<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 30549
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: MARCH 31, 1997
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
(State or other jurisdiction of incorporation or organization)
73-0679879
(I.R.S. Employer I.D. Number)
UTICA AT TWENTY-FIRST STREET, TULSA, OKLAHOMA 74114
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (918) 742-5531
Former name, former address and former fiscal year, if changed since last
report: 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
--- ---
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT MARCH 31, 1997
<S> <C>
Common Stock, .10 par value 24,931,505
AUTHORIZED AT MARCH 31, 1997
26,764,476
</TABLE>
Total Number of Pages 13
--
<PAGE> 2
HELMERICH & PAYNE, INC.
INDEX
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
March 31, 1997 and September 30, 1996. . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
March 31, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . 5
Consolidated Condensed Statement of Shareholders' Equity -
Six Months Ended March 31, 1997. . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . . . . . 7&8
Revenues and Income by Business Segments . . . . . . . . . . . . . . 9
Management's Discussion and Analysis of Financial 10,11
Condition and Results of Operations. . . . . . . . . . . . . . . & 12
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . 12
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
March 31 September 30
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 19,477 $ 16,892
Short-term investments 1,005 1,005
Accounts receivable, net 86,708 75,374
Inventories 17,894 16,915
Prepaid expenses and other 11,509 4,182
-------- --------
Total Current Assets 136,593 114,368
-------- --------
Investments 250,615 229,809
Property, Plant and Equipment, Net 486,618 463,496
Other Assets 13,186 14,241
-------- --------
Total Assets $887,012 $821,914
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 26,717 $ 25,622
Accrued liabilities 36,860 31,943
Notes payable 3,000 5,000
-------- --------
Total Current Liabilities 66,577 62,565
-------- --------
Noncurrent Liabilities
Deferred income taxes 106,320 98,335
Other 18,654 15,044
-------- --------
Total Noncurrent Liabilities 124,974 113,379
-------- --------
Shareholders' Equity
Common stock, par value
$.10 per share 2,677 2,677
Preferred stock, no shares issued -- --
Additional paid-in capital 51,219 50,410
Net unrealized holding gains 68,084 56,550
Retained earnings 594,338 557,543
-------- --------
716,318 667,180
Less treasury stock, at cost 20,857 21,210
-------- --------
Total Shareholders' Equity 695,461 645,970
-------- --------
$887,012 $821,914
======== ========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 4
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
03/31/97 03/31/96 03/31/97 03/31/96
<S> <C> <C> <C> <C>
REVENUES:
Sales and other operating revenues $130,773 $ 93,911 $ 247,499 $181,171
Income from investments 1,706 1,302 3,242 2,469
-------- -------- --------- --------
132,479 95,213 250,741 183,640
-------- -------- --------- --------
COST AND EXPENSES:
Operating costs 70,407 54,881 134,307 108,144
Depreciation, depletion and
amortization 17,379 14,432 32,851 28,005
Dry holes and abandonments 2,412 3,230 2,972 4,158
Taxes, other than income taxes 5,418 4,773 10,105 8,465
General and administrative 2,945 2,704 5,204 5,052
Interest ( 3) 248 - 327
-------- -------- --------- --------
98,558 80,268 185,439 154,151
-------- -------- --------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EQUITY IN
INCOME OF AFFILIATE 33,921 14,945 65,302 29,489
INCOME TAX EXPENSE 12,094 5,484 23,850 10,754
EQUITY IN INCOME OF AFFILIATE,
net of income taxes 591 341 1,091 535
-------- -------- --------- --------
INCOME FROM CONTINUING OPERATIONS 22,418 9,802 42,543 19,270
INCOME FROM DISCONTINUED OPERATIONS - 1,225 - 2,850
-------- -------- --------- --------
NET INCOME $ 22,418 $ 11,027 $ 42,543 $ 22,120
======== ======== ========= ========
PER COMMON SHARE:
Income from continuing operations $ .90 $ .40 $ 1.71 $ .78
Income from discontinued operations - .05 - .12
-------- -------- --------- --------
NET INCOME $ .90 $ .45 $ 1.71 $ .90
======== ======== ========= ========
CASH DIVIDENDS (Note 2) $ .13 $ .125 $ .26 $ .25
AVERAGE COMMON SHARES OUTSTANDING 24,857 24,655 24,841 24,628
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 5
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31
1997 1996
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 42,543 $ 22,120
Adjustments to reconcile net income to net
cash provided by operating activities--
Discontinued operations - (2,850)
Depreciation, depletion, and amortization 32,851 28,005
Dry holes and abandonments 2,972 4,158
Equity in income of affiliate before income taxes (1,760) ( 863)
Amortization of deferred compensation 737 866
Gain on sale of securities ( 59) -
Loss (Gain) on sale of fixed assets, other (1,558) 171
Change in assets and liabilities--
Accounts receivable (11,334) (5,209)
Inventories ( 979) 45
Prepaid expenses and other (6,272) ( 435)
Accounts payable 3,292 ( 128)
Accrued liabilities 4,917 14,583
Deferred income taxes 918 997
Other noncurrent liabilities 3,610 2,954
---------- --------
Total adjustments 27,335 42,294
---------- --------
Net cash provided by continuing operations 69,878 64,414
Net cash provided by discontinued operations - 2,387
---------- --------
Net cash provided by operating activities 69,878 66,801
========== ========
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, including dry hole costs,
from continuing operations (63,337) (55,423)
Proceeds from sales of property, plant, and
equipment 4,033 1,185
Purchase of investments ( 770) 24
Proceeds from sale of investments 103 -
Proceeds from sale of short-term investments - 6,000
Discontinued operations - ( 540)
---------- --------
Net cash used in investing activities (59,971) (48,754)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 25,000 23,000
Payments made on notes payable (27,000) (42,700)
Dividends paid (6,485) ( 6,204)
Proceeds from exercise of stock options 1,163 1,335
---------- --------
Net cash used in financing activities (7,322) (24,569)
---------- --------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 2,585 ( 6,522)
CASH AND CASH EQUIVALENTS, beginning of period 16,892 19,543
---------- --------
CASH AND CASH EQUIVALENTS, end of period $ 19,477 $ 13,021
========== ========
</TABLE>
-5-
<PAGE> 6
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Net
Common Stock Unrealized Treasury Stock
----------------- Paid-In Holding Retained -------------------
Shares Amount Capital Gains Earnings Shares Amount
------ --------- --------- --------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1996 26,764 $ 2,677 $ 50,410 $ 56,550 $ 557,543 1,879 $ (21,210)
Change in net unrealized holding
gains, net of income taxes of
$7,068 -- -- -- 11,534 -- -- --
Cash dividends ($0.26 per share) -- -- -- -- (6,485) -- --
Exercise of stock options -- -- 809 -- -- (46) 353
Amortization of deferred
compensation -- -- -- -- 737 -- --
Net income -- -- -- -- 42,543 -- --
------ --------- --------- --------- --------- ----- ---------
Balance, March 31, 1997 26,764 $ 2,677 $ 51,219 $ 68,084 $ 594,338 1,833 $ (20,857)
====== ========= ========= ========= ========= ===== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the results of
the periods presented. The results of operations for the six months
ended March 31, 1997, and March 31, 1996, are not necessarily
indicative of the results to be expected for the full year.
2. The $.13 cash dividend declared in December, 1996, was paid March 1,
1997. On March 5, 1997, a cash dividend of $.13 per share was declared
for shareholders of record on May 15, 1997, payable June 2, 1997.
3. Inventories consist of materials and supplies.
4. Income from investments includes $59,000 from gains on sales of
available-for-sale securities during the first six months of 1997.
There were no gains in the same period of 1996.
5. The following is a summary of available-for-sale securities, which
excludes those accounted for under the equity method of accounting.
The recorded investment in securities accounted for under the equity
method is $26,975,000.
<TABLE>
<CAPTION>
Gross Gross Est.
Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
----------------------------------------
<S> <C> <C> <C> <C>
Equity Securities 03/31/97 $113,828 $109,863 $ 51 $223,640
Equity Securities 09/30/96 $113,384 $ 92,081 $871 $204,594
</TABLE>
6. In May 1996 the Company renewed its line of credit agreement with
certain banks. The new agreement provides for maximum borrowing of
$50,000,000 at adjustable interest rates based on London Interbank
Offered Rates (LIBOR). The borrowings will mature either in May of
1997 or May of 1998. A $40,000,000 portion of the line is for a 364
day term and a $10,000,000 portion is for a two year term. As of
March 31, 1997, the Company had borrowed $3,000,000 against the line
of credit, at a weighted average interest rate of 5.88%, and had
letters of credit outstanding in the amount of $7,921,000, leaving an
unused portion of $39,079,000. Under the line of credit agreement,
the Company must meet certain requirements regarding levels of debt,
net worth and earnings. The Company anticipates renewing the line of
credit agreement with certain banks in May 1997 for maximum borrowing
of $40 million. The Company has an additional $14.0 million line of
credit with a bank to be used primarily for letters of credit.
-7-
<PAGE> 8
PART I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Continued)
7. Discontinued Operations
Effective August 30, 1996, the Company exchanged all of the common
stock of its wholly-owned subsidiary, Natural Gas Odorizing, Inc.
(NGO), to Occidental Petroleum Corporation (OPC) for 2,018,928 shares
of OPC common stock with a fair market value at closing of
approximately $48 million. NGO comprised all of the Company's chemical
operations. Prior period operating results for such operations are
reported as discontinued operations. Summary operating results of
discontinued operations for the six months ending March 31, 1996 are
as follows (in thousands):
<TABLE>
<S> <C>
Revenues $11,866
Operating Profit $ 4,718
Income Taxes $ 1,868
Net Income $ 2,850
</TABLE>
-8-
<PAGE> 9
I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
REVENUES AND INCOME BY BUSINESS SEGMENTS
(in thousands)
<TABLE>
<CAPTION>
Fiscal Year 1997 FY 1996
1st Qtr 2nd Qtr Six Mos. Six Mos.
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES AND OTHER REVENUES:
Contract Drilling-Domestic $ 29,596 $ 31,559 $ 61,155 $ 49,108
Contract Drilling-International 35,630 42,687 78,317 67,520
--------- --------- --------- ---------
Total Contract Drilling Div 65,226 74,246 139,472 116,628
--------- --------- --------- ---------
Exploration and Production 30,014 34,000 64,014 33,544
Natural Gas Marketing 18,991 20,366 39,357 26,816
--------- --------- --------- ---------
Total Oil & Gas Division 49,005 54,366 103,371 60,360
--------- --------- --------- ---------
Real Estate Division 2,412 2,082 4,494 4,087
Investment and Other 1,619 1,785 3,404 2,565
--------- --------- --------- ---------
Total Revenues $ 118,262 $ 132,479 $ 250,741 $ 183,640
========= ========= ========= =========
OPERATING PROFIT(LOSS):
Contract Drilling-Domestic $ 4,210 $ 4,955 $ 9,165 $ 4,691
Contract Drilling-International 6,907 8,918 15,825 16,194
--------- --------- --------- ---------
Total Contract Drilling Div 11,117 13,873 24,990 20,885
--------- --------- --------- ---------
Exploration and Production 18,274 20,196 38,470 8,765
Natural Gas Marketing 1,381 514 1,895 1,452
--------- --------- --------- ---------
Total Oil & Gas Division 19,655 20,710 40,365 10,217
--------- --------- --------- ---------
Real Estate Division 1,779 1,290 3,069 2,644
--------- --------- --------- ---------
Total Operating Profit 32,551 35,873 68,424 33,746
--------- --------- --------- ---------
OTHER (1,170) (1,952) (3,122) (4,257)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EQUITY IN
INCOME OF AFFILIATE $ 31,381 $ 33,921 $ 65,302 $ 29,489
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
-9-
<PAGE> 10
I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
Business Environment and Risk Factors
The following discussion should be read in conjunction with the
consolidated financial statements and related notes included elsewhere herein.
The Company's future operating results may be affected by various trends and
factors which are beyond the Company's control. These include, among other
factors, fluctuations in natural gas prices, expiration or termination of
drilling contracts, changes in general economic conditions, rapid or unexpected
changes in technologies and uncertain business conditions that affect the
Company's businesses. Accordingly, past results and trends should not be used
by investors to anticipate future results or trends.
With the exception of historical information, the matters discussed
below under the headings "Results of Operations" and "Liquidity and Capital
Resources" include forward-looking statements that involve risks and
uncertainties. The Company wishes to caution readers that a number of important
factors discussed in this report and in the Company's other reports filed with
the Securities and Exchange Commission, could affect the Company's actual
results and cause actual results to differ materially from those in the
forward-looking statements.
Results of Operations
The Company reported net income of $22,418,000 ($0.90 per share) from
revenues of $132,479,000 for the second quarter ended March 31, 1997, compared
with net income of $11,027,000 ($0.45 per share) from revenues of $95,213,000
for the second quarter of the prior fiscal year. Net income for the first six
months of this fiscal year totaled $42,543,000 ($1.71 per share) from revenues
of $250,741,000, compared with net income of $22,120,000 ($0.90 per share) from
revenues of $183,640,000 for the same period last year.
The Company's Exploration and Production Division reported operating
profit of $20,196,000 and $38,470,000 for the second quarter and six months
ended March 31, 1997, respectively, compared with operating profit of
$4,690,000 and $8,765,000 for the same periods in fiscal 1996.
-10-
<PAGE> 11
I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
(Continued)
The increase in operating profit was primarily the result of continued
strength in natural gas prices through most of the second quarter and increased
natural gas volumes. Natural gas prices for the second quarter and first six
months of 1997 averaged $2.65 per mcf and $2.56 per mcf, respectively, compared
with $1.72 per mcf and $1.62 per mcf in the same periods of 1996. Natural gas
volumes for the first six months of 1997 were 111.0 mmcf/day compared with 89.5
mmcf/day for the first six months of 1996. Oil prices for the second quarter
and first six months of 1997 averaged $21.86 and $22.64, respectively, compared
with $18.24 and $17.34, in the same periods of 1996. Average oil production
increased to 2,798 barrels per day for the first six months of fiscal 1997,
compared with 2,199 barrels per day in the same period of 1996. Dry hole
expense for the first six months of 1997 was $1,931,000 compared with
$2,435,000 for the first six months of 1996.
The Contract Drilling Division reported an operating profit of
$24,990,000 in the first six months of fiscal year 1997, compared with
$20,885,000 in the same period of 1996. Operating profit from the domestic
drilling operations increased to $9,165,000 for the first six months of fiscal
1997, compared with $4,691,000 for the first six months of fiscal 1996.
Increased utilization of land rigs (revenue days increased 23% from the first
six months of 1996) and increased day rates for land rigs contributed to the
increased operating profit. Also contributing substantially to earnings was the
new Mars offshore platform rig which began drilling in the third quarter of
fiscal 1996. Two additional rigs will commence operations for Shell Offshore
Inc. in the third quarter of fiscal year 1997. The Company expects this will
have a positive impact on domestic operating profit for the last six months of
fiscal 1997.
Operating profit from the Company's international drilling operations
decreased to $15,825,000 in the first six months of fiscal 1997 from
$16,194,000 in the same period last year. The first six months of fiscal 1996
included foreign currency transaction gains in Venezuela of $500,000. No such
gains were realized in the first six months of fiscal 1997. Utilization of the
37 international rigs was 90% during the second quarter of 1997 compared with
86% during the same quarter of 1996.
The Company's Real Estate Division increased operating profit to
$3,069,000 in the first six months of fiscal 1997 from $2,644,000 in the same
period of fiscal 1996. The increase was primarily due to a gain on the sale of
a small parcel of land during the first quarter of fiscal 1997.
-11-
<PAGE> 12
I. FINANCIAL INFORMATION
HELMERICH & PAYNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
(Continued)
Liquidity and Capital Resources
Net cash provided by continuing operations was $69,878,000 for the
first six months of fiscal 1997, compared with $64,414,000 for the same period
in 1996. Capital expenditures were $63,337,000 and $55,423,000 for the first
six months of fiscal 1997 and 1996, respectively.
It is anticipated for fiscal 1997 that capital expenditures could
possibly exceed internally generated cash flows and that the Company will
borrow under its line of credit agreement or sell a portion of its investment
portfolio to fund capital expenditures.
There were no significant changes in the Company's financial position
since September 30, 1996.
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
Item 1. Legal Proceedings
On March 6, 1997, the Company was dismissed, without prejudice, from a
lawsuit styled Caldwell vs Helmerich and Payne Inc. (District Court Washita
County Oklahoma)in which plaintiffs were seeking their royalty share of a gas
contract settlement covering Oklahoma wells. This lawsuit was previously
reported in the Company's Annual Report for fiscal 1996 and in the Company's
10-Q for the first quarter of fiscal 1997.
Item 6(b) Reports on Form 8-K
For the three months ended March 31, 1997, there was one Form 8-K
filed on March 27, 1997.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
HELMERICH & PAYNE, INC.
SIGNATURES
Pursuant to the requirements 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.
Date: MAY 13, 1997 /S/ DOUGLAS E. FEARS
---------------------- ------------------------------------------
Douglas E. Fears, Chief Financial Officer
Date: MAY 13, 1997 /S/ HANS C. HELMERICH
---------------------- ------------------------------------------
Hans C. Helmerich, President
-13-
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 19,477
<SECURITIES> 250,615
<RECEIVABLES> 88,735
<ALLOWANCES> 2,027
<INVENTORY> 17,894
<CURRENT-ASSETS> 136,593
<PP&E> 1,111,309
<DEPRECIATION> 624,691
<TOTAL-ASSETS> 887,012
<CURRENT-LIABILITIES> 66,577
<BONDS> 0
0
0
<COMMON> 2,677
<OTHER-SE> 692,784
<TOTAL-LIABILITY-AND-EQUITY> 887,012
<SALES> 247,499
<TOTAL-REVENUES> 250,741
<CGS> 180,235
<TOTAL-COSTS> 180,235
<OTHER-EXPENSES> 5,204
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 65,302
<INCOME-TAX> 23,850
<INCOME-CONTINUING> 42,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,543
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.71
</TABLE>
