Helmerich & Payne Ups Div; Wins Rig Contracts - Analyst Blog

Contract drilling services provider Helmerich & Payne Inc. HP announced an increase in dividend for the quarter ending Jun 30. The new dividend of 68.75 cents per share reflects a 10% hike from the prior-quarter dividend of 62.5 cents. The company stated that the new payout will be disbursed on Sep 2 to shareholders of record as of Aug 15.

Helmerich & Payne also announced that it has received multi-year term contracts from five upstream companies to build as well as operate 9 additional FlexRigs, which are likely to bring high returns.

The company stated that with these additional contracts, the total newbuild commitments for fiscal 2014 stands at 53. Moreover, Helmerich & Payne plans to increase its rig construction rate from 3 to 4 rigs per month, starting September, based on the newly won contracts and optimism of customers regarding new FlexRigs deliveries in the next fiscal year. The 2014 capital budget, however, remains $1.1 billion.

Following the latest developments at Helmerich & Payne, the stock gained about 1.1% to close at $110.24 in the NYSE.

Helmerich & Payne's 40-year track record of yearly dividend hikes reflects its commitment of increasing value for shareholders. Moreover, with FlexRigs demand remaining high and such contracts in line, the company could witness further upside going forward.

Tulsa, OK-based Helmerich & Payne is engaged in the contract drilling of oil and gas wells in the U.S. and abroad. The company's current fleet comprises 328 U.S. land rigs, 32 international land rigs and 9 offshore platform rigs. Helmerich & Payne has another 24 FlexRigs in the pipeline, the completion of which would take the FlexRig count to 354.

At present, Helmerich & Payne sports a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players from the oil & gas drilling industry like Pioneer Energy Services Corp. PES, Parker Drilling Co. PKD and Patterson-UTI Energy Inc. PTEN. While Pioneer Energy sports a Zacks Rank #1 (Strong Buy), Parker Drilling and Patterson-UTI hold a Zacks Rank #2 (Buy).