Rates for HP’s FlexRigs Command Impressive Premiums

Analysts at Pritchard Capital Partners reiterate their "neutral" rating on Helmerich & Payne HP, while raising their estimates for the company. The target price for HP is set to $44. Pritchard Capital Partners says, “HP reported an in line quarter, but announced contracts for nine newbuilds, bringing its total to 19 for the year. Rates for FlexRigs continue to command impressive premiums, but we believe the market knows the company has the best mouse trap and has priced it into HP's shares.” “Activity fell sequentially, with daily margins dropping roughly 10% as a rig rolled to a lower demobilization rate. The impact from the moratorium hit HP’s margins by $600 per day, and with the company expecting to receive standby rates for two rigs in fiscal Q4, activity days will likely remain flat but average rig margin per day is expected to fall 15% to 20% sequentially…. HP took its medicine during the quarter to the tone of $103 million as Hugo Chavez and socialist Venezuela seized HP’s eleven rigs and additional assets. HP now has a fleet of 28 rigs, which will soon be 29 as a second rig is planned to commence work in Bahrain in 1H 2011. The weaker quarterly results stem from four rigs in Argentina that received standby rates due to a strike,” the analysts mention. More Analyst Ratings here.