The Company is primarily engaged in contract drilling of oil and gas wells for others.
Land driller Helmerich & Payne will benefit from exploration growth in shale deposits, which have been found to contain huge reserves that are now economically feasible to exploit - thanks to high-tech rigs such as Helmerich & Payne's FlexRigs that can drill horizontally. Offshore drilling woes in the aftermath of the BP spill may drive even more interest in the shale deposits.The FlexRigs, 98 percent of the company's active fleet, are in high demand and pricing power is strong as investment in the shale heats up. An MIT study released last week estimated there were 650 trillion cubic feet of natural gas in the shale deposits that can be economically developed at prices of $6 per million Btu or lower. Gas is currently trading below $5 but the MIT study predicted the use of natural gas as a percentage of total U.S. energy use would double, to 40 percent, by 2050.Don't listen to MIT - listen to the oil majors circling the shale patch. On Thursday, Reliance Industries said it would pay $1.36 billion for a stake in the Texas shale-gas assets of Pioneer Natural Resources. In April, the Indian oil and gas giant agreed to pay $1.7 billion for a 40 percent stake in Atlas Energy's shale holdings. And on Friday, Exxon Mobil closed its $35 billion purchase of XTO Energy, also a major shale player.The shares are not without risk however, as Venezuelan strongman Hugo Chavez recently nationalized 11 Helmerich & Payne rigs in a dispute over contract rates.At $38, Helmerich & Payne stock is trading 23 percent off its 52-week high at a PEG ratio of 1.68 and a long-term debt to equity ratio of just 11 percent.
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Place of Reg: England & Wales. Company Reg No: 3736872. VAT Reg No: 945 6990 68. Registered Office: 5th Floor, 60 Charlotte Street London W1T 2NU.
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