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In A Challenging Environment, Argus Sees Helmerich & Payne Better Positioned Than Its Peers

Although only a modest improvement is expected in the U.S. land drilling market through the remainder of 2016, Argus’ Bill Selesky expects Helmerich & Payne, Inc. HP 0.66% to remain better positioned that its peers in a challenging environment.

Seleski maintained a Buy rating on the company, while reiterating a $72 price target.

The company reported its adjusted fiscal 3Q16 results on July 28, with net loss of $51.2 million or $0.47 per share, down from the adjusted net profit of $31.0 million or $0.28 per share reported for 3Q15.

“The adjusted loss was wider than our loss estimate of $0.44 per share and the consensus loss estimate of 0.46,” the analyst mentioned.

Seleski attributed the operating loss for the quarter primarily to lower drilling revenue, which was driven by reduced capital spending by E&P companies, as well as lower drill margins in the offshore segment and lower utilization rates.


“HP has industry-low debt, giving it the flexibility to add debt without straining its balance sheet. The company’s above-peer-average dividend yield of 4.5 percent is also attractive, in our view,” the analyst added.

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