Helmerich & Payne (HP) 10-Q 5 Aug 09 2009 Q3 Quarterly report Financial data

CONSOLIDATED CONDENSED BALANCE

CONSOLIDATED CONDENSED BALANCE SHEETS (USD $)
	Jun. 30, 2009	Sep. 30, 2008
Current assets:
Cash and cash equivalents	$141,705,000	$121,513,000
Short-term investments	12,500,000
Accounts receivable, less reserve of $711 at June 30, 2009 and $1,331 at September 30, 2008	319,827,000	462,833,000
Inventories	45,685,000	33,098,000
Deferred income taxes	8,250,000	21,939,000
Prepaid expenses and other	64,107,000	51,264,000
Total current assets	592,074,000	690,647,000
Investments	267,554,000	199,266,000
Property, plant and equipment, net	3,209,344,000	2,682,251,000
Other assets	10,882,000	15,881,000
Total assets	4,079,854,000	3,588,045,000
Current liabilities:
Accounts payable	110,640,000	153,851,000
Accrued liabilities	118,152,000	128,373,000
Short-term debt	105,000,000
Notes payable		1,733,000
Long-term debt due within one year	25,000,000	25,000,000
Total current liabilities	358,792,000	308,957,000
Noncurrent liabilities:
Long-term debt	430,000,000	475,000,000
Deferred income taxes	647,975,000	479,963,000
Other	49,145,000	58,651,000
Total noncurrent liabilities	1,127,120,000	1,013,614,000
Shareholders' equity:
Common stock, $.10 par value, 160,000,000 shares authorized, 107,057,904 shares issued	10,706,000	10,706,000
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued	0	0
Additional paid-in capital	174,008,000	169,497,000
Retained earnings	2,368,737,000	2,082,518,000
Accumulated other comprehensive income	72,247,000	38,407,000
Treasury stock, at cost	(31,756,000)	(35,654,000)
Total shareholders' equity	2,593,942,000	2,265,474,000
Total liabilities and shareholders' equity	$4,079,854,000	$3,588,045,000

1_CONSOLIDATED CONDENSED BALANC

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data	Jun. 30, 2009	Sep. 30, 2008
BALANCE SHEETS
Accounts receivable reserve (in dollars)	$711	$1,331
Common stock par value (in dollars per share)	0.1	0.1
Common stock shares authorized (in shares)	160,000,000	160,000,000
Common stock, shares issued (in shares)	107,057,904	107,057,904
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0

CONSOLIDATED CONDENSED STATEMEN

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (USD $)
In Thousands, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	9 Months Ended Jun. 30, 2009	9 Months Ended Jun. 30, 2008
Operating revenues:
Drilling - U.S. Land	$282,358	$391,755	$1,172,076	$1,104,662
Drilling - Offshore	55,605	47,298	157,424	104,368
Drilling - International Land	47,290	80,585	194,297	234,944
Other	2,514	2,879	8,024	8,850
Operating revenues	387,767	522,517	1,531,821	1,452,824
Operating costs and other:
Operating costs, excluding depreciation	220,339	274,168	814,561	763,921
Depreciation	61,043	51,210	172,928	147,066
General and administrative	14,225	14,723	45,807	42,716
Research and development	2,777	522	6,630	522
Acquired in-process research and development		11,129		11,129
Gain from involuntary conversion of long-lived assets	(264)	(5,426)	(541)	(10,236)
Income from asset sales	(1,785)	(1,616)	(4,754)	(4,404)
Operating costs and other	296,335	344,710	1,034,631	950,714
Operating income	91,432	177,807	497,190	502,110
Other icnome (expense):
Interest and dividend income	542	1,034	4,478	3,369
Interest expense	(2,793)	(4,651)	(9,047)	(14,255)
Gain on sale of investment securities		16,388		21,994
Other	514	66	614	(370)
Other income (expense)	(1,737)	12,837	(3,955)	10,738
Income before income taxes and equity in income of affiliate	89,695	190,644	493,235	512,848
Income tax provision	36,651	70,187	201,289	189,117
Equity in income of affiliate net of income taxes		4,912	10,111	11,522
NET INCOME	$53,044	$125,369	$302,057	$335,253
Earnings per common share:
Basic (in dollars per share)	0.5	1.2	2.87	3.22
Diluted (in dollars per share)	0.5	1.18	2.84	3.16
Weighted average shares outstanding:
Basic (in shares)	105,425	104,530	105,330	103,973
Diluted (in shares)	106,829	106,689	106,544	106,130
Dividends declared per common share	0.05	0.05	0.15	0.14

2_CONSOLIDATED CONDENSED STATEM

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $)
In Thousands	9 Months Ended Jun. 30, 2009	9 Months Ended Jun. 30, 2008
OPERATING ACTIVITIES:
Net income	$302,057	$335,253
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	172,928	147,066
Provision for bad debt	580	696
Equity in income of affiliate before income taxes	(16,308)	(18,584)
Stock-based compensation	6,292	5,610
Gain on sale of investment securities		(21,864)
Gain from involuntary conversion of long-lived assets	(541)	(10,236)
Income from asset sales	(4,754)	(4,404)
Acquired in-process research and development		11,129
Other		(1)
Deferred income tax expense	153,997	66,593
Change in assets and liabilities-
Accounts receivable	142,426	(61,787)
Inventories	(12,587)	(2,735)
Prepaid expenses and other	(7,882)	(31,594)
Accounts payable	(15,720)	(974)
Accrued liabilities	(9,834)	13,120
Deferred income taxes	6,514	7,774
Other noncurrent liabilities	(6,625)	8,526
Net cash provided by operating activities	710,543	443,588
INVESTING ACTIVITIES:
Capital expenditures	(738,411)	(509,018)
Acquisition of business, net of cash acquired	(16)	(12,024)
Insurance proceeds from involuntary conversion	541	13,926
Proceeds from sale of investments		25,507
Proceeds from asset sales	6,706	6,077
Purchase of short-term investments	(12,500)
Net cash used in investing activities	(743,680)	(475,532)
FINANCING ACTIVITIES:
Increase (decrease) in notes payable	(1,733)	2,259
Proceeds from lines of credit	3,185,000	2,630,000
Payments on lines of credit	(3,125,000)	(2,620,000)
Increase in bank overdraft	8,992	4,465
Dividends paid	(15,829)	(14,060)
Proceeds from exercise of stock options	710	14,267
Excess tax benefit from stock-based compensation	1,189	24,816
Net cash provided by financing activities	53,329	41,747
Net increase in cash and cash equivalents	20,192	9,803
Cash and cash equivalents, beginning of period	121,513	89,215
Cash and cash equivalents, end of period	$141,705	$99,018

3_CONSOLIDATED CONDENSED STATEM

CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS EQUITY (USD $)
In Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Total
Beginning balance at Sep. 30, 2008	$10,706	$169,497	$2,082,518	$38,407	($35,654)	$2,265,474
Beginning balance (in shares) at Sep. 30, 2008	107,058				1,835
Comprehensive income:
Net income			302,057			302,057
Other comprehensive income, Unrealized gains on available-for-sale securities (net of $20,741 income tax)				33,840		33,840
Capital adjustment of equity investee		174				174
Cash dividends ($0.15 per share)			(15,838)			(15,838)
Exercise of stock options		(1,913)			2,623	710
Exercise of stock options (in shares)					(166)
Tax benefit of stock-based awards, including excess tax benefits of $1,199		1,233				1,233
Treasury stock issued for vested restricted stock		(1,275)			1,275
Treasury stock issued for vested restricted stock (in shares)					(66)
Stock-based compensation		6,292				6,292
Ending balance at Jun. 30, 2009	10,706	174,008	2,368,737	72,247	(31,756)	2,593,942
Ending balance (in shares) at Jun. 30, 2009	107,058				1,603
Beginning balance at Mar. 31, 2009	10,706
Beginning balance (in shares) at Mar. 31, 2009	107,058
Comprehensive income:
Ending balance at Jun. 30, 2009	$10,706
Ending balance (in shares) at Jun. 30, 2009	107,058

4_CONSOLIDATED CONDENSED STATEM

CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS EQUITY (Parenthetical) (USD $)
In Thousands, except Per Share data	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income	Total
Increase (Decrease) in Shareholders' Equity:
Other comprehensive income Unrealized losses on available-for-sale securities income tax			$20,741	$20,741
Cash dividends per share (in dollars per share)		0.15		0.15
Excess tax benefits of stock-based awards	$1,199			$1,199

Basis of Presentation

Basis of Presentation
	9 Months Ended Jun. 30, 2009 USD / shares
Basis of Presentation	1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable rulesand regulations of the Securities and Exchange Commission (the Commission) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements and, therefore should be read in conjunction with the consolidated financial statements and notes thereto in the Companys 2008 Annual Report on Form10-K and other current filings with the Commission. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year. As more fully described in the Companys 2008 Annual Report on Form10-K, the Companys contract drilling revenues are comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed. For contracts that are terminated by customers prior to the expirations of their fixed term, contractual provisions customarily require early termination amounts to be paid to the Company. Revenues from early terminated contracts are recognized when all contractual requirements have been met.

Earnings per Share

Earnings per Share
	9 Months Ended Jun. 30, 2009 USD / shares
Earnings per Share	2. Earnings per Share Basic earnings per share is based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of stock options and restricted stock. A reconciliation of the weighted-average common shares outstanding on a basic and diluted basis is as follows (in thousands): Three Months Ended Nine Months Ended June30, June30, 2009 2008 2009 2008 Basic weighted average shares 105,425 104,530 105,330 103,973 Effect of dilutive shares: Stock options and restricted stock 1,404 2,159 1,214 2,157 Diluted weighted average shares 106,829 106,689 106,544 106,130 The following shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive (in thousands): Three Months Ended Nine Months Ended June30, June30, 2009 2008 2009 2008 Shares excluded from calculation of diluted earnings per share 718 1,215

Operations and Risks in Venezue

Operations and Risks in Venezuela
	9 Months Ended Jun. 30, 2009 USD / shares
Operations and Risks in Venezuela	3. Operations and Risks in Venezuela Typically, contract drilling revenues are recognized as services are performed. In U.S. generally accepted accounting principles, one of the basic revenue recognition criteria is that collectability of the revenue is reasonably assured. The Companys revenue in Venezuela is from providing drilling services to Petroleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned petroleum company. The Company determined, as of the beginning of the second quarter of fiscal 2009 and forward, the revenue recognition criteria in Venezuela is no longer met as collectability of revenue is not reasonably assured, primarily due to the uncertainty of the timing of collectability as discussed further below. As a result of this change, $19.7 million and $55.3 million of revenue was not recorded in the International Land segment in the three and nine months ended June30, 2009 respectively. As of June30, 2009 the Consolidated Balance Sheet reflected accounts receivable from PDVSA of $76.7 million. During the third quarter of fiscal 2009, approximately $13.0 million (U.S. dollars and U.S. currency equivalent) was collected from PDVSA of which approximately $8.8 million was applicable to the accounts receivable. Additionally, subsequent to the end of the third fiscal quarter, additional payments of approximately $43.0 million (U.S. currency equivalent) were received through July31, 2009 of which approximately $41.5 million was applicable to the June30, 2009 accounts receivable balance. The Company does not have enough information to conclude that the remaining receivable balance is not probable of collection. However, there is uncertainty regarding the timing of the collection due to the current political, economic and social instability in Venezuela, the dependence by Venezuela on oil to largely support its economy and the failure of PDVSA to pay many service companies working in Venezuela. The collection of receivables from PDVSA has historically been more difficult and slower than that of other customers in international countries in which the Company has drilling operations due to PDVSA policies and procedures. The Company is also exposed to risks of currency devaluation in Venezuela primarily as a result of bolivar fuerte (Bsf) receivable and Bsf cash balances. The Company has made applications with the Venezuelan government requesting the approval to convert bolivar fuerte cash balances to U.S. dollars. Upon approval from the Venezuelan government, the Companys Venezuelan subsidiary may remit approximately $28.4 million as a dividend to its U.S. based parent as cash balances permit. While the Company has been successful in the past in obtaining government approval for conversion of bolivar fuerte to U.S. dollars, there is no guarantee that future conversion to U.S. dollars will be permitted. In the event that conversion to U.S. dollars would be prohibited, then bolivar fuerte cash balances would increase and expose the Company to increased risk of devaluation. In addition to the accounts receivable discussed above, the Venezuelan subsidiary has received notification from PDVSA that reimbursement of U.S. d

Inventories

Inventories
	9 Months Ended Jun. 30, 2009 USD / shares
Inventories	4. Inventories Inventories consist primarily of replacement parts and supplies held for use in the Companys drilling operations.

Financial Instruments

Financial Instruments
	9 Months Ended Jun. 30, 2009 USD / shares
Financial Instruments	5. Financial Instruments The Company had $175 million of fixed-rate long-term debt outstanding at June30, 2009, which had an estimated fair value of $201 million. The debt was valued based on the prices of similar securities with similar terms and credit ratings. The Company used the expertise of an outside investment banking firm to assist with the estimate of the fair value of the long-term debt. The Companys line of credit bears interest at market rates and the cost of borrowings, if any, would approximate fair value. The Company has an interest rate swap agreement with a $105 million notional. The fair value of the interest rate swap liability at June30, 2009 was $0.3 million. The fair value is based on the present value of expected future cash flows, inclusive of the risk of nonperformance, using a discount rate appropriate for the duration. For further information regarding debt and the interest swap, refer to Note 11 of these consolidated condensed financial statements. Effective April1, 2009, Atwood Oceanics,Inc. (Atwood) was accounted for as an available-for-sale investment, as the Company determined it no longer exercised significant influence and discontinued accounting for Atwood using the equity method. Mark-to-market gains or losses are now deferred as a component of other comprehensive income. The estimated fair value of the Companys available-for-sale securities is primarily based on market quotes. The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of accounting, investments in limited partnerships carried at cost and assets held in a Non-qualified Supplemental Savings Plan: Gross Gross Estimated Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Equity securities 06/30/09 $ 129,183 $ 122,448 $ $ 251,631 Equity securities 09/30/08 $ 7,685 $ 67,867 $ $ 75,552 On an on-going basis, the Company evaluates the marketable equity securities to determine if a decline in fair market is other-than-temporary. If a decline in fair market value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis established. In determining if an unrealized loss is other than temporary, the Company considers how long the market value of the investment has been below cost, how significant the decline in value is as a percentage of the original cost and the market in general and analyst recommendations. The cost of securities used in determining realized gains and losses is based on the average cost basis of the security sold. During the nine months ended June30, 2008, marketable equity available-for-sale securities with a fair value at the date of sale of $25.5 million were sold with gross realized gains of $22.0 million. There have been no sales of available-for-sale securities during the nine months ended June30, 2009. The investments in the limited partnerships carried at cost were approximately $12.4 million at June30, 2009 and September30, 2008. The estimated fair value of the limited partnerships was $17.6

Comprehensive Income

Comprehensive Income
	9 Months Ended Jun. 30, 2009 USD / shares
Comprehensive Income	6. Comprehensive Income Comprehensive income, net of related income taxes, is as follows (in thousands): Three Months Ended Nine Months Ended June30, June30, 2009 2008 2009 2008 Net Income $ 53,044 $ 125,369 $ 302,057 $ 335,253 Other comprehensive income: Unrealized appreciation on securities 90,833 22,714 54,581 602 Income taxes (34,516 ) (8,632 ) (20,741 ) (230 ) 56,317 14,082 33,840 372 Reclassification of realized gains in net income (16,388 ) (21,994 ) Income taxes 6,228 8,358 (10,160 ) (13,636 ) Minimum pension liability adjustments (4 ) (10 ) Income taxes 2 4 (2 ) (6 ) Total comprehensive income $ 109,361 $ 129,289 $ 335,897 $ 321,983 The components of accumulated other comprehensive income, net of related income taxes, are as follows (in thousands): June30, September30, 2009 2008 Unrealized appreciation on securities $ 75,918 $ 42,078 Unrecognized actuarial gain (loss) and prior service cost (3,671 ) (3,671 ) Accumulated other comprehensive income $ 72,247 $ 38,407

Derivative Financial Instrument

Derivative Financial Instruments
	9 Months Ended Jun. 30, 2009 USD / shares
Derivative Financial Instruments	7. Derivative Financial Instruments In March2008, the Financial Accounting Standards Board (FASB) issued SFAS No.161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No.161).SFAS No.161 provides companies with requirements for enhanced disclosures about derivative instruments and hedging activities to enable investors to better understand their effects on a companys financial position, financial performance and cash flows.In accordance with the effective date of SFAS No.161, the Company adopted the disclosure provisions of SFAS No.161 on January1, 2009. The Company is exposed to market risk in the normal course of business operations due to ongoing investing and financing activities. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. SFAS No.133, Accounting for Derivative Instruments and Hedging Activities (SFAS No.133), requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Company has not historically entered into derivative financial instruments for trading purposes or for speculation. In January2009, the Company executed an interest rate swap agreement to limit the Companys exposure to changes in interest rates. The interest rate swap qualifies as a derivative and was not designated as a hedging instrument and as such, the Company has not applied hedge accounting. At the end of each period, the interest rate swap is recorded in the Consolidated Condensed Balance Sheet at fair value, either in other current assets or accrued liabilities, and any related gains or losses are recognized on the Companys Consolidated Condensed Statement of Income within interest expense. The fair value of the interest rate swap liability at June30, 2009 was $0.3 million and is included in accrued liabilities in the Consolidated Condensed Balance Sheet. Interest expense of $0.2 million and $0.5 million was recorded for the three and nine months ended June30, 2009, respectively.

Fair Value Measurement

Fair Value Measurement
	9 Months Ended Jun. 30, 2009 USD / shares
Fair Value Measurement	8. Fair Value Measurement On September15, 2006, the FASB issued SFAS No.157 which addresses standardizing the measurement of fair value for companies who are required to use a fair value measure for recognition or disclosure purposes. The FASB defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Companys adoption of the required portions of SFAS 157 as of October1, 2008 did not have a material impact on the Companys financial position, results of operations and cash flows. In February2008, the FASB issued Staff Position No.FAS 157-2, Effective Date of FASB Statement No.157 (FSP 157-2), which delayed the required adoption of portions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities, except for items recognized or disclosed at fair value on a recurring basis. Accordingly, the Company will adopt the provisions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value on a nonrecurring basis in fiscal 2010. The Company is currently evaluating the impact, if any, of the adoption of FSP 157-2 on its financial position, results of operations or cash flows. SFAS 157 establishes a fair value hierarchy to prioritize the inputs used in valuation techniques into three levels as follows: Level 1 Observable inputs that reflect quoted prices in active markets for identical assets or liabilities in active markets. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Valuations based on inputs that are unobservable and not corroborated by market data. At June30, 2009, the Companys financial assets utilizing Level 1 inputs include cash equivalents, money market funds the Company has elected to classify as restricted assets and equity securities with active markets. For these items, quoted current market prices are readily available. During the nine months ended June30, 2009, the Company entered into an interest rate swap agreement with a $105 million notional to hedge a portion of the risk of changes in the interest rate associated with amounts outstanding under an unsecured line of credit that expires in January2010. The fair value of the swap agreement was determined using Level 2 inputs. Level 2 inputs also include a bank certificate of deposit classified as a short-term investment and restricted cash included in current assets. The Company does not currently have any financial instruments utilizing Level 3 inputs. The following presents information about the Companys fair value hierarchy for financial assets as of June30, 2009: Quoted Prices Total in Active Significant Measure Markets for Other Significant at Identical Observable Unobservable Fair Assets Inputs Inputs

Cash Dividends

Cash Dividends
	9 Months Ended Jun. 30, 2009 USD / shares
Cash Dividends	9. Cash Dividends The $0.05 cash dividend declared March4, 2009, was paid June1, 2009. On June3, 2009, a cash dividend of $0.05 per share was declared for shareholders of record on August14, 2009, payable September1, 2009.

Stock-Based Compensation

Stock-Based Compensation
	9 Months Ended Jun. 30, 2009 USD / shares
Stock-Based Compensation	10. Stock-Based Compensation The Company has one plan providing for common-stock based awards to employees and to non-employee Directors. The plan permits the granting of various types of awards including stock options and restricted stock awards. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. Vesting requirements are determined by the Human Resources Committee of the Companys Board of Directors. Readers should refer to Note 5 of the consolidated financial statements in the Companys Annual Report on Form10-K for the fiscal year ended September30, 2008 for additional information related to stock-based compensation. The Company uses the Black-Scholes formula to estimate the value of stock options granted. The fair value of the options is amortized to compensation expense on a straight-line basis over the requisite service periods of the stock awards, which are generally the vesting periods. The Company has the right to satisfy option exercises from treasury shares and from authorized but unissued shares. A summary of compensation cost for stock-based payment arrangements recognized in general and administrative expense is as follows (in thousands): Three Months Ended Nine Months Ended June30, June30, 2009 2008 2009 2008 Compensation expense Stock options $ 1,691 $ 1,533 $ 5,205 $ 4,698 Restricted stock 363 365 1,087 912 $ 2,054 $ 1,898 $ 6,292 $ 5,610 STOCK OPTIONS The following summarizes the weighted-average assumptions utilized in determining the fair value of options granted during the nine months ended June30, 2009 and 2008: 2009 2008 Risk-free interest rate 1.7 % 3.3 % Expected stock volatility 43.4 % 31.1 % Dividend yield .9 % .5 % Expected term (in years) 5.8 4.8 Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury securities for the expected term of the option. Expected Volatility Rate. Expected volatility is based on the daily closing price of the Companys stock based upon historical experience over a period which approximates the expected term of the option. Dividend Yield. The expected dividend yield is based on the Companys current dividend yield. Expected Term. The expected term of the options granted represents the period of time that they are expected to be outstanding. The Company estimates the expected term of options granted based on historical experience with grants and exercises. A summary of stock option activity under the Plan for the three and nine months ended June30, 2009 is presented in the following tables: Three Months Ended June30, 2009 Weighted- Weighted- Average Aggregate Average Remaining Intrinsic Shares Exercise Contractual Value Options (in thousands) Price Term (in thousands) Outstanding

Debt

Debt
	9 Months Ended Jun. 30, 2009 USD / shares
Debt	11. Debt At June30, 2009, the Company had the following unsecured long-term debt outstanding (in thousands): Maturity Date Interest Rate Fixed rate debt: August15, 2009 5.91% $ 25,000 August15, 2012 6.46% 75,000 August15, 2014 6.56% 75,000 Senior credit facility: December18, 2011 .67%-.68% 280,000 455,000 Less long-term debt due within one year 25,000 Long-term debt $ 430,000 The terms of the fixed rate debt obligations require the Company to maintain a minimum ratio of debt to total capitalization. The Company has an agreement with a multi-bank syndicate for a $400 million senior unsecured credit facility which matures December2011. While the Company has the option to borrow at the prime rate for maturities of less than 30 days, the Company anticipates that the majority of all of the borrowings over the life of the facility will accrue interest at a spread over the London Interbank Bank Offered Rate (LIBOR). The Company pays a commitment fee based on the unused balance of the facility. The spread over LIBOR as well as the commitment fee is determined according to a scale based on a ratio of the Companys total debt to total capitalization. The spread ranges from .30 percent to .45 percent over LIBOR depending on the ratios. At June30, 2009, the spread on borrowings was .35 percent over LIBOR and the commitment fee was .075 percent per annum. At June30, 2009, the Company had two letters of credit totaling $20.9 million under the facility and had $280 million borrowed against the facility with $99.1 million available to borrow. The advances bear interest ranging from 0.67 percent to 0.68 percent. Subsequent to June30, 2009, the debt was reduced by $115 million with proceeds from a new facility discussed below. Short-term debt consists of a $105 million unsecured line of credit that will mature January2010. The Company closed on the agreement with a five-bank syndicate January21, 2009. The Company anticipates that this loan will remain funded for the entire term and that all borrowings will accrue interest at a spread over 30 day LIBOR. The spread over LIBOR is determined according to the same scale of debt to total capitalization used in the Companys $400 million facility which is described in the preceding paragraph. The spread over LIBOR for the new facility has increased to a range of 2 percent to 2.75 percent. At June30, 2009, the spread on the borrowing was 2.25 percent over LIBOR. Simultaneous with the closing of this facility, the Company entered into an interest-rate swap with the same maturity and a notional amount of $105 million. The Company believes that the swap will act to fix the annualized interest rate of the facility at approximately 3.17 percent assuming the spread remains at 2.25 percent over LIBOR. For further information regarding the interest rate swap, refer to Note 7 of these consolidated condensed financial statements. Financial covenants in both facilities require the Company to maintain a funded leverage ratio (as defined) of less than 50 percent and an interest coverage ratio (as defined) of not less than 3.00 to

Income Taxes

Income Taxes
	9 Months Ended Jun. 30, 2009 USD / shares
Income Taxes	12. Income Taxes The Companys effective tax rate for the first nine months of fiscal 2009 and 2008 was 40.8 percent and 36.9 percent, respectively. The Companys effective tax rate for the three months ended June30, 2009 and 2008 was 40.9 percent and 36.8 percent, respectively. The effective rate differs from the U.S. federal statutory rate of 35.0 percent primarily due to state and foreign taxes. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or financial position.

Contingent Liabilities and Comm

Contingent Liabilities and Commitments
	9 Months Ended Jun. 30, 2009 USD / shares
Contingent Liabilities and Commitments	13. Contingent Liabilities and Commitments In conjunction with the Companys current drilling rig construction program, purchase commitments for equipment, parts and supplies of approximately $160.5 million are outstanding at June30, 2009. Various legal actions, the majority of which arise in the ordinary course of business, are pending. The Company maintains insurance against certain business risks subject to certain deductibles. None of these legal actions are expected to have a material adverse effect on the Companys financial condition, cash flows or results of operations. The Company is contingently liable to sureties in respect of bonds issued by the sureties in connection with certain commitments entered into by the Company in the normal course of business. The Company has agreed to indemnify the sureties for any payments made by them in respect of such bonds.

Segment Information

Segment Information
	9 Months Ended Jun. 30, 2009 USD / shares
Segment Information	14. Segment Information The Company operates principally in the contract drilling industry. The Companys contract drilling business includes the following reportable operating segments: U.S. Land, Offshore, and International Land. The contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. The Companys primary international areas of operation include Venezuela, Colombia, Ecuador, Argentina and other South American countries. The International Land operations have similar services, have similar types of customers, operate in a consistent manner and have similar economic and regulatory characteristics. Therefore, the Company has aggregated its International Land operations into one reportable segment. Each reportable segment is a strategic business unit which is managed separately. Other includes non-reportable operating segments. The Company evaluates segment performance based on income or loss from operations (segment operating income) before income taxes which includes: revenues from external and internal customers direct operating costs depreciation and allocated general and administrative costs but excludes corporate costs for other depreciation, income from asset sales and other corporate income and expense. General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which the Company believes to be a reasonable reflection of the utilization of services provided. Segment operating income is a non-GAAP financial measure of the Companys 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 Companys core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Companys reportable segments in the aggregate. 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 Companys operating performance in future periods. Summarized financial information of the Companys reportable segments for the nine months ended June30, 2009, and 2008, is shown in the following tables: Segment External Inter- Total Operating (in thousands) Sales Segment Sales Income (Loss) June30, 2009 Contract Drilling: U.S. Land $ 1,172,076 $ $ 1,172,076 $ 483,571 Offsh

Pensions and Other Post-retirem

Pensions and Other Post-retirement Benefits
	9 Months Ended Jun. 30, 2009 USD / shares
Pensions and Other Post-retirement Benefits	15. Pensions and Other Post-retirement Benefits The following provides information at June30, 2009 and 2008 related to the Company-sponsored domestic defined benefit pension plan. Components of Net Periodic Benefit Cost Three Months Ended Nine Months Ended June30, June30, 2009 2008 2009 2008 (in thousands) Interest Cost $ 1,217 $ 1,189 $ 3,651 $ 3,569 Expected return on plan assets (1,147 ) (1,458 ) (3,441 ) (4,374 ) Recognized net actuarial loss (3 ) (9 ) Net pension expense $ 70 $ (272 ) $ 210 $ (814 ) Employer Contributions The Company intends to contribute no less frequently than annually an amount at least equal to the minimum contribution required by law. However, the Company could make discretionary contributions to fund distributions in lieu of liquidating pension assets. The Company estimates contributions could be at least $5.0 million in fiscal 2009. However, due to the decline in the fair value of pension plan assets during 2008 and the current adverse conditions in the equity, debt and global markets, it is possible that contributions will be greater than estimated. For the period October1, 2008 through July31, 2009, the Company contributed $0.5 million to the Pension Plan. Foreign Plan The Company maintains an unfunded pension plan in one of the international subsidiaries. Pension expense was approximately $113,000 and $115,000 for the three months ended June30, 2009 and 2008, respectively. Pension expense was approximately $293,000 and $247,000 for the nine months ended June30, 2009 and 2008, respectively.

Risk Factors

Risk Factors
	9 Months Ended Jun. 30, 2009 USD / shares
Risk Factors	16. Risk Factors International operations are subject to certain political, economic and other uncertainties not encountered in U.S. operations, including increased risks of terrorism, kidnapping of employees, expropriation of equipment as well as expropriation of a particular oil company operators property and drilling rights, taxation policies, foreign exchange restrictions, currency rate fluctuations and general hazards associated with foreign sovereignty over certain areas in which operations are conducted. There can be no assurance that there will not be changes in local laws, regulations and administrative requirements or the interpretation thereof which could have a material adverse effect on the profitability of the Companys operations or on the ability of the Company to continue operations in certain areas. For additional information regarding risks in Venezuela, refer to Note 3 of these consolidated condensed financial statements.

Gain Contingencies

Gain Contingencies
	9 Months Ended Jun. 30, 2009 USD / shares
Gain Contingencies	17. Gain Contingencies During the first quarter of fiscal 2009, the Company settled the claim on U.S. Land Rig 178 that experienced a fire in August2007. The Company received approximately $0.3 million as final payment and the proceeds were recorded as a gain in the Consolidated Statement of Income. During the third quarter of fiscal 2009, the Company settled the claim in connection with the loss of Rig 201 from Hurricane Katrina in August2005. The Company received approximately $0.2 million as final payment and the proceeds were recorded as a gain in the Consolidated Statement of Income.

Recently Issued Accounting Stan

Recently Issued Accounting Standards
	9 Months Ended Jun. 30, 2009 USD / shares
Recently Issued Accounting Standards	18. Recently Issued Accounting Standards In November2008, the FASB ratified EITF, Issue No.08-6, Equity-Method Investment Accounting. EITF 08-6 concludes that the cost basis of a new equity-method investment would be determined using a cost-accumulation mode, which would continue the practice of including transaction costs in the cost of investment and would exclude the value of contingent consideration. Equity-method investment should be subject to other-than-temporary impairment analysis. It also requires that a gain or loss be recognized on the portion of the investors ownership sold. EITF 8-6 is effective for fiscal years beginning after December15, 2008. The Company is currently evaluating the impact the adoption of EITF 08-6 may have on the Consolidated Financial Statements. In June2008, the FASB issued Staff Position (FSP) EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, to clarify that all outstanding unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities. An entity must include participating securities in its calculation of basic and diluted earnings per share pursuant to the two-class method pursuant to SFAS No.128, Earnings per Share. FSP EITF 03-6-1 is effective for fiscal years beginning after December15, 2008. The Company is currently evaluating FSP EITF 03-6-1 to determine the impact, if any, on the Consolidated Financial Statements. In April2008, the FASB issued FSP SFAS No.142-3, Determining the Useful Life of Intangible Assets (FSP SFAS 142-3). FSP SFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. This FSP is effective for fiscal years beginning after December15, 2008, and interim periods within those years. This FSP must be applied prospectively to intangible assets acquired after the effective date. Accordingly, the Company will adopt FSP SFAS 142-3 in fiscal year 2010. The Company is currently evaluating FSP SFAS 142-3 to determine the impact, if any, on the Consolidated Financial Statements. In February2008, the FASB issued FASB Staff Position No.FAS 157-2, Effective Date of FASB Statement No.157 (the FSP). The FSP amends SFAS No.157, Fair Value Measurements, to delay the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). For items within its scope, the FSP defers the effective date of SFAS No.157 to fiscal years beginning after November15, 2008, and interim periods within those fiscal years. The Company is currently evaluating the FSP to determine the impact, if any, on the Consolidated Financial Statements. In December2007, the FASB issued SFAS No.141(R), Business Combinations and SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No.51. Both of these standards are effective for

Subsequent Events

Subsequent Events
	9 Months Ended Jun. 30, 2009 USD / shares
Subsequent Events	19. Subsequent Events In evaluating events and transactions through August5, 2009, the Company has determined it has no recognized subsequent events and one nonrecognized subsequent event. In July2009, the Company obtained additional financing of $200 million in senior unsecured notes. Additional information regarding the debt is included in Note 11 of these consolidated condensed financial statements.

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Jun. 30, 2009	Jul. 31, 2009	Mar. 31, 2008
Document and Entity Information
Entity Registrant Name	HELMERICH & PAYNE, INC.
Entity Central Index Key	0000046765
Document Type	10-Q
Document Period End Date	2009-06-30
Amendment Flag	false
Amendment Description
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$4,722,260,676
Entity Common Stock, Shares Outstanding		105,454,592