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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-4221
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-0679879
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Utica at Twenty-first Street, Tulsa, Oklahoma 74114
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (918) 742-5531
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock ($0.10 par value) New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
(Continued)
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At December 16, 1994, the aggregate market value of the voting stock held by
non-affiliates was $583,364,215.
Number of shares of common stock outstanding at December 16, 1994:
24,718,660.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Security Holders for the fiscal year ended September
30, 1994 -- Parts I, II, and IV.
(2) Proxy Statement for Annual Meeting of Security Holders to be held
March 1, 1995 -- Part III.
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 1994
PART I
Item 1. BUSINESS
Helmerich & Payne, Inc., incorporated under the laws of the State of
Delaware on February 3, 1940, and successor to a business originally organized
in 1920, is engaged primarily in the exploration, production, and sale of crude
oil and natural gas and in contract drilling of oil and gas wells for others.
These activities account for the major portion of its operating
revenues. The Registrant is also engaged in the manufacture and distribution
of odorants for use in the gas transmission and distribution industry, and in
the ownership, development, and operation of commercial real estate.
The Registrant is organized into four separate autonomous operating
divisions being contract drilling; oil and gas exploration, production and
natural gas marketing; chemicals; and real estate. While there is a limited
amount of intercompany activity, each division operates essentially
independently of the others. Operating decentralization is balanced by a
centralized finance division, which handles all accounting, data processing,
budgeting, insurance, cash management, and related activities.
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Most of the Registrant's current exploration effort is concentrated in
Louisiana, Oklahoma, Texas, Wyoming, and the Hugoton Field of western Kansas.
The Registrant also explores from time to time in the Rocky Mountain area, New
Mexico, Alabama, Florida, and Mississippi. The Registrant's gas production is
sold to and resold by a marketing subsidiary. This subsidiary also purchases
gas from unaffiliated third parties for resale.
The Registrant's contract drilling is primarily conducted domestically
in Alabama, Oklahoma, Texas, Mississippi, and Louisiana, and offshore from
platforms in the Gulf of Mexico and offshore California. The Registrant has
also operated during fiscal 1994 in five international locations: Venezuela,
Ecuador, Colombia, Trinidad, and Yemen.
The Registrant's odorants are manufactured in its plant in Baytown,
Texas, and the Registrant's real estate investments are located in Tulsa,
Oklahoma, where the Registrant has its executive offices.
CONTRACT DRILLING
The Registrant believes that it is one of the major land and offshore
platform drilling contractors in the western hemisphere. Operating in North
and South America and the Middle East, the Registrant specializes in deep
drilling in major gas producing basins of the United States and in drilling for
oil and gas in remote areas of the world. For its international operations,
the Registrant also constructs and operates rigs which are transportable by
helicopter. In the United States, the Registrant draws its customers primarily
from the major oil companies and the larger independents, which are the
companies generally engaged in deep drilling. The Registrant also drills for
its own oil and gas
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division. In South America and the Middle East, the Registrant's current
customers include, respectively, the Venezuelan state petroleum company and
major international oil companies. BP EXPLORATION INC. (including its
affiliates) is the Registrant's largest single customer. Revenues from
drilling services performed for BP EXPLORATION INC. in fiscal 1994 totaled
approximately 14% of the Registrant's consolidated revenues.
The Registrant provides drilling equipment, personnel, and camps for
others on a contract basis for exploration and development of onshore areas and
for development from fixed platforms in offshore areas. Each of the drilling
rigs consists of engines, drawworks, a mast, pumps to circulate the drilling
fluid, blowout preventers, a drillstring, and related equipment. The intended
well depth and the drilling site conditions are the principal factors that
determine the size and type of rig most suitable for a particular drilling job.
A helicopter rig is one that can be disassembled into component part loads of
4,000 to 7,000 pounds and transported to remote locations by helicopter, cargo
plane, or other means.
The Registrant's workover rigs are equipped with engines, drawworks, a
mast, pumps, and blowout preventers (on a smaller scale than the drilling
rigs). A workover rig is used to complete a new well after the hole has been
drilled by a drilling rig, and to remedy various downhole problems that occur
in older producing wells.
The Registrant's contracts for drilling are obtained through
competitive bidding or as a result of negotiations with customers, and
sometimes cover multi-well and multi-year projects. Most of the contracts are
performed on a "daywork" basis, under which the Registrant
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charges a fixed rate per day, with the price determined by the location, depth,
and complexity of the well to be drilled, operating conditions, the duration of
the contract, and the competitive forces of the market. Current market
conditions involve an oversupply of drilling rigs for the work available. As a
consequence, the Registrant is and will be performing and bidding for contracts
on a combination "footage" and "daywork" basis, under which the Registrant
charges a fixed rate per foot of hole drilled to a stated depth, usually no
deeper than 15,000 feet, and a fixed rate per day for the remainder of the
hole. Contracts performed on a "footage" basis involve a greater element of
risk to the contractor than do contracts performed on a "daywork" basis.
Market conditions have also led the Registrant to accept "turnkey" contracts
under which the Registrant charges a fixed sum to deliver a hole to a stated
depth and agrees to furnish services such as testing, coring, and casing the
hole which are not normally done on a "footage" basis. "Turnkey" contracts
entail varying degrees of risk greater than the usual "footage" contract. The
Registrant believes that under current market conditions "daywork" basis
contract rates are too low to adequately compensate contractors and that
"footage" and "turnkey" basis contract rates do not adequately compensate
contractors for the added risks. However, the Registrant intends to remain in
the drilling contracting business in anticipation of a return to more favorable
market conditions. Contracts for use of the Registrant's drilling equipment
are "well-to-well" or for a fixed term. "Well-to-well" contracts are
cancelable at the option of either party upon the completion of drilling at any
one site, and fixed-term contracts customarily provide for
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termination at the election of the customer, with an "early termination
payment" to be paid to the contractor if a contract is terminated prior to the
expiration of the fixed term.
While current fixed term contracts are for one to three year periods,
some fixed term and well-to-well contracts are expected to be continued for
longer periods than the original terms, although the contracting parties have
no legal obligation to do so. Contracts generally contain renewal or
extension provisions exercisable at the option of the customer at prices
mutually agreeable to the Registrant and the customer, and in most instances
provide for additional payments for mobilization and demobilization. Contracts
for work in foreign countries generally provide for payment in United States
dollars, except for amounts required to meet local expenses; however,
increasingly there is a trend toward state petroleum companies insisting on
total payment in local currencies.
Domestic Drilling
The Registrant believes it is a major land and offshore platform
drilling contractor in the domestic market. At the end of September, 1994, the
Registrant had 47 rigs available for operations in the United States and had
management contracts for two operator owned rigs in offshore California.
The Registrant is competitively strongest in deep drilling rigs.
Twenty-six of its existing rigs are capable of drilling to depths in excess of
20,000 feet.
On June 30, 1994, the Registrant in a single transaction purchased 12
land drilling rigs and related equipment, together with a 14 acre
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equipment yard facility located in the state of Texas. The total purchase
price was approximately $15.5 million consisting of cash, a promissory note,
and certain contingent payment obligations. Since seven of such rigs are
considered medium depth rigs (optimum working depth of 12,000 to 15,000 feet),
Registrant believes that this acquisition should allow it to expand its
business into the shallow to medium depth drilling markets.
International Drilling
The Registrant's international drilling operations began in 1958 with
the acquisition of the Sinclair Oil Company's drilling rigs in Venezuela.
Helmerich & Payne de Venezuela, C.A., a wholly owned subsidiary of the
Registrant, is a leading drilling contractor in Venezuela. Beginning in 1972,
with the introduction of its first helicopter rig, the Registrant expanded into
other Latin American countries.
Venezuelan operations continue to be a significant part of
Registrant's operations. The Registrant presently owns and operates 15
drilling rigs in Venezuela and has labor contracts to operate two
government-owned drilling rigs in Venezuela. The Registrant has a utilization
rate of 90% for these rigs. During the fiscal year ended September 30, 1994,
the Venezuelan operations contributed 17% of the revenue generated by the
Registrant's international and domestic contract drilling activities. The
Registrant worked for all three Venezuelan producing companies during the
fiscal year ended September 30, 1994. Collectively, revenues from the three
producing companies amounted to
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approximately 9% of the Registrant's consolidated revenues. The Registrant
believes its relations with such producing companies are good.
During the mid-1970s, the Venezuelan government nationalized the
exploration and production business. At the present time it appears the
Venezuelan government will not nationalize the contract drilling business.
The Registrant in fiscal 1994 experienced unusual currency losses in
Venezuela totaling approximately $2.7 million. These losses were primarily
attributable to significant increases in the devaluation of the Venezuelan
currency and governmental restrictions in the conversion of Venezuelan currency
to United States dollars. See "Regulations and Hazards" pages I-9 through
I-11.
The Registrant's operations in Colombia continue to increase. The
Registrant presently owns and operates eight drilling rigs in Colombia. The
Registrant's utilization rate for such rigs was 88% as of the end of fiscal
1994. Four of such rigs are working in the last year of a three-year term
contract with a major international exploration and production company. During
fiscal 1994 the revenue generated by these four rigs contributed approximately
17% of the revenue generated by the Registrant's international and domestic
drilling activities.
In addition to its operations in Venezuela and Colombia, the
Registrant in fiscal 1994 owned and operated four rigs in Ecuador, one rig in
Trinidad, and one rig in Yemen. In Ecuador and Yemen, the contracts are with
large international oil companies.
In August of 1994, a newly formed venture owned 50% by Registrant and
50% by its affiliate, Atwood Oceanics, Inc., was awarded a term
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contract in Australia for the design, construction and operation of a new
generation platform rig. The rig will incorporate some of the latest
technology in instrumentation and remote control mechanization of drilling
equipment. It is presently anticipated that rig construction will be completed
in late 1995 with initial mobilization and related operations to commence in
early 1996.
During the first and second quarters of fiscal 1995, three rigs each
will be moved to Venezuela and Colombia from the United States and will be
operated under term contracts. In the first quarter of fiscal 1995, the rig in
Yemen will be moved to and stacked in Houston, Texas.
Competition
The contract drilling business is highly competitive. Competition in
contract drilling involves such factors as price, rig availability,
efficiency, condition of equipment, reputation, and customer relations.
Competition is primarily on a regional basis and may vary significantly by
region at any particular time. Drilling rigs can be readily moved from one
region to another in response to changes in levels of activity, and an
oversupply of rigs in any region may result.
The Registrant made a commitment to deep drilling in the early
1970's. During the past several years there has been what appears to the
Registrant to be an oversupply of unregulated natural gas. As a result, the
demand for deep drilling for gas has decreased. The expectation in the
industry is that the long term trend in domestic exploration will be toward
more and deeper wells.
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Regulations and Hazards
The drilling operations of the Registrant are subject to the many
hazards inherent in the business, including blowouts and well fires, which
could cause personal injury, suspend drilling operations, seriously damage or
destroy the equipment involved, and cause substantial damage to producing
formations and the surrounding areas.
The Registrant believes that it is adequately insured, with coverage
for comprehensive general liability, public liability, property damage
(including insurance against loss by fire and storm, blowout, and cratering
risks), and employer's liability. No insurance is carried against loss of
earnings. The Registrant's present coverage has been contracted through
fiscal 1995. However, in view of conditions generally in the liability
insurance industry, no assurance can be given that Registrant's present
coverage will not be cancelled during fiscal 1995 nor that insurance coverage
will continue to be available at rates considered reasonable.
International operations are subject to certain political, economic,
and other uncertainties not encountered in domestic operations, including risks
of expropriation of equipment as well as expropriation of a particular oil
company operator's property and drilling rights, taxation policies, foreign
exchange restrictions, currency rate fluctuations, and general hazards
associated with foreign sovereignty over certain areas in which operations are
conducted. There can be no assurance that there will not be changes in local
laws, regulations, and administrative requirements or the interpretation
thereof, any of which changes could have a material adverse effect on the
profitability of the Registrant's
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operations or on the ability of the Registrant to continue operations in
certain areas. Because of the impact of local laws, in certain areas the
Registrant's operations may, in the future, be conducted through entities in
which local citizens own interests and through entities (including joint
ventures) in which the Registrant holds only a minority interest, or pursuant
to arrangements under which the Registrant conducts operations under contract
to local entities. While the Registrant believes that neither operating
through such entities or pursuant to such arrangements nor the restructuring of
existing operations along such lines would have a material adverse effect on
the Registrant's operations or revenues, there can be no assurance that the
Registrant will in all cases be able to structure or restructure its operations
to conform to local law (or the administration thereof) on terms acceptable to
the Registrant. The Registrant further attempts to minimize the potential
impact of such risks by operating in more than one geographical area and by
attempting to obtain indemnification from operators against expropriation,
nationalization, and deprivation.
Many aspects of the operations of the Registrant are subject to
government regulation, including those relating to drilling practices and
methods and the level of taxation. In addition, various countries (including
the United States) have environmental regulations which affect drilling
operations. Drilling contractors may be liable for damages resulting from
pollution. Under United States regulations, drilling contractors must
establish financial responsibility to cover potential liability for pollution
of offshore waters. Generally, the Registrant is indemnified under drilling
contracts from environmental damages,
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except in certain cases of surface pollution, but the enforceability of
indemnification provisions in foreign countries may be questionable.
The Registrant believes that it is in substantial compliance with all
legislation and regulations affecting its operations in the drilling of oil and
gas wells and in controlling the discharge of wastes. To date, compliance has
not materially affected the capital expenditures, earnings, or competitive
position of the Registrant, although these measures may add to the costs of
operating drilling equipment in some instances. Further legislation or
regulation may reasonably be anticipated, and the effect thereof on operations
cannot be predicted.
OIL AND GAS DIVISION
The Registrant engages in the origination of prospects; the
identification, acquisition, exploration, and development of prospective and
proved oil and gas properties; the production and sale of crude oil,
condensate, and natural gas; and the marketing of natural gas. The Registrant
considers itself a medium-sized independent producer. All of the Registrant's
oil and gas operations are conducted in the United States.
Most of the Registrant's current exploration and drilling effort is
concentrated in Louisiana, Oklahoma, Texas, Wyoming and the Hugoton Field of
western Kansas. The Registrant also explores from time to time in the Rocky
Mountain area, New Mexico, Alabama, Florida and Mississippi.
The Registrant has commenced a 3-D seismic program in which 3-D
seismic surveys will be obtained in Kansas, Texas, Wyoming, Louisiana and
Oklahoma. The Registrant believes that these surveys will be of
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significant assistance in identifying potentially productive oil and gas
formations.
During the past fiscal year, the Registrant has reduced its
expenditures for exploration of fractured Austin Chalk reservoirs in south
central Louisiana. The Registrant in fiscal years 1993 and 1994, has
participated in the horizontal drilling and completion of four Austin Chalk
wells. Upon evaluation of the results of such wells, the Registrant has
elected to allow certain oil and gas leases covering approximately 14,763 acres
to expire during fiscal 1994. The Registrant's present efforts are
concentrated in the western portion of the original exploration area where it
holds acreage offsetting an Austin Chalk well which has recently been completed
by Oxy USA. Although this well has been initially productive of oil and gas,
it is premature to determine its commercial potential. The Registrant will
monitor production from this well to assist in the determination of the amount
of its participation, if any, in the additional drilling in the area and the
extent of its continued payment of annual rentals.
The Registrant's exploration and development program has covered a
range of prospects, from shallow "bread and butter" programs to deep,
expensive, high risk/high return wells. During fiscal 1994 the Registrant
participated in 38 development and/or wildcat wells, which resulted in new
discoveries of 8.4 bcf of gas and 208,361 barrels of oil and condensate. The
Registrant participated in six additional development wells, which resulted in
the development of 1.3 bcf of gas and 104,900 barrels of oil and condensate
which was previously classified as proved undeveloped reserves. A total of
$25,306,000 was spent in the
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Registrant's exploration and development program during fiscal 1994. This
figure is exclusive of expenditures for acreage. The Registrant's total
company-wide acquisition cost for acreage in fiscal 1994 was $4,893,094.
The Registrant spent $23,115,110 for the acquisition of proved oil and
gas reserves during fiscal 1994. As of September 30, 1994, remaining reserves
from such acquisitions totaled 19.5 bcf of natural gas and 157,484 barrels of
crude oil and condensate. Approximately 66% of such reserves are located in
western Oklahoma with the remainder being located in western Texas and southern
Louisiana. Many of these acquired properties have additional development
potential.
Market for Oil and Gas
The Registrant does not refine any of its production. The
availability of a ready market for such production depends upon a number of
factors, including the availability of other domestic production, crude oil
imports, the proximity and capacity of oil and gas pipelines, and general
fluctuations in supply and demand. The Registrant does not anticipate any
unusual difficulty in contracting to sell its production of crude oil and
natural gas to purchasers and end-users at prevailing market prices and under
arrangements that are usual and customary in the industry. However, the market
for natural gas has been in a state of oversupply for several years, and the
Registrant and its wholly owned subsidiary, Helmerich & Payne Energy Services,
Inc., have successfully developed markets with end-users, local distribution
companies, and natural gas brokers for gas produced from successful wildcat
wells or development wells. The Registrant is of the opinion that the
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supply/demand for natural gas is moving towards a state of equilibrium. Winter
demand and its effect on gas storage has a significant effect on natural gas
pricing. The stability of short-term prices for natural gas will largely
depend upon the demand during the heating season and the reduction of storage
throughout the United States. Other causes affecting supply/demand imbalances
may be federal regulation of the market; large quantities of developed gas
reserves in Canada and Mexico available for export by pipelines to the United
States; fuel switching between fuel oil and natural gas; development of coalbed
methane; and large quantities of liquefied natural gas in the Middle East,
Africa, and the Far East available for export to the United States.
Historically, the Registrant has had no long-term sales contracts for its crude
oil and condensate production. The Registrant continues its recent practice of
contracting for the sale of its Kansas and Oklahoma and portions of its west
Texas crude oil for terms of six to twelve months in an attempt to assure
itself of higher than posted prices for such crude oil production.
The Registrant, pursuant to various settlement agreements, has
previously terminated almost all its long-term gas sales contracts with
interstate pipelines. These actions previously resulted in an increase in gas
sales.
Competition
The Registrant competes with numerous other companies and individuals
in the acquisition of oil and gas properties and the marketing of oil and gas.
The Registrant continues to believe that it should prepare for increased
exploration activity without committing to a definite drilling timetable
involving large expenditures. The
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Registrant also believes that the intense competition for the acquisition of
gas producing properties will continue. Through its acquisition experience,
the Registrant believes it can still remain competitive and intends to continue
purchasing quality long-life oil and gas reserves. The Registrant's
competitors include major oil companies, other independent oil companies, and
individuals, many of whom have financial resources, staffs, and facilities
substantially greater than those of the Registrant. Many major oil companies
have committed much of their resources to offshore and international
acquisitions and exploration. Although the effect of these competitive factors
on the Registrant cannot be predicted with certainty, it would appear that the
withdrawal of major oil companies from domestic exploration and production will
provide increased domestic opportunities for the Registrant.
The Registrant has increased its exploration and development budget
for the fiscal year ending September 30, 1995. The Registrant intends to
continue to pursue the purchase of proven producing properties and to avail
itself of the opportunities for drilling and development.
Title to Oil and Gas Properties
The Registrant undertakes title examination and performs curative work
at the time properties are acquired. The Registrant believes that title to its
oil and gas properties is generally good and defensible in accordance with
standards acceptable in the industry.
Oil and gas properties in general are subject to customary royalty
interests contracted for in connection with the acquisitions of title, liens
incident to operating agreements, liens for current taxes, and other burdens
and minor encumbrances, easements, and restrictions. The
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Registrant believes that the existence of such burdens will not materially
detract from the general value of its leasehold interests.
Governmental Regulation in the Oil and Gas Industry
The Registrant's domestic operations are affected from time to time in
varying degrees by political developments and federal and state laws and
regulations. In particular, oil and gas production operations and economics
are affected by price control, tax, and other laws relating to the petroleum
industry; by changes in such laws; and by constantly changing administrative
regulations. Most states in which the Registrant conducts or may conduct oil
and gas activities regulate the production and sale of oil and natural gas,
including regulation of the size of drilling and spacing units or proration
units, the density of wells which may be drilled, and the unitization or
pooling of oil and gas properties. In addition, state conservation laws
establish maximum rates of production from oil and natural gas wells, generally
prohibit the venting or flaring of natural gas, and impose certain requirements
regarding the ratability of production. The effect of these regulations is to
limit the amounts of oil and natural gas the Registrant can produce from its
wells, and to limit the number of wells or locations at which the Registrant
can drill. In addition, legislation affecting the natural gas and oil industry
is under constant review. Inasmuch as such laws and regulations are frequently
expanded, amended, or reinterpreted, the Registrant is unable to predict the
future cost or impact of complying with such regulations. The Registrant
believes that its oil and gas operations currently are not materially affected
by such laws.
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The domestic production and sale of oil and gas are also subject to
regulation by United States federal authorities including the Federal Energy
Regulatory Commission ("FERC").
Regulatory Controls
The Registrant is subject to regulation by the FERC with respect to
various aspects of its domestic natural gas operations under the Natural Gas
Act ("NGA") and the Natural Gas Policy Act of 1978.
The Natural Gas Wellhead Decontrol Act of 1989 amended both the price
and non-price decontrol provisions of the Natural Gas Policy Act of 1978 for
the purpose of providing complete decontrol of first sales of natural gas by
January 1, 1993. The Registrant believes that substantially all of its gas is
decontrolled.
On April 8, 1992; August 3, 1992; and November 27, 1992, the FERC
issued Order 636, Order 636-A, and Order 636-B (collectively, "Order 636"),
respectively, which requires interstate pipelines to provide transportation
unbundled from their sales of gas. Also, such pipelines must provide
open-access transportation on a basis that is equal for all gas supplies.
Order 636 has been implemented through individual interstate pipeline
restructuring proceedings. Although Order 636 should provide the Registrant
with additional market access and more fairly applied transportation service
rates, it will also subject the Registrant to more restrictive pipeline
imbalance tolerances and greater penalties for violation of those tolerances.
Appeals of Order 636 are currently pending, and the Registrant cannot predict
the ultimate outcome of court review. Order 636 may be reversed in whole or in
part on review. Individual restructuring orders may also be reversed in whole
or in part,
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whether or not Order 636 is upheld. Assuming Order 636 is upheld in its
entirety, it initially appears that the Registrant will benefit from the
provisions of such Order.
The FERC has recently announced its intention to reexamine certain of
its transportation-related policies, including the appropriate manner for
setting rates for new interstate pipeline construction and the manner in which
interstate pipelines release transportation capacity under Order 636. While
any resulting FERC action would affect the Registrant only indirectly, these
inquiries are intended to further enhance competition in natural gas markets.
Under the NGA, natural gas gathering facilities are exempt from FERC
jurisdiction. The Registrant believes that its gathering systems meet the
traditional tests that the FERC has used to establish a pipeline's status as a
gatherer. Commencing in May 1994, the FERC has issued a series of orders in
individual cases that delineate its gathering policy. Among other matters, the
FERC slightly narrowed its statutory tests for establishing gathering status
and reaffirmed that it does not have jurisdiction over natural gas gathering
facilities and services and that such facilities and services are properly
regulated by state authorities. As a result, natural gas gathering may receive
greater regulatory scrutiny by state agencies. In addition, the FERC has
approved several transfers by interstate pipelines of gathering facilities to
unregulated gathering companies, including affiliates. This could allow such
companies to compete more effectively with independent gatherers. The FERC's
orders delineating its new gathering policy are subject to possible court
appeals. It is not possible at this time to predict the
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the ultimate effect of the new policy, although it could affect access to and
rates of interstate gathering service. However, the Registrant does not
presently believe the status of its facilities are affected by the FERC's
slight modification to its statutory criteria.
The Registrant's natural gas gathering operations may become subject
to additional safety and operational regulations relating to the design,
installation, testing, construction, operation, replacement, and management of
facilities. Pipeline safety issues have recently become the subject of
increasing focus in various political and administrative arenas at both the
state and federal levels. For example, federal legislation addressing pipeline
safety issues was considered in the most recent Congressional session, which,
if enacted, would have included a federal "one call" notification system and
certain new construction specifications. Similar or additional legislation is
likely to be proposed in the next federal legislative session. The Registrant
believes that the adoption of additional pipeline safety legislation will not
materially affect Registrant in light of its relatively minor gathering
operations.
On February 2, 1994, the Kansas Corporation Commission ("KCC") issued
an order which modified allowables applicable to wells within the Hugoton Gas
Field so that those proration units upon which infill wells had been drilled
would be assigned a larger allowable than those units without infill wells.
Such order was affirmed on appeal by the Kansas District Court on September 15,
1994. As a consequence of this decision, the Registrant believes that it will
be necessary in the near future to drill an additional 75 to 90 wells with the
total costs to Registrant
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ranging from $7.5 to $9 million. The KCC's order has been appealed by
several major producing companies. The order has not been stayed pending
this appeal.
Additional proposals and proceedings that might affect the oil and gas
industry are pending before the Congress, the FERC, and the courts. The
Registrant cannot predict when or whether any such proposals may become
effective. In the past, the natural gas industry has been very heavily
regulated. There is no assurance that the current regulatory approach pursued
by the FERC will continue indefinitely. Notwithstanding the foregoing, it is
anticipated that compliance with existing federal, state and local laws, rules
and regulations will not have a material adverse effect upon the capital
expenditures, earnings or competitive position of the Registrant.
Federal Income Taxation
The Registrant's oil and gas operations, and the petroleum industry in
general, are affected by certain federal income tax laws, in particular the Tax
Reform Act of 1986, which was amended by the Energy Policy Act of 1992 and the
Revenue Reconciliation Act of 1993. The Registrant has considered the effects
of such federal income tax laws on its operations and has concluded that there
will be no material impact on its liquidity, capital expenditures, or
international operations.
Environmental Laws
The Registrant's activities are subject to existing federal and state
laws and regulations governing environmental quality and pollution control.
Such laws and regulations may substantially increase the costs of exploring,
developing, or producing oil and gas and may prevent or
I - 20
<PAGE> 23
delay the commencement or continuation of a given operation. In the opinion of
the Registrant's management, its operations substantially comply with
applicable environmental legislation and regulations. The existence of such
legislation and regulations have had no material effect on the Registrant's
operations, and the cost of compliance therewith has not been material to date.
The Registrant believes that compliance with existing federal, state,
and local laws, rules, and regulations regulating the discharge of materials
into the environment or otherwise relating to the protection of the environment
will not have any material effect upon the capital expenditures, earnings, or
competitive position of the Registrant.
Natural Gas Marketing
Helmerich & Payne Energy Services, Inc., ("HPESI") continues into its
sixth year of business with emphasis on the purchase and marketing of the
Registrant's natural gas production. In addition, HPESI purchases third-party
gas for resale and provides compression and gathering services for a fee.
During fiscal year 1994, HPESI's sales of third-party gas constituted
approximately 16% of the Registrant's consolidated revenues.
HPESI sells natural gas to markets in the Midwest and Rocky Mountains.
Gas sales contracts are for varied periods ranging from six months to seven
years. However, recent contracts have tended toward shorter terms. For fiscal
1995, HPESI's term gas sales contracts provide for the sale of approximately 12
bcf of gas. HPESI presently intends to fulfill such term sales contracts with
a portion of the gas reserves purchased from the Registrant as well as from its
purchases of third-
I - 21
<PAGE> 24
party gas. See pages I-13 through I-22 regarding the market, competition, and
regulation of natural gas.
CHEMICAL OPERATIONS
The Registrant owns a chemical plant at Baytown, Texas, where it
manufactures mercaptans and sulfides which are blended for use as warning
agents in natural and liquefied petroleum gases. The Registrant believes that
it is the largest single supplier of gas odorants in North America. Its
odorants are also sold in Korea, Latin America, Australia, and Japan. These
products are marketed by the Registrant using the trade names of "Natural Gas
Odorizing" and "Captan." In addition, the Registrant makes bulk sales of
mercaptans for use as sulfiding agents.
The Registrant is one of only two companies which sell odorants for
liquefied petroleum gases and is one of only three companies which sell
odorants for natural gas within the United States. The Registrant believes
that its market share approximates 50% of all domestic odorant sales.
Competition for liquefied petroleum odorant sales is primarily based upon
service considerations, while natural gas odorant manufacturers compete for
sales based on price and service considerations.
The manufacturing facility is adjacent to a major refinery and
chemical plant complex of Exxon Corporation, from which the Registrant obtains
most of its principal raw materials. The Registrant's chemical plant and
related operations are subject to numerous local, state, and federal
environmental laws and regulations. The Registrant believes it is currently in
substantial compliance with all such laws and that
I - 22
<PAGE> 25
compliance with the same will not have any material effect upon the capital
expenditures, earnings or competitive position of Registrant.
REAL ESTATE OPERATIONS
The Registrant's real estate operations are conducted exclusively
within the area of Tulsa, Oklahoma. Its major holding is Utica Square Shopping
Center, consisting of fifteen separate buildings, with parking and other common
facilities covering an area of approximately 30 acres. Fourteen of these
buildings provide approximately 405,709 square feet of net leasable retail
sales and storage space (99.8% of which is currently leased) and approximately
18,590 square feet of net leasable general office space (99.1% of which is
currently leased). Approximately 24% of the general office space is occupied by
the Registrant's real estate operations. The fifteenth building is an
eight-story medical office building which provides approximately 76,379 square
feet of net leasable medical office space (82% of which is currently leased).
The Registrant has a two-level parking garage located in the southwest corner
of Utica Square that can accommodate approximately 250 cars.
At the end of the 1994 fiscal year the Registrant owned 19 of a total
of 73 units in The Yorktown, a 16-story luxury residential condominium with
approximately 150,940 square feet of living area located on a six-acre tract
adjacent to Utica Square Shopping Center. Thirteen of Registrant's units are
currently leased.
The Registrant owns an eight-story office building located diagonally
across the street from Utica Square Shopping Center, containing approximately
87,000 square feet of net leasable general office and retail space. This
building houses the Registrant's principal
I - 23
<PAGE> 26
executive offices. Approximately 11% of this building is leased to third
parties.
The Registrant is also engaged in the business of leasing multi-tenant
warehouse space. Three warehouses known as Space Center, each containing
approximately 165,000 square feet of net leasable space, are situated in the
southeast part of Tulsa at the intersection of two major limited-access
highways. Present occupancy is 84%. The Registrant also owns approximately
1-1/2 acres of undeveloped land lying adjacent to such warehouses.
The Registrant also owns a 270 acre tract known as Southpark located
in the high-growth area of southeast Tulsa and consisting of approximately 257
acres of undeveloped real estate and approximately 13 acres of multi-tenant
warehouse area. The warehouse area is known as Space Center East and consists
of two warehouses, one containing approximately 90,000 square feet and the
other containing approximately 112,500 square feet. Occupancy is 74%.
Preliminary planning has been accomplished to determine the best development
uses for the remaining land. A high quality office park, with peripheral
commercial, office/warehouse, and hotel sites, has been contemplated.
Registrant in January of 1994, sold a one acre tract within Southpark located
at the intersection of two major arterial streets.
The Registrant also owns a five-building complex called Tandem
Business Park. The project is located adjacent to and east of the Space Center
East facility and contains approximately six acres, with approximately 88,084
square feet of office/warehouse space and a 49% occupancy rate. The Registrant
also owns a twelve-building complex,
I - 24
<PAGE> 27
consisting of approximately 204,600 square feet of office/warehouse space,
called Tulsa Business Park. The project is located south of the Space Center
facility, separated by a city street, and contains approximately 12 acres.
Occupancy is 84%.
The Registrant also owns two service center properties located
adjacent to arterial streets in south central Tulsa. The first, called Maxim
Center, consists of one office/warehouse building containing approximately
40,800 square feet and located on approximately 2.5 acres. During fiscal 1994
occupancy decreased from 68% to 50% primarily due to the loss of one existing
tenant. The second, called Maxim Place, consists of one office/warehouse
building containing approximately 33,750 square feet and located on
approximately 2.25 acres. Occupancy is 63%.
FINANCIAL
Information relating to Revenue and Income by Business Segments may be
found on page 11 of the Registrant's Annual Report to Shareholders for fiscal
1994, which is incorporated herein by reference.
EMPLOYEES
The Registrant had 1,606 employees within the United States (15 of
which were part-time employees) and 1,181 employees employed in international
operations as of September 30, 1994.
Item 2. PROPERTIES
CONTRACT DRILLING
The following table sets forth certain information concerning the
I - 25
<PAGE> 28
Registrant's existing domestic drilling rigs:
<TABLE>
<CAPTION>
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
<S> <C> <C> <C>
140 Shallow Depth 10,000 Texas
110 Medium Depth 12,000 Texas
141 Medium Depth 14,000 Texas
142 Medium Depth 14,000 Texas
143 Medium Depth 14,000 Texas
144 Medium Depth 14,000 Texas
145 Medium Depth 14,000 Texas
146 Medium Depth 14,000 Texas
147 Medium Depth 16,000 Texas
84 Medium Depth 16,000 Louisiana
93 Medium Depth 16,000 Alabama
95 Medium Depth 16,000 Texas
96 Medium Depth 16,000 Oklahoma
77 Medium Depth 16,000 Alabama
111 Medium Depth 16,000 Louisiana
118 Medium Depth 16,000 Texas
119 Medium Depth 16,000 Texas
120 Medium Depth 16,000 Texas
78 Deep 20,000 Texas
79 Deep 20,000 Illinois
80 Deep 20,000 Oklahoma
89 Deep 20,000 Louisiana
92 Deep 20,000 Oklahoma
94 Deep 20,000 Louisiana
98 Deep 20,000 Oklahoma
122 Deep 26,000 Oklahoma
137 Deep 26,000 Texas
97 Deep 26,000 Texas
99 Deep 26,000 Texas
123 Deep 26,000 Oklahoma
149 Deep 26,000 Texas
72 Very Deep 30,000 Louisiana
73 Very Deep 30,000 Louisiana
127 Very Deep 30,000 Oklahoma
130 Super Deep 30,000+ Texas
131 Super Deep 30,000+ Wyoming
101 Medium Depth 16,000 * Gulf of Mexico
104 Medium Depth 16,000 * Offshore California
108 Medium Depth 16,000 * Gulf of Mexico
91 Deep 20,000 * Gulf of Mexico
105 Deep 20,000 * Gulf of Mexico
109 Deep 20,000 * Gulf of Mexico
100 Deep 26,000 * Gulf of Mexico
106 Deep 26,000 * Gulf of Mexico
</TABLE>
I - 26
<PAGE> 29
<TABLE>
<CAPTION>
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
<S> <C> <C> <C>
107 Deep 26,000 * Gulf of Mexico
102 Deep 20,000 * Offshore California
103 Deep 20,000 * Offshore California
</TABLE>
* Offshore platform rig
The following table sets forth information with respect to the
utilization of the Registrant's domestic drilling rigs for the periods
indicated:
<TABLE>
<CAPTION>
Years ended September 30,
---------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Number of rigs owned at end of
period 49 46 39 42 47
Average rig utilization rate
during period (1) 50% 47% 42% 53% 69%
</TABLE>
(1) A rig is considered to be utilized when it is operated or being moved,
assembled, or dismantled under contract.
The following table sets forth certain information concerning the
Registrant's international drilling rigs:
<TABLE>
<CAPTION>
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
<S> <C> <C> <C>
3 Workover/drilling 6,000 Venezuela
14 Workover/drilling 6,000 Venezuela
19 Workover/drilling 6,000 Venezuela
20 Workover/drilling 6,000 Venezuela
21 Workover/drilling 6,000 Venezuela
132 Medium Depth 16,000 Ecuador
23 Deep (helicopter rig) 18,000 Ecuador
10 Deep (helicopter rig) 18,000 Colombia
22 Deep (helicopter rig) 18,000 Yemen
12 Deep (helicopter rig) 18,000 Ecuador
45 Deep 26,000 Venezuela
82 Deep 26,000 Venezuela
83 Deep 26,000 Venezuela
138 Deep 26,000 Ecuador
148 Deep 26,000 Venezuela
117 Deep 26,000 Trinidad
121 Deep 26,000 Colombia
125 Very Deep 30,000 Colombia
</TABLE>
I - 27
<PAGE> 30
<TABLE>
<CAPTION>
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
<S> <C> <C> <C>
115 Very Deep 30,000 Venezuela
116 Very Deep 30,000 Venezuela
113 Very Deep 30,000 Venezuela
128 Very Deep 30,000 Venezuela
129 Very Deep 30,000 Venezuela
133 Very Deep 30,000 Colombia
134 Very Deep 30,000 Colombia
135 Very Deep 30,000 Colombia
136 Very Deep 30,000 Colombia
150 Very Deep 30,000 Venezuela
139 Super Deep 30,000+ Colombia
</TABLE>
The following table sets forth information with respect to the
utilization of the Registrant's international drilling rigs for the periods
indicated:
<TABLE>
<CAPTION>
Years ended September 30,
------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Number of rigs owned at end of
period 20 25 30 29 29
Average rig utilization rate
during period (1) 45% 69% 69% 68% 88%
</TABLE>
(1) A rig is considered to be utilized when it is operated or being moved,
assembled, or dismantled under contract.
OIL AND GAS DIVISION
All of the Registrant's oil and gas operations and holdings are
domestic.
Crude Oil Sales
The Registrant's net sales of crude oil and condensate for the three
fiscal years 1992 through 1994 are shown below:
<TABLE>
<CAPTION>
Average Sales Average Lifting
Year Net Barrels Price per barrel Cost per Barrel
---- ----------- ---------------- ---------------
<S> <C> <C> <C>
1992 854,124 $19.16 $8.98
1993 875,713 $17.58 $8.63
1994 887,455 $14.83 $7.74
</TABLE>
I - 28
<PAGE> 31
Natural Gas Sales
The Registrant's net sales of natural and casinghead gas for the three
fiscal years 1992 through 1994 are as follows:
<TABLE>
<CAPTION>
Average Sales Average Lifting
Year Net Mcf Price per Mcf Cost per Mcf
---- ------- ------------- ---------------
<S> <C> <C> <C>
1992 27,622,018 $1.39 $0.3115
1993 28,478,530 $1.84 $0.3460
1994 26,627,776 $1.72 $0.3760
</TABLE>
Following is a summary of the net wells drilled by the Registrant for
the fiscal years ended September 30, 1992, 1993, and 1994:
<TABLE>
<CAPTION>
Exploratory Wells Development Wells
--------------------- -----------------------
1992 1993 1994 1992 1993 1994
---- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Productive 2.605 2.866 1.021 10.869 8.760 12.334
Dry 3.363 1.393 1.436 0.969 2.858 0.233
</TABLE>
On September 30, 1994, the Registrant was in the process of drilling
or completing six gross or 1.704 net wells.
Acreage Holdings
The Registrant's holdings of acreage under oil and gas leases, as of
September 30, 1994, were as follows:
<TABLE>
<CAPTION>
Developed Acreage Undeveloped Acreage
------------------------- --------------------------
Gross Net Gross Net
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Alabama 480.00 112.21 146.00 18.12
Arkansas 4,636.73 2,295.02 -0- -0-
Colorado -0- -0- 7,676.35 4,259.24
Kansas 123,263.46 85,726.92 6,340.61 4,629.13
Louisiana 8,087.88 1,471.11 329,906.02 145,746.79
Mississippi 168.17 55.17 839.00 439.59
Montana 2,117.19 387.30 4,668.95 1,530.15
Nebraska 480.00 168.00 -0- -0-
Nevada -0- -0- 40,265.87 31,587.71
New Mexico 960.00 54.86 161.88 38.85
North Dakota -0- -0- 8,050.30 1,176.93
Oklahoma 141,638.45 43,391.37 43,013.35 17,667.40
Texas 90,298.39 41,721.09 12,638.65 6,234.27
Wyoming -0- -0- 3,800.00 860.10
---------- ---------- ---------- ----------
Total 372,130.27 175,383.65 457,506.98 214,188.28
</TABLE>
I - 29
<PAGE> 32
Acreage is held under leases which expire in the absence of production
at the end of a prescribed primary term, and is, therefore, subject to
fluctuation from year to year as new leases are acquired, old leases expire,
and other leases are allowed to terminate by failure to pay annual delay
rentals.
Productive Wells
The Registrant's total gross and net productive wells as of September
30, 1994, were as follows:
<TABLE>
<CAPTION>
Oil Wells Gas Wells
------------ ------------
Gross Net Gross Net
----- --- ----- ---
<S> <C> <C> <C>
3,419 273 853 341
</TABLE>
Additional information required by this item with respect to the
Registrant's oil and gas operations may be found on pages I-11 through I-22 of
Item 1. BUSINESS, and pages 28 through 30 of the Registrant's Annual Report to
Shareholders for fiscal 1994, "Notes to Consolidated Financial Statements" and
"Note 11 Supplementary Financial Information for Oil and Gas Producing
Activities."
Estimates of oil and gas reserves, future net revenues, and present
value of future net revenues were audited by Southmayd & Associates, Inc.,
independent consultants, 6450 South Lewis Avenue, Suite 220, Tulsa, Oklahoma,
74136. Total oil and gas reserve estimates do not differ by more than 5% from
the total reserve estimates filed with any other federal authority or agency.
CHEMICAL OPERATIONS
The Registrant owns at Baytown, Texas, a chemical plant which
manufactures mercaptans and sulfides for use primarily as warning odorants in
natural and liquefied petroleum gases. The plant occupies
I - 30
<PAGE> 33
approximately ten acres of a 30-acre tract which the Registrant owns. It is
estimated that the plant has an annual optimum design production capacity of
20,000,000 pounds of odorants and other mercaptans; however, current operating
permits limit production to 10,000,000 to 12,000,000 pounds per year.
REAL ESTATE OPERATIONS
See Item 1. BUSINESS, pages I-22 through I-25.
STOCK
At the end of fiscal 1994:
The Registrant owned 907,164 shares of the common stock of Sun
Company, Inc., and 675,000 shares of the common stock of Oryx Energy Co., Inc.
The Registrant owned 1,600,000 shares of the common stock of Atwood
Oceanics, Inc., a Houston, Texas based company engaged in offshore contract
drilling. The Registrant's ownership of Atwood is approximately 24%.
The Registrant owned 740,000 shares of the common stock of
Schlumberger, Ltd.
The Registrant owned 300,000 shares of the common stock of Phillips
Petroleum Company, Inc.
The Registrant owned 225,000 shares of the common stock of ONEOK.
The Registrant owned 500,000 shares of the common stock of Liberty
Bancorp, Inc., formerly Banks of Mid-America, Inc. Liberty Bancorp, Inc., is a
bank holding company which owns Liberty Bank and Trust Company of Tulsa, N.A.,
and Liberty Bank and Trust Company of Oklahoma City, N.A. The Registrant's
ownership of Liberty Bancorp, Inc., is approximately 5%.
I - 31
<PAGE> 34
The Registrant also owned lesser amounts of shares of several other
publicly traded corporations.
Item 3. LEGAL PROCEEDINGS
On or about January 18, 1994, the District Court dismissed without
prejudice the lawsuit styled Theresa Arceneaux, et al. v. Natural Gas
Odorizing, Inc., Case Number 93-568602, District Court Harris County, Texas,
165th Judicial District. The Court on October 27, 1994, entered an agreed
judgment ordering plaintiff's lead counsel, Mr. Thomas J. Pearson, to pay
Natural Gas Odorizing, Inc., $60,000 as sanctions for attorney's fees and
ordered Mr. Pearson to cooperate in providing certain information to the
Grievance Committee of the State Bar of Texas. Natural Gas Odorizing, Inc.,
has recently filed its grievance against Mr. Pearson with the State Bar of
Texas.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names and ages of the Registrant's
executive officers, together with all positions and offices held with the
Registrant by such executive officers. Officers are elected to serve until the
meeting of the Board of Directors following the next Annual Meeting of
Stockholders and until their successors have been elected and have qualified or
until their earlier resignation or removal.
<TABLE>
<S> <C>
W. H. Helmerich, III, 71 Director since 1949; Chairman of the Board
Chairman of the Board since December 1, 1960; Chief Executive
Officer from December 1, 1960, to
December 6, 1989; and President from
December 1, 1960, to December 11, 1987
</TABLE>
I - 32
<PAGE> 35
<TABLE>
<S> <C>
Hans Helmerich, 36 Director since March 4, 1987; appointed
President and C.E.O. Chief Executive Officer on December 6, 1989; President and
Chief Operating Officer from December 11, 1987; Executive Vice
President from March 13, 1987; Vice President from June 15, 1985;
son of W. H. Helmerich, III, Chairman
Allen S. Braumiller, 60 Appointed Vice President, Exploration, in 1977
Vice President
George S. Dotson, 53 Director since March 7, 1990; appointed
Vice President Vice President, Drilling, in 1977 and appointed President and
Chief Operating Officer of Helmerich & Payne International
Drilling Co. on February 14, 1977
Douglas E. Fears, 45 Appointed Vice President, Finance, on March
Vice President 11, 1988, prior to which he was Internal Auditor from June 30, 1986
Steven R. Mackey, 43 Appointed Secretary on March 7, 1990; Vice
Vice President and President on March 11, 1988; and General
Secretary Counsel on January 1, 1988, prior to which he was Associate
General Counsel from January 1, 1986
James L. Payne, 55 Appointed Vice President, Real Estate, on
Vice President September 4, 1991; prior to that date he was Vice President and
General Manager of Helmerich & Payne Properties, Inc., from May 9, 1985
Steven R. Shaw, 43 Appointed Vice President, Production, on
Vice President July 8, 1985; prior to that date he was Regional Operations Manager of
Santa Fe Minerals, Inc., from 1984 to July 8, 1985
Gordon K. Helm, 41 Chief Accounting Officer of the Registrant;
Controller appointed Controller effective December 10, 1993; Manager of Internal
Audit from September 13, 1991; Regional Controller for Memorex Telex
Corporation from 1989; and Manager of Planning for Memorex Telex
Corporation from 1988
</TABLE>
I - 33
<PAGE> 36
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The principal market on which the Registrant's common stock is traded
is the New York Stock Exchange. The high and low sale prices per share for
the common stock for each quarterly period during the past two fiscal years as
reported in the NYSE - Composite Transaction quotations follow:
<TABLE>
<CAPTION>
1993 1994
---- ----
Quarter High Low High Low
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First 26 3/4 22 1/4 34 1/2 26 1/2
Second 29 3/4 22 3/8 30 26
Third 37 1/8 29 1/4 27 1/8 25 1/8
Fourth 36 1/8 31 1/2 28 1/8 25 5/8
</TABLE>
The Registrant paid quarterly cash dividends during the past two years
as shown in the following table:
<TABLE>
<CAPTION>
Paid per Share Total Payment
-------------- -------------
Fiscal Fiscal
------ ------
Quarter 1993 1994 1993 1994
------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
First $0.120 $0.120 $2,949,291 $2,956,498
Second 0.120 0.120 2,949,291 2,960,098
Third 0.120 0.120 2,953,006 2,960,314
Fourth 0.120 0.125 2,956,378 3,087,902
</TABLE>
The Registrant paid a cash dividend of $0.125 per share on December 1,
1994, to shareholders of record on November 15, 1994. Payment of future
dividends will depend on earnings and other factors.
As of December 16, 1994, there were 1,814 record holders of the
Registrant's common stock as listed by the transfer agent's records.
II - 1
<PAGE> 37
Item 6. SELECTED FINANCIAL DATA
Five-year Summary of Selected Financial Data
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sales, operating,
and other revenues $238,544 $213,946 $239,700 $315,097 $329,001
Income from con-
tinuing operations 47,562 21,241 10,849 24,550 20,971
Income from con-
tinuing operations
per common share 1.97 0.88 0.45 1.01 0.86
Total assets 582,927 575,168 585,504 610,935 624,827
Long-term debt 5,648 5,693 8,339 3,600 -0-
Cash dividends
declared per
common share 0.44 0.46 0.47 0.48 0.49
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information required by this item may be found on pages 12 through 16,
Management's Discussion & Analysis of Results of Operations and Financial
Condition, in the Registrant's Annual Report to Shareholders for fiscal 1994,
which is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found on pages 17 through 30
in the Registrant's Annual Report to Shareholders for fiscal 1994, which is
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The required information regarding the change in Registrant's
certifying accountant was previously reported in a Current Report on Form 8-K
filed with the Securities and Exchange Commission on April 7, 1994.
II - 2
<PAGE> 38
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required under this item with respect to Directors is
incorporated by reference from the Registrant's definitive Proxy Statement for
the Annual Meeting of Stockholders to be held March 1, 1995, to be filed with
the Commission not later than 120 days after September 30, 1994. See pages
I-32 and I-33 for information covering the Registrant's Executive Officers.
Item 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
III - 1
<PAGE> 39
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Document List
1. The financial statements called for by Item 8 are incorporated
herein by reference from the Registrant's Annual Report to
Shareholders for fiscal 1994.
2. The following financial statement schedules are filed as a
part of this Form:
(i) Report of Independent Public Accountants on Financial
Statements and Financial Statement Schedules for the
fiscal years ended September 30, 1993 and September
30, 1992.
(ii) Schedule I - Pages IV-5 and IV-6.
(iii) Schedule V - Pages IV-7 through IV-9.
(iv) Schedule VI - Pages IV-10 through IV-12.
(v) Schedule X - Page IV-13.
3. Exhibits required by item 601 of Regulation S-K:
Exhibit Number:
3.1 Restated Certificate of Incorporation and Amendment
to Restated Certificate of Incorporation of the
Registrant are incorporated herein by reference from
the Registrant's Annual Report on Form 10-K to the
Securities and Exchange Commission for fiscal 1987.
3.2 By-Laws of the Registrant are incorporated herein by
reference from the Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1990.
4.1 Rights Agreement dated as of January 21, 1986,
between the Registrant and The First National Bank of
Boston is incorporated herein by reference to the
Registrant's Form 8-A dated January 30, 1986.
4.2 Amendment to Rights Agreement dated as of December 5,
1990, between the Registrant and The Liberty National
Bank and Trust Company of Oklahoma City is
incorporated herein by reference to the Registrant's
Form 8, Amendment No. 1 to Form 8-A, dated December
11, 1990.
IV-1
<PAGE> 40
*10.1 Incentive Stock Option Plan is incorporated herein by
reference to Exhibit 4.2 to the Registrant's
Registration Statement No. 33-16771 on Form S-8.
*10.2 Consulting Services Agreement between W. H.
Helmerich, III, and the Registrant effective
January 1, 1990, as amended, is incorporated herein by
reference from the Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1990.
*10.3 Restricted Stock Plan for Senior Executives of
Helmerich & Payne, Inc., is incorporated herein by
reference to Exhibit "A" to the Registrant's Proxy
Statement dated January 26, 1990.
*10.4 Form of Restricted Stock Award Agreement for the
Restricted Stock Plan for Senior Executives of
Helmerich & Payne, Inc., together with all amendments
thereto, is incorporated herein by reference from the
Registrant's Annual Report on Form 10-K to the
Securities and Exchange Commission for fiscal 1990.
*10.5 Supplemental Retirement Income Plan for Salaried
Employees of Helmerich & Payne, Inc., is incorporated
herein by reference from the Registrant's Annual
Report on Form 10-K to the Securities and Exchange
Commission for fiscal 1990.
*10.6 Helmerich & Payne, Inc. 1990 Stock Option Plan is
incorporated herein by reference to Exhibit "A" to
Registrant's Proxy Statement dated January 25, 1991.
*10.7 Supplemental Savings Plan for Salaried Employees of
Helmerich and Payne, Inc., is incorporated herein by
reference from Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1993.
13. The Registrant's Annual Report to Shareholders for
fiscal 1994.
22. Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Independent Auditors.
27. Financial Data Schedule.
---------------------
* Compensatory Plan or Arrangement.
IV-2
<PAGE> 41
(b) Report on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended September 30, 1994.
IV-3
<PAGE> 42
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FOR THE FISCAL YEARS ENDED
SEPTEMBER 30, 1993 AND SEPTEMBER 30, 1992
To the Shareholders and Board of Directors of Helmerich & Payne, Inc.:
We have audited the accompanying consolidated balance sheet of Helmerich &
Payne, Inc. (a Delaware corporation) and subsidiaries as of September 30, 1993,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the two years in the period ended September 30, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a) are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. The
information in these schedules as of September 30, 1993, and for each of the
two years in the period ended September 30, 1993, have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Helmerich & Payne, Inc. and
subsidiaries as of September 30, 1993, and the results of their operations and
their cash flows for each of the two years in the period ended September 30,
1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
November 16, 1993
IV-4
<PAGE> 43
HELMERICH & PAYNE, INC.
SCHEDULE I - MARKETABLE SECURITIES
AS OF SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Value Based on
Current Market
Amount at Which Quotations at
Carried in Balance
Name of Issuer and Title of Issue Number of Shares Balance Sheet (1) Sheet Date
--------------------------------- ----------------- ----------------- --------------
(000's) (000's)
<S> <C> <C> <C>
SCHLUMBERGER, LTD. 740,000 $ 23,511 $ 40,238
Common stock
ATWOOD OCEANICS, INC. 1,600,000 20,743 22,800
Common stock
SUN COMPANY, INC. 907,164 10,637 26,081
Common stock
PHILLIPS PETROLEUM COMPANY 300,000 7,470 10,275
Common stock
LIBERTY BANCORP. (2) 500,000 7,270 16,750
Common stock
ORYX ENERGY COMPANY 675,000 6,433 9,366
Common stock
ONEOK 225,000 2,751 3,796
Common stock
OTHER
Common stock,
debentures and other 8,599 15,706
-------- --------
Total consolidated $ 87,414 $145,012
======== ========
</TABLE>
NOTE:
(1) Investments are carried in the balance sheet at cost, except the
investment in Atwood which is carried on the equity method. Equity
income for 1994 from Atwood was $1,458,000. No dividends were
received from Atwood.
(2) Formerly Banks of Mid America.
IV-5
<PAGE> 44
HELMERICH & PAYNE, INC.
SCHEDULE I - MARKETABLE SECURITIES
AS OF SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D
Value Based on
Current Market
Amount at Which Quotations at
Carried in Balance
Name of Issuer and Title of Issue Number of Shares Balance Sheet (1) Sheet Date
---------------------------------- ---------------- ----------------- --------------
(000's) (000's)
<S> <C> <C> <C>
SCHLUMBERGER, LTD. 740,000 $ 23,511 $ 49,303
Common stock
ATWOOD OCEANICS, INC. 1,600,000 19,285 17,200
Common stock
SUN COMPANY, INC. 907,164 10,637 25,854
Common stock
PHILLIPS PETROLEUM COMPANY 300,000 7,470 10,125
Common stock
LIBERTY BANCORP. (2) 500,000 7,270 17,000
Common stock
ORYX ENERGY COMPANY 700,000 6,683 17,150
Common stock
ONEOK 225,000 2,751 5,006
Common stock
OTHER
Common stock,
debentures and other 7,338 10,737
-------- --------
Total consolidated $ 84,945 $152,375
======== ========
</TABLE>
NOTE:
(1) Investments are carried in the balance sheet at cost, except the
investment in Atwood which is carried on the equity method. Equity
loss for 1993 from Atwood was $435,000. No dividends were received
from Atwood.
(2) Formerly Banks of Mid America.
IV-6
<PAGE> 45
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1994
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Additions Retirements or -------------- Balance at End
CLASSIFICATION Period at Cost Sales Transfers of Period
-------------- ----------- --------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $418,004 $ 53,752 $ 27,213 $ (111) $444,432
PRODUCING OIL AND GAS PROPERTIES 340,176 40,916 3,872 151 377,371
UNDEVELOPED LEASES AND ROYALTIES 10,010 4,893 3,023 (151) 11,729
REAL ESTATE PROPERTIES 47,502 902 577 - 47,827
CHEMICAL PLANT AND EQUIPMENT 11,844 573 - - 12,417
OTHER 45,786 4,847 1,418 111 49,326
--------- ---------- ---------- --------- ---------
$873,322 $ 105,883 $ 36,103 $ - $943,102
======== ========== ========= ========= ========
</TABLE>
IV-7
<PAGE> 46
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1993
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Retirements or -------------- Balance at End
CLASSIFICATION Period Additions at Cost Sales Transfers of Period
-------------- ----------- ----------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $404,155 $ 24,100 $ 10,451 $ 200 $418,004
PRODUCING OIL AND GAS PROPERTIES 329,264 23,142 12,462 232 340,176
UNDEVELOPED LEASES AND ROYALTIES 12,973 2,410 5,141 (232) 10,010
REAL ESTATE PROPERTIES 47,286 437 221 - 47,502
CHEMICAL PLANT AND EQUIPMENT 11,304 540 - - 11,844
OTHER 43,811 3,580 1,405 (200) 45,786
--------- --------- --------- -------- ----------
$848,793 $ 54,209 $ 29,680 $ - $873,322
======== ======== ======== ========== ========
</TABLE>
IV-8
<PAGE> 47
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1992
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Additions Retirements ------------- Balance at
CLASSIFICATION Period at Cost or Sales Transfers End of Period
-------------- ----------- --------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $370,494 $43,049 $ 9,378 $ (10) $404,155
PRODUCING OIL AND GAS PROPERTIES 312,439 21,617 5,044 252 329,264
UNDEVELOPED LEASES AND ROYALTIES 5,552 9,140 1,467 (252) 12,973
REAL ESTATE PROPERTIES 46,670 690 74 - 47,286
CHEMICAL PLANT AND EQUIPMENT 11,202 104 2 - 11,304
OTHER 37,059 7,898 1,156 10 43,811
-------- ------- ------- -------- --------
$783,416 $82,498 $17,121 $ - $848,793
======== ======= ======= ======== ========
</TABLE>
IV-9
<PAGE> 48
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1994
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Additions Charged Debit (Credit)
Beginning of to Costs & Expenses Retirements or -------------- Balance at End
CLASSIFICATION Period (Note 1) Sales Transfers of Period
- ---------------------------------- ------------ ------------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $ 258,690 $ 24,183 $ 23,440 $ (10) $ 259,423
PRODUCING OIL AND GAS PROPERTIES 199,408 19,517 173 - 218,752
UNDEVELOPED LEASES AND ROYALTIES 4,500 2,650 - - 7,150
REAL ESTATE PROPERTIES 20,496 1,600 334 - 21,762
CHEMICAL PLANT AND EQUIPMENT 6,726 596 - - 7,322
OTHER 24,704 4,269 941 10 28,042
--------- -------- -------- ----------- ---------
$ 514,524 $ 52,815 $ 24,888 $ - $ 542,451
========= ======== ======== =========== =========
</TABLE>
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-10
<PAGE> 49
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1993
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Additions
Charged Other Changes
Balance at to Costs & Debit (Credit)
Beginning of Expenses Retirements or -------------- Balance at End
CLASSIFICATION Period (Note 1) Sales Transfers of Period
-------------- ------- --------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $242,987 $ 24,788 $ 9,095 $ 10 $258,690
PRODUCING OIL AND GAS PROPERTIES 189,327 18,272 7,060 (1,131) 199,408
UNDEVELOPED LEASES AND ROYALTIES 4,004 496 - - 4,500
REAL ESTATE PROPERTIES 19,061 1,655 220 - 20,496
CHEMICAL PLANT AND EQUIPMENT 6,170 556 - - 6,726
OTHER 22,648 3,510 1,444 (10) 24,704
--------- --------- ---------- ---------- ----------
$484,197 $ 49,277 $ 17,819 $ (1,131) $514,524
======== ======== ======== ======== ========
</TABLE>
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-11
<PAGE> 50
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1992
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Additions
Charged Other Changes
Balance at to Costs & Debit (Credit) Balance
Beginning Expenses Retirements -------------- at End of
CLASSIFICATION of Period (Note 1) or Sales Transfers Period
--------------- ----------- --------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING EQUIPMENT $227,276 $23,526 $ 7,914 $ 99 $242,987
PRODUCING OIL AND GAS PROPERTIES 172,245 18,794 2,843 1,131 189,327
UNDEVELOPED LEASES AND ROYALTIES 4,203 (199) - - 4,004
REAL ESTATE PROPERTIES 17,475 1,660 74 - 19,061
CHEMICAL PLANT AND EQUIPMENT 5,653 503 - 14 6,170
OTHER 20,042 3,255 658 9 22,648
-------- ------- ------- ------ --------
$446,894 $47,539 $11,489 $1,253 $484,197
======== ======= ======= ====== ========
</TABLE>
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-12
<PAGE> 51
HELMERICH & PAYNE, INC.
SCHEDULE X - SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT
INFORMATION FOR THE YEARS ENDED
SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
COLUMN A COLUMN B
-------- --------
Charged to Costs
and Expenses
----------------
1994 1993 1992
------ ------ ------
(Amounts in thousands)
<S> <C> <C> <C>
Maintenance and repairs $31,200 $23,145 $19,112
======= ======= =======
Taxes other than payroll and income taxes -
Production $ 3,661 $ 4,658 $ 3,567
Ad valorem 3,616 2,907 3,110
Other 3,006 2,765 2,098
------- ------- -------
$10,283 $10,330 $ 8,775
======= ======= =======
</TABLE>
IV-13
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By Hans Helmerich
-------------------------
Hans Helmerich, President
(Chief Executive Officer)
Date: December 16, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C>
By William L. Armstrong By Glenn A. Cox
-------------------------------- --------------------------------
William L. Armstrong, Director Glenn A. Cox, Director
Date: December 16, 1994 Date: December 16, 1994
By George S. Dotson By C. W. Flint, Jr.
-------------------------------- --------------------------------
George S. Dotson, Director C. W. Flint, Jr., Director
Date: December 16, 1994 Date: December 16, 1994
By Hans Helmerich By W. H. Helmerich, III
-------------------------------- --------------------------------
Hans Helmerich, Director and CEO W. H. Helmerich, III, Director
Date: December 16, 1994 Date: December 16, 1994
By George A. Schaefer By H. W. Todd
-------------------------------- --------------------------------
George A. Schaefer, Director H. W. Todd, Director
Date: December 16, 1994 Date: December 16, 1994
By John D. Zeglis By Douglas E. Fears
-------------------------------- --------------------------------
John D. Zeglis, Director Douglas E. Fears
Date: December 16, 1994 (Principal Financial Officer)
Date: December 16, 1994
By Gordon K. Helm
--------------------------------
Gordon K. Helm, Controller
(Principal Accounting Officer)
Date: December 16, 1994
</TABLE>
IV-14
<PAGE> 53
HELMERICH & PAYNE, INC.
Index to Exhibits Not Incorporated by Reference
<TABLE>
<CAPTION>
Exhibit No. Page
- ----------- ----
<S> <C> <C>
13. Annual Report to Shareholders for fiscal 1994 54
22. Subsidiaries of the Registrant 90
23.1 Consent of Independent Public Accountants 91
23.2 Consent of Independent Auditors (Ernst & Young LLP) 92
27. Financial Data Schedule 93
</TABLE>
<PAGE> 1
EXHIBIT 13
HELMERICH & PAYNE, INC. ANNUAL REPORT FOR 1994
HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993
------------------------- --------------- --------------
<S> <C> <C>
Revenues $ 329,001,000 $ 315,097,000
Net Income $ 24,971,000 $ 24,550,000
Earnings Per Share $ 1.02 $ 1.01
Dividends Paid Per Share $ .485 $ .48
Capital Expenditures $ 105,883,000 $ 54,209,000
Total Assets $ 624,827,000 $ 610,935,000
</TABLE>
HELMERICH & PAYNE, INC. IS A DIVERSIFIED, ENERGY-ORIENTED COMPANY ENGAGED IN
CONTRACT DRILLING, OIL AND GAS EXPLORATION AND PRODUCTION, CHEMICALS
MANUFACTURING, AND REAL ESTATE DEVELOPMENT AND MANAGEMENT. THE COMPANY ALSO
HOLDS SUBSTANTIAL EQUITY INVESTMENTS IN SEVERAL OTHER PUBLICLY OWNED
CORPORATIONS.
<PAGE> 2
PRESIDENT'S LETTER
To the Co-owners of Helmerich & Payne, Inc.
As never before in my lifetime, the American people sent shock waves through
the halls of Congress. Now the new Republican-controlled House and Senate have
a chance not only to reduce spending and allow workers to keep more of their
earnings, but to address a more imposing challenge. By a margin of nearly
two-to-one, voters said the problems facing this country were not primarily
economic in nature, but were rooted in a dramatic social and moral decline. In
part, Washington, D.C. was held accountable for the role it has played in
contributing to this decline. George Will observed that the voters simply said
"Something is amiss when a government that does not adequately deliver the mail
delivers condoms to children."
Years of irresponsibility have recklessly damaged the reputation of Congress,
leaving only nineteen percent of the people confident that their elected
representatives will do the right thing. The first order of business for this
Congress will be to earn back the trust of ordinary Americans.
Whether the relationship is between representative government and the voters,
between a business enterprise and its customers, or within our own families,
the importance of trustworthiness and a good name is paramount to success.
While a renewed commitment to these old-fashioned values would well serve the
104th Congress, it is also timely for us to reflect upon these values since
1995 marks the 75th anniversary of Helmerich & Payne, Inc.
My grandfather landed in the oil business by accident. After spending World War
I as a young officer and instructor pilot, he left the service to manage an
aerial circus until his small fleet of bi-planes were all but lost in a West
Texas thunderstorm. What little survived, he traded for three cable-tool rigs
in South Bend, Texas, where he and his partner would drill a discovery well in
1920.
2
<PAGE> 3
Growing up, I loved hearing stories of the rough and tumble oil patch where the
Company's history paralleled the early success of the industry in Oklahoma's
Osage, Tonkawa, and Oklahoma City fields; down into East Texas; and over to the
first efforts of New Mexico's Four Corners.
Deals were done over a handshake and a man's personal integrity was inseparable
from the business enterprise itself. Even as the Company grew and prospered,
keeping your word, working hard, doing the right thing, and caring about your
people and the customer never went out of fashion. I have heard Dad say a
thousand times that a good name is built over a lifetime, but lost in an
instant.
Today on drilling rigs all over the world, in operating and marketing hundreds
of oil and gas wells in the United States, and in supporting chemical and real
estate operations, there is a deep appreciation and sense of responsibility
that is shared by all of us who carry a trusted name and a hard-earned
reputation into our daily operations.
Our pledge is to approach the next seventy-five years with these time-tested
values etched clearly in our minds, remaining forever indebted to the thousands
of loyal Helmerich & Payne, Inc. co-workers that have gone before us and kept
the faith.
Sincerely,
Hans Helmerich
December 15, 1994 President
3
<PAGE> 4
DRILLING HELMERICH & PAYNE INTERNATIONAL DRILLING CO.
SUMMARY At the close of 1994, Helmerich & Payne International Drilling Co.
owned 65 land rigs and 11 offshore platform rigs which had an average
utilization of 77 percent, compared with 69 percent the previous year. Higher
domestic activity is credited for revenue and pre-tax income gains of 23 and 33
percent, respectively, in 1994. Pre-tax cash flow rose by 14 percent to $48.4
million, compared with $42.4 million in 1993.
DOMESTIC OPERATIONS Domestic land rig utilization averaged 66 percent for the
year, compared with 48 percent in 1993. An average of 19 domestic land rigs
were fully utilized during 1994, compared with 15 land rigs in 1993. In the
third quarter, the Company acquired substantially all of the equipment and
property of Energy Service Co.'s domestic land drilling operation based in
Alice, Texas. The purchase included 12 land rigs which helped increase the
Company's domestic land fleet to 36 rigs by year-end.
Offshore operations consist of eight platform rigs in the Gulf of Mexico, and
three platform rigs plus two management contracts for Exxon-owned platform rigs
offshore California. Utilization averaged 79 percent this year for the
Company's 11 platform rigs, compared with 70 percent for nine rigs in 1993. A
full year of activity for two additional rigs in the Gulf of Mexico and the
Exxon management contracts contributed significantly to the improved financial
performance in 1994.
INTERNATIONAL OPERATIONS At year-end, the Company owned 29 land rigs in the
countries of Venezuela (15), Colombia (8), Ecuador (4), Trinidad (1), and Yemen
(1). Utilization averaged 88 percent in 1994,
4
<PAGE> 5
compared with 68 percent in 1993. Although revenue increased nine percent to
$98.1 million, pre-tax earnings declined by four percent due to higher
operating costs in Colombia and foreign exchange losses suffered in Venezuela.
In 1994, the Company moved one rig to Colombia which joined the work on BP
Exploration's Cusiana/Cupiagua development, one rig was added in Ecuador for
Maxus, and two rigs were sent to Venezuela for Corpoven. For 1995, the Company
received letters of intent for three-year contracts on three additional land
rigs from BP Exploration in Colombia and one-year term contracts for three land
rigs from Corpoven in Venezuela. The Company will utilize three existing
domestic rigs as well as other equipment purchases for these projects.
The Company recently began work on a joint venture with Atwood Oceanics, Inc.,
a 24 percent owned affiliate, to build a new generation offshore platform rig
incorporating the latest technology in instrumentation and remote control
mechanization of drilling equipment. The Company will manage the design,
construction, testing, and mobilization phases of the project. Rig operations
are scheduled to begin in 1996, and will be managed by Atwood Oceanics, Inc.,
which has operated in Australia for a number of years.
The Company is well positioned to perform in a depressed and competitive
environment. Whether the work is of a conventional nature or entails complex
design and logistics, the Company will continue to focus on delivering value to
our customers.
5
<PAGE> 6
EXPLORATION & PRODUCTION HELMERICH & PAYNE, INC.
SUMMARY Helmerich & Payne, Inc. engages in the exploration, production, and
acquisition of oil and natural gas reserves primarily in the states of
Oklahoma, Kansas, Texas, and Louisiana. At the close of 1994, the Company had
proved oil and natural gas reserves of 6.7 million barrels and 290.7 billion
cubic feet (Bcf), respectively. This compares with reserves of 6.9 million
barrels of oil and 289.4 Bcf of natural gas in 1993.
PRODUCTION OVERVIEW In response to lower prices, the Company reduced its
natural gas production to an average annual rate of 72,953 thousand cubic feet
(Mcf) per day, from 78,023 Mcf per day in 1993. The average price received for
natural gas fell to $1.72 per Mcf compared with $1.84 the prior year. Oil
production increased slightly this year to 2,431 barrels per day from 2,399
barrels per day in 1993. However, the average price received for oil declined
by over 15 percent to $14.83 per barrel in 1994. Lower commodity prices and
natural gas production, coupled with higher exploration expenses, contributed
to a significant decline in revenue and pre-tax income this year.
ACQUISITIONS The Company invested $23.1 million in 1994 to purchase producing
properties which had estimated reserves of 19.9 Bcf of natural gas and 159,580
barrels of oil. Tight sands tax credits, high BTU content natural gas, and
several development opportunities are also associated with these properties.
DRILLING AND EXPLORATION Of the 44 (15 net) wells which the Company
participated in during the year, 37 (12.6 net) were classified as development
and
6
<PAGE> 7
seven (2.4 net) wells were classified as exploratory risks. Ten (4.7 net) wells
were completed as oil wells, 29 (8.7 net) wells were completed as natural gas
wells, and five (1.7 net) wells were dry holes. Exploration budget reductions
by major oil companies in the lower 48 states have opened a number of
attractive exploration opportunities in regions where technological advances
like 3-D seismic have not been fully utilized. This is particularly true for
some coastal regions in Louisiana where the Company has five new prospects. The
Company added a total of six wildcat prospects in 1994 and participated in
seven separate 3-D seismic programs. The actual drilling on many of these
prospects will not begin until 1995.
A dual-leg horizontal well was completed during the year in the Company's
Austin Chalk prospect in central Louisiana and it is apparent that the well is
marginal. The Company is limiting its efforts to the western portion of this
prospect where Occidental Petroleum Corporation has drilled a well which has
produced significant hydrocarbons in the early stages. The Company intends to
participate in an offset well in 1995 if the economic viability of Occidental's
discovery well becomes more certain.
The strategy going forward remains focused on domestic onshore acquisition,
development, and exploration opportunities, particularly in areas where the
Company can employ new drilling and seismic technologies.
7
<PAGE> 8
REAL ESTATE HELMERICH & PAYNE PROPERTIES, INC.
SUMMARY Helmerich & Payne Properties, Inc. is engaged in the leasing,
acquisition, and development of commercial real estate exclusively in the
metropolitan area of Tulsa, Oklahoma. At the close of 1994, the Company's
property holdings consisted of approximately 1,652,311 leasable square feet
which had an occupancy of 85 percent.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ------- ------- -------
(in thousands)
<S> <C> <C> <C>
Gross Revenues . . . . . . . . . . . . . . . . . . . $ 7,803 $ 7,630 $ 7,550
Pre-Tax Income . . . . . . . . . . . . . . . . . . . 4,460 4,149 4,263
Depreciation Expense . . . . . . . . . . . . . . . . 1,624 1,679 1,685
Capital Expenditures . . . . . . . . . . . . . . . . 916 458 697
Year-End Book Value . . . . . . . . . . . . . . . . . 26,065 27,006 28,224
Average Occupancy . . . . . . . . . . . . . . . . . . 83% 86% 87%
</TABLE>
UTICA SQUARE SHOPPING CENTER Consisting of 15 separate buildings including an
eight-story medical complex, Utica Square Shopping Center covers 30 landscaped
acres located approximately five minutes from downtown Tulsa. Nearly 70
distinguished shops and restaurants make up Utica Square's tenant roster,
including Ann Taylor, The Gap, Laura Ashley, Miss Jackson's, The Olive Garden,
Saks Fifth Avenue, and Williams-Sonoma.
A unique outdoor design allows Utica Square to host a number of seasonal events
each year, some of which have become traditions in the Tulsa area. These
attributes help make Utica Square a distinctive shopping environment and the
cornerstone of the Company's real estate portfolio.
8
<PAGE> 9
INDUSTRIAL PROPERTIES The Company's industrial properties and undeveloped
land holdings are located in the southeastern part of Tulsa close to major
transportation arteries and key growth areas. Two of the properties are
classified as bulk warehouse developments and the remaining four are
combination office/warehouse properties. Sluggish economic growth and an
oversupply of industrial space continues to hamper the occupancy and the rate
structure in this market segment. Occupancy for these properties slipped to an
average of 76 percent in 1994 from 80 percent the prior year.
The quality and location of the properties and land holdings place the Company
in a unique position to benefit from growth in the Tulsa economy.
SUMMARY OF PROPERTY OWNED
<TABLE>
<CAPTION>
Property Name Description Square Feet
------------- ----------- -----------
<S> <C> <C>
Utica Square Shopping Center Upscale Retail 405,709
Utica Square Offices and Medical Center Professional Offices 94,969
Plaza Office Building Corporate Offices 86,899
Space Center Industrial Warehouses 495,000
Space Center East Industrial Warehouses 202,500
Tandem Business Park Office/Warehouse Complex 88,084
Tulsa Business Park Office/Warehouse Complex 204,600
Maxim Center Office/Warehouse Complex 40,800
Maxim Place Office/Warehouse Complex 33,750
Southpark Undeveloped 257 Acres --
---------
Total Square Feet 1,652,311
=========
</TABLE>
9
<PAGE> 10
CHEMICALS NATURAL GAS ODORIZING, INC.
SUMMARY Natural Gas Odorizing, Inc. (NGO), a wholly-owned subsidiary of
Helmerich & Payne, Inc., is a leading producer and marketer of mercaptan-based
products used primarily as warning odorants in natural and liquified petroleum
gas (LPG). The Company also produces similarly composed products used as
feedstocks and sulfiding agents in other segments of the chemical industry.
The Company's Baytown, Texas, facility obtains its primary raw materials,
hydrogen sulfide and olefins, from a neighboring refinery. Raw materials are
reacted and fractionated, and then blended with other ingredients to yield the
final products. NGO's primary customers are LPG distributors and natural gas
utility companies. Depending on the customer's needs, products are delivered in
Company-operated tank trucks or shipped in non-returnable containers or
reusable cylinders. Approximately eight percent of the Company's sales were
made outside of North America in 1994, compared with 11 percent in 1993.
Price increases on LPG odorants helped the Company achieve record financial
results for the second consecutive year in 1994. Although revenue and pre-tax
income increased over 1993 levels by 31 and 64 percent, respectively, LPG
odorant prices are expected to stabilize in the coming year.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- -------- -------- --------
(in thousands)
<S> <C> <C> <C>
Gross Revenues . . . . . . . . . . . . . . . . . . . . . $ 18,849 $ 14,374 $ 13,461
Pre-Tax Income . . . . . . . . . . . . . . . . . . . . . 5,994 3,665 2,831
Depreciation Expense . . . . . . . . . . . . . . . . . . 654 594 560
Capital Expenditures . . . . . . . . . . . . . . . . . . 619 630 158
Pounds of Product Sold . . . . . . . . . . . . . . . . . 8,071 7,930 8,452
</TABLE>
10
<PAGE> 11
REVENUES AND INCOME BY BUSINESS SEGMENTS
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------ --------- -------- ---------
(in thousands)
<S> <C> <C> <C>
SALES AND OTHER REVENUES:
Contract Drilling - Domestic . . . . . . . . . . . . . . . $ 86,521 $ 60,328 $ 41,171
Contract Drilling - International . . . . . . . . . . . . 98,111 89,618 72,250
--------- -------- --------
Total Contract Drilling Division . . . . . . . . . . . 184,632 149,946 113,421
--------- -------- --------
Exploration and Production . . . . . . . . . . . . . . . . 58,884 69,795 54,525
Natural Gas Marketing . . . . . . . . . . . . . . . . . . 51,889 63,858 40,535
--------- -------- --------
Total Oil and Gas Division . . . . . . . . . . . . . . 110,773 133,653 95,060
--------- -------- --------
Chemical Division . . . . . . . . . . . . . . . . . . . . 18,849 14,374 13,461
Real Estate Division . . . . . . . . . . . . . . . . . . . 7,803 7,630 7,550
Investments and Other Income . . . . . . . . . . . . . . . 6,944 9,494 10,208
--------- -------- --------
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . $329,001 $315,097 $239,700
--------- -------- --------
--------- -------- --------
OPERATING PROFIT:
Contract Drilling - Domestic . . . . . . . . . . . . . . . $ 5,874 $ 122 $ (5,358)
Contract Drilling - International . . . . . . . . . . . . 14,645 15,281 10,929
--------- -------- --------
Total Contract Drilling Division . . . . . . . . . . . 20,519 15,403 5,571
--------- -------- --------
Exploration and Production . . . . . . . . . . . . . . . . 3,245 19,495 9,764
Natural Gas Marketing . . . . . . . . . . . . . . . . . . 1,525 667 1,864
--------- -------- --------
Total Oil and Gas Division . . . . . . . . . . . . . . 4,770 20,162 11,628
--------- -------- --------
Chemical Division . . . . . . . . . . . . . . . . . . . . 5,994 3,665 2,831
Real Estate Division . . . . . . . . . . . . . . . . . . . 4,460 4,149 4,263
--------- -------- --------
Total Operating Profit . . . . . . . . . . . . . . . . 35,743 43,379 24,293
--------- -------- --------
OTHER:
Miscellaneous operating . . . . . . . . . . . . . . . . . (1,292) (687) (711)
Income from investments . . . . . . . . . . . . . . . . . 6,303 9,050 9,202
General corporate expense . . . . . . . . . . . . . . . . (8,908) (6,820) (6,801)
Interest expense . . . . . . . . . . . . . . . . . . . . . (385) (925) (632)
Corporate depreciation . . . . . . . . . . . . . . . . . . (1,162) (766) (725)
--------- -------- --------
Total Other . . . . . . . . . . . . . . . . . . . . . . (5,444) (148) 333
--------- -------- --------
INCOME BEFORE INCOME TAXES, EQUITY IN INCOME
(LOSS) OF AFFILIATE, AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE: . . . . . . . . . . . . . $ 30,299 $ 43,231 $ 24,626
--------- -------- --------
--------- -------- --------
</TABLE>
Note: This schedule is an integral part of Note 10 (page 27) of the financial
statements that follow.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION & ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
HELMERICH & PAYNE, INC.
RESULTS OF OPERATIONS
Helmerich & Payne, Inc.'s net income for 1994 was $24,971,000 ($1.02 per
share), compared with net income of $24,550,000 ($1.01 per share) in 1993, and
$10,849,000 ($0.45 per share) in 1992. Net income in 1994 included a $4 million
($0.16 per share) one-time reduction in the Company's deferred income taxes
from the cumulative effect of adopting Statement of Financial Accounting
Standards No. 109. Included in the Company's net income, but not related to its
operations, was net income from the sale of investment securities which was
nominal in 1994, but totaled $1,780,000 ($0.07 per share) in 1993, and
$1,193,000 ($0.05 per share) in 1992. Also included was the Company's portion
of income or losses of its equity affiliate, Atwood Oceanics, Inc., ("Atwood")
which were $0.04 per share of income in 1994, and per share losses of $0.02 in
1993, and $0.19 in 1992.
Company revenues increased to $329,001,000 in 1994, from $315,097,000 in 1993,
and $239,700,000 in 1992. The 31 percent increase in total revenues from 1992
to 1993 resulted from increased revenues in every operating segment of the
Company. The greatest revenue increases during 1993 were from domestic drilling
(47 percent), international drilling (24 percent), exploration and production
(28 percent) and natural gas marketing (58 percent). Total revenue increased by
4 percent from 1993 to 1994, primarily as a result of increases in domestic
drilling (43 percent), international drilling (9 percent), and chemical (31
percent) segments.
Revenues from exploration and production (16 percent decrease) and natural gas
marketing (19 percent decrease) fell appreciably in 1994 as oil and natural gas
prices and natural gas production volume declined.
Income from investments declined to $6,303,000 in 1994, from $9,050,000 in
1993, and $9,202,000 in 1992. From 1993 to 1994, dividend and interest income
was stable, but income from the sale of investment securities dropped from
$2,914,000 to $124,000 during that time. Interest and dividend income in 1994
was helped by higher market interest rates, even though cash
12
<PAGE> 13
balances during the year were lower than the previous two years. From 1992 to
1993, dividend and interest income declined by $1,143,000 while income from
investment securities rose by $991,000.
Costs and expenses in 1994 were $298,702,000, 93 percent of total operating
revenues, compared with 89 percent in 1993 and 93 percent in 1992. Operating
costs as a percentage of operating revenues rose slightly to 66 percent in
1994, compared with 64 percent in 1993 and 63 percent in 1992. The increase
from 1992 to 1993 was mainly due to Natural Gas Marketing revenues rising by
$23,323,000, while cost percentages for that division remained very high. Other
divisions' operating cost percentages remained stable or improved. The
operating cost percentages rose slightly in 1994 because of greater activity in
the lower margin domestic land drilling business and an increase in operating
expenses in the international contract drilling business.
General and administrative expenses increased to $8,908,000 in 1994, from
$6,820,000 in 1993. There was little change from 1992 to 1993. The increase in
1994 was due primarily to increased costs of employee healthcare benefits and,
to a lesser degree, a net increase in pension expense.
Income tax expense, as a percentage of pre-tax income, fell to 34 percent in
1994, from 42 percent in 1993, and 37 percent in 1992. The increase from 1992
to 1993 was the result of an increase in the corporate tax rate from 34 percent
to 35 percent, a higher percentage of international income which is taxed at
higher rates, and a decline in the deduction related to dividends received from
domestic corporations. The effective tax rate for 1994 was substantially lower
because of the usage of foreign tax credit carryforwards, tight sands tax
credits, and a reduction in Venezuelan taxes as a result of monetary correction
tax laws enacted there.
CONTRACT DRILLING DIVISION revenues increased by 23 percent from 1993 to 1994,
and by 32 percent from 1992 to 1993. Domestic drilling pre-tax income increased
to $5,874,000 in 1994, from a $5,358,000 pre-tax loss in 1992. During that
period of time the U.S. offshore platform rig business has shown substantial
improvement. The Company's performance in its domestic land rig operations has
also improved. It is anticipated that domestic operations will continue to
improve as rig demand remains firm in both the offshore platform and the land
rig markets.
13
<PAGE> 14
International revenues climbed to $98,111,000 in 1994, from $89,618,000 in
1993, and $72,250,000 in 1992. Pre-tax income for the international contract
drilling sector declined slightly to $14,645,000 in 1994, after increasing to
$15,281,000 in 1993, from $10,929,000 in 1992. This year's decline was due to
increased operating expenses in the Company's Colombian operations, and a
significant foreign currency loss recorded in Venezuela. The Company
anticipates its pre-tax income from international operations will improve for
the coming year based on higher activity levels in both Colombia and Venezuela.
After the close of the year, the Company announced it was awarded letters of
intent for three additional deep land rigs to work in Colombia on three-year
term contracts and an additional three rigs for one-year term contracts in
Venezuela. With these additions, rig counts in Colombia and Venezuela will
increase to 11 and 18, respectively.
OIL AND GAS DIVISION revenue and operating income declined significantly in
1994, after increasing substantially from 1992 to 1993. Exploration and
production revenues increased 28 percent to $69,795,000 in 1993, from
$54,525,000 in 1992, and pre-tax income increased to $19,495,000 from
$9,764,000. The variation mirrored natural gas prices and production volumes
for the respective years. From 1992 to 1993, natural gas prices increased from
$1.39 per Mcf to $1.84 per Mcf, while production increased from 75.5 million
cubic feet per day (MMcf/d) to 78.0 MMcf/d. From 1993 to 1994, natural gas
prices fell to $1.72 per Mcf and production volumes declined to approximately
73.0 MMcf/d. Crude oil production increased 4 percent from 1992 to 1994, while
the average price per barrel fell from $19.16 in 1992, to $17.58 in 1993, and
to $14.83 in 1994.
Consequently, exploration and production revenues decreased to $58,884,000 for
1994. Pre-tax income for 1994, which fell to $3,245,000, was also affected by
higher geophysical expenses and an increase in leasehold abandonments,
resulting primarily from a reduction in the carrying value of the Company's
leasehold position in its Austin Chalk prospect in south central Louisiana. It
is anticipated that higher geophysical charges will continue for the coming
year. Additionally, the Company intends to drill a higher percentage of
exploratory wells during 1995 and could incur higher dry hole charges.
14
<PAGE> 15
Natural gas marketing revenues, which are primarily derived from selling
natural gas produced by other companies (third party), declined to $51,889,000
in 1994, from $63,858,000 in 1993. Revenues were $40,535,000 in 1992. Pre-tax
income was $1,525,000 in 1994, $667,000 for 1993, and $1,864,000 for 1992.
During 1993, the natural gas marketing industry consolidated, causing dramatic
downward pressure on income derived from third party natural gas sales.
Industry conditions improved slightly in 1994. The Company's approach has been
to use the existing capacity of its personnel and facilities to derive
additional profit from matching its customers with third party producers when
the marketing situation is not conducive for the sale of the Company's own
natural gas. It is expected that competition will continue to limit fees and
premiums for third party natural gas sales. Therefore, the Company does not
anticipate significant growth in income from third party sales in the coming
year.
CHEMICAL DIVISION revenues increased by 31 percent from 1993 to 1994, and by 7
percent from 1992 to 1993. Pre-tax income increased by 64 percent from 1993 to
1994, and by 29 percent from 1992 to 1993. Product price increases and improved
margins account for the significant rise in revenues and income over the two
years. It is anticipated that revenues and income will continue to improve
during the coming year, but not as rapidly as this past year.
REAL ESTATE DIVISION revenues and income for 1994 were up slightly due to the
sale of a small parcel of land which resulted in a $450,000 gain. Revenues and
income from operations were flat for the years 1993 and 1992. Occupancy and
rental rates have been stable to soft over the past two years with no major
changes expected for 1995.
FINANCIAL CONDITION
The Company has maintained a very strong balance sheet for many years. Current
ratios for the last three years have exceeded 2.5, while long-term debt as a
percentage of total capitalization has remained below 2 percent. During the
first quarter of 1994, the Company paid off all of its remaining long-term
debt. The only long-term liabilities that remain on the balance sheet are
associated with workers compensation and general liability accruals, deferred
income taxes, and other miscellaneous long-term payables and deferred items.
15
<PAGE> 16
Net cash provided by operating activities was $79,909,000 in 1994, $74,619,000
in 1993, and $63,331,000 in 1992. Capital expenditures were $102,883,000 in
1994, $54,209,000 in 1993, and $82,498,000 in 1992. It is anticipated that
capital expenditures in 1995 will exceed those of 1994. The Company has funded
capital expenditures in excess of its cash flow internally over the past
several years. However, the Company anticipates that it will either sell a
portion of its investment portfolio or incur debt in order to fund planned
capital expenditures for 1995. Capital expenditures budgeted for 1995 include
expanded exploration activities, rig purchases and construction for Colombian
and Venezuelan operations, as well as the Company's investment in a joint
venture with its equity affiliate, Atwood. The joint venture will construct a
new generation offshore platform rig for work offshore Australia.
The Company manages a large portfolio of marketable securities which had a book
value of $87,414,000 at September 30, 1994, and a total market value at that
time of $145,012,000, including its investment in Atwood. During 1994, the
Company paid a dividend of $.485 per share which represented its 23rd
consecutive year of dividend increases.
Stock Portfolio Held by the Company
<TABLE>
<CAPTION>
Number of
September 30, 1994 Shares Book Value Market Value
------------------ --------- ---------- ------------
(in thousands,except
share amounts)
<S> <C> <C> <C>
Schlumberger, Ltd. . . . . . . . . . . . . . . . 740,000 $ 23,511 $ 40,238
Atwood Oceanics, Inc. . . . . . . . . . . . . . . 1,600,000 20,743 22,800
Sun Company, Inc. . . . . . . . . . . . . . . . . 907,164 10,637 26,081
Phillips Petroleum Company . . . . . . . . . . . 300,000 7,470 10,275
Liberty Bancorp. . . . . . . . . . . . . . . . . 500,000 7,270 16,750
Oryx Energy Company . . . . . . . . . . . . . . . 675,000 6,433 9,366
Oneok . . . . . . . . . . . . . . . . . . . . . . 225,000 2,751 3,796
Other . . . . . . . . . . . . . . . . . . . . . . 8,599 15,706
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . $ 87,414 $145,012
======== ========
</TABLE>
16
<PAGE> 17
CONSOLIDATED STATEMENTS OF INCOME
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ------- ------ --------
(in thousands, except
per share amounts)
<S> <C> <C> <C>
REVENUES:
Sales and other operating revenues . . . . . $322,698 $306,047 $230,498
Income from investments . . . . . . . . . . . 6,303 9,050 9,202
-------- -------- --------
329,001 315,097 239,700
-------- -------- --------
COSTS AND EXPENSES:
Operating costs . . . . . . . . . . . . . . . 213,427 194,856 145,778
Depreciation, depletion and amortization . . 50,068 48,609 47,738
Dry holes and abandonments . . . . . . . . . 10,369 6,893 3,214
Taxes, other than income taxes . . . . . . . 15,545 13,763 10,911
General and administrative . . . . . . . . . 8,908 6,820 6,801
Interest . . . . . . . . . . . . . . . . . . 385 925 632
-------- -------- --------
298,702 271,866 215,074
-------- -------- --------
INCOME BEFORE INCOME TAXES, EQUITY IN INCOME
(LOSS) OF AFFILIATE AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE . . . . . . . 30,299 43,231 24,626
INCOME TAX EXPENSE . . . . . . . . . . . . . . . . . 10,232 18,279 9,192
EQUITY IN INCOME (LOSS) OF AFFILIATE,
net of income taxes . . . . . . . . . . . . . 904 (402) (4,585)
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE . . . . . . . . . . . . 20,971 24,550 10,849
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE . 4,000 -- --
-------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 24,971 $ 24,550 $ 10,849
======== ======== ========
PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE . . . . . . . . . . . . $ .86 $ 1.01 $ .45
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE . .16 -- --
-------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 1.02 $ 1.01 $ .45
======== ======= =======
AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . . . 24,416 24,307 24,210
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE> 18
CONSOLIDATED BALANCE SHEETS
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
ASSETS
September 30, 1994 1993
------------- --------- ---------
(in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . $ 29,447 $ 61,656
Short-term investments . . . . . . . . . . . . . . 8,997 9,109
Accounts receivable, less reserve of $1,480 and $608 59,897 56,305
Inventories . . . . . . . . . . . . . . . . . . . . 20,995 17,646
Prepaid expenses and other . . . . . . . . . . . . 3,603 5,783
--------- ---------
Total current assets . . . . . . . . . . . . . . 122,939 150,499
--------- ---------
INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 87,414 84,945
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Contract drilling equipment . . . . . . . . . . . . 444,432 418,004
Oil and gas properties . . . . . . . . . . . . . . 389,100 350,186
Real estate properties . . . . . . . . . . . . . . 47,827 47,502
Other . . . . . . . . . . . . . . . . . . . . . . . 61,743 57,630
--------- ---------
943,102 873,322
Less--Accumulated depreciation, depletion and
amortization . . . . . . . . . . . . . . . . . . . 542,451 514,524
--------- ---------
Net property, plant and equipment . . . . . . . . 400,651 358,798
--------- ---------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . 13,823 16,693
--------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 624,827 $ 610,935
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE> 19
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1994 1993
------------- -------- --------
(in thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 22,645 $ 23,836
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 24,056 16,899
Current maturities of long-term debt . . . . . . . . . . . . -- 5,679
-------- --------
Total current liabilities . . . . . . . . . . . . . . . 46,701 46,414
-------- --------
NONCURRENT LIABILITIES:
Long-term debt, less current maturities . . . . . . . . . . -- 3,600
Deferred income taxes . . . . . . . . . . . . . . . . . . . 44,462 44,723
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,330 7,271
-------- --------
Total noncurrent liabilities . . . . . . . . . . . . . . . 53,792 55,594
-------- --------
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value, 80,000,000 shares authorized,
26,764,476 shares issued. . . . . . . . . . . . . . . . . . 2,677 2,677
Preferred stock, no par value, 1,000,000 shares authorized,
no shares issued . . . . . . . . . . . . . . . . . . . . . -- --
Additional paid-in capital . . . . . . . . . . . . . . . . . 48,196 47,412
Retained earnings . . . . . . . . . . . . . . . . . . . . . 496,280 482,405
-------- --------
547,153 532,494
Less treasury stock, 2,054,364 shares in 1994 and 2,126,994
shares in 1993, at cost . . . . . . . . . . . . . . . . . . 22,819 23,567
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . 524,334 508,927
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . $624,827 $610,935
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE> 20
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock
------------ Paid-In Retained --------------
Shares Amount Capital Earnings Shares Amount
------ ------ ------- -------- ----- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
------ ------ ------- -------- ----- --------
Balance, September 30, 1991 . . . . . . . . 26,764 $2,677 $45,894 $467,621 2,277 $(25,059)
Cash dividends ($.47 per share) . . . . . -- -- -- (11,533) -- --
Exercise of stock options . . . . . . . . -- -- 527 -- (64) 675
Stock issued under Restricted Stock Award
Plan . . . . . . . . . . . . . . . . . . -- -- 343 (619) (25) 275
Amortization of deferred
compensation . . . . . . . . . . . . . . -- -- -- 1,636 -- --
Net income . . . . . . . . . . . . . . . . -- -- -- 10,849 -- --
------ ------ ------- -------- ----- --------
Balance, September 30, 1992 . . . . . . . . 26,764 2,677 46,764 467,954 2,188 (24,109)
Cash dividends ($.48 per share) . . . . . -- -- -- (11,815) -- --
Exercise of stock options . . . . . . . . -- -- 888 -- (61) 542
Lapse of restrictions on Restricted Stock
Awards . . . . . . . . . . . . . . . . . -- -- (240) -- -- --
Amortization of deferred compensation . . -- -- -- 1,716 -- --
Net income . . . . . . . . . . . . . . . . -- -- -- 24,550 -- --
------ ------ ------- -------- ----- --------
Balance, September 30, 1993 . . . . . . . . 26,764 2,677 47,412 482,405 2,127 23,567)
Cash dividends ($.49 per share) . . . . . -- -- -- (12,097) -- --
Exercise of stock options . . . . . . . . -- -- 549 -- (43) 415
Lapse of restrictions on Restricted Stock
Awards . . . . . . . . . . . . . . . . . -- -- (246) -- -- --
Stock issued under Restricted Stock Award
Plan . . . . . . . . . . . . . . . . . . -- -- 481 (814) (30) 333
Amortization of deferred compensation . . -- -- -- 1,815 -- --
Net income . . . . . . . . . . . . . . . -- -- -- 24,971 -- --
------ ------ ------- -------- ----- --------
Balance, September 30, 1994 . . . . . . . . 26,764 $2,677 $48,196 $496,280 2,054 $(22,819)
====== ====== ======= ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE> 21
CONSOLIDATED STATEMENTS OF CASH FLOWS
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ---- ---- ----
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,971 $ 24,550 $ 10,849
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation, depletion and amortization . . . . . . . . 50,068 48,609 47,738
Dry holes and abandonments . . . . . . . . . . . . . . . 10,369 6,893 3,214
Cumulative effect of change in accounting principle . . . (4,000) -- --
Equity in (income) loss of affiliate before income taxes (1,458) 435 4,956
Amortization of deferred compensation . . . . . . . . . . 1,815 1,716 1,636
Gain on sale of securities . . . . . . . . . . . . . . . (124) (2,914) (1,923)
(Gain) loss on sale of fixed assets, other . . . . . . . (2,465) (557) 774
Change in assets and liabilities-
Increase in accounts receivable . . . . . . . . . . . . (3,592) (13,486) (5,287)
Increase in inventories . . . . . . . . . . . . . . . . (3,349) (35) (914)
(Increase) decrease in prepaid expenses and other . . . 5,050 (492) (4,092)
Increase (decrease) in accounts payable . . . . . . . . (1,191) 7,523 2,350
Increase (decrease) in accrued liabilities . . . . . . 1,617 (1,619) 411
Increase (decrease) in deferred income taxes . . . . . 3,739 5,600 (2,900)
Increase (decrease) in other noncurrent liabilities . . (1,541) (1,604) 6,519
-------- -------- --------
Total adjustments . . . . . . . . . . . . . . . . . . . 54,938 50,069 52,482
-------- -------- --------
Net cash provided by operating activities . . . . . 79,909 74,619 63,331
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including dry hole costs . . . . . . . . (102,883) (54,209) (82,498)
Proceeds from sale of property, plant and equipment . . . . . 5,971 4,801 2,701
Purchase of investments . . . . . . . . . . . . . . . . . . . (1,500) (2,400) (761)
Proceeds from sale of investments . . . . . . . . . . . . . . 373 7,904 6,283
Purchase of short-term investments . . . . . . . . . . . . . . (12) (3,036) (5,204)
Proceeds from sale of short-term investments . . . . . . . . . 124 7,055 20,603
-------- -------- --------
Net cash used in investing activities . . . . . . . . . . (97,927) (39,885) (58,876)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt . . . . . . . . . . . -- 2,070 3,460
Payments made on long-term debt . . . . . . . . . . . . . . . (3,139) (2,180) (1,657)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . (11,965) (11,808) (11,400)
Proceeds from exercise of stock options . . . . . . . . . . . 913 1,254 1,201
-------- -------- --------
Net cash used in financing activities . . . . . . . . . . (14,191) (10,664) (8,396)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . (32,209) 24,070 (3,941)
CASH AND CASH EQUIVALENTS, beginning of period . . . . . . . . . 61,656 37,586 41,527
-------- -------- --------
CASH AND CASH EQUIVALENTS, end of period . . . . . . . . . . . . $ 29,447 $ 61,656 $ 37,586
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HELMERICH & PAYNE, INC. September 30, 1994, 1993, and 1992
NOTE 1 SUMMARY OF ACCOUNTING POLICIES
CONSOLIDATION -
The consolidated financial statements include the accounts of Helmerich &
Payne, Inc. (the Company), and all of its wholly-owned subsidiaries. Fiscal
years of the Company's foreign consolidated operations are August 31 to
facilitate reporting of consolidated accounts.
TRANSLATION OF FOREIGN CURRENCIES -
The Company has determined that the functional currency for its foreign
subsidiaries is the U.S. dollar. Foreign currency transaction losses for the
years 1994, 1993 and 1992 were $2,764,000, $493,000 and $392,000, respectively.
PROPERTY, PLANT AND EQUIPMENT -
The Company follows the successful efforts method of accounting for oil and gas
properties. Under this method, the Company capitalizes all costs to acquire
mineral interests in oil and gas properties, to drill and equip exploratory
wells which find proved reserves and to drill and equip development wells.
Geological and geophysical costs, delay rentals and costs to drill exploratory
wells which do not find proved reserves are expensed. Capitalized costs of
producing oil and gas properties are depreciated and depleted by the
unit-of-production method based on proved developed oil and gas reserves
determined by the Company and reviewed by independent engineers.
The Company reserves for impairment of its oil and gas properties whenever the
net capitalized costs of total oil and gas properties exceed the estimated
undiscounted future net revenues from proved reserves. Additionally, the
estimated undiscounted future revenues of high-cost proved properties, based on
prices at the time of the estimate, are evaluated prior to start-up of
commercial production and any significant impairment is recognized currently.
Undeveloped leases are amortized based on management's estimate of
recoverability. Costs of surrendered leases are charged to the amortization
reserve.
Substantially all other property, plant and equipment is depreciated using the
straight-line method based on the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Contract drilling equipment . . . . . . . . . . . . . . 4-10
Chemical plant and equipment . . . . . . . . . . . . . 10-25
Real estate buildings and equipment . . . . . . . . . . 10-50
Other . . . . . . . . . . . . . . . . . . . . . . . . . 3-33
</TABLE>
CASH AND CASH EQUIVALENTS -
Cash and cash equivalents consist of cash in banks and investments readily
convertible into cash which mature within three months from the date of
purchase.
INVENTORIES -
Inventories, primarily materials and supplies, are valued at the lower of cost
(moving average or actual) or market.
DRILLING REVENUE -
Substantially all drilling contracts are daywork contracts and drilling
revenues and expenses are recognized as work progresses.
GAS IMBALANCES -
The Company recognizes revenues from gas wells on the sales method, and a
liability is recorded for permanent imbalances.
INVESTMENTS -
Investments in companies owned less than 20 percent are carried at cost with
income recognized as dividends are received. Investments in companies owned
from 20 to 50 percent are accounted for using the equity method with the
Company recognizing its proportionate share of the income or loss of each
investee.
The Company owned 24.3 percent of Atwood Oceanics, Inc. (Atwood) at September
30, 1994 and 1993. The quoted market value of the Company's investment was
$22,800,000 and $17,200,000 at September 30, 1994 and 1993, respectively.
Retained earnings at September 30, 1994, include approximately $8,563,000 of
undistributed earnings of Atwood. Atwood is the only 20 to 50 percent owned
affiliate at September 30, 1994 and 1993.
22
<PAGE> 23
Summarized financial information of the affiliated company accounted for on the
equity method is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Gross revenues . . . . . . . . . . . . . . . . . $ 68,045 $ 54,219 $ 47,525
Costs and expenses . . . . . . . . . . . . . . . (62,045) (56,010) (68,593)
-------- -------- --------
Net income ( loss) . . . . . . . . . . . . . . . $ 6,000 $ (1,791) $(21,068)
======== ======== ========
Helmerich & Payne, Inc.'s equity in net income
(loss) of affiliates, net of income taxes . . . $ 904 $ (402) $ (4,585)
======== ======== ========
Current assets . . . . . . . . . . . . . . . . . $ 37,965 $ 27,903 $ 29,876
Noncurrent assets . . . . . . . . . . . . . . . . 115,065 122,356 135,566
Current liabilities . . . . . . . . . . . . . . . 13,752 11,900 12,087
Noncurrent liabilities . . . . . . . . . . . . . 53,000 58,609 71,269
Shareholders' equity . . . . . . . . . . . . . . 86,278 79,750 82,086
======== ======== ========
Helmerich & Payne, Inc.'s investment . . . . . . $ 20,743 $ 19,285 $ 19,720
======== ======== ========
</TABLE>
INCOME TAXES -
Effective October 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes." Under Statement No. 109, deferred income taxes
are computed using the liability method and are provided on all temporary
differences between the financial basis and the tax basis of assets and
liabilities. For the years ended September 30, 1993 and 1992, deferred income
taxes are computed using the deferred method and are provided on timing
differences between financial and taxable income.
OTHER POST EMPLOYMENT BENEFITS -
The Company provides medical benefits to employees who retired before November
1, 1992. The Company does not provide any other benefits to these retirees and
will not provide any post retirement benefits to any person retiring after that
date. The liability for the benefits provided is not material.
The Company has accrued a liability for estimated workers compensation claims
incurred. The liability for other benefits to former or inactive employees
after employment but before retirement is not material.
EARNINGS PER SHARE -
Earnings per share are based on the weighted average number of shares of common
stock outstanding during the year. Common stock equivalents are insignificant,
and therefore, have not been considered in the earnings per share computation.
RECLASSIFICATIONS -
Certain reclassifications have been made in the 1993 and 1992 financial
statements to conform to the 1994 presentation.
NOTE 2 LONG-TERM DEBT
Notes payable and long term debt consist of the following:
<TABLE>
<CAPTION>
At September 30, 1994 1993
---------------- ---- ----
(in thousands)
<S> <C> <C>
Mortgage notes payable (at interest rates ranging from 9.25% to 10%) $ -- $ 3,139
Other long-term debt (at interest rates ranging from 6% to 7%) . . -- 6,140
---- -------
-- 9,279
Less - Current maturities of long-term debt . . . . . . . . . . . . -- 5,679
---- -------
$ -- $ 3,600
==== =======
</TABLE>
The Company has available a $20,000,000 bank line of credit under an agreement
that expires March 15, 1995.
23
<PAGE> 24
NOTE 3 FEDERAL INCOME TAXES
Effective October 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes." The cumulative effect of
adopting Statement No. 109 as of October 1, 1993 was to increase net income by
$4,000,000. As permitted under the new rules, prior years financial statements
have not been restated.
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------ ------- ------- ------
(in thousands)
<S> <C> <C> <C>
CURRENT:
Federal . . . . . . . . . . . . . . . . . . . $ 3,645 $ 6,190 $ 4,690
Foreign . . . . . . . . . . . . . . . . . . . 2,763 5,106 6,985
State . . . . . . . . . . . . . . . . . . . . 777 911 551
------- ------- -------
7,185 12,207 12,226
------- ------- -------
DEFERRED:
Federal . . . . . . . . . . . . . . . . . . . (292) 3,174 (1,157)
Foreign . . . . . . . . . . . . . . . . . . . 3,430 2,616 (1,834)
State . . . . . . . . . . . . . . . . . . . . (91) 282 (43)
------- ------- -------
3,047 6,072 (3,034)
------- ------- -------
TOTAL PROVISION: . . . . . . . . . . . . . . . . . . . $10,232 $18,279 $9,192
------- ------- -------
------- ------- -------
</TABLE>
The amounts of domestic and foreign income are as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ------- ------- -------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAXES, EQUITY IN INCOME (LOSS)
OF AFFILIATE, AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE:
Domestic . . . . . . . . . . . . . . . . . . . . $17,513 $29,051 $12,993
Foreign . . . . . . . . . . . . . . . . . . . . . 12,786 14,180 11,633
------- ------- -------
$30,299 $43,231 $24,626
------- ------- -------
------- ------- -------
</TABLE>
Effective income tax rates as compared to the U.S. Federal income tax rate are
as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ---- ---- ----
<S> <C> <C> <C>
U.S. Federal income tax rate . . . . . . . . . . . . . 35% 35% 34%
Dividends received deduction . . . . . . . . . . . . . (2) (1) (4)
Excess statutory depletion . . . . . . . . . . . . . . (1) (1) --
Effect of higher foreign tax rates . . . . . . . . . . 3 7 5
Other, net . . . . . . . . . . . . . . . . . . . . . . (1) 2 2
---- ---- ----
Effective income tax rate . . . . . . . . . . . . . . . 34% 42% 37%
---- ---- ----
---- ---- ----
</TABLE>
The components of the Company's net deferred tax liabilities are as follows:
<TABLE>
<CAPTION>
September 30, 1994
------------------
<S> <C>
DEFERRED TAX LIABILITIES:
Property, plant and equipment . . . . . . . . . . . . . $ 42,406
Pension provision . . . . . . . . . . . . . . . . . . . 4,632
Other . . . . . . . . . . . . . . . . . . . . . . . . . 3,998
--------
Total deferred tax liabilities . . . . . . . . . . 51,036
--------
DEFERRED TAX ASSETS:
Financial accruals . . . . . . . . . . . . . . . . . . 4,419
Other . . . . . . . . . . . . . . . . . . . . . . . . . 2,155
--------
Total deferred tax assets . . . . . . . . . . . . . 6,574
--------
Valuation allowance . . . . . . . . . . . . . . . . . . --
--------
Net deferred tax assets . . . . . . . . . . . . . . 6,574
--------
NET DEFERRED TAX LIABILITIES . . . . . . . . . . . . . $ 44,462
--------
--------
</TABLE>
24
<PAGE> 25
The deferred income tax provision (benefit) for 1993 and 1992 results from
timing differences in the recognition of revenue and expense for income tax and
financial reporting purposes. The sources of these differences and the related
income tax effect of each, are as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1993 1992
------------------------ -------- --------
(in thousands)
<S> <C> <C>
Effect of intangible development costs expensed for
income tax purposes over (under) costs amortized
for financial reporting purposes . . . . . . . . . $1,302 $(1,085)
Financial under income tax depreciation . . . . . . 2,134 857
Pension income . . . . . . . . . . . . . . . . . . . 128 246
Geophysical expense . . . . . . . . . . . . . . . . (51) (532)
Insurance expense . . . . . . . . . . . . . . . . . (36) 376
Amortization of deferred compensation . . . . . . . (652) (605)
Restricted stock options vesting . . . . . . . . . . 609 --
Deferred mobilization revenues . . . . . . . . . . . 566 (1,745)
Sales of long-term investments . . . . . . . . . . . 484 (76)
Excess depletion . . . . . . . . . . . . . . . . . . 589 519
Oil and gas revenue recognition timing differences . 262 184
Other . . . . . . . . . . . . . . . . . . . . . . . 737 (1,173)
------ -------
$6,072 $(3,034)
====== =======
</TABLE>
NOTE 4 STOCK OPTIONS, AWARD PLAN AND RIGHTS
The Company has reserved 1,461,645 shares of its treasury stock to satisfy the
exercise of stock options issued under the 1982 and 1990 Stock Option Plans.
Options awarded under these plans are granted at prices equal to at least
market price on the date of grant. Options granted under the 1982 plan have a
term of nine years while options granted under the 1990 plan have a term of
seven years. Options granted under both plans become exercisable in increments
as outlined in the plans.
Activity for the incentive stock option plans, was as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------ ------- ------- ------
(in thousands)
<S> <C> <C> <C>
Outstanding at October 1, . . . . . . . . . . . . . 780,079 860,713 783,189
Granted . . . . . . . . . . . . . . . . . . . . . . 110,250 -- 142,842
Exercised . . . . . . . . . . . . . . . . . . . . . (46,510) (67,112) (65,318)
Cancelled . . . . . . . . . . . . . . . . . . . . . (7,940) (13,522) --
------- ------- -------
Outstanding at September 30, . . . . . . . . . . . . 835,879 780,079 860,713
======= ======= =======
Exercisable at September 30, . . . . . . . . . . . . 70,889 19,782 40,776
======= ======= =======
Weighted average exercise price of options
outstanding . . . . . . . . . . . . . . . . . . . . $25.65 $25.20 $24.93
====== ====== ======
Weighted average exercise price of options
exercised . . . . . . . . . . . . . . . . . . . . . $21.77 $21.53 $17.64
====== ====== ======
</TABLE>
As of September 30, 1994, the Company has issued 360,000 shares of treasury
stock under a Restricted Stock Award Plan (the "Plan") including 30,000 shares
during 1994. The Company recognized deferred compensation totalling
$12,832,000, which was the fair market value of the stock at the time of
issuance, as a reduction of retained earnings. Treasury stock was reduced by
the book value of the shares issued, $4,058,000. The difference was recognized
as an increase in paid-in capital. The deferred compensation is being amortized
over a seven-year period as compensation expense. In both 1994 and 1993,
restrictions lapsed with respect to 61,000 shares, and the shares were released
to Plan participants.
On September 30, 1994, the Company had 24,710,112 outstanding common stock
purchase rights ("Rights"). Each Right entitles the holder thereof, until
January 8, 1996, to buy one share of common stock at an exercise price of
$60.00. The exercise price and the number of shares of common stock issuable
upon the exercise of the Rights are subject to adjustment in certain cases to
prevent dilution. The Rights are evidenced by the common stock certificates and
are not exercisable or transferable apart from the common stock, until 15 days
after a person acquires 15 percent or more of the common stock. In the event
the Company is acquired in a merger or other business combination transaction
(including one in which the Company is the surviving corporation), it is
provided that each Right will entitle its holder to purchase, at the then
current exercise price of the Right, that number of shares of common stock of
the surviving company, which at the time of such transaction, would have a
market value of two times the exercise price of the Right. The Rights do not
have any voting rights and are redeemable, at the option of the Company, at a
price of $.05 per Right prior to any person or entity acquiring beneficial
ownership of at least 15 percent of the common stock. The Rights expire on
January 8, 1996. As long as the Rights are not separately transferable, the
Company will issue one Right with each new share of common stock issued.
NOTE 5 INVESTMENTS
Short-term investments consist mainly of treasury notes carried at cost, which
approximates fair value, and are pledged as collateral for a renewable letter
of credit. The aggregate quoted market value of the marketable equity
securities, excluding Atwood, was approximately $122,212,000 and $135,175,000
at September 30, 1994 and 1993, respectively. Aggregate cost, which is also
carrying value, was $66,671,000 and $65,660,000 at September 30, 1994 and 1993,
respectively.
At September 30, 1994, gross unrealized gains and unrealized losses applicable
to the marketable equity securities were approximately $55,653,000 and
$112,000, respectively. In 1994, 1993 and 1992, the Company realized gains from
the sale of marketable equity securities of approximately $124,000, $2,914,000
and $1,920,000, respectively.
Effective October 1, 1994, the Company will be required to adopt FASB Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." If
the Company had adopted the new accounting standard effective September 30,
1994, investments would have increased $55,541,000, deferred tax liabilities
would have increased $21,106,000 and shareholders' equity would have increased
$34,435,000.
25
<PAGE> 26
NOTE 6 RETIREMENT PLANS
DEFINED BENEFIT PLANS:
The Company has noncontributory pension plans covering substantially all of its
employees, including certain employees in foreign countries. The Company makes
annual contributions to the plans equal to the maximum amount allowable for tax
reporting purposes. Future service benefits are determined using a 1.5 percent
career average formula.
The net periodic pension credit included the following components:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------ -------- ------- ------
(in thousands)
<S> <C> <C> <C>
Service cost-benefits earned during the year . . . . . . . . . . . $ 1,557 $ 1,304 $ 1,172
Interest cost on projected benefit obligations . . . . . . . . . . 1,191 1,105 896
Return on plan assets . . . . . . . . . . . . . . . . . . . . . . . (2,639) (522) (3,517)
Net amortization and deferral . . . . . . . . . . . . . . . . . . . (302) (2,477) 726
------ ------ -------
Net pension credit . . . . . . . . . . . . . . . . . . . . . . $ (193) $ (590) $ (723)
------ ------ -------
------ ------ -------
</TABLE>
The discount rate used in determining the actuarial value of the projected
benefit obligation for 1994, 1993 and 1992 was 7.5%, 7.0% and 7.5%,
respectively. The average expected rate of return on plan assets was 8.5% for
1994, 1993 and 1992. The assumed rate of increase in compensation was 5.0% for
1994 and 5.5% for 1993 and 1992.
The following table sets forth the plans' funded status and amounts recognized
in the balance sheet:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993
------------------------ ------- --------
(in thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . . . . . . . . . . . $ 13,323 $ 13,493
-------- --------
-------- --------
Accumulated benefit obligation . . . . . . . . . . . . . . . . . $ 15,758 $ 15,649
-------- --------
-------- --------
Projected benefit obligation . . . . . . . . . . . . . . . . . . $ 17,755 $ 17,392
-------- --------
-------- --------
Plan assets at fair value, primarily listed stocks, U.S. Government
securities and guaranteed insurance contracts . . . . . . . . . $ 33,317 $ 31,427
-------- --------
-------- --------
Projected benefit obligation less than plan assets . . . . . . . . $ 15,562 $ 14,035
Unrecognized net gain, including unrecognized
net assets existing at October 1, 1987 . . . . . . . . . . . . . (5,589) (4,493)
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . 2,216 2,455
-------- --------
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . $ 12,189 $ 11,997
-------- --------
-------- --------
</TABLE>
DEFINED CONTRIBUTION PLAN:
Substantially all employees on the United States payroll of the Company may
elect to participate in the Company sponsored Thrift/401(K) Plan by
contributing a portion of their earnings. The Company contributes amounts equal
to 100 percent of the first five percent of the participant's compensation
subject to certain limitations. Expensed Company contributions were $1,588,000,
$1,304,000 and $1,216,000 in 1994, 1993 and 1992, respectively.
NOTE 7 ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993
------------------------ --------- ---------
(in thousands)
<S> <C> <C>
Accrued royalties payable . . . . . . . . . . . . . . . . . . . . . . $ 6,293 $ 8,179
Accrued taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 4,669 3,004
Accrued workers compensation claims . . . . . . . . . . . . . . . . . 2,364 1,100
Accrued equipment cost . . . . . . . . . . . . . . . . . . . . . . . . 3,000 --
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . 7,730 4,616
-------- --------
$ 24,056 $ 16,899
-------- --------
-------- --------
</TABLE>
26
<PAGE> 27
NOTE 8 SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ---- ---- ----
(in thousands)
<S> <C> <C> <C>
Cash payments:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 371 $ 370 $ 566
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . 9,516 15,924 12,504
Noncash investing activity:
Accrued equipment cost . . . . . . . . . . . . . . . . . . . . $3,000 $ -- $ --
</TABLE>
NOTE 9 CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations
of credit risk consist primarily of temporary cash investments and trade
receivables. The Company places its temporary cash investments with high credit
financial institutions and limits the amount of credit exposure to any one
financial institution. The Company's trade receivables are primarily with a
variety of companies in the oil and gas industry. Management requires
collateral for certain receivables of customers in its natural gas marketing
operations.
NOTE 10 SEGMENT INFORMATION
The Company operates principally in the contract drilling and oil and gas
industries. The contract drilling operations consist of contracting
Company-owned drilling equipment primarily to major oil and gas exploration
companies. Oil and gas activities consist of ownership of mineral interests in
productive oil and gas leases and undeveloped leases located primarily in
Oklahoma, Texas, Kansas and Louisiana. Intersegment sales, which are accounted
for in the same manner as sales to unaffiliated customers, are not material.
Operating profit is total revenue less operating expenses. In computing
operating profit, the following items have not been considered: equity in
earnings of Atwood Oceanics, Inc.; income from investments; general corporate
expenses; interest expense; and domestic and foreign income taxes.
Identifiable assets by segment are those assets that are used in the Company's
operations in each segment. Corporate assets are principally cash and cash
equivalents, short-term investments and investments in marketable securities.
Revenues from one company doing business with the contract drilling segment
accounted for approximately 14 percent and 11.8 percent of the total
consolidated revenues during the years ended September 30, 1994 and 1993,
respectively. Collectively, revenues from three companies controlled by the
Venezuelan government accounted for approximately 12.5 percent of total
consolidated revenues for the year ended September 30, 1992.
Summarized revenues and operating profit by industry segment for the years
ended September 30, 1994, 1993 and 1992 are located on page 11. Additional
financial information by industry segment is as follows:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ---- ---- ----
(in thousands)
<S> <C> <C> <C>
Identifiable assets:
Contract drilling - Domestic . . . . . . . . . . . . $132,804 $112,435 $109,150
Contract drilling - International . . . . . . . . . . 131,767 113,844 109,920
Exploration and Production . . . . . . . . . . . . . 175,003 162,618 163,123
Natural Gas Marketing . . . . . . . . . . . . . . . . 8,846 13,289 15,235
Chemical division . . . . . . . . . . . . . . . . . . 9,532 9,753 8,488
Real Estate division . . . . . . . . . . . . . . . . 26,958 27,845 29,017
Corporate and other . . . . . . . . . . . . . . . . . 139,917 171,151 150,571
-------- -------- --------
$624,827 $610,935 $585,504
======== ======== ========
Depreciation, depletion and amortization:
Contract drilling - Domestic . . . . . . . . . . . . $ 11,085 $ 10,126 $ 10,076
Contract drilling - International . . . . . . . . . . 15,722 16,929 15,399
Exploration and Production . . . . . . . . . . . . . 19,523 18,294 19,044
Natural Gas Marketing . . . . . . . . . . . . . . . . 290 279 268
Chemical division . . . . . . . . . . . . . . . . . . 654 594 560
Real Estate division . . . . . . . . . . . . . . . . 1,624 1,679 1,685
Corporate and other . . . . . . . . . . . . . . . . . 1,265 864 817
Intersegment elimination . . . . . . . . . . . . . . (95) (156) (111)
-------- -------- --------
$ 50,068 $ 48,609 $ 47,738
======== ======== ========
Capital expenditures:
Contract drilling - Domestic . . . . . . . . . . . . $ 31,692 $ 16,261 $ 14,956
Contract drilling - International . . . . . . . . . . 25,723 10,375 34,971
Exploration and Production . . . . . . . . . . . . . 45,809 25,551 30,757
Natural Gas Marketing . . . . . . . . . . . . . . . . 76 205 58
Chemical division . . . . . . . . . . . . . . . . . . 619 630 158
Real Estate division . . . . . . . . . . . . . . . . 916 458 697
Corporate and other . . . . . . . . . . . . . . . . . 1,048 729 901
-------- -------- --------
$105,883 $ 54,209 $ 82,498
======== ======== ========
</TABLE>
27
<PAGE> 28
NOTE 11 SUPPLEMENTARY FINANCIAL INFORMATION FOR OIL AND GAS PRODUCING
ACTIVITIES
All of the Company's oil and gas producing activities are located in
the United States.
Results of Operations from Oil and Gas Producing Activities -
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- ------ ------ ------
(in thousands)
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $58,884 $69,795 $ 54,525
------- ------- --------
Production costs . . . . . . . . . . . . . . . . . . . . . . . 18,854 19,378 18,492
Exploration expense and valuation provisions . . . . . . . . . 17,262 12,628 7,225
Depreciation, depletion and amortization . . . . . . . . . . . 19,523 18,294 19,044
Income tax expense . . . . . . . . . . . . . . . . . . . . . . 890 6,481 3,173
------- ------- --------
Total cost and expenses . . . . . . . . . . . . . . . . . . . 56,529 56,781 47,934
------- ------- --------
Results of operations (excluding corporate overhead
and interest costs) . . . . . . . . . . . . . . . . . . . . . $ 2,355 $13,014 $ 6,591
======= ======= ========
</TABLE>
Capitalized Costs -
<TABLE>
<CAPTION>
At September 30, 1994 1993
---------------- -------- -------
(in thousands)
<S> <C> <C>
Properties being amortized:
Proved properties . . . . . . . . . . . . . . . . . . . . . . . . $377,371 $340,176
Unproved properties . . . . . . . . . . . . . . . . . . . . . . . 11,729 10,010
-------- -------
Total costs being amortized . . . . . . . . . . . . . . . . . . 389,100 350,186
Less-Accumulated depreciation, depletion and amortization . . . . . 225,902 203,908
-------- --------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $163,198 $146,278
======== ========
</TABLE>
Costs Incurred Relating to Oil and Gas Producing Activities -
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- -------- -------- --------
(in thousands)
<S> <C> <C> <C>
Property acquisition:
Proved . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,115 $ 3,100 $11,441
Unproved . . . . . . . . . . . . . . . . . . . . . . . . 4,893 2,409 9,140
Exploration . . . . . . . . . . . . . . . . . . . . . . . 12,418 11,769 10,138
Development . . . . . . . . . . . . . . . . . . . . . . . 12,888 13,964 4,656
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . $53,314 $31,242 $35,375
======= ======= =======
</TABLE>
28
<PAGE> 29
Estimated Quantities of Proved Oil and Gas Reserves (Unaudited) -
Proved reserves are estimated quantities of crude oil, natural gas, and natural
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under
existing economic and operating conditions. Proved developed reserves are those
which are expected to be recovered through existing wells with existing
equipment and operating methods. The following is an analysis of proved oil and
gas reserves as estimated by the Company and reviewed by independent engineers.
<TABLE>
<CAPTION>
OIL (Bbls.) GAS (Mmcf)
----------- ----------
<S> <C> <C>
Proved reserves at September 30, 1991 . . . . . . . . . . . . . . 7,074,405 296,229
Revisions of previous estimates . . . . . . . . . . . . . . . . . 560,703 (211)
Extensions, discoveries and other additions . . . . . . . . . . . 697,006 4,565
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . (854,124) (27,622)
Purchases of reserves-in-place . . . . . . . . . . . . . . . . . 40,389 21,643
Sales of reserves-in-place . . . . . . . . . . . . . . . . . . . (10,793) (8)
--------- -------
Proved reserves at September 30, 1992 . . . . . . . . . . . . . . 7,507,586 294,596
Revisions of previous estimates . . . . . . . . . . . . . . . . . (15,550) 9,568
Extensions, discoveries and other additions . . . . . . . . . . . 168,051 10,083
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . (875,713) (28,479)
Purchases of reserves-in-place . . . . . . . . . . . . . . . . . 140,411 4,196
Sales of reserves-in-place . . . . . . . . . . . . . . . . . . . (41,586) (519)
--------- -------
Proved reserves at September 30, 1993 . . . . . . . . . . . . . . 6,883,199 289,445
Revisions of previous estimates . . . . . . . . . . . . . . . . . 302,200 (819)
Extensions, discoveries and other additions . . . . . . . . . . . 261,114 8,818
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . (887,455) (26,628)
Purchases of reserves-in-place . . . . . . . . . . . . . . . . . 159,580 19,900
Sales of reserves-in-place . . . . . . . . . . . . . . . . . . . (8,427) (64)
--------- -------
Proved reserves at September 30, 1994 . . . . . . . . . . . . . . 6,710,211 290,652
========= =======
Proved developed reserves at
September 30, 1992 . . . . . . . . . . . . . . . . . . . . . . . 6,477,661 277,169
========= =======
September 30, 1993 . . . . . . . . . . . . . . . . . . . . . . . 6,882,783 282,033
========= =======
September 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . 6,649,672 267,688
========= =======
</TABLE>
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves (Unaudited) -
The "Standardized Measure of Discounted Future Net Cash Flows Relating to
Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure requirement
under Financial Accounting Standards Board Statement No. 69. The Standardized
Measure does not purport to present the fair market value of a company's proved
oil and gas reserves. This would require consideration of expected future
economic and operating conditions, which are not taken into account in
calculating the Standardized Measure. Under the Standardized Measure, future
cash inflows were estimated by applying year-end prices to the estimated future
production of year-end proved reserves. Future cash inflows were reduced by
estimated future production and development costs based on year-end costs to
determine pre-tax cash inflows. Future income taxes were computed by applying
the statutory tax rate to the excess of pre-tax cash inflows over the Company's
tax basis in the associated proved oil and gas properties. Tax credits and
permanent differences were also considered in the future income tax
calculation. Future net cash inflows after income taxes were discounted using a
ten percent annual discount rate to arrive at the Standardized Measure.
<TABLE>
<CAPTION>
At September 30, 1994 1993
---------------- --------- ---------
(in thousands)
<S> <C> <C>
Future cash inflows . . . . . . . . . . . . . . . . . . . . . . . $ 478,426 $ 651,369
Future costs -
Future production and development costs . . . . . . . . . . . . (191,464) (207,633)
Future income tax expense . . . . . . . . . . . . . . . . . . . (71,320) (119,070)
--------- ---------
Future net cash flows . . . . . . . . . . . . . . . . . . . . . . 215,642 324,666
10% annual discount for estimated timing of cash flows . . . . . (91,019) (145,909)
--------- ---------
Standardized Measure of discounted future net cash flows . . . . $ 124,623 $ 178,757
========= =========
</TABLE>
29
<PAGE> 30
Changes in Standardized Measure relating to Proved Oil and Gas Reserves
(Unaudited) -
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
------------------------- -------- -------- ---------
(in thousands)
<S> <C> <C> <C>
Standardized Measure - Beginning of year . . . . . . . . . . $178,757 $173,644 $124,776
Increases (decreases) -
Sales, net of production costs . . . . . . . . . . . . . . . (40,030) (50,417) (36,033)
Net change in sales prices, net of production costs . . . . (80,347) 16,292 61,468
Discoveries and extensions, net of related future
development and production costs . . . . . . . . . . . . . 9,653 12,439 12,688
Changes in estimated future development costs . . . . . . . (14,571) (7,624) (2,252)
Development costs incurred . . . . . . . . . . . . . . . . . 12,888 13,964 4,656
Revisions of previous quantity estimates . . . . . . . . . . 483 6,820 2,125
Accretion of discount . . . . . . . . . . . . . . . . . . . 23,678 22,619 15,936
Net change in income taxes . . . . . . . . . . . . . . . . . 20,942 (12,656) (17,964)
Purchases of reserves-in-place . . . . . . . . . . . . . . . 11,219 3,820 15,734
Sales of reserves-in-place . . . . . . . . . . . . . . . . . (62) (652) (57)
Timing and other . . . . . . . . . . . . . . . . . . . . . . 2,013 508 (7,433)
Standardized Measure - End of year . . . . . . . . . . . . . $124,623 $178,757 $173,644
</TABLE>
NOTE 12 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
Dec. 31, March 31, June 30, Sept. 30,
1993 1994 1994 1994
-------- --------- --------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . $82,186 $87,883 $78,698 $80,234
Gross profit . . . . . . . . . . . . . . . . . . . . . 14,149 12,701 8,688 4,054
Income before cumulative effect of change
in accouting principle . . . . . . . . . . . . . . . 7,253 6,155 4,660 2,903
Net income . . . . . . . . . . . . . . . . . . . . . 11,253 6,155 4,660 2,903
Earnings per common share before cumulative
effect of change in accounting principle . . . . . . .30 .25 .19 .12
Earnings per share . . . . . . . . . . . . . . . . . . .46 .25 .19 .12
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
Dec. 31, March 31, June 30, Sept. 30,
1992 1993 1993 1993
-------- ---------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . $82,998 $83,351 $73,607 $75,141
Gross profit . . . . . . . . . . . . . . . . . . . . . 14,843 14,681 10,525 10,927
Net income . . . . . . . . . . . . . . . . . . . . . . 7,219 7,268 4,931 5,132
Earnings per share . . . . . . . . . . . . . . . . . . .30 .30 .20 .21
</TABLE>
Gross profit represents total revenues less operating costs, depreciation,
depletion and amortization, dry holes and abandonments, and taxes, other than
income taxes.
30
<PAGE> 31
Report of Independent Auditors
HELMERICH & PAYNE, INC.
The Board of Directors and Shareholders
Helmerich & Payne, Inc.
We have audited the accompanying consolidated balance sheet of Helmerich &
Payne, Inc. as of September 30, 1994, and the related consolidated statements
of income, shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated balance sheet as of September 30, 1993 and the
consolidated statements of income, shareholder's equity, and cash flows for
each of the two years in the period ended September 30, 1993, were audited by
other auditors whose report dated November 16, 1993, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1994 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Helmerich & Payne, Inc. at September 30, 1994, and the consolidated results of
its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the financial statements, effective October 1,
1993 the Company adopted Statement of Financial Accounting Standards No.109,
"Accounting for Income Taxes."
ERNST & YOUNG LLP
Tulsa, Oklahoma
November 22, 1994
<TABLE>
<CAPTION>
Stock Price Information
Closing Market Price Per Share
-----------------------------------------
1994 1993
------------------ --------------------
QUARTERS HIGH LOW HIGH LOW
------- -------- -------- --------
<S> <C> <C> <C> <C>
First . . . . . . . . . . . . . . . . $ 34 1/2 $ 26 1/2 $ 26 3/4 $22 1/4
Second . . . . . . . . . . . . . . . 30 26 22 3/8
Third . . . . . . . . . . . . . . . . 27 1/8 25 1/8 37 1/8 29 1/4
Fourth . . . . . . . . . . . . . . . 28 1/8 25 5/8 36 1/8 31 1/2
</TABLE>
Dividend Information
<TABLE>
<CAPTION>
Paid Per Share Total Payment
----------------- -------------------------
1994 1993 1994 1993
------- -------- ---------- ----------
QUARTERS
<S> <C> <C> <C> <C>
First . . . . . . . . . . . . . . . . $.120 $.120 $2,956,498 $2,949,291
Second . . . . . . . . . . . . . . . . .120 .120 2,960,098 2,949,291
Third . . . . . . . . . . . . . . . . .120 .120 2,960,314 2,953,006
Fourth . . . . . . . . . . . . . . . . .125 .120 3,087,902 2,956,378
</TABLE>
STOCKHOLDERS' MEETING
The annual meeting of stockholders will be held on March 1, 1995. A formal
notice of the meeting, together with a proxy statement and form of proxy, will
be mailed to shareholders about January 26, 1995.
STOCK EXCHANGE LISTING
Helmerich & Payne, Inc. Common Stock is traded on the New York Stock Exchange
with the ticker symbol "HP." The newspaper abbreviation most commonly used for
financial reporting is "HelmP." Options on the Company's stock are also traded
on the New York Stock Exchange.
STOCK TRANSFER AGENT AND REGISTRAR
Our Transfer Agent is responsible for our shareholder records, issuance of
stock certificates, and distribution of our dividends and the IRSForm 1099.
Your requests, as shareholders, concerning these matters are most efficiently
answered by corresponding directly with The Liberty Bank of Oklahoma City at
the following address:
The Liberty National Bank and Trust Company of Oklahoma City
Stock Transfer Department
P.O. Box 25848
Oklahoma City, Oklahoma 73125-0848
Telephone: (405) 231-6325
FORM 10-K
The Company's Annual Report on Form 10-K, which has been submitted to the
Securities and Exchange Commission, is available free of charge upon written
request.
DIRECT INQUIRIES TO:
President
Helmerich & Payne, Inc.
Utica at Twenty-First
Tulsa, Oklahoma 74114
Telephone: (918) 742-5531
31
<PAGE> 32
ELEVEN-YEAR FINANCIAL REVIEW
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992 1991 1990 1989
------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
REVENUES AND INCOME*
Contract Drilling Revenues . . . . . . . . . . 182,781 149,661 112,833 105,364 90,974 78,315
Crude Oil Sales . . . . . . . . . . . . . . . . 13,161 15,392 16,369 17,374 16,058 14,821
Natural Gas Sales . . . . . . . . . . . . . . . 45,261 52,446 38,370 35,628 37,697 33,013
Gas Marketing Revenues** . . . . . . . . . . . 51,874 63,786 40,410 10,055 10,566 --
Chemical Sales . . . . . . . . . . . . . . . . 18,746 14,286 13,411 12,674 12,067 10,754
Real Estate Revenues . . . . . . . . . . . . . 7,396 7,620 7,541 7,542 7,636 7,778
Dividend Income . . . . . . . . . . . . . . . . 3,621 3,535 4,050 5,285 7,402 9,127
Other Revenues . . . . . . . . . . . . . . . . 6,161 8,371 6,716 20,024 56,144 17,361
Total Revenues . . . . . . . . . . . . . . . . 329,001 315,097 239,700 213,946 238,544 171,169
Net Cash Provided by Operating Activities++ . . 79,909 74,619 63,331 52,110 55,422 67,099
Net Income+ . . . . . . . . . . . . . . . . . . 24,971 24,550 10,849 21,241 47,562 22,700
------- ------- ------- ------- ------- -------
PER SHARE DATA
Net Income+ . . . . . . . . . . . . . . . . . . 1.02 1.01 .45 .88 1.97 .94
Cash Dividends . . . . . . . . . . . . . . . . .485 .48 .465 .46 .44 .42
Shares Outstanding*** . . . . . . . . . . . . . 24,710 24,637 24,576 24,488 24,485 24,173
------- ------- ------- ------- ------- -------
FINANCIAL POSITION
Net Working Capital* . . . . . . . . . . . . . 76,238 104,085 82,800 108,212 146,741 114,357
Ratio of Current Assets to Current Liabilities 2.63 3.24 3.31 4.19 3.72 3.12
Investments* . . . . . . . . . . . . . . . . . 87,414 84,945 87,780 96,471 99,574 130,443
Total Assets* . . . . . . . . . . . . . . . . . 624,827 610,935 585,504 575,168 582,927 591,229
Long-Term Debt* . . . . . . . . . . . . . . . . -- 3,600 8,339 5,693 5,648 49,087
Shareholders' Equity* . . . . . . . . . . . . . 524,334 508,927 493,286 491,133 479,485 443,396
------- ------- ------- ------- ------- -------
CAPITAL EXPENDITURES*
Contract Drilling Equipment . . . . . . . . . . 53,752 24,101 43,049 56,297 18,303 17,901
Wells and Equipment . . . . . . . . . . . . . . 40,916 23,142 21,617 34,741 16,489 30,673
Chemical Plant and Equipment . . . . . . . . . 572 540 104 2,478 1,089 745
Real Estate . . . . . . . . . . . . . . . . . . 902 436 690 2,104 1,467 878
Other Assets (includes undeveloped leases) . . 9,741 5,990 17,038 6,909 5,512 6,787
Total Capital Outlays . . . . . . . . . . . . . 105,883 54,209 82,498 102,529 42,860 56,984
------- ------- ------- ------- ------- -------
PROPERTY, PLANT AND EQUIPMENT AT COST*
Contract Drilling Equipment . . . . . . . . . . 444,432 418,004 404,155 370,494 324,293 323,313
Producing Properties . . . . . . . . . . . . . 377,371 340,176 329,264 312,438 287,248 279,768
Undeveloped Leases . . . . . . . . . . . . . . 11,729 10,010 12,973 5,552 5,507 5,441
Chemical Plant and Equipment . . . . . . . . . 12,417 11,845 11,305 11,202 8,723 7,635
Real Estate . . . . . . . . . . . . . . . . . . 47,827 47,502 47,286 46,671 44,928 48,016
Other . . . . . . . . . . . . . . . . . . . . . 49,326 45,785 43,810 37,059 32,682 30,237
Total Property, Plant and Equipment . . . . . . 943,102 873,322 848,793 783,416 703,381 694,410
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Years Ended September 30, 1988 1987 1986 1985 1984
------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES AND INCOME*
Contract Drilling Revenues . . . . . . . . . . 75,985 64,718 68,220 90,647 91,970
Crude Oil Sales . . . . . . . . . . . . . . . . 14,001 15,223 20,020 32,447 31,367
Natural Gas Sales . . . . . . . . . . . . . . . 26,154 17,251 21,308 28,335 32,780
Gas Marketing Revenues** . . . . . . . . . . . -- -- -- -- --
Chemical Sales . . . . . . . . . . . . . . . . 11,265 9,603 8,471 8,778 8,473
Real Estate Revenues . . . . . . . . . . . . . 7,878 7,561 6,839 5,658 5,282
Dividend Income . . . . . . . . . . . . . . . . 10,069 9,757 11,033 10,878 11,008
Other Revenues . . . . . . . . . . . . . . . . 15,213 34,766 29,244 18,054 10,727
Total Revenues . . . . . . . . . . . . . . . . 160,565 158,879 165,135 194,797 191,607
Net Cash Provided by Operating Activities++ . . 57,967 38,337 54,756 72,552 66,927
Net Income+ . . . . . . . . . . . . . . . . . . 20,150 22,016 7,025 18,498 21,439
------- ------- ------- ------- -------
PER SHARE DATA
Net Income+ . . . . . . . . . . . . . . . . . . .83 .91 .28 .74 .85
Cash Dividends . . . . . . . . . . . . . . . . .40 .38 .36 .35 .34
Shares Outstanding*** . . . . . . . . . . . . . 24,166 24,187 24,187 25,146 25,146
------- ------- ------- ------- -------
FINANCIAL POSITION
Net Working Capital* . . . . . . . . . . . . . 135,275 135,139 108,331 118,340 84,880
Ratio of Current Assets to Current Liabilities 6.10 6.68 5.61 4.58 3.27
Investments* . . . . . . . . . . . . . . . . . 133,726 140,431 158,311 163,045 182,174
Total Assets* . . . . . . . . . . . . . . . . . 576,473 571,348 563,236 616,034 610,011
Long-Term Debt* . . . . . . . . . . . . . . . . 70,715 74,732 79,340 85,532 87,114
Shareholders' Equity* . . . . . . . . . . . . . 430,804 420,833 408,185 427,860 418,163
------- ------- ------- ------- -------
CAPITAL EXPENDITURES*
Contract Drilling Equipment . . . . . . . . . . 19,110 13,993 23,673 27,777 8,682
Wells and Equipment . . . . . . . . . . . . . . 25,936 27,402 11,767 9,527 41,657
Chemical Plant and Equipment . . . . . . . . . 688 307 232 175 108
Real Estate . . . . . . . . . . . . . . . . . . 3,095 6,128 1,409 9,782 1,190
Other Assets (includes undeveloped leases) . . 2,623 2,041 2,075 5,397 4,969
Total Capital Outlays . . . . . . . . . . . . . 51,452 49,871 39,156 52,658 56,606
------- ------- ------- ------- -------
PROPERTY, PLANT AND EQUIPMENT AT COST*
Contract Drilling Equipment . . . . . . . . . . 313,289 309,865 307,199 287,641 264,801
Producing Properties . . . . . . . . . . . . . 251,445 228,214 215,488 218,102 212,475
Undeveloped Leases . . . . . . . . . . . . . . 3,305 4,197 7,294 10,403 15,477
Chemical Plant and Equipment . . . . . . . . . 6,889 6,201 5,894 5,662 5,507
Real Estate . . . . . . . . . . . . . . . . . . 47,165 44,070 38,131 36,538 26,930
Other . . . . . . . . . . . . . . . . . . . . . 28,279 28,675 28,846 28,345 28,378
Total Property, Plant and Equipment . . . . . . 650,372 621,222 602,852 586,691 553,568
------- ------- ------- ------- -------
</TABLE>
* Thousand of dollars
** Gas Marketing activities began in 1990
*** 000's omitted
++ Funds generated by operations for 1984-1985
+ Includes cumulative effect of change in accounting for income taxes of
$4,000,000 ($.16 per share) for 1994
32
<PAGE> 33
ELEVEN-YEAR OPERATING REVIEW
HELMERICH & PAYNE, INC.
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992 1991 1990 1989
------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CONTRACT DRILLING
Drilling Rigs, United States . . . . . . . . . 47 42 39 46 49 49
Drilling Rigs, International . . . . . . . . . 29 29 30 25 20 20
Contract Wells Drilled, United States . . . . . 162 128 100 106 119 108
Total Footage Drilled, United States* . . . . . 1,842 1,504 1,085 1,301 1,316 1,350
Average Depth per Well, United States . . . . . 11,367 11,746 10,853 12,274 11,059 12,500
Percentage Rig Utilization, United States . . . 69 53 42 47 50 44
Percentage Rig Utilization, International . . . 88 68 69 45 46 30
------ ------ ------ ------ ------ ------
PETROLEUM EXPLORATION AND DEVELOPMENT
Gross Wells Completed . . . . . . . . . . . . . 44 42 54 45 36 45
Net Wells Completed . . . . . . . . . . . . . . 15 15.9 17.8 20.2 15.3 15.2
Net Dry Holes . . . . . . . . . . . . . . . . . 1.7 4.3 4.3 4.3 3.4 2.8
------ ------ ------ ------ ------ ------
PETROLEUM PRODUCTION
Net Crude Oil and Natural Gas Liquids
Produced (barrels daily) . . . . . . . . . . 2,431 2,399 2,334 2,152 2,265 2,486
Net Oil Wells Owned -- Primary Recovery . . . . 202 202 220 227 223 201
Net Oil Wells Owned -- Secondary Recovery . . . 71 71 74 55 46 214
Secondary Oil Recovery Projects . . . . . . . . 14 14 14 12 12 17
Net Natural Gas Produced
(thousands of cubic feet daily) . . . . . . . 72,953 78,023 75,470 66,617 65,147 57,490
Net Gas Wells Owned . . . . . . . . . . . . . . 341 307 289 278 194 205
------ ------ ------ ------ ------ ------
NATURAL GAS ODORANTS AND
OTHER CHEMICALS
Chemicals Sold (pounds)* . . . . . . . . . . . 8,071 7,930 8,452 8,155 8,255 7,702
------ ------ ------ ------ ------ ------
REAL ESTATE MANAGEMENT
Gross Leasable Area (square feet)* . . . . . . 1,652 1,656 1,656 1,664 1,664 1,669
Percentage Occupancy . . . . . . . . . . . . . 83 86 87 86 85 90
------ ------ ------ ------ ------ ------
TOTAL NUMBER OF EMPLOYEES
Helmerich & Payne, Inc. and Subsidiaries+ . . . 2,787 2,389 1,928 1,758 1,864 1,100
------ ------ ------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
Years Ended September 30, 1988 1987 1986 1985 1984
------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CONTRACT DRILLING
Drilling Rigs, United States . . . . . . . . . 48 50 48 47 44
Drilling Rigs, International . . . . . . . . . 18 19 19 19 19
Contract Wells Drilled, United States . . . . . 115 110 110 111 132
Total Footage Drilled, United States* . . . . . 1,284 1,182 1,384 1,477 1,529
Average Depth per Well, United States . . . . . 11,165 10,745 12,582 13,306 11,583
Percentage Rig Utilization, United States . . . 45 39 44 65 60
Percentage Rig Utilization, International . . . 16 30 47 41
------ ------ ------ ------ ------
PETROLEUM EXPLORATION AND DEVELOPMENT
Gross Wells Completed . . . . . . . . . . . . . 45 18 27 42 41
Net Wells Completed . . . . . . . . . . . . . . 14.6 5.2 10.3 19.5 17.1
Net Dry Holes . . . . . . . . . . . . . . . . . 1.6 .5 3.6 9.7 8.0
------ ------ ------ ------ ------
PETROLEUM PRODUCTION
Net Crude Oil and Natural Gas Liquids
Produced (barrels daily) . . . . . . . . . . 2,463 2,578 3,077 3,388 3,033
Net Oil Wells Owned -- Primary Recovery . . . . 202 199 234 234 233
Net Oil Wells Owned -- Secondary Recovery . . . 222 237 235 259 126
Secondary Oil Recovery Projects . . . . . . . . 21 20 18 19 18
Net Natural Gas Produced
(thousands of cubic feet daily) . . . . . . . 45,480 31,752 32,392 35,288 37,316
Net Gas Wells Owned . . . . . . . . . . . . . . 197 180 180 174 173
------ ------ ------ ------ ------
NATURAL GAS ODORANTS AND
OTHER CHEMICALS
Chemicals Sold (pounds)* . . . . . . . . . . . 8,507 8,165 7,554 9,123 9,288
------ ------ ------ ------ ------
REAL ESTATE MANAGEMENT
Gross Leasable Area (square feet)* . . . . . . 1,670 1,595 1,433 1,333 1,238
Percentage Occupancy . . . . . . . . . . . . . 90 94 95 93 91
------ ------ ------ ------ ------
TOTAL NUMBER OF EMPLOYEES
Helmerich & Payne, Inc. and Subsidiaries+ . . . 1,156 1,026 844 1,126 1,242
------ ------ ------ ------ ------
</TABLE>
* 000's omitted.
+ 1984-1989 include U.S. employees only
33
<PAGE> 34
<TABLE>
<CAPTION>
DIRECTORS OFFICERS
- --------- --------
<S> <C>
W. H. HELMERICH, III W. H. HELMERICH, III
Chairman of the Board, Chairman of the Board
Tulsa, Oklahoma
HANS HELMERICH HANS HELMERICH
President and Chief Executive Officer, President and Chief Executive Officer
Tulsa, Oklahoma
WILLIAM L. ARMSTRONG ALLEN S. BRAUMILLER
Chairman, Ambassador Media Corporation, Vice President,
Denver, Colorado Exploration
GLENN A. COX* GEORGE S. DOTSON
President and Chief Operating Officer, Retired, Vice President,
Phillips Petroleum Co., President of Helmerich & Payne
Bartlesville, Oklahoma International Drilling Co.
GEORGE S. DOTSON DOUGLAS E. FEARS
Vice President, Vice President,
President of Helmerich & Payne Finance
International Drilling Co.,
Tulsa, Oklahoma STEVEN R. MACKEY
Vice President, Secretary,
C. W. FLINT, JR.* and General Counsel
Chairman,
Flint Industries, Inc., JAMES L. PAYNE
Tulsa, Oklahoma Vice President,
Real Estate
GEORGE A. SCHAEFER
Chairman and Chief Executive Officer, Retired, STEVEN R. SHAW
Caterpillar Inc., Vice President,
Peoria, Illinois Production
HARRY W. TODD
Chairman, CEO, and President, Retired,
Rohr Industries, Inc.,
Chula Vista, California
JOHN D. ZEGLIS
Senior Vice President and General Counsel,
American Telephone & Telegraph Co.,
Basking Ridge, New Jersey
</TABLE>
*Member, Audit Committee
34
<PAGE> 1
Exhibit 22
SUBSIDIARIES OF THE REGISTRANT
Helmerich & Payne, Inc.
Subsidiaries of Helmerich & Payne, Inc.
Helmerich & Payne Properties, Inc. (Incorporated in Oklahoma)
Utica Square Shopping Center, Inc. (Incorporated in Oklahoma)
The Hardware Store of Utica Square, Inc. (Incorporated in Oklahoma)
The Tearoom in Utica Square, Inc. (Incorporated in Oklahoma), doing
business as The Garden Restaurant
The Space Center, Inc. (Incorporated in Oklahoma)
H&P DISC, Inc. (Incorporated in Oklahoma)
Helmerich & Payne Coal Co. (Incorporated in Oklahoma)
Natural Gas Odorizing, Inc. (Incorporated in Oklahoma)
Helmerich & Payne Energy Services, Inc. (Incorporated in Oklahoma)
Helmerich & Payne International Drilling Co. (Incorporated in
Delaware)
Subsidiaries of Helmerich & Payne International Drilling Co.
Helmerich & Payne (Africa) Drilling Co. (Incorporated
in Cayman Islands, British West Indies)
Helmerich & Payne (Colombia) Drilling Co. (Incorporated
in Oklahoma)
Helmerich & Payne (Gabon) Drilling Co. (Incorporated in
Cayman Islands, British West Indies)
Helmerich & Payne (Guatemala) Drilling Co. (Incorporated
in Oklahoma)
Helmerich & Payne (Peru) Drilling Co. (Incorporated in
Oklahoma)
Helmerich & Payne (Australia) Drilling Co. (Incorporated
in Oklahoma)
Helmerich & Payne del Ecuador, Inc. (Incorporated in
Oklahoma)
Helmerich & Payne de Venezuela, C.A. (Incorporated in
Venezuela)
Helmerich & Payne, C.A. (Incorporated in Venezuela)
Helmerich & Payne Rasco, Inc. (Incorporated in Oklahoma)
H&P Finco (Incorporated in Cayman Islands, British
West Indies)
H&P Invest Ltd. (Incorporated in Cayman Islands), British West
Indies, doing business as H&P (Yemen) Drilling Co.
Subsidiary of H&P Invest Ltd.
Turrum Pty. Ltd. (Incorporated in Papua, New Guinea)
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated November 16, 1993, included in this Form 10-K, into the
Company's previously filed Registration Statement File Nos. 33-16771 and
33-55239 on Forms S-8.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
December 21, 1994
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Helmerich & Payne, Inc. of our report dated November 22, 1994,
included in the 1994 Annual Report to Shareholders of Helmerich & Payne, Inc.
Our audit also included the 1994 financial statement schedules of
Helmerich & Payne, Inc. listed in Item 14(a). These schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audit. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Forms S-8 Nos. 33-16771 and 33-55239) pertaining respectively to
the Helmerich & Payne, Inc. Incentive Stock Option Plan and 1990 Stock Option
Plan of our report dated November 22, 1994, with respect to the consolidated
financial statements for 1994 incorporated herein by reference, and our report
included in the preceding paragraph with respect to the 1994 financial
statement schedules included in this Annual Report (Form 10-K) of Helmerich &
Payne, Inc.
ERNST & YOUNG LLP
Tulsa, Oklahoma
December 21, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<CASH> 29,447
<SECURITIES> 87,414
<RECEIVABLES> 61,377
<ALLOWANCES> 1,480
<INVENTORY> 20,995
<CURRENT-ASSETS> 122,939
<PP&E> 943,102
<DEPRECIATION> 542,451
<TOTAL-ASSETS> 624,827
<CURRENT-LIABILITIES> 46,701
<BONDS> 0
<COMMON> 2,677
0
0
<OTHER-SE> 521,657
<TOTAL-LIABILITY-AND-EQUITY> 624,827
<SALES> 322,698
<TOTAL-REVENUES> 329,001
<CGS> 288,581
<TOTAL-COSTS> 288,581
<OTHER-EXPENSES> 8,908
<LOSS-PROVISION> 828
<INTEREST-EXPENSE> 385
<INCOME-PRETAX> 30,299
<INCOME-TAX> 10,232
<INCOME-CONTINUING> 20,971
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 4,000
<NET-INCOME> 24,971
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
