Helmerich & Payne (H&P) said it is reassessing its capital expenditure (CAPEX) for the remainder of 2020 as the COVID-19 pandemic creates an uncertain fiscal environment within the industry. The company did not announce any specific cut in spending, but it said that, given the rapidly evolving market conditions in the past few weeks, it is appropriate to withdraw its second-quarter guidance, which was previously announced in February.
“I am proud of how our people have responded in these challenging times,” said John Lindsay, President and CEO of H&P. “In difficult times, our company will continue to make operationally sound and fiscally conservative decisions that will continue to support H&P’s long-term success.”
In light of the uncertainties related to COVID-19 and the negative impact that a weakened commodity price environment will have on the rig count outlook, H&P said it has will look at various parts of its cost structure. Gross CAPEX is expected to be approximately $210 to $230 million for the full fiscal year 2020. The company had previously estimated 2020 CAPEX between $275 and $300 million. It is still expected to include amounts for walking rig conversions backed by term contracts and certain in-process corporate projects, including information technology initiatives.
Second-half fiscal 2020 CAPEX is expected to consist primarily of maintenance activities at a level of approximately $1 million per active rig. Asset sales this year will include reimbursements for lost and damaged tubulars and sales of other used drilling equipment to offset a portion of gross CAPEX. H&P said those sales should generate approximately $25 to $25 million in 2020.