H&P sees decline in business
US drilling contractor Helmerich & Payne said some of its business could experience softness if its clients decide to cut their drilling plans like Chesapeake Energy did in the wake of falling natural gas prices.
The company has about 45% exposure to the spot market for fiscal year 2009, and could be negatively impacted by such an announcement, company spokesman Juan Pablo Tardio said by phone.
"It's not a significant amount but that portion of our business will be impacted in a couple of ways," Tardio said, adding that the company's conventional rig count and spot pricing and margins per day per rig could dip, said a Reuters report.
Shares of the Tulsa, Oklahoma-based company fell as much as 10% to $47.81 but recovered some of their losses and were down $3.75 at $49.19 this afternoon trade on the New York Stock Exchange.
Tardio said the share price fall could be attributed to general market news and possible trends, and not to any specific news his company had disclosed.
As of 15 September, Helmerich & Payne was operating 184 US land rigs, 29 international land rigs and nine offshore platform rigs mostly for industry giants like BP, ConocoPhillips, ExxonMobil and Marathon Oil.
Chesapeake Energy said it would cut its capital expenditure for drilling by 17% through 2010 due to a plunge in natural gas prices and concerns about a US market surplus.
Tardio said what Chesapeake had done might be a good indicator of things to come and if that does happen, he would expect it to impact Helmerich & Payne's business.
Natural gas prices, which had skyrocketed earlier this year, have tumbled about 50% since 30 June.