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

Thursday, November 15, 2012 6:00 AM


TULSA, 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 Ended Fiscal Year Ended
CONSOLIDATED STATEMENTS OF June 30 September 30 September 30
INCOME 2012 2012 2011 2012 2011
           
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 232,655 239,380 193,102 909,599 702,511
           
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)
  (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 30
CONSOLIDATED CONDENSED BALANCE SHEETS 2012 2011
     
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 22,584
TOTAL 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 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2012 2011
     
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 12,511
Net cash used in financing activities (218,197) (8,789)
     
Net increase (decrease) in cash and cash equivalents (268,151) 301,226
Cash and cash equivalents, beginning of period 364,246 63,020
Cash and cash equivalents, end of period $ 96,095 $ 364,246
     
     
   
SEGMENT REPORTING Three Months Ended Fiscal Year Ended
  June 30 September 30 September 30
  2012  2012 2011 2012 2011
  (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 Ended Fiscal Year Ended
  June 30 September 30 September 30
  2012 2012 2011 2012 2011
Operating 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 13,903
Operating 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 $687,067
CONTACT: Investor Relations
         investor.relations@hpinc.com
         (918) 588-5207

Helmerich & Payne, Incorporated Logo

(Source: PrimeZone )
(Source: Quotemedia)

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