UPDATE 1-Helmerich & Payne profit beats on higher U.S. drilling

Fri Jul 27, 2012 7:48am EDT

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July 27 (Reuters) - Contract driller Helmerich & Payne Inc posted a better-than-expected quarterly profit on higher drilling activity, but warned that falling oil prices was softening demand for rigs and services.

U.S. crude oil prices fell 9 percent in the April-June quarter from a year earlier to average $93 per barrel, forcing exploration companies to consider cuts on spending.

Nabors Industries Ltd, owner of the world's largest land-drilling rig fleet, on Tuesday said customers' spending reductions was partly responsible for an increasingly competitive land rig market.

Helmerich & Payne said lower rig expenses and an increase in drilling activity boosted margins at its U.S. land operations in the third quarter.

The Tulsa, Oklahoma-based company's revenue from U.S. land operations rose 31 percent, much higher than the 6 percent rise the segment posted in the preceding quarter. The segment makes up for more than 86 percent of total sales.

Income from continuing operations rose to $149.9 million, or $1.38 per share, in the third quarter, from $109.8 million, or $1.01 per share, a year earlier.

Adjusted profit was $1.37 per share, much higher than analysts expectations of $1.16 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 27 percent to $819.8 million, topping market estimates of $780.4 million.

Helmerich & Payne shares have lost about a fifth of their value so far this year, compared with a less than 2 percent fall in the wider U.S. Dow Jones Oil equipment services index.

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