Helmerich & Payne, Inc. HP reported a fiscal second-quarter 2025 adjusted net income of 2 cents per share, which missed the Zacks Consensus Estimate of 65 cents. Moreover, the bottom line compared unfavorably with the year-ago quarter’s reported figure of 86 cents. This was due to a weakness in the company's International Solutions segment. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Operating revenues of $1 billion beat the Zacks Consensus Estimate of $993 million. In particular, sales from Drilling Services beat the consensus mark by 3%. Moreover, the figure increased 47.7% from the year-ago quarter’s level.
The company distributed approximately $25 million to shareholders as part of its ongoing dividend program.
During the second quarter of fiscal 2025, the company repaid $25 million on its existing $400 million term loan, which was originally funded at the close of the acquisition. The company expects to repay an additional approximately $175 million over the course of calendar year 2025.
The acquisition of KCA Deutag was completed on Jan. 16, 2025. Consequently, the second quarter of fiscal 2025 includes a full quarter of H&P operations and 75 days of KCA Deutag operations. During this period, the naming convention for one of the reportable segments was changed from Offshore Gulf of Mexico to Offshore Solutions.
As of Jan. 16, 2025, the Offshore Solutions segment incorporates the results from the acquired KCA Deutag offshore management contract operations. Similarly, the International Solutions segment now includes results from the acquired KCA Deutag land operations. The operating results related to real estate operations and wholly-owned captive insurance companies continue to be reported under "Other" and now also encompass the Kenera business unit from KCA Deutag.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. price-consensus-eps-surprise-chart | Helmerich & Payne, Inc. Quote
HP’s Segmental Performance
North America Solutions: Operating revenues of $599.7 million were down 2.2% year over year on lower activity levels, with 149 average active rigs. The top line beat our projection of $556.6 million.
Operating profit totaled $151.9 million compared with $147.2 million in the prior-year period. Moreover, the reported figure beat our estimate of $129.2 million.
International Solutions: Operating revenues of $247.9 million increased 439.4% from the year-ago quarter’s level of $45.9 million. The top line also beat our projection of $223.2 million.
Operating loss reached $35 million, a 759.5% increase from the prior-year period. Despite the inclusion of KCA Deutag operations, the increase in operating loss was primarily attributable to the start-up costs associated with unconventional drilling operations in Saudi Arabia, as well as rig suspensions related to conventional drilling operations in the region. The figure also missed our projection of a profit of $27 million.
Offshore Solutions: Revenues of $149.1 million increased 475.3% from the year-ago quarter’s level of $25.9 million. However, the top line missed our projection of $209.6 million.
Operating profit totaled to $17.4 million from $78,000 in the year-ago quarter. The figure missed our estimate of $25.3 million.
HP’s Financial Position
In the reported quarter, this Zacks Rank #3 (Hold) company spent $265.2 million on capital programs. As of March 31, 2025, the company had $174.8 million in cash and cash equivalents, while the long-term debt totaled $2.2 billion (debt-to-capitalization of 42.3%).
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HP’s Guidance for Fiscal Q3 and 2025
The company expects direct margin for the North America Solutions segment to be between $235 million and $260 million during the third quarter of fiscal 2025. The average rig count is expected to range from approximately 143-149 contracted rigs.
For the International Solutions segment, direct margin is expected to be between $25 million and $35 million, excluding any foreign exchange gains or losses. The average rig count is projected to be around 85-91 contracted rigs, of which about 68-74 rigs are expected to be generating revenues.
In the Offshore Solutions segment, direct margin is anticipated to be between $22 million and $29 million. The average number of management contracts and contracted platform rigs is expected to range from 30 to 35.
The company expects its other operations segment to contribute a direct margin of approximately $2 million to $5 million.
HP’s gross capital expenditures are expected to range from $360 million to $395 million for fiscal 2025, partially offset by about $45 million in proceeds from asset sales, including reimbursements for lost and damaged tubulars and the sale of used drilling equipment. Depreciation for the year is projected to be approximately $595 million.
Research and development expenses are still expected to be roughly $32 million, and general and administrative expenses are projected to be approximately $280 million. Cash taxes to be paid in fiscal 2025 are expected to range from $190 million to $240 million. Interest expense for the remainder of the year, covering the fiscal third and fourth quarters, is expected to be approximately $50 million.
H&P expects to achieve more than $25 million in expense synergies from the KCA Deutag acquisition. Furthermore, the company has identified additional permanent cost savings which, when combined with these synergies, are projected to lower the overall cost structure by approximately $50 million to $75 million.
Important Earnings at a Glance
While we have discussed HP’s second-quarter results in detail, let us take a look at three other key reports in this space.
Oil and gas equipment and services provider, Liberty Energy LBRT, reported a first-quarter 2025 adjusted net income of 4 cents per share, which marginally beat the Zacks Consensus Estimate of 3 cents. Liberty's outperformance indicated operational efficiencies as well as increased utilization of frac and wireline fleets. However, the bottom line underperformed the year-ago quarter’s reported figure of 48 cents due to a decline in service activity.
As of March 31, Liberty had approximately $24.1 million in cash and cash equivalents. The pressure pumper’s long-term debt of $210 million represented a debt-to-capitalization of 9.6%.
Another oil and gas equipment and services provider, Halliburton Company HAL, posted first-quarter 2025 adjusted net income per share of 60 cents. The figure met with the Zacks Consensus Estimate but was down from the year-ago quarter’s profit of 76 cents (adjusted). The numbers reflect softer activity in the region of North America, partly offset by international growth. Meanwhile, Halliburton’s revenues of $5.4 billion decreased 6.7% year over year but beat the Zacks Consensus Estimate of $5.3 billion.
As of March 31, 2025, Halliburton had approximately $1.8 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.8.
Houston, TX-based oil and gas equipment and services provider, Baker Hughes BKR, reported first-quarter 2025 adjusted earnings of 51 cents per share, which beat the Zacks Consensus Estimate of 47 cents. The bottom line also improved from the year-ago level of 43 cents.
As of March 31, 2025, Baker had cash and cash equivalents of $3,277 million. Baker had a long-term debt of $5,969 million at the end of the reported quarter, with a debt-to-capitalization of 25.9%.
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