Which is stronger -- greed or fear? What's more compelling -- quality or quantity? That's almost certainly an oversimplification, but it's a part of the analysis of drilling company Helmerich & Payne
As expected, this was another strong quarter for the company. Revenue rose 54% on the whole, and operating income more than doubled. Performance continues to be strong in both the onshore and offshore businesses, as utilization rates climb (now at 100% for U.S. onshore), and dayrates keep rising. What's more, I've not yet heard of any major company planning to cut back total drilling activity.
Whether you look at Baker Hughes'
But we're still talking about land drillers here -- a boom/bust sector of a boom/bust industry. Companies like Nabors
I'd still argue, though, that Helmerich & Payne may not suffer the worst. Rig rates tend to correlate with rig complexity, and although land rigs in general are at the bottom of that scale, Helmerich's are by and large newer and more advanced. Moreover, in talking with drillers, it seems that they're regarded as meaningfully better than average on customer service.
Rising costs, rising supply, and uncertain gas prices are all valid reasons for worry, and the boom in drilling rates will end at some point. Investors may still have the chance to reap profits from this quality player, but I'd look to get in during another of those sectorwide swoons.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).