Helmerich & Payne, Inc.

Good day, everyone, and welcome to the H&P 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 one on your telephone keypad. You may withdraw your question by pressing star and one again. Please note this call is being recorded I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Mr. Chris Nicole, Vice President of Investor Relations.

Welcome, everyone, to Helmick & Payne's conference call and webcast for the second fiscal quarter of 2026. On today's call, Trey Adams, our President and CEO, will be joined by Kevin Vann, our Chief Financial Officer, Todd Scruggs, incoming CFO, and Mike Lennox, Executive Vice President of the Western Hemisphere. Before we begin our prepared remarks, I'd like to remind everyone that this call will include forward looking statements as defined under securities laws. Although management believes that expectations reflected in such forward looking statements are reasonable, it can give no assurance that expectations will prove to be correct. Please refer to our filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward looking statements made during this call. Adjusted EBITDA, direct margin, adjusted EPS, and fee cash flow are non-GAAP measures. The most directly compatible GAAP measures and reconciliations are included in our earnings release and investor materials on our investor relations website. I also want to highlight that we will have a presentation which will support the prepared remarks from the management team and can be found on the IR website. With that, I'll turn the call over to Trey.

Thank you, Chris. Hello, everyone. Thank you for joining us. As always, we appreciate your interest in H&P. I'll begin with an overview of our fiscal second quarter results. I will then turn to discuss the broader macro environment, current dynamics in the rig market, and several key commercial developments, including a specific update on our NAS business segment. Kevin will then walk through our financial results and provide guidance for the third quarter and full fiscal year. To wrap up, I will then return to summarize the key takeaways before we open the line for questions. Turning to slide four of the presentation, I'd like to begin by walking through some of our key highlights from the fiscal second quarter. Execution remains strong, leading to solid operational performance. Adjusted EBITDA for the period was $178 million, which aligned with the lower end to midpoint of our implied guidance. This was primarily led by the impacts of the conflict in the Middle East. Specifically, during the quarter, we were able to utilize our in-house engineering and aftermarket capabilities to reactivate the rigs in Saudi Arabia, leveraging in-country equipment and circumventing supply chain constraints. This move enhances returns and importantly avoided delays for our customers. However, it did lead to more costs being classified as OPEX. which had an impact on our direct margins. While these dynamics are important, our top priority throughout the quarter was our people. I am pleased to report that our teams have remained focused and safe. We continue to closely monitor developments in the region, and despite a fluid environment, our team has done an exceptional job in maintaining continuity of operations, supported by strong local leadership and the dedication of our people in the region. During the quarter, International Solutions delivered a direct margin of $11.5 million, aligning with the lower end of our guidance range. In addition to the incremental OPEX, the company experienced unplanned direct and indirect costs associated with the conflict in the Middle East, which Kevin will elaborate on shortly. Overall, operational activity remained stable. During the quarter, we experienced one rig suspension in Iraq, Subsequently, we have received notification of the suspension of our two rigs operating in Bahrain for a period of up to 90 days. Outside of this, we continued rig reactivations in Saudi, although at a slightly slower pace than originally planned. So far, we've been able to spud three out of seven rigs. Two more expected to commence drilling imminently, with the sixth rig anticipated to be active later this quarter and the seventh rig to follow next quarter. Even with these disruptions, the broader portfolio continues to perform as expected. We remain confident in achieving the 58 to 68 annual rig guidance range we set out at the start of the year, with strong growth in Latin America offsetting some of the weakness in the Middle East. Turning now to North America solutions, we averaged 136 rigs, slightly ahead of expectations. our industry-leading technology and talented teams continue to deliver for our customers, generating average margins ahead of our peers. Due to significant shifts in the commodity market over the last two months, we are confident that last quarter will represent a trough for both our rig count and direct margins. As a result, we have revised our outlook for the second half of the year higher. This improving outlook is already showing up in the pace of our technology adoption. Flex Robotics continues to perform ahead of expectations with our first rig now operating its fifth pad, maintaining its high performance straight out of the gates for a super major customer in the Permian Basin. As a result, I am pleased to share that we plan to deploy Flex Robotics on an additional four rigs led by customer demand. This will be a phased deployment with the first three of four systems expected to be operational this calendar year. Our offshore segment also delivered another quarter of robust operational performance coming in above the midpoint of our guidance range. This was driven by the achievement of several performance-related bonuses during the quarter. We also announced an extension of a contract with BP and the Caspian Sea, which could achieve well over $1 billion of revenues if all extensions are exercised. Alongside strong execution, we've also remained focused on enhancing our balance sheet, with a major milestone on the portfolio optimization front. We were pleased to announce at the start of April the closing of the sale of our real estate property in Tulsa. The after-tax proceeds exceeded our divestment target of $100 million and allowed us to retire the remainder of the term loan balance ahead of schedule and drive leverage lower towards our one-term target. Stepping back from the quarter and looking at the broader macro environment on slide five, the Middle East conflict has exposed the fragility of the energy complex, and we believe has fundamentally changed the outlook for oil and gas within a matter of months. The effective closure of the Strait of Hormuz has had a seismic impact on energy flows, with over 12 to 14 million barrels per day of crude and condensate supply impacted, and more than 20% of the world's LNG flows. As Wood Mackenzie puts it, this is the most serious energy supply shock ever. In some respects, we have been surprised by the relatively sanguine response by markets and governments to the potential severity of this shock and see significant dislocation with physical markets. What has not changed is our belief that the world will require significantly more energy than it consumes today, driven by expanding populations and growing prosperity in emerging markets. along with rising power needs from AI advancements in many developed nations. At the same time, the potential bifurcation of supply and energy security concerns caused by this shock support the view that we may now need even more energy supply. This dynamic strengthens our view that demand for oil and gas will persist and grow for many years to come, and therefore increases the need for our global drilling solutions and will now likely bring forward activities sooner than we anticipated. Looking at the rest of the year, we have quickly moved from fears of oversupply and a soft OFS market to one that is tightening quickly, particularly in the lower 48. Initial actions from operators have focused on accelerating the drawdown of duck inventories. However, as I will elaborate on shortly, we anticipate this trend will be temporary. Regarding rig reactivations, we have received several inquiries and firm commitments, with most pickups so far originating from private and smaller independent operators. In line with this, the near-term outlook for North America is improving, and we now anticipate a higher full-year rig count than we previously guided. The uptick in Middle East activity that was underway prior to the conflict is now less well-defined. We continue to remain optimistic that more rigs could go back to work this year, with several conversations being initiated after the start of the conflict. However, the situation remains dynamic with the wide variance of possible outcomes. Offshore is another area that could benefit. Deepwater is already showing signs of strength, and with elevated commodity prices, we could see several projects fast-tracked, particularly in basins unaffected by the conflict. Overall, we believe the seismic change to oil and gas fundamentals in the past two months has significantly strengthened the tailwinds that will support our business both in the western and eastern hemispheres over the next several years. Turning to slide six, on the commercial front, We saw strong momentum during the second fiscal quarter and advanced several important initiatives that enhance our competitive position and lay the groundwork for long-term growth. This progress was evident in North America Solutions, where we strengthened our backlog through multiple contract extensions from key customers and new rig pickups from our small private and independent operators. As a result, We now have over 55% of our operating fleet on term versus spot contracts, up from just over 50% in the prior quarter. As I mentioned earlier, we plan to deploy an additional four flex robotic systems. This is a great example of our technology leadership and onshore drilling solutions and a testament to the dedication of our engineering and R&D teams. We have received several inbounds from a variety of customers and are excited by the potential to deploy flex robotics at scale across our super spec rig fleet. Beyond traditional oil and gas, we're also seeing encouraging traction and new energy applications. Interest in geothermal continues to build, providing a promising tailwind and expanding the reach of our portfolio. Taken together, these developments underscore the strength of our offering and opportunities ahead. That momentum is playing out across international markets as well. Our Latin America portfolio saw meaningful commercial progress, with activity continuing to build across the region. In Argentina, operations in the Valcamarta accelerated, driven by both the host NOC and domestic independence. We currently have nine rigs operating in the Valcamarta today, and see a path to being 100% utilized with all 12 rigs in country active. Meanwhile, discussions in Venezuela remain active and represent the compelling medium-term opportunity as the environment continues to evolve. In the Middle East, commercial momentum continued, highlighted by a six-year contract extension covering five rigs in Oman, underscoring the strength of our operational performance and customer relationships. Reactivations in Saudi Arabia continue to progress, with the potential for additional rigs to return to work later this year as activity builds. Elsewhere internationally, activity in Australia accelerated, with a strong pipeline of work emerging as development gains pace in both the Beedaloo Basin and Cheroom Trough in Queensland. Lastly, in our offshore solution segment, as previously mentioned, we secured a major win with a long-term contract renewal from BP and the Caspian Sea. The renewal carries a firm five-year term with three additional one-year extension options. We also continue to progress several prospects, including potential multi-year contract renewals, which would further strengthen the resilience of our offshore portfolio. Given the elevated performance of North America's solutions to our near and medium-term outlook, I want to spend a bit more time here. Turning to the next slide, I will discuss the dynamics that highlight the opportunity we have in front of us. For some time, we have seen a gradual decline in the rig count and a softening of activity levels, while production has remained stable. To hold production flat in the lower 48, it is estimated that you need to bring around 15,000 wells online each year. This is getting harder every day as decline rates accelerate and rock quality degrades. In some ways, the efficiency and accuracy we bring to drilling the wellbore has helped largely offset these factors. Service intensity continues to increase as wells are becoming more complex. We are drilling faster and longer than ever before. And with our digital applications automation and flex robotics, we are driving greater consistency and truly getting closer to manufacturing mode at scale. As we enter this higher-priced environment, we anticipate activity picking up this year and continuing into 2027 and beyond. As I mentioned earlier, the first move by operators has been to draw down on their duck inventory. But as we highlight on the slide, inventories are at historical lows and with roughly 2,000 locations remaining, it is likely they will be exhausted relatively quickly. With that, we anticipate a steady increase in drilling activity just to hold production flat. If the call on the lower 48 is to increase production, we could see an altogether more meaningful increase in the rig count. At the same time, spare capacity for super spec rigs is already very tight. With around 430 super spec rigs operating in the industry, utilization is currently above 80% and tightening fast. In a recent industry survey, it was estimated that around 65 idle rigs could be brought to work for between 1 to 4 million within a six-month period. From an H&P perspective, we are uniquely positioned with unmatched scale in the lower 48. Currently, we have 138 super spec rigs operating, accounting for over 30% of the market. Additionally, around 60 super spec rigs are currently idle. Of these idle rigs, we estimate that around 20 could be reactivated at maintenance CapEx levels. We are confident in our capacity to meet customer demand during this anticipated wave of increased activity. We believe that we possess a greater number of super spec rigs available for deployment at a lower cost to reactivate than any other competitor, which positions us extremely well to increase our market share and maintain, if not enhance, our industry-leading margins. On that positive note, I will now hand it over to Kevin to walk you through the financials and our guidance.