MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1998

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 natural gas and crude oil prices, expiration or termination of drilling contracts, currency exchange losses, changes in general economic conditions, rapid or unexpected changes in technologies and uncertain business conditions that affect the Company's businesses. Accordingly, past results and trends should not be used by investors to anticipate future results or trends.

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

RESULTS OF OPERATIONS

The Company reported net income of $12,811,000 ($0.26 per share on a diluted basis) from revenues of $143,864,000 for the first quarter ended December 31, 1998, compared with net income of $29,165,000 ($0.57 per share, diluted) from revenues of $151,823,000 for the first quarter of the prior fiscal year. Net income in the first quarter of fiscal 1998 included $3,675,000 ($0.07 per share, diluted) from the sale of investment securities.

The Company's Exploration and Production Division reported operating profit of $4,505,000 for the first quarter ended December 31, 1998, compared with operating profit of $14,859,000 for the same period in fiscal 1998. This significant decrease is the result of lower oil and gas revenues, increased exploration costs and increased depreciation and depletion, offset by decreased dry hole expense and a gain recorded from the sale of producing properties.

Oil and gas revenues decreased approximately 32% from the first quarter of fiscal 1998 to $21.6 million in the first quarter of fiscal 1999. Crude oil prices for the first quarter of fiscal 1999 averaged $10.95 per bbl, compared with $18.50 per bbl in the same period of 1998. Crude oil volumes were 1,951 bbls/d and 2,220 bbls/d for the first quarter of 1999 and 1998, respectively. Natural gas prices for the first quarter of fiscal 1999 averaged $1.79 per mcf, compared with $2.61 per mcf in the same period of 1998. Natural gas volumes for the first quarter of fiscal 1999 averaged 119.4 mmcf/d, compared with 117.1 mmcf/d in the same period of 1998. The first quarter of fiscal 1999 also included gains from the sale of producing properties of approximately $4.6 million.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1998
(Continued)

Exploration costs, primarily geophysical charges, increased to $6.8 million in the first quarter of fiscal 1999, compared with $.9 million in the first quarter of fiscal 1998. Dry hole expense was $17,000 in first quarter of fiscal 1999, compared with $2,581,000 in the same period of fiscal 1998. Depreciation and depletion increased $1.3 million (21%) in the first quarter of fiscal 1999, compared with first quarter of fiscal 1998. A portion of the increase in depreciation and depletion was the recognition of an impairment charge of approximately $.7 million for proved exploration and production properties, which is included in depreciation, depletion and amortization expense.

Operating profit from the Company's domestic drilling operations for the first three months of fiscal 1999 and 1998 was $7,664,000 and $9,371,000, respectively. Domestic land rig activity averaged 85% for the first quarter of fiscal 1999, down from the 100% utilization experienced in the same period of fiscal 1998. Revenue days for land rigs were essentially the same as last year, while average dayrates were down approximately 7% from last year's first quarter. Continued softening of land dayrates and rig utilization are expected for the remainder of the fiscal year.

Domestic offshore platform rig activity was at 100% for the first quarter of both fiscal 1999 and 1998. Recent increases in offshore platform rig revenues and earnings from the Company's commencement of operations on Shell's Ursa Tension Leg Platform, together with fees earned from managing the construction of a large platform rig, should help offset declines in land rig revenues and earnings during the next three quarters.

Operating profit from the Company's international drilling operations for the first three months of fiscal 1999 and 1998 was $9,941,000 and $14,055,000, respectively. Revenues for the same periods were $54,685,000 and $51,994,000. Included in revenues and operating profit for the first quarter of fiscal 1999 were recently negotiated retroactive billings in Colombia and incentive payments in Venezuela, as well as revenues from Rig 91, which did not commence operations until late in the first quarter of fiscal 1998. During the second quarter, Rig 91 was moved from offshore Venezuela to the Company's domestic operations and will be working in the Gulf of Mexico for a major oil company.

Rig utilization in South America has fallen from 91% in the first quarter of fiscal 1998 to 65% in this year's first quarter. As volatility in dayrates and utilization continues, revenues and operating profit from international operations are expected to be lower in the next three quarters.

IMPACT OF YEAR 2000

Readers are cautioned that forward-looking statements contained in the following Year 2000 discussion should be read in conjunction with the Company's disclosures under the heading: "Risk Factors and Forward-Looking Statements". This discussion shall constitute the Company's "Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information and Readiness Act.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1998
(Continued)

THE COMPANY'S STATE OF READINESS

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

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

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

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

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

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

For the purposes of the Y2K Project material items are those items the Company believes to have a risk involving safety of individuals, damage to the environment, material effect on revenues or material damage to property.

The following represents the status of the Company's IT and Non-IT Compliance Project:

                                                               STATUS OF                         TARGET FOR
IT                                                            COMPLETION                         COMPLETION
--                                                            ----------                         ------------

o       Core accounting and operational                       Phases 1,2 & 3                     March 1999
         (mainframe) systems                                  Complete; 4 in
                                                              Progress

o       Human Resources & Payroll Systems                     Phases 1,2 & 3                     March 1999
                                                              Complete; 4 in
                                                              Progress.

                                                               STATUS OF                         TARGET FOR
IT                                                             COMPLETION                        COMPLETION
--                                                             ----------                        ----------
o        Network                                              Completed

o        Desktop Computer Hardware                            Phases 1 & 2                      March 1999
                                                              Complete; 3 in
                                                              Progress

o        Standard Company Desktop                             Phases 1 & 2                      March 1999
         Computer Software                                    Complete; 3 in
                                                              Progress

o        Business Unit User Software                          Phase 1 in                        September 1999
                                                              Progress

Non-IT
------

o        Systems and Equipment                                Phases 1 & 2 in                   September 1999
                                                              Progress

As reflected in the above table, the Company is in the process of identifying embedded technology and determining the extent to which such technology is Y2K compliant. As part of this process, the Company has mailed letters to its significant vendors and service providers to confirm that the products and services purchased from or by such entities are Y2K compliant. Also, the Company is in the process of obtaining information from significant customers regarding the extent to which Y2K issues may affect the amount of business the Company currently conducts with such customers. As of February 1, 1999, the Company had received responses from approximately 57% of such vendors and service providers. Approximately 86% of such vendors and service providers have provided written assurances that they expect to address their significant Y2K issues on a timely basis. A follow-up mailing to significant vendors and services providers that did not initially respond, or whose responses were deemed unsatisfactory, has been completed. As a result of these activities, the Company expects discussions will be conducted with the vendors or manufacturers of such mission critical equipment to determine the most effective solutions to Y2K compliance issues.

THE COST TO ADDRESS Y2K ISSUES

The Company believes that the cost of its Y2K Project should not exceed $1,000,000, including costs of employees working on the Y2K Project. Costs incurred for new software and hardware purchases are being capitalized, and other costs are being expensed as incurred. The costs relating to the Company's Y2K Project are paid from the Company's general funds. To date, the Company has incurred Y2K Project costs of approximately $600,000. This expenditure mainly relates to repair, upgrading or replacement of existing software and hardware, and solicitation and evaluation of information received from significant vendors, service providers, or customers. The $1,000,000 figure does not include the costs of independent Y2K consultants. The Company has not determined whether it will engage independent Y2K consultants. The cost of such consultants would not be material to the Company.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1998
(Continued)

THE COMPANY'S CONTINGENCY PLAN

The Company is in the process of developing its contingency plans on a business unit and departmental basis. These plans are projected to be complete by May 31, 1999. These contingency plans will include, but will not be limited to:
development of backup and recovery procedures for IT Systems; remediation of existing systems or equipment; installation of new systems or equipment; stockpiling of Y2K compliant goods and supplies; stockpiling old equipment which does not contain embedded technology; replacement of current services with temporary manual processes; finding non-technological alternatives or sources for information; or identification of alternative customers, suppliers or outsourcing subcontractors who stand ready to receive or provide critical goods, equipment and services. The Company has engaged a computer recovery services contractor as a potential source of alternative computer systems as part of its contingency plan.

THE RISKS OF THE COMPANY'S Y2K ISSUES

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

The preceding Y2K disclosure is based upon certain forward-looking information including, but not limited to, the dates on which the Company believes that various phases of the Y2K Project will be completed. This forward-looking information is based on Management's good faith estimates. These estimates were derived utilizing numerous assumptions of future events, including the continued availability of certain resources, third-party plans and other factors. However, there can be no guarantee that these estimates will be achieved, or that there will not be a delay in, or increased costs associated with, the implementation of the Y2K Project. Specific factors that might cause differences between the estimates and actual results include, but are not limited to, the availability and cost of personnel trained in these areas, the ability to locate and correct all relevant computer code, timely responses to and corrections by third-parties and suppliers, the ability to implement interfaces between the new systems and the systems not being replaced, and similar uncertainties. Due to the general uncertainty inherent in Y2K issues, including the uncertainty of third party Y2K compliance, the Company cannot ensure its ability to timely and cost-effectively resolve problems associated with Y2K issues that may affect its operations and business, or expose it to third party liability.

PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
DECEMBER 31, 1998
(Continued)

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $16,114,000 for the first quarter of fiscal 1999, compared with $32,184,000 for the same period in 1998. Capital expenditures were $44,418,000 and $48,633,000 for the first quarter of fiscal 1999 and 1998, respectively.

It is anticipated for fiscal 1999 that capital expenditures will approach $135 million, which is close to the Company's projected internally generated cash flows. The Company would, if necessary, borrow under its line of credit agreement to fund capital expenditures in excess of cash flows. The Company borrowed an additional $28,700,000 during the current quarter. The Company's indebtedness totaled $123,500,000 as of December 31, 1998, as described in Note 7 to the Consolidated Condensed Financial Statements.

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