Exhibit 99
November 16, 2006
HELMERICH & PAYNE, INC. ANNOUNCES EARNINGS AND NEW CONTRACTS
Tulsa, OK — Helmerich & Payne, Inc. announced net income of $293,858,000 ($2.77 per diluted share) from operating revenues of $1,224,813,000 for its fiscal year ended September 30, 2006, compared with net income of $127,606,000 ($1.23 per diluted share) from operating revenues of $800,726,000 for the previous fiscal year. Included in net income were gains from the sale of portfolio securities of $0.12 per share during fiscal 2006, and $0.16 per share during fiscal 2005.
Net income for the fourth quarter of fiscal 2006 was $98,496,000 ($0.93 per diluted share) from operating revenues of $358,799,000, compared with net income of $36,121,000 ($0.34 per diluted share) from operating revenues of $233,210,000 during last year’s fourth quarter. Included in net income were gains from the sale of portfolio securities of $0.05 per share during the fourth quarter of 2006, and less than $0.01 per share during the fourth quarter of 2005. This year’s fourth quarter benefited from a lower effective tax rate of 27.2%, compared to 37.8% during the previous quarter, primarily due to adjustments made to certain international deferred tax accounts.
Helmerich & Payne, Inc. also announced today that it had signed separate three-year term agreements with three exploration and production companies to operate a total of seven new FlexRigs®*. Other terms and customer names were not disclosed. This brings to 73, the total number of new FlexRigs to be built by H&P with at least three-year commitments that have been announced by the Company since March, 2005. To date, 28 of the new builds have been completed, with the remaining 45 scheduled for completion by the end of calendar 2007.
Company President and C.E.O., Hans Helmerich commented, “The Company posted another record year in 2006. Our earnings for the current year more than doubled our previous all-time high of one year ago. We are also pleased to announce seven additional FlexRig orders, bringing our newbuild book to 73. Significantly, these orders were secured during a time of market uncertainty and natural gas price volatility. We believe it is an indication of the customers’ strong preference for the FlexRig as a solution over conventional rigs even if overall rig availability becomes less of an issue. Our contention is that customer demand for drilling rigs that provide improved efficiencies, safety, and reliability will continue to push opportunities for the Company and provide us with attractive growth prospects.”
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Page 2
November 16, 2006
News Release
Operations Summary
Segment operating income in the Company’s U.S. land rig operations increased to $103,679,000 for the fourth quarter of fiscal 2006, from $56,028,000 for the same period last year, and from $93,708,000 for this year’s third quarter. Average revenue per rig day rose to $24,343 and cash margins per rig day to $13,288 for this year’s fourth quarter, compared with $23,503 revenue per rig day and $12,938 cash margins per rig day for the previous quarter. During the fourth quarter of 2006, rig utilization averaged 99% (including one rig recently returned from an international location and not currently marketed) compared with 95% during last year’s fourth quarter, and 100% during this year’s third quarter. Total U.S. land rig revenue days increased by 861. The Company anticipates similar increases in activity days in the coming quarters as additional new builds come on line at the rate of approximately three to four per month. Slightly over 50% of the segment’s potential activity days are already contracted for fiscal 2007.
The Company’s offshore platform rig business reported segment operating income of $6,892,000 for the fourth quarter of fiscal 2006, compared with $4,720,000 for the fourth quarter 2005 and $7,635,000 for the third quarter of 2006. Rig utilization was 69% during this year’s fourth quarter, compared with 65% during last year’s fourth quarter, and 73% during this year’s third quarter. Of the Company’s 11 platform rigs, six are currently active, one is contracted and waiting on location, and two of the four idle rigs are currently held for sale pursuant to a purchase option agreement. If the purchase option is exercised, the transaction will close in the second quarter of fiscal 2007.
International segment operating income during the fourth quarter of 2006 was $17,077,000, compared with $3,910,000 for last year’s fourth quarter, and $17,685,000 for this year’s third quarter. Rig utilization for international operations rose to 95% for the quarter, up from 85% during last year’s fourth quarter, and 93% during this year’s third quarter. For comparative purposes, third quarter international segment operating income was positively impacted by $2.1 million resulting from billings to the Company’s major customer in Venezuela, PDVSA, for retroactive increases in dayrates attributable to work performed during the second quarter of 2006.
The Company also announced that during the fourth quarter of fiscal 2006, it had purchased over 1.3 million shares of Helmerich & Payne stock. To date during the first quarter of fiscal 2007, the Company purchased an additional 682,000 shares of the Company’s stock, for a total of approximately 2.0 million shares. To partially fund the purchases, the Company sold 150,000 shares of Schlumberger during September, and 500,000 additional shares to date since October 1. In total, the sale of 650,000 shares of Schlumberger has generated pre-tax proceeds of approximately $39.1 million.
Helmerich & Payne, Inc. is a contract drilling company that owns 117 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 155 rigs. Included in the total fleet of 155 rigs are 78 H&P-designed and operated FlexRigs. The Company has reached contractual agreements with customers that will result in the construction of 45 additional FlexRigs.
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Page 3
November 16, 2006
News Release
Helmerich & Payne, Inc.’s conference call/webcast is scheduled for this morning and can be accessed at http://www.hpinc.com under Investors and will begin at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). If you are unable to participate during the live webcast, the call will be archived for a year 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 “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® is a registered trademark of Helmerich & Payne, Inc.
Contacts: | | Doug Fears |
| | (918) 588-5208 |
| | Juan Pablo Tardio |
| | (918) 588-5383 |
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Page 4
News Release
November 16, 2006
HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
| | Three Months Ended | | Fiscal Year Ended | |
| | June 30 | | September 30 | | September 30 | |
CONSOLIDATED STATEMENTS OF INCOME | | 2006 | | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | | | |
Operating Revenues: | | | | | | | | | | | |
Drilling — U.S. Land | | $ | 214,864 | | $ | 247,776 | | $ | 157,335 | | $ | 829,062 | | $ | 527,637 | |
Drilling — U.S. Offshore | | 34,568 | | 34,789 | | 26,011 | | 132,580 | | 84,921 | |
Drilling — International | | 67,831 | | 73,587 | | 47,180 | | 252,792 | | 177,480 | |
Real Estate | | 2,533 | | 2,647 | | 2,684 | | 10,379 | | 10,688 | |
| | 319,796 | | 358,799 | | 233,210 | | 1,224,813 | | 800,726 | |
| | | | | | | | | | | |
Operating costs and other: | | | | | | | | | | | |
Operating costs, excluding depreciation | | 169,429 | | 194,738 | | 137,188 | | 661,563 | | 484,231 | |
Depreciation | | 25,076 | | 30,199 | | 25,643 | | 101,583 | | 96,274 | |
General and administrative | | 13,049 | | 12,929 | | 10,496 | | 51,873 | | 41,015 | |
Income from asset sales | | (1,895 | ) | (1,061 | ) | (1,160 | ) | (7,492 | ) | (13,550 | ) |
| | 205,659 | | 236,805 | | 172,167 | | 807,527 | | 607,970 | |
| | | | | | | | | | | |
Operating income | | 114,137 | | 121,994 | | 61,043 | | 417,286 | | 192,756 | |
| | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | |
Interest and dividend income | | 2,633 | | 2,215 | | 1,984 | | 9,834 | | 5,809 | |
Interest expense | | (1,281 | ) | (837 | ) | (2,960 | ) | (6,644 | ) | (12,642 | ) |
Gain on sale of investment securities | | 9,390 | | 7,756 | | 656 | | 19,866 | | 26,969 | |
Other | | 1,085 | | 40 | | (610 | ) | 639 | | (235 | ) |
| | 11,827 | | 9,174 | | (930 | ) | 23,695 | | 19,901 | |
| | | | | | | | | | | |
Income before income taxes and equity in income of affiliates | | 125,964 | | 131,168 | | 60,113 | | 440,981 | | 212,657 | |
| | | | | | | | | | | |
Income tax provision | | 47,636 | | 35,713 | | 24,553 | | 154,391 | | 87,463 | |
| | | | | | | | | | | |
Equity in income of affiliates net of income taxes | | 1,647 | | 3,041 | | 561 | | 7,268 | | 2,412 | |
NET INCOME | | $ | 79,975 | | $ | 98,496 | | $ | 36,121 | | $ | 293,858 | | $ | 127,606 | |
| | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | |
Basic | | $ | 0.76 | | $ | 0.94 | | $ | 0.35 | | $ | 2.81 | | $ | 1.25 | |
Diluted | | $ | 0.75 | | $ | 0.93 | | $ | 0.34 | | $ | 2.77 | | $ | 1.23 | |
| | | | | | | | | | | |
Average common shares outstanding: | | | | | | | | | | | |
Basic | | 105,019 | | 105,003 | | 103,231 | | 104,658 | | 102,174 | |
Diluted | | 106,419 | | 106,176 | | 105,495 | | 106,091 | | 104,066 | |
A reclassification has been made to prior period amounts to conform to the current period presentation of including income from asset sales in operating income.
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News Release
November 16, 2006
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
CONSOLIDATED CONDENSED BALANCE SHEETS | | 9/30/06 | | 9/30/05 | |
| | | | | |
ASSETS | | | | | |
Cash and cash equivalents | | $ | 33,853 | | $ | 288,752 | |
Short-term investments | | 48,673 | | 388 | |
Other current assets | | 346,165 | | 210,657 | |
Total current assets | | 428,691 | | 499,797 | |
Investments | | 218,309 | | 178,452 | |
Net property, plant, and equipment | | 1,483,134 | | 981,965 | |
Other assets | | 4,578 | | 3,136 | |
TOTAL ASSETS | | $ | 2,134,712 | | $ | 1,663,350 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Total current liabilities | | $ | 264,548 | | $ | 89,481 | |
Total noncurrent liabilities | | 313,272 | | 294,631 | |
Long-term notes payable | | 175,000 | | 200,000 | |
Total shareholders’ equity | | 1,381,892 | | 1,079,238 | |
| | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 2,134,712 | | $ | 1,663,350 | |
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News Release
November 16, 2006
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
| | Years Ended
September 30 | |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | | 2006 | | 2005 | |
| | | | | |
OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 293,858 | | $ | 127,606 | |
Depreciation | | 101,583 | | 96,274 | |
Changes in assets and liabilities | | (48,167 | ) | 33,091 | |
Gain on sale of assets and investment securities | | (27,222 | ) | (40,519 | ) |
Other | | (2,708 | ) | (4,214 | ) |
Net cash provided by operating activities | | 317,344 | | 212,238 | |
| | | | | |
INVESTING ACTIVITIES: | | | | | |
Capital expenditures | | (528,905 | ) | (86,805 | ) |
Purchase of investments | | (148,440 | ) | (5,000 | ) |
Proceeds from sale of assets & investment securities | | 128,463 | | 94,531 | |
Net cash provided by (used in) investing activities | | (548,882 | ) | 2,726 | |
| | | | | |
FINANCING ACTIVITIES: | | | | | |
Dividends paid | | (17,712 | ) | (16,866 | ) |
Repurchase of common stock | | (31,931 | ) | — | |
Proceeds from exercise of stock options | | 12,372 | | 25,358 | |
Net proceeds from short-term notes | | 3,721 | | — | |
Excess tax benefit from stock-based compensation | | 10,189 | | — | |
Net cash provided by (used in) financing activities | | (23,361 | ) | 8,492 | |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | (254,899 | ) | 223,456 | |
Cash and cash equivalents, beginning of period | | 288,752 | | 65,296 | |
Cash and cash equivalents, end of period | | $ | 33,853 | | $ | 288,752 | |
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News Release
November 16, 2006
| | Three Months Ended | | Fiscal Year Ended | |
| | June 30 | | September 30 | | September 30 | |
SEGMENT REPORTING | | 2006 | | 2006 | | 2005 | | 2006 | | 2005 | |
| | (in thousands, except days and per day amounts) | |
US LAND OPERATIONS | | | | | | | | | | | |
Revenues | | $ | 214,864 | | $ | 247,776 | | $ | 157,335 | | $ | 829,062 | | $ | 527,637 | |
Direct operating expenses | | 102,094 | | 120,513 | | 82,852 | | 398,873 | | 294,164 | |
General and administrative expense | | 2,903 | | 2,914 | | 2,543 | | 12,807 | | 8,594 | |
Depreciation | | 16,159 | | 20,670 | | 15,912 | | 66,127 | | 60,222 | |
Segment operating income | | $ | 93,708 | | $ | 103,679 | | $ | 56,028 | | $ | 351,255 | | $ | 164,657 | |
| | | | | | | | | | | |
Activity days | | 8,716 | | 9,577 | | 7,994 | | 34,414 | | 30,968 | |
Average rig revenue per day | | $ | 23,503 | | $ | 24,343 | | $ | 18,563 | | $ | 22,751 | | $ | 15,941 | |
Average rig expense per day | | $ | 10,565 | | $ | 11,055 | | $ | 9,246 | | $ | 10,250 | | $ | 8,403 | |
Average rig margin per day | | $ | 12,938 | | $ | 13,288 | | $ | 9,317 | | $ | 12,501 | | $ | 7,538 | |
Rig utilization | | 100 | % | 99 | % | 95 | % | 99 | % | 94 | % |
| | | | | | | | | | | |
US OFFSHORE OPERATIONS | | | | | | | | | | | |
Revenues | | $ | 34,568 | | $ | 34,789 | | $ | 26,011 | | $ | 132,580 | | $ | 84,921 | |
Direct operating expenses | | 22,726 | | 23,439 | | 17,443 | | 88,293 | | 52,786 | |
General and administrative expense | | 1,319 | | 1,336 | | 1,103 | | 5,920 | | 3,825 | |
Depreciation | | 2,888 | | 3,122 | | 2,745 | | 11,360 | | 10,602 | |
Segment operating income | | $ | 7,635 | | $ | 6,892 | | $ | 4,720 | | $ | 27,007 | | $ | 17,708 | |
| | | | | | | | | | | |
Activity days | | 728 | | 672 | | 654 | | 2,743 | | 2,122 | |
Average rig revenue per day | | $ | 39,931 | | $ | 38,695 | | $ | 29,782 | | $ | 38,728 | | $ | 29,228 | |
Average rig expense per day | | $ | 25,210 | | $ | 24,198 | | $ | 17,838 | | $ | 24,041 | | $ | 15,967 | |
Average rig margin per day | | $ | 14,721 | | $ | 14,497 | | $ | 11,944 | | $ | 14,687 | | $ | 13,261 | |
Rig utilization | | 73 | % | 69 | % | 65 | % | 69 | % | 53 | % |
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News Release
November 16, 2006
| | Three Months Ended | | Fiscal Year Ended | | |
| | June 30 | | September 30 | | September 30 | | |
SEGMENT REPORTING | | 2006 | | 2006 | | 2005 | | 2006 | | 2005 | | |
| | (in thousands, except days and per day amounts) | | |
INTERNATIONAL OPERATIONS | | | | |
Revenues | | $ | 67,831 | | $ | 73,587 | | $ | 47,180 | | $ | 252,792 | | $ | 177,480 | | |
Direct operating expenses | | 44,258 | | 50,257 | | 36,870 | | 172,606 | | 135,837 | | |
General and administrative expense | | 1,028 | | 992 | | 794 | | 3,498 | | 2,563 | | |
Depreciation | | 4,860 | | 5,261 | | 5,606 | | 19,512 | | 20,107 | | |
Segment operating income | | $ | 17,685 | | $ | 17,077 | | $ | 3,910 | | $ | 57,176 | | $ | 18,973 | | |
| | | | | | | | | | | | |
Activity days | | 2,300 | | 2,324 | | 2,024 | | 8,812 | | 7,491 | | |
Average rig revenue per day | | $ | 24,698 | | $ | 25,242 | | $ | 19,168 | | $ | 23,404 | | $ | 19,332 | | |
Average rig expense per day | | $ | 15,096 | | $ | 15,465 | | $ | 14,416 | | $ | 14,806 | | $ | 14,039 | | |
Average rig margin per day | | $ | 9,602 | | $ | 9,777 | | $ | 4,752 | | $ | 8,598 | | $ | 5,293 | | |
Rig utilization | | 93 | % | 95 | % | 85 | % | 90 | % | 77 | % | |
Per day calculations for international operations exclude gains and losses from translation of foreign currency transactions.
Operating statistics exclude the effects of offshore platform and international management contracts, and do not include reimbursements of “out-of-pocket” expenses in revenue per day, expense per day and margin calculations.
Reimbursed amounts were as follows:
US Land Operations | | $ | 10,012 | | $ | 14,645 | | $ | 8,943 | | $ | 46,098 | | $ | 33,989 | |
US Offshore Operations | | $ | 2,657 | | 4,034 | | $ | 4,213 | | 13,933 | | $ | 9,506 | |
International Operations | | $ | 6,575 | | 10,487 | | $ | 4,207 | | 28,983 | | $ | 15,215 | |
| | | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | |
Revenues | | $ | 2,533 | | $ | 2,647 | | $ | 2,684 | | $ | 10,379 | | $ | 10,688 | |
Direct operating expenses | | 836 | | 877 | | 583 | | 3,524 | | 3,622 | |
Depreciation | | 605 | | 630 | | 589 | | 2,444 | | 2,352 | |
Segment operating income | | $ | 1,092 | | $ | 1,140 | | $ | 1,512 | | $ | 4,411 | | $ | 4,714 | |
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News Release
November 16, 2006
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 for planning and budgeting purposes and 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 affiliate as reported on the Consolidated Statements of Income (in thousands).
| | Three Months Ended | | Fiscal Year Ended | |
| | June 30 | | September 30 | | September 30 | |
SEGMENT REPORTING | | 2006 | | 2006 | | 2005 | | 2006 | | 2005 | |
Segment Operating income | | | | | | | | | | | |
US Land | | $ | 93,708 | | $ | 103,679 | | $ | 56,028 | | $ | 351,255 | | $ | 164,657 | |
US Offshore | | 7,635 | | 6,892 | | 4,720 | | 27,007 | | 17,708 | |
International | | 17,685 | | 17,077 | | 3,910 | | 57,176 | | 18,973 | |
Real Estate | | 1,092 | | 1,140 | | 1,512 | | 4,411 | | 4,714 | |
Segment operating income | | $ | 120,120 | | $ | 128,788 | | $ | 66,170 | | $ | 439,849 | | $ | 206,052 | |
Corporate general and administrative | | (7,799 | ) | (7,687 | ) | (6,056 | ) | (29,648 | ) | (26,033 | ) |
Other depreciation | | (564 | ) | (516 | ) | (791 | ) | (2,140 | ) | (2,991 | ) |
Inter-segment elimination | | 485 | | 348 | | 560 | | 1,733 | | 2,178 | |
Income from asset sales | | 1,895 | | 1,061 | | 1,160 | | 7,492 | | 13,550 | |
Operating income | | $ | 114,137 | | $ | 121,994 | | $ | 61,043 | | $ | 417,286 | | $ | 192,756 | |
| | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | |
Interest and dividend income | | 2,633 | | 2,215 | | 1,984 | | 9,834 | | 5,809 | |
Interest expense | | (1,281 | ) | (837 | ) | (2,960 | ) | (6,644 | ) | (12,642 | ) |
Gain on sale of investment securities | | 9,390 | | 7,756 | | 656 | | 19,866 | | 26,969 | |
Other | | 1,085 | | 40 | | (610 | ) | 639 | | (235 | ) |
Total other income (expense) | | 11,827 | | 9,174 | | (930 | ) | 23,695 | | 19,901 | |
| | | | | | | | | | | |
Income before income taxes and equity in income of affiliate | | $ | 125,964 | | $ | 131,168 | | $ | 60,113 | | $ | 440,981 | | $ | 212,657 | |
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