Helmerich & Payne Inc. (HP) announced that it expects its second fiscal quarter of 2010 to be impacted by Venezuelan currency devaluation. The Company's preliminary estimates regarding the impact of this devaluation on its consolidated financials indicate that it will probably result in an exchange loss of about $20 million to be recorded in the second fiscal quarter ending March 31, 2010. Not included in this estimate is the decline in value of the uncollected invoices issued since the Company changed its revenue recognition to cash basis for its Venezuelan operation.
Given that these uncollected invoices are not included in the Company's consolidated accounts receivable, their reduction in value is not expected to generate additional exchange losses. Preliminary estimates indicate that the value of future potential collections related to these unrecorded invoices, previously disclosed at about $61 million, could decline by 25% to 35%.
The company said that all eleven H&P rigs that formerly worked for PDVSA remain idle. The Company continues to pursue future drilling opportunities for these eleven large conventional rigs in Venezuela, but it does not expect to commit to new contracts until additional progress is made on pending receivable collections and on conversion of local currency to U.S. dollars.
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