| |
| Exhibit 99 |
NEWS RELEASE
FOR IMMEDIATE RELEASE: April 24, 2019
HELMERICH & PAYNE, INC. ANNOUNCES SECOND QUARTER FISCAL 2019 RESULTS
| · | | Quarterly U.S. Land adjusted average rig revenue increased by more than $450(1) per day, up approximately 2% sequentially |
| · | | Quarterly U.S. Land adjusted average rig margin increased by approximately $900(1) per day, up more than 8% sequentially |
| · | | H&P upgraded 9 FlexRigs® to super-spec(2) capacity during the second fiscal quarter of 2019 |
| · | | The Company signed a letter of intent to deploy its first super-spec FlexRig to an international market |
| · | | Achieved commercialization of our drilling automation technology, AutoSlideSM in the Midland Basin and just last week deployed into the Eagle Ford Shale |
| · | | On March 6, 2019, Directors of the Company declared a quarterly cash dividend of $0.71 per share |
| · | | H&P has been ranked 1st in total customer satisfaction for 11 years in a row by EnergyPoint Research(3) |
Helmerich & Payne, Inc. (NYSE:HP) reported income of $61 million or $0.55 per diluted share from operating revenues of $721 million for the quarter ended March 31, 2019, compared to income of $19 million, or $0.17 per diluted share, on revenues of $741 million for the quarter ended December 31, 2018. Net income per diluted share for the second and first fiscal quarters of 2019 include $(0.01) and $(0.25), respectively, of after-tax losses comprised of select items(4). For the second fiscal quarter select items(4) were comprised of:
| · | | $0.13 of after-tax gains related to early termination compensation, a non-cash fair market adjustment to our equity investments, and gains on sales |
| · | | $(0.14) of after-tax losses related to abandonments and accelerated depreciation, and losses from discontinued operations related to currency fluctuations |
Net cash provided by operating activities was $200 million for the second quarter of fiscal 2019 compared to $209 million for the first fiscal quarter of fiscal 2019.
President and CEO John Lindsay commented, “From the outset, this was a quarter challenged by industry uncertainty, so I am pleased to report that the Company not only stayed on target and delivered sequentially improved net income, but also achieved two significant milestones.
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“Concern over crude oil prices persisted from the prior quarter which softened demand for incremental super-spec rigs, but H&P completed the planned upgrades already in its pipeline bringing our total number of super-spec FlexRigs to 230 at quarter end. Based on trends we are seeing in rig releases and current demand, we believe the Company’s active rig count will bottom-out early during this quarter with super-spec utilization in the 90%-plus range. This should be supportive of the current pricing environment.
“Crude oil prices are up approximately 40% since the beginning of the calendar year and in past cycles this would have resulted in higher activity. However, we have seen a tempered response and even reductions in activity by some in the industry. Clearly, customer behavior is changing, and their movement is towards prioritization of cash flows and returns. An additional emphasis is placed on disciplined spending and determining where value can be added to improve performance and long-term cash flows. H&P is well positioned in this type of environment with the hardware – a FlexRig fleet that is an industry leader in drilling unconventional wells, and with the software – a digital technology platform that when deployed on a rig can improve well economics, both of which help our customers achieve their goals.
“During the quarter, H&P achieved a major milestone through the commercialization of its drilling automation technology, AutoSlide. We believe AutoSlide and the other software-based offerings from our H&P Technologies (HPT) platform, Motive and MagVar, will continue to gain traction in the industry as the benefits of wellbore quality and placement become more evident as multi-well pad drilling shifts to a manufacturing-type process. The benefits of these technologies can have a meaningful impact on customer well economics by improving production dynamics and lowering the risk of wellbore interference, thereby bolstering financial returns through the life of the well. We are committed to partnering with our customers to unlock these benefits.
“A pivotal long-term objective has been to translate H&P’s position of drilling leadership in U.S. unconventional basins to key international markets where super-spec FlexRigs and HPT software solutions, including AutoSlide, can add significant value to the customer. That has started coming to fruition with the signing of a letter of intent to deploy our first super-spec FlexRig from the U.S. to Argentina later this quarter. We see this as a significant milestone and are excited about this opportunity and what it portends for H&P’s Latin America business, as well as other international markets.”
Vice President and CFO Mark Smith also commented, “Despite the head winds that prevailed in the beginning of calendar year 2019, H&P kept its focus on achieving long-term success with the commercialization of AutoSlide and a letter of intent to send a super-spec FlexRig to an international location. Both lay the groundwork for future growth opportunities for H&P. The Company’s previously reduced cadence for super-spec upgrades remains unchanged for the balance of our fiscal year, as does our capital allocation strategy. As we look ahead, we are confident in the cash flow generation potential of our upgraded super-spec FlexRig fleet.”
John Lindsay concluded, “The Company achieved excellent operational results and several technical accomplishments during the quarter. Our ability to adapt and respond to uncertain market conditions while securing new opportunities for long-term success is paramount. These achievements aren’t possible without the efforts of our people working as a team to deliver on our goals; this exemplifies H&P’s commitment to excellence, which culminated in the Company being ranked first in customer satisfaction for 11 years in a row.”
Operating Segment Results for the Second Quarter of Fiscal 2019
U.S. Land Operations:
Segment operating income increased by $26.5 million to $106.1 million sequentially. The increase in operating results was primarily driven by a legal settlement cost that adversely impacted the prior quarter and the sequential increase in the adjusted average rig margin per day. The number of quarterly revenue days decreased sequentially by approximately 3% as expected.
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Adjusted average rig revenue per day improved by $468 to $25,624(1) largely due to the average dayrate increasing during the quarter.
The adjusted average rig expense per day decreased sequentially by $427 to $14,195(1) as the quarter benefitted from favorable adjustments to self-insurance expenses and lower reactivation costs associated with the Company’s slower upgrade cadence. Corresponding adjusted average rig margin per day increased $895 to $11,429(1).
The segment’s depreciation expense for the quarter includes non-cash charges of $5.3 million for abandonments and accelerated depreciation of used drilling rig components related to rig upgrades, compared to similar non-cash charges of $3.5 million during the first fiscal quarter of 2019.
International Land Operations:
Segment operating income increased by $1.3 million to $8.0 million sequentially. The increase in operating income was attributable to a higher adjusted average rig margin offset to some extent by less revenue days as some rigs in Colombia became idle. Revenue days decreased during the quarter by 11% to 1,559 while the adjusted average rig margin per day increased by $1,679 to $11,861(1).
Offshore Operations:
Segment operating income decreased by $2.6 million to $4.5 million sequentially. The number of quarterly revenue days on H&P-owned platform rigs increased sequentially by approximately 3%, while the average rig margin per day decreased sequentially by $4,578 to $5,420 due to unfavorable adjustments to self-insurance expenses and a rig moving to a standby rate during the quarter. Management contracts on customer-owned platform rigs contributed approximately $4.7 million to the segment’s operating income, compared to approximately $5.4 million during the prior quarter.
H&P Technologies:
The segment had an operating loss of $7.9 million this quarter as compared to an operating loss of $10.3 million during the previous quarter. The $2.4 million sequential decrease in the operating loss was due primarily to lower costs incurred during the quarter.
Operational Outlook for the Third Quarter of Fiscal 2019
U.S. Land Operations:
| · | | Quarterly revenue days expected to decrease by approximately 4%-6% sequentially representing a roughly 5%-7% decrease in the average number of active rigs; we expect to exit the quarter at between 215-225 active rigs |
| · | | Average rig revenue per day expected to be relatively flat between $25,500-$26,000 (excluding any impact from early termination revenue) |
| · | | Average rig expense per day expected to be between $14,250-$14,750 |
| · | | We expect to upgrade 2-3 FlexRigs to walking super-spec capabilities during the quarter |
International Land Operations:
| · | | Quarterly revenue days expected to be down approximately 1% sequentially, representing an average rig count of 17 rigs for the quarter |
| · | | Average rig margin per day expected to be roughly $9,000-$10,000 |
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Offshore Operations:
| · | | Quarterly revenue days expected to increase by approximately 1% sequentially, representing an average rig count of 6 rigs for the quarter |
| · | | Average rig margin per day expected to be approximately $9,500-$10,500 as two rigs return to full operating dayrates |
| · | | Management contracts expected to generate approximately $3-$4 million in operating income |
HP Technologies:
| · | | Following our recent deployment in the Eagle Ford Shale, we anticipate introducing the AutoSlide technology into the Scoop/Stack in the next 2-3 months. |
| · | | The recent moderation of industry rig demand has the potential to slow the rate of adoption of our new technologies. |
Other Estimates for Fiscal 2019
| · | | Capital expenditures are still expected to be approximately $500 to $530 million with roughly 35% expected for super-spec upgrades, 33-38% expected for maintenance and 27-32% expected for continued reactivations and other bulk purchases. |
| · | | Depreciation is now expected to be approximately $580 million, inclusive of abandonment and accelerated depreciation charges estimated at approximately $20 million. |
Select Items Included in Net Income per Diluted Share
Second Quarter of Fiscal 2019 net income of $0.55 per diluted share included $(0.01) in after-tax losses comprised of the following:
| · | | $0.01 of after-tax income from long-term contract early termination compensation from customers |
| · | | $0.04 of non-cash after-tax gains related to the fair market adjustment of equity investments |
| · | | $0.08 of after-tax gains related to the sale of used drilling equipment |
| · | | $(0.04) of after-tax losses from abandonment charges and accelerated depreciation related to the decommissioning of used drilling equipment |
| · | | $(0.10) of after-tax losses from discontinued operations related to adjustments resulting from currency fluctuations |
First Quarter of Fiscal 2019 net income of $0.17 per diluted share included $(0.25) in after-tax losses comprised of the following:
| · | | $0.01 of income tax adjustments related to certain discrete tax items |
| · | | $0.04 of after-tax gains related to the sale of used drilling equipment |
| · | | $0.05 of after-tax income from long-term contract early termination compensation from customers |
| · | | $0.10 of after-tax income from discontinued operations related to adjustments resulting from currency fluctuations |
| · | | $(0.02) of after-tax losses from abandonment charges and accelerated depreciation related to the decommissioning of used drilling equipment |
| · | | $(0.02) of after-tax losses from bond exchange fees |
| · | | $(0.12) of after-tax losses from the settlement of a lawsuit |
| · | | $(0.29) of non-cash after-tax losses related to the fair market adjustment of equity investments |
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Conference Call
A conference call will be held on Thursday, April 25, 2019 at 11:00 a.m. (EDT) with John Lindsay, President and CEO, Mark Smith, Vice President and CFO, and Dave Wilson, Director of Investor Relations to discuss the Company’s fiscal second quarter 2019 results. Dial-in information for the conference call is (877) 876-9173 for domestic callers or (785) 424-1667 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet by logging on to the Company’s website at http://www.hpinc.com and accessing the corresponding link through the Investor Relations section by clicking on “INVESTORS” and then clicking on “Event Calendar” to find the event and the link to the webcast.
About Helmerich & Payne, Inc.
Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. H&P’s fleet includes 350 land rigs in the U.S., 32 international land rigs and eight offshore platform rigs. For more information, see H&P online at www.hpinc.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s future financial position, operations outlook, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.
Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, FlexApp and AutoSlide, which may be registered or trademarked in the U.S. and other jurisdictions.
(1) See the Selected Statistical & Operational Highlights table(s) for details on the revenues or charges excluded on a per revenue day basis. The inclusion or exclusion of these amounts results in adjusted revenue, expense, and/or margin per day figures, which are all non-GAAP measures.
(2) The term “super-spec” herein refers to rigs with the following specifications: AC drive, 1,500 hp drawworks, 750,000 lbs. hookload rating, 7,500 psi mud circulating system and multiple-well pad capability.
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(3) EnergyPoint Research published its annual Oilfield Products & Services Customer Satisfaction Survey results on February 5, 2019. Many in the industry use this independent survey as a benchmark for measuring customer satisfaction within oilfield services.
(4) See the corresponding section of this release for details regarding the select items.
Contact: Dave Wilson, Director of Investor Relations
investor.relations@hpinc.com
(918) 588‑5190
HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 31 | | December 31 | | March 31 | | March 31 |
CONSOLIDATED STATEMENTS OF OPERATIONS | | 2019 | | 2018 | | 2018 | | 2019 | | 2018 |
| | | | | | | As adjusted | | | | | As adjusted |
Operating Revenues: | | | | | | | | | | | | | | | |
Contract drilling | | $ | 717,653 | | $ | 737,358 | | $ | 574,471 | | $ | 1,455,011 | | $ | 1,135,540 |
Other | | | 3,215 | | | 3,240 | | | 3,013 | | | 6,455 | | | 6,031 |
| | $ | 720,868 | | $ | 740,598 | | $ | 577,484 | | $ | 1,461,466 | | $ | 1,141,571 |
| | | | | | | | | | | | | | | |
Operating costs and expenses: | | | | | | | | | | | | | | | |
Contract drilling operating expenses, excluding depreciation and amortization | | | 441,719 | | | 487,593 | | | 384,419 | | | 929,312 | | | 756,335 |
Operating expenses applicable to other revenues | | | 1,620 | | | 1,274 | | | 1,137 | | | 2,894 | | | 2,304 |
Depreciation and amortization | | | 143,161 | | | 141,460 | | | 145,675 | | | 284,620 | | | 288,942 |
Research and development | | | 7,262 | | | 7,019 | | | 4,436 | | | 14,281 | | | 7,670 |
Selling, general and administrative | | | 43,506 | | | 54,508 | | | 48,236 | | | 98,014 | | | 94,695 |
Gain on sale of assets | | | (11,546) | | | (5,545) | | | (5,255) | | | (17,090) | | | (10,820) |
| | | 625,722 | | | 686,309 | | | 578,648 | | | 1,312,031 | | | 1,139,126 |
| | | | | | | | | | | | | | | |
Operating income (loss) from continuing operations | | | 95,146 | | | 54,289 | | | (1,164) | | | 149,435 | | | 2,445 |
| | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | |
Interest and dividend income | | | 2,061 | | | 2,450 | | | 1,847 | | | 4,512 | | | 3,571 |
Interest expense | | | (6,167) | | | (4,720) | | | (6,028) | | | (10,888) | | | (11,801) |
Gain (loss) on investment securities | | | 5,878 | | | (42,844) | | | — | | | (36,957) | | | — |
Other | | | 17 | | | 541 | | | (210) | | | 548 | | | 231 |
| | | 1,789 | | | (44,573) | | | (4,391) | | | (42,785) | | | (7,999) |
| | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | | 96,935 | | | 9,716 | | | (5,555) | | | 106,650 | | | (5,554) |
Income tax provision (benefit) | | | 25,078 | | | 1,352 | | | (3,922) | | | 26,429 | | | (504,563) |
Income (loss) from continuing operations | | | 71,857 | | | 8,364 | | | (1,633) | | | 80,221 | | | 499,009 |
| | | | | | | | | | | | | | | |
Income from discontinued operations, before income taxes | | | 2,889 | | | 12,665 | | | 1,263 | | | 15,554 | | | 744 |
Income tax provision | | | 13,855 | | | 2,070 | | | 11,509 | | | 15,925 | | | 11,526 |
Income (loss) from discontinued operations | | | (10,966) | | | 10,595 | | | (10,246) | | | (371) | | | (10,782) |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | 60,891 | | $ | 18,959 | | $ | (11,879) | | $ | 79,850 | | $ | 488,227 |
| | | | | | | | | | | | | | | |
Basic earnings (loss) per common share: | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.65 | | $ | 0.07 | | $ | (0.03) | | $ | 0.72 | | $ | 4.55 |
Income (loss) from discontinued operations | | $ | (0.10) | | $ | 0.10 | | $ | (0.09) | | $ | — | | $ | (0.10) |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | 0.55 | | $ | 0.17 | | $ | (0.12) | | $ | 0.72 | | $ | 4.45 |
| | | | | | | | | | | | | | | |
Diluted earnings (loss) per common share: | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.65 | | $ | 0.07 | | $ | (0.03) | | $ | 0.72 | | $ | 4.53 |
Income (loss) from discontinued operations | | $ | (0.10) | | $ | 0.10 | | $ | (0.09) | | $ | — | | $ | (0.10) |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | 0.55 | | $ | 0.17 | | $ | (0.12) | | $ | 0.72 | | $ | 4.43 |
| | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | |
Basic | | | 109,406 | | | 109,142 | | | 108,868 | | | 109,273 | | | 108,775 |
Diluted | | | 109,503 | | | 109,425 | | | 108,868 | | | 109,452 | | | 109,212 |
“As Adjusted” – Effective October 1, 2018, we adopted Accounting Standards Update No. 2017-07, Compensation-Retirement Benefits – (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The statement of operations for the three and six months ended March 31, 2018 have been adjusted to reflect changes that were applied retrospectively from that adoption.
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HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
| | | | | | |
| | March 31 | | September 30 |
CONDENSED CONSOLIDATED BALANCE SHEETS | | 2019 | | 2018 |
| | | | | | |
Assets | | | | | | |
Cash and cash equivalents | | $ | 243,912 | | $ | 284,355 |
Short-term investments | | | 26,118 | | | 41,461 |
Other current assets | | | 777,974 | | | 789,734 |
Total current assets | | | 1,048,004 | | | 1,115,550 |
Investments | | | 60,247 | | | 98,696 |
Property, plant and equipment, net | | | 4,886,948 | | | 4,857,382 |
Other noncurrent assets | | | 149,363 | | | 143,239 |
Total Assets | | $ | 6,144,562 | | $ | 6,214,867 |
| | | | | | |
Liabilities and Shareholders' Equity | | | | | | |
Current liabilities | | $ | 373,707 | | $ | 377,168 |
Long-term debt | | | 491,227 | | | 493,968 |
Other noncurrent liabilities | | | 946,429 | | | 946,742 |
Noncurrent liabilities - discontinued operations | | | 14,579 | | | 14,254 |
Total shareholders’ equity | | | 4,318,620 | | | 4,382,735 |
Total Liabilities and Shareholders' Equity | | $ | 6,144,562 | | $ | 6,214,867 |
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HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
| | | | | | |
| | Six Months Ended |
| | March 31 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | | 2019 | | 2018 |
| | | | | As adjusted |
OPERATING ACTIVITIES: | | | | | | |
Net income | | $ | 79,850 | | $ | 488,227 |
Adjustment for (income) loss from discontinued operations | | | 371 | | | 10,782 |
Income from continuing operations | | | 80,221 | | | 499,009 |
Depreciation and amortization | | | 284,620 | | | 288,942 |
Amortization of debt discount and debt issuance costs | | | 752 | | | 531 |
Provision for bad debt | | | (75) | | | 429 |
Stock-based compensation | | | 16,589 | | | 15,546 |
Loss on investment securities | | | 36,957 | | | — |
Gain on sale of assets | | | (17,090) | | | (10,820) |
Deferred income tax (benefit) expense | | | 8,827 | | | (506,373) |
Other | | | (3,209) | | | 5,701 |
Changes in assets and liabilities | | | 1,471 | | | (85,218) |
Net cash provided by operating activities from continuing operations | | | 409,063 | | | 207,747 |
Net cash used in operating activities from discontinued operations | | | (45) | | | (96) |
Net cash provided by operating activities | | | 409,018 | | | 207,651 |
| | | | | | |
INVESTING ACTIVITIES: | | | | | | |
Capital expenditures | | | (329,980) | | | (191,202) |
Purchase of short-term investments | | | (42,406) | | | (36,784) |
Payment for acquisition of business, net of cash acquired | | | (2,781) | | | (47,886) |
Proceeds from sale of short-term investments | | | 58,015 | | | 32,020 |
Proceeds from asset sales | | | 24,559 | | | 17,826 |
Net cash used in investing activities | | | (292,593) | | | (226,026) |
| | | | | | |
FINANCING ACTIVITIES: | | | | | | |
Dividends paid | | | (156,580) | | | (153,433) |
Debt issuance costs paid | | | (3,912) | | | — |
Proceeds from stock option exercises | | | 2,257 | | | 1,645 |
Payments for employee taxes on net settlement of equity awards | | | (6,268) | | | (5,791) |
Payment of contingent consideration from acquisition of business | | | — | | | (4,500) |
Net cash used in financing activities | | | (164,503) | | | (162,079) |
| | | | | | |
Net decrease in cash and cash equivalents and restricted cash | | | (48,078) | | | (180,454) |
Cash and cash equivalents and restricted cash, beginning of period | | | 326,185 | | | 560,509 |
Cash and cash equivalents and restricted cash, end of period | | $ | 278,107 | | $ | 380,055 |
“As Adjusted” – Effective October 1, 2018, we adopted Accounting Standards Update No. 2016-18, Statement of Cash Flows – (Topic 230): Restricted Cash and Accounting Standards Update No. 2016-15, Statement of Cash Flows – (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The cash flow statement for the six months ended March 31, 2018 has been adjusted to reflect changes that were applied retrospectively from those adoptions.
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| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | |
| | March 31 | | December 31 | | March 31 | | March 31 | |
SEGMENT REPORTING | | 2019 | | 2018 | | 2018 | | 2019 | | 2018 | |
| | (in thousands, except operating statistics) | |
U.S. LAND OPERATIONS | | | | | | | | | | | | | | | | |
Operating revenues | | $ | 622,204 | | $ | 624,241 | | $ | 482,729 | | $ | 1,246,445 | | $ | 944,369 | |
Direct operating expenses | | | 377,984 | | | 408,806 | | | 317,688 | | | 786,790 | | | 616,752 | |
Selling, general and administrative expense | | | 11,169 | | | 11,656 | | | 14,011 | | | 22,826 | | | 28,004 | |
Depreciation | | | 126,912 | | | 124,111 | | | 123,955 | | | 251,022 | | | 247,793 | |
Segment operating income | | $ | 106,139 | | $ | 79,668 | | $ | 27,075 | | $ | 185,807 | | $ | 51,820 | |
| | | | | | | | | | | | | | | | |
Revenue days | | | 21,262 | | | 21,933 | | | 18,666 | | | 43,194 | | | 37,028 | |
Average rig revenue per day | | $ | 25,681 | | $ | 25,265 | | $ | 22,928 | | $ | 25,471 | | $ | 22,666 | |
Average rig expense per day | | $ | 14,195 | | $ | 15,443 | | $ | 14,086 | | $ | 14,829 | | $ | 13,818 | |
Average rig margin per day | | $ | 11,486 | | $ | 9,822 | | $ | 8,842 | | $ | 10,642 | | $ | 8,848 | |
Rig utilization | | | 67 | % | | 68 | % | | 59 | % | | 68 | % | | 58 | % |
| | | | | | | | | | | | | | | | |
INTERNATIONAL LAND OPERATIONS | | | | | | | | | | | | | | | | |
Operating revenues | | $ | 50,808 | | $ | 66,287 | | $ | 52,459 | | $ | 117,095 | | $ | 115,673 | |
Direct operating expenses | | | 33,051 | | | 47,539 | | | 39,249 | | | 80,590 | | | 85,986 | |
Selling, general and administrative expense | | | 794 | | | 2,281 | | | 832 | | | 3,076 | | | 1,964 | |
Depreciation | | | 8,995 | | | 9,837 | | | 13,073 | | | 18,832 | | | 24,884 | |
Segment operating income (loss) | | $ | 7,968 | | $ | 6,630 | | $ | (695) | | $ | 14,597 | | $ | 2,839 | |
| | | | | | | | | | | | | | | | |
Revenue days | | | 1,559 | | | 1,758 | | | 1,530 | | | 3,318 | | | 3,117 | |
Average rig revenue per day | | $ | 31,130 | | $ | 35,575 | | $ | 32,796 | | $ | 33,476 | | $ | 35,465 | |
Average rig expense per day | | $ | 19,269 | | $ | 22,704 | | $ | 24,263 | | $ | 21,083 | | $ | 25,497 | |
Average rig margin per day | | $ | 11,861 | | $ | 12,871 | | $ | 8,533 | | $ | 12,393 | | $ | 9,968 | |
Rig utilization | | | 54 | % | | 60 | % | | 45 | % | | 57 | % | | 45 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
OFFSHORE OPERATIONS | | | | | | | | | | | | | | | | |
Operating revenues | | $ | 34,583 | | $ | 36,910 | | $ | 32,983 | | $ | 71,493 | | $ | 66,349 | |
Direct operating expenses | | | 26,984 | | | 26,305 | | | 23,595 | | | 53,289 | | | 44,717 | |
Selling, general and administrative expense | | | 805 | | | 769 | | | 1,106 | | | 1,574 | | | 2,271 | |
Depreciation | | | 2,263 | | | 2,668 | | | 2,833 | | | 4,931 | | | 5,187 | |
Segment operating income | | $ | 4,531 | | $ | 7,168 | | $ | 5,449 | | $ | 11,699 | | $ | 14,174 | |
| | | | | | | | | | | | | | | | |
Revenue days | | | 540 | | | 525 | | | 450 | | | 1,065 | | | 910 | |
Average rig revenue per day | | $ | 31,361 | | $ | 35,635 | | $ | 33,583 | | $ | 33,468 | | $ | 34,692 | |
Average rig expense per day | | $ | 25,941 | | $ | 25,637 | | $ | 24,079 | | $ | 25,791 | | $ | 23,737 | |
Average rig margin per day | | $ | 5,420 | | $ | 9,998 | | $ | 9,504 | | $ | 7,677 | | $ | 10,955 | |
Rig utilization | | | 75 | % | | 71 | % | | 63 | % | | 73 | % | | 63 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
H&P TECHNOLOGIES | | | | | | | | | | | | | | | | |
Revenues | | $ | 10,141 | | $ | 9,920 | | $ | 6,300 | | $ | 20,061 | | $ | 9,149 | |
Direct operating expenses, including research and development | | | 11,476 | | | 12,391 | | | 8,686 | | | 23,867 | | | 17,275 | |
General and administrative expense | | | 4,782 | | | 6,099 | | | 4,109 | | | 10,881 | | | 5,818 | |
Depreciation | | | 1,816 | | | 1,774 | | | 2,038 | | | 3,590 | | | 3,404 | |
Segment operating loss | | $ | (7,933) | | $ | (10,344) | | $ | (8,533) | | $ | (18,277) | | $ | (17,348) | |
Operating statistics exclude the effects of offshore platform management contracts and 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.
Reimbursed amounts were as follows:
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 31 | | December 31 | | March 31 | | March 31 |
| | 2019 | | 2018 | | 2018 | | 2019 | | 2018 |
U.S. Land Operations | | $ | 76,172 | | $ | 70,090 | | $ | 54,750 | | $ | 146,262 | | $ | 105,065 |
International Land Operations | | $ | 2,277 | | $ | 3,746 | | $ | 2,281 | | $ | 6,023 | | $ | 5,142 |
Offshore Operations | | $ | 5,507 | | $ | 5,750 | | $ | 5,199 | | $ | 11,257 | | $ | 9,297 |
| | | | | | | | | | | | | | | |
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News Release
April 24, 2019
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 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 operating income (loss) per the information above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations (in thousands).
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 31 | | December 31 | | March 31 | | March 31 |
| | 2019 | | 2018 | | 2018 | | 2019 | | 2018 |
| | | | | | | As adjusted | | | | | As adjusted |
Operating income (loss) | | | | | | | | | | | | | | | |
U.S. Land | | $ | 106,139 | | $ | 79,668 | | $ | 27,075 | | $ | 185,807 | | $ | 51,820 |
International Land | | | 7,968 | | | 6,630 | | | (695) | | | 14,597 | | | 2,839 |
Offshore | | | 4,531 | | | 7,168 | | | 5,449 | | | 11,699 | | | 14,174 |
H&P Technologies | | | (7,933) | | | (10,344) | | | (8,533) | | | (18,277) | | | (17,348) |
Other | | | 1,165 | | | 1,554 | | | 1,518 | | | 2,719 | | | 3,016 |
Segment operating income | | $ | 111,870 | | $ | 84,676 | | $ | 24,814 | | $ | 196,545 | | $ | 54,501 |
Gain on sale of assets | | | 11,546 | | | 5,545 | | | 5,255 | | | 17,090 | | | 10,820 |
Corporate selling, general and administrative costs and corporate depreciation | | | (28,270) | | | (35,932) | | | (31,233) | | | (64,200) | | | (62,876) |
Operating income (loss) | | $ | 95,146 | | $ | 54,289 | | $ | (1,164) | | $ | 149,435 | | $ | 2,445 |
| | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | |
Interest and dividend income | | | 2,061 | | | 2,450 | | | 1,847 | | | 4,512 | | | 3,571 |
Interest expense | | | (6,167) | | | (4,720) | | | (6,028) | | | (10,888) | | | (11,801) |
Gain (loss) on investment securities | | | 5,878 | | | (42,844) | | | — | | | (36,957) | | | — |
Other | | | 17 | | | 541 | | | (210) | | | 548 | | | 231 |
Total unallocated amounts | | | 1,789 | | | (44,573) | | | (4,391) | | | (42,785) | | | (7,999) |
| | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | $ | 96,935 | | $ | 9,716 | | $ | (5,555) | | $ | 106,650 | | $ | (5,554) |
“As Adjusted” – Effective October 1, 2018, we implemented organizational changes, consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. Certain operations previously reported in “other” within our segment disclosures are now managed and presented within the new H&P Technologies reportable segment. All segment disclosures have been recast for these segment changes. Additionally, we adopted Accounting Standards Update No. 2017-07, Compensation-Retirement Benefits – (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Operating results for the three and six months ended March 31, 2018 have been adjusted to reflect changes that were applied retrospectively from that adoption.
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News Release
April 24, 2019
SUPPLEMENTARY STATISTICAL INFORMATION
Unaudited
SELECTED STATISTICAL & OPERATIONAL HIGHLIGHTS
(Used to determine adjusted per revenue day statistics, which is a non-GAAP measure)
| | | | | | |
| | Three Months Ended |
| | March 31 | | December 31 |
| | 2019 | | 2018 |
| | (in dollars per revenue day) |
U.S. Land Operations | | | | | | |
Total impact on U.S. Land revenue per day: | | $ | 57 | | $ | 109 |
International Land Operations | | | | | | |
Total impact on International Land revenue per day: | | $ | — | | $ | 2,689 |
U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS
| | | | | | | | |
| | April 24 | | March 31 | | December 31 | | Q2FY19 |
| | 2019 | | 2019 | | 2018 | | Average |
U.S. Land Operations | | | | | | | | |
Term Contract Rigs | | 142 | | 146 | | 156 | | 148.9 |
Spot Contract Rigs | | 78 | | 80 | | 88 | | 87.4 |
Total Contracted Rigs | | 220 | | 226 | | 244 | | 236.3 |
Idle or Other Rigs | | 130 | | 124 | | 106 | | 113.7 |
Total Marketable Fleet | | 350 | | 350 | | 350 | | 350.0 |
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS
Number of Rigs Already Under Long-Term Contracts(1)
(Estimated Quarterly Average — as of 04/24/19)
| | | | | | | | | | | | | | |
| | Q3 | | Q4 | | Q1 | | Q2 | | Q3 | | Q4 | | Q1 |
Segment | | FY19 | | FY19 | | FY20 | | FY20 | | FY20 | | FY20 | | FY21 |
U.S. Land Operations | | 136.8 | | 124.3 | | 108.3 | | 80.2 | | 68.8 | | 57.9 | | 40.2 |
International Land Operations | | 11.0 | | 11.0 | | 10.0 | | 6.2 | | 1.1 | | — | | — |
Offshore Operations | | 0.4 | | — | | — | | — | | — | | — | | — |
Total | | 148.2 | | 135.3 | | 118.3 | | 86.4 | | 69.9 | | 57.9 | | 40.2 |
(1) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.
