Contract drilling services provider
Helmerich & Payne Inc.
(
HP
) reported sterling results for the third quarter of fiscal 2012
(three months ended June 30, 2012), reflecting strong contributions
from the domestic and international land operations.
Earnings per share from continuing operations (excluding special
items) came in at $1.37, beating the Zacks Consensus Estimate of
$1.15. Compared with the year-ago adjusted profit, the result
increased 38.4% from 99 cents.
Revenues of $819.8 million were up 27.3% from third quarter 2011
and also surpassed our projection of $782.0 million.
Segment Performance
U.S. Land Operations:
During the quarter, operating revenues totaled $706.8 million (86%
of total revenue), up 31.0% year over year. Average rig revenue per
operating day was $28,096, up 8.2%, while average rig margin per
day increased 11.6% to $14,759.
Utilization levels rose to 89% (from 87% in the third quarter of
fiscal 2011). As a result, segment operating income improved
significantly (by 27.8%) from the year-earlier quarter to $235.7
million.
Offshore Operations:
Helmerich & Payne's offshore revenues were down 23.8% year over
year to $41.6 million. Daily average rig revenue decreased 9.0% to
$49,539, while average rig margin per day plunged 34.5% to $16,901.
This pulled down the segment's operating income 40.3% from the
prior-year quarter to $7.7 million. Quarterly rig utilization was
74%, down from 78% recorded a year ago.
International Land Operations:
International land operations recorded revenues of $67.5 million,
up from $46.1 million in the previous-year quarter. Average daily
rig revenue was $33,362, up 14.2%, while rig margin per day was
$7,704, against $5,353 in the year-ago period. With better
activity, the segment generated operating profit of $6.3 million,
compared with a loss of $624,000 in the third quarter of fiscal
2011. Utilization level was 77%, up from 65% in the corresponding
period, last year.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately
$281.5 million on capital programs. As of June 30, 2012, the
company had approximately $148.9 million in cash, while long-term
debt stood at $235.0 million (debt-to-capitalization ratio of
6.1%).
The company bought back about 1.75 million shares at an average
price of $44.40 per share.
Outlook & Recommendation
We remain apprehensive that the deteriorating oil price scenario
will likely impact the demand for drilling equipments and services,
affecting the company's profitability in the coming days.
Barbados-based
Nabors Industries Ltd.
(
NBR
) - leading land-drilling contractor in the world - reported
weaker-than-expected second quarter 2012 results, with earnings per
share and revenue missing our projection.
Helmerich & Payne currently retains a Zacks #4 Rank (short-term
Sell rating). Longer term, we are maintaining our Underperform
recommendation on the stock.
HELMERICH&PAYNE (HP): Free Stock Analysis
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NABORS IND (NBR): Free Stock Analysis Report
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