Weak natural gas market affected Helmerich and Payne’s 2Q earnings


Second quarter earnings came in below expectations at Tulsa’s Helmerich & Payne and company leadership blames a weak natural gas market.

The company reported second quarter net income of $85 million or 84 cents a share from operating revenues of $688 million. It was below the $95 million and 94 cents a share from operating revenues of $677 million for the quarter that ended December 31, 2023.

Net cash provided by operating activities was $144 million for the second quarter of fiscal year 2024 compared to net cash provided by operating activities of $175 million for the first quarter of fiscal year 2024.

“The direct margins we have been generating in what has been, and continues to be, a somewhat choppy North America Solutions market are a testament to the value creation we provide for our customers,” said President and CEO John Lindsay.

“From our perspective, there has been a pronounced and necessary shift in the industry’s historical behavior, that is moving its fiscal foundation toward a more sustainable and investable future.”

Lindsay added that the volatility in the weaker natural gas market affected the comopany’s rig count.The North America Solutions (“NAS”) segment exited the second quarter of fiscal year 2024 with 152 active rigs with revenue per day averaging approximately $38,200/day, flat on a sequential basis; while direct margins(2) per day increased by approximately $500/day to $19,200/day.

“Some of this natural gas volatility is reminiscent of this time last year; however, we believe the impact on our overall activity will be less this year going forward. That said, we do expect the underlying factors causing the churn in the market currently to persist resulting in what we expect to be a fairly stable outlook for our rig count through the third fiscal quarter.”

The company anticipates exiting the third quarter of fiscal year 2024 between 145 and 151 active rigs. During the second fiscal quarter, the company returned nearly $46 million of capital to shareholders.

Senior Vice President and CFO Mark Smith said because of the “weaker natural gas environment,” the third quarter rig count will likely be in the high-140 range, lower than the number in the second quarter.

Helmerich & Payne is hoping to capitalize off its contracts to provide up to seven rigs to Saudi Aramco and the first is expected to arrive and begin operations later this summer. Lindsay said the majority of the rigs will arrive during the fourth calendar quarter of 2024.

“We are looking forward to working with Saudi Aramco and believe we are at the beginning of a longer-term presence in the region. The Company’s other international operations in South America and Australia are expected to remain relatively stable over the next quarter, as well as our Offshore Gulf of Mexico operations.”