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Helmerich & Payne (HP) Stock Plunges 31.4% on Worse Q4 Loss

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Shares of Helmerich & Payne Inc. HP have lost 31.4% since the fourth-quarter fiscal 2021 earnings announcement on Nov 17. Apart from a wider-than-anticipated loss in the fiscal fourth quarter, this industry player's earnings performance was hampered by increased operating expenses that discouraged investors.

Delving Deeper

Helmerich & Payne reported an adjusted loss of 62 cents per share for the fiscal fourth quarter, comparing unfavorably than the Zacks Consensus Estimate of a loss of 50 cents due to higher operating expenses and a weak revenue contribution from the Offshore Gulf of Mexico and International Solutions segments.

However, this oil and gas contract drilling services provider’s loss improved from the year-ago quarter’s loss of 79 cents, attributable to a better-than-anticipated revenue contribution from the North America Solutions segment. Operating revenues for the segment totaled $293.3 million, surpassing the Zacks Consensus Estimate of $279 million.

Nevertheless, operating revenues of $343.81 million matched the Zacks Consensus Estimate but increased 65.1% from the year-ago level.

Segmental Performance

North America Solutions: Operating revenues of $293.3 million were up 96.44% year over year. The segment reported a narrower operating loss of $60.7 million than the loss of $78.2 million reported in fourth-quarter fiscal 2020 owing to well-maintained expenses and inventory levels.

Offshore Gulf of Mexico: Revenues of $31.5 million decreased 2.6% from the year-ago quarter’s reading. The segment recorded an operating profit of $4.5 million, higher than the year-ago quarter’s $1.5 million.

International Solutions: Operations generated revenues of $17.3 million, down from $24 million in the prior-year quarter. The unit reported a loss of $5.7 million, wider than the year-ago loss of $3.5 million.

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

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

Capital Expenditure & Balance Sheet

In the reported quarter, Helmerich & Payne spent $33 million on capital programs. As of Sep 30, 2021, HP had $917.5 million of cash and cash equivalents, while long-term debt was $542 million (debt-to-capitalization of 26%).

Guidance

This Tulsa, OK-based HP anticipates operating gross margins between $75 million and $85 million in the North America Solutions segment for the first quarter of fiscal 2022. Helmerich & Payne predicts around 152-157 contracted rigs by Dec 31, 2021.

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

International Solutions’ operating gross margins are forecast at a loss of $2-$0 million for the current quarter.

For the current fiscal year, Helmerich & Payne estimates a capital outlay of $250-$270 million.

Research and development expenses for fiscal 2022 are now expected to be roughly $25 million while general and administrative expenses are projected to be approximately $170 million. Depreciation is estimated to be around $405 million.

Zacks Rank & Key Picks

Helmerich & Payne currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.

Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.

The board of directors declared a dividend of 50 cents per share for the third quarter, accounting for an 11.1% hike in Diamondback Energy’s quarterly payout from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter.

ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices.

Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.


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