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Helmerich & Payne's (HP) Q2 Earnings & Sales Beat Estimates

Helmerich & Payne Inc. HP reported fiscal second-quarter 2023 adjusted earnings of $1.26 per share, which beat the Zacks Consensus Estimate of $1.05. In the year-ago period, the company had incurred a loss of 17 cents per share. The outperformance reflects a significant uptick in drilling activities.

Operating revenues of $769.2 million topped the Zacks Consensus Estimate of $741 million. The figure also increased 64.5% from the year-ago quarter’s level due to strong results from the North America Solutions segment. Sales from the unit totaled $675.7 million, ahead of the consensus mark of $659 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

Segmental Performance

North America Solutions: Operating revenues of $675.7 million were up 65.3% year over year on higher activity levels, with the average number of active rigs at 183. Operating profit totaled $182.1 million compared with $1.3 million in the corresponding period of 2022. This improvement can be attributed to an increase in drilling activities owing to the surging oil and gas prices.

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Offshore Gulf of Mexico: Revenues of $35 million increased 20% from the year-ago quarter’s level of $29.1 million. During January-March of 2023, operating expenses surged 23% year over year. Operating profit came in at $6.7 million, up 26.7% from that recorded in the prior-year period.

International Solutions: Sales in this segment increased to $55.8 million from $27.4 million in the comparable period of 2022. This was due to improved activity levels, with the average number of active rigs at four. The unit reported a profit of $4 million against a loss of $848,000 million in the prior-year period.

Financial Position

In the reported quarter, HP spent $181.5 million on capital programs. As of Mar 31, 2023, the company had $159.6 million in cash and cash equivalents, while the long-term debt was $542.7 million (debt-to-capitalization of 16.5%).

Guidance

For the fiscal third quarter, Helmerich & Payne anticipates operating gross margin in the North America Solutions and Offshore Gulf of Mexico segments to be in the range of $265-$285 million and $5.5-$7.5 million, respectively. The company expects to exit the quarter with around 155-160 contracted rigs.

Operating gross margin in the International Solutions segment is forecasted at a loss of $4-$7 million for the next fiscal quarter.

Helmerich & Payne estimates capital outlay between $400 million and $450 million for 2023. The company projects depreciation and amortization expenses at about $400 million, and research and development expenses at roughly $30 million.

General and administrative expenses are anticipated at $205 million.

Zacks Rank and Key Picks

Currently, HP carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the energy sector are Par Pacific PARR and Marathon Petroleum MPC, each sporting a Zacks Rank #1 (Strong Buy), and Ranger Energy Services RNGR, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific: PARR is worth approximately $1.63 billion. Its shares have risen 82.1% in the past year.

The company manages and maintains interests in energy and infrastructure businesses. Its operating segment consists of refining, retail and logistics.

Marathon Petroleum: MPC is valued at around $58.02 billion. It delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.

The company currently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.

Ranger Energy Services: RNGR is valued at around $242.99 million. In the past year, its shares have gained 16.8%.

Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.

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