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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Fourth Quarter and Year-End Results and 17 New FlexRig(R) Contracts

Thursday, November 17, 2011

Helmerich & Payne, Inc. Announces Fourth Quarter and Year-End Results and 17 New FlexRig(R) Contracts03:00 EST Thursday, November 17, 2011TULSA, Okla, Nov. 17, 2011 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $434,668,000 ($3.99 per diluted share) from operating revenues of $2,543,894,000 for its fiscal year ended September 30, 2011, compared to income from continuing operations of $286,081,000 ($2.66 per diluted share) from operating revenues of $1,875,162,000 during the prior fiscal year ended September 30, 2010. Included in fiscal 2011 and fiscal 2010 income from continuing operations is non-operating income (after-tax) of $0.09 and $0.03 per diluted share, respectively. Non-operating items included income from the sale of used drilling equipment during 2011 and 2010, and gains on the sale of investment securities during 2011. Net income for fiscal 2011 was $434,186,000 ($3.99 per diluted share), compared to $156,312,000 ($1.45 per diluted share) for fiscal 2010.  Income from continuing operations for the fourth quarter of fiscal 2011 was $121,514,000 ($1.11 per diluted share) from operating revenues of $700,751,000, compared to income from continuing operations of $83,291,000 ($0.77 per diluted share) from operating revenues of $558,957,000 during the fourth fiscal quarter of 2010, and income from continuing operations of $109,828,000 ($1.01 per diluted share) from operating revenues of $644,095,000 during the third fiscal quarter of 2011. Included in income from continuing operations for the fourth and third fiscal quarters of 2011 is non-operating income (after-tax) of $0.02 and $0.03 per diluted share, respectively. Net income for the fourth quarter of fiscal 2011 was $121,420,000 ($1.11 per diluted share), compared to net income of $83,045,000 ($0.77 per diluted share) during the fourth fiscal quarter of 2010, and net income of $109,826,000 ($1.01 per diluted share) during the third fiscal quarter of 2011.      Helmerich & Payne, Inc. also announced today that the Company has entered into agreements with three exploration and production companies to build and operate 17 additional FlexRigs. These 17 rigs will be built under multi-year term contracts and are expected to generate attractive economic returns for the Company. Including new builds announced today and earlier this year, 47 contracted FlexRigs remain under construction and are currently being completed at the rate of approximately four per month. Once these rigs are completed, the Company's global fleet is expected to include 284 FlexRigs. Segment operating income for U.S. land operations was $192,133,000 for the fourth fiscal quarter of 2011, compared with $118,894,000 for last year's fourth fiscal quarter and $176,832,000 for this year's third fiscal quarter. The sequential increase in segment operating income was primarily attributable to increased drilling activity resulting from the deployment of new build FlexRigs. The Company's quarterly revenue days for the segment increased sequentially by approximately five percent to 19,947 revenue days during the fourth fiscal quarter of 2011. The corresponding average rig revenue per day also increased sequentially by $579 to $26,549 during the fourth fiscal quarter of 2011. This $579 increase in average rig revenue per day was partially offset by a $187 increase in average rig expense per day, generating a sequential increase of $392 in average rig margin per day to $13,614 during this year's fourth fiscal quarter.  Rig utilization for the Company's U.S. land segment was 87% for this year's third and fourth fiscal quarters, compared with 82% for last year's fourth fiscal quarter.  At September 30, 2011, the Company's U.S. land segment had 224 contracted rigs (including 149 under term contracts) and 24 idle rigs (including two conventional rigs that were sold in October 2011). Excluded from these 24 idle rigs are seven mechanical rigs that were decommissioned at the end of the fiscal year. The seven decommissioned rigs were the only mechanical rigs remaining in the Company's global fleet. President and CEO Hans Helmerich commented, "We are pleased to report all-time record levels in both quarterly revenue and rig activity during the most recent quarter. More importantly, we believe that we are very well positioned to continue to successfully compete in an environment that is increasingly focused on innovative technologies and productivity gains as key contributors to more cost-effective drilling programs. The shale revolution has transformed the U.S. land E&P industry, and the relative strength of crude oil prices has provided a solid foundation for continued drilling activity. Although this industry will continue to be cyclical and closely linked to the global macroeconomic outlook, we expect that our fleet will continue to benefit from premium margins and higher utilization levels as compared to that of our competitors. We believe that our strengths and competitive advantages are difficult to match, and we will remain focused on efforts to expand our lead in years to come."  Segment operating income for the Company's offshore operations was $11,871,000 for the fourth fiscal quarter of 2011, compared with $13,107,000 for last year's fourth fiscal quarter and $12,944,000 for this year's third fiscal quarter. The sequential decline in operating income was attributable to a lower average rig margin per day during the fourth fiscal quarter. The segment, however, experienced an increase in revenue days that led to an 85% rig utilization level during the fourth fiscal quarter, as compared to 78% during the immediately preceding quarter. The Company's international land operations reported segment operating income of $3,525,000 for this year's fourth fiscal quarter, compared with $15,485,000 for last year's fourth fiscal quarter and a loss of $624,000 for the third fiscal quarter of 2011.  The number of revenue days for the fourth quarter increased by approximately 13 percent as compared to the third quarter. The average rig margin per day for the fourth quarter also increased sequentially, from $5,353 per day during the third quarter to $7,690 per day during the fourth quarter.   Helmerich & Payne, Inc. is primarily a contract drilling company.  As of November 17, 2011, the Company's existing fleet included 250 land rigs in the U.S., 25 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete another 47 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 322 rigs, including 284 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 EndedFiscal Year EndedCONSOLIDATED STATEMENTS OFJune 30September 30September 30INCOME20112011201020112010           Operating Revenues:           Drilling – U.S. Land  $ 539,372  $ 588,859   $ 435,998 $2,100,508   $ 1,412,495 Drilling – Offshore 54,569 51,395 49,548 201,417 202,734 Drilling – International Land 46,051 57,160 69,802 226,849 247,179 Other 4,103 3,337 3,609 15,120 12,754   644,095 700,751 558,957 2,543,894 1,875,162           Operating costs and expenses:           Operating costs, excluding depreciation 365,586 396,931 329,198 1,432,602 1,071,959 Depreciation 79,109 87,018 73,240 315,468 262,658 General and administrative 24,071 23,086 20,183 91,452 81,479 Research and development 4,399 4,255 3,851 15,764 12,262 Income from asset sales (3,488) (3,641) (747) (13,903) (4,992)   469,677 507,649 425,725 1,841,383 1,423,366            Operating income 174,418193,102133,232702,511451,796            Other income (expense):           Interest and dividend income 903 378 275 1,951 1,811 Interest expense (3,221) (4,170) (4,465) (17,355) (17,158) Gain on sale of investment securities 913 -- -- 913 -- Other (190) (1,161) 1,534 (953) 1,787   (1,595) (4,953) (2,656) (15,444) (13,560)             Income from continuing operations before income taxes 172,823 188,149 130,576 687,067 438,236 Income tax provision 62,995 66,635 47,285 252,399 152,155 Income from continuing operations 109,828 121,514 83,291 434,668 286,081            Loss from discontinued operations, before income taxes  (2) (94) 1,216 (487) (125,944) Income tax provision (benefit) -- -- 1,462 (5) 3,825 Loss from discontinued operations (2) (94) (246) (482) (129,769)          NET INCOME  $ 109,826 $ 121,420 $ 83,045 $ 434,186 $ 156,312         Basic earnings per common share:       Income from continuing operations  $ 1.02  $ 1.13  $ 0.78  $ 4.06  $ 2.70 Loss from discontinued operations  $  --  $ --  $ --  $ --  $ (1.23)             Net income  $ 1.02  $ 1.13  $ 0.78  $ 4.06  $ 1.47             Diluted earnings per common share:           Income from continuing operations $ 1.01 $ 1.11 $ 0.77 $ 3.99 $ 2.66 Loss from discontinued operations $ -- $ -- $ -- $ -- $ (1.21)             Net income $ 1.01 $ 1.11 $ 0.77 $ 3.99 $ 1.45             Weighted average shares outstanding:           Basic 106,962 107,066 105,814 106,643 105,711 Diluted 108,784 108,782 107.452 108,632 107,404    HELMERICH & PAYNE, INC.Unaudited(in thousands)       September 30CONSOLIDATED CONDENSED BALANCE SHEETS20112010     ASSETS     Cash and cash equivalents $ 364,246 $ 63,020 Other current assets 584,538  579,514 Current assets of discontinued operations 7,529  10,270 Total current assets 956,313  652,804 Investments 347,924  320,712 Net property, plant, and equipment 3,677,070 3,275,020 Other assets 22,584 16,834TOTAL ASSETS $5,003,891 $4,265,370          LIABILITIES AND SHAREHOLDERS' EQUITY     Current liabilities $ 411,750 $ 224,646 Current liabilities of discontinued operations 4,979 7,992 Total current liabilities 416,729 232,638 Non-current liabilities 1,079,565 862,989 Non-current liabilities of discontinued operations 2,550 2,278 Long-term notes payable 235,000 360,000 Total shareholders' equity 3,270,047 2,807,465     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,003,891 $4,265,370    HELMERICH & PAYNE, INC.Unaudited(in thousands)   Years Ended  September 30CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20112010   OPERATING ACTIVITIES:     Net income $ 434,186 $ 156,312 Adjustment for loss from discontinued operations 482 129,769 Income from continuing operations 434,668 286,081 Depreciation 315,468 262,658 Changes in assets and liabilities 230,507 (93,237) Gain on sale of assets and investment securities (14,816) (4,992) Other 12,207 16,140 Net cash provided by operating activities from continuing operations 978,034 466,650 Net cash used in operating activities from discontinued operations (482) (4,362)Net cash provided by operating activities 977,552 462,288      INVESTING ACTIVITIES:     Capital expenditures (694,264) (329,572) Proceeds from sale of assets and investments 30,727 20,383 Purchase of short-term investments -- (16) Acquisition of TerraVici Drilling Solutions (4,000) -- Net cash used in investing activities from continuing operations (667,537) (309,205) Net cash used in investing activities from discontinued operations -- (55)Net cash used in investing activities (667,537) (309,260)     FINANCING ACTIVITIES:     Dividends paid (26,741) (22,254) Decrease in bank overdraft -- (2,038) Exercise of stock options 15,441 (202) Net proceeds from (payments for) short-term and long-term debt (10,000) (165,000) Excess tax benefit from stock-based compensation 12,511 3,344Net cash used in financing activities (8,789) (186,150)      Net increase (decrease) in cash and cash equivalents 301,226 (33,122)Cash and cash equivalents, beginning of period 63,020 96,142Cash and cash equivalents, end of period $ 364,246 $ 63,020            SEGMENT REPORTINGThree Months EndedFiscal Year Ended  June 30September 30September 30  20112011201020112010   (in thousands, except days and per day amounts)U.S. LAND OPERATIONS           Revenues $539,372 $588,859 $435,998 $2,100,508 $1,412,495 Direct operating expenses 289,311 317,317 251,280 1,119,700 772,766 General and administrative expense 6,330 6,493 5,606 25,066 23,799 Depreciation 66,899 72,916 60,218 264,127 211,652 Segment operating income $176,832 $192,133 $118,894 $691,615 $404,278             Revenue days 18,912 19,947 16,303 73,905 55,051 Average rig revenue per day $25,970 $26,549 $24,385 $25,809 $23,909 Average rig expense per day $12,748 $12,935 $13,054 $12,538 $12,288 Average rig margin per day $13,222 $13,614 $11,331 $13,271 $11,621 Rig utilization 87% 87% 82% 86% 73%            OFFSHORE OPERATIONS           Revenues $54,569 $51,395 $49,548 $201,417 $202,734 Direct operating expenses 36,664 33,841 31,671 135,368 131,325 General and administrative expense 1,532 1,579 1,384 6,074 5,821 Depreciation 3,429 4,104 3,386 14,684 12,519 Segment operating income  $12,944 $11,871 $13,107 $45,291 $53,069             Revenue days 638 701 644 2,544 2,642 Average rig revenue per day $54,417 $54,176 $42,312 $51,794 $47,534 Average rig expense per day $28,597 $32,393 $19,731 $29,379 $24,653 Average rig margin per day $25,820 $21,783 $22,581 $22,415 $22,881 Rig utilization  78% 85% 78% 77% 80%            INTERNATIONAL LAND OPERATIONS         Revenues $46,051 $57,160 $69,802 $226,849 $247,179 Direct operating expenses 39,131 45,269 45,647 175,728 166,021 General and administrative expense 825 759 971 3,392 2,949 Depreciation 6,719 7,607 7,699 28,018 29,938 Segment operating income (loss)   $ (624) $3,525 $15,485 $19,711 $48,271             Revenue days 1,437 1,625 1,976 6,406 7,254 Average rig revenue per day $29,201 $30,001 $33,194 $31,633 $32,451 Average rig expense per day $23,848 $22,311 $20,621 $23,416 $21,142 Average rig margin per day $5,353 $7,690 $12,573 $8,217 $11,309 Rig utilization  65% 74% 78% 70% 71%             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 $48,236 $59,295 $38,457 $193,093 $96,304 Offshore Operations $12,817 $5,487 $11,211 $33,718 $37,594 International Land Operations $4,089 $8,409 $4,210 $24,207 $11,779             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 Income (in thousands).  Three Months EndedFiscal Year Ended June 30September 30September 30 20112011201020112010Operating income           U.S. Land $176,832 $192,133 $118,894 $691,615 $404,278 Offshore  12,944 11,871 13,107 45,291 53,069 International Land  (624) 3,525 15,485 19,711 48,271 Other  (2,078) (2,638) (1,745) (7,682) (6,765)Segment operating income $187,074 $204,891 $145,741 $748,935 $498,853 Corporate general and administrative  (15,384) (14,255) (12,222) (56,920) (48,910) Other depreciation  (1,423) (1,676) (1,309) (5,829) (5,275) Inter-segment elimination  663 501 275 2,422 2,136 Income from asset sales  3,488 3,641 747 13,903 4,992Operating income $174,418$193,102$133,232$702,511$451,796             Other income (expense):           Interest and dividend income  903  378 275 1,951 1,811 Interest expense  (3,221)  (4,170) (4,465) (17,355) (17,158) Gain on sale of investment securities       913 -- -- 913 -- Other  (190)  (1,161) 1,534 (953) 1,787 Total other income (expense)  (1,595)  (4,953) (2,656) (15,444) (13,560)            Income from continuing operations before income taxes $172,823$188,149$130,576$687,067$438,236CONTACT: Investor Relations investor.relations@hpinc.com (918) 588-5207