Helmerich & Payne, Inc. Announces Earnings and New Contracts

TULSA, Okla., Aug. 1 /PRNewswire-FirstCall/ -- Helmerich & Payne, Inc. reported net income of $115,204,000 ($1.09 per diluted share) from operating revenues of $421,274,000 for its third fiscal quarter ended June 30, 2007, compared with net income of $79,975,000 ($0.75 per diluted share) from operating revenues of $319,796,000 during last year's third fiscal quarter ended June 30, 2006. Included in third quarter net income for 2007 were gains of $0.15 per share from the sale of portfolio securities and $0.06 per share net income from the sale of drilling equipment and partial insurance settlement. The third fiscal quarter of 2006 included gains of $0.06 per share from the sale of portfolio securities and drilling equipment.

For the nine months ended June 30, 2007, the Company reported net income of $332,851,000 ($3.17 per diluted share) from operating revenues of $1,180,209,000 compared with net income of $195,362,000 ($1.84 per diluted share) from operating revenues of $866,014,000 during the nine months ended June 30, 2006. Included in net income were gains from the sale of portfolio securities and drilling equipment, and gains from insurance settlements of $0.60 per share for the first nine months of fiscal 2007, and $0.11 per share for the first nine months of fiscal 2006.

Operating income in the U.S. land segment increased during the quarter to $114.6 million, from $93.7 million during last year's third quarter, and $109.8 million during this year's second quarter. The sequential increase is largely due to incremental new build rig commencements during the quarter, as well as the Company's ability to sustain high activity levels in the spot market. Average rig activity in the segment increased by 12 rigs to a total of 136 average active rigs during the third quarter, and rig utilization for the quarter was 96%. Although the segment's average revenue per rig day increased sequentially, the increase was more than offset by higher operating costs which resulted in the average margin per rig day decreasing sequentially by $476 per rig day.

The Company's U.S. offshore operations reported segment operating income of $3,013,000 for the third quarter of fiscal 2007, compared with $7,635,000 for the third quarter of fiscal 2006, and $2,198,000 for the second quarter of fiscal 2007. Total activity days in the U.S. offshore platform operations during the quarter was 546, compared with 728 activity days during the same period last year, and 522 days during the second quarter of fiscal 2007. Operating income improved sequentially due to improved activity and higher rig margins.

Segment operating income for the Company's international operations was $30,413,000 during this year's third quarter, compared with $17,685,000 during last year's third quarter and $21,481,000 during this year's second quarter. The sequential increase was primarily due to a substantial improvement in average rig revenue and margin per day. Average rig utilization for the third quarter of 2007 dropped to 90%, from 93% for both the third quarter of fiscal 2006 and the second quarter of fiscal 2007. International rig utilization for the fourth quarter of fiscal 2007 is anticipated to be slightly lower than the third quarter, and segment operating income will be negatively impacted by the reduction in labor contract revenue and operating income resulting from the associated platform rig in Equatorial Guinea recently being cold stacked.

Helmerich & Payne, Inc. also announced today that it had signed two three-year term contracts with an exploration and production company to operate two new FlexRigs(R)*. The name of the customer and other terms were not disclosed. This brings to 77, the total number of new FlexRig commitments with at least three-year term contracts that have been announced by the Company since March, 2005. To date, 64 of the new builds have been completed, with the remaining 13 scheduled for completion by the second quarter of fiscal 2008.

Company President and C.E.O., Hans Helmerich commented, "The Company's improvement in net income reflects results of the Company's strategy of delivering to our customers lower drilling costs by using the newest and best rig technology. In a time period where many of our competitors are recording net reductions in rig activity and income, our U.S. land utilization remains high while delivering additional activity days at strong dayrates and margins. We believe exploration and production companies in the U.S. and abroad will continue to search for opportunities to upgrade their operations by contracting higher quality rigs. The announcement of two additional new FlexRig commitments signals the ongoing interest in that approach."

Helmerich & Payne, Inc. is a contract drilling company with a fleet of 152 U.S. land rigs, 27 international land rigs and nine offshore platform rigs. In addition, the Company is committed to complete another 13 new H&P-designed and operated FlexRigs, which represent the remaining portion of the 77 new build commitments announced since March, 2005. Upon completion of these commitments, and including 50 previously existing FlexRigs, the Company's fleet will include a total of 127 FlexRigs.

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

Statements in this release and information disclosed in the conference call and webcast that are "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 are based on current expectations and assumptions that are subject to risks and uncertainties. For information regarding risks and uncertainties associated with the Company's business, please refer to the "Risk Factors" and "Management's Discussion & Analysis of Results of Operations and Financial Condition" 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.

*FlexRig(R) is a registered trademark of Helmerich & Payne, Inc. HELMERICH & PAYNE, INC. Unaudited (in thousands, except per share data) Three Months Ended Nine Months Ended CONSOLIDATED STATEMENTS OF Mar. 31 June 30 June 30 INCOME 2007 2007 2006 2007 2006 Operating Revenues: $269,145 $303,514 $214,864 $842,559 $581,286 Drilling - U.S. Land Drilling - U.S. Offshore 24,062 24,910 34,568 79,958 97,791 Drilling - International 76,591 90,073 67,831 249,278 179,205 Real Estate 2,738 2,777 2,533 8,414 7,732 372,536 421,274 319,796 1,180,209 866,014 Operating costs and other: Operating costs, excluding depreciation 199,456 229,025 169,429 627,948 466,825 Depreciation 32,952 38,125 25,076 101,228 71,384 General and administrative 13,350 11,538 13,049 35,501 38,944 Gain from involuntary conversion of long-lived assets (5,170) (5,900) -- (11,070) -- Income from asset sales (32,336) (6,186) (1,895) (39,008) (6,431) 208,252 266,602 205,659 714,599 570,722 Operating income 164,284 154,672 114,137 465,610 295,292 Other income (expense): Interest and dividend income 1,034 962 2,633 3,240 7,619 Interest expense (1,913) (3,260) (1,281) (6,092) (5,807) Gain on sale of investment securities 177 25,298 9,390 51,812 12,110 Other 66 120 1,085 250 599 (636) 23,120 11,827 49,210 14,521 Income before income taxes and equity in income of affiliate 163,648 177,792 125,964 514,820 309,813 Income tax provision 59,338 64,960 47,636 188,396 118,678 Equity in income of affiliate net of income taxes 2,551 2,372 1,647 6,427 4,227 NET INCOME $106,861 $115,204 $79,975 $332,851 $195,362 Earnings per common share: Basic $1.04 $1.11 $0.76 $3.22 $1.87 Diluted $1.02 $1.09 $0.75 $3.17 $1.84 Average common shares outstanding: Basic 103,239 103,323 105,019 103,292 104,542 Diluted 104,832 105,313 106,419 104,990 105,987 HELMERICH & PAYNE, INC. Unaudited (in thousands) CONSOLIDATED CONDENSED BALANCE SHEETS 6/30/07 9/30/06 ASSETS Cash and cash equivalents $70,562 $33,853 Short-term investments 396 48,673 Other current assets 392,669 346,165 Total current assets 463,627 428,691 Investments 206,437 218,309 Net property, plant, and equipment 2,009,182 1,483,134 Other assets 8,076 4,578 TOTAL ASSETS $2,687,322 $2,134,712 LIABILITIES AND SHAREHOLDERS' EQUITY Total current liabilities $254,010 $264,548 Total noncurrent liabilities 368,789 313,272 Long-term notes payable 380,000 175,000 Total shareholders' equity 1,684,523 1,381,892 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,687,322 $2,134,712 HELMERICH & PAYNE, INC. Unaudited (in thousands) Nine Months Ended June 30 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 2007 2006 OPERATING ACTIVITIES: Net income $332,851 $195,362 Depreciation 101,228 71,384 Changes in assets and liabilities 58,137 (30,971) Gain from involuntary conversion of long-lived assets (11,070) -- Gain on sale of assets and investment securities (90,682) (18,405) Other (5,065) 545 Net cash provided by operating activities 385,399 217,915 INVESTING ACTIVITIES: Capital expenditures (681,149) (322,573) Purchase of investments -- (115,077) Insurance proceeds from involuntary conversion of long-lived assets 11,070 -- Proceeds from sale of assets and investments 158,464 33,358 Net cash used in investing activities (511,615) (404,292) FINANCING ACTIVITIES: Dividends paid (13,971) (12,960) Repurchase of common stock (17,621) -- Net decrease in bank overdraft (11,293) -- Proceeds from exercise of stock options 3,277 12,341 Net proceeds from short-term and long-term debt 201,279 2,326 Excess tax benefit from stock-based compensation 1,254 10,019 Net cash provided by financing activities 162,925 11,726 Net increase (decrease) in cash and cash equivalents 36,709 (174,651) Cash and cash equivalents, beginning of period 33,853 288,752 Cash and cash equivalents, end of period $70,562 $114,101 SEGMENT REPORTING Three Months Ended Nine Months Ended Mar. 31 June 30 June 30 2007 2007 2006 2007 2006 (in thousands, except days and per day amounts) U.S. LAND OPERATIONS Revenues $269,145 $303,514 $214,864 $842,559 $581,286 Direct operating expenses 132,399 157,758 102,094 417,514 278,360 General and administrative expense 3,151 3,625 2,903 10,228 9,893 Depreciation 23,813 27,512 16,159 72,008 45,457 Segment operating income $109,782 $114,619 $93,708 $342,809 $247,576 Activity days 11,156 12,371 8,716 34,075 24,837 Average rig revenue per day $23,032 $23,401 $23,503 $23,537 $22,138 Average rig expense per day $10,774 $11,619 $10,565 $11,063 $9,941 Average rig margin per day $12,258 $11,782 $12,938 $12,474 $12,197 Rig utilization 97% 96% 100% 97% 98% U.S. OFFSHORE OPERATIONS Revenues $24,062 $24,910 $34,568 $79,958 $97,791 Direct operating expenses 17,745 18,620 22,726 57,469 64,854 General and administrative expense 1,435 865 1,319 3,721 4,584 Depreciation 2,684 2,412 2,888 7,866 8,238 Segment operating income $2,198 $3,013 $7,635 $10,902 $20,115 Activity days 522 546 728 1,656 2,071 Average rig revenue per day $29,603 $30,263 $39,931 $33,095 $38,738 Average rig expense per day $19,885 $21,734 $25,210 $21,921 $23,989 Average rig margin per day $9,718 $8,529 $14,721 $11,174 $14,749 Rig utilization 64% 67% 73% 67% 69% SEGMENT REPORTING Three Months Ended Nine Months Ended Mar. 31 June 30 June 30 2007 2007 2006 2007 2006 (in thousands, except days and per day amounts) INTERNATIONAL OPERATIONS Revenues $76,591 $90,073 $67,831 $249,278 $179,205 Direct operating expenses 48,668 52,294 44,258 151,656 122,349 General and administrative expense 1,096 712 1,028 2,408 2,506 Depreciation 5,346 6,654 4,860 17,557 14,251 Segment operating income $21,481 $30,413 $17,685 $77,657 $40,099 Activity days 2,262 2,235 2,300 6,863 6,488 Average rig revenue per day $27,001 $34,200 $24,698 $29,583 $22,746 Average rig expense per day $15,722 $18,246 $15,096 $16,253 $14,570 Average rig margin per day $11,279 $15,954 $9,602 $13,330 $8,176 Rig utilization 93% 90% 93% 93% 88% Per day calculations for international operations exclude gains and losses from translation of foreign currency transactions. Operating statistics exclude the effects of offshore platform and international management contracts, and do not include reimbursements of "out-of-pocket" expenses in revenue per day, expense per day and margin calculations. Reimbursed amounts were as follows: U.S. Land Operations $12,196 $14,016 $10,012 $40,521 $31,453 U.S. Offshore Operations $3,598 $3,306 $2,657 $10,248 $9,899 International Operations $11,066 $8,903 $6,575 $32,485 $18,496 REAL ESTATE Revenues $2,738 $2,777 $2,533 $8,414 $7,732 Direct operating expenses 1,165 890 836 2,898 2,647 Depreciation 612 602 605 1,803 1,814 Segment operating income $961 $1,285 $1,092 $3,713 $3,271

Segment operating income for all segments is a non-GAAP financial measure of the Company's performance, as it excludes general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense. The Company considers segment operating income to be an important supplemental measure of operating performance by 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 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 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.

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

SEGMENT REPORTING Three Months Ended Nine Months Ended Mar. 31 June 30 June 30 2007 2007 2006 2007 2006 Operating Income U.S. Land $109,782 $114,619 $93,708 $342,809 $247,576 U.S. Offshore 2,198 3,013 7,635 10,902 20,115 International 21,481 30,413 17,685 77,657 40,099 Real Estate 961 1,285 1,092 3,713 3,271 Segment operating income $134,422 $149,330 $120,120 $435,081 $311,061 Corporate general and administrative (7,668) (6,336) (7,799) (19,144) (21,961) Other depreciation (497) (945) (564) (1,994) (1,624) Inter-segment elimination 521 537 485 1,589 1,385 Gain from involuntary conversion of long-lived assets 5,170 5,900 -- 11,070 -- Income from asset sales 32,336 6,186 1,895 39,008 6,431 Operating income $164,284 $154,672 $114,137 $465,610 $295,292 Other income (expense): Interest and dividend income 1,034 962 2,633 3,240 7,619 Interest expense (1,913) (3,260) (1,281) (6,092) (5,807) Gain on sale of investment securities 177 25,298 9,390 51,812 12,110 Other 66 120 1,085 250 599 Total other income (expense) (636) 23,120 11,827 49,210 14,521 Income before income taxes and equity in income of affiliate $163,648 $177,792 $125,964 $514,820 $309,813