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Contract drilling services provider Helmerich & Payne Inc. (HP - Analyst Report) reported strong results for the fourth fiscal quarter of 2013 (three months ended Sep 30, 2013), driven by robust international land drilling business.

Earnings per share from continuing operations (excluding special items) came in at $1.44, comfortably surpassing the Zacks Consensus Estimate of $1.41 and the year-ago adjusted profit of $1.36.

Revenues of $864.5 million were up 4.2% from the fourth fiscal quarter 2012 and also came above the Zacks Consensus Estimate of $849.0 million.

Segment Performance

U.S. Land Operations: During the quarter, operating revenues totaled $707.9 million (82% of total revenue), up 1.8% year over year. Average rig revenue per operating day was $29,058, 2.6% above the year-ago period. However, utilization levels fell to 82% (from 85% in the fourth fiscal quarter of 2012), while average rig margin per day decreased 1.8% to $15,420. The interplay of these factors pulled down the segment operating income slightly (by 0.3%) from the year-earlier quarter to $235.8 million.

Offshore Operations: Helmerich & Payne’s offshore revenues were up 2.7% year over year to $54.7 million. But daily average rig revenue decreased 2.6% to $60,415, while average rig margin per day plummeted 22.9% to $17,981. This pulled down the segment operating income 14.5% from the previous year period to $10.3 million, partially offset by the improvement in rig utilization that went up to 89% for the period, against 84% a year ago.

International Land Operations: Helmerich & Payne’s international land operations recorded revenues of $98.5 million, up from $77.7 million in the previous-year quarter. Average daily rig revenue was $37,113, up 3.9%, while rig margin per day was $10,634, against $8,210 in the year-ago period. As a result, segment profitability took an upward trajectory, reaching $13.9 million, compared to $7.1 million in the fourth quarter of fiscal 2012. Moreover, activity levels rose to 87% from 79% a year ago.

Capital Expenditure & Balance Sheet

During the quarter, Helmerich & Payne spent approximately $190.5 million on capital programs. As of Sep 30, 2013, the company had approximately $447.9 million in cash, while long-term debt stood at $80.0 million (debt-to-capitalization ratio of 1.8%).

Zacks Rank & Stock Picks

Helmerich & Payne currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

One could also look at Matador Resources Co. (MTDR - Snapshot Report), SM Energy Co. (SM - Analyst Report) and Abraxas Petroleum Corp. (AXAS - Snapshot Report) as good buying opportunities. These U.S. upstream energy operators – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with the potential to rise significantly from the current levels.

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