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Core Viewpoint - The market anticipates a year-over-year decline in earnings for Helmerich & Payne despite an increase in revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Helmerich & Payne is expected to report quarterly earnings of $0.21 per share, reflecting a year-over-year decrease of 77.2%, while revenues are projected to be $1.01 billion, an increase of 44.6% from the previous year [3]. - The consensus EPS estimate has been revised down by 20.64% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -13.10%, indicating bearish sentiment among analysts [12]. - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [10]. Historical Performance - In the last reported quarter, Helmerich & Payne was expected to post earnings of $0.65 per share but only achieved $0.02, resulting in a surprise of -96.92% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [14]. Investment Considerations - Helmerich & Payne does not currently appear to be a strong candidate for an earnings beat, and investors should consider other factors when making investment decisions [17].

Group 1 - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets [1] - Investment diversification has become a strategy for individuals, moving away from traditional savings in banks and properties [1] - The popularity of insurance companies in the Philippines has influenced investment choices since 2014 [1] Group 2 - The focus on blue-chip companies has evolved into a broader investment strategy across various industries and market capitalizations [1] - The US market has been entered by investors, with a notable increase in awareness and engagement over the past four years [1] - The use of analytical tools and comparisons between different markets, such as the US and PH markets, has become a common practice among investors [1]

Group 1: Energy Sector Overview - The energy sector in the United States is experiencing tailwinds that may attract capital into specific stocks with strong fundamentals [1][2] - The sector is sensitive to the overall economic cycle, with current cooling inflation and trade tariffs impacting new orders [2][3] - Institutional capital of up to $1.8 billion has flowed into the Energy Select Sector SPDR Fund, indicating a shift towards this sector [5] Group 2: Energy Select Sector SPDR Fund - The Energy Select Sector SPDR Fund (XLE) is currently priced at $87.74, with a 52-week range of $74.49 to $97.92 and a dividend yield of 3.26% [4] - The fund has $28.16 billion in assets under management and is heavily exposed to larger companies that benefit later in the production cycle [6] Group 3: Company Analysis - Transocean - Transocean, valued at $2.8 billion, provides drilling equipment and leases, allowing it to collect cash flow immediately as drilling needs arise [7] - The stock has rallied 21.9% over the past month, with a price target of $4.58, suggesting a potential upside of 56% from current levels [9][10] - Production in the Gulf is projected to remain at 300,000 barrels per day, with a decline expected by 2026, but market pricing may not reflect potential production increases [8] Group 4: Company Analysis - Helmerich & Payne - Helmerich & Payne, a $1.8 billion company, operates similarly to Transocean and has a current stock price of $18.43, with a price target of $27.73 indicating a potential upside of 53.1% [12][14] - There has been a 9.7% decline in short interest for Helmerich & Payne, signaling a shift in investor sentiment towards its upside potential [13]

Core Insights - The energy sector is highlighted as a key area for investment, particularly due to recent oil inventory data indicating significant supply-demand dynamics [1][2][3] Oil Inventory and Market Dynamics - The U.S. oil inventory has seen its largest decline since December 2024, suggesting reduced need for oil storage amid economic slowdowns [3] - This decline in inventory could lead to price spikes if new demand emerges, indicating potential bottlenecks in the market [3] Company-Specific Insights Transocean Ltd. - Transocean's stock is currently priced at $2.76, with a 12-month price forecast of $4.58, representing a 66.24% upside [5] - The stock is trading at only 44% of its 52-week high, indicating that it has absorbed negative news, positioning it well for recovery as oil prices rise [6] - Analysts project a potential earnings per share (EPS) increase from a current net loss of $0.10 to $0.06, supporting the bullish outlook [8] Helmerich & Payne Inc. - Helmerich & Payne's stock is currently at $16.69, with a 12-month price forecast of $27.73, also indicating a 66.18% upside [10] - Institutional investment has increased significantly, with Vanguard Group acquiring a stake worth $286.2 million, representing 11% of the company [10] - Analysts forecast an EPS increase from $0.02 to $0.76 for the second quarter of 2025, reflecting confidence in the drilling sector [13] Occidental Petroleum Co. - Occidental Petroleum's stock is currently priced at $42.57, with a 12-month price forecast of $53.14, indicating a 24.82% upside [14] - There has been a 4.5% decline in short interest, suggesting a shift in investor sentiment towards bullishness [15] - Institutional buying has surged, with $1.1 billion in the most recent quarter and $1.7 billion in the previous quarter, indicating strong confidence in the stock and the energy sector [16]

Company Overview - Helmerich & Payne (NYSE: HP) is recognized as one of the largest onshore drilling contractors globally, owning and operating industry-leading rigs [1] Recent Challenges - The company has faced significant penalties due to both macroeconomic factors and company-specific issues [1]

Core Insights - Helmerich & Payne reported $1.02 billion in revenue for the quarter ended March 2025, marking a year-over-year increase of 47.7% [1] - The company's EPS for the same period was $0.02, a significant decrease from $0.86 a year ago, indicating a -96.92% surprise compared to the consensus estimate of $0.65 [1] Financial Performance - The reported revenue exceeded the Zacks Consensus Estimate of $992.67 million by +2.35% [1] - Operating Revenues for International Solutions reached $247.91 million, surpassing the average estimate of $180.77 million, representing a year-over-year change of +440.4% [4] - Operating Revenues for North America Solutions were $599.69 million, slightly below the average estimate of $572.80 million, reflecting a -2.2% year-over-year change [4] - Operating Revenues from Drilling services amounted to $1.01 billion, exceeding the average estimate of $982.62 million, with a year-over-year increase of +47.8% [4] Rig Metrics - Average active rigs in North America Solutions were reported at 149, slightly above the estimated 148 [4] - The number of available rigs in North America Solutions at the end of the period was 224, compared to the estimated 226 [4] - In International Solutions, the number of available rigs was 153, significantly higher than the estimated 111 [4] - Average active rigs in International Solutions were 69, compared to the estimated 47 [4] Market Performance - Helmerich & Payne's shares have returned -4.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Helmerich & Payne, Inc. reported a fiscal second-quarter 2025 adjusted net income of 2 cents per share, significantly missing the Zacks Consensus Estimate of 65 cents, and down from 86 cents in the same quarter last year, primarily due to weakness in the International Solutions segment [1] Financial Performance - Operating revenues reached $1 billion, surpassing the Zacks Consensus Estimate of $993 million, with Drilling Services sales exceeding the consensus by 3% and a 47.7% increase from the previous year [1] - The company distributed approximately $25 million to shareholders as part of its ongoing dividend program and repaid $25 million on its existing $400 million term loan during the second quarter [2] Segmental Performance - **North America Solutions**: Operating revenues of $599.7 million, down 2.2% year over year, with an operating profit of $151.9 million, slightly up from $147.2 million in the prior year [5] - **International Solutions**: Operating revenues of $247.9 million, a significant increase of 439.4% from $45.9 million in the year-ago quarter, beating projections [6] - **Offshore Solutions**: Revenues of $149.1 million, up 475.3% from $25.9 million year over year, but missed projections; operating profit was $17.4 million, up from $78,000 in the previous year [8] Financial Position - The company spent $265.2 million on capital programs in the reported quarter, with $174.8 million in cash and cash equivalents and long-term debt totaling $2.2 billion, resulting in a debt-to-capitalization ratio of 42.3% [9] Guidance - For fiscal Q3 2025, the company expects a direct margin for North America Solutions between $235 million and $260 million, with an average rig count of approximately 143-149 [10] - The International Solutions segment is projected to have a direct margin between $25 million and $35 million, with an average rig count of around 85-91 [11] - Offshore Solutions is anticipated to contribute a direct margin of $22 million to $29 million, with management contracts and contracted platform rigs expected to range from 30 to 35 [11] Cost Synergies - The company expects to achieve over $25 million in expense synergies from the KCA Deutag acquisition, with additional permanent cost savings projected to lower the overall cost structure by approximately $50 million to $75 million [14]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, significantly impacted by the KCA Deutag acquisition [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects total assets of $7.24 billion and liabilities of $4.19 billion, largely due to the KCA Deutag acquisition Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,493,188 | $1,192,069 | | **Property, plant and equipment, net** | $4,485,344 | $3,016,277 | | **Goodwill** | $343,817 | $45,653 | | **Intangible assets, net** | $511,295 | $54,147 | | **Total assets** | **$7,242,263** | **$5,781,898** | | **Total current liabilities** | $887,565 | $446,949 | | **Long-term debt, net** | $2,233,619 | $1,782,182 | | **Total liabilities** | $4,189,900 | $2,864,746 | | **Total shareholders' equity** | $3,052,263 | $2,917,152 | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Operating revenues increased due to the KCA Deutag acquisition, but net income significantly declined for both three and six-month periods Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenues** | $1,016,039 | $687,943 | $1,693,341 | $1,365,090 | | **Operating Income** | $42,163 | $111,167 | $133,049 | $236,405 | | **Net Income Attributable to H&P** | $1,654 | $84,831 | $56,426 | $180,004 | | **Diluted EPS** | $0.01 | $0.84 | $0.56 | $1.79 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to H&P significantly decreased for both the three and six-month periods ended March 31, 2025 Comprehensive Income (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $2,986 | $84,831 | $57,758 | $180,004 | | Other Comprehensive Income | $7,051 | $134 | $7,414 | $268 | | **Comprehensive Income Attributable to H&P** | **$8,705** | **$84,965** | **$63,840** | **$180,272** | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to $3.05 billion, driven by the KCA Deutag acquisition's non-controlling interests, offset by dividends - Total shareholders' equity rose to **$3.05 billion**, primarily due to the recognition of a **$117.3 million** non-controlling interest acquired in the KCA Deutag transaction[12](index=12&type=chunk) - The company declared dividends totaling **$50.4 million** during the six months ended March 31, 2025[12](index=12&type=chunk) - No share repurchases were conducted in the six months ended March 31, 2025, whereas **1.4 million** shares were repurchased for **$51.6 million** in the same period of fiscal 2024[106](index=106&type=chunk)[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows were significantly impacted by the KCA Deutag acquisition, leading to a net decrease in cash despite debt financing Cash Flow Summary (in thousands) | Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $214,404 | $318,517 | | Net cash used in investing activities | $(1,815,523) | $(224,473) | | Net cash provided by (used in) financing activities | $311,107 | $(148,099) | | **Net decrease in cash, cash equivalents, and restricted cash** | **$(1,283,606)** | **$(54,055)** | - The primary use of cash in investing activities was the **$1.84 billion** payment for the acquisition of KCA Deutag, net of cash acquired[18](index=18&type=chunk) - Financing activities were driven by **$400 million** in proceeds from debt issuance, partially offset by **$50.3 million** in dividend payments[18](index=18&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail financial statements, emphasizing the KCA Deutag acquisition's impact and related accounting policies [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting the KCA Deutag acquisition's transformative impact on operations and liquidity - The acquisition of KCA Deutag was completed on January 16, 2025, for approximately **$2.0 billion** in cash, funded by new debt, cash on hand, and monetization of an investment[175](index=175&type=chunk) - The total contract drilling backlog increased to **$7.6 billion** as of March 31, 2025, from **$1.5 billion** at September 30, 2024, primarily due to the acquisition[179](index=179&type=chunk) - The company has experienced contract suspensions for **17 rigs** in Saudi Arabia from the legacy KCA Deutag fleet[177](index=177&type=chunk) - Management anticipates realizing over **$25 million** in expense synergies from the acquisition, with total enterprise cost savings expected to be **$50 to $70 million**[178](index=178&type=chunk) [Results of Operations for the Three Months Ended March 31, 2025 and 2024](index=40&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) Operating revenues increased due to the KCA Deutag acquisition, but net income sharply declined from acquisition costs and higher interest Segment Operating Income (Loss) - Three Months Ended March 31 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | North America Solutions | $151,943 | $147,224 | | International Solutions | $(34,983) | $4,070 | | Offshore Solutions | $17,375 | $78 | - The KCA Deutag acquisition contributed **$320.6 million** in revenue and resulted in significant increases in direct operating expenses (**$260.7M**), depreciation (**$57.1M**), and SG&A (**$19.6M**) for the quarter[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Acquisition transaction costs of **$29.9 million** and a **$24.0 million** increase in interest expense significantly impacted profitability in Q2 FY25[191](index=191&type=chunk)[192](index=192&type=chunk) [Results of Operations for the Six Months Ended March 31, 2025 and 2024](index=44&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20March%2031%2C%202025%20and%202024) Consolidated revenues increased due to the KCA Deutag acquisition, but net income declined significantly due to acquisition costs and higher interest expense Segment Operating Income (Loss) - Six Months Ended March 31 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | North America Solutions | $304,154 | $291,623 | | International Solutions | $(49,467) | $11,354 | | Offshore Solutions | $20,880 | $3,130 | - The KCA Deutag acquisition contributed **$320.6 million** in revenue for the **75 days** post-acquisition within the six-month period[220](index=220&type=chunk) - Acquisition transaction costs for the six-month period were **$40.4 million**, and interest expense increased by **$42.0 million** year-over-year[224](index=224&type=chunk)[225](index=225&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity was significantly altered to fund the KCA Deutag acquisition through new debt and cash, with a **$950 million** credit facility available - Net cash used in investing activities was **$1.82 billion** for the six months ended March 31, 2025, primarily for the KCA Deutag acquisition[253](index=253&type=chunk) - Financing activities provided **$311.1 million**, mainly from a **$400 million** term loan draw and issuance of **$1.25 billion** in senior notes in September 2024[253](index=253&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - As of March 31, 2025, the company had **$950.0 million** available under its Amended Credit Facility[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including foreign currency exchange rates, interest rates, and equity price fluctuations - The company is exposed to market risks including foreign currency exchange rates, interest rates on its variable and fixed-rate debt, and price fluctuations in its equity investments[297](index=297&type=chunk)[298](index=298&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with new systems being integrated post-KCA Deutag acquisition - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[297](index=297&type=chunk) - New accounting systems and control processes are being implemented and integrated following the KCA Deutag acquisition[299](index=299&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, and other disclosures [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 for details on legal proceedings, primarily concerning the ongoing lawsuit against Venezuela for asset expropriation - For details on legal proceedings, the report refers to Note 13, which discusses the ongoing lawsuit against Venezuela for the 2010 expropriation of assets[300](index=300&type=chunk)[154](index=154&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[301](index=301&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) An executive adopted a Rule 10b5-1 trading plan to sell up to 44,157 shares of company common stock - An executive, Cara Hair, adopted a Rule 10b5-1 trading plan to sell up to **44,157** shares of common stock[302](index=302&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists documents filed as exhibits with the Form 10-Q, including corporate governance and financial statements - The exhibits filed with the report include corporate governance documents, Sarbanes-Oxley certifications, and XBRL data files[303](index=303&type=chunk)[304](index=304&type=chunk)

Financial Data and Key Metrics Changes - The company generated quarterly revenues of just over $1 billion, with total direct operating costs at $702 million and general and administrative expenses approximately $81 million for the quarter [18][19] - Gross capital expenditures for the second quarter were $159 million, aligning with expectations, while cash flow from operations was $56 million, negatively impacted by nonrecurring transaction-related costs [19][27] - The company maintains cash and short-term investments of $196 million, with an undrawn credit facility of $950 million, ensuring adequate liquidity for operations and debt repayment [27] Business Line Data and Key Metrics Changes - North America Solutions averaged 149 contracted rigs during the quarter, with revenues of $600 million, unchanged from the first quarter, and a direct margin of approximately $266 million, slightly stronger than the previous quarter [20][21] - The International Solutions segment ended the quarter with 76 rigs working and a contracted drilling backlog of approximately $4 billion, generating a direct margin of $27 million, impacted by rig suspensions in Saudi Arabia [21][23] - The Offshore Solutions segment generated $26 million in direct margins, with a current backlog of $2.5 billion, benefiting from the KCAD acquisition [24] Market Data and Key Metrics Changes - The company expects softer oil prices to lower the industry rig count as market volatility overrides potential incremental demand, with over 50% of customers preferring performance-based contracts [10][20] - The average rig count in the U.S. currently stands at about 570 rigs, with potential declines of 20 to 30 rigs if oil prices remain around $60 per barrel [54][56] Company Strategy and Development Direction - The company aims to execute its international growth strategy following the KCAD acquisition, which has positioned it as a global leader with the largest active rig count in the industry [6][15] - The focus is on enhancing value and performance for customers and shareholders, prioritizing safety, drilling efficiency, and reliability [15][16] - The company is also working on realigning cost structures, securing value-add synergies, and reducing debt on its balance sheet [16][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges headwinds from OPEC production increases and U.S. tariff initiatives, but remains optimistic about long-term demand for oil and gas [8][10] - The integration of legacy KCAD operations is progressing, with expectations for improved results in the upcoming quarters as operational challenges are addressed [12][23] - Management emphasizes the importance of performance-based contracts and technology solutions in navigating current market conditions [20][96] Other Important Information - The company is capturing synergies post-acquisition and has identified additional cost savings, projecting a full-year depreciation expense of around $595 million [25][26] - The company is evaluating broader cost reductions across the enterprise, with a potential run rate savings of $50 to $75 million by 2026 [26] Q&A Session Summary Question: What is the current state of the Saudi market regarding rig suspensions? - Management indicated uncertainty about the completion of the suspension cycle, noting that while some suspensions may be behind them, there is no clear insight into future actions [30][32] Question: How will the dynamics of rig suspensions and legacy HP rigs play out in fiscal Q4? - Management expects a positive inflection in margins for Q4 as the legacy HP rigs come online, offsetting the impact of suspensions [34][36] Question: What is the expected contribution from the eight FlexRigs in Saudi Arabia? - The historical contribution is around $25 million per year, with potential for this number to increase due to operational synergies [43][44] Question: How does the company view the potential for increased performance-based contracts? - Management noted that while the percentage of performance-based contracts has remained stable, there is ongoing effort to push for more such contracts [94][96] Question: Are pricing concessions being made to maintain market share? - Management clarified that while market share has grown, pricing is based on market conditions, and there may be some pricing reductions due to current market headwinds [105][106]