Helmerich & Payne, Inc.

Hey, everyone, and welcome to today's Helmerick & Payne's Fiscal Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing star 1 on your touch-tone phone. Please note this call may be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's call over to Vice President of Investor Relations, Dave Wilson. Please go ahead.

Thank you, Ashley, and welcome everyone to Humber Campaign's conference call and webcast for the third quarter of fiscal year 2022. With us today are John Lindsay, President and CEO, and Mark Smith, Senior Vice President and CFO. Both John and Mark will be sharing some comments with us, after which we'll open the call for questions. Before we begin our prepared remarks today, I'll remind everyone that this call will include forward-looking statements as defined under the securities laws. Such statements are based upon current information and management's expectations as of this date and are not guarantees of future performance. Board looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict. As such, our actual outcomes and results could differ materially. You can learn more about these risks in our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our other SEC filings. You should not place undue reliance on board looking statements, and we undertake no obligation to publicly update these board looking statements. We will also make reference to certain non-GAAP financial measures, such as segment direct margin and other operating statistics, You'll find the gap reconciliation comments and calculations in yesterday's press release. With that said, I'll now turn the call over to John Lindsay.

Thank you, Dave. Good morning, everyone, and thank you for joining our call today. I'm pleased with our performance during the quarter. The operational and financial results continue to reflect the benefits of our strategic initiatives we've been working on for several years now. The efforts by our sales and operations teams to improve pricing and margin growth in our North America solutions segment. On our earnings call last February, and again in April, we discussed how rig pricing needed to reach $30,000 per day. And in our third fiscal quarter, we had roughly 20% of our fleet's average revenue per day at or above that level. This is a great start. But we also recognize that pricing needs to move further to achieve gross margins of 50% or greater to generate returns that fully reflect the value we deliver to customers with our FlexRig fleet and complementary technology solutions. As intended, we saw a modest growth in rig count and exited the quarter with 175 rigs contracted in our North American Solutions segment. Fiscal discipline and contractual churn allowed us to re-contract rigs without incurring additional reactivation costs and to redeploy them at significantly higher rates. Our rapidly improving contract economics are driven by both H&P's value proposition to customers as well as a market that's very tight for available super spec rigs. We believe the drilling solutions and outcomes we provide are increasingly being recognized and coveted by customers. It's encouraging to see capital discipline in our industry. And when combined with the supply chain and labor constraints, we expect this could put a damper on the industry's ability to reactivate idle super spec rigs at significant scale during the buying season. the last two years that has been in calendar Q4 and Q1. This will likely perpetuate the supply-demand tightness for super spec rigs and provide momentum for future improvements in contract economics. We are already seeing some customers inquiring about rig availability for the fourth calendar quarter of this year. They are realizing that the market for readily available H&P Flex rigs is extremely tight. We are seeing some customers looking to add incremental rigs for 2023. The needs are typically in the range of one to four rigs. And there are some looking to replace a lower performing rig with a flex rig. While we are unable to comment on the number of rigs that we could add specifically today, it is important to underscore that going forward, we will apply the same disciplined focus on financial returns and on receiving commensurate compensation for the value we are providing. Along those lines, Mark will provide some high-level remarks on our fiscal 2023 CapEx response to potential future demand for our rigs and our idle super spec flex rig fleet. We continue to hear about the benefits our customers experience from our digital technology solutions. especially when combined with our uniform flex rig fleet. As horizontal wells continue to trend toward greater complexity and longer lateral lengths, drilling efficiency and reliability are important factors that differentiate our premium SuperSpec service offering. On the international front, activity is ticking higher with further improvements in our South American operations and the potential for more activity In the Middle East, preparations are underway to export some of our super spec capacity as part of our hub strategy. Current plans have one rig moving overseas in the coming months with additional rigs possible depending on the speed of the opportunities that develop in the Middle East compared to other competing international locations. Establishing our Middle East hub is an important step in expanding our presence in that region as part of a longer-term growth strategy. Our scale and digital technology not only enhance profitability in our North American solution segment, but we believe these are also crucial elements in our goal to grow internationally. There is a scarcity of digital solutions being applied in key energy-producing regions around the globe, and developing ways to integrate new technologies will ultimately lead to improved economic returns for all our stakeholders over time. In our offshore Gulf of Mexico segment, our people continue to deliver great value for our customers. As mentioned on the last call, we are implementing pricing improvements offshore and have made significant progress. We expect the margin contribution to continue to improve going forward at moderately higher levels. In closing, it is encouraging to see the industry rebound, but it should also remind us of past cycles driven by elevated commodity prices and how the drilling industry repeatedly responded by adding capacity, which then led to an oversupply market. So far, this cycle seems different from both an operator and a service industry perspective. The plan at H&P is straightforward. safety above all, value creation for customers, and margin growth. Getting paid for the value we provide. I'm encouraged by the achievements through the dedication of our employees, their passion, and their service attitude that they bring to the company. We all strive to deliver excellence each day to enhance the value we provide to our customers and our shareholders. As we move forward, I'm confident Our shared values and commitments will endure and enable the company to maintain its leadership position within the oil service industry. And now I'll turn the call over to Mark.