The Helmerich Maneuver

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Yesterday, I noted how Dawson Geophysical's (Nasdaq: DWSN) ability to deliver efficiency to its customers helps the seismic firm pump up prices and profits. In a much more challenging market, Helmerich & Payne (NYSE: HP) is bringing home the bacon in a similar way.

H&P has avoided falling victim to the domestic oversupply of commoditized rigs, thanks to a little secret weapon called the FlexRig. This is an in-house rig design that excels at performing directional drilling and other demanding applications. Because the FlexRig reduces the number of days required to drill a well, it is still economical for operators to employ H&P's rigs at a higher dayrate than what they would pay for an old mechanical rig. Everybody wins.

In its fourth fiscal quarter, H&P pretty much stomped its competitors in every way. U.S. land rig utilization came in at 95%, whereas Patterson-UTI (Nasdaq: PTEN) fielded only 243 of its 350 or so rigs. Dayrates rose sequentially to more than $23,000, or 17% higher than what gusher-free Grey Wolf (AMEX: GW) charged for daywork. Most triumphant, however, was H&P's daily rig margin, which in percentage terms slightly edged out even Unit Corp's (NYSE: UNT) uniquely strong result.

With 83 FlexRig commitments for three-year terms or longer, H&P is sitting pretty, no matter what wackiness befalls the lower 48 drillers in the near term. If you're seeking more leverage to the hot international land drilling market, plied by the likes of Nabors Industries (NYSE: NBR) and Parker Drilling (NYSE: PKD), don't forget that H&P also has an international segment. Between its domestic dominance and its foreign foothold, Helmerich & Payne is perplexingly cheap, even after yesterday's post-results pop.