Helmerich & Payne(US:HP)2019-11-15 21:43Financial Data and Key Metrics Changes - The company generated quarterly revenues of $649 million, down from $688 million in the previous quarter, totaling $2.8 billion for fiscal 2019 compared to $2.5 billion in fiscal 2018 [21] - Direct operating costs decreased to $432 million for the fourth quarter from $445 million in the previous quarter [22] - Helmerich & Payne earned $0.37 per diluted share, including a tax benefit of approximately $0.12 per share, compared to a loss of $1.42 in the previous quarter [23] Business Line Data and Key Metrics Changes - The U.S. Land segment exited the fourth fiscal quarter with 194 contracted rigs, a sequential decrease of approximately 9% [26] - Average rig revenue per day in the U.S. Land segment decreased to $25,365, slightly under the guidance midpoint, primarily due to less FlexServices revenue [26] - The adjusted average rig margin per day in the International segment decreased by $2,423 to $5,481, primarily due to higher-than-expected start-up costs in Argentina [35] Market Data and Key Metrics Changes - The U.S. land market share increased to 22% from quarter-to-quarter as less capable legacy rigs were sidelined [26] - The average rig expense per day increased to $15,440, largely due to a one-time legal settlement charge of $9.5 million [26] - The average rig margin per day in the Offshore segment is expected to increase to a range of $12,000 to $13,000 during the first quarter of fiscal 2020 [39] Company Strategy and Development Direction - The company is focusing on capital discipline and expects more stability in rig demand heading into calendar 2020 [10] - H&P Technologies aims to drive the development of an autonomous drilling platform to improve safety and drilling efficiency [14] - The company is committed to maintaining a strong balance sheet and returning capital to shareholders through dividends [51] Management's Comments on Operating Environment and Future Outlook - Management noted that the energy sector has faced significant challenges, with energy indices declining by more than 40% over the past year [7] - The company expects customer budget spending to be more evenly distributed throughout 2020, with a focus on stabilizing rig counts [28] - Management remains optimistic about the potential in the Vaca Muerta basin in Argentina despite uncertainties following elections [18] Other Important Information - Capital expenditures for fiscal 2020 are expected to range between $275 million to $300 million, a reduction of approximately 40% from fiscal 2019 [44] - The company has a revenue backlog of roughly $1 billion for rigs under term contracts [44] - The company’s liquidity was approximately $1.15 billion, including cash on hand and short-term investments [49] Q&A Session Summary Question: What is the expected level of activity throughout 2020? - Management indicated that customers are setting budgets similar to last year, around $50 to $55 per barrel, and expects rig counts to flatten out [55] Question: Can International cash margins return to previous levels? - Management expects margins to improve as new contracts are signed, but it depends on the rollovers and redeployment of rigs [57][58] Question: What is the mix of spot versus term work? - The company has increased term coverage from 60% to over 65% and plans to maintain this balance [60] Question: What is the revenue base required for HPT to achieve profitability? - Management noted that widespread customer adoption is challenging to predict, but success in technology adoption is crucial for profitability [61][64] Question: What is the average day rate for term contracts for fiscal year 2020? - The average day rate is expected to be in the low to mid-20s range, consistent with current rates [110]