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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 1-4221
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-0679879
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Utica at Twenty-first Street, Tulsa, Oklahoma 74114
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (918) 742-5531
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock ($0.10 par value) New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
(Continued)
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At December 16, 1994, the aggregate market value of the voting stock held by
non-affiliates was $583,364,215.
Number of shares of common stock outstanding at December 16, 1994:
24,718,660.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Security Holders for the fiscal year ended September
30, 1994 -- Parts I, II, and IV.
(2) Proxy Statement for Annual Meeting of Security Holders to be held
March 1, 1995 -- Part III.
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HELMERICH & PAYNE, INC. AND SUBSIDIARIES
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 1994
PART I
Item 1. BUSINESS
Helmerich & Payne, Inc., incorporated under the laws of the State of
Delaware on February 3, 1940, and successor to a business originally organized
in 1920, is engaged primarily in the exploration, production, and sale of crude
oil and natural gas and in contract drilling of oil and gas wells for others.
These activities account for the major portion of its operating
revenues. The Registrant is also engaged in the manufacture and distribution
of odorants for use in the gas transmission and distribution industry, and in
the ownership, development, and operation of commercial real estate.
The Registrant is organized into four separate autonomous operating
divisions being contract drilling; oil and gas exploration, production and
natural gas marketing; chemicals; and real estate. While there is a limited
amount of intercompany activity, each division operates essentially
independently of the others. Operating decentralization is balanced by a
centralized finance division, which handles all accounting, data processing,
budgeting, insurance, cash management, and related activities.
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Most of the Registrant's current exploration effort is concentrated in
Louisiana, Oklahoma, Texas, Wyoming, and the Hugoton Field of western Kansas.
The Registrant also explores from time to time in the Rocky Mountain area, New
Mexico, Alabama, Florida, and Mississippi. The Registrant's gas production is
sold to and resold by a marketing subsidiary. This subsidiary also purchases
gas from unaffiliated third parties for resale.
The Registrant's contract drilling is primarily conducted domestically
in Alabama, Oklahoma, Texas, Mississippi, and Louisiana, and offshore from
platforms in the Gulf of Mexico and offshore California. The Registrant has
also operated during fiscal 1994 in five international locations: Venezuela,
Ecuador, Colombia, Trinidad, and Yemen.
The Registrant's odorants are manufactured in its plant in Baytown,
Texas, and the Registrant's real estate investments are located in Tulsa,
Oklahoma, where the Registrant has its executive offices.
CONTRACT DRILLING
The Registrant believes that it is one of the major land and offshore
platform drilling contractors in the western hemisphere. Operating in North
and South America and the Middle East, the Registrant specializes in deep
drilling in major gas producing basins of the United States and in drilling for
oil and gas in remote areas of the world. For its international operations,
the Registrant also constructs and operates rigs which are transportable by
helicopter. In the United States, the Registrant draws its customers primarily
from the major oil companies and the larger independents, which are the
companies generally engaged in deep drilling. The Registrant also drills for
its own oil and gas
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division. In South America and the Middle East, the Registrant's current
customers include, respectively, the Venezuelan state petroleum company and
major international oil companies. BP EXPLORATION INC. (including its
affiliates) is the Registrant's largest single customer. Revenues from
drilling services performed for BP EXPLORATION INC. in fiscal 1994 totaled
approximately 14% of the Registrant's consolidated revenues.
The Registrant provides drilling equipment, personnel, and camps for
others on a contract basis for exploration and development of onshore areas and
for development from fixed platforms in offshore areas. Each of the drilling
rigs consists of engines, drawworks, a mast, pumps to circulate the drilling
fluid, blowout preventers, a drillstring, and related equipment. The intended
well depth and the drilling site conditions are the principal factors that
determine the size and type of rig most suitable for a particular drilling job.
A helicopter rig is one that can be disassembled into component part loads of
4,000 to 7,000 pounds and transported to remote locations by helicopter, cargo
plane, or other means.
The Registrant's workover rigs are equipped with engines, drawworks, a
mast, pumps, and blowout preventers (on a smaller scale than the drilling
rigs). A workover rig is used to complete a new well after the hole has been
drilled by a drilling rig, and to remedy various downhole problems that occur
in older producing wells.
The Registrant's contracts for drilling are obtained through
competitive bidding or as a result of negotiations with customers, and
sometimes cover multi-well and multi-year projects. Most of the contracts are
performed on a "daywork" basis, under which the Registrant
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charges a fixed rate per day, with the price determined by the location, depth,
and complexity of the well to be drilled, operating conditions, the duration of
the contract, and the competitive forces of the market. Current market
conditions involve an oversupply of drilling rigs for the work available. As a
consequence, the Registrant is and will be performing and bidding for contracts
on a combination "footage" and "daywork" basis, under which the Registrant
charges a fixed rate per foot of hole drilled to a stated depth, usually no
deeper than 15,000 feet, and a fixed rate per day for the remainder of the
hole. Contracts performed on a "footage" basis involve a greater element of
risk to the contractor than do contracts performed on a "daywork" basis.
Market conditions have also led the Registrant to accept "turnkey" contracts
under which the Registrant charges a fixed sum to deliver a hole to a stated
depth and agrees to furnish services such as testing, coring, and casing the
hole which are not normally done on a "footage" basis. "Turnkey" contracts
entail varying degrees of risk greater than the usual "footage" contract. The
Registrant believes that under current market conditions "daywork" basis
contract rates are too low to adequately compensate contractors and that
"footage" and "turnkey" basis contract rates do not adequately compensate
contractors for the added risks. However, the Registrant intends to remain in
the drilling contracting business in anticipation of a return to more favorable
market conditions. Contracts for use of the Registrant's drilling equipment
are "well-to-well" or for a fixed term. "Well-to-well" contracts are
cancelable at the option of either party upon the completion of drilling at any
one site, and fixed-term contracts customarily provide for
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termination at the election of the customer, with an "early termination
payment" to be paid to the contractor if a contract is terminated prior to the
expiration of the fixed term.
While current fixed term contracts are for one to three year periods,
some fixed term and well-to-well contracts are expected to be continued for
longer periods than the original terms, although the contracting parties have
no legal obligation to do so. Contracts generally contain renewal or
extension provisions exercisable at the option of the customer at prices
mutually agreeable to the Registrant and the customer, and in most instances
provide for additional payments for mobilization and demobilization. Contracts
for work in foreign countries generally provide for payment in United States
dollars, except for amounts required to meet local expenses; however,
increasingly there is a trend toward state petroleum companies insisting on
total payment in local currencies.
Domestic Drilling
The Registrant believes it is a major land and offshore platform
drilling contractor in the domestic market. At the end of September, 1994, the
Registrant had 47 rigs available for operations in the United States and had
management contracts for two operator owned rigs in offshore California.
The Registrant is competitively strongest in deep drilling rigs.
Twenty-six of its existing rigs are capable of drilling to depths in excess of
20,000 feet.
On June 30, 1994, the Registrant in a single transaction purchased 12
land drilling rigs and related equipment, together with a 14 acre
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equipment yard facility located in the state of Texas. The total purchase
price was approximately $15.5 million consisting of cash, a promissory note,
and certain contingent payment obligations. Since seven of such rigs are
considered medium depth rigs (optimum working depth of 12,000 to 15,000 feet),
Registrant believes that this acquisition should allow it to expand its
business into the shallow to medium depth drilling markets.
International Drilling
The Registrant's international drilling operations began in 1958 with
the acquisition of the Sinclair Oil Company's drilling rigs in Venezuela.
Helmerich & Payne de Venezuela, C.A., a wholly owned subsidiary of the
Registrant, is a leading drilling contractor in Venezuela. Beginning in 1972,
with the introduction of its first helicopter rig, the Registrant expanded into
other Latin American countries.
Venezuelan operations continue to be a significant part of
Registrant's operations. The Registrant presently owns and operates 15
drilling rigs in Venezuela and has labor contracts to operate two
government-owned drilling rigs in Venezuela. The Registrant has a utilization
rate of 90% for these rigs. During the fiscal year ended September 30, 1994,
the Venezuelan operations contributed 17% of the revenue generated by the
Registrant's international and domestic contract drilling activities. The
Registrant worked for all three Venezuelan producing companies during the
fiscal year ended September 30, 1994. Collectively, revenues from the three
producing companies amounted to
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approximately 9% of the Registrant's consolidated revenues. The Registrant
believes its relations with such producing companies are good.
During the mid-1970s, the Venezuelan government nationalized the
exploration and production business. At the present time it appears the
Venezuelan government will not nationalize the contract drilling business.
The Registrant in fiscal 1994 experienced unusual currency losses in
Venezuela totaling approximately $2.7 million. These losses were primarily
attributable to significant increases in the devaluation of the Venezuelan
currency and governmental restrictions in the conversion of Venezuelan currency
to United States dollars. See "Regulations and Hazards" pages I-9 through
I-11.
The Registrant's operations in Colombia continue to increase. The
Registrant presently owns and operates eight drilling rigs in Colombia. The
Registrant's utilization rate for such rigs was 88% as of the end of fiscal
1994. Four of such rigs are working in the last year of a three-year term
contract with a major international exploration and production company. During
fiscal 1994 the revenue generated by these four rigs contributed approximately
17% of the revenue generated by the Registrant's international and domestic
drilling activities.
In addition to its operations in Venezuela and Colombia, the
Registrant in fiscal 1994 owned and operated four rigs in Ecuador, one rig in
Trinidad, and one rig in Yemen. In Ecuador and Yemen, the contracts are with
large international oil companies.
In August of 1994, a newly formed venture owned 50% by Registrant and
50% by its affiliate, Atwood Oceanics, Inc., was awarded a term
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contract in Australia for the design, construction and operation of a new
generation platform rig. The rig will incorporate some of the latest
technology in instrumentation and remote control mechanization of drilling
equipment. It is presently anticipated that rig construction will be completed
in late 1995 with initial mobilization and related operations to commence in
early 1996.
During the first and second quarters of fiscal 1995, three rigs each
will be moved to Venezuela and Colombia from the United States and will be
operated under term contracts. In the first quarter of fiscal 1995, the rig in
Yemen will be moved to and stacked in Houston, Texas.
Competition
The contract drilling business is highly competitive. Competition in
contract drilling involves such factors as price, rig availability,
efficiency, condition of equipment, reputation, and customer relations.
Competition is primarily on a regional basis and may vary significantly by
region at any particular time. Drilling rigs can be readily moved from one
region to another in response to changes in levels of activity, and an
oversupply of rigs in any region may result.
The Registrant made a commitment to deep drilling in the early
1970's. During the past several years there has been what appears to the
Registrant to be an oversupply of unregulated natural gas. As a result, the
demand for deep drilling for gas has decreased. The expectation in the
industry is that the long term trend in domestic exploration will be toward
more and deeper wells.
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Regulations and Hazards
The drilling operations of the Registrant are subject to the many
hazards inherent in the business, including blowouts and well fires, which
could cause personal injury, suspend drilling operations, seriously damage or
destroy the equipment involved, and cause substantial damage to producing
formations and the surrounding areas.
The Registrant believes that it is adequately insured, with coverage
for comprehensive general liability, public liability, property damage
(including insurance against loss by fire and storm, blowout, and cratering
risks), and employer's liability. No insurance is carried against loss of
earnings. The Registrant's present coverage has been contracted through
fiscal 1995. However, in view of conditions generally in the liability
insurance industry, no assurance can be given that Registrant's present
coverage will not be cancelled during fiscal 1995 nor that insurance coverage
will continue to be available at rates considered reasonable.
International operations are subject to certain political, economic,
and other uncertainties not encountered in domestic operations, including risks
of expropriation of equipment as well as expropriation of a particular oil
company operator's property and drilling rights, taxation policies, foreign
exchange restrictions, currency rate fluctuations, and general hazards
associated with foreign sovereignty over certain areas in which operations are
conducted. There can be no assurance that there will not be changes in local
laws, regulations, and administrative requirements or the interpretation
thereof, any of which changes could have a material adverse effect on the
profitability of the Registrant's
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operations or on the ability of the Registrant to continue operations in
certain areas. Because of the impact of local laws, in certain areas the
Registrant's operations may, in the future, be conducted through entities in
which local citizens own interests and through entities (including joint
ventures) in which the Registrant holds only a minority interest, or pursuant
to arrangements under which the Registrant conducts operations under contract
to local entities. While the Registrant believes that neither operating
through such entities or pursuant to such arrangements nor the restructuring of
existing operations along such lines would have a material adverse effect on
the Registrant's operations or revenues, there can be no assurance that the
Registrant will in all cases be able to structure or restructure its operations
to conform to local law (or the administration thereof) on terms acceptable to
the Registrant. The Registrant further attempts to minimize the potential
impact of such risks by operating in more than one geographical area and by
attempting to obtain indemnification from operators against expropriation,
nationalization, and deprivation.
Many aspects of the operations of the Registrant are subject to
government regulation, including those relating to drilling practices and
methods and the level of taxation. In addition, various countries (including
the United States) have environmental regulations which affect drilling
operations. Drilling contractors may be liable for damages resulting from
pollution. Under United States regulations, drilling contractors must
establish financial responsibility to cover potential liability for pollution
of offshore waters. Generally, the Registrant is indemnified under drilling
contracts from environmental damages,
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except in certain cases of surface pollution, but the enforceability of
indemnification provisions in foreign countries may be questionable.
The Registrant believes that it is in substantial compliance with all
legislation and regulations affecting its operations in the drilling of oil and
gas wells and in controlling the discharge of wastes. To date, compliance has
not materially affected the capital expenditures, earnings, or competitive
position of the Registrant, although these measures may add to the costs of
operating drilling equipment in some instances. Further legislation or
regulation may reasonably be anticipated, and the effect thereof on operations
cannot be predicted.
OIL AND GAS DIVISION
The Registrant engages in the origination of prospects; the
identification, acquisition, exploration, and development of prospective and
proved oil and gas properties; the production and sale of crude oil,
condensate, and natural gas; and the marketing of natural gas. The Registrant
considers itself a medium-sized independent producer. All of the Registrant's
oil and gas operations are conducted in the United States.
Most of the Registrant's current exploration and drilling effort is
concentrated in Louisiana, Oklahoma, Texas, Wyoming and the Hugoton Field of
western Kansas. The Registrant also explores from time to time in the Rocky
Mountain area, New Mexico, Alabama, Florida and Mississippi.
The Registrant has commenced a 3-D seismic program in which 3-D
seismic surveys will be obtained in Kansas, Texas, Wyoming, Louisiana and
Oklahoma. The Registrant believes that these surveys will be of
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significant assistance in identifying potentially productive oil and gas
formations.
During the past fiscal year, the Registrant has reduced its
expenditures for exploration of fractured Austin Chalk reservoirs in south
central Louisiana. The Registrant in fiscal years 1993 and 1994, has
participated in the horizontal drilling and completion of four Austin Chalk
wells. Upon evaluation of the results of such wells, the Registrant has
elected to allow certain oil and gas leases covering approximately 14,763 acres
to expire during fiscal 1994. The Registrant's present efforts are
concentrated in the western portion of the original exploration area where it
holds acreage offsetting an Austin Chalk well which has recently been completed
by Oxy USA. Although this well has been initially productive of oil and gas,
it is premature to determine its commercial potential. The Registrant will
monitor production from this well to assist in the determination of the amount
of its participation, if any, in the additional drilling in the area and the
extent of its continued payment of annual rentals.
The Registrant's exploration and development program has covered a
range of prospects, from shallow "bread and butter" programs to deep,
expensive, high risk/high return wells. During fiscal 1994 the Registrant
participated in 38 development and/or wildcat wells, which resulted in new
discoveries of 8.4 bcf of gas and 208,361 barrels of oil and condensate. The
Registrant participated in six additional development wells, which resulted in
the development of 1.3 bcf of gas and 104,900 barrels of oil and condensate
which was previously classified as proved undeveloped reserves. A total of
$25,306,000 was spent in the
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Registrant's exploration and development program during fiscal 1994. This
figure is exclusive of expenditures for acreage. The Registrant's total
company-wide acquisition cost for acreage in fiscal 1994 was $4,893,094.
The Registrant spent $23,115,110 for the acquisition of proved oil and
gas reserves during fiscal 1994. As of September 30, 1994, remaining reserves
from such acquisitions totaled 19.5 bcf of natural gas and 157,484 barrels of
crude oil and condensate. Approximately 66% of such reserves are located in
western Oklahoma with the remainder being located in western Texas and southern
Louisiana. Many of these acquired properties have additional development
potential.
Market for Oil and Gas
The Registrant does not refine any of its production. The
availability of a ready market for such production depends upon a number of
factors, including the availability of other domestic production, crude oil
imports, the proximity and capacity of oil and gas pipelines, and general
fluctuations in supply and demand. The Registrant does not anticipate any
unusual difficulty in contracting to sell its production of crude oil and
natural gas to purchasers and end-users at prevailing market prices and under
arrangements that are usual and customary in the industry. However, the market
for natural gas has been in a state of oversupply for several years, and the
Registrant and its wholly owned subsidiary, Helmerich & Payne Energy Services,
Inc., have successfully developed markets with end-users, local distribution
companies, and natural gas brokers for gas produced from successful wildcat
wells or development wells. The Registrant is of the opinion that the
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supply/demand for natural gas is moving towards a state of equilibrium. Winter
demand and its effect on gas storage has a significant effect on natural gas
pricing. The stability of short-term prices for natural gas will largely
depend upon the demand during the heating season and the reduction of storage
throughout the United States. Other causes affecting supply/demand imbalances
may be federal regulation of the market; large quantities of developed gas
reserves in Canada and Mexico available for export by pipelines to the United
States; fuel switching between fuel oil and natural gas; development of coalbed
methane; and large quantities of liquefied natural gas in the Middle East,
Africa, and the Far East available for export to the United States.
Historically, the Registrant has had no long-term sales contracts for its crude
oil and condensate production. The Registrant continues its recent practice of
contracting for the sale of its Kansas and Oklahoma and portions of its west
Texas crude oil for terms of six to twelve months in an attempt to assure
itself of higher than posted prices for such crude oil production.
The Registrant, pursuant to various settlement agreements, has
previously terminated almost all its long-term gas sales contracts with
interstate pipelines. These actions previously resulted in an increase in gas
sales.
Competition
The Registrant competes with numerous other companies and individuals
in the acquisition of oil and gas properties and the marketing of oil and gas.
The Registrant continues to believe that it should prepare for increased
exploration activity without committing to a definite drilling timetable
involving large expenditures. The
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Registrant also believes that the intense competition for the acquisition of
gas producing properties will continue. Through its acquisition experience,
the Registrant believes it can still remain competitive and intends to continue
purchasing quality long-life oil and gas reserves. The Registrant's
competitors include major oil companies, other independent oil companies, and
individuals, many of whom have financial resources, staffs, and facilities
substantially greater than those of the Registrant. Many major oil companies
have committed much of their resources to offshore and international
acquisitions and exploration. Although the effect of these competitive factors
on the Registrant cannot be predicted with certainty, it would appear that the
withdrawal of major oil companies from domestic exploration and production will
provide increased domestic opportunities for the Registrant.
The Registrant has increased its exploration and development budget
for the fiscal year ending September 30, 1995. The Registrant intends to
continue to pursue the purchase of proven producing properties and to avail
itself of the opportunities for drilling and development.
Title to Oil and Gas Properties
The Registrant undertakes title examination and performs curative work
at the time properties are acquired. The Registrant believes that title to its
oil and gas properties is generally good and defensible in accordance with
standards acceptable in the industry.
Oil and gas properties in general are subject to customary royalty
interests contracted for in connection with the acquisitions of title, liens
incident to operating agreements, liens for current taxes, and other burdens
and minor encumbrances, easements, and restrictions. The
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Registrant believes that the existence of such burdens will not materially
detract from the general value of its leasehold interests.
Governmental Regulation in the Oil and Gas Industry
The Registrant's domestic operations are affected from time to time in
varying degrees by political developments and federal and state laws and
regulations. In particular, oil and gas production operations and economics
are affected by price control, tax, and other laws relating to the petroleum
industry; by changes in such laws; and by constantly changing administrative
regulations. Most states in which the Registrant conducts or may conduct oil
and gas activities regulate the production and sale of oil and natural gas,
including regulation of the size of drilling and spacing units or proration
units, the density of wells which may be drilled, and the unitization or
pooling of oil and gas properties. In addition, state conservation laws
establish maximum rates of production from oil and natural gas wells, generally
prohibit the venting or flaring of natural gas, and impose certain requirements
regarding the ratability of production. The effect of these regulations is to
limit the amounts of oil and natural gas the Registrant can produce from its
wells, and to limit the number of wells or locations at which the Registrant
can drill. In addition, legislation affecting the natural gas and oil industry
is under constant review. Inasmuch as such laws and regulations are frequently
expanded, amended, or reinterpreted, the Registrant is unable to predict the
future cost or impact of complying with such regulations. The Registrant
believes that its oil and gas operations currently are not materially affected
by such laws.
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The domestic production and sale of oil and gas are also subject to
regulation by United States federal authorities including the Federal Energy
Regulatory Commission ("FERC").
Regulatory Controls
The Registrant is subject to regulation by the FERC with respect to
various aspects of its domestic natural gas operations under the Natural Gas
Act ("NGA") and the Natural Gas Policy Act of 1978.
The Natural Gas Wellhead Decontrol Act of 1989 amended both the price
and non-price decontrol provisions of the Natural Gas Policy Act of 1978 for
the purpose of providing complete decontrol of first sales of natural gas by
January 1, 1993. The Registrant believes that substantially all of its gas is
decontrolled.
On April 8, 1992; August 3, 1992; and November 27, 1992, the FERC
issued Order 636, Order 636-A, and Order 636-B (collectively, "Order 636"),
respectively, which requires interstate pipelines to provide transportation
unbundled from their sales of gas. Also, such pipelines must provide
open-access transportation on a basis that is equal for all gas supplies.
Order 636 has been implemented through individual interstate pipeline
restructuring proceedings. Although Order 636 should provide the Registrant
with additional market access and more fairly applied transportation service
rates, it will also subject the Registrant to more restrictive pipeline
imbalance tolerances and greater penalties for violation of those tolerances.
Appeals of Order 636 are currently pending, and the Registrant cannot predict
the ultimate outcome of court review. Order 636 may be reversed in whole or in
part on review. Individual restructuring orders may also be reversed in whole
or in part,
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whether or not Order 636 is upheld. Assuming Order 636 is upheld in its
entirety, it initially appears that the Registrant will benefit from the
provisions of such Order.
The FERC has recently announced its intention to reexamine certain of
its transportation-related policies, including the appropriate manner for
setting rates for new interstate pipeline construction and the manner in which
interstate pipelines release transportation capacity under Order 636. While
any resulting FERC action would affect the Registrant only indirectly, these
inquiries are intended to further enhance competition in natural gas markets.
Under the NGA, natural gas gathering facilities are exempt from FERC
jurisdiction. The Registrant believes that its gathering systems meet the
traditional tests that the FERC has used to establish a pipeline's status as a
gatherer. Commencing in May 1994, the FERC has issued a series of orders in
individual cases that delineate its gathering policy. Among other matters, the
FERC slightly narrowed its statutory tests for establishing gathering status
and reaffirmed that it does not have jurisdiction over natural gas gathering
facilities and services and that such facilities and services are properly
regulated by state authorities. As a result, natural gas gathering may receive
greater regulatory scrutiny by state agencies. In addition, the FERC has
approved several transfers by interstate pipelines of gathering facilities to
unregulated gathering companies, including affiliates. This could allow such
companies to compete more effectively with independent gatherers. The FERC's
orders delineating its new gathering policy are subject to possible court
appeals. It is not possible at this time to predict the
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the ultimate effect of the new policy, although it could affect access to and
rates of interstate gathering service. However, the Registrant does not
presently believe the status of its facilities are affected by the FERC's
slight modification to its statutory criteria.
The Registrant's natural gas gathering operations may become subject
to additional safety and operational regulations relating to the design,
installation, testing, construction, operation, replacement, and management of
facilities. Pipeline safety issues have recently become the subject of
increasing focus in various political and administrative arenas at both the
state and federal levels. For example, federal legislation addressing pipeline
safety issues was considered in the most recent Congressional session, which,
if enacted, would have included a federal "one call" notification system and
certain new construction specifications. Similar or additional legislation is
likely to be proposed in the next federal legislative session. The Registrant
believes that the adoption of additional pipeline safety legislation will not
materially affect Registrant in light of its relatively minor gathering
operations.
On February 2, 1994, the Kansas Corporation Commission ("KCC") issued
an order which modified allowables applicable to wells within the Hugoton Gas
Field so that those proration units upon which infill wells had been drilled
would be assigned a larger allowable than those units without infill wells.
Such order was affirmed on appeal by the Kansas District Court on September 15,
1994. As a consequence of this decision, the Registrant believes that it will
be necessary in the near future to drill an additional 75 to 90 wells with the
total costs to Registrant
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ranging from $7.5 to $9 million. The KCC's order has been appealed by
several major producing companies. The order has not been stayed pending
this appeal.
Additional proposals and proceedings that might affect the oil and gas
industry are pending before the Congress, the FERC, and the courts. The
Registrant cannot predict when or whether any such proposals may become
effective. In the past, the natural gas industry has been very heavily
regulated. There is no assurance that the current regulatory approach pursued
by the FERC will continue indefinitely. Notwithstanding the foregoing, it is
anticipated that compliance with existing federal, state and local laws, rules
and regulations will not have a material adverse effect upon the capital
expenditures, earnings or competitive position of the Registrant.
Federal Income Taxation
The Registrant's oil and gas operations, and the petroleum industry in
general, are affected by certain federal income tax laws, in particular the Tax
Reform Act of 1986, which was amended by the Energy Policy Act of 1992 and the
Revenue Reconciliation Act of 1993. The Registrant has considered the effects
of such federal income tax laws on its operations and has concluded that there
will be no material impact on its liquidity, capital expenditures, or
international operations.
Environmental Laws
The Registrant's activities are subject to existing federal and state
laws and regulations governing environmental quality and pollution control.
Such laws and regulations may substantially increase the costs of exploring,
developing, or producing oil and gas and may prevent or
I - 20
23
delay the commencement or continuation of a given operation. In the opinion of
the Registrant's management, its operations substantially comply with
applicable environmental legislation and regulations. The existence of such
legislation and regulations have had no material effect on the Registrant's
operations, and the cost of compliance therewith has not been material to date.
The Registrant believes that compliance with existing federal, state,
and local laws, rules, and regulations regulating the discharge of materials
into the environment or otherwise relating to the protection of the environment
will not have any material effect upon the capital expenditures, earnings, or
competitive position of the Registrant.
Natural Gas Marketing
Helmerich & Payne Energy Services, Inc., ("HPESI") continues into its
sixth year of business with emphasis on the purchase and marketing of the
Registrant's natural gas production. In addition, HPESI purchases third-party
gas for resale and provides compression and gathering services for a fee.
During fiscal year 1994, HPESI's sales of third-party gas constituted
approximately 16% of the Registrant's consolidated revenues.
HPESI sells natural gas to markets in the Midwest and Rocky Mountains.
Gas sales contracts are for varied periods ranging from six months to seven
years. However, recent contracts have tended toward shorter terms. For fiscal
1995, HPESI's term gas sales contracts provide for the sale of approximately 12
bcf of gas. HPESI presently intends to fulfill such term sales contracts with
a portion of the gas reserves purchased from the Registrant as well as from its
purchases of third-
I - 21
24
party gas. See pages I-13 through I-22 regarding the market, competition, and
regulation of natural gas.
CHEMICAL OPERATIONS
The Registrant owns a chemical plant at Baytown, Texas, where it
manufactures mercaptans and sulfides which are blended for use as warning
agents in natural and liquefied petroleum gases. The Registrant believes that
it is the largest single supplier of gas odorants in North America. Its
odorants are also sold in Korea, Latin America, Australia, and Japan. These
products are marketed by the Registrant using the trade names of "Natural Gas
Odorizing" and "Captan." In addition, the Registrant makes bulk sales of
mercaptans for use as sulfiding agents.
The Registrant is one of only two companies which sell odorants for
liquefied petroleum gases and is one of only three companies which sell
odorants for natural gas within the United States. The Registrant believes
that its market share approximates 50% of all domestic odorant sales.
Competition for liquefied petroleum odorant sales is primarily based upon
service considerations, while natural gas odorant manufacturers compete for
sales based on price and service considerations.
The manufacturing facility is adjacent to a major refinery and
chemical plant complex of Exxon Corporation, from which the Registrant obtains
most of its principal raw materials. The Registrant's chemical plant and
related operations are subject to numerous local, state, and federal
environmental laws and regulations. The Registrant believes it is currently in
substantial compliance with all such laws and that
I - 22
25
compliance with the same will not have any material effect upon the capital
expenditures, earnings or competitive position of Registrant.
REAL ESTATE OPERATIONS
The Registrant's real estate operations are conducted exclusively
within the area of Tulsa, Oklahoma. Its major holding is Utica Square Shopping
Center, consisting of fifteen separate buildings, with parking and other common
facilities covering an area of approximately 30 acres. Fourteen of these
buildings provide approximately 405,709 square feet of net leasable retail
sales and storage space (99.8% of which is currently leased) and approximately
18,590 square feet of net leasable general office space (99.1% of which is
currently leased). Approximately 24% of the general office space is occupied by
the Registrant's real estate operations. The fifteenth building is an
eight-story medical office building which provides approximately 76,379 square
feet of net leasable medical office space (82% of which is currently leased).
The Registrant has a two-level parking garage located in the southwest corner
of Utica Square that can accommodate approximately 250 cars.
At the end of the 1994 fiscal year the Registrant owned 19 of a total
of 73 units in The Yorktown, a 16-story luxury residential condominium with
approximately 150,940 square feet of living area located on a six-acre tract
adjacent to Utica Square Shopping Center. Thirteen of Registrant's units are
currently leased.
The Registrant owns an eight-story office building located diagonally
across the street from Utica Square Shopping Center, containing approximately
87,000 square feet of net leasable general office and retail space. This
building houses the Registrant's principal
I - 23
26
executive offices. Approximately 11% of this building is leased to third
parties.
The Registrant is also engaged in the business of leasing multi-tenant
warehouse space. Three warehouses known as Space Center, each containing
approximately 165,000 square feet of net leasable space, are situated in the
southeast part of Tulsa at the intersection of two major limited-access
highways. Present occupancy is 84%. The Registrant also owns approximately
1-1/2 acres of undeveloped land lying adjacent to such warehouses.
The Registrant also owns a 270 acre tract known as Southpark located
in the high-growth area of southeast Tulsa and consisting of approximately 257
acres of undeveloped real estate and approximately 13 acres of multi-tenant
warehouse area. The warehouse area is known as Space Center East and consists
of two warehouses, one containing approximately 90,000 square feet and the
other containing approximately 112,500 square feet. Occupancy is 74%.
Preliminary planning has been accomplished to determine the best development
uses for the remaining land. A high quality office park, with peripheral
commercial, office/warehouse, and hotel sites, has been contemplated.
Registrant in January of 1994, sold a one acre tract within Southpark located
at the intersection of two major arterial streets.
The Registrant also owns a five-building complex called Tandem
Business Park. The project is located adjacent to and east of the Space Center
East facility and contains approximately six acres, with approximately 88,084
square feet of office/warehouse space and a 49% occupancy rate. The Registrant
also owns a twelve-building complex,
I - 24
27
consisting of approximately 204,600 square feet of office/warehouse space,
called Tulsa Business Park. The project is located south of the Space Center
facility, separated by a city street, and contains approximately 12 acres.
Occupancy is 84%.
The Registrant also owns two service center properties located
adjacent to arterial streets in south central Tulsa. The first, called Maxim
Center, consists of one office/warehouse building containing approximately
40,800 square feet and located on approximately 2.5 acres. During fiscal 1994
occupancy decreased from 68% to 50% primarily due to the loss of one existing
tenant. The second, called Maxim Place, consists of one office/warehouse
building containing approximately 33,750 square feet and located on
approximately 2.25 acres. Occupancy is 63%.
FINANCIAL
Information relating to Revenue and Income by Business Segments may be
found on page 11 of the Registrant's Annual Report to Shareholders for fiscal
1994, which is incorporated herein by reference.
EMPLOYEES
The Registrant had 1,606 employees within the United States (15 of
which were part-time employees) and 1,181 employees employed in international
operations as of September 30, 1994.
Item 2. PROPERTIES
CONTRACT DRILLING
The following table sets forth certain information concerning the
I - 25
28
Registrant's existing domestic drilling rigs:
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
140 Shallow Depth 10,000 Texas
110 Medium Depth 12,000 Texas
141 Medium Depth 14,000 Texas
142 Medium Depth 14,000 Texas
143 Medium Depth 14,000 Texas
144 Medium Depth 14,000 Texas
145 Medium Depth 14,000 Texas
146 Medium Depth 14,000 Texas
147 Medium Depth 16,000 Texas
84 Medium Depth 16,000 Louisiana
93 Medium Depth 16,000 Alabama
95 Medium Depth 16,000 Texas
96 Medium Depth 16,000 Oklahoma
77 Medium Depth 16,000 Alabama
111 Medium Depth 16,000 Louisiana
118 Medium Depth 16,000 Texas
119 Medium Depth 16,000 Texas
120 Medium Depth 16,000 Texas
78 Deep 20,000 Texas
79 Deep 20,000 Illinois
80 Deep 20,000 Oklahoma
89 Deep 20,000 Louisiana
92 Deep 20,000 Oklahoma
94 Deep 20,000 Louisiana
98 Deep 20,000 Oklahoma
122 Deep 26,000 Oklahoma
137 Deep 26,000 Texas
97 Deep 26,000 Texas
99 Deep 26,000 Texas
123 Deep 26,000 Oklahoma
149 Deep 26,000 Texas
72 Very Deep 30,000 Louisiana
73 Very Deep 30,000 Louisiana
127 Very Deep 30,000 Oklahoma
130 Super Deep 30,000+ Texas
131 Super Deep 30,000+ Wyoming
101 Medium Depth 16,000 * Gulf of Mexico
104 Medium Depth 16,000 * Offshore California
108 Medium Depth 16,000 * Gulf of Mexico
91 Deep 20,000 * Gulf of Mexico
105 Deep 20,000 * Gulf of Mexico
109 Deep 20,000 * Gulf of Mexico
100 Deep 26,000 * Gulf of Mexico
106 Deep 26,000 * Gulf of Mexico
I - 26
29
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
107 Deep 26,000 * Gulf of Mexico
102 Deep 20,000 * Offshore California
103 Deep 20,000 * Offshore California
* Offshore platform rig
The following table sets forth information with respect to the
utilization of the Registrant's domestic drilling rigs for the periods
indicated:
Years ended September 30,
---------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
Number of rigs owned at end of
period 49 46 39 42 47
Average rig utilization rate
during period (1) 50% 47% 42% 53% 69%
(1) A rig is considered to be utilized when it is operated or being moved,
assembled, or dismantled under contract.
The following table sets forth certain information concerning the
Registrant's international drilling rigs:
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
3 Workover/drilling 6,000 Venezuela
14 Workover/drilling 6,000 Venezuela
19 Workover/drilling 6,000 Venezuela
20 Workover/drilling 6,000 Venezuela
21 Workover/drilling 6,000 Venezuela
132 Medium Depth 16,000 Ecuador
23 Deep (helicopter rig) 18,000 Ecuador
10 Deep (helicopter rig) 18,000 Colombia
22 Deep (helicopter rig) 18,000 Yemen
12 Deep (helicopter rig) 18,000 Ecuador
45 Deep 26,000 Venezuela
82 Deep 26,000 Venezuela
83 Deep 26,000 Venezuela
138 Deep 26,000 Ecuador
148 Deep 26,000 Venezuela
117 Deep 26,000 Trinidad
121 Deep 26,000 Colombia
125 Very Deep 30,000 Colombia
I - 27
30
Rig Registrant's Optimum Working Present
Designation Classification Depth in Feet Location
----------- -------------- --------------- --------
115 Very Deep 30,000 Venezuela
116 Very Deep 30,000 Venezuela
113 Very Deep 30,000 Venezuela
128 Very Deep 30,000 Venezuela
129 Very Deep 30,000 Venezuela
133 Very Deep 30,000 Colombia
134 Very Deep 30,000 Colombia
135 Very Deep 30,000 Colombia
136 Very Deep 30,000 Colombia
150 Very Deep 30,000 Venezuela
139 Super Deep 30,000+ Colombia
The following table sets forth information with respect to the
utilization of the Registrant's international drilling rigs for the periods
indicated:
Years ended September 30,
------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
Number of rigs owned at end of
period 20 25 30 29 29
Average rig utilization rate
during period (1) 45% 69% 69% 68% 88%
(1) A rig is considered to be utilized when it is operated or being moved,
assembled, or dismantled under contract.
OIL AND GAS DIVISION
All of the Registrant's oil and gas operations and holdings are
domestic.
Crude Oil Sales
The Registrant's net sales of crude oil and condensate for the three
fiscal years 1992 through 1994 are shown below:
Average Sales Average Lifting
Year Net Barrels Price per barrel Cost per Barrel
---- ----------- ---------------- ---------------
1992 854,124 $19.16 $8.98
1993 875,713 $17.58 $8.63
1994 887,455 $14.83 $7.74
I - 28
31
Natural Gas Sales
The Registrant's net sales of natural and casinghead gas for the three
fiscal years 1992 through 1994 are as follows:
Average Sales Average Lifting
Year Net Mcf Price per Mcf Cost per Mcf
---- ------- ------------- ---------------
1992 27,622,018 $1.39 $0.3115
1993 28,478,530 $1.84 $0.3460
1994 26,627,776 $1.72 $0.3760
Following is a summary of the net wells drilled by the Registrant for
the fiscal years ended September 30, 1992, 1993, and 1994:
Exploratory Wells Development Wells
--------------------- -----------------------
1992 1993 1994 1992 1993 1994
---- ----- ----- ----- ----- ------
Productive 2.605 2.866 1.021 10.869 8.760 12.334
Dry 3.363 1.393 1.436 0.969 2.858 0.233
On September 30, 1994, the Registrant was in the process of drilling
or completing six gross or 1.704 net wells.
Acreage Holdings
The Registrant's holdings of acreage under oil and gas leases, as of
September 30, 1994, were as follows:
Developed Acreage Undeveloped Acreage
------------------------- --------------------------
Gross Net Gross Net
----------- --------- ---------- ----------
Alabama 480.00 112.21 146.00 18.12
Arkansas 4,636.73 2,295.02 -0- -0-
Colorado -0- -0- 7,676.35 4,259.24
Kansas 123,263.46 85,726.92 6,340.61 4,629.13
Louisiana 8,087.88 1,471.11 329,906.02 145,746.79
Mississippi 168.17 55.17 839.00 439.59
Montana 2,117.19 387.30 4,668.95 1,530.15
Nebraska 480.00 168.00 -0- -0-
Nevada -0- -0- 40,265.87 31,587.71
New Mexico 960.00 54.86 161.88 38.85
North Dakota -0- -0- 8,050.30 1,176.93
Oklahoma 141,638.45 43,391.37 43,013.35 17,667.40
Texas 90,298.39 41,721.09 12,638.65 6,234.27
Wyoming -0- -0- 3,800.00 860.10
---------- ---------- ---------- ----------
Total 372,130.27 175,383.65 457,506.98 214,188.28
I - 29
32
Acreage is held under leases which expire in the absence of production
at the end of a prescribed primary term, and is, therefore, subject to
fluctuation from year to year as new leases are acquired, old leases expire,
and other leases are allowed to terminate by failure to pay annual delay
rentals.
Productive Wells
The Registrant's total gross and net productive wells as of September
30, 1994, were as follows:
Oil Wells Gas Wells
------------ ------------
Gross Net Gross Net
----- --- ----- ---
3,419 273 853 341
Additional information required by this item with respect to the
Registrant's oil and gas operations may be found on pages I-11 through I-22 of
Item 1. BUSINESS, and pages 28 through 30 of the Registrant's Annual Report to
Shareholders for fiscal 1994, "Notes to Consolidated Financial Statements" and
"Note 11 Supplementary Financial Information for Oil and Gas Producing
Activities."
Estimates of oil and gas reserves, future net revenues, and present
value of future net revenues were audited by Southmayd & Associates, Inc.,
independent consultants, 6450 South Lewis Avenue, Suite 220, Tulsa, Oklahoma,
74136. Total oil and gas reserve estimates do not differ by more than 5% from
the total reserve estimates filed with any other federal authority or agency.
CHEMICAL OPERATIONS
The Registrant owns at Baytown, Texas, a chemical plant which
manufactures mercaptans and sulfides for use primarily as warning odorants in
natural and liquefied petroleum gases. The plant occupies
I - 30
33
approximately ten acres of a 30-acre tract which the Registrant owns. It is
estimated that the plant has an annual optimum design production capacity of
20,000,000 pounds of odorants and other mercaptans; however, current operating
permits limit production to 10,000,000 to 12,000,000 pounds per year.
REAL ESTATE OPERATIONS
See Item 1. BUSINESS, pages I-22 through I-25.
STOCK
At the end of fiscal 1994:
The Registrant owned 907,164 shares of the common stock of Sun
Company, Inc., and 675,000 shares of the common stock of Oryx Energy Co., Inc.
The Registrant owned 1,600,000 shares of the common stock of Atwood
Oceanics, Inc., a Houston, Texas based company engaged in offshore contract
drilling. The Registrant's ownership of Atwood is approximately 24%.
The Registrant owned 740,000 shares of the common stock of
Schlumberger, Ltd.
The Registrant owned 300,000 shares of the common stock of Phillips
Petroleum Company, Inc.
The Registrant owned 225,000 shares of the common stock of ONEOK.
The Registrant owned 500,000 shares of the common stock of Liberty
Bancorp, Inc., formerly Banks of Mid-America, Inc. Liberty Bancorp, Inc., is a
bank holding company which owns Liberty Bank and Trust Company of Tulsa, N.A.,
and Liberty Bank and Trust Company of Oklahoma City, N.A. The Registrant's
ownership of Liberty Bancorp, Inc., is approximately 5%.
I - 31
34
The Registrant also owned lesser amounts of shares of several other
publicly traded corporations.
Item 3. LEGAL PROCEEDINGS
On or about January 18, 1994, the District Court dismissed without
prejudice the lawsuit styled Theresa Arceneaux, et al. v. Natural Gas
Odorizing, Inc., Case Number 93-568602, District Court Harris County, Texas,
165th Judicial District. The Court on October 27, 1994, entered an agreed
judgment ordering plaintiff's lead counsel, Mr. Thomas J. Pearson, to pay
Natural Gas Odorizing, Inc., $60,000 as sanctions for attorney's fees and
ordered Mr. Pearson to cooperate in providing certain information to the
Grievance Committee of the State Bar of Texas. Natural Gas Odorizing, Inc.,
has recently filed its grievance against Mr. Pearson with the State Bar of
Texas.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names and ages of the Registrant's
executive officers, together with all positions and offices held with the
Registrant by such executive officers. Officers are elected to serve until the
meeting of the Board of Directors following the next Annual Meeting of
Stockholders and until their successors have been elected and have qualified or
until their earlier resignation or removal.
W. H. Helmerich, III, 71 Director since 1949; Chairman of the Board
Chairman of the Board since December 1, 1960; Chief Executive
Officer from December 1, 1960, to
December 6, 1989; and President from
December 1, 1960, to December 11, 1987
I - 32
35
Hans Helmerich, 36 Director since March 4, 1987; appointed
President and C.E.O. Chief Executive Officer on December 6, 1989; President and
Chief Operating Officer from December 11, 1987; Executive Vice
President from March 13, 1987; Vice President from June 15, 1985;
son of W. H. Helmerich, III, Chairman
Allen S. Braumiller, 60 Appointed Vice President, Exploration, in 1977
Vice President
George S. Dotson, 53 Director since March 7, 1990; appointed
Vice President Vice President, Drilling, in 1977 and appointed President and
Chief Operating Officer of Helmerich & Payne International
Drilling Co. on February 14, 1977
Douglas E. Fears, 45 Appointed Vice President, Finance, on March
Vice President 11, 1988, prior to which he was Internal Auditor from June 30, 1986
Steven R. Mackey, 43 Appointed Secretary on March 7, 1990; Vice
Vice President and President on March 11, 1988; and General
Secretary Counsel on January 1, 1988, prior to which he was Associate
General Counsel from January 1, 1986
James L. Payne, 55 Appointed Vice President, Real Estate, on
Vice President September 4, 1991; prior to that date he was Vice President and
General Manager of Helmerich & Payne Properties, Inc., from May 9, 1985
Steven R. Shaw, 43 Appointed Vice President, Production, on
Vice President July 8, 1985; prior to that date he was Regional Operations Manager of
Santa Fe Minerals, Inc., from 1984 to July 8, 1985
Gordon K. Helm, 41 Chief Accounting Officer of the Registrant;
Controller appointed Controller effective December 10, 1993; Manager of Internal
Audit from September 13, 1991; Regional Controller for Memorex Telex
Corporation from 1989; and Manager of Planning for Memorex Telex
Corporation from 1988
I - 33
36
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The principal market on which the Registrant's common stock is traded
is the New York Stock Exchange. The high and low sale prices per share for
the common stock for each quarterly period during the past two fiscal years as
reported in the NYSE - Composite Transaction quotations follow:
1993 1994
---- ----
Quarter High Low High Low
------- ---- --- ---- ---
First 26 3/4 22 1/4 34 1/2 26 1/2
Second 29 3/4 22 3/8 30 26
Third 37 1/8 29 1/4 27 1/8 25 1/8
Fourth 36 1/8 31 1/2 28 1/8 25 5/8
The Registrant paid quarterly cash dividends during the past two years
as shown in the following table:
Paid per Share Total Payment
-------------- -------------
Fiscal Fiscal
------ ------
Quarter 1993 1994 1993 1994
------- ---- ---- ---- ----
First $0.120 $0.120 $2,949,291 $2,956,498
Second 0.120 0.120 2,949,291 2,960,098
Third 0.120 0.120 2,953,006 2,960,314
Fourth 0.120 0.125 2,956,378 3,087,902
The Registrant paid a cash dividend of $0.125 per share on December 1,
1994, to shareholders of record on November 15, 1994. Payment of future
dividends will depend on earnings and other factors.
As of December 16, 1994, there were 1,814 record holders of the
Registrant's common stock as listed by the transfer agent's records.
II - 1
37
Item 6. SELECTED FINANCIAL DATA
Five-year Summary of Selected Financial Data
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
Sales, operating,
and other revenues $238,544 $213,946 $239,700 $315,097 $329,001
Income from con-
tinuing operations 47,562 21,241 10,849 24,550 20,971
Income from con-
tinuing operations
per common share 1.97 0.88 0.45 1.01 0.86
Total assets 582,927 575,168 585,504 610,935 624,827
Long-term debt 5,648 5,693 8,339 3,600 -0-
Cash dividends
declared per
common share 0.44 0.46 0.47 0.48 0.49
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information required by this item may be found on pages 12 through 16,
Management's Discussion & Analysis of Results of Operations and Financial
Condition, in the Registrant's Annual Report to Shareholders for fiscal 1994,
which is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found on pages 17 through 30
in the Registrant's Annual Report to Shareholders for fiscal 1994, which is
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The required information regarding the change in Registrant's
certifying accountant was previously reported in a Current Report on Form 8-K
filed with the Securities and Exchange Commission on April 7, 1994.
II - 2
38
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required under this item with respect to Directors is
incorporated by reference from the Registrant's definitive Proxy Statement for
the Annual Meeting of Stockholders to be held March 1, 1995, to be filed with
the Commission not later than 120 days after September 30, 1994. See pages
I-32 and I-33 for information covering the Registrant's Executive Officers.
Item 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
March 1, 1995, to be filed with the Commission not later than 120 days after
September 30, 1994.
III - 1
39
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Document List
1. The financial statements called for by Item 8 are incorporated
herein by reference from the Registrant's Annual Report to
Shareholders for fiscal 1994.
2. The following financial statement schedules are filed as a
part of this Form:
(i) Report of Independent Public Accountants on Financial
Statements and Financial Statement Schedules for the
fiscal years ended September 30, 1993 and September
30, 1992.
(ii) Schedule I - Pages IV-5 and IV-6.
(iii) Schedule V - Pages IV-7 through IV-9.
(iv) Schedule VI - Pages IV-10 through IV-12.
(v) Schedule X - Page IV-13.
3. Exhibits required by item 601 of Regulation S-K:
Exhibit Number:
3.1 Restated Certificate of Incorporation and Amendment
to Restated Certificate of Incorporation of the
Registrant are incorporated herein by reference from
the Registrant's Annual Report on Form 10-K to the
Securities and Exchange Commission for fiscal 1987.
3.2 By-Laws of the Registrant are incorporated herein by
reference from the Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1990.
4.1 Rights Agreement dated as of January 21, 1986,
between the Registrant and The First National Bank of
Boston is incorporated herein by reference to the
Registrant's Form 8-A dated January 30, 1986.
4.2 Amendment to Rights Agreement dated as of December 5,
1990, between the Registrant and The Liberty National
Bank and Trust Company of Oklahoma City is
incorporated herein by reference to the Registrant's
Form 8, Amendment No. 1 to Form 8-A, dated December
11, 1990.
IV-1
40
*10.1 Incentive Stock Option Plan is incorporated herein by
reference to Exhibit 4.2 to the Registrant's
Registration Statement No. 33-16771 on Form S-8.
*10.2 Consulting Services Agreement between W. H.
Helmerich, III, and the Registrant effective
January 1, 1990, as amended, is incorporated herein by
reference from the Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1990.
*10.3 Restricted Stock Plan for Senior Executives of
Helmerich & Payne, Inc., is incorporated herein by
reference to Exhibit "A" to the Registrant's Proxy
Statement dated January 26, 1990.
*10.4 Form of Restricted Stock Award Agreement for the
Restricted Stock Plan for Senior Executives of
Helmerich & Payne, Inc., together with all amendments
thereto, is incorporated herein by reference from the
Registrant's Annual Report on Form 10-K to the
Securities and Exchange Commission for fiscal 1990.
*10.5 Supplemental Retirement Income Plan for Salaried
Employees of Helmerich & Payne, Inc., is incorporated
herein by reference from the Registrant's Annual
Report on Form 10-K to the Securities and Exchange
Commission for fiscal 1990.
*10.6 Helmerich & Payne, Inc. 1990 Stock Option Plan is
incorporated herein by reference to Exhibit "A" to
Registrant's Proxy Statement dated January 25, 1991.
*10.7 Supplemental Savings Plan for Salaried Employees of
Helmerich and Payne, Inc., is incorporated herein by
reference from Registrant's Annual Report on Form
10-K to the Securities and Exchange Commission for
fiscal 1993.
13. The Registrant's Annual Report to Shareholders for
fiscal 1994.
22. Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Independent Auditors.
27. Financial Data Schedule.
---------------------
* Compensatory Plan or Arrangement.
IV-2
41
(b) Report on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of the
fiscal year ended September 30, 1994.
IV-3
42
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
FOR THE FISCAL YEARS ENDED
SEPTEMBER 30, 1993 AND SEPTEMBER 30, 1992
To the Shareholders and Board of Directors of Helmerich & Payne, Inc.:
We have audited the accompanying consolidated balance sheet of Helmerich &
Payne, Inc. (a Delaware corporation) and subsidiaries as of September 30, 1993,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the two years in the period ended September 30, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a) are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. The
information in these schedules as of September 30, 1993, and for each of the
two years in the period ended September 30, 1993, have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Helmerich & Payne, Inc. and
subsidiaries as of September 30, 1993, and the results of their operations and
their cash flows for each of the two years in the period ended September 30,
1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
November 16, 1993
IV-4
43
HELMERICH & PAYNE, INC.
SCHEDULE I - MARKETABLE SECURITIES
AS OF SEPTEMBER 30, 1994
Column A Column B Column C Column D
Value Based on
Current Market
Amount at Which Quotations at
Carried in Balance
Name of Issuer and Title of Issue Number of Shares Balance Sheet (1) Sheet Date
--------------------------------- ----------------- ----------------- --------------
(000's) (000's)
SCHLUMBERGER, LTD. 740,000 $ 23,511 $ 40,238
Common stock
ATWOOD OCEANICS, INC. 1,600,000 20,743 22,800
Common stock
SUN COMPANY, INC. 907,164 10,637 26,081
Common stock
PHILLIPS PETROLEUM COMPANY 300,000 7,470 10,275
Common stock
LIBERTY BANCORP. (2) 500,000 7,270 16,750
Common stock
ORYX ENERGY COMPANY 675,000 6,433 9,366
Common stock
ONEOK 225,000 2,751 3,796
Common stock
OTHER
Common stock,
debentures and other 8,599 15,706
-------- --------
Total consolidated $ 87,414 $145,012
======== ========
NOTE:
(1) Investments are carried in the balance sheet at cost, except the
investment in Atwood which is carried on the equity method. Equity
income for 1994 from Atwood was $1,458,000. No dividends were
received from Atwood.
(2) Formerly Banks of Mid America.
IV-5
44
HELMERICH & PAYNE, INC.
SCHEDULE I - MARKETABLE SECURITIES
AS OF SEPTEMBER 30, 1993
Column A Column B Column C Column D
Value Based on
Current Market
Amount at Which Quotations at
Carried in Balance
Name of Issuer and Title of Issue Number of Shares Balance Sheet (1) Sheet Date
---------------------------------- ---------------- ----------------- --------------
(000's) (000's)
SCHLUMBERGER, LTD. 740,000 $ 23,511 $ 49,303
Common stock
ATWOOD OCEANICS, INC. 1,600,000 19,285 17,200
Common stock
SUN COMPANY, INC. 907,164 10,637 25,854
Common stock
PHILLIPS PETROLEUM COMPANY 300,000 7,470 10,125
Common stock
LIBERTY BANCORP. (2) 500,000 7,270 17,000
Common stock
ORYX ENERGY COMPANY 700,000 6,683 17,150
Common stock
ONEOK 225,000 2,751 5,006
Common stock
OTHER
Common stock,
debentures and other 7,338 10,737
-------- --------
Total consolidated $ 84,945 $152,375
======== ========
NOTE:
(1) Investments are carried in the balance sheet at cost, except the
investment in Atwood which is carried on the equity method. Equity
loss for 1993 from Atwood was $435,000. No dividends were received
from Atwood.
(2) Formerly Banks of Mid America.
IV-6
45
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1994
(In Thousands)
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Additions Retirements or -------------- Balance at End
CLASSIFICATION Period at Cost Sales Transfers of Period
-------------- ----------- --------- -------------- ------------ -------------
CONTRACT DRILLING EQUIPMENT $418,004 $ 53,752 $ 27,213 $ (111) $444,432
PRODUCING OIL AND GAS PROPERTIES 340,176 40,916 3,872 151 377,371
UNDEVELOPED LEASES AND ROYALTIES 10,010 4,893 3,023 (151) 11,729
REAL ESTATE PROPERTIES 47,502 902 577 - 47,827
CHEMICAL PLANT AND EQUIPMENT 11,844 573 - - 12,417
OTHER 45,786 4,847 1,418 111 49,326
--------- ---------- ---------- --------- ---------
$873,322 $ 105,883 $ 36,103 $ - $943,102
======== ========== ========= ========= ========
IV-7
46
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1993
(In Thousands)
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Retirements or -------------- Balance at End
CLASSIFICATION Period Additions at Cost Sales Transfers of Period
-------------- ----------- ----------------- ------------- -------------- --------------
CONTRACT DRILLING EQUIPMENT $404,155 $ 24,100 $ 10,451 $ 200 $418,004
PRODUCING OIL AND GAS PROPERTIES 329,264 23,142 12,462 232 340,176
UNDEVELOPED LEASES AND ROYALTIES 12,973 2,410 5,141 (232) 10,010
REAL ESTATE PROPERTIES 47,286 437 221 - 47,502
CHEMICAL PLANT AND EQUIPMENT 11,304 540 - - 11,844
OTHER 43,811 3,580 1,405 (200) 45,786
--------- --------- --------- -------- ----------
$848,793 $ 54,209 $ 29,680 $ - $873,322
======== ======== ======== ========== ========
IV-8
47
HELMERICH & PAYNE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1992
(In Thousands)
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Debit (Credit)
Beginning of Additions Retirements ------------- Balance at
CLASSIFICATION Period at Cost or Sales Transfers End of Period
-------------- ----------- --------- ----------- ------------- -------------
CONTRACT DRILLING EQUIPMENT $370,494 $43,049 $ 9,378 $ (10) $404,155
PRODUCING OIL AND GAS PROPERTIES 312,439 21,617 5,044 252 329,264
UNDEVELOPED LEASES AND ROYALTIES 5,552 9,140 1,467 (252) 12,973
REAL ESTATE PROPERTIES 46,670 690 74 - 47,286
CHEMICAL PLANT AND EQUIPMENT 11,202 104 2 - 11,304
OTHER 37,059 7,898 1,156 10 43,811
-------- ------- ------- -------- --------
$783,416 $82,498 $17,121 $ - $848,793
======== ======= ======= ======== ========
IV-9
48
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1994
(In Thousands)
Column A Column B Column C Column D Column E Column F
Other Changes
Balance at Additions Charged Debit (Credit)
Beginning of to Costs & Expenses Retirements or -------------- Balance at End
CLASSIFICATION Period (Note 1) Sales Transfers of Period
- ---------------------------------- ------------ ------------------- -------------- -------------- -----------------
CONTRACT DRILLING EQUIPMENT $ 258,690 $ 24,183 $ 23,440 $ (10) $ 259,423
PRODUCING OIL AND GAS PROPERTIES 199,408 19,517 173 - 218,752
UNDEVELOPED LEASES AND ROYALTIES 4,500 2,650 - - 7,150
REAL ESTATE PROPERTIES 20,496 1,600 334 - 21,762
CHEMICAL PLANT AND EQUIPMENT 6,726 596 - - 7,322
OTHER 24,704 4,269 941 10 28,042
--------- -------- -------- ----------- ---------
$ 514,524 $ 52,815 $ 24,888 $ - $ 542,451
========= ======== ======== =========== =========
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-10
49
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1993
(In Thousands)
Column A Column B Column C Column D Column E Column F
Additions
Charged Other Changes
Balance at to Costs & Debit (Credit)
Beginning of Expenses Retirements or -------------- Balance at End
CLASSIFICATION Period (Note 1) Sales Transfers of Period
-------------- ------- --------- --------- ------------ ----------
CONTRACT DRILLING EQUIPMENT $242,987 $ 24,788 $ 9,095 $ 10 $258,690
PRODUCING OIL AND GAS PROPERTIES 189,327 18,272 7,060 (1,131) 199,408
UNDEVELOPED LEASES AND ROYALTIES 4,004 496 - - 4,500
REAL ESTATE PROPERTIES 19,061 1,655 220 - 20,496
CHEMICAL PLANT AND EQUIPMENT 6,170 556 - - 6,726
OTHER 22,648 3,510 1,444 (10) 24,704
--------- --------- ---------- ---------- ----------
$484,197 $ 49,277 $ 17,819 $ (1,131) $514,524
======== ======== ======== ======== ========
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-11
50
HELMERICH & PAYNE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
FOR THE YEAR ENDED SEPTEMBER 30, 1992
(In Thousands)
Column A Column B Column C Column D Column E Column F
Additions
Charged Other Changes
Balance at to Costs & Debit (Credit) Balance
Beginning Expenses Retirements -------------- at End of
CLASSIFICATION of Period (Note 1) or Sales Transfers Period
--------------- ----------- --------- ----------- -------------- ---------
CONTRACT DRILLING EQUIPMENT $227,276 $23,526 $ 7,914 $ 99 $242,987
PRODUCING OIL AND GAS PROPERTIES 172,245 18,794 2,843 1,131 189,327
UNDEVELOPED LEASES AND ROYALTIES 4,203 (199) - - 4,004
REAL ESTATE PROPERTIES 17,475 1,660 74 - 19,061
CHEMICAL PLANT AND EQUIPMENT 5,653 503 - 14 6,170
OTHER 20,042 3,255 658 9 22,648
-------- ------- ------- ------ --------
$446,894 $47,539 $11,489 $1,253 $484,197
======== ======= ======= ====== ========
NOTE:
(1) See Note 1 to the consolidated financial statements for the Company's
policies regarding provisions for depreciation, depletion and
amortization.
IV-12
51
HELMERICH & PAYNE, INC.
SCHEDULE X - SUPPLEMENTARY CONSOLIDATED INCOME STATEMENT
INFORMATION FOR THE YEARS ENDED
SEPTEMBER 30, 1994, 1993 AND 1992
COLUMN A COLUMN B
-------- --------
Charged to Costs
and Expenses
----------------
1994 1993 1992
------ ------ ------
(Amounts in thousands)
Maintenance and repairs $31,200 $23,145 $19,112
======= ======= =======
Taxes other than payroll and income taxes -
Production $ 3,661 $ 4,658 $ 3,567
Ad valorem 3,616 2,907 3,110
Other 3,006 2,765 2,098
------- ------- -------
$10,283 $10,330 $ 8,775
======= ======= =======
IV-13
52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized:
HELMERICH & PAYNE, INC.
By Hans Helmerich
-------------------------
Hans Helmerich, President
(Chief Executive Officer)
Date: December 16, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
By William L. Armstrong By Glenn A. Cox
-------------------------------- --------------------------------
William L. Armstrong, Director Glenn A. Cox, Director
Date: December 16, 1994 Date: December 16, 1994
By George S. Dotson By C. W. Flint, Jr.
-------------------------------- --------------------------------
George S. Dotson, Director C. W. Flint, Jr., Director
Date: December 16, 1994 Date: December 16, 1994
By Hans Helmerich By W. H. Helmerich, III
-------------------------------- --------------------------------
Hans Helmerich, Director and CEO W. H. Helmerich, III, Director
Date: December 16, 1994 Date: December 16, 1994
By George A. Schaefer By H. W. Todd
-------------------------------- --------------------------------
George A. Schaefer, Director H. W. Todd, Director
Date: December 16, 1994 Date: December 16, 1994
By John D. Zeglis By Douglas E. Fears
-------------------------------- --------------------------------
John D. Zeglis, Director Douglas E. Fears
Date: December 16, 1994 (Principal Financial Officer)
Date: December 16, 1994
By Gordon K. Helm
--------------------------------
Gordon K. Helm, Controller
(Principal Accounting Officer)
Date: December 16, 1994
IV-14
53
HELMERICH & PAYNE, INC.
Index to Exhibits Not Incorporated by Reference
Exhibit No. Page
- ----------- ----
13. Annual Report to Shareholders for fiscal 1994 54
22. Subsidiaries of the Registrant 90
23.1 Consent of Independent Public Accountants 91
23.2 Consent of Independent Auditors (Ernst & Young LLP) 92
27. Financial Data Schedule 93