Helmerich & Payne, Inc. Announces Third Quarter Fiscal 2018 Results
July 25, 2018
- Quarterly
U.S. Land revenue days (activity) increased approximately 7% - H&P’s spot pricing in the
U.S. land market increased by approximately 11% during the quarter - Quarterly
U.S. Land average rig revenue increased more than$650 per day, 3% sequentially - H&P upgraded 13 FlexRigs® to super-spec(1) capacity during the third fiscal quarter
- On
June 6, 2018 , Directors of the Company declared a quarterly cash dividend of$0.71 per share representing a$0.01 increase from the dividend paid in the prior quarter
President and CEO
“Our
“Permian bottleneck headlines have clouded the near-term outlook; however, we continue to experience strong demand and are adding rigs accordingly. Oil prices have remained strong during the quarter and we’re optimistic that E&P spending in 2018 is not yet fully reflecting the inherent potential in these higher than expected oil prices or the prospects for continued momentum into 2019. In addition to the Permian growth, we are seeing improved rig activity in the Eagle Ford, the SCOOP/STACK play in
“Higher crude oil prices positively impacted our international and offshore businesses as additional rigs were contracted during the quarter. We are actively pursuing opportunities in these segments.
“An increasing number of customers are realizing the long-term value proposition of the services provided by our new technology subsidiaries, MOTIVE®
Operating Segment Results for the Third Quarter of Fiscal 2018
Segment operating income increased by
The average rig expense per day increased sequentially by
The segment’s depreciation expense for the quarter includes non-cash charges of
Offshore Operations:
Segment operating income decreased by
International Land Operations:
The segment had operating income of
Operational Outlook for the Fourth Quarter of Fiscal 2018
- Quarterly revenue days expected to increase by approximately 6% sequentially, representing an average rig count of approximately 230 rigs for the quarter
- Average rig revenue per day expected to be roughly
$24,000 (excluding any impact from early termination revenue) - Average rig expense per day expected to be roughly
$14,700
Offshore Operations:
- Quarterly revenue days expected to decrease by approximately 4% sequentially, representing an average rig count of 6 rigs for the quarter
- Average rig margin per day expected to be approximately
$13,000 - Management contracts expected to generate approximately
$3 to$4 million in operating income
International Land Operations:
- Quarterly revenue days expected to increase by approximately 3% sequentially, representing an average rig count of 19-20 rigs for the quarter
- Average rig margin per day expected to be roughly
$9,000
Other Estimates for Fiscal 2018
- Capital expenditures are now expected to be approximately
$450 million . - General and administrative expenses for fiscal 2018 are now expected to be approximately
$200 million . - Depreciation is still expected to be approximately
$585 million , inclusive of abandonment charges estimated at approximately$35 million .
Select Items Included in Net Income (or Loss) per Diluted Share
Third Quarter of Fiscal 2018 net loss of
$0.04 of after-tax income from long-term contract early termination compensation from customers$0.03 of after-tax gains related to the sale of used drilling equipment$(0.01) of incremental income tax adjustments related to the recognition of the new corporate tax rate under the Tax Cuts and Jobs Act(4) in calculating the Company’s deferred income tax liability$(0.05) of after-tax losses from abandonment charges related to the decommissioning of used drilling equipment$(0.08) of additional discrete tax items impacting the quarter
Second Quarter of Fiscal 2018 net loss of
$0.04 of after-tax gains related to the sale of used drilling equipment$0.03 of after-tax income from long-term contract early termination compensation from customers$0.01 of incremental income tax adjustments related to the recognition of the new corporate tax rate under the Tax Cuts and Jobs Act(4) in calculating the Company’s deferred income tax liability$(0.06) of after-tax losses from abandonment charges related to the decommissioning of used drilling equipment$(0.09) of after-tax losses from discontinued operations related to adjustments resulting from currency devaluation
Conference Call
A conference call will be held on
About Helmerich & Payne, Inc.
Founded in 1920,
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
_______________________
Note Regarding Trademarks.
(1) The term “super-spec” herein refers to rigs with the following specifications: AC drive, 1,500 hp drawworks, 750,000 lbs. hookload rating, 7,500 psi mud circulating system and multiple-well pad capability.
(2) See the corresponding section of this release for details regarding the select items.
(3) See the Selected Statistical & Operational Highlights table(s) for details on the revenues or charges excluded on a per revenue day basis. The inclusion or exclusion of these amounts results in adjusted revenue, expense, and/or margin per day figures, which are all non-GAAP measures.
(4) On
Contact:
investor.relations@hpinc.com
(918) 588‑5190
| Exhibit 99 |
| HELMERICH & PAYNE, INC. Unaudited (in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF | March 31 | |||||||||||||||||||
| OPERATIONS | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Operating Revenues: | ||||||||||||||||||||
| Drilling — | $ | 536,582 | $ | 482,729 | $ | 405,516 | $ | 1,480,951 | $ | 1,000,119 | ||||||||||
| Drilling — Offshore | 37,669 | 32,983 | 33,711 | 104,018 | 103,758 | |||||||||||||||
| Drilling — International Land | 63,297 | 52,459 | 55,075 | 178,970 | 157,863 | |||||||||||||||
| Other | 11,324 | 9,313 | 4,262 | 26,504 | 10,697 | |||||||||||||||
| $ | 648,872 | $ | 577,484 | $ | 498,564 | $ | 1,790,443 | $ | 1,272,437 | |||||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Operating costs, excluding depreciation and amortization | 444,511 | 385,556 | 337,463 | 1,203,150 | 881,971 | |||||||||||||||
| Depreciation and amortization | 144,579 | 145,675 | 145,043 | 433,521 | 431,667 | |||||||||||||||
| General and administrative | 52,399 | 48,325 | 42,890 | 147,272 | 110,671 | |||||||||||||||
| Research and development | 5,479 | 4,436 | 3,058 | 13,149 | 8,585 | |||||||||||||||
| Income from asset sales | (4,313 | ) | (5,255 | ) | (1,862 | ) | (15,133 | ) | (17,593 | ) | ||||||||||
| 642,655 | 578,737 | 526,592 | 1,781,959 | 1,415,301 | ||||||||||||||||
| Operating income (loss) | 6,217 | (1,253 | ) | (28,028 | ) | 8,484 | (142,864 | ) | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest and dividend income | 2,109 | 1,847 | 1,700 | 5,680 | 4,028 | |||||||||||||||
| Interest expense | (5,993 | ) | (6,028 | ) | (6,364 | ) | (17,794 | ) | (17,503 | ) | ||||||||||
| Other | 28 | (121 | ) | (911 | ) | 437 | (350 | ) | ||||||||||||
| (3,856 | ) | (4,302 | ) | (5,575 | ) | (11,677 | ) | (13,825 | ) | |||||||||||
| Income (loss) from continuing operations before income taxes | 2,361 | (5,555 | ) | (33,603 | ) | (3,193 | ) | (156,689 | ) | |||||||||||
| Income tax provision (benefit) | 10,535 | (3,922 | ) | (10,478 | ) | (494,028 | ) | (50,537 | ) | |||||||||||
| Income (loss) from continuing operations | (8,174 | ) | (1,633 | ) | (23,125 | ) | 490,835 | (106,152 | ) | |||||||||||
| Income from discontinued operations, before income taxes | 8,383 | 1,263 | 3,223 | 9,127 | 2,705 | |||||||||||||||
| Income tax provision | 8,217 | 11,509 | 1,897 | 19,743 | 2,233 | |||||||||||||||
| Income (loss) from discontinued operations | 166 | (10,246 | ) | 1,326 | (10,616 | ) | 472 | |||||||||||||
| NET INCOME (LOSS) | $ | (8,008 | ) | $ | (11,879 | ) | $ | (21,799 | ) | $ | 480,219 | $ | (105,680 | ) | ||||||
| Basic earnings per common share: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.08 | ) | $ | (0.03 | ) | $ | (0.22 | ) | $ | 4.47 | $ | (0.99 | ) | ||||||
| Income (loss) from discontinued operations | $ | — | $ | (0.09 | ) | $ | 0.01 | $ | (0.10 | ) | $ | — | ||||||||
| Net income (loss) | $ | (0.08 | ) | $ | (0.12 | ) | $ | (0.21 | ) | $ | 4.37 | $ | (0.99 | ) | ||||||
| Diluted earnings per common share: | ||||||||||||||||||||
| Income (loss) from continuing operations | $ | (0.08 | ) | $ | (0.03 | ) | $ | (0.22 | ) | $ | 4.45 | $ | (0.99 | ) | ||||||
| Income (loss) from discontinued operations | $ | — | $ | (0.09 | ) | $ | 0.01 | $ | (0.10 | ) | $ | — | ||||||||
| Net income (loss) | $ | (0.08 | ) | $ | (0.12 | ) | $ | (0.21 | ) | $ | 4.35 | $ | (0.99 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 108,905 | 108,868 | 108,572 | 108,818 | 108,470 | |||||||||||||||
| Diluted | 108,905 | 108,868 | 108,572 | 109,338 | 108,470 | |||||||||||||||
| HELMERICH & PAYNE, INC. Unaudited (in thousands) | ||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | 2018 | 2017 | ||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 306,426 | $ | 521,375 | ||
| Short-term investments | 44,279 | 44,491 | ||||
| Other current assets | 782,773 | 669,398 | ||||
| Current assets of discontinued operations | — | 3 | ||||
| Total current assets | 1,133,478 | 1,235,267 | ||||
| Investments | 92,702 | 84,026 | ||||
| Net property, plant, and equipment | 4,883,378 | 5,001,051 | ||||
| Other assets | 156,314 | 119,644 | ||||
| TOTAL ASSETS | $ | 6,265,872 | $ | 6,439,988 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities | $ | 381,667 | $ | 344,311 | ||
| Current liabilities of discontinued operations | 1 | 74 | ||||
| Total current liabilities | 381,668 | 344,385 | ||||
| Non-current liabilities | 933,465 | 1,434,098 | ||||
| Non-current liabilities of discontinued operations | 14,548 | 4,012 | ||||
| Long-term debt less unamortized discount and debt issuance costs | 493,700 | 492,902 | ||||
| Total shareholders’ equity | 4,442,491 | 4,164,591 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 6,265,872 | $ | 6,439,988 | ||
| HELMERICH & PAYNE, INC. Unaudited (in thousands) | ||||||||
| Nine Months Ended | ||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | 2018 | 2017 | ||||||
| As adjusted | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 480,219 | $ | (105,680 | ) | |||
| Adjustment for loss from discontinued operations | 10,616 | (472 | ) | |||||
| Income (loss) from continuing operations | 490,835 | (106,152 | ) | |||||
| Depreciation and amortization | 433,521 | 431,667 | ||||||
| Changes in assets and liabilities | (579,255 | ) | (92,919 | ) | ||||
| Income from asset sales | (15,133 | ) | (17,593 | ) | ||||
| Other | 28,603 | 25,367 | ||||||
| Net cash provided by operating activities from continuing operations | 358,571 | 240,370 | ||||||
| Net cash used in operating activities from discontinued operations | (150 | ) | (115 | ) | ||||
| Net cash provided by operating activities | 358,421 | 240,255 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (322,658 | ) | (300,275 | ) | ||||
| Purchase of short-term investments | (52,159 | ) | (48,958 | ) | ||||
| Payment for acquisition of business, net of cash acquired | (47,886 | ) | (70,416 | ) | ||||
| Proceeds from sale of short-term investments | 52,470 | 53,150 | ||||||
| Proceeds from asset sales | 28,049 | 17,921 | ||||||
| Net cash used in investing activities | (342,184 | ) | (348,578 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Dividends paid | (230,368 | ) | (229,061 | ) | ||||
| Proceeds from stock option exercises | 5,160 | 10,884 | ||||||
| Payments for employee taxes on net settlement of equity awards | (5,978 | ) | (6,274 | ) | ||||
| Net cash used in financing activities | (231,186 | ) | (224,451 | ) | ||||
| Net decrease in cash and cash equivalents | (214,949 | ) | (332,774 | ) | ||||
| Cash and cash equivalents, beginning of period | 521,375 | 905,561 | ||||||
| Cash and cash equivalents, end of period | $ | 306,426 | $ | 572,787 | ||||
“As adjusted” – Effective
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| March 31 | |||||||||||||||||||
| SEGMENT REPORTING - Unaudited | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| (in thousands, except days and per day amounts) | |||||||||||||||||||
| Revenues | $ | 536,582 | $ | 482,729 | $ | 405,516 | $ | 1,480,951 | $ | 1,000,119 | |||||||||
| Direct operating expenses | 362,037 | 317,688 | 277,372 | 978,789 | 686,227 | ||||||||||||||
| General and administrative expense | 14,788 | 14,011 | 13,347 | 42,792 | 37,562 | ||||||||||||||
| Depreciation | 125,418 | 123,955 | 122,777 | 373,211 | 367,048 | ||||||||||||||
| Segment operating income (loss) | $ | 34,339 | $ | 27,075 | $ | (7,980 | ) | $ | 86,159 | $ | (90,718 | ) | |||||||
| Revenue days | 19,917 | 18,666 | 16,577 | 56,946 | 39,527 | ||||||||||||||
| Average rig revenue per day | $ | 23,698 | $ | 22,928 | $ | 21,986 | $ | 23,027 | $ | 22,902 | |||||||||
| Average rig expense per day | $ | 14,934 | $ | 14,086 | $ | 14,256 | $ | 14,209 | $ | 14,942 | |||||||||
| Average rig margin per day | $ | 8,764 | $ | 8,842 | $ | 7,730 | $ | 8,818 | $ | 7,960 | |||||||||
| Rig utilization | 63 | % | 59 | % | 52 | % | 60 | % | 42 | % | |||||||||
| OFFSHORE OPERATIONS | |||||||||||||||||||
| Revenues | $ | 37,669 | $ | 32,983 | $ | 33,711 | $ | 104,018 | $ | 103,758 | |||||||||
| Direct operating expenses | 30,146 | 23,595 | 23,656 | 74,863 | 72,524 | ||||||||||||||
| General and administrative expense | 1,126 | 1,106 | 969 | 3,397 | 2,787 | ||||||||||||||
| Depreciation | 2,617 | 2,833 | 2,630 | 7,804 | 9,295 | ||||||||||||||
| Segment operating income | $ | 3,780 | $ | 5,449 | $ | 6,456 | $ | 17,954 | $ | 19,152 | |||||||||
| Revenue days | 574 | 450 | 546 | 1,484 | 1,785 | ||||||||||||||
| Average rig revenue per day | $ | 35,293 | $ | 33,583 | $ | 35,644 | $ | 34,924 | $ | 34,204 | |||||||||
| Average rig expense per day | $ | 30,607 | $ | 24,079 | $ | 24,141 | $ | 26,394 | $ | 23,300 | |||||||||
| Average rig margin per day | $ | 4,686 | $ | 9,504 | $ | 11,503 | $ | 8,530 | $ | 10,904 | |||||||||
| Rig utilization | 79 | % | 63 | % | 75 | % | 68 | % | 77 | % | |||||||||
| INTERNATIONAL LAND OPERATIONS | |||||||||||||||||||
| Revenues | $ | 63,297 | $ | 52,459 | $ | 55,075 | $ | 178,970 | $ | 157,863 | |||||||||
| Direct operating expenses | 46,810 | 39,249 | 35,006 | 132,796 | 120,537 | ||||||||||||||
| General and administrative expense | 995 | 832 | 714 | 2,959 | 2,303 | ||||||||||||||
| Depreciation | 11,160 | 13,073 | 14,428 | 36,044 | 40,248 | ||||||||||||||
| Segment operating income (loss) | $ | 4,332 | $ | (695 | ) | $ | 4,927 | $ | 7,171 | $ | (5,225 | ) | |||||||
| Revenue days | 1,762 | 1,530 | 1,633 | 4,878 | 3,660 | ||||||||||||||
| Average rig revenue per day | $ | 33,941 | $ | 32,796 | $ | 32,708 | $ | 34,919 | $ | 41,134 | |||||||||
| Average rig expense per day | $ | 23,947 | $ | 24,263 | $ | 19,645 | $ | 24,941 | $ | 30,328 | |||||||||
| Average rig margin per day | $ | 9,994 | $ | 8,533 | $ | 13,063 | $ | 9,978 | $ | 10,806 | |||||||||
| Rig utilization | 50 | % | 45 | % | 47 | % | 47 | % | 35 | % | |||||||||
Operating statistics exclude the effects of offshore platform management contracts and 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:
| $ | 64,587 | $ | 54,750 | $ | 41,059 | $ | 169,652 | $ | 94,861 | |||||||
| Offshore Operations | $ | 5,057 | $ | 5,199 | $ | 5,181 | $ | 14,354 | $ | 15,678 | ||||||
| International Land Operations | $ | 3,492 | $ | 2,281 | $ | 1,663 | $ | 8,634 | $ | 7,312 | ||||||
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 (loss) per the information above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations (in thousands).
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31 | ||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Operating income (loss) - Unaudited | ||||||||||||||||||||
| $ | 34,339 | $ | 27,075 | $ | (7,980 | ) | $ | 86,159 | $ | (90,718 | ) | |||||||||
| Offshore | 3,780 | 5,449 | 6,456 | 17,954 | 19,152 | |||||||||||||||
| International Land | 4,332 | (695 | ) | 4,927 | 7,171 | (5,225 | ) | |||||||||||||
| Other | (7,226 | ) | (7,015 | ) | (2,569 | ) | (21,558 | ) | (5,752 | ) | ||||||||||
| Segment operating income (loss) | $ | 35,225 | $ | 24,814 | $ | 834 | $ | 89,726 | $ | (82,543 | ) | |||||||||
| Corporate general and administrative | (30,419 | ) | (28,267 | ) | (27,283 | ) | (87,235 | ) | (67,442 | ) | ||||||||||
| Other depreciation | (3,308 | ) | (3,418 | ) | (3,852 | ) | (10,271 | ) | (11,751 | ) | ||||||||||
| Inter-segment elimination | 406 | 363 | 411 | 1,131 | 1,279 | |||||||||||||||
| Income from asset sales | 4,313 | 5,255 | 1,862 | 15,133 | 17,593 | |||||||||||||||
| Operating income (loss) | $ | 6,217 | $ | (1,253 | ) | $ | (28,028 | ) | $ | 8,484 | $ | (142,864 | ) | |||||||
| Other income (expense): | ||||||||||||||||||||
| Interest and dividend income | 2,109 | 1,847 | 1,700 | 5,680 | 4,028 | |||||||||||||||
| Interest expense | (5,993 | ) | (6,028 | ) | (6,364 | ) | (17,794 | ) | (17,503 | ) | ||||||||||
| Other | 28 | (121 | ) | (911 | ) | 437 | (350 | ) | ||||||||||||
| Total other income (expense) | (3,856 | ) | (4,302 | ) | (5,575 | ) | (11,677 | ) | (13,825 | ) | ||||||||||
| Income (loss) from continuing operations before income taxes | $ | 2,361 | $ | (5,555 | ) | $ | (33,603 | ) | $ | (3,193 | ) | $ | (156,689 | ) | ||||||
SUPPLEMENTARY STATISTICAL INFORMATION
Unaudited
SELECTED STATISTICAL & OPERATIONAL HIGHLIGHTS
(Used to determine adjusted per revenue day statistics, which is a non-GAAP measure)
| Three Months Ended | ||||||
| March 31 | ||||||
| 2018 | 2018 | |||||
| (in dollars per revenue day) | ||||||
| Early contract termination revenues | $ | 298 | $ | 217 | ||
| Total impact per revenue day: | $ | 298 | $ | 217 | ||
| March 31 | Q3FY18 | |||||||
| 2018 | 2018 | 2018 | Average | |||||
| Term Contract Rigs | 129 | 136 | 125 | 130.6 | ||||
| Spot Contract Rigs | 98 | 88 | 88 | 88.3 | ||||
| Total Contracted Rigs | 227 | 224 | 213 | 218.9 | ||||
| Idle or Other Rigs | 123 | 126 | 137 | 131.1 | ||||
| Total Marketable Fleet | 350 | 350 | 350 | 350.0 | ||||
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS
Number of Rigs Already Under Long-Term Contracts(1)
(Estimated Quarterly Average — as of 07/25/18)
| Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||
| Segment | FY18 | FY19 | FY19 | FY19 | FY19 | FY20 | FY20 | |||||||
| 125.8 | 113.7 | 73.1 | 54.4 | 38.2 | 28.3 | 13.5 | ||||||||
| International Land Operations | 10.0 | 10.0 | 10.0 | 10.0 | 10.0 | 9.0 | 5.2 | |||||||
| Offshore Operations | 0.3 | — | — | — | — | — | — | |||||||
| Total | 136.1 | 123.7 | 83.1 | 64.4 | 48.2 | 37.3 | 18.7 |
(1) The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 07/25/18. Given notifications as of 07/25/18, the Company expects to generate approximately