MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999

RISK FACTORS AND FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with the consolidated financial statements, notes and management's narrative analysis contained in the Company's 1998 Annual Report on Form 10-K and the Company's 1999 First and Second Quarter Reports on Form 10-Q and the condensed consolidated financial statements and related notes included elsewhere herein. The Company's future operating results may be affected by various trends and factors, which are beyond the Company's control. These include, among other factors, fluctuations in natural gas and crude oil prices, expiration or termination of drilling contracts, currency exchange losses, changes in general economic conditions, rapid or unexpected changes in technologies and uncertain business conditions that affect the Company's businesses. Accordingly, past results and trends should not be used by investors to anticipate future results or trends.

With the exception of historical information, the matters discussed in Management's Discussion & Analysis of Results of Operations and Financial Condition includes forward-looking statements. These forward-looking statements are based on various assumptions. The Company cautions that, while it believes such assumptions to be reasonable and makes them in good faith, assumed facts almost always vary from actual results. The differences between assumed facts and actual results can be material. The Company is including this cautionary statement to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. The factors identified in this cautionary statement are important factors (but not necessarily all important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

RESULTS OF OPERATIONS

The Company reported net income of $12,196,000 ($0.24 per share)from revenues of $131,799,000 for the third quarter ended June 30, 1999, compared with net income of $33,861,000 ($0.67 per share) from revenues of $177,136,000 for the third quarter of the prior fiscal year. Net income for the first nine months of this fiscal year totaled $32,359,000 ($0.65 per share) from revenues of $431,037,000, compared with net income of $82,363,000 ($1.62 per share) from revenues of $471,348,000 recorded for the same period last year.

Included in the third quarter net income were gains from the sale of available-for-sale securities of $0.01 per share, compared with $0.26 per share during last year's third quarter. Net income from security sales for the nine months ended June 30, 1999, was $0.02 per share and $0.33 per share for same period of fiscal 1998.

COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998

Operating profit from the Company's domestic drilling operations for the third quarter of fiscal 1999 and 1998 was $6,332,000 and $9,363,000, respectively. Fundamentals in the domestic drilling land sector continued to deteriorate in the current quarter, because of reductions in capital spending by most of the Company's customers. Land rig utilization during the quarter was 53%, compared with 95% during the third quarter of fiscal 1998, and 74% in the second quarter of fiscal 1999. Average U.S. land rig dayrates were down by approximately 19% from last year's third quarter and down 5% from the second quarter of fiscal 1999. Offshore rig utilization during the third quarter of fiscal 1999 was 83%, compared with 98% during last year's third quarter. Although rig utilization was

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

down from last year, third quarter results from domestic offshore operations were higher than last year, helped by a full quarter of income from Rig 204 and the income from Rig 91, which was transferred from offshore Venezuela to U.S. operations in December, 1998. Also included in this quarter's domestic operating results was $10.4 million of revenues and $2.3 million of operating profit from the Company's JADE construction project. This project neared completion during the third quarter, and could produce as much as a half million dollars of operating profit in the fourth quarter.

Operating profit from the Company's international drilling operations for the third quarter of fiscal 1999 and 1998 was $7,307,000 and $13,414,000, respectively. Revenues for the same periods were $42,528,000 and $69,202,000, respectively. International rig utilization fell to 49% for this year's third quarter, compared with 91% during third quarter of fiscal 1998. The most significant declines in rig utilization and operating profit occurred in the Company's largest international operations in Venezuela and Colombia. Also during the current quarter, Rig 200, the offshore platform rig located in Australia owned in a 50-50 partnership with Atwood Oceanics, ceased operations and is now stacked.

The Company's Exploration and Production Division reported an operating profit of $5,445,000 and $7,299,000 for the third quarter of fiscal 1999 and 1998, respectively. Oil and gas revenues for the same periods were $22,364,000 and $22,296,000, respectively. The decrease in operating profit in the third quarter of fiscal 1999, compared with the same quarter of 1998, is primarily the result of higher depreciation and depletion expense and dry hole costs. Crude oil prices for the third quarter of fiscal 1999 and 1998 averaged $15.66 per bbl and $12.89 per bbl, respectively, while crude oil volumes for the same periods averaged 1,718 bbls/d and 1,886 bbls/d, respectively. Natural gas prices for the third quarter of fiscal 1999 and 1998 averaged $1.80 per mcf and $1.94 per mcf, respectively. Natural gas volumes for the third quarter of fiscal 1999 and 1998 averaged 122.0 mcf/d and 112.5 mcf/d, respectively.

COMPARISON OF THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998

Operating profit from the Company's domestic drilling operations for the nine months ended June 30, 1999 and 1998 was $25,700,000 and $27,009,000, respectively. Land rig utilization during the first nine months of fiscal 1999 was 71%, compared with 97% for the same period of fiscal 1998. Average U.S. land rig dayrates were down approximately 14% for the same periods. Offshore rig utilization for the nine months ended June 30, 1999, was 94% compared with 99% for the same period of fiscal 1998. The Company experienced substantial increases in operating results from offshore rigs for the nine months ended June 30, 1999, compared with the first nine months of fiscal 1998. This was the result of increased operating days of Rig 204 (273 days vs. 77 days) and the transfer of Rig 91 from offshore Venezuela to U.S. offshore operations in December 1998. Also included in the nine months operating results for domestic operations was $36.4 million of revenues and $4.9 million of operating profit from the Company's JADE construction project. Even with some improvements in offshore operations, operating profit for the domestic drilling operations are expected to decline during the fourth quarter.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

Operating profit from the Company's international drilling operations for the nine months ended June 30, 1999 and 1998 was $26,330,000 and $42,272,000, respectively. Revenues for the same periods were $147,066,000 and $182,873,000, respectively. International rig utilization was 56% for the first nine months of fiscal 1999, compared with 92% for the same period of fiscal 1998. Significant declines in rig utilization in both Venezuela and Colombia, as well as reduced dayrates in both countries, were the major reasons for the overall decline in international operating results. The Company expects to record lower international earnings during the fourth quarter primarily because Rig 200 in Australia will be stacked and continued low rig utilization in South America.

The Company's Exploration and Production Division reported an operating profit of $3,680,000 and $28,794,000 for the nine months ended June 30, 1999, and 1998, respectively. The significant decrease in operating profit is the result of lower oil and gas revenues, increased exploration costs and increased depreciation and depletion expense, offset by decreased dry hole expense and gains recorded from the sale of producing properties.

Oil and gas revenues for the nine months ended June 30, 1999 and 1998 were $67,641,000 and $76,697,000, respectively. For the nine months ended June 30, 1999 and 1998, crude oil prices averaged $12.69 per bbl and $15.52 per bbl, respectively, while crude oil volumes for the same periods averaged 1,743 bbls/d and 1,962 bbls/d, respectively. Natural gas prices for the nine months ended June 30, 1999 and 1998 averaged $1.69 per mcf and $2.15 per mcf, respectively. Natural gas volumes for the same periods averaged 122.4 mcf/d and 115.1 mcf/d, respectively. Also included in revenues for the nine months ended June 30, 1999, were gains from the sale of producing properties of approximately $4.7 million.

Exploration costs, primarily geophysical charges, increased to $9.4 million for the nine months ending June 30, 1999, compared with $4.6 million for the same period of fiscal 1998. Division depreciation and depletion expense was $30.7 million for the first nine months of fiscal 1999, compared with $18.2 million during the first nine months of fiscal 1998. This year's total included an impairment charge of $8.9 million in connection with the drilling and completion of a pinnacle reef well with reserve values significantly below its carrying cost. Dry hole expense for the first nine months of fiscal 1999, and 1998, were $978,000 and $4,505,000, respectively.

During the fourth quarter, the Company will be drilling a significant development well in its Dixieland prospect in Texas, and will continue its drilling in Jefferson County, Texas, where four successful exploratory wells, in which the Company owns approximately 33%, are at various stages of completion.

For the nine months ended June 30, 1999 and 1998, the other line item, included in the Statement of Revenues and Income by Business Segments on page 10, was a loss of $14,000,000 and a profit of $21,682,000, respectively. The significant decrease in other operating profit is the result of lower gains on the sale of available-for-sale securities in fiscal 1999 compared with fiscal 1998 (see Note
4), increased interest expense in fiscal 1999, and increased corporate general and administrative expense in fiscal 1999. Interest expense increased to $5,407,000 in fiscal 1999, compared with $631,000 in fiscal 1998 because of increased notes payable balances. General and administrative expense increased to $11,413,000 in fiscal 1999, compared with $8,801,000 in fiscal 1998 as the result of higher employee benefit expenses and expenses associated with staff increases in the information technology area.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $103,704,000 for the first nine months of fiscal 1999, compared with $92,151,000 for the same period in 1998. Capital expenditures were $93,150,000 and $177,329,000 for the first nine months of fiscal 1999 and 1998, respectively.

It is anticipated for fiscal 1999 that capital expenditures will approach $135 million, which is less than the Company's projected internally generated cash flow. The Company would, if necessary, borrow under its line of credit agreement to fund capital expenditures in excess of cash flows. The Company reduced borrowings by $23,500,000 during the current quarter. The Company's indebtedness totaled $86,000,000 as of June 30, 1999, as described in Note 7 to the Consolidated Condensed Financial Statements.

There were no other significant changes in the Company's financial position since September 30, 1998.

YEAR 2000 COMPLIANCE

THE COMPANY'S STATE OF READINESS

The following information shall constitute the Company's "Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information Readiness Act.

The Company has undertaken various initiatives in an attempt to ensure that its hardware, software and equipment will function properly with respect to dates before and after January 1, 2000. For this purpose, the phrase "hardware, software and equipment" includes systems that are commonly thought of as Information Technology ("IT") systems, as well as those Non-Information Technology ("Non-IT") systems and equipment, which include embedded technology. IT systems include computer hardware and software, and other related systems. Non-IT systems include certain oil and gas drilling and production equipment, security systems and other miscellaneous systems. The Non-IT systems present the greatest compliance challenge since identification of embedded technology is difficult and because the Company is, to a great extent, reliant on third parties for Non-IT compliance.

The Company has formed a Year 2000 ("Y2K") Project team, which is chaired by the Director of IT. The team includes IT staff, corporate staff and representatives from the Company's business units. The Company has organized its compliance efforts into a four-phase approach as follows:

Phase 1: Identification - Identify and inventory mission critical components of Company operations and systems, which may be affected.

Phase 2: Assessment - Determine which hardware, software and equipment must be modified, upgraded or replaced.

Phase 3: Remediation - Modify, upgrade or replace non-compliant hardware, software and equipment.

Phase 4: Testing - Fully test all IT systems which are material to the Company's operations. Selectively test those Non-IT systems and equipment which are material to the Company's operations.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

For the purposes of the Y2K Project material items are those items the Company believes to have a risk involving safety of individuals, damage to the environment, material effect on revenues or material damage to property. The project is proceeding on schedule to date. The following represents the status of the Company's IT and Non-IT Compliance Project:

                                           STATUS OF                TARGET FOR
                                           COMPLETION               COMPLETION
                                          -------------             ----------
IT
o  Core accounting and operational        Phases 1,2,3              Completed
   (mainframe) systems                    & 4 completed

o  Human Resources & Payroll Systems      Phases 1,2,3              Completed
                                          & 4 completed

o  Network                                Phases 1,2,3              Completed
                                          & 4 completed

o  Desktop Computer Hardware              Phases 1,2,3 &            Completed
                                          4 completed

o  Standard Company Desktop               Phases 1,2,3 &            Completed
   Computer Software                      4 completed

o  Business Unit User Software            Phase 1 & 2 completed;    September 30,
                                          Phases 3 & 4 in           1999
                                          progress

Non-IT

o  Systems and Equipment                  Phase 1 & 2 completed;    September 30,
                                          Phases 3 & 4 in           1999
                                          progress

As reflected in the above table, the Company has exercised diligence in the process of identifying embedded technology and determining the extent to which such technology is Y2K compliant. As part of this process, the Company mailed letters to its significant vendors and service providers to confirm that the products and services purchased from or by such entities are Y2K compliant. Also, the Company obtained information from significant customers regarding the extent to which Y2K issues may affect the amount of business the Company currently conducts with such customers. As of June 30, 1999, this phase of the Y2K project was essentially complete. As a result of these activities, the Company is conducting discussions with the vendors or manufacturers of such mission critical equipment to determine the most effective solutions to Y2K compliance issues.

THE COST TO ADDRESS Y2K ISSUES

The Company believes that the cost of its Y2K Compliance Project should not exceed $1,000,000, including costs of employees working on the Y2K Project. Costs for the new hardware and equipment are being capitalized, and other costs are being expensed as incurred. The costs relating to the Company's Y2K

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

project are paid from the Company's general funds. To date, the Company has incurred Y2K Project costs of approximately $800,000. This expenditure mainly relates to repair, upgrading or replacement of existing software and hardware, and solicitation and evaluation of information received from significant vendors, service providers, or customers. The $1,000,000 figure includes the costs of independent consultants engaged to review selected Y2K issues.

THE COMPANY'S CONTINGENCY PLAN

The Company has developed its contingency plans on a business unit and departmental basis. These contingency plans include, but are not limited to:
development of backup and recovery procedures for IT Systems; remediation of existing systems or equipment; installation of new systems or equipment; stockpiling of Y2K compliant goods and supplies; stockpiling old equipment which does not contain embedded technology; replacement of current services with temporary manual processes; finding non-technological alternatives or sources for information; or identification of alternative customers, suppliers or outsourcing subcontractors who stand ready to receive or provide critical goods, equipment and services. The Company has engaged a computer recovery services contractor as a potential source of alternative computer systems for its core accounting systems as part of its contingency plan.

THE RISKS OF THE COMPANY'S Y2K ISSUES

The Company is in the process of completing an analysis of the operational problems and costs (including loss of revenues) that would be reasonably likely to result from the failure by the Company and certain third parties to complete efforts necessary to achieve Y2K compliance on a timely basis. The Company presently believes that the Y2K issue will not pose significant operational problems for the Company. However, if all significant Y2K issues are not properly identified, or assessment, remediation and testing are not effected timely, there can be no assurance that the Y2K issue will not materially and adversely impact the Company's results of operations, liquidity and financial condition or materially and adversely affect the Company's relationships with customers, vendors, or others. Additionally, there can be no assurance that the lack of Y2K compliance by other entities will not have a material and adverse impact on the Company's operations or financial condition.

The preceding Y2K disclosure is based upon certain forward-looking information including, but not limited to, the dates on which the Company believes that various phases of the Y2K Project will be completed. This forward-looking information is based on Management's good faith estimates. These estimates were derived utilizing numerous assumptions of future events, including the continued availability of certain resources, third-party plans and other factors. However, there can be no guarantee that these estimates will be achieved, or that there will not be a delay in, or increased costs associated with, the implementation of the Y2K Project. Specific factors that might cause differences between the estimates and actual results include, but are not limited to, the availability and cost of personnel trained in these areas, the ability to locate and correct

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
JUNE 30, 1999
(Continued)

all relevant computer code, timely responses to and corrections by third-parties and suppliers, the ability to implement interfaces between the new systems and the systems not being replaced, and similar uncertainties. Due to the general uncertainty inherent in Y2K issues, including the uncertainty of third party Y2K compliance, the Company cannot ensure its ability to timely and cost-effectively resolve problems associated with Y2K issues that may affect its operations and business, or expose it to third party liability.