Newspaper article THE JOURNAL RECORD

Revenue Drops 25.7 Percent; Tulsa-Based Company Makes $200M Private Placement

Newspaper article THE JOURNAL RECORD

Revenue Drops 25.7 Percent; Tulsa-Based Company Makes $200M Private Placement

Article excerpt

With revenues down 25.7 percent, Helmerich and Payne suffered a 57.6-percent plunge in fiscal third-quarter earnings.

To ease that burden, the Tulsa-based international drilling contractor closed a $200 million private placement last week of 6.1- percent senior unsecured, fixed-rate notes due July 2016. Starting in three years, Helmerich intends to pay off the notes with five $40- million installments. It will pay interest semiannually.

"What we're seeing with H&P is no different from other oil and gas players - it's all based upon supply/demand for energy," said Oklahoma City securities analyst Greg Womack. "We are starting to see a bottoming in rig count, which could bode well for them. But ultimately, we have to see natural gas move higher."

Like Womack, Helmerich President and Chief Executive Hans Helmerich pinned the results on declining U.S. land rig activity. The company's U.S. land fleet rig utilization fell to 51 percent in the last quarter from 96 percent a year ago and 72 percent in the second fiscal quarter.

But with the rig count leveling, he remains optimistic H&P's propriety FlexRigs will continue to earn top marks and high daily rates.

"H&P's rig utilization is the highest in the industry among large drilling contractors due to its high percentage of rigs on term contracts and because of the availability of FlexRigs in the spot market," he said in a press release Thursday. "With over 80 percent of our U.S. land fleet comprised of FlexRigs, we are in a favored position to benefit from any improvement that lies ahead in the land rig market."

Wall Street seemed to take Thursday's earnings report in stride. With 3 million shares trading hands, a third more than the daily average, HP shares finished a roller-coaster session up 15 cents to $33.35.

"Income was expected to be off due to lower drilling activity," said Womack, president of Womack Investment Advisers of Edmond. "The average rig margin per day declined 17 percent from previous quarter."

For the three months ended June 30, Helmerich and Payne posted a net income of $53 million, or 50 cents per diluted share, down from $125.36 million, or $1.18, the prior year.

That actually beat the average of analysts surveyed by Zack's Investment Research, although it trailed by a penny the forecast by Thompson Financial/First Call. …

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