With leaders of Tulsa-based Helmerich and Payne declaring the unprecedented events caused by COVID-19 have had a dramatic impact on the company, they said the firm suffered a net loss of $421 million or $3.88 per diluted share for the quarter ending March 31, 2020. Further, the company incurred a non-cash impairment charge of $563 million as leadership believes things will get worse before they get better.
The loss compares to $31 million in net income or 27-cents a share at the end of the fourth quarter of 2019.
The company had already announced plans to reduce annual dividends by $200 million and cut capital expenditures by nearly $95 million.
Despite the reported losses, the company managed to increase its U.S. land revenue $22 million to $531 million compared to the last quarter of 2019, even as the revenue days declined 2 percennt to 17,273 from 17,684. The company also saw a one percent increase in its average rig revenue.
The firm said it still has a debt-to-cap ratio of 12% with nearly $380 million in cash on hand and no amounts drawn on its $750 million revolving credit facility.
Company President and CEO John Lindsay noted how the coronavirus and the oil price war abruptly resulted in a decrease in demand for refined productions and also brought about an abundance of supply.
“Consequently, some E&P companies are having to shut-in and stop production, and are not completing or drilling additional wells until the supply-demand balance is restored and production and drilling become economically viable once again. We believe these ramifications have yet to be fully reflected in industry activity levels and we expect steeper declines in our third fiscal quarter,” he said.
“H&P has responded to many downturns and we believe that our consistent long-term perspective and our financial strength enables us to further the strategic objectives of the Company. In this regard, we will remain focused on new commercial models, expanding our digital technology offerings to the market,
increasing our international presence and cost management.”
The quarterly report made no mention of any planned reductions in the company workforce, but Senior Vice President and Chief Financial Officer Mark Smith made it clear that the company will look for ways to trim expenses.
Further cost reductions will come to fruition over the coming quarters as we reduce additional overhead and implement evergreen cost reductions throughout the Company, to right-size
the cost structure for a lower expected activity level.”
He revealed that the company’s impairment charge of $563 million affected 95 rigs of which 37 were decommissioned subsequent to the end of the quarter.
“The full extent of the COVID-19 pandemic is uncertain, and we are unable to reasonably estimate the duration and ultimate impact, including the timing of or level to which the industry will recover. Consequently, we cannot be certain of the degree of the impact on H&P’s operations or financial position in
the future,” added Smith.
Here is how the company experienced losses. International Land Operations had an operating loss of $152.5 million compared to operating income of $3.1 million in the previous quarter.
Offshore Operations had an operating loss of $3.3 million compared to operating income of $6.3 million during the previous quarter. H&P Technologies had an operating loss of $33.6 million compared to an operating loss of $4.6 million during the previous quarter.
Click here to view entire H and P report.
Source: Helmerich and Payne