Helmerich & Payne Annual Report 1995

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FY1995 Annual Report · Helmerich & Payne

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Helmerich & Payne, Inc. Annual Report for 1995

Highlights

Years Ended September 30,

1995

1994

Revenues

Net Income

$ 325,776,000

$ 329,001,000

$ 9,751,000

$ 24,971,000

Earnings Per Share

Dividends Paid Per Share

$ .40

$ .50

$ 1.02

$ .485

Capital Expenditures

$ 111,776,000

$ 105,883,000

Total Assets

$ 710,165,000

$ 624,827,000

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.

In our fast paced lives, we easily forget to pause long enough to
reflect on our significant milestones.

The Company’s celebration of its 75th year anniversary provided
such an opportunity during 1995. The theme of that celebration
is captured by Peter Drucker when he suggests that people are
a Company’s only strategic asset. From the first days of the
partnership between my grandfather and Bill Payne, the Company
has been built on the principle that success springs from the
character and competency of its people.

The acceleration of change in today’s world and the challenge
of generating growth and economic returns in a stagnate energy
industry only act to underscore that our future will be measured
by our ability to carry forward the successful combination of talent
and integrity characteristic of the people that have served the
Company during its first 75 years.

On the first score, I am convinced we will continue to recruit and
develop a team with superior skills and training. In fact, today
we are stronger than ever and are building a roster loaded with
talent as we face the opportunities ahead.

But talent is not enough. It must be teamed together with the
inner qualities of integrity and trustworthiness.

This elusive quality of heart is more a matter of daily habit than
a slogan or catch phrase. It is not scripted by company policy,
but from deep inside, a kind of internal reflex of character. My
grandfather was fond of saying that you must always hire good
people and that life was just too short to do business with the
wrong people. Over the years, our nation has produced a good-
ness, a strength of character in its people that has fueled the
greatest economy and quality of life ever before in all of history.

Looking forward, does de Tocqueville’s classic observation that
America’s greatness is secured from the wellspring of her basic
goodness still hold true for our children? In his tour across
America, Colin Powell lamented that our society had lost its
sense of shame. Our young people are paying a terrible price.
We lead the industrialized world in illegitimate births, abortions,
teenage suicide, and violent crime while ranking at the bottom
in our elementary and secondary school achievement scores.

By its nature, the government cannot impart goodness, and
displacing parental responsibility with political compassion is
doomed to fail. We see our prisons and welfare rolls dominated
by the fatherless. If a young person’s core principles and
goodness of heart are nurtured from early childhood, shaped
and cultivated within families, then every business person and
citizen has a stake in their success. Strong families drive our future.

Scripture speaks of turning the hearts of the fathers to the children
and an African proverb says the raising of a child is so important
that it takes an entire village to do it.

While the government can play a role by reforming welfare and
reducing the crushing tax burden, only parents, families, rela-
tives, pastors, troop leaders, coaches, and teachers can build
and safeguard our nation’s most strategic asset, our children.

December 15, 1995

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 1995, Helmerich & Payne
International Drilling Co. owned 30 land rigs and 11 off-
shore platform rigs in the United States, and 35 land rigs
in the countries of Venezuela (18), Colombia (10),
Ecuador (4), Bolivia (2), and Trinidad (1). Financial
results in 1995 improved considerably over 1994 with
revenues and pre-tax operating profit increasing 11 and
38 percent, respectively.

INTERNATIONAL OPERATIONS The Company has had
operations in South America since the 1950’s and today
the region ranks among the most active contract drilling
arenas in the world. A total of nine rigs were moved to
South America in 1995, three of which were deployed to
Colombia for the Cusiana/Cupiagua development operated
by BP Exploration, and two rigs were moved to Bolivia for
Exxon and Total. Four rigs were sent to Venezuela and
one more was en route at the close of the fiscal year. For
the first time in several decades, Venezuela is encouraging
outside investment to develop its prolific oil and gas
resources. This change in policy is expected to stimulate
additional demand for drilling services in the future.

DOMESTIC OPERATIONS Land rig utilization aver-
aged 73 percent in 1995, compared with 66 percent the
previous year. An average of five more rigs worked
throughout the year than in 1994, primarily due to the
Company’s acquisition of ENSCO’s domestic land drilling
business in the third quarter of last year.

Offshore platform activity declined in 1995, with Company-
owned rigs averaging 66 percent utilization compared with
79 percent in 1994. Five rigs worked continually in the Gulf
of Mexico and two rigs offshore California. The Company

also provided labor and other services for two Exxon-owned
platform rigs located offshore California.

In the spring of 1995, Helmerich & Payne International
Drilling Co. was awarded a contract to design, build, and
operate an offshore platform rig for Shell Offshore Inc.’s
(SOI) Mars tension leg platform (TLP) in the Gulf of
Mexico. The Mars project, considered by many to be the
largest discovery in the Gulf of Mexico in more than 20
years, is scheduled to begin in the spring of 1996 and will
be set at a water depth exceeding 2,900 feet. The
Company was also awarded a letter of intent to build a
similar rig for SOI’s Ram-Powell project which is sched-
uled to begin in 1997. The Ram-Powell TLP will be set at
a water depth of approximately 3,200 feet. Deepwater
developments like these will be pivotal to the future of the
offshore oil and gas industry, and the Company is well posi-
tioned to participate at the forefront of this trend.

OUTLOOK Four points stand out among the myriad
issues and challenges facing the Company and this industry.
First, safety and the prevention of accidents is and will
continue to be a crucial objective. Second, the organiza-
tional structure needs to have the agility to respond
effectively in periods of both high and low demand. Third,
as customers continue to hone their organizations to
achieve better efficiency and productivity, this will create
opportunities for contractors to provide additional services.
Finally, each of these three points is contributing to the
formation of alliances between operators, contractors, and
other service companies. The Company is leading and
participating in several of these relationships, and is
committed to further enhancing its ability to add value to
the customer.

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

SUMMARY Helmerich & Payne, Inc. explores for,
develops, and acquires oil and natural gas reserves pri-
marily in the states of Oklahoma, Kansas, Texas, and
Louisiana. Additionally, the Company provides natural
gas marketing services through its wholly-owned sub-
sidiary, Helmerich & Payne Energy Services, Inc. At
year-end, the Company reported proved reserves of
approximately 280 billion cubic feet (Bcf) of natural gas
and 6.3 million barrels of oil. Reserves were approxi-
mately 290.7 Bcf and 6.7 million barrels in 1994.

PRODUCTION OVERVIEW Natural gas production
averaged 72,387 thousand cubic feet (Mcf) per day in
1995, compared with a 72,953 Mcf per day average in
1994. The average price received for natural gas fell by
45 cents per Mcf to $1.27 in 1995, reducing natural gas
revenue by 25 percent for the year. Oil production aver-
aged 2,214 barrels per day compared with 2,431 barrels
in 1994. The average price received per barrel of oil
increased to $16.37 per barrel in 1995, from $14.83 the
previous year.

FINANCIAL OVERVIEW Effective in 1995, the
Company adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121) “Accounting for the
Impairment of Long-Lived Assets” which resulted in a $20
million non-cash charge to pre-tax operating profit. Under
SFAS 121, the Company measures impairment to oil and
gas assets on a field-by-field basis, rather than using a
single cost center. This impairment charge, coupled with
the collapse of natural gas prices, had a significant negative
impact on the year’s financial results.

Financial Summary

Years Ended September 30,

1995

1994

1993

Oil Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Natural Gas Revenue . . . . . . . . . . . . . . . . . . . . . . .
Pre-tax Operating Profit (Loss) . . . . . . . . . . . . . . . .
Depreciation and Depletion . . . . . . . . . . . . . . . . . .
SFAS 121 Impairment . . . . . . . . . . . . . . . . . . . . . .
Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . .

$13,227
33,851
(23,961)
19,913
19,982
20,956

(in thousands)

$13,161
45,261
3,245
19,523

45,809

$15,392
52,446
19,495
18,294

25,551

DRILLING AND EXPLORATION The Company partici-
pated in the drilling of 59 (27.4 net) wells in 1995, 46
(24.1 net) of which were development wells, and 13 (3.3
net) were classified as exploratory wells. A total of 42
wells (21.5 net) were productive and 17 (5.9 net) wells
were dry holes.

During 1995, the Company increased its investment in
exploration prospects. The Company had working inter-
ests in several high profile, yet unsuccessful wells including
the Sealind 1-11 in Wyoming, and the Shadyside A-1 and
the Miami Fee #5 in Louisiana. In the Louisiana Austin
Chalk, the Company is exchanging or pooling some of its
acreage on the western side of this prospect for overriding
royalties or carried interests in exploratory drilling efforts.
The Company intends to minimize its financial exposure to
the exploratory phase of this prospect, while retaining an
acreage position for potential development opportunities.

OUTLOOK In September of 1995, the Company
restructured its Exploration and Production Division
around geographically focused teams. Each team will
review and develop drilling, workover, and acquisition
prospects for a specific region. The objective is to
enhance performance by refocusing on the Company’s
strengths in key geographic regions.

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 .

The purchase of Utica Square Shopping

SUMMARY
Center in 1964 marked the beginning of the Company’s
active involvement in Tulsa’s commercial real estate market.
Through its wholly-owned subsidiary, Helmerich & Payne
Properties, Inc., the Company owns 1,652,311 square feet
of leasable space and approximately 257 acres of undevel-
oped land. An increase in industrial leasing activity helped
move the Company’s occupancy level from an average of
83 percent in 1994, to 87 percent in 1995.

Pre-tax operating profit fell sharply in 1995, as the
Company adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121) which resulted in a write-
down in the book value of two combination office/ware-
house properties acquired in the mid-1980’s.

Financial Highlights

Years Ended September 30,

1995

1994

1993

Gross Revenues............................................................................
Pre-Tax Operating Profit ...............................................................
Depreciation Expense ...................................................................
SFAS 121 Impairment ...................................................................
Capital Expenditures.....................................................................
Year-End Book Value ....................................................................
Average Occupancy......................................................................

$ 7,570
2,157
1,623
2,000
907
23,353
87%

(in thousands)

$ 7,803
4,460
1,624

916
26,065
83%

$ 7,630
4,149
1,679

458
27,006
86%

UTICA SQUARE SHOPPING CENTER With its unique
outdoor design spread over 30 landscaped acres, Utica
Square Shopping Center is the cornerstone of the Company’s
real estate portfolio and a landmark in the Tulsa community.
Nearly 70 merchants and restaurants reside at Utica Square
including Ann Taylor, Banana Republic, The Disney Store,
Miss Jackson’s, The Limited, Pier 1, Saks Fifth Avenue and
Williams-Sonoma.

INDUSTRIAL PROPERTIES The Company’s industrial real
estate holdings consist of two bulk warehouse developments
encompassing 697,500 square feet and four combination
office/warehouse developments with a total of 367,234
square feet. All of the Company’s properties are located in
the southeastern section of Tulsa, proximate to major trans-
portation arteries. During 1994, the Company reorganized
its marketing strategy for these properties by outsourcing
leasing activities to a local broker specializing in industrial
properties. The additional exposure derived from this effort,
combined with an improved leasing climate, helped increase
occupancy from 77 percent at the end of 1994, to 90 percent
at the close of 1995.
Summary of Property Owned

Property Name

Description

Square Feet

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

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

OUTLOOK There are a number of positive signs in the
Tulsa economy which should help to continue the absorption
of excess commercial space into the next year. Tulsa was
the beneficiary of some significant expansion and relocation
decisions in 1995 and the aviation industry, one of the area’s
largest employers, appears to be enjoying a modest recov-
ery. While a development boom is not anticipated anytime
soon, the Company’s property holdings are well positioned
in the market to benefit from future growth of the Tulsa area.

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), is a leading
producer of mercaptan-based chemicals used as warning agents
in natural and liquified petroleum gas (LPG). In most North
American jurisdictions natural gas and LPG odorization is
required by law before the fuels can be sold for commercial or
residential purposes. On a smaller scale, NGO produces simi-
larly composed products which are used as sulfides or feed stock
in other processes within the chemical and refining industries.
The Company’s Baytown, Texas, plant neighbors an Exxon
refinery from which the Company receives its key raw materials,
hydrogen sulfide and olefins. Products are shipped in Company-
owned tank trucks or in returnable or non-returnable cylinders
to a customer base primarily made up of natural gas utilities
and LPG distribution companies. NGO competes with two
other suppliers in this small but highly competitive market.
Approximately nine percent of NGO’s sales came from outside
of North America in 1995, compared with eight percent in 1994.

Financial Highlights

Years Ended September 30,

1995

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

$ 19,055
6,221
672
859
7,670

1994

(in thousands)

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

1993

$ 14,374
3,665
594
630
7,930

Total revenue and operating profit finished at record levels
for the respective sixth and fifth consecutive years in 1995.
Product price increases were the major reason for improved
results over the past three years.

During 1995, an investment banking firm was retained to
advise the Company regarding the potential sale of Natural
Gas Odorizing, Inc.

Revenues and Income by Business Segments

HELMERICH & PAYNE, INC.

Years Ended September 30,

1995

1994

1993

(in thousands)

SALES AND OTHER REVENUES:

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

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

$ 93,890
110,695
204,585

$ 86,521
98,111
184,632

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

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

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

47,986
35,301
83,287

19,055
7,570
11,279

58,884
51,889
110,773

18,849
7,803
6,944

$ 60,328
89,618
149,946

69,795
63,858
133,653

14,374
7,630
9,494

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

$325,776

$329,001

$315,097

OPERATING PROFIT (LOSS):

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

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

$ 7,127
21,110
28,237

$ 5,874
14,645
20,519

$ 122
15,281
15,403

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:........................

(23,961)
1,892
(22,069)

6,221
2,157
14,546

(1,624)
10,846
(8,801)
(407)
(851)
(837)

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)

$ 13,709

$ 30,299

$ 43,231

Note: This schedule is an integral part of Note 11 (pages 27-28) 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 1995 was $9,751,000 ($0.40
per share), compared with net income of $24,971,000 ($1.02 per
share) in 1994, and $24,550,000 ($1.01 per share) in 1993. Net
income in 1995 includes a non-cash, non-recurring charge of
$13,600,000 ($0.55 per share) as a result of the Company’s adoption of
Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. Results for 1994 included $4 million ($0.16
per share) of income due to a one-time reduction in the Company’s
deferred income taxes from the cumulative effect of adopting SFAS No.
109, Accounting for Income Taxes.

Included in the Company’s net income, but not related to its operations,
were after-tax gains from the sale of investment securities of $3,481,000
($0.14 per share) in 1995, and $1,780,000 ($0.07 per share) in 1993.
Also included was the Company’s portion of income or losses of its
equity affiliate, Atwood Oceanics, Inc., which was $0.04 per share of
income in both 1995 and 1994, and a loss of $0.02 per share in 1993.

Company revenues declined slightly to $325,776,000 in 1995, from
$329,001,000 in 1994, and $315,097,000 in 1993. Although contract
drilling revenues rose by 11 percent this past year, oil and gas division
revenues declined by almost 25 percent, primarily due to lower natural
gas prices and production volumes. Total revenue increased by 4 per-
cent from 1993 to 1994, as a result of increases in domestic drilling (43
percent), international drilling (9 percent), and chemical (31 percent)
segments. Revenues from exploration and production (16 percent
decrease) and natural gas marketing (19 percent decrease) also fell
appreciably in 1994 as oil and natural gas prices and natural gas pro-
duction volume declined. Total revenues for 1996 are expected to be
slightly higher than for 1995 due to increased activity in international
contract drilling operations.

Revenues from investments rose to $10,846,000 in 1995, after declining
to $6,303,000 in 1994, from $9,050,000 in 1993. Gains from the sale
of investment securities were $5,697,000 in 1995, $124,000 in 1994
and $2,914,000 in 1993. Dividend income was stable during 1995,
1994 and 1993, but interest income steadily decreased as cash balances
and interest rates generally declined during these periods.

Costs and expenses in 1995 were $312,067,000, 96 percent of total
revenues, compared with 91 percent in 1994, and 86 percent in 1993.
Total costs for 1995 were abnormally high due to the adoption of SFAS
No. 121 which resulted in a total pre-tax impairment charge of
$22,000,000 recorded as additional depreciation, depletion, and amorti-
zation. Operating costs as a percentage of operating revenues declined
in 1995 to 1993 levels (64 percent) after rising slightly to 66 percent in
1994. The operating cost percentages rose slightly in 1994 because of
increased 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 of $8,801,000 in 1995 were down
slightly from $8,908,000 in 1994, and up significantly from $6,820,000
in 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. It is anticipated that 1996 general and administrative
expenses will increase slightly from 1995.

Income tax expense, as a percentage of pre-tax income, rose to 37 per-
cent in 1995, from 34 percent in 1994. The effective tax rate for 1994
was lower because of the usage of foreign tax credit carryforwards, tight
sands tax credits, and a reduction in Venezuelan taxes as a result of the
monetary correction tax law enacted there. The effective tax rate was
42 percent in 1993, prior to the enactment of the monetary correction
tax law in Venezuela.

CONTRACT DRILLING DIVISION revenues increased by 11 percent this
year, following a 23 percent increase from 1993 to 1994. Domestic
drilling operating profit increased to $7,127,000 in 1995, from
$5,874,000 in 1994 and $122,000 in 1993. From 1993 to 1994, the
Company’s U.S. offshore platform rig business improved significantly,
thereby helping boost revenue and income. During that time and con-
tinuing into 1995, the land rig operations also improved substantially,
aided by the 1994 purchase of Ensco’s south Texas land rig operations.
However, it is anticipated that 1996 domestic revenues and income will
not materially change from 1995 levels.

International revenues climbed to $110,695,000 in 1995, from
$98,111,000 in 1994, and $89,618,000 in 1993. Operating profit for
the international contract drilling sector improved by 44 percent to
$21,110,000 for 1995, compared with $14,645,000 in 1994 and
$15,281,000 in 1993. Revenues and profit margins in the Company’s
two most active international operations, Venezuela and Colombia,
improved significantly in 1995. The Company sent four new rigs to
Venezuela and three to Colombia, bringing rig counts in those countries
to 18 and 10, respectively. The Company anticipates its operating

profit from international operations will improve for the coming year
based on higher activity levels in both Colombia and Venezuela.

In 1994, the Venzuelan government fixed the exchange rate which resulted
in exchange losses for the Company totaling approximately $2,764,000.
During fiscal 1995, the currency exchange rates remained fixed, however,
the Company’s operating costs increased due to hyperinflation in the
Venezuelan economy. These higher costs were partially offset by the
purchase of currency at market rates using Brady Bonds. During the
first week of December 1995, the government reset the exchange rate,
increasing it from 170 Bolivars to 290 Bolivars to the U.S. dollar. It is
estimated that the Company will not experience a material loss, if any,
from this devaluation. It is uncertain when the government will reset the
exchange rate again but the Company does not expect losses from future
fluctuations in the exchange rate during 1996 to be material. The Company
will continue to purchase Brady Bonds to help offset a portion of any
future exchange losses or higher operating costs as a result of inflation.

OIL AND GAS DIVISION revenues and operating profit have declined
over the past two years due to a significant decrease in natural gas
prices from $1.84 per Mcf in 1993, to $1.72 in 1994 and $1.27 in 1995.
Natural gas production volumes also declined over the same period of
time from approximately 78 milion cubic feet a day (Mmcf/d) in 1993,
to 73 Mmcf/d in 1994, and 72.4 Mmcf/d in 1995. During 1995, the
Company elected to adopt SFAS No. 121, resulting in a $19,982,000
charge to the Oil and Gas Division.

Because of the decline in natural gas volumes and prices, revenues
fell from $69,795,000 in 1993, to $58,884,000 in 1994, and to
$47,986,000 in 1995. Operating profit over the same period fell from
$19,495,000 in 1993, to $3,245,000 in 1994, and to a loss of
$23,961,000 in 1995, which includes the $19,982,000 charge discussed
above. Dry-hole and abandonment charges for the oil and gas division
rose from $6,938,000 in 1993, to $8,932,000 in 1994, and to $8,981,000
in 1995. Abandonment charges in 1994 increased significantly due to
the reduction in the carrying value of the Company’s leasehold position in
its Austin Chalk prospect in south central Louisiana. Dry-hole expense
was up in 1995 due to increased exploratory activity during the year.

A lawsuit was filed in an Oklahoma state court in November of 1995
against Helmerich & Payne, Inc., in which five named plaintiffs, on behalf
of themselves and other unnamed plaintiffs, are demanding their royalty
share of a gas contract settlement. The plaintiffs are attempting to certify
a class which would contain certain of the Company’s lessors and certain
other mineral owners who own an interest in wells covered by such gas
contract settlement. The Company intends to vigorously defend this law-
suit. However, if a certified class is awarded a royalty share of the gas
contract settlement, then any such award could have a material impact

on income from continuing operations for the applicable quarter.
Management believes that any such award should not exceed approxi-
mately $2.7 million.

Natural gas marketing revenues, which are primarily derived from sell-
ing natural gas produced by other companies (third party), declined to
$35,301,000 in 1995, from $51,889,000 in 1994, and $63,858,000 in
1993. Operating profit was $1,892,000 in 1995, $1,525,000 in 1994,
and $667,000 in 1993. 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 mar-
keting 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 pre-
miums for third party natural gas sales. Therefore, the Company does
not anticipate significant growth in revenue and income from third party
sales in the coming year.

CHEMICAL DIVISION revenues increased by 1 percent from 1994 to
1995 to $19,055,000, and by 31 percent from 1993 to 1994. Operating
profit increased by 4 percent from 1994 to 1995 to $6,221,000, and by
64 percent from 1993 to 1994. Product price increases and improved
margins accounted for the significant rise in revenues and income in
1994. Growth flattened during 1995 as prices remained stable. The
Company has engaged an investment banking firm for the purpose of
advising the Company regarding the potential sale of its chemical opera-
tions in 1996. Specialty chemical companies appear to be valued at
premium prices at this time and the Company believes that, given an
attractive price, the timing may be appropriate to sell the Division.

REAL ESTATE DIVISION revenues for 1994 were up, compared to 1995
and 1993, due to the sale of a small parcel of land which resulted in a
$450,000 gain. Operating profit for 1995 was down significantly due to
a $2,000,000 charge to two properties in connection with the adoption of
SFAS No. 121. However, occupancy for 1995 was slightly improved
and it is anticipated that the division will return to normal levels of rev-
enues and income during 1996.

FINANCIAL CONDITION

The Company has maintained a very strong balance sheet for many
years with current ratios above 1.65 for the last three years and long-
term debt to total capitalization remaining below 2 percent for that same
period. During 1995, the Company signed a three-year agreement with
a syndicate of banks for a line of credit totaling $75 million. At year
end, $21,700,000 had been borrowed under the facility. This was the
first time the Company had gone to outside sources for capital funding
since the early 1980’s. Capital expenditures for the last two years were
over $100 million and exceeded the funds generated internally. It is

anticipated that during 1996 the capital expenditures will again exceed
$100 million and that additional borrowings will be necessary to fund
those expenditures. Cash flow provided by operating activities totaled
$88,572,000 for 1995, $79,909,000 for 1994, and $74,619,000 for
1993. It is anticipated that cash generated by operating activities will
increase again during the coming year due to improvement in rig utiliza-
tion and profitability in South America. As it did in 1993 and 1995, the
Company may choose to sell a portion of its investment portfolio to aid
in the funding of capital expenditures. Capital expenditures budgeted
for 1996 include continued exploration and development drilling activities,
major offshore platform rig construction projects for Gulf of Mexico
operations, and the completion of the Company’s investment in a joint
venture with its equity affiliate, Atwood Oceanics. 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 cost basis of $87,299,000 at September 30, 1995, and a total
market value at that time of $158,201,000, including its investment in
Atwood. During 1995, the Company adopted SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities, which resulted in
the balance sheet adjustment to market values for investments in com-
panies owned less than 20 percent. Accordingly, a deferred tax estimate
was added to deferred taxes under the liability section and the net
unrealized holding gains were reflected in the shareholders’ equity sec-
tion of the balance sheet. During 1995, the Company paid a dividend
of $.50 per share which represented the 24th consecutive year of
dividend increases.

Stock Portfolio Held by the Company

September 30, 1995

Number of
Shares

Book Value

Market Value

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

740,000
1,600,000
466,451
329,053
240,000
395,000
625,000
225,000

(in thousands,except
share amounts)

$ 23,511
22,495
5,742
3,192
5,976
5,743
6,032
2,751
11,857
$ 87,299

$ 48,378
32,100
12,011
9,172
7,800
14,516
8,125
5,231
20,868
$158,201

Consolidated Statements of Income

HELMERICH & PAYNE, INC.

Years Ended September 30,

1995

1994

1993

(in thousands,
except per share amounts)

REVENUES:

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

$314,930
10,846

$322,698
6,303

$306,047
9,050

COSTS AND EXPENSES:

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

325,776

329,001

315,097

200,240
77,115
10,096
15,408
8,801
407

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

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

312,067

298,702

271,866

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

13,709

30,299

43,231

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

5,044

10,232

18,279

EQUITY IN INCOME (LOSS) OF AFFILIATE,

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

1,086

904

(402)

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN

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

9,751

20,971

24,550

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE ...

4,000

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

$ 9,751

$ 24,971

$ 24,550

PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN

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

$ .40

.86

$ 1.01

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE ....

.16

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

.40

1.02

1.01

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

24,536

24,416

24,307

The accompanying notes are an integral part of these statements.

Consolidated Balance Sheets

HELMERICH & PAYNE, INC.

Assets

CURRENT ASSETS:

September 30,

1995

1994

(in thousands)

Cash and cash equivalents.................................................................. $ 19,661
8,989
Short-term investments.......................................................................
59,314
Accounts receivable, less reserve of $489 and $1,480 ..............................
21,313
Inventories .......................................................................................
5,717
Prepaid expenses and other ................................................................
114,994

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

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

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

156,908

87,414

PROPERTY, PLANT AND EQUIPMENT, at cost:

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

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

501,682
392,806
46,642
69,592

1,010,722
586,960

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

943,102
542,451

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

423,762

400,651

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

14,501

13,823

TOTAL ASSETS .................................................................................... $ 710,165

$624,827

The accompanying notes are an integral part of these statements.

Liabilities and Shareholders’ Equity

September 30,

1995

1994

(in thousands)

CURRENT LIABILITIES:

Accounts payable ..............................................................................
Accrued liabilities ..............................................................................
Notes payable...................................................................................

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

$ 26,382
21,529
21,700
69,611

$ 22,645
24,056

46,701

NONCURRENT LIABILITIES:

Deferred income taxes........................................................................
Other ..............................................................................................

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

66,047
12,072
78,119

44,462
9,330
53,792

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 .....................................................................
Net unrealized holding gains ................................................................
Retained earnings .............................................................................

Lesstreasury stock, 1,999,856 shares in 1995 and 2,054,364 shares in 1994, at cost ......

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

48,436
38,004
495,692

584,809
22,374

562,435

48,196

496,280

547,153
22,819

524,334

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

$710,165

$624,827

The accompanying notes are an integral part of these statements.

Consolidated Statements of Shareholders’ Equity

HELMERICH & PAYNE, INC.

Additional Unrealized

Net

Common Stock
Shares Amount

Paid-In
Capital

Holding
Gains

Retained
Earnings

Treasury Stock

Amount

(in thousands)

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

$467,954
(11,815)

2,188 $(24,109)

(61)

542

1,716
24,550

482,405
(12,097)

2,127

(23,567)

(43)

415

(814)

(30)

333

1,815
24,971

Balance, September 30, 1994 ............. 26,764

2,677

48,196

496,280

2,054

(22,819)

Adjustment to beginning balance for
change in accounting method, net
of income taxes of $21,106 ...........

Change in net unrealized holding

gains, net of income taxes of $2,187
Cash dividends ($.50 per share) ......
Exercise of stock options..................
Lapse of restrictions on Restricted
Stock Awards .................................
Forfeiture of restricted stock award ..
Amortization of deferred

compensation ...............................
Net income ......................................

34,435

3,569

859

(229)
(390)

(12,372)

(69)

615

560

(170)

1,473
9,751

Balance, September 30, 1995 ............. 26,764 $2,677

$48,436

$38,004

$495,692

2,000 $(22,374)

The accompanying notes are an integral part of these statements.

Consolidated Statements of Cash Flows

HELMERICH & PAYNE, INC.

Years Ended September 30,

1995

1994

1993

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

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

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 on sale of fixed assets, other ...................................
Change in assets and liabilities-

(Increase) decrease 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.....................

$ 9,751

$ 24,971

$ 24,550

77,115
10,096

(1,752)
1,473
(5,697)
(1,115)

583
(318)
(2,792)
2,675
(2,481)
(1,708)
2,742

78,821

88,572

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

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

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 ...........................

(110,760)
2,923
(12,858)
11,713

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

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

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

(108,975)

(97,927)

(39,885)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of long-term debt................................
Payments made on long-term debt..........................................
Proceeds from notes payable.................................................
Payments made on notes payable...........................................
Dividends paid....................................................................
Proceeds from exercise of stock options...................................
Net cash provided by (used in) financing activities .........

NET INCREASE (DECREASE) IN CASH AND CASH

(3,139)

2,070
(2,180)

(11,965)
913
(14,191)

(11,808)
1,254
(10,664)

37,100
(15,400)
(12,365)
1,282
10,617

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

(9,786)
29,447
$ 19,661

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

24,070
37,586
$ 61,656

The accompanying notes are an integral part of these statements.

Notes to Consolidated Financial Statements

HELMERICH & PAYNE, INC.

September 30, 1995,1994 and 1993

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.

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 gain for 1995 was $1,845,000 with losses
for the years 1994 and 1993 of $2,764,000, and $493,000,
respectively.

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.
Undeveloped leases are amortized based on management’s
estimate of recoverability. Costs of surrendered leases are
charged to the amortization reserve.

Effective July 1, 1995, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121,
“Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of”, which requires
impairment losses to be recognized for long-lived assets
used in operations when indicators of impairment are pre-
sent and the undiscounted cash flows are not sufficient to
recover the assets carrying amount. The impairment loss
is measured by comparing the fair value of the asset to its
carrying amount. Under the new statement, the Company
now evaluates impairment of exploration and production
assets on a field by field basis rather than using one world-
wide cost center for its proved properties. Fair values are
based on discounted future cash flows or information pro-
vided by sales and purchases of similar assets.

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

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

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 progresses.

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

INVESTMENTS -
Prior to October 1, 1994, investments in companies owned less
than 20 percent were carried at the lower of cost or market. The
Company adopted SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”, effective October 1,
1994. SFAS No. 115 requires that the Company’s investments in
companies owned less than 20 percent, all of which are consid-
ered available-for-sale securities, be carried at their fair value.
Upon adoption of SFAS No. 115, the Company recorded an
increase to shareholders’ equity of $34 million, which is net of
income taxes of $21 million.

The Company determines fair value of its investments in com-
panies owned less than 20 percent based on quoted market
prices. The cost of securities used in determining realized
gains and losses is based on average cost of the security sold.

Investments in companies owned from 20 to 50 percent are
accounted for using the equity method with the Company recog-
nizing its proportionate share of the income or loss of each
investee. The Company owned 24.14 percent and 24.3 percent of
Atwood Oceanics, Inc. (Atwood) at September 30, 1995 and
1994, respectively. The quoted market value of the Company’s
investment was $32,100,000 and $22,800,000 at September 30,
1995 and 1994, respectively. Retained earnings at September 30,
1995 include approximately $10,315,000 of undistributed earnings
of Atwood. At September 30, 1995, the Company also had invest-
ed $8.3 million in a joint venture with Atwood to build and operate
a new generation offshore platform drilling rig, which is currently
under construction. The Company has a receivable from Atwood
of $2.2 million related to the construction of the drilling rig.

Summarized financial information of Atwood 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...................................

1995

$ 77,315
(70,255)
$ 7,060

$ 1,086

$ 34,266
118,587
20,505
37,456
94,892

$ 22,495

1994

(in thousands)

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

$ 904

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

$ 20,743

1993

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

$ (402)

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

$ 19,285

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 year ended September 30, 1993, 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. The liability for the benefits provided is not material. Effective October 1, 1995, the
Company offered medical benefits to employees who retired after November 1, 1992, with retirees to pay the entire estimated
cost of such benefits.

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.

NOTE 2 SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS

The Company maintains a line of credit agreement with certain banks which provides for maximum borrowing of $75,000,000 at
adjustable interest rates. Under the agreement, $75,000,000 may be borrowed through May 1996, and $45,000,000 may be bor-
rowed through May 1998. As of September 30, 1995, the Company had borrowed $21,700,000 at a weighted average interest
rate of 7.27%, leaving an unused portion of $53,300,000. Under the line of credit agreement, the Company must meet certain
requirements regarding levels of debt, net worth and earnings.

The Company has an additional $8.5 million uncommitted line of credit with a bank which can be used primarily for letters of
credit.

NOTE 3 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,

1995

1993

1994
(in thousands)

CURRENT:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,102
6,442
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
370
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,914

DEFERRED:

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

TOTAL PROVISION:

The amounts of domestic and foreign income are as follows:

(3,155)
534
(249)
(2,870)
$ 5,044

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

Years Ended September 30,

1995

1994
(in thousands)

1993

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

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (5,816)
19,525
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 13,709

17,513
12,786
30,299

29,051
14,180
43,231

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

Years Ended September 30,

1995

1994

1993

U.S. Federal income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends received deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess statutory depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of higher foreign tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-conventional fuel source credits utilized . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35%
(4)
(2)
11
(5)
2
37%

35%
(2)
(1)
3
(1)
-
34%

35%
(1)
(1)
7
-
2
42%

The components of the Company’s net deferred tax liabilities are as follows:
1995

Years Ended September 30,

1994

(in thousands)

DEFERRED TAX LIABILITIES:

Property, plant and equipment
Available-for-sale securities
Pension provision
Equity Investment
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

$ 40,702
23,293
4,774
3,920
846
73,535

5,376
2,112
7,488

7,488
$ 66,047

$ 42,406

4,632
3,254
744
51,036

4,419
2,155
6,574

6,574
$ 44,462

The deferred income tax provision (benefit) for 1993 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:

Year Ended September 30,

1993
(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

NOTE 4 STOCK OPTIONS, AWARD PLAN AND RIGHTS
The Company has reserved 1,361,681 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.....

1995
835,879
107,750
(78,094)
(24,264)
841,271
110,399
$ 26.39
$ 19.68

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

As of September 30, 1995, the Company has issued 360,000 shares of treasury stock under a Restricted Stock Award Plan (the
“Plan”). 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. The deferred compensation is being amortized over a seven-year period as
compensation expense. The unamortized balance at September 30, 1995 and 1994 was $3,189,000 and $5,223,000, respectively.
In 1995, 1994, and 1993, restrictions lapsed with respect to 61,000 shares, and the shares were released to Plan participants. In
1995 there was a forfeiture of 15,000 shares.
On September 30, 1995, the Company had 24,764,620 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 FINANCIAL INSTRUMENTS
Short-term investments consist mainly of U.S. treasury notes carried at cost, which approximates fair value, and are pledged as collateral
for a renewable letter of credit. Notes payable bear interest at market rates and is carried at cost which approximates fair value.
The following is a summary of available-for-sale securities, which excludes those accounted for under the equity method of
accounting (see Note 1):

Gross Gross Estimated

Unrealized Unrealized Fair

Cost Gains Losses Value
(in thousands)

Equity Securities, September 30, 1995 $64,804 $61,455 $158 $126,101

During the years ended September 30, 1995, 1994, and 1993, marketable equity available-for-sale securities with a fair value at the date
of sale of $11,713,000, $373,000 and $7,904,000, respectively, were sold. The gross realized gains on such sales of available-for-sale
securities totaled $5,734,000, $124,000, and $3,579,000, respectively, and the gross realized losses totaled $37,000, $0, and $665,000,
respectively.

NOTE 6 IMPAIRMENT OF LONG-LIVED ASSETS

Adoption of SFAS No. 121, effective July 1, 1995, resulted in a before-tax charge of $22 million which is included in depreciation,
depletion and amortization expense. The charge reduced 1995 after-tax net income by $13.6 million, or $.55 per share. The
before-tax charges included $20 million for proved Exploration and Production properties and $2 million for Real Estate proper-
ties. The fair values of the proved properties were determined using the present value of expected future net cash flows. The
fair values of the impaired real estate properties were determined based on the estimated sales price of comparable assets.

NOTE 7 EMPLOYEE BENEFIT 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,

1995

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

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

$ 1,589
1,301
(2,798)
(301)

$ (209)

1994
(in thousands)

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

$ (193)

1993

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

$ (590)

The discount rate used in determining the actuarial value of the projected benefit obligation for 1995, 1994 and 1993 was 7.25%,
7.5% and 7.0%, respectively. The average expected rate of return on plan assets was 8.5% for 1995, 1994 and 1993. The assumed
rate of increase in compensation was 5.0% for 1995 and 1994, and 5.5% for 1993.

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

Years Ended September 30,

1995

1994

(in thousands)

Actuarial present value of benefit obligations:

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

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

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

$ 16,199

$ 19,215

$ 21,735

$ 13,323

$ 15,758

$ 17,755

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

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

$ 38,114

$ 33,317

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..................................................................................

$ 16,379

$ 15,562

(5,959)
1,978
$ 12,398

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

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 $1,735,000,
$1,588,000 and $1,304,000 in 1995, 1994 and 1993, respectively.

NOTE 8 ACCRUED LIABILITIES

Accrued liabilities consist of the following:

Years Ended September 30,

1995

1994

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

(in thousands)

$ 5,977
3,109
2,430
4,017
5,996
$ 21,529

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

NOTE 9 CONCENTRATIONS OF CREDIT RISK

Years Ended September 30,

1995

1994

1993

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

$ 408
4,624

(in thousands)

371
9,516

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

$ 1,016

$ 3,000

370

15,924

NOTE 10 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 11 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 con-
sist 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 cus-
tomers, 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 18 percent, 14 per-
cent, and 11.8 percent of the total consolidated revenues during the years ended September 30, 1995, 1994 and 1993, respec-
tively. Collectively, revenues from three companies controlled by the Venezuelan government accounted for approximately 13.4
percent of total consolidated revenues for the year ended September 30, 1995.

Summarized revenues and operating profit by industry segment for the years ended September 30, 1995, 1994 and 1993 are
located on page 11. Additional financial information by industry segment is as follows:

Years Ended September 30,

1995

1994

1993

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:

$138,359
188,587
142,184
10,192
9,822
24,380
196,641
$710,165

$ 12,213
19,557
39,895
298
672
3,623
959
(102)
$ 77,115

$ 32,503
55,044
20,956
252
859
907
1,255
$111,776

(in thousands)

$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

NOTE 12 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,

1995

1994

1993

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

$ 47,986
18,035
14,017
39,895
(7,243)
64,704

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

$(16,718)

(in thousands)

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

$ 2,355

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

$13,014

Capitalized Costs -

At September 30,

1995

1994

(in thousands)

Properties being amortized:

Proved properties .................................................................................................
Unproved properties .............................................................................................
Total costs being amortized ..............................................................................
Accumulated depreciation, depletion and amortization........................................
Net Capitalized Costs .......................................................................................

$384,755
8,051
392,806
257,988
$134,818

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

Costs Incurred Relating to Oil and Gas Producing Activities -

Years Ended September 30,

1995

1994

1993

(in thousands)

Property acquisition:

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

$ 1,228
1,565
13,497
9,703
$25,993

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

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

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, 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 .........................................................................................

Proved reserves at September 30, 1994 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

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)

6,710,211
124,361
328,539
(808,058)
310
(26,251)

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

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

290,652
5,222
8,775
(26,421)
1,934
(116)

Proved reserves at September 30, 1995 ...................................................................

6,329,112

280,046

Proved developed reserves at

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

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

September 30, 1995...............................................................................................

6,882,783

6,649,672

6,270,216

282,033

267,688

262,319

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, 1995 1994

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)

$429,259

$478,426

(173,633)
(63,183)
192,443
(81,509)
$110,934

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

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

Years Ended September 30, 1995 1994 1993

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..................................................
Other ..................................................................................
Standardized Measure - End of year .....................................

$124,623

(29,951)
(12,917)

8,179
(4,672)
9,703
2,825
16,171
(7,538)
1,202
(51)
3,360
$110,934

(in thousands)
$178,757

(40,030)
(80,347)

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

$173,644

(50,417)
16,292

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

NOTE 13 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarter Ended

Dec. 31, March 31, June 30, Sept. 30,
1994 1995 1995 1995
(in thousands, except per share amounts)

Revenues .............................................................................
Gross profit (loss) ..................................................................
Net income (loss)1 .................................................................
Earnings (loss) per share.......................................................

$79,944
8,909
4,416
.18

$79,301
11,550
5,820
.24

$78,756
9,389
4,584
.19

$87,775
(6,931)
(5,069)
(.21)

Quarter Ended

Dec. 31, March 31, June 30, Sept. 30,

1993 1994 1994 1994

(in thousands, except per share amounts)

Revenues ...............................................................................
Gross profit ............................................................................
Income before cumulative effect of change

in accounting principle........................................................
Net income 2 ..........................................................................
Earnings per common share before cumulative

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

$82,186
14,149

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

2,903
2,903

.12
.12

Gross profit (loss) represents total revenues less operating costs, depreciation, depletion and amortization, dry holes and abandon-
ments, and taxes, other than income taxes.

1 The quarter ended September 30, 1995 included an after-tax charge of $13.6 million ($.55 per share) related to the Company adopting SFAS

No. 121 (see note 6).

2 The quarter ended September 30, 1994 included an after-tax charge of $2.7 million ($.11 per share) for impairment of leases ($1.35 million)

and dry-hole costs ($1.35 million) in the Austin Chalk prospect in Louisiana.

Report of Independent Auditors

HELMERICH & PAYNE, INC.

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

We have audited the accompanying consolidated balance sheets of Helmerich &
Payne, Inc. as of September 30, 1995 and 1994, and the related consolidated state-
ments of income, shareholders’ equity, and cash flows for the years 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
audits. The consolidated statements of income, shareholders’ equity, and cash flows
for the year 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 audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the 1995 and 1994 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Helmerich &
Payne, Inc. at September 30, 1995 and 1994, and the consolidated results of its oper-
ations and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

As discussed in Note 6 to the financial statements, effective July 1, 1995, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 121,
“Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of”. As discussed in Note 1 to the financial statements, effective October
1, 1994, the Company adopted SFAS No., 115, “Accounting for Cer tain
Investments in Debt and Equity Securities.” As discussed in Note 3 to the financial
statements, effective October 1, 1993, the Company adopted SFAS No. 109,
“Accounting for Income Taxes.”

Tulsa, Oklahoma
November 17, 1995

Stock Price Information

Closing Market Price Per Share

1995

1994

QUARTERS HIGH LOW HIGH

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

$ 311/4
271/2
31
30

$ 255/8

$ 341/2

241/2 30
265/8
27 5/8

271/8
281/8

LOW
$261/2
26
251/8
255/8

Dividend Information

QUARTERS

Paid Per Share Total Payment

1995

1994 1995 1994

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

$3,089,758
3,087,958
3,092,973
3,094,813

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

STOCKHOLDERS’ MEETING

The annual meeting of stockholders will be held
on March 6, 1996. A formal notice of the meet-
ing, together with a proxy statement and form of
proxy, will be mailed to shareholders on or about
January 25, 1996.

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

As of Decemer 15, 1995, there were 1,656
record holders of Helmerich & Payne, Inc. com-
mon stock as listed by the transfer agent’s
records.

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, 1995 1994 1993

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†.....................................................................................

203,325
13,227
33,851
34,729
18,986
7,560
3,389
10,709
325,776
88,572
9,751

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

PER SHARE DATA

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

.40
.50
24,765

1.02
.485
24,710

1.01
.48
24,637

FINANCIAL POSITION

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

45,383
1.65
156,908
710,165

76,238
2.63
87,414
624,827

562,435

524,334

CAPITAL EXPENDITURES*

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

80,943
19,384
793
873
9,783
111,776

PROPERTY, PLANT AND EQUIPMENT AT COST*

501,682
Contract Drilling Equipment .............................................................
384,755
Producing Properties .......................................................................
8,051
Undeveloped Leases........................................................................
13,210
Chemical Plant and Equipment........................................................
46,642
Real Estate.......................................................................................
56,382
Other ................................................................................................
Total Property, Plant and Equipment................................................ 1,010,722

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

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

* 000’s omitted
** Gas Marketing activities began in 1990
†† Funds generated by operations for 1985
† Includes $13.6 million (.55 per share) effect of impairment charge for adoption of SFAS No. 121 in 1995 and cumulative effect of change in accounting for income taxes of $4,000,000
($.16 per share) in 1994

1992 1991 1990 1989 1988 1987 1986 1985

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

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

.45
.465
24,576

.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

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

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

Eleven-Year Operating Review

HELMERICH & PAYNE, INC.

Years Ended September 30,

1995

1994

1993

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............................................

41
35
212
1,933
9,119
71
84

47
29
162
1,842
11,367
69
88

42
29
128
1,504
11,746
53
68

PETROLEUM EXPLORATION AND DEVELOPMENT

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

59
27.4
5.9

44
15
1.7

42
15.9
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........................................................................

2,214
186
64
12

72,387
354

2,431
202
71
14

72,953
341

2,399
202
71
14

78,023
307

NATURAL GAS ODORANTS AND
OTHER CHEMICALS

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

7,670

8,071

7,930

REAL ESTATE MANAGEMENT

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

1,652
87

1,652
83

1,656
86

TOTAL NUMBER OF EMPLOYEES

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

3,245

2,787

2,389

* 000’s omitted.
† 1985-1989 include U.S. employees only

1992

1991

1990

1989

1988

1987

1986

1985

39
30
100
1,085
10,853
42
69

46
25
106
1,301
12,274
47
69

49
20
119
1,316
11,059
50
46

49
20
108
1,350
12,500
44
46

48
18
115
1,284
11,165
45
30

50
19
110
1,182
10,745
39
16

48
19
110
1,384
12,582
44
30

47
19
111
1,477
13,306
65
47

54
17.8
4.3

45
20.3
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

2,334
220
74
14

75,470
289

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

8,452

8,155

8,255

7,702

8,507

8,165

7,554

9,123

1,656
87

1,664
86

1,664
85

1,669
90

1,670
90

1,595
94

1,433
95

1,333
93

1,928

1,758

1,864

1,100

1,156

1,026

844

1,126

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

20,983,983
57,490
$1.48

24,310,155
66,617
$1.35

27,622,018
75,470
$1.39

23,778,690
65,147
$1.48

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.