SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: November 13, 2001
HELMERICH & PAYNE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-4221 73-0679879
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
Utica at Twenty-first Street, Tulsa, Oklahoma 74114
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(Address of principal executive offices) (Zip Code)
(918) 742-5531
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Page 1 of 10 Pages.
1
Item 9. Other Events.
On November 13, 2001, Helmerich & Payne, Inc. issued the following press
release:
"Tulsa, OK - Helmerich & Payne, Inc. announced record net income of
$144,254,000 ($2.84 per share) from revenues of $826,854,000 for the
fiscal year ended September 30, 2001. Net income for the previous year
was $82,300,000 ($1.64 per share) from revenues of $631,095,000. Net
income included gains from the sale of equity securities of $0.01 per
share for 2001, and $0.16 per share for 2000. Also included in FY2000
net income was $0.13 per share of gains related to a non-monetary
dividend received, and a gain on the conversion of shares of common
stock of a company investee pursuant to that investee being acquired.
Fourth quarter net income was $28,228,000 ($0.56 per share) from
revenues of $195,513,000, compared with net income of $24,009,000 ($0.48
per share) from revenues of $177,698,000 for last year's fourth quarter.
Included in this year's fourth quarter results is a loss of $0.02 per
share from non-cash write-downs related to its portfolio of other
publicly held stocks. As required by FAS 115, several securities were
written down as a result of their market value declining below their
financial cost basis. There were no gains or losses reported during last
year's fourth quarter from sales or write-downs of the Company's
securities.
Driven by the increase in natural gas prices, the Oil & Gas Division
reported a record operating profit of $100.8 million, compared with
$71.9 million last year. During the twelve months ended September 30,
2001, there was significant volatility in natural gas prices, reaching
record high average levels for the Company in January of $8.73 per mcf,
but declining throughout the rest of the spring and summer to $2.03 per
mcf in September. Natural gas prices for FY2001 averaged $4.55 per mcf,
a 63% increase over the $2.79 per mcf averaged last year. Crude oil
prices for the year averaged $27.88 per barrel, compared with $27.95 per
barrel in the previous year. Natural gas production declined to an
average of 116.1 mmcf/day during 2001, from 128.2 mmcf/day in 2000.
Crude oil production averaged 2,242 barrels a day in 2001, compared with
2,405 barrels in 2000.
2
Expenses were higher due to an increased exploration budget and higher
operating service costs. Dry hole and abandonment expense for the Oil &
Gas Division totaled $33.5 million for 2001, compared with $22.6 million
for 2000. Additionally, producing property impairment write-downs
totaled $8.9 million in 2001, compared with $4.0 million in 2000. Other
expenses relating to the Division were up sharply over last year, mainly
due to increases in geophysical expenses and a significant rise in ad
valorem and production taxes due to higher revenues.
Total oil and gas reserves for the Company fell to 252 billion cubic
feet equivalent (bcfe) of natural gas as of September 30, 2001, from 300
bcfe as of September 30, 2000. A large portion of the decline (23 bcfe)
was a result of the lower natural gas price ($1.90 per mcf) used in this
year's calculation, versus $5.13 per mcf used in last year's
calculation.
As previously announced, an investment banking firm is currently
assisting the Company in its effort to establish the Oil & Gas Division
as a separate public entity and potentially expanding that operation
through some sort of combination. The Company is continuing to hold
serious discussions with selected companies and, while time consuming,
the Company's selective process has produced viable candidates and
substantive negotiations aimed toward maximizing shareholder value.
Driven by significantly higher U.S. land rig dayrates and profit
margins, the Company's Contract Drilling Division recorded the highest
level of operating profit in its 82-year history. Operating profit
totaled $136.2 million for 2001, compared with $45.6 million in 2000.
U.S. land rig revenue per day averaged $14,230 for 2001, compared with
$9,080 in 2000. Average offshore platform revenue per day was flat
compared with last year at just under $28,500. U.S. land rig utilization
averaged 97% for 2001, compared with 85% in 2000, while U.S. offshore
platform utilization averaged 98% this year, compared with 94% last
year.
Operating profit for contract drilling's international operations
increased to $28.5 million this year, compared with $9.8 million last
year. Improved performance in Venezuela, Ecuador and Argentina, and a
full year of labor contract income in Equatorial Guinea, helped improve
operating profits. Rig utilization improved to 56% in 2001, from an
average of 47% in 2000.
3
Also impacting total contract drilling operating profit was the
reduction in depreciation expense due to the change in the
Company's estimated useful life for drilling equipment. The
previously announced change from a 10-year depreciation term, to
a 15-year depreciation term effective October 1, 2000, resulted
in a $7.5 million and $30.0 million improvement in contract
drilling operating profit for the three month and twelve month
periods ended September 30, 2001, respectively, and a $0.09 and
$0.36 per share net income improvement during those same periods.
The change affected quarterly domestic operating profit by $3.8
million and international operating profit by $3.7 million.
The Company President and CEO, Hans Helmerich, commented,
"Natural gas prices and U.S. rig dayrates reached all-time highs
during the past year, yet both are now experiencing demand driven
declines. We believe these downward trends will be somewhat
short-lived as in the last cycle, and that the Company is well
positioned to benefit when the environment improves."
Fourth Quarter Review
---------------------
During the fourth quarter, the Contract Drilling Division
experienced its highest dayrates ever in the U.S. land rig
sector, which resulted in a record $48.9 million of operating
profit for the Division. On the other hand, in the Oil & Gas
Division natural gas prices fell dramatically during the fourth
quarter and the Company experienced higher dry hole, abandonment,
and impairment write-downs than in the previous year. Overall,
the Company posted higher operating profit and net income for
this year's fourth quarter compared to last year's fourth
quarter.
Average natural gas prices for this year's fourth quarter were
$2.66 per mcf, compared with $3.65 per mcf in last year's fourth
quarter. Crude oil prices averaged $25.33 per barrel during the
fourth quarter of this year, compared with $31.02 per barrel in
last year's fourth quarter. Fourth quarter production for natural
gas and oil declined compared to last year's fourth quarter.
Natural gas production was 112.1 mmcf/day, compared with 125.8
mmcf/day last year. Oil production was 2,060 barrels per day this
year, versus 2,813 barrels per day in last year's fourth quarter.
In the recent fourth quarter, dry hole and abandonment charges
for the Oil & Gas Division totaled $8.3 million, geophysical
expenses were $1.8 million and property impairment charges
totaled $4.5 million.
4
These expenses compare with last year's fourth quarter totals of
$8.0 million for dry hole and abandonment charges, $0.8 million
of geophysical charges and $3.7 million of impairment charges.
Other expenses were up for the fourth quarter due to higher ad
valorem taxes and depreciation and depletion charges.
Contract Drilling operating profit was $48.9 million for this
year's fourth quarter, more than triple that of the $15.2 million
recorded for last year's fourth quarter. Both the U.S. land and
offshore platform rigs experienced 100% utilization during this
year's fourth quarter, compared with 94% utilization for both
U.S. land and offshore rig fleets in last year's fourth quarter.
International rig utilization was 62% for this year's fourth
quarter versus 50% last year. Average U.S. land rig revenue per
day rose to $16,386, compared with $9,842 during last year's
fourth quarter. Platform rig dayrates were up slightly, as were
average dayrates for international rigs. Improvements in
operating earnings in Ecuador and Argentina helped push
international operating profits substantially above those
recorded for last year's fourth quarter.
Outlook
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The Company also announced today new guidance for projected
FY2002 net income. It is estimated that average oil and gas
production levels for the coming year will possibly decline by
10% or more from those recorded in 2001, because of the reduced
drilling capital expenditure program planned for FY2002.
Estimated revenues and operating profit for the Oil & Gas
Division are highly sensitive to natural gas prices. Based on
average wellhead commodity prices for FY2002 of $2.75 per mcf of
natural gas and $21.00 per barrel of oil, and based on 100 mmcf/d
of natural gas production and 1,800 barrels per day of oil
production, the Company projects an estimated $32.0 million of
operating profit for the Oil & Gas Division. Clearly this is a
subjective number based on other variables such as dry hole
costs, geophysical expenses, possible impairment charges, and
other expenses.
Guidance for the Contract Drilling Division assumes an average
U.S. land rig dayrate of $12,300 per day and U.S. land rig
utilization of 78%, offshore platform utilization of 85% and
international rig utilization at 58%. Based on current capital
expenditure plans for 2002, the Company anticipates that total
U.S. land rigs available will rise from its current level of 51
to 74 by the end of FY2002, available offshore platform rigs will
increase from 10 to 12, and the number of international rigs will
remain at 32.
5
Given these assumptions, it is estimated that operating profit
for the U.S. contract drilling operations will range from $75 to
$85 million for FY2002. International operating profit will range
from $25 to $30 million.
Given these general assumptions, it is estimated that the
Company's net income for FY2002 will range from $1.50 to $1.65,
with significant sensitivity to natural gas and oil prices, rig
dayrates, rig utilizations, taxes, and other variables.
The Company plans to add 18 more FlexRigs(TM) and 2 offshore
platform rigs to its fleet during FY2002, and 10 FlexRigs in
FY2003. Fleet additions for this year, along with refurbishment
of existing rigs and other capital equipment, are estimated to
bring total capital spending for the Contract Drilling Division
for FY 2002 to approximately $340 million. Capital spending for
the Company's Oil & Gas Division, earlier estimated to be $80
million for FY 2002, has been reduced to approximately $50
million. It is anticipated that the total capital budget of $390
million will be funded by a combination of existing cash on hand,
operating cash flow, the sale of portfolio securities, and/or
additional borrowing. During FY2001, capital spending totaled
approximately $182 million for the Contract Drilling Division and
approximately $95 million for the Oil & Gas Division.
Helmerich & Payne, Inc. (HP/NYSE) is an energy-oriented company
engaged in contract drilling and oil and gas exploration and
production. Currently, H&P has 51 U.S. land rigs, 10 U.S.
platform rigs located in the Gulf of Mexico, 32 rigs located in
South America, and 11 land rigs and 2 offshore platform rigs
under construction or modification. The Company also holds
substantial equity investments in several other publicly owned
corporations.
Helmerich & Payne, Inc.'s conference call/webcast is scheduled
for today at 3:30 p.m. ET (2:30 p.m. CT). To listen, go to
www.videonewswire.com/HELMERICHPAYNE/111301/. If you are unable
to participate during the live webcast, the call will be archived
for 60 days on the website www.prnewswire.com.
6
The information contained within this announcement is forward looking
and involves risks and uncertainties that could significantly impact
expected results. A discussion of these risks and uncertainties is
contained in the Company's Form 10-Q filed with the Securities and
Exchange Commission on August 13, 2001."
7
HELMERICH & PAYNE, INC.
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
09/30/01 09/30/00
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CONSOLIDATED CONDENSED BALANCE SHEETS
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ASSETS:
Total current assets $ 331,412 $ 265,144
Investments 200,286 304,326
Net property, plant, and equipment 818,404 673,605
Other assets 14,405 16,417
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TOTAL ASSETS $ 1,364,507 $ 1,259,492
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total current liabilities $ 121,221 $ 78,894
Total noncurrent liabilities 166,809 174,895
Long-term debt 50,000 50,000
Total Shareholders' Equity 1,026,477 955,703
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,364,507 $ 1,259,492
============ ============
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2001 2000 2001 2000
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
REVENUES:
Sales and other operating revenues $ 195,124 $ 173,927 $ 816,262 $ 599,122
Income from investments 389 3,771 10,592 31,973
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195,513 177,698 826,854 631,095
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COST AND EXPENSES:
Operating costs 101,136 87,397 413,378 316,933
Depreciation, depletion and amortization 25,206 30,299 87,309 110,851
Dry holes and abandonments 8,416 8,054 34,042 22,692
Taxes, other than income taxes 10,430 7,244 41,640 29,202
General and administrative 3,753 2,957 15,415 11,578
Interest 919 687 (32) 3,076
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149,860 136,638 591,752 494,332
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INCOME BEFORE INCOME TAXES AND EQUITY
IN INCOME OF AFFILIATE 45,653 41,060 235,102 136,763
INCOME TAX EXPENSE 18,195 17,894 93,027 57,684
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 770 843 2,179 3,221
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NET INCOME $ 28,228 $ 24,009 $ 144,254 $ 82,300
========== ========== ========== ==========
EARNINGS PER COMMON SHARE:
Basic $ 0.56 $ 0.48 $ 2.88 $ 1.66
Diluted $ 0.56 $ 0.48 $ 2.84 $ 1.64
Average common shares outstanding:
Basic 49,907 49,694 50,096 49,534
Diluted 50,267 50,319 50,772 50,035
8
HELMERICH & PAYNE, INC.
UNAUDITED
(IN THOUSANDS)
THREE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2001 2000 2001 2000
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FINANCIAL RESULTS - LINES OF BUSINESS
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SALES AND OTHER REVENUES:
Contract Drilling - Domestic $ 103,630 $ 57,845 $ 332,399 $ 214,531
Contract Drilling - International 40,544 37,204 154,890 136,549
---------- ---------- ---------- ----------
Total Contract Drilling Division 144,174 95,049 487,289 351,080
---------- ---------- ---------- ----------
Exploration and Production 32,294 51,867 217,194 157,583
Natural Gas Marketing 16,450 24,748 100,111 80,907
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Total Oil and Gas Division 48,744 76,615 317,305 238,490
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Real Estate Division 2,192 2,315 11,018 8,999
Investments and Other Income 403 3,719 11,242 32,526
---------- ---------- ---------- ----------
Total Revenues $ 195,513 $ 177,698 $ 826,854 $ 631,095
========== ========== ========== ==========
OPERATING PROFIT (LOSS):
Contract Drilling - Domestic $ 39,696 $ 11,089 $ 107,691 $ 35,808
Contract Drilling - International 9,164 4,121 28,475 9,753
---------- ---------- ---------- ----------
Total Contract Drilling Division 48,860 15,210 136,166 45,561
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Exploration and Production 532 24,550 95,579 66,604
Natural Gas Marketing 437 1,284 5,254 5,271
---------- ---------- ---------- ----------
Total Oil and Gas Division 969 25,834 100,833 71,875
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Real Estate Division 1,003 1,329 6,315 5,346
---------- ---------- ---------- ----------
Total Operating Profit 50,832 42,373 243,314 122,782
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OTHER (5,179) (1,313) (8,212) 13,981
INCOME BEFORE INCOME TAXES AND
---------- ---------- ---------- ----------
EQUITY IN INCOME OF AFFILIATE: $ 45,653 $ 41,060 $ 235,102 $ 136,763
========== ========== ========== ==========
AVERAGE PRODUCTION AND PRICES
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PRODUCTION
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Oil - Barrels Per Day 2,060 2,813 2,242 2,405
Natural Gas - Mcf Per Day 112,058 125,782 116,128 128,204
SALES PRICES
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Oil - $ Per Barrel 25.33 31.02 27.88 27.95
Natural Gas - $ Per Mcf 2.66 3.65 4.55 2.79
9
SIGNATURES
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.
HELMERICH & PAYNE, INC.
(Registrant)
By: /s/ STEVEN R. MACKEY
---------------------------------------
Name: Steven R. Mackey
Title: Vice President
Dated: November 13, 2001
10