TULSA, Okla., April 24, 2014 (GLOBE NEWSWIRE) -- Helmerich & Payne, Inc. (NYSE:HP) reported net income of $174.6 million ($1.59 per diluted share) from operating revenues of $893.4 million for the second quarter of fiscal 2014, compared to net income of $151.1 million ($1.39 per diluted share) from operating revenues of $838.3 million during the second fiscal quarter of 2013, and net income of $173.2 million ($1.59 per diluted share) from operating revenues of $889.2 million during the first fiscal quarter of 2014. Included in net income corresponding to this year's second fiscal quarter are approximately $0.02 per diluted share of after-tax gains related to the sale of used drilling equipment and approximately $0.12 per diluted share of after-tax gains on the sale of investment securities. Included in both this year's first fiscal quarter and last year's second fiscal quarter were approximately $0.03 per diluted share of after-tax gains related to the sale of used drilling equipment.
President and CEO John Lindsay commented, "We are pleased to report yet another quarter with strong operating results, including an all-time record level of quarterly revenue and rig activity. The demand for new FlexRigs remains strong, and our U.S. land segment continues to benefit from increasing activity and recovering spot pricing levels. We have entered into agreements with five exploration and production companies to build and operate nine additional FlexRigs®* to drill unconventional resource plays in the U.S. All of these rigs were ordered under multi-year term contracts and are expected to generate attractive economic returns for the Company. The new contracts bring the total number of new build commitments announced in fiscal 2014 to 44 FlexRigs. We will continue to focus on making investments that provide attractive returns for our shareholders while at the same time creating value for our customers by striving to provide even safer and more cost-effective drilling operations."
Operating Segment Results
Segment operating income for the Company's U.S. land operations was $245.1 million for the second quarter of fiscal 2014, compared with $226.0 million for last year's second fiscal quarter and $251.0 million for this year's first fiscal quarter. As compared to the first fiscal quarter, the number of revenue days for the segment increased by 836 (3.6%) to 24,300 during the second fiscal quarter of 2014. Nevertheless, segment operating income declined sequentially primarily as a result of approximately $10 million in early termination fees included in the first fiscal quarter (and no early termination fees during the second fiscal quarter). Excluding early termination fees, the average rig revenue per day decreased by only $9 to $28,037 and the average rig margin per day decreased by $155 to $14,957 during the second fiscal quarter as compared to this year's first fiscal quarter. Also as compared to the first fiscal quarter, average rig expense per day for the segment increased by $146 to $13,080 during the second fiscal quarter. Rig utilization for the Company's U.S. land segment was 86% for this year's second fiscal quarter, compared with 82% for last year's second fiscal quarter and 84% for this year's first fiscal quarter. At March 31, 2014, the Company's U.S. land segment had 282 contracted rigs (including 159 under term contracts) and 40 idle rigs.
Segment operating income for the Company's offshore operations was $19.3 million for the second quarter of fiscal 2014, compared with $13.7 million for last year's second fiscal quarter and $18.5 million for this year's first fiscal quarter. The sequential increase in operating income was attributable to a higher average rig margin per day in the second quarter of fiscal 2014. Rig utilization in the segment was reported at 89% for both the first and second quarters of fiscal 2014 and also for the second quarter of fiscal 2013.
The Company's international land operations reported segment operating income of $11.2 million for this year's second fiscal quarter, compared with $13.2 million for the second fiscal quarter of 2013 and $12.8 million for this year's first fiscal quarter. The decrease in segment operating income as compared to the first fiscal quarter was mostly attributable to a lower number of revenue days during the second fiscal quarter. The reduced number of revenue days was partly offset by an increase of $576 to $10,918 in the segment's average rig margin per day during the second fiscal quarter as compared to the first fiscal quarter of 2014.
Drilling Operations Outlook for the Third Quarter of Fiscal 2014
In the U.S. land segment, the Company expects revenue days (activity) to increase by approximately seven percent during the third fiscal quarter as compared to the second fiscal quarter of 2014. The average rig revenue per day is expected to remain at approximately $28,000 and the average rig expense per day is expected to remain at roughly $13,000 during the third fiscal quarter. As of today, the U.S. land segment has 287 contracted rigs, including 161 under term contracts.
In the offshore segment, the Company expects the average rig margin per day to be approximately $25,000 during the third fiscal quarter and revenue days to increase by approximately one percent as compared to the second fiscal quarter of 2014.
In the international land segment, the Company expects total revenue days during the third fiscal quarter to be relatively flat and the average rig margin per day to decline by approximately five percent as compared to the second fiscal quarter of 2014.
Capital Expenditures and Other Estimates for Fiscal 2014
Given today's new build announcements, other previously announced contracts and ongoing conversations with customers regarding new FlexRig deliveries in early fiscal 2015, the Company is increasing its fiscal 2014 capital expenditures estimate from $950 million to $1.1 billion.
Including changes in income tax estimates that increased the second fiscal quarter's effective income tax rate, the Company expects the effective income tax rate for all of fiscal 2014 to be approximately 35%.
About Helmerich & Payne, Inc.
Helmerich & Payne, Inc. is primarily a contract drilling company. As of April 24, 2014, the Company's existing fleet included 325 land rigs in the U.S., 31 international land rigs and 9 offshore platform rigs. In addition, the Company is scheduled to complete another 19 new H&P-designed and operated FlexRigs under long-term contracts with customers in fiscal 2014. Upon completion of these commitments, the Company's global fleet is expected to have a total of 375 land rigs, including 345 FlexRigs.
Forward-Looking Statements
This release includes "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, 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. For information regarding risks and uncertainties associated with the Company's business, please refer to the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's SEC filings, including but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. As a result of these factors, Helmerich & Payne, Inc.'s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.
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*FlexRig® is a registered trademark of Helmerich & Payne, Inc. |
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HELMERICH & PAYNE, INC. |
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Unaudited |
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(in thousands, except per share data) |
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|
Three Months Ended |
Six Months Ended |
|
CONSOLIDATED STATEMENTS OF |
December 31 |
March 31 |
March 31 |
|
INCOME |
2013 |
2014 |
2013 |
2014 |
2013 |
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|
|
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Operating Revenues: |
|
|
|
|
|
|
Drilling – U.S. Land |
$ 731,674 |
$ 741,791 |
$ 685,710 |
$ 1,473,465 |
$ 1,381,740 |
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Drilling – Offshore |
59,054 |
63,276 |
55,605 |
122,330 |
113,323 |
|
Drilling – International Land |
95,341 |
85,533 |
94,092 |
180,874 |
181,359 |
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Other |
3,083 |
2,830 |
2,902 |
5,913 |
6,459 |
|
|
889,152 |
893,430 |
838,309 |
1,782,582 |
1,682,881 |
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Operating costs and expenses: |
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|
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Operating costs, excluding depreciation |
474,048 |
480,167 |
461,737 |
954,215 |
928,608 |
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Depreciation |
120,237 |
123,963 |
112,433 |
244,200 |
219,032 |
|
General and administrative |
32,243 |
34,431 |
32,836 |
66,674 |
65,257 |
|
Research and development |
4,257 |
3,625 |
3,696 |
7,882 |
7,049 |
|
Income from asset sales |
(5,664) |
(4,098) |
(5,313) |
(9,762) |
(10,532) |
|
|
625,121 |
638,088 |
605,389 |
1,263,209 |
1,209,414 |
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|
|
|
|
|
|
|
Operating income |
264,031 |
255,342 |
232,920 |
519,373 |
473,467 |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
Interest and dividend income |
453 |
490 |
315 |
943 |
741 |
|
Interest expense |
(1,194) |
(1,725) |
(1,186) |
(2,919) |
(2,494) |
|
Gain on sale of investment securities |
-- |
21,352 |
-- |
21,352 |
8,752 |
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Other |
(345) |
(32) |
103 |
(377) |
(1,981) |
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|
(1,086) |
20,085 |
(768) |
18,999 |
5,018 |
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|
|
|
|
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Income from continuing operations before income taxes |
262,945 |
275,427 |
232,152 |
538,372 |
478,485 |
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Income tax provision |
89,763 |
100,838 |
81,085 |
190,601 |
167,807 |
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Income from continuing operations |
173,182 |
174,589 |
151,067 |
347,771 |
310,678 |
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|
|
|
|
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Income (loss) from discontinued operations, before income taxes |
-- |
2,786 |
(472) |
2,786 |
(480) |
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Income tax provision |
-- |
2,805 |
(485) |
2,805 |
(485) |
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Income (loss) from discontinued operations |
-- |
(19) |
13 |
(19) |
5 |
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|
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NET INCOME |
$ 173,182 |
$ 174,570 |
$ 151,080 |
$ 347,752 |
$ 310,683 |
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Basic earnings per common share: |
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Income from continuing operations |
$ 1.61 |
$ 1.61 |
$ 1.41 |
$ 3.22 |
$ 2.91 |
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Income from discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
$ -- |
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|
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Net income |
$ 1.61 |
$ 1.61 |
$ 1.41 |
$ 3.22 |
$ 2.91 |
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Diluted earnings per common share: |
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Income from continuing operations |
$ 1.59 |
$ 1.59 |
$ 1.39 |
$ 3.17 |
$ 2.87 |
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Income from discontinued operations |
$ -- |
$ -- |
$ -- |
$ -- |
$ -- |
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|
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|
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Net income |
$ 1.59 |
$ 1.59 |
$ 1.39 |
$ 3.17 |
$ 2.87 |
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Weighted average shares outstanding: |
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Basic |
107,149 |
107,692 |
106,326 |
107,417 |
106,094 |
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Diluted |
108,577 |
109,081 |
107,786 |
108,945 |
107,640 |
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HELMERICH & PAYNE, INC. |
|
Unaudited |
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(in thousands) |
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March 31 |
September 30 |
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CONSOLIDATED CONDENSED BALANCE SHEETS |
2014 |
2013 |
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ASSETS |
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Cash and cash equivalents |
$ 584,979 |
$ 447,868 |
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Other current assets |
797,026 |
806,638 |
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Current assets of discontinued operations |
6,979 |
3,705 |
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Total current assets |
1,388,984 |
1,258,211 |
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Investments |
284,670 |
316,154 |
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Net property, plant, and equipment |
4,801,236 |
4,676,103 |
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Other assets |
13,391 |
14,359 |
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TOTAL ASSETS |
$ 6,488,281 |
$ 6,264,827 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
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Current liabilities |
$ 435,147 |
$ 449,063 |
|
Current liabilities of discontinued operations |
3,341 |
3,210 |
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Total current liabilities |
438,488 |
452,273 |
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Non-current liabilities |
1,278,082 |
1,288,332 |
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Non-current liabilities of discontinued operations |
3,638 |
495 |
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Long-term notes payable |
80,000 |
80,000 |
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Total shareholders' equity |
4,688,073 |
4,443,727 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ 6,488,281 |
$ 6,264,827 |
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HELMERICH & PAYNE, INC. |
|
Unaudited |
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(in thousands) |
|
|
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Six Months Ended |
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March 31 |
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
2014 |
2013 |
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OPERATING ACTIVITIES: |
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|
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Net income |
$ 347,752 |
$ 310,683 |
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Adjustment for (income) loss from discontinued operations |
19 |
(5) |
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Income from continuing operations |
347,771 |
310,678 |
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Depreciation |
244,200 |
219,032 |
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Changes in assets and liabilities |
(33,437) |
(32,408) |
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Gain on sale of assets and investment securities |
(31,114) |
(19,284) |
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Other |
12,610 |
16,290 |
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Net cash provided by operating activities from continuing operations |
540,030 |
494,308 |
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Net cash provided by (used in) operating activities from discontinued operations |
(19) |
5 |
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Net cash provided by operating activities |
540,011 |
494,313 |
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INVESTING ACTIVITIES: |
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Capital expenditures |
(356,753) |
(438,473) |
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Proceeds from sale of assets and invested securities |
36,659 |
34,253 |
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Net cash used in investing activities |
(320,094) |
(404,220) |
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FINANCING ACTIVITIES: |
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Dividends paid |
(121,545) |
(23,469) |
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Exercise of stock options |
19,701 |
4,906 |
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Tax withholdings related to net share settlements of restricted stock |
(3,049) |
(1,677) |
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Excess tax benefit from stock-based compensation |
22,087 |
7,045 |
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Net cash used in financing activities |
(82,806) |
(13,195) |
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|
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Net increase in cash and cash equivalents |
137,111 |
76,898 |
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Cash and cash equivalents, beginning of period |
447,868 |
96,095 |
|
Cash and cash equivalents, end of period |
$ 584,979 |
$ 172,993 |
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SEGMENT REPORTING |
Three Months Ended |
Six Months Ended |
|
|
December 31 |
March 31 |
March 31 |
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2013 |
2014 |
2013 |
2014 |
2013 |
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(in thousands, except days and per day amounts) |
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U.S. LAND OPERATIONS |
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Revenues |
$ 731,674 |
$ 741,791 |
$ 685,710 |
$ 1,473,465 |
$ 1,381,740 |
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Direct operating expenses |
367,186 |
378,347 |
354,170 |
745,533 |
715,238 |
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General and administrative expense |
9,957 |
10,656 |
9,057 |
20,613 |
18,378 |
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Depreciation |
103,579 |
107,726 |
96,485 |
211,305 |
187,738 |
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Segment operating income |
$ 250,952 |
$ 245,062 |
$ 225,998 |
$ 496,014 |
$ 460,386 |
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Revenue days |
23,464 |
24,300 |
21,847 |
47,764 |
43,590 |
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Average rig revenue per day |
$ 28,468 |
$ 28,037 |
$ 28,255 |
$ 28,249 |
$ 28,148 |
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Average rig expense per day |
$ 12,934 |
$ 13,080 |
$ 13,085 |
$ 13,009 |
$ 12,860 |
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Average rig margin per day |
$ 15,534 |
$ 14,957 |
$ 15,170 |
$ 15,240 |
$ 15,288 |
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Rig utilization |
84% |
86% |
82% |
85% |
82% |
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OFFSHORE OPERATIONS |
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Revenues |
$ 59,054 |
$ 63,276 |
$ 55,605 |
$ 122,330 |
$ 113,323 |
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Direct operating expenses |
34,876 |
38,479 |
36,106 |
73,355 |
73,313 |
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General and administrative expense |
2,330 |
2,528 |
2,159 |
4,858 |
4,394 |
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Depreciation |
3,350 |
2,926 |
3,690 |
6,276 |
6,960 |
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Segment operating income |
$ 18,498 |
$ 19,343 |
$ 13,650 |
$ 37,841 |
$ 28,656 |
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Revenue days |
736 |
720 |
720 |
1,456 |
1,456 |
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Average rig revenue per day |
$ 62,306 |
$ 64,242 |
$ 60,536 |
$ 63,263 |
$ 61,243 |
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Average rig expense per day |
$ 34,857 |
$ 36,577 |
$ 35,698 |
$ 35,707 |
$ 35,928 |
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Average rig margin per day |
$ 27,449 |
$ 27,665 |
$ 24,838 |
$ 27,556 |
$ 25,315 |
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Rig utilization |
89% |
89% |
89% |
89% |
89% |
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INTERNATIONAL LAND OPERATIONS |
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Revenues |
$ 95,341 |
$ 85,533 |
$ 94,092 |
$ 180,874 |
$ 181,359 |
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Direct operating expenses |
71,930 |
63,688 |
71,692 |
135,618 |
140,331 |
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General and administrative expense |
1,000 |
964 |
910 |
1,964 |
1,949 |
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Depreciation |
9,660 |
9,713 |
8,321 |
19,373 |
16,799 |
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Segment operating income (loss) |
$ 12,751 |
$ 11,168 |
$ 13,169 |
$ 23,919 |
$ 22,280 |
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Revenue days |
2,156 |
2,032 |
2,023 |
4,188 |
4,260 |
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Average rig revenue per day |
$ 38,433 |
$ 37,095 |
$ 40,677 |
$ 37,784 |
$ 37,964 |
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Average rig expense per day |
$ 28,091 |
$ 26,177 |
$ 29,624 |
$ 27,163 |
$ 28,304 |
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Average rig margin per day |
$ 10,342 |
$ 10,918 |
$ 11,053 |
$ 10,621 |
$ 9,660 |
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Rig utilization |
82% |
78% |
78% |
80% |
81% |
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Operating statistics exclude the effects of offshore platform management contracts, gains and losses from translation of foreign currency transactions, and do not include reimbursements of "out-of-pocket" expenses in revenue per day, expense per day and margin calculations. |
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Reimbursed amounts were as follows: |
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U.S. Land Operations |
$ 63,700 |
$ 60,488 |
$ 68,421 |
$ 124,188 |
$ 154,780 |
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Offshore Operations |
$ 2,766 |
$ 4,920 |
$ 6,130 |
$ 7,686 |
$ 12,389 |
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International Land Operations |
$ 12,480 |
$ 10,157 |
$ 11,804 |
$ 22,637 |
$ 19,632 |
Segment operating income for all segments is a non-GAAP financial measure of the Company's performance, as it excludes general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense. The Company considers segment operating income to be an important supplemental measure of operating performance for presenting trends in the Company's core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company's reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company's operating performance in future periods.
The following table reconciles operating income per the information above to income from continuing operations before income taxes as reported on the Consolidated Statements of Income (in thousands).
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Three Months Ended |
Six Months Ended |
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December 31 |
March 31 |
March 31 |
|
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2013 |
2014 |
2013 |
2014 |
2013 |
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Operating income |
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U.S. Land |
$ 250,952 |
$ 245,062 |
$ 225,998 |
$ 496,014 |
$ 460,386 |
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Offshore |
18,498 |
19,343 |
13,650 |
37,841 |
28,656 |
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International Land |
12,751 |
11,168 |
13,169 |
23,919 |
22,280 |
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Other |
(3,005) |
(2,244) |
(2,539) |
(5,249) |
(4,174) |
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Segment operating income |
$ 279,196 |
$ 273,329 |
$ 250,278 |
$ 552,525 |
$ 507,148 |
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Corporate general and administrative |
(18,956) |
(20,283) |
(20,710) |
(39,239) |
(40,536) |
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Other depreciation |
(3,244) |
(3,172) |
(3,307) |
(6,416) |
(6,241) |
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Inter-segment elimination |
1,371 |
1,370 |
1,346 |
2,741 |
2,564 |
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Income from asset sales |
5,664 |
4,098 |
5,313 |
9,762 |
10,532 |
|
Operating income |
$ 264,031 |
$ 255,342 |
$ 232,920 |
$ 519,373 |
$ 473,467 |
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Other income (expense): |
|
|
|
|
|
|
Interest and dividend income |
453 |
490 |
315 |
943 |
741 |
|
Interest expense |
(1,194) |
(1,725) |
(1,186) |
(2,919) |
(2,494) |
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Gain on sale of investment securities |
-- |
21,352 |
-- |
21,352 |
8,752 |
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Other |
(345) |
(32) |
103 |
(377) |
(1,981) |
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Total other income (expense) |
(1,086) |
20,085 |
(768) |
18,999 |
5,018 |
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Income from continuing operations before income taxes |
$ 262,945 |
$ 275,427 |
$ 232,152 |
$ 538,372 |
$ 478,485 |
CONTACT: Investor Relations
investor.relations@hpinc.com
(918)-588-5207
