Search Close Menu Open Menu Close

Helmerich & Payne, Inc. Announces Third Quarter Results

July 30, 2015

TULSA, Okla., July 30, 2015 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported net income of $91 million ($0.83 per diluted share) from operating revenues of $660 million for the third fiscal quarter of 2015, compared to net income of $192 million ($1.75 per diluted share) from operating revenues of $952 million during the third quarter of fiscal 2014, and net income of $150 million ($1.37 per diluted share) from operating revenues of $883 million during the second quarter of fiscal 2015.  Included in net income per diluted share corresponding to this year’s third fiscal quarter are approximately $0.55 of after-tax gains from long-term contract early termination compensation from customers (which favorably impacted net income by approximately $60 million) and $0.01 of after-tax gains related to the sale of used drilling equipment.  Included in net income per diluted share corresponding to last year’s third fiscal quarter are approximately $0.13 of after-tax gains on the sale of investment securities and $0.01 of after-tax gains related to the sale of used drilling equipment. Included in net income per diluted share corresponding to this year’s second fiscal quarter are approximately $0.44 of after-tax gains from long-term contract early termination compensation from customers, $0.02 of after-tax gains related to the sale of used drilling equipment, and $0.05 of after-tax losses from abandonment charges.

President and CEO John Lindsay commented, “The industry has endured an unprecedented rig count decline, and yet we believe that the Company remains well positioned.  Long-term contracts continue to protect our investments, the balance sheet is in great shape, our customer base remains strong, and our competitive advantages have positioned us very well to manage through this cycle and to capture opportunities when they emerge. 

“The industry is faced with a global oversupply of oil, as well as other macroeconomic headwinds to a strengthening oil price.  A significant difference today, compared to previous down-cycles, is that the U.S. may be positioned to become a global swing producer.  In such an environment, the energy services landscape would most probably become increasingly competitive, with even greater pressure to reduce well costs, enhance productivity and add value for customers. H&P’s long-term strategy has delivered a track record of innovation and value creation.  We remain committed to this endeavor and look forward to opportunities ahead.”  

Operating Segment Results

Segment operating income for the Company’s U.S. land operations was $122 million for the third quarter of fiscal 2015, compared with $271 million for last year’s third fiscal quarter and $225 million for this year’s second fiscal quarter.  As compared to the second quarter of fiscal 2015, segment operating income decreased primarily as a result of significantly lower levels of quarterly activity.  The number of quarterly revenue days decreased sequentially by approximately 32% to 14,219 days.  Excluding the impact of $3,413 and $5,325 per day corresponding to revenues from early contract terminations during this year’s second and third fiscal quarters, respectively, the average rig revenue per day decreased sequentially by $941 to $26,634, and the average rig margin per day decreased sequentially by $1,676 to $12,504.  The average rig expense per day increased sequentially by $735 to $14,130.  Rig utilization for the segment was 47% for this year’s third fiscal quarter, compared with 88% and 68% for last year’s third fiscal quarter and this year’s second fiscal quarter, respectively.  At June 30, 2015, the Company’s U.S. land segment had approximately 153 contracted rigs generating revenue (including 123 under long-term contracts) and 188 idle rigs (including 181 AC drive FlexRigs®*). 

Segment operating income for the Company’s offshore operations was $14.7 million for the third quarter of fiscal 2015, compared with $17.0 million for last year’s third fiscal quarter and $19.1 million for this year’s second fiscal quarter.  The sequential decrease in operating income was attributable to a decline in the average rig margin per day and a decline in quarterly revenue days.  The average rig margin per day decreased from $18,671 to $14,265, and quarterly revenue days decreased by approximately 8% to 728 days.

The Company’s international land operations reported segment operating income of $16.7 million for this year’s third fiscal quarter, compared with $6.6 million for last year’s third fiscal quarter and $6.3 million for this year’s second fiscal quarter.  The sequential increase in operating income was attributable to higher early termination revenues earned during the third quarter of fiscal 2015, an increase in the average rig margin per day and an increase in quarterly revenue days.  Excluding the impact of $373 and $4,658 per day corresponding to revenues from early contract terminations during this year’s second and third fiscal quarters, respectively, the average rig margin per day increased sequentially from $10,524 to $13,086.  The number of quarterly revenue days increased sequentially by approximately 2% to 1,887 days.

Drilling Operations Outlook for the Fourth Quarter of Fiscal 2015

In the U.S. land segment, the Company expects revenue days (activity) to decrease by roughly three to four percent during the fourth fiscal quarter as compared to the third fiscal quarter of 2015.  Excluding the impact from early termination revenue during the fourth quarter of fiscal 2015, the average rig revenue per day is expected to decrease to roughly $26,000, and the corresponding average rig expense per day is expected to decrease to roughly $13,900.  As of today, the U.S. land segment has approximately 156 contracted rigs that are generating revenue (including 124 under term contracts) and 186 idle rigs (including 179 AC drive FlexRigs).

In the offshore segment, the Company expects the average rig margin per day to be approximately $10,500 during the fourth fiscal quarter and revenue days to be roughly flat as compared to the third quarter of fiscal 2015. 

In the international land segment, the Company expects revenue days during the fourth fiscal quarter to be sequentially down by 10% to 15%.  Excluding the impact from early termination revenue and also as compared to the third quarter of fiscal 2015, the average rig margin per day is expected to decline by approximately 30% to 35%.

Capital Expenditures and Other Estimates for Fiscal 2015

The Company continues to expect a total of approximately $1.3 billion in capital expenditures during all of fiscal 2015.  Depreciation expense is now expected to be approximately $580 million, and general and administrative expenses are now expected to be approximately $130 million for fiscal 2015.  Furthermore, the Company expects an effective income tax rate of approximately 34% for the fourth quarter of fiscal 2015.

About Helmerich & Payne, Inc.

Helmerich & Payne, Inc. is primarily a contract drilling company.  As of July 30, 2015, the Company’s existing fleet includes 342 land rigs in the U.S., 40 international land rigs, and 9 offshore platform rigs.  In addition, the Company is scheduled to complete another 12 new H&P-designed and operated FlexRigs, all under long-term contracts with customers.  Upon completion of these commitments, the Company’s global fleet is expected to have a total of 394 land rigs, including 373 AC drive FlexRigs.

Forward-Looking Statements

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, operations outlook, 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 and 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.  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 EndedNine Months Ended
CONSOLIDATED STATEMENTS OFMarch 31June 30June 30
INCOME 2015  2015  2014  2015  2014 
      
Operating Revenues:     
Drilling – U.S. Land$718,463 $494,615 $802,279 $2,103,125 $2,275,744 
Drilling – Offshore 62,626  55,673  64,554  187,772  186,884 
Drilling – International Land 98,222  106,198  81,267  297,305  262,141 
Other 3,741  3,208  3,987  11,129  9,900 
  883,052  659,694  952,087  2,599,331  2,734,669 
      
Operating costs and expenses:     
Operating costs, excluding depreciation 469,328  351,670  515,239  1,375,241  1,469,454 
Depreciation 149,708  144,295  128,978  431,616  373,178 
General and administrative 34,902  29,404  34,222  97,213  100,896 
Research and development 4,857  3,329  3,864  12,344  11,746 
Income from asset sales (2,915) (1,784) (2,128) (8,854) (11,890)
  655,880  526,914  680,175  1,907,560  1,943,384 
      
Operating income 227,172  132,780  271,912  691,771  791,285 
      
Other income (expense):     
Interest and dividend income 2,549  1,602  373  4,436  1,316 
Interest expense (2,471) (6,258) (1,435) (9,290) (4,354)
Gain on sale of investment securities -  -  23,882  -  45,234 
Other 55  (281) 346  88  (31)
  133  (4,937) 23,166  (4,766) 42,165 
      
Income from continuing operations     
before income taxes 227,305  127,843  295,078  687,005  833,450 
Income tax provision 77,769  36,956  102,788  243,525  293,389 
Income from continuing operations 149,536  90,887  192,290  443,480  540,061 
      
Income (loss) from discontinued operations, (76) (27) (11) (118) 2,775 
before income taxes     
Income tax provision (77) -  -  (77) 2,805 
Income (loss) from discontinued operations 1  (27) (11) (41) (30)
      
NET INCOME$149,537  $90,860  $192,279  $443,439  $540,031  
      
Basic earnings per common share:     
Income from continuing operations$1.38 $0.84 $1.77 $4.09 $4.99 
Income from discontinued operations$  - $  - $  - $  - $  - 
      
Net income$1.38 $0.84 $1.77 $4.09 $4.99 
      
Diluted earnings per common share:     
Income from continuing operations$1.37 $0.83 $1.75 $4.06 $4.92 
Income from discontinued operations$  - $  - $  - $  - $  - 
      
Net income$1.37 $0.83 $1.75 $4.06 $4.92 
      
Weighted average shares outstanding:     
Basic 107,646  107,652  108,137  107,759  107,657 
Diluted 108,370  108,469  109,285  108,571  109,086 

 

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
     
  June 30 September 30
CONSOLIDATED CONDENSED BALANCE SHEETS  2015  2014*
     
ASSETS    
    Cash and cash equivalents $    770,918  $  360,909 
    Other current assets  722,951   908,886 
    Current assets of discontinued operations  7,822   7,206 
    Total current assets  1,501,691   1,277,001 
    Investments  159,976   236,644 
    Net property, plant, and equipment  5,630,311   5,188,544 
    Other assets  43,839   18,809 
TOTAL ASSETS $7,335,817  $ 6,720,998 
     
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
    Current liabilities $    343,109  $  503,944 
    Current liabilities of discontinued operations  3,394   3,217 
    Total current liabilities  346,503   507,161 
    Non-current liabilities  1,430,989   1,279,369 
    Non-current liabilities of discontinued operations  4,428   3,989 
    Long-term notes payable  532,388   39,502 
    Total equity  5,021,509   4,890,977 
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,335,817  $ 6,720,998 


* The September 30, 2014 balance sheet has been restated due to the adoption of Accounting Standards Update No. 2015-03 applied retrospectively.

 

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
 
 Nine Months Ended
 June 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS20152014
   
OPERATING ACTIVITIES:  
    Net income$    443,439 $  540,031 
    Adjustment for loss from discontinued operations 41  30 
    Income from continuing operations 443,480  540,061 
    Depreciation 431,616  373,178 
    Changes in assets and liabilities 260,533  (79,406)
    Gain on sale of assets and investment securities (8,854) (57,124)
    Other 20,805  21,216 
    Net cash provided by operating activities from continuing operations 1,147,580  797,925 
    Net cash used in operating activities from discontinued operations (41) (30)
    Net cash provided by operating activities 1,147,539  797,895 
   
INVESTING ACTIVITIES:  
    Capital expenditures (971,857) (622,028)
    Proceeds from sale of assets and invested securities 17,805  70,690 
    Net cash used in investing activities (954,052) (551,338)
   
FINANCING  ACTIVITIES:  
    Proceeds from senior notes, net of discount and debt issuance costs 491,923  - 
    Proceeds from short-term debt 1,002  - 
    Payments on short-term debt (1,002) - 
    Increase in bank overdraft 10,824  - 
    Dividends paid (223,827) (189,542)
    Repurchase of common stock (59,654) - 
    Exercise of stock options, net of tax withholding (609) 22,370 
    Tax withholdings related to net share settlements of restricted stock (5,104) (3,049)
    Excess tax benefit from stock-based compensation 2,969  25,724 
    Net cash provided by (used in) financing activities 216,522  (144,497)
   
Net increase in cash and cash equivalents 410,009  102,060 
Cash and cash equivalents, beginning of period 360,909  447,868 
Cash and cash equivalents, end of period$    770,918 $  549,928 
   
   


  
SEGMENT REPORTINGThree Months EndedNine Months Ended
 March 31June 30June 30
  2015  2015  2014  2015  2014 
 (in thousands, except days and per day amounts)
U.S. LAND OPERATIONS     
Revenues$718,463 $494,615 $802,279 $2,103,125 $2,275,744 
Direct operating expenses 352,489  241,109  408,990  1,034,724  1,154,523 
General and administrative expense 12,605  10,465  9,548  34,785  30,161 
Depreciation 128,503  121,307  112,639  368,894  323,944 
Segment operating income$224,866 $121,734 $271,102 $664,722 $767,116 
      
Revenue days 20,802  14,219  26,062  62,376  73,826 
Average rig revenue per day$30,988 $31,959 $28,126 $30,538 $28,205 
Average rig expense per day$13,395 $14,130 $13,035 $13,410 $13,018 
Average rig margin per day$17,593 $17,829 $15,091 $17,128 $15,187 
Rig utilization 68% 47% 88% 68% 86%
      
OFFSHORE OPERATIONS     
Revenues$62,626 $55,673 $64,554 $187,772 $186,884 
Direct operating expenses 39,433  37,580  42,446  121,252  115,801 
General and administrative expense 954  688  2,264  2,468  7,122 
Depreciation 3,170  2,689  2,848  8,783  9,124 
Segment operating income$19,069 $14,716 $16,996 $55,269 $54,837 
      
Revenue days 794  728  728  2,331  2,184 
Average rig revenue per day$49,783 $38,333 $64,019 $48,136 $63,515 
Average rig expense per day$31,112 $24,068 $39,716 $30,126 $37,044 
Average rig margin per day$18,671 $14,265 $24,303 $18,010 $26,471 
Rig utilization 98% 89% 89% 95% 89%
      
INTERNATIONAL LAND OPERATIONS     
Revenues$98,222 $106,198 $81,267 $297,305 $262,141 
Direct operating expenses 77,452  73,096  63,950  219,485  199,568 
General and administrative expense 1,019  781  1,169  2,487  3,133 
Depreciation 13,423  15,651  9,578  40,121  28,951 
Segment operating income$6,328 $16,670 $6,570 $35,212 $30,489 
      
Revenue days 1,842  1,887  2,024  5,809  6,212 
Average rig revenue per day$47,063 $51,673 $35,454 $46,027 $37,025 
Average rig expense per day$36,166 $33,929 $26,130 $32,952 $26,826 
Average rig margin per day$10,897 $17,744 $9,324 $13,075 $10,199 
Rig utilization 52% 51% 74% 55% 78%
      
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$73,853 $40,188 $69,267 $198,303 $193,455 
Offshore Operations$5,306 $9,466 $5,364 $20,247 $13,050 
International Land Operations$11,532 $8,691 $9,508 $29,936 $32,145 

 

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 EndedNine Months Ended
 March 31June 30June 30
  2015  2015  2014  2015  2014 
Operating income      
U.S. Land$224,866 $121,734 $271,102 $  664,722 $  767,116 
Offshore 19,069  14,716  16,996  55,269  54,837 
International Land 6,328  16,670  6,570  35,212  30,489 
Other   (3,217) (2,324) (1,490) (7,440) (6,739)
 Segment operating income $247,046 $150,796 $293,178 $  747,763 $  845,703  
Corporate general and administrative (20,324) (17,470) (21,241) (57,473) (60,480)
Other depreciation (3,767) (3,626) (3,479) (11,274) (9,895)
Inter-segment elimination 1,302  1,296  1,326  3,901  4,067 
Income from asset sales 2,915  1,784  2,128  8,854  11,890 
  Operating income $227,172 $132,780 $271,912 $  691,771  $  791,285   
      
Other income (expense):     
 Interest and dividend income   2,549  1,602    373  4,436  1,316 
 Interest expense   (2,471)   (6,258) (1,435) (9,290) (4,354)
 Gain on sale of investment securities   -    -  23,882  -  45,234 
 Other   55    (281) 346  88  (31)
 Total other income (expense)   133    (4,937) 23,166  (4,766) 42,165 
      
      
Income from continuing operations
  before income taxes
$  227,305 $  127,843 $295,078 $  687,005  $   833,450   

 

Contact:
Investor Relations
investor.relations@hpinc.com
(918) 588-5190

Primary Logo

Source: Helmerich & Payne, Incorporated