Tulsa based-Helmerich and Payne reports it has lost $467 million in the first half of the year, mostly due to the oil price crisis and the COVID-19 pandemic and what the pandemic has done to the oil and gas industry around the world. And it is reacting to more reductions in expenditures and costs.
The company reported a net loss of $46 million or 43 cents a diluted share in the second quarter of 2020. The loss came on operating revenues of $317 million.
The $46 million net loss was on top of the $421 million net loss or $3.88 a diluted share at the end of the first quarter on March 31, 2020. That’s a combined net loss of $467 million in the first half of the year.
But the company reported the net cash provided by operating activities was $214 million for the third quarter of fiscal year 2020 compared to $121 million for the second quarter of fiscal year 2020.
President and CEO John Lindsay commented, “The unprecedented decline in activity experienced during the quarter continues to reverberate throughout the industry and we expect that ramifications will be felt for several quarters to come.”
Lindsay said the current state of the industry pointedly underscores a necessity for change “and is providing opportunities to accelerate strategic objectives aimed at how we approach adding value and how that value is perceived by our customers.”
As a result, he said the company is choosing to focusing its packaging on the total solution rather than on rigs and separate technology applications. Lindsay in the fight against COVID-19 and what it did to the energy industry, Helmerick and Payne created the North America Solutions business segment. It had historically been referred to as the U.S. Land Operations and HP Technologies business segments.
Company leaders also revealed they have made further cost-saving moves including a reduction to the annual dividend of nearly $200 million along with a reduction in planned fiscal 2020 capital spend of $95 million.
Senior Vice President and CFO Mark Smith said there has been a roughly $50 million reduction in fixed operational overhead. He explained in the quarterly financial report that the company took further steps to cut its planned fiscal 2020 capital spending by another $40 million and its selling, general and administrative cost structure by $25 million on an annualized basis. He also said the culmination of the cost-saving moves resulted in a $15 million restructuring charge during the quarter.
“More than a quarter has passed since the COVID-19 pandemic began, and we are still unable to reasonably estimate its duration or ascertain the full extent it will have on the industry in terms of timing or magnitude of a recovery. As a result, we cannot be certain of the ultimate impact on H&P’s operations or financial position,” said Smith.
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