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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Second Quarter Earnings

Thursday, April 26, 2012

Helmerich & Payne, Inc. Announces Second Quarter Earnings03:00 EDT Thursday, April 26, 2012TULSA, Okla., April 26, 2012 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $129,763,000 ($1.18 per diluted share) from operating revenues of $769,982,000 for its second fiscal quarter ended March 31, 2012, compared to income from continuing operations of $98,961,000 ($0.91 per diluted share) from operating revenues of $604,406,000 during last year's second fiscal quarter ended March 31, 2011. Included in this year's and last year's second fiscal quarter income from continuing operations were $0.05 and $0.02 per share, respectively, of after-tax gains related to the sale of used drilling equipment. Net income for the second fiscal quarter of 2012 was $129,719,000 ($1.18 per diluted share), compared to net income of $98,790,000 ($0.91 per diluted share) during last year's second fiscal quarter. For the six months ended March 31, 2012, the Company reported income from continuing operations of $274,060,000 ($2.51 per diluted share) from operating revenues of $1,502,570,000 compared with income from continuing operations of $203,326,000 ($1.87 per diluted share) from operating revenues of $1,199,048,000 during the six months ended March 31, 2011. Included in income from continuing operations for the first six months of fiscal 2012 and 2011 were approximately $0.07 and $0.04 per share, respectively, of gains from the sale of used drilling equipment. Net income for the first six months of fiscal 2012 was $274,005,000 ($2.51 per diluted share), compared to net income of $202,940,000 ($1.87 per diluted share) during the first six months of fiscal 2011. Segment operating income for U.S. land operations was $209,959,000 for the second fiscal quarter of 2012, compared with $164,289,000 for last year's second fiscal quarter and $224,706,000 for this year's first fiscal quarter. The sequential decline in segment operating income was mainly attributable to an increase in operating expenses, even though the segment's rig activity level and average rig revenue per day continued to improve during the second fiscal quarter of 2012. Quarterly revenue days for the segment sequentially increased by approximately two percent to 21,444 revenue days during the second fiscal quarter of 2012. The corresponding average rig revenue per day also sequentially increased by $764 to $27,625 during the second fiscal quarter of 2012. Nonetheless, the increase in average rig revenue per day was more than offset by a $1,534 increase in average rig expense per day, generating a sequential decline of $770 in average rig margin per day, from $14,569 during this year's first fiscal quarter to $13,799 during this year's second fiscal quarter. Rig utilization for the Company's U.S. land segment was 91% for this year's second fiscal quarter, compared with 85% for last year's second fiscal quarter and 91% for this year's first fiscal quarter.  At March 31, 2012, the Company's U.S. land segment had 241 contracted rigs (including 159 under term contracts) and 25 idle rigs.  Chairman and CEO Hans Helmerich commented, "The U.S. land market transition towards oil and liquids-rich-gas directed drilling continues, along with a clear trend towards more complex well designs and higher performance rig requirements.  Our FlexRigs®*, combined with our premium service offering, are well positioned to make the transition. We are fortunate to have a customer roster with substantial multi-year drilling inventory that is capable of shifting targets and taking advantage of strong oil prices. These customers are also continuing to strive for added drilling efficiencies and allowed us to add nine previously announced new builds to our order book during the quarter. As we enter the second half of fiscal 2012, we continue to deliver four new rigs per month on time and on budget." Segment operating income for the Company's offshore operations was $9,818,000 for the second fiscal quarter of 2012, compared with $11,476,000 for last year's second fiscal quarter and $12,204,000 for this year's first fiscal quarter. The sequential decline in segment operating income was primarily a function of a reduced level of activity and a lower average rig margin per day. The number of revenue days for this year's second fiscal quarter sequentially declined by approximately ten percent, and the average rig margin per day for this year's second fiscal quarter was $20,561 as compared to $22,171 for this year's first fiscal quarter.  The Company's international land operations segment reported a loss of $974,000 for this year's second fiscal quarter, compared with operating income of $2,443,000 for last year's second fiscal quarter and operating income of $7,939,000 for this year's first fiscal quarter. The sequential decline in segment operating income was mostly attributable to increased operating expenses during this year's second fiscal quarter. As a result, average rig margin per day decreased to $4,884 in the second fiscal quarter of 2012 from $9,015 in the first fiscal quarter of 2012. Also as compared to this year's first fiscal quarter, the number of revenue days for the second fiscal quarter increased by approximately two percent to 1,761.     Helmerich & Payne, Inc. is primarily a contract drilling company. As of April 26, 2012, the Company's existing fleet included 270 land rigs in the U.S., 26 international land rigs and nine offshore platform rigs.  In addition, the Company is scheduled to complete another 34 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 330 land rigs, including 293 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 for at least one year.  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 EndedSix Months Ended  December 31March 31March 31CONSOLIDATED STATEMENTS OF INCOME20112012201120122011           Operating Revenues:           Drilling – U.S. Land  $ 617,779  $ 658,804  $ 495,459 $1,276,583  $ 972,277 Drilling – Offshore 50,792 43,421 50,586 94,213 95,453 Drilling – International Land 60,735 64,088 54,684 124,823 123,638 Other 3,282 3,669 3,677 6,951 7,680   732,588 769,982 604,406 1,502,570 1,199,048           Operating costs and expenses:           Operating costs, excluding depreciation 391,032 448,208 340,039 839,240 670,085 Depreciation 86,288 90,934 76,161 177,222 149,341 General and administrative 26,163 27,805 24,406 53,968 44,295 Research and development 3,249 3,830 3,640 7,079 7,110 Income from asset sales (4,683) (7,820) (4,105) (12,503) (6,774)   502,049 562,957 440,141 1,065,006 864,057            Operating income 230,539207,025164,265437,564334,991            Other income (expense):           Interest and dividend income 336 356 356 692 670 Interest expense (2,461) (2,421) (5,513) (4,882) (9,964) Other 21 (42) 232 (21) 398   (2,104) (2,107) (4,925) (4,211) (8,896)             Income from continuing operations before income taxes 228,435 204,918 159,340 433,353 326,095 Income tax provision 84,138 75,155 60,379 159,293 122,769 Income from continuing operations 144,297 129,763 98,961 274,060 203,326            Loss from discontinued operations, before income taxes  (11) (44) (176) (55) (391) Income tax provision -- -- (5) -- (5) Loss from discontinued operations (11) (44) (171) (55) (386)          NET INCOME $ 144,286 $ 129,719 $ 98,790 $ 274,005 $ 202,940         Basic earnings per common share:         Income from continuing operations  $ 1.34  $ 1.20  $ 0.92  $ 2.54  $ 1.90   Loss from discontinued operations $      --  $      --  $      --  $      --  $      --               Net income  $ 1.34  $ 1.20  $ 0.92  $ 2.54  $ 1.90       Diluted earnings per common share:      Income from continuing operations $ 1.32 $ 1.18 $ 0.91 $ 2.51      $ 1.87 Loss from discontinued operations $     -- $     -- $     -- $     --       $    --              Net income $ 1.32  $ 1.18  $ 0.91  $ 2.51  $ 1.87        Weighted average shares outstanding:       Basic 107,186  107,385 106,515 107,285 106,270  Diluted 108,788 109,042 108,595 108,925 108,375  HELMERICH & PAYNE, INC.Unaudited(in thousands)    March 31September 30CONSOLIDATED CONDENSED BALANCE SHEETS20122011    ASSETS       Cash and cash equivalents  $ 324,385 $ 364,246   Other current assets 667,413 584,538  Current assets of discontinued operations 7,562 7,529  Total current assets 999,360 956,313   Investments 444,365 347,924   Net property, plant, and equipment 3,975,239 3,677,070   Other assets 22,108 22,584TOTAL ASSETS  $5,441,072 $5,003,891          LIABILITIES AND SHAREHOLDERS' EQUITY       Current liabilities $ 380,526 $ 411,750  Current liabilities of discontinued operations 5,198 4,979  Total current liabilities 385,724 416,729  Non-current liabilities 1,215,888 1,079,565   Non-current liabilities of discontinued operations 2,364 2,550   Long-term notes payable 235,000 235,000   Total shareholders' equity 3,602,096 3,270,047     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $5,441,072 $5,003,891  HELMERICH & PAYNE, INC.Unaudited(in thousands)   Six Months Ended  March 31CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  2012  2011      OPERATING ACTIVITIES:     Net income $ 274,005 $ 202,940 Adjustment for loss from discontinued operations 55 386 Income from continuing operations 274,060 203,326 Depreciation 177,222 149,341 Changes in assets and liabilities (8,664) 100,094 Gain on sale of assets (12,503) (6,774) Other 8,762 6,146 Net cash provided by operating activities from continuing operations 438,877 452,133 Net cash used in operating activities from discontinued operations (55) (386)Net cash provided by operating activities 438,822 451,747      INVESTING ACTIVITIES:     Capital expenditures (492,701) (286,251) Proceeds from sale of assets 25,543 17,022 Acquisition of TerraVici Drilling Solutions -- (4,000)Net cash used in investing activities (467,158) (273,229)     FINANCING ACTIVITIES:     Dividends paid (15,070) (12,784) Exercise of stock options 1,895 11,115 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 3,164 10,816Net cash used in financing activities (11,525) (853)      Net increase (decrease) in cash and cash equivalents (39,861) 177,665Cash and cash equivalents, beginning of period 364,246 63,020Cash and cash equivalents, end of period $ 324,385 $ 240,685                  SEGMENT REPORTINGThree Months EndedSix Months Ended December 31March 31March 31 2011 2012201120122011  (in thousands, except days and per day amounts)U.S. LAND OPERATIONS           Revenues $617,779 $658,804 $495,459 $1,276,583 $972,277 Direct operating expenses 312,306 362,898 260,834 675,204 513,072 General and administrative expense 7,298 8,195 6,388 15,493 12,243 Depreciation 73,469 77,752 63,948 151,221 124,312 Segment operating income $224,706 $209,959 $164,289  $ 434,665 $322,650             Revenue days  20,968  21,444  17,797  42,412  35,046 Average rig revenue per day  $ 26,861  $ 27,625  $ 25,640  $ 27,247  $ 25,301 Average rig expense per day  $ 12,292  $ 13,826  $ 12,457  $ 13,068  $ 12,198 Average rig margin per day  $ 14,569  $ 13,799  $ 13,183  $ 14,179  $ 13,103 Rig utilization  91%  91%  85%  91%  84%           OFFSHORE OPERATIONS           Revenues  $ 50,792  $ 43,421  $ 50,586  $ 94,213 $95,453 Direct operating expenses 33,201 28,473 33,936 61,674 64,863 General and administrative expense 1,732 1,955 1,553 3,687 2,963 Depreciation 3,655 3,175 3,621 6,830 7,151 Segment operating income  $ 12,204  $ 9,818  $ 11,476  $ 22,022  $ 20,476             Revenue days  697  627 618  1,324  1,205 Average rig revenue per day  $ 53,644  $ 49,514  $ 52,507  $ 51,688  $ 49,021 Average rig expense per day  $ 31,473  $ 28,953  $ 28,760  $ 30,280  $ 28,042 Average rig margin per day  $ 22,171  $ 20,561  $ 23,747  $ 21,408  $ 20,979 Rig utilization 84%  74%  76%  79%  74%    INTERNATIONAL LAND OPERATIONS         Revenues  $ 60,735  $ 64,088  $ 54,684  $ 124,823  $ 123,638 Direct operating expenses 45,164 56,637  44,793 101,801  91,328 General and administrative expense 778 795 940 1,573 1,808 Depreciation 6,854 7,630 6,508 14,484 13,692 Segment operating income (loss)  $ 7,939  $ (974)  $ 2,443  $ 6,965  $ 16,810            Revenue days  1,729  1,761  1,421  3,490  3,344 Average rig revenue per day  $ 31,072  $ 31,401  $ 33,043  $ 31,238  $ 33,472 Average rig expense per day  $ 22,057  $ 26,517  $ 25,937  $ 24,307  $ 23,767 Average rig margin per day  $ 9,015  $ 4,884  $ 7,106   $ 6,931  $ 9,705 Rig utilization  78%  75%  64%  77%  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  $ 54,562  $ 66,419  $ 39,143  $ 120,981  $ 85,562 Offshore Operations  $ 5,798  $ 4,267  $ 8,131  $ 10,065  $ 15,414 International Land Operations  $ 7,012  $ 8,791  $ 7,730  $ 15,803  $ 11,709 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 EndedSix Months Ended December 31March 31March 31 20112012201120122011Operating income           U.S. Land $224,706 $209,959 $164,289 $434,665  $322,650 Offshore 12,204 9,818 11,476 22,022 20,476 International Land 7,939 (974) 2,443 6,965 16,810 Other (1,788) (1,833) (1,815) (3,621) (2,966) Segment operating income $243,061 $216,970 $176,393 $460,031  $356,970 Corporate general and administrative (16,355) (16,860) (15,525) (33,215) (27,281) Other depreciation (1,556) (1,668) (1,349) (3,224) (2,730) Inter-segment elimination 706 763 641 1,469 1,258 Income from asset sales 4,683 7,820 4,105 12,503 6,774  Operating income  $230,539$207,025$164,265$437,564 $334,991             Other income (expense):            Interest and dividend income 336 356 356 692 670  Interest expense (2,461) (2,421) (5,513) (4,882) (9,964)  Other 21 (42) 232 (21) 398 Total other income (expense) (2,104) (2,107) (4,925)  (4,211) (8,896)             Income from continuing operation before income taxes  $228,435$204,918$159,340 $433,353 $326,095                        CONTACT: Investor Relations investor.relations@hpinc.com (918) 588-5207