Helmerich & Payne Announces Second Quarter Results

Helmerich & Payne, Inc. (NYSE: HP) reported net income of $6,048,000 ($0.12 per diluted share) from revenues of $151,186,000 for its second fiscal quarter ended March 31, 2004, compared with net income of $2,574,000 ($0.05 per diluted share) from revenues of $126,320,000 during last year's second fiscal quarter ended March 31, 2003. Net income for this year's second quarter includes $4,337,000 ($0.09 per share) of after-tax gains from the sale of portfolio securities. There were no material gains from portfolio sales in last year's second quarter. Although net income for the Company was up compared with both last year's second quarter and this year's first quarter, total operating profit from the Company's core contract drilling operations was down from both comparative periods. The primary reasons for the decline were a $1.4 million currency devaluation loss in Venezuela (previously announced February 13, 2004), reduced profitability in the Company's offshore platform rig segment, and higher depreciation expenses due to four additional FlexRigs(R) brought into service during the first and second quarter. The decline from the previous quarter was further accentuated by decreases in rig activity and profitability in the Company's operations in Colombia and Ecuador, and the higher effective income tax rate caused by the tax treatment of the devaluation loss in Venezuela.

U.S. Land
U.S. land rig utilization for this year's second quarter increased to 86%, from 81% the previous quarter and 80% for last year's second quarter. Cash margins per rig day for the second quarter, ($3,270 per day) were down from the previous quarter ($3,499), but up from last year's second quarter ($3,038). Operating profit declined sequentially due to the reduction in operating margin and an $857,000 increase in depreciation expense, even though total revenue days increased by over 7% to 6,758 days in the second quarter.

U. S. Offshore Platform
Operating profit for the U.S. offshore platform rig segment fell slightly sequentially, but was down by roughly 50% compared to last year's second quarter. During this year's second quarter, rig utilization for the Company's 12 rigs was the same as in the previous quarter (42%) but was down from the 50% recorded during last year's second quarter. Since last year's second quarter, one rig has been stacked and two rigs that were working on full dayrate were changed to standby status with reduced cash margins. A sixth H&P rig commenced operations in early April, bringing utilization to 50% and adding the potential for modest improvement next quarter.

International rig utilization was generally flat with the previous quarter at slightly over 50%, compared with 41% during last year's second quarter. As mentioned above, segment operating profit was down sequentially due to a currency devaluation loss in Venezuela and declines in activity in Colombia and Ecuador.

Company President and C.E.O., Hans Helmerich commented, "The improvement in activity levels continues to materialize very slowly. This is particularly true for our two most challenging segments, the offshore platform and international operations, which together constitute a third of our rig fleet. We share the hope of many in the industry that while the pace of improvement has been frustrating, the unfolding up cycle will be longer in duration than previous cycles."

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