Helmerich & Payne, Inc. (NYSE:HP) reported net income of $422 million($3.87 per diluted share) from operating revenues of $3.2 billion for its fiscal year ended September 30, 2015, compared to net income of $709 million ($6.46 per diluted share) from operating revenues of $3.7 billion for its prior fiscal year endedSeptember 30, 2014.  Included in net income per diluted share for fiscal 2015 and fiscal 2014 are approximately $0.86 and$0.23, respectively, in after-tax income related to a combination of select items as described in a separate section of this press release.  Select items, among others, include long-term contract early termination compensation, gains from the sale of investment securities, abandonment charges, and impairment charges.

Net loss for the fourth fiscal quarter of 2015 was $21 million (negative $0.20 per diluted share) from operating revenues of$566 million.  Included in net loss per diluted share corresponding to this year’s fourth fiscal quarter are approximately $0.24in after-tax losses related to a combination of select items as described in a separate section of this press release.

President and CEO John Lindsay commented, “After delivering record-breaking results in 2014, we began fiscal 2015 with high expectations.  Unfortunately, these past 12 months have brought very low and volatile oil prices and the industry rig count in the U.S. has fallen to levels below those experienced during the recession in 2009.  Drilling activity and service pricing levels continue to decline, and for many the major theme across the industry is survival, and has led to sharp reductions in personnel, expenses, and investments across the board.  No company is immune to these conditions and fortunately a cornerstone of our strategy has always been fiscal conservatism, which continues to serve us well.  Additionally, we believe our advanced rig fleet, long-term contract backlog, strong customer base, and best-in-class reputation for customer service and value creation position us very well in this difficult environment.  In the midst of this very challenging market, our efforts remain focused on adding value to shareholders by prudently allocating capital, providing innovative solutions and helping our customers reduce their total cost per well.  The short-term outlook for the industry remains uncertain, but we do expect better days ahead and believe the Company is well positioned to grow market share.”

Operating Segment Results

Segment operating income for the Company’s U.S. land operations was $34 million for the fourth quarter of fiscal 2015, compared with $259 million for last year’s fourth fiscal quarter and $122 million for this year’s third fiscal quarter.  As compared to the third quarter of fiscal 2015, the decrease in segment operating income was attributable to a decline in early termination revenues, lower levels of quarterly activity and a lower rig margin per day average as well as abandonment (non-cash) charges of approximately $30 million incurred during the fourth fiscal quarter related to the decommissioning of six of the Company’s 3,000 horsepower (SCR) land rigs and other used drilling equipment at the end of the quarter.  These abandonment charges are included with depreciation in the segment.  The number of quarterly revenue days decreased sequentially by 5.1% to 13,490 days.  Excluding the impact of $5,325 and $2,482 per day corresponding to revenues from early contract terminations during this year’s third and fourth fiscal quarters, respectively, the average rig revenue per day decreased sequentially by $416 to $26,218, and the average rig margin per day decreased sequentially by $109 to $12,395.  The average rig expense per day decreased sequentially by $307 to $13,823.  Rig utilization for the segment was 43% for this year’s fourth fiscal quarter, compared with 87% and 47% for last year’s fourth fiscal quarter and this year’s third fiscal quarter, respectively.  At September 30, 2015, the Company’s U.S. land segment had approximately 145 contracted rigs generating revenue (including 120 under long-term contracts) and 198 idle rigs (including 197 AC drive FlexRigs®*).

Segment operating income for the Company’s offshore operations was $12.5 million for the fourth quarter of fiscal 2015, compared with $15.0 million for last year’s fourth fiscal quarter and $14.7 million for this year’s third fiscal quarter.  The sequential decrease in operating income was mostly attributable to a decline in the average rig margin per day, which decreased from $14,265 to $13,296.  Quarterly revenue days sequentially increased by approximately 1% to 736 days during the fourth fiscal quarter.

The Company’s international land operations reported segment operating loss of $38.1 million for this year’s fourth fiscal quarter, compared with operating income of $5.9 million for last year’s fourth fiscal quarter and $16.7 million for this year’s third fiscal quarter.  The sequential decrease in operating income was mostly attributable to impairment (non-cash) charges of approximately $39 million incurred during the fourth fiscal quarter related to several of the Company’s international (SCR) land rigs.  The sequential decline was also attributable to approximately $5 million in charges related to an allowance for doubtful accounts, a decrease in the average rig margin per day, and a decrease in quarterly revenue days.  Excluding the impact of $4,658 and $5,535 per day corresponding to revenues from early contract terminations during this year’s third and fourth fiscal quarters, respectively, as well as the impact of $3,021 per day corresponding to charges related to an allowance for doubtful accounts during the fourth fiscal quarter, the average rig margin per day decreased sequentially from$13,086 to $7,856.  The number of quarterly revenue days decreased sequentially by approximately 12% to 1,665 days.

Drilling Operations Outlook for the First Quarter of Fiscal 2016

In the U.S. land segment, the Company expects revenue days (activity) to decrease by roughly 11% to 14% during the first fiscal quarter of 2016 as compared to the fourth fiscal quarter of 2015.  Excluding any impact from early termination revenue, the average rig revenue per day is expected to decrease to roughly $26,000, and the corresponding average rig expense per day is expected to decrease to roughly $13,600.  As of today, the U.S. land segment has approximately 132 contracted rigs that are generating revenue (including 108 under term contracts) and 212 idle rigs (including 211 AC drive FlexRigs).

In the offshore segment, the Company expects the average rig margin per day to be approximately $9,500 during the first fiscal quarter of 2016 and revenue days to be flat as compared to the fourth quarter of fiscal 2015.

In the international land segment, the Company expects revenue days to decline to roughly 1,400 during the first fiscal quarter of 2016.  Over the same period, the average rig margin per day is expected to be roughly $8,000.

Capital Expenditures and Other Estimates for Fiscal 2016

The Company’s capital expenditures for fiscal 2016 are expected to be in the range of $300 million to $400 million.  Depreciation expense is expected to be slightly under $580 million, and general and administrative expenses are expected to be approximately $135 million for fiscal 2016.

Select Items Included in Net Income (or Loss) per Diluted Share

Included in net income per diluted share for fiscal 2015 are approximately $0.86 in after-tax income related to a combination of the following:  $1.30 of after-tax income from long-term contract early termination compensation from customers (which favorably impacted net income by approximately $141 million); $0.07 of after-tax gains related to the sale of used drilling equipment; $0.03 of after-tax losses related to an allowance for doubtful accounts; $0.25 of after-tax losses from abandonment charges related to the decommissioning of certain (SCR) land rigs and other used drilling equipment; and$0.23 of after-tax losses from impairment charges for certain (SCR) land rigs.

Included in net income per diluted share for fiscal year 2014 are approximately $0.23 in after-tax income related to a combination of the following:  $0.25 of after-tax gains from the sale of investment securities; $0.12 of after-tax gains related to the sale of used drilling equipment; and $0.14 of after-tax losses from abandonment charges related to certain decommissioned (SCR) land rigs and other used drilling equipment.

Included in net loss per diluted share corresponding to the fourth quarter of fiscal 2015 are approximately $0.24 in after-tax losses related to a combination of the following:  $0.25 of after-tax income from long-term contract early termination compensation from customers; $0.02 of after-tax gains related to the sale of used drilling equipment; $0.03 of after-tax losses related to an allowance for doubtful accounts; $0.18 of after-tax losses from abandonment charges related to the decommissioning of certain (SCR) land rigs and other used drilling equipment; $0.23 of after-tax losses from impairment charges for certain (SCR) land rigs; and a $0.07 impact on income tax expense due primarily to limitations on foreign income tax credits. (Original Source)

Shares of Helmerich & Payne closed yesterday at $55.42 . HP has a 1-year high of $87.42 and a 1-year low of $46.16. The stock’s 50-day moving average is $54.41 and its 200-day moving average is $61.17.

On the ratings front, Helmerich & Payne has been the subject of a number of recent research reports. In a report issued on September 21, FBR analyst Tom Curran maintained a Buy rating on HP, with a price target of $69, which implies an upside of 24.5% from current levels. Separately, on September 18, RBC’s Kurt Hallead downgraded the stock to Hold and has a price target of $55.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Tom Curran and Kurt Hallead have a total average return of -4.7% and -9.4% respectively. Curran has a success rate of 37.5% and is ranked #3379 out of 3840 analysts, while Hallead has a success rate of 37.3% and is ranked #3709.

Overall, 3 research analysts have rated the stock with a Sell rating, 4 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $45.50 which is -17.9% under where the stock closed yesterday.

Helmerich & Payne Inc is engaged in contract drilling of oil & gas wells for others in the ownership, development & operation of commercial real estates. Its business comprises of three reportable segments: U.S. Land, Offshore & International Land.