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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Third Quarter Earnings and 20 New FlexRig(R) Contracts

Friday, July 29, 2011

Helmerich & Payne, Inc. Announces Third Quarter Earnings and 20 New FlexRig(R) Contracts03:00 EDT Friday, July 29, 2011TULSA, Okla., July 29, 2011 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $109,828,000 ($1.01 per diluted share) from operating revenues of $644,095,000 for its third fiscal quarter ended June 30, 2011, compared to income from continuing operations of $64,883,000 ($0.61 per diluted share) from operating revenues of $483,384,000 during last year's third fiscal quarter ended June 30, 2010. Included in this year's third fiscal quarter income from continuing operations are after-tax gains of $0.01 per share from the sale of portfolio securities and $0.02 per share from the sale of tubulars and other used drilling equipment. Also included in this year's third fiscal quarter income from continuing operations are $0.02 per share of after-tax expenses unrelated to normal operations during the quarter and attributable to the settlement of a lawsuit. Included in income from continuing operations for the third fiscal quarter of 2010 were after-tax gains of $0.01 per share from the sale of tubulars and other used drilling equipment. Net income for the third fiscal quarter of 2011 was $109,826,000 ($1.01 per diluted share), compared to a net loss of $36,715,000 (-$0.34 per diluted share) during last year's third fiscal quarter. For the nine months ended June 30, 2011, the Company reported income from continuing operations of $313,154,000 ($2.87 per diluted share) from operating revenues of $1,843,143,000 compared with income from continuing operations of $202,790,000 ($1.89 per diluted share) from operating revenues of $1,316,205,000 during the nine months ended June 30, 2010. Included in income from continuing operations for the first nine months of fiscal 2011 are after-tax gains of $0.01 per share from the sale of portfolio securities and $0.06 per share from the sale of tubulars and other used drilling equipment. Also included in income from continuing operations for the first nine months of fiscal 2011 are $0.06 per share of after-tax expenses unrelated to normal operations. Included in income from continuing operations for the first nine months of fiscal 2010 were after-tax gains of $0.03 per share from the sale of tubulars and other used drilling equipment. Net income for the first nine months of fiscal 2011 was $312,766,000 ($2.87 per diluted share), compared to net income of $73,276,000 ($0.68 per diluted share) during the first nine months of fiscal 2010. Helmerich & Payne, Inc. also announced today that, in addition to the 12 new FlexRig commitments announced earlier this month, the Company has entered into agreements to build and operate 20 additional FlexRigs. These 20 rigs will be built under multi-year term contracts with four exploration and production companies and are scheduled to be completed during fiscal 2012. The names of the customers and other terms were not disclosed. The Company has now announced commitments during this fiscal year to build a total of 58 new FlexRigs, all under multi-year term contracts with attractive dayrates and economic returns. This represents a 28 percent increase in the number of FlexRigs in the Company's fleet. Including the new builds announced today, 42 remain under construction and are currently being completed at the rate of approximately three FlexRigs per month. In response to the significant increase in demand for FlexRigs, the Company is now planning to increase the production cadence to four FlexRigs per month beginning October 2011. Consistent with the Company's long standing tradition of innovative leadership, Helmerich & Payne, Inc. also announced today the introduction of the FlexRig5 design, the fifth FlexRig generation. The FlexRig5 is ideally suited for long lateral drilling of multiple wells from a single location, which is increasingly in demand for plays such as unconventional shale reservoirs. The new design preserves the key performance features of H&P's flagship FlexRig3 combined with a bi-directional pad drilling system and equipment capacities suitable for wells in excess of 24,000 feet of measured depth. The FlexRig5 will help the Company expand into new markets as it provides its customers with a broader offering. Upon completion of the announced rig orders, the Company will have produced eleven FlexRig5 rigs. President and CEO Hans Helmerich commented, "We are pleased with the Company's third quarter results and the announcement of 20 additional rig orders, bringing our quarterly total to 32 new builds. Our introduction of the FlexRig5 reflects our ongoing commitment to innovative design and driving enhanced rig capacity and performance. It promises to deliver all the FlexRig safety, performance and reliability features that our customers have come to rely upon in a greater depth capacity, multi-well pad drilling application." Segment operating income for U.S. land operations was $176,832,000 for the third fiscal quarter of 2011, compared with $103,138,000 for last year's third fiscal quarter and $164,289,000 for this year's second fiscal quarter. The sequential increase in segment operating income was primarily attributable to increased drilling activity related to the delivery of new build FlexRigs. The Company's quarterly revenue days for the segment increased by approximately six percent to 18,912 revenue days during the third fiscal quarter of 2011, from 17,797 revenue days during the second fiscal quarter of 2011. The corresponding average rig revenue per day also sequentially increased by $330 to $25,970 during the third fiscal quarter of 2011. The $330 increase in average rig revenue per day was largely offset by a $291 increase in average rig expense per day, generating only a slight sequential increase in average rig margin per day, from $13,183 during this year's second fiscal quarter to $13,222 during this year's third fiscal quarter. However, the lawsuit settlement mentioned in the first paragraph (that was unrelated to normal operations during the quarter) resulted in approximately $189 per day that is included in the average rig expense per day of $12,748 during the third fiscal quarter. Rig utilization for the Company's U.S. land segment was 87% for this year's third fiscal quarter, compared with 76% for last year's third fiscal quarter and 85% for this year's second fiscal quarter. At June 30, 2011, the Company's U.S. land segment had 213 contracted rigs and 32 idle rigs. The 213 contracted rigs included 140 rigs under term contracts. Segment operating income for the Company's offshore operations was $12,944,000 for the third fiscal quarter of 2011, compared with $11,231,000 for last year's third fiscal quarter and $11,476,000 for this year's second fiscal quarter. The sequential increase in segment operating income was primarily a function of a higher average rig margin per day, which was $25,820 for this year's third fiscal quarter as compared to $23,747 for this year's second fiscal quarter. The Company's international land operations reported a segment operating loss of $624,000 for this year's third fiscal quarter, compared with operating income of $9,893,000 for last year's third fiscal quarter and $2,443,000 for this year's second fiscal quarter. The sequential decline in segment operating income was primarily a function of a lower average rig margin per day, which was $5,353 for this year's third fiscal quarter as compared to $7,106 for this year's second fiscal quarter. Helmerich & Payne, Inc. is primarily a contract drilling company. As of July 29, 2011, the Company's existing fleet included 249 land rigs in the U.S., 24 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete by the end of fiscal 2012 another 42 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 have a total of 315 rigs, including 267 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. 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 EndedNine Months Ended  March 31June 30June 30CONSOLIDATED STATEMENTS OF OPERATIONS20112011201020112010            Operating Revenues:           Drilling – U.S. Land $ 495,459 $ 539,372  $366,989 $1,511,649 $ 976,497 Drilling – Offshore  50,586  54,569  53,131  150,022  153,186 Drilling – International Land  54,684  46,051  60,045  169,689  177,377 Other  3,677  4,103  3,219  11,783  9,145    604,406  644,095  483,384  1,843,143  1,316,205            Operating costs and expenses:           Operating costs, excluding depreciation  340,039  365,586  285,583  1,035,671  742,761 Depreciation  76,161  79,109  65,208  228,450  189,418 General and administrative  24,406  24,071  20,114  68,366  61,296 Research and development  3,640  4,399  3,254  11,509  8,411 Income from asset sales  (4,105)  (3,488)  (2,249)  (10,262)  (4,245)    440,141  469,677  371,910  1,333,734  997,641            Operating income  164,265 174,418  111,474 509,409 318,564             Other income (expense):           Interest and dividend income  356  903  940  1,573  1,536 Interest expense  (5,513)  (3,221)  (3,961)  (13,185)  (12,693) Gain on sale of investment securities  --  913  --  913  -- Other  232  (190)  215  208  253    (4,925)  (1,595)  (2,806)  (10,491)  (10,904)             Income from continuing operations before income taxes  159,340  172,823  108,668  498,918  307,660 Income tax provision  60,379  62,995  43,785  185,764  104,870 Income from continuing operations  98,961  109,828  64,883  313,154  202,790             Loss from discontinued operations, before income taxes  (176)  (2)  (101,548)  (393)  (127,160) Income tax provision  (5)  --  50  (5)  2,363 Loss from discontinued operations  (171)  (2)  (101,598)  (388)  (129,523)            NET INCOME (LOSS)$ 98,790$ 109,826  $ (36,715)$ 312,766$ 73,267             Basic earnings per common share:           Income from continuing operations $ 0.92 $ 1.02 $ 0.61 $ 2.93  $ 1.92 Loss from discontinued operations $ -- $ -- $ (0.96) $ -- $ (1.23)             Net income (loss) $ 0.92 $ 1.02 $ (0.35) $ 2.93 $ 0.69   Diluted earnings per common share:           Income from continuing operations $ 0.91 $ 1.01 $ 0.61 $ 2.87 $ 1.89 Loss from discontinued operations $ -- $ -- $ (0.95) $ -- $ (1.21)             Net income (loss) $ 0.91 $ 1.01 $ (0.34) $ 2.87 $ 0.68             Weighted average shares outstanding:           Basic  106,515  106,962  105,743  106,501  105,676 Diluted  108,595  108,784  107,444  108,550  107,400    HELMERICH & PAYNE, INC.Unaudited(in thousands)     CONSOLIDATED CONDENSED BALANCE SHEETS 6/30/11 9/30/10     ASSETS     Cash and cash equivalents $ 288,065 $ 63,020 Other current assets  586,913  579,514 Current assets of discontinued operations  7,631  10,270 Total current assets  882,609  652,804 Investments  453,046  320,712 Net property, plant, and equipment 3,553,743 3,275,020 Other assets  21,638 16,834TOTAL ASSETS $4,911,036 $4,265,370          LIABILITIES AND SHAREHOLDERS' EQUITY     Current liabilities $ 256,739 $ 224,646 Current liabilities of discontinued operations  5,170 7,992 Total current liabilities  261,909 232,638 Non-current liabilities 1,076,428 862,989 Non-current liabilities of discontinued operations  2,461 2,278 Long-term notes payable  350,000 360,000 Total shareholders' equity 3,220,238 2,807,465     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,911,036 $4,265,370    HELMERICH & PAYNE, INC.Unaudited(in thousands)    Nine Months Ended June 30   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20112010     OPERATING ACTIVITIES:     Net income $ 312,766 $ 73,267 Adjustment for loss from discontinued operations  388  129,523 Income from continuing operations  313,154  202,790 Depreciation  228,450  189,418 Changes in assets and liabilities  157,282  (66,376) Gain on sale of assets and investment securities  (11,175)  (4,245) Other  9,120  12,957 Net cash provided by operating activities from continuing operations  696,831  334,544 Net cash used in operating activities from discontinued operations  (388)  (1,507)Net cash provided by operating activities  696,443  333,037      INVESTING ACTIVITIES:     Capital expenditures  (493,776)  (220,200) Proceeds from sale of assets and investments  25,670  18,813 Purchase of short-term investments  --  (16) Acquisition of TerraVici Drilling Solutions  (4,000)  -- Net cash used in investing activities from continuing operations  (472,106)  (201,403) Net cash used in investing activities from discontinued operations  --  (55)Net cash used in investing activities  (472,106)  (201,458)     FINANCING ACTIVITIES:     Dividends paid  (19,222)  (15,891) Increase (decrease) in bank overdraft  4,844  (2,038) Exercise of stock options  13,734  (391) Net proceeds from (payments for) short-term and long-term debt  (10,000)  (135,000) Excess tax benefit from stock-based compensation  11,352  3,316Net cash provided by (used in) financing activities  708  (150,004)      Net increase (decrease) in cash and cash equivalents  225,045  (18,425)Cash and cash equivalents, beginning of period  63,020  96,142Cash and cash equivalents, end of period $ 288,065 $ 77,717            SEGMENT REPORTINGThree Months EndedNine Months Ended  March 31June 30June 30 20112011201020112010   (in thousands, except days and per day amounts)U.S. LAND OPERATIONS           Revenues $495,459 $539,372 $366,989 $1,511,649 $976,497 Direct operating expenses  260,834  289,311  206,707  802,383  521,486 General and administrative expense  6,388  6,330  5,458  18,573  18,193 Depreciation  63,948  66,899  51,686  191,211  151,434 Segment operating income $164,289 $176,832 $103,138 $ 499,482 $285,384             Revenue days  17,797  18,912  14,374  53,958  38,748 Average rig revenue per day $25,640 $25,970 $23,690 $ 25,536 $23,708 Average rig expense per day $12,457 $12,748 $12,539 $ 12,391 $11,965 Average rig margin per day $13,183 $13,222 $11,151 $ 13,145 $11,743 Rig utilization  85%  87%  76%  85%  69%            OFFSHORE OPERATIONS           Revenues $50,586 $54,569 $53,131 $ 150,022 $153,186 Direct operating expenses  33,936  36,664  37,382  101,527  99,654 General and administrative expense  1,553  1,532  1,329  4,495  4,437 Depreciation  3,621  3,429  3,189  10,580  9,133 Segment operating income $11,476 $12,944 $11,231 $ 33,420 $39,962             Revenue days  618  638  638   1,843  1,998 Average rig revenue per day $52,507 $54,417 $46,138 $ 50,889 $49,218 Average rig expense per day $28,760 $28,597 $25,356 $ 28,234 $26,240 Average rig margin per day $23,747 $25,820 $20,782 $ 22,655 $22,978 Rig utilization  76%  78%  78%  75%  81%            INTERNATIONAL LAND OPERATIONS         Revenues $54,684 $46,051  $ 60,045  $ 169,689  $177,377 Direct operating expenses  44,793  39,131  41,113  130,459  120,374 General and administrative expense  940  825  771  2,633  1,978 Depreciation  6,508  6,719  8,268  20,411  22,239 Segment operating income (loss) $ 2,443 $ (624)  $ 9,893  $ 16,186  $ 32,786             Revenue days  1,421  1,437  1,881  4,781  5,278  Average rig revenue per day $33,043 $29,201  $ 30,669  $ 32,188  $ 32,173 Average rig expense per day $25,937 $23,848  $ 20,477  $ 23,791  $ 21,337 Average rig margin per day $ 7,106 $ 5,353  $ 10,192  $ 8,397  $ 10,836 Rig utilization  64%  65%  76%  69%  68%           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 $39,143 $48,236  $ 26,474  $ 133,798  $ 57,847 Offshore Operations $ 8,131 $12,817  $ 13,771  $ 28,231  $ 26,383 International Land Operations $ 7,730 $ 4,089  $ 2,357  $ 15,798  $ 7,569   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 Operations (in thousands).     Three Months EndedNine Months Ended March 31June 30June 30 20112011201020112010Operating income           U.S. Land $164,289 $176,832 $103,138 $499,482  $285,384 Offshore  11,476  12,944 11,231  33,420  39,962 International Land  2,443  (624)  9,893  16,186  32,786 Other  (1,815)  (2,078)  (1,803)  (5,044)  (5,020)Segment operating income $176,393 $187,074 $122,459 $544,044  $353,112 Corporate general and administrative  (15,525)  (15,384)  (12,556)  (42,665)  (36,688) Other depreciation  (1,349)  (1,423) ( 1,295)  (4,153)  (3,966) Inter-segment elimination  641  663  617  1,921  1,861 Income from asset sales  4,105  3,488  2,249  10,262  4,245Operating income  $164,265$174,418$111,474$509,409 $318,564           Other income (expense):           Interest and dividend income  356  903  940  1,573  1,536 Interest expense  (5,513)  (3,221)  (3,961)  (13,185)  (12,693) Gain on sale of investment securities  --  913 --  913  -- Other  232  (190)  215  208  253 Total other income (expense)  (4,925)  (1,595) ( 2,806)  (10,491)  (10,904)            Income from continuing operations  before income taxes  $159,340$172,823$108,668 $498,918 $307,660CONTACT: Investor Relations Contact: Mike Drickamer (918) 588-5190