Helmerich & Payne, Inc. Announces Third Quarter Earnings and New Contracts

TULSA, Okla., July 31 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc.
(NYSE: HP) reported record net income of $125,369,000 ($1.18 per diluted
share) from operating revenues of $522,517,000 for its third fiscal quarter
ended June 30, 2008, compared with net income of $115,204,000 ($1.09 per
diluted share) from operating revenues of $421,274,000 during last year's
third fiscal quarter ended June 30, 2007. Included in this year's third
quarter's net income are $0.09 per share of after-tax gains from the sale of
portfolio securities and $0.04 per share from the sale of drilling equipment
and insurance settlements, as well as a charge equivalent to $0.07 per share
(after-tax) from the in-process research and development write-off
corresponding to the previously announced acquisition of TerraVici Drilling
Solutions. Included in third quarter net income for 2007 were gains of $0.15
per share from the sale of portfolio securities and $0.06 per share from the
sale of drilling equipment and insurance settlements.
For the nine months ended June 30, 2008, the Company reported net income
of $335,253,000 ($3.16 per diluted share) from operating revenues of
$1,452,824,000 compared with net income of $332,851,000 ($3.17 per diluted
share) from operating revenues of $1,180,209,000 during the nine months ended
June 30, 2007. Included in net income were gains from the sale of portfolio
securities and drilling equipment, and gains from insurance settlements of
$0.21 per share for the first nine months of fiscal 2008 and $0.60 per share
for the first nine months of fiscal 2007. Also included in the net income
corresponding to the first nine months of fiscal 2008 is the above mentioned
in-process research and development charge of $0.07 per share.
Helmerich & Payne, Inc. also announced today that, since its last
announcement in late May, it had signed 18 long-term contracts with eight
exploration and production companies to operate 18 new FlexRigs(R)*. The
names of the customers and other terms were not disclosed. Since the
beginning of this fiscal year, the Company has announced 50 new contracts for
the construction and operation of 50 new FlexRigs under long-term contracts
with firm term durations of three years or greater. This also brings to 127,
the total number of long-term commitments for new FlexRigs that have been
announced by the Company since March, 2005. To date, 95 of the 127 new builds
have been completed, with the remaining 32 scheduled for completion by the end
of fiscal 2009. Upon completion of these commitments, FlexRigs will represent
over 70% of the Company's global fleet and over 80% of its U.S. land rig
fleet.
Company President and C.E.O., Hans Helmerich commented, "This past
quarter's results in our U.S. land rig operations and the announcement of 18
more new build orders further validate the Company's leadership in
implementing new technology in the field. We believe that as FlexRigs continue
to meet and exceed expectations in the field and bring meaningful value to our
customers with safer and lower cost wells, demand for both the FlexRig and the
organizational competence H&P delivers, will provide more opportunities for
growth in both our U.S. and international operations."
All three of the Company's drilling segments recorded improved results
compared with the previous quarter. The Company's U.S. land rig segment
operating income increased sequentially by 11% to $159,413,000 for this year's
third quarter, from $143,740,000 during this year's second quarter. Last
year's third quarter U.S. land rig segment operating income was $114,619,000.
Segment operating income grew during the quarter as a result of both increased
average margins per rig day and growth in total rig activity driven primarily
by the Company's new build program. Average margins for the quarter increased
to $13,365 per rig day, compared to $12,858 per rig day in the previous
quarter, a $507 per day increase. Total revenue days for the recent quarter
increased by 7% over the previous quarter as the Company's average rig
utilization remained high, totaling 96% for this year's third quarter,
compared to 94% for the previous quarter.
The Company's offshore operations reported segment operating income of
$12,013,000 for the third quarter of fiscal 2008, compared with $3,603,000 for
the second quarter of fiscal 2008 and $4,553,000 for the third quarter of
fiscal 2007. The recent commencement of operations of two additional platform
rigs in the Gulf of Mexico and one rig offshore Trinidad helped increase
average third quarter dayrates, margins and rig utilization compared to the
same statistics in the second quarter. Total activity days in the offshore
operations during the quarter were 732, compared with 514 days during the
second quarter of fiscal 2008, and 546 activity days during the same period
last year. By the end of this year's third quarter, eight of the Company's
nine platform rigs were working.
Segment operating income for the Company's international land operations
was $17,492,000 during this year's third quarter, compared with $12,752,000
during this year's second quarter and $28,873,000 during last year's third
quarter. This year's second quarter income included an accounting adjustment
of $5.9 million relating to the depreciation of certain assets recorded in
prior years. Average rig utilization for the third quarter of 2008 was 79%,
compared with 73% for the second quarter of fiscal 2008 and 90% for the third
quarter of fiscal 2007. By the end of the third quarter, 24 of the Company's
27 international land rigs were working. In addition, the first of seven
previously announced new international FlexRigs was completed and is currently
being mobilized to its location in Latin America.
Helmerich & Payne, Inc. is primarily a contract drilling company. As of
July 31, 2008, the Company's existing fleet included 181 U.S. land rigs, 27
international land rigs and nine offshore platform rigs.
Helmerich & Payne, Inc.'s conference call/webcast is scheduled to begin
this morning at 11:00 a.m. ET (10:00 a.m. CT) and can be accessed at
http://www.hpinc.com under Investors. If you are unable to participate during
the live webcast, the call will be archived on H&P's website indicated above.
Statements in this release and information disclosed in the conference
call and webcast that are "forward-looking statements" within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934 are based
on current expectations and assumptions that are subject to risks and
uncertainties. For information regarding risks and uncertainties associated
with the Company's business, please refer to the "Risk Factors" and
"Management's Discussion & Analysis of Results of Operations and Financial
Condition" 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.
*FlexRig(R) is a registered trademark of Helmerich & Payne, Inc.

HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)

Three Months Ended Nine Months Ended
CONSOLIDATED March 31 June 30 June 30
STATEMENTS OF INCOME 2008 2008 2007 2008 2007

Operating Revenues:
Drilling - U.S.
Land $365,263 $391,755 $303,514 $1,104,662 $842,559
Drilling - Offshore 29,789 47,298 29,626 104,368 94,083
Drilling -
International Land 75,757 80,585 85,357 234,944 235,153
Other 2,835 2,879 2,777 8,850 8,414
473,644 522,517 421,274 1,452,824 1,180,209

Operating costs and
other:
Operating costs,
excluding
depreciation 253,958 274,168 229,025 763,921 627,948
Depreciation 51,872 51,210 38,125 147,066 101,228
General and
administrative 14,090 14,723 11,538 42,716 35,501
Research and
development - 522 - 522 -
In-process research
and development - 11,129 - 11,129 -
Gain from
involuntary
conversion of
long-lived assets - (5,426) (5,900) (10,236) (11,070)
Income from asset
sales (1,946) (1,616) (6,186) (4,404) (39,008)
317,974 344,710 266,602 950,714 714,599

Operating income 155,670 177,807 154,672 502,110 465,610

Other income
(expense):
Interest and
dividend income 1,220 1,034 962 3,369 3,240
Interest expense (4,773) (4,651) (3,260) (14,255) (6,092)
Gain on sale of
investment
securities 5,476 16,388 25,298 21,994 51,812
Other 180 66 120 (370) 250
2,103 12,837 23,120 10,738 49,210

Income before income
taxes and equity
in income of
affiliate 157,773 190,644 177,792 512,848 514,820

Income tax provision 58,784 70,187 64,960 189,117 188,396

Equity in income of
affiliate net of
income taxes 3,065 4,912 2,372 11,522 6,427
NET INCOME $102,054 $125,369 $115,204 $335,253 $332,851

Earnings per common
share:
Basic $0.98 $1.20 $1.11 $3.22 $3.22
Diluted $0.96 $1.18 $1.09 $3.16 $3.17

Average common
shares outstanding:
Basic 103,883 104,530 103,323 103,973 103,292
Diluted 106,090 106,689 105,313 106,130 104,990

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)

CONSOLIDATED CONDENSED BALANCE SHEETS
6/30/08 9/30/07
ASSETS
Cash and cash equivalents $99,018 $89,215
Other current assets 512,381 409,749
Total current assets 611,399 498,964
Investments 218,869 223,360
Net property, plant, and equipment 2,534,931 2,152,616
Other assets 13,322 10,429
TOTAL ASSETS $3,378,521 $2,885,369

LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $272,108 $226,612
Total noncurrent liabilities 485,241 398,241
Long-term notes payable 455,000 445,000
Total shareholders' equity 2,166,172 1,815,516

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,378,521 $2,885,369

HELMERICH & PAYNE, INC.
Unaudited
(in thousands)

Nine Months Ended
June 30
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2008 2007

OPERATING ACTIVITIES:
Net income $335,253 $332,851
Depreciation 147,066 101,228
In-process research and development 11,129 -
Changes in assets and liabilities (1,077) 58,137
Gain from involuntary conversion of
long-lived assets (10,236) (11,070)
Gain on sale of assets and investment securities (26,268) (90,682)
Other (12,279) (5,065)
Net cash provided by operating activities 443,588 385,399

INVESTING ACTIVITIES:
Capital expenditures (509,018) (681,149)
Insurance proceeds from involuntary
conversion of long-lived assets 13,926 11,070
Proceeds from sale of assets and investments 31,584 158,464
Acquisition of business, net of cash acquired (12,024) -
Net cash used in investing activities (475,532) (511,615)

FINANCING ACTIVITIES:
Dividends paid (14,060) (13,971)
Repurchase of common stock - (17,621)
Net increase (decrease) in bank overdraft 4,465 (11,293)
Proceeds from exercise of stock options 14,267 3,277
Net proceeds from short-term and long-term debt 12,259 201,279
Excess tax benefit from stock-based compensation 24,816 1,254
Net cash provided by financing activities 41,747 162,925

Net increase in cash and cash equivalents 9,803 36,709
Cash and cash equivalents, beginning of period 89,215 33,853
Cash and cash equivalents, end of period $99,018 $70,562

SEGMENT REPORTING Three Months Ended Nine Months Ended
March 31 June 30 June 30
2008 2008 2007 2008 2007
(in thousands, except days and per day amounts)
U.S. LAND OPERATIONS
Revenues $365,263 $391,755 $303,514 $1,104,662 $842,559
Direct operating expenses 181,757 187,771 157,758 535,093 417,514
General and
administrative expense 4,257 4,801 3,625 13,452 10,228
Depreciation 35,509 39,770 27,512 109,123 72,008
Segment operating income $143,740 $159,413 $114,619 $446,994 $342,809

Revenue days 14,272 15,263 12,371 43,422 34,075
Average rig revenue per day $24,415 $24,543 $23,401 $24,329 $23,537
Average rig expense per day $11,557 $11,178 $11,619 $11,212 $11,063
Average rig margin per day $12,858 $13,365 $11,782 $$13,117 $12,474
Rig utilization 94% 96% 96% 95% 97%

OFFSHORE OPERATIONS
Revenues $29,789 $47,298 $29,626 $104,368 $94,083
Direct operating expenses 21,918 31,166 21,748 72,295 66,595
General and administrative
expense 1,114 1,276 907 3,488 3,865
Depreciation 3,154 2,843 2,418 8,855 7,885
Segment operating income $3,603 $12,013 $4,553 $19,730 $15,738

Revenue days 514 732 546 1,706 1,656
Average rig revenue per day $41,209 $51,309 $30,263 $45,711 $33,095
Average rig expense per day $29,144 $31,181 $21,734 $29,483 $21,921
Average rig margin per day $12,065 $20,128 $8,529 $16,228 $11,174
Rig utilization 65% 89% 67% 70% 67%

SEGMENT REPORTING Three Months Ended Nine Months Ended
March 31 June 30 June 30
2008 2008 2007 2008 2007
(in thousands, except days and per day amounts)
INTERNATIONAL LAND
OPERATIONS
Revenues $75,757 $80,585 $85,357 $234,944 $235,153
Direct operating expenses 50,129 55,093 49,166 156,004 142,530
General and administrative
expense 1,300 1,182 670 3,420 2,264
Depreciation 11,576 6,818 6,648 24,120 17,538
Segment operating income $12,752 $17,492 $28,873 $51,400 $72,821

Revenue days 1,795 1,951 2,235 5,727 6,863
Average rig revenue per day $39,695 $38,709 $34,200 $37,570 $29,583
Average rig expense per day $25,299 $25,638 $18,246 $23,704 $16,253
Average rig margin per day $14,396 $13,071 $15,954 $13,866 $13,330
Rig utilization 73% 79% 90% 77% 93%

Operating statistics exclude the effects of offshore 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.

A management contract for a customer-owned offshore rig working in an
international location was moved from the International segment to the
Offshore segment in the fourth quarter of fiscal 2007. The amounts for
Offshore and International land segments for the three and nine months
ended June 30, 2007 have been restated to reflect this change.

Reimbursed amounts were as follows:

U.S. Land Operations $16,809 $17,158 $14,016 $48,244 $40,521
Offshore Operations $3,343 $4,296 $3,639 $10,501 $11,183
International Land Operations $4,505 $5,066 $8,570 $19,784 $31,550

With the growth of the drilling segments, the previously reported Real
Estate segment has become a smaller percentage of total segment operating
income. As a result, the Real Estate segment has been included with
other non-reportable business segments. The three months ended March 31,
2008, and the three and nine months ended June 30, 2007, have been
restated to reflect this change.

Segment operating income 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 segment operating income per the
information above to income before income taxes and equity in income of
affiliates as reported on the Consolidated Statements of Income (in
thousands).

SEGMENT REPORTING Three Months Ended Nine Months Ended
March 31 June 30 June 30
2008 2008 2007 2008 2007
Operating Income
U.S. Land $143,740 $159,413 $114,619 $446,994 $342,809
Offshore 3,603 12,013 4,553 19,730 15,738
International Land 12,752 17,492 28,873 51,400 72,821
Other 1,301 (10,421) 1,285 (7,596) 3,713
Segment operating
income $161,396 $178,497 $149,330 $510,528 $435,081
Corporate general and
administrative (7,419) (7,464) (6,336) (22,356) (19,144)
Other depreciation (1,003) (1,087) (945) (3,019) (1,994)
Inter-segment
elimination 750 819 537 2,317 1,589
Gain from involuntary
conversion of
long-lived assets - 5,426 5,900 10,236 11,070
Income from asset sales 1,946 1,616 6,186 4,404 39,008
Operating income $155,670 $177,807 $154,672 $502,110 $465,610

Other income (expense):
Interest and
dividend income 1,220 1,034 962 3,369 3,240
Interest expense (4,773) (4,651) (3,260) (14,255) (6,092)
Gain on sale of
investment
securities 5,476 16,388 25,298 21,994 51,812
Other 180 66 120 (370) 250
Total other income
(expense) 2,103 12,837 23,120 10,738 49,210

Income before income
taxes and equity
in income of affiliate $157,773 $190,644 $177,792 $512,848 $514,820

SOURCE Helmerich & Payne, Inc.

Juan Pablo Tardio, +1-918-588-5383, for Helmerich & Payne, Inc.