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 condensed 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 reported based 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 June 30, 2012
		Helix			Guarantors		Non-Guarantors			Consolidating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents..............................	$	584,113		$	2,775	$	62,615		$	—		$	649,503
Accounts receivable, net.................................		71,410			82,343		34,151			—			187,904
Unbilled revenue...............................................		10,416			187		40,942			—			51,545
Income taxes receivable...................................		111,850			—		8,463			(120,313	)		—
Other current assets........................................		57,286			44,058		16,630			5			117,979
Total current assets....................................		835,075			129,363		162,801			(120,308	)		1,006,931
Intercompany.........................................................		(183,504	)		368,513		(119,650	)		(65,359	)		—
Property and equipment, net..................................		223,058			1,458,080		682,846			(4,691	)		2,359,293
Other assets:
Equity investments in unconsolidated affiliates		—			—		173,543			—			173,543
Equity investments in affiliates.........................		2,031,892			43,534		—			(2,075,426	)		—
Goodwill, net.....................................................		—			45,107		17,145			—			62,252
Other assets, net..............................................		53,241			38,923		32,066			(37,444	)		86,786
Due from subsidiaries/parent...........................		47,426			580,277		—			(627,703	)		—
	$	3,007,188		$	2,663,797	$	948,751		$	(2,930,931	)	$	3,688,805

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable............................................	$	49,247		$	71,377	$	36,114		$	—		$	156,738
Accrued liabilities..............................................		59,212			95,392		22,621			—			177,225
Income taxes payable.......................................		—			139,280		—			(136,215	)		3,065
Current maturities of long-term debt.................		8,000			—		4,997			—			12,997
Total current liabilities..................................		116,459			306,049		63,732			(136,215	)		350,025
Long-term debt......................................................		1,065,148			—		102,760			—			1,167,908
Deferred tax liabilities............................................		240,263			103,693		107,317			(5,456	)		445,817
Asset retirement obligations..................................		—			135,235		—			—			135,235
Other long-term liabilities........................................		4,237			4,067		528			—			8,832
Due to parent.........................................................		—			—		81,056			(81,056	)		—
Total liabilities		1,426,107			549,044		355,393			(222,727	)		2,107,817
Convertible preferred stock...................................		1,000			—		—			—			1,000
Total equity............................................................		1,580,081			2,114,753		593,358			(2,708,204	)		1,579,988
	$	3,007,188		$	2,663,797	$	948,751		$	(2,930,931	)	$	3,688,805

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 tax liabilities............................................		231,255			88,625		103,552			(5,822	)		417,610
Asset retirement obligations..................................		—			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 AND COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended June 30, 2012
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues...........................................................	$	19,963		$	254,880		$	95,632		$	(23,081	)	$	347,394
Cost of sales...........................................................		26,084			178,437			72,509			(22,861	)		254,169
Gross profit........................................................		(6,121	)		76,443			23,123			(220	)		93,225
Loss on sale or acquisition of assets.....................		—			(236	)		—			—			(236	)
Ineffectiveness on oil and gas derivative contract.		—			10,069			—			—			10,069
Selling, general and administrative expenses.........		(11,658	)		(8,919	)		(4,257	)		263			(24,571	)
Income (loss) from operations.................................		(17,779	)		77,357			18,866			43			78,487
Equity in earnings of investments..........................		64,446			3,670			5,748			(68,116	)		5,748
Net interest expense and other.............................		(9,597	)		(7,074	)		(3,648	)		—			(20,319	)
Income (loss) before income taxes.........................		37,070			73,953			20,966			(68,073	)		63,916
Provision (benefit) for income taxes.....................		(7,554	)		24,142			1,872			16			18,476
Net income (loss) applicable to Helix ......................		44,624			49,811			19,094			(68,089	)		45,440
Less: net income applicable to noncontrolling interests..............................................................		—			—			—			(789	)		(789	)
Preferred stock dividends.....................................		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders......................................................	$	44,614		$	49,811		$	19,094		$	(68,878	)	$	44,641

Total comprehensive income (loss) applicable to Helix common shareholders...............................	$	44,535		$	62,570		$	16,254		$	(68,876	)	$	54,483


	Three Months Ended June 30, 2011
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues...........................................................	$	20,545		$	247,855		$	92,926		$	(23,007	)	$	338,319
Cost of sales...........................................................		15,123			173,897			71,730			(22,629	)		238,121
Gross profit........................................................		5,422			73,958			21,196			(378	)		100,198
Loss on sale or acquisition of assets.....................		(22	)		—			—			—			(22	)
Selling, general and administrative expenses.........		(9,574	)		(9,915	)		(4,658	)		389			(23,758	)
Income (loss) from operations.................................		(4,174	)		64,043			16,538			11			76,418
Equity in earnings of investments..........................		58,929			4,194			5,887			(63,123	)		5,887
Net interest expense and other.............................		(18,243	)		(5,890	)		108			—			(24,025	)
Income (loss) before income taxes.........................		36,512			62,347			22,533			(63,112	)		58,280
Provision (benefit) for income taxes.....................		(4,790	)		20,319			637			5			16,171
Net income (loss) applicable to Helix ......................		41,302			42,028			21,896			(63,117	)		42,109
Less:net income applicable to noncontrolling interests..............................................................		—			—			—			(786	)		(786	)
Preferred stock dividends.....................................		(10	)		—			—			—			(10	)
Net income (loss) applicable to Helix common shareholders......................................................	$	41,292		$	42,028		$	21,896		$	(63,903	)	$	41,313

Total comprehensive income (loss) applicable to Helix common shareholders...............................	$	41,542		$	62,748		$	20,485		$	(63,908	)	$	60,867

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Six Months Ended June 30, 2012
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues...........................................................	$	39,985		$	540,568		$	221,532		$	(46,764	)	$	755,321
Cost of sales...........................................................		42,705			343,030			160,954			(46,303	)		500,386
Gross profit........................................................		(2,720	)		197,538			60,578			(461	)		254,935
Loss on sale or acquisition of assets.....................		—			(1,714	)		—			—			(1,714	)
Ineffectiveness on oil and gas derivative contract.		—			7,730			—			—			7,730
Selling, general and administrative expenses.........		(22,930	)		(18,796	)		(9,091	)		550			(50,267	)
Income (loss) from operations.................................		(25,650	)		184,758			51,487			89			210,684
Equity in earnings of investments..........................		157,696			6,295			6,155			(163,991	)		6,155
Net interest expense and other.............................		(40,144	)		(14,284	)		(4,692	)		—			(59,120	)
Income (loss) before income taxes.........................		91,902			176,769			52,950			(163,902	)		157,719
Provision (benefit) for income taxes.....................		(18,428	)		59,023			5,127			31			45,753
Net income (loss) applicable to Helix ......................		110,330			117,746			47,823			(163,933	)		111,966
Less: net income applicable to noncontrolling interests..............................................................		—			—			—			(1,578	)		(1,578	)
Preferred stock dividends.....................................		(20	)		—			—			—			(20	)
Net income (loss) applicable to Helix common shareholders......................................................	$	110,310		$	117,746		$	47,823		$	(165,511	)	$	110,368

Total comprehensive income (loss) applicable to Helix common shareholders...............................	$	109,985		$	116,950		$	49,138		$	(165,513	)	$	110,560


	Six Months Ended June 30, 2011
		Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated

Net revenues...........................................................	$	36,127		$	489,897		$	150,802		$	(46,900	)	$	629,926
Cost of sales...........................................................		31,716			339,128			128,008			(46,200	)		452,652
Gross profit........................................................		4,411			150,769			22,794			(700	)		177,274
Loss on sale or acquisition of assets.....................		(6	)		—			—			—			(6	)
Selling, general and administrative expenses.........		(20,760	)		(19,951	)		(8,812	)		784			(48,739	)
Income (loss) from operations.................................		(16,355	)		130,818			13,982			84			128,529
Equity in earnings of investments..........................		107,036			(1,468	)		11,537			(105,568	)		11,537
Net interest expense and other.............................		(35,527	)		(10,599	)		525			—			(45,601	)
Income (loss) before income taxes.........................		55,154			118,751			26,044			(105,484	)		94,465
Provision (benefit) for income taxes.....................		(11,963	)		42,060			(4,404	)		28			25,721
Net income (loss) applicable to Helix ......................		67,117			76,691			30,448			(105,512	)		68,744
Less:net income applicable to noncontrolling interests..............................................................		—			—			—			(1,554	)		(1,554	)
Preferred stock dividends.....................................		(20	)		—			—			—			(20	)
Net income (loss) applicable to Helix common shareholders......................................................	$	67,097		$	76,691		$	30,448		$	(107,066	)	$	67,170

Total comprehensive income (loss) applicable to Helix common shareholders...............................	$	67,559		$	86,633		$	31,157		$	(107,077	)	$	78,272

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Six Months Ended June 30, 2012
			Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Cash flow from operating activities:
Net income (loss), including noncontrolling interests............................................................		$	110,330		$	117,746		$	47,823		$	(163,933	)	$	111,966
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates...........................			(157,696	)		(6,295	)		—			163,991			—
Other adjustments.............................................			(23,636	)		146,623			(11,702	)		(2,231	)		109,054
Net cash provided by (used in) operating
activities....................................................			(71,002	)		258,074			36,121			(2,173	)		221,020

Cash flows from investing activities:
Capital expenditures...........................................			(1,635	)		(131,879	)		(16,593	)		—			(150,107	)
Distributions from equity investments, net..........			—			—			2,045			—			2,045
Decreases in restricted cash.............................			—			2,660			—			—			2,660
Net cash used in investing activities...............			(1,635	)		(129,219	)		(14,548	)		—			(145,402	)

Cash flows from financing activities:
Borrowings of debt.............................................			400,000			—			—			—			400,000
Repayments of debt............................................			(356,195	)		—			(2,409	)		—			(358,604	)
Deferred financing costs ...................................			(6,485	)		—			—			—			(6,485	)
Repurchases of common stock..........................			(7,510	)		—			—			—			(7,510	)
Excess tax benefit from stock-based compensation....................................................			(657	)		—			—			—			(657	)
Exercise of stock options, net............................			372			—			—			—			372
Intercompany financing.......................................			131,741			(128,514	)		(5,400	)		2,173			—
Net cash provided by (used in) financing activities............................................................			161,266			(128,514	)		(7,809	)		2,173			27,116
Effect of exchange rate changes on cash and cash equivalents...............................................			—			—			304			—			304
Net increase in cash and cash equivalents...........			88,629			341			14,068			—			103,038
Cash and cash equivalents:
Balance, beginning of year.................................			495,484			2,434			48,547			—			546,465
Balance, end of year..........................................		$	584,113		$	2,775		$	62,615		$	—		$	649,503

HELIX ENERGY SOLUTIONS GROUP, INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended June 30, 2011
			Helix			Guarantors			Non-Guarantors			Consolidating Entries			Consolidated
Cash flow from operating activities:
Net income (loss), including noncontrolling interests............................................................		$	67,117		$	76,691		$	30,448		$	(105,512	)	$	68,744
Adjustments to reconcile net income (loss), including noncontrolling interests to net cash provided by (used in) operating activities:
Equity in earnings of affiliates...........................			(107,036	)		1,468			—			105,568			—
Other adjustments.............................................			21,261			180,193			(14,149	)		(5,476	)		181,829
Net cash provided by (used in) operating
activities....................................................			(18,658	)		258,352			16,299			(5,420	)		250,573

Cash flows from investing activities:
Capital expenditures...........................................			(15,699	)		(76,331	)		(14,092	)		—			(106,122	)
Distributions from equity investments, net..........			—			—			(1,106	)		—			(1,106	)
Proceeds from sale of Cal Dive common stock..			3,588			—			—			—			3,588
Decreases in restricted cash.............................			—			863			—			—			863
Net cash used in investing activities...............			(12,111	)		(75,468	)		(15,198	)		—			(102,777	)

Cash flows from financing activities:
Repayments of debt............................................			(111,191	)		—			(2,294	)		—			(113,485	)
Deferred financing costs....................................			(9,014	)		—			—			—			(9,014	)
Repurchases of common stock..........................			(1,012	)		—			—			—			(1,012	)
Excess tax benefit from stock-based compensation....................................................			(1,196	)		—			—			—			(1,196	)
Exercise of stock options, net and other............			1,652			—			(1,213	)		—			439
Intercompany financing.......................................			162,868			(183,765	)		15,477			5,420			—
Net cash provided by (used in) financing activities............................................................			42,107			(183,765	)		11,970			5,420			(124,268	)
Effect of exchange rate changes on cash and cash equivalents...............................................			—			—			(424	)		—			(424	)
Net increase (decrease) in cash and cash equivalents........................................................			11,338			(881	)		12,647			—			23,104
Cash and cash equivalents:
Balance, beginning of year.................................			376,434			3,294			11,357			—			391,085
Balance, end of year..........................................		$	387,772		$	2,413		$	24,004		$	—		$	414,189