Newspaper article THE JOURNAL RECORD

Tulsa-Based Helmerich and Payne Profits Drop, but Top Expectations

Newspaper article THE JOURNAL RECORD

Tulsa-Based Helmerich and Payne Profits Drop, but Top Expectations

Article excerpt

Shares of Helmerich and Payne dropped 2 percent Thursday after the drilling contractor posted double-digit earnings and revenue declines for both its fiscal year and fourth quarter, beating Wall Street estimates.

"It could be several more quarters before we see significant growth in comparisons for year over year," said Oklahoma City securities analyst Greg Womack. "But for now it appears they are controlling costs, improving margins and their balance sheet, and that's all you can ask for in this market."

The Tulsa company also reported $32 million in collections from Petroleos de Venezuela, leaving $73 million in outstanding invoices from that yearlong controversy. All 11 of Helmerich's Venezuela rigs now stand idle, following actions by the state-run oil company to tie its financial debts to this year's dramatically lower commodity prices.

In a press release Thursday, the company said it does not expect to receive any new PDVSA contracts until it progresses on pending receivables and conversion to U.S. currency. H&P intends to continue discussions with Petroleos to work through the situation.

"Venezuela is one of the most, if not the most, volatile government in the world in terms of relationships with the U.S.," said Tulsa analyst M. "Jake" Dollarhide. "Obviously it's a black eye probably the company is not proud of. They could have declared a loss, but that's not Helmerich and Payne-like."

For the 12 months ended Sept. 30, Helmerich and Payne reported a 23.4-percent drop in net income to $353.5 million, or $3.32 per diluted share, from $461.7 million, or $4.34, the prior fiscal year.

While the fiscal 2009 numbers included 4 cents of after-tax income, those results still topped the $3.24 earnings forecast by Thomson Financial/First Call analyst polls and the $3.25 profit foreseen by Zacks Investment Research analysts.

Operating revenue slipped 6.9 percent to $1.89 billion from $2 billion.

For its fiscal fourth quarter, the developer of the FlexRig drilling rig posted a 59.2-percent decline in income to $51.48 million, or 48 cents per diluted share, from $126.48 million, or $1.18, the prior year.

Analysts surveyed by both Thomson and Zacks had expected 44 cents per diluted share. H&P's latest quarter included a 1-cent-per-share gain from nonoperating items.

Revenue fell 37.9 percent to $362.2 million from $583.7 million.

After falling 5 percent Thursday morning on the New York Stock Exchange, HP shares recovered to finish the day down 78 cents to close at $37.40. At 2.7 million shares, its trading volume almost doubled HP's daily average.

Dollarhide said Helmerich and Payne had done well to keep its head above water in the face of lower commodity prices, decreased drilling activity and the Venezuela problems.

"This is a solid report, one that gives investors hope that when markets turn around in 2010, 2011, Helmerich and Payne will be poised to be a great growth play," said the chief executive of Tulsa's Longbow Asset Management. …

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