Digital Automation And Global Energy Demand Will Accelerate Drilling

Key Takeaways

• International growth, acquisitions, and advanced drilling technology are likely to boost margins, earnings, and global market share much more quickly than consensus expects.
  
• Strong capital discipline, reduced capital spending, and operational efficiencies position the company for substantial increases in dividends, buybacks, and resilient shareholder returns.
  
• The shift to renewables, high operating costs, reliance on key clients, tech disruption, and global regulatory pressures threaten H&P's revenue stability and competitive position.

Catalysts

Provides drilling solutions and technologies for oil and gas exploration and production companies.

• While analyst consensus expects revenue growth from the 8 FlexRigs in Saudi Arabia, a more bullish case is that H&P's expanded operational footprint and the restart of suspended rigs, plus deepening relationships, could drive an accelerated, outsized surge in international contract wins-doubling the region's revenue contribution by late 2026 and sharply raising consolidated earnings.
  
• Analysts broadly agree the KCAD acquisition will provide synergies, but this view underestimates both the pace and magnitude: substantial G&A and R&D cost reductions, rapid integration, and further operational rationalization could result in margin expansion and EBITDA uplift much earlier than expected-potentially adding over $75 million in annualized cost savings to the bottom line starting in 2026.
  
• Surging, enduring global demand for lower-emission hydrocarbons such as natural gas, combined with H&P's top-tier fleet and leadership in complex, long-lateral drilling, positions the company to capture premium dayrates and high utilization globally, significantly sustaining and boosting net margins and top-line revenue as LNG and gas markets mature.
  
• H&P's early, aggressive investment and leadership position in automation, AI-powered drilling optimization, and digital solutions is driving market share gains-especially as customers increasingly demand performance contracts linked to outcomes-pointing toward structurally higher margins, resilient earnings, and an enhanced ability to price at a premium, well ahead of industry peers.
  
• The company's robust balance sheet, disciplined capital allocation, and declining CapEx needs open the door for meaningful increases in dividends and opportunistic buybacks, enabling strong double-digit growth in total shareholder returns and EPS acceleration even during broader industry downturns.

Helmerich & Payne Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Helmerich & Payne compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Helmerich & Payne's revenue will grow by 7.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -1.0% today to 7.1% in 3 years time.
• The bullish analysts expect earnings to reach $301.2 million (and earnings per share of $2.9) by about August 2028, up from $-33.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 12.1x on those 2028 earnings, up from -53.7x today. This future PE is lower than the current PE for the US Energy Services industry at 13.6x.
• Analysts expect the number of shares outstanding to grow by 0.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.22%, as per the Simply Wall St company report.

Helmerich & Payne Future Earnings Per Share Growth

Risks

• The global transition toward renewable energy, ambitious net-zero targets in major economies, and increasing ESG-driven capital allocation away from oilfield services present a significant risk of long-term demand erosion for H&P's core drilling business, threatening future revenues and earnings.
  
• H&P's capital-intensive and high fixed-cost operating model leaves it exposed to margin compression and earnings volatility if rig utilization remains subdued for extended periods due to cyclical overcapacity or long-term secular decline in drilling activity.
  
• Customer concentration remains a risk as the company relies on a constrained pool of E&P operators, meaning that the loss of a major client or contract-especially in the face of ongoing industry consolidation-could cause a material loss in future revenues.
  
• Despite digital and automation initiatives, the company faces the risk that technological disruption or failure to keep pace with next-generation drilling and efficiency solutions could erode H&P's competitive positioning, placing sustained pressure on pricing power and net margins.
  
• Ongoing rig suspensions in key regions like Saudi Arabia, combined with global regulatory tightening and the sector-wide challenge of attracting skilled labor, raise the risk of operational inefficiencies, higher compliance and wage costs, and uncertainty in the recovery of international revenues and margins.

Valuation

• The assumed bullish price target for Helmerich & Payne is $27.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Helmerich & Payne's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $17.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $4.3 billion, earnings will come to $301.2 million, and it would be trading on a PE ratio of 12.1x, assuming you use a discount rate of 10.2%.
• Given the current share price of $17.8, the bullish analyst price target of $27.0 is 34.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.