Dahlman Rose Comments On Helmerich & Payne Following Earnings Report

Helmerich & Payne HP reported EPS results that were lighter than expected mostly reflecting lower international results. Dahlman expects the market will look through this and focus on the US land market where the company announced 8 additional newbuilds under multi-year contracts. HP reported fiscal 2Q11 EPS of $0.91, but excluding one-time items of $0.02, continuing EPS was $0.93. Dahlman's forecast was $0.99 and the Street was $0.97. US land drilling revenues of $495.5MM were below Dahlman's $504.6MM forecast while gross income for the segment of $234.6MM was slightly less than its $237.2MM estimate. Average margins per day improved sequentially to $13,183/day from $13,020/day during 4Q11, but were below the $13,400/day forecast. Offshore revenues were higher than expected at $50.6MM, ahead of Dahlman's $48.9MM projection and overall gross income was $16.7MM compared to its $14.7MM estimate. Average margins per day improved significantly q/q to $23,747/day versus $18,065/day during 4Q10 and our $18,000/day forecast. Dahlman Rose has a $73 PT and Buy rating on HP HP is trading lower at $67.49