HP Helmerich and Payne Inc

TULSA, Okla., May 1 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc. (NYSE:HP) reported net income of $102,054,000 ($0.96 per diluted share) from operating revenues of $473,644,000 for its second fiscal quarter ended March 31, 2008, compared with net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 during last year's second fiscal quarter ended March 31, 2007. Included in this year's second quarter net income are $0.04 per share of after-tax gains from the sale of portfolio securities and drilling equipment. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales. For the six months ended March 31, 2008, the Company reported net income of $209,884,000 ($1.98 per diluted share) from operating revenues of $930,307,000, compared with net income of $217,647,000 ($2.08 per diluted share) from operating revenues of $758,935,000 during the six months ended March 31, 2007. Included in net income were after-tax gains from the sale of portfolio securities and drilling equipment, including insurance proceeds, of $0.07 per share for the first six months of fiscal 2008, and $0.39 per share for the first six months of fiscal 2007. Helmerich & Payne, Inc. also announced today that it had signed three additional long-term contracts with three exploration and production companies to operate three new FlexRigs(R)* in the U.S. The name of the customers and other terms were not disclosed. This brings to 97 the total number of new FlexRigs with at least three-year term commitments that have been announced by the Company since March 2005. To date, 87 of these new builds have been completed, with the remaining 10 scheduled for completion during this calendar year. FlexRigs are expected to represent about 70% of the Company's global land fleet by the end of calendar 2008. Company President and C.E.O. Hans Helmerich commented, "During the Company's second quarter, we experienced declines in our offshore and international business, while our U.S. land segment continued to perform at historically high levels. As we move into the second half of the fiscal year, we expect to deliver operating income growth in all three of our drilling segments. As evidenced by our announcement today, we continue to see a very encouraging level of demand for new H&P FlexRigs, which have clearly become the standard for reliability, performance and well cost efficiencies in U.S. land drilling. With energy market conditions, both domestic and internationally, pointing toward increasing and more challenging drilling activity, we are very well positioned to compete and continue to gain market share while delivering attractive returns to our shareholders." The Company's U.S. land rig business continued to experience an increase in revenue day activity and higher average rig revenue per day during the quarter. The increase in daily revenue, however, was more than offset by daily field cost increases. Segment operating income from the Company's U.S. land rig operations was up substantially from one year ago, but relatively flat sequentially with $143,841,000 of operating income during this year's first fiscal quarter and $143,740,000 operating income during this year's second quarter. The Company recorded a sequential $409 increase in rig revenue per day to $24,415, which is the segment's highest quarterly average in the Company's history and reflects the strong dayrate premium that the Company's fleet commands in the U.S. land market. However, average rig expenses increased by $662 to $11,557 per day. As a result, the average rig margin per day decreased sequentially by $253 to $12,858 per day. The Company's U.S. land rig utilization was 94% during this year's second quarter, compared with 97% for last year's second quarter and 95% for this year's first quarter. Additionally, the Company's U.S. land rig activity increased 3% sequentially to 14,272 revenue days during this year's second quarter, as more newly constructed rigs were deployed to the field. Given improving market conditions, the Company expects continued expansion in its U.S. land rig activity during the third fiscal quarter, as well as strong daily rig margins in the segment. Segment operating income for the Company's offshore operations was $3,603,000 for this year's second quarter, compared with $3,805,000 for last year's second quarter and $4,114,000 for this year's first quarter. Average rig utilization in the offshore segment increased sequentially from 56% to 65% during the quarter ending March 31, 2008, and is expected to increase to over 80% during the current third fiscal quarter. As a result and in combination with anticipated improvement in average daily rig margins in the third quarter, the Company expects offshore segment operating income to increase from the second to the third fiscal quarter. All nine of the Company's offshore segment rigs are contracted, eight of which are currently active. The ninth rig is scheduled to commence operations in the second quarter of fiscal 2009. Segment operating income for the Company's international land operations was $12,752,000 for this year's second quarter, compared with $19,874,000 for last year's second quarter and $21,156,000 for this year's first quarter. The sequential decline this year was mostly attributable to an adjustment of $5.9 million relating to the depreciation of certain assets recorded in prior years. (This adjustment had a negative impact to the second quarter's net income of approximately $0.04 per share.) As expected, the decline in segment operating income was also attributable to a reduction in average rig utilization from 81% to 73% during the second quarter. The average rig margin per day corresponding to the quarter was $14,396, or 2% higher than that of the first quarter. Average international rig utilization is expected to increase to over 75% during the third fiscal quarter ending June 30, 2008. Helmerich & Payne, Inc. is primarily a contract drilling company. As of May 1, 2008, the Company's existing fleet included 175 U.S. land rigs, 27 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(R) is a registered trademark of Helmerich & Payne, Inc. HELMERICH & PAYNE, INC. Unaudited (in thousands, except per share data) Three Months Ended Six Months Ended CONSOLIDATED Dec. 31 March 31 March 31 STATEMENTS OF INCOME 2007 2008 2007 2008 2007 Operating Revenues: Drilling - U.S. Land $347,644 $365,263 $269,145 $712,907 $539,045 Drilling - U.S. Offshore 27,281 29,789 28,703 57,070 64,457 Drilling - International 78,602 75,757 71,950 154,359 149,796 Real Estate 3,136 2,835 2,738 5,971 5,637 456,663 473,644 372,536 930,307 758,935 Operating costs and other: Operating costs, excluding depreciation 235,795 253,958 199,456 489,753 398,923 Depreciation 43,984 51,872 32,952 95,856 63,103 General and administrative 13,903 14,090 13,350 27,993 23,963 Gain from involuntary conversion of long-lived assets (4,810) - (5,170) (4,810) (5,170) Income from asset sales (842) (1,946) (32,336) (2,788) (32,822) 288,030 317,974 208,252 606,004 447,997 Operating income 168,633 155,670 164,284 324,303 310,938 Other income (expense): Interest and dividend income 1,115 1,220 1,034 2,335 2,278 Interest expense (4,831) (4,773) (1,913) (9,604) (2,832) Gain on sale of investment securities 130 5,476 177 5,606 26,514 Other (616) 180 66 (436) 130 (4,202) 2,103 (636) (2,099) 26,090 Income before income taxes and equity in income of affiliate 164,431 157,773 163,648 322,204 337,028 Income tax provision 60,146 58,784 59,338 118,930 123,436 Equity in income of affiliate net of income taxes 3,545 3,065 2,551 6,610 4,055 NET INCOME $107,830 $102,054 $106,861 $209,884 $217,647 Earnings per common share: Basic $1.04 $0.98 $1.04 $2.02 $2.11 Diluted $1.02 $0.96 $1.02 $1.98 $2.08 Average common shares outstanding: Basic 103,509 103,883 103,239 103,695 103,276 Diluted 105,615 106,090 104,832 105,740 104,841 HELMERICH & PAYNE, INC. Unaudited (in thousands) CONSOLIDATED CONDENSED BALANCE SHEETS 3/31/08 9/30/07 ASSETS Cash and cash equivalents $90,736 $89,215 Other current assets 453,249 409,749 Total current assets 543,985 498,964 Investments 205,660 223,360 Net property, plant, and equipment 2,395,862 2,152,616 Other assets 10,611 10,429 TOTAL ASSETS $3,156,118 $2,885,369 LIABILITIES AND SHAREHOLDERS' EQUITY Total current liabilities $210,996 $226,612 Total noncurrent liabilities 451,042 398,241 Long-term notes payable 480,000 445,000 Total shareholders' equity 2,014,080 1,815,516 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,156,118 $2,885,369 HELMERICH & PAYNE, INC. Unaudited (in thousands) Six Months Ended March 31 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2008 2007 OPERATING ACTIVITIES: Net income $209,884 $217,647 Depreciation 95,856 63,103 Changes in assets and liabilities (23,149) 32,364 Gain from involuntary conversion of long-lived assets (4,810) (5,170) Gain on sale of assets and investment securities (8,264) (59,198) Other (6,262) (2,881) Net cash provided by operating activities 263,255 245,865 INVESTING ACTIVITIES: Capital expenditures (321,711) (433,900) Insurance proceeds from involuntary conversion of long-lived assets 8,500 5,170 Proceeds from sale of assets and investments 11,437 122,759 Other - 214 Net cash used in investing activities (301,774) (305,757) FINANCING ACTIVITIES: Dividends paid (9,354) (9,311) Repurchase of common stock - (17,621) Net decrease in bank overdraft - (10,195) Proceeds from exercise of stock options 8,284 872 Net proceeds from short-term and long-term debt 35,000 151,279 Excess tax benefit from stock-based compensation 6,110 155 Net cash provided by financing activities 40,040 115,179 Net increase in cash and cash equivalents 1,521 55,287 Cash and cash equivalents, beginning of period 89,215 33,853 Cash and cash equivalents, end of period $90,736 $89,140 SEGMENT REPORTING Three Months Ended Six Months Ended Dec. 31 March 31 March 31 2007 2008 2007 2008 2007 (in thousands, except days and per day amounts) U.S. LAND OPERATIONS Revenues $347,644 $365,263 $269,145 $712,907 $539,045 Direct operating expenses 165,565 181,757 132,399 347,322 259,756 General and administrative expense 4,394 4,257 3,151 8,651 6,603 Depreciation 33,844 35,509 23,813 69,353 44,496 Segment operating income $143,841 $143,740 $109,782 $287,581 $228,190 Revenue days 13,877 14,272 11,156 28,159 21,704 Average rig revenue per day $24,006 $24,415 $23,032 $24,213 $23,615 Average rig expense per day $10,895 $11,557 $10,774 $11,231 $10,747 Average rig margin per day $13,111 $12,858 $12,258 $12,982 $12,868 Rig utilization 95% 94% 97% 94% 98% OFFSHORE OPERATIONS Revenues $27,281 $29,789 $28,703 $57,070 $64,457 Direct operating expenses 19,211 21,918 20,709 41,129 44,847 General and administrative expense 1,098 1,114 1,500 2,212 2,958 Depreciation 2,858 3,154 2,689 6,012 5,467 Segment operating income $4,114 $3,603 $3,805 $7,717 $11,185 Revenue days 460 514 522 974 1,110 Average rig revenue per day $41,833 $41,209 $29,603 $41,503 $34,488 Average rig expense per day $27,160 $29,144 $19,885 $28,207 $22,012 Average rig margin per day $14,673 $12,065 $9,718 $13,296 $12,476 Rig utilization 56% 65% 64% 60% 68% SEGMENT REPORTING Three Months Ended Six Months Ended Dec. 31 March 31 March 31 2007 2008 2007 2008 2007 (in thousands, except days and per day amounts) INTERNATIONAL LAND OPERATIONS Revenues $78,602 $75,757 $71,950 $154,359 $149,796 Direct operating expenses 50,782 50,129 45,704 100,911 93,364 General and administrative expense 938 1,300 1,031 2,238 1,594 Depreciation 5,726 11,576 5,341 17,302 10,890 Segment operating income $21,156 $12,752 $19,874 $33,908 $43,948 Revenue days 1,981 1,795 2,262 3,776 4,628 Average rig revenue per day $34,522 $39,695 $27,001 $36,981 $27,354 Average rig expense per day $20,353 $25,299 $15,722 $22,704 $15,291 Average rig margin per day $14,169 $14,396 $11,279 $14,277 $12,063 Rig utilization 81% 73% 93% 77% 95% 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. A management contract for a customer-owned platform rig working in an international location was moved from the International segment to the Offshore segment in the fourth quarter of fiscal 2007. The amounts for Offshore and International land segments for the three and six months ended March 31, 2007 have been restated to reflect this change. Reimbursed amounts were as follows: U.S. Land Operations $14,277 $16,809 $12,196 $31,086 $26,505 Offshore Operations $2,862 $3,343 $3,840 $6,205 $7,544 International Land Operations $10,213 $4,505 $10,824 $14,718 $22,980 REAL ESTATE Revenues $3,136 $2,835 $2,738 $5,971 $5,637 Direct operating expenses 985 904 1,165 1,889 2,008 Depreciation 627 630 612 1,257 1,201 Segment operating income $1,524 $1,301 $961 $2,825 $2,428 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 before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Income (in thousands). SEGMENT REPORTING Three Months Ended Six Months Ended Dec. 31 March 31 March 31 2007 2008 2007 2008 2007 Operating Income U.S. Land $143,841 $143,740 $109,782 $287,581 $228,190 Offshore 4,114 3,603 3,805 7,717 11,185 International Land 21,156 12,752 19,874 33,908 43,948 Real Estate 1,524 1,301 961 2,825 2,428 Segment operating income $170,635 $161,396 $134,422 $332,031 $285,751 Corporate general and administrative (7,473) (7,419) (7,668) (14,892) (12,808) Other depreciation (929) (1,003) (497) (1,932) (1,049) Inter-segment elimination 748 750 521 1,498 1,052 Gain from involuntary conversion of long-lived assets 4,810 - 5,170 4,810 5,170 Income from asset sales 842 1,946 32,336 2,788 32,822 Operating income $168,633 $155,670 $164,284 $324,303 $310,938 Other income (expense): Interest and dividend income 1,115 1,220 1,034 2,335 2,278 Interest expense (4,831) (4,773) (1,913) (9,604) (2,832) Gain on sale of investment securities 130 5,476 177 5,606 26,514 Other (616) 180 66 (436) 130 Total other income (expense) (4,202) 2,103 (636) (2,099) 26,090 Income before income taxes and equity in income of affiliate $164,431 $157,773 $163,648 $322,204 $337,028 DATASOURCE: Helmerich & Payne, Inc. CONTACT: Juan Pablo Tardio of Helmerich & Payne, Inc., +1-918-588-5383 Web site: http://www.hpinc.com/

Copyright