TULSA, Okla., July 30 /PRNewswire-FirstCall/ -- Helmerich &
Payne, Inc. (NYSE:HP) reported net income of $53,044,000 ($0.50 per
diluted share) from operating revenues of $387,767,000 for its
third fiscal quarter ended June 30, 2009, compared with net income
of $125,369,000 ($1.18 per diluted share) from operating revenues
of $522,517,000 during last year's third fiscal quarter ended June
30, 2008. Net income recorded for the third fiscal quarter ended
June 30, 2009, includes $0.01 per share of after-tax gains from the
sale of drilling equipment. Included in last year's third quarter
net income were $0.09 per share of after-tax gains from the sale of
portfolio securities and $0.04 per share from the sale of drilling
equipment and insurance settlements, as well as a charge of $0.07
per share (after-tax) from the write-off of in-process research and
development resulting from the acquisition of TerraVici Drilling
Solutions. For the nine months ended June 30, 2009, the Company
reported net income of $302,057,000 ($2.84 per diluted share) from
operating revenues of $1,531,821,000 compared with net income of
$335,253,000 ($3.16 per diluted share) from operating revenues of
$1,452,824,000 during the nine months ended June 30, 2008. Net
income recorded for the first nine months of fiscal 2009 included
$0.03 per share of after-tax gains from the sale of drilling
equipment. Included in net income for the first nine months of
fiscal 2008 were gains from the sale of portfolio securities and
drilling equipment, and gains from insurance settlements of $0.21
per share and the above mentioned in-process research and
development charge of $0.07 per share. Segment operating income for
U.S. land operations was $96,593,000 for this year's third fiscal
quarter, compared with $159,413,000 for last year's third fiscal
quarter and $192,930,000 for this year's second fiscal quarter. The
decline was primarily a result of significantly lower activity
levels in the U.S. land drilling market during this year's third
fiscal quarter as compared to prior quarters. The segment's average
rig revenue per day declined by $3,059 from $31,384 during this
year's second fiscal quarter to $28,325 during the third fiscal
quarter, and the average rig margin per day declined by $3,302 from
$19,354 during this year's second fiscal quarter to $16,052 during
the third fiscal quarter. Approximately $4,400 per day of the
average rig revenue and margin per day reported for this year's
third fiscal quarter was primarily a result of early contract
termination revenue and of delay penalty revenues corresponding to
requested delivery delays for new builds under long-term contracts.
This compares to approximately $6,500 per day included in the rig
revenue and margin per day averages corresponding to this year's
second fiscal quarter for the same type of early termination and
delay penalty revenue. Additional revenues of approximately $70
million corresponding to new build early terminations and requested
delivery delays are expected to be recognized after the third
fiscal quarter. At this point, the Company expects about 40% of
this amount to favorably impact the fourth fiscal quarter revenues,
and the remainder to favorably impact fiscal 2010. Excluding the
impact of income corresponding to early terminations and requested
delivery delays during this year's second and third fiscal
quarters, the average rig revenue per day declined sequentially by
$949 to $23,927 for the third fiscal quarter, and the average rig
margin per day declined sequentially by $1,168 to $11,730 for the
third fiscal quarter. Rig utilization for the Company's U.S. land
segment declined to 51% for this year's third fiscal quarter,
compared with 96% for last year's third fiscal quarter and 72% for
this year's second fiscal quarter. The rig utilization rate
excludes new builds under long-term contracts that may already be
generating revenue, but that have not yet commenced operations
given customer requests to delay new build deliveries. The
Company's U.S. land segment had 110 rigs contracted (including 89
rigs under term contracts) and 100 rigs idle and available at the
end of the third fiscal quarter. In its U.S. land segment, the
Company expects an average of approximately 91 rigs to remain under
term contracts during the fourth fiscal quarter of 2009, and an
average of approximately 80 rigs to remain under term contracts
during all of fiscal 2010. President and C.E.O. Hans Helmerich
commented, "The first half of calendar 2009 has seen a dramatic
plunge in U.S. land rig activity driven by lower natural gas prices
and resultant capital spending reductions by exploration and
production companies. We're encouraged by what appears to be a
recent bottoming out in the industry rig count. H&P's rig
utilization is the highest in the industry among large drilling
contractors due to its high percentage of rigs on term contracts
and because of the availability of FlexRigs in the spot market.
With over 80% of our U.S. land fleet comprised of FlexRigs, we are
in a favored position to benefit from any improvement that lies
ahead in the land rig market." Segment operating income for the
Company's offshore operations was $12,723,000 for this year's third
fiscal quarter, compared with $12,013,000 for last year's third
fiscal quarter and $15,837,000 for this year's second fiscal
quarter. The sequential decline was attributable to declining
activity given softer market conditions in the offshore platform
business and to a significant number of rigs that were concurrently
operating at reduced standby or move rates during portions of the
third fiscal quarter. Average rig utilization in the offshore
segment was reported at 93% for this year's third fiscal quarter,
compared with 89% during last year's third fiscal quarter and 98%
during this year's second fiscal quarter. Average rig margins per
day declined to $18,555 during this year's third fiscal quarter
from $22,330 during this year's second fiscal quarter. The
Company's international land operating segment recorded a loss of
$8,321,000 for this year's third fiscal quarter, compared with
operating income of $17,492,000 for last year's third fiscal
quarter, and a $15,282,000 loss for this year's second fiscal
quarter. The operating loss was a result of the Company's previous
decision to not record revenue beginning the second fiscal quarter
from the Company's operations in Venezuela until the corresponding
cash is collected. This negatively impacted the international land
segment's revenue by $19.7 million during the third fiscal quarter
of 2009, or approximately $10,024 per rig revenue day.
Consequently, the segment's average rig margin per day was reported
at $907 for the quarter, as compared to $10,931, which would have
been reported for the quarter if Venezuelan revenues were to have
been recorded. Average rig utilization for the third fiscal quarter
was 62%, compared with 79% for last year's third fiscal quarter,
and 81% during this year's second fiscal quarter. The sequential
decline in utilization was primarily a result of the Company's
lower level of activity in Venezuela. The Company is proactively
continuing efforts to collect unpaid invoice amounts in Venezuela.
Since the Company's last quarterly earnings release on April 30,
2009, the Company has collected approximately $48 million (U.S.
currency equivalent) from PDVSA. Included in these collections is a
recent total collection in local currency equivalent to
approximately $40 million U.S. dollars. As of today, the total
invoiced amount by the Company that remains pending payment from
PDVSA is approximately $97 million (U.S. currency equivalent), of
which approximately 80% is over 90 days old. Nine of the 11 H&P
rigs that formerly worked for PDVSA and that have completed their
contract obligations are currently stacked in Venezuela. The
Company's remaining two rigs continue to work for PDVSA and are
expected to complete their contract obligations within the next six
weeks. The Company will continue to pursue future drilling
opportunities in Venezuela, but it does not expect to commit to new
contracts until additional progress is made on pending receivable
collections. The Company also announced today that it has entered
into term daywork drilling contracts with a multinational service
company (Schlumberger Ltd - SLB) for integrated project management
(IPM) work in Mexico, providing four FlexRigs for a duration of at
least two years. Furthermore, a fifth FlexRig is being prepared for
international work based on a binding letter of intent from a U.S.
based exploration and production company for a short-term project
in Africa. All five of these FlexRigs were built in prior years and
were recently idle and available for work in the U.S. land market.
President and C.E.O. Hans Helmerich commented, "We are pleased
about the opportunity to increase our international exposure to the
FlexRig. The availability of FlexRigs in the U.S. provides the
Company the opportunity to enlarge its international fleet with
newer and more technologically advanced rigs in geographical areas
where the value of the FlexRig has not been experienced before." On
July 21, 2009, the Company closed a private placement of $200
million of senior unsecured, fixed-rate 6.10% notes due July 2016.
The proceeds from this facility will be used to repay indebtedness,
to fund capital expenditures, or for other general corporate
purposes. Interest on the notes is payable semi-annually. The
Company will make five equal annual principal repayments of $40
million beginning on the third anniversary of the closing date.
Helmerich & Payne, Inc. is primarily a contract drilling
company. As of June 30, 2009, the Company's existing fleet included
210 U.S. land rigs, 32 international land rigs and nine offshore
platform rigs. Helmerich & Payne, Inc.'s conference
call/webcast is scheduled to begin this morning at 11:00 a.m. ET
(10:00 a.m. CT) and can be accessed at http://www.hpinc.com/ under
Investors. If you are unable to participate during the live
webcast, the call will be archived for a year on H&P's website
indicated above. Statements in this release and information
disclosed in the conference call and webcast that are
"forward-looking statements" within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934 are based on
current expectations and assumptions that are subject to risks and
uncertainties. For information regarding risks and uncertainties
associated with the Company's business, please refer to the "Risk
Factors" and "Management's Discussion & Analysis of Results of
Operations and Financial Condition" sections of the Company's SEC
filings, including but not limited to, its annual report on Form
10-K and quarterly reports on Form 10-Q. As a result of these
factors, Helmerich & Payne, Inc.'s actual results may differ
materially from those indicated or implied by such forward-looking
statements. *FlexRig is a registered trademark of Helmerich &
Payne, Inc. HELMERICH & PAYNE, INC. Unaudited (in thousands,
except per share data) Three Months Ended Nine Months Ended
CONSOLIDATED March 31 June 30 June 30 STATEMENTS OF INCOME 2009
2009 2008 2009 2008 --------------------- ---- ---- ---- ---- ----
Operating Revenues: Drilling - U.S. Land $414,514 $282,358 $391,755
$1,172,076 $1,104,662 Drilling - Offshore 51,331 55,605 47,298
157,424 104,368 Drilling - International Land 51,829 47,290 80,585
194,297 234,944 Other 2,626 2,514 2,879 8,024 8,850 ----- -----
----- ----- ----- 520,300 387,767 522,517 1,531,821 1,452,824
------- ------- ------- --------- --------- Operating costs and
expenses: Operating costs, excluding depreciation 263,294 220,339
274,168 814,561 763,921 Depreciation 57,113 61,043 51,210 172,928
147,066 General and Administrative 16,434 14,225 14,723 45,807
42,716 Research and development 2,176 2,777 522 6,630 522
In-process research and development - - 11,129 - 11,129 Gain from
involuntary conversion of long-lived assets - (264) (5,426) (541)
(10,236) Income from asset sales (2,055) (1,785) (1,616) (4,754)
(4,404) ------ ------ ------ ------ ------ 336,962 296,335 344,710
1,034,631 950,714 ------- ------- ------- --------- -------
Operating income 183,338 91,432 177,807 497,190 502,110 Other
income (expense): Interest and dividend income 2,150 542 1,034
4,478 3,369 Interest expense (2,554) (2,793) (4,651) (9,047)
(14,255) Gain on sale of investment securities - - 16,388 - 21,994
Other (28) 514 66 614 (370) --- --- -- --- ---- (432) (1,737)
12,837 (3,955) 10,738 ---- ------ ------ ------ ------ Income
before income taxes and equity in income of affiliate 182,906
89,695 190,644 493,235 512,848 Income tax provision 83,390 36,651
70,187 201,289 189,117 Equity in income of affiliate net of income
taxes 4,222 - 4,912 10,111 11,522 ----- --- ----- ------ ------ NET
INCOME $103,738 $53,044 $125,369 $302,057 $335,253 ======== =======
======== ======== ======== Earnings per common share: Basic $0.99
$0.50 $1.20 $2.87 $3.22 Diluted $0.98 $0.50 $1.18 $2.84 $3.16
Average common shares outstanding: Basic 105,317 105,425 104,530
105,330 103,973 Diluted 106,372 106,829 106,689 106,544 106,130
HELMERICH & PAYNE, INC. Unaudited (in thousands) CONSOLIDATED
CONDENSED BALANCE SHEETS 6/30/09 9/30/08
------------------------------------- ----------- ---------- ASSETS
Cash and cash equivalents $141,705 $121,513 Other current assets
450,369 569,134 ------- ------- Total current assets 592,074
690,647 ------- ------- Investments 267,554 199,266 Net property,
plant, and equipment 3,209,344 2,682,251 Other assets 10,882 15,881
------ ------ TOTAL ASSETS $4,079,854 $3,588,045 ==========
========== LIABILITIES AND SHAREHOLDERS' EQUITY Total current
liabilities $358,792 $308,957 Total noncurrent liabilities 697,120
538,614 Long-term notes payable 430,000 475,000 Total shareholders'
equity 2,593,942 2,265,474 --------- --------- TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $4,079,854 $3,588,045 ==========
========== HELMERICH & PAYNE, INC. Unaudited (in thousands)
Nine Months Ended June 30 CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS 2009 2008 -----------------------------------------------
---- ---- OPERATING ACTIVITIES: Net income $302,057 $335,253
Depreciation 172,928 147,066 In-process research and development -
11,129 Changes in assets and liabilities 250,289 (1,077) Gain from
involuntary conversion of long-lived assets (541) (10,236) Gain on
sale of assets and investment securities (4,754) (26,268) Other
(9,436) (12,279) ------ ------- Net cash provided by operating
activities 710,543 443,588 ------- ------- INVESTING ACTIVITIES:
Capital expenditures (738,411) (509,018) Insurance proceeds from
involuntary conversion of long-lived assets 541 13,926 Proceeds
from sale of assets and investments 6,706 31,584 Purchase of
short-term investments (12,500) - Acquisition of business, net of
cash acquired (16) (12,024) --- ------- Net cash used in investing
activities (743,680) (475,532) -------- -------- FINANCING
ACTIVITIES: Dividends paid (15,829) (14,060) Net increase in bank
overdraft 8,992 4,465 Proceeds from exercise of stock options 710
14,267 Net proceeds from short-term and long-term debt 58,267
12,259 Excess tax benefit from stock-based compensation 1,189
24,816 ----- ------ Net cash provided by financing activities
53,329 41,747 ------ ------ Net increase in cash and cash
equivalents 20,192 9,803 Cash and cash equivalents, beginning of
period 121,513 89,215 ------- ------ Cash and cash equivalents, end
of period $141,705 $99,018 ======== ======= SEGMENT REPORTING Three
Months Ended Nine Months Ended March 31 June 30 June 30 2009 2009
2008 2009 2008 ---- ---- ---- ---- ---- (in thousands, except days
and per day amounts) U.S. LAND OPERATIONS --------------------
Revenues $414,514 $282,358 $391,755 $1,172,076 $1,104,662 Direct
operating expenses 172,033 133,041 187,771 538,380 535,093 General
and administrative expense 4,274 4,133 4,801 12,834 13,452
Depreciation 45,277 48,591 39,770 137,291 109,123 ------ ------
------ ------- ------- Segment Operating income $192,930 $96,593
$159,413 $483,571 $446,994 Revenue days 12,529 9,302 15,263 38,153
43,422 Average rig revenue per day $31,384 $28,325 $24,543 $28,791
$24,329 Average rig expense per day $12,030 $12,273 $11,178 $12,182
$11,212 Average rig margin per day $19,354 $16,052 $13,365 $16,609
$13,117 Rig utilization 72% 51% 96% 72% 95% OFFSHORE OPERATIONS
------------------- Revenues $51,331 $55,605 $47,298 $157,424
$104,368 Direct operating expenses 31,403 38,854 31,166 102,019
72,295 General and administrative expense 1,064 1,004 1,276 3,120
3,488 Depreciation 3,027 3,024 2,843 9,015 8,855 ----- ----- -----
----- ----- Segment operating income $15,837 $12,723 $12,013
$43,270 $19,730 Revenue days 796 763 732 2,294 1,706 Average rig
revenue per day $48,562 $45,531 $51,309 $48,994 $45,711 Average rig
expense per day $26,232 $26,976 $31,181 $27,516 $29,483 Average rig
margin per day $22,330 $18,555 $20,128 $21,478 $16,228 Rig
utilization 98% 93% 89% 93% 70% SEGMENT REPORTING Three Months
Ended Nine Months Ended March 31 June 30 June 30 2009 2009 2008
2009 2008 ---- ---- ---- ---- ---- (in thousands, except days and
per day amounts) INTERNATIONAL LAND OPERATIONS
---------------------------- Revenues $51,829 $47,290 $80,585
$194,297 $234,944 Direct operating expenses 59,787 47,913 55,093
173,348 156,004 General and administrative expense 784 555 1,182
2,035 3,420 Depreciation 6,540 7,143 6,818 19,889 24,120 Segment
operating income (loss) $(15,282) $(8,321) $17,492 $(975) $51,400
Revenue days 2,050 1,622 1,951 6,055 5,727 Average rig revenue per
day $23,397 $27,340 $38,709 $29,704 $37,570 Average rig expense per
day $27,483 $26,433 $25,638 $25,957 $23,704 Average rig margin per
day $(4,086) $907 $13,071 $3,747 $13,866 Rig utilization 81% 62%
79% 80% 77% Operating statistics exclude the effects of offshore
platform management contracts, gains and losses from translation of
foreign currency transactions, and do not include reimbursements of
"out-of-pocket" expenses in revenue per day, expense per day and
margin calculations. Reimbursed amounts were as follows: U.S. Land
Operations $21,309 $18,877 $17,158 $73,621 $48,244 Offshore
Operations $6,752 $13,409 $4,296 $25,627 $10,501 International Land
Operations $3,865 $2,945 $5,066 $14,443 $19,784 Segment operating
income for all segments is a non-GAAP financial measure of the
Company's performance, as it excludes general and administrative
expenses, corporate depreciation, income from asset sales and other
corporate income and expense. The Company considers segment
operating income to be an important supplemental measure of
operating performance for presenting trends in the Company's core
businesses. This measure is used by the Company to facilitate
period-to-period comparisons in operating performance of the
Company's reportable segments in the aggregate by eliminating items
that affect comparability between periods. The Company believes
that segment operating income is useful to investors because it
provides a means to evaluate the operating performance of the
segments and the Company on an ongoing basis using criteria that
are used by our internal decision makers. Additionally, it
highlights operating trends and aids analytical comparisons.
However, segment operating income has limitations and should not be
used as an alternative to operating income or loss, a performance
measure determined in accordance with GAAP, as it excludes certain
costs that may affect the Company's operating performance in future
periods. The following table reconciles operating income (loss) per
the information above to income before income taxes and equity in
income of affiliates as reported on the Consolidated Statements of
Income (in thousands). Three Months Ended Nine Months Ended March
31 June 30 June 30 2009 2009 2008 2009 2008 ---- ---- ---- ----
---- Operating income (loss) ----------------------- U.S. Land
$192,930 $96,593 $159,413 $483,571 $446,994 Offshore 15,837 12,723
12,013 43,270 19,730 International Land (15,282) (8,321) 17,492
(975) 51,400 Other (1,491) (2,304) (10,421) (4,656) (7,596) ------
------ ------- ------ ------ Segment operating income $191,994
$98,691 $178,497 $521,210 $510,528 Corporate general and
administrative (10,312) (8,533) (7,464) (27,818) (22,356) Other
depreciation (1,273) (1,305) (1,087) (3,775) (3,019) Inter-segment
elimination 874 530 819 2,278 2,317 Gain from involuntary
conversion of long-lived assets - 264 5,426 541 10,236 Income from
asset sales 2,055 1,785 1,616 4,754 4,404 ----- ----- ----- -----
----- Operating income $183,338 $91,432 $177,807 $497,190 $502,110
Other income (expense): Interest and dividend income 2,150 542
1,034 4,478 3,369 Interest expense (2,554) (2,793) (4,651) (9,047)
(14,255) Gain on sale of Investment securities - - 16,388 - 21,994
Other (28) 514 66 614 (370) --- --- -- --- ----- Total other income
(expense) (432) (1,737) 12,837 (3,955) 10,738 ---- ------ ------
------ ------ Income before income taxes and equity in income of
affiliate $182,906 $89,695 $190,644 $493,235 $512,848 ========
======= ======== ======== ======== DATASOURCE: Helmerich &
Payne, Inc. CONTACT: Juan Pablo Tardio of Helmerich & Payne,
Inc., +1-918-588-5383 Web Site: http://www.hpinc.com/
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