Helmerich & Payne Secures Rig Deal - Analyst Blog
July 06 2011 - 9:15AM
Zacks
Global contract drilling company
Helmerich & Payne Inc. (HP) signed a deal to
manufacture and operate 12 additional FlexRigs. Eight exploration
and production companies, names of which were not disclosed,
contracted Helmerich & Payne for the construction job.
Although the rigs are slated to be
completed and operational in 2012, Helmerich does not expect the
deal to have any significant impact on its previously announced
2011 capital expenditure forecast.
Helmerich’s proprietary FlexRig
design makes the rigs move faster than the conventional ones,
drills quicker and more efficiently and allows for a safer
operating environment. As such, these are better suited for the new
demands of the exploration business and, therefore, command higher
dayrates and utilization than rigs from other land drillers.
Since March 2005, the company has
committed to install 197 new FlexRigs. Currently, Helmerich has 26
rigs under construction, including the 12 recently announced ones.
Following the completion of these commitments in 2012, the global
land fleet of the company will comprise 247 FlexRigs, of which 236
will be utilized in the domestic land market.
As of June 30, 2011, the company’s
existing fleet consisted of 245 U.S. land rigs (about 213 are
active), 24 international land rigs (17 active) and 9 offshore
platform rigs (7 active).
Helmerich & Payne is a major
land and offshore drilling contractor in the western hemisphere,
having an efficient drilling fleet with major work contracts from
well capitalized and large independent oil companies.
We believe Helmerich’s
technologically advanced FlexRigs will help it to increase its
active rig count and maintain relatively strong daily-rate margins
even during the current market uncertainty period. Moreover, the
uptrend in the U.S.land rig market will lead to improved demand for
the company’s services in the coming months.
However, with unstable oil and
natural gas fundamentals, supply-demand imbalance, challenging
international operations and stiff competition from peers such as
Nabors Industries Ltd. (NBR) and Noble
Corp. (NE), we maintain our long-term Neutral rating on
the stock.
HELMERICH&PAYNE (HP): Free Stock Analysis Report
NABORS IND (NBR): Free Stock Analysis Report
NOBLE CORP (NE): Free Stock Analysis Report
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