EX-99 2 a09-33812_1ex99.htm EX-99

 

Exhibit 99

 

November 19, 2009

 

HELMERICH & PAYNE, INC. ANNOUNCES FOURTH QUARTER AND

FISCAL YEAR-END EARNINGS

 

Helmerich & Payne, Inc. reported net income of $353,545,000 ($3.32 per diluted share) from operating revenues of $1,894,038,000 for its fiscal year ended September 30, 2009, compared with net income of $461,738,000 ($4.34 per diluted share) from operating revenues of $2,036,543,000 during the prior fiscal year ended September 30, 2008.  Included in fiscal 2009 and 2008 net income is non-operating related income (after-tax) of $0.04 and $0.27 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 2009 was $51,488,000 ($0.48 per diluted share) from operating revenues of $362,217,000, compared with net income of $126,485,000 ($1.18 per diluted share) from operating revenues of $583,719,000 during last year’s fourth quarter.  Included in net income were gains from non-operating items that totaled $0.01 per diluted share for the fourth quarter of 2009 and $0.05 per diluted share for the fourth quarter of 2008.

 

Segment operating income for U.S. land operations was $90,137,000 for this year’s fourth fiscal quarter, compared with $158,724,000 for last year’s fourth fiscal quarter and $96,593,000 for this year’s third fiscal quarter.  The decline as compared to last year’s fourth quarter was primarily a result of significantly lower activity levels in the U.S. land drilling market.  The segment’s average rig revenue per day declined from $28,325 to $25,895, a drop of $2,430 per day from the third to the fourth fiscal quarter.  The corresponding average rig margin per day also sequentially declined from $16,052 to $14,551, a drop of $1,501 per day.  Excluding the impact of income corresponding to early contract terminations and to compensation from customers that requested delivery delays for new builds under long-term contracts during this year’s third and fourth fiscal quarters, the average rig revenue per day declined sequentially by $909 to $23,018 for the fourth fiscal quarter, and the average rig margin per day only slightly declined sequentially by $34 to $11,696 for the fourth fiscal quarter.

 

Approximately $2,850 of the average rig revenue and margin per day corresponding to U.S. land operations for this year’s fourth fiscal quarter was primarily a result of early contract termination revenue and of revenue corresponding to requested delivery delays for new builds under long-term contracts.   This compares to approximately $4,400 included in the rig revenue and margin per day averages corresponding to this year’s third fiscal quarter for the same type of revenue.  Additional revenues of approximately $40 million corresponding to new build early terminations (all of which took place before the fourth

 

(over)

 


 

Page 2

News Release

November 19, 2009

 

fiscal quarter of 2009) and to requested delivery delays are expected to be recognized after fiscal 2009.  At this point, the Company expects about 40% of this amount to favorably impact revenue during the first fiscal quarter of 2010, and the remainder to favorably impact the last three quarters of fiscal 2010.

 

Rig utilization for the Company’s U.S. land segment was 55% for this year’s fourth fiscal quarter, compared with 98% for last year’s fourth fiscal quarter and 51% for this year’s third fiscal quarter.  At the end of fiscal 2009, the Company’s U.S. land segment had 122 contracted rigs and 79 idle and available rigs.  The 122 contracted rigs included 94 rigs under term contracts, eight of which were new FlexRigs®* waiting on customers that requested delivery delays.  These eight completed but delayed FlexRigs were not considered for purposes of calculating the rig utilization rate for the quarter.  In its U.S. land segment, the Company now expects an average of approximately 95 rigs to remain under term contracts during the first fiscal quarter of 2010, and an average of approximately 90 rigs to remain under term contracts during all of fiscal 2010.

 

Segment operating income for the Company’s offshore operations was $12,023,000 for the fourth fiscal quarter of 2009, compared with $13,664,000 for last year’s fourth fiscal quarter and $12,723,000 for this year’s third fiscal quarter.  Average rig utilization of the Company’s nine platform rigs in the offshore segment was reported at 78% for this year’s fourth fiscal quarter, compared with 89% during last year’s fourth fiscal quarter and 93% during this year’s third fiscal quarter.  Lower utilization as compared to this year’s third fiscal quarter was offset by improving margins.  Average rig margins per day increased to $20,679 during this year’s fourth fiscal quarter from $18,555 during this year’s third fiscal quarter.

 

The Company’s international land operations segment recorded a loss of $6,252,000 for this year’s fourth fiscal quarter, compared with operating income of $18,573,000 for last year’s fourth fiscal quarter, and an operating loss of $8,321,000 for this year’s third fiscal quarter.  This year’s fourth quarter results in international land operations were negatively impacted by the Company’s decision earlier this year (due to the uncertainty of the timing of collections from PDVSA) to not record revenue from its operations in Venezuela until the corresponding cash is collected.  A devaluation loss of approximately $1.0 million recorded in Argentina operations also had a negative impact on this year’s fourth quarter results.   Average international rig utilization for the fourth fiscal quarter was 41%, compared with 97% during last year’s fourth fiscal quarter, and 62% during this year’s third fiscal quarter.  The rig utilization rate during the fourth quarter of fiscal 2009 was unfavorably impacted by five idle rigs in the U.S. that were transferred to the Company’s international land operations segment during the quarter for international bidding purposes.  Furthermore, the rig utilization rate excludes three new FlexRigs built under long-term contracts that had not commenced operations by the end of the fiscal year.  Including these three new rigs, the Company’s international land segment had 23 rigs contracted (13 of which were under term contracts) and 21 rigs idle and available at the end of fiscal 2009.

 

(more)

 


 

Page 3

News Release

November 19, 2009

 

The Company is proactively continuing efforts to collect unpaid invoice amounts in Venezuela.  Since its last quarterly earnings release on July 30, 2009, the Company has collected approximately $32 million (U.S. currency equivalent) from PDVSA.  As of today, the total invoiced amount by the Company that remains pending payment from PDVSA is approximately $73 million (U.S. currency equivalent), including approximately $61 million in invoices issued since the Company changed its revenue recognition to cash basis for its Venezuelan operation.  Invoices issued under cash basis revenue recognition include approximately $55 million in potential future revenue and approximately $6 million in non-revenue billings.  All 11 H&P rigs that formerly worked for PDVSA have completed their contract obligations and are currently idle.  The Company will continue to pursue future drilling opportunities in Venezuela, but it does not expect to commit to new contracts until additional progress is made on pending receivable collections and on conversion of local currency to U.S. dollars.

 

President and C.E.O. Hans Helmerich commented, “We are encouraged by signs of improvement in the U.S. land rig market.  The Company’s FlexRigs are clearly well suited for the more prolific shale plays and other horizontal and directional work that greatly benefits from our newer drilling technology.  We are also pleased to be working in Mexico under a Schlumberger Integrated Project Management (IPM) contract with PEMEX where six of our FlexRigs are now operating.  We believe FlexRig performance will add significant value under these types of contracts where large number of wells are drilled and valuable savings can be achieved with faster drilling and move times.  In a little over one year, we have taken our international FlexRig footprint from one to 14 rigs.”

 

Helmerich & Payne, Inc. is primarily a contract drilling company.  As of November 19, 2009, the Company’s existing fleet included 247 land rigs and nine offshore platform rigs.  In addition, the Company is scheduled to complete another five new H&P-designed and operated FlexRigs during fiscal 2010.  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® is a registered trademark of Helmerich & Payne, Inc.

 

Contact:  Juan Pablo Tardio

(918) 588-5383

 

(more)

 


 

Page 4

News Release

November 19, 2009

 

HELMERICH & PAYNE, INC.

Unaudited

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

June 30

 

September 30

 

September 30

 

CONSOLIDATED STATEMENTS OF INCOME

 

2009

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

Drilling – U.S. Land

 

$

282,358

 

$

269,088

 

$

437,376

 

$

1,441,164

 

$

1,542,038

 

Drilling – Offshore

 

55,605

 

47,278

 

50,084

 

204,702

 

154,452

 

Drilling – International Land

 

47,290

 

43,100

 

93,300

 

237,397

 

328,244

 

Other

 

2,514

 

2,751

 

2,959

 

10,775

 

11,809

 

 

 

387,767

 

362,217

 

583,719

 

1,894,038

 

2,036,543

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Operating costs, excluding depreciation

 

220,339

 

196,997

 

322,745

 

1,011,558

 

1,086,666

 

Depreciation

 

61,043

 

63,509

 

63,700

 

236,437

 

210,766

 

General and administrative

 

14,225

 

13,606

 

14,343

 

59,413

 

57,059

 

Research and development

 

2,777

 

3,041

 

1,311

 

9,671

 

1,833

 

In-process research and development

 

—

 

—

 

—

 

—

 

11,129

 

Gain from involuntary conversion of long-lived assets

 

(264

)

—

 

—

 

(541

)

(10,236

)

Income from asset sales

 

(1,785

)

(1,278

)

(9,086

)

(6,032

)

(13,490

)

 

 

296,335

 

275,875

 

393,013

 

1,310,506

 

1,343,727

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

91,432

 

86,342

 

190,706

 

583,532

 

692,816

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

542

 

487

 

1,669

 

4,965

 

5,038

 

Interest expense

 

(2,793

)

(4,443

)

(4,434

)

(13,490

)

(18,689

)

Gain on sale of investment securities

 

—

 

—

 

—

 

—

 

21,994

 

Other

 

514

 

194

 

(860

)

808

 

(1,230

)

 

 

(1,737

)

(3,762

)

(3,625

)

(7,717

)

7,113

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and equity in income of affiliate

 

89,695

 

82,580

 

187,081

 

575,815

 

699,929

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

36,651

 

31,092

 

66,440

 

232,381

 

255,557

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in income of affiliate net of income taxes

 

—

 

—

 

5,844

 

10,111

 

17,366

 

NET INCOME

 

$

53,044

 

$

51,488

 

$

126,485

 

$

353,545

 

$

461,738

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

$

0.49

 

$

1.20

 

$

3.36

 

$

4.43

 

Diluted

 

$

0.50

 

$

0.48

 

$

1.18

 

$

3.32

 

$

4.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

105,425

 

105,464

 

105,211

 

105,364

 

104,284

 

Diluted

 

106,829

 

106,967

 

107,300

 

106,650

 

106,424

 

 

(more)

 


 

Page 5

News Release

November 19, 2009

 

HELMERICH & PAYNE, INC.

Unaudited

(in thousands)

 

CONSOLIDATED CONDENSED BALANCE SHEETS

 

9/30/09

 

9/30/08

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

141,486

 

$

121,513

 

Other current assets

 

381,446

 

569,134

 

Total current assets

 

522,932

 

690,647

 

Investments

 

356,404

 

199,266

 

Net property, plant, and equipment

 

3,265,907

 

2,682,251

 

Other assets

 

15,781

 

15,881

 

TOTAL ASSETS

 

$

4,161,024

 

$

3,588,045

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Total current liabilities

 

301,906

 

$

308,957

 

Total noncurrent liabilities

 

756,109

 

538,614

 

Long-term notes payable

 

420,000

 

475,000

 

Total shareholders’ equity

 

2,683,009

 

2,265,474

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

4,161,024

 

$

3,588,045

 

 

(more)

 


 

Page 6

News Release

November 19, 2009

 

HELMERICH & PAYNE, INC.

Unaudited

(in thousands)

 

 

 

Years Ended

 

 

 

September 30

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

 

2009

 

2008

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

353,545

 

$

461,738

 

Depreciation

 

236,437

 

210,766

 

In-process research and development

 

—

 

11,129

 

Changes in assets and liabilities

 

322,513

 

(7,366

)

Gain from involuntary conversion of long-lived assets

 

(541

)

(10,236

)

Gain on sale of assets and investment securities

 

(6,032

)

(35,354

)

Other

 

(8,603

)

(19,849

)

Net cash provided by operating activities

 

897,319

 

610,828

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(880,753

)

(705,635

)

Insurance proceeds from involuntary conversion of long-lived assets

 

541

 

13,926

 

Proceeds from sale of assets and investments

 

8,699

 

48,415

 

Purchase of short-term investments

 

(12,500

)

—

 

Acquisition of business, net of cash acquired

 

(16

)

(12,041

)

Net cash used in investing activities

 

(884,029

)

(655,335

)

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

Dividends paid

 

(21,111

)

(19,333

)

Increase in bank overdraft

 

2,038

 

—

 

Proceeds from exercise of stock options

 

1,272

 

14,537

 

Net proceeds from short-term and long-term debt

 

23,267

 

56,733

 

Excess tax benefit from stock-based compensation

 

1,217

 

24,868

 

Net cash provided by financing activities

 

6,683

 

76,805

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

19,973

 

32,298

 

Cash and cash equivalents, beginning of period

 

121,513

 

89,215

 

Cash and cash equivalents, end of period

 

$

141,486

 

$

121,513

 

 

(more)

 


 

Page 7

News Release

November 19, 2009

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

June 30

 

September 30

 

September 30

 

SEGMENT REPORTING

 

2009

 

2009

 

2008

 

2009

 

2008

 

 

 

(in thousands, except days and per day amounts)

 

U.S. LAND OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

282,358

 

$

269,088

 

$

437,376

 

$

1,441,164

 

$

1,542,038

 

Direct operating expenses

 

133,041

 

125,005

 

221,735

 

663,385

 

756,828

 

General and administrative expense

 

4,133

 

3,978

 

4,147

 

16,812

 

17,599

 

Depreciation

 

48,591

 

49,968

 

52,770

 

187,259

 

161,893

 

Segment operating income

 

$

96,593

 

$

90,137

 

$

158,724

 

$

573,708

 

$

605,718

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue days

 

9,302

 

9,902

 

16,382

 

48,055

 

59,804

 

Average rig revenue per day

 

$

28,325

 

$

25,895

 

$

25,034

 

$

28,194

 

$

24,522

 

Average rig expense per day

 

$

12,273

 

$

11,344

 

$

11,871

 

$

12,009

 

$

11,393

 

Average rig margin per day

 

$

16,052

 

$

14,551

 

$

13,163

 

$

16,185

 

$

13,129

 

Rig utilization

 

51

%

55

%

98

%

68

%

96

%

 

 

 

 

 

 

 

 

 

 

 

 

OFFSHORE OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

55,605

 

$

47,278

 

$

50,084

 

$

204,702

 

$

154,452

 

Direct operating expenses

 

38,854

 

31,423

 

32,159

 

133,442

 

104,454

 

General and administrative expense

 

1,004

 

975

 

964

 

4,095

 

4,452

 

Depreciation

 

3,024

 

2,857

 

3,297

 

11,872

 

12,152

 

Segment operating income

 

$

12,723

 

$

12,023

 

$

13,664

 

$

55,293

 

$

33,394

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue days

 

763

 

644

 

736

 

2,938

 

2,442

 

Average rig revenue per day

 

$

45,531

 

$

47,547

 

$

52,452

 

$

48,677

 

$

47,743

 

Average rig expense per day

 

$

26,976

 

$

26,868

 

$

30,054

 

$

27,373

 

$

29,655

 

Average rig margin per day

 

$

18,555

 

$

20,679

 

$

22,398

 

$

21,304

 

$

18,088

 

Rig utilization

 

93

%

78

%

89

%

89

%

75

%

 

(more)

 


 

Page 8

News Release

November 19, 2009

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

June 30

 

September 30

 

September 30

 

SEGMENT REPORTING

 

2009

 

2009

 

2008

 

2009

 

2008

 

 

 

(in thousands, except days and per day amounts)

 

INTERNATIONAL LAND OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

47,290

 

$

43,100

 

$

93,300

 

$

237,397

 

$

328,244

 

Direct operating expenses

 

47,913

 

40,204

 

68,679

 

213,552

 

224,683

 

General and administrative expense

 

555

 

857

 

554

 

2,892

 

3,974

 

Depreciation

 

7,143

 

8,291

 

5,494

 

28,180

 

29,614

 

Segment operating income (loss)

 

$

(8,321

)

$

(6,252

)

$

18,573

 

$

(7,227

)

$

69,973

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue days

 

1,622

 

1,319

 

2,299

 

7,374

 

8,026

 

Average rig revenue per day

 

$

27,340

 

$

29,406

 

$

37,691

 

$

29,650

 

$

37,604

 

Average rig expense per day

 

$

26,433

 

$

26,162

 

$

26,447

 

$

25,993

 

$

24,489

 

Average rig margin per day

 

$

907

 

$

3,244

 

$

11,244

 

$

3,657

 

$

13,115

 

Rig utilization

 

62

%

41

%

97

%

68

%

82

%

 

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

 

$

18,877

 

$

12,676

 

$

27,275

 

$

86,297

 

$

75,519

 

Offshore Operations

 

$

13,409

 

$

8,498

 

$

5,829

 

$

34,125

 

$

16,330

 

International Land Operations

 

$

2,945

 

$

4,312

 

$

6,647

 

$

18,755

 

$

26,431

 

 

(more)

 


 

Page 9

News Release

November 19, 2009

 

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 (loss) 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).

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

June 30

 

September 30

 

September 30

 

SEGMENT REPORTING

 

2009

 

2009

 

2008

 

2009

 

2008

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

U.S. Land

 

$

96,593

 

$

90,137

 

$

158,724

 

$

573,708

 

$

605,718

 

Offshore

 

12,723

 

12,023

 

13,664

 

55,293

 

33,394

 

International Land

 

(8,321

)

(6,252

)

18,573

 

(7,227

)

69,973

 

Other

 

(2,304

)

(2,376

)

(400

)

(7,032

)

(7,996

)

Segment operating income

 

$

98,691

 

$

93,532

 

$

190,561

 

$

614,742

 

$

701,089

 

Corporate general and administrative

 

(8,533

)

(7,796

)

(8,678

)

(35,614

)

(31,034

)

Other depreciation

 

(1,305

)

(1,349

)

(1,137

)

(5,124

)

(4,156

)

Inter-segment elimination

 

530

 

677

 

874

 

2,955

 

3,191

 

Gain from involuntary conversion of long-lived assets

 

264

 

—

 

—

 

541

 

10,236

 

Income from asset sales

 

1,785

 

1,278

 

9,086

 

6,032

 

13,490

 

Operating income

 

$

91,432

 

$

86,342

 

$

190,706

 

$

583,532

 

$

692,816

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

542

 

487

 

1,669

 

4,965

 

5,038

 

Interest expense

 

(2,793

)

(4,443

)

(4,434

)

(13,490

)

(18,689

)

Gain on sale of investment securities

 

—

 

—

 

—

 

—

 

21,994

 

Other

 

514

 

194

 

(860

)

808

 

(1,230

)

Total other income (expense)

 

(1,737

)

(3,762

)

(3,625

)

(7,717

)

7,113

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and equity in income of affiliate

 

$

89,695

 

$

82,580

 

$

187,081

 

$

575,815

 

$

699,929

 

 

###