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Helmerich & Payne Inc HP

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Low Drilling Activity Weighs on Helmerich & Payne’s Fiscal-Year 2021 Results; Brighter Days Ahead

Analyst Note

| Katherine Olexa |

Helmerich & Payne ended its fiscal-year 2021 (ended September 2021) with total revenue 31% lower than its fiscal-year 2020. Operating margins dropped to negative 29% compared with negative 5% last year. After rolling our model to incorporate the full fiscal year, we slightly increase our fair value estimate to $29 from $27. We expect H&P’s steadily improving utilization rates will continue through fiscal 2022. Near-term headwinds include rig reactivation costs--reaching upwards of $1 million per rig--that will weigh on margins as H&P prepares to return to prepandemic utilization levels. However, we expect those additional costs will dissipate over the next year or so and forecast a midcycle operating margin of 13% by 2030, slightly lower than our prior estimate of 14.5%

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Company Profile

Business Description

Helmerich & Payne has the largest fleet of U.S. land drilling rigs. The company's FlexRig line is the leading choice to drill horizontal wells for production of U.S. tight oil and gas. H&P is present in nearly every major U.S. shale play and also has a small presence internationally.

1437 South Boulder Avenue, Suite 1400
Tulsa, OK, 74119
T +1 918 742-5531
Sector Energy
Industry Oil & Gas Drilling
Most Recent Earnings Sep 30, 2021
Fiscal Year End Sep 30, 2022
Stock Type Distressed
Employees 5,932