Helmerich & Payne

Helmerich & Payne, Inc. Annual Report for 1997

Revenue Breakdown for 1997

Domestic
27%

Contract
Drilling

International
34%

Exploration and
Production
22%

Oil and Gas

Natural Gas
Marketing
13%

Real Estate    2%

Investments and Other Income    2%

Financial Highlights

Years Ended September 30,

1997

1996

Revenues

$    517,859,000

$  393,255,000

Income from Continuing Operations $      84,186,000

$    45,426,000

Income per Share from
Continuing Operations

Net Income

Net Income Per Share

Dividends Paid Per Share

$ 1.69

$     .92

$      84,186,000

$    72,566,000

$ 1.69

$   .26

$   1.47

$ .2525

Capital Expenditures

$    159,578,000

$  109,747,000

Total Assets

$ 1,033,595,000

$  821,914,000

President’s Letter

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

During 1997, Americans achieved the dubious distinction of
bearing the heaviest tax burden in our country’s history.
Compounding the confiscatory levels of taxation is the com-
plexity and confusion a taxpayer faces in figuring out some
seven million words of tax law.  Again this year, we will spend
over five billion hours and 225 billion dollars simply preparing
our tax returns.  Senator Don Nickles commented, “The present
tax code is about 10 times longer than the Bible, a lot more
complicated and, unlike the Bible, contains no good news.”

In fact, it is bad news when the average American family shells
out more for taxes than for food, clothing, shelter, and trans-
portation combined.  It is bad news when that same family’s
savings and stock market holdings are punished through double
and triple taxation; first from a layer of corporate taxes with
rates up to 35 percent, then again the same dollar is taxed as
high as 39.6 percent when received as a dividend.  Finally, as
those investments share in asset value growth, they are sub-
jected to another bite through a capital gains tax.

It is more bad news when the American family is betrayed by
their elected representatives and the tax code becomes an
exclusive feeding trough of special-interest politics.  Business
and union campaign contributions are too often rewarded by
loopholes and favored tax treatment.

We have arrived at the place where injury has been inflicted
beyond the sizable pocketbook damage.  Harm has also fallen
upon the great American spirit of enterprise.  This great
engine of creativity, innovation, entrepreneurial risk taking,

2

and diligence has produced an unprecedented record of accom-
plishment, but is forced to labor under heavy disincentives.

What repair can be made to a tax system that holds funda-
mental property rights in such low esteem and disregards the
basic liberty to keep and dispose of the fruit of one’s labor
and intellect?

The New York Times expressed early concerns with the new
income tax all the way back in 1909, predicting, “When men
get in the habit of helping themselves to the property of others,
they cannot easily be cured of it.”  The time is right to take a
step toward that cure by replacing what is clearly broken with
the simplicity and fairness of a flat tax.

Sincerely,

December 15, 1997

Hans Helmerich
President

3

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     Increased U.S. land activity, the activation of
two new offshore platform rigs, and continued high utilization
in international markets resulted in a 30 percent increase in
revenues in 1997.  Earnings before interest, taxes, depreciation,
and amortization (EBITDA) increased 45 percent to $111.9
million, and pre-tax operating profit rose 64 percent to $67.6
million.  For the second consecutive year, revenues were at an
all-time high for Helmerich & Payne International Drilling Co.
and the overall pre-tax operating profit margin of 21 percent
was at its highest level since 1983.

FIVE YEAR FINANCIAL SUMMARY

1997               1996               1995             1994              1993

(in thousands)

$ 140,294
176,651

$ 108,336
135,695

$   93,890
110,695

$   86,521
98,111

$   60,328
89,618

316,945

244,031

204,585

184,632

149,946

24,437
43,118

10,066
31,176

7,127
21,110

5,874
14,645

122
15,281

67,555

41,242

28,237

20,519

15,403

Revenue

Domestic
International

Total Revenue

Pre-tax Operating Profit

Domestic
International

Total Pre-tax 
Operating Profit

Capital Expenditures

$112,177

$  81,805

$  87,547

$  57,415

$  26,636

At the close of 1997, the Company’s domestic rig fleet con-
sisted of 29 land rigs and nine offshore platform rigs.
Internationally, the Company has a total of 38 land rigs in
the countries of Venezuela (20), Colombia (10), Bolivia (4),
Ecuador (3), and Peru (1).  The Company also has one plat-
form rig offshore Venezuela and owns a one-half interest in a
platform rig offshore Australia.  Total fleet utilization averaged
89 percent in 1997, compared with 84 percent in 1996.

UNITED STATES LAND OPERATIONS
statistics collected by Baker Hughes, total rig activity in the
United States increased 24 percent during the Company’s

According to 

4

fiscal year.  Almost 60 percent of these gains resulted from
increased activity in the states of Texas and Louisiana, the
Company’s primary domestic land drilling markets. The
Company’s land rig utilization remained at 100 percent for
most of the year, with an average of 28 rigs working continu-
ously compared with 24 in 1996.

During the year, the Company announced plans to refurbish
two 3,000 horsepower rigs and to further expand the fleet
with an order for six new 1,500 horsepower rigs.  The new
rigs will be capable of drilling to depths of 18,000 feet and
are configured to minimize space and mobilization time.
Designed by Helmerich & Payne International Drilling Co.
with the latest technological, environmental, and safety
advances in mind, the rigs will be marketed to both domestic
and international customers.

UNITED STATES OFFSHORE OPERATIONS At the close of
the year, the Company had eight offshore platform rigs in the
Gulf of Mexico, one platform rig offshore California, and labor
contracts on three Exxon-owned platform rigs offshore
California.  During 1997, rigs 202 and 203 began operations for
Shell Offshore, Inc. (SOI) in the Gulf of Mexico.  Rig 202 is on
the Ram/Powell tension leg platform (TLP) and represents the
second of three rigs built by Helmerich & Payne International
Drilling Co. for SOI deepwater developments.  The third, rig
204, is nearing completion and is scheduled to begin operations
on Shell’s Ursa TLP in 1998.  Rig 203, a minimum-area, self-
moving platform rig was installed on SOI’s Enchilada platform
during the year.  The Company retired three offshore platform
rigs in 1997, one of which worked almost continually since
being constructed in 1983.

INTERNATIONAL OPERATIONS
revenues increased 30 percent over last year due largely to
higher dayrates.

International drilling

5

Venezuela continues to be a very active area for the Company
with two expansion opportunities announced during the year.
BP Exploration de Venezuela, S.A. awarded the Company a
two-year contract for offshore platform rig 91.  Approximately
$15 million was spent to upgrade the rig for operations which
began  in December of 1997. The Company also received a
letter of intent for a multi-well contract from Agencia
Operadora Guarapiche S.A., on behalf of BP Exploration
Orinoco Limited, Amoco Venezuela Energy Company B.V. and
Maxus Guarapiche Ltd.  A new 3,000 horsepower, helicopter-
transportable rig is being built for the endeavor at an approxi-
mate cost of $20 million. Drilling operations are scheduled to
begin in May of 1998.  In the fourth quarter of the year, the
Company purchased three land rigs and related drilling
assets from Serpetbol Perforaciones, S.A. in Bolivia.  Recent
legislative changes have increased Bolivia’s potential as a
very active drilling market, and this purchase increases the
Company’s presence in the country from one rig to four.

The industry’s response to increasing U.S.

OUTLOOK
demand confronts shortages in experienced or skilled per-
sonnel in several sectors critical to building, operating, and
maintaining the industry’s rig fleet. Attracting, training, and
retaining new employees in an already competitive labor
market is perhaps the most significant challenge going for-
ward.  This year, the Company placed the first significant
new land rig order since the early 1980s.  The decision to
build new rigs rather than to buy used is in keeping with the
strategy of having the most technologically advanced fleet,
which can add significant value to a customer’s drilling project.
As important as good equipment is to a quality operation,
ultimately H&P personnel make the difference in achieving
project success.

6

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

Helmerich & Payne, Inc. explores for, develops,

SUMMARY
and produces oil and natural gas primarily in the states of
Kansas, Louisiana, Oklahoma, and Texas.  Through its wholly-
owned subsidiary, Helmerich & Payne Energy Services, Inc.,
the Company also provides natural gas marketing services for
itself and third party customers.  At the close of 1997, the
Company had proved natural gas reserves of 263 billion cubic
feet (Bcf) and proved oil reserves of 5.8 million barrels.
Revenues and operating profit from exploration and production
activities were up sharply in 1997, the result of higher prices
and increased production volumes for both natural gas and oil.

The average price received this year for natural gas was 
$2.23 per thousand cubic feet (Mcf), compared with $1.75
per Mcf in 1996.  This 27 percent increase in price was aug-
mented by a 17 percent increase in producing volumes,
which averaged 110,859 Mcf per day in 1997.  Oil prices also
increased to an average of $20.77 per barrel, compared with
$19 per barrel in 1996.  Oil production averaged 2,700 bar-
rels per day in 1997, compared with 2,212 barrels in 1996.
Revenues from exploration and production activities increased
45 percent for the year and pre-tax operating profit more than
doubled to $55.2 million.

The Company participated

EXPLORATION ACTIVITIES
in 100 (49.3 net) wells during the year, 84 (39.2 net) of
which were completed as natural gas wells, two (.5 net) were
oil wells, and 14 (9.6 net) were dry holes. Approximately 20
percent more reserves were added through drilling efforts in
1997, than in the previous year. These efforts fell short of
replacing reserves, but that objective was significantly larger
this year given that natural gas production was at a record
level and oil production was at its highest level in 10 years.

The most significant reserve additions this year came from the
Company’s Mountain Front prospect area in western Oklahoma,

7

which was discovered in 1996.  The Rocky East field, discovered
in 1996, is currently producing an average of 15,000 Mcf per
day, and has produced over 10 Bcf of natural gas since the
first well was completed.  Southeast of the Rocky East field
the Company has a significant interest in the Kiowa Flats
field, which was discovered during the year in Kiowa County,
Oklahoma.  The Company has participated in nine wells in
the prospect, with working interests ranging from 11 to 100
percent.  Current production from the field is averaging
19,000 Mcf per day.  The Company has approximately 7,200
net acres under lease in the prospect, half of which have been
developed with the remainder to be drilled as success war-
rants in the coming year.   The Company participated in a
number of wells drilled and completed in the Louisiana Austin
Chalk during the year and most of them have been disap-
pointments.  The Company is considering a sharp reduction
in its involvement in this area during 1998. 

Considerable progress was made during the year to put together
future exploration prospects.  Wildcat drilling began in four
prospect areas shortly after the close of the fiscal year.  Two of
the wells are in east Texas; one a Cotton Valley Lime prospect
and the second a Pinnacle Reef prospect.  The remaining two
wildcats are being drilled in Louisiana and Oklahoma.

Record natural gas production and higher nat-

OUTLOOK
ural gas prices combined to make 1997 an excellent year
financially; however, the measurements of long-term success
remain centered on reserve growth and finding cost reduction.
The Company seeks to generate the majority of its prospects
internally using geographically focused exploration teams to
develop an expertise in key areas.  To that end, considerable
progress was made in the Rocky East and Kiowa Flats fields,
as well as in the development of future prospects resulting in
increased exploration drilling for the coming year.

8

Revenues and Income by Business Segments

HELMERICH & PAYNE, INC.

Years Ended September 30,

1997

1996

1995

(in thousands)

SALES AND OTHER REVENUES:

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

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

$140,294   
176,651
316,945

$108,336
135,695
244,031

$ 93,890
110,695
204,585

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

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

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

111,512
69,015
180,527

8,641
11,746

76,643
58,507
135,150

8,082
5,992

47,986
35,301
83,287

7,570
11,279

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

$517,859

$393,255

$306,721

OPERATING PROFIT (LOSS):   

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

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

$ 24,437
43,118
67,555

$ 10,066
31,176
41,242

$ 7,127
21,110
28,237

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

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

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

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

OTHER:

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

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

55,191
3,363
58,554

5,615
131,724

(1,269) 
11,437
(9,346)
(4,212)
(919)
(4,309)

26,333
3,415
29,748

5,055
76,045

(1,663)
5,782
(9,083)
(678)
(860)
(6,502)

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

2,157
8,325

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

INCOME FROM CONTINUING OPERATIONS 
BEFORE INCOME TAXES AND EQUITY 
IN INCOME OF AFFILIATE ........................................

$127,415

$ 69,543

$ 7,488

Note: This schedule is an integral part of Note 12 (page 27) of the financial statements that follow.

9

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

HELMERICH & PAYNE, INC.

Business Environment and Risk Factors

The following discussion should be read in conjunction with the
consolidated financial statements and related notes included else-
where herein.  The Company’s future operating results may be
affected by various trends and factors which are beyond the
Company’s control.  These include, among other factors, fluctua-
tions in oil and natural gas prices, expiration or termination of
drilling contracts, currency exchange losses, changes in general
economic conditions, rapid or unexpected changes in technolo-
gies, and uncertain business conditions that affect the Company’s
businesses.  Accordingly, past results and trends should not be
used by investors to anticipate future results or trends.

With the exception of historical information, the matters dis-
cussed below under the headings “Results of Operations” and
“Liquidity and Capital Resources” may include forward-looking
statements that involve risks and uncertainties.  The Company
wishes to caution readers that a number of important factors dis-
cussed in this report and in the Company’s other reports filed
with the Securities and Exchange Commission could affect the
Company’s actual results and cause actual results to differ
materially from those in the forward-looking statements.

Results of Operations

On December 3, 1997, the Board of Directors declared a two-for-
one common stock split, effective December 15, 1997 (the “Record
Date”).  All references to share and per share amounts have been
restated to reflect the two-for-one stock split and distribution.

Helmerich & Payne, Inc.’s net income for 1997 was $84,186,000
($1.69 per share), compared with net income of $72,566,000
($1.47 per share) in 1996, and $9,751,000 ($0.20 per share) in
1995. Included in 1996 income is a $24,050,000 ($0.49 per
share) gain from the sale of the Company’s chemical subsidiary,
Natural Gas Odorizing, Inc. (NGO).   Net income in 1995 included
a non-cash, non-recurring charge of $13,600,000 ($0.28 per
share) as a result of the Company’s adoption of Statement of

10

Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of.

Included in the Company’s net income, but not related to its
operations, were after-tax gains from the sale of investment secu-
rities of $2,870,000 ($0.06 per share) in 1997, $346,000 ($0.01
per share) in 1996, and $3,481,000 ($0.07 per share) in 1995.
Also included was the Company’s portion of income of its equity
affiliate, Atwood Oceanics, Inc., which was $0.05 per share in
1997, $0.03 per share in 1996, and $0.02 per share in 1995.

Consolidated revenues increased to $517,859,000 in 1997, from
$393,255,000 in 1996, and $306,721,000 in 1995.  The 32 percent
increase from 1996 to 1997 was a result of increased dayrates
for contract drilling services and a significant increase in oil and
gas revenues due to higher commodity prices and  production vol-
umes. Consolidated revenues increased by 28 percent from 1995
to 1996 as a result of revenue increases in the exploration and
production, natural gas marketing, international drilling, and
domestic drilling segments.  

Revenues from investments were $11,437,000 in 1997, up from
$5,782,000 in 1996, and $10,846,000 in 1995.  Included in
revenues from investments were pre-tax gains from the sale of
investment securities of $4,697,000 in 1997, $566,000 in 1996,
and $5,697,000 in 1995.  Interest income was stable during
1997, 1996, and 1995, but dividend revenue increased in 1997
due to the addition of 2,018,928 shares of Occidental Petroleum
Corporation common stock to the investment portfolio. During
the first quarter of fiscal 1998, the Company sold 600,000
shares of Occidental Petroleum Corporation stock.

Costs and expenses in 1997 were $390,444,000, 75 percent of
total revenues, compared with 82 percent in 1996, and 98 per-
cent in 1995.  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 amortization.  Operating costs as a
percentage of operating revenues declined to 55 percent in 1997,
compared with 59 percent in 1996, and 64 percent in 1995.

General and administrative expenses increased by three percent
to $9,346,000 in 1997, from $9,083,000 in 1996, and $8,801,000

11

in 1995. Income tax expense, as a percentage of pre-tax income
was 36 percent in 1997, and 37 percent for 1996 and 1995.

CONTRACT DRILLING DIVISION revenues increased by 30 per-
cent from 1996 to 1997, and by 19 percent from 1995 to 1996.
Total operating profit rose by 64 percent over last year to
$67,555,000 in 1997, from $41,242,000 in 1996, and
$28,237,000 in 1995.  Domestic drilling operating profit increased
to $24,437,000 in 1997, from $10,066,000 in 1996, and from
$7,127,000 in 1995.  Domestic contract drilling revenues and
operating profit for both 1997 and 1996 increased, primarily due
to significant improvements in revenues and margins from U.S.
land rig operations, the addition of offshore platform rigs for
Shell’s tension leg platforms, and increased revenues and
earnings from the Company’s three offshore labor contracts.
Rig utilization for the U.S. land fleet was 99 percent in 1997,
88 percent in 1996, and 73 percent in 1995.  Domestic platform
rig utilization was 63 percent in 1997, 70 percent in 1996, and
66 percent in 1995.

International revenues climbed to $176,651,000 in 1997, from
$135,695,000 in 1996, and $110,695,000 in 1995.  Operating
profit for the international contract drilling sector improved by 38
percent over last year to $43,118,000 in 1997, compared with
$31,176,000 in 1996, and $21,110,000 for 1995.  Increases
during 1997 were primarily due to a full year of activity for three
additional rigs sent to Venezuela in 1996, increased dayrates in
Venezuela and Colombia, and increased activity in Ecuador.
During the fourth quarter of fiscal 1997, three additional rigs
were purchased in Bolivia, bringing total rigs located there to
four and the total international rig count to 39.  During 1995, six
additional rigs were shipped to Venezuela and three to Colombia,
which helped boost revenues and earnings significantly in 1996.

In Venezuela, approximately 50 percent of the Company’s
billings are in U.S. dollars and the other 50 percent are in boli-
vars, the local currency.  As a result, the Company is exposed to
risks of currency devaluation in Venezuela because of the bolivar
receivables created by billings in that currency.  Over the past
three years, total net devaluation losses in Venezuela have not
been material.  Although devaluation losses may occur again in
1998, the Company does not presently believe that such losses

12

will have a material impact on the Company.  However, if the
country experiences extreme economic difficulty, accompanied
by severe devaluation and/or inflation, the Company could
experience material losses.

OIL AND GAS DIVISION revenues and operating profit increased
dramatically this year as average prices received for the
Company’s production rose to $20.77 per barrel of oil and $2.23
per Mcf of natural gas from $19.00 per barrel and $1.75 per Mcf
last year.  In 1995, average prices were $16.37 per barrel and
$1.27 per Mcf.  Average natural gas production increased by 17
percent over last year to 110.9 million cubic feet per day (Mmcf/d)
during 1997, compared with 94.4 Mmcf/d in 1996, and 72.4
Mmcf/d in 1995.  Oil production rose to an average of 2,700 bar-
rels per day in 1997 from  approximately 2,200 barrels per day in
both 1996 and 1995.  The Company’s natural gas production has
grown over the past two years as a result of allowing more of its
existing reserves to be delivered to the market and by virtue of dis-
coveries and production of new natural gas reserves.  Due to the
significant increases in product prices and production volumes,
exploration and production revenues increased by 45 percent over
last year to $111,512,000 in 1997, from $76,643,000 in 1996, and
$47,986,000 in 1995.  Exploration and production operating profit
increased by 110 percent over last year to $55,191,000 in 1997,
from $26,333,000 in 1996, compared with a loss of $23,961,000
in 1995.

In 1997, the Company recorded a one-time net income reduction
as a result of a recent Federal Energy Regulatory Commission
(FERC) order which requires certain Kansas producers of
natural gas to make certain refunds of ad valorem tax reim-
bursement, with interest, for tax bills rendered between October
4, 1983 and June 28, 1988.  The Company’s total pre-tax
adjustment of $6,700,000 includes a reduction of exploration
and production revenues of $2,700,000 and $4,000,000 of
interest charges.

Earnings for 1996 were aided by lower dry hole and abandon-
ment charges, lower geophysical expense and reduced depletion
per production unit than in the previous year.  During the past
three years, the Company has not hedged any of its oil or natural
gas production and does not intend to do so during 1998.

13

Therefore, increases or decreases in its product prices will affect
its ongoing results accordingly.  In 1995, the Company elected to
adopt SFAS No. 121, resulting in a pre-tax, non-cash charge of
$19,982,000 to the Oil and Gas Division.
Natural gas marketing revenues, which are primarily derived from
selling natural gas produced by other unaffiliated companies,
increased to $69,015,000 in 1997, from $58,507,000 in 1996,
and $35,301,000 in 1995.  Operating profit was $3,363,000 in
1997, $3,415,000 in 1996, and $1,892,000 in 1995.  The
Company’s approach has been to derive additional profit from
matching its customers with third party producers when the
marketing situation is not conducive to the sale of the Company’s
own natural gas.  Although revenues are likely to increase during
periods of rising natural gas prices, it is expected that competition
will continue to limit fees and premiums for third party natural
gas sales.

REAL ESTATE DIVISION revenues totaled $8,641,000 for 1997,
$8,082,000 for 1996, and $7,570,000 for 1995.  Revenues and
operating profit were up in 1997, primarily due to the sale of a
small parcel of land for a gain of $400,000.  Operating profits for
1995 were down from normal levels due to a $2,000,000 charge
to two properties in connection with the adoption of SFAS No.
121. No major changes are anticipated in the Real Estate
Division for 1998.

Liquidity and Capital Resources

The Company has maintained a very strong balance sheet for
many years, with current ratios above 1.6 for the last three
years.  During the past three years, the Company has main-
tained a line of credit with its bank group that has ranged from
$40 to $75 million in order to fund short-term cash needs.  The
Company had borrowings under its line of credit totaling
$5,000,000 at the end of both fiscal 1997 and 1996, and line of
credit borrowings totaling $21,700,000 at the end of fiscal 1995. 

Capital expenditures for each of the last three years were over
$100 million and exceeded the funds generated internally during
1995.  Cash provided by operating activities totaled $165,568,000
for 1997, $124,923,000 for 1996, and $88,572,000 for 1995.  It
is anticipated that during 1998, capital expenditures will be
approximately $200 million.  Capital expenditures budgeted for

14

1998 include exploration and development drilling and major off-
shore platform rig construction projects for Gulf of Mexico opera-
tions.  Capital expenditure totals could be significantly increased
by additional projects now being considered.  Additional borrow-
ings and/or portfolio liquidations would be used to fund capital
expenditures exceeding internally generated capital.

The Company manages a large portfolio of marketable securi-
ties which had a cost basis of $138,906,000 at September 30,
1997, and a total market value at that time of $474,815,000
including its investment in Atwood Oceanics, Inc.  During 1995,
the Company adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, which resulted in a
balance sheet adjustment to market values for investments in
companies of which the Company owned less than 20 percent.
Accordingly, at the end of each reporting period, a deferred tax
estimate is calculated from pre-tax unrealized changes in the
portfolio market value and posted to deferred taxes under the
liability section of the balance sheet.  Net unrealized holding
gains are reflected in the shareholders’ equity section of the bal-
ance sheet and not in the statement of income.  Those unrealized
gains were $114,454,000, $56,550,000, and $38,004,000 at the
end of fiscal years 1997, 1996, and 1995, respectively.  During
1997, the Company paid a dividend of $0.26 per share which
represented the 26th consecutive year of dividend increases.

Stock Portfolio Held by the Company

September 30, 1997

Number of
Shares

Book Value
(in thousands,except share amounts) 

Market Value

Occidental Petroleum Corporation . . . . . . . . . . . . . . . . . . 
Atwood Oceanics, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Schlumberger, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Sun Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Sun Company PFD A . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Phillips Petroleum Company . . . . . . . . . . . . . . . . . . . . . . 
BANC ONE CORPORATION. . . . . . . . . . . . . . . . . . . . . . 
Oryx Energy Company . . . . . . . . . . . . . . . . . . . . . . . . . . 
ONEOK INC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2,000,000
1,600,000
1,480,000
300,000
329,053
240,000
464,125
500,000
225,000

$ 47,550
28,895
23,511
3,512
3,192
5,976
5,743
4,899
2,751
12,877
$138,906

$ 51,875
180,200
124,597
13,144
11,928
12,390
25,991
12,719
7,341
34,630
$474,815

15

Consolidated Balance Sheets

HELMERICH & PAYNE, INC.

Assets

CURRENT ASSETS:

September 30,

1997

1996

(in thousands)

Cash and cash equivalents.................................................................. $
Short-term investments.......................................................................
Accounts receivable, less reserve of $1,308 and $712...............................
Inventories .......................................................................................
Prepaid expenses and other ................................................................

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

27,963
1,318
98,697
19,639
10,387
158,004

$ 16,892
1,005
75,374
16,915
4,182

114,368

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

323,510

229,809

PROPERTY, PLANT AND EQUIPMENT, at cost:

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

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

643,619
409,921
47,682
59,659

568,110
401,804
46,970
53,547

1,160,881
621,856

1,070,431
606,935

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

539,025

463,496

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

13,056

14,241

TOTAL ASSETS .................................................................................... $ 1,033,595

$ 821,914

The accompanying notes are an integral part of these statements.

16

Liabilities and Shareholders’ Equity

September 30,

1997

1996

(in thousands)

CURRENT LIABILITIES:

Accounts payable .............................................................................. $     42,642
47,525
Accrued liabilities ..............................................................................
5,000
Notes payable...................................................................................
95,167

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

$  25,622
31,943
5,000
62,565

NONCURRENT LIABILITIES:

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

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

141,331
16,517
157,848

98,335
15,044
113,379

SHAREHOLDERS’ EQUITY:

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

53,528,952 shares issued ................................................................

5,353

5,353

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, 3,500,698 shares in 1997 and 3,757,680 shares in 1996, at cost......

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

51,316
114,454
629,562

800,685
20,105

780,580

47,734
56,550
557,543

667,180
21,210

645,970

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY .................................. $1,033,595

$821,914

Note:  Certain amounts have been restated to reflect the effect of the two-for-one common stock split and distribution as discussed in Note 4.
The accompanying notes are an integral part of these statements.

17

Consolidated Statements of Income

HELMERICH & PAYNE, INC.

Years Ended September 30,

1997

1996

1995

(in thousands,
except per share amounts)

REVENUES: 

Sales and other operating revenues .............................................. $506,422
11,437
Income from investments ...............................................................

$387,473
5,782

$295,875
10,846

517,859

393,255

306,721

COSTS AND EXPENSES:

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

276,094
71,691
7,783
21,318
9,346
4,212

229,584
59,442
7,986
16,939
9,083
678

188,497
76,443
10,095
14,990
8,801
407

390,444

323,712

299,233

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME

TAXES AND EQUITY IN INCOME OF AFFILIATE ........................

127,415

69,543

7,488

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

45,511

25,803

2,786

EQUITY IN INCOME OF AFFILIATE

net of income taxes ........................................................................
INCOME FROM CONTINUING OPERATIONS...................................
INCOME FROM DISCONTINUED OPERATIONS ..............................
GAIN ON SALE OF DISCONTINUED OPERATIONS.........................

2,282
84,186

1,686
45,426
3,090
24,050

1,086
5,788
3,963

NET INCOME ...................................................................................... $ 84,186

$ 72,566

$

9,751

PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS................................... $
INCOME FROM DISCONTINUED OPERATIONS ..............................
GAIN ON SALE OF DISCONTINUED OPERATIONS.........................

1.69

$
$

$
$

.12
.08

.92
.06
.49

NET INCOME ........................................................................................ $

1.69

$

1.47

$

.20

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

49,779

49,380

49,072

Note:  Certain amounts have been restated to reflect the effect of the two-for-one common stock split and distribution as discussed in Note 4.
The accompanying notes are an integral part of these statements.

18

Consolidated Statements of Shareholders’ Equity

HELMERICH & PAYNE, INC.

Additional Unrealized

Net

Common Stock
Shares      Amount

Paid-In
Capital

Holding
Gains

Retained
Earnings

Treasury Stock

Shares

Amount

(in thousands except per share data)

Balance, September 30, 1994 ............. 53,529

$5,353     $45,520   $       

$496,280

4,109    $(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 $2,187.......................................
Cash dividends ($.25 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)

(139)

615

560

30

(170)

1,473
9,751

Balance, September 30, 1995 ............. 53,529

5,353

45,760

38,004

495,692

4,000

(22,374)

Change in net unrealized holding
gains, net of income taxes 
of $11,367.....................................
Cash dividends ($.255 per share).
Exercise of stock options ...................
Lapse of restrictions on 

Restricted Stock Awards...............
Forfeiture of Restricted Stock Award .
Amortization of deferred

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

18,546

(12,670)

2,197

(61)
(162)

(262)

1,274

272

20

(110)

1,683
72,566

Balance, September 30, 1996 ............. 53,529

5,353

47,734

56,550

557,543

3,758

(21,210)

Change in net unrealized holding
gains, net of income taxes
of $35,490 ...................................
Cash dividends ($.26 per share) ......
Exercise of stock options..................
Lapse of restrictions on     

Restricted Stock Awards ................

Amortization of deferred

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

57,904

(12,987)

(257)

1,105

3,306

276

820
84,186

Balance, September 30, 1997 ............. 53,529 $5,353

$51,316 $114,454

$629,562

3,501 $(20,105)

Note:  Certain amounts have been restated to reflect the effect of the two-for-one common stock split and distribution as discussed in Note 4.
The accompanying notes are an integral part of these statements.

19

Consolidated Statements of Cash Flows

HELMERICH & PAYNE, INC.

Years Ended September 30,

1997

1996

1995

(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 .........................................
Equity in income of affiliate before income taxes .................
Amortization of deferred compensation .............................
Gain on sale of investments............................................
Loss (gain) on sale of property, plant and equipment ...........
Discontinued operations ................................................
Other .........................................................................
Change in assets and liabilities:

Accounts receivable ...................................................
Inventories ...............................................................
Prepaid expenses and other ........................................
Accounts payable ......................................................
Accrued liabilities ......................................................
Deferred income taxes .................................................
Other noncurrent liabilities...........................................
Total adjustments ......................................................
Net cash provided by continuing operations .................
Net cash provided by discontinued operations................
Net cash provided by operating activities........................

$  84,186

$  72,566

$   9,751

71,691
7,783
(3,680)
820
(4,697)
(4,545)

1,897

(23,323)
(2,724)
(5,020)
18,619
15,582
7,506
1,473
81,382
165,568

165,568

59,442
7,986
(2,720)
1,683
(566)
303
(27,140)
473

(18,340)
2,435
1,706
(1,115)
14,237
6,668
3,802
48,854
121,420
3,503
124,923

76,443
10,095
(1,752)
1,473
(5,697)
(1,205)
(3,963)
10

275
86
(2,768)
3,030
(2,701)
(1,630)
2,563
74,259
84,010
4,562
88,572

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..........................................
Discontinued operations .......................................................
Purchase of short-term investments ........................................
Proceeds from sale of short-term investments ...........................
Net cash used in investing activities............................

(161,177)
9,432
(1,091)
8,557

(313)

(144,592)

(109,985)
3,987
(1,196)
619
(2,746)

(109,901) 
2,923
(12,858)
11,713
(977)

7,984
(101,337)

7
(109,093)

CASH FLOWS FROM FINANCING ACTIVITIES:

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 .........

34,000
(34,000)
(12,970)
3,065
(9,905)

35,000
(51,700)
(12,530)
2,993
(26,237)

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

NET INCREASE (DECREASE) IN CASH AND CASH

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

11,071
16,892
$  27,963

(2,651)
19,543
$  16,892

(9,904)
29,447
$ 19,543

The accompanying notes are an integral part of these statements.

20

Notes to Consolidated Financial Statements

HELMERICH & PAYNE, INC.         

September 30, 1997,1996 and 1995

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 end on August 31 to facili-
tate reporting of consolidated results.

TRANSLATION OF FOREIGN CURRENCIES -
The  Company  has  determined  that  the  functional  currency
for its foreign subsidiaries is the U.S. dollar.  The foreign cur-
rency transaction loss for 1997 was $452,000, with a gain for
1996 and 1995 of $764,000 and $1,845,000, respectively.

USE OF ESTIMATES -
The  preparation  of  financial  statements  in  conformity  with
generally  accepted  accounting  principles  requires  manage-
ment  to  make  estimates  and  assumptions  that  affect  the
amounts  reported  in  the  consolidated  financial  statements
and  accompanying  notes.    Actual  results  could  differ  from
those estimates.

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.
Reserves are recorded for capitalized costs of undeveloped
leases  based  on  management’s estimate  of  recoverability.
Costs of surrendered leases are charged to the 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  carrying  amount  of  the  asset.    Adoption  of
SFAS No. 121 resulted in a before-tax impairment charge
of $22 million which is included in depreciation, depletion
and  amortization  expense.    After-tax,  the  impairment
charge  reduced  1995  net  income  by  $13.6  million,  $.28
per  share.    The  before-tax  impairment  charges  included
$20 million for proved Exploration and Production properties
and  $2  million  for  Real  Estate  properties.    The  Company

evaluates impairment of exploration and production assets on
a  field  by  field  basis.    Fair  values  on  all  long-lived  assets  are
based on discounted future cash flows or information provided
by sales and purchases of similar assets.

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

YEARS
Contract drilling equipment ............................................. 4-10
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 -
The  Company  adopted  SFAS  No.  115,  “Accounting  for  Certain
Investments in Debt and Equity Securities”, effective October 1,
1994.    SFAS  No.  115  requires  that  available-for-sale  securities
be carried at their fair value determined based on quoted market
prices.  Upon adoption of SFAS No. 115, the Company recorded
an increase to shareholders’ equity of $34 million, which was net
of income taxes of $21 million.

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 23.6 percent and 23.9 percent of
Atwood Oceanics,  Inc.  (Atwood)  at  September  30,  1997  and
1996,  respectively.    The  quoted  market  value  of  the  Company’s
investment was $180,200,000 and $70,400,000 at September 30,
1997 and 1996, respectively.  Retained earnings at September 30,
1997 include approximately $16,715,000 of undistributed earnings
of Atwood.  

21

Summarized financial information of Atwood is as follows:

Gross revenues ..............................................................
Costs and expenses ........................................................
Net income ....................................................................
Helmerich & Payne, Inc.’s equity in net income,

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

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

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

1997

1996

(in thousands)

$  89,082
73,463
$  15,619

$    2,282

$  47,961
168,279
19,621
73,930
122,689

$  28,895

$  84,760
73,392
$  11,368

$    1,686

$  44,170
115,139
18,019
35,736
105,554

$  25,215

1995

$ 77,315
70,255
$    7,060

$    1,086

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

$ 22,495

INCOME TAXES -
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 the Company’s assets and liabilities.

OTHER POST EMPLOYMENT BENEFITS -
The Company sponsors a health care plan that provides post retirement medical benefits to retired employees.  Employees who
retire after November 1, 1992 and elect to participate in the plan 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.

NET INCOME PER SHARE -
Net  income  per  share  is  computed  using  the  weighted  average  number  of  common  shares  outstanding  during  the  period.    The
number of shares for 1996 and 1995 have been restated to reflect the effect of a two-for-one stock split and distribution (see Note 4).
Common stock equivalents are insignificant, and therefore, have not been considered in the net income per share computation.

DERIVATIVES - 
The Company does not utilize financial or commodity derivative instruments to hedge its market risks.

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 $40,000,000 at
adjustable  interest  rates.    Under  the  agreement,  $40,000,000  may  be  borrowed  through  May  1998,  and  $10,000,000  may  be
borrowed through May 1999.  As of September 30, 1997, the Company had borrowed $5,000,000 at a rate of 6.0375% and had
letters of credit outstanding in the amount of $7,671,000, leaving $27,329,000 available.  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 $14.5 million line of credit with a bank to be used primarily for letters of credit.  As of September
30, 1997, the Company had letters of credit outstanding in the amount of $1,347,222 leaving, $13,152,778 available.  

22

NOTE 3   INCOME TAXES
The components of the provision (credit) for income taxes from continuing operations are as follows:
Years Ended September 30,

1997

1996
(in thousands)

CURRENT:

Federal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,582
Foreign  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,214
2,190
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,986

DEFERRED:

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

6,349
603
573
7,525
TOTAL PROVISION:  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  45,511

$ 8,909
11,037
1,050
20,996

3,757
725
325
4,807
$ 25,803

1995

$ 

(802)
6,104
276
5,578

(3,083)
534
(243)
(2,792)
$    2,786

The amounts of domestic and foreign income are as follows:

Years Ended September 30, 

1997

1996
(in thousands)

1995

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME

TAXES AND EQUITY IN INCOME OF AFFILIATE:

Domestic  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  84,723
42,692
Foreign  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$127,415

$ 41,299
28,244
$ 69,543

$ (11,399)
18,887
7,488

$

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

Years Ended September 30,

1997

1996

1995              

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%
( 1 )       
-
1
-          
1                      
36%

35%
(1)
-  
2
(1)
2          
37%

35%
(8)
(3)
19
(8)
2
37%

The components of the Company’s net deferred tax liabilities are as follows:
1997

September 30,

1996

(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

$  56,328
85,378
4,738
6,238
308
$ 152,990

8,929
2,730
11,659

$   46,706
49,889
4,720
4,840
709
$ 106,864

5,213
3,316
8,529

NET DEFERRED TAX LIABILITIES

$ 141,331

$ 98,335

23

NOTE 4   SHAREHOLDERS’ EQUITY

On December 3, 1997, the Board of Directors of the Company declared a two-for-one stock split and distribution; approximately 26.8
million shares will be issued on December 31, 1997 to stockholders of record on December 15, 1997.  All references in the financial
statements and notes to the number of common shares outstanding, options and per share amounts reflect the impact of the split.

The Company has several plans providing for common stock-based awards to employees and to non-employee directors.  The
plans permit the granting of various types of awards including stock options and restricted stock.  Awards may be granted for no
consideration other than prior and future services.  The purchase price per share for stock options may not be less than the
market price of the underlying stock on the date of grant.  Stock options expire 10 years after grant.

The Company has reserved 1,745,502 shares of its treasury stock to satisfy the exercise of stock options issued under the 1982
and 1990 Stock Option Plans.  Effective December 4, 1996 additional options are no longer granted under these plans.    Options
granted under the 1982 plan vest over a period of nine years while options granted under the 1990 plan generally vest over a
seven year period.  Options granted under both plans become exercisable in increments as outlined in the plans.

In March 1997, the Company adopted the 1996 Stock Incentive Plan (the “Stock Incentive Plan”).  The Stock Incentive Plan was
effective December 4, 1996 and will terminate December 3, 2006.  Under this plan, the Company is authorized to grant options for
up to 4,000,000 shares of the Company’s common stock at an exercise price not less than the fair market value of the common stock
on the date of grant.  Up to 600,000 shares of the total authorized may be granted to participants as restricted stock awards.  There
was no activity under this plan during fiscal 1997.

The following summary reflects the stock option activity and related information (shares in thousands):

1997

1996

1995

Shares

Weighted-Average
Exercise Price

Shares

Weighted-Average
Exercise Price

Shares

Weighted-Average
Exercise Price

Outstanding on October 1,
Granted
Exercised
Forfeited/Expired
Outstanding on September 30,
Exercisable on September 30,     
Shares available on September 30,
for options that may be granted

1,708
393
(270)
(86)
1,745
135

4,000

$13.63
26.07
13.03
14.89
$16.44
$12.22

$13.20
14.00
11.76
13.53
$13.63
$13.07

1,682
494
(280)
(188)
1,708
148

652

1,672
216
(156)
(50)
1,682
221

1,040

$12.83
13.44
9.84 
12.41
$13.20
$12.05

The following table summarizes information about stock options at September 30, 1997 (shares in thousands):

Range of
Exercise Prices 
$10.00 to $12.00
$12.01 to $14.00
$14.01 to $16.50
$16.51 to $26.50
$10.00 to $26.50

Shares
94
1,017
252
382
1,745

Outstanding Stock Options

Exercisable Stock Options

Weighted-Average

Remaining Contractural Weighted-Average

Life
.9 years
6.9 years
2.4 years
9.2 years
6.4 years

Exercise Price
$10.88
$13.50
$15.75
$26.07
$16.44

Shares
34
97
4

Weighted-Average
Exercise Price
$10.88
$12.53
$16.35

135

$12.22

In 1995, the Financial Accounting Standards Board issued SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS
123).  As permitted by SFAS 123, the Company continues to apply the recognition and measurement provisions of Accounting
Principles  Board  Opinion  No.  25,  “Accounting  for  Stock  Issued  to  Employees”  (APB  25).    As  stock  options  issued  by  the
Company are equal to at least market price on the date of grant, no compensation expense is recognized under APB 25.  The
differences between the recognition and measurement provisions of SFAS 123 and APB 25 are not significant to net income or
per common share amounts.

On September 30, 1997, the Company had 50,028,254 outstanding common stock purchase rights (“Rights”) pursuant to terms
of the Rights Agreement dated January 8, 1996.  Under the terms of the Rights Agreement each Right entitled the holder there-
of  to  purchase  from  the  Company  one  half  of  one  unit  consisting  of  one  one-thousandth  of  a  share  of  Series  A  Junior
Participating Preferred Stock (“Preferred Stock”), without par value, at a price of $90 per unit.  The exercise price and the num-
ber of units of Preferred Stock issuable on exercise of the Rights are subject to adjustment in certain cases to prevent dilution.
The Rights will be attached to the common stock certificates and are not exercisable or transferrable apart from the common
stock, until 10 business days after a person acquires 15% or more of the outstanding common stock or 10 business days follow-
ing the commencement of a tender offer or exchange offer that would result in a person owning 15% or more of the outstanding
common stock.  In the event the Company is acquired in a merger or certain other business combination transactions (including
one in which the Company is the surviving corporation), or more than 50% of the Company’s assets or earning power is sold or
transferred,  each  holder  of  a  Right  shall  have  the  right  to  receive,  upon  exercise  of  the  Right,  common stock  of  the  acquiring
company having a value equal to two times the exercise price of the Right.  The Rights are redeemable under certain circum-
stances at $.01 per Right and will expire, unless earlier redeemed, on January 31, 2006.  As long as the Rights are not sepa-
rately transferable, the Company will issue one half of one Right with each new share of common stock issued. 

24

NOTE 5   FINANCIAL INSTRUMENTS

Short-term investments consist mainly of U.S. treasury notes carried at cost, which approximates fair value.  Notes payable bear interest
at market rates and are 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): 

Equity Securities:

September 30, 1997
September 30, 1996

Gross                       Gross                  Estimated

Unrealized               Unrealized                    Fair               

Cost                   Gains                      Losses                     Value
(in thousands)

$110,011
$113,384

$184,708
$  92,081

$104
$871

$294,615
$204,594

During the years ended September 30, 1997, 1996, and 1995, marketable equity available-for-sale securities with a fair value at the
date of sale of $8,557,000, $619,000, and $11,713,000, respectively, were sold.  The gross realized gains on such sales of available-
for-sale securities totaled $4,697,000, $596,000, and $5,734,000, respectively, and the gross realized losses totaled  $0, $30,000,
and $37,000, respectively.

NOTE 6   DISCONTINUED OPERATIONS

Effective  August  30,  1996,  the  Company  exchanged  all  of  the  common  stock  of  its  wholly-owned  subsidiary,  Natural  Gas
Odorizing, Inc. (NGO), to Occidental Petroleum Corporation (OPC) for 2,018,928 shares of OPC common stock with a fair mar-
ket value of approximately $48 million.  The sale yielded a gain of $24.1 million (net of deferred income taxes of approximately
$14.8 million) which is reported as gain on sale of discontinued operations.  NGO comprised the Company’s chemical opera-
tions.    Prior  period  operating  results  for  such  operations  are  reported  as  discontinued  operations.    Income  from  discontinued
operations has been reduced for income taxes by $2,566,000 and $2,258,000 for 1996 and 1995, respectively.

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, subject to regulatory fund-
ing limitations.  Future service benefits are determined using a 1.5 percent career average formula. 
The net pension expense (credit) included the following components:

Years Ended September 30,

1997

1996

1995

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

$ 2,114
1,797
(3,592)
(367)
(48)

$

(in thousands)
$ 1,979
1,553
(3,214)
(304)
$      14

$ 1,589
1,301
(2,798)
(301)
$ (209)

The  discount  rate  used  in  determining  the  actuarial  value  of  the  projected  benefit  obligation  for  1997  and  1996  was  7.25%  and
7.75%,  respectively.    The  average  expected  rate  of  return  on  plan  assets  was  9.0%,  8.5%  and  8.5%  for  1997,  1996  and  1995,
respectively.  The assumed rate of increase in compensation was 5.5% for 1997 and 5.0% for 1996.
The following table sets forth the plans’ funded status and amounts recognized in the balance sheet:

September 30, 

1997

1996

(in thousands)

Actuarial present value of benefit obligations:

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

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

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

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

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

Plan assets in excess of projected benefit obligation .......................................
Unrecognized net gain, including unrecognized

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

$ 23,392

$ 27,988

$ 33,913

$ 53,834

$ 19,921

(8,989)
1,501
$ 12,433

$ 17,376

$ 20,675

$ 23,534

$ 42,609

$ 19,075

(8,430)
1,740
$12,385

25

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 $2,255,000,
$1,908,000 and $1,735,000 in 1997, 1996 and 1995, respectively.

NOTE 8   ACCRUED LIABILITIES 

Accrued liabilities consist of the following:

September 30,

1997

1996

(in thousands)

Accrued royalties payable .................................................................................
Accrued taxes payable - operations..................................................................
Accrued income taxes payable .........................................................................
Accrued interest payable ..................................................................................
Accrued workers compensation claims  ...........................................................
Accrued equipment cost ...................................................................................
Other .................................................................................................................

$   8,687
9,240
9,371
4,056
3,087
598
12,486
$ 47,525

$   7,709
4,645
4,915
200
2,561
2,197
9,716
$ 31,943

NOTE 9   SUPPLEMENTAL CASH FLOW INFORMATION

Years Ended September 30,

1997

1996

1995

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

Continuing operations ..........................................................
Discontinued operations.......................................................

Noncash investing activity:

(in thousands)

$

357

36,347

$

798

$

408

15,491
2,563

2,102
2,522

Accrued equipment cost ......................................................

$

598

$

2,197

$

4,016

NOTE 10    RISK FACTORS

CONCENTRATIONS OF CREDIT -
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 quality 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.

INTERNATIONAL OPERATIONS -
International drilling operations are significant contributors to the Company’s revenues and net profit.  It is possible that operating
results could be affected by the risks of such activities, including economic conditions in the international markets in which the
Company operates, political and economic instability, fluctuations in currency exchange rates, changes in international regulatory
requirements, international employment issues, and the burden of complying with foreign laws.  These risks may adversely affect
the Company’s future operating results and financial position.

NOTE 11   NEW ACCOUNTING PRONOUNCEMENTS

The  Financial  Accounting  Standards  Board  has  issued  SFAS  No.  128  “Earnings  per  Share”,  effective  for  financial  statement
reporting periods ending after December 15, 1997.  Management does not believe that earnings per share calculated under this
standard would differ significantly from amounts reported in the Consolidated Statements of Income.

The Financial Accounting Standards Board has issued two new accounting standards, SFAS No. 130, “Reporting Comprehensive
Income”, (SFAS 130) and SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, (SFAS 131)
both effective for fiscal years beginning after December 15, 1997.  SFAS 130 establishes standards for the reporting and display of
comprehensive income.  While the Company does have certain comprehensive income items, management does not believe that
adopting SFAS 130 will materially change the Company’s financial reporting and disclosures.  SFAS 131 establishes standards for
reporting financial and descriptive information about a company’s operating segments.  Management is currently analyzing the
impact of SFAS 131, but does not expect the standard to materially change its current segment reporting disclosures.  

26

NOTE 12  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.    The  Company’s  primary
international areas of operation include Venezuela, Colombia and Ecuador.  Oil and gas activities consist of ownership of mineral
interests in productive oil and gas leases and undeveloped leases located primarily in Oklahoma, Texas, Kansas and Louisiana.
Intersegment sales, which are accounted for in the same manner as sales to unaffiliated customers, are not material.  Operating
profit is total revenue less operating expenses.  In computing operating profit, the following items have not been considered:  equity
in income of affiliate; 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 17 percent, 19 percent,
and  18  percent  of  the  total  consolidated  revenues  during  the  years  ended  September  30,  1997,  1996  and  1995,  respectively.
Collectively, revenues from three companies controlled by the Venezuelan government accounted for approximately 12 percent,
12.8 percent and 13.4 percent of total consolidated revenues for the years ended September 30, 1997, 1996, and 1995, respectively.

Summarized revenues and operating profit by industry segment for the years ended September 30, 1997, 1996 and 1995 are
located on page 9.  Additional financial information by industry segment is as follows:

Years Ended September 30,

1997

1996

1995

Net Income (loss):

Contract Drilling - Domestic .................................................
Contract Drilling - International ............................................
Exploration and Production ..................................................
Natural Gas Marketing .........................................................
Real Estate Division .............................................................
Other ....................................................................................
Equity in income of affiliate ..................................................

$

Income from Continuing Operations ................................
Discontinued operations ..........................................................
Net Income ..............................................................................

Identifiable assets:

Contract drilling - Domestic ..................................................
Contract drilling - International .............................................
Exploration and Production ..................................................
Natural Gas Marketing .........................................................
Real Estate Division .............................................................
Corporate and other.............................................................
Discontinued operations.......................................................

15,508
26,848
35,719
2,172
3,448
(1,791)
2,282
84,186

$

84,186

$   257,505
210,976
152,892
18,884
23,310
370,028

(in thousands)

$    6,796
17,693
17,335
2,247
3,121
(3,452)
1,686
45,426
27,140
$ 72,566

$169,363
213,171
141,058
15,602
23,628
259,092

$1,033,595

$821,914

Depreciation, depletion and amortization:

Contract drilling - Domestic ..................................................
Contract drilling - International .............................................
Exploration and Production ..................................................
Natural Gas Marketing .........................................................
Real Estate Division .............................................................
Corporate and other.............................................................
Continuing operations......................................................
Discontinued operations ..................................................

Capital expenditures:

Contract drilling - Domestic ..................................................
Contract drilling - International .............................................
Exploration and Production ..................................................
Natural Gas Marketing .........................................................
Real Estate Division .............................................................
Corporate and other.............................................................
Continuing operations......................................................
Discontinued operations ..................................................

$    17,916
26,458
24,627
258
1,412
1,020
71,691

$    71,691

$    95,277
16,900
41,782
3,170
1,161
1,288
159,578

$   159,578

$  13,879
22,120
20,299
725
1,455
964
59,442
754
$  60,196

$  57,004
24,801
24,320
435
776
830
108,166
1,581
$109,747

$ 4,506
12,106
(13,906)
1,230
1,324
(558)
1,086
5,788
3,963
$    9,751

$138,359
188,587
142,474
10,192
24,380
196,233
6,836
$707,061 

$  12,111
19,557
39,895
298
3,623
959
76,443
672
$  77,115

$  32,503
55,044
20,956
252
907
1,255
110,917
859
$111,776

27

NOTE 13  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,

1997

1996

1995

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

Results of operations (excluding corporate overhead

$111,512
21,750
9,943
24,628
19,327
75,648

(in thousands)

$ 76,643
20,080
9,931
20,299
9,187
59,497

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

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

$ 35,864

$ 17,146

$ (16,718)

Capitalized Costs  -

September 30,

1997

1996

(in thousands)

Properties being amortized:

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

$395,812
14,109
409,921
268,572
$141,349

$392,562
9,242
401,804
269,994
$131,810

Costs Incurred Relating to Oil and Gas Producing Activities -

Years Ended September 30,

1997

1996

1995

Property acquisition:

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

$

47
8,358
9,656
27,808
$  45,869

(in thousands)

$       256
3,178
9,874
14,131
$  27,439

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

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 demonstrate
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, 1994 ...................................................................
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, 1995 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

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

6,329,112
629,154
298,986
(809,571)
21,912
(1,477)

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

280,046
5,098
21,311
(34,535)
647
(266)

28

OIL (Bbls.)

GAS (Mmcf)

Proved reserves at September 30, 1996 ...................................................................
Revisions of previous estimates ................................................................................
Extensions, discoveries and other additions..............................................................
Production..................................................................................................................
Purchases of reserves-in-place .................................................................................
Sales of reserves-in-place .........................................................................................

6,468,116
92,863
419,795
(985,633)
120
(189,875)

272,301
6,178
25,762
(40,463)
6
(548)

Proved reserves at September 30, 1997 ...................................................................

5,805,386

263,236

Proved developed reserves at

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

September 30, 1996...............................................................................................

September 30, 1997...............................................................................................

6,270,216

6,441,803

5,787,116

262,319

261,519

256,443

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 production
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
permanent differences were also considered in the future income tax calculation. Future net cash inflows after income taxes were
discounted using a ten percent annual discount rate to arrive at the Standardized Measure.

September 30,                 1997                      1996

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)

$656,698

$549,033

(187,672)
(134,892)
334,134
(129,099)
$205,035

(193,047)
(98,158)
257,828
(103,964)
$153,864

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

Years Ended September 30,

1997

1996

1995

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

(in thousands)

$153,864

$110,934

$124,623

(89,762)
77,789

42,741
(16,570)
27,509
6,146
20,691
(29,397)
2
(1,551)
13,573
$205,035

(56,563)
59,479

29,189
(6,651)
14,050
5,731
14,362
(31,158)
643
(124)
13,972
$153,864

(29,951)
(12,917)

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

29

NOTE 14  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

1997

Revenues  . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit  . . . . . . . . . . . . . . . . . . . . . . . .
Net income  . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share  . . . . . . . . . . . . . . . . . .

1996

Revenues  . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations  . . . . .
Income (loss) from discontinued 

operations  . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of discontinued operations  .
Net income  . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) per share:

Continuing operations  . . . . . . . . . . . . . .
Discontinued operations  . . . . . . . . . . . .
Gain on sale of discontinued operations
Net income  . . . . . . . . . . . . . . . . . . . . . .

(in thousands, except per share amounts)

1st
Quarter

2nd
Quarter

3rd
Quarter

$118,262          $132,479          

$129,812         

33,643
20,125
.41

1st
Quarter

36,863
22,418
.45

2nd
Quarter

37,513
23,648
.47

3rd
Quarter

$ 88,427         

$ 95,213          

$101,358         

16,971
9,468

1,625

11,093

.19
.04

.23

17,897
9,802

1,225

11,027

.20
.02

.22

23,256
12,650

508

13,158

.26
.01

.27

4th
Quarter

$137,306
32,954
17,995
.36

4th
Quarter

$108,257
21,180
13,506

(268)
24,050
37,288

.27
(.01)
.49
.75

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

Per share amounts have been restated to reflect the effect of the two-for-one common stock split and distribution (see Note 4).

Net income in the fourth quarter of 1997 includes a provision of $6.7 million ($.08 per share after income taxes) for a Federal
Energy Regulatory Commission ordered repayment of ad valorem taxes reimbursed to the Company during the period 1983-
1988.  The provision includes $2.7 million for ad valorem taxes (reduced revenues) and $4.0 million for interest.

Net income in the fourth quarter of 1996 includes the gain from sale of discontinued operations (see Note 6).

30

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, 1997 and 1996, and the related consolidated state-
ments of income, shareholders’ equity, and cash flows for each of the three years in
the period ended September 30, 1997.  These financial statements are the responsi-
bility of the Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures  in  the  financial  statements.    An  audit  also  includes  assessing  the
accounting  principles  used  and  significant  estimates  made  by  management,  as
well as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In  our  opinion,  the  financial  statements  referred  to  above  present  fairly,  in  all
material respects, the consolidated financial position of Helmerich & Payne, Inc. at
September 30, 1997 and 1996, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended September 30, 1997,
in conformity with generally accepted accounting principles.

As  discussed  in  Note  1  to  the  financial  statements,  effective  July  1,  1995,  the
Company  adopted  Statement  of  Financial  Accounting  Standards  No.  121,
“Accounting for the Impairment of Long-Lived Assets to be Disposed Of”. 

Tulsa, Oklahoma
December 4, 1997

Stock Price Information*

Closing Market Price Per Share

1997 

1996

QUARTERS                                        HIGH     LOW    HIGH   

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

$27.56
27.44
29.63
40.00

$21.94
21.00
21.81
29.47

$15.06
17.25
19.13
21.81

LOW
$12.25
13.50
16.50
17.38

Dividend Information*

QUARTERS

Paid Per Share                Total Payment

1997 

1996           1997               1996

First .................................................. $.065 $.0625 $3,239,007
3,239,892
Second .............................................. .065
3,242,952
.065
Third .................................................
3,248,275
Fourth................................................ .065

.0625
.0625
.065

$3,095,578
3,100,568
3,104,724
3,229,596

*Restated to reflect the effect of the two-for-one common stock split and distribution (see Note 4).

STOCKHOLDERS’ MEETING

The annual meeting of stockholders will be held
on March 4, 1998. 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 27, 1998.

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  December  15,  1997,  there  were  1,467
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
Transfer Agent at the following address:

Bank One Trust Company, N.A.
Stock Transfer Department
P.O. Box 25848, OK1-1096
Oklahoma City, Oklahoma 73125-0848
Telephone: (405) 231-6325

800-395-2662, Extension 6598

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

31

Eleven-Year Financial Review

HELMERICH & PAYNE, INC.

Years Ended September 30,         1997                  1996                   1995     

REVENUES AND INCOME*

Contract Drilling Revenues...............................................................
Crude Oil Sales ................................................................................
Natural Gas Sales ............................................................................
Gas Marketing Revenues.................................................................
Real Estate Revenues......................................................................
Dividend Income ..............................................................................
Other Revenues ...............................................................................
Total Revenues††.............................................................................
Net Cash Provided by Continuing Operations††..............................
Income from Continuing Operations ................................................
Net Income3 .....................................................................................

315,327
20,475
87,737
66,306
8,224
5,268
14,522
517,859
165,568
84,186
84,186

244,338
15,378
60,500
57,817
8,076
3,650
3,496
393,255
121,420
45,426
72,566

PER SHARE DATA**

Income from Continuing Operations ................................................
Net Income3......................................................................................
Cash Dividends ................................................................................
Shares Outstanding* ........................................................................

1.69
1.69
.26
50,028

.92
1.47
.2525
49,771

FINANCIAL POSITION

62,837
Net Working Capital* ........................................................................
1.66
Ratio of Current Assets to Current Liabilities ...................................
323,510
Investments*.....................................................................................
Total Assets* .................................................................................... 1,033,595
Long-Term Debt* ..............................................................................
Shareholders’ Equity*.......................................................................

780,580

__

CAPITAL EXPENDITURES*

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

109,036
33,425
1,095
16,022
__

159,578

51,803
1.83
229,809
821,914
__

645,970

79,269
21,142
752
7,003
1,581
109,747

203,325
13,227
33,851
34,729
7,560
3,389
10,640
306,721
84,010
5,788
9,751

.12
.20
.25
49,529

50,038
1.74
156,908
707,061
__

562,435

80,943
19,384
873
9,717
859
111,776

PROPERTY, PLANT AND EQUIPMENT AT COST*

Contract Drilling Equipment .............................................................
Producing Properties .......................................................................
Undeveloped Leases........................................................................
Real Estate.......................................................................................
Other ................................................................................................
Discontinued Operations ..................................................................
Total Property, Plant and Equipment................................................ 1,160,881

643,619
395,812
14,109
47,682
59,659
__ 

568,110
392,562
9,242
46,970
53,547
__

1,070,431

501,682
384,755
8,051
46,642
55,655
13,937
1,010,722

* 000’s omitted
** Per share data and shares outstanding are restated to reflect the effect of a two-for-one stock split and distribution as discussed in Note 4.
†† Chemical operations were sold August 30, 1996 (see note 6).  Prior year amounts have been restated to exclude discontinued operations.
3 Includes $13.6 million ($.28 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 $4,000,000
($.08 per share) in 1994.

32

1994                  1993                   1992                 1991                 1990                1989                   1988

1987

182,781
13,161
45,261
51,874
7,396
3,621
6,058
310,152
74,463
17,108
24,971

149,661
15,392
52,446
63,786
7,620
3,535
8,283
300,723
72,493
22,158
24,550

.35
.51
.2425
49,420

.46
.51
.24
49,275

76,238
2.63
87,414
621,689
__  

524,334

53,752
40,916
902
9,695
618
105,883

444,432
377,371
11,729
47,827
48,612
13,131
943,102

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

24,101
23,142
436
5,901
629
54,209

418,004
340,176
10,010
47,502
45,085
12,545
873,322

112,833
16,369
38,370
40,410
7,541
4,050
6,646
226,219
60,414
8,973
10,849

.19
.22
.2325
49,152

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

43,049
21,617
690
16,984
158
82,498

404,155
329,264
12,973
47,286
43,153
11,962
848,793

105,364
17,374
35,628
10,055
7,542
5,285
20,020
201,268
50,006
19,608
21,241

.41
.44
.23
48,976

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

56,297
34,741
2,104
6,793
2,594
102,529

370,494
312,438
5,552
46,671
36,423
11,838
783,416

90,974
16,058
37,697
10,566
7,636
7,402
56,131
226,464
53,288
45,489
47,562

78,315
14,821
33,013
__

7,778
9,127
17,371
160,425
65,474
20,715
22,700

75,985
14,001
26,154
__

7,878
10,069
15,206
149,293
54,959
17,746
20,150

64,718
15,223
17,251
__

7,561
9,757
34,757
149,267
36,999
20,575
22,016

.94
.98
.22
48,971

.43
.47
.21
48,346

.37
.42
.20
48,331

.43
.46
.19
48,374

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

18,303
16,489
1,467
5,448
1,153
42,860

324,293
287,248
5,507
44,928
32,135
9,270
703,381

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

17,901
30,673
878
6,717
815
56,984

323,313
279,768
5,441
48,016
29,716
8,156
694,410

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

19,110
25,936
3,095
2,496
815
51,452

313,289
251,445
3,305
47,165
27,798
7,370
650,372

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

13,993
27,402
6,128
2,012
336
49,871

309,865
228,214
4,197
44,070
28,274
6,602
621,222

33

Eleven-Year Operating Review

HELMERICH & PAYNE, INC.

Years Ended September 30,

1997

1996

1995

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

38
39
246
2,753
11,192
88
91

41
36
233
2,499
10,724
82
85

PETROLEUM EXPLORATION AND DEVELOPMENT

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

100
49.3
9.6

63
35.3
7.3

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

2,700
133
49
5

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

110,859
410

2,212
176.9
63.8
12

94,358
378

41
35
212
1,933
9,119
71
84

59
27.4
5.9

2,214
186
64
12

72,387
354

NATURAL GAS ODORANTS AND
OTHER CHEMICALS††

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

9,823

7,670

REAL ESTATE MANAGEMENT

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

1,652
95

1,654
94

1,652
87

TOTAL NUMBER OF EMPLOYEES

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

3,627

3,309

3,245

* 000’s omitted.
† 1987-1989 include U.S. employees only
†† Chemical operations were sold August 30, 1996 (see note 6).  Treated as discontinued operations in Financial Statements for all years presented.  

34

1994

1993

1992

1991

1990

1989

1988

1987

47
29
162
1,842
11,367
69
88

42
29
128
1,504
11,746
53
68

39
30
100
1,085
10,853
42
69

46
25
106
1,301
12,274
47
69

49
20
119
1,316
11,059
50
45

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

44
15
1.7

42
15.9
4.3

54
17.8
4.3

45
20.2
4.3

36
15.3
3.4

45
15.2
2.8

45
14.6
1.6

18
5.2
.5

2,431
202
71
14

72,953
341

2,399
202
71
14

78,023
307

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

8,071

7,930

8,452

8,155

8,255

7,702

8,507

8,165

1,652
83

1,656
86

1,656
87

1,664
86

1,664
85

1,669
90

1,670
90

1,595
94

2,787

2,389

1,928

1,758

1,864

1,100

1,156

1,026

35

Directors

Officers

W. H. Helmerich, III
Chairman of the Board

Hans Helmerich
President and Chief Executive Officer

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

Douglas E. Fears
Vice President and 
Chief Financial Officer

Steven R. Mackey
Vice President, Secretary
and General Counsel

Steven R. Shaw
Vice President
Exploration & 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 Company
Bartlesville, Oklahoma

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

L. F. Rooney, III*
Chief Executive Officer
Manhattan Construction Company
Tulsa, Oklahoma

Edward B. Rust, Jr.
President and Chief Executive Officer
State Farm Insurance Companies
Bloomington, Illinois

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

John D. Zeglis
President
AT&T
Basking Ridge, New Jersey

*Member, Audit Committee

36