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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Record Fourth Quarter and Year-End Results

Thursday, November 15, 2012

Helmerich & Payne, Inc. Announces Record Fourth Quarter and Year-End Results03:00 EST Thursday, November 15, 2012TULSA, Okla., Nov. 15, 2012 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported record income from continuing operations of $573,609,000 ($5.27 per diluted share) from record operating revenues of $3,151,802,000 for its fiscal year ended September 30, 2012, compared to income from continuing operations of $434,668,000 ($3.99 per diluted share) from operating revenues of $2,543,894,000 during the prior fiscal year ended September 30, 2011. Included in fiscal 2012 and fiscal 2011 income from continuing operations were $0.11 and $0.09 per diluted share, respectively, of after-tax gains related to the sale of used drilling equipment during 2012 and 2011, and the sale of investment securities during 2011. Net income for fiscal 2012 was also at an all-time high level of $581,045,000 ($5.34 per diluted share), compared to $434,186,000 ($3.99 per diluted share) for fiscal 2011. Income from continuing operations for the fourth quarter of fiscal 2012 was $149,606,000 ($1.39 per diluted share) from operating revenues of $829,447,000, compared to 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, and income from continuing operations of $149,943,000 ($1.38 per diluted share) from operating revenues of $819,785,000 during the third fiscal quarter of 2012. Included in income from continuing operations for the fourth and third fiscal quarters of 2012 were $0.03 and $0.01 per diluted share, respectively, of after-tax gains related to the sale of used drilling equipment. Net income for the fourth fiscal quarter of 2012 was also at a record level of $157,115,000 ($1.46 per diluted share), compared to net income of $121,420,000 ($1.11 per diluted share) during the fourth fiscal quarter of 2011, and net income of $149,925,000 ($1.38 per diluted share) during the third fiscal quarter of 2012. Chairman and CEO Hans Helmerich commented, "We are very pleased with our fiscal 2012 record results and with the brand leadership and competitive position that we continue to build. While market conditions in the coming year remain uncertain, we believe we will be able to continue to add value to our customers through innovative technology, drilling performance and safety leadership." Segment operating income for U.S. land operations was $236,619,000 for the fourth fiscal quarter of 2012, compared with $192,133,000 for last year's fourth fiscal quarter and $235,684,000 for this year's third fiscal quarter. As compared to this year's third fiscal quarter, the number of revenue days for the segment sequentially decreased by less than one percent to 21,951, and the average rig revenue per day increased by $229 to $28,325 during the fourth fiscal quarter of 2012. Also as compared to this year's third fiscal quarter, the average rig expense per day for the segment declined by $717, and the average rig margin per day increased by $946 to $15,705 during this year's fourth fiscal quarter. The rig revenue and margin per day averages included approximately $283 per day of early termination fees during the fourth fiscal quarter as compared to approximately $140 per day during the previous quarter. The favorable impact of lower sequential average rig expense per day during the quarter in this segment was offset by abandonment charges of approximately $14 million that were mostly associated with obsolete equipment previously used to support drilling rig operations. Abandonments are included with depreciation in the consolidated statements of income. Rig utilization for the Company's U.S. land segment was 85% for this year's fourth fiscal quarter, compared with 87% for last year's fourth fiscal quarter and 89% for this year's third fiscal quarter. At September 30, 2012, the Company's U.S. land segment had 231 contracted rigs (including 158 under term contracts) and 51 idle rigs. Excluded from these 51 idle rigs are 4 highly mobile rigs and 2 conventional rigs that were decommissioned at the end of the fiscal year.   Segment operating income for the Company's offshore operations was $12,033,000 for the fourth fiscal quarter of 2012, compared with $11,871,000 for last year's fourth fiscal quarter and $7,720,000 for this year's third fiscal quarter. The sequential increase in segment operating income was attributable to higher levels of activity and a higher average rig margin per day. The number of revenue days for this year's fourth fiscal quarter sequentially increased by approximately 15 percent to 695, and the average rig margin per day for this year's fourth fiscal quarter was $23,330, as compared to $16,901 for this year's third fiscal quarter.  The Company's international land segment operating income was $7,126,000 for this year's fourth fiscal quarter, compared with $3,525,000 for last year's fourth fiscal quarter and $6,275,000 for this year's third fiscal quarter. The sequential increase in segment operating income was attributable to increased activity and daily margins during this year's fourth fiscal quarter. The average rig margin per day increased to $8,210 in the fourth fiscal quarter of 2012 from $7,704 in the third fiscal quarter of 2012. Also as compared to the third fiscal quarter of 2012, the number of revenue days for the fourth fiscal quarter increased by approximately eight percent to 2,001.     Helmerich & Payne, Inc. is primarily a contract drilling company. As of November 15, 2012, the Company's existing fleet included 289 land rigs in the U.S., 29 international land rigs and 9 offshore platform rigs.  In addition, the Company is scheduled to complete another 9 new H&P-designed and operated FlexRigs®* under long-term contracts with customers by early calendar 2013.  Upon completion of these commitments, the Company's global fleet is expected to have a total of 327 land rigs, including 296 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 EndedFiscal Year EndedCONSOLIDATED STATEMENTS OFJune 30September 30September 30INCOME20122012201120122011           Operating Revenues:           Drilling – U.S. Land  $ 706,786  $ 695,106  $ 588,859  $ 2,678,475  $2,100,508 Drilling – Offshore 41,617 53,256 51,395 189,086 201,417 Drilling – International Land 67,482 77,722 57,160 270,027 226,849 Other 3,900 3,363 3,337 14,214 15,120   819,785 829,447 700,751 3,151,802 2,543,894           Operating costs and expenses:           Operating costs, excluding depreciation 463,935 447,335 396,931 1,750,510 1,432,602 Depreciation 95,182 115,145 87,018 387,549 315,468 General and administrative 25,576 27,763 23,086 107,307 91,452 Research and development 4,299 4,682 4,255 16,060 15,764 Income from asset sales (1,862) (4,858) (3,641) (19,223) (13,903)   587,130 590,067 507,649 2,242,203 1,841,383            Operating income 232,655239,380193,102909,599702,511             Other income (expense):           Interest and dividend income 329 359 378 1,380 1,951 Interest expense (2,411) (1,360) (4,170) (8,653) (17,355) Gain on sale of investment securities -- -- -- -- 913 Other 309 (34) (1,161) 254 (953)   (1,773) (1,035) (4,953) (7,019) (15,444)             Income from continuing operations before income taxes 230,882 238,345 188,149 902,580 687,067 Income tax provision 80,939 88,739 66,635 328,971 252,399 Income from continuing operations 149,943 149,606 121,514 573,609 434,668            Income (loss) from discontinued operations before income taxes  (18) 7,509 (94) 7,355 (487) Income tax provision -- -- -- (81) (5) Income (loss) from discontinued operations (18) 7,509 (94) 7,436 (482)         NET INCOME $ 149,925 $ 157,115 $ 121,420 $ 581,045 $ 434,186        Basic earnings per common share:      Income from continuing operations  $ 1.40  $ 1.41  $ 1.13  $ 5.35  $ 4.06 Income from discontinued operations  $ --  $  .07  $  --  $  .07  $ --             Net income  $ 1.40  $ 1.48  $ 1.13  $ 5.42  $ 4.06             Diluted earnings per common share:           Income from continuing operations $ 1.38 $ 1.39 $ 1.11 $ 5.27 $ 3.99 Income from discontinued operations $ --  $ .07  $ -- $ .07  $ --             Net income $ 1.38 $ 1.46  $ 1.11  $ 5.34  $ 3.99             Weighted average shares outstanding:            Basic 107,016 105,695 107,066 106,819 106,643  Diluted 108,425 107,086 108,782 108,377 108,632    HELMERICH & PAYNE, INC.Unaudited(in thousands)  September 30CONSOLIDATED CONDENSED BALANCE SHEETS20122011      ASSETS     Cash and cash equivalents  $ 96,095 $ 364,246 Other current assets 791,514 584,538 Current assets of discontinued operations 7,619 7,529 Total current assets 895,228 956,313 Investments 451,144 347,924 Net property, plant, and equipment 4,351,571 3,677,070 Other assets 23,142 22,584TOTAL ASSETS  $5,721,085 $5,003,891          LIABILITIES AND SHAREHOLDERS' EQUITY     Current liabilities  $ 376,035 $ 411,750 Current liabilities of discontinued operations 5,129 4,979 Total current liabilities 381,164 416,729 Non-current liabilities 1,307,433 1,079,565 Non-current liabilities of discontinued operations 2,490 2,550 Long-term notes payable 195,000 235,000 Total shareholders' equity 3,834,998 3,270,047     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,721,085 $5,003,891    HELMERICH & PAYNE, INC.Unaudited(in thousands)  Years Ended  September 30CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20122011      OPERATING ACTIVITIES:     Net income $ 581,045 $ 434,186 Adjustment for (income) loss from discontinued operations (7,436) 482 Income from continuing operations 573,609 434,668 Depreciation 387,549 315,468 Changes in assets and liabilities 40,178 230,507 Gain on sale of assets and investment securities (19,223) (14,816) Other 18,283 12,207 Net cash provided by operating activities from continuing operations 1,000,396 978,034 Net cash used in operating activities from discontinued operations (64) (482)Net cash provided by operating activities 1,000,332 977,552      INVESTING ACTIVITIES:     Capital expenditures (1,097,680) (694,264) Proceeds from sale of assets 39,894 30,727 Acquisition of TerraVici Drilling Solutions -- (4,000) Net cash used in investing activities from continuing operations (1,057,786) (667,537) Net cash provided by investing activities from discontinued operations 7,500 --Net cash used in investing activities (1,050,286) (667,537)     FINANCING ACTIVITIES:     Repurchase of common stock (77,610) -- Dividends paid (30,049) (26,741) Exercise of stock options 2,673 15,441 Tax withholdings related to net share settlements of restricted stock (1,514) -- Net payments for short-term and long-term debt (115,000) (10,000) Excess tax benefit from stock-based compensation 3,303 12,511Net cash used in financing activities (218,197) (8,789)      Net increase (decrease) in cash and cash equivalents (268,151) 301,226Cash and cash equivalents, beginning of period 364,246 63,020Cash and cash equivalents, end of period $ 96,095 $ 364,246                SEGMENT REPORTINGThree Months EndedFiscal Year Ended  June 30September 30September 30 2012 2012201120122011  (in thousands, except days and per day amounts)U.S. LAND OPERATIONS           Revenues  $706,786  $695,106 $588,859  $2,678,475  $2,100,508  Direct operating expenses 382,418 350,364 317,317 1,407,986 1,119,700 General and administrative expense 7,227 8,078 6,493 30,798 25,066 Depreciation 81,457 100,045 72,916 332,723 264,127 Segment operating income  $235,684  $236,619 $192,133   $ 906,968  $ 691,615             Revenue days  21,977  21,951 19,947 86,340 73,905 Average rig revenue per day  $ 28,096  $ 28,325  $ 26,549  $ 27,737  $ 25,809 Average rig expense per day  $ 13,337  $ 12,620  $ 12,935  $ 13,022  $ 12,538 Average rig margin per day  $ 14,759  $ 15,705  $ 13,614  $ 14,715  $ 13,271 Rig utilization  89%  85%  87%  89%  86%           OFFSHORE OPERATIONS           Revenues  $ 41,617  $ 53,256  $ 51,395  $ 189,086  $ 201,417 Direct operating expenses 28,972 35,824 33,841 126,470 135,368 General and administrative expense 1,725 1,974 1,579 7,386 6,074 Depreciation 3,200 3,425 4,104 13,455 14,684 Segment operating income  $ 7,720  $ 12,033  $ 11,871  $ 41,775  $ 45,291             Revenue days  606  695 701 2,625 2,544 Average rig revenue per day  $ 49,539  $ 62,018  $ 54,176  $ 53,927  $ 51,794 Average rig expense per day  $ 32,638  $ 38,688  $ 32,393  $ 33,051  $ 29,379 Average rig margin per day  $ 16,901  $ 23,330  $ 21,783  $ 20,876  $ 22,415 Rig utilization  74%  84%  85%  79%   77%            INTERNATIONAL LAND OPERATIONS           Revenues  $ 67,482  $ 77,722  $ 57,160  $ 270,027  $ 226,849 Direct operating expenses 52,495 61,346 45,269 215,642 175,728 General and administrative expense 939 806 759 3,318 3,392 Depreciation 7,773 8,444 7,607 30,701 28,018 Segment operating income  $ 6,275  $ 7,126  $ 3,525  $ 20,366  $ 19,711            Revenue days  1,852 2,001 1,625 7,343 6,406 Average rig revenue per day  $ 33,362  $ 35,732  $ 30,001  $ 32,998  $ 31,633 Average rig expense per day  $ 25,658  $ 27,522  $ 22,311  $ 25,524  $ 23,416 Average rig margin per day  $ 7,704  $ 8,210  $ 7,690   $ 7,474   $ 8,217 Rig utilization  77%  79%  74%  77%  70%             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  $ 89,313  $ 73,346  $ 59,295  $ 283,640  $ 193,093 Offshore Operations  $ 3,550  $ 4,731  $ 5,487  $ 18,346  $ 33,718 International Land Operations  $ 5,696  $ 6,221  $ 8,409  $ 27,720  $ 24,207 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 20122012201120122011Operating income           U.S. Land $235,684 $236,619 $192,133 $906,968 $691,615 Offshore 7,720 12,033 11,871 41,775 45,291 International Land 6,275 7,126 3,525 20,366 19,711 Other (2,161) (3,042) (2,638) (8,824) (7,682)Segment operating income $247,518 $252,736 $204,891 $960,285 $748,935 Corporate general and administrative (15,685) (16,905) (14,255) (65,805) (56,920) Other depreciation (2,041) (2,510) (1,676) (7,775) (5,829) Inter-segment elimination 1,001 1,201 501 3,671 2,422 Income from asset sales 1,862 4,858 3,641 19,223 13,903Operating income $232,655$239,380$193,102$909,599$702,511             Other income (expense):           Interest and dividend income  329  359  378 1,380 1,951 Interest expense  (2,411)  (1,360)  (4,170) (8,653) (17,355) Gain on sale of investment securities  --  --  -- -- 913 Other  309  (34)  (1,161) 254 (953) Total other income (expense)  (1,773)  (1,035)  (4,953) (7,019) (15,444)            Income from continuing operations before income taxes $230,882$238,345$188,149$902,580$687,067CONTACT: Investor Relations investor.relations@hpinc.com (918) 588-5207