Company Reports

After further reviewing the impact from Helmerich & Payne's fiscal third-quarter earnings report, we slightly decrease our fair value estimate to $46 from $49. The decrease from our initial Aug. 12 review is due to lower direct margins than we previously assumed, in line with guidance. For the North America Solutions segment—the company's largest at 88% of revenue—we now expect direct margins of $264 million for the fiscal third quarter, down just under 9% from $289 million. That said, our no-moat and Standard capital allocation ratings are unchanged.

Helmerich & Payne has maintained the dominant market share in US horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation. It was an early adopter of super-spec rigs (AC drive, minimum 1,500-horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one third of total super-spec rigs available in the United States.

Helmerich & Payne posted fiscal third-quarter revenue of $698 million, slightly 2% above our forecast of $682 million. Improved average pricing in North America bolstered this uptick. After updating our cash flow model, our fair value estimate saw a slight increase to $49 from $48 because of the time value of money. Our no moat rating and Standard Morningstar Capital Allocation Rating remain unchanged.

Helmerich & Payne has maintained the dominant market share in US horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation. It was an early adopter of super-spec rigs (AC drive, minimum 1,500-horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one third of total super-spec rigs available in the United States.

Helmerich & Payne has maintained the dominant market share in US horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation. It was an early adopter of super-spec rigs (AC drive, minimum 1,500-horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one third of total super-spec rigs available in the United States.

Helmerich & Payne posted fiscal second-quarter earnings slightly under our forecasts. The company had $688 million of revenue, an 11% drop from its $769 million in revenue this time last year. Adjusted operating margin dropped 200 basis points sequentially to 15% from 17%. A weak natural gas market in the US market and recent E&P consolidations drove this downward trend, as both factors affected the firm’s largest segment. After updating our model for slightly lower revenue and higher capital expenditures, we lower our fair value estimate to $48 from $50. Our no-moat rating remains unchanged.

Helmerich & Payne has maintained the dominant market share in US horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one-third of total super-spec rigs available in the United States.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one-third of total super-spec rigs available in the United States.

Helmerich & Payne commenced its fiscal first quarter on solid footing, with revenue expanding 3% sequentially despite standard seasonal slowdowns, and the firmwide operating margin jumped nearly 300 basis points to 17%. Year-over-year performance was less impressive due in large part to comparatively subdued drilling activity throughout North America, with 160 fewer active rigs on average. We maintain our $50 fair value estimate and no-moat rating following the results.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose the majority of its operating fleet. H&P is the largest super-spec provider in the industry, representing about one-third of total super-spec rigs available in the United States.

Helmerich & Payne, or H&P, reported a slightly weaker second quarter (the firm’s fiscal third quarter) despite a softened North American land drilling market. We maintain our no-moat rating and are slightly raising our fair value estimate to $50 per share from $49, mainly because industry activity is still elevated compared with recent years. Furthermore, we view the current dip in land drilling as largely transitory and anticipate a rebound in contracting activity around December 2023, after well operators finalize capital budgets for fiscal 2024. Near-term drilling activity will nevertheless be comparatively subdued after several straight months of explosive growth, and we expect H&P’s results through year-end will reflect its relatively weaker second-quarter performance.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose about 84% of its operating fleet. H&P is the largest super-spec provider in the industry, representing about 30% of total super-spec rigs available in the United States.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose about 84% of its operating fleet. H&P is the largest super-spec provider in the industry, representing about 30% of total super-spec rigs available in the United States.

Helmerich & Payne, or H&P, continued to benefit from a strong North America drilling market, posting revenue growth of 65% year over year and 7% sequentially for the firm’s fiscal second quarter. Operating margins expanded nearly 175 basis points sequentially to 21% as the firm's average rig day rates pushed into the high $30,000s, a trend that is likely to continue over the next several quarters due to a favorable oil environment. We’ll incorporate the firm’s full financial and operating results shortly, but after this first look, we maintain our $49 per share fair value estimate and no-moat rating.

Helmerich & Payne, or H&P, commenced its fiscal-year 2023 on strong footing, posting first-quarter revenue growth of 76% year over year and 14% sequentially. H&P’s quarterly operating margin expanded to 19%, the firm’s highest level since mid-2015, mostly driven by steadily improving day rates in North America, a trend that will likely persist over the next several quarters. We’re raising our fair value estimate to $49 from $42 following results, primarily due to our improved outlook for firmwide margin accretion. We now estimate firmwide operating margins will average 20% moving forward, compared with our prior forecast of 15%. We maintain our no-moat rating and stable moat trend.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose about 84% of its operating fleet. H&P is the largest super-spec provider in the industry, representing about 30% of total super-spec rigs available in the United States.

Helmerich & Payne posted solid fiscal fourth-quarter results, reflecting continued operating strength to end the company's fiscal year. We expect the strong results to persist through fiscal 2023. We’re raising our fair value estimate to $42 per share from $35 following results. Two key factors drive the increase: a higher average active rig count for the firm and a steady increase in day rates over the next several quarters.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose about 84% of its operating fleet and about 30% of total super-spec rigs available in the United States.

Helmerich & Payne posted impressive results for the second quarter (the firm’s fiscal third-quarter 2022). Increased rig demand along with supply chain constraints and service provider capital discipline throughout North America continue to drive high rig utilization that’s improved pricing power for service providers, including H&P. We’ve also increased our midcycle estimate for the U.S. rig count, creating a more attractive long-term picture for suppliers. As such, we have increased our fair value estimate to $35 from $31 per share. Our no-moat and stable trend ratings are unchanged.

Helmerich & Payne has maintained the dominant market share in U.S. horizontal land rigs (26%) for over a decade. H&P seeks to differentiate itself in the commoditized drilling services market by staying at the forefront of technological innovation in the space. It was an early adopter of super-spec rigs (AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 pounds hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability), which now compose about 84% of its operating fleet and about 30% of total super-spec rigs available in the United States.