Helmerich & Payne, Inc.

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Helmerich & Payne, Inc. Announces Third Quarter Earnings

TULSA, Okla., July 27, 2012 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $149,943,000 ($1.38 per diluted share) from operating revenues of $819,785,000 for its third fiscal quarter ended June 30, 2012, compared to income from continuing operations of $109,828,000 ($1.01 per diluted share) from operating revenues of $644,095,000 during last year's third fiscal quarter ended June 30, 2011. Included in this year's and last year's third fiscal quarter income from continuing operations were $0.01 and $0.02 per share, respectively, of after-tax gains related to the sale of used drilling equipment and investment securities. Net income for the third fiscal quarter of 2012 was $149,925,000 ($1.38 per diluted share), compared to net income of $109,826,000 ($1.01 per diluted share) during last year's third fiscal quarter.

For the nine months ended June 30, 2012, the Company reported income from continuing operations of $424,003,000 ($3.88 per diluted share) from operating revenues of $2,322,355,000 compared with income from continuing operations of $313,154,000 ($2.87 per diluted share) from operating revenues of $1,843,143,000 during the nine months ended June 30, 2011. Included in income from continuing operations for the first nine months of fiscal 2012 and 2011 were approximately $0.08 and $0.07 per share, respectively, of after-tax gains from the sale of used drilling equipment and investment securities. Net income for the first nine months of fiscal 2012 was $423,930,000 ($3.88 per diluted share), compared to net income of $312,766,000 ($2.87 per diluted share) during the first nine months of fiscal 2011.

Chairman and CEO Hans Helmerich commented, "We are pleased to report yet another all-time record level of quarterly income from continuing operations.  Including the previous record level reported for the first fiscal quarter, this marks the second time that we announce record breaking results this year.  Nonetheless, the pronounced decline in oil prices has impacted drilling market conditions and prospects.  Our customers appear to be adjusting their budgets accordingly, and demand for drilling rigs and services seems to be softening.  In the current rig count environment, operators may even become more focused in their efforts to enhance drilling efficiencies and reduce total well costs. We would expect the industry movement toward more complex well designs, faster cycle time, greater focus on safety and the use of innovative technology to continue to support H&P as a preferred drilling services provider. Our strengths are well aligned with these trends, which should allow us to continue to successfully provide greater value to our customers through the cycles."

Segment operating income for U.S. land operations was $235,684,000 for the third fiscal quarter of 2012, compared with $176,832,000 for last year's third fiscal quarter and $209,959,000 for this year's second fiscal quarter. The sequential increase in segment operating income was attributable to a continued increase in activity and revenue combined with a decline in per rig expenses. As compared to this year's second fiscal quarter, the number of revenue days for the segment sequentially increased by over two percent to 21,977, and the average rig revenue per day increased by $471 to $28,096 during the third fiscal quarter of 2012. The average rig expense per day for the segment declined by $489, and the average rig margin per day increased by $960 to $14,759 during this year's third fiscal quarter. The rig revenue and margin per day averages included approximately $140 per day of early termination fees during the third fiscal quarter. These fees were attributable to four rigs that had an average remaining term duration of 45 days. Rig utilization for the segment was 89% for this year's third fiscal quarter, compared with 87% for last year's third fiscal quarter and 91% for this year's second fiscal quarter. At June 30, 2012, the Company's U.S. land segment had 246 contracted rigs (including 164 under term contracts) and 30 idle rigs. 

Segment operating income for the Company's offshore operations was $7,720,000 for the third fiscal quarter of 2012, compared with $12,944,000 for last year's third fiscal quarter and $9,818,000 for this year's second fiscal quarter. The sequential decline in segment operating income resulted from a lower level of activity and a lower average rig margin per day. The number of revenue days for this year's third fiscal quarter sequentially declined by approximately three percent to 606, and the average rig margin per day for this year's third fiscal quarter was $16,901 as compared to $20,561 for this year's second quarter. 

The Company's international land segment operating income was $6,275,000 for this year's third fiscal quarter, compared with a loss of $624,000 for last year's third fiscal quarter and a loss of $974,000 for this year's second fiscal quarter. The sequential increase in segment operating income was attributable to increased activity and margins during this year's third fiscal quarter. The average rig margin per day increased to $7,704 in the third fiscal quarter of 2012 from $4,884 in the second fiscal quarter of 2012. Also as compared to this year's second fiscal quarter, the number of revenue days for the third fiscal quarter increased by approximately five percent to 1,852.    

The Company repurchased approximately 1.75 million shares of Helmerich & Payne stock during the third fiscal quarter at an average cost of approximately $44.40 per share. Also during the third fiscal quarter (and as previously announced), the Company entered into a credit agreement establishing a $300 million senior unsecured revolving credit facility. 

Helmerich & Payne, Inc. is primarily a contract drilling company. As of July 27, 2012, the Company's existing fleet included 279 land rigs in the U.S., 29 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete another 25 new H&P-designed and operated FlexRigs®* under long-term contracts with customers. Upon completion of these commitments, the Company's global fleet is expected to have a total of 333 land rigs, including 296 FlexRigs.

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 on H&P's website indicated above for at least one year. 

This release includes "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. 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. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.

*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 STATEMENTS OF March 31 June 30 June 30
INCOME 2012 2012 2011 2012 2011
           
Operating Revenues:          
Drilling – U.S. Land $658,804 $706,786 $539,372 $1,983,369 $1,511,649
Drilling – Offshore 43,421 41,617 54,569 135,830 150,022
Drilling – International Land 64,088 67,482 46,051 192,305 169,689
Other 3,669 3,900 4,103 10,851 11,783
  769,982 819,785 644,095 2,322,355 1,843,143
           
Operating costs and expenses:          
Operating costs, excluding depreciation 448,208 463,935 365,586 1,303,175 1,035,671
Depreciation  90,934 95,182 79,109 272,404 228,450
General and administrative 27,805 25,576 24,071 79,544 68,366
Research and development 3,830 4,299 4,399 11,378 11,509
Income from asset sales (7,820) (1,862) (3,488) (14,365) (10,262)
  562,957 587,130 469,677 1,652,136 1,333,734
           
Operating income  207,025 232,655 174,418 670,219 509,409
           
Other income (expense):          
Interest and dividend income 356 329 903 1,021 1,573
Interest expense (2,421) (2,411) (3,221) (7,293) (13,185)
Gain on sale of investment securities -- -- 913 -- 913
Other (42) 309 (190) 288 208
  (2,107) (1,773) (1,595) (5,984) (10,491)
           
Income from continuing operations before income taxes  204,918 230,882 172,823 664,235 498,918
Income tax provision  75,155 80,939 62,995 240,232 185,764
Income from continuing operations 129,763 149,943 109,828 424,003 313,154
           
Loss from discontinued operations before income taxes   (125)  (18)  (2)  (154)  (393)
Income tax provision (81) -- -- (81) (5)
Loss from discontinued operations  (44) (18) (2) (73) (388)
           
NET INCOME $129,719 $149,925 $109,826 $423,930 $312,766
           
Basic earnings per common share:          
Income from continuing operations $1.20 $1.40 $1.02 $3.94 $2.93
Loss from discontinued operations $ -- $ -- $ -- $ -- $ -- 
           
Net income  $1.20 $1.40 $1.02 $3.94 $2.93
Diluted earnings per common share:          
Income from continuing operations $1.18 $1.38 $1.01 $3.88 $2.87
Loss from discontinued operations $ -- $ -- $ -- $ -- $ --
           
Net income  $1.18 $1.38 $1.01 $3.88 $2.87
           
Weighted average shares outstanding:          
Basic 107,385 107,016 106,962 107,196 106,501
Diluted 109,042 108,425 108,874 108,798 108,550
 
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
     
CONSOLIDATED CONDENSED BALANCE SHEETS June 30
2012
September 30
2011
     
ASSETS    
Cash and cash equivalents $148,866 $364,246
Other current assets 786,133 584,538
Current assets of discontinued operations 7,578 7,529
Total current assets 942,577 956,313
Investments 382,527 347,924
Net property, plant, and equipment 4,170,303 3,677,070
Other assets 22,894 22,584
TOTAL ASSETS $5,518,301 $5,003,891
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities $408,433 $411,750
Current liabilities of discontinued operations 5,156 4,979
Total current liabilities 413,589 416,729
Non-current liabilities 1,232,700 1,079,565
Non-current liabilities of discontinued operations 2,422 2,550
Long-term notes payable 235,000 235,000
Total shareholders' equity 3,634,590 3,270,047
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,518,301 $5,003,891
 
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
     
  Nine Months Ended
June 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2012 2011
     
OPERATING ACTIVITIES:    
Net income $423,930 $312,766
Adjustment for loss from discontinued operations 73 388
Income from continuing operations 424,003 313,154
Depreciation 272,404 228,450
Changes in assets and liabilities (82,428) 157,282
Gain on sale of assets and investment securities  (14,365) (11,175)
Other 13,437 9,120
Net cash provided by operating activities from continuing operations 613,051 696,831
Net cash used in operating activities from discontinued operations (73) (388)
Net cash provided by operating activities 612,978 696,443
     
INVESTING ACTIVITIES:    
Capital expenditures (774,243) (493,776)
Proceeds from sale of assets  31,838 25,670
Acquisition of TerraVici Drilling Solutions -- (4,000)
Net cash used in investing activities (742,405) (472,106)
     
FINANCING ACTIVITIES:    
Repurchase of common stock (71,404) --
Dividends paid (22,620) (19,222)
Exercise of stock options 2,374 13,734
Tax withholdings related to net share settlements of restricted stock (1,514)  --
Increase in bank overdraft 3,955 4,844
Net proceeds from (payments for) short-term and long-term debt -- (10,000)
Excess tax benefit from stock-based compensation 3,256 11,352
Net cash used in financing activities (85,953) 708
     
Net increase (decrease) in cash and cash equivalents (215,380) 225,045
Cash and cash equivalents, beginning of period 364,246 63,020
Cash and cash equivalents, end of period $148,866 $288,065
     
SEGMENT REPORTING Three Months Ended Nine Months Ended
  March 31 June 30 June 30
  2012 2012 2011 2012 2011
  (in thousands, except days and per day amounts)
U.S. LAND OPERATIONS        
Revenues $658,804 $706,786 $539,372 $1,983,369 $1,511,649
Direct operating expenses 362,898 382,418 289,311 1,057,622 802,383
General and administrative expense 8,195 7,227 6,330 22,720 18,573
Depreciation 77,752 81,457 66,899 232,678 191,211
Segment operating income $209,959 $235,684 $176,832 $670,349 $499,482
           
Revenue days 21,444 21,977 18,912 64,389 53,958
Average rig revenue per day $27,625 $28,096 $25,970 $27,537 $25,536
Average rig expense per day $13,826 $13,337 $12,748 $13,160 $12,391
Average rig margin per day $13,799 $14,759 $13,222 $14,377 $13,145
Rig utilization 91% 89% 87% 90% 85%
           
OFFSHORE OPERATIONS        
Revenues $43,421 $41,617 $54,569 $135,830 $150,022
Direct operating expenses 28,473 28,972 36,664 90,646 101,527
General and administrative expense 1,955 1,725 1,532 5,412 4,495
Depreciation 3,175 3,200 3,429 10,030 10,580
Segment operating income  $9,818 $7,720 $12,944 $29,742 $33,420
           
Revenue days 627 606 638 1,930 1,843
Average rig revenue per day $49,514 $49,539 $54,417 $51,013 $50,889
Average rig expense per day $28,953 $32,638 $28,597 $31,020 $28,234
Average rig margin per day $20,561 $16,901 $25,820 $19,993 $22,655
Rig utilization  74% 74% 78% 77% 75%
           
INTERNATIONAL LAND OPERATIONS        
Revenues $64,088 $67,482 $46,051 $192,305 $169,689
Direct operating expenses 56,637 52,495 39,131 154,296 130,459
General and administrative expense 795 939 825 2,512 2,633
Depreciation 7,630 7,773 6,719 22,257 20,411
Segment operating income (loss)  $ (974) $6,275 $ (624) $13,240 $16,186
           
Revenue days 1,761 1,852 1,437 5,342 4,781
Average rig revenue per day $31,401 $33,362 $29,201 $31,974 $32,188
Average rig expense per day $26,517 $25,658 $23,848 $24,775 $23,791
Average rig margin per day $4,884 $7,704 $5,353 $7,199 $8,397
Rig utilization  75% 77% 65% 77% 69%
           
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 $66,419 $89,313 $48,236 $210,294 $133,798
Offshore Operations $4,267 $3,550 $12,817 $13,615 $28,231
International Land Operations $8,791 $5,696 $4,089 $21,499 $15,798
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 per the information above to income from continuing operations before income taxes as reported on the Consolidated Statements of Income (in thousands).
           
   Three Months Ended Nine Months Ended
  March 31 June 30 June 30
  2012 2012 2011 2012 2011
Operating income           
U.S. Land $209,959 $235,684 $176,832 $670,349 $499,482
Offshore 9,818 7,720 12,944 29,742 33,420
International Land (974) 6,275 (624) 13,240 16,186
Other (1,833) (2,161) (2,078) (5,782) (5,044)
Segment operating income  $216,970 $247,518 $187,074 $707,549 $544,044
Corporate general and administrative (16,860) (15,685) (15,384) (48,900) (42,665)
Other depreciation (1,668) (2,041) (1,423) (5,265) (4,153)
Inter-segment elimination 763 1,001 663 2,470 1,921
Income from asset sales 7,820 1,862 3,488 14,365 10,262
Operating income  $207,025 $232,655 $174,418 $670,219 $509,409
           
Other income (expense):          
Interest and dividend income 356 329 903 1,021 1,573
Interest expense (2,421) (2,411) (3,221) (7,293) (13,185)
Gain on sale of investment securities --  -- 913  -- 913
Other (42) 309 (190) 288 208
Total other income (expense) (2,107) (1,773) (1,595) (5,984) (10,491)
           
Income from continuing operations before income taxes $204,918 $230,882 $172,823 $664,235 $498,918
CONTACT:  Investor Relations
          investor.relations@hpinc.com
          (918) 588-5207

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