Earlier this month, Helmerich & Payne, Inc. (H&P) announced its supplemental shareholder return plan and capital budget for fiscal year 2023. The Company also announced the timing of the upcoming conference call and webcast for its fiscal fourth quarter of 2022.
President and CEO John Lindsay commented, “I am pleased to announce the Company’s 2023 supplemental shareholder return plan, which augments our long-standing commitment to returning cash to shareholders. Our current base dividend of $1/share per annum is meant to serve as a foundation of that cash return commitment throughout the cycles inherent in our industry. The supplemental dividend for fiscal 2023, which we anticipate will be approximately $100 million in aggregate, is meant to further boost shareholder returns. This plan, and any potential subsequent ones for future fiscal years, are not only designed to further enhance base cash returns, but also allow the Company the flexibility to further invest in the business, supplement additional dividend returns, and/or repurchase shares as those opportunities arise."
"Implementation of this plan is also reflective of the Company’s ability to execute across multiple capital allocation strategies simultaneously. In North America Solutions, we plan to reactivate up to 16 rigs by March 31, 2023, for appropriate prices and terms. This would take our rig count from 176 as of September 30, 2022, to an upper target of 192 active rigs for fiscal 2023. H&P’s continued efforts to expand its international presence and operations in fiscal 2023 is another such strategy. We realize some of the international capital investments H&P makes this fiscal year, captured in our capex budget, will take time to fully develop and generate returns for the Company. However, we have previously stated that our international strategy, particularly with regards to the Middle East, is a long-term play, knowing that there will be upfront investments to secure our success.”
2023 Supplemental Shareholder Return Plan
The Company has established its 2023 supplemental shareholder return plan, which is currently projected to provide approximately $100 million in additional cash returns to shareholders in the form of additional dividends. These supplemental dividends are expected to be paid in four, approximately equal, installments during fiscal 2023. These additional cash returns represent approximately 50% of the Company’s projected cash flow generation in fiscal 2023 after planned capital expenditures and after the Company’s already established “base” annual dividend of $1.00/share, which is roughly $110 million on an annualized basis. All such established base and supplemental dividends are subject to the determination and approval of the Company’s Board of Directors on a quarterly basis.
Capex for Fiscal Year 2023
The Company has set its initial fiscal year 2023 capex budget to range between $425 and $475 million, representing a sizeable sequential increase and highlighting the capital-intensive nature of H&P’s business as well as planned international expansion. H&P’s North America Solutions segment accounts for approximately two-thirds of the expected spend as the Company plans to reactivate up to 16 idle rigs from its super-spec FlexRig® fleet, of which six rigs will be converted to a walking configuration and as maintenance capex per rig is expected to modestly exceed the high-end of the historic normalized range. The Company’s International Solutions segment accounts for roughly a quarter of the planned expenditures in anticipation of reactivating more rigs during the fiscal year, upgrading five rigs in Argentina to super-spec and converting six additional super-spec rigs domiciled in the U.S. to walking configurations that are currently planned to be exported to international operations later in the fiscal year. The remainder of the fiscal 2023 capex budget is slated for corporate and information technology purposes as the Company continues to invest in and modernize its own operational and business-driven technologies.
Fiscal Fourth Quarter 2022 Conference Call and Webcast
The Company’s fiscal fourth quarter 2022 conference call will take place on Thursday, November 17, 2022, at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations. Investors may listen to the conference call either by phone or audio webcast.