FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 30549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 incorporation (I.R.S. Employer I.D. Number)
or organization)
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Registrant's telephone number, including area code: (918) 742-5531
NONE
(Former name, former address and former fiscal year, if changed since last
report)
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.
CLASS OUTSTANDING AT JUNE 30, 1996
- ---------------------------- ----------------------------
Common Stock, .10 par value 24,839,153
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Consolidated Condensed Balance Sheets -
June 30, 1996 and September 30, 1995 . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended June 30, 1996 and 1995 . . . . . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity
Nine Months Ended June 30, 1996. . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . . 7
Revenues and Income by Business Segments . . . . . . . . . . 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 9 & 10
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . 10
Signature Page . . . . . . . . . . . . . . . . . . . . . . . 10
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PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30 September 30
1996 1995
----------- ------------
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 16,286 $ 19,661
Short-term investments 1,005 8,989
Accounts receivable, net 75,596 59,314
Inventories 20,784 21,313
Prepaid expenses and other 5,094 5,717
---------- -----------
Total Current Assets 118,765 114,994
---------- -----------
Investments 178,528 156,908
Property, Plant and Equipment, net 460,876 423,762
Other Assets 14,402 14,501
---------- -----------
Total Assets $ 772,571 $ 710,165
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 26,718 $ 26,382
Accrued liabilities 23,746 21,101
Income taxes payable 10,454 428
Notes payable 6,000 21,700
---------- -----------
Total Current Liabilities 66,918 69,611
---------- -----------
Noncurrent Liabilities
Deferred income taxes 80,669 66,047
Other 15,566 12,072
---------- -----------
Total Noncurrent Liabilities 96,235 78,119
---------- -----------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued - -
Additional paid-in capital 49,208 48,436
Net unrealized holding gains 56,081 38,004
Retained earnings 523,186 495,692
---------- -----------
631,152 584,809
Less treasury stock, at cost 21,734 22,374
---------- -----------
Total Shareholders' Equity 609,418 562,435
---------- -----------
Total Liabilities and Shareholders' Equity $ 772,571 $ 710,165
========== ===========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands except per share data)
Quarter Ended Nine Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
---------------------- ----------------------
REVENUES:
Sales and other operating revenues $104,371 $ 76,413 $297,408 $231,077
Income from investments 1,656 2,343 4,125 6,924
-------- -------- -------- --------
106,027 78,756 301,533 238,001
-------- -------- -------- --------
COST AND EXPENSES:
Operating costs 60,357 49,725 175,016 149,065
Depreciation, depletion and 14,346 13,792 42,728 40,606
amortization
Dry holes and abandonments 2,397 1,888 6,555 6,383
Taxes, other than income taxes 4,896 3,962 13,617 12,099
General and administrative 1,918 2,037 6,970 6,822
Interest 63 94 390 237
-------- -------- -------- --------
83,977 71,498 245,276 215,212
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATE 22,050 7,258 56,257 22,789
INCOME TAX EXPENSE 9,050 2,822 21,672 8,643
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 158 148 693 674
-------- -------- -------- --------
NET INCOME $ 13,158 $ 4,584 $ 35,278 $ 14,820
======== ======== ======== ========
NET INCOME PER AVERAGE COMMON
SHARE $ 0.53 $ 0.19 $ 1.43 $ 0.60
======== ======== ======== ========
CASH DIVIDENDS (Note 2) $ 0.125 $ 0.125 $ 0.375 $ 0.375
AVERAGE COMMON SHARES OUTSTANDING 24,743 24,573 24,666 24,516
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
06/30/96 06/30/95
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $ 35,278 $ 14,820
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization 42,728 40,606
Dry holes and abandonments 6,555 6,383
Equity in income of affiliate before income taxes ( 1,118) ( 1,087)
Amortization of deferred compensation 1,255 1,037
Gain on sale of securities ( 566) ( 2,947)
Other, net 97 ( 771)
Change in assets and liabilities-
Increase in accounts receivable (16,282) ( 811)
Decrease in inventories 529 902
(Increase) decrease in prepaid expenses and other 722 ( 3,785)
Increase in accounts payable 1,398 4,477
Increase in accrued liabilities 15,624 1,500
Increase in deferred income taxes 3,543 726
Increase in other noncurrent liabilities 3,494 3,464
-------- --------
Total Adjustments 57,979 49,694
-------- --------
Net cash provided by operating activities 93,257 64,514
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital expenditures, including dry hole costs (84,099) (88,345)
Proceeds from sales of property, plant and equipment 2,078 2,156
Purchase of investments 24 ( 9,927)
Proceeds from sale of investments 619 7,294
Proceeds from sale of short-term investments 7,984 -
-------- --------
Net cash used in investing activities (73,394) (88,822)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from notes payable 30,000 20,200
Payments made on notes payable (45,700) -
Dividends paid ( 9,310) ( 9,265)
Proceeds from exercise of stock options 1,772 1,157
-------- --------
Net cash provided by (used in) financing activities (23,238) 12,092
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS ( 3,375) (12,216)
CASH AND CASH EQUIVALENTS, beginning of period 19,661 29,447
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 16,286 $ 17,231
======== ========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)
Net
Unrlzed
Common Stock Paid-In Holding Retained Treasury Stock
Shares Amount Capital Gains Earnings Shares Amount
--------------- ------- -------- -------- ------------------
Balance, September 30, 1995 26,764 $2,677 $48,436 $38,004 $495,692 2,000 $(22,374)
Change in net unrealized holding
gains, net of income taxes of
$11,080 - - - 18,077 - - -
Cash dividends ($0.375 per share) - - - - (9,310) - -
Exercise of stock options - - 1,022 - - ( 85) 750
Lapse of restrictions on restricted
stock awards - - ( 89) - - - -
Forfeiture of restricted stock
award - - (161) - 271 10 (110)
Amortization of deferred
compensation - - - - 1,255 - -
Net income - - - - 35,278 -
---------------------------------------------------------------------------
Balance, June 30, 1996 26,764 $2,677 $49,208 $56,081 $523,186 1,925 $(21,734)
===========================================================================
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the results of the periods presented. The results of operations for the nine months ended June 30, 1996, and June 30, 1995, are not necessarily indicative of the results to be expected for the full year.
2. The $.125 cash dividend declared in March was paid June 1, 1996. On June 5, 1996, a cash dividend of $.13 per share was declared for shareholders of record on August 15, 1996, payable September 1, 1996.
3. Inventories consisted of the following (in thousands of dollars):
06-30-96 09-30-95
-------- --------
Raw Materials $ 221 $ 100
Works in Progress 270 315
Finished Goods 1,357 1,435
Materials & Supplies 18,936 19,463
-------- --------
$ 20,784 $ 21,313
======== ========
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4. Income from investments includes $566,000 from gains on sales of securities during the first nine months of 1996, versus $2,947,000 on sales of securities during the first nine months of 1995.
5. The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting. The cost of securities accounted for under the equity method is $23,613,000.
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
------------------------------------------------
Equity Securities 06/30/96 $64,461 $90,466 $ 12 $154,915
Equity Securities 09/30/95 $64,804 $61,455 $158 $126,101
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During the quarter ended June 30, 1996, marketable equity available-for-sale securities with a fair value at the date of sale of $619,000 were sold. The gross realized gains on such sales of available-for-sale- securities totaled $596,000 and the gross realized losses totaled $30,000.
6. In May 1996 the Company renewed its line of credit agreement with certain banks. The new agreement provides for maximum borrowing of $50,000,000 at adjustable interest rates based on London Interbank Offered Rates (LIBOR). The borrowings will mature either in May of 1997 or May of 1998. A $40,000,000 portion of the line is for a 364 day term and a $10,000,000 portion is for a two year term. As of June 30, 1996, the Company had borrowed $6,000,000 against the line of credit, at a weighted average interest rate of 5.81%, and had letters of credit outstanding in the amount of $9,991,000, leaving an unused portion of $34,009,000. Under the line of credit agreement, the Company must meet certain requirements regarding levels of debt, net worth and earnings.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(UNAUDITED)
(in thousands)
FISCAL YEAR 1996 Nine Mos. Nine Mos.
1st Qtr 2nd Qtr 3rd Qtr 06/30/96 06/30/95
----------------------------------------------------------- ---------
Sales and Other Revenues:
Contract Drilling-Domestic $23,020 $ 26,088 $ 29,981 $ 79,089 $ 70,640
Contract Drilling-Internat'l 33,935 33,585 31,534 99,054 75,648
------- -------- -------- -------- ---------
Total Contract Drilling
Division 56,955 59,673 61,515 178,143 146,288
------- -------- -------- -------- ---------
Exploration and Production 15,460 18,084 20,727 54,271 36,202
Natural Gas Marketing 12,786 14,030 15,484 42,300 26,567
------- -------- -------- -------- --------
Total Oil & Gas Division 28,246 32,114 36,211 96,571 62,769
------- -------- -------- -------- --------
Chemical Division 6,158 5,708 4,669 16,535 16,010
Real Estate Division 2,008 2,079 1,971 6,058 5,624
Investments and other 1,218 1,347 1,661 4,226 7,310
------- -------- -------- -------- --------
Total Revenues $94,585 $100,921 $106,027 $301,533 $ 238,001
======= ======== ======== ======== ========
OPERATING PROFIT(LOSS):
Contract Drilling-Domestic $ 1,915 $ 2,776 $ 3,675 $ 8,366 $ 4,250
Contract Drilling-Internat'l 8,309 7,885 7,847 24,041 12,541
------- -------- -------- -------- --------
Total Contract Drilling
Division 10,224 10,661 11,522 32,407 16,791
------- -------- -------- -------- --------
Exploration and Production 4,075 4,690 8,605 17,370 (2,900)
Natural Gas Marketing 757 695 889 2,341 1,384
------- -------- -------- -------- --------
Total Oil & Gas Division 4,832 5,385 9,494 19,711 (1,516)
------- -------- -------- -------- --------
Chemical Division 2,739 1,979 775 5,493 5,997
Real Estate Division 1,221 1,423 1,201 3,845 3,210
------- -------- -------- -------- --------
Total Operating Profit 19,016 19,448 22,992 61,456 24,482
------- -------- -------- -------- --------
OTHER (1,733) (2,524) (942) (5,199) (1,693)
INCOME BEFORE INCOME TAXES AND
------- -------- -------- -------- ---------
EQUITY IN INCOME OF AFFILIATE $17,283 $ 16,924 $ 22,050 $ 56,257 $ 22,789
======= ======== ======== ======== =========
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See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
RESULTS OF OPERATIONS
The Company reported net income of $13,158,000 ($0.53 per share) from revenues of $106,027,000 for the third quarter of fiscal 1996, compared with net income of $4,584,000 ($0.19 per share) from revenues of $78,756,000 for the third quarter of fiscal 1995. Net income for the first nine months totaled $35,278,000 ($1.43 per share) from revenues of $301,533,000, compared with $14,820,000 ($0.60 per share) from revenues of $238,001,000 last year.
Net income for the nine months ended June 30, 1996, includes $346,000 after-tax gains from the sale of securities, compared with $1,800,000 after-tax gain from the sale of securities for the same period in 1995.
Exploration and Production reported an operating profit of $17,370,000 for the nine months ended June 30, 1996, compared with an operating loss of $2,900,000 for the same period last year. Oil & gas revenues for the first nine months increased to $54,271,000 (a fifty percent increase) from last year's revenues of $36,202,000. The increase in revenues is the result of continued strength in oil and natural gas prices compared to last year and the increase in natural gas volumes.
Natural gas prices for the third quarter and first nine months of 1996 averaged $1.88 per mcf and $1.71 per mcf respectively, compared with $1.28 per mcf and $1.31 per mcf in the same periods of 1995. Natural gas volumes for the first nine months of 1996 were 91.4 mmcf/d compared with 71.2 mmcf/d for the same period of 1995. Oil prices for the third quarter and first nine months of 1996 averaged $20.02 and $18.25, respectively, compared with $17.42 and $16.48, respectively, in the same periods of 1995. Oil volumes for the nine months ended June 30, 1996 and 1995 were 2,222 bbls/d and 2,224 bbls/d, respectively.
Exploration and Production's third quarter results were also affected by three natural gas wells that commenced production during the quarter. These wells are part of the previously announced Rocky East discovery in Washita County, Oklahoma. It is anticipated that two additional natural gas wells will commence production in the fourth quarter.
The Contract Drilling Division reported an operating profit of $32,407,000 for the first nine months of fiscal 1996, compared with $16,791,000 for the first nine months of fiscal 1995. Operating profit from international operations increased to $24,041,000 for the first nine months of 1996, compared with $12,541,00 for the same period (a ninety-two percent increase) in 1995. The primary reason for the increase in operating profits was the strong performance in the Company's Venezuelan and Colombian operations. Rig utilization was over 90% in both countries for the nine months ended June 30, 1996.
Operating profit from the domestic drilling operations increased to $8,366,000 for the first nine months of 1996, compared with $4,250,000 for the same period in 1995. The increase is the result of improved profit margins on the Company's land rigs and the earnings from the new Mars Offshore Platform Rig which began drilling in the third quarter of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $93,257,000 for the nine months ended June 30, 1996, compared with $64,514,000 for the same period in 1995. Capital expenditures for the first nine months of 1996 were $84,099,000, compared with $88,345,000 for the first nine months of 1995.
During the third quarter the Company renewed its line of credit agreement as described in Note 6 to the financial statements. Additional borrowing may be necessary to meet capital expenditure requirements for the remainder of fiscal 1996.
There were no other significant changes in the Company's financial position since September 30, 1995.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 1 Legal Proceedings
The lawsuit William G. Caldwell, et al v Helmerich & Payne, Inc. is described in the Company's 10-Q filings for the quarterly periods ended December 31, 1995 and March 31, 1996.
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended June 30, 1996.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements 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.
Date: AUGUST 14, 1996 /S/ DOUGLAS E. FEARS
---------------------- -----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: AUGUST 14, 1996 /S/ HANS C. HELMERICH
---------------------- -----------------------------------------
Hans C. Helmerich, President
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EXHIBIT INDEX
Exhibit No. Exhibit Description - ----------- ------------------- 27 Financial Data Schedule |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | SEP 30 1996 |
| PERIOD START | OCT 01 1995 |
| PERIOD END | JUN 30 1996 |
| CASH | 16,286 |
| SECURITIES | 178,528 |
| RECEIVABLES | 76,058 |
| ALLOWANCES | 462 |
| INVENTORY | 20,784 |
| CURRENT ASSETS | 118,765 |
| PP&E | 1,073,498 |
| DEPRECIATION | 612,622 |
| TOTAL ASSETS | 772,571 |
| CURRENT LIABILITIES | 66,918 |
| BONDS | 0 |
| COMMON | 2,677 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| OTHER SE | 606,741 |
| TOTAL LIABILITY AND EQUITY | 772,571 |
| SALES | 297,408 |
| TOTAL REVENUES | 301,533 |
| CGS | 237,916 |
| TOTAL COSTS | 237,916 |
| OTHER EXPENSES | 6,970 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 390 |
| INCOME PRETAX | 56,257 |
| INCOME TAX | 21,672 |
| INCOME CONTINUING | 35,278 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 35,278 |
| EPS PRIMARY | 1.43 |
| EPS DILUTED | 1.43 |