Why The Future Is Bright For Helix Energy Solutions Group Inc (NYSE:HLX)

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Helix Energy Solutions Group Inc (NYSE:HLX) recently updated on its 1Q2016 results and as it turned out, continued weakness in the energy industry adversely impacted the company’s performance in the quarter. However, the management tried to diffuse worries by saying that it had anticipated the quarter to be low. Analysts also believe that uptick in well intervention demand as oil prices recover will benefit Helix.

Helix Energy Solutions Group Inc (NYSE:HLX) posted EBITDA of $1 million and revenue of $91 million for the quarter. Adverse weather conditions and fallout in the oil industry hurt performance. Helix plays in the well intervention industry.

Helix Energy Solutions Group Inc Asset sales

Helix performed a sales lease back transaction at its warehouse facility in Aberdeen that yielded $11 million. In another asset transaction, the company sold its interest (50%) in Marco Polo Hub for $25 million. The transactions helped strengthen the balance sheet.

Balance sheet position

According to Helix’s CEO, Owen Kratz, the asset sales helped the company to paiy down a portion of its outstanding debt and maintain a strong balance sheet position. As such, the company finished the quarter with cash balance nearly steady at $488 million compared to $494 million at the yearend.

The $36 million unlocked from asset helped Helix Energy Solutions Group Inc (NYSE:HLX) to cut its debt burden by $19 million during the quarter. With that, the company’s net debt fell to $244 million at the end of 1Q2016 compared to $255 million at the end of the December quarter.

What’s Wall Street saying about Helix?

Analysts at Credit Suisse recently upgraded their rating on Helix Energy Solutions Group Inc (NYSE:HLX) to OUTPERFORM from Neutral and boosted the price target to $10 from $5. The analysts took the action because they believe that the company is well-placed to benefit from increased demand for well intervention as oil prices rise.

For example, recovery of oil prices would see drillers trying to boost volumes and propping up old wells. With that Credit Suisse sees the prospects of strong demand for well intervention in 2017.

A number of Wall Street analysts have also recently commented positively on Helix Energy Solutions Group Inc (NYSE:HLX). Morgan Stanley analysts have a price estimate of $14.5 on the stock with OVERWEIGHT rating. Iberia Capital also has OUTPERFORM rating and price estimate of $10 on the stock.

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