UPDATE 1-Helmerich & Payne buys private firm TerraVici

(Adds details on deal)

NEW YORK, May 28 (Reuters) - Helmerich & Payne Inc (HP.N) announced on Wednesday it had acquired drilling technology developer TerraVici Drilling for up to $22 million in cash, plus certain payments based on future earnings.

The company also said it had signed 12 long-term contracts with two exploration and production companies to operate 12 new FlexRigs in the United States. Most of the contracts cover a minimum of three years, with the remainder for a duration of four to seven years.

It said the TerraVici deal would result in a write-off that will hurt its net income by 6 to 8 cents per share in its third fiscal quarter, as a big portion of the price will be allocated as in-process research and development.

Helmerich & Payne also said that subsequent research and development efforts are expected to impact operating costs and expenses by about $3 million, or 2 cents per share, every quarter for the rest of 2008 and for 2009.

It said that while TerraVici was not expected to add to earnings before fiscal 2010, it sees developments in the technology "eventually" producing attractive results.

TerraVici is developing a patented rotary steerable system aimed at improving horizontal and directional drilling, the company said.

Helmerich & Payne said its revised estimate for capital spending in fiscal 2008 is $750 million, which will be funded primarily by after-tax cash flow from operations. It may also use part of its revolving credit facility, it said.

The company said that 30 FlexRigs are expected to be completed in fiscal 2008, 20 of which have already been completed. Ten rigs are scheduled to be completed in fiscal 2009 under existing commitments, it said. (Reporting by Sinead Carew; Editing by Braden Reddall