TULSA, Okla., April 28, 2011 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported income from continuing operations of $98,961,000 ($0.91 per diluted share) from operating revenues of $604,406,000 for its second fiscal quarter ended March 31, 2011, compared to income from continuing operations of $74,105,000 ($0.68 per diluted share) from operating revenues of $436,579,000 during last year's second fiscal quarter ended March 31, 2010. Included in this year's second fiscal quarter income from continuing operations are $0.02 per share of after-tax gains related to the sale of three conventional U.S. land rigs, tubulars, and other used drilling equipment, as well as $0.04 per share of after-tax expenses unrelated to normal operations. Also included in income from continuing operations for the second fiscal quarter of 2010 was approximately $0.01 per share related to the sale of used drilling equipment. Net income for the second fiscal quarter of 2011 was $98,790,000 ($0.91 per diluted share), compared to net income of $46,747,000 ($0.43 per diluted share) during last year's second fiscal quarter.
For the six months ended March 31, 2011, the Company reported income from continuing operations of $203,326,000 ($1.87 per diluted share) from operating revenues of $1,199,048,000 compared with income from continuing operations of $137,907,000 ($1.28 per diluted share) from operating revenues of $832,821,000 during the six months ended March 31, 2010. Included in income from continuing operations for the first six months of fiscal 2011 and 2010 were approximately $0.04 and $0.01, respectively, of gains from the sale of used drilling equipment. Net income for the first six months of fiscal 2011 was $202,940,000 ($1.87 per diluted share), compared to net income of $109,982,000 ($1.02 per diluted share) during the first six months of fiscal 2010.
Helmerich & Payne, Inc. also announced today that it signed contracts to build and operate eight additional FlexRigs, bringing to 14 the number of additional FlexRig commitments announced since the Company's January 27, 2011, earnings release. These rigs will be built and operated in the U.S. under multi-year term contracts that provide attractive dayrates and economic returns. Since March 2010, the Company has announced contracts for the construction of 45 new build FlexRigs, of which 26 have been completed. The remaining 19 rigs are expected to be delivered during calendar 2011.
President and CEO Hans Helmerich commented, "The major shift across the industry towards oil and liquids rich plays is increasingly employing unconventional drilling techniques to conventional reservoirs. Basins that were historically characterized by shallow, vertical well paths are now seeing a greater number of drilling efforts apply horizontal well paths and longer lateral sections. These trends have clearly and favorably influenced market demand for H&P's FlexRigs. We expect demand for new FlexRigs to remain strong and we are uniquely positioned to compete in this expanding market. The value creation that our customers experience while using FlexRigs has helped to make H&P the most active contractor in the U.S. land drilling market, and we are focused on maintaining our competitive advantage."
Segment operating income for U.S. land operations was $164,289,000 for the second fiscal quarter of 2011, compared with $90,723,000 for last year's second fiscal quarter and $158,361,000 for this year's first fiscal quarter. The sequential increase in segment operating income was primarily attributable to increased drilling activity related to the delivery of new build FlexRigs, as the Company's quarterly revenue days for the segment increased by approximately three percent to 17,797 revenue days from the first quarter of fiscal 2011 to the second fiscal quarter of 2011. The corresponding average rig revenue per day also sequentially increased by $688 to $25,640 during the second fiscal quarter of 2011. The $688 increase in average rig revenue per day was partially offset by a $525 increase in average rig expense per day, generating a sequential increase of $163 in average rig margin per day, from $13,020 during this year's first fiscal quarter to $13,183 during this year's second fiscal quarter. Rig utilization for the Company's U.S. land segment was 85% for this year's second fiscal quarter, compared with 70% for last year's second fiscal quarter and 84% for this year's first fiscal quarter. At March 31, 2011, the Company's U.S. land segment had 205 contracted rigs and 32 idle rigs. The 205 contracted rigs included 136 rigs under term contracts.
Segment operating income for the Company's offshore operations was $11,476,000 for the second fiscal quarter of 2011, compared with $13,625,000 for last year's second fiscal quarter and $9,000,000 for this year's first fiscal quarter. The sequential increase in segment operating income was primarily a function of a higher average rig margin per day, which was $23,747 for this year's second fiscal quarter as compared to $18,065 for this year's first fiscal quarter. The number of revenue days increased to 618 during the second fiscal quarter of 2011, from 587 during the first fiscal quarter of 2011.
The Company's international land operations reported segment operating income of $2,443,000 for this year's second fiscal quarter, compared with $11,784,000 for last year's second fiscal quarter and $14,367,000 for this year's first fiscal quarter. The decrease in segment operating income was primarily attributable to a decline in revenues associated with the Company's prior operations in Mexico, as the remaining three rigs in that country were relocated to the U.S. early in the second fiscal quarter of 2011. The number of revenue days for this year's second fiscal quarter decreased by approximately 26% to 1,421 as compared to this year's first fiscal quarter. Average rig margin per day decreased to $7,106 in the second fiscal quarter of 2011 from $11,625 in the first fiscal quarter of 2011.
Helmerich & Payne, Inc. is primarily a contract drilling company. As of April 28, 2011, the Company's existing fleet included 240 land rigs in the U.S., 24 international land rigs and nine offshore platform rigs. In addition, the Company is scheduled to complete during calendar 2011 another 19 new H&P-designed and operated FlexRigs under long-term contracts with customers. Upon completion of these commitments, the Company's global land fleet is expected to include a total of 224 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® is a registered trademark of Helmerich & Payne, Inc.
| HELMERICH & PAYNE, INC. | |||||
| Unaudited | |||||
| (in thousands, except per share data) | |||||
| Three Months Ended | Six Months Ended | ||||
| Dec. 31 | March 31 | March 31 | |||
| CONSOLIDATED STATEMENTS OF INCOME | 2010 | 2011 | 2010 | 2011 | 2010 |
| Operating Revenues: | |||||
| Drilling – U.S. Land | $476,818 | $495,459 | $324,439 | $972,277 | $609,508 |
| Drilling – Offshore | 44,867 | 50,586 | 47,765 | 95,453 | 100,055 |
| Drilling – International Land | 68,954 | 54,684 | 61,535 | 123,638 | 117,332 |
| Other | 4,003 | 3,677 | 2,840 | 7,680 | 5,926 |
| 594,642 | 604,406 | 436,579 | 1,199,048 | 832,821 | |
| Operating costs and expenses: | |||||
| Operating costs, excluding depreciation | 330,046 | 340,039 | 248,480 | 670,085 | 457,178 |
| Depreciation | 73,180 | 76,161 | 63,493 | 149,341 | 124,210 |
| General and administrative | 19,889 | 24,406 | 20,543 | 44,295 | 41,182 |
| Research and development | 3,470 | 3,640 | 3,342 | 7,110 | 5,157 |
| Income from asset sales | (2,669) | (4,105) | (985) | (6,774) | (1,996) |
| 423,916 | 440,141 | 334,873 | 864,057 | 625,731 | |
| Operating income | 170,726 | 164,265 | 101,706 | 334,991 | 207,090 |
| Other income (expense): | |||||
| Interest and dividend income | 314 | 356 | 287 | 670 | 596 |
| Interest expense | (4,451) | (5,513) | (4,038) | (9,964) | (8,732) |
| Other | 166 | 232 | 23 | 398 | 38 |
| (3,971) | (4,925) | (3,728) | (8,896) | (8,098) | |
|
Income from continuing operations before income taxes |
166,755 | 159,340 | 97,978 | 326,095 | 198,992 |
| Income tax provision | 62,390 | 60,379 | 23,873 | 122,769 | 61,085 |
| Income from continuing operations | 104,365 | 98,961 | 74,105 | 203,326 | 137,907 |
|
Loss from discontinued operations, before income taxes |
(215) | (176) | (22,744) | (391) | (25,612) |
| Income tax provision | -- | (5) | 4,614 | (5) | 2,313 |
| Loss from discontinued operations | (215) | (171) | (27,358) | (386) | (27,925) |
| NET INCOME | $104,150 | $98,790 | $46,747 | $202,940 | $109,982 |
| Basic earnings per common share: | |||||
| Income from continuing operations | $0.98 | $0.92 | $0.70 | $1.90 | $1.30 |
| Loss from discontinued operations | $ -- | $ -- | $(0.26) | $ -- | $(0.26) |
| Net Income | $0.98 | $0.92 | $0.44 | $1.90 | $1.04 |
| Diluted earnings per common share: | |||||
| Income from continuing operations | $0.96 | $0.91 | $0.68 | $1.87 | $1.28 |
| Loss from discontinued operations | $ -- | $ -- | $(0.25) | $ -- | $(0.26) |
| Net Income | $0.96 | $0.91 | $0.43 | $1.87 | $1.02 |
| Weighted average shares outstanding: | |||||
| Basic | 106,031 | 106,515 | 105,711 | 106,270 | 105,642 |
| Diluted | 107,852 | 108,595 | 107,484 | 108,375 | 107,349 |
| HELMERICH & PAYNE, INC. | ||
| Unaudited | ||
| (in thousands) | ||
| CONSOLIDATED CONDENSED BALANCE SHEETS | 3/31/11 | 9/30/10 |
| ASSETS | ||
| Cash and cash equivalents | $240,685 | $63,020 |
| Other current assets | 554,627 | 579,514 |
| Current assets of discontinued operations | 8,275 | 10,270 |
| Total current assets | 803,587 | 652,804 |
| Investments | 480,939 | 320,712 |
| Net property, plant, and equipment | 3,420,635 | 3,275,020 |
| Other assets | 20,551 | 16,834 |
| TOTAL ASSETS | $4,725,712 | $4,265,370 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities | $209,866 | $224,646 |
| Current liabilities of discontinued operations | 5,882 | 7,992 |
| Total current liabilities | 215,748 | 232,638 |
| Non-current liabilities | 1,030,577 | 862,989 |
| Non-current liabilities of discontinued operations | 2,393 | 2,278 |
| Long-term notes payable | 350,000 | 360,000 |
| Total shareholders' equity | 3,126,994 | 2,807,465 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $4,725,712 | $4,265,370 |
| HELMERICH & PAYNE, INC. | ||
| Unaudited | ||
| (in thousands) | ||
|
Six Months Ended March 31 |
||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | 2011 | 2010 |
| OPERATING ACTIVITIES: | ||
| Net income | $202,940 | $109,982 |
| Adjustment for loss from discontinued operations | 386 | 27,925 |
| Income from continuing operations | 203,326 | 137,907 |
| Depreciation | 149,341 | 124,210 |
| Changes in assets and liabilities | 100,094 | (43,578) |
| Gain on sale of assets | (6,774) | (1,996) |
| Other | 6,146 | 10,071 |
|
Net cash provided by operating activities from continuing operations |
452,133 | 226,614 |
|
Net cash used in operating activities from discontinued operations |
(386) | (1,105) |
| Net cash provided by operating activities | 451,747 | 225,509 |
| INVESTING ACTIVITIES: | ||
| Capital expenditures | (286,251) | (142,318) |
| Proceeds from sale of assets and short-term investments | 17,022 | 16,133 |
| Purchase of short-term investments | -- | (16) |
| Acquisition of TerraVici Drilling Solutions | (4,000) | -- |
|
Net cash used in investing activities from continuing operations |
(273,229) | (126,201) |
|
Net cash used in investing activities from discontinued operations |
-- | (86) |
| Net cash used in investing activities | (273,229) | (126,287) |
| FINANCING ACTIVITIES: | ||
| Dividends paid | (12,784) | (10,587) |
| Decrease in bank overdraft | -- | (2,038) |
| Exercise of stock options | 11,115 | 309 |
| Net proceeds from (payments for) short-term and long-term debt | (10,000) | (85,000) |
| Excess tax benefit from stock-based compensation | 10,816 | 1,897 |
| Net cash used in financing activities | (853) | (95,419) |
| Net increase in cash and cash equivalents | 177,665 | 3,803 |
| Cash and cash equivalents, beginning of period | 63,020 | 96,142 |
| Cash and cash equivalents, end of period | $240,685 | $99,945 |
| SEGMENT REPORTING | Three Months Ended | Six Months Ended | |||
| Dec. 31 | March 31 | March 31 | |||
| 2010 | 2011 | 2010 | 2011 | 2010 | |
| (in thousands, except days and per day amounts) | |||||
| U.S. LAND OPERATIONS | |||||
| Revenues | $476,818 | $495,459 | $324,439 | $972,277 | $609,508 |
| Direct operating expenses | 252,238 | 260,834 | 176,424 | 513,072 | 314,779 |
| General and administrative expense | 5,855 | 6,388 | 6,074 | 12,243 | 12,735 |
| Depreciation | 60,364 | 63,948 | 51,218 | 124,312 | 99,748 |
| Segment operating income | $158,361 | $164,289 | $90,723 | $322,650 | $182,246 |
| Revenue days | 17,249 | 17,797 | 13,114 | 35,046 | 24,374 |
| Average rig revenue per day | $24,952 | $25,640 | $23,382 | $25,301 | $23,719 |
| Average rig expense per day | $11,932 | $12,457 | $12,095 | $12,198 | $11,627 |
| Average rig margin per day | $13,020 | $13,183 | $11,287 | $13,103 | $12,092 |
| Rig utilization | 84% | 85% | 70% | 84% | 66% |
| OFFSHORE OPERATIONS | |||||
| Revenues | $44,867 | $50,586 | $47,765 | $95,453 | $100,055 |
| Direct operating expenses | 30,927 | 33,936 | 29,696 | 64,863 | 62,272 |
| General and administrative expense | 1,410 | 1,553 | 1,478 | 2,963 | 3,108 |
| Depreciation | 3,530 | 3,621 | 2,966 | 7,151 | 5,944 |
| Segment operating income | $9,000 | $11,476 | $13,625 | $20,476 | $28,731 |
| Revenue days | 587 | 618 | 660 | 1,205 | 1,360 |
| Average rig revenue per day | $45,350 | $52,507 | $48,225 | $49,021 | $50,662 |
| Average rig expense per day | $27,285 | $28,760 | $25,202 | $28,042 | $26,654 |
| Average rig margin per day | $18,065 | $23,747 | $23,023 | $20,979 | $24,008 |
| Rig utilization | 71% | 76% | 81% | 74% | 83% |
| INTERNATIONAL LAND OPERATIONS | |||||
| Revenues | $68,954 | $54,684 | $61,535 | $123,638 | $117,332 |
| Direct operating expenses | 46,535 | 44,793 | 41,980 | 91,328 | 79,261 |
| General and administrative expense | 868 | 940 | 716 | 1,808 | 1,207 |
| Depreciation | 7,184 | 6,508 | 7,055 | 13,692 | 13,971 |
| Segment operating income | $14,367 | $2,443 | $11,784 | $16,810 | $22,893 |
| Revenue days | 1,923 | 1,421 | 1,766 | 3,344 | 3,397 |
| Average rig revenue per day | $33,789 | $33,043 | $33,283 | $33,472 | $33,006 |
| Average rig expense per day | $22,164 | $25,937 | $22,116 | $23,767 | $21,814 |
| Average rig margin per day | $11,625 | $7,106 | $11,167 | $9,705 | $11,192 |
| Rig utilization | 76% | 64% | 73% | 71% | 65% |
|
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 | $46,419 | $39,143 | $17,813 | $85,562 | $31,373 |
| Offshore Operations | $7,283 | $8,131 | $5,880 | $15,414 | $12,612 |
| International Land Operations | $3,979 | $7,730 | $2,758 | $11,709 | $5,212 |
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 Company's Venezuelan operation, which was historically an operating segment within the International Land Segment, was discontinued in the third quarter of fiscal 2010. Consequently, its operating results are excluded from the segment data tables above.
The following table reconciles operating income per the information above to income from continuing operations before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Income (in thousands).
| Three Months Ended | Six Months Ended | ||||
| Dec. 31 | March 31 | March 31 | |||
| 2010 | 2011 | 2010 | 2011 | 2010 | |
| Operating income | |||||
| U.S. Land | $158,361 | $164,289 | $90,723 | $322,650 | $182,246 |
| Offshore | 9,000 | 11,476 | 13,625 | 20,476 | 28,731 |
| International Land | 14,367 | 2,443 | 11,784 | 16,810 | 22,893 |
| Other | (1,151) | (1,815) | (2,423) | (2,966) | (3,217) |
| Segment operating income | $180,577 | $176,393 | $113,709 | $356,970 | $230,653 |
| Corporate general and administrative | (11,756) | (15,525) | (12,275) | (27,281) | (24,132) |
| Other depreciation | (1,381) | (1,349) | (1,335) | (2,730) | (2,671) |
| Inter-segment elimination | 617 | 641 | 622 | 1,258 | 1,244 |
| Income from asset sales | 2,669 | 4,105 | 985 | 6,774 | 1,996 |
| Operating income | $170,726 | $164,265 | $101,706 | $334,991 | $207,090 |
| Other income (expense): | |||||
| Interest and dividend income | 314 | 356 | 287 | 670 | 596 |
| Interest expense | (4,451) | (5,513) | (4,038) | (9,964) | (8,732) |
| Other | 166 | 232 | 23 | 398 | 38 |
| Total other income (expense) | (3,971) | (4,925) | (3,728) | (8,896) | (8,098) |
| Income from continuing operations before income taxes | $166,755 | $159,340 | $97,978 | $326,095 | $198,992 |