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Helmerich & Payne (HP) to Pump $100M Into ADNOC Drilling IPO

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Helmerich & Payne, Inc. (HP - Free Report) recently announced a strategic collaboration with The Abu Dhabi National Oil Company (ADNOC) and its subsidiary ADNOC Drilling Company wherein ADNOC Drilling will purchase eight FlexRig® land rigs from Helmerich & Payne for $86.5 million. Following this buyout, the company will make a $100-million cornerstone investment in ADNOC Drilling's recently announced initial public offering (IPO).

Last week, ADNOC expressed its plan to list a 7.5% minority stake in ADNOC Drilling on the Abu Dhabi Securities Exchange (ADX) in an IPO, reflecting the continuous development, strength and relevance in the Middle Eastern capital city's financial market. ADNOC, a renowned diversified energy and petrochemicals company, and Helmerich & Payne will remain ADNOC Drilling's dedicated, long-term stockholders.

The above agreement will help Helmerich & Payne achieve its goal of deploying capital worldwide, especially in the MENA (Middle East and North Africa) area, by boosting its entry into the lucrative and rapidly-rising Abu Dhabi market as a vital platform for further regional expansion.

The cornerstone investment by the company will be made at the IPO price and is conditional on a three-year lock-up period. Helmerich & Payne, a global leader in rig technologies and drilling solutions, intends to profit from ADNOC Drilling's commitment to a strong dividend policy, as indicated in the ADNOC Drilling Prospectus.

The rigs will be delivered and commissioned in phases over the course of a year with acceptance contingent on the successful completion of a final inspection under standard terms and conditions.

Helmerich & Payne will join Baker Hughes Company (BKR - Free Report) , one of the world’s largest oilfield service providers, as a major shareholder once the $100-million share purchase is completed. In 2018, Baker Hughes paid $550 million for a 5% ownership in ADNOC Drilling, valuing the company at roughly $11 billion.

Shares of Tulsa, OK-based Helmerich & Payne have gained 17.9% compared with its industry's 84.8% rise.

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Zacks Rank & Key Picks

Helmerich & Payne currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Devon Energy Corporation (DVN - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Devon Energy is likely to see earnings growth of 9.32% in 2021 while the bottom line of Continental is expected to soar 435.9% in the same period.