Helmerich & Payne, Inc. Announces Third Quarter Results
July 28, 2020
-
Reported a net loss of
$(0.43) per diluted share; including select items(1) of$(0.09) per diluted share
-
The Company realigned its financial reporting into three operating segments - North America Solutions, International Solutions and Offshore
Gulf of Mexico
-
Quarterly North America Solutions operating gross margins(2) decreased
$98 million to$102 million sequentially, as revenues decreased by$292 million to$254 million and expenses decreased by$194 million to$153 million
-
The Company took additional actions reducing its cost structure by an additional
$25 million annually bringing total cost-savings to over$75 million on an annualized basis
-
Concurrent with its cost-saving measures the Company incurred a restructuring charge of
$15 million
- H&P continued its leadership position in drilling automation technology as customers have now drilled more than 300 wells and over 5 million feet utilizing AutoSlide℠
-
On
June 3, 2020 , Directors of the Company declared a quarterly cash dividend of$0.25 per share onAugust 31, 2020 to stockholders of record at the close of businessAugust 17, 2020
-
The Company ended the quarter with
$492 million in cash and short-term investments and no amounts drawn on its$750 million revolving credit facility creating over$1.2 billion in liquidity
-
$0.02 of after-tax gains pertaining to a non-cash fair market adjustment to our equity investment
-
$(0.11) of after-tax losses pertaining to restructuring charges
Net cash provided by operating activities was
President and CEO
"The current state of the industry pointedly underscores a necessity for change and is providing opportunities to accelerate strategic objectives aimed at how we approach adding value and how that value is perceived by our customers. Our customer centric approach has served the Company well for 100 years and is evolving to encompass the wider array of drilling and digital technology solutions H&P can deliver. This will change the narrative around the value proposition we offer to our customers. Rather than focusing on discrete products, like rigs or separate technology applications, we are focusing on packaging the total solution - combining people, rigs and technology to deliver the best possible well that accomplishes our customer's operational goals while reducing their financial risk. We believe these changes are required in order to improve not only the value delivery, but also to enhance the economic performance for our customers and H&P stakeholders.
"As we continue to evolve this business model, we are also aligning business segments to reflect the integration of our solution-based offering by combining our proprietary rig technology, touch of a button automation software, uniform FlexRig fleet and digital expertise into one unique industry offering. Accordingly, what historically had been referred to as the
"We will utilize this new segment to facilitate deployment of digital technologies and assimilate new performance-based commercial models into the industry. The utilization of rig automation software, such as AutoSlide℠, in combination with contracts based upon H&P's drilling performance and well quality, rather than a generic dayrate, provide a higher level of wellbore efficiency and value. Customer adoption of AutoSlide is progressing and it is now deployed on over one-third of our active rigs - more than during any previous quarter. Our number of performance-based contracts has held relatively steady despite record rig count declines and limited incremental contracting activity."
Senior Vice President and CFO
"More than a quarter has passed since the COVID-19 pandemic began, and we are still unable to reasonably estimate its duration or ascertain the full extent it will have on the industry in terms of timing or magnitude of a recovery. As a result, we cannot be certain of the ultimate impact on H&P's operations or financial position. In the meantime, the Company will continue to innovate and lead the way forward. Our solid economic footing remains intact with approximately
Operating Segment Results for the Third Quarter of Fiscal Year 2020
North America Solutions:
This segment had an operating loss of
Operating gross margins(2) declined by
International Solutions:
This segment had an operating loss of
Offshore
This segment had operating income of
Operational Outlook for the Fourth Quarter of Fiscal Year 2020
North America Solutions:
-
We expect North America Solutions operating gross margins(2) to be between
$38-$48 million , inclusive of approximately$12 million of contract early termination compensation - We expect to exit the quarter at between 58-63 contracted rigs, inclusive of approximately 10-15 contracted rigs generating revenue that could remain idle
International Solutions:
-
We expect International Solutions operating gross margins(2) to be between
$(2)-$0 million , exclusive of any foreign exchange gains or loses
Offshore
-
We expect Offshore
Gulf of Mexico rig operating gross margins(2) to be between$5-$7 million -
Management contracts are also expected to generate approximately
$2 million in operating income
Other Estimates for Fiscal Year 2020
-
Gross capital expenditures are now expected to be approximately
$150 to$165 million . Asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are expected to total approximately$35 million in fiscal year 2020. -
General and administrative expenses for fiscal year 2020 are expected to be less than
$175 million , excluding any future one-time items -
Depreciation is now expected to be approximately
$475 million
COVID-19 Update
The COVID-19 pandemic continues to have a significant impact around the world and on our Company. After falling dramatically, crude oil prices and industry activity appear to have stabilized albeit at much lower levels. The environment in which we operate is still uncertain; however, from the onset of COVID-19's rapid spread across the
Select Items Included in Net Income per Diluted Share
Third quarter of fiscal year 2020 net loss of
-
$0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments -
$(0.11) of after-tax losses related to restructuring charges
Second quarter of fiscal year 2020 net loss of
-
$0.03 of after-tax gains related to the change in fair value of a contingent liability -
$0.13 of after-tax benefits from the reversal of accrued compensation -
$(0.09) of non-cash after-tax losses related to fair market value adjustments to equity investments -
$(4.03) of non-cash after-tax losses related to the impairment of goodwill, less capable rigs and excess related equipment and inventory
Conference Call
A conference call will be held on
About
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, dividends, budgets, projected costs and plans and objectives of management for future operations, and the impact or duration of the COVID-19 pandemic and any subsequent recovery, 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
We use our Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on our Investor Relations website at www.hpinc.com.
Note Regarding Trademarks.
(1) See the corresponding section of this release for details regarding the select items. The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside of the Company's core business operations.
(2) Operating gross margin is defined as operating revenues less direct operating expenses.
|
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||||
Operating revenues |
|
|
|
|
|
|
|
|
|
||||||||||
Contract drilling services |
$ |
314,405 |
|
|
$ |
630,290 |
|
|
$ |
684,788 |
|
|
$ |
1,556,093 |
|
|
$ |
2,139,798 |
|
Other |
2,959 |
|
|
3,349 |
|
|
3,186 |
|
|
9,567 |
|
|
9,642 |
|
|||||
|
317,364 |
|
|
633,639 |
|
|
687,974 |
|
|
1,565,660 |
|
|
2,149,440 |
|
|||||
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
||||||||||
Contract drilling services operating expenses, excluding depreciation and amortization |
205,198 |
|
|
417,743 |
|
|
443,114 |
|
|
1,022,270 |
|
|
1,372,426 |
|
|||||
Other operating expenses |
1,549 |
|
|
1,315 |
|
|
1,414 |
|
|
4,286 |
|
|
4,308 |
|
|||||
Depreciation and amortization |
110,161 |
|
|
132,006 |
|
|
143,297 |
|
|
372,298 |
|
|
427,917 |
|
|||||
Research and development |
3,638 |
|
|
6,214 |
|
|
7,066 |
|
|
16,730 |
|
|
21,347 |
|
|||||
Selling, general and administrative |
43,108 |
|
|
41,978 |
|
|
46,590 |
|
|
134,894 |
|
|
144,604 |
|
|||||
Asset impairment charge |
— |
|
|
563,234 |
|
|
224,327 |
|
|
563,234 |
|
|
224,327 |
|
|||||
Restructuring charges |
15,495 |
|
|
— |
|
|
— |
|
|
15,495 |
|
|
— |
|
|||||
Gain on sale of assets |
(4,201 |
) |
|
(10,310 |
) |
|
(9,960 |
) |
|
(18,790 |
) |
|
(27,050 |
) |
|||||
|
374,948 |
|
|
1,152,180 |
|
|
855,848 |
|
|
2,110,417 |
|
|
2,167,879 |
|
|||||
Operating loss from continuing operations |
(57,584 |
) |
|
(518,541 |
) |
|
(167,874 |
) |
|
(544,757 |
) |
|
(18,439 |
) |
|||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
||||||||||
Interest and dividend income |
771 |
|
|
3,566 |
|
|
2,349 |
|
|
6,551 |
|
|
6,861 |
|
|||||
Interest expense |
(6,125 |
) |
|
(6,095 |
) |
|
(6,257 |
) |
|
(18,320 |
) |
|
(17,145 |
) |
|||||
Gain (loss) on investment securities |
2,267 |
|
|
(12,413 |
) |
|
(13,271 |
) |
|
(7,325 |
) |
|
(50,228 |
) |
|||||
Gain on sale of subsidiary |
— |
|
|
— |
|
|
— |
|
|
14,963 |
|
|
— |
|
|||||
Other |
(2,914 |
) |
|
(398 |
) |
|
(1,599 |
) |
|
(3,711 |
) |
|
(1,051 |
) |
|||||
|
(6,001 |
) |
|
(15,340 |
) |
|
(18,778 |
) |
|
(7,842 |
) |
|
(61,563 |
) |
|||||
Loss from continuing operations before income taxes |
(63,585 |
) |
|
(533,881 |
) |
|
(186,652 |
) |
|
(552,599 |
) |
|
(80,002 |
) |
|||||
Income tax benefit |
(17,578 |
) |
|
(113,413 |
) |
|
(32,031 |
) |
|
(116,853 |
) |
|
(5,602 |
) |
|||||
Loss from continuing operations |
(46,007 |
) |
|
(420,468 |
) |
|
(154,621 |
) |
|
(435,746 |
) |
|
(74,400 |
) |
|||||
Income from discontinued operations before income taxes |
9,151 |
|
|
6,067 |
|
|
7,244 |
|
|
22,675 |
|
|
22,798 |
|
|||||
Income tax provision |
8,743 |
|
|
6,139 |
|
|
7,306 |
|
|
22,463 |
|
|
23,231 |
|
|||||
Income (loss) from discontinued operations |
408 |
|
|
(72 |
) |
|
(62 |
) |
|
212 |
|
|
(433 |
) |
|||||
Net loss |
$ |
(45,599 |
) |
|
$ |
(420,540 |
) |
|
$ |
(154,683 |
) |
|
$ |
(435,534 |
) |
|
$ |
(74,833 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic loss per common share: |
|
|
|
|
|
|
|
|
|
||||||||||
Loss from continuing operations |
$ |
(0.43 |
) |
|
$ |
(3.88 |
) |
|
$ |
(1.42 |
) |
|
$ |
(4.05 |
) |
|
$ |
(0.71 |
) |
Loss from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Net loss |
$ |
(0.43 |
) |
|
$ |
(3.88 |
) |
|
$ |
(1.42 |
) |
|
$ |
(4.05 |
) |
|
$ |
(0.71 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted loss per common share: |
|
|
|
|
|
|
|
|
|
||||||||||
Loss from continuing operations |
$ |
(0.43 |
) |
|
$ |
(3.88 |
) |
|
$ |
(1.42 |
) |
|
$ |
(4.05 |
) |
|
$ |
(0.71 |
) |
Loss from discontinued operations |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
— |
|
|
Net loss |
$ |
(0.43 |
) |
|
$ |
(3.88 |
) |
|
$ |
(1.42 |
) |
|
$ |
(4.05 |
) |
|
$ |
(0.71 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
||||||||||
Basic |
107,439 |
|
|
108,557 |
|
|
109,425 |
|
|
108,185 |
|
|
109,324 |
|
|||||
Diluted |
107,439 |
|
|
108,557 |
|
|
109,425 |
|
|
108,185 |
|
|
109,324 |
|
|
|||||||
(Unaudited) |
|||||||
(in thousands) |
|||||||
|
|
|
|
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
2020 |
|
2019 |
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
426,245 |
|
|
$ |
347,943 |
|
Short-term investments |
65,787 |
|
|
52,960 |
|
||
Other current assets |
498,512 |
|
|
714,183 |
|
||
Total current assets |
990,544 |
|
|
1,115,086 |
|
||
Investments |
25,280 |
|
|
31,991 |
|
||
Property, plant and equipment, net |
3,754,206 |
|
|
4,502,084 |
|
||
Other noncurrent assets |
192,296 |
|
|
190,354 |
|
||
Total Assets |
$ |
4,962,326 |
|
|
$ |
5,839,515 |
|
|
|
|
|
||||
Liabilities and Shareholders' Equity |
|
|
|
||||
Current liabilities |
$ |
242,167 |
|
|
$ |
410,238 |
|
Long-term debt, net |
480,269 |
|
|
479,356 |
|
||
Other noncurrent liabilities |
828,751 |
|
|
922,357 |
|
||
Noncurrent liabilities - discontinued operations |
15,082 |
|
|
15,341 |
|
||
Total shareholders’ equity |
3,396,057 |
|
|
4,012,223 |
|
||
Total Liabilities and Shareholders' Equity |
$ |
4,962,326 |
|
|
$ |
5,839,515 |
|
|
|||||||
(Unaudited) |
|||||||
(in thousands) |
|||||||
|
Nine Months Ended |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
2020 |
|
2019 |
||||
OPERATING ACTIVITIES: |
|
|
|
||||
Net loss |
$ |
(435,534 |
) |
|
$ |
(74,833 |
) |
Adjustment for (income) loss from discontinued operations |
(212 |
) |
|
433 |
|
||
Loss from continuing operations |
(435,746 |
) |
|
(74,400 |
) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
372,298 |
|
|
427,917 |
|
||
Asset impairment charge |
563,234 |
|
|
224,327 |
|
||
Restructuring charges |
3,536 |
|
|
— |
|
||
Amortization of debt discount and debt issuance costs |
1,358 |
|
|
1,176 |
|
||
Provision for bad debt |
4,151 |
|
|
544 |
|
||
Stock-based compensation |
32,059 |
|
|
25,467 |
|
||
Loss on investment securities |
7,325 |
|
|
50,228 |
|
||
Gain on sale of assets |
(18,790 |
) |
|
(27,050 |
) |
||
Gain on sale of subsidiary |
(14,963 |
) |
|
— |
|
||
Deferred income tax benefit |
(122,366 |
) |
|
(25,503 |
) |
||
Other |
(2,891 |
) |
|
5,356 |
|
||
Changes in assets and liabilities |
57,086 |
|
|
51,365 |
|
||
Net cash provided by operating activities from continuing operations |
446,291 |
|
|
659,427 |
|
||
Net cash used in operating activities from discontinued operations |
(38 |
) |
|
(56 |
) |
||
Net cash provided by operating activities |
446,253 |
|
|
659,371 |
|
||
|
|
|
|
||||
INVESTING ACTIVITIES: |
|
|
|
||||
Capital expenditures |
(120,960 |
) |
|
(403,570 |
) |
||
Purchase of short-term investments |
(78,303 |
) |
|
(71,852 |
) |
||
Payment for acquisition of business, net of cash acquired |
— |
|
|
(2,781 |
) |
||
Proceeds from sale of short-term investments |
66,033 |
|
|
68,015 |
|
||
Proceeds from sale of subsidiary |
15,056 |
|
|
— |
|
||
Proceeds from asset sales |
31,200 |
|
|
36,227 |
|
||
Other |
(50 |
) |
|
— |
|
||
Net cash used in investing activities |
(87,024 |
) |
|
(373,961 |
) |
||
|
|
|
|
||||
FINANCING ACTIVITIES: |
|
|
|
||||
Dividends paid |
(233,124 |
) |
|
(235,058 |
) |
||
Debt issuance costs paid |
— |
|
|
(3,912 |
) |
||
Proceeds from stock option exercises |
4,100 |
|
|
2,901 |
|
||
Payments for employee taxes on net settlement of equity awards |
(3,752 |
) |
|
(6,420 |
) |
||
Payment of contingent consideration from acquisition of business |
(4,250 |
) |
|
— |
|
||
Share repurchase |
(28,504 |
) |
|
— |
|
||
Other |
(446 |
) |
|
— |
|
||
Net cash used in financing activities |
(265,976 |
) |
|
(242,489 |
) |
||
Net increase in cash and cash equivalents and restricted cash |
93,253 |
|
|
42,921 |
|
||
Cash and cash equivalents and restricted cash, beginning of period |
382,971 |
|
|
326,185 |
|
||
Cash and cash equivalents and restricted cash, end of period |
$ |
476,224 |
|
|
$ |
369,106 |
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
SEGMENT REPORTING (in thousands, except operating statistics) |
2020 |
|
2020 (1) |
|
2019 (1) |
|
2020 |
|
2019 (1) |
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues |
$ |
254,434 |
|
|
$ |
545,961 |
|
|
$ |
600,831 |
|
|
$ |
1,325,076 |
|
|
$ |
1,867,253 |
|
Direct operating expenses |
152,663 |
|
|
346,564 |
|
|
380,454 |
|
|
832,229 |
|
|
1,176,746 |
|
|||||
Research and development |
3,459 |
|
|
5,663 |
|
|
4,966 |
|
|
15,871 |
|
|
19,247 |
|
|||||
Selling, general and administrative expense |
13,533 |
|
|
12,519 |
|
|
16,654 |
|
|
42,798 |
|
|
50,361 |
|
|||||
Depreciation |
102,699 |
|
|
117,334 |
|
|
128,864 |
|
|
336,098 |
|
|
383,477 |
|
|||||
Asset impairment charge |
— |
|
|
406,548 |
|
|
216,908 |
|
|
406,548 |
|
|
216,908 |
|
|||||
Restructuring charges |
7,237 |
|
|
— |
|
|
— |
|
|
7,237 |
|
|
— |
|
|||||
Segment operating income (loss) |
$ |
(25,157 |
) |
|
$ |
(342,667 |
) |
|
$ |
(147,015 |
) |
|
$ |
(315,705 |
) |
|
$ |
20,514 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue days |
8,101 |
|
|
17,273 |
|
|
19,846 |
|
|
43,058 |
|
|
63,040 |
|
|||||
Average rig revenue per day |
$ |
27,975 |
|
|
$ |
27,281 |
|
|
$ |
26,627 |
|
|
$ |
26,953 |
|
|
$ |
26,152 |
|
Average rig expense per day |
15,412 |
|
|
15,598 |
|
|
15,523 |
|
|
15,507 |
|
|
15,198 |
|
|||||
Average rig margin per day |
$ |
12,563 |
|
|
$ |
11,683 |
|
|
$ |
11,104 |
|
|
$ |
11,446 |
|
|
$ |
10,954 |
|
Rig utilization |
32 |
% |
|
63 |
% |
|
62 |
% |
|
54 |
% |
|
66 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
INTERNATIONAL SOLUTIONS OPERATIONS |
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues |
$ |
22,477 |
|
|
$ |
51,250 |
|
|
$ |
46,283 |
|
|
$ |
120,189 |
|
|
$ |
163,378 |
|
Direct operating expenses |
27,595 |
|
|
37,964 |
|
|
34,146 |
|
|
99,634 |
|
|
114,736 |
|
|||||
Selling, general and administrative expense |
1,129 |
|
|
1,248 |
|
|
1,150 |
|
|
3,832 |
|
|
4,225 |
|
|||||
Depreciation |
996 |
|
|
7,821 |
|
|
8,591 |
|
|
16,634 |
|
|
27,423 |
|
|||||
Asset impairment charge |
— |
|
|
156,686 |
|
|
7,419 |
|
|
156,686 |
|
|
7,419 |
|
|||||
Restructuring charges |
2,297 |
|
|
— |
|
|
— |
|
|
2,297 |
|
|
— |
|
|||||
Segment operating income (loss) |
$ |
(9,540 |
) |
|
$ |
(152,469 |
) |
|
$ |
(5,023 |
) |
|
$ |
(158,894 |
) |
|
$ |
9,575 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue days |
988 |
|
|
1,547 |
|
|
1,510 |
|
|
4,154 |
|
|
4,828 |
|
|||||
Average rig revenue per day |
$ |
19,642 |
|
|
$ |
31,706 |
|
|
$ |
29,669 |
|
|
$ |
27,281 |
|
|
$ |
32,285 |
|
Average rig expense per day |
21,589 |
|
|
20,922 |
|
|
21,650 |
|
|
20,919 |
|
|
21,261 |
|
|||||
Average rig margin per day |
$ |
(1,947 |
) |
|
$ |
10,784 |
|
|
$ |
8,019 |
|
|
$ |
6,362 |
|
|
$ |
11,024 |
|
Rig utilization |
34 |
% |
|
53 |
% |
|
51 |
% |
|
48 |
% |
|
55 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
OFFSHORE GULF OF |
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues |
$ |
37,494 |
|
|
$ |
33,079 |
|
|
$ |
37,674 |
|
|
$ |
110,828 |
|
|
$ |
109,167 |
|
Direct operating expenses |
28,967 |
|
|
32,648 |
|
|
28,869 |
|
|
91,660 |
|
|
82,158 |
|
|||||
Selling, general and administrative expense |
1,248 |
|
|
908 |
|
|
1,145 |
|
|
3,293 |
|
|
2,719 |
|
|||||
Depreciation |
3,004 |
|
|
2,842 |
|
|
2,582 |
|
|
8,591 |
|
|
7,512 |
|
|||||
Restructuring charges |
1,262 |
|
|
— |
|
|
— |
|
|
1,262 |
|
|
— |
|
|||||
Segment operating income (loss) |
$ |
3,013 |
|
|
$ |
(3,319 |
) |
|
$ |
5,078 |
|
|
$ |
6,022 |
|
|
$ |
16,778 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue days |
455 |
|
|
457 |
|
|
546 |
|
|
1,462 |
|
|
1,611 |
|
|||||
Average rig revenue per day |
$ |
49,654 |
|
|
$ |
42,098 |
|
|
$ |
39,643 |
|
|
$ |
45,105 |
|
|
$ |
35,561 |
|
Average rig expense per day |
34,702 |
|
|
48,117 |
|
|
27,222 |
|
|
37,348 |
|
|
26,276 |
|
|||||
Average rig margin per day |
$ |
14,952 |
|
|
$ |
(6,019 |
) |
|
$ |
12,421 |
|
|
$ |
7,757 |
|
|
$ |
9,285 |
|
Rig utilization |
63 |
% |
|
63 |
% |
|
75 |
% |
|
67 |
% |
|
74 |
% |
(1) | Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment. |
Note 1: Per revenue day metrics and segment operating income/loss are used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate. These measures highlight operating trends and aid analytical comparisons. However, per revenue day metrics and segment operating income/loss have limitations and should not be used as alternatives to revenues, expenses, or operating income/loss, which are performance measures determined in accordance with GAAP.
Note 2: 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 per day calculations. Additionally, expense per day and margin per day calculations do not include intercompany expenses.
Reimbursed amounts were as follows: | ||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||
|
|
|
|
|
|
|
|
|||||||
(in thousands) |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||
North America Solutions Operations |
27,807 |
|
|
77,146 |
|
|
72,386 |
|
|
164,533 |
|
|
218,648 |
|
International Solutions Operations |
3,079 |
|
|
2,209 |
|
|
1,483 |
|
|
6,875 |
|
|
7,506 |
|
Offshore Gulf of Mexico Operations |
8,223 |
|
|
6,770 |
|
|
7,277 |
|
|
24,895 |
|
|
18,534 |
|
Segment reconciliation amounts were as follows: | |||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
(in thousands) |
|
|
Offshore |
|
International
|
|
Other |
|
Eliminations |
|
Total |
||||||||||||
Operating revenue |
$ |
254,434 |
|
|
$ |
37,494 |
|
|
$ |
22,477 |
|
|
$ |
2,959 |
|
|
$ |
— |
|
|
$ |
317,364 |
|
Intersegment |
— |
|
|
— |
|
|
— |
|
|
10,384 |
|
|
(10,384 |
) |
|
— |
|
||||||
Total operating revenue |
$ |
254,434 |
|
|
$ |
37,494 |
|
|
$ |
22,477 |
|
|
$ |
13,343 |
|
|
$ |
(10,384 |
) |
|
$ |
317,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct operating expenses |
144,522 |
|
|
26,986 |
|
|
27,333 |
|
|
7,906 |
|
|
— |
|
|
206,747 |
|
||||||
Intersegment |
8,141 |
|
|
1,981 |
|
|
262 |
|
|
— |
|
|
(10,384 |
) |
|
— |
|
||||||
Total contract drilling services & other operating expenses |
$ |
152,663 |
|
|
$ |
28,967 |
|
|
$ |
27,595 |
|
|
$ |
7,906 |
|
|
$ |
(10,384 |
) |
|
$ |
206,747 |
|
|
Nine Months Ended |
||||||||||||||||||||||
(in thousands) |
North America Solutions |
|
Offshore |
|
International Solutions |
|
Other |
|
Eliminations |
|
Total |
||||||||||||
Operating revenue |
$ |
1,325,076 |
|
|
$ |
110,828 |
|
|
$ |
120,189 |
|
|
$ |
9,567 |
|
|
$ |
— |
|
|
$ |
1,565,660 |
|
Intersegment |
— |
|
|
— |
|
|
— |
|
|
28,927 |
|
|
(28,927 |
) |
|
— |
|
||||||
Total operating revenue |
$ |
1,325,076 |
|
|
$ |
110,828 |
|
|
$ |
120,189 |
|
|
$ |
38,494 |
|
|
$ |
(28,927 |
) |
|
$ |
1,565,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct operating expenses |
808,420 |
|
|
87,285 |
|
|
98,891 |
|
|
31,960 |
|
|
— |
|
|
1,026,556 |
|
||||||
Intersegment |
23,809 |
|
|
4,375 |
|
|
743 |
|
|
— |
|
|
(28,927 |
) |
|
— |
|
||||||
Total contract drilling services & other operating expenses |
$ |
832,229 |
|
|
$ |
91,660 |
|
|
$ |
99,634 |
|
|
$ |
31,960 |
|
|
$ |
(28,927 |
) |
|
$ |
1,026,556 |
|
Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses, corporate restructuring charges, and corporate depreciation. 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 loss from continuing operations before income taxes as reported on the Consolidated Statements of Operations:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
(in thousands) |
2020 |
|
2020 (1) |
|
2019 (1) |
|
2020 |
|
2019 (1) |
||||||||||
Operating income (loss) |
|
|
|
|
|
|
|
|
|
||||||||||
North America Solutions |
$ |
(25,157 |
) |
|
$ |
(342,667 |
) |
|
$ |
(147,015 |
) |
|
$ |
(315,705 |
) |
|
$ |
20,514 |
|
International Solutions |
(9,540 |
) |
|
(152,469 |
) |
|
(5,023 |
) |
|
(158,894 |
) |
|
9,575 |
|
|||||
Offshore |
3,013 |
|
|
(3,319 |
) |
|
5,078 |
|
|
6,022 |
|
|
16,778 |
|
|||||
Other |
4,389 |
|
|
376 |
|
|
(731 |
) |
|
3,704 |
|
|
1,988 |
|
|||||
Segment operating income (loss) |
$ |
(27,295 |
) |
|
$ |
(498,079 |
) |
|
$ |
(147,691 |
) |
|
$ |
(464,873 |
) |
|
$ |
48,855 |
|
Gain on sale of assets |
4,201 |
|
|
10,310 |
|
|
9,960 |
|
|
18,790 |
|
|
27,050 |
|
|||||
Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges |
(34,490 |
) |
|
(30,772 |
) |
|
(30,143 |
) |
|
(98,674 |
) |
|
(94,344 |
) |
|||||
Operating loss |
$ |
(57,584 |
) |
|
$ |
(518,541 |
) |
|
$ |
(167,874 |
) |
|
$ |
(544,757 |
) |
|
$ |
(18,439 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
||||||||||
Interest and dividend income |
771 |
|
|
3,566 |
|
|
2,349 |
|
|
6,551 |
|
|
6,861 |
|
|||||
Interest expense |
(6,125 |
) |
|
(6,095 |
) |
|
(6,257 |
) |
|
(18,320 |
) |
|
(17,145 |
) |
|||||
Gain (loss) on investment securities |
2,267 |
|
|
(12,413 |
) |
|
(13,271 |
) |
|
(7,325 |
) |
|
(50,228 |
) |
|||||
Gain on sale of subsidiary |
— |
|
|
— |
|
|
— |
|
|
14,963 |
|
|
— |
|
|||||
Other |
(2,914 |
) |
|
(398 |
) |
|
(1,599 |
) |
|
(3,711 |
) |
|
(1,051 |
) |
|||||
Total unallocated amounts |
(6,001 |
) |
|
(15,340 |
) |
|
(18,778 |
) |
|
(7,842 |
) |
|
(61,563 |
) |
|||||
Loss from continuing operations before income taxes |
$ |
(63,585 |
) |
|
$ |
(533,881 |
) |
|
$ |
(186,652 |
) |
|
$ |
(552,599 |
) |
|
$ |
(80,002 |
) |
(1) |
Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment. |
SUPPLEMENTARY STATISTICAL INFORMATION |
|||||||||||
Unaudited |
|||||||||||
|
|||||||||||
|
|
|
|
|
|
|
Q3FY20 |
||||
|
2020* |
|
2020* |
|
2019 |
|
Average |
||||
|
|
|
|
|
|
|
|
||||
Term Contract Rigs |
51 |
|
|
53 |
|
|
90 |
|
|
66 |
|
Spot Contract Rigs |
13 |
|
|
15 |
|
|
60 |
|
|
23 |
|
Total Contracted Rigs |
64 |
|
|
68 |
|
|
150 |
|
|
89 |
|
Idle or Other Rigs |
198 |
|
|
194 |
|
|
149 |
|
|
173 |
|
Total Marketable Fleet |
262 |
|
|
262 |
|
|
299 |
|
|
262 |
|
(*) As of |
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS |
||||||||||||||||||||
Number of Rigs Already Under Long-Term Contracts(**) |
||||||||||||||||||||
(Estimated Quarterly Average — as of 6/30/20) |
||||||||||||||||||||
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|||||||
Segment |
FY20 |
|
FY21 |
|
FY21 |
|
FY21 |
|
FY21 |
|
FY22 |
|
FY22 |
|||||||
|
50.1 |
|
|
45.5 |
|
|
37.9 |
|
|
31.8 |
|
|
27.5 |
|
|
17.3 |
|
|
13.1 |
|
International Land Operations |
1.0 |
|
|
1.0 |
|
|
1.0 |
|
|
1.0 |
|
|
1.0 |
|
|
1.0 |
|
|
1.0 |
|
Offshore Operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total |
51.1 |
|
|
46.5 |
|
|
38.9 |
|
|
32.8 |
|
|
28.5 |
|
|
18.3 |
|
|
14.1 |
|
(**) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees. |
SELECT ITEMS(***) |
|||||||||||||||
|
|
||||||||||||||
(in thousands, except per share data) |
Pretax |
|
Tax |
|
Net |
|
EPS |
||||||||
Net loss (GAAP basis) |
|
|
|
|
$ |
(45,599 |
) |
|
$ |
(0.43 |
) |
||||
Restructuring charges |
$ |
(15,495 |
) |
|
$ |
(3,254 |
) |
|
$ |
(12,241 |
) |
|
$ |
(0.11 |
) |
Fair market adjustment to equity investments |
$ |
2,267 |
|
|
$ |
652 |
|
|
$ |
1,615 |
|
|
$ |
0.02 |
|
Adjusted net loss |
|
|
|
|
$ |
(34,973 |
) |
|
$ |
(0.34 |
) |
|
|
||||||||||||||
(in thousands, except per share data) |
Pretax |
|
Tax |
|
Net |
|
EPS |
||||||||
Net loss (GAAP basis) |
|
|
|
|
$ |
(420,540 |
) |
|
$ |
(3.88 |
) |
||||
Impairment of goodwill, rigs and related equipment |
$ |
(563,234 |
) |
|
$ |
(125,770 |
) |
|
$ |
(437,464 |
) |
|
$ |
(4.03 |
) |
Fair market adjustment to equity investments |
$ |
(12,413 |
) |
|
$ |
(2,983 |
) |
|
$ |
(9,430 |
) |
|
$ |
(0.09 |
) |
Reversal of accrued compensation |
$ |
17,681 |
|
|
$ |
4,038 |
|
|
$ |
13,643 |
|
|
$ |
0.13 |
|
Change in fair value of contingent liability |
$ |
3,600 |
|
|
$ |
822 |
|
|
$ |
2,778 |
|
|
$ |
0.03 |
|
Adjusted net income |
|
|
|
|
$ |
9,933 |
|
|
$ |
0.08 |
|
Note: Excluded from the select items above are revenues recognized due to early contract terminations in the amount (pretax) of
(***)The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future period results. Select items are excluded as they are deemed to be outside of the Company's core business operations. Previously reflected in the |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200728005896/en/
investor.relations@hpinc.com
(918) 588‑5190
Source: