- H&P generated $856 million in operating cash flow during
fiscal 2019 representing an increase of approximately $300 million
from the prior year
- During the fourth fiscal quarter, even though completing an
acquisition, repurchasing debt and shares, the Company increased
its cash and short-term investment position by approximately $20
million from the prior quarter
- Quarterly U.S. Land revenue decreased $39 million to $545
million sequentially, while operating margins decreased by $23
million to $188 million sequentially; revenue days decreased to
18,765 from 19,846 in the prior quarter
- Quarterly U.S. Land adjusted average rig revenue of $25,365
per day decreased by roughly $400(1) per day, down approximately 2%
sequentially, while quarterly U.S. Land adjusted average rig margin
of roughly $10,400 per day decreased by approximately $520(1) per
day, down roughly 5% sequentially
- The Company has signed letters of intent (LOIs) to deploy
rigs in Bahrain, Abu Dhabi and Colombia
- H&P's drilling automation technology, AutoSlideSM, has
been commercially deployed in four U.S. shale basins, and has
drilled over 100 wells and 1.7 million feet of hole
- On September 4, 2019, Directors of the Company declared a
quarterly cash dividend of $0.71 per share
- During a challenging year, H&P exhibited its strengths
and market leadership by generating strong cash flows, gaining
market share, paying an industry leading dividend, and maintaining
a strong balance sheet
Helmerich & Payne, Inc. (NYSE: HP) reported income of $41
million or $0.37 per diluted share from operating revenues of $649
million for the quarter ended September 30, 2019, compared to a net
loss of $155 million, or $(1.42) per diluted share, on revenues of
$688 million for the quarter ended June 30, 2019. The net income
per diluted share for the fourth fiscal quarter and the net loss
for third fiscal quarter include $(0.01) and $(1.82), respectively,
of after-tax losses comprised of select items(2). For the fourth
fiscal quarter select items(2) were comprised of:
- $0.13 of after-tax gains pertaining to early termination
compensation, gains on sales and a reduction in the fair value of a
contingent liability
- $(0.14) of after-tax losses pertaining to abandonments and
accelerated depreciation, bond redemption fees, a lawsuit
settlement, losses from discontinued operations, acquisition costs
and a net loss related to our equity investments
Net cash provided by operating activities was $196 million for
the fourth quarter of fiscal 2019 compared to $250 million for the
third fiscal quarter of fiscal 2019.
For the fiscal year 2019, the Company reported a net loss of $34
million or $(0.34) per diluted share from operating revenues of
$2.8 billion. The net loss per diluted share includes $(2.09) of
after-tax losses comprised of select items(2), the most significant
of which are non-cash losses of $224 million related to impairments
of drilling equipment and spares driven by the downsizing of the
Flex4 rig fleet. Net cash provided by operating activities was $856
million in fiscal 2019 compared to $558 million in fiscal 2018.
President and CEO John Lindsay commented, “The Company continued
to perform efficiently despite a sizable pull-back in industry
activity. The steep decline this past quarter is a result of the
over-spend of E&P capital budgets that occurred during the
first six months of the calendar year. Reflective of the most
recent trends, and customer conversations, we expect to see more
stability in rig demand over the next couple of months and heading
into calendar 2020, but capital discipline will remain the dominant
theme.
"In addition to capital spending discipline, customers are
becoming more selective in the quality and capability of the rigs
they employ, as the decline in legacy rigs drilling horizontal
wells is more pronounced compared to the decline felt in the
super-spec(3) space. In previous industry down drafts, we've
experienced rigs released regardless of performance or capability,
so this discernment on rig performance is welcome news. Rig
contractors continue to write off legacy rig fleets, resulting from
low-performing, less capable rigs in the U.S. market. Despite the
softness experienced this year, super-spec utilization is still
strong in the most active basins and the Company has remained
disciplined in its approach to pricing. We believe services and
solutions that deliver lower costs and better well performance
deserve compensation that is commensurate to the value they add.
Our people and technology are making that happen every day.
"The results from our H&P Technologies (HPT) segment this
quarter are not only reflective of the decreased drilling activity,
but also the slow and often difficult process of introducing change
into the industry. HPT's purpose is to drive development of an
autonomous drilling platform that improves safety, drilling
consistency and accuracy, completions costs and better well
economics for our customers. One example of this is AutoSlide,
which is automated sliding while directional drilling, and it is
currently commercialized in four U.S. basins. We have now drilled
over 100 autonomous horizontal wells comprising 1.7 million feet of
vertical, curve and lateral footage. As true with many industrial
innovations, the largest barrier to technology adoption is the
human workflow changes new technologies can trigger. The adoption
resistance we are experiencing today is reminiscent of the initial
responses we had over 15 years ago when we rolled out our first
AC-drive FlexRigs. Accordingly, we believe customers will continue
to adopt and utilize these software solutions because of the value
propositions they provide like risk mitigation of parent-child well
interference. These incremental investments in well performance and
productivity on the front end will pay dividends over the entire
life of the well for our customers.
"The traction we experienced in the prior quarter with regard to
our international markets continues. The Company signed letters of
intent to deploy a third FlexRig in Bahrain, two FlexRigs in Abu
Dhabi, a high horsepower AC drive rig in Colombia, and our FlexApps
to a customer in Argentina. Each of these successes demonstrate
increasing awareness in international markets to the value H&P
can deliver from both a rig and digital technology perspective. The
elections are over in Argentina, but their impact is still very
uncertain. While we did not experience any meaningful operational
disruptions this last quarter, we did have a customer delay a
commitment to move a second super-spec FlexRig from the U.S. We
continue to remain committed and optimistic about the ultimate
potential in the Vaca Muerta basin and its importance to
Argentina."
Vice President and CFO Mark Smith also commented, "The Company
executed well during a volatile quarter and finished the fiscal
year generating approximately $196 million in cash flow from
operations and roughly $142 million in free cash flow. Looking out
into fiscal 2020, we expect customers to remain disciplined with
their spending behavior and have based our initial capex budget on
those expectations. Accordingly, we anticipate our fiscal 2020
capex to range between $275 and $300 million, which should result
in another year of healthy free cash flow generation.
"Additionally, during the fourth fiscal quarter we made a
decision to rationalize a portion of our equity holdings. Utilizing
these proceeds and cash on hand, the Company funded debt
redemptions and share repurchases. H&P’s ability to generate
relatively strong cash flow and maintain our strong balance sheet
positioned us well to address challenges and opportunities while we
continued to fund a strong dividend during this past fiscal
year.”
John Lindsay concluded, “Delivering performance in a challenging
environment is not new at H&P. The dedication of our employees
combined with our rig fleet and digital technology solutions are
unmatched in the industry and give us a solid base to build and
innovate upon. With that, we will continue to partner with
customers to achieve mutual long-term success."
Operating Segment Results for the Fourth
Quarter of Fiscal 2019
U.S. Land Operations(4):
Segment operating income increased by $203.4 million to $59.2
million sequentially. The increase in operating results was
primarily attributable to the impairment of drilling equipment and
spares that negatively impacted prior quarter results. Absent the
impact of impairment, segment operating income declined due to
sequential decreases in revenue days and the adjusted average rig
margin per day. The number of quarterly revenue days decreased
sequentially by approximately 5%.
Adjusted average rig revenue per day declined by $390 to
$25,365(1) largely due to a decrease in our FlexServices (trucking,
casing running, rental equipment) during the quarter and some
slight softening in the average dayrate. The adjusted average rig
expense per day increased sequentially by $128 to $14,934(1).
Corresponding adjusted average rig margin per day decreased $518 to
$10,431(1).
The segment’s depreciation expense for the quarter includes
non-cash charges of $4.6 million for abandonments and accelerated
depreciation of used drilling rig components related to rig
upgrades, compared to similar non-cash charges of $2.1 million
during the third fiscal quarter of 2019.
International Land Operations:
The segment operating loss decreased by $0.8 million to a loss
of $4.2 million sequentially. The decrease in operating loss was
primarily attributable to an impairment of drilling equipment and
spares that negatively impacted prior quarter results. Absent the
impact of the impairment, segment operating loss declined due to a
$3.5 million foreign currency loss related to our Argentina
operations and a sequential decrease in the average margin per day
caused by rig recommission costs associated with the deployment of
a super-spec FlexRig in Argentina, as well as regional price
concessions in Argentina. Revenue days increased during the quarter
by 6% to 1,598 while the adjusted average rig margin per day
decreased by $2,423 to $5,481(1).
Offshore Operations:
Segment operating income decreased by $2.3 million to $2.8
million sequentially. The number of quarterly revenue days on
H&P-owned platform rigs increased sequentially by approximately
1%, while the average rig margin per day decreased sequentially by
$4,960 to $7,460 primarily due to a rig experiencing unexpected
repair down time during the quarter. Segment operating income from
management contracts on customer-owned platform rigs contributed
approximately $2.2 million, compared to approximately $2.0 million
during the prior quarter.
H&P Technologies(4):
The segment had operating income of $0.6 million compared to an
operating loss of $2.7 million during the previous quarter. Fiscal
fourth quarter results benefited from a change in the fair value of
a contingent liability. Excluding this benefit, HPT would have had
an operating loss of $8.3 million. The sequential increase in the
operating loss was due primarily to lower revenues associated with
lower H&P and industry rig counts.
Operational Outlook for the First Quarter
of Fiscal 2020
U.S. Land Operations:
- Quarterly revenue days expected to decrease by approximately
5.5%-6.5% sequentially; we expect to exit the quarter at between
187-197 active rigs
- Average rig revenue per day expected to be down slightly to
between $24,750-$25,250 (excluding any impact from early
termination revenue)
- Average rig expense per day expected to be between
$14,350-$14,850
International Land Operations:
- Quarterly revenue days expected to decrease roughly 2%
sequentially, representing an average rig count of approximately 17
rigs for the quarter
- Average rig margin per day expected to decrease to
$3,000-$4,000 as result of rig start-up costs in Abu Dhabi, Bahrain
and Colombia
Offshore Operations:
- Quarterly revenue days expected to decrease by approximately
15% sequentially, representing an average rig count of 5 rigs for
the quarter as one rig returns to the shipyard for repairs prior to
redeployment
- Average rig margin per day expected to increase to
$12,000-$13,000
- Management contracts expected to generate approximately $2
million in operating income
H&P Technologies:
- Fiscal first quarter revenue is expected to be between $15-$18
million
Other Estimates for Fiscal 2020
- Capital expenditures are expected to be approximately $275 to
$300 million; 57-62% expected for maintenance, 17-19% expected for
tubular purchases, 11-15% for skidding to walking conversions, and
roughly 10% for corporate and information technology projects
- General and administrative expenses for fiscal 2020 are
expected to be approximately $200 million
- Depreciation is expected to be approximately $540 million
Select Items Included in Net Income per
Diluted Share
Fourth Quarter of Fiscal 2019 net income of $0.37 per diluted
share included $(0.01) in after-tax losses comprised of the
following:
- $0.01 of after-tax income from long-term contract early
termination compensation from customers
- $0.05 of after-tax gains related to the change in fair value of
a contingent liability
- $0.07 of after-tax gains related to the sale of used drilling
equipment
- $(0.01) of after-tax losses related to bond redemption
fees
- $(0.01) of after-tax losses related to acquisition costs
- $(0.01) of after-tax losses from discontinued operations
related to adjustments resulting from currency fluctuations
- $(0.02) of a net after-tax loss related to the fair market
adjustments to equity investments and the sale of a portion of
equity investments
- $(0.03) of non-cash after-tax losses from abandonment charges
and accelerated depreciation related to the decommissioning of used
drilling equipment
- $(0.06) of after-tax losses from the settlement of a
lawsuit
Third Quarter of Fiscal 2019 net loss of $(1.42) per diluted
share included $(1.82) in after-tax losses comprised of the
following:
- $0.01 of after-tax income from long-term contract early
termination compensation from customers
- $0.06 of income tax adjustments related to certain discrete tax
items
- $0.08 of after-tax gains related to the sale of used drilling
equipment
- $(0.02) of non-cash after-tax losses from abandonment charges
and accelerated depreciation related to the decommissioning of used
drilling equipment
- $(0.06) of non-cash after-tax losses from inventory
write-downs, some of which result from the downsizing of the Flex4
rig fleet
- $(0.11) of non-cash after-tax losses related to the fair market
adjustment of equity investments
- $(1.78) of non-cash after-tax losses from impairments of
drilling equipment and spares driven by the downsizing of the Flex4
rig fleet
Fiscal 2019 net loss of $(0.34) per diluted share included
$(2.09) in after-tax losses comprised of the following:
- $0.05 of after-tax gains related to the change in fair value of
a contingent liability
- $0.07 of income tax adjustments related to certain discrete tax
items
- $0.08 of after-tax income from long-term contract early
termination compensation from customers
- $0.27 of after-tax gains related to the sale of used drilling
equipment
- $(0.01) of after-tax losses related to acquisition costs
- $(0.01) of after-tax losses from discontinued operations
related to adjustments resulting from currency fluctuations
- $(0.03) of after-tax losses related to bond exchange and
redemption fees
- $(0.06) of non-cash after-tax losses from inventory
write-downs, some of which result from the downsizing of the Flex4
rig fleet
- $(0.11) of non-cash after-tax losses from abandonment charges
and accelerated depreciation related to the decommissioning of used
drilling equipment
- $(0.18) of after-tax losses from the settlement of
lawsuits
- $(0.38) of a net after-tax loss related to the fair market
adjustments of equity investments and the sale of a portion of
equity investments
- $(1.78) of non-cash after-tax losses from impairments of
drilling equipment and spares driven by the downsizing of the Flex4
rig fleet
Conference Call
A conference call will be held on Friday, November 15, 2019 at
11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith,
Vice President and CFO, and Dave Wilson, Director of Investor
Relations to discuss the Company’s fiscal fourth quarter 2019
results. Dial-in information for the conference call is (866)
342-8591 for domestic callers or (203) 518-9713 for international
callers. The call access code is ‘Helmerich’. You may also listen
to the conference call that will be broadcast live over the
Internet by logging on to the Company’s website at
http://www.hpinc.com and accessing the corresponding link through
the Investor Relations section by clicking on “INVESTORS” and then
clicking on “Event Calendar” to find the event and the link to the
webcast.
About Helmerich & Payne,
Inc.
Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE:
HP) is committed to delivering industry leading levels of drilling
productivity and reliability. H&P operates with the highest
level of integrity, safety and innovation to deliver superior
results for its customers and returns for shareholders. Through its
subsidiaries, the Company designs, fabricates and operates
high-performance drilling rigs in conventional and unconventional
plays around the world. H&P also develops and implements
advanced automation, directional drilling and survey management
technologies. H&P’s fleet includes 299 land rigs in the U.S.,
31 international land rigs and eight offshore platform rigs. For
more information, see H&P online at www.hpinc.com.
Forward-Looking Statements
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, operations outlook,
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 and 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. 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.
Note Regarding Trademarks. Helmerich & Payne, Inc. owns or
has rights to the use of trademarks, service marks and trade names
that it uses in conjunction with the operation of its business.
Some of the trademarks that appear in this release or otherwise
used by H&P include FlexRig, FlexApp and AutoSlide, which may
be registered or trademarked in the U.S. and other
jurisdictions.
(1) See the Selected Statistical & Operational Highlights
table(s) for details on the revenues or charges excluded on a per
revenue day basis. The inclusion or exclusion of these amounts
results in adjusted revenue, expense, and/or margin per day
figures, which are all non-GAAP measures.
(2) See the corresponding section of this release for details
regarding the select items.
(3) The term “super-spec” herein refers to rigs with the
following specifications: AC drive, 1,500 hp drawworks, 750,000
lbs. hookload rating, 7,500 psi mud circulating system and
multiple-well pad capability.
(4) Fiscal third quarter 2019 U.S. Land and H&P Technologies
segment results have been adjusted to reflect the reclassification
of FlexApp revenues and expenses from the U.S. Land segment to the
H&P Technologies segment.
HELMERICH & PAYNE,
INC.
(Unaudited)
(in thousands, except per
share data)
Three Months Ended
Year Ended
September 30,
June 30,
September 30,
September 30,
2019
2019
2018
2019
2018
CONSOLIDATED STATEMENTS OF
OPERATIONS
As adjusted
As adjusted
Operating revenues
Contract drilling services
$
645,759
$
684,788
$
693,677
$
2,785,557
$
2,474,458
Other
3,291
3,186
3,148
12,933
12,810
649,050
687,974
696,825
2,798,490
2,487,268
Operating costs and expenses
Contract drilling services operating
expenses, excluding depreciation and amortization
430,778
443,114
448,135
1,803,204
1,647,557
Operating expenses applicable to other
revenues
1,072
1,414
1,325
5,382
5,053
Depreciation and amortization
134,887
143,297
150,281
562,803
583,802
Research and development
6,121
7,066
5,018
27,467
18,167
Selling, general and administrative
49,812
46,590
52,252
194,416
199,257
Asset impairment charge
—
224,327
23,128
224,327
23,128
Gain on sale of assets
(12,641
)
(9,960
)
(7,527
)
(39,691
)
(22,660
)
610,029
855,848
672,612
2,777,908
2,454,304
Operating income (loss) from continuing
operations
39,021
(167,874
)
24,213
20,582
32,964
Other income (expense)
Interest and dividend income
2,607
2,349
2,337
9,468
8,017
Interest expense
(8,043
)
(6,257
)
(6,471
)
(25,188
)
(24,265
)
Gain (loss) on investment securities
(4,260
)
(13,271
)
(1
)
(54,488
)
1
Other
(546
)
(1,598
)
1,146
(1,596
)
(876
)
(10,242
)
(18,777
)
(2,989
)
(71,804
)
(17,123
)
Income (loss) from continuing operations
before income taxes
28,779
(186,651
)
21,224
(51,222
)
15,841
Income tax provision (benefit)
(13,110
)
(32,031
)
16,859
(18,712
)
(477,169
)
Income (loss) from continuing
operations
41,889
(154,620
)
4,365
(32,510
)
493,010
Income (loss) from discontinued operations
before income taxes
10,050
7,244
14,262
32,848
23,389
Income tax provision
10,763
7,306
13,984
33,994
33,727
Income (loss) from discontinued
operations
(713
)
(62
)
278
(1,146
)
(10,338
)
Net income (loss)
$
41,176
$
(154,682
)
$
4,643
$
(33,656
)
$
482,672
Basic earnings (loss) per common
share:
Income (loss) from continuing
operations
$
0.38
$
(1.42
)
$
0.02
$
(0.33
)
$
4.49
Loss from discontinued operations
$
(0.01
)
$
—
$
—
$
(0.01
)
$
(0.10
)
Net income (loss)
$
0.37
$
(1.42
)
$
0.02
$
(0.34
)
$
4.39
Diluted earnings (loss) per common
share:
Income (loss) from continuing
operations
$
0.38
$
(1.42
)
$
0.02
$
(0.33
)
$
4.47
Loss from discontinued operations
$
(0.01
)
$
—
$
—
$
(0.01
)
$
(0.10
)
Net income (loss)
$
0.37
$
(1.42
)
$
0.02
$
(0.34
)
$
4.37
Weighted average shares outstanding (in
thousands):
Basic
108,896
109,425
108,948
109,216
108,851
Diluted
108,950
109,425
109,397
109,216
109,387
“As Adjusted” – Effective October 1, 2018, we adopted
Accounting Standards Update No. 2017-07, Compensation-Retirement
Benefits – (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost. The
statement of operations for the three months and year ended
September 30, 2018 have been adjusted to reflect changes that were
applied retrospectively from that adoption.
HELMERICH & PAYNE,
INC.
(Unaudited)
(in thousands)
September 30,
September 30,
CONDENSED CONSOLIDATED BALANCE
SHEETS
2019
2018
Assets
Cash and cash equivalents
$
347,943
$
284,355
Short-term investments
52,960
41,461
Other current assets
714,183
789,734
Total current assets
1,115,086
1,115,550
Investments
31,991
98,696
Property, plant and equipment, net
4,502,084
4,857,382
Other noncurrent assets
190,354
143,239
Total Assets
$
5,839,515
$
6,214,867
Liabilities and Shareholders'
Equity
Current liabilities
$
410,238
$
377,168
Long-term debt, net
479,356
493,968
Other noncurrent liabilities
922,357
946,742
Noncurrent liabilities - discontinued
operations
15,341
14,254
Total shareholders’ equity
4,012,223
4,382,735
Total Liabilities and Shareholders'
Equity
$
5,839,515
$
6,214,867
HELMERICH & PAYNE,
INC.
(Unaudited)
(in thousands)
Year Ended
September 30
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
2019
2018
As adjusted
OPERATING ACTIVITIES:
Net income (loss)
$
(33,656
)
$
482,672
Adjustment for loss from discontinued
operations
1,146
10,338
Income (loss) from continuing
operations
(32,510
)
493,010
Depreciation and amortization
562,803
583,802
Asset impairment charge
224,327
23,128
Amortization of debt discount and debt
issuance costs
1,732
1,067
Provision for bad debt
2,321
2,193
Stock-based compensation
34,292
31,687
Pension settlement charge
1,953
913
Loss (gain) on investment securities
54,488
(1
)
Gain on sale of assets
(39,691
)
(22,660
)
Deferred income tax benefit
(44,554
)
(486,758
)
Other
(5,248
)
6,710
Changes in assets and liabilities
95,900
(75,070
)
Net cash provided by operating activities
from continuing operations
855,813
558,021
Net cash used in operating activities from
discontinued operations
(62
)
(169
)
Net cash provided by operating
activities
855,751
557,852
INVESTING ACTIVITIES:
Capital expenditures
(458,402
)
(466,584
)
Purchase of short-term investments
(97,652
)
(71,049
)
Payment for acquisition of business, net
of cash acquired
(16,163
)
(47,886
)
Proceeds from sale of short-term
investments
86,765
68,776
Proceeds from sale of marketable
securities
11,999
—
Proceeds from asset sales
50,817
44,381
Net cash used in investing
activities
(422,636
)
(472,362
)
FINANCING ACTIVITIES:
Dividends paid
(313,421
)
(308,430
)
Debt issuance costs paid
(3,912
)
—
Proceeds from stock option exercises
3,053
6,355
Payments for employee taxes on net
settlement of equity awards
(6,418
)
(7,114
)
Payment of contingent consideration from
acquisition of business
—
(10,625
)
Payments for early extinguishment of long
term debt
(12,852
)
—
Share repurchase
(42,779
)
—
Net cash used in financing
activities
(376,329
)
(319,814
)
Net increase (decrease) in cash and
cash equivalents and restricted cash
56,786
(234,324
)
Cash and cash equivalents and
restricted cash, beginning of period
326,185
560,509
Cash and cash equivalents and
restricted cash, end of period
$
382,971
$
326,185
“As Adjusted” – Effective October 1, 2018, we adopted Accounting
Standards Update No. 2016-18, Statement of Cash Flows – (Topic
230): Restricted Cash and Accounting Standards Update No. 2016-15,
Statement of Cash Flows – (Topic 230): Classification of Certain
Cash Receipts and Cash Payments. The cash flow statement for the
year ended September 30, 2018 has been adjusted to reflect changes
that were applied retrospectively from those adoptions.
Three Months Ended
Year Ended
September 30,
June 30,
September 30,
September 30
SEGMENT REPORTING
2019
2019
2018
2019
2018
(in thousands, except operating
statistics)
As adjusted
As adjusted
As adjusted
U.S. LAND OPERATIONS
Operating revenues
$
545,060
$
584,184
$
584,870
$
2,366,201
$
2,063,362
Direct operating expenses
356,704
372,980
368,896
1,514,641
1,346,192
Research and development
188
165
63
653
262
Selling, general and administrative
expense
9,864
11,451
15,365
44,141
58,157
Depreciation
119,060
126,922
131,824
496,770
504,805
Asset impairment charge
—
216,908
5,695
216,908
5,695
Segment operating income (loss)
$
59,244
$
(144,242
)
$
63,027
$
93,088
$
148,251
Revenue days
18,765
19,846
21,035
81,805
77,980
Average rig revenue per day
$
25,478
$
25,788
$
24,336
$
25,433
$
23,349
Average rig expense per day
15,440
15,146
14,069
15,024
14,152
Average rig margin per day
$
10,038
$
10,642
$
10,267
$
10,409
$
9,197
Rig utilization
68
%
62
%
65
%
67
%
61
%
INTERNATIONAL LAND OPERATIONS
Operating revenues
$
48,353
$
46,283
$
59,387
$
211,731
$
238,356
Direct operating expenses
43,119
34,148
44,958
157,856
177,938
Selling, general and administrative
expense
1,399
1,150
699
5,624
3,658
Depreciation
8,042
8,592
10,782
35,466
46,826
Asset impairment charge
—
7,419
10,616
7,419
10,616
Segment operating income (loss)
$
(4,207
)
$
(5,026
)
$
(7,668
)
$
5,366
$
(682
)
Revenue days
1,598
1,510
1,818
6,426
6,696
Average rig revenue per day
$
28,199
$
29,669
$
30,909
$
31,269
$
33,830
Average rig expense per day
22,722
21,650
22,251
21,626
24,211
Average rig margin per day
$
5,477
$
8,019
$
8,658
$
9,643
$
9,619
Rig utilization
56
%
51
%
55
%
55
%
49
%
OFFSHORE OPERATIONS
Operating revenues
$
38,468
$
37,674
$
38,482
$
147,635
$
142,500
Direct operating expenses
32,148
28,869
26,615
114,306
101,477
Selling, general and administrative
expense
1,004
1,147
1,493
3,725
4,890
Depreciation
2,499
2,582
2,589
10,010
10,394
Segment operating income
$
2,817
$
5,076
$
7,785
$
19,594
$
25,739
Revenue days
552
546
552
2,163
2,036
Average rig revenue per day
$
43,072
$
39,643
$
36,424
$
37,478
$
35,331
Average rig expense per day
35,612
27,222
24,972
28,663
26,009
Average rig margin per day
$
7,460
$
12,421
$
11,452
$
8,815
$
9,322
Rig utilization
75
%
75
%
75
%
74
%
70
%
H&P TECHNOLOGIES
Operating revenues
$
13,878
$
16,647
$
10,938
$
59,990
$
30,239
Direct operating expenses
(874
)
7,472
7,913
17,935
23,511
Research and development
5,730
4,801
4,955
24,511
17,905
Selling, general and administrative
expense
6,471
5,093
4,699
22,038
15,588
Depreciation and amortization
1,928
1,942
1,824
7,696
7,153
Asset impairment charge
—
—
5,637
—
5,637
Segment operating income (loss)
$
623
$
(2,661
)
$
(14,090
)
$
(12,190
)
$
(39,555
)
“As Adjusted” – Effective October 1, 2018, and during the fourth
quarter of fiscal year 2019, we implemented organizational changes,
consistent with the manner in which our chief operating decision
maker evaluates performance and allocates resources. Effective
October 1, 2018, technology reporting units previously reported in
“Other” within our segment disclosures are now managed and
presented within the new H&P Technologies reportable segment.
As a result, beginning with the reporting of first quarter of
fiscal year 2019, our operations are organized into the following
reportable business segments: U.S. Land, Offshore, International
Land and H&P Technologies. Additionally, during the fourth
quarter of fiscal year 2019, we migrated our FlexApp offerings into
our H&P Technologies segment. The activity of our FlexApps was
previously included in our U.S. Land segment. All segment
disclosures have been restated, as practicable, for these segment
changes.
Operating statistics exclude the effects of offshore platform
management contracts and 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:
Three Months Ended
Year Ended
September 30,
June 30,
September 30,
September 30,
2019
2019
2018
2019
2018
U.S. Land Operations
$
66,966
$
72,386
$
72,965
$
285,614
$
242,617
International Land Operations
3,291
1,483
3,194
10,797
11,828
Offshore Operations
7,899
7,277
5,925
26,433
20,279
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 (loss) from continuing operations
before income taxes as reported on the Consolidated Statements of
Operations.
Three Months Ended
Year Ended
September 30,
June 30,
September 30,
September 30,
(in thousands)
2019
2019
2018
2019
2018
As adjusted
As adjusted
As adjusted
Operating income (loss)
U.S. Land
$
59,244
$
(144,242
)
$
63,027
$
93,088
$
148,251
International Land
(4,207
)
(5,026
)
(7,668
)
5,366
(682
)
Offshore
2,817
5,076
7,785
19,594
25,739
H&P Technologies
623
(2,661
)
(14,090
)
(12,190
)
(39,555
)
Other
1,388
(729
)
1,427
3,375
6,268
Segment operating income (loss)
$
59,865
$
(147,582
)
$
50,481
$
109,233
$
140,021
Gain on sale of assets
12,641
9,960
7,527
39,691
22,660
Corporate selling, general and
administrative costs and corporate depreciation
(33,485
)
(30,252
)
(33,795
)
(128,342
)
(129,717
)
Operating income (loss)
$
39,021
$
(167,874
)
$
24,213
$
20,582
$
32,964
Other income (expense):
Interest and dividend income
$
2,607
$
2,349
$
2,337
$
9,468
$
8,017
Interest expense
(8,043
)
(6,257
)
(6,471
)
(25,188
)
(24,265
)
Gain (loss) on investment securities
(4,260
)
(13,271
)
(1
)
(54,488
)
1
Other
(546
)
(1,598
)
1,146
(1,596
)
(876
)
Total unallocated amounts
(10,242
)
(18,777
)
(2,989
)
(71,804
)
(17,123
)
Income (loss) from continuing
operations before income taxes
$
28,779
$
(186,651
)
$
21,224
$
(51,222
)
$
15,841
“As Adjusted” – Effective October 1, 2018, and during the fourth
quarter of fiscal year 2019, we implemented organizational changes,
consistent with the manner in which our chief operating decision
maker evaluates performance and allocates resources. Effective
October 1, 2018, technology reporting units previously reported in
“Other” within our segment disclosures are now managed and
presented within the new H&P Technologies reportable segment.
As a result, beginning with the reporting of first quarter of
fiscal year 2019, our operations are organized into the following
reportable business segments: U.S. Land, Offshore, International
Land and H&P Technologies. Additionally, during the fourth
quarter of fiscal year 2019, we migrated our FlexApp offerings into
our H&P Technologies segment. The activity of our FlexApps was
previously included in our U.S. Land segment. Our real estate
operations and our incubator program for new research and
development projects are included in "Other". All segment
disclosures have been restated, as practicable, for these segment
changes. Additionally, effective October 1, 2018, we adopted
Accounting Standards Update No. 2017-07, Compensation-Retirement
Benefits – (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost.
Operating results for the three months and year ended September 30,
2018 have been adjusted to reflect changes that were applied
retrospectively from that adoption.
SUPPLEMENTARY STATISTICAL
INFORMATION
Unaudited
SELECTED STATISTICAL &
OPERATIONAL HIGHLIGHTS
(Used to determine adjusted per
day statistics for revenue and expense, which are non-GAAP
measures)
Three Months Ended
(in dollars per revenue day)
September 30, 2019
June 30, 2019
U.S. Land Operations
Early contract termination revenue
$
113
$
33
Total impact on U.S. Land revenue per
day:
113
33
Settlement of lawsuit
506
—
Inventory write-downs
—
340
Total impact on U.S. Land expense per
day:
506
340
International Land Operations
Early contract termination revenue
—
115
Total impact on International Land revenue
per day:
—
115
U.S. LAND RIG COUNTS &
MARKETABLE FLEET STATISTICS
November 14,
September 30,
June 30,
Q4FY19
2019
2019
2019
Average
U.S. Land Operations
Term Contract Rigs
127
124
143
133
Spot Contract Rigs
63
70
71
71
Total Contracted Rigs
190
194
214
204
Idle or Other Rigs
109
105
85
95
Total Marketable Fleet
299
299
299
299
H&P GLOBAL FLEET UNDER
TERM CONTRACT STATISTICS
Number of Rigs Already Under
Long-Term Contracts(1)
(Estimated Quarterly Average — as
of 11/14/19)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Segment
FY20
FY20
FY20
FY20
FY21
FY21
FY21
U.S. Land Operations
130.5
102.9
81.3
63.7
43.3
18.6
12.9
International Land Operations
11.0
7.2
2.1
1.0
1.0
1.0
1.0
Offshore Operations
—
—
—
—
—
—
—
Total
141.5
110.1
83.4
64.7
44.3
19.6
13.9
(1) All of the above rig contracts have original terms equal to or
in excess of six months and include provisions for early
termination fees.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191114005920/en/
Dave Wilson, Director of Investor Relations
investor.relations@hpinc.com (918)
588‑5190
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