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: July 24, 2002
HELMERICH & PAYNE, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-4221 73-0679879
--------------- ---------------- ----------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
Utica at Twenty-first Street, Tulsa, Oklahoma 74114
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(918) 742-5531
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
--------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1 of 10 Pages.
Item 9. Other Events.
On July 24, 2002, Helmerich & Payne, Inc. issued the following press
release:
"TULSA, OK., -- Helmerich & Payne, Inc. announced net income of
$28,218,000 ($0.56 per share, on a diluted basis) from revenues of
$185,467,000 for the third quarter ended June 30, 2002, compared with
net income of $40,437,000 ($0.79 per share, on a diluted basis) from
revenues of $217,222,000 for the third quarter of the prior fiscal
year. Net income for the first nine months of this fiscal year totaled
$54,694,000 ($1.09 per share, on a diluted basis) from revenues of
$515,190,000, compared with net income of $116,026,000 ($2.28 per
share, on a diluted basis) from revenues of $631,341,000 for the same
period last year. This year's third quarter and year-to-date results
include net income from the sale of investment securities of
$15,468,000 ($0.30 per share) and $15,792,000 ($0.31 per share),
compared to $1,423,000 and $1,497,000 ($0.03 per share) for the same
periods of fiscal 2001.
Contract Drilling Division
Total Contract Drilling Division operating profit for the third quarter
was $17,907,000, down slightly from $17,949,000 for the previous
quarter, and down substantially from $38,263,000 recorded for the third
quarter of last year. Third quarter operating profit for U.S.
operations of $14,360,000 was a slight improvement over the previous
quarter's operating profit of $13,533,000, but down from $30,305,000
recorded in last year's third quarter. Average revenue per day for the
U.S. land rig fleet was $11,501 for the recent quarter, compared with
$12,386 for the second quarter of this year and $15,420 for the third
quarter of 2001. Average U.S. land rig utilization was 85% for the
current quarter, compared with 76% for the previous quarter, and 98%
for the third quarter of 2001. The average number of H&P land rigs
available for work in the U.S. has increased 30%, from 44.6 rigs in the
third quarter of last year, to 58.1 rigs during the third quarter of
this year. The increase is due to the additional FlexRigs(TM)*
constructed by the Company over the past year, as well as four rigs
moved from international locations to the U.S.
*FlexRig(TM) hereinafter referred to as FlexRig.
2
Revenues and profitability were flat in the Company's U.S. offshore
platform rig business, even though rig utilization for the Company's
fleet fell to 81% during the quarter, compared to 89% in the previous
quarter, and 100% in last year's third quarter. Performance for the
quarter was helped by reduced operating costs and the commencement of
work for the Company's new offshore platform Rigs 205 and 206.
Operating profit for the Company's international operations fell to
$3,547,000 for the third quarter, compared with $4,416,000 for the
previous quarter, and $7,958,000 for last year's third quarter. Rig
utilization averaged 48% for the current quarter, compared with 58% in
the previous quarter, and 60% in last year's third quarter. Rig
activity continued to be low in all Company international locations
except in Ecuador where 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.
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 fiscal 2003 of
the FlexRig3 project, it is estimated that the H&P land rig fleet in
the U.S. will total 83 rigs, representing a 43% increase over the 58
rigs available during the recent quarter.
To help finance the FlexRig3 construction and future capital
requirements, the Company is currently negotiating a $200,000,000
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 financial
flexibility, the Company recently sold a portion of its stock
portfolio, generating $36,819,000 of gross proceeds, and also increased
its revolving bank lines of credit to a total of $175,000,000. The
Company currently has bank borrowings of $50,000,000 and its remaining
stock portfolio has a market value of approximately $170,000,000.
3
Oil and Gas Division
As announced on February 25, 2002, the Company and Key Production
Company, Inc. (Key) have signed a definitive agreement that provides
for Helmerich & Payne, Inc. to spin off its Oil and Gas Division to its
shareholders and for the newly spun company to combine with Key. The
combined company, named Cimarex Energy Co., will be a new publicly
traded exploration and production company. The boards of directors of
H&P and Key have each unanimously approved the contemplated
transaction. The transaction will close after receipt of necessary Key
shareholder and regulatory approvals, including the receipt of a
favorable letter ruling from the Internal Revenue Service. Closing will
likely occur prior to the end of the Company's fiscal year (September
30, 2002). Approval of the transaction by H&P's shareholders will not
be required. Subject to a favorable IRS ruling, it is anticipated that
the transaction will be tax free to H&P and will be tax deferred to the
shareholders of H&P and Key. Application will be made for Cimarex
shares to be listed on the New York Stock Exchange.
During the third quarter, the Company's Oil and Gas Division recorded
improved operating profit over the previous quarter of this year, but
significantly lower than recorded for last year's third quarter.
Operating profit for the current quarter was $8,540,000, compared with
$3,985,000 during the previous quarter, and $24,083,000 during last
year's third quarter. The average price received for the Company's
natural gas production was $2.94 per mcf during the recent quarter,
compared with $2.05 in the previous quarter, and $4.27 per mcf for last
year's third quarter. Oil prices averaged $24.34 per barrel during the
recent quarter, compared with $20.11 during the previous quarter, both
down from the $26.12 per barrel received for Company oil production
during last year's third quarter. Production volumes were flat in both
natural gas and oil compared with the previous quarter, but were down
in both categories compared with the third quarter of last year.
Operating profit for this quarter improved over last quarter due
primarily to the improvement in natural gas prices, even though dry
hole, depreciation and depletion expenses were up over the previous
quarter. Additionally, there was an impairment charge on producing
properties for the quarter of $2,464,000.
4
Outlook
Guidance for Helmerich & Payne, Inc.'s net income for fiscal year 2002
remains the same as that announced previously. Net income for the year
is anticipated to be in the range of $1.00 to $1.10 per share,
exclusive of the $0.31 per share net income recorded for gains from the
sale of equity securities. This year's earnings guidance assumes a full
year of income from the Company's Oil and Gas Division.
Company President and C.E.O., Hans Helmerich commented, "Although
industry conditions remain soft at this point, we continue to be
encouraged by the market's response to the planned spin/merge and the
selection of Key Production Company as Cimarex's merger partner.
Additionally, recent field performance data are confirming reasons why
the H&P FlexRig is in high demand and underscores our enthusiasm for
the FlexRig3 construction program."
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 60 U.S. land rigs, 12 U.S. platform rigs located in
the Gulf of Mexico, and 33 rigs located in South America. Of the 60
U.S. land rigs currently available, 20 are the H&P-designed FlexRig.
The Company is scheduled to complete the construction of an additional
23 FlexRigs to be put in service over the next 12 to 14 months.
Helmerich and Payne, Inc.'s conference call/web cast is scheduled for
this afternoon at 3:30 EDT (2:30 CDT). To listen, go to
http://www.firstcallevents.com/service/ajwz361263400gf12.html. Due to
applicable SEC regulations, the Company has elected not to archive this
conference call on its website.
Forward-Looking Statements
It should be noted that this announcement contains certain statements
that may be deemed to be "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include, without limitation, statements
regarding the consummation of the proposed spin-off and merger, its
effect on future earnings, cash flow or
5
other operating results, the expected closing date of the proposed
spin-off and merger, any other effect or benefit of the proposed
spin-off and merger, the tax treatment of the proposed spin-off and
merger and the combined company, market prospects, and any other
statements that are not historical facts. H&P and Key strongly
encourage readers to note that some or all of the assumptions upon
which such forward-looking statements are based are beyond their
ability to control or estimate precisely, and may in some cases be
subject to rapid and material changes. Such assumptions include, but
are not limited to, costs and difficulties related to the integration
of the businesses, costs, delays and other difficulties related to the
proposed spin-off and merger, closing conditions not being satisfied,
general market conditions prevailing in the exploration for and
development and production of oil and gas (including inflation or lack
of availability of goods and services, environmental risks, drilling
risks and regulatory changes), operating hazards and delays, actions by
customers and other third parties, the future price of oil and gas, and
other factors detailed in H&P's filings with the Securities and
Exchange Commission (the "SEC"), which are available free of charge on
the SEC's website at www.sec.gov. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated. H&P
and Key undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Additional Information
In connection with the proposed spin-off and merger, Key and Cimarex
filed with the SEC on May 9, 2002, a Registration Statement No.
333-87948 on Form S-4. Investors and security holders are urged to
carefully read the Registration Statement regarding the proposed
transaction because it contains important information. Investors and
security holders may obtain a free copy of the Registration Statement
and other documents containing information about Key and H&P's oil and
gas division, without charge, at the SEC's web site at www.sec.gov.
Copies of the Registration Statement and the SEC filings incorporated
by reference therein may also be obtained for free by directing a
request to either: Key Production Company, Inc., 707 Seventeenth
Street, Suite 3300, Denver, Colorado 80202, Attention: Sharon M. Pope,
Assistant Corporate Secretary; telephone 303-295-3995, fax:
303-295-3494, or Helmerich & Payne, Inc, Utica at Twenty-First Street,
Tulsa, Oklahoma
6
74114, Attention: Steven R. Mackey, Corporate Secretary; telephone
918-742-5531, fax 918-743-2671.
Participants in Solicitation
H&P and Cimarex and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from
Key's shareholders in connection with the proposed merger. Hans
Helmerich, Douglas E. Fears and Steven R. Mackey are currently
directors of Cimarex, and each of them and Steven R. Shaw are currently
officers of Cimarex (the "Cimarex Participants"). None of the Cimarex
Participants beneficially owns any shares of Cimarex common stock. The
Cimarex Participants are all executive officers of H&P. Information
concerning H&P's participants in the solicitation is set forth in H&P's
proxy statement dated January 25, 2002, which is filed with the SEC.
Key's shareholders may obtain additional information about the
interests of all such participants in the proposed merger by reading
Registration Statement No. 333-87948 on Form S-4 which was filed with
the SEC on May 9, 2002. Investors should read the Registration
Statement carefully before making any voting or investment decisions."
7
HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
06/30/02 09/30/01
--------------- ---------------
Consolidated Condensed Balance Sheets
ASSETS:
Total current assets $ 216,694 $ 331,412
Investments 167,356 200,286
Net property, plant, and equipment 978,414 818,404
Other assets 12,796 14,405
--------------- ---------------
TOTAL ASSETS $ 1,375,260 $ 1,364,507
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total current liabilities $ 83,953 $ 121,221
Total noncurrent liabilities 179,840 166,809
Long-term debt 50,000 50,000
Total Shareholders' Equity 1,061,467 1,026,477
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,375,260 $ 1,364,507
=============== ===============
Three Months Ended Nine Months Ended
June 30 June 30
2002 2001 2002 2001
-------------- -------------- -------------- --------------
Consolidated Statements of Income
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
INCOME TAX EXPENSE 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
Average common shares outstanding:
Basic 49,855 50,467 49,793 50,159
Diluted 50,574 51,256 50,306 50,941
8
HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
Three Months Ended Nine Months Ended
June 30 June 30
2002 2001 2002 2001
-------------- -------------- -------------- --------------
Financial Results - Lines of Business
SALES AND OTHER REVENUES:
Contract Drilling - Domestic $ 80,586 $ 93,316 $ 251,379 $ 228,769
Contract Drilling - International 31,380 40,527 109,643 114,346
-------------- -------------- -------------- --------------
Total Contract Drilling 111,966 133,843 361,022 343,115
-------------- -------------- -------------- --------------
Exploration and Production 32,538 52,337 80,385 184,900
Natural Gas Marketing 13,193 23,508 38,995 83,661
-------------- -------------- -------------- --------------
Total Oil and Gas 45,731 75,845 119,380 268,561
-------------- -------------- -------------- --------------
Real Estate 2,189 2,250 6,649 8,826
Other 25,581 5,284 28,139 10,839
-------------- -------------- -------------- --------------
Total Revenues $ 185,467 $ 217,222 $ 515,190 $ 631,341
============== ============== ============== ==============
OPERATING PROFIT (LOSS):
Contract Drilling - Domestic $ 14,360 $ 30,305 $ 55,709 $ 67,995
Contract Drilling - International 3,547 7,958 11,840 19,311
-------------- -------------- -------------- --------------
Total Contract Drilling 17,907 38,263 67,549 87,306
-------------- -------------- -------------- --------------
Exploration and Production 8,649 23,932 7,696 95,047
Natural Gas Marketing (109) 151 1,330 4,817
-------------- -------------- -------------- --------------
Total Oil and Gas 8,540 24,083 9,026 99,864
-------------- -------------- -------------- --------------
Real Estate 1,340 1,008 4,073 5,312
-------------- -------------- -------------- --------------
Total Operating Profit 27,787 63,354 80,648 192,482
-------------- -------------- -------------- --------------
OTHER 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
============== ============== ============== ==============
Average Production and Prices
Production
Oil - Barrels Per Day 2,044 2,224 2,052 2,303
Natural Gas - Mcf Per Day 103,511 117,782 105,450 117,500
Sales Prices
Oil - $ Per Barrel $ 24.34 $ 26.12 $ 21.33 $ 28.65
Natural Gas - $ Per Mcf $ 2.94 $ 4.27 $ 2.34 $ 5.16
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: July 24, 2002
10