UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No. 2
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-4221

HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)

                   DELAWARE                                      73-0679879
       (State or other jurisdiction of                        (I.R.S. employer
        incorporation or organization)                      identification no.)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA                      74114
   (Address of principal executive offices)                      (Zip code)

Registrant's telephone number, including area code (918) 742-5531

Securities registered pursuant to Section 12(b) of the Act:

     TITLE OF EACH CLASS                    NAME OF EXCHANGE ON WHICH REGISTERED
     -------------------                    ------------------------------------
Common Stock ($0.10 par value)                    New York Stock Exchange
 Common Stock Purchase Rights                     New York Stock Exchange

Securities registered Pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

At December 14, 2001, the aggregate market value of the voting stock held by non-affiliates was $1,402,779,905.

Number of shares of common stock outstanding at December 14, 2001:
49,859,297.

DOCUMENTS INCORPORATED BY REFERENCE

(1) Annual Report to Shareholders for the fiscal year ended September 30, 2001 -- Parts I, II, and IV.

(2) Proxy Statement for Annual Meeting of Security Holders to be held March 6, 2002 -- Part III.




Registrant's September 30, 2001 Annual Report is amended to:

1. Include additional information in "Item 2. PROPERTIES" about the Registrant's Significant Properties in its Oil and Gas Division.

2. Modify Note 15 "Supplementary Financial Information for Oil and Gas Producing Activities" of the financial statements. Certain operating costs that do not relate to the cost of producing reserves have been removed from Production costs in the Results of Operations from Oil and Gas Producing Activities in Note 15. The increase to the Results of Operations, net of income tax expense, in Note 15 is $3,349, $2,472 and $2,266 in 2001, 2000, and 1999, respectively. This adjustment made to Note 15 has no affect on net income or earnings per share for the three years ended September 30, 2001, 2000 and 1999.

These two changes are done in connection with the proposed spin off of the oil and gas exploration and production and gas marketing business to Cimarex Energy Co. and the proposed merger of Cimarex Energy Co. with Key Production Company.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

THIS REPORT INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS REPORT, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE REGISTRANT'S FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED COSTS AND PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, FORWARD-LOOKING STATEMENTS GENERALLY CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY", "WILL", "EXPECT", "INTEND", "ESTIMATE", "ANTICIPATE", "BELIEVE", OR "CONTINUE" OR THE NEGATIVE THEREOF OR SIMILAR TERMINOLOGY. ALTHOUGH THE REGISTRANT BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO BE CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE REGISTRANT'S EXPECTATIONS ARE DISCLOSED IN ITEM 1. BUSINESS "REGULATIONS AND HAZARDS", AND "MARKET FOR OIL AND GAS", AS WELL AS IN MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ON PAGES 10 THROUGH 17 IN REGISTRANT'S ANNUAL REPORT TO THE SHAREHOLDERS FOR FISCAL 2001 AND IN THE REMAINDER OF THIS REPORT. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE REGISTRANT, OR PERSONS ACTING ON ITS BEHALF, ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY SUCH CAUTIONARY STATEMENTS. THE REGISTRANT ASSUMES NO DUTY TO UPDATE OR REVISE ITS FORWARD-LOOKING STATEMENTS BASED ON CHANGES IN INTERNAL ESTIMATES OR EXPECTATIONS OR OTHERWISE.


HELMERICH & PAYNE, INC. AND SUBSIDIARIES

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 2001

PART I

Item 1. BUSINESS

Helmerich & Payne, Inc. (the "Registrant"), was incorporated under the laws of the State of Delaware on February 3, 1940, and is successor to a business originally organized in 1920. Registrant is primarily engaged in the exploration, production, and sale of crude oil and natural gas and in contract drilling of oil and gas wells for others. These activities account for the major portion of its operating revenues. The Registrant is also engaged in the ownership, development, and operation of commercial real estate.

The Registrant is organized into three separate autonomous operating divisions being contract drilling; oil & gas exploration and production operations; and real estate. While there is a limited amount of intercompany activity, each division operates essentially independently of the others. Each of the divisions, except exploration and production, conducts their respective business through wholly owned subsidiaries. Operating decentralization is balanced by a centralized finance division, which handles all accounting, data processing, budgeting, insurance, cash management, and related activities.


Most of the Registrant's current exploration efforts are concentrated in Louisiana, Oklahoma, Texas, and the Hugoton Field of western Kansas. The Registrant also explores from time to time in the Rocky Mountain area, New Mexico, Alabama, Michigan, and Mississippi. Substantially all of the Registrant's gas production is sold to and resold by its marketing subsidiary. This subsidiary also purchases gas from unaffiliated third parties for resale.

The Registrant's domestic contract drilling is conducted primarily in Oklahoma, Texas, Wyoming, and Louisiana, and offshore from platforms in the Gulf of Mexico and offshore California. The Registrant has also operated during fiscal 2001 in six international locations: Venezuela, Ecuador, Colombia, Argentina, Bolivia and Equatorial Guinea.

The Registrant's real estate investments are located in Tulsa, Oklahoma, where the Registrant has its executive offices.

CONTRACT DRILLING

The Registrant believes that it is one of the major land and offshore platform drilling contractors in the western hemisphere. Operating principally in North and South America, the Registrant specializes primarily in deep drilling in major gas producing basins of the United States and in drilling for oil and gas in remote international areas. For its international operations, the Registrant operates certain rigs which are transportable by helicopter. In the United States, the Registrant draws its customers primarily from the major oil companies and the larger independents. The Registrant also drills for its own oil and gas division. In South America, the Registrant's current customers include the Venezuelan state petroleum company and major international oil companies.

In fiscal 2001, Registrant received approximately 45% of its consolidated revenues from the Registrant's ten largest contract drilling customers. BP and Shell Oil Co., including their affiliates, (respectively, "BP" and "Shell") are the Registrant's two largest contract drilling customers. The

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Registrant performs drilling services for BP and Shell on a world-wide basis. Revenues from drilling services performed for BP and Shell in fiscal 2001 accounted for approximately 15% and 8%, respectively, of the Registrant's consolidated revenues for the same period. While the Registrant believes that its relationship with all of these customers is good, the loss of BP or Shell or a simultaneous loss of several of its larger customers would have a material adverse effect on the drilling subsidiary and the Registrant.

The Registrant provides drilling rigs, equipment, personnel, and camps on a contract basis. These services are provided so that Registrant's customers may explore for and develop oil and gas from onshore areas and from fixed and tension leg platforms in offshore areas. Each of the drilling rigs consists of engines, drawworks, a mast, pumps, blowout preventers, a drillstring, and related equipment. The intended well depth and the drilling site conditions are the principal factors that determine the size and type of rig most suitable for a particular drilling job. A land drilling rig may be moved from location to location without modification to the rig. Conversely, a platform rig is specifically designed to perform drilling operations upon a particular platform. While a platform rig may be moved from its original platform, significant expense is incurred to modify a platform rig for operation on each subsequent platform. In addition to traditional platform rigs, Registrant operates self-moving minimum space platform drilling rigs and drilling rigs to be used on tension leg platforms. The minimum space rig is designed to be moved without the use of expensive derrick barges. The tension leg platform rig allows drilling operations to be conducted in much deeper water than traditional fixed platforms. A helicopter rig is one that can be disassembled into component part loads of approximately 4,000-20,000 pounds and transported to remote locations by helicopter, cargo plane, or other means.

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The Registrant's workover rigs are equipped with engines, drawworks, a mast, pumps, and blowout preventers. A workover rig is used to complete a new well after the hole has been drilled by a drilling rig, and to remedy various downhole problems that occur in producing wells.

During fiscal 1998, Registrant put to work a new generation of six highly mobile/depth flexible new rigs (individually the "FlexRig"TM). The FlexRig has the potential to reduce rig move times by at least 50%. In addition, the FlexRig allows a greater depth flexibility of between 8,000 to 18,000 feet and provides greater operating efficiency. During fiscal 2000, the Registrant ordered 12 new FlexRigs at an approximate cost of between $7.5 million and $8.25 million each. The Registrant took delivery of nine new FlexRigs through October 2001, and expects the final three FlexRigs to be delivered by the end of calendar 2001. During fiscal 2001, the Registrant ordered an additional 25 new FlexRigs at an approximate cost of $10 million each. These new rigs are the next generation of FlexRigs which incorporate new drilling technology and new safety design. The FlexRigs will be available for work in the Registrant's domestic and international drilling operations. The Registrant expects that approximately 15 of these next generation rigs will be delivered between March and September, 2002, with the remaining rigs expected to be delivered by the end of fiscal 2003.

The Registrant's drilling contracts are obtained through competitive bidding or as a result of negotiations with customers, and sometimes cover multi-well and multi-year projects. Each drilling rig operates under a separate drilling contract. Most of the contracts are performed on a "daywork" basis, under which the Registrant charges a fixed rate per day, with the price determined by the location, depth, and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market. The Registrant has previously performed contracts on a combination "footage" and "daywork" basis, under which the Registrant charged a fixed rate per foot of hole drilled to a stated depth, usually no deeper than 15,000 feet, and a fixed rate per day for the

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remainder of the hole. Contracts performed on a "footage" basis involve a greater element of risk to the contractor than do contracts performed on a "daywork" basis. Also, the Registrant has previously accepted "turnkey" contracts under which the Registrant charges a fixed sum to deliver a hole to a stated depth and agrees to furnish services such as testing, coring, and casing the hole which are not normally done on a "footage" basis. "Turnkey" contracts entail varying degrees of risk greater than the usual "footage" contract. Registrant did not accept a "footage" or "turnkey" contract during fiscal 2001. The Registrant believes that under current market conditions "footage" and "turnkey" contract rates do not adequately compensate contractors for the added risks. The duration of the Registrant's drilling contracts are "well-to-well" or for a fixed term. "Well-to-well" contracts are cancelable at the option of either party upon the completion of drilling at any one site. Fixed-term contracts customarily provide for termination at the election of the customer, with an "early termination payment" to be paid to the contractor if a contract is terminated prior to the expiration of the fixed term.

While current fixed term contracts are for one to five year periods, some fixed term and well-to-well contracts are expected to be continued for longer periods than the original terms. However, the contracting parties have no legal obligation to extend the contracts. Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to the Registrant and the customer. In most instances contracts provide for additional payments for mobilization and demobilization. Contracts for work in foreign countries generally provide for payment in United States dollars, except for amounts required to meet local expenses. However, government owned petroleum companies are more frequently requesting that a greater proportion of these payments be made in local currencies. See Regulations and Hazards, page I-8.

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Domestic Drilling

The Registrant believes it is a major land and offshore platform drilling contractor in the domestic market. At the end of September, 2001, the Registrant had 59 of its rigs (49 land rigs and 10 platform rigs) operating in the United States and had management contracts for three customer-owned rigs. The 11 rig increase from fiscal 2000 to 2001 is due to the delivery of seven new FlexRigs, transfer of three rigs from Registrant's international operations, and the assembly of one rig from existing components.

During fiscal 2001, Registrant was awarded one term contract for the construction and operation of one self-moving platform rig in the Gulf of Mexico for a major oil company. Registrant expects that this rig will commence drilling operations during calendar year 2002. Also, during fiscal 2001, Registrant signed a letter of intent for the construction and operation of one self-moving platform rig in the Gulf of Mexico for another major oil company. If a contract is awarded, it is expected that drilling operations would commence during calendar year 2002.

International Drilling

The Registrant's international drilling operations began in 1958 with the acquisition of the Sinclair Oil Company's drilling rigs in Venezuela. Helmerich & Payne de Venezuela, C.A., a wholly owned subsidiary of the Registrant, is one of the leading drilling contractors in Venezuela. Beginning in 1972, with the introduction of its first helicopter rig, the Registrant expanded into other Latin American countries.

Venezuelan operations continue to be a significant part of the Registrant's operations. At the end of fiscal 2001, the Registrant owned and operated 14 land drilling rigs in Venezuela with a utilization rate of 37% for such fiscal year. The Registrant worked for the Venezuelan state petroleum company during fiscal 2001, and revenues from this work accounted for approximately 3.5% of the

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Registrant's consolidated revenues during the fiscal year. During fiscal year 2001, Registrant moved three rigs from Venezuela to Houston, Texas, for modifications and upgrades.

Registrant's rig utilization rate in Venezuela has increased from approximately 32% during the 2000 fiscal year to approximately 37% in fiscal 2001. Even though the Registrant is, at this time, unable to predict future fluctuations in its utilization rates during fiscal 2002, the Registrant believes that the prospects are good for returning at least three of its idle rigs back to work during fiscal 20021.

The Venezuelan government, in early 1996, permitted foreign exploration and production companies to acquire rights to explore for and produce oil and gas in Venezuela. Registrant has performed contract drilling services in Venezuela for three independent oil companies during fiscal 2001.

At the end of fiscal 2001, the Registrant owned and operated seven rigs in Ecuador. The Registrant's utilization rate was 92% during fiscal 2001. Revenues generated by Ecuadorian drilling operations contributed approximately 4.3% of the Registrant's consolidated revenue. The contracts are with large international oil companies. During fiscal 2001, one rig was moved into Ecuador from Venezuela.

At the end of fiscal 2001, the Registrant owned and operated three drilling rigs in Colombia. The Registrant's utilization rate in Colombia was 69% during fiscal 2001. During fiscal 2001 the revenues generated by Colombian drilling operations contributed approximately 3.3% of the Registrant's consolidated revenues. During fiscal 2001, the Registrant moved four rigs from Colombia to Houston, Texas, for modifications and upgrades. The Registrant expects continued reduction in activity and revenues from Colombia.

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In addition to its operations in Venezuela, Ecuador and Colombia, the Registrant in fiscal 2001 owned and operated six rigs in Bolivia and two rigs in Argentina. In Bolivia and Argentina, the contracts are with large international oil companies. During fiscal 2001, the Registrant continued operations under a management contract for a customer-owned platform rig located offshore Equatorial Guinea.

Competition

The contract drilling business is highly competitive. Competition in contract drilling involves such factors as price, rig availability, efficiency, condition of equipment, reputation, and customer relations. Competition is primarily on a regional basis and may vary significantly by region at any particular time. Land drilling rigs can be readily moved from one region to another in response to changes in levels of activity, and an oversupply of rigs in any region may result.

Although many contracts for drilling services are awarded based solely on price, the Registrant has been successful in establishing long-term relationships with certain customers which have allowed the Registrant to secure drilling work even though the Registrant may not have been the lowest bidder for such work. The Registrant has continued to attempt to differentiate its services based upon its engineering design expertise, operational efficiency, safety and environmental awareness.

Regulations and Hazards

The drilling operations of the Registrant are subject to the many hazards inherent in the business, including blowouts and well fires. These hazards could cause personal injury, suspend drilling operations, seriously damage or destroy the equipment involved, and cause substantial damage to producing formations and the surrounding areas.

The Registrant believes that it has adequate insurance coverage for comprehensive general liability, public liability, property damage (including insurance against loss by fire and storm, blowout,

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and cratering risks), workers compensation and employer's liability. No insurance is carried against loss of earnings or business interruption. The Registrant is unable to obtain significant amounts of insurance to cover risks of underground reservoir damage; however, the Registrant is generally indemnified under its drilling contracts from this risk. The majority of the Registrant's insurance coverage has been purchased through fiscal 2002, however, rates and deductibles increased substantially for a number of coverages due to general hardening in the energy insurance market as well as the events of September 11, 2001. In view of these present conditions, no assurance can be given that all or a portion of the Registrant's coverage will not be cancelled during fiscal 2002 nor that insurance coverage will continue to be available at rates considered reasonable.

International operations are subject to certain political, economic, and other uncertainties not encountered in domestic operations, including increased risks of terrorism, expropriation of equipment as well as expropriation of a particular oil company operator's property and drilling rights, taxation policies, foreign exchange restrictions, currency rate fluctuations, and general hazards associated with foreign sovereignty over certain areas in which operations are conducted. There can be no assurance that there will not be changes in local laws, regulations, and administrative requirements or the interpretation thereof which could have a material adverse effect on the profitability of the Registrant's operations or on the ability of the Registrant to continue operations in certain areas. Because of the impact of local laws, the Registrant's future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which the Registrant holds only a minority interest, or pursuant to arrangements under which the Registrant conducts operations under contract to local entities. While the Registrant believes that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on the Registrant's operations or revenues, there can be no assurance that the Registrant will in all

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cases be able to structure or restructure its operations to conform to local law (or the administration thereof) on terms acceptable to the Registrant. The Registrant further attempts to minimize the potential impact of such risks by operating in more than one geographical area and by attempting to obtain indemnification from operators against expropriation, nationalization, and deprivation.

During fiscal 2001, approximately 18.7% of the Registrant's consolidated revenues were generated from the international contract drilling business. Approximately 93% of the international revenues were from operations in South America and 51% of South American revenues were from Venezuela and Ecuador. Exposure to potential losses from currency devaluation is minimal in Colombia, Ecuador, Bolivia and Argentina. In those countries, all receivables and payments are currently in U.S. dollars. Cash balances are kept at a minimum which assists in reducing exposure.

In Venezuela, approximately 50% of the Registrant's invoice billings are in U.S. dollars and the other 50% are in the local currency, the bolivar. The Registrant is exposed to risks of currency devaluation in Venezuela as a result of bolivar receivable balances and necessary bolivar cash balances. In 1994, the Venezuelan government established a fixed exchange rate in hopes of stemming economic problems caused by a high rate of inflation. During the first week of December, 1995, the government established a new exchange rate, resulting in further devaluation of the bolivar. In April of 1996, the bolivar was again devalued when the government decided to abolish its fixed rate policy and to allow a floating market exchange rate. During fiscal 2000, the Registrant experienced losses of approximately US$687,000 and in fiscal 2001 it experienced losses of US$796,000 as a result of the devaluation of the bolivar. Registrant is unable to predict future devaluation in Venezuela. In the event that fiscal 2002 activity levels are similar to fiscal 2001 and if a 25% to 50% devaluation would occur, the Registrant could experience potential currency valuation losses ranging from approximately US$1,600,000 to US$2,600,000.

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During the mid-1970s, the Venezuelan government nationalized the exploration and production business. At the present time it appears the Venezuelan government will not nationalize the contract drilling business. Any such nationalization could result in Registrant's loss of all or a portion of its assets and business in Venezuela.

Many aspects of the Registrant's operations are subject to government regulation, including those relating to drilling practices and methods and the level of taxation. In addition, various countries (including the United States) have environmental regulations which affect drilling operations. Drilling contractors may be liable for damages resulting from pollution. Under United States regulations, drilling contractors must establish financial responsibility to cover potential liability for pollution of offshore waters. Generally, the Registrant is indemnified under drilling contracts from liability arising from pollution, except in certain cases of surface pollution. However, the enforceability of indemnification provisions in foreign countries may be questionable.

The Registrant believes that it is in substantial compliance with all legislation and regulations affecting its operations in the drilling of oil and gas wells and in controlling the discharge of wastes. To date, compliance has not materially affected the capital expenditures, earnings, or competitive position of the Registrant, although these measures may add to the costs of operating drilling equipment in some instances. Additional legislation or regulation may reasonably be anticipated, and the effect thereof on operations cannot be predicted.

OIL & GAS EXPLORATION AND PRODUCTION OPERATIONS

The Registrant engages in the origination of prospects; the identification, acquisition, exploration, and development of prospective and proved oil and gas properties; the production and sale of crude oil, condensate, and natural gas; and the marketing of natural gas. The Registrant

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considers itself a medium-sized independent producer. All of the Registrant's oil and gas operations are conducted in the United States.

Most of the Registrant's current exploration and drilling effort is concentrated in Oklahoma, Kansas, Texas, and Louisiana. The Registrant also explores from time to time in New Mexico, Alabama, Michigan, Mississippi, and the Rocky Mountain area.

The Registrant's exploration and production division includes geographical exploitation/exploration teams comprised of geological, engineering, and land personnel. These personnel primarily develop in-house oil and gas prospects as well as review outside prospects and acquisitions for their respective geographical areas. The Registrant believes that this structure allows each team to gain greater expertise in its respective geographical area and reduces risk in the development of prospects.

The Registrant has been focusing on developing prospects using 3D seismic technology. Currently, the Registrant is involved in 3D surveys covering more than 1,480 square miles, of which approximately 1,180 square miles are proprietary. Approximately 1,100 square miles of land covered by such surveys is located near the Texas and Louisiana onshore Gulf Coast.

Registrant's exploration and development program has covered a range of prospects, from shallow "bread and butter" programs to deep, expensive, high risk/high return wells. The Registrant continued its drilling program in Oklahoma, Kansas, west Texas, south Texas and south Louisiana, participating in a total of 123 wells during fiscal 2001.

Of the 123 well total, 47 wells were development wells drilled in areas where reserves were previously booked, and 29 wells were dry holes. Registrant increased its development of proved undeveloped reserves in fiscal 2001 as the result of high natural gas prices during the last half of calendar 2000. The focus of this drilling was the Redfork play in western Oklahoma, additional

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development of Ashland Field in southeastern Oklahoma and the Hugoton Field in Kansas, as well as additional drilling in the panhandle of Texas and in southern Louisiana. Registrant's participation in these 47 development wells resulted in the addition of approximately 15.7 BCF of gas and 75,826 barrels of oil previously classified as proved undeveloped.

Of the remaining 76 wells drilled during the year, 40 were wildcat wells, 20 of which were successfully completed. These drilling efforts resulted in new discoveries of approximately 12.8 BCF of gas and 1,145,195 barrels of oil and condensate.

A total of $80,040,769 was spent in the Registrant's exploration and development program during fiscal 2001. This figure includes $7,838,770 of geophysical expense, but is exclusive of expenditures for acreage and acquisition of proved oil and gas reserves. The Registrant's total company-wide acquisition cost for acreage in fiscal 2001 was $18,611,957.

The Registrant also spent $737,500 for the acquisition of proved oil and gas reserves during fiscal 2001. The reserves associated with these acquisitions were 495,888 MCF of gas and 434 barrels of oil.

The Registrant's fiscal 2002 exploration and production budget has been reduced to approximately $50 million due to lower product prices, higher service company costs and high-grading of existing prospects in order to reduce finding costs. This is a 47.6% reduction from actual exploration and production expenditures in fiscal 2001.

During fiscal 2001, the Registrant continued to work with its investment banker, Petrie Parkman & Co., to analyze strategic alternatives with regard to the Registrant's oil and gas division. It is contemplated that a successful transaction could, among other things, lead to the spinoff of the Company's exploration and production business and the subsequent merger of such business with a third party. The Registrant is unable to predict if and when such a transaction may occur.

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Market for Oil and Gas

The Registrant does not refine any of its production. The availability of a ready market for such production depends upon a number of factors, including the availability of other domestic production, price, crude oil imports, the proximity and capacity of oil and gas pipelines, and general fluctuations in supply and demand. The Registrant does not anticipate any unusual difficulty in contracting to sell its production of crude oil and natural gas to purchasers and end-users at prevailing market prices and under arrangements that are usual and customary in the industry. The Registrant and its subsidiary, Helmerich & Payne Energy Services, Inc., have successfully developed markets with end-users, local distribution companies, and natural gas brokers for gas produced from successful wildcat wells and development wells. Substantially all of Registrant's gas production is sold to and resold by Helmerich & Payne Energy Services, Inc. During fiscal 2001, the price that Registrant received for the sale of its natural gas has fluctuated. Registrant's average per MCF natural gas sales price in fiscal 2001 for each of the first through fourth quarters was $4.73, $6.49, $4.27 and $2.66, respectively.

The Registrant is of the opinion that during the next 12 to 18 months, the natural gas market will continue to be characterized by high volatility and relatively lower or moderating prices as compared to the average prices of natural gas in fiscal 2001.

Last year's record high natural gas prices spawned an increase of productive capacity and a dramatic increase in drilling. This increase in productive capacity combined with a slowing economy and record storage levels is expected to result in excess gas supplies for the next 12 to 18 months. During the next two to three years, Registrant believes that there will be a more balanced supply and demand of natural gas as the economy recovers and productive capacity continues to decline.

In the long-term, natural gas prices will be impacted by the decline in deliverability of domestic supply; increased use of natural gas for electrical generation; a recovery of U.S. economic growth; the

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increased usage and better management of natural gas storage; seasonal usage; fuel switching; usage of gas as a feed stock; and importation of gas from Canada and Mexico. All these factors will continue to influence the cyclical nature of the supply/demand balance and will continue to occur as drilling activity and productive capacity respond to the changing prices.

Historically, the Registrant has had no long-term sales contracts for its crude oil and condensate production. The Registrant continues its practice of contracting for the sale of its Kansas and Oklahoma and portions of its west Texas crude oil for terms of six to twelve months in an attempt to assure itself of the best price in the area for crude oil production. During fiscal 2001, the price that Registrant received for the sale of its crude oil has steadily decreased. Registrant's average per barrel crude oil sales price in fiscal 2001 for each of the first through fourth quarters was $31.44, $28.09, $26.12 and $25.33, respectively.

Mid-East tensions, disputes among OPEC and non-OPEC countries over production quotas, and sluggish economies have created a continued mixed market in crude oil trading. Although a change in any of these factors could dramatically affect pricing, it is anticipated that crude oil prices may remain in the low $20's over the coming year.

Competition

The Registrant competes with numerous other companies and individuals in the acquisition of oil and gas properties and the marketing of oil and gas. The Registrant believes that it should continue to prepare for increased exploration activity without committing to a definite drilling timetable. The Registrant also believes that competition for the acquisition of gas producing properties will continue. Considering the Registrant's conservative acquisition strategy, the Registrant believes that it may be unable to acquire significant proved developed producing reserves from third parties. The Registrant intends to continue its review of properties in areas where the Registrant has expertise. The

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Registrant's competitors include major oil companies, other independent oil companies, and individuals. Many of these competitors have financial resources, staffs, and facilities substantially larger than those of the Registrant. The effect of these competitive factors on the Registrant cannot be predicted.

Title to Oil and Gas Properties

The Registrant undertakes title examination and performs curative work at the time properties are acquired. The Registrant believes that title to its oil and gas properties is generally good and defensible in accordance with standards acceptable in the industry.

Oil and gas properties in general are subject to customary royalty interests contracted for in connection with the acquisitions of title, liens incident to operating agreements, liens for current taxes, and other burdens and minor encumbrances, easements, and restrictions. The Registrant believes that the existence of such burdens will not materially detract from the general value of its leasehold interests.

Governmental Regulation in the Oil and Gas Industry

The Registrant's domestic operations are affected from time to time in varying degrees by political developments and federal and state laws and regulations. In particular, oil and gas production operations and economics are affected by price control, tax, and other laws relating to the petroleum industry; by changes in such laws; and by constantly changing administrative regulations. Most states in which the Registrant conducts or may conduct oil and gas activities regulate the production and sale of oil and natural gas, including regulation of the size of drilling and spacing units or proration units, the density of wells which may be drilled, and the unitization or pooling of oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas, and impose certain requirements regarding the

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ratability of production. The effect of these regulations is to limit the amounts of oil and natural gas the Registrant can produce from its wells, and to limit the number of wells or locations at which the Registrant can drill. In addition, legislation affecting the natural gas and oil industry is under constant review. Inasmuch as such laws and regulations are frequently expanded, amended, or reinterpreted, the Registrant is unable to predict the future cost or impact of complying with such regulations. The Registrant believes that compliance with existing federal, state and local laws, rules and regulations will not have a material adverse effect upon its capital expenditures, earnings or competitive position.

Regulatory Controls

Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated under the Natural Gas Act ("NGA") and the regulations promulgated thereunder. Furthermore, the various states have regulated the production of natural gas and the gathering of natural gas, i.e., those activities which are not subject to Federal jurisdiction.

Specifically, as to sales by the Registrant, under the NGA prior to November 1978 the Federal Power Commission and its successor, the Federal Energy Regulatory Commission ("FERC"), established ceiling prices for sales of natural gas for resale in interstate commerce by the Registrant. In November 1978, the U.S. Congress enacted the Natural Gas Policy Act ("NGPA") which adopted certain FERC ceiling prices and established additional price ceiling categories (such ceiling prices called maximum lawful prices - "MLPs"). In addition, the NGPA provided for a phased removal of certain ceiling prices.

In 1989, the U.S. Congress enacted the Natural Gas Wellhead Decontrol Act which provided a process for the phased decontrol of all first sales of natural gas, with complete removal of price ceilings on first sales by January 1, 1993. Since the Registrant believes that all of its sales of natural gas are first sales, such sales are no longer subject to Federal regulation. However, there may still be

I - 17

issues of compliance with price ceilings as to prior periods. At this point, the only such issue, that the Registrant is aware of, relates to the Registrant's collection of reimbursement from certain interstate pipelines of Kansas ad valorem taxes paid by Registrant for sales prior to decontrol.

Prior to decontrol of first sales, the Registrant made first sales to several interstate pipelines for which it received reimbursement for Kansas ad valorem taxes based upon the understanding (supported by prior agency case law) that such reimbursements were permitted under NGPA Section 110. In September 1997, FERC reversed its prior rulings and found that the Kansas ad valorem tax was not a tax which was reimbursable under Section 110 of the NGPA. Therefore, FERC found that to the extent that a producer collected an amount for a first sale in excess of the applicable MLP, as a result of reimbursement for Kansas ad valorem taxes, then such producer was required to make refunds, with interest, to the interstate pipeline purchaser which had paid the reimbursements. The pipeline was then required to disburse such refunds to its customers.

Initially, reports of the affected pipelines listed refund liabilities of the Registrant based upon the total sales from wells which Registrant operated. Initial claims against the Registrant, as operator, totaled in excess of $13 million. During this period, Registrant estimated that its share of such refund liability totaled approximately $6.7 million. Subsequently, FERC issued clarifying orders providing that a producer was only responsible for refunds attributable to its own working interest ownership (and the related royalty interests) in production sold. Based upon that clarification, the interstate pipelines subsequently adjusted their refund claims to reflect only the respective producers' working interest share (with related royalty). Subsequently the pipelines made further adjustments to the claims based on corrected data.

In response to the pipeline claims and prior to FERC's clarification as discussed above, the Registrant paid, under protest, approximately $1,379,000 to four interstate pipelines and placed

I - 18

approximately $6,384,000 in an escrow account pending FERC's and the courts' decisions on various related legal issues and challenges. During calendar years 2000 and 2001, settlement negotiations have occurred among the affected pipelines, producers, and other interested parties. Settlement agreements resolving the refund claims have been reached in connection with four of the five pipelines which have made claims against the Registrant. Those settlements, with Colorado Interstate Gas Company, Northern Natural Gas Company, Williams Gas Pipelines Central, Inc. and Panhandle Eastern Pipe Line Company, are final and the settlement payments have been made by the Registrant out of the escrow account. Since the aggregate amount of the four settlements were less than the amounts escrowed for such liability, the Registrant, in May of 2001, was refunded approximately $3,240,252 of excess escrowed funds. A settlement in the fifth case, with Kinder Morgan Interstate Gas Transmission, LLC, is being negotiated. Based upon the total potential liability of the Registrant in the Kinder Morgan case, Registrant believes there is more than sufficient funds remaining in the Registrant's escrow account to cover any settlement liability therein.

Commencing in 1992, FERC implemented a requirement that interstate pipelines must provide open access transportation of natural gas. Interstate pipelines have implemented this requirement by modifying their tariffs and implementing new services and rates. These changes have provided the Registrant with additional market access and more fairly applied transportation services and rates. FERC continues to review and modify its open access and other regulations applicable to interstate pipelines.

Under the NGA, natural gas gathering facilities are expressly exempt from FERC jurisdiction; what constitutes "gathering" under the NGA has evolved through FERC decisions and judicial review of such decisions. The Registrant believes that its gathering systems meet the test for non-jurisdictional "gathering" systems under the NGA. Therefore, the Registrant believes that its gathering facilities are

I - 19

not subject to Federal NGA regulation. A number of states have either enacted new laws or are considering the adequacy of existing laws affecting gathering rates and/or services that are not Federally regulated under the NGA. Although exempt from Federal regulatory oversight, the Registrant's natural gas gathering systems and services may receive regulatory scrutiny by state agencies.

In addition, the Registrant may use third-party gathering services or interstate transmission facilities (owned and operated by interstate pipelines) to ship the Registrant's gas to markets. In the past decade, FERC has approved the shift of certain interstate transmission facilities to unregulated gathering through the approval of abandonment of the jurisdictional facilities. The subsequent owner/operator of the gathering facilities may be an independent entity or an affiliate of the interstate pipeline company. This shift of a facility from a jurisdictional transmission facility to a non-jurisdictional gathering facility could result in the ability of the unregulated gathering entities to compete more effectively, and could result in changes in services and/or rates. It is not possible to predict the ultimate affect of these shifts on the Registrant's own gathering services or on the Registrant's use of third-party gathering/transmission facilities.

In February, 1994, the Kansas Corporation Commission issued an order which modified allowables applicable to wells within the Hugoton Gas Field so that those proration units upon which infill wells had been drilled would be assigned a larger allowable than those units without infill wells. As a consequence of this order, the Registrant has participated in the drilling of 160 infill wells.

Additional proposals and proceedings that might affect the oil and gas industry are pending before the U. S. Congress, FERC, state legislatures, state agencies, and the courts. The Registrant cannot predict when or whether any such proposals may become effective and what effect they will have on operations of the Registrant. Notwithstanding the foregoing, the Registrant does not anticipate that compliance with existing Federal, state and local laws, rules or regulations will have a

I - 20

material adverse effect upon the capital expenditures, earnings or competitive position of the Registrant.

Federal Income Taxation

The Registrant's oil and gas operations, and the petroleum industry in general, are affected by certain federal income tax laws. The Registrant has considered the effects of such federal income tax laws on its operations and does not anticipate that there will be any material impact on the capital expenditures, earnings or competitive position of the Registrant.

Environmental Laws

The Registrant's activities are subject to existing federal and state laws and regulations governing environmental quality and pollution control. Such laws and regulations may substantially increase the costs of exploring, developing, or producing oil and gas and may prevent or delay the commencement or continuation of a given operation. In the opinion of the Registrant's management, its operations substantially comply with applicable environmental legislation and regulations. The Registrant believes that compliance with existing federal, state, and local laws, rules, and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment will not have any material effect upon the capital expenditures, earnings, or competitive position of the Registrant.

Natural Gas Marketing

Helmerich & Payne Energy Services, Inc. ("HPESI") continues its emphasis on the purchase of the Registrant's natural gas production. In addition, HPESI purchases third-party gas for resale and provides compression, gathering services and processing for a fee. During fiscal year 2001, HPESI's sales of third-party gas constituted approximately 12% of the Registrant's consolidated revenues.

I - 21

HPESI sells natural gas to markets in the Midwest and Rocky Mountain areas. HPESI's term gas sales contracts are for varied periods ranging from three months to seven years. However, recent contracts have tended toward shorter terms. The remainder of HPESI's gas is sold under spot market contracts having a duration of 30 days or less. For fiscal 2001, HPESI's term gas sales contracts provided for the sale of approximately 17 BCF of gas at prices which were indexed to market prices. For fiscal 2002, HPESI currently has approximately 7 BCF contracted at prices which are indexed to market prices. The balance of HPESI's gas is selling at spot prices or is not yet contracted. HPESI presently intends to fulfill such term sales contracts with a portion of the gas reserves purchased from the Registrant as well as from its purchases of third-party gas. See pages I-14 through I-21 regarding the market, competition, and regulation of natural gas.

REAL ESTATE OPERATIONS

The Registrant's real estate operations are conducted exclusively within the metropolitan area of Tulsa, Oklahoma. Its major holding is Utica Square Shopping Center, consisting of fifteen separate buildings, with parking and other common facilities covering an area of approximately 30 acres. Fourteen of these buildings provide approximately 405,709 square feet of net leasable retail sales and storage space (97% of which is currently leased) and approximately 18,590 square feet of net leasable general office space (99% of which is currently leased). Approximately 24% of the general office space is occupied by the Registrant's real estate operations. The fifteenth building is an eight-story medical office building which provides approximately 76,379 square feet of net leasable medical office space (44% of which is currently leased). Due to increased operating costs and related business considerations, the Registrant intends to close the Medical Building in January 2002. All tenant leases in the Medical Building shall have expired prior to such date. The Registrant has not decided as to the future use of the area upon which the Medical Building is located.

I - 22

In September, 2001, the Registrant purchased one of its long-time Utica Square Shopping Center tenants, Miss Jackson's. Miss Jackson's is a retailer of fine women's clothing, accessories and gifts. The purchase price was $4,500,000.

At the end of the 2001 fiscal year the Registrant owned 11 of a total of 73 units in The Yorktown, a 16-story luxury residential condominium with approximately 150,940 square feet of living area located on a six-acre tract adjacent to Utica Square Shopping Center. Ten of the Registrant's units are currently leased.

The Registrant owns an eight-story office building located diagonally across the street from Utica Square Shopping Center, containing approximately 87,000 square feet of net leasable general office space. This building houses the Registrant's principal executive offices. Approximately 11% of this building was leased to a third party during fiscal 2001. However, such third party's lease was not renewed and it vacated the leased premises in November of 2001. The vacated space will be used as general office space by Registrant.

Registrant leases approximately 29,000 square feet of office space in Tulsa for Registrant's oil and gas division.

The Registrant also owns and leases multi-tenant warehouse space. Three warehouses known as Space Center, each containing approximately 165,000 square feet of net leasable space, are situated in the southeast part of Tulsa at the intersection of two major limited-access highways. Present occupancy is 100%. The Registrant also owns approximately 1.5 acres of undeveloped land lying adjacent to such warehouses.

Registrant owns approximately 253.5 acres in Southpark consisting of approximately 240.5 acres of undeveloped real estate and approximately 13 acres of multi-tenant warehouse area. The warehouse area is known as Space Center East and consists of two warehouses, one containing

I - 23

approximately 90,000 square feet and the other containing approximately 112,500 square feet. Occupancy has decreased from 100% to 93%. The Registrant believes that a high quality office park, with peripheral commercial, office/warehouse, and hotel sites, is the best development use for the remaining land. However, no development plans are currently pending.

Registrant is a party to a condemnation proceeding initiated during fiscal 2000 by the Oklahoma Department of Transportation ("ODOT") which seeks to acquire approximately 15.14 acres of undeveloped real property adjacent to a major expressway in Southpark. In this proceeding, court appointed appraisers estimated the value of this tract to equal $2,800,000. ODOT, in January of 2001, was required to pay Registrant this amount, but continues to litigate the fair market value of this tract. If ODOT was successful at trial, Registrant would be required to reimburse up to $750,000 of such proceeds. It is expected that this matter will be concluded during calendar 2002.

The Registrant also owns a five-building complex called Tandem Business Park. The project is located adjacent to and east of the Space Center East facility and contains approximately six acres, with approximately 88,084 square feet of office/warehouse space. Occupancy has decreased from 100% to 94% during fiscal 2001. The Registrant also owns a twelve-building complex, consisting of approximately 204,600 square feet of office/warehouse space, called Tulsa Business Park. The project is located south of the Space Center facility, separated by a city street, and contains approximately 12 acres. During fiscal 2001, occupancy has remained steady at 93%. However, on October 1, 2001, Registrant added a new tenant and increased total occupancy to 96%.

The Registrant also owns two service center properties located adjacent to arterial streets in south central Tulsa. The first, called Maxim Center, consists of one office/warehouse building containing approximately 40,800 square feet and located on approximately 2.5 acres. During fiscal 2001, occupancy has decreased from 94% to 79%. On October 1, 2001, Registrant added one

I - 24

new tenant bringing the occupancy to 94%. The second, called Maxim Place, consists of one office/warehouse building containing approximately 33,750 square feet and located on approximately 2.25 acres. During fiscal 2000, this property was 100% occupied by one tenant. During fiscal 2001, this tenant significantly reduced the size of its operation with such property presently being 17% occupied.

Competition

The Registrant has numerous competitors in the multi-tenant leasing business. The size and financial capacity of these competitors range from one property sole proprietors to large international corporations. The primary competitive factors include price, location and configuration of space. Registrant's competitive position is enhanced by the location of its properties, its financial capability and the long-term ownership of its properties. However, many competitors have financial resources greater than Registrant and have more contemporary facilities.

FINANCIAL

Information relating to Revenue and Operating Profit by Business Segments may be found on pages 9 and 31 through 32 of the Registrant's Annual Report to Shareholders for fiscal 2001, which is incorporated herein by reference.

EMPLOYEES

The Registrant had 3,043 employees within the United States (11 of which were part-time employees) and 1,202 employees in international operations as of September 30, 2001.

I - 25

Item 2. PROPERTIES

CONTRACT DRILLING

The following table sets forth certain information concerning the Registrant's domestic drilling rigs as of September 30, 2001:

     Rig            Registrant's         Optimum Working      Present
Designation        Classification        Depth in Feet        Location
-----------        --------------        ---------------      --------
    158            Medium Depth              10,000            Wyoming
    110            Medium Depth              12,000            Oklahoma
    156            Medium Depth              12,000            Texas
    159            Medium Depth              12,000            Wyoming
    141            Medium Depth              14,000            Texas
    142            Medium Depth              14,000            Texas
    143            Medium Depth              14,000            Texas
    145            Medium Depth              14,000            Texas
    155            Medium Depth              14,000            Texas
     96            Medium Depth              16,000            Oklahoma
    118            Medium Depth              16,000            Texas
    119            Medium Depth              16,000            Texas
    120            Medium Depth              16,000            Texas
    146            Medium Depth              16,000            Texas
    147            Medium Depth              16,000            Texas
    154            Medium Depth              16,000            Wyoming
    162            Medium Depth              16,000            Texas
    164            Medium Depth              16,000            Texas
    165            Medium Depth              16,000            Texas
    166            Medium Depth              16,000            Texas
    167            Medium Depth              16,000            Oklahoma
    168            Medium Depth              16,000            Texas
    169            Medium Depth              16,000            Texas
    108            Medium Depth              18,000            Gulf of Mexico
    178            Medium Depth              18,000            Texas
    179            Medium Depth              18,000            Wyoming
    180            Medium Depth              18,000            Wyoming
    181            Medium Depth              18,000            Texas
    182            Medium Depth              18,000            Texas
    183            Medium Depth              18,000            Texas
    184            Medium Depth              18,000            Texas
     79            Deep                      20,000            Louisiana
     80            Deep                      20,000            Oklahoma
     89            Deep                      20,000            Texas

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     Rig            Registrant's         Optimum Working   Present
Designation        Classification        Depth in Feet     Location
-----------        --------------        ---------------   --------
     91            Deep                  20,000            Gulf of Mexico
     92            Deep                  20,000            Oklahoma
     94            Deep                  20,000            Texas
     98            Deep                  20,000            Oklahoma
    122            Deep                  20,000            Texas
    203            Deep                  20,000            Gulf of Mexico
     97            Deep                  26,000            Texas
     99            Deep                  26,000            Texas
    137            Deep                  26,000            Texas
    149            Deep                  26,000            Texas
    170            Deep (Heli Rig)       26,000            Texas
     72            Very Deep             30,000            Mississippi
     73            Very Deep             30,000            Texas
    100            Very Deep             30,000            Gulf of Mexico
    105            Very Deep             30,000            Gulf of Mexico
    106            Very Deep             30,000            Gulf of Mexico
    107            Very Deep             30,000            Gulf of Mexico
    134            Very Deep             30,000            Texas
    136            Very Deep             30,000            Louisiana
    157            Very Deep             30,000            Texas
    161            Very Deep             30,000            Louisiana
    163            Very Deep             30,000            Louisiana
    201            Very Deep             30,000            Gulf of Mexico
    202            Very Deep             30,000            Gulf of Mexico
    204            Very Deep             30,000            Gulf of Mexico

The following table sets forth information with respect to the utilization of the Registrant's domestic drilling rigs for the periods indicated:

                                                               Years ended September 30,
                                                               -------------------------
                                                       1997     1998     1999     2000     2001
                                                       ----     ----     ----     ----     ----
Number of rigs owned at end of
  period                                                38       46       50       48       59
Average rig utilization rate
  during period (1)                                     88%      95%      75%      87%      97%

(1) A rig is considered to be utilized when it is operated or being moved, assembled, or dismantled under contract.

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The following table sets forth certain information concerning the Registrant's international drilling rigs as of September 30, 2001:

    Rig         Registrant's           Optimum Working       Present
Designation    Classification           Depth in Feet        Location
-----------    --------------           -------------        --------
    14       Workover/drilling              6,000            Venezuela
    19       Workover/drilling              6,000            Venezuela
    20       Workover/drilling              6,000            Venezuela
   140       Medium Depth                  10,000            Venezuela
   171       Medium Depth                  16,000            Bolivia
   172       Medium Depth                  16,000            Bolivia
    22       Medium Depth (Heli Rig)       18,000            Ecuador
    23       Medium Depth (Heli Rig)       18,000            Ecuador
   132       Medium Depth                  18,000            Ecuador
   176       Medium Depth                  18,000            Ecuador
   121       Deep                          20,000            Ecuador
   173       Deep                          20,000            Bolivia
   117       Deep                          26,000            Ecuador
   123       Deep                          26,000            Bolivia
   138       Deep                          26,000            Ecuador
   148       Deep                          26,000            Venezuela
   160       Deep                          26,000            Venezuela
   190*      Deep                          26,000            Texas
   191*      Deep                          26,000            Texas
   192*      Deep                          26,000            Texas
   113       Very Deep                     30,000            Venezuela
   115       Very Deep                     30,000            Venezuela
   116       Very Deep                     30,000            Venezuela
   125*      Very Deep                     30,000            Texas
   127       Very Deep                     30,000            Venezuela
   128       Very Deep                     30,000            Venezuela
   129       Very Deep                     30,000            Venezuela
   133       Very Deep                     30,000            Colombia
   135       Very Deep                     30,000            Colombia
   150       Very Deep                     30,000            Venezuela
   151       Very Deep                     30,000            Bolivia
   152       Very Deep                     30,000            Colombia
   153       Very Deep                     30,000            Venezuela
   174       Very Deep                     30,000            Argentina
   175       Very Deep                     30,000            Bolivia
   177       Very Deep                     30,000            Argentina
   139*      Super Deep                    30,000+           Texas

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*Rigs returned to the United States for major modifications and upgrades.

The following table sets forth information with respect to the utilization of the Registrant's international drilling rigs for the periods indicated:

                                                                Years ended September 30,
                                                                -------------------------
                                                        1997     1998     1999     2000     2001
                                                        ----     ----     ----     ----     ----
Number of rigs owned at end of
  period                                                 39       44       39       40       37
Average rig utilization rate
  during period (1)(2)                                   91%      88%      53%      47%      56%

(1) A rig is considered to be utilized when it is operated or being moved, assembled, or dismantled under contract.

(2) Does not include rigs returned to United States for major modifications and upgrades.

OIL AND GAS DIVISION

All of the Registrant's oil and gas operations and holdings are located within the continental United States.

Significant Properties

The following six gas fields represent significant production areas for Registrant and accounted for approximately 47% of total oil and gas revenues and 51% of total gas reserves at September 30, 2001:

Hugoton field, located in southwest Kansas, has 348 producing wells and 19 proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 14.8% of total gas revenues. Reserves from this field represented 26.1% of total gas reserves at September 30, 2001. Registrant operates 309 of the producing wells with an average ownership of 68.0% and has a working interest in 39 non-operated wells with an average ownership of 20.6%.

Dixieland field, located in west Texas, has 5 producing wells and no proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 12.2% of total gas revenues. Reserves from this field represented 8.1% of total gas reserves at September 30, 2001. Registrant operates all of the wells with an average ownership of 99.7%.

Hammon field, located in western Oklahoma, has 103 producing wells and 7 proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 5.3% of total gas revenues. Reserves from this field represented 5.7% of total gas reserves at September 30, 2001. Registrant operates 32 of the producing wells with an average ownership of 54.6% and has a working interest in 71 non-operated wells with an average ownership of 18.6%.

Hemphill field, located in the Texas panhandle, has 32 producing wells and 2 proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 3.3% of total gas revenues. Reserves from this field represented 4.3% of total gas reserves at September 30, 2001. Registrant operates 24 of the producing wells with a 100% ownership and has a working interest in 8 non-operated wells with an average ownership of 50.0%.

Ashland field, located in southeast Oklahoma, has 65 producing wells and 22 proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 4.7% of total gas revenues. Reserves from this field represented 4.1% of total gas reserves at September 30, 2001. Registrant operates 21 of the producing wells with an average ownership of 84.3% and has a working interest in 44 non-operated wells with an average ownership of 33.0%.

Kiowa field, located in southwest Oklahoma, has 24 producing wells and no proved undeveloped locations. For the year ending September 30, 2001, revenues from this field were 12.1% of total gas revenues. Reserves from this field represented 3.1% of total gas reserves at September 30, 2001. Registrant operates 18 of the producing wells with an average ownership of 82.6% and has a working interest in 6 non-operated wells with an average ownership of 14.9%.

Oil revenues represent approximately 10% of Registrant's total oil and gas revenues. Two secondary oil properties comprised approximately 58% of total oil reserves at September 30, 2001. One property, the Pleasant Prairie Unit is located in western Kansas with an ownership of 48.6% and is Company operated. The other property, the Denver Unit, located in west Texas, is non-operated with an ownership of 1%.

Crude Oil Sales

The Registrant's net sales of crude oil and condensate for the fiscal years 1999 through 2001 are shown below:

                                             Average Sales            Average Lifting
Year              Net Barrels               Price per Barrel          Cost per Barrel
----              -----------               ----------------          ---------------
1999               649,370                       $14.60                    $7.02
2000               880,304                       $27.95                    $6.06
2001               818,356                       $27.88                    $7.76

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Natural Gas Sales

The Registrant's net sales of natural and casinghead gas for the three fiscal years 1999 through 2001 are as follows:

                                            Average Sales         Average Lifting
Year                 Net MCF                Price per MCF           Cost per MCF
----              ------------              -------------         ---------------
1999              44,240,332                      $1.83               $0.3300
2000              46,922,752                      $2.79               $0.3704
2001              42,386,796                      $4.55               $0.6019

Following is a summary of the net wells drilled by the Registrant for the fiscal years ended September 30, 1999, 2000, and 2001:

                         Exploratory Wells                                 Development Wells
                         -----------------                                 -----------------

                       1999      2000      2001                          1999      2000      2001
                       ----      ----      ----                          ----      ----      ----
Productive            2.917     9.735     9.0382                        13.846    23.862    43.4622
Dry                   2.615     5.7017    9.9618                         4.502     3.403     7.0031

On September 30, 2001, the Registrant was in the process of drilling or completing eight gross or 4.6342 net wells.

I - 30

Acreage Holdings

The Registrant's holdings of acreage under oil and gas leases, as of September 30, 2001, were as follows:

                             Developed Acreage            Undeveloped Acreage
                             -----------------            -------------------
                             Gross         Net            Gross          Net
                             -----         ---            -----          ---
Arkansas                   3,068.23       1,725.11            -0-            -0-
Colorado                        -0-            -0-         320.00         160.00
Kansas                   119,633.07      84,079.86      13,081.82      12,752.60
Louisiana                  3,481.48       1,589.14      80,020.27      23,166.46
Michigan                        -0-            -0-       4,123.64       4,123.64
Montana                    1,997.19         377.99       2,708.95         969.73
Nebraska                     480.00         168.00            -0-            -0-
Nevada                          -0-            -0-       4,864.04       4,864.04
New Mexico                   760.00          96.63         121.88          40.22
North Dakota                 200.00          11.52            -0-            -0-
Oklahoma                 123,559.86      49,647.24      27,138.98      16,664.45
Texas                     87,692.92      43,885.47     190,421.95      87,554.14
Wyoming                         -0-            -0-         440.00         105.59
                         ----------     ----------     ----------     ----------
    Total                340,872.75     181,580.96     323,241.53     150,400.87

Acreage is held under leases which expire in the absence of production at the end of a prescribed primary term, and is, therefore, subject to fluctuation from year to year as new leases are acquired, old leases expire, and other leases are allowed to terminate by failure to pay annual delay rentals. As shown in the above table, the Registrant has a significant portion of its undeveloped acreage in Texas, with nine major project areas accounting for 40,517 net acres. The average minimum remaining term of leases in these nine project areas is approximately 16 months.

I - 31

Productive Wells

The Registrant's total gross and net productive wells as of September 30, 2001, were as follows:

    Oil Wells                              Gas Wells
    ---------                              ---------
Gross         Net                     Gross             Net

3,438         168                     1,026             493

Additional information required by this item with respect to the Registrant's oil and gas operations may be found on pages I-11 through I-22 of Item 1. BUSINESS, and pages 23 through 34 of the Registrant's Annual Report to Shareholders for fiscal 2001, "Notes to Consolidated Financial Statements" and "Note 15 Supplementary Financial Information for Oil and Gas Producing Activities."

Estimates of oil and gas reserves, future net revenues, and present value of future net revenues were prepared by Netherland, Sewell & Associates, Inc., 4950 Three Allen Center, 333 Clay Street, Houston, Texas 77002. Total oil and gas reserve estimates do not differ by more than 5% from the total reserve estimates filed with any other federal authority or agency.

REAL ESTATE OPERATIONS

See Item 1. BUSINESS, pages I-22 through I-25.

I - 32

STOCK

As of December 14, 2001:

The Registrant owned 312,546 shares of the common stock of SUNOCO, Inc. and 150,000 shares of Kerr McGee Corporation.

The Registrant owned 3,000,000 shares of the common stock of Atwood Oceanics, Inc., a Houston, Texas based company engaged in offshore contract drilling. The Registrant owns approximately 22% of Atwood.

The Registrant owned 1,480,000 shares of the common stock of Schlumberger, Ltd.

The Registrant owned 240,000 shares of the common stock of Phillips Petroleum Company, Inc.

The Registrant owned 150,000 shares of the common stock of Occidental Petroleum Corporation, Inc.

The Registrant owned 175,000 shares of the common stock of Banc One Corporation.

The Registrant owned 450,000 shares of the common stock of ONEOK Inc.

The Registrant owned 286,528 shares of the common stock of Transocean Sedco Forex, Inc., which it received in a merger between Transocean Offshore and the contract drilling division of Schlumberger.

The Registrant owned 168,350 shares of the common stock of Protein Design Labs, Inc.

The Registrant also owned lesser holdings in several other publicly traded corporations.

Item 3. LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Registrant or its subsidiaries.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

I - 33

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names and ages of the Registrant's executive officers, together with all positions and offices held with the Registrant by such executive officers. Officers are elected to serve until the meeting of the Board of Directors following the next Annual Meeting of Stockholders and until their successors have been elected and have qualified or until their earlier resignation or removal.

W. H. Helmerich, III, 78            Director since 1949; Chairman of the Board
Chairman of the Board               since 1960

Hans Helmerich, 43                  Director  since  1987; President and Chief
President                           Executive Officer since 1989

George S. Dotson, 60                Director since 1990; Vice President,
Vice President                      Drilling since 1977 and President and
                                    Chief Operating Officer of Helmerich &
                                    Payne International Drilling Co. since 1977

Douglas E. Fears, 52                Vice President, Finance, since 1988
Vice President

Steven R. Mackey, 50                Secretary since 1990; Vice President and
Vice President and                  General Counsel since 1988
Secretary

Steven R. Shaw, 50                  Vice  President, Production, since 1985;
Vice President                      Vice President, Exploration and Production since 1996

Gordon K. Helm, 48                  Chief Accounting Officer of the Registrant;
Controller                          Controller since December 10, 1993

I - 34

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER

MATTERS

The principal market on which the Registrant's common stock is traded is the New York Stock Exchange. The high and low sale prices per share for the common stock for each quarterly period during the past two fiscal years as reported in the NYSE - Composite Transaction quotations follow:

                      2000                       2001
                ------------------        -----------------
Quarter         High           Low        High          Low
-------         ----           ---        ----          ---
First          27.44          19.13       44.19        28.94
Second         31.00          20.00       58.51        39.63
Third          37.75          29.06       51.23        30.82
Fourth         38.31          30.06       32.77        23.74

The Registrant paid quarterly cash dividends during the past two years as shown in the following table:

                             Paid per Share                      Total Payment
                            ------------------              ----------------------

                                  Fiscal                            Fiscal
                            ------------------              ----------------------
Quarter                     2000          2001              2000              2001
-------                     ----          ----              ----              ----
First                      $0.070         $0.075          $3,474,612      $3,748,896
Second                      0.070          0.075           3,475,623       3,776,612
Third                       0.070          0.075           3,484,189       3,796,489
Fourth                      0.075          0.075           3,740,863       3,765,488

The Registrant paid a cash dividend of $.075 per share on December 3, 2001, to shareholders of record on November 15, 2001. Payment of future dividends will depend on earnings and other factors.

As of December 14, 2001, there were 1,090 record holders of the Registrant's common stock as listed by the transfer agent's records.

II-1


Item 6. SELECTED FINANCIAL DATA

                                      Five-year Summary of Selected Financial Data
                              -------------------------------------------------------------

                              1997         1998          1999           2000           2001
                              ----         ----          ----           ----           ----
                                                      (in thousands)
Sales, operating,
and other revenues        $  517,859     $636,640     $  564,319     $  631,095     $  826,854

Income from con-
tinuing operations            84,186      101,154         42,788         82,300        144,254

Income from con-
tinuing operations
per common share:

         Basic                  1.69         2.03           0.87           1.66           2.88
         Diluted                1.67         2.00           0.86           1.64           2.84

Total assets               1,033,595    1,090,430      1,109,699      1,259,492      1,364,507

Long-term debt                   -0-       50,000         50,000         50,000         50,000

Cash dividends
declared per
common share                    0.26        0.275           0.28          0.285           0.30

Item 7. MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Information required by this item may be found on pages 10 through 17, Management's Discussion & Analysis of Results of Operations and Financial Condition, in the Registrant's Annual Report to Shareholders for fiscal 2001, which is incorporated herein by reference.

II-2


Item 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this item may be found on the following pages of Management's Discussion & Analysis of Results of Operations and Financial Condition and in Notes to Consolidated Financial Statements, in the Registrant's Annual Report to Shareholders for fiscal 2001, which is incorporated herein by reference:

         Market Risk                                 Page
         -----------                                 ----
o        Foreign Currency Exchange Rate Risk         13-14, 23
o        Commodity Price Risk                        14-15, 29
o        Interest Rate Risk                          17, 24
o        Equity Price Risk                           17, 23

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item may be found on pages 18 through 34 in the Registrant's Annual Report to Shareholders for fiscal 2001, which is incorporated herein by reference.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

II-3


PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required under this item with respect to Directors and with respect to delinquent filers pursuant to Item 405 of Regulation S-K is incorporated by reference from the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held March 6, 2002, to be filed with the Commission not later than 120 days after September 30, 2001. See page I-34 for information covering the Registrant's Executive Officers.

Item 11. EXECUTIVE COMPENSATION

This information is incorporated by reference from the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held March 6, 2002, to be filed with the Commission not later than 120 days after September 30, 2001.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This information is incorporated by reference from the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held March 6, 2002, to be filed with the Commission not later than 120 days after September 30, 2001.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is incorporated by reference from the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held March 6, 2002, to be filed with the Commission not later than 120 days after September 30, 2001.

III - 1


PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Document List

1. The financial statements called for by Item 8 are incorporated herein by reference from the Registrant's Annual Report to Shareholders for fiscal 2001.

2. Exhibits required by Item 601 of Regulation S-K:

Exhibit Number:

3.1 Restated Certificate of Incorporation and Amendment to Restated Certificate of Incorporation of the Registrant are incorporated herein by reference to Exhibit 3.1 of the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1996, SEC File No. 001-04221.

3.2 By-Laws of the Registrant are incorporated herein by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1996, SEC File No. 001-04221.

4.1 Rights Agreement dated as of January 8, 1996, between the Registrant and The Liberty National Bank and Trust Company of Oklahoma City, N.A. is incorporated herein by reference to the Registrant's Form 8-A, dated January 18, 1996, SEC File No. 001-04221.

* 10.1 Consulting Services Agreement between W. H. Helmerich, III, and the Registrant effective January 1, 1990, as amended is incorporated herein by reference to Exhibit 10.3 of the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1996, SEC File No. 001-04221.

* 10.2 Supplemental Retirement Income Plan for Salaried Employees of Helmerich & Payne, Inc. is incorporated herein by reference to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1996, SEC File No. 001-04221.

* 10.3 Helmerich & Payne, Inc. 1990 Stock Option Plan is incorporated herein by reference to Exhibit 10.7 of the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1996, SEC File No. 001- 04221.


* Compensatory Plan or Arrangement.

IV-1


* 10.4 Form of Nonqualified Stock Option Agreement for the 1990 Stock Option Plan is incorporated by reference to Exhibit 99.2 to the Registrant's Registration Statement No. 33-55239 on Form S-8, dated August 26, 1994.

* 10.5 Supplemental Savings Plan for Salaried Employees of Helmerich and Payne, Inc. is incorporated herein by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1999, SEC File No. 001-04221.

* 10.6 Helmerich & Payne, Inc. 1996 Stock Incentive Plan is incorporated herein by reference to Exhibit 99.1 to Registrant's Registration Statement No. 333-34939 on Form S-8 dated September 4, 1997.

* 10.7 Form of Nonqualified Stock Option Agreement for Helmerich & Payne, Inc. 1996 Stock Incentive Plan is incorporated by reference to Exhibit 99.2 to Registrant's Registration Statement No. 333-34939 on Form S-8 dated September 4, 1997.

* 10.8 Form of Restricted Stock Agreement for Helmerich & Payne, Inc. 1996 Stock Incentive Plan is incorporated by reference to Exhibit 10.12 to the Registrant's Annual Report on Form 10-K to the Securities and Exchange Commission for fiscal 1997, SEC File No. 001-04221.

* 10.9 Helmerich & Payne, Inc. 2000 Stock Incentive Plan is incorporated herein by reference to Exhibit 99.1 to the Registrant's Registration Statement No. 333- 63124 on Form S-8 dated June 15, 2001.

* 10.10 Form of Agreements for Helmerich & Payne, Inc. 2000 Stock Incentive Plan being (i) Restricted Stock Award Agreement, (ii) Incentive Stock Option Agreement and
(iii) Nonqualified Stock Option Agreement are incorporated by reference to Exhibit 99.2 to Registrant's Registration Statement No. 333-63124 on Form S-8 dated June 15, 2001.

13. The Registrant's Annual Report to Shareholders for fiscal 2001.

21. Subsidiaries of the Registrant.


* Compensatory Plan or Arrangement.

IV-2


23.1 Consent of Independent Auditors.

(b) Report on Form 8-K

None.


* Compensatory Plan or Arrangement.

IV-3


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized:

HELMERICH & PAYNE, INC.

By Hans Helmerich

Hans Helmerich, President
(Chief Executive Officer)

Date: December 27, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

By  William L. Armstrong                 By  Glenn A. Cox
    -----------------------------------      -----------------------------------
    William L. Armstrong, Director           Glenn A. Cox, Director
    Date:  December 27, 2001                 Date:  December 27, 2001

By  George S. Dotson                     By  Hans Helmerich
    -----------------------------------      -----------------------------------
    George S. Dotson, Director               Hans Helmerich, Director and CEO
    Date:  December 27, 2001                 Date:  December 27, 2001

By  W. H. Helmerich, III                 By  L. F. Rooney, III
    -----------------------------------      -----------------------------------
    W. H. Helmerich, III, Director           L. F. Rooney, III, Director
    Date:  December 27, 2001                 Date:  December 27, 2001

By  Edward B. Rust, Jr.                  By  George A. Schaefer
    -----------------------------------      -----------------------------------
    Edward B. Rust, Jr., Director            George A. Schaefer, Director
    Date:  December 27, 2001                 Date:  December 27, 2001

By  John D. Zeglis                       By  Douglas E. Fears
    -----------------------------------      -----------------------------------
    John D. Zeglis, Director                 Douglas E. Fears
    Date:  December 27, 2001                 (Principal Financial Officer)
                                             Date:  December 27, 2001

By  Gordon K. Helm
    -----------------------------------
    Gordon K. Helm, Controller
    (Principal Accounting Officer)
    Date:  December 27, 2001

CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Amendment No. 2 to the Annual Report of Helmerich & Payne, Inc. (the "Company") on Form 10-K/A for the period ending September 30, 2001 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Hans Helmerich, as Chief Executive Officer of the Company, and Douglas E. Fears, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/   Hans Helmerich
-----------------------
Hans Helmerich
Chief Executive Officer
August 16, 2002


/s/   Douglas E. Fears
-----------------------
Douglas E. Fears
Chief Financial Officer
August 16, 2002


INDEX TO EXHIBITS

EXHIBIT
 NUMBER                            DESCRIPTION
--------                           -----------
                  3.1      Restated Certificate of Incorporation and Amendment
                           to Restated Certificate of Incorporation of the
                           Registrant are incorporated herein by reference to
                           Exhibit 3.1 of the Registrant's Annual Report on Form
                           10-K to the Securities and Exchange Commission for
                           fiscal 1996, SEC File No. 001-04221.

                  3.2      By-Laws of the Registrant are incorporated herein by
                           reference to Exhibit 3.2 of the Registrant's Annual
                           Report on Form 10-K to the Securities and Exchange
                           Commission for fiscal 1996, SEC File No. 001-04221.

                  4.1      Rights Agreement dated as of January 8, 1996, between
                           the Registrant and The Liberty National Bank and
                           Trust Company of Oklahoma City, N.A. is incorporated
                           herein by reference to the Registrant's Form 8-A,
                           dated January 18, 1996, SEC File No. 001-04221.

         *        10.1     Consulting Services Agreement between W. H.
                           Helmerich, III, and the Registrant effective January
                           1, 1990, as amended is incorporated herein by
                           reference to Exhibit 10.3 of the Registrant's Annual
                           Report on Form 10-K to the Securities and Exchange
                           Commission for fiscal 1996, SEC File No. 001-04221.

         *        10.2     Supplemental Retirement Income Plan for Salaried
                           Employees of Helmerich & Payne, Inc. is incorporated
                           herein by reference to Exhibit 10.6 of the
                           Registrant's Annual Report on Form 10-K to the
                           Securities and Exchange Commission for fiscal 1996,
                           SEC File No. 001-04221.

         *        10.3     Helmerich & Payne, Inc. 1990 Stock Option Plan is
                           incorporated herein by reference to Exhibit 10.7 of
                           the Registrant's Annual Report on Form 10-K to the
                           Securities and Exchange Commission for fiscal 1996,
                           SEC File No. 001-04221.


         *        10.4     Form of Nonqualified Stock Option Agreement for the
                           1990 Stock Option Plan is incorporated by reference
                           to Exhibit 99.2 to the Registrant's Registration
                           Statement No. 33-55239 on Form S-8, dated August 26,
                           1994.

         *        10.5     Supplemental Savings Plan for Salaried Employees of
                           Helmerich and Payne, Inc. is incorporated herein by
                           reference to Exhibit 10.6 to the Registrant's Annual
                           Report on Form 10-K to the Securities and Exchange
                           Commission for fiscal 1999, SEC File No. 001-04221.

         *        10.6     Helmerich & Payne, Inc. 1996 Stock Incentive Plan is
                           incorporated herein by reference to Exhibit 99.1 to
                           Registrant's Registration Statement No. 333-34939 on
                           Form S-8 dated September 4, 1997.

         *        10.7     Form of Nonqualified Stock Option Agreement for
                           Helmerich & Payne, Inc. 1996 Stock Incentive Plan is
                           incorporated by reference to Exhibit 99.2 to
                           Registrant's Registration Statement No. 333-34939 on
                           Form S-8 dated September 4, 1997.

         *        10.8     Form of Restricted Stock Agreement for Helmerich &
                           Payne, Inc. 1996 Stock Incentive Plan is incorporated
                           by reference to Exhibit 10.12 to the Registrant's
                           Annual Report on Form 10-K to the Securities and
                           Exchange Commission for fiscal 1997, SEC File No.
                           001-04221.

         *        10.9     Helmerich & Payne, Inc. 2000 Stock Incentive Plan is
                           incorporated herein by reference to Exhibit 99.1 to
                           the Registrant's Registration Statement No. 333-
                           63124 on Form S-8 dated June 15, 2001.

         *        10.10    Form of Agreements for Helmerich & Payne, Inc. 2000
                           Stock Incentive Plan being (i) Restricted Stock Award
                           Agreement, (ii) Incentive Stock Option Agreement and
                           (iii) Nonqualified Stock Option Agreement are
                           incorporated by reference to Exhibit 99.2 to
                           Registrant's Registration Statement No. 333-63124 on
                           Form S-8 dated June 15, 2001.

                  13.      The Registrant's Annual Report to Shareholders for
                           fiscal 2001.

                  21.      Subsidiaries of the Registrant.

                  23.1     Consent of Independent Auditors.


* Compensatory Plan or Arrangement.


EXHIBIT 13


HELMERICH & PAYNE, INC. ANNUAL REPORT FOR 2001

REVENUE BREAKDOWN FOR 2001

[PIE CHART]

CONTRACT DRILLING:
International                   19%
Domestic                        40%

OIL AND GAS:
Natural Gas Marketing           12%
Exploration & Production        26%

Real Estate                     1%
Investments and Other Income    2%

FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------
Years Ended September 30,           2001                 2000
-------------------------      --------------     -----------------
Revenues                       $  826,854,000     $     631,095,000
Net Income                     $  144,254,000     $      82,300,000
Diluted Earnings Per Share     $         2.84     $            1.64
Dividends Paid Per Share       $          .30     $            .285
Capital Expenditures           $  274,670,000     $     131,932,000
Total Assets                   $1,364,507,000     $   1,259,492,000



PRESIDENT'S LETTER

To the Co-owners of Helmerich & Payne, Inc.

Sometimes risk factors are difficult to identify, much less quantify. Unthinkable risks confronted each of us and our families in the aftermath of the terrorist attacks on the World Trade Center and Pentagon. Dinner table conversations at home and discussions at work contemplated possible threats of anthrax exposure, bioterror, and even nuclear "dirty bomb" strikes on civilians.

Today we are a nation at war, facing a real and present danger to our basic freedoms and liberty. We are also a nation united and determined. A renewed patriotic spirit has raised a standard against the evil that struck at our core values. We have witnessed acts of untold heroism and sacrifice, along with a flood of prayers and support from friends of freedom around the globe.

We have been inspired by the leadership of President Bush: "The course of this conflict is not known, yet its outcome is certain. Freedom and fear, justice and cruelty have always been at war and we know that God is not neutral between them. The advance of human freedom now depends on us. We will rally the world to this cause by our efforts, by our courage. We will not tire, we will not falter, and we will not fail."

2

The President has urged all Americans to take up the fight, in part, by leading our lives. That is what your Company intends to do. Each of our employees plays a proud part in an industry vital to our country's energy security.

Remarkably, energy prices are falling at the end of 2001, even in the face of the current geopolitical situation in the Middle East. Will a "smoking gun" surface to further implicate Iraq in terrorist sponsorship? Will a bloody and volatile Palestinian-Israeli conflict deteriorate further?

How should markets price the possible risk of a far-reaching supply disruption?

We're confident the market will sort it all out. That time-tested dynamic of free markets is one of the many enduring principles worth fighting for and defending. All the while, your Company will stand prepared and financially fit for the challenges and opportunities ahead.

Sincerely,

                                               /s/ HANS HELMERICH

                                               Hans Helmerich
December 14, 2001                                   President

3


DRILLING HELMERICH & PAYNE INTERNATIONAL DRILLING CO.

SUMMARY Both oil and natural gas prices increased substantially at the beginning of the year, resulting in higher demand for land rigs in the United States. Industry census data produced by Reed-Hycalog indicates that 93 percent of all U.S. land rigs were active during 2001, a level of activity not achieved since the early 1980s. The resulting impact of this environment on the Company's 2001 financial performance was significant. Contract drilling revenues increased 39 percent, and earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by over 50 percent, driven primarily by increased activity in the U.S. land market.

FIVE-YEAR OPERATING SUMMARY
-----------------------------------------------------------------------------------------
                           2001          2000          1999          1998          1997
                         --------      --------      --------      --------      --------
                                           (Dollar figures in thousands)
  UNITED STATES

Revenues ...........     $332,399      $214,531      $213,647      $177,059      $140,294
EBITDA .............     $133,968      $ 71,163      $ 61,498      $ 60,053      $ 44,066
Operating Profit ...     $107,691      $ 35,808      $ 30,154      $ 35,817      $ 24,437

Activity Days ......       18,656        15,083        12,509        14,237        12,872
Rig Utilization ....           97%           87%           75%           95%           88%

  INTERNATIONAL

Revenues ...........     $154,890      $136,549      $182,987      $253,072      $176,651
EBITDA .............     $ 47,313      $ 47,853      $ 66,075      $ 82,650      $ 69,621
Operating Profit ...     $ 28,475      $  9,753      $ 29,845      $ 50,834      $ 43,118

Activity Days ......        7,283         7,067         8,442        12,832        12,253
Rig Utilization ....           56%           47%           53%           88%           91%

At the close of fiscal 2001, Helmerich & Payne International Drilling Co. owned ten offshore platform rigs located in the Gulf of Mexico, and 81 land rigs located in the United States (49), Venezuela (14), Ecuador (7), Bolivia (6), Colombia (3), and Argentina (2). The Company also had five international land rigs undergoing major upgrades in the U.S., as well as five land rigs and two offshore platform rigs at various stages of new construction at year-end.

4

Additionally, the Company operates four management contracts on customer-owned platform rigs, three offshore California and one offshore Equatorial Guinea, West Africa.

UNITED STATES OPERATIONS Rig utilization averaged 97 and 98 percent, respectively, for land and offshore platform rigs during the year. The Company worked an average of 41 land rigs and ten offshore platform rigs for the whole year, up from 32 land and nine offshore platform rigs in 2000. A total of 11 rigs were added to the land fleet in 2001, seven new FlexRigs(TM), one reconditioned medium depth rig, and three deep rigs that were transferred from international operations.

The Company plans to complete the construction of 20 FlexRigs during 2002, which will be available for work in the U.S. or international markets. The highly mobile FlexRig, named for its flexible drilling range of 8,000 to 18,000 feet, offers significant drilling efficiencies through improved technology, including disc-brakes, block control system, and the Company's patented round mud tank system. The FlexRig design has reduced the average moving time by more than one-half of that for a conventional 1500 horsepower rig. The FlexRig design includes many health, safety, and environmental (HSE) improvements and features reducing HSE hazards. These include noise abatement, enhanced anti-fall protection, and an integrated fluid containment system around the rig floor.

During 2001, the Company received commitments to build and operate two new self-moving platform rigs in the Gulf of Mexico, one each from Shell Exploration & Production Co. and BP. These rigs are scheduled to commence operations in the third quarter of 2002.

(TM) FlexRig is a trademark of Helmerich & Payne International Drilling Co.

5

INTERNATIONAL OPERATIONS Rig utilization averaged 56 percent in 2001, compared with 47 percent in 2000, primarily because the Company moved eight rigs to the U.S. for drilling opportunities or refurbishment during 2001. Revenues increased 13 percent over last year, but EBITDA decreased slightly as improvements in Venezuela, Equatorial Guinea, Ecuador, and Argentina were offset by declines in Colombia and Bolivia. Increased operating profit was primarily the result of reduced depreciation expense caused by rig transfers from international to domestic operations, as well as a change in the estimated useful life of drilling equipment, increasing it from ten to 15 years.

OUTLOOK The Company has lowered its expectations for drilling activity in the coming year because of the precipitous drop in both oil and natural gas prices caused by reduced economic activity and mild weather in the U.S. Because the present downturn does not appear to be due to excessive supplies, the Company anticipates that it will be short-lived, improving as energy demand rises in response to U.S. and world economic recovery. This is the second volatile drilling cycle in four years and, with each downturn, the industry loses experienced employees and momentum on capital projects, many of which require long lead times to bring to fruition. The inevitable upturn in the cycle is likely to become even more pronounced, stretching the already thin human, technological, and financial resources of the industry. The Company has focused its investment efforts on delivering the latest in equipment and technology to the field and in training our people to operate safely and effectively. Our primary goal remains to deliver high quality equipment and services that will add measurable value to a customer's drilling operation.

6


EXPLORATION & PRODUCTION HELMERICH & PAYNE, INC.

SUMMARY Helmerich & Payne, Inc. explores for and produces oil and natural gas primarily in Kansas, Louisiana, Oklahoma, and Texas. The Company also provides natural gas marketing services through its wholly owned subsidiary, Helmerich & Payne Energy Services, Inc. A substantial increase in the price of natural gas produced record financial results for the Exploration and Production segment in 2001. Revenues and operating profit grew 38 percent and 44 percent, respectively, over 2000 levels. Helmerich & Payne Energy Services, Inc.'s revenues increased 24 percent in 2001, although operating profit remained flat for the year. Oil production declined seven percent to average 2,242 barrels per day in 2001, while prices remained flat at $27.88 per barrel compared with $27.95 per barrel in 2000. Natural gas production also declined to 116,128 thousand cubic feet (Mcf) per day, compared with 128,204 Mcf per day in 2000. Natural gas prices increased 63 percent to average $4.55 per Mcf in 2001, compared with $2.79 per Mcf in 2000.

FIVE-YEAR OPERATING SUMMARY
----------------------------------------------------------------------------------------------------------------------
                                              2001            2000            1999            1998            1997
                                           -----------     -----------     -----------     -----------     -----------
                                                           (Revenues and operating profit in thousands)
Revenues...............................    $   217,194     $   157,583     $    95,953     $    98,696     $   111,512
Operating Profit.......................    $    95,579     $    66,604     $    11,245     $    28,088     $    55,191

Average Oil Price per barrel .........     $     27.88     $     27.95     $     14.60     $     14.74     $     20.77
Oil Production (barrels) .............         818,356         880,304         649,370         701,180         985,633
Proved Oil Reserves (barrels) ........       5,931,595       6,305,137       4,833,898       4,761,313       5,805,386

Average Natural Gas Prices per Mcf ...     $      4.55     $      2.79     $      1.83     $      2.04     $      2.24
Natural Gas Production (Mcf) .........      42,386,796      46,922,752      44,240,332      42,862,300      40,463,374
Proved Natural Gas Reserves (Bcf) ....           216.3           262.5           239.6           251.6           263.2

Gross Wells Completed ................           123.0            81.0            49.0            62.0           100.0
Net Wells Completed ..................            69.5            42.7            23.9            35.7            49.3
Net Dry Holes ........................            17.0             9.1             7.1             4.2             9.6

7

EXPLORATION RESULTS Even though the Company had a record financial performance, it was a disappointing year for the exploration effort. Proved reserves declined from 300 billion cubic feet equivalent (Bcfe) to 252 Bcfe during 2001. Almost half of this decline was the result of the lower natural gas price used in the reserve calculation, which was $1.90 per Mcf in 2001, compared with $5.13 per Mcf in 2000.

The Company participated in 123 (69.5 net) wells in 2001, 29 (17 net) of which were dry holes. Given the high natural gas prices, additional emphasis was placed on developing proved undeveloped reserves during the year. Forty-seven gross wells were drilled for this purpose in 2001. The remaining wells included
40 (19 net) wildcat wells, five of which exposed the Company to over 250 Bcfe in net potential reserve additions.

OUTLOOK Given that oil and gas prices have declined substantially, the Company plans to be highly selective with regard to drilling prospects in 2002, and will reduce capital expenditures by as much as half of what they were in 2001. With the assistance of the investment bank of Petrie Parkman & Co., the Company is continuing to explore strategic alternatives for the Oil and Gas Division. These alternatives include combining the Company's oil and gas operations with another of similar size to form a separate, stand-alone exploration and production company. The Company engaged in discussions with a number of companies during the past year and plans to continue these efforts into 2002.

8

REVENUES AND OPERATING PROFIT BY BUSINESS SEGMENTS

HELMERICH & PAYNE, INC.

                                      Years Ended September 30,           2001            2000              1999
---------------------------------------------------------------         --------        --------          --------
                                                                                     (in thousands)
SALES AND OTHER REVENUES:
     Contract Drilling - Domestic..............................         $332,399        $214,531          $213,647
     Contract Drilling - International.........................          154,890         136,549           182,987
                                                                        --------        --------          --------
        Total Contract Drilling................................          487,289         351,080           396,634
                                                                        --------        --------          --------

     Exploration and Production................................          217,194         157,583            95,953
     Natural Gas Marketing.....................................          100,111          80,907            55,259
                                                                        --------        --------          --------
        Total Oil and Gas Operations...........................          317,305         238,490           151,212
                                                                        --------        --------          --------

     Real Estate ..............................................           11,018           8,999             8,671
     Other.....................................................           11,242          32,526             7,802
                                                                        --------        --------          --------

Total Revenues.................................................         $826,854        $631,095          $564,319
                                                                        ========        ========          ========

OPERATING PROFIT:
     Contract Drilling - Domestic..............................         $107,691       $  35,808         $  30,154
     Contract Drilling - International.........................           28,475           9,753            29,845
                                                                        --------        --------          --------
        Total Contract Drilling................................          136,166          45,561            59,999
                                                                        --------        --------          --------

     Exploration and Production................................           95,579          66,604            11,245
     Natural Gas Marketing.....................................            5,254           5,271             4,418
                                                                        --------        --------          --------
        Total Oil and Gas Operations...........................          100,833          71,875            15,663
                                                                        --------        --------          --------

     Real Estate...............................................            6,315           5,346             5,338
                                                                        --------        --------          --------
        Total Operating Profit.................................          243,314         122,782            81,000
                                                                        --------        --------          --------

OTHER:
     Income from investments...................................           10,592          31,973             7,757
     General and administrative expense........................          (15,415)        (11,578)          (14,198)
     Interest expense..........................................               32          (3,076)           (6,481)
     Corporate depreciation....................................           (2,043)         (2,152)           (1,565)
     Other corporate expense...................................           (1,378)         (1,186)           (1,575)
                                                                        --------        --------          --------
        Total Other............................................           (8,212)         13,981           (16,062)
                                                                        --------        --------          --------

INCOME BEFORE INCOME TAXES AND
     EQUITY IN INCOME OF AFFILIATES............................         $235,102        $136,763         $  64,938
                                                                        ========        ========         =========

Note: See Note 14 (pages 30, 31 and 32) for complete segment disclosure.

9

MANAGEMENT'S DISCUSSION & ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

HELMERICH & PAYNE, INC.

RISK FACTORS AND FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with the 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 oil and natural gas prices, expiration or termination of drilling contracts, currency exchange gains and losses, changes in general economic conditions, rapid or unexpected changes in technologies, risks of foreign operations, uninsured risks, 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 include 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

All per share amounts included in the Results of Operations discussion are stated on a diluted basis. Helmerich & Payne, Inc.'s net income for 2001 was $144,254,000 ($2.84 per share), compared with net income of $82,300,000 ($1.64 per share) in 2000, and $42,788,000 ($0.86 per share) in 1999. Included in the Company's net income, but not related to its operations, were after-tax gains from the sale of investment securities of $691,000 ($0.01 per share) in 2001, $8,152,000 ($0.16 per share) in 2000, and $1,562,000 ($0.03 per share) in 1999. In addition to income from security sales, the Company also recorded net income during 2000 of $6,637,000 ($0.13 per share) from gains relating to non-monetary dividends received. Also included in net income is the Company's portion of income from its

10

equity affiliates, which totaled $0.04 per share in 2001, $0.06 in 2000, and $0.07 in 1999. The Company's equity affiliates are Atwood Oceanics, Inc. and a 50-50 joint venture with Atwood called Atwood Oceanics West Tuna Pty. Ltd., which owns an offshore platform rig.

Consolidated revenues were $826,854,000 in 2001, $631,095,000 in 2000, and $564,319,000 in 1999. The 31 percent increase from 2000 to 2001 was due to significant increases in revenues from all of the operating divisions. Revenues from investments decreased by $21,381,000. Contract Drilling Division revenues increased by 39 percent due to the strengthening of the U.S. land rig market. This resulted in higher utilization of the Company's rigs and higher dayrates. Oil and Gas Division revenues rose 33 percent over 2000 due primarily to higher oil and natural gas prices. The 12 percent increase in consolidated revenues from 1999 to 2000 was primarily due to higher oil and natural gas prices resulting in an increase of $87,278,000 in Oil and Gas Division revenues and increased investment revenues of $24,216,000. Partially offsetting these increases was a reduction of international contract drilling revenues of $46,438,000.

Revenues from investments were $10,592,000 in 2001, $31,973,000 in 2000, and $7,757,000 in 1999. Included in revenues were pre-tax gains from the sale of investment securities of $1,189,000 in 2001, $13,295,000 in 2000, and $2,547,000 in 1999. Interest income from short-term investments increased in 2001 and 2000 because the Company's cash and cash equivalent balances increased in each of these years. Dividend income decreased in 2001, primarily because in 2000, the Company recognized $10,706,000 of non-monetary dividends when three Company investees spun-off subsidiaries to their shareholders.

Costs and expenses in 2001 were $591,752,000, 72 percent of revenues, compared with 78 percent in 2000, and 88 percent in 1999. Operating costs, as a percentage of operating revenues, were 51 percent in 2001, 53 percent in 2000, and 60 percent in 1999. Operating costs, as a percentage of operating revenues, declined each of the last two years, primarily due to proportionately higher revenues.

Effective October 1, 2000, the Company changed the estimated useful life of its drilling equipment from ten years to 15 years, resulting in lower annual depreciation expense of approximately $30 million in 2001. Excluding write-downs of producing properties, depreciation expense was $78,400,000 in 2001, $106,815,000 in 2000, and $99,108,000 in 1999. Producing property

11

write-downs totaled $8,909,000 in 2001, $4,036,000 in 2000, and $10,059,000 in 1999.

General and administrative expenses increased by 33 percent from 2000 to 2001, to a total of $15,415,000, compared with $11,578,000 in 2000, and $14,198,000 in 1999. Expenses rose this past year due to costs associated with legal, accounting, and investment banking fees related to the potential spin-off of the Oil and Gas Division, settlements of lawsuits, higher pension expense accrual, and higher labor and bonus charges, compared with 2000. General and administrative expenses decreased in 2000, compared to 1999, due to the inclusion in 1999 of reduced allocations of charges to operations and unusually high expenses relating to corporate aircraft maintenance. Income taxes, as a percentage of pre-tax income, were 40 percent in 2001, 42 percent in 2000, and 40 percent in 1999.

Interest expense for the Company was negative $32,000 in 2001, $3,076,000 in 2000, and $6,481,000 in 1999. Most of the expense reduction from 2000 to 2001 resulted from a reversal of interest expense previously accrued relating to an ad valorem tax dispute that was settled for less interest costs than accrued. The specific case was settled during 2001, resulting in a reversal of interest expense of $2,280,000 that had been accrued in 1999. Additionally, the Company reduced its overall debt position during the last half of 1999 and early 2000, resulting in less debt related interest expense booked in the last three years.

CONTRACT DRILLING DIVISION revenues, which include both domestic and international segment revenues, increased 39 percent to $487,289,000 during 2001, from $351,080,000 in 2000. Revenues for 2000 were 11 percent lower than in 1999. Division operating profit of $136,166,000 was almost triple that of the $45,461,000 recorded in 2000. Operating profit for 2000 was 24 percent lower than in 1999.

Domestic segment revenues were $332,399,000 in 2001, $214,531,000 in 2000, and $213,647,000 in 1999. Domestic segment operating profit was $107,691,000 in 2001, $35,808,000 in 2000, and $30,154,000 in 1999. Rig utilization for the U.S. land fleet was 97 percent in 2001, 85 percent in 2000, and 69 percent in 1999. Domestic platform rig utilization was 98 percent in 2001, 94 percent in 2000, and 95 percent in 1999.

Both U.S. land rig and U.S. platform rig revenues increased in 2001 over 2000. Dayrates for U.S. land rigs and total operating days for the U.S. land rig segment increased dramatically during 2001. Operating profit for the

12

domestic operation improved dramatically from 2000 to 2001, mostly on the strength of average land rig dayrates, which improved more than 50 percent, and the resulting improvement in profit margins. The previously discussed change in the estimated useful life of drilling equipment increased domestic operating profit by approximately $15 million in 2001. U.S. platform rig dayrates did not improve, but total operating days helped boost revenues for the year. Improvements in revenues and operating profit from 1999 to 2000 were primarily the result of average U.S. land rig dayrates and profit margins moving up, while the platform business improved only slightly. During 1999, there were approximately $40 million of revenues recorded as a result of a rig construction project that was completed in early 2000.

International segment revenues increased by 13 percent from 2000 to 2001, after falling by 25 percent from 1999 to 2000. International operating profit rose to $28,475,000 in 2001, from $9,753,000 in 2000. Operating profit for 1999 was $29,845,000. International rig utilization averaged 56 percent during 2001, 47 percent in 2000, and 53 percent in 1999. International operating profit improved during 2001, mainly due to lower depreciation expenses resulting from a change in the estimated useful life of the Company's drilling equipment, as previously discussed. The impact of the change added approximately $15 million to international operating profit in 2001. Revenues in Venezuela increased 24 percent during 2001, and the Company expects to see activity improve slightly in 2002. The Company's labor contract in Equatorial Guinea added $6,054,000 to international revenues in 2001. The decline in operating profit from 1999 to 2000 was primarily due to reduced activity in Colombia where the Company had previously employed ten rigs. Activity in Colombia continued to decline in 2000 and 2001, and currently, the Company has one rig working out of the three remaining in that country. Conversely, Ecuador's rig count has grown from three in 1999 to seven in 2001, and an eighth, newly refurbished rig will be shipped during the second quarter of 2002, to begin work under a one-year contract.

The Company has international operations in several South American countries. With the exception of Venezuela, the Company believes that its exposure to currency valuation losses is minimal due to the fact that virtually all billings and payments are in U.S. dollars. In Venezuela, approximately 50 percent of the Company's billings are in U.S. dollars and 50 percent are in bolivars, the local currency. As a result, the Company is exposed to risks of currency devaluation in Venezuela because of the bolivar denominated receivables. During 2001, the Company experienced a loss of $796,000 due to devaluation of the bolivar,

13

compared with a $687,000 loss in 2000, and a $712,000 loss in 1999. The Company anticipates additional devaluation losses in Venezuela during 2002, but is unable to predict the extent of either the devaluation or its financial impact. Should Venezuela experience a 25 to 50 percent devaluation, Company losses could range from approximately $1,600,000 to $2,600,000.

OIL AND GAS DIVISION operating results include those from its Exploration and Production segment, as depicted in the following table. The Natural Gas Marketing segment will be discussed separately.

Exploration & Production                           2001             2000             1999
------------------------------------------     ------------     ------------     ------------
Revenues (in 000's) ......................     $    217,194     $    157,583     $     95,953
Operating Profit (in 000's) ..............     $     95,579     $     66,604     $     11,245
Natural Gas Production (Mmcf per day) ....            116.1            128.2            121.2
Average Natural Gas Price (per Mcf) ......     $       4.55     $       2.79     $       1.83
Crude Oil Production (barrels per day) ...            2,242            2,405            1,779
Average Crude Oil Price (per barrel) .....     $      27.88     $      27.95     $      14.60

Exploration and Production segment revenues and operating profit increased significantly this year as average prices received for the Company's natural gas production rose dramatically. Average prices received for natural gas increased by 63 percent, while average crude oil prices remained flat, compared to 2000. Natural gas and crude oil production for the Company decreased by nine percent and seven percent, respectively. Increased exploration drilling resulted in dry hole and abandonment charges rising to $33.5 million in 2001, compared with $22.6 million in 2000, and $11.4 million in 1999. Revenues and operating profit for 2000 were up substantially from 1999 due to significant increases in both commodity price levels and Company production volumes for natural gas and crude oil. Average prices for natural gas increased by 52 percent and average crude oil prices increased by 91 percent from 1999 to 2000. In 2000, natural gas and crude oil production increased by six percent and 35 percent, respectively, over 1999 levels. Producing property impairment write-downs totaled $8,909,000 in 2001, $4,036,000 in 2000, and $10,059,000 in 1999.

During 2002, the Company's Oil and Gas Division intends to decrease its capital spending over the previous year. However, dry hole, abandonment, and geophysical expenses are difficult to predict and will continue to impact operating profit for the coming year. Additionally, with a reduced capital spending budget, it is expected that the Company's production volumes for natural gas and crude oil will decline during the year.

14

The Company has retained the investment banking firm of Petrie Parkman & Co. to analyze, develop, and facilitate possible strategic options for the Oil and Gas Division. It is uncertain whether such a transaction will occur or, if so, when.

The Company's Natural Gas Marketing segment, Helmerich & Payne Energy Services, Inc., (HPESI) derives most of its revenues from selling natural gas produced by other unaffiliated companies. Total Natural Gas Marketing segment revenues were $100,111,000 in 2001, $80,907,000 in 2000, and $55,259,000 in 1999. Operating profit was $5,254,000 in 2001, $5,271,000 in 2000, and $4,418,000 in 1999. The operating profit margin declined to 5.2 percent in 2001, from 6.5 percent in 2000, and 8 percent in 1999. A rapid decline in natural gas prices over the last three-quarters of the year as well as an increasingly competitive gas marketing environment was primarily responsible for lower margins in 2001. Most of the natural gas owned and produced by the Exploration and Production segment is sold through HPESI to third parties at variable prices based on industry pricing publications or exchange quotations. Revenues for the Company's own natural gas production are reported by the Exploration and Production segment with the Natural Gas Marketing segment retaining a market-based fee from the sale of such production. HPESI sells most of its natural gas with monthly or daily contracts tied to industry market indices, such as Inside FERC Gas Market Report. The Company, through HPESI, has natural gas delivery commitments for periods of less than a year for approximately 59 percent of its total natural gas production. At times, the Exploration and Production segment may direct HPESI to enter into fixed price natural gas sales contracts on its behalf for a small portion (normally less than 20 percent) of its natural gas sales for periods of less than 12 months to guarantee a certain price. In 2001, HPESI had approximately three percent of its natural gas sales portfolio dedicated to such fixed price sales contracts compared to 13.6 percent in 2000. As of September 30, 2001, HPESI had no long-term fixed contracts.

REAL ESTATE DIVISION revenues totaled $11,018,000 for 2001, $8,999,000 for 2000, and $8,671,000 for 1999. Operating profit was $6,315,000 in 2001, $5,346,000 in 2000, and $5,338,000 in 1999. The increase in revenues and operating profit in 2001 was due to the sale of a small parcel of raw land. Occupancy rates, revenues, and operating profit remained solid in 2001 due to the continued strength of the Tulsa economy. No material changes are anticipated in the Real Estate Division in 2002.

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," effective October 1, 2000, which required that all derivatives be recognized

15

as assets or liabilities in the balance sheet and that these instruments be measured at fair value. The effect of SFAS No. 133 on the Company's results of operations and financial position was not material for fiscal year 2001, and is not expected to be material in 2002.

In 2001, the Financial Standards Board (FASB) issued SFAS No. 143, "Accounting for Asset Retirement Obligations," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets." The Company does not anticipate that these pronouncements will have an immediate material impact on its results of operations or financial position. More information on these pronouncements can be found in Note 12 on page 30 of this Annual Report.

LIQUIDITY AND CAPITAL RESOURCES

The Company's capital spending was $274,670,000 in 2001, $131,932,000 in 2000, and $122,951,000 in 1999. Net cash provided from operating activities for those same time periods were $278,856,000 in 2001, $201,836,000 in 2000, and $158,694,000 in 1999. In addition to the net cash provided by operating activities, the Company also generated net proceeds from the sale of portfolio securities of $24,439,000 in 2001, $12,569,000 in 2000, and $2,803,000 in 1999.

During 2000, the Company announced a program (FlexRig II program) under which it would construct 12 new FlexRigs at an approximate cost of between $7.5 and $8.25 million each. During 2001, the Company completed construction on seven of those 12 rigs. Additionally, the Company announced in 2001 that it would embark on another construction project (FlexRig III program) to build an additional 25 FlexRigs at an approximate cost of $10.2 million each. It is expected that the Company will complete construction on 15 of those 25 rigs under the FlexRig III program during 2002. During 2001, the Company also announced that it had reached agreement with two operators for offshore platform rig operations in the Gulf of Mexico. This will result in the Company spending approximately $50 million to construct two offshore platform rigs that should commence operations in the Company's third quarter of 2002.

These projects, along with ongoing remodification and refurbishment of existing equipment, plus additional drill pipe and other expenditures, should bring Contract Drilling capital expenditures to approximately $340 million in 2002. Additionally, the Oil and Gas Division has estimated its capital spending needs for the coming year to be approximately $50 million. These capital expenditures, along with miscellaneous real estate and corporate

16

capital expenditures, should bring total Company capital spending for 2002 close to $400 million. Funding for this significant increase in Company capital expenditures will come from existing cash balances, internally generated cash flow, additional bank borrowings, and proceeds from securities sales.

As described in Note 2 of Notes to Consolidated Financial Statements, in October 1998, the Company obtained $50 million in long-term debt proceeds. The $50 million of long-term debt matures in October 2003. The interest rate on this debt fluctuates based on the 30-day London Interbank Offered Rate (LIBOR). However, simultaneous to receiving the $50 million in long-term debt proceeds, the Company entered into a $50 million interest rate swap agreement with a major national bank. The swap effectively fixes the interest rate on this facility at 5.38 percent for the entire five-year term of the note. The Company's interest rate risk exposure is limited to its potential short-term borrowings, and results predominately from fluctuations in short-term interest rates as measured by 30-day LIBOR. This exposure should increase during 2002, as the Company secures additional debt financing.

The strength of the Company's balance sheet is substantial, with current ratios for 2001 and 2000 at 2.7 and 3.4, respectively, and with total bank borrowings less than four percent of total assets at September 30, 2001. Additionally, the Company manages a large portfolio of marketable securities that, at the close of 2001, had a market value of $226,134,000, with a cost basis of $119,165,000. The portfolio, heavily weighted in energy stocks, is subject to fluctuation in the market and may vary considerably over time. Excluding the Company's equity-method investments, the portfolio is marked to market on the Company's balance sheet for each reporting period. During 2001, the Company paid a dividend of $0.30 per share, or a total of $15,047,000, representing the 30th consecutive year of dividend increases.

STOCK PORTFOLIO HELD BY THE COMPANY
---------------------------------------------------------------------------------------------
                                                 Number of
                        September 30, 2001         Shares        Cost Basis      Market Value
------------------------------------------       -----------    ------------     ------------
                                                     (in thousands, except share amounts)
Atwood Oceanics, Inc. ....................        3,000,000     $     52,152     $     78,000
Schlumberger, Ltd. .......................        1,480,000           23,511           67,636
Transocean Sedco Forex, Inc. .............          286,528            9,509            7,564
SUNOCO, Inc. .............................          312,546            2,873           11,127
Phillips Petroleum Company ...............          240,000            5,976           12,946
BANK ONE CORPORATION .....................          175,000            1,969            5,507
Kerr-McGee Corporation ...................          150,000            3,983            7,787
Occidental Petroleum Corporation .........          150,000            3,566            3,651
ONEOK, Inc. ..............................          450,000            2,751            7,452
Other ....................................                            12,875           24,464
                                                                ------------     ------------
            Total ........................                      $    119,165     $    226,134
                                                                ============     ============

17

CONSOLIDATED BALANCE SHEETS

HELMERICH & PAYNE, INC.

ASSETS
------------------------------------------------------------------------------------------------------------
                                                                 September 30,        2001           2000
------------------------------------------------------------------------------     ----------     ----------
                                                                                         (in thousands)
CURRENT ASSETS:

    Cash and cash equivalents ................................................     $  122,962     $  108,087
    Accounts receivable, less reserve of $1,661 in 2001 and $2,003 in 2000 ...        147,235        106,630
    Inventories ..............................................................         28,934         25,598
    Prepaid expenses and other ...............................................         32,281         24,829
                                                                                   ----------     ----------
        Total current assets .................................................        331,412        265,144
                                                                                   ----------     ----------
INVESTMENTS ..................................................................        200,286        304,326
                                                                                   ----------     ----------
PROPERTY, PLANT AND EQUIPMENT, at cost:

    Contract drilling equipment ..............................................      1,028,015        891,749
    Oil and gas properties ...................................................        521,673        457,724
    Real estate properties ...................................................         50,579         50,649
    Other ....................................................................         86,300         80,268
                                                                                   ----------     ----------
                                                                                    1,686,567      1,480,390
    Less--Accumulated depreciation, depletion and amortization ...............        868,163        806,785
                                                                                   ----------     ----------
        Net property, plant and equipment ....................................        818,404        673,605

OTHER ASSETS .................................................................         14,405         16,417
                                                                                   ----------     ----------
TOTAL ASSETS .................................................................     $1,364,507     $1,259,492
                                                                                   ==========     ==========

The accompanying notes are an integral part of these statements.

18

LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------
                                                                      September 30,        2001              2000
-----------------------------------------------------------------------------------     ------------      ------------
                                                                                                (in thousands,
                                                                                              except share data)
CURRENT LIABILITIES:

    Accounts payable ..............................................................     $     67,595      $     32,279
    Accrued liabilities ...........................................................           53,626            46,615
                                                                                        ------------      ------------
                    Total current liabilities .....................................          121,221            78,894
                                                                                        ------------      ------------
NONCURRENT LIABILITIES:

    Long-term notes payable .......................................................           50,000            50,000
    Deferred income taxes .........................................................          144,439           156,650
    Other .........................................................................           22,370            18,245
                                                                                        ------------      ------------
            Total noncurrent liabilities ..........................................          216,809           224,895
                                                                                        ------------      ------------
SHAREHOLDERS' EQUITY:

    Common stock, $.10 par value, 80,000,000 shares authorized,
       53,528,952 shares issued ...................................................            5,353             5,353
    Preferred stock, no par value, 1,000,000 shares authorized,
       no shares issued ...........................................................               --                --
    Additional paid-in capital ....................................................           80,324            66,090
    Retained earnings .............................................................          943,105           813,885
    Unearned compensation .........................................................           (1,812)           (3,277)
    Accumulated other comprehensive income ........................................           49,309           106,064
                                                                                        ------------      ------------
                                                                                           1,076,279           988,115
    Less treasury stock, 3,676,155 shares in 2001 and 3,548,480 shares in 2000,
       at cost ....................................................................           49,802            32,412
                                                                                        ------------      ------------
           Total shareholders' equity .............................................        1,026,477           955,703
                                                                                        ------------      ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........................................     $  1,364,507      $  1,259,492
                                                                                        ============      ============

The accompanying notes are an integral part of these statements.

19

CONSOLIDATED STATEMENTS OF INCOME

HELMERICH & PAYNE, INC.

                       Years Ended September 30,         2001              2000             1999
------------------------------------------------     ------------      ------------     ------------
                                                                      (in thousands,
                                                                except per share amounts)
REVENUES:

    Sales and other operating revenues .........     $    816,262      $    599,122     $    556,562
    Income from investments ....................           10,592            31,973            7,757
                                                     ------------      ------------     ------------
                                                          826,854           631,095          564,319
                                                     ------------      ------------     ------------
COSTS AND EXPENSES:

    Operating costs ............................          413,378           316,933          332,330
    Depreciation, depletion and amortization ...           87,309           110,851          109,167
    Dry holes and abandonments .................           34,042            22,692           11,727
    Taxes, other than income taxes .............           41,640            29,202           25,478
    General and administrative .................           15,415            11,578           14,198
    Interest ...................................              (32)            3,076            6,481
                                                     ------------      ------------     ------------
                                                          591,752           494,332          499,381
                                                     ------------      ------------     ------------
INCOME BEFORE INCOME TAXES AND
    EQUITY IN INCOME OF AFFILIATES .............          235,102           136,763           64,938

INCOME TAX EXPENSE .............................           93,027            57,684           25,706

EQUITY IN INCOME OF AFFILIATES
    net of income taxes ........................            2,179             3,221            3,556
                                                     ------------      ------------     ------------
NET INCOME .....................................     $    144,254      $    182,300     $     42,788
                                                     ============      ============     ============
EARNINGS PER COMMON SHARE:
    BASIC ......................................     $       2.88      $       1.66     $       0.87
    DILUTED ....................................     $       2.84      $       1.64     $       0.86

AVERAGE COMMON SHARES OUTSTANDING:
    BASIC ......................................           50,096            49,534           49,243
    DILUTED ....................................           50,772            50,035           49,817

The accompanying notes are an integral part of these statements.

20

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

HELMERICH & PAYNE, INC.

                                                                                                         Accumulated
                                       Common Stock   Additional  Unearned             Treasury Stock      Other
                                      --------------   Paid-in      Comp-   Retained  ----------------  Comprehensive
                                      Shares  Amount   Capital   pensation  Earnings  Shares    Amount  Income (Loss)    Total
                                      ------  ------  ---------- ---------  --------  ------    ------  ------------- -----------
                                                                  (in thousands, except per share amounts)
Balance, Sept. 30, 1998 ............  53,529   $5,353  $59,004    $(5,605)  $716,875   4,146   $(37,168)   $  54,689  $   793,148

Comprehensive income:
  Net income .......................      --       --       --         --     42,788      --         --           --       42,788
  Other comprehensive income
    Unrealized gains on available-
      for-sale securities, net .....      --       --       --         --         --      --         --       20,493       20,493
                                                                                                                      -----------
Comprehensive income ...............                                                                                       63,281
                                                                                                                      -----------
Cash dividends ($.28 per share) ....      --       --       --         --    (13,866)     --         --           --      (13,866)
Exercise of stock options ..........      --       --    2,201         --         --    (226)     1,710           --        3,911
Tax benefit of stock-based awards ..      --       --       69         --         --      --         --           --           69
Stock issued under Restricted
  Stock Award Plan .................      --       --      137       (289)        --     (17)       152           --           --
Amortization of deferred
  compensation .....................      --       --       --      1,407        159      --         --           --        1,566
                                     -------   ------  -------    -------   --------   -----   --------    ---------  -----------
Balance, Sept. 30, 1999 ............  53,529    5,353   61,411     (4,487)   745,956   3,903    (35,306)      75,182      848,109

Comprehensive income:
  Net income .......................      --       --       --         --     82,300      --         --           --       82,300
  Other comprehensive income,
    Unrealized gains on available-
      for-sale securities, net .....      --       --       --         --         --      --         --       30,882       30,882
                                                                                                                      -----------
Comprehensive income ...............                                                                                      113,182
                                                                                                                      -----------
Cash dividends ($.285 per share) ...      --       --       --         --    (14,448)     --         --           --      (14,448)
Exercise of stock options ..........      --       --    4,491         --         --    (366)     3,253           --        7,744
Purchase of stock for treasury .....      --       --       --         --         --      21       (450)          --         (450)
Tax benefit of stock-based awards ..      --       --       31         --         --      --         --           --           31
Stock issued under Restricted
  Stock Award Plan .................      --       --      157       (248)        --     (10)        91           --           --
Amortization of deferred
  compensation .....................      --       --       --      1,458         77      --         --           --        1,535
                                     -------   ------  -------    -------   --------   -----   --------    ---------  -----------
Balance, Sept. 30, 2000 ............  53,529    5,353   66,090     (3,277)   813,885   3,548    (32,412)     106,064      955,703

Comprehensive income:
  Net income .......................      --       --       --         --    144,254      --         --           --      144,254
  Other comprehensive income,
    Unrealized gains on available-
      for-sale securities,net ......      --       --       --         --         --      --         --      (55,769)     (55,769)
    Derivatives instruments losses,
      net ..........................      --       --       --         --         --      --         --         (986)        (986)
    Total other comprehensive
     income.........................                                                                                      (56,755)
                                                                                                                      -----------
Comprehensive income ...............                                                                                       87,499
                                                                                                                      -----------
Cash dividends ($.30 per share) ....      --       --       --         --    (15,047)     --         --           --      (15,047)
Exercise of stock options ..........      --       --    7,965         --         --    (646)     5,808           --       13,773
Purchase of stock for treasury .....      --       --       --         --         --     774    (23,198)          --      (23,198)
Tax benefit of stock-based awards ..      --       --    6,269         --         --      --         --           --        6,269
Amortization of deferred
  compensation .....................      --       --       --      1,465         13      --         --           --        1,478
                                     -------   ------  -------    -------   --------   -----   --------    ---------  -----------
Balance, Sept. 30, 2001 ............  53,529   $5,353  $80,324    $(1,812)  $943,105   3,676   $(49,802)   $  49,309  $ 1,026,477
                                     =======   ======  =======    =======   ========   =====   ========    =========  ===========

The accompanying notes are an integral part of these statements.

21

CONSOLIDATED STATEMENTS OF CASH FLOWS

HELMERICH & PAYNE, INC.

                                                   Years Ended September 30,        2001            2000            1999
----------------------------------------------------------------------------     ----------      ----------      ----------
                                                                                               (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income ..............................................................     $  144,254      $  182,300      $   42,788
                                                                                 ----------      ----------      ----------
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation, depletion and amortization ...........................         87,309         110,851         109,167
        Dry holes and abandonments .........................................         34,042          22,692          11,727
        Equity in income of affiliates before income taxes .................         (4,383)         (5,196)         (5,735)
        Amortization of deferred compensation ..............................          1,478           1,535           1,566
        Gain on sale of securities and non-monetary investment income ......         (1,189)        (24,000)         (2,547)
        Gain on sale of property, plant and equipment ......................         (4,895)         (2,479)         (6,900)
        Other - net ........................................................            906             944           2,148
        Change in assets and liabilities:
           Accounts receivable .............................................        (39,747)         (7,032)         19,797
           Inventories .....................................................         (2,062)           (411)            214
           Prepaid expenses and other ......................................         (4,874)         (7,780)         (5,079)
           Accounts payable ................................................         34,840           6,575         (16,147)
           Accrued liabilities .............................................          9,065           7,557           2,367
           Deferred income taxes ...........................................         21,641          21,133             559
           Other noncurrent liabilities ....................................          2,471          (4,853)          4,769
                                                                                 ----------      ----------      ----------
                                                                                    134,602         119,536         115,906
                                                                                 ----------      ----------      ----------
              Net cash provided by operating activities ....................        278,856         201,836         158,694
                                                                                 ----------      ----------      ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures, including dry hole costs ..........................       (274,670)       (131,932)       (122,951)
   Acquisition of business, net of cash acquired ...........................         (2,279)             --              --
   Proceeds from sale of property, plant and equipment .....................         13,173          18,044           9,990
   Purchase of investments .................................................             --              --            (537)
   Proceeds from sale of securities ........................................         24,439          12,569           2,803
                                                                                 ----------      ----------      ----------
              Net cash used in investing activities ........................       (239,337)       (101,319)       (110,695)
                                                                                 ----------      ----------      ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable .............................................             --              --         102,000
   Payments made on notes payable ..........................................             --          (5,000)       (141,800)
   Dividends paid ..........................................................        (15,047)        (14,175)        (13,849)
   Purchases of stock for treasury .........................................        (23,198)           (450)             --
   Proceeds from exercise of stock options .................................         13,601           5,437           2,932
                                                                                 ----------      ----------      ----------
              Net cash used in financing activities ........................        (24,644)        (14,188)        (50,717)
                                                                                 ----------      ----------      ----------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS .............................................................         14,875          86,329          (2,718)
CASH AND CASH EQUIVALENTS, beginning of period .............................        108,087          21,758          24,476
                                                                                 ----------      ----------      ----------
CASH AND CASH EQUIVALENTS, end of period ...................................     $  122,962      $  108,087      $   21,758
                                                                                 ==========      ==========      ==========

The accompanying notes are an integral part of these statements.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

HELMERICH & PAYNE, INC. September 30, 2001, 2000 and 1999


NOTE 1 SUMMARY OF ACCOUNTING POLICIES

CONSOLIDATION -

The consolidated financial statements include the accounts of Helmerich & Payne, Inc. (the Company), and all of its wholly-owned subsidiaries. Fiscal years of the Company's foreign consolidated operations end on August 31 to facilitate reporting of consolidated results.

TRANSLATION OF FOREIGN CURRENCIES -

The Company has determined that the functional currency for its foreign subsidiaries is the U.S. dollar. The foreign currency transaction loss for 2001, 2000, and 1999 was $494,000, $664,000, and $21,000, respectively.

USE OF ESTIMATES -

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

PROPERTY, PLANT AND EQUIPMENT -

The Company follows the successful efforts method of accounting for oil and gas properties. Under this method, the Company capitalizes all costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells which find proved reserves and to drill and equip development wells. Geological and geophysical costs, delay rentals and costs to drill exploratory wells which do not find proved reserves are expensed. Capitalized costs of producing oil and gas properties are depreciated and depleted by the unit-of-production method based on proved oil and gas reserves as determined by the Company and its independent engineers. Reserves are recorded for capitalized costs of undeveloped leases based on management's estimate of recoverability. Costs of surrendered leases are charged to the reserve.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Company recognizes impairment losses for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the carrying amount of the asset. The Company recognized impairment charges of approximately $8.9 million, $4.0 million and $10.1 million in 2001, 2000, and 1999, respectively, for proved Exploration and Production properties which are included in depreciation, depletion, and amortization expense. After-tax, the impairment charge reduced 2001, 2000, and 1999 net income by approximately $5.5 million, $2.5 million, and $6.2 million, respectively. On a diluted basis the impairment charges reduced earnings per share in 2001, 2000, and 1999 by $0.11, $0.05, and $0.13, respectively. The Company evaluates impairment of exploration and production assets on a field by field basis. Fair value on all long-lived assets is based on discounted future cash flows or information provided by sales and purchases of similar assets.

Substantially all property, plant and equipment other than oil and gas properties is depreciated using the straight-line method based on the following estimated useful lives:

                                                   YEARS
                                                   -----
Contract drilling equipment......................   4-15
Real estate buildings and equipment..............  10-50
Other............................................   3-33

As a result of an economic evaluation of useful lives of its drilling equipment, the Company extended the depreciable life of its rig equipment from ten to 15 years. This change will provide a better matching of revenues and depreciation expense over the useful life of the equipment. This change, effective October 1, 2000, reduced depreciation expense for 2001 by approximately $30 million.

CASH AND CASH EQUIVALENTS -

Cash and cash equivalents consist of cash in banks and investments readily convertible into cash which mature within three months from the date of purchase.

INVENTORIES -

Inventories, primarily materials and supplies, are valued at the lower of cost (moving average or actual) or market.

SHIPPING COSTS -

The Company's shipping and handling costs are included under operating costs for all periods presented.

DRILLING REVENUES -

Contract drilling revenues are comprised primarily of daywork drilling contracts for which the related revenues and expenses are recognized as work progresses. Fiscal 2000 and 1999 contract drilling revenues also include revenues of $4,109,000, and $40,790,000, respectively, from a rig construction contract for which revenues were recognized based on the percentage-of-completion method, measured by the percentage that incurred costs to date bear to total estimated costs. The Company does not currently have any third party rig construction contracts.

GAS IMBALANCES -

The Company recognizes revenues from gas wells on the sales method, and a liability is recorded for permanent imbalances resulting from gas wells in which the Company has sold more production than it is entitled.

INVESTMENTS -

The cost of securities used in determining realized gains and losses is based on the average cost basis of the security sold. Net income in 2001 includes a loss of approximately $1.4 million, $0.03 per share on a diluted basis, resulting from the Company's assessment that the decline in market value of certain available-for-sale securities below their financial cost basis was other than temporary. Net income in 2000 included approximately $6.6 million, $0.13 per share on a diluted basis, on gains related to non-monetary transactions within the Company's available-for-sale security invested portfolio which were accounted for at fair value.

Investments in companies owned from 20 to 50 percent are accounted for using the equity method with the Company recognizing its proportionate share of the income or loss of each investee. The Company owned approximately 22% of Atwood Oceanics, Inc. (Atwood) at both September 30, 2001 and 2000. The quoted market value of the Company's investment was $78,000,000 and $125,063,000 at September 30, 2001 and 2000, respectively. Retained earnings at September 30, 2001 includes approximately $25,514,000 of undistributed earnings of Atwood.

23

Summarized financial information of Atwood is as follows:

                                                          2001           2000           1999
                                                       ----------     ----------     ----------
                                                                    (in thousands)
Gross revenues ...................................     $  147,540     $  134,514     $  150,009
Costs and expenses ...............................        120,395        111,366        122,289
                                                       ----------     ----------     ----------
Net income .......................................     $   27,145     $   23,148     $   27,720
                                                       ==========     ==========     ==========
Helmerich & Payne, Inc.'s equity in net income,
      net of income taxes ........................     $    3,596     $    3,221     $    3,556
                                                       ==========     ==========     ==========

Current assets ...................................     $   45,891     $   63,951     $   50,532
Noncurrent assets ................................        304,857        248,334        243,072
Current liabilities ..............................         19,144         17,484         19,013
Noncurrent liabilities ...........................         85,948         77,332         82,362
Shareholders' equity .............................        245,656        217,469        192,229
                                                       ==========     ==========     ==========
Helmerich & Payne, Inc.'s investment .............     $   52,153     $   46,353     $   41,157
                                                       ==========     ==========     ==========

INCOME TAXES -

Deferred income taxes are computed using the liability method and are provided on all temporary differences between the financial basis and the tax basis of the Company's assets and liabilities.

OTHER POST EMPLOYMENT BENEFITS -

The Company sponsors a health care plan that provides post retirement medical benefits to retired employees. Employees who retire after November 1, 1992 and elect to participate in the plan pay the entire estimated cost of such benefits.

The Company has accrued a liability for estimated workers compensation claims incurred. The liability for other benefits to former or inactive employees after employment but before retirement is not material.

EARNINGS PER SHARE -

Basic earnings per share is based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of stock options and restricted stock.

EMPLOYEE STOCK-BASED AWARDS -

Employee stock-based awards are accounted for under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related information. Fixed plan common stock options do not result in compensation expense, because the exercise price of the stock equals the market price of the underlying stock on the date of grant.

TREASURY STOCK -

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in-capital using the average-cost method.

CAPITALIZATION OF INTEREST -

The Company capitalizes interest on major projects during construction. Interest is capitalized on borrowed funds, with the rate based on the average interest rate on related debt. Capitalized interest for 2001, 2000, and 1999 was $1.3 million, $0.4 million, and $0.1 million, respectively.

INTEREST RATE RISK MANAGEMENT -

The Company uses derivatives as part of an overall operating strategy to moderate certain financial market risks and is exposed to interest rate risk from long-term debt. To manage this risk, in October 1998, the Company entered into an interest rate swap to exchange floating rate for fixed rate interest payments through October 2003, the remaining life of the debt. The difference to be paid or received is accrued and recognized as an adjustment of interest expense. As of September 30, 2001, the Company's interest rate swap had a notional principal amount of $50 million.

The Company's accounting policy for these instruments is based on its designation of such instruments as hedging transactions. An instrument is designated as a hedge based in part on its effectiveness in risk reduction and one-to-one matching of derivative instruments to underlying transactions. The Company records all derivatives on the balance sheet at fair value.

For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure of variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income in stockholders' equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The change in value of the derivative instrument in excess of the cumulative change in the present value of the future cash flows of the risk being hedged, if any, is recognized in the current earnings during the period of change.

The Company's interest rate swap has been designated as a cash flow hedge and is 100% effective in hedging the exposure of variability in the future interest payments attributable to the debt because the terms of the interest swap correlate with the terms of the debt.

Gains and losses from termination of interest rate swap agreements are deferred and amortized as an adjustment to interest expense over the original term of the terminated swap agreement.


NOTE 2 NOTES PAYABLE AND LONG-TERM DEBT

At September 30, 2001, the Company had committed bank lines totaling $85 million; $50 million expires October 2003 and $35 million expires May 2002. Additionally, the Company had uncommitted credit facilities totaling $10 million. Collectively, the Company had $50 million in outstanding borrowings and outstanding letters of credit totaling $10.6 million against these lines at September 30, 2001. As described above, concurrent with a $50 million borrowing under the facility that expires October 2003, the Company entered into an interest rate swap with a notional value of $50 million and an expiration date of October 2003. The swap effectively converts this $50 million facility from a floating rate of LIBOR plus 50 basis points to a fixed effective rate of 5.38 percent. Excluding the impact of the interest rate swap, the average interest rate for the borrowings at September 30, 2001, was approximately 5.66 percent on a 360 day basis.

Under the various credit agreements, the Company must meet certain requirements regarding levels of debt, net worth and earnings.

24


NOTE 3 INCOME TAXES

The components of the provision (benefit) for income taxes are as follows:

                                           Years Ended September 30,     2001               2000              1999
--------------------------------------------------------------------   ---------         ----------         --------
                                                                                       (in thousands)
CURRENT:
   Federal...........................................................  $  57,607         $  325,736         $  9,684
     Foreign.........................................................      8,870              8,766           15,963
     State...........................................................      6,680              3,366            1,744
                                                                       ---------         ----------         --------
                                                                          73,157             37,868           27,391
                                                                       ---------         ----------         --------
DEFERRED:
     Federal.........................................................     14,020             12,318             (842)
     Foreign.........................................................      4,701              6,146             (771)
     State ..........................................................      1,149              1,352              (72)
                                                                       ---------         ----------         --------
                                                                          19,870             19,816           (1,685)
                                                                       ---------         ----------         --------
TOTAL PROVISION:                                                       $  93,027         $   57,684         $ 25,706
                                                                       =========         ==========         ========

The amounts of domestic and foreign income are as follows:

                                           Years Ended September 30,      2001              2000              1999
--------------------------------------------------------------------   ---------         ----------         --------
                                                                                       (in thousands)
INCOME BEFORE INCOME TAXES AND
   EQUITY IN INCOME OF AFFILIATES:
     Domestic........................................................  $ 208,288         $  129,373         $ 41,693
     Foreign.........................................................     26,814              7,390           23,245
                                                                       ---------         ----------         --------
                                                                       $ 235,102         $  136,763         $ 64,938
                                                                       =========         ==========         ========

Effective income tax rates on income as compared to the U.S. Federal income tax rate are as follows:

                                            Years Ended September 30,     2001        2000        1999
---------------------------------------------------------------------  ---------    --------    --------
U.S. Federal income tax rate.........................................      35%         35%         35%
Dividends received deduction.........................................      --          --          (1)
Effect of foreign taxes..............................................       2           5           5
Non-conventional fuel source credits utilized........................      --          --          (1)
Other, net...........................................................       3           2           2
                                                                          ---         ---         ---
Effective income tax rate............................................      40%         42%         40%
                                                                          ===         ===         ===

The components of the Company's net deferred tax liabilities are as follows:

                                      September 30,                      2001                2000
---------------------------------------------------                  -----------         ----------
                                                                                (in thousands)
            DEFERRED TAX LIABILITIES:
                Property, plant and equipment                        $   101,674         $   75,653
                Available-for-sale securities                             33,937             72,583
                Pension provision                                          3,194              4,075
                Equity investments                                        15,637             12,734
                Other                                                        506              1,217
                                                                     -----------         ----------
                    Total deferred tax liabilities                       154,948            166,262
                                                                     -----------         ----------
            DEFERRED TAX ASSETS:
                Financial accruals                                         6,746              9,612
                Other                                                      3,763                 --
                    Total deferred tax assets                             10,509              9,612
                                                                     -----------         ----------
            NET DEFERRED TAX LIABILITIES                             $   144,439         $  156,650
                                                                     ===========         ==========

25


NOTE 4 SHAREHOLDERS' EQUITY

In January 2000, the board of directors authorized the repurchase of up to 1,000,000 shares of the Company's common stock in the open market or private transactions. The repurchased shares will be held in treasury and used for general corporate purposes including use in the Company's benefit plans. During fiscal 2001, the Company purchased 773,800 shares at a cost of approximately $23,198,000 and in fiscal 2000 purchased 20,600 shares at a cost of approximately $450,000. The Company did not purchase any shares is fiscal 1999. As of September 30, 2001, the Company is authorized to repurchase up to 205,600 additional shares.

The Company has several plans providing for common-stock based awards to employees and to non-employee directors. The plans permit the granting of various types of awards including stock options and restricted stock. Awards may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after grant.

The Company has reserved 3,135,509 shares of its treasury stock to satisfy the exercise of stock options issued under the 1990 and 1996 Stock Option Plans. Effective after December 6, 2000, additional options are no longer granted under these Plans. Options granted under the 1996 Plan vest over a four-year period. In fiscal 2001, 843,800 options were granted under the 1996 Plan.

In March 2001, the Company adopted the 2000 Stock Incentive Plan (the "Stock Incentive Plan"). The Stock Incentive Plan was effective December 6, 2000, and will terminate December 6, 2010. Under this plan, the Company is authorized to grant options for up to 3,000,000 shares of the Company's common stock at an exercise price not less than the fair market value of the common stock on the date of grant. Up to 450,000 shares of the total authorized may be granted to participants as restricted stock awards. There was no activity under this plan during fiscal 2001.

In fiscal 2000 and 1999, 10,000 and 17,000 shares of restricted stock, respectively, were granted at a weighted-average price of $24.75 and $17.00, respectively, which approximated fair market value at the date of grant. Unearned compensation of $248,000 and $289,000 for fiscal 2000 and 1999, respectively, is being amortized over a five-year period as compensation expense. There were no restricted stock grants in fiscal 2001.

The following summary reflects the stock option activity and related information (shares in thousands):

                                             2001                             2000                           1999
                                  ----------------------------      ---------------------------    --------------------------
                                              Weighted-Average                 Weighted-Average              Weighted-Average
                                  Options      Exercise Price       Options     Exercise Price     Options    Exercise Price
                                  -------     ----------------      -------    ----------------    -------   ----------------
Outstanding at October 1,           2,955         $22.94             2,574         $21.34           2,090          $22.09
Granted                               844          32.36               767          24.75             726           16.81
Exercised                            (644)         21.34              (364)         15.44            (238)          14.28
Forfeited/Expired                     (19)         25.57               (22)         23.00              (4)          13.51
                                  -------       --------           -------       --------          ------        --------
Outstanding on September 30,        3,136         $25.78             2,955         $22.94           2,574          $21.34
                                  -------       --------           -------       --------          ------        --------
Exercisable on September 30,        1,078         $23.82             1,046         $22.40             782          $20.13
                                  -------       --------           -------       --------          ------        --------
Shares available on September 30,
 for options that may be granted    3,000                            1,777                          2,537
                                  -------                          -------                         ------

The following table summarizes information about stock options at September 30, 2001 (shares in thousands):

                                    Outstanding Stock Options                     Exercisable Stock Options
                      -----------------------------------------------------      ----------------------------
                                    Weighted-Average
       Range of                  Remaining Contractural    Weighted-Average                  Weighted-Average
   Exercise Prices    Options             Life              Exercise Price       Options      Exercise Price
--------------------  -------    ----------------------    ----------------      -------     ----------------
$12.00   to   $16.50     374           3.7 years                $13.78              284           $13.77
$16.51   to   $26.50   1,511           7.3 years                $22.08              511           $22.18
$26.51   to   $38.31   1,251           8.2 years                $33.84              283           $36.85
                      ------           ---------                ------            -----           ------
$12.00   to   $38.31   3,136           7.2 years                $25.78            1,078           $23.82
                      ------           ---------                ------            -----           ------

26

The following table reflects pro forma net income and earnings per share had the Company elected to adopt the fair value method of SFAS No. 123, "Accounting for Stock-Based Compensation," in measuring compensation cost beginning with 1997 employee stock-based awards.

                 Years Ended September 30,         2001             2000            1999
------------------------------------------     ------------     ------------     -----------
                                                   (in thousands, except per share data)
Net Income:
   As reported ...........................     $    144,254     $     82,300     $     42,788
   Pro forma .............................     $    139,211     $     78,788     $     40,268

Basic earnings per share:
   As reported ...........................     $       2.88     $       1.66     $        .87
   Pro forma .............................     $       2.78     $       1.59     $        .82

Diluted earnings per share:
   As reported ...........................     $       2.84     $       1.64     $        .86
   Pro forma .............................     $       2.74     $       1.57     $        .81

These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years.

The weighted-average fair values of options at their grant date during 2001, 2000, and 1999 were $13.01, $10.80, and $6.81, respectively. The estimated fair value of each option granted is calculated using the Black-Scholes option-pricing model. The following summarizes the weighted-average assumptions used in the model:

                                                                         2001       2000      1999
                                                                         ----       ----      ----
Expected years until exercise.....................................       4.5        5.5        5.5
Expected stock volatility.........................................        43%        41%        38%
Dividend yield....................................................        .8%        .8%       1.2%
Risk-free interest rate...........................................       5.2%       6.0%       6.0%

On September 30, 2001, the Company had 49,852,797 outstanding common stock purchase rights ("Rights") pursuant to terms of the Rights Agreement dated January 8, 1996. Under the terms of the Rights Agreement each Right entitled the holder thereof to purchase from the Company one half of one unit consisting of one one-thousandth of a share of Series A Junior Participating Preferred Stock ("Preferred Stock"), without par value, at a price of $90 per unit. The exercise price and the number of units of Preferred Stock issuable on exercise of the Rights are subject to adjustment in certain cases to prevent dilution. The Rights will be attached to the common stock certificates and are not exercisable or transferrable apart from the common stock, until ten business days after a person acquires 15% or more of the outstanding common stock or ten business days following the commencement of a tender offer or exchange offer that would result in a person owning 15% or more of the outstanding common stock. In the event the Company is acquired in a merger or certain other business combination transactions (including one in which the Company is the surviving corporation), or more than 50% of the Company's assets or earning power is sold or transferred, each holder of a Right shall have the right to receive, upon exercise of the Right, common stock of the acquiring company having a value equal to two times the exercise price of the Right. The Rights are redeemable under certain circumstances at $0.01 per Right and will expire, unless earlier redeemed, on January 31, 2006. As long as the Rights are not separately transferrable, the Company will issue one half of one Right with each new share of common stock issued.


NOTE 5 EARNINGS PER SHARE

A reconciliation of the weighted-average common shares outstanding on a basic and diluted basis is as follows:

   (in thousands)                                                          2001         2000         1999
--------------------------------------------------------------           --------     --------     --------
   Basic weighted-average shares..............................            50,096       49,534       49,243
   Effect of dilutive shares:
     Stock options............................................               644          492          561
     Restricted stock.........................................                32            9           13
                                                                          ------       ------       ------
                                                                             676          501          574
                                                                          ------       ------       ------
Diluted weighted-average shares...............................            50,772       50,035       49,817
                                                                          ======       ======       ======

Restricted stock of 180,000 shares at a weighted-average price of $37.73 and options to purchase 1,250,750 shares of common stock at a weighted-average price of $33.84 were outstanding at September 30, 2001 but were not included in the computation of diluted earnings per common share. Inclusion of these shares would be antidilutive.

At September 30, 2000, restricted stock of 180,000 shares at a weighted-average price of $37.73 and options to purchase 533,000 shares of common stock at a price of $36.84 were outstanding but were not included in the computation of diluted earnings per common share. Inclusion of these shares would be antidilutive.

At September 30, 1999, restricted stock of 180,000 shares at a weighted-average price of $37.73 and options to purchase 540,000 shares of common stock at a price of $36.84 were outstanding but were not included in the computation of diluted earnings per common share. Inclusion of these shares would be antidilutive.

27


NOTE 6 FINANCIAL INSTRUMENTS

Notes payable bear interest at market rates and are carried at cost which approximates fair value. The estimated fair value of the Company's interest rate swap is ($1,590,553) at September 30, 2001, based on forward-interest rates derived from the year-end yield curve as calculated by the financial institution that is a counterparty to the swap. The estimated fair value of the Company's available-for-sale securities is primarily based on market quotes.

The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting (see Note 1):

                                         Gross         Gross       Estimated
                                       Unrealized    Unrealized       Fair
                             Cost        Gains         Losses        Value
                           --------    ----------    ----------    ---------
                                             (in thousands)
Equity Securities:
    September 30, 2001     $63,778      $ 84,257       $3,136       $144,899
    September 30, 2000     $86,901      $173,137       $2,065       $257,973

During the years ended September 30, 2001, 2000, and 1999, marketable equity available-for-sale securities with a fair value at the date of sale of $24,439,000, $12,640,000, and $2,803,000, respectively, were sold. The gross realized gains on such sales of available-for-sale securities totaled $3,314,000, $12,576,000, and $2,547,000, respectively, and the gross realized losses totaled $0, $0, and $0 respectively.


NOTE 7 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The table below presents changes in the components of accumulated other comprehensive income (loss).

                                                                  Unrealized Appreciation       Interest
                                                               (Depreciation) on Securities    Rate Swap       Total
                                                               ----------------------------    ---------       -----
Balance at September 30, 1998...................................        $ 54,689                $    --      $ 54,689
1999 Change:
     Pre-income tax amount......................................          35,600                     --        35,600
     Income tax provision.......................................         (13,528)                    --       (13,528)
     Realized gains in net income (net of $968 income tax)......          (1,579)                    --        (1,579)
                                                                        --------                -------      --------
   .............................................................          20,493                     --        20,493
                                                                        --------                -------      --------
Balance at September 30, 1999...................................          75,182                     --        75,182
                                                                        --------                -------      --------
2000 Change:
     Pre-income tax amount......................................          73,810                     --        73,810
     Income tax provision.......................................         (28,048)                    --       (28,048)
     Realized gains in net income (net of $9,120 income tax)....         (14,880)                    --       (14,880)
                                                                        --------                -------      --------
   .............................................................          30,882                     --        30,882
                                                                        --------                -------      --------
Balance at September 30, 2000...................................         106,064                     --       106,064
                                                                        --------                -------      --------
2001 Change:
     Pre-income tax amount......................................         (88,762)                (1,590)      (90,352)
     Income tax provision.......................................          33,730                    604        34,334
     Realized gains in net income (net of $452 income tax)......            (737)                    --          (737)
                                                                        --------                -------      --------
   .............................................................         (55,769)                  (986)      (56,755)
                                                                        --------                -------      --------
Balance at September 30, 2001...................................        $ 50,295                $  (986)     $ 49,309
                                                                        ========                =======      ========


NOTE 8 EMPLOYEE BENEFIT PLANS

The following tables set forth the Company's disclosures required by SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement Benefits".

CHANGE IN BENEFIT OBLIGATION:

                                                    Years ended September 30,              2001              2000
-----------------------------------------------------------------------------             -------           -------
                                                                                               (in thousands)
   Benefit obligation at beginning of year...................................             $44,838           $36,995
   Service cost..............................................................               3,851             3,427
   Interest cost.............................................................               3,330             2,741
   Actuarial loss ...........................................................                 903             3,059
   Benefits paid.............................................................              (1,189)           (1,384)
                                                                                          -------           -------
   Benefit obligation at end of year.........................................             $51,733           $44,838
                                                                                          =======           =======

CHANGE IN PLAN ASSETS:

                                                    Years ended September 30,              2001              2000
-----------------------------------------------------------------------------             -------           -------
                                                                                                (in thousands)
   Fair value of plan assets at beginning of year............................             $60,611          $ 58,517
   Actual return (loss) on plan assets.......................................              (5,435)            3,478
   Benefits paid.............................................................              (1,189)           (1,384)
                                                                                          -------          --------
   Fair value of plan assets at end of year .................................             $53,987          $ 60,611
                                                                                          =======          ========

   Funded status of the plan.................................................             $ 2,254          $ 15,773
   Unrecognized net actuarial (gain) loss....................................               6,720            (5,016)
   Unrecognized prior service cost...........................................                 548               786
   Unrecognized net transition asset.........................................                (540)           (1,079)
                                                                                          -------          --------
   Prepaid benefit cost......................................................             $ 8,982          $(10,464)
                                                                                          =======          ========

28

WEIGHTED-AVERAGE ASSUMPTIONS:

             Years Ended September 30,     2001      2000     1999
--------------------------------------    -------   ------   -------
         Discount rate                      7.50%    7.50%    7.50%
         Expected return on plan            9.00%    9.00%    9.00%
         Rate of compensation increase      5.00%    5.00%    5.00%

COMPONENTS OF NET PERIODIC PENSION EXPENSE:

                                     Years Ended September 30,          2001           2000            1999
--------------------------------------------------------------         -------       --------        --------
                                                                                  (in thousands)
   Service cost...............................................         $ 3,851        $ 3,427         $ 3,700
   Interest cost..............................................           3,330          2,741           2,468
   Expected return on plan assets.............................          (5,415)        (5,226)         (4,606)
   Amortization of prior service cost.........................             238            238             238
   Amortization of transition asset...........................            (540)          (540)           (540)
   Recognized net actuarial gain..............................              17           (303)             14
                                                                       -------        -------         -------
   Net pension expense........................................         $ 1,481        $  (337)        $ 1,274
                                                                       =======        =======         =======

DEFINED CONTRIBUTION PLAN:

Substantially all employees on the United States payroll of the Company may elect to participate in the Company sponsored Thrift/401(k) Plan by contributing a portion of their earnings. The Company contributes amounts equal to 100 percent of the first five percent of the participant's compensation subject to certain limitations. Expensed Company contributions were $4,935,000, $3,545,000, and $3,315,000 in 2001, 2000, and 1999, respectively.


NOTE 9 ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                                                September 30,              2001               2000
-----------------------------------------------------------------------------            --------           --------
                                                                                                (in thousands)
   Royalties payable.........................................................             $13,527           $18,918
   Taxes payable - operations................................................               9,996             6,861
   Ad valorem tax............................................................                 354             7,783
   Income taxes payable......................................................                 739                --
   Workers compensation claims...............................................               2,585             2,840
   Payroll and employee benefits.............................................               5,676             4,055
   Loss contingency (see note 13)............................................              10,000                --
   Other.....................................................................              10,749             6,158
                                                                                          -------           -------
                                                                                          $53,626           $46,615
                                                                                          =======           =======


NOTE 10 SUPPLEMENTAL CASH FLOW INFORMATION

                                     Years Ended September 30,           2001                2000              1999
--------------------------------------------------------------         -------             --------          --------
                                                                                        (in thousands)
   CASH PAYMENTS:
   Interest paid..............................................         $ 5,030              $ 2,491          $ 5,705
   Income taxes paid..........................................         $73,039              $39,673          $27,843


NOTE 11 RISK FACTORS

CONCENTRATION OF CREDIT -

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of temporary cash investments and trade receivables. The Company places temporary cash investments with established financial institutions and invests in a diversified portfolio of highly rated, short-term money market instruments. The Company's trade receivables are primarily with companies in the oil and gas industry. The Company normally does not require collateral except for certain receivables of customers in its natural gas marketing operations.

CONTRACT DRILLING OPERATIONS -

International drilling operations are significant contributors to the Company's revenues and net profit. It is possible that operating results could be affected by the risks of such activities, including economic conditions in the international markets in which the Company operates, political and economic instability, fluctuations in currency exchange rates, changes in international regulatory requirements, international employment issues, and the burden of complying with foreign laws. These risks may adversely affect the Company's future operating results and financial position.

The Company believes that its rig fleet is not currently impaired based on an assessment of future cash flows of the assets in question. However, it is possible that the Company's assessment that it will recover the carrying amount of its rig fleet from future operations may change in the near term.

OIL AND GAS OPERATIONS -

In estimating future cash flows attributable to the Company's exploration and production assets, certain assumptions are made with regard to commodity prices received and costs incurred. Due to the volatility of commodity prices, it is possible that the Company's assumptions used in estimating future cash flows for exploration and production assets may change in the near term.

29


NOTE 12 NEW ACCOUNTING STANDARDS

Effective October 1, 2000, the Company adopted Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," as amended, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133, as amended, requires that all derivatives be recorded on the balance sheet at fair value. Upon adoption at October 1, 2000, the effect of complying with SFAS 133, as amended, was immaterial to the Company's results of operations and financial position.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs and amends FASB Statement No. 19, "Financial Accounting and Reporting by Oil and Gas Producing Companies." The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The effect of this standard on the Company's results of operations and financial position is being evaluated.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and amends Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The Statement retains the basic framework of SFAS No. 121, resolves certain implementation issues of SFAS No. 121, extends applicability to discontinued operations, and broadens the presentation of discontinued operations to include a component of an entity. The Statement will be applied prospectively and is effective for financial statements issued for fiscal years beginning after December 15, 2001. Adoption of the Statement is not expected to have any initial impact on the Company's results of operations or financial position.


NOTE 13 CONTINGENT LIABILITIES AND COMMITMENTS

LITIGATION SETTLEMENT -

As previously discussed in the Company's filings on Forms 8-K dated March 16, 2001, and June 13, 2001, and in the Company's Form 10-Q filed on August 13, 2001, the Company is a defendant in Verdin v. R&B Falcon Drilling USA, Inc., et al., a civil action in the United States District Court, Galveston, Texas. The lawsuit alleges, among other things, that the company and many other defendant companies whose collective operations represent a substantial majority of the U.S. offshore drilling industry, conspired to fix wages and benefits paid to drilling employees. Plaintiff contends that this alleged conduct violates federal and state antitrust laws. Plaintiff sought treble damages, attorneys' fees and costs on behalf of himself and an alleged class of offshore workers.

In May 2001, the Company reached an agreement in principle with Plaintiff's counsel to settle all claims pending court approval of the settlement. In the third quarter of fiscal 2001, the Company accrued $3.25 million to contract drilling expense based on the pending settlement. The total settlement liability is $10 million of which $6.75 million will be paid by the Company's insurer. The Company does not believe that the settlement will have a material adverse affect on its business or financial position.

KANSAS AD VALOREM SETTLEMENT -

In fiscal 1997, the Company was assessed with approximately $6.7 million of Kansas ad valorem taxes which had been reimbursed to the Company for the period from October 1983 through June 1988 by interstate pipelines transporting natural gas to end users. In fiscal 1997, based on the assessment, natural gas revenues were reduced by $2.7 million and interest expense was increased by $4.0 million. In March 1998, approximately $6.1 million of the unpaid assessment was placed in an escrow account pending resolution of this matter. Since March 1998, the escrow account and the related liability continued to accrue interest income and interest expense of approximately $1.0 million.

The Federal Energy Regulatory Commission approved settlements between the Company and three of the pipelines. The last of these settlements was final in May 2001. The Company paid approximately $3.9 million out of its escrow account for the settlement of all three pipeline proceedings. The three settlements were approximately $3.1 million less than the amount the Company accrued for this liability. The impact of these settlements in the third quarter of fiscal 2001 was to increase natural gas revenues by approximately $1.1 million, reduce interest expense by approximately $2.0 million and reduce the liability by $3.1 million. At September 30, 2001, the Company continues to escrow approximately $337,000 to cover reimbursement liability in the remaining two pipeline proceedings. The Company believes this amount will be adequate to cover future reimbursement liability.

COMMITMENTS -

The Company, on a regular basis, makes commitments for the purchase of contract drilling equipment. At September 30, 2001, the Company has commitments of approximately $230 million for the purchase of drilling equipment.


NOTE 14 SEGMENT INFORMATION

The Company operates principally in the contract drilling industry, which includes a Domestic segment and an International segment, and in the oil and gas industry, which includes an Exploration and Production segment and a Natural Gas Marketing segment. The contract drilling operations consist of contracting Company-owned drilling equipment primarily to major oil and gas exploration companies. The Company's primary international areas of operation include Venezuela, Colombia, Ecuador, Argentina and Bolivia. Oil and gas activities include the exploration for and development of productive oil and gas properties located primarily in Oklahoma, Texas, Kansas, and Louisiana, as well as, the marketing of natural gas for third parties. The Natural Gas Marketing segment also markets most of the natural gas produced by the Exploration and Production segment retaining a market based fee from the sale of such production. The Company also has a Real Estate segment whose operations are conducted exclusively in the metropolitan area of Tulsa, Oklahoma. The primary areas of operations include a major shopping center and several multi-tenant warehouses. Each reportable segment is a strategic business unit which is managed separately as an autonomous business. Other includes investments in available-for-sale securities and corporate operations. The "other" component of Total Assets also includes the Company's investment in equity-owned investments.

The Company evaluates performance of its segments based upon operating profit or loss from operations before income taxes which includes revenues from external and internal customers; operating costs; depreciation, depletion and amortization; dry holes and abandonments and taxes other than income taxes. The accounting policies of the segments are the same as those described in Note 1, Summary of Accounting Policies. Intersegment sales are accounted for in the same manner as sales to unaffiliated customers.

30

Summarized financial information of the Company's reportable segments for each of the years ended September 30, 2001, 2000, and 1999 is shown in the following table:

                                                                                   Depreciation                 Additions
                                      External    Inter-      Total    Operating   Depletion &       Total    to Long-Lived
(in thousands)                          Sales    Segment      Sales     Profit     Amortization      Assets      Assets
--------------                        --------   --------    --------  ---------   ------------    ---------- -------------
2001:
CONTRACT DRILLING
  Domestic..........................  $332,399   $  4,487    $336,886   $107,691     $ 25,890      $  506,173   $144,063
  International Services............   154,890         --     154,890     28,475       18,838         268,947     38,022
                                      --------   --------    --------   --------     --------      ----------   --------
                                       487,289      4,487     491,776    136,166       44,728         775,120    182,085
                                      --------   --------    --------   --------     --------      ----------   --------
OIL & GAS OPERATIONS
  Exploration and Production........   217,194         --     217,194     95,579       38,104         190,907     89,733
  Natural Gas Marketing.............   100,111         --     100,111      5,254          170          14,598        269
                                      --------   --------    --------   --------     --------      ----------   --------
                                       317,305         --     317,305    100,833       38,274         205,505     90,002
                                      --------   --------    --------   --------     --------      ----------   --------
REAL ESTATE.........................    11,018      1,545      12,563      6,315        2,264          22,621      1,190
OTHER...............................    11,242         --      11,242         --        2,043         361,261      1,393
ELIMINATIONS........................        --     (6,032)     (6,032)        --           --              --         --
                                      --------   --------    --------   --------     --------      ----------   --------
    TOTAL...........................  $826,854   $     --    $826,854   $243,314     $ 87,309      $1,364,507   $274,670
                                      ========   ========    ========   ========     ========      ==========   ========

2000:
CONTRACT DRILLING
  Domestic..........................  $214,531   $  3,048    $217,579   $ 35,808     $ 35,310      $  342,278   $ 40,722
  International.....................   136,549                136,549      9,753       38,096         259,892     13,825
                                      --------   --------    --------   --------     --------      ----------   --------
                                       351,080      3,048     354,128     45,561       73,406         602,170     54,547
                                      --------   --------    --------   --------     --------      ----------   --------
OIL & GAS OPERATIONS
  Exploration and Production........   157,583         --     157,583     66,604       33,462         174,466     65,804
  Natural Gas Marketing.............    80,907         --      80,907      5,271          164          21,897        175
                                      --------   --------    --------   --------     --------      ----------   --------
                                       238,490         --     238,490     71,875       33,626         196,363     65,979
                                      --------   --------    --------   --------     --------      ----------   --------
REAL ESTATE.........................     8,999      1,545      10,544      5,346        1,598          24,235      2,909
OTHER...............................    32,526         --      32,526         --        2,221         436,724      8,497
ELIMINATIONS........................        --     (4,593)     (4,593)        --           --              --         --
                                      --------   --------    --------   --------     --------      ----------   --------
    TOTAL...........................  $631,095   $     --    $631,095   $122,782     $110,851      $1,259,492   $131,932
                                      ========   ========    ========   ========     ========      ==========   ========

1999:
CONTRACT DRILLING
  Domestic..........................  $213,647   $  2,457    $216,104   $ 30,154     $ 31,164      $  371,766   $ 57,975
  International.....................   182,987         --     182,987     29,845       36,178         271,746     17,293
                                      --------   --------    --------   --------     --------      ----------   --------
                                       396,634      2,457     399,091     59,999       67,342         643,512     75,268
                                      --------   --------    --------   --------     --------      ----------   --------
OIL & GAS OPERATIONS
  Exploration and Production........    95,953         --      95,953     11,245       38,658         151,898     44,333
  Natural Gas Marketing.............    55,259         --      55,259      4,418          174          15,156        261
                                      --------   --------    --------   --------     --------      ----------   --------
                                       151,212         --     151,212     15,663       38,832         167,054     44,594
                                      --------   --------    --------   --------     --------      ----------   --------
REAL ESTATE.........................     8,671      1,531      10,202      5,338        1,427          22,816      1,445
OTHER...............................     7,802         --       7,802         --        1,566         276,317      1,644
ELIMINATIONS........................        --     (3,988)     (3,988)        --           --              --         --
                                      --------   --------    --------   --------     --------      ----------   --------
    TOTAL...........................  $564,319   $     --    $564,319   $ 81,000     $109,167      $1,109,699   $122,951
                                      ========   ========    ========   ========     ========      ==========   ========

The following table reconciles segment operating profit per the table on page 31 to income before taxes and equity in income of affiliate as reported on the Consolidated Statements of Income (in thousands).

               Years Ended September 30,        2001          2000         1999
----------------------------------------      --------      --------     --------
   Segment operating profit.................. $243,314      $122,782     $ 81,000

   Unallocated amounts:
     Income from investments.................   10,592        31,973        7,757
     General and administrative expense......  (15,415)      (11,578)     (14,198)
     Interest expense........................       32        (3,076)      (6,481)
     Corporate depreciation..................   (2,043)       (2,152)      (1,565)
     Other corporate expense.................   (1,378)       (1,186)      (1,575)
                                              --------      --------     --------
       Total unallocated amounts.............   (8,212)       13,981      (16,062)
                                              --------      --------     --------
   Income before income taxes and equity
     in income of affiliates................. $235,102      $136,763     $ 64,938
                                              ========      ========     ========

31

The following tables present revenues from external customers and long-lived assets by country based on the location of service provided (in thousands).

                        Years Ended September 30,        2001           2000           1999
-------------------------------------------------     ----------     ----------     ----------

     Revenues
       United States ............................     $  671,964     $  494,546     $  381,332
       Venezuela ................................         43,409         34,922         59,481
       Colombia .................................         27,045         42,509         60,838
       Other Foreign ............................         84,436         59,118         62,668
                                                      ----------     ----------     ----------
         Total ..................................     $  826,854     $  631,095     $  564,319
                                                      ==========     ==========     ==========

     Long-Lived Assets
       United States ............................     $  616,472     $  477,593     $  479,753
       Venezuela ................................         84,856         37,001         62,931
       Colombia .................................         16,195         26,361         46,621
       Other Foreign ............................        100,881        132,650        101,910
                                                      ----------     ----------     ----------
         Total ..................................     $  818,404     $  673,605     $  691,215
                                                      ==========     ==========     ==========

Long-lived assets are comprised of property, plant and equipment.

Revenues from one company doing business with the contract drilling segment accounted for approximately 14.9 percent, 15.2 percent, and 17.5 percent of the total consolidated revenues during the years ended September 30, 2001, 2000 and 1999, respectively. Revenues from another company doing business with the contract drilling segment accounted for approximately 8.0 percent, 7.4 percent, and 12 percent of total consolidated revenues in the years ended September 30, 2001, 2000, and 1999, respectively. Collectively, the receivables from these customers were approximately $32.6 million and $17.4 million at September 30, 2001 and 2000, respectively.


NOTE 15 SUPPLEMENTARY FINANCIAL INFORMATION FOR OIL AND GAS PRODUCING ACTIVITIES

All of the Company's oil and gas producing activities are located in the United States.

Results of Operations from Oil and Gas Producing Activities -

                                   Years Ended September 30,        2001           2000           1999
------------------------------------------------------------     ----------     ----------     ----------
                                                                              (in thousands)

     Revenues ..............................................     $  217,194     $  157,583     $   95,953
                                                                 ----------     ----------     ----------
     Production costs ......................................         32,056         22,779         19,665
     Exploration expense and valuation provisions ..........         46,093         30,832         22,992
     Depreciation, depletion and amortization ..............         38,104         33,462         38,658
     Income tax expense ....................................         36,999         24,881          4,564
                                                                 ----------     ----------     ----------
          Total cost and expenses ..........................        153,252        111,954         85,879
                                                                 ----------     ----------     ----------
     Results of operations (excluding corporate overhead
          and interest costs) ..............................     $   63,942     $   45,629     $   10,074
                                                                 ==========     ==========     ==========

Capitalized Costs -

                                                          September 30,        2001           2000
-----------------------------------------------------------------------     ----------     ----------
                                                                                (in thousands)

     Proved properties ................................................     $  486,772     $  430,675
     Unproved properties ..............................................         34,901         27,050
          Total costs .................................................        521,673        457,725
                                                                            ----------     ----------

     Less - Accumulated depreciation, depletion and amortization ......        357,094        314,091
                                                                            ----------     ----------

          Net .........................................................     $  164,579     $  143,634
                                                                            ==========     ==========

Costs Incurred Relating to Oil and Gas Producing Activities -

             Years Ended September 30,        2001           2000           1999
--------------------------------------     ----------     ----------     ----------
                                                        (in thousands)
     Property acquisition:
         Proved ......................     $      738     $      105     $       89
         Unproved ....................         18,612         11,040         14,385
     Exploration .....................         44,166         43,833         22,292
     Development .....................         41,459         18,843         19,167
                                           ----------     ----------     ----------
         Total .......................     $  104,975     $   73,821     $   55,933
                                           ==========     ==========     ==========

32

Estimated Quantities of Proved Oil and Gas Reserves (Unaudited) -

Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those which are expected to be recovered through existing wells with existing equipment and operating methods. The following is an analysis of proved oil and gas reserves as estimated by Netherland, Sewell & Associates, Inc. at September 30, 2001 and 2000. Amounts at September 30, 1999 were estimated by the Company and reviewed by independent engineers.

                                                                                         OIL (Bbls)        GAS (Mmcf)
                                                                                         ----------        ----------
Proved reserves at September 30, 1998............................................         4,761,313         251,626
Revisions of previous estimates..................................................           570,126          11,771
Extensions, discoveries and other additions......................................           151,829          22,491
Production.......................................................................          (649,370)        (44,240)
Purchases of reserves-in-place...................................................                --              77
Sales of reserves-in-place.......................................................                --          (2,105)
                                                                                          ---------         -------
Proved reserves at September 30, 1999............................................         4,833,898         239,620
Revisions of previous estimates..................................................         1,316,714          17,363
Extensions, discoveries and other additions......................................         1,119,314          52,569
Production.......................................................................          (880,304)        (46,923)
Purchases of reserves-in-place...................................................             1,502             242
Sales of reserves-in-place.......................................................           (85,987)           (373)
                                                                                          ---------         -------
Proved reserves at September 30, 2000............................................         6,305,137         262,498
Revisions of previous estimates..................................................          (700,329)        (17,018)
Extensions, discoveries and other additions......................................         1,144,709          12,748
Production.......................................................................          (818,356)        (42,387)
Purchases of reserves-in-place...................................................               434             496
Sales of reserves-in-place.......................................................                --              --
                                                                                          ---------         -------

Proved reserves at September 30, 2001............................................         5,931,595         216,337
                                                                                          =========         =======

Proved developed reserves at
   September 30, 1999 ...........................................................         4,828,071         229,765
                                                                                          =========         =======
   September 30, 2000 ...........................................................         5,847,217         217,334
                                                                                          =========         =======
   September 30, 2001 ...........................................................         4,865,569         198,103
                                                                                          =========         =======

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited) -

The "Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure requirement under Financial Accounting Standards Board Statement No. 69 "Disclosures About Oil and Gas Producing Activities". The Standardized Measure does not purport to present the fair market value of a company's proved oil and gas reserves. This would require consideration of expected future economic and operating conditions, which are not taken into account in calculating the Standardized Measure.

Under the Standardized Measure, future cash inflows were estimated by applying year-end prices to the estimated future production of year-end proved reserves. Future cash inflows were reduced by estimated future production and development costs based on year-end costs to determine pre-tax cash inflows. Future income taxes were computed by applying the statutory tax rate to the excess of pre-tax cash inflows over the Company's tax basis in the associated proved oil and gas properties. Tax credits and permanent differences were also considered in the future income tax calculation. Future net cash inflows after income taxes were discounted using a ten percent annual discount rate to arrive at the Standardized Measure.

                                                  At September 30,      2001            2000
------------------------------------------------------------------   -----------    -----------
                                                                            (in thousands)
Future cash inflows ..............................................   $   467,886    $ 1,377,922
Future costs -
    Future production and development costs ......................      (174,703)      (317,898)
    Future income tax expense ....................................       (81,253)      (331,672)
                                                                     -----------    -----------
Future net cash flows ............................................       211,930        728,352
10% annual discount for estimated timing of cash flows ...........       (67,891)      (240,281)
                                                                     -----------    -----------
Standardized Measure of discounted future net cash flows .........   $   144,039    $  (488,071)
                                                                     ===========    ===========

33

Changes in Standardized Measure Relating to Proved Oil and Gas Reserves
(Unaudited)

                                      Years Ended September 30,     2001          2000         1999
---------------------------------------------------------------   ---------    ---------    ---------
                                                                           (in thousands)
Standardized Measure - Beginning of year ......................   $ 488,071    $ 232,618    $ 125,927
Increases (decreases) -
  Sales, net of production costs ..............................    (179,776)    (130,898)     (72,895)
  Net change in sales prices, net of production costs .........    (400,679)     261,926      142,970
  Discoveries and extensions, net of related future
      development and production costs ........................      29,387      156,840       38,164
  Changes in estimated future development costs ...............      10,667      (36,994)     (11,095)
  Development costs incurred ..................................      17,311       13,587       16,558
  Revisions of previous quantity estimates ....................     (15,298)      57,730       17,713
  Accretion of discount .......................................      68,021       30,951       16,700
  Net change in income taxes ..................................     160,776     (114,762)     (40,671)
  Purchases of reserves-in-place ..............................         619          542           96
  Sales of reserves-in-place ..................................          --         (700)      (1,390)
  Changes in production rates and other .......................     (35,060)      17,231          541
                                                                  ---------    ---------    ---------
Standardized Measure - End of year ............................   $(144,039    $ 488,071    $ 232,618
                                                                  =========    =========    =========

NOTE 16 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

(in thousands, except per share amounts)

                                             1st          2nd          3rd          4th
                     2001                  Quarter      Quarter      Quarter      Quarter
                     ----                  -------      -------      -------      -------
Revenues .............................     $192,550     $221,569     $217,222     $195,513
Gross profit .........................       59,614       72,939       67,607       50,325
Net income ...........................       33,840       41,749       40,437       28,228
Basic net income per share ...........          .68          .83          .80          .56
Diluted net income per share .........          .67          .82          .79          .56

                                             1st          2nd          3rd          4th
                     2000                  Quarter      Quarter      Quarter      Quarter
                     ----                  -------      -------      -------      -------
Revenues .............................     $149,581     $151,848     $151,968     $177,698
Gross profit .........................       37,852       36,256       32,605       44,704
Net income ...........................       20,461       19,273       18,557       24,009
Basic net income per share ...........          .41          .39          .37          .48
  Diluted net income per share .......          .41          .39          .37          .48

Gross profit represents total revenues less operating costs, depreciation, depletion and amortization, dry holes and abandonments, and taxes, other than income taxes.

The sum of earnings per share for the four quarters may not equal the total earnings per share for the year due to changes in the average number of common shares outstanding.

Net income in the second quarter of 2001 includes an after-tax charge of $2.4 million ($0.05 per share, on a diluted basis) related to the write-down of producing properties in accordance with SFAS No. 121.

Net income in the third quarter of 2001 includes an after-tax gain of approximately $1.9 million ($0.04 per share, on a diluted basis) related to a 1997 Kansas ad valorem assessment that was settled at less than the original liability. The after-tax gain increased natural gas revenues by approximately $.7 million and decreased interest expense by approximately $1.2 million.

Net income in the fourth quarter of 2001 includes an after-tax charge of $2.8 million ($0.06 per share, on a diluted basis) related to the write-down of producing properties in accordance with SAFS No. 121.

Net income in the first quarter of 2000 includes approximately $6.3 million ($0.13 per share, on a diluted basis) on gains related to a non-monetary dividend received and a gain on the conversion of shares of common stock of a Company investee pursuant to that investee being acquired.

Net income in the fourth quarter of 2000 includes an after-tax charge of $2.5 million ($0.05 per share, on a diluted basis) related to the write-down of producing properties in accordance with SFAS No. 121.

34

REPORT OF INDEPENDENT AUDITORS

HELMERICH & PAYNE, INC.

The Board of Directors and Shareholders
Helmerich & Payne, Inc.

We have audited the accompanying consolidated balance sheets of Helmerich & Payne, Inc. as of September 30, 2001 and 2000, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended September 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Helmerich & Payne, Inc. at September 30, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2001, in conformity with accounting principles generally accepted in the United States.

                                                        /s/ ERNST & YOUNG LLP

Tulsa, Oklahoma
November 19, 2001

STOCK PRICE INFORMATION

                                              Closing Market Price Per Share
                                              ------------------------------
                                               2001                  2000
                                               ----                  ----
QUARTERS                                  HIGH        LOW       HIGH        LOW
--------                                  ----        ---       ----        ---
First...............................    $ 44.19    $ 28.94    $ 27.44    $ 19.13
Second..............................      58.51      39.63      31.00      20.00
Third...............................      51.23      30.82      37.75      29.06
Fourth..............................      32.77      23.74      38.31      30.06

DIVIDEND INFORMATION

                                      Paid Per Share        Total Payment
                                      --------------        -------------
                                        2001  2000         2001        2000
                                        ----  ----         ----        ----
QUARTERS
--------
First...............................   $.075  $.070     $3,748,896  $3,474,612
Second...............................   .075   .070      3,776,612   3,475,623
Third...............................    .075   .070      3,796,489   3,484,189
Fourth...............................   .075   .075      3,765,488   3,740,863

STOCKHOLDERS' MEETING

The annual meeting of stockholders will be held on March 6, 2002. A formal notice of the meeting, together with a proxy statement and form of proxy, will be mailed to shareholders on or about January 25, 2002.

STOCK EXCHANGE LISTING

Helmerich & Payne, Inc. Common Stock is traded on the New York Stock Exchange with the ticker symbol "HP." The newspaper abbreviation most commonly used for financial reporting is "HelmP." Options on the Company's stock are also traded on the New York Stock Exchange.

STOCK TRANSFER AGENT AND REGISTRAR

As of December 14, 2001, there were 1,090 record holders of Helmerich & Payne, Inc. common stock as listed by the transfer agent's records.

Our Transfer Agent is responsible for our shareholder records, issuance of stock certificates, and distribution of our dividends and the IRS Form 1099. Your requests, as shareholders, concerning these matters are most efficiently answered by corresponding directly with The Transfer Agent at the following address:

UMB Bank
Security Transfer Division
928 Grand Blvd., 13th Floor
Kansas City, MO 64106
Telephone: (800) 884-4225
(816) 860-5000

FORM 10-K

The Company's Annual Report on Form 10-K, which has been submitted to the Securities and Exchange Commission, is available free of charge upon written request.

ADDITIONAL INFORMATION

In a continuing effort to find timely and cost effective communications solutions to serve the needs of our shareholders, we are discontinuing the printing and distribution of our traditional quarterly shareholder reports. Effective the first quarter ending December 31, 2001, quarterly reports on Form 10-Q, earnings releases and financial statements will be made available on the investor relations section of the Company's Web site. Quarterly reports on Form 10-Q, earnings releases and financial statements will also be available free of charge upon written request.

DIRECT INQUIRIES TO:
Investor Relations
Helmerich & Payne, Inc.
Utica at Twenty-First
Tulsa, Oklahoma 74114
Telephone: (918) 742-5531

Internet Address: http://www.hpinc.com

35

ELEVEN-YEAR FINANCIAL REVIEW

HELMERICH & PAYNE, INC.

                                                  Years Ended September 30,         2001      2000       1999
---------------------------------------------------------------------------      --------  ---------  ---------
REVENUES AND INCOME*(2)
          Contract Drilling Revenues.......................................        484,927    349,992    394,715
          Crude Oil Sales..................................................         22,815     24,601      9,479
          Natural Gas Sales................................................        192,962    131,056     81,533
          Gas Marketing Revenues...........................................         99,140     78,921     54,263
          Real Estate Revenues.............................................          9,066      8,991      8,663
          Dividend Income..................................................          3,909     14,482      3,569
          Other Revenues...................................................         14,035     23,052     12,097
          Total Revenues+..................................................        826,854    631,095    564,319
          Net Cash Provided by Continuing Operations+......................        278,856    201,836    158,694
          Income from Continuing Operations................................        144,254     82,300     42,788
          Net Income.......................................................        144,254     82,300     42,788
                                                                                 ---------  ---------  ---------

PER SHARE DATA
          Income from Continuing Operations(1):
              Basic........................................................           2.88       1.66        .87
              Diluted......................................................           2.84       1.64        .86
          Net Income(1):
              Basic........................................................           2.88       1.66        .87
              Diluted......................................................           2.84       1.64        .86
          Cash Dividends...................................................            .30       .285        .28
          Shares Outstanding*..............................................         49,853     49,980     49,626
                                                                                 ---------  ---------  ---------

FINANCIAL POSITION
          Net Working Capital*.............................................        210,191    186,250     88,720
          Ratio of Current Assets to Current Liabilities...................           2.73       3.36       2.23
          Investments*.....................................................        200,286    304,326    238,475
          Total Assets*....................................................      1,364,507  1,259,492  1,109,699
          Long-Term Debt*..................................................         50,000     50,000     50,000
          Shareholders' Equity*............................................      1,026,477    955,703    848,109
                                                                                 ---------  ---------  ---------

CAPITAL EXPENDITURES*
          Contract Drilling Equipment......................................        173,856     49,774     68,639
          Wells and Equipment..............................................         74,580     54,764     29,947
          Real Estate......................................................          1,144      2,880      1,435
          Other Assets (includes undeveloped leases).......................         28,904     24,514     22,930
          Discontinued Operations..........................................             --         --         --
          Total Capital Outlays............................................        278,484    131,932    122,951
                                                                                 ---------  ---------  ---------

PROPERTY, PLANT AND EQUIPMENT AT COST*
          Contract Drilling Equipment......................................      1,028,015    891,749    881,269
          Producing Properties.............................................        486,772    430,674    421,552
          Undeveloped Leases...............................................         34,901     27,050     25,337
          Real Estate......................................................         50,579     50,649     49,065
          Other............................................................         86,300     80,268     71,139
          Discontinued Operations..........................................             --         --         --
          Total Property, Plant and Equipment..............................      1,686,567  1,480,390  1,448,362
                                                                                 ---------  ---------  ---------

* 000's omitted.

+ Chemical operations were sold August 30, 1996. Prior year amounts have been restated to exclude discontinued operations.

(1) Includes $13.6 million ($.28 per share, on a diluted basis) effect of impairment charge for adoption of SFAS No. 121 in 1995 and cumulative effect of change in accounting for income taxes of $4,000,000 ($.08 per share, on a diluted basis) in 1994.

(2) See Note 14 for segment presentation of revenues.

36

                                                  Years Ended September 30,         1998        1997       1996        1995
---------------------------------------------------------------------------      ---------   ---------   ---------   ---------
REVENUES AND INCOME*(2)
          Contract Drilling Revenues.......................................        427,713     315,327     244,338     203,325
          Crude Oil Sales..................................................         10,333      20,475      15,378      13,227
          Natural Gas Sales................................................         87,646      87,737      60,500      33,851
          Gas Marketing Revenues...........................................         52,469      66,306      57,817      34,729
          Real Estate Revenues.............................................          8,587       8,224       8,076       7,560
          Dividend Income..................................................          4,117       5,268       3,650       3,389
          Other Revenues...................................................         45,775      14,522       3,496      10,640
          Total Revenues+..................................................        636,640     517,859     393,255     306,721
          Net Cash Provided by Continuing Operations+......................        113,533     165,568     121,420      84,010
          Income from Continuing Operations................................        101,154      84,186      45,426       5,788
          Net Income.......................................................        101,154      84,186      72,566       9,751
                                                                                 ---------   ---------   ---------   ---------

PER SHARE DATA
          Income from Continuing Operations(1):
              Basic........................................................           2.03        1.69         .92         .12
              Diluted......................................................           2.00        1.67         .91         .12
          Net Income(1):
              Basic........................................................           2.03        1.69        1.47         .20
              Diluted......................................................           2.00        1.67        1.46         .20
          Cash Dividends...................................................           .275         .26       .2525         .25
          Shares Outstanding*..............................................         49,383      50,028      49,771      49,529
                                                                                 ---------   ---------   ---------   ---------

FINANCIAL POSITION
          Net Working Capital*.............................................         58,861      62,837      51,803      50,038
          Ratio of Current Assets to Current Liabilities...................           1.47        1.66        1.83        1.74
          Investments*.....................................................        200,400     323,510     229,809     156,908
          Total Assets*....................................................      1,090,430   1,033,595     821,914     707,061
          Long-Term Debt*..................................................         50,000          --          --          --
          Shareholders' Equity*............................................        793,148     780,580     645,970     562,435
                                                                                 ---------   ---------   ---------   ---------

CAPITAL EXPENDITURES*
          Contract Drilling Equipment......................................        206,794     109,036      79,269      80,943
          Wells and Equipment..............................................         38,970      35,024      21,142      19,384
          Real Estate......................................................            854       1,095         752         873
          Other Assets (includes undeveloped leases).......................         19,681      16,022       7,003       9,717
          Discontinued Operations..........................................             --          --       1,581         859
          Total Capital Outlays............................................        266,299     161,177     109,747     111,776
                                                                                 ---------   ---------   ---------   ---------

PROPERTY, PLANT AND EQUIPMENT AT COST*
          Contract Drilling Equipment......................................        829,217     643,619     568,110     501,682
          Producing Properties.............................................        414,770     395,812     392,562     384,755
          Undeveloped Leases...............................................         20,977      14,109       9,242       8,051
          Real Estate......................................................         48,451      47,682      46,970      46,642
          Other............................................................         65,120      59,659      53,547      55,655
          Discontinued Operations..........................................             --          --          --      13,937
          Total Property, Plant and Equipment..............................      1,378,535   1,160,881   1,070,431   1,010,722
                                                                                 ---------   ---------   ---------   ---------



                                                  Years Ended September 30,         1994        1993       1992        1991
---------------------------------------------------------------------------      ---------   ---------   ---------   ---------
REVENUES AND INCOME*(2)
          Contract Drilling Revenues.......................................         182,781     149,661     112,833     105,364
          Crude Oil Sales..................................................          13,161      15,392      16,369      17,374
          Natural Gas Sales................................................          45,261      52,446      38,370      35,628
          Gas Marketing Revenues...........................................          51,874      63,786      40,410      10,055
          Real Estate Revenues.............................................           7,396       7,620       7,541       7,542
          Dividend Income..................................................           3,621       3,535       4,050       5,285
          Other Revenues...................................................           6,058       8,283       6,646      20,020
          Total Revenues+..................................................         310,152     300,723     226,219     201,268
          Net Cash Provided by Continuing Operations+......................          74,463      72,493      60,414      50,006
          Income from Continuing Operations................................          17,108      22,158       8,973      19,608
          Net Income.......................................................          24,971      24,550      10,849      21,241
                                                                                  ---------   ---------   ---------   ---------

PER SHARE DATA
          Income from Continuing Operations(1):
              Basic........................................................             .35         .46         .19         .41
              Diluted......................................................             .35         .45         .19         .41
          Net Income(1):
              Basic........................................................             .51         .51         .22         .44
              Diluted......................................................             .51         .50         .22         .44
          Cash Dividends...................................................           .2425         .24       .2325         .23
          Shares Outstanding*..............................................          49,420      49,275      49,152      48,976
                                                                                  ---------   ---------   ---------   ---------

FINANCIAL POSITION
          Net Working Capital*.............................................          76,238     104,085      82,800     108,212
          Ratio of Current Assets to Current Liabilities...................            2.63        3.24        3.31        4.19
          Investments*.....................................................          87,414      84,945      87,780      96,471
          Total Assets*....................................................         621,689     610,504     585,504     575,168
          Long-Term Debt*..................................................              --       3,600       8,339       5,693
          Shareholders' Equity*............................................         524,334     508,927     493,286     491,133
                                                                                  ---------   ---------   ---------   ---------

CAPITAL EXPENDITURES*
          Contract Drilling Equipment......................................          53,752      24,101      43,049      56,297
          Wells and Equipment..............................................          40,916      23,142      21,617      34,741
          Real Estate......................................................             902         436         690       2,104
          Other Assets (includes undeveloped leases).......................           9,695       5,901      16,984       6,793
          Discontinued Operations..........................................             618         629         158       2,594
          Total Capital Outlays............................................         105,883      54,209      82,498     102,529
                                                                                  ---------   ---------   ---------   ---------

PROPERTY, PLANT AND EQUIPMENT AT COST*
          Contract Drilling Equipment......................................         444,432     418,004     404,155     370,494
          Producing Properties.............................................         377,371     340,176     329,264     312,438
          Undeveloped Leases...............................................          11,729      10,010      12,973       5,552
          Real Estate......................................................          47,827      47,502      47,286      46,671
          Other............................................................          48,612      45,085      43,153      36,423
          Discontinued Operations..........................................          13,131      12,545      11,962      11,838
          Total Property, Plant and Equipment..............................         943,102     873,322     848,793     783,416
                                                                                  ---------   ---------   ---------   ---------

37

ELEVEN-YEAR OPERATING REVIEW

HELMERICH & PAYNE, INC.

                              Years Ended September 30,        2001           2000           1999
-------------------------------------------------------     ----------     ----------     ----------

CONTRACT DRILLING
        Drilling Rigs, United States ..................             59             48             46
        Drilling Rigs, International ..................             32             40             44
        Contract Wells Drilled, United States .........            346            335            242
        Total Footage Drilled, United States* .........          4,415          4,058          2,938
        Average Depth per Well, United States .........         12,761         12,115         12,142
        Percentage Rig Utilization, United States .....             97             87             75
        Percentage Rig Utilization, International .....             56             47             53
                                                            ----------     ----------     ----------

PETROLEUM EXPLORATION AND DEVELOPMENT
        Gross Wells Completed .........................            123             81             49
        Net Wells Completed ...........................           69.5           42.7           23.9
        Net Dry Holes .................................           17.0            9.1            7.1
                                                            ----------     ----------     ----------

PETROLEUM PRODUCTION
        Net Crude Oil and Natural Gas Liquids
          Produced (barrels daily) ....................          2,242          2,405          1,779
        Net Oil Wells Owned-- Primary Recovery ........            113          107.1            124
        Net Oil Wells Owned-- Secondary Recovery ......             55           55.5             54
        Secondary Oil Recovery Projects ...............              4              3              5
        Net Natural Gas Produced
          (thousands of cubic feet daily) .............        116,128        128,204        121,206
        Net Gas Wells Owned ...........................            493            453            439
                                                            ----------     ----------     ----------

REAL ESTATE MANAGEMENT
        Gross Leasable Area (square feet)* ............          1,652          1,652          1,652
        Percentage Occupancy ..........................             93             91             95
                                                            ----------     ----------     ----------

TOTAL NUMBER OF EMPLOYEES
        Helmerich & Payne, Inc. and Subsidiaries ......          4,245          3,606          3,440
                                                            ----------     ----------     ----------

000's omitted.

38

                              Years Ended September 30,      1998        1997        1996        1995        1994
-------------------------------------------------------    --------    --------    --------    --------    --------

CONTRACT DRILLING
        Drilling Rigs, United States ..................          46          38          41          41          47
        Drilling Rigs, International ..................          44          39          36          35          29
        Contract Wells Drilled, United States .........         242         246         233         212         162
        Total Footage Drilled, United States* .........       2,938       2,753       2,499       1,933       1,842
        Average Depth per Well, United States .........      12,142      11,192      10,724       9,119      11,367
        Percentage Rig Utilization, United States .....          95          88          82          71          69
        Percentage Rig Utilization, International .....          88          91          85          84          88
                                                           --------    --------    --------    --------    --------

PETROLEUM EXPLORATION AND DEVELOPMENT
        Gross Wells Completed .........................          62         100          63          59          44
        Net Wells Completed ...........................        35.7        49.3        35.3        27.4          15
        Net Dry Holes .................................         4.2         9.6         7.3         5.9         1.7
                                                           --------    --------    --------    --------    --------

PETROLEUM PRODUCTION
        Net Crude Oil and Natural Gas Liquids
          Produced (barrels daily) ....................       1,921       2,700       2,212       2,214       2,431
        Net Oil Wells Owned-- Primary Recovery ........         124         133       176.9         186         202
        Net Oil Wells Owned-- Secondary Recovery ......          53          49        63.8          64          71
        Secondary Oil Recovery Projects ...............           5           5          12          12          14
        Net Natural Gas Produced
          (thousands of cubic feet daily) .............     117,431     110,859      94,358      72,387      72,953
        Net Gas Wells Owned ...........................         436         410         378         354         341
                                                           --------    --------    --------    --------    --------

REAL ESTATE MANAGEMENT
        Gross Leasable Area (square feet)* ............       1,652       1,652       1,654       1,652       1,652
        Percentage Occupancy ..........................          97          95          94          87          83
                                                           --------    --------    --------    --------    --------

TOTAL NUMBER OF EMPLOYEES
        Helmerich & Payne, Inc. and Subsidiaries ......       3,340       3,627       3,309       3,245       2,787
                                                           --------    --------    --------    --------    --------

                              Years Ended September 30,      1993        1992        1991
-------------------------------------------------------    --------    --------    --------

CONTRACT DRILLING
        Drilling Rigs, United States ..................          42          39          46
        Drilling Rigs, International ..................          29          30          25
        Contract Wells Drilled, United States .........         128         100         106
        Total Footage Drilled, United States* .........       1,504       1,085       1,301
        Average Depth per Well, United States .........      11,746      10,853      12,274
        Percentage Rig Utilization, United States .....          53          42          47
        Percentage Rig Utilization, International .....          68          69          69
                                                           --------    --------    --------

PETROLEUM EXPLORATION AND DEVELOPMENT
        Gross Wells Completed .........................          42          54          45
        Net Wells Completed ...........................        15.9        17.8        20.2
        Net Dry Holes .................................         4.3         4.3         4.3
                                                           --------    --------    --------

PETROLEUM PRODUCTION
        Net Crude Oil and Natural Gas Liquids
          Produced (barrels daily) ....................       2,399       2,334       2,152
        Net Oil Wells Owned-- Primary Recovery ........         202         220         227
        Net Oil Wells Owned-- Secondary Recovery ......          71          74          55
        Secondary Oil Recovery Projects ...............          14          14          12
        Net Natural Gas Produced
          (thousands of cubic feet daily) .............      78,023      75,470      66,617
        Net Gas Wells Owned ...........................         307         289         278
                                                           --------    --------    --------

REAL ESTATE MANAGEMENT
        Gross Leasable Area (square feet)* ............       1,656       1,656       1,664
        Percentage Occupancy ..........................          86          87          86
                                                           --------    --------    --------

TOTAL NUMBER OF EMPLOYEES
        Helmerich & Payne, Inc. and Subsidiaries ......       2,389       1,928       1,758
                                                           --------    --------    --------

39

DIRECTORS OFFICERS

W. H. HELMERICH, III                                W. H. HELMERICH, III
Chairman of the Board                               Chairman of the Board
Tulsa, Oklahoma
                                                    HANS HELMERICH
HANS HELMERICH                                      President and Chief Executive Officer
President and Chief Executive Officer
Tulsa, Oklahoma                                     GEORGE S. DOTSON
                                                    Vice President,
WILLIAM L. ARMSTRONG**                              President of Helmerich & Payne
Chairman                                            International Drilling Co.
Transland Financial Services, Inc.
Denver, Colorado                                    DOUGLAS E. FEARS
                                                    Vice President and
GLENN A. COX*                                       Chief Financial Officer
President and Chief Operating Officer, Retired
Phillips Petroleum Company                          STEVEN R. MACKEY
Bartlesville, Oklahoma                              Vice President, Secretary,
                                                    and General Counsel
GEORGE S. DOTSON
Vice President,                                     STEVEN R. SHAW
President of Helmerich & Payne                      Vice President,
International Drilling Co.                          Exploration & Production
Tulsa, Oklahoma

L. F. ROONEY, III*
Chief Executive Officer
Manhattan Construction Company
Tulsa, Oklahoma

EDWARD B. RUST, JR.*
Chairman and Chief Executive Officer
State Farm Insurance Companies
Bloomington, Illinois

GEORGE A. SCHAEFER**
Chairman and Chief Executive Officer, Retired
Caterpillar Inc.
Peoria, Illinois

JOHN D. ZEGLIS**
Chairman and Chief Executive Officer
AT&T Wireless Services
Basking Ridge, New Jersey

----------
* Member, Audit Committee
** Member, Human Resources Committee

40

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Helmerich & Payne, Inc.

Subsidiaries of Helmerich & Payne, Inc.

Helmerich & Payne Properties, Inc. (Incorporated in Oklahoma) Utica Square Shopping Center, Inc. (Incorporated in Oklahoma) The Hardware Store of Utica Square, Inc. (Incorporated in Oklahoma) The Space Center, Inc. (Incorporated in Oklahoma) H&P DISC, Inc. (Incorporated in Oklahoma) Helmerich & Payne Coal Co. (Incorporated in Oklahoma) Helmerich & Payne Energy Services, Inc. (Incorporated in Oklahoma) Helmerich & Payne International Drilling Co. (Incorporated in Delaware)

Subsidiaries of Utica Square Shopping Center, Inc.

Fishercorp, Inc. (Incorporated in Oklahoma)

Subsidiaries of Helmerich & Payne International Drilling Co.

Helmerich & Payne (Africa) Drilling Co. (Incorporated in Cayman Islands, British West Indies) Helmerich & Payne Drilling (Bolivia) S.A.


(Incorporated in Bolivia)

Helmerich & Payne (Colombia) Drilling Co. (Incorporated in Oklahoma)
Helmerich & Payne (Gabon) Drilling Co. (Incorporated in Cayman Islands, British West Indies) Helmerich & Payne (Argentina) Drilling Co. (Incorporated in Oklahoma)
Helmerich & Payne (Peru) Drilling Co. (Incorporated in Oklahoma)
Helmerich & Payne (Peru) Drilling Co., Sucursal del Peru, Lima (Lima Branch - Incorporated in Peru) Helmerich & Payne (Peru) Drilling Co., Sucursal del Peru


(Iquitos Branch - Incorporated in Peru)

Helmerich & Payne (Australia) Drilling Co. (Incorporated in Oklahoma)
Helmerich & Payne del Ecuador, Inc. (Incorporated in Oklahoma)
Helmerich & Payne de Venezuela, C.A. (Incorporated in Venezuela)
Helmerich & Payne, C.A. (Incorporated in Venezuela) Helmerich & Payne Rasco, Inc. (Incorporated in Oklahoma) H&P Finco (Incorporated in Cayman Islands, British West Indies)
H&P Invest Ltd. (Incorporated in Cayman Islands), British West Indies, doing business as H&P (Yemen) Drilling Co.

Subsidiary of H&P Invest Ltd.

Turrum Pty. Ltd. (Incorporated in Papua, New Guinea)


EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Helmerich & Payne, Inc. of our report dated November 19, 2001, included in the 2001 Annual Report to Shareholders of Helmerich & Payne, Inc.

We also consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-55239, 333-34939 and 333-63124) pertaining, respectively, to the 1990 Stock Option Plan, 1996 Stock Incentive Plan and 2000 Stock Incentive Plan of our report dated November 19, 2001, with respect to the consolidated financial statements of Helmerich & Payne, Inc. incorporated by reference in the Annual Report (Form 10-K) for the year ended September 30, 2001.

ERNST & YOUNG LLP

Tulsa, Oklahoma
December 27, 2001