Helmerich & Payne (HP) reported first-quarter fiscal 2025 revenue of $677.3 million, essentially flat YoY and down modestly QoQ from $693.8 million in the prior quarter, reflecting resilient North America margin generation amid a cyclical downturn and the initial contribution of the KCAD Deutag acquisition. The North America Solutions segment demonstrated durable margins with direct margin of roughly $266 million and an exit rig count of 148, supported by a strong shift toward performance-based contracts that anchored pricing discipline and customer value.
The KCAD acquisition defines HP’s global growth trajectory, expanding the company’s footprint into the Middle East and broadening its onshore drilling capabilities. Management emphasized transformational value from the integration, including cost synergies and enhanced diversification across assets and geographies. However, near-term profitability is temporarily pressured by Saudi rig suspensions tied to the integration and startup costs for organic growth in Saudi Arabia. Management indicated the Saudi-related direct margins would be modest in Q2 2025 and highlighted that the majority of the 8 FlexRigs in-country remain either idled or ramping, with three already contributing revenue. The company remains focused on deleveraging, preserving an investment-grade rating, and funding shareholder-friendly returns while investing for long-term growth.
Looking ahead, HP provided 2025 guidance that contemplates CapEx of $360–$395 million, full-year G&A around $280 million, cash taxes of $190–$240 million, and roughly $75 million of incremental interest expense from the new international footprint (partially offset by >$35 million in interest savings from favorable debt terms). The near-term trajectory features continued North America margin resilience, an improving but still lumpy international path, and a substantial backlog (c.$5.5 billion from KCAD) that underpins long-dated revenue visibility. The stock remains positioned to benefit from a multi-year energy demand upcycle, revised cost structures, and a disciplined capital allocation framework, but investors should monitor Saudi rig activity, integration costs, and ramp timing for the KCAD-enabled international platform.