Helmerich & Payne, Inc. Announces Fiscal Year Earnings and More Contracts

TULSA, Okla., Nov. 16 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc. announced net income of $127,606,000 ($2.45 per diluted share) from operating revenues of $800,726,000 for its fiscal year ended September 30, 2005, compared with net income of $4,359,000 ($0.09 per diluted share) from operating revenues of $589,056,000 for the previous fiscal year. Net income includes gains from the sale of portfolio securities of $0.32 per share for 2005, and $0.31 per share for 2004. Net income for fiscal 2004 includes a non-cash charge of $51,516,000 ($0.63 per diluted share) for impairment of a portion of the Company's Gulf of Mexico offshore platform rigs.

Net income for the fourth quarter of fiscal 2005 was $36,121,000 ($0.68 per diluted share) from operating revenues of $233,210,000. Included in this year's fourth quarter net income was $0.01 per share from gains from the sale of portfolio securities. Including the impairment charge mentioned above, the Company recorded a loss for its fourth quarter of fiscal 2004 of $12,624,000 ($0.25 per diluted share) from operating revenues of $164,068,000. During the fourth quarter of 2004, the Company recorded $0.16 per share of gains from the sale of portfolio securities.

Helmerich & Payne, Inc. also announced today that it had signed separate term agreements with two exploration and production companies to operate a total of nine new FlexRig4s(R). Each rig agreement includes a minimum term of at least three years and construction costs are estimated at slightly over $11 million per rig. Other terms and customer names were not disclosed. This brings to 50, the total number of new FlexRigs to be built by H&P with at least three-year commitments that have been announced by the Company since March of this year.

Company President and C.E.O., Hans Helmerich commented, "We are pleased to reach the milestone of our 50th new-build order. This latest announcement will bring our total number of FlexRigs to 100 once completed, or 71% of our entire U.S. land rig fleet. This strong organic growth further establishes our belief that the Company's overall fleet is the newest and most uniform in the land drilling industry. Customers continue to respond favorably to the proven performance that establishes these rigs as what we believe are best in class. We also believe the market will continue to push demand, not only for more available rigs, but for more capable rigs as well.

"Our 2005 results benefited from the strongest U.S. land market environment in over 20 years as average cash margins per day increased to $9,317. The robust ramp-up in the energy industry has brought to bear its own challenges, including additional pressure on costs and people. Nonetheless, we are confident this energy cycle will continue to present exciting opportunities going forward."

Operations Summary

Operating income in the Company's U.S. land rig operations increased to $56,028,000 for the fourth quarter of fiscal 2005, from $13,856,000 for the same period last year, and from $47,244,000 for this year's third quarter. Average revenue per rig day rose to $18,563 and cash margins per rig day to $9,317 for this year's fourth quarter, compared with $16,658 revenue per rig day and $8,219 cash margins per rig day for the previous quarter. U.S. land rig operating expense per day increased by 9.6% from this year's third quarter to this year's fourth quarter. The rise in expenses resulted from labor, materials, and supply cost increases. Average U.S. land rig utilization during the fourth quarter of 2005 was 95%, compared with 92% during last year's fourth quarter, and 94% during this year's third quarter.

The Company's offshore platform rig business reported operating income of $4,720,000 for the fourth quarter of fiscal 2005, compared with $4,648,000 for the third quarter of 2005, and an operating loss of $47,540,000 for the fourth quarter 2004. For quarterly comparisons, the offshore operations would have reported an operating profit of $3,976,000 for the fourth quarter of 2004, without the $51,516,000 impairment charge. Rig utilization was 65% during this year's fourth quarter, compared with 54% during last year's fourth quarter, and 45% during this year's third quarter. This year's fourth quarter was negatively impacted by lost operating income of approximately $600,000 due to damage from Hurricane Katrina to offshore platform Rig 201. Seven platform rigs are currently operating and one additional rig is scheduled for work commencing the second fiscal quarter of 2006. It is anticipated that Rig 201 will not return to service during fiscal 2006.

International operating income declined during the fourth quarter of 2005 to $3,910,000, from $5,185,000 for last year's fourth quarter, and $5,284,000 for this year's third quarter. During the quarter, it was discovered the Company had not adequately reserved for future government stipulated deferred compensation payments to Venezuelan rig employees. As a result, $1,865,000 was expensed during this year's fourth quarter for those previously earned, but unpaid future obligations. Rig utilization for international operations rose to 85% for the quarter, up from 57% during last year's fourth quarter, and 80% during this year's third quarter.

Helmerich & Payne, Inc. is a contract drilling company that owns 90 U.S. land rigs, 11 U.S. platform rigs located in the Gulf of Mexico, and 27 international rigs, for a total of 128 rigs. Included in the total fleet of 128 rigs are 50 H&P-designed and operated FlexRigs. The Company has reached contractual agreements with customers that will result in the construction of 50 additional FlexRigs.

Helmerich & Payne, Inc.'s conference call/webcast is scheduled for this morning and can be accessed at http://www.hpinc.com/ under Investors and will begin at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). If you are unable to participate during the live webcast, the call will be archived for a year on H&P's website indicated above.

The information to be disclosed in the conference call and webcast shall include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by H&P from time to time in its filings with the Securities and Exchange Commission. As a result of these factors, H&P's actual results may differ materially from those indicated or implied by such forward-looking statements.

* FlexRig(R) is a registered trademark of Helmerich & Payne, Inc. HELMERICH & PAYNE, INC. Unaudited (in thousands, except per share data) Three Months Ended Fiscal Year Ended CONSOLIDATED STATEMENTS June 30 Sept. 30 Sept. 30 OF OPERATIONS 2005 2005 2004 2005 2004 Operating Revenues: Drilling - U.S. Land $138,720 $157,335 $100,055 $527,637 $346,015 Drilling - U.S. Offshore 19,905 26,011 23,601 84,921 84,238 Drilling - International 46,030 47,180 38,029 177,480 148,788 Real Estate 2,732 2,684 2,383 10,688 10,015 207,387 233,210 164,068 800,726 589,056 Operating costs and expenses: Operating costs 121,470 137,188 113,423 484,231 417,716 Depreciation 23,419 25,643 24,821 96,274 94,425 Asset impairment --- --- 51,516 --- 51,516 General and administrative 11,680 10,496 9,254 41,015 37,661 156,569 173,327 199,014 621,520 601,318 Operating income (loss) 50,818 59,883 (34,946) 179,206 (12,262) Other income (expense): Interest and dividend income 1,671 1,984 476 5,809 1,965 Interest expense (3,127) (2,960) (3,247) (12,642) (12,695) Gain on sale of investment securities --- 656 13,442 26,969 25,418 Income from asset sales 603 1,160 3,639 13,550 5,377 Other 29 (610) 66 (235) 197 (824) 230 14,376 33,451 20,262 Income(loss)before income taxes and equity in income of affiliates 49,994 60,113 (20,570) 212,657 8,000 Income tax provision (benefit) 20,627 24,553 (7,772) 87,463 4,365 Equity in income of affiliates net of income taxes 458 561 174 2,412 724 NET INCOME(LOSS) $29,825 $36,121 $(12,624) $127,606 $4,359 Earnings(loss)per common share: Basic $0.58 $0.70 $(0.25) $2.50 $0.09 Diluted $0.57 $0.68 $(0.25) $2.45 $0.09 Average common shares outstanding: Basic 51,233 51,616 50,426 51,087 50,312 Diluted 52,236 52,748 50,883 52,033 50,833 HELMERICH & PAYNE, INC. Unaudited (in thousands) CONSOLIDATED CONDENSED BALANCE SHEETS 9/30/05 9/30/04 ASSETS Cash and cash equivalents $288,752 $65,296 Other current assets 212,294 180,034 Total current assets 501,046 245,330 Investments 178,452 161,532 Net property, plant, and equipment 981,965 998,674 Other assets 3,136 1,308 TOTAL ASSETS $1,664,599 $1,406,844 LIABILITIES AND SHAREHOLDERS' EQUITY Total current liabilities $90,730 $59,903 Total noncurrent liabilities 294,631 232,831 Long-term notes payable 200,000 200,000 Total shareholders' equity 1,079,238 914,110 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,664,599 $1,406,844 HELMERICH & PAYNE, INC. Unaudited (in thousands) Years Ended CONSOLIDATED CONDENSED Sept. 30 STATEMENT OF CASH FLOWS 2005 2004 OPERATING ACTIVITIES: Net Income $127,606 $4,359 Depreciation 96,274 94,425 Asset impairment charge --- 51,516 Changes in assets and liabilities 33,091 18,260 Gain on sale of assets and investment securities (40,519) (28,143) Non-monetary investment gain --- (2,521) Other (4,214) (1,256) Net cash provided by operating activities 212,238 136,640 INVESTING ACTIVITIES: Capital expenditures (86,805) (90,212) Purchase of investments (5,000) --- Proceeds from sale of assets and investment securities 94,531 21,974 Net cash provided by (used in) investing activities 2,726 (68,238) FINANCING ACTIVITIES: Net payments on short-term notes --- (30,000) Dividends paid (16,866) (16,222) Proceeds from exercise of stock options 25,358 4,927 Net cash provided by (used in) financing activities 8,492 (41,295) Net increase in cash and cash equivalents 223,456 27,107 Cash and cash equivalents, beginning of period 65,296 38,189 Cash and cash equivalents, end of period $288,752 $65,296 SEGMENT REPORTING Three Months Ended Fiscal Year Ended June 30 Sept. 30 Sept. 30 2005 2005 2004 2005 2004 (in thousands, except days and per day amounts) U.S. LAND OPERATIONS Revenues $138,720 $157,335 $100,055 $527,637 $346,015 Direct operating expenses 74,639 82,852 68,960 294,164 246,177 General and administrative expense 2,346 2,543 2,142 8,594 7,765 Depreciation 14,491 15,912 15,097 60,222 56,528 Operating income $47,244 $56,028 $13,856 $164,657 $35,545 Activity days 7,797 7,994 7,363 30,968 27,472 Average rig revenue per day $16,658 $18,563 $12,437 $15,941 $11,635 Average rig expense per day $8,439 $9,246 $8,214 $8,403 $8,001 Average rig margin per day $8,219 $9,317 $4,223 $7,538 $3,634 Rig utilization 94% 95% 92% 94% 87% U.S. OFFSHORE OPERATIONS Revenues $19,905 $26,011 $23,601 $84,921 $84,238 Direct operating expenses 11,504 17,443 15,653 52,786 52,987 General and administrative expense 1,071 1,103 968 3,825 3,256 Depreciation 2,682 2,745 3,004 10,602 12,107 Asset impairment --- --- 51,516 --- 51,516 Operating income(loss)* $4,648 $4,720 $(47,540) $17,708 $(35,628) Activity days 455 654 601 2,122 2,088 Average rig revenue per day $32,614 $29,782 $27,777 $29,228 $29,070 Average rig expense per day $16,426 $17,838 $17,377 $15,967 $16,509 Average rig margin per day $16,188 $11,944 $10,400 $13,261 $12,561 Rig utilization 45% 65% 54% 53% 48% *NOTE: The following is a reconciliation of the operating income (loss) for the U.S. Offshore segment for the fourth quarter of 2004, which is provided to assist with quarterly comparisons. Operating Loss $(47,540) Impairment charge 51,516 Operating income, as adjusted $ 3,976 SEGMENT REPORTING Three Months Ended Fiscal Year Ended June 30 Sept. 30 Sept. 30 2005 2005 2004 2005 2004 (in thousands, except days and per day amounts) INTERNATIONAL OPERATIONS Revenues $46,030 $47,180 $38,029 $177,480 $148,788 Direct operating expenses 35,192 36,870 27,050 135,837 113,988 General and administrative expense 619 794 527 2,563 2,144 Depreciation 4,935 5,606 5,267 20,107 20,530 Operating income $5,284 $3,910 $5,185 $18,973 $12,126 Activity days 1,916 2,024 1,692 7,491 6,266 Average rig revenue per day $19,536 $19,168 $18,746 $19,332 $19,580 Average rig expense per day $14,633 $14,416 $12,739 $14,039 $14,279 Average rig margin per day $4,903 $4,752 $6,007 $5,293 $5,301 Rig utilization 80% 85% 57% 77% 54%

Per day calculations for international operations exclude gains and losses from translation of foreign currency transactions.

Operating statistics exclude the effects of offshore platform and international management contracts, and do not include reimbursements of "out-of-pocket" expenses in revenue per day, expense per day and margin calculations.

Reimbursed amounts were as follows: U.S. Land Operations $8,838 $8,943 $8,478 $33,989 $26,367 U.S. Offshore Operations $2,412 $4,213 $1,680 $9,506 $6,012 International Operations $4,115 $4,207 $2,481 $15,215 $11,731 REAL ESTATE Revenues $2,732 $2,684 $2,383 $10,688 $10,015 Direct operating expenses 838 583 1,760 3,622 4,564 Depreciation 628 589 589 2,352 2,253 Operating income $1,266 $1,512 $34 $4,714 $3,198

The following table reconciles operating income (loss) per the information above to income (loss) before income taxes and equity in income of affiliates as reported on the Consolidated Statements of Operations (in thousands).

SEGMENT REPORTING Three Months Ended Fiscal Year Ended June 30 Sept. 30 Sept. 30 2005 2005 2004 2005 2004 Operating income (loss) U.S. Land $47,244 $56,028 $13,856 $164,657 $35,545 U.S. Offshore 4,648 4,720 (47,540) 17,708 (35,628) International 5,284 3,910 5,185 18,973 12,126 Real Estate 1,266 1,512 34 4,714 3,198 Segment operating income (loss) $58,442 $66,170 $(28,465) $206,052 $15,241 Corporate general and administrative (7,644) (6,056) (5,617) (26,033) (24,496) Other depreciation (683) (791) (864) (2,991) (3,007) Inter-segment elimination 703 560 --- 2,178 --- Operating income (loss) $50,818 $59,883 $(34,946) $179,206 $(12,262) Other income (expense): Interest and dividend income 1,671 1,984 476 5,809 1,965 Interest expense (3,127) (2,960) (3,247) (12,642) (12,695) Gain on sale of investment securities --- 656 13,442 26,969 25,418 Income from asset sales 603 1,160 3,639 13,550 5,377 Other 29 (610) 66 (235) 197 Total other income (expense) (824) 230 14,376 33,451 20,262 Income (loss) before income taxes and equity in income of affiliates $49,994 $60,113 $(20,570) $212,657 $8,000