Helmerich & Payne Could Take Hit From Venezuelan Devaluation

Venezuela's decision to devalue its currency could affect oilfield-services provider Helmerich & Payne (HP) to the tune of several million dollars.

The company, based in Tulsa, Okla., said in itsannual report in November that if a 10% to 100% devaluation were to occur, the company could experience potential losses ranging from about $6.6 million to $35.7 million.Last Friday, the Venezuelan government slashed the official rate of exchange for the bolivar by half to VEF4.3 for $1.

Helmerich said that 40% of its billings to state-owned Petroleos de Venezuela S.A. are in bolivares. The remaining 60% are in U.S. dollars, but in the past, PdVSA paid for these services in local currency instead, which increased the company's exposure to devaluation.

As of Sept. 30, Helmerich had $45.3 million in cash exposed to the risk of currency devaluation, the company said in the filing. On Monday the company didn't return calls for comment.

The devaluation's potential effect on Helmerich's profits underscores how challenging the country has been for oilfield-service companies operating in its rich oilpatch. Last May, Venezuelan president Hugo Chavez began nationalizing more than 70 foreign and local oil-service companies and dragged its feet in compensating its owners. Companies such asWilliams Cos. (WMB) wrote off some of their Venezuelan operations after the expropriation.

Helmerich & Payne was more exposed to Venezuela than many other oilfield-service companies, said Phil Weiss, an analyst with Argus Research in New York. But the company has been slowly pulling back.

Contracts with PdVSA accounted for about 21% of Helmerich's international operating revenues during its 2009 fiscal year ended September, but early last year, the company decided to discontinue work upon the expiration of contracts. At the end of the fiscal year, one rig remained active and "has since become idle," the company said.

Helmerich & Payne shares closed down 3.21% at $46.46 on Monday.

-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214; angel.gonzalez@dowjones.com

(Dan Molinski in Caracas contributed to this story)

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