Helmerich & Payne, Inc.

The journey to becoming an outcome and customer focused firm did not happen overnight or over a few quarters. This customer centric focus is truly embedded in everything we do every day. We continue to advance in both performance based agreements and in our technology journey. Both performance based agreements and technology aid in our ability to create customer value. Our digital applications, are now at all-time highs for adoption and value creation. We now have advanced applications and automation working on essentially every rig in the US Lower 48, with app count growing 20% year-over-year. The drive for additional efficiencies continues, along with lateral links and well complexity. Our customer-centric models, rig equipment, drilling expertise, technology portfolio, and our people continue to place us at the center of this continued evolution. In addition, our customers' drive for safety and performance improvements uniquely positions H&P and our approach for further share capture and customer value creation. An example of this can be seen in the Permian Basin. The Permian Basin is down 12% year-over-year in total rate count. And over that same period, our share position of the Permian Basin has grown over three percentage points. On the international and offshore solutions fronts, we continue to enhance relationships around the globe. We are now active and effectively all of the major basins outside of Russia and China. Our teams continue to find growth opportunities in international markets, highlighted by near-term growth in South America and other key markets. The need for capital efficiency is not unique to the US shale market. customers large and small all over the globe need the right partner to create long-term and sustainable growth. Our distinctive capabilities, along with our broad geographical footprint, put us in a great position to grow in the U.S. and global markets. I'll turn it back over to John Lindsay.

Thank you, Trey. As Trey mentioned, we are well positioned for growth around the globe. Our customer exposure and geographical footprint have never been this broad in our company's long history. While we are still absorbing some of the impact of the rig suspensions in Saudi, we are firmly committed to further growth in Saudi Arabia and in the Middle East. We believe that our foundation of the right rigs, relationships, people, and approach will lead to incremental activity gains. I'm also encouraged by the progress on our KCA integration. We've adopted a deliberate phased approach, streamlining corporate back office and operational support functions while maintaining an appropriate pace at the rig level to maintain strong safety performance and deliver exceptional results to our customers. The initial phase of integrating our corporate and back office functions is nearly three quarters of the way complete, with most of the work targeted for completion in the first quarter of 2026. This focus has already unlocked meaningful cost synergies across our corporate functions. In Saudi Arabia, where we once ran two separate businesses, the merger has generated significant financial and operational gains. Our acquisition thesis is coming to life. We're leveraging a broader operational footprint and expanded customer base and our combined capabilities to differentiate H&P on the global stage. Today we're operating over 200 land rigs globally across major oil and gas basins and another 30 or so offshore management contracts. And we continue to serve our customers through customer-centric performance contracts and advanced technology rigs backed by digital solutions that drive safety and reliability. Our financial profile remains robust, and Kevin will go into greater detail during his remarks. I would like to reference the last slide in our deck, slide 10, as that truly captures the H&P differentiated drilling business model. And to reinforce those points, we believe our global scale and innovative solutions are differentiating in the market. And those capabilities, along with our investment grade balance sheet, sharp focus on cost and debt reduction, and a longstanding sustainable dividend is a unique value proposition in our industry. This successful integration positions us to deliver superior values to to our customers, our teams, and our shareholders. And now I'll turn the call over to Kevin. Thanks, John.

Today I will review our fiscal third quarter 25 operating results, which includes a full quarter impact from our KCAD acquisition, provide guidance for the fiscal fourth quarter, update remaining full year 2025 guidance where an update is needed, and finally comment on our financial positions. Let me start with a few highlights. The company generated quarterly revenues of just over $1 billion for the second straight quarter. Total direct operating costs were $735 million, and general and administrative expenses were approximately $66 million for the quarter, which represents a reduction of $15 million from the second. I will provide some additional color on the trajectory of our cost structure and the progress we have made against our cost initiatives later in my comments. Gross capital expenditures for our second quarter were $97 million, which was down from the second quarter but in line with our expectations for the full year, and second quarter cash flow from operations was $122 million. Lastly, overall, the company generated $268 million in EBITDA versus $242 million last quarter. Turning to our three segments, beginning with North American Solutions, we averaged 147 contracted rigs during the quarter. which was down a couple of rigs as compared to the second, however, pretty much in line with our expectations and the guidance that we provided during our last earnings call. The exit rig count was 141, which declined late in the quarter due to some churn, but is in line with the broader North American market conditions and consistent with our guidance during the last call. Segment direct margin was 266 million, which was right in line with last quarter, but materially higher than our expectations. As Trey indicated, this outcome is a testament to our operations and sales team working side by side our customers and understanding the needed outcomes to help them achieve the results they desire. We recognize that there are factors that negatively weigh on overall market conditions, such as continued uncertainty around tariffs and the possibility of lower commodity prices. However, we remain steadfastly focused on partnering with our customers to achieve the mutually successful outcomes that are required for all of us to generate acceptable returns on our investments. Our international solutions activity ended the third fiscal quarter with 69 rigs working. As we stated in the press release, all eight unconventional flex rigs in Saudi Arabia have now commenced operations with margins continuing to improve as we further integrate operations with KCAD. As a whole, our international solutions business generated direct margins of $34 million which was up $7 million from the second quarter. Finally, to our offshore solution segment, which generated $23 million in direct margins. With the inclusion of the KCAD's offshore business, we have added significant scale and geographic expansion to this segment. The business requires very little capital and generates steady cash flows from a set of blue chip customers. We are extremely pleased with how this business is performing and the additional value being created by the team that came over with the acquisition. As we noted in the press release, we did record an impairment of a significant part of the goodwill that was recorded at the date of the closing of the acquisition. This write-down was largely driven by the drop in our equity price, which is obviously driven by several factors, including the market's interest and sentiment around the energy sector and the various subsectors within it. To be clear, we still believe that over the long term, The acquisition will provide the growth and shareholder value creation that was originally contemplated. Looking ahead to the fourth quarter of fiscal 2025 for North American Solutions, we expect to average between 138 and 144 contracted rigs, or approximately flat to our exit rate. Again, we are focused on providing customer-centric solutions and believe direct margins in fiscal Q4 to range between 230 and 250 million. The NAS team continues to exceed expectations in any given market conditions. I want to thank them for continuing to bring these amazing results that are obviously industry leading. As we look toward the fourth quarter of fiscal 25 for international, we expect direct margins from our international solutions to be between 22 and 32 million. Further, we expect the average operating rig count to be between 62 and 66 contracted rigs. The guidance range includes the impact of the Saudi rig suspensions, but also includes the margin improvement from the flex rig business. Now turning to guidance for our offshore solution segment, we expect to generate between $22 and $30 million in direct margin in the fourth quarter, with average management contracts and contracted platform rigs to be around $30 to $35. Outside of our core operating segments, we do have some businesses that generate direct margin collectively. Those are expected to contribute between between zero and three million in the fourth quarter. Now let me update a few full year 25 guidance items. As I stated previously, our capex spend was weighted to the front half of the year, and we were fully expecting it to moderate for the balance of the year, which it has. However, we are slightly revising the full year capital spend to 380 to 395 million, therefore increasing the lower end of the guidance as the full year number crystallizes in the last couple months of the year. Although we are not ready to give 2026 capital guidance, the number will be coming down from the 2025 levels. With the current level of rig activity and the continued savings that Mike and his team are finding to drive our maintenance costs per rig down, we expect the absolute capital spend to moderate over the 2025 levels. As for depreciation, general and administrative, and research and development expenses, we are not changing our guidance numbers from those estimates we provided during the second quarter earnings call. For cash taxes paid, we are lowering the top end of our guidance to $220 million. We are still assessing the impact of the recently passed Big Beautiful bill, but we do expect that to be a material benefit for us going forward. Lastly, we are expecting $25 million in interest expense for the fourth quarter. As we stated last call, we have been aggressively seeking and capturing synergies post-close of the acquisition. We also engaged in a full analysis of the necessary cost structure to support the expanded H&P business in the future. As a result of the analysis, we set a goal to reduce G&A and R&D costs by $50 to $75 million, which was inclusive of both synergies and the absolute right-sizing of the organization to manage the business going forward. I am pleased to say that we have identified $50 million of cost savings so far for which we expect to see the full benefit of starting in 2026. Lastly, I just want to emphasize that we are now anticipating by the end of this calendar year, we will have paid $200 million on the $400 million term loan, which is an increase to our previous expectation. And with that, I'll turn it back to the operator to open it up for questions.