Exhibit 99
August 1, 2007
HELMERICH & PAYNE, INC. ANNOUNCES EARNINGS AND NEW CONTRACTS
Helmerich & Payne, Inc. reported net income of $115,204,000 ($1.09 per diluted share) from operating revenues of $421,274,000 for its third fiscal quarter ended June 30, 2007, compared with net income of $79,975,000 ($0.75 per diluted share) from operating revenues of $319,796,000 during last year’s third fiscal quarter ended June 30, 2006. 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 net income from the sale of drilling equipment and partial insurance settlement. The third fiscal quarter of 2006 included gains of $0.06 per share from the sale of portfolio securities and drilling equipment.
For the nine months ended June 30, 2007, the Company reported net income of $332,851,000 ($3.17 per diluted share) from operating revenues of $1,180,209,000 compared with net income of $195,362,000 ($1.84 per diluted share) from operating revenues of $866,014,000 during the nine months ended June 30, 2006. Included in net income were gains from the sale of portfolio securities and drilling equipment, and gains from insurance settlements of $0.60 per share for the first nine months of fiscal 2007, and $0.11 per share for the first nine months of fiscal 2006.
Operating income in the U.S. land segment increased during the quarter to $114.6 million, from $93.7 million during last year’s third quarter, and $109.8 million during this year’s second quarter. The sequential increase is largely due to incremental new build rig commencements during the quarter, as well as the Company’s ability to sustain high activity levels in the spot market. Average rig activity in the segment increased by 12 rigs to a total of 136 average active rigs during the third quarter, and rig utilization for the quarter was 96%. Although the segment’s average revenue per rig day increased sequentially, the increase was more than offset by higher operating costs which resulted in the average margin per rig day decreasing sequentially by $476 per rig day.
The Company’s U.S. offshore operations reported segment operating income of $3,013,000 for the third quarter of fiscal 2007, compared with $7,635,000 for the third quarter of fiscal 2006, and $2,198,000 for the second quarter of fiscal 2007. Total activity days in the U.S. offshore platform operations during the quarter was 546, compared with 728 activity days during the same period last year, and 522 days during the second quarter of fiscal 2007. Operating income improved sequentially due to improved activity and higher rig margins.
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Page 2
News Release
August 1, 2007
Segment operating income for the Company’s international operations was $30,413,000 during this year’s third quarter, compared with $17,685,000 during last year’s third quarter and $21,481,000 during this year’s second quarter. The sequential increase was primarily due to a substantial improvement in average rig revenue and margin per day. Average rig utilization for the third quarter of 2007 dropped to 90%, from 93% for both the third quarter of fiscal 2006 and the second quarter of fiscal 2007. International rig utilization for the fourth quarter of fiscal 2007 is anticipated to be slightly lower than the third quarter, and segment operating income will be negatively impacted by the reduction in labor contract revenue and operating income resulting from the associated platform rig in Equatorial Guinea recently being cold stacked.
Helmerich & Payne, Inc. also announced today that it had signed two three-year term contracts with an exploration and production company to operate two new FlexRigs®*. The name of the customer and other terms were not disclosed. This brings to 77, the total number of new FlexRig commitments with at least three-year term contracts that have been announced by the Company since March, 2005. To date, 64 of the new builds have been completed, with the remaining 13 scheduled for completion by the second quarter of fiscal 2008.
Company President and C.E.O., Hans Helmerich commented, “The Company’s improvement in net income reflects results of the Company’s strategy of delivering to our customers lower drilling costs by using the newest and best rig technology. In a time period where many of our competitors are recording net reductions in rig activity and income, our U.S. land utilization remains high while delivering additional activity days at strong dayrates and margins. We believe exploration and production companies in the U.S. and abroad will continue to search for opportunities to upgrade their operations by contracting higher quality rigs. The announcement of two additional new FlexRig commitments signal the ongoing interest in that approach.”
Helmerich & Payne, Inc. is a contract drilling company with a fleet of 152 U.S. land rigs, 27 international land rigs and nine offshore platform rigs. In addition, the Company is committed to complete another 13 new H&P-designed and operated FlexRigs, which represent the remaining portion of the 77 new build commitments announced since March, 2005. Upon completion of these commitments, and including 50 previously existing FlexRigs, the Company’s fleet will include a total of 127 FlexRigs.
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.
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News Release
August 1, 2007
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® is a registered trademark of Helmerich & Payne, Inc.
Contact: Juan Pablo Tardio
(918) 588-5383
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News Release
August 1, 2007
HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
| | Three Months Ended | | Nine Months Ended | |
| | Mar. 31 | | June 30 | | June 30 | |
CONSOLIDATED STATEMENTS OF INCOME | | 2007 | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | | | |
Operating Revenues: | | | | | | | | | | | |
Drilling — U.S. Land | | $ | 269,145 | | $ | 303,514 | | $ | 214,864 | | $ | 842,559 | | $ | 581,286 | |
Drilling — U.S. Offshore | | 24,062 | | 24,910 | | 34,568 | | 79,958 | | 97,791 | |
Drilling — International | | 76,591 | | 90,073 | | 67,831 | | 249,278 | | 179,205 | |
Real Estate | | 2,738 | | 2,777 | | 2,533 | | 8,414 | | 7,732 | |
| | 372,536 | | 421,274 | | 319,796 | | 1,180,209 | | 866,014 | |
| | | | | | | | | | | |
Operating costs and other: | | | | | | | | | | | |
Operating costs, excluding depreciation | | 199,456 | | 229,025 | | 169,429 | | 627,948 | | 466,825 | |
Depreciation | | 32,952 | | 38,125 | | 25,076 | | 101,228 | | 71,384 | |
General and administrative | | 13,350 | | 11,538 | | 13,049 | | 35,501 | | 38,944 | |
Gain from involuntary conversion of long-lived assets | | (5,170 | ) | (5,900 | ) | — | | (11,070 | ) | — | |
Income from asset sales | | (32,336 | ) | (6,186 | ) | (1,895 | ) | (39,008 | ) | (6,431 | ) |
| | 208,252 | | 266,602 | | 205,659 | | 714,599 | | 570,722 | |
| | | | | | | | | | | |
Operating income | | 164,284 | | 154,672 | | 114,137 | | 465,610 | | 295,292 | |
| | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | |
Interest and dividend income | | 1,034 | | 962 | | 2,633 | | 3,240 | | 7,619 | |
Interest expense | | (1,913 | ) | (3,260 | ) | (1,281 | ) | (6,092 | ) | (5,807 | ) |
Gain on sale of investment securities | | 177 | | 25,298 | | 9,390 | | 51,812 | | 12,110 | |
Other | | 66 | | 120 | | 1,085 | | 250 | | 599 | |
| | (636 | ) | 23,120 | | 11,827 | | 49,210 | | 14,521 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Income before income taxes and equity in income of affiliate | | 163,648 | | 177,792 | | 125,964 | | 514,820 | | 309,813 | |
| | | | | | | | | | | |
Income tax provision | | 59,338 | | 64,960 | | 47,636 | | 188,396 | | 118,678 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Equity in income of affiliate net of income taxes | | 2,551 | | 2,372 | | 1,647 | | 6,427 | | 4,227 | |
NET INCOME | | $ | 106,861 | | $ | 115,204 | | $ | 79,975 | | $ | 332,851 | | $ | 195,362 | |
| | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | |
Basic | | $ | 1.04 | | $ | 1.11 | | $ | 0.76 | | $ | 3.22 | | $ | 1.87 | |
Diluted | | $ | 1.02 | | $ | 1.09 | | $ | 0.75 | | $ | 3.17 | | $ | 1.84 | |
| | | | | | | | | | | |
Average common shares outstanding: | | | | | | | | | | | |
Basic | | 103,239 | | 103,323 | | 105,019 | | 103,292 | | 104,542 | |
Diluted | | 104,832 | | 105,313 | | 106,419 | | 104,990 | | 105,987 | |
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News Release
August 1, 2007
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
CONSOLIDATED CONDENSED BALANCE SHEETS | | 6/30/07 | | 9/30/06 | |
| | | | | |
ASSETS | | | | | |
Cash and cash equivalents | | $ | 70,562 | | $ | 33,853 | |
Short-term investments | | 396 | | 48,673 | |
Other current assets | | 392,669 | | 346,165 | |
Total current assets | | 463,627 | | 428,691 | |
Investments | | 206,437 | | 218,309 | |
Net property, plant, and equipment | | 2,009,182 | | 1,483,134 | |
Other assets | | 8,076 | | 4,578 | |
TOTAL ASSETS | | $ | 2,687,322 | | $ | 2,134,712 | |
| | | | | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Total current liabilities | | $ | 254,010 | | $ | 264,548 | |
Total noncurrent liabilities | | 368,789 | | 313,272 | |
Long-term notes payable | | 380,000 | | 175,000 | |
Total shareholders’ equity | | 1,684,523 | | 1,381,892 | |
| | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 2,687,322 | | $ | 2,134,712 | |
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News Release
August 1, 2007
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
| | Nine Months Ended June 30 | |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | | 2007 | | 2006 | |
| | | | | |
OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 332,851 | | $ | 195,362 | |
Depreciation | | 101,228 | | 71,384 | |
Changes in assets and liabilities | | 58,137 | | (30,971 | ) |
Gain from involuntary conversion of long-lived assets | | (11,070 | ) | — | |
Gain on sale of assets and investment securities | | (90,682 | ) | (18,405 | ) |
Other | | (5,065 | ) | 545 | |
Net cash provided by operating activities | | 385,399 | | 217,915 | |
| | | | | |
INVESTING ACTIVITIES: | | | | | |
Capital expenditures | | (681,149 | ) | (322,573 | ) |
Purchase of investments | | — | | (115,077 | ) |
Insurance proceeds from involuntary conversion of long-lived assets | | 11,070 | | — | |
Proceeds from sale of assets and investments | | 158,464 | | 33,358 | |
Net cash used in investing activities | | (511,615 | ) | (404,292 | ) |
| | | | | |
FINANCING ACTIVITIES: | | | | | |
Dividends paid | | (13,971 | ) | (12,960 | ) |
Repurchase of common stock | | (17,621 | ) | — | |
Net decrease in bank overdraft | | (11,293 | ) | — | |
Proceeds from exercise of stock options | | 3,277 | | 12,341 | |
Net proceeds from short-term and long-term debt | | 201,279 | | 2,326 | |
Excess tax benefit from stock-based compensation | | 1,254 | | 10,019 | |
Net cash provided by financing activities | | 162,925 | | 11,726 | |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | 36,709 | | (174,651 | ) |
Cash and cash equivalents, beginning of period | | 33,853 | | 288,752 | |
Cash and cash equivalents, end of period | | $ | 70,562 | | $ | 114,101 | |
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News Release
August 1, 2007
| | Three Months Ended | | Nine Months Ended | |
SEGMENT REPORTING | | Mar. 31 | | June 30 | | June 30 | |
| 2007 | | 2007 | | 2006 | | 2007 | | 2006 | |
| | (in thousands, except days and per day amounts) | |
U.S. LAND OPERATIONS | | | | | | | | | | | |
Revenues | | $ | 269,145 | | $ | 303,514 | | $ | 214,864 | | $ | 842,559 | | $ | 581,286 | |
Direct operating expenses | | 132,399 | | 157,758 | | 102,094 | | 417,514 | | 278,360 | |
General and administrative expense | | 3,151 | | 3,625 | | 2,903 | | 10,228 | | 9,893 | |
Depreciation | | 23,813 | | 27,512 | | 16,159 | | 72,008 | | 45,457 | |
Segment operating income | | $ | 109,782 | | $ | 114,619 | | $ | 93,708 | | $ | 342,809 | | $ | 247,576 | |
| | | | | | | | | | | |
Activity days | | 11,156 | | 12,371 | | 8,716 | | 34,075 | | 24,837 | |
Average rig revenue per day | | $ | 23,032 | | $ | 23,401 | | $ | 23,503 | | $ | 23,537 | | $ | 22,138 | |
Average rig expense per day | | $ | 10,774 | | $ | 11,619 | | $ | 10,565 | | $ | 11,063 | | $ | 9,941 | |
Average rig margin per day | | $ | 12,258 | | $ | 11,782 | | $ | 12,938 | | $ | 12,474 | | $ | 12,197 | |
Rig utilization | | 97% | | 96% | | 100% | | 97% | | 98% | |
| | | | | | | | | | | |
| | | | | | | | | | | |
U.S. OFFSHORE OPERATIONS | | | | | | | | | | | |
Revenues | | $ | 24,062 | | $ | 24,910 | | $ | 34,568 | | $ | 79,958 | | $ | 97,791 | |
Direct operating expenses | | 17,745 | | 18,620 | | 22,726 | | 57,469 | | 64,854 | |
General and administrative expense | | 1,435 | | 865 | | 1,319 | | 3,721 | | 4,584 | |
Depreciation | | 2,684 | | 2,412 | | 2,888 | | 7,866 | | 8,238 | |
Segment operating income | | $ | 2,198 | | $ | 3,013 | | $ | 7,635 | | $ | 10,902 | | $ | 20,115 | |
| | | | | | | | | | | |
Activity days | | 522 | | 546 | | 728 | | 1,656 | | 2,071 | |
Average rig revenue per day | | $ | 29,603 | | $ | 30,263 | | $ | 39,931 | | $ | 33,095 | | $ | 38,738 | |
Average rig expense per day | | $ | 19,885 | | $ | 21,734 | | $ | 25,210 | | $ | 21,921 | | $ | 23,989 | |
Average rig margin per day | | $ | 9,718 | | $ | 8,529 | | $ | 14,721 | | $ | 11,174 | | $ | 14,749 | |
Rig utilization | | 64% | | 67% | | 73% | | 67% | | 69% | |
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News Release
August 1, 2007
| | Three Months Ended | | Nine Months Ended | |
SEGMENT REPORTING | | Mar. 31 | | June 30 | | June 30 | |
| 2007 | | 2007 | | 2006 | | 2007 | | 2006 | |
| | (in thousands, except days and per day amounts) | |
INTERNATIONAL OPERATIONS | | | | | | | | | | | |
Revenues | | $ | 76,591 | | $ | 90,073 | | $ | 67,831 | | $ | 249,278 | | $ | 179,205 | |
Direct operating expenses | | 48,668 | | 52,294 | | 44,258 | | 151,656 | | 122,349 | |
General and administrative expense | | 1,096 | | 712 | | 1,028 | | 2,408 | | 2,506 | |
Depreciation | | 5,346 | | 6,654 | | 4,860 | | 17,557 | | 14,251 | |
Segment operating income | | $ | 21,481 | | $ | 30,413 | | $ | 17,685 | | $ | 77,657 | | $ | 40,099 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Activity days | | 2,262 | | 2,235 | | 2,300 | | 6,863 | | 6,488 | |
Average rig revenue per day | | $ | 27,001 | | $ | 34,200 | | $ | 24,698 | | $ | 29,583 | | $ | 22,746 | |
Average rig expense per day | | $ | 15,722 | | $ | 18,246 | | $ | 15,096 | | $ | 16,253 | | $ | 14,570 | |
Average rig margin per day | | $ | 11,279 | | $ | 15,954 | | $ | 9,602 | | $ | 13,330 | | $ | 8,176 | |
Rig utilization | | 93% | | 90% | | 93% | | 93% | | 88% | |
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:
U.S. Land Operations | | $ | 12,196 | | $ | 14,016 | | $ | 10,012 | | $ | 40,521 | | $ | 31,453 | |
U.S. Offshore Operations | | $ | 3,598 | | $ | 3,306 | | $ | 2,657 | | $ | 10,248 | | $ | 9,899 | |
International Operations | | $ | 11,066 | | $ | 8,903 | | $ | 6,575 | | $ | 32,485 | | $ | 18,496 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | |
Revenues | | $ | 2,738 | | $ | 2,777 | | $ | 2,533 | | $ | 8,414 | | $ | 7,732 | |
Direct operating expenses | | 1,165 | | 890 | | 836 | | 2,898 | | 2,647 | |
Depreciation | | 612 | | 602 | | 605 | | 1,803 | | 1,814 | |
Segment operating income | | $ | 961 | | $ | 1,285 | | $ | 1,092 | | $ | 3,713 | | $ | 3,271 | |
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News Release
August 1, 2007
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 by 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 before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Income (in thousands).
| | Three Months Ended | | Nine Months Ended | |
SEGMENT REPORTING | | Mar. 31 | | June 30 | | June 30 | |
| 2007 | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | | | |
Operating Income | | | | | | | | | | | |
U.S. Land | | $ | 109,782 | | $ | 114,619 | | $ | 93,708 | | $ | 342,809 | | $ | 247,576 | |
U.S. Offshore | | 2,198 | | 3,013 | | 7,635 | | 10,902 | | 20,115 | |
International | | 21,481 | | 30,413 | | 17,685 | | 77,657 | | 40,099 | |
Real Estate | | 961 | | 1,285 | | 1,092 | | 3,713 | | 3,271 | |
Segment operating income | | $ | 134,422 | | $ | 149,330 | | $ | 120,120 | | $ | 435,081 | | $ | 311,061 | |
Corporate general and administrative | | (7,668 | ) | (6,336 | ) | (7,799 | ) | (19,144 | ) | (21,961 | ) |
Other depreciation | | (497 | ) | (945 | ) | (564 | ) | (1,994 | ) | (1,624 | ) |
Inter-segment elimination | | 521 | | 537 | | 485 | | 1,589 | | 1,385 | |
Gain from involuntary conversion of long-lived assets | | 5,170 | | 5,900 | | — | | 11,070 | | — | |
Income from asset sales | | 32,336 | | 6,186 | | 1,895 | | 39,008 | | 6,431 | |
Operating income | | $ | 164,284 | | $ | 154,672 | | $ | 114,137 | | $ | 465,610 | | $ | 295,292 | |
| | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | |
Interest and dividend income | | 1,034 | | 962 | | 2,633 | | 3,240 | | 7,619 | |
Interest expense | | (1,913 | ) | (3,260 | ) | (1,281 | ) | (6,092 | ) | (5,807 | ) |
Gain on sale of investment securities | | 177 | | 25,298 | | 9,390 | | 51,812 | | 12,110 | |
Other | | 66 | | 120 | | 1,085 | | 250 | | 599 | |
Total other income (expense) | | (636 | ) | 23,120 | | 11,827 | | 49,210 | | 14,521 | |
| | | | | | | | | | | |
Income before income taxes and equity in income of affiliate | | $ | 163,648 | | $ | 177,792 | | $ | 125,964 | | $ | 514,820 | | $ | 309,813 | |
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