Helmerich & Payne Annual Report 1994

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FY1994 Annual Report · Helmerich & Payne

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Helmerich & Payne, Inc. Annual Report for 1994

Highlights

Years Ended September 30,

1994

1993

Revenues

Net Income

$ 329,001,000

$ 315,097,000

$ 24,971,000

$ 24,550,000

Earnings Per Share

Dividends Paid Per Share

$ 1.02

$ .485

$ 1.01

$ .48

Capital Expenditures

$ 105,883,000

$ 54,209,000

Total Assets

$ 624,827,000

$ 610,935,000

HELMERICH & PAYNE, INC. IS A DIVERSIFIED, ENERGY-ORIENTED COMPANY
ENGAGED IN CONTRACT DRILLING, OIL AND GAS EXPLORATION AND PRO-
DUCTION, CHEMICALS MANUFACTURING, AND REAL ESTATE DEVELOPMENT
AND MANAGEMENT. THE COMPANY ALSO HOLDS SUBSTANTIAL EQUITY
INVESTMENTS IN SEVERAL OTHER PUBLICLY OWNED CORPORATIONS.

President’s Letter

To the Co-owners of Helmerich & Payne, Inc.

As never before in my lifetime, the American people sent shock
waves through the halls of Congress. Now the new Republican-
controlled House and Senate have a chance not only to reduce
spending and allow workers to keep more of their earnings, but
to address a more imposing challenge. By a margin of nearly
two-to-one, voters said the problems facing this country were not
primarily economic in nature, but were rooted in a dramatic social
and moral decline. In part, Washington, D.C. was held accountable
for the role it has played in contributing to this decline. George Will
observed that the voters simply said “Something is amiss when a
government that does not adequately deliver the mail delivers
condoms to children.”

Years of irresponsibility have recklessly damaged the reputation of
Congress, leaving only nineteen percent of the people confident
that their elected representatives will do the right thing. The first
order of business for this Congress will be to earn back the trust of
ordinary Americans.

Whether the relationship is between representative government
and the voters, between a business enterprise and its customers,
or within our own families, the importance of trustworthiness and
a good name is paramount to success. While a renewed commit-
ment to these old-fashioned values would well serve the 104th
Congress, it is also timely for us to reflect upon these values since
1995 marks the 75th anniversary of Helmerich & Payne, Inc.

My grandfather landed in the oil business by accident. After
spending World War I as a young officer and instructor pilot, he
left the service to manage an aerial circus until his small fleet of
bi-planes were all but lost in a West Texas thunderstorm. What little
survived, he traded for three cable-tool rigs in South Bend, Texas,
where he and his partner would drill a discovery well in 1920.

Growing up, I loved hearing stories of the
rough and tumble oil patch where the
Company’s history paralleled the early suc-
cess of the industry in Oklahoma’s Osage,
Tonkawa, and Oklahoma City fields; down
into East Texas; and over to the first efforts
of New Mexico’s Four Corners.

Deals were done over a handshake and a
man’s personal integrity was inseparable
from the business enterprise itself. Even as
the Company grew and prospered, keeping
your word, working hard, doing the right
thing, and caring about your people and
the customer never went out of fashion. I have heard Dad say a
thousand times that a good name is built over a lifetime, but lost
in an instant.

Today on drilling rigs all over the world, in operating and marketing
hundreds of oil and gas wells in the United States, and in supporting
chemical and real estate operations, there is a deep appreciation
and sense of responsibility that is shared by all of us who carry a
trusted name and a hard-earned reputation into our daily operations.

Our pledge is to approach the next seventy-five years with these
time-tested values etched clearly in our minds, remaining forever
indebted to the thousands of loyal Helmerich & Payne, Inc. co-
workers that have gone before us and kept the faith.

December 15, 1994

Sincerely,

Hans Helmerich
President

Drilling H E L M E R I C H & PAY N E I N T E R N AT I O N A L D R I L L I N G C O.

SUMMARY At the close of 1994, Helmerich & Payne
International Drilling Co. owned 65 land rigs and 11 off-
shore platform rigs which had an average utilization of
77 percent, compared with 69 percent the previous year.
Higher domestic activity is credited for revenue and pre-tax
income gains of 23 and 33 percent, respectively, in
1994. Pre-tax cash flow rose by 14 percent to $48.4 million,
compared with $42.4 million in 1993.

DOMESTIC OPERATIONS Domestic land rig utiliza-
tion averaged 66 percent for the year, compared with 48
percent in 1993. An average of 19 domestic land rigs
were fully utilized during 1994, compared with 15 land
rigs in 1993. In the third quarter, the Company acquired
substantially all of the equipment and property of Energy
Service Co.’s domestic land drilling operation based in
Alice, Texas. The purchase included 12 land rigs which
helped increase the Company’s domestic land fleet to 36
rigs by year-end.

Offshore operations consist of eight platform rigs in the Gulf
of Mexico, and three platform rigs plus two management
contracts for Exxon-owned platform rigs offshore
California. Utilization averaged 79 percent this year for
the Company’s 11 platform rigs, compared with 70 percent
for nine rigs in 1993. A full year of activity for two additional
rigs in the Gulf of Mexico and the Exxon management
contracts contributed significantly to the improved financial
performance in 1994.

INTERNATIONAL OPERATIONS At year-end, the
Company owned 29 land rigs in the countries of
Venezuela (15), Colombia (8), Ecuador (4), Trinidad (1),
and Yemen (1). Utilization averaged 88 percent in 1994,

compared with 68 percent in 1993. Although revenue
increased nine percent to $98.1 million, pre-tax earnings
declined by four percent due to higher operating costs in
Colombia and foreign exchange losses suffered in
Venezuela.

In 1994, the Company moved one rig to Colombia which
joined the work on BP Exploration’s Cusiana/Cupiagua
development, one rig was added in Ecuador for Maxus,
and two rigs were sent to Venezuela for Corpoven. For
1995, the Company received letters of intent for three-
year contracts on three additional land rigs from BP
Exploration in Colombia and one-year term contracts for
three land rigs from Corpoven in Venezuela. The
Company will utilize three existing domestic rigs as well
as other equipment purchases for these projects.

The Company recently began work on a joint venture
with Atwood Oceanics, Inc., a 24 percent owned affiliate,
to build a new generation offshore platform rig incorpo-
rating the latest technology in instrumentation and
remote control mechanization of drilling equipment. The
Company will manage the design, construction, testing,
and mobilization phases of the project. Rig operations
are scheduled to begin in 1996, and will be managed by
Atwood Oceanics, Inc., which has operated in Australia
for a number of years.

The Company is well positioned to perform in a
depressed and competitive environment. Whether the
work is of a conventional nature or entails complex
design and logistics, the Company will continue to focus
on delivering value to our customers.

Exploration & Production H E L M E R I C H & PAY N E , I N C .

SUMMARY Helmerich & Payne, Inc. engages in the
exploration, production, and acquisition of oil and natural
gas reserves primarily in the states of Oklahoma,
Kansas, Texas, and Louisiana. At the close of 1994, the
Company had proved oil and natural gas reserves of
6.7 million barrels and 290.7 billion cubic feet (Bcf),
respectively. This compares with reserves of 6.9 million
barrels of oil and 289.4 Bcf of natural gas in 1993.

PRODUCTION OVERVIEW In response to lower
prices, the Company reduced its natural gas production
to an average annual rate of 72,953 thousand cubic
feet (Mcf) per day, from 78,023 Mcf per day in 1993.
The average price received for natural gas fell to $1.72 per
Mcf compared with $1.84 the prior year. Oil production
increased slightly this year to 2,431 barrels per day
from 2,399 barrels per day in 1993. However, the average
price received for oil declined by over 15 percent to
$14.83 per barrel in 1994. Lower commodity prices and
natural gas production, coupled with higher exploration
expenses, contributed to a significant decline in revenue
and pre-tax income this year.

ACQUISITIONS The Company invested $23.1 million
in 1994 to purchase producing properties which had
estimated reserves of 19.9 Bcf of natural gas and
159,580 barrels of oil. Tight sands tax credits, high
BTU content natural gas, and several development
opportunities are also associated with these properties.

DRILLING AND EXPLORATION Of the 44 (15 net)
wells which the Company participated in during the
year, 37 (12.6 net) were classified as development and

seven (2.4 net) wells were classified as exploratory
risks. Ten (4.7 net) wells were completed as oil wells, 29
(8.7 net) wells were completed as natural gas wells, and
five (1.7 net) wells were dry holes. Exploration budget
reductions by major oil companies in the lower 48
states have opened a number of attractive exploration
opportunities in regions where technological advances
like 3-D seismic have not been fully utilized. This is
particularly true for some coastal regions in Louisiana
where the Company has five new prospects. The
Company added a total of six wildcat prospects in 1994
and participated in seven separate 3-D seismic programs.
The actual drilling on many of these prospects will not
begin until 1995.

A dual-leg horizontal well was completed during the
year in the Company’s Austin Chalk prospect in central
Louisiana and it is apparent that the well is marginal.
The Company is limiting its efforts to the western por-
tion of this prospect where Occidental Petroleum
Corporation has drilled a well which has produced
significant hydrocarbons in the early stages. The
Company intends to participate in an offset well in
1995 if the economic viability of Occidental’s discovery
well becomes more certain.

The strategy going forward remains focused on domestic
onshore acquisition, development, and exploration
opportunities, particularly in areas where the Company
can employ new drilling and seismic technologies.

Real Estate H E L M E R I C H & PAY N E P R O P E R T I E S , I N C .

SUMMARY Helmerich & Payne Properties, Inc. is
engaged in the leasing, acquisition, and development of
commercial real estate exclusively in the metropolitan area
of Tulsa, Oklahoma. At the close of 1994, the Company’s
property holdings consisted of approximately 1,652,311
leasable square feet which had an occupancy of 85 percent.

Financial Highlights

Years Ended September 30,

1994

1993

1992

Gross Revenues.......................................................................
Pre-Tax Income ........................................................................
Depreciation Expense ..............................................................
Capital Expenditures ................................................................
Year-End Book Value ...............................................................
Average Occupancy .................................................................

$ 7,803
4,460
1,624
916
26,065
83%

(in thousands)
$ 7,630
4,149
1,679
458
27,006
86%

$ 7,550
4,263
1,685
697
28,224
87%

UTICA SQUARE SHOPPING CENTER Consisting of 15
separate buildings including an eight-story medical com-
plex, Utica Square Shopping Center covers 30 landscaped
acres located approximately five minutes from downtown
Tulsa. Nearly 70 distinguished shops and restaurants make
up Utica Square’s tenant roster, including Ann Taylor, The
Gap, Laura Ashley, Miss Jackson’s, The Olive Garden,
Saks Fifth Avenue, and Williams-Sonoma.

A unique outdoor design allows Utica Square to host a
number of seasonal events each year, some of which have
become traditions in the Tulsa area. These attributes help
make Utica Square a distinctive shopping environment and
the cornerstone of the Company’s real estate portfolio.

INDUSTRIAL PROPERTIES The Company’s industrial
properties and undeveloped land holdings are located in the
southeastern part of Tulsa close to major transportation
arteries and key growth areas. Two of the properties are
classified as bulk warehouse developments and the
remaining four are combination office/warehouse properties.
Sluggish economic growth and an oversupply of industrial
space continues to hamper the occupancy and the rate
structure in this market segment. Occupancy for these
properties slipped to an average of 76 percent in 1994
from 80 percent the prior year.

The quality and location of the properties and land holdings
place the Company in a unique position to benefit from
growth in the Tulsa economy.

Summary of Property Owned
Property Name

Utica Square Shopping Center
Utica Square Offices and Medical Center
Plaza Office Building
Space Center
Space Center East
Tandem Business Park
Tulsa Business Park
Maxim Center
Maxim Place
Southpark

Description

Square Feet

Upscale Retail
Professional Offices
Corporate Offices
Industrial Warehouses
Industrial Warehouses
Office/Warehouse Complex
Office/Warehouse Complex
Office/Warehouse Complex
Office/Warehouse Complex
Undeveloped 257 Acres
Total Square Feet

405,709
94,969
86,899
495,000
202,500
88,084
204,600
40,800
33,750

1,652,311

Chemicals N AT U R A L G A S O D O R I Z I N G , I N C .

SUMMARY Natural Gas Odorizing, Inc. (NGO), a wholly-
owned subsidiary of Helmerich & Payne, Inc., is a leading
producer and marketer of mercaptan-based products used
primarily as warning odorants in natural and liquified
petroleum gas (LPG). The Company also produces simi-
larly composed products used as feedstocks and sulfiding
agents in other segments of the chemical industry.
The Company’s Baytown, Texas, facility obtains its primary
raw materials, hydrogen sulfide and olefins, from a neigh-
boring refinery. Raw materials are reacted and fractionated,
and then blended with other ingredients to yield the final
products. NGO’s primary customers are LPG distributors
and natural gas utility companies. Depending on the
customer’s needs, products are delivered in Company-
operated tank trucks or shipped in non-returnable containers
or reusable cylinders. Approximately eight percent of the
Company’s sales were made outside of North America in
1994, compared with 11 percent in 1993.
Price increases on LPG odorants helped the Company
achieve record financial results for the second consecutive
year in 1994. Although revenue and pre-tax income
increased over 1993 levels by 31 and 64 percent,
respectively, LPG odorant prices are expected to stabilize
in the coming year.

Financial Highlights

Years Ended September 30,

1994

Gross Revenues .................................................................................
Pre-Tax Income ..................................................................................
Depreciation Expense.....................................................................
Capital Expenditures ..........................................................................
Pounds of Product Sold ..................................................................

$ 18,849
5,994
654
619
8,071

1993
(in thousands)
$ 14,374
3,665
594
630
7,930

1992

$ 13,461
2,831
560
158
8,452

Revenues and Income by Business Segments

HELMERICH & PAYNE, INC.

Years Ended September 30,

1994

1993

1992

(in thousands)

SALES AND OTHER REVENUES:

Contract Drilling - Domestic ......................................
Contract Drilling - International ..................................

Total Contract Drilling Division .....................................

$ 86,521
98,111
184,632

$ 60,328
89,618
149,946

$ 41,171
72,250
113,421

Exploration and Production.......................................
Natural Gas Marketing.............................................

Total Oil and Gas Division ....................................

Chemical Division ...................................................
Real Estate Division ................................................
Investments and Other Income ..................................

58,884
51,889
110,773

18,849
7,803
6,944

69,795
63,858
133,653

14,374
7,630
9,494

54,525
40,535
95,060

13,461
7,550
10,208

Total Revenues ............................................................

$329,001

$315,097

$239,700

OPERATING PROFIT:

Contract Drilling - Domestic ......................................
Contract Drilling - International ..................................

Total Contract Drilling Division ...............................

$ 5,874
14,645
20,519

$ 122
15,281
15,403

$ (5,358)
10,929
5,571

Exploration and Production.......................................
Natural Gas Marketing.............................................

Total Oil and Gas Division ....................................

Chemical Division ...................................................
Real Estate Division ................................................

Total Operating Profit ...................................................

OTHER:

Miscellaneous operating ..........................................
Income from investments .........................................
General corporate expense ......................................
Interest expense.....................................................
Corporate depreciation ............................................

Total Other ........................................................

INCOME BEFORE INCOME TAXES, EQUITY IN INCOME

(LOSS) OF AFFILIATE, AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE:........................

3,245
1,525
4,770

5,994
4,460
35,743

(1,292)
6,303
(8,908)
(385)
(1,162)
(5,444)

19,495
667
20,162

3,665
4,149
43,379

(687)
9,050
(6,820)
(925)
(766)
(148)

9,764
1,864
11,628

2,831
4,263
24,293

(711)
9,202
(6,801)
(632)
(725)
333

$ 30,299

$ 43,231

$ 24,626

Note: This schedule is an integral part of Note 10 (page 27) of the financial statements that follow.

Management’s Discussion & Analysis of
Results of Operations and Financial Condition

HELMERICH & PAYNE, INC.

Results of Operations

Helmerich & Payne, Inc.’s net income for 1994 was $24,971,000
($1.02 per share), compared with net income of $24,550,000
($1.01 per share) in 1993, and $10,849,000 ($0.45 per share) in
1992. Net income in 1994 included a $4 million ($0.16 per share)
one-time reduction in the Company’s deferred income taxes from
the cumulative effect of adopting Statement of Financial
Accounting Standards No. 109. Included in the Company’s net
income, but not related to its operations, was net income from the
sale of investment securities which was nominal in 1994, but
totaled $1,780,000 ($0.07 per share) in 1993, and $1,193,000
($0.05 per share) in 1992. Also included was the Company’s
portion of income or losses of its equity affiliate, Atwood Oceanics,
Inc., (“Atwood”) which were $0.04 per share of income in 1994,
and per share losses of $0.02 in 1993, and $0.19 in 1992.

Company revenues increased to $329,001,000 in 1994, from
$315,097,000 in 1993, and $239,700,000 in 1992. The 31 percent
increase in total revenues from 1992 to 1993 resulted from
increased revenues in every operating segment of the Company.
The greatest revenue increases during 1993 were from domestic
drilling (47 percent), international drilling (24 percent), exploration
and production (28 percent) and natural gas marketing (58 percent).
Total revenue increased by 4 percent from 1993 to 1994, primarily
as a result of increases in domestic drilling (43 percent), interna-
tional drilling (9 percent), and chemical (31 percent) segments.

Revenues from exploration and production (16 percent decrease)
and natural gas marketing (19 percent decrease) fell appreciably
in 1994 as oil and natural gas prices and natural gas production
volume declined.

Income from investments declined to $6,303,000 in 1994, from
$9,050,000 in 1993, and $9,202,000 in 1992. From 1993 to
1994, dividend and interest income was stable, but income from
the sale of investment securities dropped from $2,914,000 to
$124,000 during that time. Interest and dividend income in 1994
was helped by higher market interest rates, even though cash

balances during the year were lower than the previous two years.
From 1992 to 1993, dividend and interest income declined by
$1,143,000 while income from investment securities rose by
$991,000.

Costs and expenses in 1994 were $298,702,000, 93 percent of
total operating revenues, compared with 89 percent in 1993 and
93 percent in 1992. Operating costs as a percentage of operating
revenues rose slightly to 66 percent in 1994, compared with 64
percent in 1993 and 63 percent in 1992. The increase from
1992 to 1993 was mainly due to Natural Gas Marketing revenues
rising by $23,323,000, while cost percentages for that division
remained very high. Other divisions’ operating cost percentages
remained stable or improved. The operating cost percentages
rose slightly in 1994 because of greater activity in the lower margin
domestic land drilling business and an increase in operating
expenses in the international contract drilling business.

General and administrative expenses increased to $8,908,000 in
1994, from $6,820,000 in 1993. There was little change from
1992 to 1993. The increase in 1994 was due primarily to
increased costs of employee healthcare benefits and, to a lesser
degree, a net increase in pension expense.

Income tax expense, as a percentage of pre-tax income, fell to 34
percent in 1994, from 42 percent in 1993, and 37 percent in 1992.
The increase from 1992 to 1993 was the result of an increase in the
corporate tax rate from 34 percent to 35 percent, a higher percentage
of international income which is taxed at higher rates, and a decline
in the deduction related to dividends received from domestic corpo-
rations. The effective tax rate for 1994 was substantially lower
because of the usage of foreign tax credit carryforwards, tight sands
tax credits, and a reduction in Venezuelan taxes as a result of
monetary correction tax laws enacted there.

CONTRACT DRILLING DIVISION revenues increased by 23 per-
cent from 1993 to 1994, and by 32 percent from 1992 to 1993.
Domestic drilling pre-tax income increased to $5,874,000 in 1994,
from a $5,358,000 pre-tax loss in 1992. During that period of time
the U.S. offshore platform rig business has shown substantial
improvement. The Company’s performance in its domestic land
rig operations has also improved. It is anticipated that domestic
operations will continue to improve as rig demand remains firm in
both the offshore platform and the land rig markets.

International revenues climbed to $98,111,000 in 1994, from
$89,618,000 in 1993, and $72,250,000 in 1992. Pre-tax
income for the international contract drilling sector declined
slightly to $14,645,000 in 1994, after increasing to $15,281,000 in
1993, from $10,929,000 in 1992. This year’s decline was due to
increased operating expenses in the Company’s Colombian
operations, and a significant foreign currency loss recorded in
Venezuela. The Company anticipates its pre-tax income from inter-
national operations will improve for the coming year based on
higher activity levels in both Colombia and Venezuela. After the
close of the year, the Company announced it was awarded letters
of intent for three additional deep land rigs to work in Colombia on
three-year term contracts and an additional three rigs for one-year
term contracts in Venezuela. With these additions, rig counts in
Colombia and Venezuela will increase to 11 and 18, respectively.

OIL AND GAS DIVISION revenue and operating income declined
significantly in 1994, after increasing substantially from 1992 to
1993. Exploration and production revenues increased 28 percent to
$69,795,000 in 1993, from $54,525,000 in 1992, and pre-tax
income increased to $19,495,000 from $9,764,000. The variation
mirrored natural gas prices and production volumes for the respective
years. From 1992 to 1993, natural gas prices increased from $1.39
per Mcf to $1.84 per Mcf, while production increased from 75.5
million cubic feet per day (MMcf/d) to 78.0 MMcf/d. From 1993 to
1994, natural gas prices fell to $1.72 per Mcf and production volumes
declined to approximately 73.0 MMcf/d. Crude oil production
increased 4 percent from 1992 to 1994, while the average price
per barrel fell from $19.16 in 1992, to $17.58 in 1993, and to
$14.83 in 1994.

Consequently, exploration and production revenues decreased to
$58,884,000 for 1994. Pre-tax income for 1994, which fell to
$3,245,000, was also affected by higher geophysical expenses and
an increase in leasehold abandonments, resulting primarily from a
reduction in the carrying value of the Company’s leasehold position
in its Austin Chalk prospect in south central Louisiana. It is
anticipated that higher geophysical charges will continue for the
coming year. Additionally, the Company intends to drill a higher
percentage of exploratory wells during 1995 and could incur higher
dry hole charges.

Natural gas marketing revenues, which are primarily derived from
selling natural gas produced by other companies (third party),
declined to $51,889,000 in 1994, from $63,858,000 in 1993.
Revenues were $40,535,000 in 1992. Pre-tax income was
$1,525,000 in 1994, $667,000 for 1993, and $1,864,000 for 1992.
During 1993, the natural gas marketing industry consolidated,
causing dramatic downward pressure on income derived from third
party natural gas sales. Industry conditions improved slightly in
1994. The Company’s approach has been to use the existing
capacity of its personnel and facilities to derive additional profit
from matching its customers with third party producers when the
marketing situation is not conducive for the sale of the Company’s
own natural gas. It is expected that competition will continue to
limit fees and premiums for third party natural gas sales.
Therefore, the Company does not anticipate significant growth in
income from third party sales in the coming year.

CHEMICAL DIVISION revenues increased by 31 percent from 1993
to 1994, and by 7 percent from 1992 to 1993. Pre-tax income
increased by 64 percent from 1993 to 1994, and by 29 percent
from 1992 to 1993. Product price increases and improved margins
account for the significant rise in revenues and income over the two
years. It is anticipated that revenues and income will continue to
improve during the coming year, but not as rapidly as this past year.

REAL ESTATE DIVISION revenues and income for 1994 were up
slightly due to the sale of a small parcel of land which resulted in a
$450,000 gain. Revenues and income from operations were flat
for the years 1993 and 1992. Occupancy and rental rates have
been stable to soft over the past two years with no major changes
expected for 1995.

FINANCIAL CONDITION
The Company has maintained a very strong balance sheet for
many years. Current ratios for the last three years have exceeded
2.5, while long-term debt as a percentage of total capitalization has
remained below 2 percent. During the first quarter of 1994, the
Company paid off all of its remaining long-term debt. The only
long-term liabilities that remain on the balance sheet are associated
with workers compensation and general liability accruals, deferred
income taxes, and other miscellaneous long-term payables and
deferred items.

Net cash provided by operating activities was $79,909,000 in
1994, $74,619,000 in 1993, and $63,331,000 in 1992. Capital
expenditures were $102,883,000 in 1994, $54,209,000 in 1993,
and $82,498,000 in 1992. It is anticipated that capital expenditures
in 1995 will exceed those of 1994. The Company has funded
capital expenditures in excess of its cash flow internally over the
past several years. However, the Company anticipates that it will
either sell a portion of its investment portfolio or incur debt in order
to fund planned capital expenditures for 1995. Capital expenditures
budgeted for 1995 include expanded exploration activities, rig
purchases and construction for Colombian and Venezuelan
operations, as well as the Company’s investment in a joint venture
with its equity affiliate, Atwood. The joint venture will construct a
new generation offshore platform rig for work offshore Australia.

The Company manages a large portfolio of marketable securities
which had a book value of $87,414,000 at September 30, 1994,
and a total market value at that time of $145,012,000, including its
investment in Atwood. During 1994, the Company paid a dividend
of $.485 per share which represented its 23rd consecutive year of
dividend increases.

Stock Portfolio Held by the Company

September 30, 1994

Number of
Shares

Book Value

Market Value

Schlumberger, Ltd....................................................
Atwood Oceanics, Inc......................................................
Sun Company, Inc. ..........................................................
Phillips Petroleum Company ............................................
Liberty Bancorp...............................................................
Oryx Energy Company ....................................................
Oneok.............................................................................
Other ..............................................................................
Total....................................................................

740,000
1,600,000
907,164
300,000
500,000
675,000
225,000

(in thousands,except
share amounts)

$ 23,511
20,743
10,637
7,470
7,270
6,433
2,751
8,599
$ 87,414

$ 40,238
22,800
26,081
10,275
16,750
9,366
3,796
15,706
$145,012

Consolidated Statements of Income

HELMERICH & PAYNE, INC.

Years Ended September 30,

1994

1993

1992

(in thousands,
except per share amounts)

REVENUES:

Sales and other operating revenues ....................................
Income from investments ..................................................

$322,698
6,303

$306,047
9,050

$230,498
9,202

COSTS AND EXPENSES:

Operating costs ..............................................................
Depreciation, depletion and amortization .............................
Dry holes and abandonments ............................................
Taxes, other than income taxes ..........................................
General and administrative................................................
Interest .........................................................................

329,001

315,097

239,700

213,427
50,068
10,369
15,545
8,908
385

194,856
48,609
6,893
13,763
6,820
925

145,778
47,738
3,214
10,911
6,801
632

298,702

271,866

215,074

INCOME BEFORE INCOME TAXES, EQUITY IN INCOME
(LOSS) OF AFFILIATE AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE .................................

30,299

43,231

24,626

INCOME TAX EXPENSE ..............................................................

10,232

18,279

9,192

EQUITY IN INCOME (LOSS) OF AFFILIATE,

net of income taxes .........................................................

904

(402)

(4,585)

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN

ACCOUNTING PRINCIPLE .....................................................

20,971

24,550

10,849

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE ...

4,000

NET INCOME.....................................................................

$ 24,971

$ 24,550

$ 10,849

PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN

ACCOUNTING PRINCIPLE ........................................................

.86

$ 1.01

$ .45

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE ....

.16

NET INCOME.....................................................................................

$ 1.02

1.01

$ .45

AVERAGE COMMON SHARES OUTSTANDING .........................

24,416

24,307

24,210

The accompanying notes are an integral part of these statements.

Consolidated Balance Sheets

HELMERICH & PAYNE, INC.

Assets

CURRENT ASSETS:

September 30,

1994

1993

(in thousands)

Cash and cash equivalents..................................................................
Short-term investments.......................................................................
Accounts receivable, less reserve of $1,480 and $608 ..............................
Inventories .......................................................................................
Prepaid expenses and other ................................................................

Total current assets .....................................................................

$ 29,447
8,997
59,897
20,995
3,603
122,939

$ 61,656
9,109
56,305
17,646
5,783
150,499

INVESTMENTS.....................................................................................

87,414

84,945

PROPERTY, PLANT AND EQUIPMENT, at cost:

Contract drilling equipment ..................................................................
Oil and gas properties ........................................................................
Real estate properties ........................................................................
Other ..............................................................................................

Less__Accumulated depreciation, depletion and amortization.....................

444,432
389,100
47,827
61,743

943,102
542,451

418,004
350,186
47,502
57,630

873,322
514,524

Net property, plant and equipment ..................................................

400,651

358,798

OTHER ASSETS ...................................................................................

13,823

16,693

TOTAL ASSETS ....................................................................................

$624,827

$610,935

The accompanying notes are an integral part of these statements.

Liabilities and Shareholders’ Equity

September 30,

1994

1993

(in thousands)

CURRENT LIABILITIES:

Accounts payable ..............................................................................
Accrued liabilities ..............................................................................
Current maturities of long-term debt ......................................................

$ 22,645
24,056

Total current liabilities ................................................................

46,701

$ 23,836
16,899
5,679
46,414

NONCURRENT LIABILITIES:

Long-term debt, less current maturities ..................................................
Deferred income taxes........................................................................
Other ..............................................................................................

Total noncurrent liabilities............................................................

44,462
9,330
53,792

3,600
44,723
7,271
55,594

SHAREHOLDERS’ EQUITY:

Common stock, $.10 par value, 80,000,000 shares authorized,

26,764,476 shares issued. ...............................................................

2,677

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

no shares issued............................................................................
Additional paid-in capital .....................................................................
Retained earnings .............................................................................

Lesstreasury stock, 2,054,364 shares in 1994 and 2,126,994 shares in 1993, at cost ......

Total shareholders’ equity............................................................

48,196
496,280

547,153
22,819

524,334

47,412

482,405

532,494
23,567

508,927

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY ..................................

$624,827

$610,935

The accompanying notes are an integral part of these statements.

Consolidated Statements of Shareholders’ Equity

HELMERICH & PAYNE, INC.

Common Stock
Shares Amount

Additional
Paid-In
Capital

Retained
Earnings

Treasury Stock
Shares Amount

(in thousands)

Balance, September 30, 1991 ............................. 26,764 $2,677

$45,894

Cash dividends ($.47 per share)......................
Exercise of stock options .....................................
Stock issued under Restricted Stock Award

Plan...............................................................
Amortization of deferred compensation ............
Net income.......................................................

527

343

Balance, September 30, 1992 ............................. 26,764

2,677

46,764

Cash dividends ($.48 per share)......................
Exercise of stock options ...................................
Lapse of restrictions on Restricted Stock

Awards ..........................................................
Amortization of deferred compensation ...........
Net income.......................................................

888

(240)

Balance, September 30, 1993 ............................. 26,764

2,677

47,412

Cash dividends ($.49 per share)......................
Exercise of stock options .................................
Lapse of restrictions on Restricted Stock

Awards ............................................................

Stock issued under Restricted Stock Award

Plan...............................................................
Amortization of deferred compensation ............
Net income .....................................................

549

(246)

481

$467,621
(11,533)

2,277 $(25,059)

(64)

(25)

675

275

2,188 (24,109)

(61)

542

2,127 (23,567)

(43)

415

(30)

333

(619)
1,636
10,849

467,954
(11,815)

1,716
24,550

482,405
(12,097)

(814)
1,815
24,971

Balance, September 30, 1994 ............................. 26,764 $2,677

$48,196

$496,280

2,054 $(22,819)

The accompanying notes are an integral part of these statements.

Consolidated Statements of Cash Flows

HELMERICH & PAYNE, INC.

Years Ended September 30,

1994

1993

1992

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income ........................................................................
Adjustments to reconcile net income to net
cash provided by operating activities-

$ 24,971

$ 24,550

$ 10,849

Depreciation, depletion and amortization...........................
Dry holes and abandonments .........................................
Cumulative effect of change in accounting principle................
Equity in (income) loss of affiliate before income taxes .........
Amortization of deferred compensation .............................
Gain on sale of securities...............................................
(Gain) loss on sale of fixed assets, other ...........................
Change in assets and liabilities-

Increase in accounts receivable....................................
Increase in inventories................................................
(Increase) decrease in prepaid expenses and other ...............
Increase (decrease) in accounts payable........................
Increase (decrease) in accrued liabilities ........................
Increase (decrease) in deferred income taxes........................
Increase (decrease) in other noncurrent liabilities.............

Total adjustments ......................................................

Net cash provided by operating activities.....................

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures, including dry hole costs ...........................
Proceeds from sale of property, plant and equipment ..................
Purchase of investments.......................................................
Proceeds from sale of investments..........................................
Purchase of short-term investments ........................................
Proceeds from sale of short-term investments ...........................

Net cash used in investing activities............................

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of long-term debt................................
Payments made on long-term debt..........................................
Dividends paid....................................................................
Proceeds from exercise of stock options...................................
Net cash used in financing activities ...........................

NET INCREASE (DECREASE) IN CASH AND CASH

50,068
10,369
(4,000)
(1,458)
1,815
(124)
(2,465)

(3,592)
(3,349)
5,050
(1,191)
1,617
3,739
(1,541)

54,938

79,909

(102,883)
5,971
(1,500)
373
(12)
124

(97,927)

(3,139)
(11,965)
913
(14,191)

48,609
6,893
__

435
1,716
(2,914)
(557)

(13,486)
(35)
(492)
7,523
(1,619)
5,600
(1,604)

50,069

74,619

(54,209)
4,801
(2,400)
7,904
(3,036)
7,055

(39,885)

2,070
(2,180)
(11,808)
1,254
(10,664)

47,738
3,214
__

4,956
1,636
(1,923)
774

(5,287)
(914)
(4,092)
2,350
411
(2,900)
6,519

52,482

63,331

(82,498)
2,701
(761)
6,283
(5,204)
20,603

(58,876)

3,460
(1,657)
(11,400)
1,201
(8,396)

EQUIVALENTS...................................................................
CASH AND CASH EQUIVALENTS, beginning of period .................
CASH AND CASH EQUIVALENTS, end of period .........................

(32,209)
61,656
$ 29,447

24,070
37,586
$ 61,656

(3,941)
41,527
$ 37,586

The accompanying notes are an integral part of these statements.

Notes to Consolidated Financial Statements

HELMERICH & PAYNE, INC.

September 30,1994,1993 and 1992

NOTE 1 SUMMARY OF ACCOUNTING POLICIES

CONSOLIDATION -
The consolidated financial statements include the accounts
of Helmerich & Payne, Inc. (the Company), and all of its
wholly-owned subsidiaries. Fiscal years of the Company’s
foreign consolidated operations are August 31 to facilitate
reporting of consolidated accounts.

YEARS
Contract drilling equipment ............................................. 4-10
Chemical plant and equipment ....................................... 10-25
Real estate buildings and equipment.............................. 10-50
Other ............................................................................... 3-33

TRANSLATION OF FOREIGN CURRENCIES -
The Company has determined that the functional currency
for its foreign subsidiaries is the U.S. dollar. Foreign cur-
rency transaction losses for the years 1994, 1993 and
1992 were $2,764,000, $493,000 and $392,000, respec-
tively.

PROPERTY, PLANT AND EQUIPMENT -
The Company follows the successful efforts method of
accounting for oil and gas properties. Under this method,
the Company capitalizes all costs to acquire mineral inter-
ests in oil and gas properties, to drill and equip exploratory
wells which find proved reserves and to drill and equip
development wells. Geological and geophysical costs,
delay rentals and costs to drill exploratory wells which do
not find proved reserves are expensed. Capitalized costs
of producing oil and gas properties are depreciated and
depleted by the unit-of-production method based on
proved developed oil and gas reserves determined by the
Company and reviewed by independent engineers.

The Company reserves for impairment of its oil and gas
properties whenever the net capitalized costs of total oil
and gas properties exceed the estimated undiscounted
future net revenues from proved reserves. Additionally, the
estimated undiscounted future revenues of high-cost
proved properties, based on prices at the time of the esti-
mate, are evaluated prior to start-up of commercial produc-
tion and any significant impairment is recognized currently.
Undeveloped leases are amortized based on management’s
estimate of recoverability. Costs of surrendered leases are
charged to the amortization reserve.

Substantially all other property, plant and equipment is
depreciated using the straight-line method based on the
following estimated useful lives:

CASH AND CASH EQUIVALENTS -
Cash and cash equivalents consist of cash in banks and
investments readily convertible into cash which mature within
three months from the date of purchase.

INVENTORIES -
Inventories, primarily materials and supplies, are valued at the
lower of cost (moving average or actual) or market.

DRILLING REVENUE -
Substantially all drilling contracts are daywork contracts and
drilling revenues and expenses are recognized as work pro-
gresses.

GAS IMBALANCES -
The Company recognizes revenues from gas wells on the
sales method, and a liability is recorded for permanent imbal-
ances.

INVESTMENTS -
Investments in companies owned less than 20 percent are
carried at cost with income recognized as dividends are
received. Investments in companies owned from 20 to 50 per-
cent are accounted for using the equity method with the
Company recognizing its proportionate share of the income or
loss of each investee.

The Company owned 24.3 percent of Atwood Oceanics, Inc.
(Atwood) at September 30, 1994 and 1993. The quoted mar-
ket value of the Company’s investment was $22,800,000 and
$17,200,000 at September 30, 1994 and 1993, respectively.
Retained earnings at September 30, 1994, include approxi-
mately $8,563,000 of undistributed earnings of Atwood.
Atwood is the only 20 to 50 percent owned affiliate at
September 30, 1994 and 1993.

Summarized financial information of the affiliated company accounted for on the equity method is as follows:

Gross revenues ..............................................................
Costs and expenses ........................................................
Net income ( loss) ...........................................................

Helmerich & Payne, Inc.’s equity in net income

(loss) of affiliates, net of income taxes ............................

Current assets ................................................................
Noncurrent assets ...........................................................
Current liabilities .............................................................
Noncurrent liabilities ........................................................
Shareholders’ equity ........................................................

Helmerich & Payne, Inc.’s investment...................................

1994

$ 68,045
(62,045)
$ 6,000

$ 904

$ 37,965
115,065
13,752
53,000
86,278

$ 20,743

1993

(in thousands)

$ 54,219
(56,010)
$ (1,791)

1992

$ 47,525
(68,593)
$ (21,068)

$ (402)

$ (4,585)

$ 27,903
122,356
11,900
58,609
79,750

$ 19,285

$ 29,876
135,566
12,087
71,269
82,086

$ 19,720

INCOME TAXES -
Effective October 1, 1993, the Company adopted FASB Statement No. 109, “Accounting for Income Taxes.” Under Statement
No. 109, deferred income taxes are computed using the liability method and are provided on all temporary differences between
the financial basis and the tax basis of assets and liabilities. For the years ended September 30, 1993 and 1992, deferred
income taxes are computed using the deferred method and are provided on timing differences between financial and taxable
income.

OTHER POST EMPLOYMENT BENEFITS -
The Company provides medical benefits to employees who retired before November 1, 1992. The Company does not provide
any other benefits to these retirees and will not provide any post retirement benefits to any person retiring after that date. The
liability for the benefits provided is not material.

The Company has accrued a liability for estimated workers compensation claims incurred. The liability for other benefits to former
or inactive employees after employment but before retirement is not material.

EARNINGS PER SHARE -
Earnings per share are based on the weighted average number of shares of common stock outstanding during the year.
Common stock equivalents are insignificant, and therefore, have not been considered in the earnings per share computation.

RECLASSIFICATIONS -
Certain reclassifications have been made in the 1993 and 1992 financial statements to conform to the 1994 presentation.

NOTE 2 LONG-TERM DEBT

Notes payable and long term debt consist of the following:

At September 30,

1994

1993

(in thousands)

Mortgage notes payable (at interest rates ranging from 9.25% to 10%)..................
Other long-term debt (at interest rates ranging from 6% to 7%) ............................

Less - Current maturities of long-term debt ......................................................

The Company has available a $20,000,000 bank line of credit under an agreement that expires March 15, 1995.

$ 3,139
6,140
9,279
5,679
$ 3,600

NOTE 3 FEDERAL INCOME TAXES

Effective October 1, 1993, the Company changed its method of accounting for income taxes from the deferred method to the
liability method required by FASB Statement No. 109, “Accounting for Income Taxes.” The cumulative effect of adopting Statement
No. 109 as of October 1, 1993 was to increase net income by $4,000,000. As permitted under the new rules, prior years
financial statements have not been restated.
The components of the provision for income taxes are as follows:

Years Ended September 30,

1994

1993

1992

(in thousands)

CURRENT:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DEFERRED:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TOTAL PROVISION:

3,645
2,763
777
7,185

(292)
3,430
(91)
3,047
10,232

6,190
5,106
911
12,207

3,174
2,616
282
6,072
18,279

4,690
6,985
551
12,226

(1,157)
(1,834)
(43)
(3,034)
9,192

The amounts of domestic and foreign income are as follows:

Years Ended September 30,

1994

1993

1992

INCOME BEFORE INCOME TAXES, EQUITY IN INCOME (LOSS)
OF AFFILIATE, AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE:

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,513
12,786
30,299

29,051
14,180
43,231

12,993
11,633
24,626

Effective income tax rates as compared to the U.S. Federal income tax rate are as follows:

Years Ended September 30,

1994

1993

1992

U.S. Federal income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends received deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess statutory depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of higher foreign tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35%
(2)
(1)
3
(1)

35%
(1)
(1)
7
2

34% 42%

34%
(4)
-
5
2
37%

The components of the Company’s net deferred tax liabilities are as follows:

DEFERRED TAX LIABILITIES:

Property, plant and equipment
Pension provision
Other

Total deferred tax liabilities

DEFERRED TAX ASSETS:
Financial accruals
Other

Total deferred tax assets

Valuation allowance

Net deferred tax assets

NET DEFERRED TAX LIABILITIES

September 30, 1994

$ 42,406
4,632
3,998
51,036

4,419
2,155
6,574

6,574
$ 44,462

The deferred income tax provision (benefit) for 1993 and 1992 results from timing differences in the recognition of revenue
and expense for income tax and financial reporting purposes. The sources of these differences and the related income
tax effect of each, are as follows:

Years Ended September 30,

1993

1992

(in thousands)

Effect of intangible development costs expensed for income tax purposes

over (under) costs amortized for financial reporting purposes

Financial under income tax depreciation .....................
Pension income ...........................................................
Geophysical expense...................................................
Insurance expense ......................................................
Amortization of deferred compensation .......................
Restricted stock options vesting ..................................
Deferred mobilization revenues ...................................
Sales of long-term investments ...................................
Excess depletion..........................................................
Oil and gas revenue recognition timing differences .....
Other............................................................................

$ 1,302
2,134
128
(51)
(36)
(652)
609
566
484
589
262
737
$ 6,072

$(1,085)
857
246
(532)
376
(605)
__
(1,745)
(76)
519
184
(1,173)
$(3,034)

NOTE 4 STOCK OPTIONS, AWARD PLAN AND RIGHTS
The Company has reserved 1,461,645 shares of its treasury stock to satisfy the exercise of stock options issued under the 1982
and 1990 Stock Option Plans. Options awarded under these plans are granted at prices equal to at least market price on the
date of grant. Options granted under the 1982 plan have a term of nine years while options granted under the 1990 plan have a
term of seven years. Options granted under both plans become exercisable in increments as outlined in the plans.
Activity for the incentive stock option plans, was as follows:

Years Ended September 30,

Outstanding at October 1, ................................................
Granted.............................................................................
Exercised..........................................................................
Cancelled .........................................................................

Outstanding at September 30, .........................................

Exercisable at September 30, ..........................................

Weighted average exercise price of options outstanding .

Weighted average exercise price of options exercised.....

1994
780,079
110,250
(46,510)
(7,940)
835,879
70,889
$ 25.65
$ 21.77

1993
860,713
__
(67,112)
(13,522)
780,079
19,782
$ 25.20
$ 21.53

1992
783,189
142,842
(65,318)
__

860,713
40,776
$ 24.93
$ 17.64

As of September 30, 1994, the Company has issued 360,000 shares of treasury stock under a Restricted Stock Award Plan (the
“Plan”) including 30,000 shares during 1994. The Company recognized deferred compensation totalling $12,832,000, which was
the fair market value of the stock at the time of issuance, as a reduction of retained earnings. Treasury stock was reduced by the book
value of the shares issued, $4,058,000. The difference was recognized as an increase in paid-in capital. The deferred compensation
is being amortized over a seven-year period as compensation expense. In both 1994 and 1993, restrictions lapsed with respect to
61,000 shares, and the shares were released to Plan participants.

On September 30, 1994, the Company had 24,710,112 outstanding common stock purchase rights (“Rights”). Each Right entitles the
holder thereof, until January 8, 1996, to buy one share of common stock at an exercise price of $60.00. The exercise price and the
number of shares of common stock issuable upon the exercise of the Rights are subject to adjustment in certain cases to prevent dilution.
The Rights are evidenced by the common stock certificates and are not exercisable or transferable apart from the common stock, until
15 days after a person acquires 15 percent or more of the common stock. In the event the Company is acquired in a merger or other
business combination transaction (including one in which the Company is the surviving corporation), it is provided that each Right will
entitle its holder to purchase, at the then current exercise price of the Right, that number of shares of common stock of the surviving
company, which at the time of such transaction, would have a market value of two times the exercise price of the Right. The
Rights do not have any voting rights and are redeemable, at the option of the Company, at a price of $.05 per Right prior to
any person or entity acquiring beneficial ownership of at least 15 percent of the common stock. The Rights expire on January
8, 1996. As long as the Rights are not separately transferable, the Company will issue one Right with each new share of
common stock issued.

NOTE 5 INVESTMENTS
Short-term investments consist mainly of treasury notes carried at cost, which approximates fair value, and are pledged as collateral for
a renewable letter of credit. The aggregate quoted market value of the marketable equity securities, excluding Atwood, was approxi-
mately $122,212,000 and $135,175,000 at September 30, 1994 and 1993, respectively. Aggregate cost, which is also carrying value,
was $66,671,000 and $65,660,000 at September 30, 1994 and 1993, respectively.
At September 30, 1994, gross unrealized gains and unrealized losses applicable to the marketable equity securities were approximately
$55,653,000 and $112,000, respectively. In 1994, 1993 and 1992, the Company realized gains from the sale of marketable equity secu-
rities of approximately $124,000, $2,914,000 and $1,920,000, respectively.
Effective October 1, 1994, the Company will be required to adopt FASB Statement No. 115, “Accounting for Certain Investments in
Debt and Equity Securities.” If the Company had adopted the new accounting standard effective September 30, 1994, investments
would have increased $55,541,000, deferred tax liabilities would have increased $21,106,000 and shareholders’ equity would have
increased $34,435,000.

NOTE 6 RETIREMENT PLANS

Defined Benefit Plans:

The Company has noncontributory pension plans covering substantially all of its employees, including certain
employees in foreign countries. The Company makes annual contributions to the plans equal to the maximum
amount allowable for tax reporting purposes. Future service benefits are determined using a 1.5 percent career
average formula.

The net periodic pension credit included the following components:

Years Ended September 30,

1994

Service cost-benefits earned during the year ..........................
Interest cost on projected benefit obligations ..........................
Return on plan assets..............................................................
Net amortization and deferral ..................................................

Net pension credit ...........................................................

$ 1,557
1,191
(2,639)
(302)

$ (193)

1993
(in thousands)

$ 1,304
1,105
(522)
(2,477)

$ (590)

1992

$ 1,172
896
(3,517)
726

$ (723)

The discount rate used in determining the actuarial value of the projected benefit obligation for 1994, 1993 and 1992 was
7.5%, 7.0% and 7.5%, respectively. The average expected rate of return on plan assets was 8.5% for 1994, 1993 and 1992.
The assumed rate of increase in compensation was 5.0% for 1994 and 5.5% for 1993 and 1992.

The following table sets forth the plans’ funded status and amounts recognized in the balance sheet:

Years Ended September 30,

1994

1993

(in thousands)

Actuarial present value of benefit obligations:

Vested benefit obligation ....................................................................

Accumulated benefit obligation ..........................................................

Projected benefit obligation................................................................

$ 13,323

$ 15,758

$ 17,755

$ 13,493

$ 15,649

$ 17,392

Plan assets at fair value, primarily listed stocks, U.S. Government

securities and guaranteed insurance contracts .................................

$ 33,317

$ 31,427

Projected benefit obligation less than plan assets .....................................
Unrecognized net gain, including unrecognized

net assets existing at October 1, 1987...............................................
Unrecognized prior service cost .................................................................
Prepaid pension cost..................................................................................

$ 15,562

$ 14,035

(5,589)
2,216
$ 12,189

(4,493)
2,455
$ 11,997

Defined Contribution Plan:

Substantially all employees on the United States payroll of the Company may elect to participate in the Company sponsored
Thrift/401(K) Plan by contributing a portion of their earnings. The Company contributes amounts equal to 100 percent of
the first five percent of the participant’s compensation subject to certain limitations. Expensed Company contributions
were $1,588,000, $1,304,000 and $1,216,000 in 1994, 1993 and 1992, respectively.

NOTE 7 ACCRUED LIABILITIES
Accrued liabilities consist of the following:

Years Ended September 30,

Accrued royalties payable...........................................................................
Accrued taxes payable ...............................................................................
Accrued workers compensation claims .....................................................
Accrued equipment cost.............................................................................
Other accrued liabilities ..............................................................................

1994

1993

(in thousands)

$ 6,293
4,669
2,364
3,000
7,730
$ 24,056

$ 8,179
3,004
1,100

4,616
$ 16,899

NOTE 8 SUPPLEMENTAL CASH FLOW INFORMATION

Years Ended September 30,

1994

1993

1992

Cash payments:
Interest paid ............................................................................
Income taxes paid....................................................................

Noncash investing activity:
Accrued equipment cost .....................................................

$ 371
9,516

$ 3,000

370

15,924

566
12,504

(in thousands)

NOTE 9 CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of temporary cash
investments and trade receivables. The Company places its temporary cash investments with high credit financial institutions and
limits the amount of credit exposure to any one financial institution. The Company’s trade receivables are primarily with a
variety of companies in the oil and gas industry. Management requires collateral for certain receivables of customers in its
natural gas marketing operations.

NOTE 10 SEGMENT INFORMATION

The Company operates principally in the contract drilling and oil and gas industries. The contract drilling operations consist of
contracting Company-owned drilling equipment primarily to major oil and gas exploration companies. Oil and gas activities consist
of ownership of mineral interests in productive oil and gas leases and undeveloped leases located primarily in Oklahoma, Texas,
Kansas and Louisiana. Intersegment sales, which are accounted for in the same manner as sales to unaffiliated customers, are
not material. Operating profit is total revenue less operating expenses. In computing operating profit, the following items have not been
considered: equity in earnings of Atwood Oceanics, Inc.; income from investments; general corporate expenses; interest expense; and
domestic and foreign income taxes. Identifiable assets by segment are those assets that are used in the Company’s operations in each
segment. Corporate assets are principally cash and cash equivalents, short-term investments and investments in marketable securities.

Revenues from one company doing business with the contract drilling segment accounted for approximately 14 percent and 11.8
percent of the total consolidated revenues during the years ended September 30, 1994 and 1993, respectively. Collectively,
revenues from three companies controlled by the Venezuelan government accounted for approximately 12.5 percent of total
consolidated revenues for the year ended September 30, 1992.

Summarized revenues and operating profit by industry segment for the years ended September 30, 1994, 1993 and 1992 are
located on page 11. Additional financial information by industry segment is as follows:

Years Ended September 30,

1994

1993
(in thousands)

1992

Identifiable assets:

Contract drilling - Domestic ..................................................
Contract drilling - International .............................................
Exploration and Production ..................................................
Natural Gas Marketing .........................................................
Chemical division .................................................................
Real Estate division .............................................................
Corporate and other.............................................................

Depreciation, depletion and amortization:

Capital expenditures:

$132,804
131,767
175,003
8,846
9,532
26,958
139,917
$624,827

$ 11,085
15,722
19,523
290
654
1,624
1,265
(95)
$ 50,068

$ 31,692
25,723
45,809
76
619
916
1,048
$105,883

$112,435
113,844
162,618
13,289
9,753
27,845
171,151
$610,935

$ 10,126
16,929
18,294
279
594
1,679
864
(156)
$ 48,609

$ 16,261
10,375
25,551
205
630
458
729
$ 54,209

$109,150
109,920
163,123
15,235
8,488
29,017
150,571
$585,504

$ 10,076
15,399
19,044
268
560
1,685
817
(111)
$ 47,738

$ 14,956
34,971
30,757
58
158
697
901
$ 82,498

NOTE 11 SUPPLEMENTARY FINANCIAL INFORMATION FOR OIL AND GAS PRODUCING ACTIVITIES

All of the Company’s oil and gas producing activities are located in the United States.

Results of Operations from Oil and Gas Producing Activities -

Years Ended September 30,

1994

Revenues ............................................................................
Production costs ..................................................................
Exploration expense and valuation provisions .......................
Depreciation, depletion and amortization ..............................
Income tax expense .............................................................
Total cost and expenses....................................................

Results of operations (excluding corporate overhead

$58,884
18,854
17,262
19,523
890
56,529

and interest costs) ............................................................

$ 2,355

1993
(in thousands)

$69,795
19,378
12,628
18,294
6,481
56,781

$13,014

1992

$54,525
18,492
7,225
19,044
3,173
47,934

$ 6,591

Capitalized Costs -

At September 30,

1994

1993

(in thousands)

Properties being amortized:

Proved properties .................................................................................................
Unproved properties .............................................................................................
Total costs being amortized ..............................................................................
Less-Accumulated depreciation, depletion and amortization...................................
Net ....................................................................................................................

$377,371
11,729
389,100
225,902
$163,198

$340,176
10,010
350,186
203,908
$146,278

Costs Incurred Relating to Oil and Gas Producing Activities -

Years Ended September 30,

1994

1993
(in thousands)

1992

Property acquisition:

Proved .............................................................................
Unproved..........................................................................
Exploration...........................................................................
Development........................................................................
Total..............................................................................

$ 23,115
4,893
12,418
12,888
$53,314

$ 3,100
2,409
11,769
13,964
$31,242

$11,441
9,140
10,138
4,656
$35,375

Estimated Quantities of Proved Oil and Gas Reserves (Unaudited) -
Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demon-
strate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.
Proved developed reserves are those which are expected to be recovered through existing wells with existing equipment and operating
methods. The following is an analysis of proved oil and gas reserves as estimated by the Company and reviewed by independent engineers.

OIL (Bbls.) GAS (Mmcf)

Proved reserves at September 30, 1991 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

Proved reserves at September 30, 1992 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

Proved reserves at September 30, 1993 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

7,074,405
560,703
697,006
(854,124)
40,389
(10,793)

7,507,586
(15,550)
168,051
(875,713)
140,411
(41,586)

6,883,199
302,200
261,114
(887,455)
159,580
(8,427)

296,229
(211)
4,565
(27,622)
21,643
(8)

294,596
9,568
10,083
(28,479)
4,196
(519)

289,445
(819)
8,818
(26,628)
19,900
(64)

Proved reserves at September 30, 1994 ...................................................................

6,710,211

290,652

Proved developed reserves at

September 30, 1992...............................................................................................

September 30, 1993...............................................................................................

September 30, 1994...............................................................................................

6,477,661

6,882,783

6,649,672

277,169

282,033

267,688

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited) -

The “Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves” (Standardized
Measure) is a disclosure requirement under Financial Accounting Standards Board Statement No. 69. The Standardized Measure
does not purport to present the fair market value of a company’s proved oil and gas reserves. This would require consideration of
expected future economic and operating conditions, which are not taken into account in calculating the Standardized Measure.
Under the Standardized Measure, future cash inflows were estimated by applying year-end prices to the estimated future produc-
tion of year-end proved reserves. Future cash inflows were reduced by estimated future production and development costs based
on year-end costs to determine pre-tax cash inflows. Future income taxes were computed by applying the statutory tax rate to the
excess of pre-tax cash inflows over the Company’s tax basis in the associated proved oil and gas properties. Tax credits and per-
manent differences were also considered in the future income tax calculation. Future net cash inflows after income taxes were dis-
counted using a ten percent annual discount rate to arrive at the Standardized Measure.

At September 30, 1994 1993

Future cash inflows ....................................................................................................
Future costs -

Future production and development costs ............................................................
Future income tax expense ...................................................................................
Future net cash flows.................................................................................................
10% annual discount for estimated timing of cash flows ...........................................
Standardized Measure of discounted future net cash flows ......................................

(in thousands)

$478,426

$651,369

(191,464)
(71,320)
215,642
(91,019)
$124,623

(207,633)
(119,070)
324,666
(145,909)
$178,757

Changes in Standardized Measure Relating to Proved Oil and Gas Reserves (Unaudited) _

Years Ended September 30, 1994 1993 1992

Standardized Measure - Beginning of year............................
Increases (decreases) -

Sales, net of production costs ............................................
Net change in sales prices, net of production costs ...........
Discoveries and extensions, net of related future

development and production costs.................................
Changes in estimated future development costs ...............
Development costs incurred ...............................................
Revisions of previous quantity estimates ...........................
Accretion of discount ..........................................................
Net change in income taxes ...............................................
Purchases of reserves-in-place..........................................
Sales of reserves-in-place..................................................
Timing and other ................................................................
Standardized Measure - End of year .....................................

(in thousands)

$178,757

$173,644

$124,776

(40,030)
(80,347)

9,653
(14,571)
12,888
483
23,678
20,942
11,219
(62)
2,013
$124,623

(50,417)
16,292

12,439
(7,624)
13,964
6,820
22,619
(12,656)
3,820
(652)
508
$178,757

(36,033)
61,468

12,688
(2,252)
4,656
2,125
15,936
(17,964)
15,734
(57)
(7,433)
$173,644

NOTE 12 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarter Ended

Dec. 31, March 31, June 30, Sept. 30,
1993 1994 1994 1994
(in thousands, except per share amounts)

Revenues ............................................................................... $82,186
14,149
Gross profit ............................................................................
Income before cumulative effect of change

in accouting principle..........................................................
Net income.............................................................................
Earnings per common share before cumulative

effect of change in accounting principle .............................
Earnings per share ................................................................

7,253
11,253

.30
.46

$87,883
12,701

$78,698
8,688

$80,234
4,054

6,155
6,155

.25
.25

4,660
4,660

.19
.19

Quarter Ended

2,903
2,903

.12
.12

Dec. 31, March 31, June 30, Sept. 30,
1992 1993 1993 1993
(in thousands, except per share amounts)

Revenues ............................................................................... $82,998
14,843
Gross profit ............................................................................
7,219
Net income.............................................................................
.30
Earnings per share ................................................................

$83,351
14,681
7,268
.30

$73,607
10,525
4,931
.20

$75,141
10,927
5,132
.21

Gross profit represents total revenues less operating costs, depreciation, depletion and amortization, dry holes and abandonments,
and taxes, other than income taxes.

Report of Independent Auditors

HELMERICH & PAYNE, INC.

The Board of Directors and Shareholders
Helmerich & Payne, Inc.

We have audited the accompanying consolidated balance sheet of Helmerich &
Payne, Inc. as of September 30, 1994, and the related consolidated statements of
income, shareholders’ equity, and cash flows for the year then ended. 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
audit. The consolidated balance sheet as of September 30, 1993 and the consoli-
dated statements of income, shareholder’s equity, and cash flows for each of the
two years in the period ended September 30, 1993, were audited by other auditors
whose report dated November 16, 1993, expressed an unqualified opinion on
those statements.

We conducted our audit in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain rea-
sonable assurance about whether the financial statements are free of material mis-
statement. 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 man-
agement, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 1994 financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Helmerich & Payne, Inc. at
September 30, 1994, and the consolidated results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting principles.

As discussed in Note 3 to the financial statements, effective October 1, 1993 the
Company adopted Statement of Financial Accounting Standards No.109,
“Accounting for Income Taxes.”

Tulsa, Oklahoma
November 22, 1994

Stock Price Information

Closing Market Price Per Share

1994

1993

QUARTERS HIGH LOW HIGH

First ..................................................
Second .............................................
Third .................................................
Fourth...............................................

$ 341/2
30
271/8
281/8

$ 261/2
26
251/8
255/8

$ 263/4
293/4
371/8
361/8

LOW
$221/4
223/8
291/4
311/2

Dividend Information

QUARTERS

Paid Per Share Total Payment

1994

1993 1994 1993

First .................................................. $.120 $.120
.120
Second .............................................. .120
.120
.120
Third .................................................
.120
Fourth................................................ .125

$2,956,498
2,960,098
2,960,314
3,087,902

$2,949,291
2,949,291
2,953,006
2,956,378

STOCKHOLDERS’ MEETING

The annual meeting of stockholders will be held
on March 1, 1995. A formal notice of the meet-
ing, together with a proxy statement and form of
proxy, will be mailed to shareholders about
January 26, 1995.

STOCK EXCHANGE LISTING

Helmerich & Payne, Inc. Common Stock is traded
on the New York Stock Exchange with the ticker
symbol “HP.” The newspaper abbreviation most
commonly used for financial reporting is “HelmP.”
Options on the Company’s stock are also traded
on the New York Stock Exchange.

STOCK TRANSFER AGENT AND REGISTRAR

Our Transfer Agent is responsible for our share-
holder records, issuance of stock certificates,
and distribution of our dividends and the IRS
Form 1099. Your requests, as shareholders,
concerning these matters are most efficiently
answered by corresponding directly with The
Liberty Bank of Oklahoma City at the following
address:

The Liberty National Bank and Trust Company
of Oklahoma City
Stock Transfer Department
P.O. Box 25848
Oklahoma City, Oklahoma 73125-0848
Telephone: (405) 231-6325

FORM 10-K

The Company’s Annual Report on Form 10-K,
which has been submitted to the Securities and
Exchange Commission, is available free of
charge upon written request.

DIRECT INQUIRIES TO:
President
Helmerich & Payne, Inc.
Utica at Twenty- First
Tulsa, Oklahoma 74114
Telephone: (918) 742-5531

Eleven-Year Financial Review

HELMERICH & PAYNE, INC.

Years Ended September 30,

1994

1993

1992

REVENUES AND INCOME*

Contract Drilling Revenues...............................................................
Crude Oil Sales ................................................................................
Natural Gas Sales ............................................................................
Gas Marketing Revenues** ..............................................................
Chemical Sales ................................................................................
Real Estate Revenues......................................................................
Dividend Income ..............................................................................
Other Revenues ...............................................................................
Total Revenues.................................................................................
Net Cash Provided by Operating Activities†† ..................................
Net Income†.....................................................................................

182,781
13,161
45,261
51,874
18,746
7,396
3,621
6,161
329,001
79,909
24,971

149,661
15,392
52,446
63,786
14,286
7,620
3,535
8,371
315,097
74,619
24,550

112,833
16,369
38,370
40,410
13,411
7,541
4,050
6,716
239,700
63,331
10,849

PER SHARE DATA

Net Income†.....................................................................................
Cash Dividends ................................................................................
Shares Outstanding*** .....................................................................

1.02
.485
24,710

1.01
.48
24,637

.45
.465
24,576

FINANCIAL POSITION

Net Working Capital* ........................................................................
Ratio of Current Assets to Current Liabilities ...................................
Investments*.....................................................................................
Total Assets* ....................................................................................
Long-Term Debt* ..............................................................................
Shareholders’ Equity*.......................................................................

76,238
2.63
87,414
624,827

524,334

CAPITAL EXPENDITURES*

Contract Drilling Equipment .............................................................
Wells and Equipment .......................................................................
Chemical Plant and Equipment........................................................
Real Estate.......................................................................................
Other Assets (includes undeveloped leases) ...................................
Total Capital Outlays ........................................................................

53,752
40,916
572
902
9,741
105,883

PROPERTY, PLANT AND EQUIPMENT AT COST*

Contract Drilling Equipment .............................................................
Producing Properties .......................................................................
Undeveloped Leases........................................................................
Chemical Plant and Equipment........................................................
Real Estate.......................................................................................
Other ................................................................................................
Total Property, Plant and Equipment................................................

444,432
377,371
11,729
12,417
47,827
49,326
943,102

104,085
3.24
84,945
610,935
3,600
508,927

24,101
23,142
540
436
5,990
54,209

418,004
340,176
10,010
11,845
47,502
45,785
873,322

82,800
3.31
87,780
585,504
8,339
493,286

43,049
21,617
104
690
17,038
82,498

404,155
329,264
12,973
11,305
47,286
43,810
848,793

* Thousand of dollars
** Gas Marketing activities began in 1990
*** 000’s omitted
†† Funds generated by operations for 1984-1985
† Includes cumulative effect of change in accounting for income taxes of $4,000,000 ($.16 per share) for 1994

1991 1990 1989 1988 1987 1986 1985 1984

105,364
17,374
35,628
10,055
12,674
7,542
5,285
20,024
213,946
52,110
21,241

90,974
16,058
37,697
10,566
12,067
7,636
7,402
56,144
238,544
55,422
47,562

78,315
14,821
33,013
__

10,754
7,778
9,127
17,361
171,169
67,099
22,700

75,985
14,001
26,154
__

11,265
7,878
10,069
15,213
160,565
57,967
20,150

64,718
15,223
17,251
__

9,603
7,561
9,757
34,766
158,879
38,337
22,016

68,220
20,020
21,308
__

8,471
6,839
11,033
29,244
165,135
54,756
7,025

90,647
32,447
28,335
__

8,778
5,658
10,878
18,054
194,797
72,552
18,498

91,970
31,367
32,780
__

8,473
5,282
11,008
10,727
191,607
66,927
21,439

.88
.46
24,488

1.97
.44
24,485

.94
.42
24,173

.83
.40
24,166

.91
.38
24,187

.28
.36
24,187

.74
.35
25,146

.85
.34
25,146

108,212
4.19
96,471
575,168
5,693
491,133

56,297
34,741
2,478
2,104
6,909
102,529

370,494
312,438
5,552
11,202
46,671
37,059
783,416

146,741
3.72
99,574
582,927
5,648
479,485

18,303
16,489
1,089
1,467
5,512
42,860

324,293
287,248
5,507
8,723
44,928
32,682
703,381

114,357
3.12
130,443
591,229
49,087
443,396

17,901
30,673
745
878
6,787
56,984

323,313
279,768
5,441
7,635
48,016
30,237
694,410

135,275
6.10
133,726
576,473
70,715
430,804

19,110
25,936
688
3,095
2,623
51,452

313,289
251,445
3,305
6,889
47,165
28,279
650,372

135,139
6.68
140,431
571,348
74,732
420,833

13,993
27,402
307
6,128
2,041
49,871

309,865
228,214
4,197
6,201
44,070
28,675
621,222

108,331
5.61
158,311
563,236
79,340
408,185

23,673
11,767
232
1,409
2,075
39,156

307,199
215,488
7,294
5,894
38,131
28,846
602,852

118,340
4.58
163,045
616,034
85,532
427,860

27,777
9,527
175
9,782
5,397
52,658

287,641
218,102
10,403
5,662
36,538
28,345
586,691

84,880
3.27
182,174
610,011
87,114
418,163

8,682
41,657
108
1,190
4,969
56,606

264,801
212,475
15,477
5,507
26,930
28,378
553,568

Eleven-Year Operating Review

HELMERICH & PAYNE, INC.

Years Ended September 30,

1994

1993

1992

CONTRACT DRILLING

Drilling Rigs, United States ................................................................
Drilling Rigs, International..................................................................
Contract Wells Drilled, United States.................................................
Total Footage Drilled, United States* .................................................
Average Depth per Well, United States .............................................
Percentage Rig Utilization, United States ..........................................
Percentage Rig Utilization, International............................................

47
29
162
1,842
11,367
69
88

42
29
128
1,504
11,746
53
68

39
30
100
1,085
10,853
42
69

PETROLEUM EXPLORATION AND DEVELOPMENT

Gross Wells Completed .....................................................................
Net Wells Completed .........................................................................
Net Dry Holes ....................................................................................

44
15
1.7

42
15.9
4.3

54
17.8
4.3

PETROLEUM PRODUCTION

Net Crude Oil and Natural Gas Liquids

Produced (barrels daily)................................................................
Net Oil Wells Owned — Primary Recovery........................................
Net Oil Wells Owned — Secondary Recovery...................................
Secondary Oil Recovery Projects ......................................................
Net Natural Gas Produced

(thousands of cubic feet daily) ......................................................
Net Gas Wells Owned........................................................................

2,431
202
71
14

72,953
341

2,399
202
71
14

78,023
307

2,334
220
74
14

75,470
289

NATURAL GAS ODORANTS AND
OTHER CHEMICALS

Chemicals Sold (pounds)* .................................................................

8,071

7,930

8,452

REAL ESTATE MANAGEMENT

Gross Leasable Area (square feet)* ..................................................
Percentage Occupancy......................................................................

1,652
83

1,656
86

1,656
87

TOTAL NUMBER OF EMPLOYEES

Helmerich & Payne, Inc. and Subsidiaries† .......................................

2,787

2,389

1,928

* 000’s omitted.
† 1984-1989 include U.S. employees only

1991

1990

1989

1988

1987

1986

1985

1984

46
25
106
1,301
12,274
47
45

49
20
119
1,316
11,059
50
46

49
20
108
1,350
12,500
44
30

48
18
115
1,284
11,165
45
16

50
19
110
1,182
10,745
39
30

48
19
110
1,384
12,582
44
47

47
19
111
1,477
13,306
65
41

44
19
132
1,529
11,583
60

45
20.2
4.3

36
15.3
3.4

45
15.2
2.8

45
14.6
1.6

18
5.2
.5

27
10.3
3.6

42
19.5
9.7

41
17.1
8.0

2,152
227
55
12

66,617
278

2,265
223
46
12

65,147
194

2,486
201
214
17

57,490
205

2,463
202
222
21

45,480
197

2,578
199
237
20

31,752
180

3,077
234
235
18

32,392
180

3,388
234
259
19

35,288
174

3,033
233
126
18

37,316
173

8,155

8,255

7,702

8,507

8,165

7,554

9,123

9,288

1,664
86

1,664
85

1,669
90

1,670
90

1,595
94

1,433
95

1,333
93

1,238
91

1,758

1,864

1,100

1,156

1,026

844

1,126

1,242

Directors

Officers

W. H. Helmerich, III
Chairman of the Board

Hans Helmerich
President and Chief Executive Officer

Allen S. Braumiller
Vice President,
Exploration

George S. Dotson
Vice President,
President of Helmerich & Payne
International Drilling Co.

Douglas E. Fears
Vice President,
Finance

Steven R. Mackey
Vice President, Secretary,
and General Counsel

James L. Payne
Vice President,
Real Estate

Steven R. Shaw
Vice President,
Production

W. H. Helmerich, III
Chairman of the Board,
Tulsa, Oklahoma

Hans Helmerich
President and Chief Executive Officer,
Tulsa, Oklahoma

William L. Armstrong
Chairman, Ambassador Media Corporation,
Denver, Colorado

Glenn A. Cox*
President and Chief Operating Officer, Retired,
Phillips Petroleum Co.,
Bartlesville, Oklahoma

George S. Dotson
Vice President,
President of Helmerich & Payne
International Drilling Co.,
Tulsa, Oklahoma

C. W. Flint, Jr.*
Chairman,
Flint Industries, Inc.,
Tulsa, Oklahoma

George A. Schaefer
Chairman and Chief Executive Officer, Retired,
Caterpillar Inc.,
Peoria, Illinois

Harry W. Todd
Chairman, CEO, and President, Retired,
Rohr Industries, Inc.,
Chula Vista, California

John D. Zeglis
Senior Vice President and General Counsel,
American Telephone & Telegraph Co.,
Basking Ridge, New Jersey

*Member, Audit Committee

Five-Year Production Review

Years Ended September 30,

1993

1992

1991

Barrels

1990

1989

OIL AND LIQUIDS
Annual Production ................................ 007,854,124 007,074,405 008,826,843 008,907,289 006,299,410
2,463
$15.54
6,299,410

Per Day Production ...........................
Average Price per Barrel ......................
Year-end Proved Reserves ..................

2,486
$16.34
8,618,850

2,265
$19.42
8,102,761

2,334
$19.16
7,507,586

2,152
$22.12
7,074,405

NATURAL GAS
Annual Production ................................
16,600,054
Per Day Production ...........................
45,480
Average Price per Mcf .........................
$1.44
Year-end Proved Reserves .................. 294,596,000 296,229,000 279,923,000 291,630,000 279,562,000

24,310,155
66,617
$1.35

20,983,983
57,490
$1.48

23,778,690
65,147
$1.48

27,622,018
75,470
$1.39

Thousand Cubic Feet (mcf)

Financial Highlights

Years Ended September 30,

1993

(in thousands)

Gross Revenues ...............................................................
Pre-Tax Income ................................................................
Depreciation Expense.......................................................
Capital Expenditures .........................................................
Year-end Book Value ........................................................
Average Occupancy .........................................................

$ 7,550
4,074
1,685
697
28,234
87%

1992

$ 7,558
3,722
1,633
2,190
29,194
86%

Financial Highlights

Years Ended September 30,

1993

1992
(in thousands)

1991

Gross Revenues .................................................................................
Pre-Tax Income ..................................................................................
Non-Cash Charges.........................................................................
Capital Expenditures ..........................................................................
Pounds of Product Sold ..................................................................

$ 7,550
4,074
1,685
697
28,234

$ 7,558
3,722
1,633
2,190
29,194

Summary of Property Owned
Property Name

Utica Square Shopping Center
Utica Square Offices and Medical Center
Plaza Office Building
Space Center
Space Center East
Tandem Business Park
Tulsa Business Park
Maxim Center
Maxim Place
Southpark/100 East Industrial Park

Description

Square Feet

406,260
94,969
90,156
495,000
202,500
88,084
204,600
40,800
33,750

1,656,119

Stock Portfolio Held by the Company

September 30, 1993

Number of
Shares

Carrying Amount
on Balance Sheet

Market Value
at End of
Fiscal Year

(in thousands,except
share amounts)

Schlumberger, Ltd....................................................
Atwood Oceanics, Inc......................................................
Sun Company, Inc. ..........................................................
Phillips Petroleum Company. ...........................................
Liberty Bancorp...............................................................
Oryx Energy Company ....................................................
Oneok.............................................................................
Other ..............................................................................
Total....................................................................

740,000
1,600,000
907,164
300,000
500,000
700,000
225,000

$ 23,511
19,285
10,637
7,470
7,270
6,683
2,751
7,338
$ 84,945

$ 49,303
17,200
25,854
10,125
17,000
17,150
5,006
10,737
$152,375

On November 11, 1993 approximately 1,000 plaintiffs filed a
lawsuit one of the Company’s subsidiaries, alleging person-
al injury and property damage arising out of the operation of
the subsidiary’s facility. The plaintiffs allege that the sub-
sidiary released dangerous chemicals and waste into the air
and ground water and are seeking actual damages of $500
million and punitive damages of $500 billion. This lawsuit is
one of three lawsuits filed simultaneously. A similar lawsuit
has been filed against another company and a class action
lawsuit was filed against virtually every chemical plant and
oil refinery in the area.
Management believes that the lawsuit is without merit and
that the ultimate monetary exposure is not material to the
financial statements because they believe that the Company
has complied in all material respects with applicable laws
and regulations.
The Company is also a defendant in other litigation arising
out of operations in the normal course of business. In the
opinion of management, after taking into account existing
legal reserves, none of the various other pending lawsuits
and proceedings should have a material adverse effect
upon the consolidated financial position or results of opera-
tions of the Company.