HELMERICH & PAYNE, INC. 
By TULSA, Okla., Jan. 28 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc. (NYSE: HP) reported net income of $63,235,000 ($0.59 per diluted share) from operating revenues of $399,843,000 for its first fiscal quarter ended December 31, 2009, compared with net income of $145,275,000 ($1.36 per diluted share) from operating revenues of $623,754,000 during last year's first fiscal quarter ended December 31, 2008. Included in both this year's and last year's first quarter net income are less than $.01 per share of gains from the sale of drilling equipment and involuntary conversion of long lived assets.
Segment operating income for U.S. land operations was $91,523,000 for this year's first fiscal quarter, compared with $194,048,000 for last year's first fiscal quarter and $90,137,000 for last year's fourth fiscal quarter. The decline as compared to last year's first quarter was primarily a result of significantly lower activity levels in the U.S. land drilling market. Excluding the impact of income corresponding to early contract terminations and to compensation from customers that requested delivery delays during last year's fourth and this year's first fiscal quarters, the average rig revenue per day declined sequentially by $295 to $22,724 for the first fiscal quarter, and the average rig margin per day only slightly declined sequentially by $45 to $11,651 for the first fiscal quarter.
Approximately $1,400 of the average rig revenue and margin per day corresponding to U.S. land operations for this year's first fiscal quarter was a result of early contract termination revenue and of revenue related to requested delivery delays for new builds under long-term contracts. This compares to approximately $2,850 included in the rig revenue and margin per day averages corresponding to last year's fourth fiscal quarter for the same type of revenue. Additional revenue of approximately $19 million corresponding to new build early terminations (all of which took place before the fourth fiscal quarter of 2009) and to requested delivery delays are expected to be recognized during the last three quarters of fiscal 2010. At this point, the Company expects almost 50% of this amount to favorably impact revenue during the second fiscal quarter, and the remainder to favorably impact the last two quarters of fiscal 2010.
Rig utilization for the Company's U.S. land segment was 62% for this year's first fiscal quarter, compared with 95% for last year's first fiscal quarter and 55% for last year's fourth fiscal quarter. At December 31, 2009, the Company's U.S. land segment had 143 contracted rigs and 67 idle and available rigs. The 143 contracted rigs included 101 rigs under term contracts, five of which were new FlexRigs®* waiting on customers that requested delivery delays. Delayed FlexRigs do not generate revenue days and are not considered for purposes of calculating and reporting rig utilization rates. In its U.S. land segment, the Company now expects an average of approximately 102 rigs to remain under term contracts during the second fiscal quarter, 97 during the third fiscal quarter and 87 during the fourth fiscal quarter of 2010. The corresponding estimated annual averages for rigs already under term contracts for fiscal 2010, fiscal 2011 and fiscal 2012 are 95, 60 and 36 rigs, respectively.
Segment operating income for the Company's offshore operations was $15,106,000 for the first fiscal quarter of 2010, compared with $14,710,000 for last year's first fiscal quarter and $12,023,000 for last year's fourth fiscal quarter. Average rig utilization of the Company's nine platform rigs in the offshore segment was 85% for this year's first fiscal quarter, compared with 89% during last year's first fiscal quarter and 78% during last year's fourth fiscal quarter. Average rig margins per day increased to $24,936 during this year's first fiscal quarter from $20,679 during last year's fourth fiscal quarter.
The Company's international land operations recorded segment operating income of $8,403,000 for this year's first fiscal quarter, compared with operating income of $22,628,000 for the first fiscal quarter of 2009, and an operating loss of $6,252,000 for the fourth fiscal quarter of 2009. The operating income decline as compared to last year's first quarter is mostly attributable to the reduction in the Company's level of activity in Venezuela from 11 to no active rigs. The sequential quarter to quarter improvement was primarily a result of the Company's incremental activity in Mexico and Argentina, as well as a very successful short-term project executed in Africa during the first fiscal quarter of 2010. Average international rig utilization for the first fiscal quarter was 44%, compared with 98% during last year's first fiscal quarter, and 41% during last year's fourth fiscal quarter.
After the adjustments corresponding to the recent devaluation in Venezuela, the total invoiced amount by the Company that remains due from PDVSA as of January 12, 2010, is valued at approximately $57 million (U.S. currency equivalent), including approximately $46 million in invoices issued since the Company changed its revenue recognition to cash basis for its Venezuelan operation. Invoices issued under cash basis revenue recognition include approximately $42 million in potential future revenue and approximately $4 million in non-revenue billings. As reported in its press release dated January 12, 2010, the Company expects the recent devaluation in Venezuela to result in a currency exchange loss of approximately $20 million to be recorded in the second fiscal quarter ending March 31, 2010. All 11 H&P rigs that formerly worked for PDVSA have completed their contract obligations and are currently idle. The Company will continue to pursue future drilling opportunities in Venezuela for these 11 conventional rigs, but it does not expect to return to work in Venezuela until additional progress is made on pending receivable collections and on conversion of local currency to U.S. dollars.
President and CEO Hans Helmerich commented, "We are encouraged by the improvements we saw during the first fiscal quarter, particularly with the sequential increases in operating income and rig utilization in each of our markets. Customers are signaling that their spending plans are increasing in 2010 and the Company is well positioned with the newest and most technologically advanced land rig fleet to deliver the best value in the market. While there is still an oversupply of land rigs in the U.S., only a fraction are higher technology rigs which are clearly the preferred tool for the increasing and prolific shale projects requiring horizontal and directional drilling."
Helmerich & Payne, Inc. is primarily a contract drilling company. As of January 28, 2010, the Company's existing fleet included 210 land rigs in the U.S., 39 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete another three new H&P-designed and operated FlexRigs during fiscal 2010 under long-term contracts with customers. Upon completion of these commitments, the Company's global land fleet will include a total of 190 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.
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 Financial Condition and Results of Operations" 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
September 30 December 31
CONSOLIDATED STATEMENTS OF INCOME 2009 2009 2008
Operating revenues:
Drilling - U.S. Land $269,088 $285,069 $475,204
Drilling - Offshore 47,278 52,290 50,488
Drilling - International 43,100 59,398 95,178
Other 2,751 3,086 2,884
----- ----- -----
362,217 399,843 623,754
------- ------- -------
Operating costs and expenses:
Operating costs, excluding depreciation 196,997 212,693 330,928
Depreciation 63,509 62,803 54,772
General and administrative 13,606 20,844 15,148
Research and development 3,041 1,815 1,677
Gain from involuntary conversion of - - (277)
long-lived assets
Income from asset sales (1,278) (698) (914)
------ ---- ----
275,875 297,457 401,334
------- ------- -------
Operating income 86,342 102,386 222,420
Other income (expense):
Interest and dividend income 487 439 1,786
Interest expense (4,443) (4,694) (3,700)
Other 194 15 128
--- --- ---
(3,762) (4,240) (1,786)
------ ------ ------
Income before income taxes and equity
in income of affiliates 82,580 98,146 220,634
Income tax provision 31,092 34,911 81,248
Equity in income of affiliates
net of income taxes - - 5,889
--- --- -----
NET INCOME $51,488 $63,235 $145,275
======= ======= ========
Earnings per common share:
Basic $0.49 $0.60 $1.38
Diluted $0.48 $0.59 $1.36
Average common shares outstanding:
Basic 105,464 105,575 105,249
Diluted 106,868 107,238 106,310
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
CONSOLIDATED CONDENSED BALANCE SHEETS 12/31/09 9/30/09
------------------------------------- -------- -------
ASSETS
Cash and cash equivalents $153,053 $141,486
Other current assets 427,443 381,446
------- -------
Total current assets 580,496 522,932
------- -------
Investments 366,672 356,404
Net property, plant, and equipment 3,273,643 3,265,907
Other assets 14,803 15,781
------ ------
TOTAL ASSETS $4,235,614 $4,161,024
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $320,347 301,906
Total noncurrent liabilities 779,285 756,109
Long-term notes payable 380,000 420,000
Total shareholders' equity 2,755,982 2,683,009
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,235,614 $4,161,024
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
Three Months Ended
December 31
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2009 2008
----------------------------------------------- ---- ----
OPERATING ACTIVITIES:
Net income $63,235 $145,275
Depreciation 62,803 54,772
Changes in assets and liabilities (12,200) 63,014
Gain from involuntary conversion of long-lived
assets - (277)
Gain on sale of assets (698) (914)
Other 7,010 7,291)
----- ------
Net cash provided by operating activities 120,150 254,579
------- -------
INVESTING ACTIVITIES:
Capital expenditures (64,754)(250,381)
Insurance proceeds from involuntary conversion of
long-lived assets - 277
Proceeds from sale of assets 2,486 1,411
Other (16) (16)
--- ---
Net cash used in investing activities (62,284)(248,709)
------- --------
FINANCING ACTIVITIES:
Dividends paid (5,287) (5,273)
Net increase(decrease)in bank overdraft (2,038) 2,330
Exercise of stock options (623) 300
Net proceeds from (payment of) notes payable (40,000) 13,267
and long-term debt
Excess tax benefit from stock-based compensation 1,649 17
----- ---
Net cash provided by (used in)financing
activities (46,299) 10,641
------- ------
Net increase in cash and cash equivalents 11,567 16,511
Cash and cash equivalents, beginning of period 141,486 121,513
------- -------
Cash and cash equivalents, end of period $153,053 $138,024
======== ========
SEGMENT REPORTING Three Months Ended
September 30 December 31
2009 2009 2008
(in thousands except days and per day amounts)
U.S. LAND OPERATIONS
--------------------
Revenues $269,088 $285,069 $475,204
Direct operating expenses 125,005 138,355 233,306
General and administrative expense 3,978 6,661 4,427
Depreciation 49,968 48,530 43,423
------ ------ ------
Segment operating income $90,137 $91,523 $194,048
Revenue days 9,902 11,260 16,322
Average rig revenue per day $25,895 $24,113 $27,066
Average rig expense per day $11,344 $11,083 $12,246
Average rig margin per day $14,551 $13,030 $14,820
Rig utilization 55% 62% 95%
OFFSHORE OPERATIONS
-------------------
Revenues $47,278 $52,290 $50,488
Direct operating expenses 31,423 32,576 31,762
General and administrative expense 975 1,630 1,052
Depreciation 2,857 2,978 2,964
----- ----- -----
Segment operating income $12,023 $15,106 $14,710
Revenue days 644 700 735
Average rig revenue per day $47,547 $52,960 $53,057
Average rig expense per day $26,868 $28,024 $29,468
Average rig margin per day $20,679 $24,936 $23,589
Rig utilization 78% 85% 89%
SEGMENT REPORTING Three Months Ended
September 30 December 31
2009 2009 2008
(in thousands except days and per day amounts)
INTERNATIONAL
LAND
OPERATIONS
-------------
Revenues $43,100 $59,398 $95,178
Direct
operating
expenses 40,204 41,297 65,648
General and
administrative
expense 857 696 696
Depreciation 8,291 9,002 6,206
----- ----- -----
Segment
operating
income
(loss) $(6,252) $8,403 $22,628
Revenue days 1,319 1,689 2,383
Average rig
revenue per
day $29,406 $33,714 $36,737
Average rig
expense per
day $26,162 $23,138 $24,320
Average rig
margin per
day $3,244 $10,576 $12,417
Rig
utilization 41% 44% 98%
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 $ 12,676 $ 13,560 $ 33,435
Offshore
Operations $ 8,498 $ 6,732 $ 5,466
International
Land
Operations $ 4,312 $ 2,454 $ 7,633
Segment operating income 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 before income taxes and equity in income of affiliates as
reported on the Consolidated Statements of Income (in thousands).
Three Months Ended
September 30 December 31
2009 2009 2008
Operating income (loss)
-----------------------
U.S. Land $90,137 $91,523 $194,048
Offshore 12,023 15,106 14,710
International Land (6,252) 8,403 22,628
Other (2,376) (794) (861)
------ ---- ----
Segment operating income $93,532 $114,238 $230,525
Corporate general & administrative (7,796) (11,857) (8,973)
Other depreciation (1,349) (1,336) (1,197)
Inter-segment elimination 677 643 874
Gain from involuntary conversion of
long-lived assets - - 277
Income from asset sales 1,278 698 914
----- --- ---
Operating income $86,342 $102,386 $222,420
Other income (expense):
Interest and dividend income 487 439 1,786
Interest expense (4,443) (4,694) (3,700)
Other 194 15 128
--- --- ---
Total other income (expense) (3,762) (4,240) (1,786)
------ ------ ------
Income before income taxes and
equity in income of affiliates $82,580 $98,146 $220,634
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SOURCE Helmerich & Payne, Inc.
