Helmerich & Payne, Inc.

Good day, everyone, and welcome to Helmick and Payne's fiscal second 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 the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and 2. Please note, this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Dave Wilson, Vice President of Investor Relations.

Thank you, Abby, and welcome everyone to Hummer Campaign's conference call and webcast for the second quarter of fiscal year 2024. 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, I'll remind everyone that this call will include forward-looking statements as defined under the securities laws. Such statements are based on current information and management expectations as of this date and are not guarantees of future performance. Forward-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 forward-looking statements, and we undertake no obligation to publicly update these forward-looking statements. We also make reference to certain non-GAAP financial measures, such as segment operating income, direct margin, and other operating statistics. You'll find the GAAP 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. In light of the choppy market conditions in the U.S., Hummer Campaign is pleased with our second fiscal quarter results. Even with these shifting market conditions, our margins remain strong, reflecting our continued focus on maintaining commercial economics commensurate to the value we're delivering to customers. We're also encouraged to see evidence that there's an ongoing and necessary shift in the industry's fiscal behavior, which is moving it toward a more sustainable and investable future. In the US market, contractual churn is still prevalent, and while we achieved our average planned rig count for the second quarter, our exit rig count for the quarter was just below what was projected. Mark will give more rig count details during his remarks, but let me summarize by saying that part of this churn continues to be a product of the volatility created by a weaker natural gas market and is reminiscent of the volatility experienced this time last year. However, we believe the impact on our overall activity will be less this year going forward. E&P consolidations and a variety of other factors have also contributed to churn, and while we expect many of these underlying factors will persist, we are also projecting a relatively stable outlook for our rig count through the third fiscal quarter. We expect Our total projected North America Solutions direct margin for the third fiscal quarter to be down slightly on a sequential basis due to a lower average rig count, but it's important to note that we also expect resiliency in our per-day direct margins. Our customers benefit from reliability, faster well cycles, and better well quality, all of which lowers their total well costs. Our ability to deliver consistently on these measures is what ultimately drives direct margins and market share. Oil prices remain attractive, and we see the customer outlook becoming more positive regarding medium and long-term energy fundamentals. Based on that, we believe there will be growing demand for the top-performing super spec rigs due to customers deploying well designs that require technologies to derive stronger economics from their acreage positions. Intersecting with this is the major industry theme of service intensity, where daily rig costs are higher because laterals are longer and circulating pressures are higher to drill these wells. All these elements coalesce to create the opportunity for technology and performance-based contracts that demonstrate the performance differentiation H&P brings to the table. Our operations and sales teams are working more closely than ever with the customer to deliver more collaborative solutions. Regarding our international solutions segment, we are busy preparing for the unconventional project in Saudi Arabia that we announced last quarter and have finalized the contractual terms for the 7-rig tender award. Our first rig awarded by Saudi Aramco in August of 2023 is expected to arrive and commence operations later this summer. For the recent seven rig tender award in January, preparations are ongoing from both the rig and operational perspective with expectations that a majority of these rigs will arrive in Saudi Arabia during the fourth calendar quarter of 2024 and commence operations shortly thereafter. During these preparations, we'll continue to spend our 2024 budgeted capex toward this project and incur startup operational expenses, which will disproportionately impact near-term international segment margins. We look forward to working with Saudi Aramco and believe this is the beginning of a long-term presence in the region with additional growth opportunities. International operations in South America and Australia are expected to remain relatively stable over the next quarter, as well as our offshore Gulf of Mexico operations. In addition to our international growth strategy, our capital allocation strategy this fiscal year is structured with a base and supplemental dividend, as well as opportunistic share repurchases. Mark will provide more details in his remarks. I want to conclude my prepared remarks by stating again, we have remained firm on our contractual economics by working with and collaborating closely with customers on alternative contract models. Our primary commercial model today is using performance contracts combined with our technology solutions. Having the operational confidence and our ability to consistently execute with our technology solutions results in win-win economics for both the customer and H&P and provides our customers with safety, consistency, and reduced execution risk. All of these successes are possible because of the people at H&P. It's you that make our FlexRigs and our technology solutions the best in the industry. Each of you play a key role in our success and will continue to be drivers of that success in the future. And now I'll turn the call over to Mark Smith to provide more details and a review of our financials.