Helmerich & Payne Earnings Call Insights: Market Opportunity and New Builds

Helmerich & Payne, Inc. (NYSE:HP) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Market Opportunity

Kurt Hallead – RBC Capital Markets Corp.: We have heard now from Schlumberger and Halliburton among others in expectation that the U.S. rig count will increase now about 100 to 150 between, low-point December to the end of March. I guess I am trying to gauge of that 100 to 150 what do you think the market opportunity is for Helmerich & Payne?

Investors are making great returns as markets roar higher. Join the party. Click here to discover our Feature Stock Pick now!

Hans Helmerich – Chairman and CEO: Kurt, I will take a stab at that, this is Hans and then John can jump in as well. It’s hard to predict where that goes. I mentioned that things have started out in January a little bit slower than we thought they might have back in late November or early December. But we still believe those plans are intact and we will still see some increases rollout. But as you know from watching this business, it’s hard to – where you are going to be wrong on the upside or we are going to underestimate it. I think the point that I will make, then let John add is, we are not strapped to this overall rig count as a determining factor of how we do. I think we are going to be able in a subset of whatever the macro rig count does, continue to gain market share. I believe that as customers bring rigs back on their strong bias is going to be to bring AC drive rigs on for the better performance. So we would hope that it would prove out to be that we disproportionately gain by an improving rig count.

John W. Lindsay – President and COO: Kurt, this is John, I might add that so far, year-to-date, it’s been a little – the activity has been a little more sluggish than probably what we expected back towards the end of 2012. I mean, we’ve obviously picked up our rig count but it seems like it’s gone a little slower than at least what we expected and it seems to me if you said by the end of March, I think a 100 rigs would be pretty difficult to see by the end of March. I think it’s possible through mid-year. I think the other thing to keep in mind is the rigs that – consider what rigs are going to go back to work, if you talk about 100 rigs, you’ve got approximately 70 that are AC drive rigs, you would think those rigs would be the most likely candidates to go back to work first, and then at the same time we also have newbuild AC rigs that are being delivered, I don’t know exactly at what count, as Hans mentioned it that an estimation would be 75 for the year. So, maybe there is 30 or 35 for the first half of the year. So there is your 100 rigs, assuming that that’s going to happen.

More Articles About:   , ,