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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Helmerich and Payne Inc | NYSE:HP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.03 | -0.08% | 37.80 | 116 | 14:05:11 |
Helmerich & Payne, Inc. (NYSE: HP) reported income of $31 million or $0.27 per diluted share from operating revenues of $615 million for the quarter ended December 31, 2019, compared to net income of $41 million, or $0.37 per diluted share, on revenues of $649 million for the quarter ended September 30, 2019. The net income per diluted share for the first fiscal quarter of 2020 and the fourth fiscal quarter of 2019 include $0.14 and $(0.01), respectively, of after-tax gains and losses comprised of select items(3). For the first fiscal quarter, select items(3) were comprised of:
Net cash provided by operating activities was $112 million for the first quarter of fiscal 2020 compared to $196 million for the fourth fiscal quarter of fiscal 2019. The timing of certain accruals and payments and a seasonal slowdown in receivable collections combined with modestly lower activity contributed to the sequential decline in operating cash flow.
President and CEO John Lindsay commented, “As we look back on the challenges the industry experienced in 2019, our leadership position and performance continued to demonstrate our ability to deliver value while adapting to rapidly changing market conditions. This quarter's results reflect the momentum of those successes.
“H&P continued to gain market share during the quarter while the overall industry rig count declined. This is indicative of the growing preference for super-spec(4) rigs and the performance these rigs deliver relative to legacy SCR rigs, which still represented roughly 15% of the unconventional activity at calendar year-end. We believe this replacement trend will persist as our super-spec FlexRig fleet's performance and efficiency gains create value for our customers.
"H&P remains committed to developing new pricing models that enable us to share in an equitable portion of the value created. While performance and commodity-based contracts made up 10% of our U.S. contract mix during the first fiscal quarter, today we have approximately 15% of our active U.S. FlexRig fleet contracted under non-traditional dayrate contracts, the majority of which are performance-based contracts.
“We are encouraged as we head into fiscal 2020. For the first time in four quarters our ending rig count was sequentially higher than the previous quarter's ending rig count. We believe capital discipline by our customers will remain a prevailing theme and we expect industry activity to look similar to the average level experienced during the second half of calendar 2019, which implies a modest increase from current levels.
“Our H&P Technologies (HPT) segment solutions continue to gain momentum with customers, particularly AutoSlide, our software that automatically controls the rig to execute steering of the well with a simple press of a button. To date, AutoSlide's deployment count is more than 150 wells, executing the drilling of the vertical, curve and horizontal wellbore totaling over 2.6 million feet. Customers using AutoSlide are seeing significant benefits from wellbore quality and placement in the forms of efficiency, predictability, and risk mitigation that only automation can provide.
"The power of predictability in performance has enabled our customers to optimize completion stages, increase contact with the reservoir in ways that are better for life of the well, and push the envelope on new methods and techniques that ultimately lead to production increases. We believe these advantages are improving well economics, capital certainty and becoming overriding factors for increasing adoption of our software solutions.
“Turning to our international operations, we remain optimistic about the opportunities we are seeing in the Middle East. Our rigs in the Middle East are now fully utilized and prospects for further growth will likely result in exporting additional FlexRig drilling rigs from the U.S. In Argentina, the Company has a strong market presence in the Vaca Muerta, and economic concerns notwithstanding, we continue to believe this world-class resource play remains an attractive area for further industry activity in the future.”
Senior Vice President and CFO Mark Smith also commented, "As we move into calendar 2020, we remain confident that our balance sheet strength and level of free cash flow generation will allow us to maintain industry leading returns to stockholders and have ample flexibility to take advantage of additional investment opportunities should they develop. H&P's cash flow from operations during the first fiscal quarter was impacted by several seasonal and one-time events. We expect it to be higher in the remaining quarters of the fiscal year. Our fiscal 2020 capex budget remains in the range we initially set, which is between $275 and $300 million.”
John Lindsay concluded, “The year 2020 is momentous for the Company as it is our centennial year. In keeping with this milestone, we remain focused on maintaining our position as the industry's most trusted partner in drilling productivity and technological innovation. H&P's unmatched expertise, experience and people are the linchpin of our leadership position as a drilling solutions provider. Along with our exceptional workforce, our best-in-class FlexRig fleet, balance sheet and leading-edge digital technology, we continue to enable well economics and returns that have strengthened our customer commitment of achieving shared, long-term success.”
Operating Segment Results for the First Quarter of Fiscal 2020
U.S. Land Operations:
Segment operating income decreased $2.6 million to $56.7 million sequentially. The decrease in operating results was primarily attributable to a decline in revenue days, which decreased by approximately 6% sequentially.
Adjusted average rig revenue per day increased slightly by $32 to $25,397(2) largely due to an increase in our FlexServices (trucking, casing running, rental equipment) during the quarter. The adjusted average rig expense per day increased sequentially by $53 to $14,987(2). Corresponding adjusted average rig margin per day decreased $21, less than half of a percent, to $10,410(2).
The segment’s depreciation expense for the quarter includes non-cash charges of $1.3 million for abandonments and accelerated depreciation related to used drilling rig components related to rig upgrades and scrapping of idle equipment, compared to similar non-cash charges of $4.6 million during the fourth fiscal quarter of 2019.
International Land Operations:
Segment operating income increased by $7.3 million to $3.1 million sequentially. The increase in operating income was primarily attributable to higher average margins per day and a foreign currency gain. Prior quarter results included a $3.5 million foreign currency loss related to our Argentina operations compared to an approximate $0.7 million foreign currency gain in the first fiscal quarter. Revenue days increased during the quarter by 1% to 1,619 while the average rig margin per day increased by $1,731 to $7,208.
Offshore Operations:
Segment operating income increased by $3.5 million to $6.3 million sequentially. The number of quarterly revenue days on H&P-owned platform rigs was relatively flat sequentially at 550, while the average rig margin per day increased sequentially by $5,777 to $13,237 due to unexpected repair down time that adversely impacted prior quarter results. Segment operating income from management contracts on customer-owned platform rigs contributed approximately $2.9 million, compared to approximately $2.2 million during the prior quarter.
H&P Technologies:
The segment had an operating loss of $4.6 million compared to income of $0.6 million during the previous quarter. Prior quarter results benefited from a change in the fair value of a contingent liability. Excluding this benefit, HPT's operating loss decreased by $3.7 million sequentially. The sequential decrease in the operating loss was due primarily to higher revenues.
Operational Outlook for the Second Quarter of Fiscal 2020
U.S. Land Operations:
International Land Operations:
Offshore Operations:
HP Technologies:
Other Estimates for Fiscal 2020
Select Items Included in Net Income per Diluted Share
First Quarter of Fiscal 2020 net income of $0.27 per diluted share included $0.14 in after-tax gains comprised of the following:
Fourth Quarter of Fiscal 2019 net income of $0.37 per diluted share included $(0.01) in after-tax losses comprised of the following:
Conference Call
A conference call will be held on Tuesday, February 4, 2020 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Director of Investor Relations to discuss the Company’s fiscal first quarter 2020 results. Dial-in information for the conference call is (877) 876-9174 for domestic callers or (785) 424-1667 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet by logging on to the Company’s website at http://www.hpinc.com and accessing the corresponding link through the Investor Relations section by clicking on “INVESTORS” and then clicking on “Event Calendar” to find the event and the link to the webcast.
About Helmerich & Payne, Inc.
Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. H&P’s fleet includes 299 land rigs in the U.S., 32 international land rigs and eight offshore platform rigs. For more information, see H&P online at www.hpinc.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s future financial position, operations outlook, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s SEC filings, including but not limited to its annual report on Form 10‑K and quarterly reports on Form 10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.
Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, and AutoSlide, which may be registered or trademarked in the U.S. and other jurisdictions.
(1) Operating gross margin defined as operating revenues less direct operating expenses.
(2) See the Selected Statistical & Operational Highlights table(s) for details on the revenues or charges excluded on a per revenue day basis. The inclusion or exclusion of these amounts results in adjusted revenue, expense, and/or margin per day figures, which are all non-GAAP measures.
(3) See the corresponding section of this release for details regarding the select items.
(4) The term “super-spec” herein refers to rigs with the following specifications: AC drive, 1,500 hp drawworks, 750,000 lbs. hookload rating, 7,500 psi mud circulating system and multiple-well pad capability.
HELMERICH & PAYNE, INC.
(Unaudited)
(in thousands, except per share data)
Three Months Ended
December 31,
September 30,
December 31,
2019
2019
2018
CONSOLIDATED STATEMENTS OF OPERATIONS
Operating revenues
Contract drilling services
$
611,398
$
645,759
$
737,358
Other
3,259
3,291
3,240
614,657
649,050
740,598
Operating costs and expenses
Contract drilling services operating expenses, excluding depreciation and amortization
389,206
430,778
487,593
Other operating expenses
11,545
1,072
1,274
Depreciation and amortization
130,131
134,887
141,460
Research and development
6,878
6,121
7,019
Selling, general and administrative
49,808
49,812
54,508
Gain on sale of assets
(4,279
)
(12,641
)
(5,545
)
583,289
610,029
686,309
Operating income (loss) from continuing operations
31,368
39,021
54,289
Other income (expense)
Interest and dividend income
2,214
2,607
2,450
Interest expense
(6,100
)
(8,043
)
(4,720
)
Gain (loss) on investment securities
2,821
(4,260
)
(42,844
)
Gain on sale of subsidiary
14,963
—
—
Other
(399
)
(546
)
541
13,499
(10,242
)
(44,573
)
Income from continuing operations before income taxes
44,867
28,779
9,716
Income tax provision (benefit)
14,138
(13,110
)
1,352
Income from continuing operations
30,729
41,889
8,364
Income from discontinued operations before income taxes
7,457
10,050
12,665
Income tax provision
7,581
10,763
2,070
Income (loss) from discontinued operations
(124
)
(713
)
10,595
Net income
$
30,605
$
41,176
$
18,959
Basic earnings (loss) per common share:
Income from continuing operations
$
0.27
$
0.38
$
0.07
Income (loss) from discontinued operations
$
—
$
(0.01
)
$
0.10
Net income
$
0.27
$
0.37
$
0.17
Diluted earnings (loss) per common share:
Income from continuing operations
$
0.27
$
0.38
$
0.07
Income (loss) from discontinued operations
$
—
$
(0.01
)
$
0.10
Net income
$
0.27
$
0.37
$
0.17
Weighted average shares outstanding (in thousands):
Basic
108,555
108,896
109,142
Diluted
108,724
108,950
109,425
HELMERICH & PAYNE, INC.
(Unaudited)
(in thousands)
December 31,
September 30,
CONDENSED CONSOLIDATED BALANCE SHEETS
2019
2019
Assets
Cash and cash equivalents
$
355,010
$
347,943
Short-term investments
57,044
52,960
Other current assets
742,590
714,183
Total current assets
1,154,644
1,115,086
Investments
35,149
31,991
Property, plant and equipment, net
4,412,359
4,502,084
Other noncurrent assets
239,358
190,354
Total Assets
$
5,841,510
$
5,839,515
Liabilities and Shareholders' Equity
Current liabilities
$
419,347
$
410,238
Long-term debt, net
479,355
479,356
Other noncurrent liabilities
951,828
922,357
Noncurrent liabilities - discontinued operations
15,443
15,341
Total shareholders’ equity
3,975,537
4,012,223
Total Liabilities and Shareholders' Equity
$
5,841,510
$
5,839,515
HELMERICH & PAYNE, INC.
(Unaudited)
(in thousands)
Three Months Ended
December 31,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
2019
2018
OPERATING ACTIVITIES:
Net income
$
30,605
$
18,959
Adjustment for (income) loss from discontinued operations
124
(10,595
)
Income (loss) from continuing operations
30,729
8,364
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
130,131
141,460
Amortization of debt discount and debt issuance costs
444
329
Provision for bad debt
(2,069
)
873
Stock-based compensation
10,201
7,158
(Gain) loss on investment securities
(2,821
)
42,844
Gain on sale of assets
(4,279
)
(5,545
)
Gain on sale of subsidiary
(14,963
)
—
Deferred income tax (benefit) expense
(7,966
)
1,107
Other
(139
)
168
Changes in assets and liabilities
(27,487
)
12,750
Net cash provided by operating activities from continuing operations
111,781
209,508
Net cash used in operating activities from discontinued operations
—
(26
)
Net cash provided by operating activities
111,781
209,482
INVESTING ACTIVITIES:
Capital expenditures
(46,021
)
(196,094
)
Purchase of short-term investments
(28,948
)
(31,324
)
Payment for acquisition of business, net of cash acquired
—
(2,781
)
Proceeds from sale of short-term investments
25,000
31,860
Proceeds from sale of subsidiary
15,056
—
Proceeds from asset sales
11,878
11,609
Net cash used in investing activities
(23,035
)
(186,730
)
FINANCING ACTIVITIES:
Dividends paid
(77,602
)
(78,122
)
Debt issuance costs paid
—
(3,912
)
Proceeds from stock option exercises
4,100
1,954
Payments for employee taxes on net settlement of equity awards
(3,455
)
(6,267
)
Other
(445
)
0
Net cash used in financing activities
(77,402
)
(86,347
)
Net increase (decrease) in cash and cash equivalents and restricted cash
11,344
(63,595
)
Cash and cash equivalents and restricted cash, beginning of period
382,971
326,185
Cash and cash equivalents and restricted cash, end of period
$
394,315
$
262,590
Three Months Ended
December 31,
September 30,
December 31,
SEGMENT REPORTING (in thousands, except operating statistics)
2019
2019
2018
U.S. LAND OPERATIONS
Operating revenues
$
508,828
$
545,060
$
619,425
Direct operating expenses
327,292
356,704
407,852
Research and development
259
188
166
Selling, general and administrative expense
10,861
9,864
11,656
Depreciation
113,726
119,060
124,003
Segment operating income
$
56,690
$
59,244
$
75,748
Revenue days
17,684
18,765
21,933
Average rig revenue per day
$
25,405
$
25,478
$
25,047
Average rig expense per day
14,987
15,440
15,400
Average rig margin per day
$
10,418
$
10,038
$
9,647
Rig utilization
64
%
68
%
68
%
INTERNATIONAL LAND OPERATIONS
Operating revenues
$
46,462
$
48,353
$
66,287
Direct operating expenses
34,075
43,119
47,539
Selling, general and administrative expense
1,455
1,399
2,281
Depreciation
7,817
8,042
9,837
Segment operating income (loss)
$
3,115
$
(4,207
)
$
6,630
Revenue days
1,619
1,598
1,758
Average rig revenue per day
$
27,714
$
28,199
$
35,575
Average rig expense per day
20,506
22,722
22,704
Average rig margin per day
$
7,208
$
5,477
$
12,871
Rig utilization
57
%
56
%
60
%
OFFSHORE OPERATIONS
Operating revenues
$
40,255
$
38,468
$
36,910
Direct operating expenses
30,045
32,148
26,305
Selling, general and administrative expense
1,137
1,004
769
Depreciation
2,745
2,499
2,668
Segment operating income
$
6,328
$
2,817
$
7,168
Revenue days
550
552
525
Average rig revenue per day
$
43,839
$
43,072
$
35,635
Average rig expense per day
30,602
35,612
25,637
Average rig margin per day
$
13,237
$
7,460
$
9,998
Rig utilization
75
%
75
%
71
%
H&P TECHNOLOGIES
Operating revenues
$
18,552
$
13,878
$
14,736
Direct operating expenses
8,389
(874
)
6,326
Research and development
6,490
5,730
6,853
Selling, general and administrative expense
5,885
6,471
6,056
Depreciation and amortization
2,339
1,928
1,882
Segment operating income (loss)
$
(4,551
)
$
623
$
(6,381
)
Operating statistics exclude the effects of offshore platform management contracts and gains and losses from translation of foreign currency transactions and do not include reimbursements of “out-of-pocket” expenses in revenue per day, expense per day and margin per day calculations. Additionally, expense per day and margin per day calculations do not include intercompany expenses.
Reimbursed amounts were as follows:
Three Months Ended
December 31,
September 30,
December 31,
(in thousands)
2019
2019
2018
U.S. Land Operations
$
59,566
$
66,966
$
70,090
International Land Operations
1,587
3,291
3,746
Offshore Operations
9,902
7,899
5,750
Intercompany amounts were as follows:
Three Months Ended
December 31,
September 30,
December 31,
(in thousands)
2019
2019
2018
U.S. Land Operations - Direct operating expenses
$
2,699,000
$
—
$
—
Segment operating income for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses and corporate depreciation. The Company considers segment operating income to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.
The following table reconciles operating income (loss) per the information above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations.
Three Months Ended
December 31,
September 30,
December 31,
(in thousands)
2019
2019
2018
Operating income
U.S. Land
$
56,690
$
59,244
$
75,748
International Land
3,115
(4,207
)
6,630
Offshore
6,328
2,817
7,168
H&P Technologies
(4,551
)
623
(6,381
)
Other
(1,237
)
1,388
1,554
Segment operating income
$
60,345
$
59,865
$
84,719
Gain on sale of assets
4,279
12,641
5,545
Corporate selling, general and administrative costs and corporate depreciation
(33,256
)
(33,485
)
(35,975
)
Operating income
$
31,368
$
39,021
$
54,289
Other income (expense):
Interest and dividend income
$
2,214
$
2,607
$
2,450
Interest expense
(6,100
)
(8,043
)
(4,720
)
Gain (loss) on investment securities
2,821
(4,260
)
(42,844
)
Gain on sale of subsidiary
14,963
—
—
Other
(399
)
(546
)
541
Total unallocated amounts
13,499
(10,242
)
(44,573
)
Income from continuing operations before income taxes
$
44,867
$
28,779
$
9,716
SUPPLEMENTARY STATISTICAL INFORMATION
Unaudited
SELECTED STATISTICAL & OPERATIONAL HIGHLIGHTS
(Used to determine adjusted per day statistics for revenue and expense, which are non-GAAP measures)
Three Months Ended
(in dollars per revenue day)
December 31, 2019
September 30, 2019
U.S. Land Operations
Early contract termination revenue
$
8
$
113
Total impact on U.S. Land revenue per day:
8
113
Settlement of lawsuit
—
506
Total impact on U.S. Land expense per day:
—
506
U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS
February 3,
December 31,
September 30,
Q1FY20
2020
2019
2019
Average
U.S. Land Operations
Term Contract Rigs
128
132
124
128
Spot Contract Rigs
69
63
70
64
Total Contracted Rigs
197
195
194
192
Idle or Other Rigs
102
104
105
107
Total Marketable Fleet
299
299
299
299
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS
Number of Rigs Already Under Long-Term Contracts(1)
(Estimated Quarterly Average — as of 2/3/20)
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Segment
FY20
FY20
FY20
FY21
FY21
FY21
FY21
U.S. Land Operations
125.6
101.5
81.5
64.2
32.4
23.0
20.1
International Land Operations
7.2
2.1
1.0
1.0
1.0
1.0
1.0
Offshore Operations
—
—
—
—
—
—
—
Total
132.8
103.6
82.5
65.2
33.4
24.0
21.1
(1) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200203005799/en/
Dave Wilson, Director of Investor Relations investor.relations@hpinc.com (918) 588-5190
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