Helmerich & Payne Earnings: North American Rig Count Unlikely to Recover Until 2023 Year-End

Helmerich & Payne, or H&P, reported a slightly weaker second quarter (the firm’s fiscal third quarter) despite a softened North American land drilling market. We maintain our no-moat rating and are slightly raising our fair value estimate to $50 per share from $49, mainly because industry activity is still elevated compared with recent years. Furthermore, we view the current dip in land drilling as largely transitory and anticipate a rebound in contracting activity around December 2023, after well operators finalize capital budgets for fiscal 2024. Near-term drilling activity will nevertheless be comparatively subdued after several straight months of explosive growth, and we expect H&P’s results through year-end will reflect its relatively weaker second-quarter performance.