HELMERICH & PAYNE INC (Form: 8-K, Received: 11/16/2005 08:59:48)

Table of Contents

Table of Contents

Exhibit 99

November 16, 2005

HELMERICH & PAYNE, INC. ANNOUNCES FISCAL YEAR EARNINGS AND MORE CONTRACTS

Tulsa, OK — Helmerich & Payne, Inc. announced net income of $127,606,000 ($2.45 per diluted share) from operating revenues of $800,726,000 for its fiscal year ended September 30, 2005, compared with net income of $4,359,000 ($0.09 per diluted share) from operating revenues of $589,056,000 for the previous fiscal year. Net income includes gains from the sale of portfolio securities of $0.32 per share for 2005, and $0.31 per share for 2004. Net income for fiscal 2004 includes a non-cash charge of $51,516,000 ($0.63 per diluted share) for impairment of a portion of the Company’s Gulf of Mexico offshore platform rigs.

Net income for the fourth quarter of fiscal 2005 was $36,121,000 ($0.68 per diluted share) from operating revenues of $233,210,000. Included in this year’s fourth quarter net income was $0.01 per share from gains from the sale of portfolio securities. Including the impairment charge mentioned above, the Company recorded a loss for its fourth quarter of fiscal 2004 of $12,624,000 ($0.25 per diluted share) from operating revenues of $164,068,000. During the fourth quarter of 2004, the Company recorded $0.16 per share of gains from the sale of portfolio securities.

Helmerich & Payne, Inc. also announced today that it had signed separate term agreements with two exploration and production companies to operate a total of nine new FlexRig4s®. Each rig agreement includes a minimum term of at least three years and construction costs are estimated at slightly over $11 million per rig. Other terms and customer names were not disclosed. This brings to 50, the total number of new FlexRigs to be built by H&P with at least three-year commitments that have been announced by the Company since March of this year.

Company President and C.E.O., Hans Helmerich commented, “We are pleased to reach the milestone of our 50 ^th new-build order. This latest announcement will bring our total number of FlexRigs to 100 once completed, or 71% of our entire U.S. land rig fleet. This strong organic growth further establishes our belief that the Company’s overall fleet is the newest and most uniform in the land drilling industry. Customers continue to respond favorably to the proven performance that establishes these rigs as what we believe are best in class. We also believe the market will continue to push demand, not only for more available rigs, but for more capable rigs as well.

“Our 2005 results benefited from the strongest U.S. land market environment in over 20 years as average cash margins per day increased to $9,317. The robust ramp-up in the energy industry has brought to bear its own challenges, including additional pressure on costs and people. Nonetheless, we are confident this energy cycle will continue to present exciting opportunities going forward.”

Operations Summary

Operating income in the Company’s U.S. land rig operations increased to $56,028,000 for the fourth quarter of fiscal 2005, from $13,856,000 for the same period last year, and from $47,244,000 for this year’s third quarter. Average revenue per rig day rose to $18,563 and cash margins per rig day to $9,317 for this year’s fourth quarter, compared with $16,658 revenue per rig day and $8,219 cash margins per rig day for the previous quarter. U.S. land rig operating

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November 16, 2005
News Release

expense per day increased by 9.6% from this year’s third quarter to this year’s fourth quarter. The rise in expenses resulted from labor, materials, and supply cost increases. Average U.S. land rig utilization during the fourth quarter of 2005 was 95%, compared with 92% during last year’s fourth quarter, and 94% during this year’s third quarter.

The Company’s offshore platform rig business reported operating income of $4,720,000 for the fourth quarter of fiscal 2005, compared with $4,648,000 for the third quarter of 2005, and an operating loss of $47,540,000 for the fourth quarter 2004. For quarterly comparisons, the offshore operations would have reported an operating profit of $3,976,000 for the fourth quarter of 2004, without the $51,516,000 impairment charge. Rig utilization was 65% during this year’s fourth quarter, compared with 54% during last year’s fourth quarter, and 45% during this year’s third quarter. This year’s fourth quarter was negatively impacted by lost operating income of approximately $600,000 due to damage from Hurricane Katrina to offshore platform Rig 201. Seven platform rigs are currently operating and one additional rig is scheduled for work commencing the second fiscal quarter of 2006. It is anticipated that Rig 201 will not return to service during fiscal 2006.

International operating income declined during the fourth quarter of 2005 to $3,910,000, from $5,185,000 for last year’s fourth quarter, and $5,284,000 for this year’s third quarter. During the quarter, it was discovered the Company had not adequately reserved for future government stipulated deferred compensation payments to Venezuelan rig employees. As a result, $1,865,000 was expensed during this year’s fourth quarter for those previously earned, but unpaid future obligations. Rig utilization for international operations rose to 85% for the quarter, up from 57% during last year’s fourth quarter, and 80% during this year’s third quarter.

Helmerich & Payne, Inc. is a contract drilling company that owns 90 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 128 rigs. Included in the total fleet of 128 rigs are 50 H&P-designed and operated FlexRigs. The Company has reached contractual agreements with customers that will result in the construction of 50 additional FlexRigs.

Helmerich & Payne, Inc.’s conference call/webcast is scheduled for this morning and can be accessed at http://www.hpinc.com under Investors and will begin at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). If you are unable to participate during the live webcast, the call will be archived for a year on H&P’s website indicated above.

The information to be disclosed in the conference call and webcast shall include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by H&P from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, H&P’s actual results may differ materially from those indicated or implied by such forward-looking statements.

* FlexRig® is a registered trademark of Helmerich & Payne, Inc.

Contacts: Doug Fears
(918) 588-5208

Juan Pablo Tardio
(918) 588-5383

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November 16, 2005

HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)


	Three Months Ended									Fiscal Year Ended
	June 30			September 30						September 30
CONSOLIDATED STATEMENTS OF OPERATIONS	2005			2005			2004			2005			2004

Operating Revenues:
Drilling — U.S. Land	$	138,720		$	157,335		$	100,055		$	527,637		$	346,015
Drilling — U.S. Offshore		19,905			26,011			23,601			84,921			84,238
Drilling — International		46,030			47,180			38,029			177,480			148,788
Real Estate		2,732			2,684			2,383			10,688			10,015

		207,387			233,210			164,068			800,726			589,056


Operating costs and expenses:
Operating costs		121,470			137,188			113,423			484,231			417,716
Depreciation		23,419			25,643			24,821			96,274			94,425
Asset impairment		—			—			51,516			—			51,516
General and administrative		11,680			10,496			9,254			41,015			37,661

		156,569			173,327			199,014			621,520			601,318


Operating income (loss)		50,818			59,883			(34,946	)		179,206			(12,262	)

Other income (expense):
Interest and dividend income		1,671			1,984			476			5,809			1,965
Interest expense		(3,127	)		(2,960	)		(3,247	)		(12,642	)		(12,695	)
Gain on sale of investment securities		—			656			13,442			26,969			25,418
Income from asset sales		603			1,160			3,639			13,550			5,377
Other		29			(610	)		66			(235	)		197


		(824	)		230			14,376			33,451			20,262


Income (loss) before income taxes and equity in income of affiliates		49,994			60,113			(20,570	)		212,657			8,000

Income tax provision (benefit)		20,627			24,553			(7,772	)		87,463			4,365
Equity in income of affiliates net of income taxes		458			561			174			2,412			724

NET INCOME (LOSS)	$	29,825		$	36,121		$	(12,624	)	$	127,606		$	4,359


Earnings (loss) per common share:
Basic	$	0.58		$	0.70		$	(0.25	)	$	2.50		$	0.09
Diluted	$	0.57		$	0.68		$	(0.25	)	$	2.45		$	0.09

Average common shares outstanding:
Basic		51,233			51,616			50,426			51,087			50,312
Diluted		52,236			52,748			50,883			52,033			50,833

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November 16, 2005

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)


CONSOLIDATED CONDENSED BALANCE SHEETS	9/30/05		9/30/04

ASSETS
Cash and cash equivalents	$	288,752	$	65,296
Other current assets		212,294		180,034

Total current assets		501,046		245,330

Investments		178,452		161,532
Net property, plant, and equipment		981,965		998,674
Other assets		3,136		1,308

TOTAL ASSETS	$	1,664,599	$	1,406,844


LIABILITIES AND SHAREHOLDERS’ EQUITY
Total current liabilities	$	90,730	$	59,903
Total noncurrent liabilities		294,631		232,831
Long-term notes payable		200,000		200,000
Total shareholders’ equity		1,079,238		914,110


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,664,599	$	1,406,844

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November 16, 2005

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)


	Years Ended
	September 30
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS	2005			2004

OPERATING ACTIVITIES:
Net Income	$	127,606		$	4,359
Depreciation		96,274			94,425
Asset impairment charge		—			51,516
Changes in assets and liabilities		33,091			18,260
Gain on sale of assets and investment securities		(40,519	)		(28,143	)
Non-monetary investment gain		—			(2,521	)
Other		(4,214	)		(1,256	)

Net cash provided by operating activities		212,238			136,640


INVESTING ACTIVITIES:
Capital expenditures		(86,805	)		(90,212	)
Purchase of investments		(5,000	)		—
Proceeds from sale of assets and investment securities		94,531			21,974

Net cash provided by (used in) investing activities		2,726			(68,238	)


FINANCING ACTIVITIES:
Net payments on short-term notes		—			(30,000	)
Dividends paid		(16,866	)		(16,222	)
Proceeds from exercise of stock options		25,358			4,927

Net cash provided by (used in) financing activities		8,492			(41,295	)


Net increase in cash and cash equivalents		223,456			27,107
Cash and cash equivalents, beginning of period		65,296			38,189

Cash and cash equivalents, end of period	$	288,752		$	65,296

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November 16, 2005


SEGMENT REPORTING	Three Months Ended									Fiscal Year Ended
	June 30			September 30						September 30
	2005			2005			2004			2005			2004
	(in thousands, except days and per day amounts)
U.S. LAND OPERATIONS
Revenues	$	138,720		$	157,335		$	100,055		$	527,637		$	346,015
Direct operating expenses		74,639			82,852			68,960			294,164			246,177
General and administrative expense		2,346			2,543			2,142			8,594			7,765
Depreciation		14,491			15,912			15,097			60,222			56,528

Operating income	$	47,244		$	56,028		$	13,856		$	164,657		$	35,545

Activity days		7,797			7,994			7,363			30,968			27,472
Average rig revenue per day	$	16,658		$	18,563		$	12,437		$	15,941		$	11,635
Average rig expense per day	$	8,439		$	9,246		$	8,214		$	8,403		$	8,001
Average rig margin per day	$	8,219		$	9,317		$	4,223		$	7,538		$	3,634
Rig utilization		94	%		95	%		92	%		94	%		87	%

U.S. OFFSHORE OPERATIONS
Revenues	$	19,905		$	26,011		$	23,601		$	84,921		$	84,238
Direct operating expenses		11,504			17,443			15,653			52,786			52,987
General and administrative expense		1,071			1,103			968			3,825			3,256
Depreciation		2,682			2,745			3,004			10,602			12,107
Asset impairment		—			—			51,516			—			51,516

Operating income (loss)*	$	4,648		$	4,720		$	(47,540	)	$	17,708		$	(35,628	)

Activity days		455			654			601			2,122			2,088
Average rig revenue per day	$	32,614		$	29,782		$	27,777		$	29,228		$	29,070
Average rig expense per day	$	16,426		$	17,838		$	17,377		$	15,967		$	16,509
Average rig margin per day	$	16,188		$	11,944		$	10,400		$	13,261		$	12,561
Rig utilization		45	%		65	%		54	%		53	%		48	%


*NOTE:		The following is a reconciliation of the operating income (loss) for the U.S. Offshore segment for the fourth quarter of 2004, which is provided to assist with quarterly comparisons.

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November 16, 2005


SEGMENT REPORTING	Three Months Ended									Fiscal Year Ended
	June 30			September 30						September 30
	2005			2005			2004			2005			2004
	(in thousands, except days and per day amounts)
INTERNATIONAL OPERATIONS
Revenues	$	46,030		$	47,180		$	38,029		$	177,480		$	148,788
Direct operating expenses		35,192			36,870			27,050			135,837			113,988
General and administrative expense		619			794			527			2,563			2,144
Depreciation		4,935			5,606			5,267			20,107			20,530

Operating income	$	5,284		$	3,910		$	5,185		$	18,973		$	12,126

Activity days		1,916			2,024			1,692			7,491			6,266
Average rig revenue per day	$	19,536		$	19,168		$	18,746		$	19,332		$	19,580
Average rig expense per day	$	14,633		$	14,416		$	12,739		$	14,039		$	14,279
Average rig margin per day	$	4,903		$	4,752		$	6,007		$	5,293		$	5,301
Rig utilization		80	%		85	%		57	%		77	%		54	%

Per day calculations for international operations exclude gains and losses from translation of foreign currency transactions.

Operating statistics exclude the effects of offshore platform and international management contracts, 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	$	8,838		$	8,943		$	8,478		$	33,989		$	26,367
U.S. Offshore Operations	$	2,412		$	4,213		$	1,680		$	9,506		$	6,012
International Operations	$	4,115		$	4,207		$	2,481		$	15,215		$	11,731

REAL ESTATE
Revenues	$	2,732		$	2,684		$	2,383		$	10,688		$	10,015
Direct operating expenses		838			583			1,760			3,622			4,564
Depreciation		628			589			589			2,352			2,253

Operating income	$	1,266		$	1,512		$	34		$	4,714		$	3,198

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November 16, 2005

The following table reconciles operating income (loss) per the information above to income (loss) before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Operations (in thousands).


SEGMENT REPORTING	Three Months Ended									Fiscal Year Ended
	June 30			September 30						September 30
	2005			2005			2004			2005			2004

Operating income (loss)
U.S. Land	$	47,244		$	56,028		$	13,856		$	164,657		$	35,545
U.S. Offshore		4,648			4,720			(47,540	)		17,708			(35,628	)
International		5,284			3,910			5,185			18,973			12,126
Real Estate		1,266			1,512			34			4,714			3,198

Segment operating income (loss)	$	58,442		$	66,170		$	(28,465	)	$	206,052		$	15,241
Corporate general and administrative		(7,644	)		(6,056	)		(5,617	)		(26,033	)		(24,496	)
Other depreciation		(683	)		(791	)		(864	)		(2,991	)		(3,007	)
Inter-segment elimination		703			560			—			2,178			—

Operating income (loss)	$	50,818		$	59,883		$	(34,946	)	$	179,206		$	(12,262	)

Other income (expense):
Interest and dividend income		1,671			1,984			476			5,809			1,965
Interest expense		(3,127	)		(2,960	)		(3,247	)		(12,642	)		(12,695	)
Gain on sale of investment securities		—			656			13,442			26,969			25,418
Income from asset sales		603			1,160			3,639			13,550			5,377
Other		29			(610	)		66			(235	)		197

Total other income (expense)		(824	)		230			14,376			33,451			20,262


Income (loss) before income taxes and equity in income of affiliates	$	49,994		$	60,113		$	(20,570	)	$	212,657		$	8,000

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	ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	SIGNATURES
EXHIBIT INDEX
Earnings Press Release


	HELMERICH & PAYNE, INC. (Registrant)
	/s/ Steven R. Mackey
	Steven R. Mackey
	Vice President


Exhibit No.		Description

99		Helmerich & Payne, Inc. earnings press release dated November 16, 2005

Operating Loss

Impairment charge

Operating income, as adjusted