Helmerich & Payne (H&P) has completed the acquisition of KCA Deutag, a global drilling company, for approximately $2.0 billion. The acquisition has led to a change in the naming convention for H&P's reportable segments, with Offshore Gulf of Mexico now termed as Offshore Solutions, and International Solutions now including the results from the acquired KCA Deutag land operations. As of March 31, 2025, H&P's drilling rig fleet included a total of 384 rigs, with 229 active contracted rigs.
The company's total contract drilling backlog as of March 31, 2025, was $7.6 billion, reflecting a significant increase from the previous year primarily due to the completion of the KCA Deutag acquisition. Approximately 13.3 percent of the total backlog is reasonably expected to be fulfilled during the remainder of fiscal year 2025. The backlog figures for the International Solutions and Offshore Solutions segments include significant contributions from the recently acquired subsidiary, KCA Deutag International Limited.
H&P anticipates realizing in excess of $25 million in expense synergies associated with the acquisition, with the overall cost structure expected to be reduced by approximately $50 to $70 million. The company believes that these cost-saving efforts will become increasingly evident in the forthcoming quarters.
The company highlights the volatility of future oil and natural gas prices, changes in worldwide rig supply and demand, competition, and technology, as well as geopolitical developments and tensions, as factors that could impact its operations. Additionally, the announcements by the U.S. government regarding the implementation of global tariffs and OPEC+ regarding the planned increase of crude oil supply have created a high level of uncertainty in the global energy markets.
H&P's revenues are primarily derived from the capital expenditures of companies involved in the exploration, development, and production of crude oil and natural gas. The company acknowledges that the announcements and subsequent suspension or modification of certain tariffs could lead to reduced activity and profitability for the remainder of fiscal 2025, or until the global economic impacts are fully realized.
The completion of the KCA Deutag acquisition and the subsequent contract suspensions for rigs from the legacy KCA Deutag rig fleet operating in Saudi Arabia have been significant recent developments for H&P. The company has received notifications of contract suspensions for a total of 17 rigs in the country.
The market has reacted to these announcements by moving the company's shares -3.47% to a price of $18.34. Check out the company's full 10-Q submission here.
