04-HP-876_10K.qxd 12/15/04 2:43 PM Page 6 U.S. LAND DRILLING U.S. OFFSHORE PLATFORM DRILLING INTERNATIONAL DRILLING General Venezuela Venezuelan operations continue to be a significant par of the Company’s operations. During fiscal 2004, the Company moved two additional deep drilling rigs into the country, bringing the Company rig count to 13 land drilling rigs in Venezuela at the end of fiscal 2004. However in early fiscal 2005, the Company moved a highly mobile rig to the United States, leaving the rig count at twelve. The Company work ed primarily for the Venezuelan state petroleum  company PDVSA, during fiscal 2004, and revenues from this work accounted for approximately eight percent of the Company’s consolidated revenues during the fiscal year and 33 percent of international drilling revenues. Revenues  The Company’s international operations contributed approximately 24 percent of the Company’s consolidated revenues during fiscal 2004, compared with 21 percent of consolidated revenues during fiscal 2003 and 27 percent of consolidated revenues during fiscal 2002. Rig utilization in fiscal 2004 was 54 percent, up from 39 percent in fiscal 2003. The Company’s international drilling operations began in 1958 with the acquisition of Sinclair Oil Company’s drilling rigs in Venezuela. Helmerich & Payne de Venezuela, C.A., a wholly owned subsidiary of the Company, is one of the leading drilling contractors in Venezuela. Beginning in 1972, with the introduction of its first helicopter rig, the Company  expanded into other Latin American countries. As a result of declining financial trends and unfavorable market conditions in the Gulf of Mexico, the Company completed an analysis of its offshore platform business in the Gulf of Mexico . Based on this analysis, the Company recorded a pre- tax asset impairment charge of $51.5 million in the fourth quarter of 2004. It is likely during the first six months of calendar 2005 that one additional platform rig will be stacked and one  management contract will be terminated. The Company’s offshore platform operations contributed approximately 14 percent of the Company’s consolidated  revenues during fiscal 2004, compared with 22 percent of consolidated revenues during fiscal 2003 and 24 percent  of consolidated revenues during fiscal 2002. Rig utilization in fiscal 2004 was 48 percent, down from 51 percent in fiscal 2003. At the end of this fiscal year the Company had six of its 11 offshore platform rigs under contract and it  continued to work under management contracts for three customer- owned rigs. Revenues from drilling services  performed for the Company’s largest offshore platform drilling customer totaled approximately 61 percent of U.S.  offshore platform revenues during fiscal 2004. In November of 2004, the Company sold two conventional 2,000 horsepower U.S. land rigs for a total of $23.9 million. At the end of September 2004 and 2003, the Company had 87 and 83, respectively, of its land rigs available for work in the United States. The total number of rigs owned at the end of the period increased by a net of four rigs, resulting from five additional FlexRigs being completed during the year and removing from service one older conventional rig. The Company’s U.S. land operations contributed approximately 56 percent of the Company’s consolidated revenues during fiscal 2004, compared with 53 percent of consolidated revenues during fiscal 2003 and 42 percent of consolidated  revenues during fiscal 2002. Rig utilization in fiscal 2004 was 87 percent, up from 81 percent in fiscal 2003. The Company’s fleet of FlexRigs and highly mobile rigs maintained an average utilization of approximately 97 percent during fiscal 2004 while the Company’s conventional rigs had an average utilization rate of approximately 67 percent. At the close of fiscal 2004, 80 land rigs were working out of 87 available rigs. 3