Helmerich & Payne, Inc.

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good day, everyone, and welcome to the H&P 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 and 1 on your telephone keypad. You may withdraw your question by pressing star 1 again. Please note this call is being recorded. Operators will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Chris Nickel, Vice President of Investor Relations.

Welcome everyone to Helmer & Payne's conference call and webcast for the third fiscal quarter of 2026. On today's call, Frey Adams, our President and CEO, will be joined by Todd Scruggs, our Chief Financial Officer, 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 the expectations reflected in such forward-looking statements are reasonable, It can give no assurance that the expectations will prove to be correct. Please refer to our filings with the SEP 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 Free Cash Flow are non-GAAP measures. The most directly comparable GAAP measures and reconciliations are included in our earnings release and investment materials on our Investor Relations website. I also want to highlight that we have a presentation which supports 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 quarter results. I will then turn to discuss the broader macro environment, current rig market dynamics, and several key commercial developments. including a specific update on our activities in the Vaca Muerta in Argentina. Todd will then walk through our financial results, share details on our financial framework, and discuss additional cost optimization actions we are initiating. He will then provide guidance for the fourth fiscal quarter and full year. To wrap up, I will then return to summarize the key takeaways before opening 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 third quarter. We delivered strong financial and operational performance during the quarter, led by our operations in the U.S. Adjusted EBITDA with $236 million, coming in comfortably ahead of the implied midpoint of our guidance. We also generated strong free cash flows during the quarter. One of the most pleasing aspects was exceeding the midpoint of our direct margin guidance in all operating segments. Despite ongoing disruption in the Middle East and recent market volatility, we experienced a strong rebound in activity in North America Solutions, averaging 142 rigs during the quarter and direct margins of $241 million, coming in at the high end of the guidance range. Our talented teams and leading technology continue to deliver for our customers, generating industry-leading margins of $18,700 per day, of over $1,000 a day sequentially. Being able to deliver this margin growth across the largest fleet in the lower 48 while reactivating 10 rigs during the quarter demonstrates our differentiated capability to efficiently and economically reactivate rigs. Despite recent commodity price volatility, we have continued to experience strong customer demand and exited the quarter with 147 rigs running in the lower 48. The combination of a stronger activity landscape and pricing environment has enabled us to increase our fiscal fourth quarter and full year guidance for North America Solutions. In International Solutions, we saw a significant sequential increase in direct margins. During the quarter, we delivered a direct margin of $31 million, aligning with the high end of our guidance range. This was led by strong performance in our Latin America region, As well as slightly less than expected impacts from the ongoing conflict in the Middle East. We continue to closely monitor developments in the region, and I have just returned from a trip to Saudi Arabia last week. I spent time in the field with our teams and met with our customer and partners in the Kingdom. Despite the ongoing conflict, we continue to do an exceptional job in maintaining continuity of operations and navigating supply chain constraints. I left encouraged by our customer interactions and we're seeing ongoing commercial momentum despite the conflict as we look ahead to 2027. During the quarter, operational activity remained stable in the region. We continued rig reactivations in Saudi, although at a slower pace than planned. We closed the quarter with four rigs fully reactivated and our fifth rig began drilling early this quarter. This takes us to a total of 22 rigs operating in the kingdom, and we expect to maintain this level of activity through the fiscal fourth quarter. Even with these delays, the broader portfolio continues to perform as expected. We remain confident in achieving the midpoint of the annual grid guidance range we set out at the start of the year. We also remain on course to get the quarterly direct margin run rate to at least 45 million with strong growth in Argentina offsetting some of the near-term conflict-related activity changes in the Middle East. Our offshore segment delivered another quarter of strong operational and financial results coming in above the high end of our guidance range. This was again driven by the achievement of several performance-related bonuses during the quarter. In addition to our robust operational performance, we have maintained a clear emphasis on strengthening our balance sheet and optimizing our enterprise. As we begin preparing for 2027, we are implementing several new initiatives to accelerate debt repayment Optimize our cost structure and position our portfolio to support the anticipated multi-year growth cycle. Todd will elaborate on these efforts shortly. Looking at the broader macro environment on slide 5, the Middle East conflict continues to dominate the direction of travel of commodity prices. Over the past three months, we have navigated a highly volatile pricing environment. With prices initially retreating to pre-conflict levels before rebounding as geopolitical tensions once again intensified. Given the volatile situation, visibility remains somewhat limited. Regardless, with the 12-month strip remaining around $70 per barrel WTI, we are confident that our customers will be using higher planning price assumptions this budget season compared to what they used last year, pointing to upstream spending growth in 2027. Beyond the short-term market dynamics, what has not changed is that our belief that the world will require significantly more energy than it consumes today is 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 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 activity sooner than we anticipated. Looking at the rest of this calendar year, we have not seen any deviation from the recent ramp-up in drilling activity from private operators. We are on track to surpass 150 rigs during the quarter, which is at least 17 more than we were operating at our recent trough in February. We are confident that our rig activity will persist at these levels throughout the remainder of the year and is likely to continue into 2027 assuming commodity prices remain supportive. The majority of these additions have originated from private and small independent operators who typically are more price sensitive. Larger operators have so far focused on adding term and additional technology to existing rigs We are encouraged by this dynamic heading into 2027, as we believe all operators will need to increase drilling programs to maintain, if not grow, production. With utilization of the SuperSpec fleet already trending at 95%, we see further tightening of the market, which will be supportive of direct margins. As of today, we have around 10 rigs remaining that can go back to work relatively quickly for maintenance capex levels or less. Importantly, we are not solely relying on operators in the lower 48 picking up these rigs. We are seeing strong demand in the Waccamarta, geothermal continues to grow, and we are in several discussions to strengthen our flex rig footprint in the Middle East and Australia. More specifically in the Middle East, as was the case last quarter, the uptick in activity remains less defined as the conflict continues to create disruption. However, We remain hopeful that more rigs will be required in 2027, with several of the NOCs stating plans to grow production. Lastly, offshore continues to be an area of strength for us and the market more broadly, with several projects progressing. We are hopeful that we can continue to capture increasing scopes of work as operators seek to maximize output from existing assets. In summary, we remain positive on the outlook, despite the market volatility created by the ongoing conflict. This will be led by North American Solutions, our most important market, and supplemented by growth in Argentina and the ongoing recovery in the Middle East. Importantly, we believe this is the early innings of a multi-year upstream growth cycle. Turning to slide six, on the commercial front, we continue to make progress during the third fiscal quarter. And while market conditions remain dynamic, we are encouraged by the level of customer engagement and the opportunities developing across our diversified portfolio. These opportunities are taking shape in North America Solutions, where demand for private operators drove 10 incremental rig additions during the quarter. That activity reflects the constructive industry outlook that we discussed earlier, as operators continue to advance development programs despite commodity price volatility. We also continue to advance the deployment of Flex Robotics, with a second package now operating on a rig for a supermajor customer in the Permian Basin, marking another key milestone in the rollout of this innovative technology. As these systems transition from initial commitment to field deployment, they are demonstrating the effectiveness of our automation strategy and strengthening the competitive advantage of our SuperSpec fleet. Beyond traditional oil and gas, geothermal activity continues to expand, representing an exciting opportunity to leverage are drilling expertise in technology in a growing adjacent market. We recently signed agreements for three additional rigs to work on geothermal projects in the U.S. Combined with our existing projects in the U.S. and Europe, we are well on our way to hitting a double-digit rig count. That commercial momentum extends across our international operations. We're encouraged by the progress in Argentina, where activity levels and customer engagement continue to increase. We are nearing 100% utilization, securing multi-year contracts for our remaining idle flex rigs available in country, as well as contracts for an additional three rigs which will be exported from the United States. Operational performance remains a key differentiator for us in the Basin, and we are particularly pleased with the results being delivered through our technology portfolio. In the Middle East, Activity remained stable as conflict-related disruptions began to ease. As a result, we have now resumed operations on the two suspended rigs in Bahrain during the fourth quarter. Elsewhere internationally, Australia continues to gain momentum. We are pleased to announce the award for a third rig which will be exporting from the U.S. as development activity continues to build in the Betaleague Basin. In offshore solutions we secured a multi-million dollar four-year contract renewal with an operator in Norway, strengthening the durability of our offshore backlog. We also continue to advance several opportunities, including potential multi-year contract renewals and possible rig mobilizations in the Gulf of America, which could further enhance the resilience and growth prospects of our offshore portfolio. Taken together, These developments reinforce our confidence in the competitive position of our business. We continue to see opportunities to expand our technology footprint, deepen customer relationships, and create long-term value for our shareholders. Turning to the next slide, I want to spend some time on our operations in the Vaca Marta. We have been in Argentina since 1998 and currently have nine rigs operating, which represents approximately 25% market share. Making H&P one of the region's leading drilling contractors. The Volcamorta continues to gain momentum and is quickly transitioning into one of the most attractive and advanced shale basins outside the lower 48. Production growth continues to accelerate, with Argentina's oil output recently reaching its highest level in more than two decades. The quality of the resource has never been in doubt, but several changes led by the Millet government, including the Riggi Investment Framework, are providing greater fiscal and regulatory stability. Combined with large-scale infrastructure investments, including several pipeline and LNG projects, the strengthening long-term demand visibility is influencing not only domestic operators, but several IOCs to deploy capital across the basin. Looking ahead, the rigged demand outlook remains favorable. Welligence Energy Analytics forecasts Valka Martha production could grow by more than 50% between 2026 and 2030, supported by approximately $60 billion of investment in unconventional resource development and infrastructure projects. Growing operator focus on reducing well costs and maximizing drilling efficiency continues to reinforce the value proposition of super-spec rigs and advanced technology solutions. Recently, H&P drilled a record-setting well in the Guacamarta, completing the well 13% faster than the operator's previous record, while coming in 15% below the operator's budget. The project was executed under a performance-based contract, demonstrating our ability to translate operational excellence into tangible customer value. We also continue to extend our technology leadership in the Basin, recently deploying auto slide drilling automation that enabled zero manual slides. This success is creating opportunities to expand adoption of H&P's broader automation and drilling technology suite across customer programs. As operators shift to larger pads, longer laterals, and more repeatable drilling programs, the importance of reliable execution continues to increase. These dynamics play directly into H&P's core strengths. particularly as the region remains in the early stages of its evolution. In addition to the nine flex rigs, we are currently operating in Guacamarta. We expect to activate our 10th and 11th rigs by the end of August. We have contracted our last flex rig that is in Argentina and then plan to export three more from the U.S. later this year. This will take our total to 15 flex rigs. which we expect to all be drilling by this time next year with potential to deploy more rigs through 2027. As well as the strong growth, the most important aspect for us is the healthy margin rates we're able to achieve on longer duration contracts in country, adding further strength and diversity to our international drilling solutions portfolio. Overall, we view the Guacamarta as a basin with substantial long-term potential. With proven drilling performance and growing customer demand for super spec rigs, we believe H&P is well positioned to expand alongside the Basin. To close, let me briefly recap. Our third quarter performance highlights the momentum we're building across H&P. We delivered a strong set of results, led by our operations in the lower 48 where we gained share and increased margins. Latin America and offshore also made strong contributions alongside ongoing resilience in the Middle East. This strong performance is a testament to our teams around the world, and I want to thank them for their dedication and commitment to H&P and to our customers. We appreciate the continued partnership. On that positive note, I will now hand it over to our new CFO, Todd Scruggs, to walk you through our financial results, our updated financial framework, and our guidance for the fiscal fourth quarter and full year.