Helmerich & Payne, Inc. Announces First Quarter Results

• H&P’s North America Solutions segment exited the first quarter of fiscal year 2022 with 154 active rigs, up over 20% during the quarter

• Quarterly North America Solutions operating gross margins⁽¹⁾ increased $15 million to $84 million sequentially, as revenues increased by $48 million to $341 million and expenses increased by $32 million to $257 million

• The Company reported a fiscal first quarter net loss of $(0.48) per diluted share; including select items⁽²⁾ of $(0.03) per diluted share

• On October 27, 2021, the Company redeemed all of its outstanding 2025 Notes, which resulted in a make-whole premium and write-off of unamortized discount and debt issuance costs of approximately $60 million

• During the fiscal first quarter H&P repurchased 2.5⁽³⁾ million shares for approximately $60⁽³⁾ million with an additional 0.6⁽³⁾ million shares repurchased so far in the fiscal second quarter for approximately $16⁽³⁾ million

• In December 2021, the Company published its inaugural sustainability report

• On December 10, 2021, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share, payable on February 28, 2022 to stockholders of record at the close of business on February 11, 2022

TULSA, Okla.–(BUSINESS WIRE)–Helmerich & Payne, Inc. (NYSE: HP) reported a net loss of $51 million, or $(0.48) per diluted share, from operating revenues of $410 million for the quarter ended December 31, 2021, compared to a net loss of $79 million, or $(0.74) per diluted share, on revenues of $344 million for the quarter ended September 30, 2021. The net losses per diluted share for first quarter of fiscal year 2022 and the fourth quarter of fiscal year 2021 include $(0.03) and $(0.12), respectively, of after-tax gains and losses comprised of select items⁽²⁾. For the first quarter of fiscal year 2022, select items⁽²⁾ were comprised of:

• $0.51 of after-tax gains pertaining to a non-cash fair market adjustment to our equity investments and a settlement of a previous contractual dispute with an international customer

• $(0.54) of after-tax losses pertaining to a debt make-whole premium and write-off of debt discount and issuance costs, a non-cash impairment for fair market adjustments to decommissioned rigs and equipment that are held for sale, losses on sale of assets, and restructuring charges

Net cash used by operating activities was $4 million for the first quarter of fiscal year 2022 compared to net cash provided by operating activities of $47 million in the prior quarter.

President and CEO John Lindsay commented, “I am encouraged by the progress the industry has made on its path to recovery from the market collapse in 2020. Increasing demand for super-spec rigs has predictably led to a very tight market in 2022. As expected this demand increase resulted in a significant uptick in our rig count during the first fiscal quarter, which we anticipate will likely be followed by a more moderate, yet still healthy increase in the second fiscal quarter. H&P’s ability to provide superior rigs, people, and digital technologies culminates in a compelling value proposition for customers in this environment. Our position as a leading drilling solutions provider is strengthening as evidenced by our market share growth.

“The rig demand experienced thus far, combined with costs associated with reactivating idle super-spec rigs and other general operating cost inflation, has led to an increase in leading-edge pricing. However, higher pricing is required, not only due to the near-term scarcity of readily available super-spec rigs and the long-term supply constraints of the industry, but also for the value creation of a well-placed, high-quality wellbore. Additional pricing momentum is warranted to recoup reactivation costs and inflationary adjustments we have experienced over the past decade and as a return for the value proposition H&P offers the customer. Notwithstanding the activity improvements and higher commodity prices that have benefited the industry, from an oilfield service provider perspective, substantially higher pricing is still required in order to generate the returns necessary to attract and retain investors and for this business to be vibrant and sustainable.

“The activity outlook for international markets is positive, however in the near term our rig count in the Middle East is expected to decline due to two unexpected rig releases. We are excited about our strategic alliance and the investment we have made with ADNOC Drilling and we look forward to further expanding that relationship as well as developing additional opportunities in the Middle East region. Our activity in South America is improving slowly and we remain encouraged by the prospects for additional growth in the coming quarters and beyond.”

Senior Vice President and CFO Mark Smith also commented, “The strength of our balance sheet underpins our ability to focus on the long-term and execute across different capital allocation opportunities. Our attractive debt refinance, at a low 2.90% coupon rate and extended 10-year maturity, and our $100 million investment in ADNOC Drilling’s IPO, now with a market value in excess of $140 million, are recent examples. This strength also enables H&P to respond to specific customer needs as well as to generate additional returns and garner market share by converting some of our skidding rigs to walking rigs. Similar to our E&P customers we will maintain our strong capex budget discipline when it comes to allocating capital.

“These various return-enhancing allocations of capital are being accomplished simultaneously as we provide a return of cash to our shareholders, something we have done uninterrupted for more than 60 years with our dividend. More recently, we augmented our dividend returns with share repurchases that encompassed buying back approximately 3.1⁽³⁾ million shares for roughly $76⁽³⁾ million.”

John Lindsay concluded, “Despite the industry challenges faced during the past couple of years we remain focused on our long-term opportunities with a strong disciplined approach of allocating capital to return-accretive endeavors for the long-term benefit of our shareholders. This would not be possible without the hard work and dedication of H&P employees, both past and present, who continually set the standard in the industry. Over one hundred years of drilling experience combined with our uniform FlexRig® fleet and industry leading automation solutions puts us in a great position as we move forward. Our rigs, automation solutions, and digital portfolio have compelling value propositions for both North America and international markets. The momentum we built during fiscal 2021 carries into fiscal 2022 with a fresh sense of optimism. We look forward to strengthening our partnerships with new and existing customers, and developing drilling solutions that contribute to our mutual successes.”

Operating Segment Results for the First Quarter of Fiscal Year 2022

North America Solutions:

This segment had an operating loss of $28.9 million compared to an operating loss of $60.7 million during the previous quarter. The decrease in the operating loss was primarily due to higher activity levels and the prior quarter being adversely impacted by an impairment for fair market adjustments for equipment held for sale. Absent the select item⁽²⁾ negative impacts of the fair market impairments and restructuring charges for the quarters, this segment’s operating loss improved by $16.9 million on a sequential basis.

Operating gross margins⁽¹⁾ increased by $15.3 million to $84.5 million as both revenues and expenses increased sequentially. Operating results were still negatively impacted by the costs associated with reactivating rigs; $20.5 million in the first fiscal quarter compared to $6.6 million in the previous quarter.

International Solutions:

This segment had operating income of $8.0 million compared to an operating loss of $5.7 million during the previous quarter. The increase in operating income was twofold – there was a settlement related to a previous contractual dispute with a customer resulting in $16.4 million in revenue during the first fiscal quarter and the previous quarter was adversely impacted by $2.6 million of expenses associated with the closing of the ADNOC Drilling transactions. Absent the select items⁽²⁾ for the quarters, this segment’s operating loss increased $3.0 million on a sequential basis primarily due to rig start-up costs and other transitory expenses.

Operating gross margins⁽¹⁾ during the first fiscal quarter were a positive $13.0 million, benefiting from the aforementioned $16.4 million settlement related to a previous contractual dispute with a customer. Excluding the settlement, operating gross margins⁽¹⁾ were a negative $3.4 million compared to a negative $0.4 million in the previous quarter. Current quarter results included a $1.0 million foreign currency loss primarily related to our South American operations compared to a $0.7 million foreign currency loss in the fourth quarter of fiscal year 2021.

Offshore Gulf of Mexico:

This segment had operating income of $5.5 million compared to operating income of $4.5 million during the previous quarter. Operating gross margins⁽¹⁾ for the quarter were $8.6 million compared to $7.7 million in the prior quarter.

Operational Outlook for the Second Quarter of Fiscal Year 2022

North America Solutions:

• We expect North America Solutions operating gross margins⁽¹⁾ to be between $100-$115 million, which includes approximately $11 million in estimated reactivation costs

• We expect to exit the quarter at between 165-175 contracted rigs

International Solutions:

• We expect International Solutions operating gross margins⁽¹⁾ to be between $(2)-$0 million, exclusive of any foreign exchange gains or losses

Offshore Gulf of Mexico:

• We expect Offshore Gulf of Mexico operating gross margins⁽¹⁾ to be between $6-$8 million

Other Estimates for Fiscal Year 2021

• 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 now 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 now expected to be roughly $27 million

• Selling, general and administrative expenses for fiscal year 2022 are still expected to be approximately $170 million

Select Items Included in Net Income per Diluted Share

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

Fourth quarter of fiscal year 2021 net loss of $(0.74) per diluted share included $(0.12) in after-tax losses comprised of the following:

• $0.03 of after-tax gains related to the sale of equipment

• $(0.01) of non-cash after-tax losses related to fair market value adjustments to equity investments

• $(0.01) of non-cash after-tax losses related to an inventory write-down

• $(0.01) of after-tax losses related to restructuring charges

• $(0.02) of after-tax losses related to closing costs associated with the ADNOC Drilling transactions

• $(0.10) of after-tax losses related to the non-cash impairment for fair market value adjustments to equipment that is held for sale

Conference Call

A conference call will be held on Tuesday, February 1, 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 first quarter fiscal year 2022 results. Dial-in information for the conference call is (800) 895-3361 for domestic callers or (785) 424-1062 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 December 31, 2021, 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.

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, and the ongoing effect of the COVID-19 pandemic and actions we or others may take in response to the COVID-19 pandemic 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) Operating gross margin is defined as operating revenues less direct operating expenses.

(2) See the corresponding section of this release for details regarding the select items. 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.

(3) During our first fiscal quarter of 2022 we repurchased 2,547,750 shares for $60,358,000. During our second fiscal quarter through January 28, 2022 we repurchased an additional 598,677 shares for $16,391,000.

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended
(in thousands, except per share amounts)	December 31,				September 30,				December 31,
	2021				2021				2020
OPERATING REVENUES
Drilling services	$	407,534			$	342,219			$	244,781
Other		2,248				1,588				1,596
		409,782				343,807				246,377
OPERATING COSTS AND EXPENSES
Drilling services operating expenses, excluding depreciation and amortization		299,652				268,127				198,689
Other operating expenses		1,182				1,021				1,362
Depreciation and amortization		100,437				101,955				106,861
Research and development		6,527				5,197				5,583
Selling, general and administrative		43,715				51,824				39,303
Asset impairment charge		4,363				14,436				—
Restructuring charges		742				2,070				138
Gain on reimbursement of drilling equipment		(5,254	)			(2,115	)			(2,191	)
Other gain (loss) on sale of assets		1,029				(1,672	)			(10,145	)
		452,393				440,843				339,600
OPERATING LOSS FROM CONTINUING OPERATIONS		(42,611	)			(97,036	)			(93,223	)
Other income (expense)
Interest and dividend income		2,589				2,029				1,879
Interest expense		(6,114	)			(6,094	)			(6,139	)
Gain (loss) on investment securities		47,862				(1,126	)			2,924
Loss on extinguishment of debt		(60,083	)			—				—
Other		(542	)			(2,630	)			(1,480	)
		(16,288	)			(7,821	)			(2,816	)
Loss from continuing operations before income taxes		(58,899	)			(104,857	)			(96,039	)
Income tax benefit		(7,568	)			(25,323	)			(18,115	)
Loss from continuing operations		(51,331	)			(79,534	)			(77,924	)
Income (loss) from discontinued operations before income taxes		(31	)			373				7,493
Income tax provision		—				—				—
Income (loss) from discontinued operations		(31	)			373				7,493
NET LOSS	$	(51,362	)		$	(79,161	)		$	(70,431	)
Basic earnings (loss) per common share:
Loss from continuing operations	$	(0.48	)		$	(0.74	)		$	(0.73	)
Income from discontinued operations	$	—			$	—			$	0.07
Net loss	$	(0.48	)		$	(0.74	)		$	(0.66	)
Diluted earnings (loss) per common share:
Loss from continuing operations	$	(0.48	)		$	(0.74	)		$	(0.73	)
Income from discontinued operations	$	—			$	—			$	0.07
Net loss	$	(0.48	)		$	(0.74	)		$	(0.66	)
Weighted average shares outstanding (in thousands):
Basic		107,571				107,899				107,617
Diluted		107,571				107,899				107,617

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	December 31,				September 30,
(in thousands except share data and share amounts)	2021				2021
ASSETS
Current Assets:
Cash and cash equivalents	$	234,196			$	917,534
Short-term investments		207,068				198,700
Accounts receivable, net of allowance of $1,730 and $2,068, respectively		282,381				228,894
Inventories of materials and supplies, net		87,272				84,057
Prepaid expenses and other, net		80,956				85,928
Assets held-for-sale		62,821				71,453
Total current assets		954,694				1,586,566
Investments		193,624				135,444
Property, plant and equipment, net		3,066,326				3,127,287
Other Noncurrent Assets:
Goodwill		45,653				45,653
Intangible assets, net		72,042				73,838
Operating lease right-of-use assets		47,356				49,187
Other assets, net		12,559				16,153
Total other noncurrent assets		177,610				184,831
Total assets	$	4,392,254			$	5,034,128
LIABILITIES & SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	109,032			$	71,996
Dividends payable		26,819				27,332
Current portion of long-term debt, net		—				483,486
Accrued liabilities		263,125				283,492
Total current liabilities		398,976				866,306
Noncurrent Liabilities:
Long-term debt, net		542,236				541,997
Deferred income taxes		545,869				563,437
Other		126,551				147,757
Noncurrent liabilities – discontinued operations		2,031				2,013
Total noncurrent liabilities		1,216,687				1,255,204
Shareholders’ Equity:
Common stock, $.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of both December 31, 2021 and September 30, 2021, and 105,731,795 and 107,898,859 shares outstanding as of December 31, 2021 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		514,969				529,903
Retained earnings		2,495,206				2,573,375
Accumulated other comprehensive loss		(19,850	)			(20,244	)
Treasury stock, at cost, 6,491,070 shares and 4,324,006 shares as of December 31, 2021 and September 30, 2021, respectively		(224,956	)			(181,638	)
Total shareholders’ equity		2,776,591				2,912,618
Total liabilities and shareholders’ equity	$	4,392,254			$	5,034,128

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended December 31,
(in thousands)	2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(51,362	)		$	(70,431	)
Adjustment for (income) loss from discontinued operations		31				(7,493	)
Loss from continuing operations		(51,331	)			(77,924	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		100,437				106,861
Asset impairment charge		4,363				—
Amortization of debt discount and debt issuance costs		239				460
Loss on extinguishment of debt		60,083				—
Provision for credit loss		(112	)			(465	)
Provision for obsolete inventory		(708	)			216
Stock-based compensation		6,218				7,451
Gain on investment securities		(47,862	)			(2,924	)
Gain on reimbursement of drilling equipment		(5,254	)			(2,191	)
Other (gain) loss on sale of assets		1,029				(10,145	)
Deferred income tax benefit		(17,750	)			(15,016	)
Other		(3,781	)			1,458
Changes in assets and liabilities		(49,276	)			(27,382	)
Net cash used in operating activities from continuing operations		(3,705	)			(19,601	)
Net cash used in operating activities from discontinued operations		(13	)			(3	)
Net cash used in operating activities		(3,718	)			(19,604	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(44,014	)			(13,985	)
Other capital expenditures related to assets held-for-sale		(3,877	)			—
Purchase of short-term investments		(47,083	)			(94,151	)
Purchase of long-term investments		(9,015	)			(1,000	)
Proceeds from sale of short-term investments		37,777				37,097
Proceeds from asset sales		21,483				6,836
Net cash used in investing activities		(44,729	)			(65,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid		(27,320	)			(26,918	)
Payments for employee taxes on net settlement of equity awards		(4,113	)			(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		(60,358	)			—
Net cash used in financing activities		(635,610	)			(29,287	)
Net decrease in cash and cash equivalents and restricted cash		(684,057	)			(114,094	)
Cash and cash equivalents and restricted cash, beginning of period		936,716				536,747
Cash and cash equivalents and restricted cash, end of period	$	252,659			$	422,653

Contacts

Dave Wilson, Vice President of Investor Relations

investor.relations@hpinc.com
(918) 588‑5190

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