Helmerich & Payne, Inc. (NYSE: HP) reported net income of $55 million, or $0.54 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2024, compared to net income of $75 million, or $0.76 per diluted share, from operating revenues of $694 million for the quarter ended September 30, 2024. The net income per diluted share for the first quarter of fiscal 2025 and fourth quarter of fiscal year 2024 include net $(0.17) and $0.00 of after-tax gains and losses, respectively, comprised of select items(1).
Net cash provided by operating activities was $158 million for the first quarter of fiscal year 2025 compared to net cash provided by operating activities of $169 million for the fourth quarter of fiscal year 2024.
Quarter Highlights
- H&P reported fiscal first quarter Adjusted EBITDA(2) of $199 million
- The North America Solutions ("NAS") segment exited the first quarter of fiscal year 2025 with 148 active rigs and recognized revenue per day of $38,600/day with associated direct margins(3) per day of $19,400 day during the quarter
- Quarterly NAS operating income decreased $4 million to $152 million, from the fourth fiscal quarter of 2024; while direct margins(3) decreased by $9 million to $266 million as revenues decreased by $20 million to $598 million and expenses decreased by $11 million to $333 million
- Completed the exportation of eight super-spec FlexRigs into our Saudi Arabia operations
- On December 11, 2024, the Board of Directors of H&P declared a quarterly cash dividend of $0.25 per share, payable on February 28, 2025 to stockholders of record at the close of business on February 14, 2025
On January 16th, H&P completed the acquisition of KCA Deutag, which establishes H&P as a global leader in onshore drilling and positions H&P for value-creation opportunities in the years ahead. Key highlights of the acquisition include:
- An increase in our contracted rig count in key Middle Eastern markets from 11 to 65, with significant sources of cash flows in Saudi Arabia, Oman, Kuwait, and Bahrain
- Substantial growth in our offshore business, with exposure now to stable markets in the North Sea, U.S. Gulf of Mexico, the Caspian Sea, and offshore Canada
- Growth in key customer relationships, with legacy KCA Deutag activity already generating incremental new commercial interest for H&P's leading technology solution offerings
- The addition of approximately $5.5(4) billion in backlog with high-quality, investment-grade customers
- Maintenance of H&P's own strong, investment-grade credit profile, with additional cash flow diversification to provide stability across a variety of market environments
- Enhances geographic footprint, with the Company levered to the most resilient basins in the world
Commentary
President and CEO John Lindsay commented, "During the first fiscal quarter of 2025, the Company executed at a high level on multiple fronts. Our NAS segment maintained its industry-leading position with a financial performance and a stable rig count reflecting the value proposition we are providing to customers. In our International Solutions segment, we completed the exportation of eight rigs into Saudi Arabia during the quarter, three of which have spud. We are looking forward to more of those rigs commencing operations in the coming months.
"Crude oil prices and industry rig counts were relatively steady during the quarter, but market sentiment remained cautious in the face of a multitude of economic and geopolitical uncertainties that have materialized over the past several quarters. Contractual churn in our NAS rig count continues to characterize the market, yet we have been successful in managing that volatility by consistently delivering drilling performance and efficiencies for our customers. Looking through the remainder of the second fiscal quarter we expect our NAS rig count to remain relatively flat and exit the quarter in a range of 146-152 active rigs.
"Results in our International Solutions and Offshore Solutions segments were in line with recent quarter norms but are poised to increase significantly in the second fiscal quarter. In addition to the direct margin contributions from KCA Deutag's core Middle East operations, the eight rigs recently delivered into Saudi Arabia are also expected to be a factor in improving this segment's overall direct margins and collectively position the Company as a leading land driller in the region. In terms of magnitude, KCA Deutag's core Middle East assets drive H&P's rig count in the Middle East from 11 rigs contracted as of December 31, 2024, to approximately 65 rigs contracted at the end of March 31, 2025. In South America, tendering activity has increased and we see the potential to add 1-3 rigs later in calendar 2025. Regarding the Offshore Solutions segment, the addition of approximately 30 management contracts from the KCA Deutag acquisition will meaningfully increase this segment's contribution to the overall Company as well."
Senior Vice President and CFO Kevin Vann also commented, "As John mentioned, we are excited about the recent completion of the KCA Deutag acquisition as it substantially accelerates our international growth, and we are looking forward to the benefits of being a larger and more diversified company. We expect operations in our North America Solutions segment to continue generating significant levels of cash flow. We believe that cash generation combined with a lower capex outlook for fiscal 2025 for H&P's legacy operations relative to fiscal 2024 and the inclusion of KCA Deutag's cash flow from operations, will create free cash flow that we intend to use to service our near-term debt reduction goals as well as continue to provide a competitive dividend to our shareholders."
John Lindsay concluded, “Over the past several months H&P and KCA Deutag employees have been working on integration planning, and now with the acquisition complete that integration is underway. I have been impressed by the hard work of our employees while maintaining our focus on safety. We realize that it may take several months to fully harmonize the new organization, but we believe the leadership and plans are in place to achieve that end. During this time of internal integration, our external focus will remain on our customers. We will continue to have a customer-centric approach, putting safety and value creation at the forefront of our operations."