SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: April 24, 2002
HELMERICH & PAYNE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-4221 73-0679879
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
Utica at Twenty-first Street, Tulsa, Oklahoma 74114
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(Address of principal executive offices) (Zip Code)
(918) 742-5531
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Page 1 of 10 Pages.
Item 9. Other Events.
On April 24, 2002, Helmerich & Payne, Inc. issued the following press
release:
"TULSA, OK., -- Helmerich & Payne, Inc. announced net income of
$10,872,000 ($0.22 per share, on a diluted basis) from revenues of
$155,576,000 for the second quarter ended March 31, 2002, compared with
net income of $41,749,000 ($0.82 per share, on a diluted basis) from
revenues of $221,569,000 for the second quarter of the prior fiscal
year. Net income for the first six months of this fiscal year totaled
$26,476,000 ($0.53 per share, on a diluted basis) from revenues of
$329,723,000, compared with net income of $75,589,000 ($1.49 per share,
on a diluted basis) from revenues of $414,119,000 for the same period
last year. This year's second quarter and year-to-date results include
net income from the sale of investment securities of $324,000 ($0.01
per share). There were no meaningful gains from security sales during
the first six months of last year.
Contract Drilling Division
Total Contract Drilling Division operating profit fell to $17,949,000,
from $31,693,000 recorded for the first quarter of this year, and
$24,449,000 for last year's second quarter. The most significant
decline in division performance occurred in the U.S. where continued
reductions in land rig dayrates drove second quarter operating profit
for U.S. operations to $13,533,000, from the $27,816,000 recorded for
this year's first quarter, and from $20,644,000 reported for last
year's second quarter. Average U.S. land rig revenue per day for the
second quarter was $12,386, down 13% from $14,192 reported in the first
quarter of this year, and down 6% from $13,154 recorded for the second
quarter of last year. U.S. land rig utilization for the quarter was
76%, compared with 89% during the first quarter of this year, and 95%
for the second quarter of last year. The Company's U.S. land rig
utilization for this quarter was impacted by the inclusion of an
additional four rigs that recently became available after significant
modification. Dayrates for the Company's U.S. offshore platform rigs
remained steady, however, utilization in that sector dropped to 89%,
compared with 100% in both the previous quarter and in the second
quarter of last year. The Company anticipates that its newly
constructed platform rigs, 205 and 206, will commence operations in May
and June, respectively.
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The Company's international contract drilling operating profit of
$4,416,000 was up slightly over the previous quarter and last year's
second quarter. Improved profitability in Ecuador and Argentina
operations helped to offset reduced operating profit in Venezuela and
Bolivia. Venezuela's second quarter results were negatively impacted by
$2,379,000 of currency devaluation losses resulting from a severe
decline in the value of the Venezuelan bolivar due to a change in its
government exchange rate policy. However, the value of the bolivar has
improved relative to the U.S. dollar during the last 30 days. Rig
utilization for international operations averaged 58% for this year's
second quarter, 55% for the first quarter of this year, and 49% for the
second quarter of last year.
During the second quarter, the Company commenced operations on the two
remaining new FlexRigs(TM)* constructed during its FlexRig2 program.
Those rigs, along with the additional four conventional rigs that
completed refurbishment early in the quarter, brought the total U.S.
land rig count to 58. As previously announced, the Company is currently
in its FlexRig3 construction program wherein a total of 25 new rigs are
expected to be built over the next 18 months. It is anticipated that
the Company will commence operations on ten of the 25 rigs prior to the
end of fiscal year 2002, and that the remainder will commence
operations during fiscal year 2003. The first rig from the FlexRig3
project is scheduled to be completed next month.
Oil and Gas Division
As announced on February 25, 2002, the Company and Key Production
Company, Inc. (Key) have signed a definitive agreement that provides
for Helmerich & Payne, Inc. to spin off its Oil and Gas Division to its
shareholders and for the newly spun company to combine with Key. The
combined company, named Cimarex Energy Co., will be a new publicly
traded exploration and production company. The boards of directors of
H&P and Key have each unanimously approved the contemplated
transaction. The transaction will close after receipt of necessary Key
shareholder and regulatory approvals, including the receipt of a
favorable letter ruling from the Internal Revenue Service. Closing will
likely occur in the third calendar quarter of 2002. Approval of the
* FlexRigTM hereinafter referred to as FlexRig.
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transaction by H&P's shareholders will not be required. Subject to a
favorable IRS ruling, it is anticipated that the transaction will be
tax free to H&P and will be tax deferred to the shareholders of H&P and
Key. Application will be made for Cimarex shares to be listed on the
New York Stock Exchange.
During the second quarter, the Company's Exploration and Production
Division recorded improved operating profit over the first quarter of
this year, but significantly lower than recorded for last year's second
quarter. The average price received for the Company's natural gas
production was $2.03 per mcf in this quarter, compared with $2.06 in
the first quarter of this year, and $6.49 per mcf for last year's
second quarter. Oil prices averaged $19.86 per barrel during the second
quarter, compared with $19.60 per barrel during the first quarter, both
down substantially from the $28.09 per barrel received for company's
production during last year's second quarter. Production volumes
declined slightly in both natural gas and oil compared with the first
quarter, but were down by approximately 10% in both categories compared
with the second quarter of last year. Operating profit for this quarter
improved over last quarter due to reductions in dry hole and
abandonment expenditures and the absence of any significant impairment
charges.
Outlook
Guidance for Helmerich & Payne, Inc.'s net income for fiscal year 2002
is slightly increased from that provided in the January 23, 2002 First
Quarter Earnings Release. Although average U.S. land rig dayrates are
expected to remain under pricing pressure, natural gas prices have
strengthened in recent weeks and therefore, net income for the year is
anticipated to be in the range of $1.00 to $1.10 per share if commodity
prices remain at or above current levels. This earnings guidance also
assumes a full year of income from the Company's Oil and Gas Division.
As stated earlier, the contemplated spin-off and merging of the Oil and
Gas Division could be completed prior to September 30 and would reduce
Company income accordingly.
Company President and C.E.O., Hans Helmerich commented, 'We believe the
spin/merge of the Company's Oil and Gas Division and the FlexRig
construction projects are two exceptional events in the Company's 82
year old history and add significant value for shareholders.
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Although industry conditions continue to be soft, the market's response
to the spin/merge announcement and our customers' preference for the
FlexRig technology have been very encouraging.'
Helmerich & Payne, Inc. (HP/NYSE) is an energy-oriented company engaged
in contract drilling and oil and gas exploration and production.
Currently, H&P has 58 U.S. land rigs, ten U.S. platform rigs located in
the Gulf of Mexico, and 33 rigs located in South America. Additionally,
the Company has two offshore platform rigs under construction and near
completion, and has begun the construction of 25 FlexRigs to be put in
service over the next 15 to 18 months.
Helmerich & Payne, Inc.'s conference call/webcast is scheduled for this
afternoon at 3:30 EDT (2:30 CDT). To listen, go to
http://www.videonewswire.com/event.asp?id=4487. Due to applicable SEC
regulations, the Company has elected not to archive this conference
call on its website.
Forward-Looking Statements
It should be noted that this announcement contains certain statements
that may be deemed to be "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include, without limitation, statements
regarding the consummation of the proposed spin-off and merger, its
effect on future earnings, cash flow or other operating results, the
expected closing date of the proposed spin-off and merger, any other
effect or benefit of the proposed spin-off and merger, the tax
treatment of the proposed spin-off and merger and the combined company,
market prospects, and any other statements that are not historical
facts. H&P strongly encourages readers to note that some or all of the
assumptions upon which such forward-looking statements are based are
beyond their ability to control or estimate precisely, and may in some
cases be subject to rapid and material changes. Such assumptions
include but are not limited to costs and difficulties related to the
integration of the businesses, costs, delays and other difficulties
related to the proposed spin-off and merger, closing conditions not
being satisfied, general market conditions prevailing in the
exploration for and development and production of oil and gas
(including inflation or lack of availability of goods and services,
environmental risks, drilling risks and regulatory changes), operating
hazards and
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delays, actions by customers and other third parties, the future price
of oil and gas, and other factors detailed in H&P's filings with the
Securities and Exchange Commission (the "SEC"), which are available
free of charge on the SEC's website at www.sec.gov. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those indicated. H&P undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information
In connection with the proposed spin-off and merger, Key and Cimarex
will file a proxy statement/prospectus with the SEC. Investors and
security holders are urged to carefully read the proxy
statement/prospectus regarding the proposed transaction when it becomes
available, because it will contain important information. Investors and
security holders may obtain a free copy of the proxy
statement/prospectus (when it is available) and other documents
containing information about Key and H&P's oil and gas division,
without charge, at the SEC's web site at www.sec.gov. Copies of the
proxy statement/prospectus and the SEC filings that will be
incorporated by reference in the proxy statement/prospectus may also be
obtained for free by directing a request to: Helmerich & Payne, Inc,
Utica at Twenty-First Street, Tulsa, Oklahoma 74114, Attention: Steven
R. Mackey, Corporate Secretary; telephone 918-742-5531, fax
918-743-2671.
Participants in Solicitation
H&P and Cimarex and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from
Key's shareholders in connection with the proposed merger. Hans
Helmerich, Douglas E. Fears and Steven R. Mackey are currently
directors of Cimarex, and each of them and Steven R. Shaw are currently
officers of Cimarex (the "Cimarex Participants"). None of the Cimarex
Participants beneficially owns any shares of Cimarex common stock. The
Cimarex Participants are all executive officers of H&P. Information
concerning H&P's participants in the solicitation is set forth in H&P's
proxy statement dated January 25, 2002, which is filed with the SEC.
Key's shareholders may obtain additional information about the
interests of all such participants in the proposed merger by reading
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the proxy statement/prospectus when it becomes available. Investors
should read the proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions."
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HELMERICH & PAYNE, INC.
Unaudited
(in thousands, except per share data)
03/31/02 09/30/01
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Consolidated Condensed Balance Sheets
ASSETS:
Total current assets $ 223,069 $ 331,412
Investments 231,823 200,286
Net property, plant, and equipment 919,301 818,404
Other assets 15,153 14,405
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TOTAL ASSETS $1,389,346 $1,364,507
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Total current liabilities $ 76,080 $ 121,221
Total noncurrent liabilities 195,232 166,809
Long-term debt 50,000 50,000
Total Shareholders' Equity 1,068,034 1,026,477
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,389,346 $1,364,507
========== ==========
Three Months Ended Six Months Ended
March 31 March 31
2002 2001 2002 2001
-------- -------- -------- --------
Consolidated Statements of Income
REVENUES:
Sales and other operating revenues $153,959 $218,817 $326,756 $408,565
Income from investments 1,617 2,752 2,967 5,554
-------- -------- -------- --------
155,576 221,569 329,723 414,119
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COST AND EXPENSES:
Operating costs 96,919 107,076 199,250 201,122
Depreciation, depletion and amortization 21,893 22,784 48,886 40,762
Dry holes and abandonments 4,311 6,704 10,123 18,748
Taxes, other than income taxes 9,154 12,066 18,113 20,934
General and administrative 5,358 4,646 9,926 8,213
Interest 342 68 716 675
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137,977 153,344 287,014 290,454
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND EQUITY
IN INCOME OF AFFILIATES 17,599 68,225 42,709 123,665
INCOME TAX EXPENSE 7,497 27,118 18,095 49,153
EQUITY IN INCOME OF AFFILIATES,
net of income taxes 770 642 1,862 1,077
-------- -------- -------- --------
NET INCOME $ 10,872 $ 41,749 $ 26,476 $ 75,589
======== ======== ======== ========
EARNINGS PER COMMON SHARE:
Basic $ 0.22 $ 0.83 $ 0.53 $ 1.51
Diluted $ 0.22 $ 0.82 $ 0.53 $ 1.49
Average common shares outstanding:
Basic 49,788 50,197 49,762 50,005
Diluted 50,265 51,139 50,171 50,783
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HELMERICH & PAYNE, INC.
Unaudited
(in thousands)
Three Months Ended Six Months Ended
March 31 March 31
2002 2001 2002 2001
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Financial Results - Lines of Business
SALES AND OTHER REVENUES:
Contract Drilling - Domestic $ 78,670 $ 73,159 $ 170,793 $ 135,453
Contract Drilling - International 39,210 35,128 78,263 73,819
--------- --------- --------- ---------
Total Contract Drilling 117,880 108,287 249,056 209,272
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Exploration and Production 23,056 74,835 47,847 132,563
Natural Gas Marketing 11,481 31,474 25,802 60,153
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Total Oil and Gas 34,537 106,309 73,649 192,716
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Real Estate 1,965 4,245 4,460 6,576
Other 1,194 2,728 2,558 5,555
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Total Revenues $ 155,576 $ 221,569 $ 329,723 $ 414,119
========= ========= ========= =========
OPERATING PROFIT (LOSS):
Contract Drilling - Domestic $ 13,533 $ 20,644 $ 41,349 $ 37,690
Contract Drilling - International 4,416 3,805 8,293 11,353
--------- --------- --------- ---------
Total Contract Drilling 17,949 24,449 49,642 49,043
--------- --------- --------- ---------
Exploration and Production 3,006 44,095 (953) 71,115
Natural Gas Marketing 979 (33) 1,439 4,666
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Total Oil and Gas 3,985 44,062 486 75,781
--------- --------- --------- ---------
Real Estate 1,336 2,929 2,733 4,304
Total Operating Profit 23,270 71,440 52,861 129,128
--------- --------- --------- ---------
OTHER (5,671) (3,215) (10,152) (5,463)
INCOME BEFORE INCOME TAXES AND
--------- --------- --------- ---------
EQUITY IN INCOME OF AFFILIATES: $ 17,599 $ 68,225 $ 42,709 $ 123,665
========= ========= ========= =========
Average Production and Prices
Production
Oil - Barrels Per Day 2,018 2,258 2,064 2,345
Natural Gas - Mcf Per Day 104,494 118,401 106,722 117,438
Sales Prices
Oil - $ Per Barrel $ 19.86 $ 28.09 $ 19.72 $ 29.70
Natural Gas - $ Per Mcf $ 2.03 $ 6.49 $ 2.05 $ 5.59
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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.
HELMERICH & PAYNE, INC.
(Registrant)
By: /s/ STEVEN R. MACKEY
----------------------------------
Name: Steven R. Mackey
Title: Vice President
Dated: April 24, 2002
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