Morningstar Rating

Stock Research and Analysis

by Connie Hsu, CFA

Bulls Say

H&P's FlexRigs command a substantial premium for its rigs while still completing wells for a lower total cost than the competition.
Horizontal wells now make up more than 60% of the wells drilled in North America, a sharp increase from 10% of the wells in 2004. H&P's rigs are well suited to drill the more demanding horizontal wells and will likely continue to take industry market share from conventional drilling rigs.
H&P recently hiked its dividend to $0.6875 from $0.625 per share, indicative of the firm's strong free cash flow generation and commitment to investor returns. Read more 

Bears Say

H&P's Venezuelan operations have been a disaster for the firm. The company has experienced difficulty collecting invoices, currency exchange losses, and the government has forcefully acquired H&P's 11 Venezuelan drilling rigs.
The company generates nearly 60% of its business from its 10 largest customers. The loss of any large customer could hurt H&P.
Competitors have been able to catch up to H&P's industry leading AC-drive capabilities with roughly comparable rigs. H&P's premium margins may erode if they do not continually improve their own rig design and efficiency. Read more 

Management

Former HP President and COO John Lindsay recently took the CEO reins from Hans Helmerich, who led the firm for 25 years. Lindsay has been with Helmerich since 1987, when he joined initially as a drilling engineer. Over the next couple of decades, Lindsay   Read more 

Profile

Helmerich & Payne is one of the largest land drillers in the U.S. In 1998, the company introduced a new generation of highly mobile land rigs called FlexRigs, which   Read more 

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