Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Feel the Payne

So far this reporting season we've heard from deepwater denizen Noble (NYSE: NE  ) and shallow water whiz Hercules Offshore (Nasdaq: HERO  ) , but nothing out of the land drilling camp. Well, Helmerich & Payne (NYSE: HP  ) just threw down the gauntlet, and I don't expect any competitors to pick it up.

I've written about the Helmerich maneuver, in which the company delivers superior value through its high-quality rigs, and captures premium pricing power in the process. Back at $34, I called the company "perplexingly cheap." As investors see results like those of the past quarter, they may finally be recognizing H&P's prowess.

At H&P's core U.S. land operations, rig utilization held tenaciously to last quarter's 95% figure. Dayrates lifted, and per-rig daily expenses dropped as the fleet continued to grow, as evidenced by a higher number of "revenue days." Cash margins clocked in higher, at 52%. These combined factors led to a 16% sequential increase in operating income within the segment, and the year-over-year improvement was even better.

The recent fleet expansion was no fluke. H&P announced even more orders for its fabulous FlexRig, some of which will help Quicksilver Resources (NYSE: KWK  ) and Carrizo Oil & Gas (Nasdaq: CRZO  ) continue their Barnett Shale conquest. More interesting, perhaps, is that an even greater amount of newbuilds are headed to Latin America. It's extremely encouraging to see that foreign operators are embracing the FlexRig's technological edge, rather than looking at mere horsepower.

Based on what I know about the international drilling market, that marks a significant change in mind-set. It also marks a potential step change for H&P's international segment, which has a bit of a gap to close in terms of drilling margins.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 568660, ~/Articles/ArticleHandler.aspx, 10/24/2016 4:47:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:01 PM
HP $66.42 Down -0.06 -0.09%
Helmerich and Payn… CAPS Rating: ****
CRZO $38.87 Down -1.25 -3.12%
Carrizo Oil and Ga… CAPS Rating: ***
HERO.DL $1.16 Down -0.02 -1.50%
Hercules Offshore CAPS Rating: **
KWKAQ $0.00 Down +0.00 +0.00%
Quicksilver Resour… CAPS Rating: ***
NE $5.76 Down -0.21 -3.52%
Noble CAPS Rating: ****