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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces First Quarter Results

Tuesday, January 31, 2012

Helmerich & Payne, Inc. Announces First Quarter Results03:00 EST Tuesday, January 31, 2012TULSA, Okla., Jan. 31, 2012 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $144,297,000 ($1.32 per diluted share) from operating revenues of $732,588,000 for the first quarter of fiscal 2012, compared to income from continuing operations of $104,365,000 ($0.96 per diluted share) from operating revenues of $594,642,000 during the first fiscal quarter of 2011, and income from continuing operations of $121,514,000 ($1.11 per diluted share) from operating revenues of $700,751,000 during the fourth fiscal quarter of 2011. Included in income from continuing operations for the first fiscal quarters of 2012 and 2011, and for the fourth fiscal quarter of 2011, is non-operating income (after-tax) related to the sale of used drilling assets of $0.03, $0.02 and $0.02 per diluted share, respectively. Net income for the first quarter of fiscal 2012 was $144,286,000 ($1.32 per diluted share), compared to net income of $104,150,000 ($0.96 per diluted share) during the first fiscal quarter of 2011, and net income of $121,420,000 ($1.11 per diluted share) during the fourth fiscal quarter of 2011.      President and CEO Hans Helmerich commented, "We are pleased to announce strong first quarter results including an all-time record level of income from continuing operations. We also reached best ever levels for revenue and rig activity during this recent quarter. While we expect some moderation in this record breaking pace in the upcoming March quarter, we are gratified for the strong start for our 2012 fiscal year. Even with the uncertainty surrounding slumping natural gas prices and the anticipated softening in dry gas directed drilling in the U.S., we remain upbeat that our business model of providing premium drilling services will continue to prosper in 2012."  Segment operating income for U.S. land operations was $224,706,000 for the first fiscal quarter of 2012, compared with $158,361,000 for last year's first fiscal quarter and $192,133,000 for last year's fourth fiscal quarter. The sequential increase in segment operating income was attributable to increases in activity and pricing, along with a decline in expenses. The Company's quarterly revenue days for the segment increased sequentially by approximately five percent to 20,968 revenue days during the first fiscal quarter of 2012. The corresponding average rig revenue per day also increased sequentially by $312 to $26,861 during the first fiscal quarter of 2012. Average rig expense per day declined by $643, generating a sequential increase of $955 in average rig margin per day to $14,569 during this year's first fiscal quarter.  Rig utilization for the Company's U.S. land segment was 91% for this year's first quarter, compared with 84% for last year's first fiscal quarter and 87% for last year's fourth fiscal quarter.  At December 31, 2011, the Company's U.S. land segment had 234 contracted rigs (including 150 under term contracts) and 21 idle rigs. The Company also announced today that it has entered into agreements with two exploration and production companies to build and operate three additional FlexRigs in the U.S. These three rigs will be built under multi-year term contracts and are expected to generate attractive economic returns for the Company. Including the new builds announced today, 40 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 287 FlexRigs. Segment operating income for the Company's offshore operations was $12,204,000 for the first fiscal quarter of 2012, compared with $9,000,000 for last year's first fiscal quarter and $11,871,000 for last year's fourth fiscal quarter. The sequential increase in operating income was attributable to a higher average rig margin per day during the first fiscal quarter. Rig utilization in the segment was reported at 84% for the first fiscal quarter of 2012, as compared to 85% for the immediately preceding quarter. The Company's international land operations reported segment operating income of $7,939,000 for this year's first fiscal quarter, compared with $14,367,000 for last year's first fiscal quarter and $3,525,000 for the fourth fiscal quarter of 2011. The decline in segment operating income as compared to last year's first fiscal quarter was mostly attributable to early termination revenue earned in Mexico during that quarter. The number of revenue days for the first quarter of 2012 increased by approximately six percent as compared to the fourth quarter. The average rig margin per day for the first quarter also increased sequentially, from $7,690 per day during the fourth quarter of fiscal 2011 to $9,015 per day during the first quarter of fiscal 2012.  Helmerich & Payne, Inc. is primarily a contract drilling company.  As of January 31, 2012, the Company's existing fleet included 259 land rigs in the U.S., 26 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete another 40 new H&P-designed and operated FlexRigs under long-term contracts with customers. Upon completion of these commitments, the Company's global fleet is expected to have a total of 325 land rigs, including 287 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 EndedCONSOLIDATED STATEMENTS OFSeptember 30December 31INCOME201120112010       Operating Revenues:       Drilling – U.S. Land  $ 588,859 $ 617,779  $ 476,818 Drilling – Offshore 51,395 50,792 44,867 Drilling – International Land 57,160 60,735 68,954 Other 3,337 3,282 4,003   700,751 732,588 594,642       Operating costs and expenses:       Operating costs, excluding depreciation 396,931 391,032 330,046 Depreciation 87,018 86,288 73,180 General and administrative 23,086 26,163 19,889 Research and development 4,255 3,249 3,470 Income from asset sales (3,641) (4,683) (2,669)   507,649 502,049 423,916        Operating income 193,102230,539170,726         Other income (expense):       Interest and dividend income 378 336 314 Interest expense (4,170) (2,461) (4,451) Other (1,161) 21 166   (4,953) (2,104) (3,971)         Income from continuing operations before income taxes 188,149 228,435 166,755 Income tax provision 66,635 84,138 62,390 Income from continuing operations 121,514 144,297 104,365        Loss from discontinued operations, before income taxes  (94) (11) (215) Income tax provision -- -- -- Loss from discontinued operations (94) (11) (215)       NET INCOME  $ 121,420 $ 144,286 $ 104,150        Basic earnings per common share:    Income from continuing operations  $ 1.13  $ 1.34  $ 0.98 Loss from discontinued operations  $      --  $      --  $      --         Net income  $ 1.13  $ 1.34  $ 0.98     Diluted earnings per common share:    Income from continuing operations  $ 1.11  $ 1.32   $ 0.96 Loss from discontinued operations $      --  $      -- $      --         Net income  $ 1.11  $ 1.32  $ 0.96      Weighted average shares outstanding:    Basic 107,066 107,186 106,031 Diluted 108,782 108,788 107,852  HELMERICH & PAYNE, INC.Unaudited (in thousands)        December 31September 30CONSOLIDATED CONDENSED BALANCE SHEETS20112011      ASSETS     Cash and cash equivalents $347,859 $364,246 Other current assets 647,792 584,538 Current assets of discontinued operations 7,777 7,529 Total current assets 1,003,428 956,313 Investments 399,995 347,924 Net property, plant, and equipment 3,832,001 3,677,070 Other assets 22,463 22,584TOTAL ASSETS $5,257,887 $5,003,891            LIABILITIES AND SHAREHOLDERS' EQUITY     Current liabilities $423,678 $411,750 Current liabilities of discontinued operations 5,171 4,979 Total current liabilities 428,849 416,729 Non-current liabilities 1,145,624 1,079,565 Non-current liabilities of discontinued operations 2,606 2,550 Long-term notes payable 235,000 235,000 Total shareholders' equity 3,445,808 3,270,047      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,257,887 $5,003,891  HELMERICH & PAYNE, INC.Unaudited (in thousands)        Three Months Ended  December 31CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20112010      OPERATING ACTIVITIES:     Net income $144,286 $104,150 Adjustment for loss from discontinued operations 11 215 Income from continuing operations 144,297 104,365 Depreciation 86,288 73,180 Changes in assets and liabilities 6,823 60,807 Gain on sale of assets  (4,683) (2,669) Other 3,924 3,187 Net cash provided by operating activities from continuing operations 236,649 238,870 Net cash used in operating activities from discontinued operations (11) (215)Net cash provided by operating activities 236,638 238,655      INVESTING ACTIVITIES:     Capital expenditures (256,943) (116,224) Proceeds from sale of assets  10,155 3,028 Acquisition of TerraVici Drilling Solutions -- (4,000)Net cash used in investing activities (246,788) (117,196)      FINANCING ACTIVITIES:     Dividends paid (7,522) (6,376) Exercise of stock options 373 2,988 Tax withholdings related to net share settlements of restricted stock (1,514) -- Net proceeds from (payments for) short-term and long-term debt -- (10,000) Excess tax benefit from stock-based compensation 2,426 2,733Net cash used in financing activities (6,237) (10,655)      Net increase (decrease) in cash and cash equivalents (16,387) 110,804Cash and cash equivalents, beginning of period 364,246 63,020Cash and cash equivalents, end of period $347,859 $173,824  SEGMENT REPORTINGThree Months Ended September 30December 31  201120112010         (in thousands, except days and per day amounts)U.S. LAND OPERATIONS       Revenues $588,859  $617,779 $476,818 Direct operating expenses 317,317 312,306 252,238 General and administrative expense 6,493 7,298 5,855 Depreciation 72,916 73,469 60,364 Segment operating income $192,133   $ 224,706  $158,361         Revenue days 19,947 20,968 17,249 Average rig revenue per day  $ 26,549  $ 26,861  $ 24,952 Average rig expense per day  $ 12,935  $ 12,292  $ 11,932 Average rig margin per day  $ 13,614  $ 14,569  $ 13,020 Rig utilization  87%  91%  84%       OFFSHORE OPERATIONS       Revenues  $ 51,395  $ 50,792 $ 44,867 Direct operating expenses 33,841 33,201 30,927 General and administrative expense 1,579 1,732 1,410 Depreciation 4,104 3,655 3,530 Segment operating income  $ 11,871  $ 12,204  $ 9,000         Revenue days 701 697 587 Average rig revenue per day  $ 54,176  $ 53,644  $ 45,350 Average rig expense per day  $ 32,393  $ 31,473  $ 27,285 Average rig margin per day  $ 21,783  $ 22,171  $ 18,065 Rig utilization  85%  84%  71%        INTERNATIONAL LAND OPERATIONS       Revenues  $ 57,160  $ 60,735  $ 68,954  Direct operating expenses 45,269 45,164 46,535 General and administrative expense 759 778 868 Depreciation 7,607 6,854 7,184 Segment operating income (loss)  $ 3,525  $ 7,939  $ 14,367        Revenue days 1,625 1,729 1,923 Average rig revenue per day  $ 30,001  $ 31,072  $ 33,789 Average rig expense per day  $ 22,311  $ 22,057  $ 22,164 Average rig margin per day $ 7,690   $ 9,015  $ 11,625 Rig utilization  74%  78%  76%         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  $ 59,295  $ 54,562  $ 46,419 Offshore Operations  $ 5,487  $ 5,798  $ 7,283 International Land Operations  $ 8,409  $ 7,012  $ 3,979 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 Ended  September 30December 31  201120112010Operating income        U.S. Land $192,133 $224,706 $158,361 Offshore 11,871 12,204 9,000 International Land 3,525 7,939 14,367 Other (2,638) (1,788) (1,151)Segment operating income  $204,891 $243,061 $180,577 Corporate general and administrative (14,255) (16,355) (11,756) Other depreciation (1,676) (1,556) (1,381) Inter-segment elimination 501 706 617 Income from asset sales 3,641 4,683 2,669Operating income $193,102 $230,539 $170,726         Other income (expense):       Interest and dividend income 378 336 314 Interest expense (4,170) (2,461) (4,451) Gain on sale of investment securities -- -- -- Other (1,161) 21 166 Total other income (expense) (4,953) (2,104) (3,971)        Income from continuing operations before income taxes $188,149 $228,435 $166,755 CONTACT: Investor Relations investor.relations@hpinc.com (918) 588-5207