With U.S. oil prices hovering around $90 per barrel and key data Friday showing the number of U.S. oil rigs declined this week, top oil and natural gas drilling rig maker Helmerich & Payne is set up just below a buy point.
U.S. drilling rigs decreased by 11 to 630 this week, according to Baker Hughes data. The prior week broke a string of nine straight declines in the number of drilling rigs working in North America with U.S. drilling rigs gaining nine to 641.
Helmerich & Payne stock edged up 0.4% to 42.83 Friday during market trade. BlackRock holds a 15.7% stake in Helmerich & Payne, the energy stock's top institutional investor.
Meanwhile, West Texas Intermediate oil prices edged higher Friday, following four days of declines. WTI futures traded just below $90 per barrel Friday, down about 1% for the week, but still near their highest level since November, 2022.
Oil prices and energy stocks have rallied since June, after a fall off from 2022 highs driven by Russia's Ukraine invasion. U.S. oil producers and the Saudi Arabia-led Organization of Petroleum Exporting Countries and its partners have kept global oil supplies tight. But the outlook for demand remains uncertain, with China's economy struggling, and the outcome of the U.S. battle vs. inflation yet to be determined.
Drilling Rig Leader: Helmerich & Payne
Helmerich & Payne and rival Patterson-UTI Energy are the two largest suppliers of land drilling rigs in the U.S. Their high horsepower, mobile drilling units are the real workhorses of any North American production boom. The companies also provide contract services to operate and manage the rigs.
HP ranks first in the Oil&Gas-Drilling industry group. Collectively, the 12-stocks in the group have dropped nearly 2% in 2023, underperforming the broad market. HP stock itself is down around 4% this year.
However, shares are up 35% since May and the stock has formed a cup-with-handle base. It is currently about 7% below a 45.46 buy point.
Analysts predict HP profit ballooning more than 4000% to $4.14 per share in fiscal year 2023, up from 10 cents per share last year. However, earnings are expected to retreat in 2024. Wall Street also forecasts revenue growing 39% in fiscal year 2023.
The U.S. Energy Information Administration (EIA) on September 12 reported that U.S. natural gas production in 2023 will slightly increase, up 4%, compared to 2022. The EIA expects production to remain nearly flat in 2024.
The EIA also sees U.S. crude oil production increasing 7% vs. 2022 before slowing in 2024.
The energy stock has a Composite Rating of 99 out of 99 and an 87 Relative Strength Rating. Helmerich & Payne stock has an EPS Rating of 83 out of 99.
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