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Helmerich & Payne (HP) Gains Since Posting Q1 Earnings Beat

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The stock of Helmerich & Payne Inc. (HP - Free Report) has gained 12.7% since its fiscal first-quarter earnings announcement on Jan 31. Besides scoring top and bottom-line beats, investors were encouraged by the oil and gas contract drilling services provider’s bullish outlook.

What Did Helmerich & Payne’s Earnings Unveil?

Helmerich & Payne reported fiscal first-quarter 2022 adjusted loss of 45 cents per share, narrower than the Zacks Consensus Estimate of 50 cents. In the year-ago period, the company had incurred a loss of 82 cents per share. The outperformance reflects a significant uptick in activity.

Meanwhile, operating revenues of $409.8 million topped the Zacks Consensus Estimate of $377 million and increased 66.3% from the year-ago level on strong results from the key North America Solutions segment. Precisely, sales from the unit totaled $341 million, ahead of the consensus mark of $337 million.

Highlighting the recovery from pandemic blues, Helmerich & Payne claims to have captured a roughly 35% market share for super spec rigs compared to less than 20% at the height of the pandemic.
 

Helmerich & Payne, Inc. Price, Consensus and EPS Surprise

Helmerich & Payne, Inc. Price, Consensus and EPS Surprise

Helmerich & Payne, Inc. price-consensus-eps-surprise-chart | Helmerich & Payne, Inc. Quote

Segment Performance

North America Solutions: During the quarter, operating revenues of $341 million were up 68.8% year over year on higher activity levels, with the average number of active rigs falling from 81 to 141. The steep uptick drilling works on the back of stronger oil and gas prices meant that the segment cut its operating loss from $72.9 million to $29 million in a year.

Offshore Gulf of Mexico: Revenues of $29.3 million decreased 9.2% from the year-ago quarter as there was one less average active rig (4). However, operating expenses during the October-December period of 2021 fell 21.1% year over year, resulting in the segment’s operating profit doubling from the prior-year period to $5.5 million.

International Solutions: The segment’s operations generated revenues of $37.2 million, up from $10.5 million in the corresponding period of 2020 – again due to improved activity levels, with the average number of active rigs rising 100% from 4 to 8. The unit reported a profit of $8 million, turning around from the loss of $8.4 million incurred in the corresponding period a year ago. Apart from increased drilling, the International Solutions segment benefited from a contractual dispute settlement.

Financial Position

In the reported quarter, Helmerich & Payne spent $44 million on capital programs. As of Dec 31, 2021, the company had $234.2 million in cash and cash equivalents while long-term debt was $542.2 million (debt-to-capitalization of 16.3%). The company repurchased around $60.4 million in stock during the quarter and an additional $16.4 million so far in 2022.

Guidance

With the rig market tightening, Helmerich & Payne sees certain leading-edge contracts getting revenue per day of around $30,000 compared to $23,000 in the reported quarter.

This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment between $100 million and $115 million in the fiscal second quarter. It sees around 165-175 contracted rigs by Mar 31, 2022.  

Coming to the Offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $6-$8 million for the fiscal second quarter.

Additionally, International Solutions operating gross margins are forecast between a loss of $2 million and breakeven for the current quarter.

For the current fiscal year, Helmerich & Payne still estimates capital outlay within $250-$270 million, while it hopes to have between $400 million and $450 million of cash and short-term investments on hand by Sep 30, 2022.

Zacks Rank & Stock Picks

Helmerich & Payne currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Vermilion Energy (VET - Free Report) , Murphy USA (MUSA - Free Report) and ExxonMobil (XOM - Free Report) . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vermilion Energy: Vermilion Energy is valued at around $2.7 billion. The Zacks Consensus Estimate for VET’s 2022 earnings has been revised 45% upward over the past 60 days.

Vermilion Energy delivered a four-quarter average earnings surprise of 54.4%, including a 100% beat in Q3. VET shares have gained around 206.1% in a year.

Murphy USA: Murphy USA is valued at around $4.6 billion. The consensus estimate for MUSA’s 2022 earnings has been revised 19.6% upward over the past 60 days.

MUSA beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.6%. Murphy USA has rallied around 42.4% in a year.

ExxonMobil: ExxonMobil has a projected earnings growth rate of 29.9% this year. The Zacks Consensus Estimate for XOM’s 2022 earnings has been revised 18.9% upward over the past 60 days.

ExxonMobil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 5.8%. XOM shares have gained around 69.8% in a year.