,042		$	57,876		$	(23,893	)	$	291,607
Cost of sales..........................................................		16,593			165,231			56,278			(23,571	)		214,531
Gross profit.......................................................		(1,011	)		76,811			1,598			(322	)		77,076
Gain on sale or acquisition of assets..................		16			—			—			—			16
Selling, general and administrative expenses...		(11,186	)		(10,036	)		(4,154	)		395			(24,981	)
Income (loss) from operations.............................		(12,181	)		66,775			(2,556	)		73			52,111
Equity in earnings of investments.....................		48,107			(5,662	)		5,650			(42,445	)		5,650
Net interest expense and other..........................		(17,284	)		(4,709	)		417			—			(21,576	)
Income (loss) before income taxes......................		18,642			56,404			3,511			(42,372	)		36,185
Provision (benefit) for income taxes..................		(7,173	)		21,741			(5,041	)		23			9,550
Net income (loss) applicable to Helix .................		25,815			34,663			8,552			(42,395	)		26,635
Less:net income applicable to noncontrolling interests.............................................................		—			—			—			(768	)		(768	)
Preferred stock dividends..................................		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders.....................................................	$	25,805		$	34,663		$	8,552		$	(43,163	)	$	25,857

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31, 2012
			Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Cash flow from operating activities:
Net income (loss), including noncontrolling interests...........................................................		$	65,706		$	67,935		$	28,729		$	(95,844	)	$	66,526
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates.......................			(93,250	)		(2,625	)		—			95,875			—
Other adjustments...........................................			15,685			68,889			(14,792	)		(2,503	)		67,279
Net cash provided by (used in) operating			(11,859	)		134,199			13,937			(2,472	)		133,805
activities...................................................

Cash flows from investing activities:
Capital expenditures.........................................			(896	)		(94,640	)		(6,208	)		—			(101,744	)
Distributions from equity investments, net.....			—			—			5,943			—			5,943
Decreases (increases) in restricted cash..........			—			922			—			—			922
Net cash used in investing activities.................			(896	)		(93,718	)		(265	)		—			(94,879	)

Cash flows from financing activities:
Borrowings of debt...........................................			400,000			—			—			—			400,000
Repayments of debt..........................................			(354,195	)		—			(2,409	)		—			(356,604	)
Deferred financing costs .................................			(6,337	)		—			—			—			(6,337	)
Repurchases of common stock.......................			(991	)		—			—			—			(991	)
Excess tax benefit from stock-based compensation.................................................			(340	)		—			—			—			(340	)
Exercise of stock options, net.........................			381			—			—			—			381
Intercompany financing...................................			45,040			(40,417	)		(7,095	)		2,472			—
Net cash provided by (used in) financing activities...........................................................			83,558			(40,417	)		(9,504	)		2,472			36,109
Effect of exchange rate changes on cash and cash equivalents.............................................			—			—			(1,051	)		—			(1,051	)
Net increase (decrease) in cash and cash equivalents......................................................			70,803			64			3,117			—			73,984
Cash and cash equivalents:
Balance, beginning of year..............................			495,484			2,434			48,547			—			546,465
Balance, end of year.........................................		$	566,287		$	2,498		$	51,664		$	—		$	620,449

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


	Three Months Ended March 31, 2011
			Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Cash flow from operating activities:
Net income (loss), including noncontrolling interests...........................................................		$	25,815		$	34,663		$	8,552		$	(42,395	)	$	26,635
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates.......................			(48,107	)		5,662			—			42,445			—
Other adjustments...........................................			(16,484	)		74,174			4,644			(3,904	)		58,430
Net cash provided by (used in) operating
activities...................................................			(38,776	)		114,499			13,196			(3,854	)		85,065

Cash flows from investing activities:
Capital expenditures.........................................			(7,143	)		(18,200	)		(9,145	)		—			(34,488	)
Distributions from equity investments, net.....			—			—			480			—			480
Proceeds from sale of Cal Dive common stock.................................................................			3,588			—			—			—			3,588
Decreases (increases) in restricted cash..........			—			613			—			—			613
Net cash used in investing activities.................			(3,555	)		(17,587	)		(8,665	)		—			(29,807	)

Cash flows from financing activities:
Repayments of debt..........................................			(1,082	)		—			(2,294	)		—			(3,376	)
Repurchases of common stock.......................			(927	)		—			—			—			(927	)
Excess tax benefit from stock-based compensation.................................................			(969	)		—			—			—			(969	)
Exercise of stock options, net and other.......			590			—			(660	)		—			(70	)
Intercompany financing...................................			93,799			(97,733	)		80			3,854			—
Net cash provided by (used in) financing activities...........................................................			91,411			(97,733	)		(2,874	)		3,854			(5,342	)
Effect of exchange rate changes on cash and cash equivalents.............................................			—			—			(470	)		—			(470	)
Net increase (decrease) in cash and cash equivalents......................................................			49,080			(821	)		1,187			—			49,446
Cash and cash equivalents:
Balance, beginning of year..............................			376,434			3,294			11,357			—			391,085
Balance, end of year.........................................		$	425,514		$	2,473		$	12,544		$	—		$	440,531