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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Second Quarter Results

Thursday, April 25, 2013

Helmerich & Payne, Inc. Announces Second Quarter Results

03:00 EDT Thursday, April 25, 2013

TULSA, Okla., April 25, 2013 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $151,067,000 ($1.39 per diluted share) from operating revenues of $838,309,000 for the second quarter of fiscal 2013, compared to income from continuing operations of $129,763,000 ($1.18 per diluted share) from operating revenues of $769,982,000 during the second fiscal quarter of 2012, and income from continuing operations of $159,611,000 ($1.48 per diluted share) from operating revenues of $844,572,000 during the first fiscal quarter of 2013. Included in income from continuing operations for the second fiscal quarters of 2013 and 2012 are after-tax gains equivalent to $0.03 and $0.05 per diluted share, respectively, related to the sale of used drilling assets. Included in income from continuing operations for the first fiscal quarter of 2013 are after-tax gains equivalent to $0.08 per diluted share related to the sale of used drilling assets and investment securities. Net income for the second quarter of fiscal 2013 was $151,080,000 ($1.39 per diluted share), compared to net income of $129,719,000 ($1.18 per diluted share) during the second fiscal quarter of 2012, and net income of $159,603,000 ($1.48 per diluted share) during the first fiscal quarter of 2013.

Chairman and CEO Hans Helmerich commented, "We are pleased with our solid financial results for the quarter and continue to expect 2013 to improve as the year unfolds. Assuming some measure of oil price resiliency, we anticipate slow activity improvement ahead with customer focus around capturing potential efficiencies, performance reliability and safety providing attractive opportunities for the Company."

The Company also announced today that it has entered into agreements with two exploration and production companies to build and operate two additional FlexRigs®* in the U.S. In addition, the Company entered an agreement to build a new 3,000 horsepower AC drive rig which is scheduled to begin operations in Colombia in the spring of 2014. All three rigs are under multi-year term contracts and expected to generate attractive economic returns for the Company. 

For the six months ended March 31, 2013, the Company reported income from continuing operations of $310,678,000 ($2.87 per diluted share) from operating revenues of $1,682,881,000 compared with income from continuing operations of $274,060,000 ($2.51 per diluted share) from operating revenues of $1,502,570,000 during the six months ended March 31, 2012. Included in income from continuing operations for the first six months of fiscal 2013 and 2012 were approximately $0.11 and $0.07 per share, respectively, of after-tax gains from the sale of used drilling equipment and investment securities. Net income for the first six months of fiscal 2013 was $310,683,000 ($2.87 per diluted share), compared to net income of $274,005,000 ($2.51 per diluted share) during the first six months of fiscal 2012.

Segment operating income for U.S. land operations was $225,998,000 for the second fiscal quarter of 2013, compared with $209,959,000 for last year's second fiscal quarter and $234,388,000 for this year's first fiscal quarter. Quarterly revenue days for the U.S. land segment sequentially increased by 104 days to 21,847 revenue days, and the corresponding average rig revenue per day increased by $215 to $28,255 during the second fiscal quarter of 2013. The average rig expense per day increased by $451 to $13,085, generating a sequential decline of $236 in average rig margin per day, from $15,406 during this year's first fiscal quarter to $15,170 during this year's second fiscal quarter. Both the average rig margin and average rig expense per day were negatively impacted by a bad debt reserve during the quarter equivalent to $174 per day. Rig utilization for the Company's U.S. land segment was 82% for this year's second fiscal quarter, compared with 91% for last year's second fiscal quarter and 82% for this year's first fiscal quarter. At March 31, 2013, the Company's U.S. land segment had 246 active rigs, including 161 under term contracts.

Segment operating income for the Company's offshore operations was $13,650,000 for the second fiscal quarter of 2013, compared with $9,818,000 for last year's second fiscal quarter and $15,006,000 for this year's first fiscal quarter. The sequential decline in operating income was attributable to a slightly lower number of revenue days along with a lower average rig margin per day during the most recent quarter. Average rig margin per day for this year's second fiscal quarter was $24,838 as compared to $25,782 for this year's first fiscal quarter.

The Company's international land operations reported segment operating income of $13,169,000 for this year's second fiscal quarter, compared with an operating loss of $974,000 for last year's second fiscal quarter and operating income of $9,111,000 for this year's first fiscal quarter. The sequential increase in segment operating income was primarily attributable to early termination compensation equivalent to approximately $2,600 of rig revenue per day during this year's second fiscal quarter. As a result, average rig margin per day increased to $11,053 in the second fiscal quarter of 2013 from $8,400 in the first fiscal quarter of 2013. As compared to this year's first fiscal quarter, the level of activity for the second fiscal quarter decreased by approximately ten percent to a total of 2,023 revenue days.

Helmerich & Payne, Inc. is primarily a contract drilling company. As of April 25, 2013, the Company's existing fleet included 302 land rigs in the U.S., 29 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete two new rigs under long-term contracts. Upon completion of these commitments, the Company's global fleet is expected to have a total of 333 land rigs, including 301 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 Ended Six Months Ended
  December 31 March 31 March 31
CONSOLIDATED STATEMENTS OF INCOME 2012 2013 2012 2013 2012
           
Operating Revenues:          
Drilling – U.S. Land $696,030 $685,710 $658,804 $1,381,740 $1,276,583
Drilling – Offshore 57,718 55,605 43,421 113,323 94,213
Drilling – International Land 87,267 94,092 64,088 181,359 124,823
Other 3,557 2,902 3,669 6,459 6,951
  844,572 838,309 769,982 1,682,881 1,502,570
           
Operating costs and expenses:        
Operating costs, excluding depreciation 466,871 461,737 448,208 928,608 839,240
Depreciation  106,599 112,433 90,934 219,032 177,222
General and administrative 32,421 32,836 27,805 65,257 53,968
Research and development 3,353 3,696 3,830 7,049 7,079
Income from asset sales (5,219) (5,313) (7,820) (10,532) (12,503)
  604,025 605,389 562,957 1,209,414 1,065,006
           
Operating income  240,547 232,920 207,025 473,467 437,564
           
Other income (expense):          
Interest and dividend income 426 315 356 741 692
Interest expense (1,308) (1,186) (2,421) (2,494) (4,882)
Gain on sale of investment securities 8,752 -- -- 8,752 --
Other (2,084) 103 (42) (1,981) (21)
  5,786 (768) (2,107) 5,018 (4,211)
           
Income from continuing operations before income taxes  246,333 232,152 204,918 478,485 433,353
Income tax provision  86,722 81,085 75,155 167,807 159,293
Income from continuing operations 159,611 151,067 129,763 310,678 274,060
           
Loss from discontinued operations, before income taxes  (8) (472) (44) (480) (55)
Income tax provision -- (485) -- (485) --
Income (loss) from discontinued operations  (8) 13 (44) 5 (55)
           
NET INCOME $159,603 $151,080 $129,719 $310,683 $274,005
           
Basic earnings per common share:        
Income from continuing operations $1.50 $1.41 $1.20 $2.91 $2.54
Income from discontinued operations $ -- $ -- $ -- $ --  $ --
           
Net income  $1.50 $1.41 $1.20 $2.91 $2.54
           
Diluted earnings per common share:        
Income from continuing operations $1.48 $1.39 $1.18 $2.87 $2.51
Income from discontinued operations $ -- $ -- $ -- $ -- $ --
           
Net income  $1.48 $1.39 $1.18 $2.87 $2.51
           
Weighted average shares outstanding:        
 Basic 105,867 106,326 107,385 106,094 107,285
 Diluted 107,412 107,786 109,042 107,640 108,925
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
     
  March 31 September 30
CONSOLIDATED CONDENSED BALANCE SHEETS 2013 2012
     
ASSETS    
Cash and cash equivalents $172,993 $96,095
Other current assets 754,910 791,514
Current assets of discontinued operations 4,073 7,619
Total current assets 931,976 895,228
Investments 501,383 451,144
Net property, plant, and equipment 4,560,562 4,351,571
Other assets 18,531 23,142
TOTAL ASSETS $6,012,452 $5,721,085
     
     
LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities $300,890 $376,035
Current liabilities of discontinued operations 3,647 5,129
Total current liabilities 304,537 381,164
Non-current liabilities 1,337,857 1,307,433
Non-current liabilities of discontinued operations 426 2,490
Long-term notes payable 195,000 195,000
Total shareholders' equity 4,174,632 3,834,998
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,012,452 $5,721,085
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
     
  Six Months Ended
  March 31
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS   2013  2012
OPERATING ACTIVITIES:    
Net income $310,683 $274,005
Adjustment for (income) loss from discontinued operations (5) 55
Income from continuing operations 310,678 274,060
Depreciation 219,032 177,222
Changes in assets and liabilities (32,408) (8,664)
Gain on sale of assets and investment securities  (19,284) (12,503)
Other 16,290 8,762
Net cash provided by operating activities from continuing operations 494,308 438,877
Net cash provided by (used in) operating activities from discontinued operations 5 (55)
Net cash provided by operating activities 494,313 438,822
     
INVESTING ACTIVITIES:    
Capital expenditures (438,473) (492,701)
Proceeds from sale of assets  34,253 25,543
Net cash used in investing activities (404,220) (467,158)
     
FINANCING ACTIVITIES:    
Dividends paid (23,469) (15,070)
Exercise of stock options 4,906 1,895
Tax withholdings related to net share settlements of restricted stock (1,677) (1,514)
Excess tax benefit from stock-based compensation 7,045 3,164
Net cash used in financing activities (13,195) (11,525)
     
Net increase (decrease) in cash and cash equivalents 76,898 (39,861)
Cash and cash equivalents, beginning of period 96,095 364,246
Cash and cash equivalents, end of period $172,993 $324,385
SEGMENT REPORTING Three Months Ended Six Months Ended
  December 31 March 31 March 31
  2012 2013 2012 2013 2012
  (in thousands, except days and per day amounts)
U.S. LAND OPERATIONS          
Revenues $696,030 $685,710 $658,804 $1,381,740 $1,276,583
Direct operating expenses 361,068 354,170 362,898 715,238 675,204
General and administrative expense 9,321 9,057 8,195 18,378 15,493
Depreciation 91,253 96,485 77,752 187,738 151,221
Segment operating income $234,388 $225,998 $209,959 $460,386 $434,665
           
Revenue days 21,743 21,847 21,444 43,590 42,412
Average rig revenue per day $28,040 $28,255 $27,625 $28,148 $27,247
Average rig expense per day $12,634 $13,085 $13,826 $12,860 $13,068
Average rig margin per day $15,406 $15,170 $13,799 $15,288 $14,179
Rig utilization 82% 82% 91% 82% 91%
           
OFFSHORE OPERATIONS          
Revenues $57,718 $55,605 $43,421 $113,323 $94,213
Direct operating expenses 37,207 36,106 28,473 73,313 61,674
General and administrative expense 2,235 2,159 1,955 4,394 3,687
Depreciation 3,270 3,690 3,175 6,960 6,830
Segment operating income  $15,006 $13,650 $9,818 $28,656 $22,022
           
Revenue days 736 720 627 1,456 1,324
Average rig revenue per day $61,936 $60,536 $49,514 $61,243 $51,688
Average rig expense per day $36,154 $35,698 $28,953 $35,928 $30,280
Average rig margin per day $25,782 $24,838 $20,561 $25,315 $21,408
Rig utilization  89% 89% 74% 89% 79%
           
INTERNATIONAL LAND OPERATIONS          
Revenues $87,267 $94,092 $64,088 $181,359 $124,823
Direct operating expenses 68,639 71,692 56,637 140,331 101,801
General and administrative expense 1,039 910 795 1,949 1,573
Depreciation 8,478 8,321 7,630 16,799 14,484
Segment operating income (loss)  $9,111 $13,169  $ (974) $22,280 $6,965
           
Revenue days 2,237 2,023 1,761 4,260 3,490
Average rig revenue per day $35,511 $40,677 $31,401 $37,964 $31,238
Average rig expense per day $27,111 $29,624 $26,517 $28,304 $24,307
Average rig margin per day $8,400 $11,053 $4,884 $9,660 $6,931
Rig utilization  85% 78% 75% 81% 77%
           
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 $86,359 $68,421 $66,419 $154,780 $120,981
Offshore Operations $6,259 $6,130 $4,267 $12,389 $10,065
International Land Operations $7,828 $11,804 $8,791 $19,632 $15,803

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 Six Months Ended
  December 31 March 31 March 31
  2012 2013 2012 2013 2012
Operating income           
U.S. Land $234,388 $225,998 $209,959 $460,386 $434,665
Offshore 15,006 13,650 9,818 28,656 22,022
International Land 9,111 13,169 (974) 22,280 6,965
Other (1,635) (2,539) (1,833) (4,174) (3,621)
Segment operating income  $256,870 $250,278 $216,970 $507,148 $460,031
Corporate general and administrative (19,826) (20,710) (16,860) (40,536) (33,215)
Other depreciation (2,934) (3,307) (1,668) (6,241) (3,224)
Inter-segment elimination 1,218 1,346 763 2,564 1,469
Income from asset sales 5,219 5,313 7,820 10,532 12,503
Operating income $240,547 $232,920 $207,025 $473,467 $437,564
           
Other income (expense):          
Interest and dividend income 426 315 356 741 692
Interest expense (1,308) (1,186) (2,421) (2,494) (4,882)
Gain on sale of investment securities 8,752 -- -- 8,752 --
Other (2,084) 103 (42) (1,981) (21)
Total other income (expense) 5,786 (768) (2,107) 5,018 (4,211)
           
Income from continuing operations before income taxes           
  $246,333 $232,152 $204,918 $478,485 $433,353
CONTACT: Investor Relations
investor.relations@hpinc.com
(918) 588-5207

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