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, 1997
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 incorporation (I.R.S. Employer I.D. Number)
or organization)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA 74114
(Address of principal executive office) (Zip Code)
|
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.
Yes x No
CLASS OUTSTANDING AT JUNE 30, 1997
---------------------------- ----------------------------
Common Stock, .10 par value 24,973,359
AUTHORIZED AT JUNE 30, 1997
---------------------------
26,764,476
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Total Number of Pages 12
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
June 30, 1997 and September 30, 1996 . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended June 30, 1997 and 1996 . . . . . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity
Nine Months Ended June 30, 1997. . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . . 7 & 8
Revenues and Income by Business Segments . . . . . . . . . . 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 10 & 11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . 12
Signature Page . . . . . . . . . . . . . . . . . . . . . . . 12
|
PART I FINANCIAL INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30 September 30
1997 1996
-------- --------
ASSETS
Current Assets
Cash and cash equivalents $ 30,236 $ 16,892
Short-term investments 1,005 1,005
Accounts receivable, net 87,872 75,374
Inventories 18,597 16,915
Prepaid expenses and other 9,315 4,182
-------- --------
Total Current Assets 147,025 114,368
-------- --------
Investments 271,249 229,809
Property, Plant and Equipment, net 504,395 463,496
Other Assets 13,278 14,241
-------- --------
Total Assets $935,947 $821,914
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 28,393 $ 25,622
Accrued liabilities 33,146 31,943
Notes payable 4,000 5,000
-------- --------
Total Current Liabilities 65,539 62,565
-------- --------
Noncurrent Liabilities
Deferred income taxes 119,786 98,335
Other 19,243 15,044
-------- --------
Total Noncurrent Liabilities 139,029 113,379
-------- --------
Shareholders' Equity
Common stock, par value $.10 per share 2,677 2,677
Preferred stock, no shares issued -- --
Additional paid-in capital 51,930 50,410
Net unrealized holding gains 82,533 56,550
Retained earnings 614,779 557,543
-------- --------
751,919 667,180
Less treasury stock, at cost 20,540 21,210
-------- --------
Total Shareholders' Equity 731,379 645,970
-------- --------
$935,947 $821,914
======== ========
|
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
6/30/97 6/30/96 6/30/97 6/30/96
REVENUES:
Sales and other operating revenues $123,363 $ 99,702 $370,862 $280,873
Income from investments 6,449 1,656 9,691 4,125
-------- -------- -------- --------
129,812 101,358 380,553 284,998
-------- -------- -------- --------
COST AND EXPENSES:
Operating costs 67,265 56,834 201,572 164,978
Depreciation, depletion and
amortization 18,740 14,123 51,591 42,128
Dry holes and abandonments 1,102 2,397 4,074 6,555
Taxes, other than income taxes 5,192 4,748 15,297 13,213
General and administrative 1,946 1,918 7,150 6,970
Interest 143 63 143 390
-------- -------- -------- --------
94,388 80,083 279,827 234,234
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EQUITY IN
INCOME OF AFFILIATE 35,424 21,275 100,726 50,764
INCOME TAX EXPENSE 12,216 8,783 36,066 19,537
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 440 158 1,531 693
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS 23,648 12,650 66,191 31,920
INCOME FROM DISCONTINUED OPERATIONS -- 508 -- 3,358
-------- -------- -------- --------
NET INCOME $ 23,648 $ 13,158 $ 66,191 $ 35,278
======== ======== ======== ========
PER COMMON SHARE:
Income from continuing operations $ 0.95 $ 0.51 $ 2.66 $ 1.29
Income from discontinued operations -- 0.02 -- .14
-------- -------- -------- --------
NET INCOME $ 0.95 $ 0.53 $ 2.66 $ 1.43
======== ======== ======== ========
CASH DIVIDENDS (Note 2) $ 0.13 $ 0.125 $ 0.39 $ 0.375
AVERAGE COMMON SHARES OUTSTANDING 24,917 24,743 24,866 24,666
|
See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
6/30/97 06/30/96
------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 66,191 35,278
Adjustments to reconcile net income to net
cash provided by operating activities:
Discontinued operations -- (3,358)
Depreciation, depletion and amortization 51,591 42,128
Dry holes and abandonments 4,074 6,555
Equity in income of affiliate before income taxes (2,470) (1,118)
Amortization of deferred compensation 871 1,255
Gain on sale of securities (4,631) (566)
Other, net (2,659) 36
Change in assets and liabilities-
Accounts receivable (12,498) (15,643)
Inventories (1,682) 497
Prepaid expenses and other (4,170) 762
Account payable 4,968 961
Accrued liabilities 1,203 15,918
Deferred income taxes 5,527 3,394
Other noncurrent liabilities 4,199 3,366
--------- ---------
Total adjustments 44,323 54,187
--------- ---------
Net cash provided by continuing operations 110,514 89,465
Net cash provided by discontinued operations -- 3,792
--------- ---------
Net cash provided by operating activities 110,514 93,257
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including dry hole costs,
from continuing operations (101,445) (82,734)
Proceeds from sales of property, plant and equipment 5,774 2,078
Purchase of investments (901) 24
Proceeds from sale of investments 8,038 619
Discontinued operations -- (1,974)
Proceeds from sale of short-term investments -- 7,984
--------- ---------
Net cash used in investing activities (88,534) (74,003)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 29,000 30,000
Payments made on notes payable (30,000) (45,700)
Dividends paid (9,733) (9,310)
Proceeds from exercise of stock options 2,097 1,772
--------- ---------
Net cash used in financing activities (8,636) (23,238)
--------- ---------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 13,344 (3,984)
CASH AND CASH EQUIVALENTS, beginning of period 16,892 19,543
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 30,236 $ 15,559
========= =========
|
See accompanying notes to financial statements.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)
Net
Common Stock Unrealized Treasury Stock
------------------- Paid-In Holding Retained ----------------------
Shares Amount Capital Gains Earnings Shares Amount
------- ------- ------- --------- --------- -------- --------
Balance, September 30, 1996 26,764 $ 2,677 $50,410 $ 56,550 $ 557,543 1,879 $(21,210)
Change in net unrealized holding
gains, net of income taxes of
$15,924 - - - 25,983 - - -
Cash dividends ($0.39 per share - - - (9,733) - -
Exercise of stock options - - 1,450 - - (86) 647
Distribution under incentive
compensation plans - - 70 - - (2) 23
Amortization of deferred
compensation - - - - 778 - -
Net income - - - - 66,191 - -
---------------------------------------------------------------------------------------
Balance, June 30, 1997 26,764 $ 2,677 $51,930 $ 82,533 $ 614,779 1,791 $(20,540)
=======================================================================================
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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, 1997, and June 30, 1996, are not necessarily indicative of the results to be expected for the full year.
2. The $.13 cash dividend declared in March was paid June 2, 1997. On June 4, 1997, a cash dividend of $.13 per share was declared for shareholders of record on August 15, 1997, payable September 2, 1997.
3. Inventories consist of materials and supplies.
4. Income from investments includes $4,631,000 from gains on sales of securities during the first nine months of 1997, versus $566,000 on sales of securities during the first nine months of 1996.
5. The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting. The recorded investment in securities accounted for under the equity method is $27,684,527.
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
----------------------------------------
Equity Securities 06/30/97 $110,446 $133,158 $ 40 $243,564
Equity Securities 09/30/96 $113,384 $ 92,081 $871 $204,594
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During the nine months ended June 30, 1997, marketable equity available-for-sale securities with a fair value at the date of sale of $8,038,000 were sold. The gross realized gains on such sales of available-for-sale-securities totaled $4,631,000.
6. In May 1997 the Company renewed its line of credit agreement with certain banks. The new agreement provides for maximum borrowing of $40,000,000 at adjustable interest rates based on London Interbank Offered Rates (LIBOR). The borrowings will mature either in May of 1998 or May of 1999. A $30,000,000 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, 1997, the Company had borrowed $4,000,000 against the line of credit, at a weighted average interest rate of 6.06875%,and had letters of credit outstanding in the amount of $7,921,000, leaving an unused portion of $28,079,000. Under the line of credit agreement, the Company must meet certain requirements regarding levels of debt, net worth and earnings.
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
7. Discontinued Operations
Effective August 30, 1996, the Company exchanged all of the common stock of its wholly-owned subsidiary, Natural Gas Odorizing, Inc. (NGO), to Occidental Petroleum Corporation (OPC) for 2,018,928 shares of OPC common stock with a fair market value at closing of approximately $48 million. NGO comprised all of the Company's chemical operations. Prior period operating results for such operations are reported as discontinued operations. Summary operating results of discontinued operations for the nine months ending June 30, 1996 are as follows (in thousands):
Revenues $16,535 Operating Profit $ 5,493 Income Taxes $ 2,135 Net Income $ 3,358 |
8. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted for periods ending after December 15, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. There will be no impact to primary earnings per share for the third quarter and nine months ended June 30, 1997 and June 30, 1996, respectively. The impact of Statement 128 on the calculation of fully diluted earnings per share for these periods is not expected to be material.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
REVENUES AND INCOME BY BUSINESS SEGMENTS
(UNAUDITED)
(in thousands)
FISCAL YEAR 1997 Nine Mos. Nine Mos.
1st Qtr 2nd Qtr 3rd Qtr 06/30/97 06/30/96
--------------------------------------------------- ---------
Sales and Other Revenues:
Contract Drilling-Domestic $ 29,596 $ 31,559 $ 36,773 $ 97,928 $ 79,089
Contract Drilling-Internat'l 35,630 42,687 47,204 125,521 99,054
--------- --------- -------- -------- ---------
Total Contract Drilling
Division 65,226 74,246 83,977 223,449 178,143
--------- --------- -------- -------- ---------
Exploration and Production 30,014 34,000 23,627 87,641 54,271
Natural Gas Marketing 18,991 20,366 13,645 53,002 42,300
--------- --------- -------- -------- ---------
Total Oil & Gas Division 49,005 54,366 37,272 140,643 96,571
--------- --------- -------- -------- ---------
Real Estate Division 2,412 2,082 2,048 6,542 6,058
Investments and other 1,619 1,785 6,515 9,919 4,226
--------- --------- -------- -------- ---------
Total Revenues $ 118,262 $ 132,479 $129,812 $380,553 $ 284,998
========= ========= ======== ======== =========
OPERATING PROFIT(LOSS):
Contract Drilling-Domestic $ 4,210 $ 4,955 $ 6,802 $ 15,967 $ 8,366
Contract Drilling-Internat'l 6,907 8,918 12,551 28,376 24,041
--------- --------- -------- -------- ---------
Total Contract Drilling
Division 11,117 13,873 19,353 44,343 32,407
--------- --------- -------- -------- ---------
Exploration and Production 18,274 20,196 10,392 48,862 17,370
Natural Gas Marketing 1,381 514 532 2,427 2,341
--------- --------- -------- -------- ---------
Total Oil & Gas Division 19,655 20,710 10,924 51,289 19,711
--------- --------- -------- -------- ---------
Real Estate Division 1,779 1,290 1,340 4,409 3,845
--------- --------- -------- -------- ---------
Total Operating Profit 32,551 35,873 31,617 100,041 55,963
--------- --------- -------- -------- ---------
OTHER (1,170) (1,952) 3,807 685 (5,199)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EQUITY
IN INCOME OF AFFILIATE $ 31,381 $ 33,921 $ 35,424 $100,726 $ 50,764
========= ========= ======== ======== =========
|
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, 1997
BUSINESS ENVIRONMENT AND RISK FACTORS
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 prices, expiration or termination of drilling contracts, 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 below under the headings "Results of Operations" and "Liquidity and Capital Resources" include forward-looking statements that involve risks and uncertainties. The Company wishes to caution readers that a number of important factors discussed in this report and in the Company's other reports filed with the Securities and Exchange Commission, could affect the Company's actual results and cause actual results to differ materially from those in the forward-looking statements.
RESULTS OF OPERATIONS
The Company reported net income of $23,648,000 ($0.95 per share) from revenues of $129,812,000 for the third quarter of fiscal 1997, compared with net income of $13,158,000 ($0.53 per share) from revenues of $101,358,000 for the third quarter of fiscal 1996. Net income for the first nine months totaled $66,191,000 ($2.66 per share) from revenues of $380,553,000, compared with $35,278,000 ($1.43 per share) from revenues of $284,998,000 last year.
Net income for the nine months ended June 30, 1997, included $2,829,000 after-tax gains from the sale of securities, compared with $346,000 after-tax gains from the sale of securities for the same period in 1996.
The Company's Exploration and Production Division reported operating profit of $10,392,000 and $48,862,000 for the third quarter and nine months ended June 30, 1997, respectively, compared with operating profit of $8,605,000 and $17,370,000 for the same periods in fiscal 1996.
Natural gas prices for the third quarter and first nine months of fiscal 1997 averaged $1.78 per mcf and $2.30 per mcf, respectively, compared with $1.89 per mcf and $1.71 per mcf in the same periods of 1996. Natural gas volumes for the first nine months of 1997 were 110.3 mmcf/d, compared with 91.1 mmcf/d for the first nine months of 1996. Oil prices for the third quarter and first nine months of 1997 averaged $18.89 and $21.45, respectively, compared with $20.26 and $18.33, respectively, in the same periods of 1996. Average oil production increased to 2,803 barrels per day for the first nine months of fiscal 1997, compared with 2,229 barrels per day in the same period of 1996. Dryhole expense for the first nine months of 1997 was $2,140,000, compared with $3,779,000 for the first nine months of 1996.
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1997
(Continued)
The Contract Drilling Division reported an operating profit of $44,343,000 for the first nine months of fiscal year 1997, compared with $32,407,000 in the same period of 1996. Operating profit from the domestic drilling operations increased to $15,967,000 for the first nine months of fiscal 1997, compared with $8,366,000 for the first nine months of fiscal 1996. Increased utilization of land rigs and increased dayrates for land rigs contributed to the increased operating profit. Total revenue days for land rigs increased 20% for the first nine months of 1997 compared with the same period in 1996. Land rig utilization averaged 95% and 84% for the first nine months of fiscal 1997 and 1996, respectively. Also during the third quarter, H&P rigs on Shell's Ram Powell Tension Leg Platform and Shell's Enchilada Platform began work.
The Company also recently announced plans to increase its land rig fleet to 36 rigs. Two 3,000 horsepower deep land rigs will be built at the Company's facilities, with the first one already operating in South Texas for Exxon Company USA. The second deep rig should be available in October of this year. Six additional 1,500 horsepower rigs have been ordered from IRI International Corporation with the first two rigs scheduled to be delivered in October 1997 and the remaining rigs to be delivered at various times during the first six months of calendar 1998.
Operating profit from the Company's international drilling operations increased to $28,376,000 in the first nine months of fiscal 1997 from $24,041,000 in the same period last year. Operating results for the Company's two main South American operations of Venezuela and Colombia showed significant improvement in the third quarter of fiscal 1997. Utilization of the 39 international rigs was 94% and 90% during the third quarter and first nine months of 1997, respectively, compared with 81% and 86% during the same periods of 1996.
The Company increased its presence in Bolivia by purchasing three land rigs in late June from Serpetbol Perforaciones, S.A., a Bolivian contractor. The Company will now own and operate four medium to deep capacity rigs in Bolivia.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $110,514,000 for the nine months ended June 30, 1997, compared with $93,257,000 for the same period in 1996. Capital expenditures for the first nine months of 1997 were $101,445,000, compared with $82,734,000 for the first nine months of 1996.
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 1997.
There were no other significant changes in the Company's financial position since September 30, 1996.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Item 6(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended June 30, 1997.
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 13, 1997 /s/ DOUGLAS E. FEARS
-----------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: August 13, 1997 /s/ HANS C. HELMRERICH
-----------------------------------------
Hans C. Helmerich, President
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INDEX TO EXHIBITS
Exhibit Number Exhibit ------ ------- Exhibit 27 Financial Data Schedule |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | SEP 30 1997 |
| PERIOD START | OCT 01 1996 |
| PERIOD END | JUN 30 1997 |
| CASH | 30,236 |
| SECURITIES | 271,249 |
| RECEIVABLES | 89,949 |
| ALLOWANCES | 2,077 |
| INVENTORY | 18,597 |
| CURRENT ASSETS | 147,025 |
| PP&E | 1,141,339 |
| DEPRECIATION | 636,944 |
| TOTAL ASSETS | 935,947 |
| CURRENT LIABILITIES | 65,539 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 2,677 |
| OTHER SE | 728,702 |
| TOTAL LIABILITY AND EQUITY | 935,947 |
| SALES | 370,862 |
| TOTAL REVENUES | 380,553 |
| CGS | 272,534 |
| TOTAL COSTS | 272,534 |
| OTHER EXPENSES | 7,150 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 143 |
| INCOME PRETAX | 100,726 |
| INCOME TAX | 36,066 |
| INCOME CONTINUING | 66,191 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 66,191 |
| EPS PRIMARY | 2.66 |
| EPS DILUTED | 2.66 |