Helmerich & Payne Beats Estimates - Analyst Blog
January 31 2012 - 9:15AM
Zacks
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.
InternationalLandOperations:
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
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