Contract drilling services provider Helmerich & Payne Inc. (HP - Free Report) reported net operating loss per share for the fourth fiscal quarter of 2016 (three months ended Sep 30, 2016) – excluding special items – of 33 cents, narrower than the Zacks Consensus Estimate for a loss of 43 cents. The outperformance came on the back of greater operational efficiency and lower operating costs, which decreased by approximately 27% to $424.7 million.
However, the bottom line compared unfavorably with the year-ago adjusted profit of 4 cents amid sharply lower drilling activity.
Revenues of $331.7 million was down 40% from the fourth fiscal quarter of 2015 but came above the Zacks Consensus Estimate of $300.7 million.
Segment Performance
U.S. Land: During the quarter, operating revenues totaled $238.3 million (72% of total revenue), down 43% year over year. While average rig revenue per operating day was $28,148 - 2% below the year-ago period, average rig margin per day was down 20% to $11,899. Moreover, utilization levels plunged to 25% (from 43% in the fourth fiscal quarter of 2015), plunging the segment to an operating loss of $69.7 million. In the year-earlier quarter income from the unit was $33.7 million.
Offshore: Helmerich & Payne’s ‘Offshore’ revenues were down 39% year over year to $31.9 million. Daily average rig revenue fell 15% to $26,608 and average rig margin per day tumbled 37% to $8,318. This led to the steep decline in the segment operating income, which dived 80% from the previous year period to $2.6 million. Meanwhile, rig utilization came down from the year-ago level of 89% to 78%.
International Land: Helmerich & Payne’s ‘International Land’ operations recorded revenues of $58.4 million, down from $78.1 million in the previous-year quarter. Average daily rig revenue was $38,061, down 13% from the corresponding period last year but rig margin per day was $10,619, more than double the $5,001 a year ago as average rig expense per day tumbled 29%. As a result, despite declining activity levels - 39% as against 45% a year ago - the segment managed to reduce its losses from $47.2 million in the fourth fiscal quarter of 2015 to just $162,000.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $37.6 million on capital programs bringing the full-year figure to $257.2 million. As of Sep 30, 2016, the company had approximately $905.6 million in cash, while long-term debt stood at $491.8 million (debt-to-capitalization ratio of 9.7%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise by 20% sequentially during the first fiscal quarter of 2017. While the average rig revenue per day is likely to be around $23,500, daily average rig cost is expected to go down to roughly $14,200 during next quarter.
As for the offshore segment, Helmerich & Payne sees the average rig margin per day to be around $11,250 during the first quarter of fiscal 2017 and revenue days to stay unchanged sequentially.
Lastly, the international land segment will likely experience a decline in revenue days by 5% in the next quarter, while average rig margin per day is expected to average roughly $8,000.
For fiscal 2017, Helmerich & Payne expects a capital budget of $200 million.
Zacks Rank
Helmerich & Payne – whose peers include the likes of Patterson-UTI Energy Inc. (PTEN - Free Report) , Nabors Industries Ltd. (NBR - Free Report) and Transocean Ltd. (RIG - Free Report) – currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Contract drilling services provider Helmerich & Payne Inc. (HP - Free Report) reported net operating loss per share for the fourth fiscal quarter of 2016 (three months ended Sep 30, 2016) – excluding special items – of 33 cents, narrower than the Zacks Consensus Estimate for a loss of 43 cents. The outperformance came on the back of greater operational efficiency and lower operating costs, which decreased by approximately 27% to $424.7 million.
However, the bottom line compared unfavorably with the year-ago adjusted profit of 4 cents amid sharply lower drilling activity.
Revenues of $331.7 million was down 40% from the fourth fiscal quarter of 2015 but came above the Zacks Consensus Estimate of $300.7 million.
Segment Performance
U.S. Land: During the quarter, operating revenues totaled $238.3 million (72% of total revenue), down 43% year over year. While average rig revenue per operating day was $28,148 - 2% below the year-ago period, average rig margin per day was down 20% to $11,899. Moreover, utilization levels plunged to 25% (from 43% in the fourth fiscal quarter of 2015), plunging the segment to an operating loss of $69.7 million. In the year-earlier quarter income from the unit was $33.7 million.
Offshore: Helmerich & Payne’s ‘Offshore’ revenues were down 39% year over year to $31.9 million. Daily average rig revenue fell 15% to $26,608 and average rig margin per day tumbled 37% to $8,318. This led to the steep decline in the segment operating income, which dived 80% from the previous year period to $2.6 million. Meanwhile, rig utilization came down from the year-ago level of 89% to 78%.
International Land: Helmerich & Payne’s ‘International Land’ operations recorded revenues of $58.4 million, down from $78.1 million in the previous-year quarter. Average daily rig revenue was $38,061, down 13% from the corresponding period last year but rig margin per day was $10,619, more than double the $5,001 a year ago as average rig expense per day tumbled 29%. As a result, despite declining activity levels - 39% as against 45% a year ago - the segment managed to reduce its losses from $47.2 million in the fourth fiscal quarter of 2015 to just $162,000.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $37.6 million on capital programs bringing the full-year figure to $257.2 million. As of Sep 30, 2016, the company had approximately $905.6 million in cash, while long-term debt stood at $491.8 million (debt-to-capitalization ratio of 9.7%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise by 20% sequentially during the first fiscal quarter of 2017. While the average rig revenue per day is likely to be around $23,500, daily average rig cost is expected to go down to roughly $14,200 during next quarter.
As for the offshore segment, Helmerich & Payne sees the average rig margin per day to be around $11,250 during the first quarter of fiscal 2017 and revenue days to stay unchanged sequentially.
Lastly, the international land segment will likely experience a decline in revenue days by 5% in the next quarter, while average rig margin per day is expected to average roughly $8,000.
For fiscal 2017, Helmerich & Payne expects a capital budget of $200 million.
Zacks Rank
Helmerich & Payne – whose peers include the likes of Patterson-UTI Energy Inc. (PTEN - Free Report) , Nabors Industries Ltd. (NBR - Free Report) and Transocean Ltd. (RIG - Free Report) – currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on RIG - FREE
Get the latest research report on PTEN - FREE
Get the latest research report on NBR - FREE
Get the latest research report on HP - FREE