On April 17, 1998, at 0845 central daylight time, a Bell 206B helicopter, N59604, owned and operated by Houston Helicopters Inc., of Houston, Texas, was substantially damaged during a hard landing near Cameron, Louisiana. The airline transport rated pilot and the four passengers on board were not injured. Visual meteorological conditions prevailed and a company VFR flight plan was filed for the Title 14 CFR Part 135 on-demand air taxi flight. At 0824, the flight departed from EC-33, an oil production platform in the Gulf of Mexico, and was en route to a company base in Cameron, Louisiana. In a written statement the pilot reported the following information. Immediately upon takeoff from EC-33, the rotor rpm [N2] began to "droop below one hundred percent." As collective power was increased to 90% torque, the pilot verified that the throttle was full open and maintained power as the aircraft accelerated. Shortly thereafter, the N2 drooped to 70% and at 50 mph the pilot reduced power and the "N2 built back up into the green." He then called company dispatch on the radio and informed them that he had an "uncontrolled engine/rotor droop," and he was going to land at Cameron. The pilot further stated that he was able to "stabilize" the N2 at 102% and 80% torque during the over-water flight to Cameron. The pilot stated that he set up an approach to Cameron at 300 feet AGL and 85 mph. During the approach, the "engine/rotor rpm immediately surged to one hundred twenty percent" He increased collective pitch, then rolled throttle down. As the N2 spooled down to 100%, he "increased throttle for turbine control and collective pitch for a controlled descent." The N2 continued to droop to 70% and the collective was reduced. The pilot initiated a cyclic flare approximately 75 feet AGL and leveled the helicopter prior to touchdown. Although he pulled maximum collective pitch, the helicopter contacted the ground "harder than normal in a level attitude." The pilot stated that, upon impact the main rotor blades "flexed" downward, consequently contacting and separating the tail boom from the helicopter. The 4 passengers onboard the helicopter submitted written statements to the NTSB investigator-in-charge. All 4 stated that they thought the helicopter "lost power" during the approach to Cameron base. According to a flight manifest document provided by the operator, the helicopter was within its prescribed weight and balance limits for the flight. Engine maintenance record documents provided by the operator were reviewed by an FAA airworthiness inspector on 21 April, 1998. He reported that he did not find any indicated discrepancies within the documents. The documents indicated that an annual inspection was completed on November 24, 1997, and the aircraft had logged 49.3 hours since the inspection. Also, the documents indicated that the fuel control was last overhauled in 1992, the power turbine governor was overhauled in 1997, and the fuel pump was overhauled in 1997. Physical examination of the engine and accessories by the FAA inspector and a representative from Allison Engine Company revealed the following. The engine compartment was not damaged with the engine inlet screen was intact with no obstructions. N1 and N2 wheels rotated smoothly by hand. No pneumatic system leaks were noted with shop air application. Low and high pressure fuel filters were clean. Fuel control rigging appeared to be within limits. The linear actuator was measured 6/32 of an inch below full increase. Linear actuator travel was measured at 15/16 of an inch. The governor pointer was indicating "MIN." Fuel was found in lines from the pump to the fuel nozzle. The fuel control, fuel pump, and power turbine governor were removed from the engine by the operator (under the supervision of the FAA) and sent to Allison Engine Company, Indianapolis, Indiana, for testing. The calibrated bench testing was completed on May 1, 1997, under the supervision of a FAA inspector at the Allison facility. All of the tested components were found to be within overhaul specifications. The EDS test sheets for the components are attached to this report. The N2/rotor rpm dual tachometer indicator and the N1 tachometer indicator, were removed from the aircraft by the operator (at the request of the NTSB) and sent to Precision Avionics & Instruments Inc., Atlanta, Georgia, for testing. Both tachometers conformed to bench check specifications during the testing that was completed on 5 May, 1998. The work orders and FAA Forms 8130-3 (Airworthiness Approval Tags) for the bench checks are attached to this report.