Helmerich & Payne Beats Estimates - Analyst Blog

By
A A A

Contract drilling services provider Helmerich & Payne Inc. ( HP ) reported strong results for the first fiscal quarter of 2012 (three months ended December 31, 2011), driven by a robust U.S. land drilling business.

Earnings per share from continuing operations (excluding special items) came in at $1.29, comfortably surpassing the Zacks Consensus Estimate of $1.16 and way above the year-ago adjusted profit of 94 cents.

Revenues of $732.6 million were up 23.2% from the first quarter 2011 and also just about beat our projection of $730.0 million.

Segment Performance

U.S. Land Operations: During the quarter, operating revenues totaled $617.8 million (85% of total revenue), up 29.6% year over year. Average rig revenue per operating day was $26,861, up 7.7%, while average rig margin per day increased 11.9% to $14,569. Utilization levels rose to 91% (from 84% in the first fiscal quarter of 2011). As a result, segment operating income improved significantly (by 41.9%) from the year-earlier quarter to $224.7 million.

Offshore Operations: Helmerich & Payne's offshore revenues were up 13.2% year over year to $50.8 million. Daily average rig revenue increased 18.3% to $53,644, while average rig margin per day edged up 22.7% to $22,171. This drove up the segment operating income 35.6% from the previous year period to $12.2 million, further helped by the improvement in rig utilization that went up to 84% for the period, against 71% a year ago.

International Land Operations: International land operations recorded revenues of $60.7 million, down from $69.0 million in the previous-year quarter. Average daily rig revenue was $31,072, down 8.0%, while rig margin per day was $9,015, against $11,625 in the year-ago period. As a result, segment profitability took a severe beating, down to just $7.9 million, compared to $14.4 million in the first quarter of fiscal 2011. However, activity levels rose to 78% from 76% a year ago.

Capital Expenditure & Balance Sheet

During the quarter, Helmerich & Payne spent approximately $256.9 million on capital programs. As of December 31, 2011, the company had approximately $347.9 million in cash, while long-term debt stood at $235.0 million (debt-to-capitalization ratio of 6.4%).

Outlook & Recommendation

Management indicated that with the industry shifting towards oil and liquids-rich targets, there is high demand for modern, technologically sophisticated rigs. With its newest and most technologically advanced land rig fleet, Helmerich & Payne is well positioned to take advantage of this scenario, while continuing to gain market share and adding value for its shareholders and customers. 

Importantly, Helmerich & Payne entered into contracts to build and operate 3 additional technologically-advanced FlexRigs in the U.S. under multi-year term contracts with attractive dayrates and economic returns.

Helmerich & Payne currently retains a Zacks #2 Rank (short-term 'Buy' rating), a notch higher than its rig contractor peers Patterson-UTI Inc. ( PTEN ) and Nabors Industries ( NBR ) . Longer term, we are maintaining our Neutral recommendation on the stock.


 
HELMERICH&PAYNE ( HP ): Free Stock Analysis Report
 
NABORS IND ( NBR ): Free Stock Analysis Report
 
PATTERSON-UTI ( PTEN ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HP , NBR , PTEN

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

50%
67%
100%

Most Active by Volume

112,007,213
  • $14.79 ▼ 2.12%
79,492,830
  • $17.05 ▲ 0.24%
63,236,947
  • $56.63 ▲ 7.54%
55,553,482
  • $3.41 ▼ 3.94%
53,662,885
  • $14.19 ▼ 3.47%
52,606,858
  • $100.75 ▲ 0.64%
39,074,810
  • $4.84 ▼ 2.22%
38,681,912
  • $25.62 ▲ 0.79%
As of 9/30/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com