Helmerich & Payne, Inc. Announces Record Fourth Quarter and Fiscal Year-End Earnings
Thu Nov 20, 8:50 AMTULSA, Okla., Nov. 20 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc. (NYSE: HP) reported record net income of $461,738,000 ($4.34 per diluted share) from operating revenues of $2,036,543,000 for its fiscal year ended September 30, 2008, compared with net income of $449,261,000 ($4.27 per diluted share) from operating revenues of $1,629,658,000 during the prior fiscal year ended September 30, 2007. Included in fiscal 2008 and 2007 net income is non-operating related income (after-tax) of $0.27 and $0.74 per diluted share, respectively. Non-operating items included are gains on the sales of investment securities, gains from involuntary conversion of long-lived assets, and income from asset sales.
Net income for the fourth quarter of fiscal 2008 was $126,485,000 ($1.18 per diluted share) from operating revenues of $583,719,000, compared with net income of $116,410,000 ($1.10 per diluted share) from operating revenues of $449,449,000 during last year's fourth quarter. Included in net income were gains from non-operating type activities mentioned above that totaled $0.05 per diluted share for the fourth quarter of 2008 and $0.13 per diluted share for the fourth quarter of 2007.
Helmerich & Payne, Inc. also announced today that, since its last announcement in late July, the Company has signed 13 long-term contracts with five exploration and production companies to operate 13 new FlexRigs(R)*. The names of the customers and other terms were not disclosed. Since the beginning of fiscal 2008, the Company has announced 63 new contracts for the construction and operation of 63 new FlexRigs under long-term contracts with term durations of three years or greater. This also brings to 140 the total number of long-term commitments for new FlexRigs that have been announced by the Company since March, 2005. To date, 107 of the 140 new builds have been completed, with the remaining 33 scheduled for completion in the next twelve months. Upon completion of these commitments, FlexRigs will represent 73% of the Company's global fleet and over 80% of its U.S. land rig fleet.
Company President and C.E.O., Hans Helmerich commented, "With 58% of our U.S. land potential revenue days in fiscal 2009 already under long-term contracts with strong dayrates, and with the addition of the 13 new build orders announced today, we are optimistic about the position of the Company as we head toward uncertain times in the oil services industry. In the long term we believe our customers' capital spending plans and demand for drilling services will improve and that the retooling of the industry's rig fleet will continue."
Total Company operating income increased to an all time high of $190,706,000 for the fourth quarter of 2008, compared with $177,807,000 during the third quarter of 2008, and $166,709,000 for the fourth quarter of 2007. This year's fourth quarter results for the U.S. land segment were negatively affected by $11.7 million of abandonment charges ($0.07 per share after tax), mostly associated with obsolete equipment. Including the non-cash abandonment charge, segment operating income for U.S. land operations was $158,724,000 for the fourth quarter of 2008 compared with $159,413,000 for the third quarter of 2008 and $124,191,000 for the fourth quarter of 2007.
Total revenue days for U.S. land operations increased 7.3% from 15,263 during the third quarter of 2008 to 16,382 during the fourth quarter of 2008. Rig margins for U.S. land operations averaged $13,163 per day during the fourth quarter of fiscal 2008, compared with $13,365 per day during the third quarter of 2008, and $12,221 during the fourth quarter of 2007. The $202 per day sequential decline resulted from a slightly higher average rig revenue per day that was more than offset by an increase in daily operating cost.
The Company's offshore operations reported segment operating income of $13,664,000 for the fourth quarter of fiscal 2008, compared with $12,013,000 for the third quarter of fiscal 2008 and $6,343,000 for the fourth quarter of fiscal 2007. During both the third and fourth quarters of 2008, eight of the Company's nine offshore platform rigs were working (89% utilization), compared with 59% utilization during last year's fourth quarter.
Segment operating income for the Company's international land operations was $18,573,000 during this year's fourth quarter, compared with $17,492,000 during this year's third quarter and $32,358,000 during last year's fourth quarter. Income for this year's third and fourth quarters was down compared to last year's fourth quarter primarily as a result of significantly higher daily operating cost and an early termination fee that favorably impacted last year's fourth quarter by approximately $6 million. Average rig utilization for the fourth quarter of 2008 was 97%, compared with 79% for the third quarter of fiscal 2008 and 81% for the fourth quarter of fiscal 2007. By the end of the fourth quarter, all of the Company's international land rigs were working. Two of the previously announced new international FlexRigs have been completed and mobilized and are currently working in South America. Five others are at various stages of construction and mobilization to South America.
Helmerich & Payne, Inc. is primarily a contract drilling company. As of November 20, 2008, the Company's existing fleet included 189 U.S. land rigs, 31 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete another 33 new H&P-designed and operated FlexRigs. Upon completion of these commitments, the Company's global land fleet will include a total of 190 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.
Statements in this release and information disclosed in the conference call and webcast that are "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 are based on current expectations and assumptions that are subject to risks and uncertainties. For information regarding risks and uncertainties associated with the Company's business, please refer to the "Risk Factors" and "Management's Discussion & Analysis of Financial Condition and Results of Operations" 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.
*FlexRig(R) is a registered trademark of Helmerich & Payne, Inc.
HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
Three Months Ended Fiscal Year Ended
June 30 September 30 September 30
CONSOLIDATED STATEMENTS 2008 2008 2007 2008 2007
OF INCOME
Operating Revenues:
Drilling - U.S. Land $391,755 $437,376 $332,397 $1,542,038 $1,174,956
Drilling -
Offshore 47,298 50,084 29,065 154,452 123,148
Drilling -
International Land 80,585 93,300 85,130 328,244 320,283
Other 2,879 2,959 2,857 11,809 11,271
522,517 583,719 449,449 2,036,543 1,629,658
Operating costs and other:
Operating costs,
excluding
depreciation 274,168 322,745 234,306 1,086,666 862,254
Depreciation 51,210 63,700 44,814 210,766 146,042
General and
administrative 14,723 14,343 11,900 57,059 47,401
Research and
development 522 1,311 - 1,833 -
In-process research
and development 11,129 - - 11,129 -
Gain from involuntary
conversion of
long-lived assets (5,426) - (5,591) (10,236) (16,661)
Income from asset sales (1,616) (9,086) (2,689) (13,490) (41,697)
344,710 393,013 282,740 1,343,727 997,339
Operating income 177,807 190,706 166,709 692,816 632,319
Other income (expense):
Interest and dividend
income 1,034 1,669 994 5,038 4,234
Interest expense (4,651) (4,434) (4,034) (18,689) (10,126)
Gain on sale of
investment securities 16,388 - 13,646 21,994 65,458
Other 66 (860) (1,782) (1,230) (1,532)
12,837 (3,625) 8,824 7,113 58,034
Income before income taxes
and equity in income of
affiliate 190,644 187,081 175,533 699,929 690,353
Income tax provision 70,187 66,440 62,588 255,557 250,984
Equity in income of
affiliate net of income
taxes 4,912 5,844 3,465 17,366 9,892
NET INCOME $125,369 $126,485 $116,410 $461,738 $449,261
Earnings per common share:
Basic $1.20 $1.20 $1.13 $4.43 $4.35
Diluted $1.18 $1.18 $1.10 $4.34 $4.27
Average common shares
outstanding:
Basic 104,530 105,211 103,475 104,284 103,338
Diluted 106,689 107,300 105,498 106,424 105,128
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
CONSOLIDATED CONDENSED BALANCE SHEETS 9/30/08 9/30/07
ASSETS
Cash and cash equivalents $121,513 $89,215
Other current assets 569,134 409,749
Total current assets 690,647 498,964
Investments 199,266 223,360
Net property, plant, and equipment 2,682,251 2,152,616
Other assets 15,881 10,429
TOTAL ASSETS $3,588,045 $2,885,369
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $308,957 $226,612
Total noncurrent liabilities 538,614 398,241
Long-term notes payable 475,000 445,000
Total shareholders' equity 2,265,474 1,815,516
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,588,045 $2,885,369
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
Years Ended
September 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2008 2007
OPERATING ACTIVITIES:
Net income $461,738 $449,261
Depreciation 210,766 146,042
In-process research and development 11,129 -
Changes in assets and liabilities (7,366) 96,356
Gain from involuntary conversion of
long-lived assets (10,236) (16,661)
Gain on sale of assets and investment
securities (35,354) (107,017)
Other (19,849) (6,914)
Net cash provided by operating activities 610,828 561,067
INVESTING ACTIVITIES:
Capital expenditures (705,635) (894,214)
Insurance proceeds from involuntary
conversion of long-lived assets 13,926 16,257
Proceeds from sale of assets and investments 48,415 179,387
Acquisition of business, net of cash acquired (12,041) -
Net cash used in investing activities (655,335) (698,570)
FINANCING ACTIVITIES:
Dividends paid (19,333) (18,638)
Repurchase of common stock - (17,621)
Net increase (decrease)in bank overdraft - (17,430)
Proceeds from exercise of stock options 14,537 3,802
Net proceeds from short-term and long-term debt 56,733 241,279
Excess tax benefit from stock-based
compensation 24,868 1,473
Net cash provided by financing activities 76,805 192,865
Net increase in cash and cash equivalents 32,298 55,362
Cash and cash equivalents, beginning of period 89,215 33,853
Cash and cash equivalents, end of period $121,513 $89,215
SEGMENT REPORTING Three Months Ended Fiscal Year Ended
June 30 September 30 September 30
2008 2008 2007 2008 2007
(in thousands, except days and per day amounts)
U.S. LAND OPERATIONS
Revenues $391,755 $437,376 $332,397 $1,542,038 $1,174,956
Direct operating
expenses 187,771 221,735 170,311 756,828 587,825
General and
administrative expense 4,801 4,147 3,796 17,599 14,024
Depreciation 39,770 52,770 34,099 161,893 106,107
Segment operating
income $159,413 $158,724 $124,191 $605,718 $467,000
Revenue days 15,263 16,382 13,263 59,804 47,338
Average rig revenue
per day $24,543 $25,034 $23,666 $24,522 $23,573
Average rig expense
per day $11,178 $11,871 $11,445 $11,393 $11,170
Average rig margin
per day $13,365 $13,163 $12,221 $13,129 $12,403
Rig utilization 96% 98% 95% 96% 97%
OFFSHORE OPERATIONS
Revenues $47,298 $50,084 $29,065 $154,452 $123,148
Direct operating
expenses 31,166 32,159 18,961 104,454 85,556
General and
administrative expense 1,276 964 959 4,452 4,824
Depreciation 2,843 3,297 2,802 12,152 10,687
Segment operating
income $12,013 $13,664 $6,343 $33,394 $22,081
Revenue days 732 736 485 2,442 2,141
Average rig revenue
per day $51,309 $52,452 $39,160 $47,743 $34,469
Average rig expense
per day $31,181 $30,054 $20,347 $29,655 $21,564
Average rig margin
per day $20,128 $22,398 $18,813 $18,088 $12,905
Rig utilization 89% 89% 59% 75% 65%
SEGMENT REPORTING Three Months Ended Fiscal Year Ended
June 30 September 30 September 30
2008 2008 2007 2008 2007
(in thousands, except days and per day amounts)
INTERNATIONAL LAND OPERATIONS
Revenues $80,585 $93,300 $85,130 $328,244 $320,283
Direct operating
expenses 55,093 68,679 45,556 224,683 188,086
General and
administrative
expense 1,182 554 972 3,974 3,236
Depreciation 6,818 5,494 6,244 29,614 23,782
Segment operating
income $17,492 $18,573 $32,358 $69,973 $105,179
Revenue days 1,951 2,299 2,023 8,026 8,886
Average rig revenue
per day $38,709 $37,691 $37,847 $37,604 $31,465
Average rig expense
per day $25,638 $26,447 $18,250 $24,489 $16,708
Average rig margin
per day $13,071 $11,244 $19,597 $13,115 $14,757
Rig utilization 79% 97% 81% 82% 90%
Operating statistics exclude the effects of offshore 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 $17,158 $27,275 $18,514 $75,519 $59,035
Offshore Operations $4,296 $5,829 $3,145 $16,330 $14,328
International Land
Operations $5,066 $6,647 $8,563 $ 26,431 $40,113
With the growth of the drilling segments, the previously reported Real Estate segment has become a smaller percentage of total segment operating income. As a result, the Real Estate segment has been included with other non-reportable business segments. The amounts for fiscal 2007 and the three months ended September 30, 2007 have been restated to reflect this change.
Segment operating income 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 segment operating income per the information above to income before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Income (in thousands).
SEGMENT REPORTING Three Months Ended Fiscal Year Ended
June 30 September 30 September 30
2008 2008 2007 2008 2007
Operating Income
U.S. Land $159,413 $158,724 $124,191 $605,718 $467,000
Offshore 12,013 13,664 6,343 33,394 22,081
International Land 17,492 18,573 32,358 69,973 105,179
Other (10,421) (400) 1,294 (7,996) 5,007
Segment operating
income $178,497 $190,561 $164,186 $701,089 $599,267
Corporate general
and administrative (7,464) (8,678) (6,173) (31,034) (25,317)
Other depreciation (1,087) (1,137) (1,016) (4,156) (3,010)
Inter-segment
elimination 819 874 1,432 3,191 3,021
Gain from involuntary
conversion of
long-lived assets 5,426 - 5,591 10,236 16,661
Income from asset
sales 1,616 9,086 2,689 13,490 41,697
Operating income $177,807 $190,706 $166,709 $692,816 $632,319
Other income (expense):
Interest and dividend
income 1,034 1,669 994 5,038 4,234
Interest expense (4,651) (4,434) (4,034) (18,689) (10,126)
Gain on sale of
investment
securities 16,388 - 13,646 21,994 65,458
Other 66 (860) (1,782) (1,230) (1,532)
Total other income
(expense) 12,837 (3,625) 8,824 7,113 58,034
Income before income
taxes and equity in
income of
affiliate $190,644 $187,081 $175,533 $699,929 $690,353
SOURCE Helmerich & Payne, Inc.
350.77 (3.70%)
