Helmerich & Payne Announces Earnings and New Contracts
Helmerich & Payne, Inc. reported net income of $293,858,000 ($2.77 per diluted share) from operating revenues of $1,224,813,000 for its fiscal year ended September 30, 2006, compared with net income of $127,606,000 ($1.23 per diluted share) from operating revenues of $800,726,000 for the previous fiscal year. Included in net income were gains from the sale of portfolio securities of $0.12 per share during fiscal 2006, and $0.16 per share during fiscal 2005.
Net income for the fourth quarter of fiscal 2006 was $98,496,000 ($0.93 per diluted share) from operating revenues of $358,799,000, compared with net income of $36,121,000 ($0.34 per diluted share) from operating revenues of $233,210,000 during last year's fourth quarter. Included in net income were gains from the sale of portfolio securities of $0.05 per share during the fourth quarter of 2006, and less than $0.01 per share during the fourth quarter of 2005. This year's fourth quarter benefited from a lower effective tax rate of 27.2%, compared to 37.8% during the previous quarter, primarily due to adjustments made to certain international deferred tax accounts.
Helmerich & Payne, Inc. also announced that it had signed separate three-year term agreements with three exploration and production companies to operate a total of seven new FlexRigs®. Other terms and customer names were not disclosed. This brings to 73, the total number of new FlexRigs to be built by H&P with at least three-year commitments that have been announced by the company since March, 2005. To date, 28 of the new builds have been completed, with the remaining 45 scheduled for completion by the end of calendar 2007.
Company President and C.E.O., Hans Helmerich commented, "The company posted another record year in 2006. Our earnings for the current year more than doubled our previous all-time high of one year ago. We are also pleased to announce seven additional FlexRig orders, bringing our newbuild book to 73. Significantly, these orders were secured during a time of market uncertainty and natural gas price volatility. We believe it is an indication of the customers' strong preference for the FlexRig as a solution over conventional rigs even if overall rig availability becomes less of an issue. Our contention is that customer demand for drilling rigs that provide improved efficiencies, safety, and reliability will continue to push opportunities for the company and provide us with attractive growth prospects."
Segment operating income in the company's U.S. land rig operations increased to $103,679,000 for the fourth quarter of fiscal 2006, from $56,028,000 for the same period last year, and from $93,708,000 for this year's third quarter. Average revenue per rig day rose to $24,343 and cash margins per rig day to $13,288 for this year's fourth quarter, compared with $23,503 revenue per rig day and $12,938 cash margins per rig day for the previous quarter. During the fourth quarter of 2006, rig utilization averaged 99% (including one rig recently returned from an international location and not currently marketed) compared with 95% during last year's fourth quarter, and 100% during this year's third quarter. Total U.S. land rig revenue days increased by 861. The company anticipates similar increases in activity days in the coming quarters as additional new builds come on line at the rate of approximately three to four per month. Slightly over 50% of the segment's potential activity days are already contracted for fiscal 2007.
The company's offshore platform rig business reported segment operating income of $6,892,000 for the fourth quarter of fiscal 2006, compared with $4,720,000 for the fourth quarter 2005 and $7,635,000 for the third quarter of 2006. Rig utilization was 69% during this year's fourth quarter, compared with 65% during last year's fourth quarter, and 73% during this year's third quarter. Of the company's 11 platform rigs, six are currently active, one is contracted and waiting on location, and two of the four idle rigs are currently held for sale pursuant to a purchase option agreement. If the purchase option is exercised, the transaction will close in the second quarter of fiscal 2007.
International segment operating income during the fourth quarter of 2006 was $17,077,000, compared with $3,910,000 for last year's fourth quarter, and $17,685,000 for this year's third quarter. Rig utilization for international operations rose to 95% for the quarter, up from 85% during last year's fourth quarter, and 93% during this year's third quarter. For comparative purposes, third quarter international segment operating income was positively impacted by $2.1 million resulting from billings to the company's major customer in Venezuela, PDVSA, for retroactive increases in dayrates attributable to work performed during the second quarter of 2006.
The company also announced that during the fourth quarter of fiscal 2006, it had purchased over 1.3 million shares of Helmerich & Payne stock. To date during the first quarter of fiscal 2007, the company purchased an additional 682,000 shares of the company's stock, for a total of approximately 2.0 million shares. To partially fund the purchases, the company sold 150,000 shares of Schlumberger during September, and 500,000 additional shares to date since October 1. In total, the sale of 650,000 shares of Schlumberger has generated pre-tax proceeds of approximately $39.1 million.
Helmerich & Payne, Inc. is a contract drilling company that owns 117 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 155 rigs. Included in the total fleet of 155 rigs are 78 H&P-designed and operated FlexRigs. The company has reached contractual agreements with customers that will result in the construction of 45 additional FlexRigs.
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