Why Is Drilling Rig Operator Helmerich & Payne Stock Seeing Blue Skies Today?

Helmerich & Payne Inc HP shares are surging today after the company reported first-quarter FY24 results yesterday.

Revenue of $677.1 million beat the consensus of $662.2 million. Adjusted EPS of $0.97 beat the consensus of $0.72.

Segment operating income stood at $153.2 million vs. $130.6 million prior quarter. Operating cash flow stood at $175 million in the quarter.

The North America Solutions (NAS) segment exited the first quarter with 151 active rigs and witnessed an increase in revenue per day of about $1,000/day to $38,300/day on a sequential basis, while direct margins per day rose by about $1,200/day to $18,700/day.

In the first quarter, Helmerich & Payne returned around $90 million of capital to shareholders through base dividends ($25 million), supplemental dividends $17 million and share repurchases ($47 million).

Dividend: In December, the Board of Directors declared a quarterly dividend per share of $0.25 and a supplemental cash dividend of $0.17 per share, both payable on February 27, 2024, to stockholders of record as of February 13, 2024.

Outlook: The company expects second-quarter North America Solutions direct margins to be $255 million-$275 million and International Solutions direct margins to be $1 million-$3 million.

Helmerich & Payne sees fiscal 2024 gross capital expenditures of about $450 million-$500 million.

Given the outlook for a lower level of crude oil production growth in the U.S. in 2024, combined with the recent volatility in commodity prices, the company expects its rig count to only grow modestly in fiscal 2024.

“Our recent successes on the international front are evidence of this with our announcement of securing work for eight rigs in the Middle East, subject to finalization of contractual agreements. Including the one rig contracted in August 2023, we now have plans to put nine additional rigs to work in the Middle East, which when they begin operations will nearly double our existing international active rig count,” said President and CEO John Lindsay.

Price Action: HP shares are up 16.42% at $42.19 on the last check Tuesday.