Helmerich & Payne : earnings release dated April 27, 2022 - Form 8-K
April 27, 2022 at 06:21 pm EDT
Share
NEWS RELEASE
April 27, 2022
HELMERICH & PAYNE, INC. ANNOUNCES SECOND QUARTER RESULTS
•H&P's North America Solutions segment exited the second quarter of fiscal year 2022 with 171 active rigs, up over 10% during the quarter
•Quarterly North America Solutions operating income increased $30 million sequentially, while direct margins(1) increased $30 million to $114 million sequentially, as revenues increased by $68 million to $409 million and expenses increased by $38 million to $294 million
•The Company reported a fiscal second quarter net loss of $(0.05) per diluted share; including select items(2) of $0.12 per diluted share
•North America Solutions revenue per day increased approximately $1,500/day or 7% to $24,500/day on a sequential basis with additional increases expected
•On March 2, 2022, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share, payable on May 27, 2022 to stockholders of record at the close of business on May 13, 2022
Helmerich & Payne, Inc. (NYSE: HP) reported a net loss of $5 million, or $(0.05) per diluted share, from operating revenues of $468 million for the quarter ended March 31, 2022, compared to a net loss of $51 million, or $(0.48) per diluted share, on revenues of $410 million for the quarter ended December 31, 2021. The net losses per diluted share for the second and first quarters of fiscal year 2022 include $0.12 and $(0.03), respectively, of after-tax gains and losses comprised of select items(2). For the second quarter of fiscal year 2022, select items(2) were comprised of:
•$0.13 of after-tax gains pertaining to non-cash fair market adjustments to our equity investments
•$(0.01) of after-tax losses pertaining to losses on sale of assets
Net cash provided by operating activities was $23 million for the second quarter of fiscal year 2022 compared to net cash used by operating activities of $4 million in the prior quarter.
Helmerich & Payne | 1437 South Boulder Ave. | Suite 1400
Tulsa, OK 74119 | 918.588.5190 | helmerichpayne.com
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News Release
April 27, 2022
President and CEO John Lindsay commented, "Just when the energy industry is beginning to normalize, another geopolitical event and its immediate and lasting ramifications provide a sharp reminder of how critical abundant, cost effective and secure energy is to sustaining the broader global economy. Given the industry's experience in recent years we are not at all surprised to find our customers remaining rational and disciplined with regards to their capital expenditures, even in the face of spiking commodity prices. Holding that line is something we believe is crucial to creating a healthy and sustainable industry over the longer-term.
"During the quarter our active North America Solutions rig count increased in line with expectations and exited the quarter at 171 rigs. The industry rig count increase in the March quarter continued to shrink the availability of super-spec rigs that have worked at some point in the last two years, compounding the pre-existing supply-demand constraints in the market. As we have previously noted, the value proposition H&P brings to its customers through technology-driven efficiency and wellbore quality combined with the current market dynamics is accelerating improvements in contract economics. Like our customers, we expect to have disciplined capex spending, consistent with current industry trends, and as a consequence, the underlying supply-demand tightness will likely persist. We believe these conditions could provide a pathway to achieve significant improvement in average spot contract revenues. Our ultimate aim is to generate returns more in line with the high-value drilling solutions we are providing to our customers.
"The outlook for international markets remains positive with additional developments and prospects progressing albeit it at a much slower pace than what we have experienced domestically. In South America, Argentina and Colombia remain areas of focus and we have begun to re-contract rigs located in those countries. In the Middle East, our strategy and opportunity set is a bit different. We started delivering the rigs we sold to ADNOC Drilling and are moving forward with the strong business alliance we established with them. We are also actively pursuing opportunities to export some of our idle super-spec capacity into that region. While we are optimistic about our strategy in the Middle East, we are also keenly aware that this is a long-term play and it will take time for opportunities to emerge and fully develop."
Senior Vice President and CFO Mark Smith also commented, "While a company's financial position and cash flows are tested during a declining and weak market, its fiscal discipline is often tested during a recovering and strong market. At this time, we remain fully committed to a long-standing, fiscally sound and disciplined approach to capital allocation and hence we are not compelled to adjust our previously established capex budget range of $250 to $270 million for fiscal 2022.
"The economics for our spot contracts are improving and we expect similar improvements for our term contracts as they are renewed or move into the spot market in the coming quarters. As John alluded to, current contracting economics are moving our financial returns higher and the resulting cash generation will enhance our strong financial position furthering our ability to take advantage of various opportunities, including capital allocation to shareholders."
John Lindsay concluded, "We continue to be encouraged as the industry rebounds; however, we are reminded, particularly with elevated commodity prices, of the industry track record to add excessive capacity to the market and the longer-term negative consequences that could ultimately result from those actions if not carefully considered. The axiom, "Change is the only constant in life" keeps us mindful of the changing industry dynamics and the long-term challenges and opportunities that lie ahead. I would also add that another constant at H&P has been the passion and innovative spirit of our hardworking employees, who continue to lead the way forward within our industry and partnering with our customers to create value for our shareholders."
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News Release
April 27, 2022
Operating Segment Results for the Second Quarter of Fiscal Year 2022
North America Solutions:
This segment had operating income of $1.3 million compared to an operating loss of $28.9 million during the previous quarter. The increase in operating income was primarily due to higher activity levels and improving contract economics during the quarter, while the prior quarter was adversely impacted by an impairment for fair market adjustments for equipment held for sale and a restructuring charge. Absent the select item(2) impacts on the previous quarter, this segment's operating income improved by $27.8 million on a sequential basis.
Direct margins(1) increased by $30.0 million to $114.4 million as both revenues and expenses increased sequentially. Operating results were still negatively impacted by the costs associated with reactivating rigs; $14.2 million in the second fiscal quarter compared to $20.5 million in the previous quarter.
International Solutions:
This segment had an operating loss of $0.8 million compared to an operating income of $8.0 million during the previous quarter. The decrease in operating income related to a contractual dispute with a customer that benefited the first fiscal quarter by $16.4 million, partially offset by a $2.5 million impairment recognized in the prior quarter as well. Absent these select items(2) for the previous quarter, this segment's operating loss narrowed by $5.0 million on a sequential basis.
Direct margins(1) during the second fiscal quarter were $2.3 million compared to $13.0 million during the previous quarter. Excluding the aforementioned $16.4 million settlement during the first fiscal quarter, direct operating margins(1) increased by $5.6 million on a sequential basis. Current quarter results included a $2.4 million foreign currency loss primarily related to our South American operations compared to a $1.0 million foreign currency loss the previous quarter.
Offshore Gulf of Mexico:
This segment had operating income of $5.3 million compared to operating income of $5.5 million during the previous quarter. Direct margins(1) for the quarter were $8.3 million compared to $8.6 million in the prior quarter.
Operational Outlook for the Third Quarter of Fiscal Year 2022
North America Solutions:
•We expect North America Solutions direct margins(1) to be between $150-$165 million, which includes approximately $5.5 million in estimated reactivation costs
•We expect to exit the quarter at approximately 175 contracted rigs
International Solutions:
•We expect International Solutions direct margins(1) to be between $(3)-$(1) million, exclusive of any foreign exchange gains or losses
•International Solutions direct margins(1) are expected to be negatively impacted by costs incurred to move a rig from the U.S. as part of our Middle East hub strategy
Offshore Gulf of Mexico:
•We expect Offshore Gulf of Mexico direct margins(1) to be between $7-$9 million
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News Release
April 27, 2022
Other Estimates for Fiscal Year 2022
•Gross capital expenditures are still expected to be approximately $250 to $270 million; approximately 50% expected for maintenance, including tubular purchases, roughly 35% expected for skidding to walking conversions and approximately 15% for corporate and information technology. Ongoing asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are still expected to total approximately $45 million in fiscal year 2022.
•Depreciation and amortization expenses are still expected to be approximately $405 million
•Research and development expenses for fiscal year 2022 are still expected to be roughly $27 million
•Selling, general and administrative expenses for fiscal year 2022 are now expected to be just over $180 million
Select Items Included in Net Income per Diluted Share
Second quarter of fiscal year 2022 net loss of $(0.05) per diluted share included $0.12 in after-tax gains comprised of the following:
•$0.13 of non-cash after-tax gains related to fair market value adjustments to equity investments
•$(0.00) of after-tax losses related to restructuring charges
•$(0.01) of after-tax losses related to the sale of assets
First quarter of fiscal year 2022 net loss of $(0.48) per diluted share included $(0.03) in after-tax losses comprised of the following:
•$0.13 of after-tax gains related to a settlement of a previous contractual dispute with an international customer
•$0.38 of non-cash after-tax gains related to fair market value adjustments to equity investments
•$(0.01) of after-tax losses related to restructuring charges
•$(0.03) of after-tax losses related to the sale of assets
•$(0.03) of non-cash after-tax losses for impairments related to fair market value adjustments to decommissioned rigs and equipment that are held for sale
•$(0.47) of after-tax losses related to a debt make-whole premium and write-off of debt discount and issuance costs
Conference Call
A conference call will be held on Thursday, April 28, 2022, at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company's second quarter fiscal year 2022 results. Dial-in information for the conference call is (877) 830-2596 for domestic callers or (785) 424-1744 for international callers. The call access code is 'Helmerich'. You may also listen to the conference call that will be broadcast live over the internet by logging on to the Company's website at http://www.helmerichpayne.com and accessing the corresponding link through the investor relations section by clicking on "Investors" and then clicking on "News and Events - Events & Presentations" to find the event and the link to the webcast.
About Helmerich & Payne, Inc.
Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P strives to operate with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. As of March 31, 2022, H&P's fleet included 236 land rigs in the U.S., 28 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.
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News Release
April 27, 2022
Forward-Looking Statements
This release includes "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding our future financial position, operations outlook, business strategy, dividends, share repurchases, budgets, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, spot contract economics, future supply-demand tightness, capex spending and outlook for international markets are forward-looking statements. For information regarding risks and uncertainties associated with the Company's business, please refer to the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's SEC filings, including but not limited to its annual report on Form 10-K and quarterly reports on Form 10-Q. As a result of these factors, Helmerich & Payne, Inc.'s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to publicly update or revise any forward-looking statements, whether as a result of new information changes in internal estimates, expectations or otherwise, except as required under applicable securities laws.
We use our Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on our Investor Relations website at www.helmerichpayne.com.
Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, which may be registered or trademarked in the U.S. and other jurisdictions.
(1) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See - Non-GAAP Measurements for a reconciliation of segment operating income(loss) to direct margin. Expected direct margin for the third quarter of fiscal 2022 is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain item. There, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, we are unable to provide a reconciliation of expected direct margin to the most comparable GAAP measure without unreasonable effort.
(2) Select items are considered non-GAAP metrics and are included as a supplemental disclosure as the Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside of the Company's core business operations. See - Non-GAAP Measurements.
Contact: Dave Wilson, Vice President of Investor Relations
investor.relations@hpinc.com
(918) 588-5190
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News Release
April 27, 2022
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
(in thousands, except per share
amounts)
March 31,
December 31,
March 31,
March 31,
March 31,
2022
2021
2021
2022
2021
OPERATING REVENUES
Drilling services
$
465,370
$
407,534
$
294,026
$
872,904
$
538,807
Other
2,227
2,248
2,145
4,475
3,741
467,597
409,782
296,171
877,379
542,548
OPERATING COSTS AND EXPENSES
Drilling services operating expenses, excluding depreciation and amortization
339,759
299,652
230,313
639,411
429,002
Other operating expenses
1,181
1,182
1,274
2,363
2,636
Depreciation and amortization
102,937
100,437
106,417
203,374
213,278
Research and development
6,387
6,527
5,334
12,914
10,917
Selling, general and administrative
47,051
43,715
39,349
90,766
78,652
Asset impairment charge
-
4,363
54,284
4,363
54,284
Restructuring charges
63
742
1,608
805
1,746
Gain on reimbursement of drilling equipment
(6,448)
(5,254)
(3,748)
(11,702)
(5,939)
Other (gain) loss on sale of assets
(716)
1,029
22,263
313
12,118
490,214
452,393
457,094
942,607
796,694
OPERATING LOSS FROM CONTINUING OPERATIONS
(22,617)
(42,611)
(160,923)
(65,228)
(254,146)
Other income (expense)
Interest and dividend income
3,399
2,589
4,819
5,988
6,698
Interest expense
(4,390)
(6,114)
(5,759)
(10,504)
(11,898)
Gain on investment securities
22,132
47,862
2,520
69,994
5,444
Loss on extinguishment of debt
-
(60,083)
-
(60,083)
-
Other
(476)
(542)
(577)
(1,018)
(2,057)
20,665
(16,288)
1,003
4,377
(1,813)
Loss from continuing operations before income taxes
(1,952)
(58,899)
(159,920)
(60,851)
(255,959)
Income tax expense (benefit)
2,672
(7,568)
(36,624)
(4,896)
(54,739)
Loss from continuing operations
(4,624)
(51,331)
(123,296)
(55,955)
(201,220)
Income (loss) from discontinued operations before income taxes
(352)
(31)
2,293
(383)
9,786
Income tax provision
-
-
-
-
-
Income (loss) from discontinued operations
(352)
(31)
2,293
(383)
9,786
NET LOSS
$
(4,976)
$
(51,362)
$
(121,003)
$
(56,338)
$
(191,434)
Basic earnings (loss) per common share:
Loss from continuing operations
$
(0.05)
$
(0.48)
$
(1.15)
$
(0.53)
$
(1.87)
Income from discontinued operations
$
-
$
-
$
0.02
$
-
$
0.09
Net loss
$
(0.05)
$
(0.48)
$
(1.13)
$
(0.53)
$
(1.78)
Diluted earnings (loss) per common share:
Loss from continuing operations
$
(0.05)
$
(0.48)
$
(1.15)
$
(0.53)
$
(1.87)
Income from discontinued operations
$
-
$
-
$
0.02
$
-
$
0.09
Net loss
$
(0.05)
$
(0.48)
$
(1.13)
$
(0.53)
$
(1.78)
Weighted average shares outstanding (in thousands):
Basic
105,393
107,571
107,861
106,494
107,738
Diluted
105,393
107,571
107,861
106,494
107,738
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News Release
April 27, 2022
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31,
September 30,
(in thousands except share data and share amounts)
2022
2021
ASSETS
Current Assets:
Cash and cash equivalents
$
202,206
$
917,534
Short-term investments
148,377
198,700
Accounts receivable, net of allowance of $2,490 and $2,068, respectively
329,572
228,894
Inventories of materials and supplies, net
83,588
84,057
Prepaid expenses and other, net
97,380
85,928
Assets held-for-sale
57,373
71,453
Total current assets
918,496
1,586,566
Investments
219,295
135,444
Property, plant and equipment, net
3,022,335
3,127,287
Other Noncurrent Assets:
Goodwill
45,653
45,653
Intangible assets, net
70,246
73,838
Operating lease right-of-use assets
45,325
49,187
Other assets, net
13,000
16,153
Total other noncurrent assets
174,224
184,831
Total assets
$
4,334,350
$
5,034,128
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
105,123
$
71,996
Dividends payable
26,697
27,332
Current portion of long-term debt, net
-
483,486
Accrued liabilities
245,778
283,492
Total current liabilities
377,598
866,306
Noncurrent Liabilities:
Long-term debt, net
541,969
541,997
Deferred income taxes
552,263
563,437
Other
125,754
147,757
Noncurrent liabilities - discontinued operations
2,356
2,013
Total noncurrent liabilities
1,222,342
1,255,204
Shareholders' Equity:
Common stock, $.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of both March 31, 2022 and September 30, 2021, and 105,285,460 and 107,898,859 shares outstanding as of March 31, 2022 and September 30, 2021, respectively
11,222
11,222
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued
-
-
Additional paid-in capital
514,771
529,903
Retained earnings
2,463,665
2,573,375
Accumulated other comprehensive loss
(19,456)
(20,244)
Treasury stock, at cost, 6,937,405 shares and 4,324,006 shares as of March 31, 2022 and September 30, 2021, respectively
(235,792)
(181,638)
Total shareholders' equity
2,734,410
2,912,618
Total liabilities and shareholders' equity
$
4,334,350
$
5,034,128
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News Release
April 27, 2022
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended March 31,
(in thousands)
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(56,338)
$
(191,434)
Adjustment for (income) loss from discontinued operations
383
(9,786)
Loss from continuing operations
(55,955)
(201,220)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
203,374
213,278
Asset impairment charge
4,363
54,284
Amortization of debt discount and debt issuance costs
559
920
Loss on extinguishment of debt
60,083
-
Provision for credit loss
669
(227)
Provision for obsolete inventory
(761)
423
Stock-based compensation
14,163
14,277
Gain on investment securities
(69,994)
(5,444)
Gain on reimbursement of drilling equipment
(11,702)
(5,939)
Other loss on sale of assets
313
12,118
Deferred income tax benefit
(11,597)
(46,068)
Other
(3,526)
3,646
Changes in assets and liabilities
(111,051)
18,779
Net cash provided by operating activities from continuing operations
18,938
58,827
Net cash used in operating activities from discontinued operations
(42)
(25)
Net cash provided by operating activities
18,896
58,802
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(104,482)
(30,745)
Other capital expenditures related to assets held-for-sale
(10,550)
-
Purchase of short-term investments
(68,565)
(105,662)
Purchase of long-term investments
(14,124)
(1,069)
Proceeds from sale of short-term investments
117,456
63,742
Proceeds from asset sales
34,944
13,419
Net cash used in investing activities
(45,321)
(60,315)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid
(54,007)
(54,230)
Payments for employee taxes on net settlement of equity awards
(5,503)
(2,119)
Payment of contingent consideration from acquisition of business
(250)
(250)
Payments for early extinguishment of long-term debt
(487,148)
-
Make-whole premium payment
(56,421)
-
Share repurchases
(76,999)
-
Other
(587)
-
Net cash used in financing activities
(680,915)
(56,599)
Net decrease in cash and cash equivalents and restricted cash
(707,340)
(58,112)
Cash and cash equivalents and restricted cash, beginning of period
936,716
536,747
Cash and cash equivalents and restricted cash, end of period
$
229,376
$
478,635
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News Release
April 27, 2022
HELMERICH & PAYNE, INC.
SEGMENT REPORTING
Three Months Ended
Six Months Ended
March 31,
December 31,
March 31,
March 31,
(in thousands, except operating statistics)
2022
2021
2021
2022
2021
NORTH AMERICA SOLUTIONS
Operating revenues
$
408,814
$
341,034
$
249,939
$
749,848
$
451,929
Direct operating expenses
294,397
256,568
185,841
550,965
343,150
Depreciation and amortization
95,817
93,621
99,917
189,438
200,241
Research and development
6,420
6,568
5,329
12,988
10,795
Selling, general and administrative expense
10,883
10,829
12,960
21,712
24,640
Asset impairment charge
-
1,868
54,284
1,868
54,284
Restructuring charges
-
473
1,442
473
1,581
Segment operating income (loss)
$
1,297
$
(28,893)
$
(109,834)
$
(27,596)
$
(182,762)
Financial Data and Other Operating Statistics1:
Direct margin (Non-GAAP)2
114,417
84,466
64,098
198,883
108,779
Revenue days3
14,752
12,946
9,454
27,698
16,916
Average active rigs4
164
141
105
152
93
Number of active rigs at the end of period5
171
154
109
171
109
Number of available rigs at the end of period
236
236
242
236
242
Reimbursements of "out-of-pocket" expenses
46,664
43,129
27,290
89,793
46,079
INTERNATIONAL SOLUTIONS
Operating revenues
27,422
37,159
14,813
64,581
25,331
Direct operating expenses
25,171
24,131
16,718
49,302
34,241
Depreciation
1,049
755
415
1,804
788
Selling, general and administrative expense
2,050
1,729
1,138
3,779
2,117
Asset impairment charge
-
2,495
-
2,495
-
Segment operating income (loss)
$
(848)
$
8,049
$
(3,458)
$
7,201
$
(11,815)
Financial Data and Other Operating Statistics1:
Direct margin (Non-GAAP)2
2,251
13,028
(1,905)
15,279
(8,910)
Revenue days3
636
647
393
1,283
741
Average active rigs4
7
7
4
7
4
Number of active rigs at the end of period5
6
8
5
6
5
Number of available rigs at the end of period
28
28
32
28
32
Reimbursements of "out-of-pocket" expenses
1,226
1,443
1,613
2,669
4,172
OFFSHORE GULF OF MEXICO
Operating revenues
$
29,147
$
29,314
$
29,274
58,461
61,547
Direct operating expenses
20,884
20,711
23,069
41,595
49,325
Depreciation
2,401
2,380
2,593
4,781
5,199
Selling, general and administrative expense
584
757
634
1,341
1,303
Segment operating income
$
5,278
$
5,466
$
2,978
$
10,744
$
5,720
Financial Data and Other Operating Statistics1:
Direct margin (Non-GAAP)2
8,263
8,603
6,205
16,866
12,222
Revenue days3
360
368
360
728
820
Average active rigs4
4
4
4
4
5
Number of active rigs at the end of period5
4
4
4
4
4
Number of available rigs at the end of period
7
7
7
7
7
Reimbursements of "out-of-pocket" expenses
5,809
6,075
5,193
11,884
13,061
1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See - Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
3)Defined as the number of contractual days we recognized revenue for during the period.
4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 90 days).
5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Page 10
News Release
April 27, 2022
Segment reconciliation amounts were as follows:
Three Months Ended March 31, 2022
(in thousands)
North America Solutions
International Solutions
Offshore Gulf of Mexico
Other
Eliminations
Total
Operating revenue
$
408,814
$
29,147
$
27,422
$
2,214
$
-
$
467,597
Intersegment
-
-
-
13,204
(13,204)
-
Total operating revenue
$
408,814
$
29,147
$
27,422
$
15,418
$
(13,204)
$
467,597
Direct operating expenses
$
285,596
$
19,149
$
25,030
$
11,165
$
-
$
340,940
Intersegment
8,801
1,735
141
43
(10,720)
-
Total drilling services & other operating expenses
$
294,397
$
20,884
$
25,171
$
11,208
$
(10,720)
$
340,940
Six Months Ended March 31, 2022
(in thousands)
North America Solutions
International Solutions
Offshore Gulf of Mexico
Other
Eliminations
Total
Operating revenue
$
749,848
$
58,461
$
64,581
$
4,489
$
-
$
877,379
Intersegment
-
-
-
26,852
(26,852)
-
Total operating revenue
$
749,848
$
58,461
$
64,581
$
31,341
$
(26,852)
$
877,379
Direct operating expenses
$
532,322
$
37,946
$
49,045
$
22,461
$
-
$
641,774
Intersegment
18,643
3,649
257
67
(22,616)
-
Total drilling services & other operating expenses
$
550,965
$
41,595
$
49,302
$
22,528
$
(22,616)
$
641,774
The following table reconciles segment operating income (loss) per the information above to loss from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:
Three Months Ended
Six Months Ended
March 31,
December 31,
March 31,
March 31,
(in thousands)
2022
2021
2021
2022
2021
Operating income (loss)
North America Solutions
$
1,297
$
(28,893)
$
(109,834)
$
(27,596)
$
(182,762)
International Solutions
(848)
8,049
(3,458)
7,201
(11,815)
Offshore Gulf of Mexico
5,278
5,466
2,978
10,744
5,720
Other
3,167
3,929
(1,072)
7,096
3,039
Eliminations
(2,031)
(1,282)
(3,433)
(3,313)
(5,559)
Segment operating income (loss)
$
6,863
$
(12,731)
$
(114,819)
$
(5,868)
$
(191,377)
Gain on reimbursement of drilling equipment
6,448
5,254
3,748
11,702
5,939
Other gain (loss) on sale of assets
716
(1,029)
(22,263)
(313)
(12,118)
Corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges
(36,644)
(34,105)
(27,589)
(70,749)
(56,590)
Operating loss from continuing operations
$
(22,617)
$
(42,611)
$
(160,923)
$
(65,228)
$
(254,146)
Other income (expense):
Interest and dividend income
3,399
2,589
4,819
5,988
6,698
Interest expense
(4,390)
(6,114)
(5,759)
(10,504)
(11,898)
Gain on investment securities
22,132
47,862
2,520
69,994
5,444
Loss on extinguishment of debt
-
(60,083)
-
(60,083)
-
Other
(476)
(542)
(577)
(1,018)
(2,057)
Total unallocated amounts
20,665
(16,288)
1,003
4,377
(1,813)
Loss from continuing operations before income taxes
$
(1,952)
$
(58,899)
$
(159,920)
$
(60,851)
$
(255,959)
Page 11
News Release
April 27, 2022
SUPPLEMENTARY STATISTICAL INFORMATION
Unaudited
U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS
April 27,
March 31,
December 31,
Q2FY22
2022
2022
2021
Average
U.S. Land Operations
Term Contract Rigs
104
103
85
95
Spot Contract Rigs
69
68
69
69
Total Contracted Rigs
173
171
154
164
Idle or Other Rigs
63
65
82
72
Total Marketable Fleet
236
236
236
236
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS
Number of Rigs Already Under Long-Term Contracts(*)
(Estimated Quarterly Average - as of 3/31/22)
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Segment
FY22
FY22
FY23
FY23
FY23
FY23
FY24
U.S. Land Operations
103.0
91.1
40.9
17.7
11.7
9.4
6.0
International Land Operations
3.9
6.0
6.0
6.0
4.8
4.0
4.0
Offshore Operations
-
-
-
-
-
-
-
Total
106.9
97.1
46.9
23.7
16.5
13.4
10.0
(*) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.
Non-GAAP Measurements
NON-GAAP RECONCILIATION OF SELECT ITEMS AND ADJUSTED NET LOSS(**)
Three Months Ended March 31, 2022
(in thousands, except per share data)
Pretax
Tax
Net
EPS
Net loss (GAAP basis)
$
(4,976)
$
(0.05)
(-) Fair market adjustments to equity investments
$
22,308
$
8,483
13,825
0.13
(-) Restructuring charges
(63)
(10)
(53)
-
(-) Loss related to the sale of equipment
(1,353)
(205)
(1,148)
(0.01)
Adjusted net loss (Non-GAAP)
$
(17,600)
$
(0.17)
Three Months Ended December 31, 2021
(in thousands, except per share data)
Pretax
Tax
Net
EPS
Net loss (GAAP basis)
$
(51,362)
$
(0.48)
(-) Fair market adjustments to equity investments
$
47,931
$
7,223
40,708
0.38
(-) Settlement of a previous contractual dispute with an international customer
16,381
2,469
13,912
0.13
(-) Restructuring charges
(742)
(112)
(630)
(0.01)
(-) Loss related to the sale of equipment
(3,391)
(511)
(2,880)
(0.03)
(-) Impairment for fair market value adjustments to equipment held for sale
(4,363)
(658)
(3,705)
(0.03)
(-) Debt make whole premium and write-off of debt discount and issuance costs
(60,083)
(9,054)
(51,029)
(0.47)
Adjusted net loss (Non-GAAP)
$
(47,738)
$
(0.45)
(**)Select items and adjusted net loss are considered non-GAAP metrics. The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future period results. Select items are excluded as they are deemed to be outside of the Company's core business operations.
Page 12
News Release
April 27, 2022
NON-GAAP RECONCILIATION OF DIRECT MARGIN
Direct margin is considered a non-GAAP metric. We define "direct margin" as operating revenues less direct operating expenses. Direct margin is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. Direct margin is not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures.
The following table reconciles direct margin to segment operating income (loss), which we believe is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to direct margin.
.
Three Months Ended March 31, 2022
(in thousands)
North America Solutions
Offshore Gulf of Mexico
International Solutions
Segment operating income (loss)
$
1,297
$
5,278
$
(848)
Add back:
Depreciation and amortization
95,817
2,401
1,049
Research and development
6,420
-
-
Selling, general and administrative expense
10,883
584
2,050
Direct margin (Non-GAAP)
$
114,417
$
8,263
$
2,251
Three Months Ended December 31, 2021
(in thousands)
North America Solutions
Offshore Gulf of Mexico
International Solutions
Segment operating income (loss)
$
(28,893)
$
5,466
$
8,049
Add back:
Depreciation and amortization
93,621
2,380
755
Research and development
6,568
-
-
Selling, general and administrative expense
10,829
757
1,729
Asset impairment charge
1,868
-
2,495
Restructuring charges
473
-
-
Direct margin (Non-GAAP)
$
84,466
$
8,603
$
13,028
Three Months Ended March 31, 2021
(in thousands)
North America Solutions
Offshore Gulf of Mexico
International Solutions
Segment operating income (loss)
$
(109,834)
$
2,978
$
(3,458)
Add back:
Depreciation and amortization
99,917
2,593
415
Research and development
5,329
-
-
Selling, general and administrative expense
12,960
634
1,138
Asset impairment charge
54,284
-
-
Restructuring charges
1,442
-
-
Direct margin (Non-GAAP)
$
64,098
$
6,205
$
(1,905)
Page 13
News Release
April 27, 2022
Six Months Ended March 31, 2022
(in thousands)
North America Solutions
Offshore Gulf of Mexico
International Solutions
Segment operating income (loss)
$
(27,596)
$
10,744
$
7,201
Add back:
Depreciation and amortization
189,438
4,781
1,804
Research and development
12,988
-
-
Selling, general and administrative expense
21,712
1,341
3,779
Asset impairment charge
1,868
-
2,495
Restructuring charges
473
-
-
Direct margin (Non-GAAP)
$
198,883
$
16,866
$
15,279
Six Months Ended March 31, 2021
(in thousands)
North America Solutions
Offshore Gulf of Mexico
International Solutions
Segment operating income (loss)
$
(182,762)
$
5,720
$
(11,815)
Add back:
Depreciation and amortization
200,241
5,199
788
Research and development
10,795
-
-
Selling, general and administrative expense
24,640
1,303
2,117
Asset impairment charge
54,284
-
-
Restructuring charges
1,581
-
-
Direct margin (Non-GAAP)
$
108,779
$
12,222
$
(8,910)
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H&P - Helmerich & Payne Inc. published this content on 27 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 April 2022 22:20:18 UTC.
Helmerich & Payne, Inc., through its subsidiaries, designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. The Company also develops and implements advanced automation, directional drilling and survey management technologies. Its segments include North America Solutions, Offshore Gulf of Mexico and International Solutions. The North America Solutions segment has operations which are located in Texas and other states, including Colorado, Louisiana and New Mexico. The Offshore Gulf of Mexico segment has operations that are located in Louisiana and in United States federal waters in the Gulf of Mexico. The International Solutions segment has rigs and/or services located in five international locations: Argentina, Bahrain, Colombia, the United Arab Emirates and Australia. The Company's fleet includes approximately 233 land rigs in the United States, 22 international land rigs and seven offshore platform rigs.