Helmerich & Payne, Inc.

H&P completed its purchase of KCA Deutag on Jan 16, 2025, resolving the acquisition thread open since July 2024. It paid about $897 million in cash for the shares, with about $80 million placed in escrow pending resolution of certain potential KCA Deutag tax obligations. At closing, KCA Deutag's notes (the $500M 9.875% secured notes, $250M floating rate notes and $272.2M PIK notes) were redeemed and about $100M of bank borrowings repaid. The filing states total consideration was estimated at about $1.9725 billion including this debt repayment. John Lindsay stays CEO and KCA Deutag CEO Joseph Elkhoury will not continue; an updated fiscal 2025 outlook is expected with first-quarter results, and KCA Deutag financial statements are to be filed later.

asset acquisition disposition

H&P completed a private sale of $1.25 billion of new senior notes: $350M at 4.650% due 2027, $350M at 4.850% due 2029 and $550M at 5.500% due 2034. The proceeds, together with the term loan and cash on hand, are intended to pay for the pending KCA Deutag purchase, repay some of KCA Deutag's debt and cover fees. If the acquisition has not closed by the later of Oct 25, 2025 or an agreed extended long-stop date, or the purchase agreement is terminated, the notes must be redeemed at 101% of principal plus interest. This continues the KCA Deutag funding thread; the filing does not say whether the bridge loan will be used.

debt financing

To fund the KCA Deutag purchase, H&P signed a new term loan of up to $400 million (two-year maturity from the closing date), which cuts the Morgan Stanley bridge loan to $1.5725 billion. It also replaced its Wells Fargo-led credit agreement with a larger $950 million revolver (up from $750 million) and raised the allowed debt-to-capital ratio from 50% to 55%, giving it more borrowing room.

debt financing

H&P agreed to buy all of KCA Deutag, a global drilling company, for about $946.4 million in cash for the shares (the press release describes the deal as $1.9725 billion in cash), with closing expected before the end of 2024 subject to antitrust approvals and other conditions. It lined up a $1.9725 billion Morgan Stanley bridge loan as backup funding, but intends to use cash, borrowings and debt market deals first. The company says the deal raises its Middle East rig count from 12 to 88; this is the international expansion the CEO had previously talked about.

debt financing

The board declared the usual $0.25 quarterly dividend plus a new supplemental dividend of $0.235 per share, both payable Feb 28, 2023 to holders of record on Feb 14, 2023. It also raised the maximum share buyback for calendar 2023 from four million to five million shares, so more cash is going back to shareholders than in prior quarters.

dividend declaration

The $550 million 2.900% senior notes due Sept 29, 2031 closed on Sept 29, 2021. They are unsecured, issued under the Dec 2018 indenture with Wells Fargo as trustee. The company agreed to file a registered exchange offer, with effectiveness targeted by June 26, 2022 and completion by July 26, 2022, or it pays 0.25% extra interest. The CEO said the deal extends debt maturity at a lower rate, and the company still states it intends to redeem the 4.65% 2025 notes with the proceeds and cash. The filing does not report the redemption as done.

debt financing

Helmerich & Payne agreed on Sept 27, 2021 to sell $550 million of 2.900% senior notes due 2031 to institutional buyers through Goldman Sachs, upsized from a planned $500 million. It says it will use the proceeds plus cash on hand to redeem all of its outstanding 4.65% notes due 2025 ($487.1 million outstanding); the offering is not conditioned on that redemption. This starts the replacement of the 2025 notes the context has tracked since 2018.

material agreement

The company said it intends to cut future quarterly dividends from $0.71 to $0.25 per share, while still paying the already announced $0.71 on June 1, 2020 to holders of record on May 11, 2020. It cited the weakened commodity price environment and COVID-19 uncertainty, and cut fiscal 2020 capital spending guidance to $210-230 million and SG&A guidance to about $185 million. This ends the $0.71 dividend run that began with the June 2018 raise.

dividend declaration

The Motive Drilling Technologies acquisition announced May 22 closed on June 2, 2017. Motive is now a wholly owned subsidiary of the company; the earnout of up to $25 million remains a possible future payment per the earlier agreement.

business combination

On May 22, 2017, the company agreed to buy Motive Drilling Technologies, which makes directional drilling guidance software, for $75 million at closing plus up to $25 million in earnout payments based on future performance. The press release says closing is expected in June 2017.

business combination

On September 14, 2016, the parties settled the Keel injury lawsuit (over a July 2014 rig accident in New Mexico, where he sought well over $100 million) for $72 million, subject to court approval. After insurance, the company estimates its own cost at $21 to $23 million, with payment due by December 24, 2016.

material agreement