Still stinging from the nationalization last month of 11 idled rigs in Venezuela, contract driller Helmerich & Payne Inc. looked on the bright side Thursday, announcing plans to build nine new rigs for U.S. deployment along with its third fiscal quarter results, which took a hefty hit from a Venezuela-related charge.
Before the impairment charge, Helmerich & Payne reported income of $64.9 million (61 cents/share) from operating revenues of $483.4 million for its third fiscal quarter ended June 30, compared with $68 million (64 cents/share) from operating revenues of $384.4 million during last year's third fiscal quarter.
However, the company's Venezuela operations have been reclassified as discontinued and it has taken an impairment charge of $102.7 million, making a third quarter loss from discontinued operations of $101.6 million (95 cents/share). Including discontinued operations the company recorded a net loss of $36.7 million for the third fiscal quarter compared to net income of $53 million for the third fiscal quarter of 2009.
"While the final chapter of this story will be about pursuing compensation for those seized assets and payment for outstanding receivables...the larger part of this disappointing episode is behind us and we are moving forward accordingly," CEO Hans Helmerich told financial analysts during a conference call Thursday.
Income from U.S. land operations was $103.1 million for this year's third fiscal quarter, compared with $96.6 million for last year's third fiscal quarter and $90.7 million for this year's second fiscal quarter. The sequential increase was primarily attributable to the continuing recovery in U.S. land drilling activity, as revenue days increased to 14,374 from 13,114 during this year's second fiscal quarter, the company said.
Following the recent announcement of seven new-build rigs, Helmerich & Payne Thursday said it has signed contracts to build and operate nine additional FlexRigs, which will be built under multiyear term contracts with four exploration and production companies and will operate in the United States. Customer names and terms were not disclosed. Including these latest additions, the company has announced 19 new-build rigs during fiscal 2010, of which four have been completed and 15 are under construction.
"We are encouraged by improved activity for the company's FlexRigs. It confirms our earlier expectations for a bifurcated market where high-performing rigs, and our FlexRigs in particular, would command better utilization and margins compared to the industry rig fleet," Helmerich said. "Our recent new-build announcements further reinforce our long-held conviction that a growing number of customers are increasingly shaping their efforts in the field around efficient, high-performing rigs."
Rig utilization for the company's U.S. land segment was 76% for this year's third fiscal quarter, compared with 51% for last year's third fiscal quarter and 70% for this year's second fiscal quarter.
Average rig utilization of the company's nine platform rigs in the offshore segment was 78% for this year's third fiscal quarter, compared with 93% during last year's third fiscal quarter and 81% during this year's second fiscal quarter.
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