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Press release from GlobeNewswire (a Nasdaq OMX company)

Helmerich & Payne, Inc. Announces Third Quarter Earnings

Friday, July 26, 2013

Helmerich & Payne, Inc. Announces Third Quarter Earnings

03:00 EDT Friday, July 26, 2013

TULSA, Okla., July 26, 2013 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $250,978,000 ($2.32 per diluted share) from operating revenues of $840,197,000 for its third fiscal quarter ended June 30, 2013, compared to income from continuing operations of $149,943,000 ($1.38 per diluted share) from operating revenues of $819,785,000 during last year's third fiscal quarter, and income from continuing operations of $151,067,000 ($1.39 per diluted share) from operating revenues of $838,309,000 during the second fiscal quarter of 2013. Included in this year's third fiscal quarter income from continuing operations were $0.86 per share of after-tax gains related to the sale of investment securities and $0.02 per share of after-tax gains related to the sale of used drilling equipment. Last year's third fiscal quarter income from continuing operations included $0.01 per share of after-tax gains related to the sale of used drilling equipment, and this year's second fiscal quarter income from continuing operations included $0.03 per share of after-tax gains related to the sale of used drilling equipment. Net income for the third fiscal quarter of 2013 was $266,159,000 ($2.46 per diluted share), compared to net income of $149,925,000 ($1.38 per diluted share) during last year's third fiscal quarter, and net income of $151,080,000 ($1.39 per diluted share) during this year's second fiscal quarter.

For the nine months ended June 30, 2013, the Company reported income from continuing operations of $561,656,000 ($5.19 per diluted share) from operating revenues of $2,523,078,000, compared with income from continuing operations of $424,003,000 ($3.88 per diluted share) from operating revenues of $2,322,355,000 during the nine months ended June 30, 2012. Included in income from continuing operations for the first nine months of fiscal 2013 were $0.91 per share of after-tax gains from the sale of investment securities and $0.08 per share of after-tax gains from the sale of used drilling equipment. Income from continuing operations for the first nine months of fiscal 2012 included $0.08 per share of after-tax gains from the sale of used drilling equipment. Net income for the first nine months of fiscal 2013 was $576,842,000 ($5.33 per diluted share), compared to net income of $423,930,000 ($3.88 per diluted share) during the first nine months of fiscal 2012.

Chairman and CEO Hans Helmerich commented, "In light of the challenging rig market, we are pleased with the strong quarterly results corresponding to our drilling operations. Also during the most recent quarter, the Board approved a significant increase in dividends paid to shareholders. After doubling the dividend at the end of last year, in June the dividend was increased again from $0.15 to $0.50 per share per quarter. We are confident that our strong capital structure allows us to pursue growth opportunities and, at the same time, return meaningful cash to shareholders. Relatedly, we previously announced that the Company had sold 4,000,000 shares of Atwood, representing one-half of our position at a substantial gain. That sale fit well with our stated intention to rationalize our equity over a period of time. That said, we have no immediate plans for further sales at this time. So far this year, E&P spending has been disciplined in the general anticipation that oil prices would trend lower. Instead, prices have moved well above $100 per barrel and may well drive an increase in levels of FlexRig®* demand. We are in excellent position to quickly respond to improving market conditions and continue to expect the rig fleet replacement cycle to provide H&P with growth opportunities. Our focus will remain on helping customers reduce their total well costs through applied innovations and productivity improvements, while at the same time delivering attractive returns to our shareholders."

Segment operating income for U.S. land operations was $236,388,000 for the third fiscal quarter of 2013, compared with $235,684,000 for last year's third fiscal quarter and $225,998,000 for this year's second fiscal quarter. The sequential increase in segment operating income (as compared to the immediately preceding quarter) was primarily attributable to a three percent increase in quarterly revenue days. Also as compared to this year's second fiscal quarter, the average rig revenue per day for the segment decreased by $95 to $28,160 and the average rig expense per day declined by $339 to $12,746. Consequently, the average rig margin per day sequentially increased by $244 to $15,414 during this year's third fiscal quarter. Rig utilization for the segment was 83% for this year's third fiscal quarter, compared with 82% for this year's second fiscal quarter. At June 30, 2013, the Company's U.S. land segment had 246 active rigs (including 157 under term contracts) and 54 idle rigs (excluding two conventional rigs that were decommissioned at the end of the third fiscal quarter). 

Segment operating income for the Company's offshore operations was $14,122,000 for the third fiscal quarter of 2013, compared with $7,720,000 for last year's third fiscal quarter and $13,650,000 for this year's second fiscal quarter. The sequential increase in segment operating income was primarily attributable to a higher rig margin per day, which averaged $25,108 during this year's third fiscal quarter, compared to $24,838 during this year's second fiscal quarter. 

The Company's international land segment operating income was $8,458,000 for this year's third fiscal quarter, compared with $6,275,000 for last year's third fiscal quarter and $13,169,000 for this year's second fiscal quarter. The sequential decline in segment operating income was primarily attributable to early termination compensation equivalent to approximately $2,600 per day that only benefited the second fiscal quarter. Consequently, the average rig margin per day decreased to $8,591 during the third fiscal quarter of 2013 from $11,053 during the second fiscal quarter. The number of revenue days for the third fiscal quarter sequentially increased by approximately five percent to 2,132.

Helmerich & Payne, Inc. is primarily a contract drilling company. As of July 26, 2013, the Company's existing fleet included 300 land rigs in the U.S., 29 international land rigs and nine offshore platform rigs.  Included in the Company's global fleet of 329 land rigs are 300 H&P-designed and operated 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 Ended Nine Months Ended
  March 31 June 30 June 30
CONSOLIDATED STATEMENTS OF INCOME 2013 2013 2012 2013 2012
           
Operating Revenues:          
Drilling – U.S. Land  $  685,710  $  695,816  $ 706,786  $ 2,077,556  $ 1,983,369
Drilling – Offshore 55,605 53,859 41,617 167,182 135,830
Drilling – International Land 94,092 86,978 67,482 268,337 192,305
Other 2,902 3,544 3,900 10,003 10,851
  838,309 840,197 819,785 2,523,078 2,322,355
           
Operating costs and expenses:          
Operating costs, excluding depreciation 461,737 450,990 463,935 1,379,598 1,303,175
Depreciation 112,433 117,790 95,182 336,822 272,404
General and administrative 32,836 31,090 25,576 96,347 79,544
Research and development 3,696 4,373 4,299 11,422 11,378
Income from asset sales (5,313) (4,006) (1,862) (14,538) (14,365)
  605,389 600,237 587,130 1,809,651 1,652,136
           
Operating income 232,920 239,960 232,655 713,427 670,219
           
Other income (expense):          
Interest and dividend income 315 341 329 1,082 1,021
Interest expense (1,186) (2,091) (2,411) (4,585) (7,293)
Gain on sale of investment securities -- 153,369 -- 162,121 --
Other 103 (1,214) 309 (3,195) 288
  (768) 150,405 (1,773) 155,423 (5,984)
           
Income from continuing operations before income taxes 232,152 390,365 230,882 868,850 664,235
Income tax provision 81,085 139,387 80,939 307,194 240,232
Income from continuing operations 151,067 250,978 149,943 561,656 424,003
           
Income (loss) from discontinued operations, before income taxes  (472) 15,181 (18) 14,701 (154)
Income tax provision (485) -- -- (485) (81)
Income (loss) from discontinued operations 13 15,181 (18) 15,186 (73)
           
NET INCOME  $ 151,080  $ 266,159  $ 149,925  $ 576,842  $ 423,930
           
Basic earnings per common share:          
Income from continuing operations  $ 1.41  $ 2.35  $ 1.40  $ 5.26  $ 3.94
Income from discontinued operations  $  --  0.14   $  --  $  0.14  $  --
           
Net income  $ 1.41  $ 2.49  $ 1.40  $ 5.40  $ 3.94
           
Diluted earnings per common share:          
Income from continuing operations  $ 1.39  $ 2.32  $ 1.38  $ 5.19  $ 3.88
Income from discontinued operations  $  --  $  0.14  $  --  $  0.14  $  --
           
Net income  $ 1.39  $ 2.46  $ 1.38  $ 5.33  $ 3.88
           
Weighted average shares outstanding:          
Basic  106,326  106,430  107,016  106,206  107,196
Diluted  107,786  107,826  108,425  107,717  108,798
 
 
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
  June 30 September 30
CONSOLIDATED CONDENSED BALANCE SHEETS 2013 2012
     
ASSETS    
Cash and cash equivalents  $ 480,480  $  96,095
Other current assets 795,550  791,514
Current assets of discontinued operations 4,460  7,619
Total current assets 1,280,490  895,228
Investments 287,634  451,144
Net property, plant, and equipment 4,613,301  4,351,571
Other assets 16,186  23,142
TOTAL ASSETS $6,197,611  $5,721,085
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities  $  428,885  $ 376,035
Current liabilities of discontinued operations 3,969 5,129
Total current liabilities 432,854 381,164
Non-current liabilities 1,274,242 1,307,433
Non-current liabilities of discontinued operations 491 2,490
Long-term notes payable 195,000 195,000
Total shareholders' equity 4,295,024 3,834,998
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,197,611 $5,721,085
 
 
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
 
  Nine Months Ended
  June 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2013 2012
     
OPERATING ACTIVITIES:    
Net income $ 576,842 $ 423,930
Adjustment for (income) loss from discontinued operations (15,186) 73
Income from continuing operations 561,656 424,003
Depreciation 336,822 272,404
Changes in assets and liabilities 17,230 (82,428)
Gain on sale of assets and investment securities (176,659) (14,365)
Other 22,408 13,437
Net cash provided by operating activities from continuing operations 761,457 613,051
Net cash provided by (used in) operating activities from discontinued operations 186 (73)
Net cash provided by operating activities 761,643 612,978
     
INVESTING ACTIVITIES:    
Capital expenditures (618,550) (774,243)
Proceeds from sale of assets and investment securities 253,950 31,838
Net cash used in investing activities from continuing operations (364,600) (742,405)
Net cash provided by investing activities from discontinued operations 15,000 --
Net cash used in investing activities (349,600) (742,405)
     
FINANCING ACTIVITIES:    
Repurchase of common stock -- (71,404)
Dividends paid (39,519) (22,620)
Exercise of stock options 6,118 2,374
Tax withholdings related to net share settlements of restricted stock (1,677) (1,514)
Increase in bank overdraft -- 3,955
Excess tax benefit from stock-based compensation 7,420 3,256
Net cash used in financing activities (27,658) (85,953)
     
Net increase (decrease) in cash and cash equivalents 384,385 (215,380)
Cash and cash equivalents, beginning of period 96,095 364,246
Cash and cash equivalents, end of period $ 480,480 $ 148,866


     
SEGMENT REPORTING Three Months Ended Nine Months Ended
  March 31 June 30 June 30
  2013  2013 2012 2013 2012
  (in thousands, except days and per day amounts)
U.S. LAND OPERATIONS          
Revenues $685,710 $695,816  $706,786 $2,077,556  $ 1,983,369
Direct operating expenses 354,170 348,850 382,418 1,064,088  1,057,622
General and administrative expense 9,057 9,284 7,227 27,662  22,720
Depreciation 96,485 101,294 81,457 289,032  232,678
Segment operating income $225,998 $236,388  $235,684 $696,774  $  670,349
           
Revenue days  21,847  22,510  21,977 66,100   64,389
Average rig revenue per day  $ 28,255  $ 28,160  $ 28,096  $ 28,152  $  27,537
Average rig expense per day  $ 13,085  $ 12,746  $ 13,337  $ 12,821  $  13,160
Average rig margin per day  $ 15,170  $ 15,414  $ 14,759  $ 15,331  $  14,377
Rig utilization 82% 83%  89%  82%   90%
           
OFFSHORE OPERATIONS          
Revenues  $ 55,605  $ 53,859  $ 41,617  $ 167,182  $  135,830
Direct operating expenses 36,106 33,961 28,972 107,274  90,646
General and administrative expense 2,159 2,214 1,725 6,608  5,412
Depreciation 3,690 3,562 3,200 10,522  10,030
Segment operating income  $ 13,650  $ 14,122  $ 7,720  $ 42,778  $  29,742
           
Revenue days  720  728  606 2,184   1,930
Average rig revenue per day  $ 60,536  $ 61,380  $ 49,539  $ 61,289  $ 51,013
Average rig expense per day  $ 35,698  $ 36,272  $ 32,638  $ 36,043  $  31,020
Average rig margin per day  $ 24,838  $ 25,108  $ 16,901  $ 25,246  $  19,993
Rig utilization  89%  89%  74%  89%   77%
           
INTERNATIONAL LAND OPERATIONS          
Revenues  $ 94,092  $ 86,978  $ 67,482  $ 268,337  $ 192,305
Direct operating expenses 71,692 68,310 52,495 208,641 154,296
General and administrative expense 910 976 939 2,925 2,512
Depreciation 8,321 9,234 7,773 26,033 22,257
Segment operating income  $ 13,169  $ 8,458  $ 6,275  $ 30,738  $ 13,240
           
Revenue days  2,023  2,132  1,852 6,392  5,342
Average rig revenue per day  $ 40,677  $ 35,955  $ 33,362  $ 37,294  $ 31,974
Average rig expense per day  $ 29,624  $ 27,364  $ 25,658  $ 27,991  $ 24,775
Average rig margin per day  $ 11,053  $ 8,591  $ 7,704  $ 9,303   $ 7,199
Rig utilization  78%  80%  77%  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  $ 68,421  $ 61,944  $ 89,313  $ 216,724  $ 210,294
Offshore Operations  $ 6,130  $ 4,045  $ 3,550  $ 16,434  $ 13,615
International Land Operations  $ 11,804  $ 10,323  $ 5,696  $ 29,955  $ 21,499

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 Nine Months Ended
  March 31 June 30 June 30
  2013 2013 2012 2013 2012
Operating income          
U.S. Land $225,998  $236,388  $235,684 $696,774 $670,349
Offshore 13,650 14,122 7,720 42,778  29,742
International Land 13,169 8,458 6,275 30,738  13,240
Other  (2,539) (2,464) (2,161) (6,638)  (5,782)
Segment operating income $250,278  $256,504 $247,518 $763,652 $707,549
Corporate general and administrative (20,710)  (18,616) (15,685) (59,152)  (48,900)
Other depreciation (3,307)  (3,096) (2,041) (9,337)  (5,265)
Inter-segment elimination 1,346 1,162 1,001  3,726  2,470
Income from asset sales 5,313 4,006 1,862  14,538  14,365
Operating income $232,920  $239,960 $232,655  $713,427 $670,219
           
Other income (expense):          
Interest and dividend income  315  341  329 1,082  1,021
Interest expense  (1,186)  (2,091)  (2,411) (4,585)  (7,293)
Gain on sale of investment securities  -- 153,369  --  162,121  --
Other  103 (1,214)  309 (3,195)  288
Total other income (expense)  (768)  150,405  (1,773)  155,423  (5,984)
           
Income from continuing operations before income taxes  $232,152  $390,365  $230,882  $868,850  $664,235
CONTACT: Investor Relations
investor.relations@hpinc.com
(918) 588-5207

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