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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Second Quarter Earnings and New FlexRig(R) Contracts

Thursday, April 28, 2011

Helmerich & Payne, Inc. Announces Second Quarter Earnings and New FlexRig(R) Contracts03:00 EDT Thursday, April 28, 2011TULSA, Okla., April 28, 2011 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $98,961,000 ($0.91 per diluted share) from operating revenues of $604,406,000 for its second fiscal quarter ended March 31, 2011, compared to income from continuing operations of $74,105,000 ($0.68 per diluted share) from operating revenues of $436,579,000 during last year's second fiscal quarter ended March 31, 2010. Included in this year's second fiscal quarter income from continuing operations are $0.02 per share of after-tax gains related to the sale of three conventional U.S. land rigs, tubulars, and other used drilling equipment, as well as $0.04 per share of after-tax expenses unrelated to normal operations. Also included in income from continuing operations for the second fiscal quarter of 2010 was approximately $0.01 per share related to the sale of used drilling equipment. Net income for the second fiscal quarter of 2011 was $98,790,000 ($0.91 per diluted share), compared to net income of $46,747,000 ($0.43 per diluted share) during last year's second fiscal quarter. For the six months ended March 31, 2011, the Company reported income from continuing operations of $203,326,000 ($1.87 per diluted share) from operating revenues of $1,199,048,000 compared with income from continuing operations of $137,907,000 ($1.28 per diluted share) from operating revenues of $832,821,000 during the six months ended March 31, 2010. Included in income from continuing operations for the first six months of fiscal 2011 and 2010 were approximately $0.04 and $0.01, respectively, of gains from the sale of used drilling equipment. Net income for the first six months of fiscal 2011 was $202,940,000 ($1.87 per diluted share), compared to net income of $109,982,000 ($1.02 per diluted share) during the first six months of fiscal 2010. Helmerich & Payne, Inc. also announced today that it signed contracts to build and operate eight additional FlexRigs, bringing to 14 the number of additional FlexRig commitments announced since the Company's January 27, 2011, earnings release. These rigs will be built and operated in the U.S. under multi-year term contracts that provide attractive dayrates and economic returns. Since March 2010, the Company has announced contracts for the construction of 45 new build FlexRigs, of which 26 have been completed. The remaining 19 rigs are expected to be delivered during calendar 2011.  President and CEO Hans Helmerich commented, "The major shift across the industry towards oil and liquids rich plays is increasingly employing unconventional drilling techniques to conventional reservoirs. Basins that were historically characterized by shallow, vertical well paths are now seeing a greater number of drilling efforts apply horizontal well paths and longer lateral sections. These trends have clearly and favorably influenced market demand for H&P's FlexRigs. We expect demand for new FlexRigs to remain strong and we are uniquely positioned to compete in this expanding market. The value creation that our customers experience while using FlexRigs has helped to make H&P the most active contractor in the U.S. land drilling market, and we are focused on maintaining our competitive advantage." Segment operating income for U.S. land operations was $164,289,000 for the second fiscal quarter of 2011, compared with $90,723,000 for last year's second fiscal quarter and $158,361,000 for this year's first fiscal quarter. The sequential increase in segment operating income was primarily attributable to increased drilling activity related to the delivery of new build FlexRigs, as the Company's quarterly revenue days for the segment increased by approximately three percent to 17,797 revenue days from the first quarter of fiscal 2011 to the second fiscal quarter of 2011. The corresponding average rig revenue per day also sequentially increased by $688 to $25,640 during the second fiscal quarter of 2011. The $688 increase in average rig revenue per day was partially offset by a $525 increase in average rig expense per day, generating a sequential increase of $163 in average rig margin per day, from $13,020 during this year's first fiscal quarter to $13,183 during this year's second fiscal quarter. Rig utilization for the Company's U.S. land segment was 85% for this year's second fiscal quarter, compared with 70% for last year's second fiscal quarter and 84% for this year's first fiscal quarter. At March 31, 2011, the Company's U.S. land segment had 205 contracted rigs and 32 idle rigs. The 205 contracted rigs included 136 rigs under term contracts.  Segment operating income for the Company's offshore operations was $11,476,000 for the second fiscal quarter of 2011, compared with $13,625,000 for last year's second fiscal quarter and $9,000,000 for this year's first fiscal quarter. The sequential increase in segment operating income was primarily a function of a higher average rig margin per day, which was $23,747 for this year's second fiscal quarter as compared to $18,065 for this year's first fiscal quarter. The number of revenue days increased to 618 during the second fiscal quarter of 2011, from 587 during the first fiscal quarter of 2011. The Company's international land operations reported segment operating income of $2,443,000 for this year's second fiscal quarter, compared with $11,784,000 for last year's second fiscal quarter and $14,367,000 for this year's first fiscal quarter. The decrease in segment operating income was primarily attributable to a decline in revenues associated with the Company's prior operations in Mexico, as the remaining three rigs in that country were relocated to the U.S. early in the second fiscal quarter of 2011. The number of revenue days for this year's second fiscal quarter decreased by approximately 26% to 1,421 as compared to this year's first fiscal quarter. Average rig margin per day decreased to $7,106 in the second fiscal quarter of 2011 from $11,625 in the first fiscal quarter of 2011.   Helmerich & Payne, Inc. is primarily a contract drilling company. As of April 28, 2011, the Company's existing fleet included 240 land rigs in the U.S., 24 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete during calendar 2011 another 19 new H&P-designed and operated FlexRigs under long-term contracts with customers. Upon completion of these commitments, the Company's global land fleet is expected to include a total of 224 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 EndedSix Months Ended  Dec. 31March 31March 31CONSOLIDATED STATEMENTS OF INCOME20102011201020112010            Operating Revenues:            Drilling – U.S. Land $476,818 $495,459 $324,439 $972,277 $609,508  Drilling – Offshore 44,867 50,586 47,765 95,453 100,055  Drilling – International Land 68,954 54,684 61,535 123,638 117,332  Other 4,003 3,677 2,840 7,680 5,926   594,642 604,406 436,579 1,199,048 832,821            Operating costs and expenses:          Operating costs, excluding depreciation 330,046 340,039 248,480 670,085 457,178  Depreciation  73,180 76,161 63,493 149,341 124,210  General and administrative 19,889 24,406 20,543 44,295 41,182  Research and development 3,470 3,640 3,342 7,110 5,157  Income from asset sales (2,669) (4,105) (985) (6,774) (1,996)   423,916 440,141 334,873 864,057 625,731            Operating income 170,726164,265101,706334,991207,090             Other income (expense):            Interest and dividend income 314 356 287 670 596  Interest expense (4,451) (5,513) (4,038) (9,964) (8,732)  Other 166 232 23 398 38   (3,971) (4,925) (3,728) (8,896) (8,098)             Income from continuing operations before income taxes  166,755 159,340 97,978 326,095 198,992 Income tax provision  62,390 60,379 23,873 122,769 61,085 Income from continuing operations 104,365 98,961 74,105 203,326 137,907                     Loss from discontinued operations, before income taxes (215) (176) (22,744) (391) (25,612) Income tax provision  -- (5) 4,614 (5) 2,313 Loss from discontinued operations  (215) (171) (27,358) (386) (27,925)            NET INCOME $104,150 $98,790 $46,747 $202,940 $109,982             Basic earnings per common share:          Income from continuing operations $0.98 $0.92 $0.70 $1.90 $1.30  Loss from discontinued operations $ -- $ -- $(0.26) $ -- $(0.26)              Net Income  $0.98 $0.92 $0.44 $1.90 $1.04           Diluted earnings per common share:          Income from continuing operations $0.96 $0.91 $0.68 $1.87 $1.28  Loss from discontinued operations $ -- $ -- $(0.25) $ -- $(0.26)              Net Income  $0.96 $0.91 $0.43 $1.87 $1.02             Weighted average shares outstanding:          Basic 106,031 106,515 105,711 106,270 105,642  Diluted 107,852 108,595 107,484 108,375 107,349  HELMERICH & PAYNE, INC.Unaudited (in thousands)      CONSOLIDATED CONDENSED BALANCE SHEETS 3/31/11 9/30/10      ASSETS      Cash and cash equivalents $240,685 $63,020  Other current assets 554,627 579,514 Current assets of discontinued operations 8,275 10,270  Total current assets 803,587 652,804  Investments 480,939 320,712  Net property, plant, and equipment 3,420,635 3,275,020  Other assets 20,551 16,834TOTAL ASSETS $4,725,712 $4,265,370            LIABILITIES AND SHAREHOLDERS' EQUITY      Current liabilities $209,866 $224,646 Current liabilities of discontinued operations 5,882 7,992  Total current liabilities 215,748 232,638 Non-current liabilities 1,030,577 862,989  Non-current liabilities of discontinued operations 2,393 2,278  Long-term notes payable 350,000 360,000  Total shareholders' equity 3,126,994 2,807,465      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,725,712 $4,265,370      HELMERICH & PAYNE, INC.Unaudited (in thousands)        Six Months Ended March 31CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20112010      OPERATING ACTIVITIES:      Net income $202,940 $109,982  Adjustment for loss from discontinued operations 386 27,925  Income from continuing operations 203,326 137,907 Depreciation 149,341 124,210 Changes in assets and liabilities 100,094 (43,578) Gain on sale of assets  (6,774) (1,996) Other 6,146 10,071 Net cash provided by operating activities from  continuing operations 452,133 226,614 Net cash used in operating activities from discontinued operations (386) (1,105) Net cash provided by operating activities 451,747 225,509      INVESTING ACTIVITIES:     Capital expenditures (286,251) (142,318) Proceeds from sale of assets and short-term investments 17,022 16,133 Purchase of short-term investments  -- (16) Acquisition of TerraVici Drilling Solutions (4,000)  -- Net cash used in investing activities from continuing operations (273,229) (126,201) Net cash used in investing activities from discontinued operations  -- (86) Net cash used in investing activities (273,229) (126,287)      FINANCING ACTIVITIES:      Dividends paid (12,784) (10,587)  Decrease in bank overdraft  -- (2,038)  Exercise of stock options 11,115 309 Net proceeds from (payments for) short-term and long-term debt (10,000) (85,000) Excess tax benefit from stock-based compensation 10,816 1,897 Net cash used in financing activities (853) (95,419)      Net increase in cash and cash equivalents 177,665 3,803Cash and cash equivalents, beginning of period 63,020 96,142Cash and cash equivalents, end of period $240,685 $99,945            SEGMENT REPORTING Three Months Ended Six Months Ended  Dec. 31March 31March 31 20102011201020112010     (in thousands, except days and per day amounts)U.S. LAND OPERATIONS         Revenues $476,818 $495,459 $324,439 $972,277 $609,508 Direct operating expenses 252,238 260,834 176,424 513,072 314,779 General and administrative expense 5,855 6,388 6,074 12,243 12,735 Depreciation 60,364 63,948 51,218 124,312 99,748 Segment operating income $158,361 $164,289 $90,723 $322,650 $182,246             Revenue days 17,249 17,797 13,114 35,046 24,374 Average rig revenue per day $24,952 $25,640 $23,382 $25,301 $23,719 Average rig expense per day $11,932 $12,457 $12,095 $12,198 $11,627 Average rig margin per day $13,020 $13,183 $11,287 $13,103 $12,092 Rig utilization  84% 85% 70% 84% 66%                        OFFSHORE OPERATIONS         Revenues $44,867 $50,586 $47,765 $95,453 $100,055 Direct operating expenses 30,927 33,936 29,696 64,863 62,272 General and administrative expense 1,410 1,553 1,478 2,963 3,108 Depreciation 3,530 3,621 2,966 7,151 5,944 Segment operating income  $9,000 $11,476 $13,625 $20,476 $28,731             Revenue days 587 618 660 1,205 1,360 Average rig revenue per day $45,350 $52,507 $48,225 $49,021 $50,662 Average rig expense per day $27,285 $28,760 $25,202 $28,042 $26,654 Average rig margin per day $18,065 $23,747 $23,023 $20,979 $24,008 Rig utilization  71% 76% 81% 74% 83%                        INTERNATIONAL LAND OPERATIONS       Revenues $68,954 $54,684 $61,535 $123,638 $117,332 Direct operating expenses 46,535 44,793 41,980 91,328 79,261 General and administrative expense 868 940 716 1,808 1,207 Depreciation 7,184 6,508 7,055 13,692 13,971 Segment operating income  $14,367 $2,443 $11,784 $16,810 $22,893             Revenue days 1,923 1,421 1,766 3,344 3,397 Average rig revenue per day $33,789 $33,043 $33,283 $33,472 $33,006 Average rig expense per day $22,164 $25,937 $22,116 $23,767 $21,814 Average rig margin per day $11,625 $7,106 $11,167 $9,705 $11,192 Rig utilization  76% 64% 73% 71% 65%             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 $46,419 $39,143 $17,813 $85,562 $31,373 Offshore Operations $7,283 $8,131 $5,880 $15,414 $12,612 International Land Operations $3,979 $7,730 $2,758 $11,709 $5,212 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 Company's Venezuelan operation, which was historically an operating segment within the International Land Segment, was discontinued in the third quarter of fiscal 2010. Consequently, its operating results are excluded from the segment data tables above.  The following table reconciles operating income per the information above to income from continuing operations before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Income (in thousands).  Three Months EndedSix Months Ended Dec. 31March 31March 31 20102011201020112010Operating income           U.S. Land  $158,361 $164,289 $90,723  $322,650  $182,246 Offshore  9,000  11,476 13,625  20,476  28,731 International Land  14,367  2,443 11,784  16,810  22,893 Other  (1,151)  (1,815)  (2,423)  (2,966)  (3,217) Segment operating income  $180,577 $176,393 $113,709  $356,970  $230,653 Corporate general and administrative  (11,756)  (15,525) (12,275)  (27,281)  (24,132) Other depreciation  (1,381)  (1,349)  (1,335)  (2,730)  (2,671) Inter-segment elimination  617  641  622  1,258  1,244 Income from asset sales  2,669  4,105  985  6,774  1,996  Operating income  $170,726 $164,265$101,706 $334,991 $207,090             Other income (expense):            Interest and dividend income  314  356  287  670  596  Interest expense  (4,451)  (5,513)  (4,038)  (9,964)  (8,732)  Other  166  232  23  398  38 Total other income (expense)  (3,971)  (4,925)  (3,728)  (8,896)  (8,098)             Income from continuing operations before income taxes  $166,755 $159,340$97,978$326,095 $198,992CONTACT: Mike Drickamer (918) 588-5190