FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number: 1-4221
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
73-0679879
(I.R.S. Employer I.D. Number)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA 74114
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (918) 742-5531
Former name, former address and former fiscal year, if changed since last
report:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
CLASS OUTSTANDING AT JUNE 30, 2002
Common Stock, $0.10 par value 49,980,947
TOTAL NUMBER OF PAGES - 24
HELMERICH & PAYNE, INC.
INDEX
<Table>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
June 30, 2002 and September 30, 2001 .............................. 3
Consolidated Condensed Statements of Income for the
Three Months and Nine Months Ended June 30, 2002 and 2001 ......... 4
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended June 30, 2002 and 2001 .......................... 5
Consolidated Condensed Statement of Shareholders' Equity
For the Nine Months Ended June 30, 2002 ........................... 6
Notes to Consolidated Condensed Financial Statements .............. 7 - 14
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ................................ 15 - 21
Item 3. Quantitative and Qualitative Disclosures about Market
Risk .............................................................. 22
PART II. OTHER INFORMATION .......................................................... 22
Item 1. Legal Proceedings ................................................. 22
Item 6. Exhibits and Reports on Form 8-K ................................. 22 - 23
Signatures ..................................................................... 23
Exhibit Index .................................................................. 24
</Table>
-2-
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<Table>
<Caption>
(Unaudited)
June 30, September 30,
2002 2001
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 48,200 $ 122,962
Accounts receivable, net 122,267 147,235
Inventories 26,964 28,934
Prepaid expenses and other 19,263 32,281
------------ ------------
Total current assets 216,694 331,412
------------ ------------
Investments 167,356 200,286
Property, plant and equipment, net 978,414 818,404
Other assets 12,796 14,405
------------ ------------
Total assets $ 1,375,260 $ 1,364,507
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,822 $ 67,595
Accrued liabilities 54,131 53,626
------------ ------------
Total current liabilities 83,953 121,221
------------ ------------
Noncurrent liabilities:
Long-term notes payable 50,000 50,000
Deferred income taxes 155,056 144,439
Other 24,784 22,370
------------ ------------
Total noncurrent liabilities 229,840 216,809
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per
share 5,353 5,353
Preferred stock, no shares issued -- --
Additional paid-in capital 81,881 80,324
Retained earnings 986,559 943,105
Unearned compensation (713) (1,812)
Accumulated other comprehensive income 36,453 49,309
------------ ------------
1,109,533 1,076,279
Less treasury stock, at cost 48,066 49,802
------------ ------------
Total shareholders' equity 1,061,467 1,026,477
------------ ------------
Total liabilities and shareholders' equity $ 1,375,260 $ 1,364,507
============ ============
</Table>
See accompanying notes to financial statements.
-3-
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
<Table>
<Caption>
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
------------ ------------ ------------ ------------
REVENUES:
Sales and other operating revenues $ 159,912 $ 212,573 $ 486,668 $ 621,138
Income from investments 25,555 4,649 28,522 10,203
------------ ------------ ------------ ------------
185,467 217,222 515,190 631,341
------------ ------------ ------------ ------------
COST AND EXPENSES:
Operating costs 91,464 111,120 290,714 312,242
Depreciation, depletion and
amortization 25,728 21,341 74,614 62,103
Dry holes and abandonments 5,628 6,878 15,751 25,626
Taxes, other than income taxes 10,389 10,276 28,502 31,210
General and administrative 4,127 3,449 14,053 11,662
Interest (684) (1,626) 32 (951)
------------ ------------ ------------ ------------
136,652 151,438 423,666 441,892
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND
EQUITY IN INCOME OF AFFILIATES 48,815 65,784 91,524 189,449
PROVISION FOR INCOME TAXES 21,259 25,679 39,354 74,832
EQUITY IN INCOME OF AFFILIATES,
net of income taxes 662 332 2,524 1,409
------------ ------------ ------------ ------------
NET INCOME $ 28,218 $ 40,437 $ 54,694 $ 116,026
============ ============ ============ ============
EARNINGS PER COMMON SHARE:
Basic $ 0.57 $ 0.80 $ 1.10 $ 2.31
Diluted 0.56 $ 0.79 $ 1.09 $ 2.28
CASH DIVIDENDS $ 0.08 $ 0.075 $ 0.23 $ 0.225
AVERAGE COMMON SHARES OUTSTANDING:
Basic 49,855 50,467 49,793 50,159
Diluted 50,574 51,256 50,306 50,941
</Table>
The accompanying notes are an integral part of these statements.
-4-
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<Table>
<Caption>
Nine Months Ended
June 30,
2002 2001
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 54,694 $ 116,026
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 74,614 62,103
Dry holes and abandonments 15,751 25,626
Equity in income of affiliates before income taxes (4,696) (2,898)
Amortization of deferred compensation 1,099 1,112
Gain on sale of securities and non-monetary
investment income (25,078) (2,634)
Gain on sale of property, plant & equipment (1,321) (3,759)
Other, net 3 22
Change in assets and liabilities-
Accounts receivable 25,408 (28,112)
Inventories 1,970 (5,274)
Prepaid expenses and other 14,627 11,200
Accounts payable (33,960) 15,432
Accrued liabilities (411) 22,451
Deferred income taxes 18,495 (1,417)
Other noncurrent liabilities 4,005 1,425
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 145,200 211,303
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including dry hole costs (257,494) (186,664)
Proceeds from sales of property, plant and equipment 4,624 10,476
Proceeds from sale of investments 41,489 24,438
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (211,381) (151,750)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (11,240) (11,366)
Purchases of stock for Treasury -- (1,921)
Proceeds from exercise of stock options 2,659 13,521
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (8,581) 234
---------- ----------
NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS (74,762) 59,787
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 122,962 108,087
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 48,200 $ 167,874
========== ==========
</Table>
-5-
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands - except per share data)
<Table>
<Caption>
Common Stock Additional Treasury Stock
-------------------- Paid-In Unearned Retained ----------------------
Shares Amount Capital Compensation Earnings Shares Amount
------- --------- ---------- ------------ ---------- ------ ----------
Balance, September 30, 2001 53,529 $ 5,353 $ 80,324 $ (1,812) $ 943,105 3,676 $ (49,802)
Comprehensive Income:
Net Income 54,694
Other comprehensive income,
Unrealized losses on available-
for-sale securities, net
of deferred taxes of $7,894
Derivatives instruments gains, net
of deferred taxes of $16
Total other comprehensive income
Comprehensive income
Cash dividends ($0.23 per share) (11,240)
Exercise of stock options 923 (128) 1,736
Tax benefit of stock-based awards 634
Amortization of deferred compensation 1,099
------- --------- --------- --------- ---------- ------ ----------
Balance, June 30, 2002 53,529 $ 5,353 $ 81,881 $ (713) $ 986,559 3,548 $ (48,066)
======= ========= ========= ========= ========== ====== ==========
<Caption>
Accumulated
Other Total
Comprehensive Shareholders'
Income Equity
------------- -------------
Balance, September 30, 2001 $ 49,309 $ 1,026,477
Comprehensive Income:
Net Income 54,694
Other comprehensive income,
Unrealized losses on available-
for-sale securities, net
of deferred taxes of $7,894 (12,881) (12,881)
Derivatives instruments gains, net
of deferred taxes of $16 25 25
Total other comprehensive income (12,856) (12,856)
Comprehensive income 41,838
Cash dividends ($0.23 per share) (11,240)
Exercise of stock options 2,659
Tax benefit of stock-based awards 634
Amortization of deferred compensation 1,099
--------- -----------
Balance, June 30, 2002 $ 36,453 $ 1,061,467
========= ===========
</Table>
-6-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, which
consists only of those of a normal recurring nature, necessary to
present fairly the results of the periods presented. The results of
operations for the three and nine months ended June 30, 2002, and June
30, 2001, are not necessarily indicative of the results to be expected
for the full year. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto in the Company's 2001 Annual Report on
Form 10-K and the Company's 2002 First and Second Quarter Reports on
Form 10-Q.
As announced on February 25, 2002, the Company and Key Production
Company, Inc. (Key) have signed a definitive agreement that provides
for Helmerich & Payne to contribute the assets and liabilities of the
Oil and Gas Division to a newly formed subsidiary, Cimarex Energy Co.
(Cimarex), and distribute on a pro-rata basis all of the shares of
stock of Cimarex to the shareholders of Helmerich & Payne. Cimarex
would then merge with Key. Cimarex Energy Co. will be a new publicly
traded exploration and production company. The transaction will close
after receipt of necessary Key shareholder and regulatory approvals.
The Company has received a favorable private letter ruling from the
Internal Revenue Service with regard to the transaction. Closing will
likely occur prior to the end of the Company's fiscal year. Approval of
the transaction by Helmerich and Payne shareholders will not be
required.
2. The $.075 cash dividend declared in March, 2002, was paid June 3, 2002.
On June 5, 2002, a cash dividend of $.08 per share was declared for
shareholders of record on August 15, 2002, payable September 3, 2002.
3. Inventories consist of materials and supplies.
4. Income from investments includes $15,468,000 ($0.30 per share) and
$15,792,000 ($0.31 per share) after-tax gains from sales of
available-for-sale securities during the third quarter and first nine
months of fiscal 2002. After-tax gains from security sales were
$1,423,000 and $1,497,000 ($0.03 per share)for the same periods in
fiscal 2001.
5. The following is a summary of available-for-sale securities, which
excludes those accounted for under the equity method of accounting. At
June 30, 2002, the Company's investment in securities accounted for
under the equity method is $60,083,000.
<Table>
<Caption>
Unrealized Unrealized Fair
Cost Gains Losses Value
------- ---------- ----------- ---------
(in thousands)
Equity Securities 06/30/02 $ 46,927 $ 60,950 $ 604 $ 107,273
Equity Securities 09/30/01 $ 63,778 $ 84,257 $ 3,136 $ 144,899
</Table>
-7-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
6. Comprehensive Income -
The components of comprehensive income, net of related tax, are as follows
(in thousands):
<Table>
<Caption>
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net Income $ 28,218 $ 40,437 $ 54,694 $ 116,026
Other comprehensive income:
Net unrealized gain (loss) on
securities (33,360) 939 (12,881) (34,771)
Net unrealized gain (loss) on
derivative instruments (358) 6 25 (22)
----------- ----------- ----------- -----------
Other comprehensive income (loss) (33,718) 945 (12,856) (34,793)
----------- ----------- ----------- -----------
Comprehensive income (loss) $ (5,500) $ 41,382 $ 41,838 $ 81,233
=========== =========== =========== ===========
</Table>
The components of accumulated other comprehensive income, net of related
taxes, are as follows (in thousands):
<Table>
<Caption>
June 30, Sept.30,
2002 2001
---------- ----------
Unrealized gains on securities, net $ 37,414 $ 50,295
Unrealized loss on derivative instruments (961) (986)
---------- ----------
Accumulated other comprehensive income $ 36,453 $ 49,309
========== ==========
</Table>
7. At June 30, 2002, the Company had committed bank lines of credit totaling
$100 million; $50 million expires in February 2003 and $50 million expires
in October 2003. Additionally, the Company had uncommitted credit
facilities totaling $10 million. Collectively, the Company had $50 million
in outstanding borrowings and outstanding letters of credit totaling $10.6
million against these lines at June 30, 2002. Concurrent with a $50
million borrowing under the facility that expires October 2003, the Company
entered into an interest rate swap with a notional value of $50 million and
an expiration date of October 2003. The swap effectively converts this $50
million facility from a floating rate of LIBOR plus 50 basis points to a
fixed effective rate of 5.38 percent. Excluding the impact of the interest
rate swap, the average interest rate for the borrowings at June 30, 2002,
was approximately 2.34 percent on a 360-day basis.
In July 2002, the Company modified its short-term revolving credit
arrangements by replacing the above mentioned $50 million committed line
that expires in February 2003 and a $10 million uncommitted line with a
$125 million committed unsecured revolving credit facility, which expires
in July, 2005. Each year the Company can request a one year extension on
the facility. The facility requires quarterly interest payments with the
principal payment due at the expiration date. The interest rate on the
facility is LIBOR plus 87.5 basis points.
The Company is also in the process of negotiating a $200 million
intermediate term debt facility that would provide staged maturities
ranging from 5 to 12 years. The Company expects to finalize this
arrangement in mid-August 2002.
Under the credit agreements currently in effect, the Company must meet
certain requirements regarding levels of debt, net worth, cash flows and
earnings. The Company met all requirements at June 30, 2002.
-8-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
8. 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 include
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):
<Table>
<Caption>
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Basic weighted-average shares 49,855 50,467 49,793 50,159
Effect of dilutive shares:
Stock options 691 735 498 743
Restricted stock 28 54 15 39
---------- ---------- ---------- ----------
719 789 513 782
---------- ---------- ---------- ----------
Diluted weighted-average
shares 50,574 51,256 50,306 50,941
========== ========== ========== ==========
</Table>
9. Income Taxes -
The Company's effective tax rate was 43% in the first nine months of fiscal
2002 compared to 39.5% in the same period of fiscal 2001. Costs and
expenses related to certain foreign locations for which the Company does
not receive a tax benefit resulted in the current year estimated effective
tax rate of 43%. The two major reasons for the effective tax rate increase
are that the Company had larger net operating loss carry forwards from
Venezuela in fiscal 2001, and the Company does not receive a tax benefit
from the devaluation losses in Argentina and Venezuela.
10. Interest Rate Risk Management -
The Company uses derivatives as part of an overall operating strategy to
moderate certain financial market risks and its exposure to interest rate
risk from long-term debt. To manage this risk, the Company has entered into
an interest rate swap to exchange floating rate for fixed rate interest
payments over the remaining life of the debt. As of June 30, 2002, the
Company had an interest rate swap outstanding with a notional principal
amount of $50 million. (See Note 7)
The Company's accounting policy for these instruments is based on its
designation of such instruments as hedging transactions. An instrument is
designated as a hedge based in part on its effectiveness in risk reduction
and one-to-one matching of derivative instruments to underlying
transactions. The Company records all derivatives on the balance sheet at
fair value.
-9-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
For derivative instruments that are designated and qualify as a cash flow
hedge (i.e., hedging the exposure of variability in expected future cash
flows that is attributable to a particular risk), the effective portion of
the gain or loss on the derivative instrument is reported as a component of
other comprehensive income in stockholders' equity and reclassified into
earnings in the same period or periods during which the hedged transaction
affects earnings. The change in value of the derivative instrument in
excess of the cumulative change in the present value of the future cash
flows of the risk being hedged, if any, is recognized in the current
earnings during the period of change.
The Company's interest rate swap has been designated as a cash flow hedge
and is expected to be 100% effective in hedging the exposure of variability
in the future interest payments attributable to the debt because the terms
of the interest swap correlate with the terms of the debt.
11. Currency Devaluation -
The uncertainty regarding economic, banking and currency stability
continues without improvement in Argentina. The development of a solution
to the crisis is uncertain, increasing the potential for additional
currency declines in the near term. The Argentine peso currently trades in
the range of 3 to 3.6 pesos to one U.S. dollar. The Company has recorded
$1.2 million in pre-tax currency devaluation losses related to the peso
during the first quarter of fiscal 2002. The Company could be exposed to
additional currency losses of between $1 million and $2 million during the
remainder of fiscal 2002. The Company currently has one rig under contract
and working in Argentina.
Also, as a result of a severe decline in the value of the Venezuelan
bolivar due to political instability and a change in the Venezuelan
government's exchange policy, pre-tax currency devaluation losses of $3.1
million and $0.5 million were recorded in the first nine months and the
third quarter of fiscal 2002, respectively. Subsequent to June 30, 2002,
the bolivar has improved in value relative to the U.S. dollar. Should an
additional devaluation of the bolivar occur, the Company could be exposed
to additional currency losses of between $0.5 million and $1.4 million
during the remainder of fiscal 2002. The Company currently has three rigs
under contract and working in Venezuela.
12. Contingent Liabilities and Commitments -
Litigation Settlement -
The Company was a defendant in Verdin v. R&B Falcon Drilling USA, Inc., et
al., a civil action in the United States District Court, Galveston, Texas.
In May 2001, the Company reached an agreement in principle with Plaintiff's
counsel to settle all claims pending court approval of the settlement. In
the third quarter of fiscal 2001, the Company incurred a net charge of
$3.25 million to contract drilling expense based on the pending settlement.
The Court approved the settlement on April 25, 2002. In June, 2002, the
Company paid $10 million to settle all claims in this litigation. The
Company was reimbursed $6.75 million in June, 2002 by the Company's
insurer.
-10-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
Other Matters -
The Company is a defendant to claims of drainage of gas from two properties
that it operates. The royalty owner plaintiffs have filed suit on behalf of
themselves and a class of similarly situated royalty owners in two 640 acre
spacing units. The plaintiffs allege that the two units have suffered
approximately 12 billion cubic feet of gross gas drainage. Although the
plaintiffs have not specified in their pleadings the amount of damages
alleged, the plaintiffs have orally stated that the royalty owner class has
sustained actual damages of approximately $6.2 million exclusive of
interest and costs. The Company estimates that the share of such alleged
damages attributable to its working interest ownership would total
approximately $1.0 million exclusive of interest and costs. Plaintiffs
further allege that, as a former operator, the Company is liable for all
damages attributable to the drainage. The Company believes that it is
liable only for its working interest share of any actual damages
attributable to the alleged drainage. In the event that the Company is held
liable for the full amount of any actual damages, the Company will seek
contribution, indemnification and/or other appropriate relief from all
other working interest owners for their portion of the alleged drainage
that is attributable to the interest of those other owners.
The Company, on a regular basis, makes commitments for the purchase of
contract drilling equipment. At June 30, 2002, the Company had commitments
outstanding of approximately $170 million for the purchase of drilling
equipment.
13. Segment Information -
The Company evaluates performance of its segments based upon operating
profit or loss from operations before income taxes, which includes revenues
from external and internal customers; operating costs; depreciation,
depletion and amortization; dry holes and abandonments and taxes other than
income taxes. Intersegment sales are accounted for in the same manner as
sales to unaffiliated customers. Other includes investments in
available-for-sale securities, equity owned investments, as well as
corporate operations.
-11-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
Summarized financial information of the Company's reportable segments
for the nine months ended June 30, 2002, and 2001, is shown in the
following table:
<Table>
<Caption>
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
- ---------------------------------------- ---------- ---------- ---------- ----------
JUNE 30, 2002
Contract Drilling
Domestic $ 251,379 $ 682 $ 252,061 $ 55,709
International 109,643 -- 109,643 11,840
---------- ---------- ---------- ----------
361,022 682 361,704 67,549
---------- ---------- ---------- ----------
Oil & Gas Operations
Exploration & Production 80,385 -- 80,385 7,696
Natural Gas Marketing 38,995 -- 38,995 1,330
---------- ---------- ---------- ----------
119,380 -- 119,380 9,026
---------- ---------- ---------- ----------
Real Estate 6,649 1,128 7,777 4,073
Other 28,139 -- 28,139 --
Eliminations -- (1,810) (1,810) --
---------- ---------- ---------- ----------
Total $ 515,190 $ -- $ 515,190 $ 80,648
========== ========== ========== ==========
</Table>
<Table>
<Caption>
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
- ---------------------------------------- ---------- ---------- ---------- ----------
JUNE 30, 2001
Contract Drilling
Domestic $ 228,769 $ 2,331 $ 231,100 $ 67,995
International 114,346 -- 114,346 19,311
---------- ---------- ---------- ----------
343,115 2,331 345,446 87,306
---------- ---------- ---------- ----------
Oil & Gas Operations
Exploration & Production 184,900 -- 184,900 95,047
Natural Gas Marketing 83,661 -- 83,661 4,817
---------- ---------- ---------- ----------
268,561 -- 268,561 99,864
---------- ---------- ---------- ----------
Real Estate 8,826 1,159 9,985 5,312
Other 10,839 -- 10,839 --
Eliminations -- (3,490) (3,490) --
---------- ---------- ---------- ----------
Total $ 631,341 $ -- $ 631,341 $ 192,482
========== ========== ========== ==========
</Table>
-12-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
Summarized financial information of the Company's reportable segments
for the quarters ended June 30, 2002, and 2001, is shown in the
following table:
<Table>
<Caption>
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
- ---------------------------------------- ---------- ---------- ---------- ----------
JUNE 30, 2002
Contract Drilling
Domestic $ 80,586 $ 144 $ 80,730 $ 14,360
International 31,380 -- 31,380 3,547
---------- ---------- ---------- ----------
111,966 144 112,110 17,907
---------- ---------- ---------- ----------
Oil & Gas Operations
Exploration & Production 32,538 -- 32,538 8,649
Natural Gas Marketing 13,193 -- 13,193 (109)
---------- ---------- ---------- ----------
45,731 -- 45,731 8,540
---------- ---------- ---------- ----------
Real Estate 2,189 368 2,557 1,340
Other 25,581 -- 25,581 --
Eliminations -- (512) (512) --
---------- ---------- ---------- ----------
Total $ 185,467 $ -- $ 185,467 $ 27,787
========== ========== ========== ==========
</Table>
<Table>
<Caption>
External Inter- Total Operating
(in thousands) Sales Segment Sales Profit
- ---------------------------------------- ---------- ---------- ---------- ----------
JUNE 30, 2001
Contract Drilling
Domestic $ 93,316 $ 719 $ 94,035 $ 30,305
International 40,527 -- 40,527 7,958
---------- ---------- ---------- ----------
133,843 719 134,562 38,263
---------- ---------- ---------- ----------
Oil & Gas Operations
Exploration & Production 52,337 -- 52,337 23,932
Natural Gas Marketing 23,508 -- 23,508 151
---------- ---------- ---------- ----------
75,845 -- 75,845 24,083
---------- ---------- ---------- ----------
Real Estate 2,250 383 2,633 1,008
Other 5,284 -- 5,284 --
Eliminations -- (1,102) (1,102) --
---------- ---------- ---------- ----------
Total $ 217,222 $ -- $ 217,222 $ 63,354
========== ========== ========== ==========
</Table>
-13-
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
((Unaudited)
The following table reconciles segment-operating profit per the table above to
income before income taxes and equity in income of affiliate as reported on the
Consolidated Condensed Statements of Income (in thousands).
<Table>
<Caption>
Quarter Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Segment operating profit $ 27,787 $ 63,354 $ 80,648 $ 192,482
Unallocated amounts:
Income from investments 25,555 4,649 28,522 10,203
General corporate expense (4,127) (3,449) (14,053) (11,662)
Interest expense 684 1,626 (32) 951
Corporate depreciation (509) (550) (1,498) (1,526)
Other corporate expense (575) 154 (2,063) (999)
---------- ---------- ---------- ----------
Total unallocated amounts 21,028 2,430 10,876 (3,033)
---------- ---------- ---------- ----------
Income before income taxes
and equity in income of
affiliates $ 48,815 $ 65,784 $ 91,524 $ 189,449
========== ========== ========== ==========
</Table>
The following table presents revenues from external customers by country based
on the location of service provided (in thousands).
<Table>
<Caption>
Quarter Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenues:
United States $ 154,087 $ 176,695 $ 405,547 $ 516,995
Venezuela 10,528 11,987 40,746 29,818
Ecuador 10,698 9,763 32,908 25,560
Colombia 1,915 6,089 7,946 20,155
Other Foreign 8,239 12,688 28,043 38,813
---------- ---------- ---------- ----------
Total $ 185,467 $ 217,222 $ 515,190 $ 631,341
========== ========== ========== ==========
</Table>
14. Impairment -
Included in depreciation, depletion and amortization for the three and nine
month periods ended June 30, 2002 were impairment charges of $2,464,000 and
$7,908,000, respectively for proved Exploration and Production properties.
After tax, the impairment charges reduced net income by approximately
$1,528,000 and $4,903,000 ($0.03 and $0.10 per share) for the three and
nine month periods ended June 30, 2002, respectively. Included in
depreciation, depletion and amortization for the three and nine month
periods ended June 30, 2001 were impairment charges of $642,000 and
$4,450,000 for proved Exploration and Production properties. After tax, the
impairment charges reduced net income by approximately $398,000 and
$2,759,000 ($0.01 and $0.05 per share) for the three and nine month periods
ended June 30, 2001, respectively.
-14-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
RISK FACTORS AND FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the consolidated
financial statements, notes and management's narrative analysis contained in the
Company's 2001 Annual Report on Form 10-K and the Company's fiscal 2002 First
and Second Quarter Report on Form 10-Q and the condensed consolidated financial
statements and related notes included elsewhere herein. The Company's future
operating results may be affected by various trends and factors, which are
beyond the Company's control. These include, among other factors, fluctuations
in natural gas and crude oil prices, expiration or termination of drilling
contracts, currency exchange losses, changes in general economic and political
conditions, rapid or unexpected changes in technologies and uncertain business
conditions that affect the Company's businesses. Accordingly, past results and
trends should not be used by investors to anticipate future results or trends.
With the exception of historical information, the matters discussed in
Management's Discussion & Analysis of Results of Operations and Financial
Condition includes forward-looking statements. These forward-looking statements
are based on various assumptions. The Company cautions that, while it believes
such assumptions to be reasonable and makes them in good faith, assumed facts
almost always vary from actual results. The differences between assumed facts
and actual results can be material. The Company is including this cautionary
statement to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by, or on behalf of, the Company. The factors identified in this cautionary
statement are important factors (but not necessarily all important factors) that
could cause actual results to differ materially from those expressed in any
forward-looking statement made by, or on behalf of, the Company.
RESULTS OF OPERATIONS
THIRD QUARTER 2002 VS THIRD QUARTER 2001
The Company reported net income of $28,218,000 ($0.56 per share) from revenues
of $185,467,000 for the third quarter ended June 30, 2002, compared to net
income of $40,437,000 ($0.79 per share) from revenues of $217,222,000 for the
third quarter of the prior fiscal year. Net income in the third quarter of
fiscal 2002 included $15,468,000 ($0.30 per share) of after-tax gains from the
sale of available-for-sale securities compared to $1,423,000 ($0.03 per share)
in the third quarter of fiscal 2001.
OIL & GAS DIVISION
EXPLORATION and PRODUCTION reported operating profit of $8.6 million for the
third quarter of fiscal 2002 compared to $23.9 million for the same period of
fiscal 2001. Oil & gas revenues decreased to $32.5 million compared with $52.3
million in 2001.
-15-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
Natural gas revenues decreased to $27.7 million from $46.5 million, or 40
percent. The $18.8 million decrease in gas revenues was the result of
significantly lower gas prices ($14.4 million decrease) and a 12% decrease in
gas volumes ($4.4 million decrease). Natural gas prices averaged $2.94 per mcf
and $4.27 per mcf for the third quarter of fiscal 2002 and 2001, respectively,
while natural gas volumes averaged 103.5 Mmcf/d and 117.8 Mmcf/d, respectively.
Oil revenues decreased to $4.5 million from $5.4 million. The $0.9 million
decrease in oil revenues was the result of both lower prices ($0.4 million
decrease) and volumes ($0.5 million decrease). Crude oil prices averaged $24.34
per Bbl and $26.12 per Bbl for the third quarter of fiscal 2002 and 2001,
respectively, while crude oil volumes averaged 2,044 Bbls/d and 2,224 Bbls/d,
respectively.
Exploration expenses were approximately $5.6 million and $9.5 million in the
third quarter of fiscal 2002 and 2001, respectively. Dry hole costs were $3.1
million for the quarter compared with $2.6 million in 2001 and impairment of
undeveloped leases was $2.4 million compared with $4.2 million in 2001. There
were no geophysical expenses in the third quarter of fiscal 2002 compared to
$2.7 million in the same period of fiscal 2001. The decreases were the result of
reduced exploration activity in fiscal 2002.
Operating expenses decreased to $6.7 million in the third quarter of fiscal 2002
compared to $9.6 million in the same period of fiscal 2001. Lower production
taxes of $2.5 million, as the result of lower gas prices than last year's third
quarter, was the primary reason for the decrease.
The Company participated in an additional 29 wells during the third quarter, of
which 24 were producing, waiting on pipeline connections or completing. Of the
29 wells drilled, 6 were wildcat wells, of which 3 were successful and 3 were
dry holes. For the first nine months of fiscal 2002, the Company participated in
51 wells, of which 39 were completed or are completing, and 12 were dry holes.
The Company expects to participate in 94 gross wells for the year.
NATURAL GAS MARKETING segment reported an operating loss of $0.1 million in the
third quarter of fiscal 2002 compared to an operating profit of $0.4 million in
the third quarter of fiscal 2001.
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
DOMESTIC DRILLING
Domestic contract drilling revenues for the third quarter of 2002 and 2001 were
$80.6 million and $93.3 million, respectively. Operating profit for the third
quarter of fiscal 2002 was $14.4 million, compared with $30.3 million in last
year's third quarter. The decrease in operating profit is primarily the result
of reduced performance in the Company's land operations. Land dayrates averaged
approximately $11,500 per day in the current quarter, compared to $15,000 per
day in the third quarter of fiscal 2001. Land rig utilization was 85% and 98%
for the third quarter of 2002 and 2001, respectively. The average number of land
rigs available in the U.S. has increased 30%, from 44.6 rigs in the third
quarter of fiscal 2001, to 58.1 rigs during the current quarter. The increase is
due to the additional FlexRigs constructed by the Company over the past year, as
well as four rigs moved from international locations to the U.S.
Operating profit from offshore operations decreased approximately 19% in the
current quarter compared to the third quarter of fiscal 2001, as rig utilization
was 81% and 100% for the third quarter of 2002 and 2001, respectively. Offshore
operating profit for the third quarter of 2002 was helped by the commencement of
work for the Company's new offshore platform rigs 205 and 206. This improvement
was more than offset with two rigs down for the entire quarter, with plans for
modification, and another rig going to standby rates for the quarter.
As previously announced, the Company has begun construction of its third series
of the H&P-designed FlexRig. The current series of rigs, named FlexRig3, is
being assembled in the Company's construction facility in Houston. Two of the
new FlexRig3s recently were deployed to the field to commence operations for
customers. An additional 23 rigs are scheduled to be completed within the next
12-14 months. The next six FlexRig3s to be completed are already committed to
specific customers for work. Rig utilization for all FlexRigs since 1998 have
averaged over 95%. Upon the projected completion in late 2003 of the FlexRig3
project, it is estimated that the Company's land rig fleet in the U.S. will
total 83 rigs, representing a 43% increase over the 58 rigs available during the
current quarter.
INTERNATIONAL DRILLING
International Drilling's operating profit decreased to $3.5 million from $8.0
million. Revenues decreased to $31.4 million from $40.5 milion. The operating
profit decrease is due primarily to decreases in Venezuela, Colombia and
Equatorial Guinea, partially offset by continued improvement from Ecuador as the
result of increased margins. Colombia decreased from three rigs working in the
third quarter of 2001 to one rig in the third quarter of fiscal 2002. The one
remaining rig in Colombia is scheduled to end its contract in September 2002.
The decrease in Venezuela is the result of lower margins compared to last year
and in the third quarter of fiscal 2001 there was a one-time contract settlement
of $2.0 million
Rig utilization averaged 48% for the current quarter, compared to 60% in the
third quarter of 2001. Rig activity continued to be low in all international
countries except in Ecuador where the rig utilization averaged 86% for the
quarter. Rig activity in Venezuela, where the Company operates 14 of its 33
international rigs, averaged 38% for the quarter.
-17-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
OTHER
Other revenues increased approximately $20.3 million over last year, including a
$22.5 million increase in gains from the sale of available-for-sale securities.
In the current quarter, the Company sold all of its holdings in Bank One
Corporation, Kerr McGee, Oneok and Sun Co. (see note 4). Dividend income
decreased $0.4 million for the quarter as compared to the third quarter of 2001.
Interest income decreased to $0.2 million compared to $1.4 million in the third
quarter of fiscal 2001 as interest rates and average cash invested both
decreased in 2002.
Interest expense was a credit of $0.7 million in the third quarter of fiscal
2002 compared to a credit of $1.6 million for the same period of 2001. In 2002,
third quarter interest expense included credits for capitalized interest and ad
valorem tax settlements of $1.2 million and $0.2 million, respectively. For the
same period of 2001, the capitalized interest was $0.4 million and the credit
for ad valorem tax settlements was $1.9 million, respectively.
General and administrative expenses increased to $4.1 million from $3.4 million,
due to increased professional services, pension expense and administrative labor
and benefits.
The company's effective income tax rate increased to 43.5% for the third quarter
of fiscal 2002 compared to 39.0% for the same period of 2001. The increase is
due primarily to certain costs and expenses related to foreign locations for
which the Company does not receive a tax benefit, including currency devaluation
losses.
NINE MONTHS ENDED JUNE 30, 2002 VS NINE MONTHS ENDED JUNE 30, 2001
The Company reported net income of $54,694,000 ($1.09 per share) from revenues
of $515,190,000 for the nine months ended June 30, 2002, compared with net
income of $116,026,000 ($2.28 per share) from revenues of $631,341,000 for the
first nine months of the prior fiscal year. Net income in the first nine months
of fiscal 2002 and 2001 included $15,792,000 ($0.31 per share) from the sale of
investment securities compared with $1,497,000 ($0.03 per share) for the same
period of fiscal 2001.
OIL AND GAS DIVISION
EXPLORATION AND PRODUCTION reported an operating profit of $7.7 million for the
first nine months of fiscal 2002 compared to $95.0 million for the same period
of fiscal 2001. Oil & gas revenues decreased to $80.4 million compared to $184.9
million in 2001.
-18-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
Natural gas revenues decreased to $67.6 million from $166.1 million, or 59
percent. The $98.5 million decrease in gas revenues was the result of
significantly lower gas prices ($90.4 million decrease) and a 10% decrease in
gas volumes ($8.1 million decrease). Natural gas prices averaged $2.34 per mcf
and $5.16 per mcf for the first nine months of fiscal 2002 and 2001
respectively. Natural gas volumes averaged 105.5 Mmcf/d and 117.5 Mmcf/d,
respectively. Oil revenues decreased to $12.0 million from $18.0 million. The
$6.0 million decrease in oil revenues was the result of both lower prices ($4.5
million decrease) and volumes ($1.5 million decrease). Crude oil prices averaged
$21.33 per Bbl and $28.65 per Bbl for the nine months of fiscal 2002 and 2001,
respectively. Crude oil volumes averaged 2,052 Bbls/d and 2,303 Bbls/d,
respectively.
Exploration expenses were approximately $16.8 million and $31.3 million in the
first nine months of fiscal 2002 and 2001, respectively. A decrease in
exploration activity in 2002, as a result of lower gas prices, is the primary
reason for the $14.5 million decrease in exploration expenses. Dry hole costs
were $6.8 million for the first nine months of fiscal 2002 compared to $14.1
million in the same period of 2001. Impairment of undeveloped leases and
geophysical expense were $8.6 million and $1.4 million, respectively, in the
first nine months of fiscal 2002 compared to $11.2 million and $6.0 million,
respectively, in the same period of fiscal 2001.
Operating expenses for the first nine months of fiscal 2002 were $21.9 million
compared to $28.8 million in the same period of fiscal 2001. The $6.9 million
decrease is primarily the result of decreased production taxes in 2002 due to
significantly lower commodity prices in the first nine months of fiscal 2002
compared to the same period in 2001.
Depreciation, depletion and amortization expense was $30.7 million for the first
nine months of fiscal 2002 compared to $26.1 million in the same period of 2001.
Impairment charges for producing properties of $7.9 million and $4.5 million
were included in these respective amounts. After-tax, the impairment charge
reduced net income in 2002 and 2001 by approximately $4.9 million ($0.10 per
share) and $2.8 million ($0.05 per share), respectively. The remaining increase
of $1.2 million is due to higher depreciation rates as the result of lower
reserves at September 30, 2001.
NATURAL GAS MARKETING segment reported an operating profit of $1.3 million for
the first nine months of fiscal 2002 compared to $4.8 million in the same period
of fiscal 2001. The significant decrease is the result of very favorable spot
market prices in the first quarter of fiscal 2001, as gas prices were increasing
dramatically. Those same conditions did not occur during the first nine months
of fiscal 2002.
DOMESTIC DRILLING
Domestic Drilling's operating profit was $55.7 million and $68.0 million for the
first nine months of fiscal 2002 and fiscal 2001, respectively. Revenues for the
same periods were $251.4 million and $228.8, respectively. The decrease in
operating profit is due
-19-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
primarily to reduced performance in land operations, with average revenue per
day of approximately $12,600 in the first nine months of fiscal 2002, compared
with $15,420 in the same period of fiscal 2001. Land rig utilization was 83% and
95% for the first nine months of fiscal 2002 and 2001, respectively. Operating
profit from offshore operations was down 3% for the first nine months of fiscal
2002, compared to the same period in fiscal 2001. Offshore rig utilization was
90% and 97% for the same periods, respectively.
Although land dayrates are still soft and difficult to predict in future months,
there are signs that they are stabilizing, if commodity prices stay at present
levels. Rig utilization for both land and offshore operations should remain at
third quarter levels in the fourth quarter, as the two new platform rigs 205 and
206 will work a full quarter.
INTERNATIONAL DRILLING
International Drilling's operating profit decreased to $11.8 million from $19.3
million. Revenues decreased to $109.6 from $114.3 million. The decrease in
operating profit is due primarily to a 15% reduction in revenue days and
currency devaluation losses in Venezuela and Argentina. Operating profit in
Colombia decreased $4.9 million in the first nine months of fiscal 2002 compared
to the same period of 2001 as there was one rig working in 2002 and an average
of 3.4 rigs in 2001. Equatorial Guinea operating profit decreased $1.2 million
due to an increase in operating expenses. Operating profit in Ecuador increased
$4.6 million for the first nine months of 2002 compared to the same period in
2001 as revenue per day increased by 25%.
In Argentina, operating profit decreased $2.3 million in 2002 compared with 2001
as the average rigs working decreased from 2.8 rigs in the first nine months of
2001 to 1.3 rigs in 2002. Argentina also recorded a currency devaluation loss of
$1.2 million in the first nine months of fiscal 2002 due to devaluation of the
Argentina peso. Although some stability has been achieved, there is still
significant uncertainty regarding economic, banking and currency stability.
Operations in Venezuela incurred currency valuation losses in the first nine
months of fiscal 2002 of $3.1 million compared to $0.6 million in the same
period of fiscal 2001. The severe decline in the value of the Venezuelan Bolivar
relative to the U.S. dollar is the result of a change in the government's
exchange policy and general instability in the country. Should additional
devaluation of the bolivar occur, the Company could be exposed to additional
currency losses of between $0.5 million and $1.4 million during the remainder of
fiscal 2002.
OTHER
Other revenues increased approximately $17 million in the first nine months of
2002 compared to the same period of 2001. Gains from the sale of
available-for-sale securities in the first nine months of 2002 were $25.4
million compared to $2.6 million in the same period of 2001. Dividend income
decreased from $3.1 million in 2001 to $1.8 million in 2002 as the result of
reduced equity holdings and lower money market investments in fiscal 2002.
Interest income was $1.3 million in the first nine months of fiscal 2002
compared to $4.5 million in the same period of 2001. The decrease is the result
of lower interest rates and decreased cash balances in fiscal 2002.
-20-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
June 30, 2002
(Continued)
Interest expense for the first nine months of fiscal 2001 was a credit of $1.0
million compared with an expense of $32,000 in fiscal 2002. In the first nine
months of fiscal 2002, interest expense included credits for capitalized
interest and ad valorem tax settlements of $1.8 million and $0.3 million,
respectively. For the same period of fiscal 2001, the credits were $0.8 million
and $2.3 million, respectively.
General and administrative expense increased from $11.7 million in the first
nine months of fiscal 2001 to $14.1 million in the same period of fiscal 2002.
The increase is related to labor and employee benefits, advertising costs,
professional services related to establishing the Company's Exploration &
Production Division as a separate public entity, and pension expense.
The Company's effective income tax rate increased to 43.0% for the nine months
compared to 39.9% for the first nine months of fiscal 2001. The increase is due
primarily to certain costs and expenses related to foreign locations for which
the Company does not receive a tax benefit, including currency devaluation
losses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $145.2 million for the first nine
months of fiscal 2002, compared with $211.3 million for the same period in 2001.
The decrease in cash flows was primarily the result of significantly lower cash
flow from the Exploration and Production segment due to decreased commodity
prices. Capital expenditures were $257.5 million and $186.7 million for the
first nine months of 2002 and 2001, respectively. The increase is primarily the
result of new rig construction in the Company's U.S. land operations.
The Company anticipates capital expenditures to be approximately $350 million
for fiscal 2002. Internally generated cash flows are projected to be
approximately $200 million for fiscal 2002 and cash balances were $48 million at
June 30, 2002. The Company's indebtedness totaled $50 million as of June 30,
2002, as described in Note 7 to the Consolidated Financial Statements. To help
finance the future capital expenditure requirements, the Company is currently
negotiating a $200 million intermediate term debt facility. This facility will
provide for staged maturities from 5 to 12 years. The Company expects to
finalize this facility in mid-August 2002. To provide short-term flexibility,
the Company increased its revolving bank lines of credit to a total of $175
million. (see Note 7)
In the third quarter of fiscal 2002, the Company sold its remaining shares in
Bank One Corporation (175,000 shares), Kerr McGee (150,000 shares), Oneok
(450,000 shares) and Sun Co. (312,546 shares) for total proceeds of
approximately $36.8 million. The Company's remaining stock portfolio has a
market value of approximately $180 million.
There were no other significant changes in the Company's financial position
since September 30, 2001.
-21-
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
June 30, 2002
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
For a description of the Company's market risks, see "Item 7 (a). Quantitative
and Qualitative Disclosures About Market Risk" in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 2001, and Note 10 to the
Consolidated condensed Financial Statements contained in Part I hereof.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The discussion of legal proceedings under the heading "Litigation Settlement" as
disclosed in Note 12 to the Consolidated Condensed Financial Statements
contained in Part I hereof is hereby incorporated by reference.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following documents are included as exhibits to this Form 10-Q. Those
exhibits below incorporated by reference herein are indicated as such. If not so
indicated, such exhibits are filed herewith.
<Table>
<Caption>
Exhibit
Number Description
- ------- -----------
10.1 Form of Director Nonqualified Stock Option Agreement Under 2000
Helmerich & Payne, Inc. Stock Incentive Plan
10.2 Form of Change of Control Agreement for Helmerich & Payne
Exploration and Production Employees
10.3 Form of Change of Control Agreement for Helmerich & Payne
Drilling Employees
10.4 Second Amendment to Credit Agreement, dated as of July 16, 2002,
by and among Helmerich & Payne International Drilling Co.,
Helmerich & Payne, Inc., and Bank One, Oklahoma, N.A.
10.5 Credit Agreement, dated as of July 16, 2002, among Helmerich &
Payne International Drilling Co., Helmerich & Payne, Inc., The
Several Lenders From Time to Time Party Hereto, and Bank of
Oklahoma, National Association
</Table>
-22-
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
June 30, 2002
(continued)
(b) Reports on Form 8-K
For the three months ended June 30, 2002, registrant furnished, on April 24,
2002, one form 8-K reporting under Item 9, Regulation FD Disclosure, attaching a
press release announcing results of operations and certain supplemental
information, including financial statements.
SIGNATURES
HELMERICH & PAYNE, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ HANS HELMERICH /s/ DOUGLAS E. FEARS
- ------------------------------ -------------------------------
Hans Helmerich Douglas E. Fears
Chief Executive Officer Chief Financial Officer
August 14, 2002 August 14, 2002
Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Helmerich & Payne, Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Hans
Helmerich, as Chief Executive Officer of the Company, and Douglas E. Fears, as
Chief Financial Officer of the Company, each hereby certifies, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, to the best of his knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ HANS HELMERICH /s/ DOUGLAS E. FEARS
- ------------------------------ -------------------------------
Hans Helmerich Douglas E. Fears
Chief Executive Officer Chief Financial Officer
August 14, 2002 August 14, 2002
-23-
EXHIBIT INDEX
The following documents are included as exhibits to this Form 10-Q. Those
exhibits below incorporated by reference herein are indicated as such. If not so
indicated, such exhibits are filed herewith.
<Table>
<Caption>
Exhibit
Number Description
- ------- -----------
10.1 Form of Director Nonqualified Stock Option Agreement Under
2000 Helmerich & Payne, Inc. Stock Incentive Plan
10.2 Form of Change of Control Agreement for Helmerich & Payne
Exploration and Production Employees
10.3 Form of Change of Control Agreement for Helmerich & Payne
Drilling Employees
10.4 Second Amendment to Credit Agreement, dated as of July 16,
2002, by and among Helmerich & Payne International Drilling
Co., Helmerich & Payne, Inc., and Bank One, Oklahoma, N.A.
10.5 Credit Agreement, dated as of July 16, 2002, among Helmerich &
Payne International Drilling Co., Helmerich & Payne, Inc., The
Several Lenders From Time to Time Party Hereto, and Bank of
Oklahoma, National Association
</Table>
-24-