Helmerich & Payne Makes Big Bet on Middle East with ~$2B KCA Deutag Acquisition
Portfolio Pulse from Lekha Gupta
Helmerich & Payne, Inc. (NYSE:HP) is acquiring KCA Deutag for $1.9725 billion, significantly expanding its presence in the Middle East. The acquisition will increase H&P's Middle East rig count from 12 to 88 and is expected to be immediately accretive to cash flow. The transaction is anticipated to close by the end of 2024.
July 25, 2024 | 6:00 pm
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POSITIVE IMPACT
Helmerich & Payne's acquisition of KCA Deutag for $1.9725 billion will significantly expand its Middle East operations, increasing its rig count from 12 to 88. The deal is expected to be immediately accretive to cash flow and free cash flow per share, with double-digit free cash flow accretion by 2025.
The acquisition significantly expands H&P's operations in the Middle East, a region with projected market growth. The deal is expected to be immediately accretive to cash flow and free cash flow per share, indicating a positive short-term impact on the stock price.
CONFIDENCE 95
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Investors can gain exposure to Helmerich & Payne's growth through the Invesco S&P SmallCap Energy ETF (NASDAQ:PSCE), which includes HP in its portfolio. The acquisition of KCA Deutag is expected to positively impact HP's stock, benefiting PSCE.
PSCE includes HP in its portfolio, and the positive impact on HP's stock due to the acquisition is likely to benefit PSCE as well.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
The SPDR S&P Oil & Gas Equipment & Services ETF (NYSE:XES) includes Helmerich & Payne (NYSE:HP) in its portfolio. The acquisition of KCA Deutag is expected to positively impact HP's stock, benefiting XES.
XES includes HP in its portfolio, and the positive impact on HP's stock due to the acquisition is likely to benefit XES as well.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 50