By the mid 1960s, offshore drilling had become a major component of the oil and gas industry. Helmerich & Payne had been enticed by its prospects for some time, and had been encouraged by contract drilling customers who appreciated the company's dedication to quality and efficiency in its land-based drilling.
Finally, in 1964, the company contracted for the design and construction of its first offshore drilling vessel, Spindletop. It was a mobile unit, 352 feet long, 76 feet wide, and 19 feet deep that could drill in water up to 600 feet in depth.
Completed in 1968, the new rig was launched with great fanfare. It was felt that Spindletop would be a new beginning for Helmerich & Payne, and could offset the decline in land-based drilling in the United States, where the number of active rigs in 1967 had dropped to less than 1,000.
Unfortunately, in 1969, while drilling under contract to Shell and the Italian government off the coast of Italy, Spindletop was severely damaged during a storm. The incident resulted in cancellation of the drilling contract.
The following year, the company traded Spindletop to Atwood Oceanics, Inc., an experienced offshore drilling company, in exchange for a 28 percent interest in the firm. Atwood already owned a rig identical to Spindletop, and soon added a third. By mid-1970, the three rigs were operating off the coasts of Brunei and Ghana, and in the Persian Gulf.
Like his father, Walt Helmerich, III, had a keen sense for attractive investments. In 1967, he spotted an opportunity in a larger oil and gas company, Sunray DX. H&P began purchasing Sunray DX common stock, and by September 30, 1968, had made its largest single investment up to that time by acquiring 616,000 shares at a cost of approximately $22 million. The two companies began merger discussions, but before a deal could be struck, Sun Oil Company made an offer for Sunray DX. H&P brought suit to block the merger and won in its initial legal efforts. In the end, a federal court overturned the decision and the Sun/Sunray DX merger was subsequently approved by shareholders, but only by a narrow margin.
The merger provided H&P with a significant "paper profit" on its investment, and through a stock exchange the Company became the largest holder of preferred stock in Sun. The dividend from the investment provided significant tax-favored income, and the stock was subsequently used in a unique $60 million Eurobond subordinated debenture offering that established H&P's credentials in international finance.
In reflecting on the significance of the investment, Helmerich would comment, "The Sunray DX investment represented the largest percentage increase in assets made during the 35 years I ran the Company."
Diversification Pays Off.
The time had been right for diversification.
By 1965, the benefits were evident as company sales reached $27.5 million, with only half that amount coming from traditional Helmerich & Payne businesses, oil and gas sales and contract drilling.
Helmerich and Payne had been listed on the New York Stock Exchange since 1963, and investors had witnessed substantial growth. During the 1960s, the company revenues grew from $14.2 million to more than $38 million — almost a three-fold expansion.
In the next ten-year period, from January 1, 1970, to December 31, 1979, the price of Helmerich & Payne stock rose 1,174 percent