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Helmerich & Payne, Inc. Announces Fiscal Third Quarter Results

  • The Company reported fiscal third quarter net income of $89 million, or $0.88 per diluted share; including select items(1) of $(0.04) per diluted share
  • The North America Solutions ("NAS") segment exited the third quarter of fiscal year 2024 with 146 active rigs and recognized revenue per day of $39,800/day with associated direct margins(2) per day of $20,300/day during the quarter
  • Quarterly NAS operating income increased $16 million sequentially; while direct margins(2) increased by $6 million to $277 million, as revenues increased by $6 million to $620 million and expenses remained relatively flat at $343 million
  • H&P's NAS segment anticipates exiting the fourth quarter of fiscal year 2024 between 147-153 active rigs
  • On June 5, 2024, the Board of Directors of the Company declared a quarterly base cash dividend of $0.25 per share and a supplemental cash dividend of $0.17 per share; both dividends are payable on August 30, 2024 to stockholders of record at the close of business on August 16, 2024

Helmerich & Payne, Inc. (NYSE: HP) reported net income of $89 million, or $0.88 per diluted share, from operating revenues of $698 million for the quarter ended June 30, 2024, compared to net income of $85 million, or $0.84 per diluted share, from operating revenues of $688 million for the quarter ended March 31, 2024. The net income per diluted share for the third and second quarters of fiscal year 2024 include net $(0.04) and net $0.00 of after-tax gains and losses, respectively, comprised of select items(1). For the third quarter of fiscal year 2024, select items were comprised of:

  • $0.06 of after-tax gains related to the non-cash fair market value adjustments to our equity investments
  • $(0.10) of after-tax losses related to a Blue Chip Swap transaction and non-recurring professional service fees

Net cash provided by operating activities was $197 million for the third quarter of fiscal year 2024 compared to net cash provided by operating activities of $144 million for the second quarter of fiscal year 2024.

President and CEO John Lindsay commented, “Our financial results for the third fiscal quarter continue to demonstrate the resilience of our strategy in the North America Solutions segment. Once again, it was particularly notable, that despite a more sizeable decline in the overall industry rig count, our NAS active rig count remained relatively stable during the third fiscal quarter which is a reflection of H&P’s unyielding focus on providing value to our customers. On the international front, the Company's first super-spec FlexRig® arrived in Saudi Arabia, which is another step in our strategy to increase our operational presence in the region.

“Macro headwinds, both directly and indirectly related to the oil and gas industry, persist and are still causing a more cautionary outlook for the industry. With the cyclical nature of our industry, we are hopeful that these will subside and bring about a more positive outlook for the industry in the coming quarters. Contractual churn remains prevalent in the U.S. market, but our people are doing a good job managing through this. We expect the churn to continue and as we have seen in recent summers, we also anticipate our active rig count to be flat with perhaps a modest incline heading into our fiscal year-end.

“Activity levels in the International Solutions segment in the fourth fiscal quarter are expected to remain consistent with the third fiscal quarter with the exception that the first of the eight Saudi Arabia rigs is expected to commence work in the fiscal fourth quarter once contractual acceptance procedures are completed. The preparation work for the remaining seven super-spec rigs is progressing as planned with export dates expected through the balance of the calendar year. We are looking forward to working with Saudi Aramco and building a long-term, valuable relationship with our new customer.”

Senior Vice President and CFO Mark Smith also commented, “Currently, we expect our active NAS rig count in the fourth fiscal quarter to remain consistent with our third fiscal quarter average. Accordingly, our NAS direct margin guidance also remains relatively consistent with the level recognized during the third fiscal quarter. Contract economics remain the cornerstone of our NAS strategy and we do not anticipate the same level of volatility or correlation to overall rig counts that we have experienced in the past. Recent quarterly results continue to provide evidence of that.

“The Company returned another $42 million to shareholders in the form of base and supplemental dividends during the quarter and the Board of Directors declared the fourth and final installment of the supplemental dividend under the 2024 Supplemental Shareholder Return Plan. Looking ahead, we have just begun the process of establishing our fiscal 2025 capital budget and preliminarily we believe the projected maintenance and walking rig conversions capex will be similar to fiscal 2024 levels with the biggest swing factor related to any international tender awards that would result in additional capex. As part of its budgeting process for the fiscal year ahead, the Company continuously evaluates the uses of cash and capital allocation priorities.”

John Lindsay concluded, “The Company will continue to execute as it always has with a customer-centric approach and safety focus, which is ingrained in our Company culture. We look forward to commencing work in Saudi Arabia and taking advantage of additional opportunities as those arise in the coming quarters."

Operating Segment Results for the Third Quarter of Fiscal Year 2024

North America Solutions:

This segment had operating income of $163.4 million compared to operating income of $147.1 million during the previous quarter. The increase in operating income was primarily attributable to a higher direct margin and the prior quarter experiencing higher depreciation and research and development expenses. Direct margin(2) increased by $6.0 million to $277.4 million sequentially.

International Solutions:

This segment had an operating loss of $4.8 million compared to operating income of $3.6 million during the previous quarter. The decrease in operating income was mainly due to recommissioning expenses for rigs that will be exported to Saudi Arabia and related start-up costs. Direct margin(2) during the third fiscal quarter was $0.4 million compared to $8.4 million during the previous quarter. Current quarter results included a $2.1 million foreign currency loss compared to a $0.5 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico:

This segment had operating income of $5.0 million compared to operating income of $0.1 million during the previous quarter. Direct margin(2) for the quarter was $7.6 million compared to $2.9 million in the previous quarter. The increase in operating income was primarily attributable to rigs moving to full operating rates earlier than planned.

Operational Outlook for the Fourth Quarter of Fiscal Year 2024

North America Solutions:

  • We expect North America Solutions direct margins(2) to be between $260-$280 million
  • We expect to exit the quarter between approximately 147-153 contracted rigs

International Solutions:

  • We expect International Solutions direct margins(2) to be between $(2)-$2 million, exclusive of any foreign exchange gains or losses
  • Projected International Solutions direct margins(2) for the fourth fiscal quarter are inclusive of approximately $6-$8 million of rig preparation and start-up expense related to our Saudi Arabia operations, higher than previous guidance as some costs shifted from the third fiscal quarter into the fourth fiscal quarter

Offshore Gulf of Mexico:

  • We expect Offshore Gulf of Mexico direct margins(2) to be between $6-$8 million

Other Estimates for Fiscal Year 2024

  • Gross capital expenditures are still expected to be approximately $500 million;
    • Ongoing asset sales that include reimbursements for lost and damaged tubulars and sales of other used drilling equipment offset a portion of the gross capital expenditures, and are now expected to total approximately $45 million in fiscal year 2024
  • Depreciation for fiscal year 2024 is now expected to be approximately $400 million
  • Research and development expenses for fiscal year 2024 are now expected to be roughly $40 million
  • General and administrative expenses for fiscal year 2024 are now expected to be approximately $250 million
  • Cash taxes to be paid in fiscal year 2024 are still expected to be approximately $150-$200 million

Select Items(1) Included in Net Income per Diluted Share

Third quarter of fiscal year 2024 net income of $0.88 per diluted share included a net impact $(0.04) per share in after-tax gains and losses comprised of the following:

  • $0.06 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $(0.05) of after-tax losses on a Blue Chip Swap transaction to repatriate cash to the U.S. from Argentina
  • $(0.05) of after-tax losses related to non-recurring professional service fees

Second quarter of fiscal year 2024 net income of $0.84 per diluted share included $0.00 in after-tax losses comprised of the following:

  • $0.03 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $(0.03) of after-tax losses related to research and development expenses associated with an asset acquisition

Conference Call

A conference call will be held on Thursday, July 25, 2024 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 third quarter fiscal year 2024 results. Dial-in information for the conference call is (800) 225-9448 for domestic callers or (203) 518-9814 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 operates 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. At June 30, 2024, H&P's fleet included 232 land rigs in the United States, 23 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.

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 the registrant’s business strategy, future financial position, operations outlook, future cash flow, future use of generated cash flow, dividend amounts and timing, supplemental shareholder return plans and amounts of any future dividends, future share repurchases, investments, active rig count projections, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, capex spending and budgets, outlook for domestic and international markets, future commodity prices, and future customer activity and relationships 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 and other disclosures in 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. Investors are cautioned not to put undue reliance on such 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.

Helmerich & Payne uses its Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on its Investor Relations website at www.helmerichpayne.com. Information on our website is not part of this release.

 

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 United States and other jurisdictions.

(1) 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 the Company's core business operations. See Non-GAAP Measurements.

(2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues (less reimbursements) less direct operating expenses (less reimbursements) 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 2024 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 items. Therefore, as a result of the uncertainty and variability of the nature and amount of future items and 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.

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

 

Nine Months Ended

(in thousands, except per share amounts)

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

2024

 

2024

 

2023

 

2024

 

2023

OPERATING REVENUES

 

 

 

 

 

 

 

 

 

Drilling services

$

695,139

 

 

$

685,131

 

 

$

721,567

 

 

$

2,054,835

 

 

$

2,205,419

 

Other

 

2,585

 

 

 

2,812

 

 

 

2,389

 

 

 

7,979

 

 

 

7,396

 

 

 

697,724

 

 

 

687,943

 

 

 

723,956

 

 

 

2,062,814

 

 

 

2,212,815

 

OPERATING COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

Drilling services operating expenses, excluding depreciation and amortization

 

417,028

 

 

 

401,851

 

 

 

429,182

 

 

 

1,222,182

 

 

 

1,306,543

 

Other operating expenses

 

1,144

 

 

 

1,026

 

 

 

1,003

 

 

 

3,307

 

 

 

3,317

 

Depreciation and amortization

 

97,816

 

 

 

104,545

 

 

 

94,811

 

 

 

296,352

 

 

 

287,721

 

Research and development

 

10,555

 

 

 

12,942

 

 

 

7,085

 

 

 

32,105

 

 

 

22,720

 

Selling, general and administrative

 

66,870

 

 

 

62,037

 

 

 

49,271

 

 

 

185,484

 

 

 

150,581

 

Asset impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

12,097

 

Gain on reimbursement of drilling equipment

 

(9,732

)

 

 

(7,461

)

 

 

(10,642

)

 

 

(24,687

)

 

 

(37,940

)

Other (gain) loss on sale of assets

 

2,730

 

 

 

2,431

 

 

 

4,504

 

 

 

2,718

 

 

 

(394

)

 

 

586,411

 

 

 

577,371

 

 

 

575,214

 

 

 

1,717,461

 

 

 

1,744,645

 

OPERATING INCOME

 

111,313

 

 

 

110,572

 

 

 

148,742

 

 

 

345,353

 

 

 

468,170

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

11,888

 

 

 

6,567

 

 

 

10,748

 

 

 

29,189

 

 

 

20,508

 

Interest expense

 

(4,336

)

 

 

(4,261

)

 

 

(4,324

)

 

 

(12,969

)

 

 

(12,918

)

Gain (loss) on investment securities

 

389

 

 

 

3,747

 

 

 

(18,538

)

 

 

102

 

 

 

6,123

 

Other

 

3,134

 

 

 

400

 

 

 

(672

)

 

 

2,991

 

 

 

(1,218

)

 

 

11,075

 

 

 

6,453

 

 

 

(12,786

)

 

 

19,313

 

 

 

12,495

 

Income before income taxes

 

122,388

 

 

 

117,025

 

 

 

135,956

 

 

 

364,666

 

 

 

480,665

 

Income tax expense

 

33,703

 

 

 

32,194

 

 

 

40,663

 

 

 

95,977

 

 

 

124,187

 

NET INCOME

$

88,685

 

 

$

84,831

 

 

$

95,293

 

 

$

268,689

 

 

$

356,478

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.89

 

 

$

0.85

 

 

$

0.93

 

 

$

2.68

 

 

$

3.40

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.88

 

 

$

0.84

 

 

$

0.93

 

 

$

2.67

 

 

$

3.39

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

98,752

 

 

 

98,774

 

 

 

101,163

 

 

 

98,891

 

 

 

103,464

 

Diluted

 

99,007

 

 

 

99,046

 

 

 

101,550

 

 

 

99,116

 

 

 

103,852

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

June 30,

 

September 30,

(in thousands except share data and share amounts)

2024

 

2023

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

203,633

 

 

$

257,174

 

Restricted cash

 

78,369

 

 

 

59,064

 

Short-term investments

 

86,088

 

 

 

93,600

 

Accounts receivable, net of allowance of $2,377 and $2,688, respectively

 

415,395

 

 

 

404,188

 

Inventories of materials and supplies, net

 

115,312

 

 

 

94,227

 

Prepaid expenses and other, net

 

71,522

 

 

 

97,727

 

Assets held-for-sale

 

 

 

 

645

 

Total current assets

 

970,319

 

 

 

1,006,625

 

 

 

 

 

Investments

 

292,229

 

 

 

264,947

 

Property, plant and equipment, net

 

3,014,345

 

 

 

2,921,695

 

Other Noncurrent Assets:

 

 

 

Goodwill

 

45,653

 

 

 

45,653

 

Intangible assets, net

 

55,752

 

 

 

60,575

 

Operating lease right-of-use asset

 

57,315

 

 

 

50,400

 

Other assets, net

 

49,369

 

 

 

32,061

 

Total other noncurrent assets

 

208,089

 

 

 

188,689

 

 

 

 

 

Total assets

$

4,484,982

 

 

$

4,381,956

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

158,896

 

 

$

130,852

 

Dividends payable

 

42,045

 

 

 

25,194

 

Accrued liabilities

 

255,851

 

 

 

262,885

 

Total current liabilities

 

456,792

 

 

 

418,931

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

Long-term debt, net

 

545,589

 

 

 

545,144

 

Deferred income taxes

 

494,412

 

 

 

517,809

 

Other

 

131,344

 

 

 

128,129

 

Total noncurrent liabilities

 

1,171,345

 

 

 

1,191,082

 

 

 

 

 

Shareholders' Equity:

 

 

 

Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of June 30, 2024 and September 30, 2023, and 98,755,412 and 99,426,526 shares outstanding as of June 30, 2024 and September 30, 2023, respectively

 

11,222

 

 

 

11,222

 

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

 

 

 

 

 

Additional paid-in capital

 

510,379

 

 

 

525,369

 

Retained earnings

 

2,833,136

 

 

 

2,707,715

 

Accumulated other comprehensive loss

 

(8,499

)

 

 

(7,981

)

Treasury stock, at cost, 13,467,453 shares and 12,796,339 shares as of June 30, 2024 and September 30, 2023, respectively

 

(489,393

)

 

 

(464,382

)

Total shareholders’ equity

 

2,856,845

 

 

 

2,771,943

 

Total liabilities and shareholders' equity

$

4,484,982

 

 

$

4,381,956

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Nine Months Ended June 30,

(in thousands)

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

268,689

 

 

$

356,478

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

296,352

 

 

 

287,721

 

Asset impairment charges

 

 

 

 

12,097

 

Provision for credit loss

 

(213

)

 

 

2,165

 

Stock-based compensation

 

23,777

 

 

 

23,884

 

Gain on investment securities

 

(102

)

 

 

(6,123

)

Gain on reimbursement of drilling equipment

 

(24,687

)

 

 

(37,940

)

Other (gain) loss on sale of assets

 

2,718

 

 

 

(394

)

Deferred income tax expense (benefit)

 

(23,634

)

 

 

4,197

 

Other

 

3,011

 

 

 

3,960

 

Changes in assets and liabilities

 

(30,004

)

 

 

(27,045

)

Net cash provided by operating activities

 

515,907

 

 

 

619,000

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Capital expenditures

 

(389,095

)

 

 

(281,790

)

Purchase of short-term investments

 

(148,451

)

 

 

(102,140

)

Purchase of long-term investments

 

(9,167

)

 

 

(18,813

)

Proceeds from sale of short-term investments

 

152,034

 

 

 

148,651

 

Insurance proceeds from involuntary conversion

 

5,533

 

 

 

 

Proceeds from asset sales

 

35,148

 

 

 

63,048

 

Net cash used in investing activities

 

(353,998

)

 

 

(191,044

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

 

(126,417

)

 

 

(152,579

)

Payments for employee taxes on net settlement of equity awards

 

(12,176

)

 

 

(14,410

)

Payment of contingent consideration from acquisition of business

 

(6,250

)

 

 

(250

)

Share repurchases

 

(51,302

)

 

 

(247,213

)

Other

 

 

 

 

(540

)

Net cash used in financing activities

 

(196,145

)

 

 

(414,992

)

Net increase (decrease) in cash and cash equivalents and restricted cash

 

(34,236

)

 

 

12,964

 

Cash and cash equivalents and restricted cash, beginning of period

 

316,238

 

 

 

269,009

 

Cash and cash equivalents and restricted cash, end of period

$

282,002

 

 

$

281,973

 

HELMERICH & PAYNE, INC.

SEGMENT REPORTING

 

Three Months Ended

 

Nine Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

(in thousands, except operating statistics)

2024

 

2024

 

2023

 

2024

 

2023

NORTH AMERICA SOLUTIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

620,040

 

 

$

613,339

 

$

641,612

 

 

$

1,827,661

 

$

1,944,555

Direct operating expenses

 

342,617

 

 

 

341,938

 

 

364,688

 

 

 

1,022,763

 

 

1,111,154

Depreciation and amortization

 

89,207

 

 

 

97,573

 

 

87,209

 

 

 

273,799

 

 

266,093

Research and development

 

10,623

 

 

 

13,006

 

 

7,254

 

 

 

32,318

 

 

23,051

Selling, general and administrative expense

 

14,234

 

 

 

13,692

 

 

12,962

 

 

 

43,802

 

 

43,364

Asset impairment charges

 

 

 

 

 

 

 

 

 

 

 

3,948

Segment operating income

$

163,359

 

 

$

147,130

 

$

169,499

 

 

$

454,979

 

$

496,945

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

277,423

 

 

$

271,401

 

$

276,924

 

 

$

804,898

 

$

833,401

Revenue days3

 

13,683

 

 

 

14,123

 

 

15,075

 

 

 

41,516

 

 

48,142

Average active rigs4

 

150

 

 

 

155

 

 

166

 

 

 

152

 

 

176

Number of active rigs at the end of period5

 

146

 

 

 

152

 

 

153

 

 

 

146

 

 

153

Number of available rigs at the end of period

 

232

 

 

 

233

 

 

233

 

 

 

232

 

 

233

Reimbursements of "out-of-pocket" expenses

$

74,915

 

 

$

73,584

 

$

82,688

 

 

$

218,227

 

$

239,288

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL SOLUTIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

47,882

 

 

$

45,878

 

$

48,692

 

 

$

148,512

 

$

159,383

Direct operating expenses

 

47,446

 

 

 

37,514

 

 

45,390

 

 

 

129,479

 

 

133,642

Depreciation

 

2,797

 

 

 

2,418

 

 

2,171

 

 

 

7,549

 

 

5,215

Selling, general and administrative expense

 

2,483

 

 

 

2,377

 

 

2,528

 

 

 

7,336

 

 

8,245

Asset impairment charges

 

 

 

 

 

 

 

 

 

 

 

8,149

Segment operating income (loss)

$

(4,844

)

 

$

3,569

 

$

(1,397

)

 

$

4,148

 

$

4,132

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

436

 

 

$

8,364

 

$

3,302

 

 

$

19,033

 

$

25,741

Revenue days3

 

1,067

 

 

 

1,038

 

 

1,215

 

 

 

3,278

 

 

3,618

Average active rigs4

 

12

 

 

 

11

 

 

13

 

 

 

12

 

 

13

Number of active rigs at the end of period5

 

12

 

 

 

11

 

 

13

 

 

 

12

 

 

13

Number of available rigs at the end of period

 

23

 

 

 

22

 

 

22

 

 

 

23

 

 

22

Reimbursements of "out-of-pocket" expenses

$

2,069

 

 

$

1,964

 

$

2,098

 

 

$

7,417

 

$

7,743

 

 

 

 

 

 

 

 

 

 

OFFSHORE GULF OF MEXICO

 

 

 

 

 

 

 

 

 

Operating revenues

$

27,218

 

 

$

25,913

 

$

31,221

 

 

$

78,662

 

$

101,364

Direct operating expenses

 

19,611

 

 

 

23,010

 

 

23,913

 

 

 

62,200

 

 

75,292

Depreciation

 

1,798

 

 

 

1,941

 

 

1,873

 

 

 

5,807

 

 

5,671

Selling, general and administrative expense

 

799

 

 

 

884

 

 

730

 

 

 

2,515

 

 

2,263

Segment operating income

$

5,010

 

 

$

78

 

$

4,705

 

 

$

8,140

 

$

18,138

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

7,607

 

 

$

2,903

 

$

7,308

 

 

$

16,462

 

$

26,072

Revenue days3

 

273

 

 

 

273

 

 

364

 

 

 

835

 

 

1,092

Average active rigs4

 

3

 

 

 

3

 

 

4

 

 

 

3

 

 

4

Number of active rigs at the end of period5

 

3

 

 

 

3

 

 

4

 

 

 

3

 

 

4

Number of available rigs at the end of period

 

7

 

 

 

7

 

 

7

 

 

 

7

 

 

7

Reimbursements of "out-of-pocket" expenses

$

7,746

 

 

$

8,857

 

$

7,823

 

 

$

24,430

 

$

23,006

(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 reimbursements) less direct operating expenses (less reimbursements) 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. 91 days for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, 274 days for the nine months ended June 30, 2024 and 273 days for the nine months ended June 30, 2023).

(5)

Defined as the number of rigs generating revenue at the applicable end date of the time period.

Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income (loss) has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations during the three and nine months ended June 30, 2023. To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations, which were not material, to Other within Other income (expense) on our Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2023.

The following table reconciles operating income per the information above to income (loss) from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

 

Three Months Ended

 

Nine Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

(in thousands)

2024

 

2024

 

2023

 

2024

 

2023

Operating income (loss)

 

 

 

 

 

 

 

 

 

North America Solutions

$

163,359

 

 

$

147,130

 

 

$

169,499

 

 

$

454,979

 

 

$

496,945

 

International Solutions

 

(4,844

)

 

 

3,569

 

 

 

(1,397

)

 

 

4,148

 

 

 

4,132

 

Offshore Gulf of Mexico

 

5,010

 

 

 

78

 

 

 

4,705

 

 

 

8,140

 

 

 

18,138

 

Other

 

(4,791

)

 

 

2,785

 

 

 

2,104

 

 

 

(2,073

)

 

 

13,604

 

Eliminations

 

(616

)

 

 

(772

)

 

 

4,470

 

 

 

(1,054

)

 

 

4,513

 

Segment operating income

$

158,118

 

 

$

152,790

 

 

$

179,381

 

 

$

464,140

 

 

$

537,332

 

Gain on reimbursement of drilling equipment

 

9,732

 

 

 

7,461

 

 

 

10,642

 

 

 

24,687

 

 

 

37,940

 

Other gain (loss) on sale of assets

 

(2,730

)

 

 

(2,431

)

 

 

(4,504

)

 

 

(2,718

)

 

 

394

 

Corporate selling, general and administrative costs and corporate depreciation

 

(53,807

)

 

 

(47,248

)

 

 

(36,777

)

 

 

(140,756

)

 

 

(107,496

)

Operating income

$

111,313

 

 

$

110,572

 

 

$

148,742

 

 

$

345,353

 

 

$

468,170

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

11,888

 

 

 

6,567

 

 

 

10,748

 

 

 

29,189

 

 

 

20,508

 

Interest expense

 

(4,336

)

 

 

(4,261

)

 

 

(4,324

)

 

 

(12,969

)

 

 

(12,918

)

Gain (loss) on investment securities

 

389

 

 

 

3,747

 

 

 

(18,538

)

 

 

102

 

 

 

6,123

 

Other

 

3,134

 

 

 

400

 

 

 

(672

)

 

 

2,991

 

 

 

(1,218

)

Total unallocated amounts

 

11,075

 

 

 

6,453

 

 

 

(12,786

)

 

 

19,313

 

 

 

12,495

 

Income before income taxes

$

122,388

 

 

$

117,025

 

 

$

135,956

 

 

$

364,666

 

 

$

480,665

 

SUPPLEMENTARY STATISTICAL INFORMATION

Unaudited

 

U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS

 

 

July 24,

 

June 30,

 

March 31,

 

Q3FY24

 

2024

 

2024

 

2024

 

Average

U.S. Land Operations

 

 

 

 

 

 

 

Term Contract Rigs

88

 

83

 

96

 

86

Spot Contract Rigs

60

 

63

 

56

 

64

Total Contracted Rigs

148

 

146

 

152

 

150

Idle or Other Rigs

84

 

86

 

81

 

82

Total Marketable Fleet

232

 

232

 

233

 

232

H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS

Number of Rigs Already Under Long-Term Contracts(*)

(Estimated Quarterly Average — as of 6/30/24)

 

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

Segment

FY24

 

FY25

 

FY25

 

FY25

 

FY25

 

FY26

 

FY26

U.S. Land Operations

86.9

 

72.5

 

40.8

 

30.4

 

27.1

 

19.3

 

4.0

International Land Operations

9.0

 

10.9

 

13.1

 

11.7

 

11.0

 

10.9

 

10.0

Offshore Operations

 

 

 

 

 

 

Total

95.9

 

83.4

 

53.9

 

42.1

 

38.1

 

30.2

 

14.0

 

(*) 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 INCOME(**)

 

 

Three Months Ended June 30, 2024

(in thousands, except per share data)

Pretax

 

Tax Impact

 

Net

 

EPS

Net income (GAAP basis)

 

 

 

 

$

88,685

 

 

$

0.88

 

(-) Fair market adjustment to equity investments

$

7,508

 

 

$

1,944

 

 

$

5,564

 

 

$

0.06

 

(-) Non-recurring professional service fees

$

(6,680

)

 

$

(1,730

)

 

$

(4,950

)

 

$

(0.05

)

(-) Losses on a Blue Chip Swap transaction

$

(7,112

)

 

$

(1,842

)

 

$

(5,270

)

 

$

(0.05

)

Adjusted net income

 

 

 

 

$

93,341

 

 

$

0.92

 

 

Three Months Ended March 31, 2024

(in thousands, except per share data)

Pretax

 

Tax Impact

 

Net

 

EPS

Net income (GAAP basis)

 

 

 

 

$

84,831

 

 

$

0.84

 

(-) Fair market adjustment to equity investments

$

3,777

 

 

$

920

 

 

$

2,857

 

 

$

0.03

 

(-) Research and development expenses associated with an asset acquisition

$

(3,840

)

 

$

(995

)

 

$

(2,845

)

 

$

(0.03

)

Adjusted net income

 

 

 

 

$

84,819

 

 

$

0.84

 

(**)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.

NON-GAAP RECONCILIATION OF DIRECT MARGIN

Direct margin is considered a non-GAAP metric. We define "direct margin" as operating revenues (less reimbursements) less direct operating expenses (less reimbursements). 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 June 30, 2024

(in thousands)

North America Solutions

 

International Solutions

 

Offshore Gulf of Mexico

Segment operating income (loss)

$

163,359

 

$

(4,844

)

 

$

5,010

Add back:

 

 

 

 

 

Depreciation and amortization

 

89,207

 

 

2,797

 

 

 

1,798

Research and development

 

10,623

 

 

 

 

 

Selling, general and administrative expense

 

14,234

 

 

2,483

 

 

 

799

Direct margin (Non-GAAP)

$

277,423

 

$

436

 

 

$

7,607

 

Three Months Ended March 31, 2024

(in thousands)

North America Solutions

 

International Solutions

 

Offshore Gulf of Mexico

Segment operating income

$

147,130

 

$

3,569

 

$

78

Add back:

 

 

 

 

 

Depreciation and amortization

 

97,573

 

 

2,418

 

 

1,941

Research and development

 

13,006

 

 

 

 

Selling, general and administrative expense

 

13,692

 

 

2,377

 

 

884

Direct margin (Non-GAAP)

$

271,401

 

$

8,364

 

$

2,903

 

Three Months Ended June 30, 2023

(in thousands)

North America Solutions

 

International Solutions

 

Offshore Gulf of Mexico

Segment operating income (loss)

$

169,499

 

$

(1,397

)

 

$

4,705

Add back:

 

 

 

 

 

Depreciation and amortization

 

87,209

 

 

2,171

 

 

 

1,873

Research and development

 

7,254

 

 

 

 

 

Selling, general and administrative expense

 

12,962

 

 

2,528

 

 

 

730

Direct margin (Non-GAAP)

$

276,924

 

$

3,302

 

 

$

7,308

 

Nine Months Ended June 30, 2024

(in thousands)

North America Solutions

 

International Solutions

 

Offshore Gulf of Mexico

Segment operating income

$

454,979

 

$

4,148

 

$

8,140

Add back:

 

 

 

 

 

Depreciation and amortization

 

273,799

 

 

7,549

 

 

5,807

Research and development

 

32,318

 

 

 

 

Selling, general and administrative expense

 

43,802

 

 

7,336

 

 

2,515

Direct margin (Non-GAAP)

$

804,898

 

$

19,033

 

$

16,462

 

Nine Months Ended June 30, 2023

(in thousands)

North America Solutions

 

International Solutions

 

Offshore Gulf of Mexico

Segment operating income

$

496,945

 

$

4,132

 

$

18,138

Add back:

 

 

 

 

 

Depreciation and amortization

 

266,093

 

 

5,215

 

 

5,671

Research and development

 

23,051

 

 

 

 

Selling, general and administrative expense

 

43,364

 

 

8,245

 

 

2,263

Asset impairment charges

 

3,948

 

 

8,149

 

 

Direct margin (Non-GAAP)

$

833,401

 

$

25,741

 

$

26,072

 

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