HP

Helmerich & Payne Inc

Energy


Presented:06/22/2017
Price:$52.12
Cap:$5.66B
Current Price:$34.06
Cap:$3.36B

Presented

Date06/22/2017
Price$52.12
Market Cap$5.66B
Ent Value$6.93B
P/E RatioN/A
Book Value$40.04
Div Yield5.31%
Shares O/S108.57M
Ave Daily Vol1,989,497
Short Int20.76%

Current

Price$34.06
Market Cap$3.36B
Helmerich & Payne, Inc. engages in contract drilling of oil and gas well. It operates through the following segments: U.S. Land, Offshore, and International Land. The U.S. Land segment operates its drilling business primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Ohio, Utah, New Mexico, Montana, North Dakota, West Virginia and Nevada. The Offshore segment conducts its business in the Gulf of Mexico and Equatorial Guinea. The International Land segment operates in six international locations including Ecuador, Colombia, Argentina, Bahrain, United Arab Emirates, and Mozambique. The company was founded by Walter Helmerich II and William Payne in 1920 and is headquartered in Tulsa, OK.,000LMP-E

Publicly traded companies mentioned herein: Helmerich & Payne Inc (HP)

Highlights

The presenter is short shares of Helmerich & Payne (HP; $52-53), the leading US land driller by market share (~19%). As a result of the pressure on the oilfield services segment, the stock has declined from ~$80, where it began 2017, to the low $50s and there appears to be further downside risk. Based on his model, fair value is $45, at best (he calculates the NAV in his base case to be ~$43). While the 5.3% dividend is a risk to consider, it’s a ~$300mm outflow that is not likely sustainable due to HP’s cash flow profile. And, given recent trends in day rates and expenses, Street EBITDA estimates that call for growth from $350mm in 2017 to $740mm FY end 2019 are likely overly optimistic and will have to come down.

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