Contract drilling services provider
Helmerich & Payne Inc.
) reported strong earnings for the third fiscal quarter of 2013
(three months ended Jun 30, 2013), driven by robust offshore and
international land drilling businesses.
Earnings per share from continuing operations (excluding
special items) came in at $1.44, comfortably surpassing the Zacks
Consensus Estimate of $1.35 and the year-ago adjusted profit of
The latest beat marks Helmerich & Payne's fifth
outperformance in as many quarters. It is also as per our
expectation, due to the combination of Helmerich & Payne's
Zacks Rank #3 (Hold) and +0.74% ESP (Read:
Zacks Earnings ESP: A Better Method
Earlier this week, Helmerich & Payne's direct rival
Nabors Industries Ltd.
) missed earnings forecasts, hamstrung by weakness in its North
Revenues of $840.2 million were up 2.5% from the third quarter
2012 but came under the Zacks Consensus Estimate of $846.0
million amid lower contribution from U.S. land drilling
During the quarter, operating revenues totaled $695.8 million
(83% of total revenue), down 1.6% year over year. Average rig
revenue per operating day was $28,160, almost flat from the
year-ago period. Utilization levels fell to 83% (from 89% in the
third fiscal quarter of 2012). Nevertheless, segment operating
income improved slightly (by 0.3%) from the year-earlier quarter
to $236.4 million, as average rig margin per day increased 4.4%
Helmerich & Payne's offshore revenues were up 29.4% year over
year to $53.9 million. Daily average rig revenue increased 23.9%
to $61,380, while average rig margin per day jumped 48.6% to
$25,108. This drove up the segment operating income 82.9% from
the previous year period to $14.1 million, further helped by the
improvement in rig utilization that went up to 89% for the
period, against 74% a year ago.
Helmerich & Payne's international land operations recorded
revenues of $87.0 million, up from $67.5 million in the
previous-year quarter. Average daily rig revenue was $35,955, up
7.8%, while rig margin per day was $8,591, against $7,704 in the
As a result, segment profitability took an upward trajectory,
reaching $8.5 million, compared to $6.3 million in the third
quarter of fiscal 2012. Moreover, activity levels rose to 80%
from 77% a year ago.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately
$180.1 million on capital programs. As of Jun 30, 2013, the
company had approximately $480.5 million in cash, while long-term
debt stood at $195.0 million (debt-to-capitalization ratio of
Zacks Rank & Stock Picks
Helmerich & Payne currently carries a Zacks Rank #3
(Hold), implying that it is expected to perform in line with the
broader U.S. equity market over the next one to three months.
Meanwhile, one can look at
Atwood Oceanics Inc.
Parker Drilling Co.
) as good buying opportunities. These drilling service providers
- sporting a Zacks Rank #2 (Buy) - have solid secular growth
stories with potential to rise from current levels.
ATWOOD OCEANICS (ATW): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
NABORS IND (NBR): Free Stock Analysis Report
PARKER DRILLING (PKD): Free Stock Analysis
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