Helmerich & Payne Reports Net Income of $102 Million for Q1
Helmerich & Payne, Inc. reported net income of $102,054,000 ($0.96 per diluted share) from operating revenues of $473,644,000 for its second fiscal quarter ended March 31, 2008, compared with net income of $106,861,000 ($1.02 per diluted share) from operating revenues of $372,536,000 during last year's second fiscal quarter ended March 31, 2007. Included in this year's second quarter net income are $0.04 per share of after-tax gains from the sale of portfolio securities and drilling equipment. Included in net income for the second fiscal quarter of 2007 was approximately $0.18 per share from after-tax gains related to the sale of two platform rigs, and $0.05 per share from after-tax gains related to an ongoing insurance settlement for hurricane damages to offshore platform Rig 201 and other asset sales.
For the six months ended March 31, 2008, the Company reported net income of $209,884,000 ($1.98 per diluted share) from operating revenues of $930,307,000, compared with net income of $217,647,000 ($2.08 per diluted share) from operating revenues of $758,935,000 during the six months ended March 31, 2007. Included in net income were after-tax gains from the sale of portfolio securities and drilling equipment, including insurance proceeds, of $0.07 per share for the first six months of fiscal 2008, and $0.39 per share for the first six months of fiscal 2007.
Company President and C.E.O. Hans Helmerich commented, "During the Company's second quarter, we experienced declines in our offshore and international business, while our U.S. land segment continued to perform at historically high levels. As we move into the second half of the fiscal year, we expect to deliver operating income growth in all three of our drilling segments. As evidenced by our announcement today, we continue to see a very encouraging level of demand for new H&P FlexRigs, which have clearly become the standard for reliability, performance and well cost efficiencies in U.S. land drilling. With energy market conditions, both domestic and internationally, pointing toward increasing and more challenging drilling activity, we are very well positioned to compete and continue to gain market share while delivering attractive returns to our shareholders."
The Company's U.S. land rig business continued to experience an increase in revenue day activity and higher average rig revenue per day during the quarter. The increase in daily revenue, however, was more than offset by daily field cost increases. Segment operating income from the Company's U.S. land rig operations was up substantially from one year ago, but relatively flat sequentially with $143,841,000 of operating income during this year's first fiscal quarter and $143,740,000 operating income during this year's second quarter. The Company recorded a sequential $409 increase in rig revenue per day to $24,415, which is the segment's highest quarterly average in the Company's history and reflects the strong dayrate premium that the Company's fleet commands in the U.S. land market. However, average rig expenses increased by $662 to $11,557 per day. As a result, the average rig margin per day decreased sequentially by $253 to $12,858 per day. The Company's U.S. land rig utilization was 94% during this year's second quarter, compared with 97% for last year's second quarter and 95% for this year's first quarter. Additionally, the Company's U.S. land rig activity increased 3% sequentially to 14,272 revenue days during this year's second quarter, as more newly constructed rigs were deployed to the field. Given improving market conditions, the Company expects continued expansion in its U.S. land rig activity during the third fiscal quarter, as well as strong daily rig margins in the segment.
Segment operating income for the Company's offshore operations was $3,603,000 for this year's second quarter, compared with $3,805,000 for last year's second quarter and $4,114,000 for this year's first quarter. Average rig utilization in the offshore segment increased sequentially from 56% to 65% during the quarter ending March 31, 2008, and is expected to increase to over 80% during the current third fiscal quarter. As a result and in combination with anticipated improvement in average daily rig margins in the third quarter, the Company expects offshore segment operating income to increase from the second to the third fiscal quarter. All nine of the Company's offshore segment rigs are contracted, eight of which are currently active. The ninth rig is scheduled to commence operations in the second quarter of fiscal 2009.
Segment operating income for the Company's international land operations was $12,752,000 for this year's second quarter, compared with $19,874,000 for last year's second quarter and $21,156,000 for this year's first quarter. The sequential decline this year was mostly attributable to an adjustment of $5.9 million relating to the depreciation of certain assets recorded in prior years. (This adjustment had a negative impact to the second quarter's net income of approximately $0.04 per share.) As expected, the decline in segment operating income was also attributable to a reduction in average rig utilization from 81% to 73% during the second quarter. The average rig margin per day corresponding to the quarter was $14,396, or 2% higher than that of the first quarter. Average international rig utilization is expected to increase to over 75% during the third fiscal quarter ending June 30, 2008.