Helmerich & Payne Q3 2025 Earnings Report

Helmerich & Payne EPS Results

• Actual EPS: $0.22
• Consensus EPS: $0.20
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.92

Helmerich & Payne Revenue Results

• Actual Revenue: $1.04 billion
• Expected Revenue: $1.00 billion
• Beat/Miss: Beat by +$39.39 million
• YoY Revenue Growth: +49.20%

Helmerich & Payne Announcement Details

• Quarter: Q3 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 11:00AM ET

Founded in 1920, Helmerich & Payne (NYSE:HP) (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. H&P's fleet includes 299 land rigs in the U.S., 31 international land rigs and eight offshore platform rigs.

Helmerich & Payne Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Helmerich & Payne delivered $1.0 billion in Q3 revenue, with North American Solutions achieving a daily margin of $19,860 and a direct margin of $266 million, while gaining three percentage points of share in the Permian Basin.
• Positive Sentiment: Integration of the KCA acquisition is roughly 75 percent complete in corporate functions, unlocking meaningful cost synergies, and the merged Saudi operations have generated significant financial and operational gains.
• Positive Sentiment: The company identified $50 million of G&A and R&D cost savings to be realized in 2026 and expects to pay down $200 million on its $400 million term loan by year-end, reinforcing its investment-grade balance sheet.
• Negative Sentiment: Helmerich & Payne recorded a significant goodwill impairment related to the acquisition due to a decline in its equity price and sector sentiment, though management remains confident in the long-term value of the deal.
• Neutral Sentiment: For Q4, the company expects North American Solutions to average 138–144 rigs with direct margins of $230–250 million, International Solutions margins of $22–32 million on 62–66 rigs, and Offshore Solutions margins of $22–30 million.

Presentation

[Operator]

Please stand by. Your program is about to begin. Good day, everyone, and welcome to today's Helmholmerich and 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.

[Operator]

Please note this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Todd Scruggs, Vice President of Finance and Treasury. Please go ahead.

[Todd Scruggs, VP - Corporate Finance & Treasury at Helmerich & Payne]

Thank you, Ressa, and welcome, everyone, to Helmerich and Payne's conference call and webcast for the 2025. With us today on the call are John Lindsay, President and CEO Kevin Vann, Senior Vice President and CFO Trey Adams, Senior Vice President, Global Commercial Sales and Marketing and Mike Lennox, Senior Vice President, Americas. 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 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. With that, I'll turn the call over to John.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you, Todd. Hello, everyone, and thanks for joining us today. Just over two decades ago, H and P took a bold step by investing in 32 flex rigs that were built on spec, an investment that became the bedrock of our fleet. Looking back, the market was challenging at that time, and that investment was heavily scrutinized.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Ultimately, that lead carried us from the fourth to first in North America land drilling. Today, fresh off our most recent acquisition, familiar headwinds are upon us. Volatile oil and natural gas prices driven by tariffs, shifting supply dynamics and geopolitical currents are once again challenging our strategic initiative. It took a few years under the spotlight of adversity, but ultimately, H and P led the industry on a path of innovation and unmatched performance. It showcased our unique safety culture, our people's deep expertise, and gave rise to the new technologies that help transform the business as we know it today.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Anchored by a clear long term vision, we remain steadfast in executing our global strategy that will keep us at the forefront of the drilling solutions industry. Our teams are laser focused on future growth and leveraging the advantages that H and P brings to the market. Now turning to our fiscal Q3 results, I was very pleased with our operating performance and progress made on multiple fronts. Our customer focus and hard work was evident in our industry leading North American solutions results, and we're gaining operating momentum in several areas around the world. We're making great progress on our debt and cost reduction goals, and our integrated team is working well together.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

I'm now going to turn the call over to Trey Adams, and he will provide a global sales, marketing, and commercial update on our North America Solutions, international land and offshore segment performance and outlook. Trey?

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Thank you, John.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Our North American Solutions segment produced another great quarter with daily margins of $19,860 per day, highlighted by sequential quarter over quarter improvements in expense per day. Our NAS teams continue to focus on producing differentiated outcomes for customers. 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.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

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 lengths 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.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

In addition, our customers' drive for safety and performance improvements uniquely positions H and 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 rig 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.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

We are now active in 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 US and global markets.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

I will now turn it back over to John Lindsay.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

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.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

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 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.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

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 and 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.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

I would like to reference the last slide in our deck, Slide 10, as that truly captures the H and 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 long standing sustainable dividend is a unique value proposition in our industry. This successful integration positions us to deliver superior values value to our customers, our teams and our shareholders. And now I'll turn the call over to Kevin.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Thanks, John. Today, I review our fiscal third quarter twenty five 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 position. Let me start with a few highlights. The company generated quarterly revenues of just over $1,000,000,000 for the second straight quarter.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Total direct operating costs were $735,000,000 and general and administrative expenses were approximately $66,000,000 for the quarter, which represents a reduction of $15,000,000 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 $97,000,000 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 122,000,000 Lastly, overall, the company generated $268,000,000 in EBITDA versus $242,000,000 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.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Segment direct margin was $266,000,000 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 fiscal the third fiscal quarter with 69 rigs working.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

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 $34,000,000 which was up $7,000,000 from the second quarter. Finally, to our Offshore Solutions segment, which generated $23,000,000 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.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

We are extremely pleased with how this business is performing and 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 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 2025 for North American Solutions, we expect to average between one hundred and thirty eight and one hundred and forty four contracted rigs or approximately flat to our exit rate.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Again, we are focused on providing customer centric solutions and believe direct margins in fiscal q four to range between 230,000,000 and 250,000,000. The NASS 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 2025 for international, we expect direct margins from our international solutions to be between $22,000,000 and 32,000,000 Further, we expect the average operating rig count to be between sixty two and sixty six contracted rigs. The guidance range includes the impact of the Saudi rig suspensions, but also includes the margin improvement from the FlexRig business.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Now turning to guidance for our Offshore Solutions segment. We expect to generate between 22,000,000 and $30,000,000 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 0 and $3,000,000 in the fourth quarter. Now let me update a few full year 2025 guidance items.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

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 $380,000,000 to $395,000,000 therefore increasing the lower end of the guidance as the full year number crystallizes in the last couple of 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 cost per rig down, we expect the absolute capital spend to moderate over the 25 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 two twenty 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.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Lastly, we are expecting $25,000,000 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 and P business in the future. As a result of the analysis, we set a goal to reduce G and A and R and D costs by 50,000,000 to $75,000,000 which was inclusive of both synergies and the absolute rightsizing of the organization to manage the business going forward. I am pleased to say that we have identified 50,000,000 of cost savings so far for which we expect to see the full benefit of starting in 2026.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Lastly, I just wanna emphasize that we are now anticipating by the end of this calendar year, we will have paid 200,000,000 on the 400,000,000 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.

[Douglas Becker, Analyst at Capital One]

John, you mentioned you're committed to further growth in Saudi Arabia and The Middle East more broadly. You have a full quarter of the KCA assets under your belt. Laser focused on growth. Just curious if you could provide some more color on how H and P might start to grow the international business from the fiscal fourth quarter level that's been laid out.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Sure, Doug. Hey. Before I I answer that, I I also wanted to mention that, during the opening remarks, Todd had made reference to, Mike Lennox and Trey Adams being here. Many of you have met them, but just to be clear, they're members of my team. They're in the really in the trenches every day, you know, dealing with Mike's got responsibility for North America Solutions in South America.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Trey's got everything commercially, globally. They've been on the road a couple times with Kevin and I, but so many of you have met them, but not not everybody has. So I just wanted to put that context. As far as growth in in Saudi, you know, there there continues to be opportunities. There's a there's a tender that will be coming out.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

I guess it may be actually out now. There's other opportunities for for growth in Saudi. I think all of that is gonna be a 2026 type timing. I I don't see anything necessarily, you know, going back in 2025, but I do think there's there's great opportunities in for 2026. And I think when you when you consider in with our prepared remarks, we're talking about the the the value proposition that we provide and that desire from NOCs around the world and IOCs around the world for different operating model and being able to to point to perform at a different at a different level. Trey, you have anything you wanna Yeah.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

I'll just I'll just carry on there, John, and just share that absolutely we're we're tracking a lot of opportunities coming through the region in The Middle East. What's different in the from to from where we were six, seven, eight months ago to where we are today is we have the right people, right assets on the ground to participate in those tenders meaningfully. And what John just described, you know, getting the eight flex rigs into Saudi was a big win for us. We're gonna continue to advance relationships across the region more broadly. And those those conversations are are deeper than what we've ever had because of the right fit rigs, right people, and the scalable operation that we have on the ground.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

So we we're tracking quite a bit of activity. It's premature to get into some of the details associated with those tenders, but we're very active in them, and we feel very confident that our our value proposition will be shown through.

[Douglas Becker, Analyst at Capital One]

That definitely sounds encouraging. Are you able to see if there's any ongoing conversations about when the suspended rigs might go back to work, or is that still up in the air?

[John Lindsay, Director, President & CEO at Helmerich & Payne]

You know, Doug, what I what I continue to hear is that the worst is is behind us. There's you know, we just don't know what the timing is, and I think it's really it's really more of a budgeting issue than anything at this point. And so we don't have anything additional to to share again. I think the easiest thing for us to to just get our our minds wrapped around is that it's a 2026 time frame is is what we would be looking at is probably the best way to approach it. And and, again, hopefully, there's some opportunities along the way.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

We've got people on the on the ground and a lot of good things going on. But until we I think we're just gonna need a little bit more time to pass.

[Douglas Becker, Analyst at Capital One]

Got it. Thank you.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you.

[Operator]

Our next question comes from Grant Hynes with JPMorgan.

[Grant Hynes, Equity Research Associate at JP Morgan]

So you talked about performance contracts making up about 50% kind of active rigs and obviously driving outperformance in the quarter. But could you maybe highlight what types of customers have been sort of the primary adopters of this contracting and maybe where the next leg of adoption might be?

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. Grant, this is Mike. I'll start with it and then maybe hand it over to Trey. So on the performance contracts, really, it's it's all types. And so you got your small privates, your your mids, and then your your large majors.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

And we're participating with them in in always. But, really, it starts with getting in, understanding what outcomes they're looking to achieve, and then aligning on those. And so we've had great success doing that and continue to see that as a tool that we'll use going forward.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. And the only comment I would I would make, this is Trey, in in addition to what Mike just shared is is you've probably seen our performance contract percentages stay around 50% for it's probably been eight quarters now, and it's it's been relatively range bound. But I don't think that that's totally totally encompassing what we're providing at a larger scale and across what I would consider the vast majority of our customer conversations today. So as Mike pointed out, every every conversation we have with a customer is is attributable to a a goal or an outcome that they're looking to achieve. Half of those today were being remunerated on delivering of that outcome. There's the other vast majority of those that were coming in, and we're we're creating differentiated value and getting compensated differential different differentially for that value creation.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

So, you know, I I think that number is a is a bit misleading because it doesn't fully encompass the conversations that we're having every day with customers and the value that they're seeing with working and partnering with H and P.

[Grant Hynes, Equity Research Associate at JP Morgan]

Gotcha. And and maybe just as a follow-up, I mean, are there any pockets internationally where where you're having, you know, conversations with customers about about these types of contracting models just as obviously it's been successful in North America?

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Absolutely. We're having those conversations. They're they're going on today. We're putting our toe in the water in several markets today where we have those type of agreements taking shape. We have early stages of of an agreement in The Middle East today that's arranged similar to what we have in The United States.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

And so we're seeing a lot of interest. Obviously, the IOC clients that have global scale are looking to translate what's happening in The US shale abroad. And then conversations with with NOCs and other smaller customers across the globe, they're very interested and wanna better understand how we can partner and align. So, yes, early days, but, absolutely ongoing.

[Grant Hynes, Equity Research Associate at JP Morgan]

Great. Thanks. I'll turn it back.

[Operator]

Our next question comes from Eddie Kim with Barclays. Your line is open.

[Eddie Kim, VP - Equity Research at Barclays]

Hi. Good morning. So you're guiding to an average rig count in the Lower 48, about 141 rigs at the midpoint or about a 4% sequential decline, which is below the industry wide rig count decline and a little less severe than what some of your peers have been telegraphing. Any thoughts you can provide on on that that relative outperformance in your rig count on your expectations for the fiscal 4Q? I know I know you highlighted some market share gains, but is it is it bad?

[Eddie Kim, VP - Equity Research at Barclays]

Is it is it maybe the mix of or your customer mix? Just any thoughts there.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. I'll start and then again hand it over to Trey. But we've got a great customer mix. And, we're aligned to their outcomes. We've made investments for the last several years to to drill these more complex, longer lateral wells.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

And so that's really where it's shifting to, and so we're very well positioned. And I think we've had resilience with our rig count and our margins, everything that we're doing as a result of those investments that we've made in previous years.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Yeah. That's true.

[Eddie Kim, VP - Equity Research at Barclays]

Got it. Great. My follow-up is just on just your thoughts on on on oil basins versus gas basins in the Lower 48. I mean, your your rig count has has been fairly steady so far this year, but has that makeup maybe changed what we've seen some oil rigs come off, but about equally offset by by gas rigs coming on? And just your thoughts on gas activity for the for the remainder of this calendar year.

[Eddie Kim, VP - Equity Research at Barclays]

We we've seen a steady ramp up in gas rigs just just industry wide. Do do you expect that to continue based on the conversations you're you're having, or is is the next move up in gas rigs really really gonna take place maybe in early twenty twenty six? Just just your thought there would be great.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. No. I I think you're spot on. Right? We've had a pullback, slight pullback in the old plays.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

We've seen a slight uptick in the in the natural gas plays, specifically the Haynesville, Marcellus. If that is somewhat offset, I mean, just to to acknowledge it, we've had a few rigs move from the old plays over to the gas plays. So those rigs are hot rigs that are staying working. There may be a slight continuation of that going forward. I don't think it's it's it's a drastic jump.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

I think it's smaller in rig count, but we we expect that to continue.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

I think there this is John. I think there's also just obviously a a global trend toward natural gas, and there's a lot of opportunities in The Middle East. And and so I think being able to leverage our experience, whether it's performance, whether it's leveraging our technologies, there's huge opportunities for us as as more gas is being drilled internationally.

[Eddie Kim, VP - Equity Research at Barclays]

Great. Thank you. I'll turn I'll turn it back.

[Operator]

Our next question comes from Derek Potheiser with Piper Sandler. Your line is open.

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

Hey. Good morning, guys. Just just sticking on the the North America guide. The the range of $1.38 to $1.44, like Kevin mentioned in the prepared remarks, is flat with the exit rate. Maybe could you just help us understand what brings you down to the lower end of the range versus the higher end of the range as we start thinking about next quarter?

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

Is that a gas or oil versus oil commodity price driven, basin driven, customer driven? Just maybe some more color around the top end and bottom end of that range.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. Some of it I mean, I'd say we're gonna you know, it it fluctuates down. We'll we expect to bring some out as potential high grading of opportunities arise, which we do expect that to to play out.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. I mean, I I would layer in and just say, I mean, the the the largest impact to us is that there's a big commodity price shift or move, and and you see some private E and P pull back. But with what we have in front of us right now, we feel pretty comfortable and confident. Even if there was a a large consolidation that occurred in the next few months, we wouldn't see the impact of that towards in until towards our first fiscal period or or beyond. So I think we're pretty comfortable absent of a a big commodity move.

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

Okay. Fair enough. Maybe switching over to KCA. Just, John, you mentioned the tenders, you know, obviously a 2026 event. But how should we think about incremental activity for H and P?

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

I mean, would this be a pull for the legacy flex rigs? It's great to see that that all eight are working now. I think you had one KCA rig working in the Jafora. I'm not sure. But how do I think about the interplay between what would be more of the pull?

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

Would it be some of the the suspended KCA rigs being able to move into Jafora, or would this be a pull of the legacy HP FlexRig that you have right now? Just trying to think about the opportunities there where you would pull that from specifically in Jafura.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Sure, Derek. Yeah. It there are additional, KCA legacy KCA rigs that are working in Jafura, and we think there's additional opportunities there. Just in general, the the rigs that more than likely that will be going back to work are gonna be gas focused. I mentioned that earlier.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

And so whether it's in Jafura or whether it's in, more conventional, gas basins, we've got a a great fleet to, to approach those opportunities with. But I I don't I don't see any at this stage necessarily being flex rigs. It will it will all be the legacy KCA fleet.

[Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies]

Got it. Okay. That's helpful. Appreciate the color. I'll turn it back.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you.

[Operator]

Our next question comes from Ati Modak with Goldman Sachs. Your line is open.

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

Hey, good morning team. John, can you give us a sense of the direction we should think about in terms of the margins and the context of all the conversations you're having with the customers, whether it's oil versus gas, for the performance based contract as well versus the trajectory of the rig count, say, into '26?

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Yeah. I'm gonna I'm gonna let let Mike, jump on that.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah, Augie. I think there's resilience in those margins, for a a few reasons. One, on the revenue side, we mentioned the performance contracts. We think, again, that's a great tool that aligns with our customers. So when they see value, we we receive value as well.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Our digital solutions, our technology is continuing to grow and expand on our rigs, which is helping aid in the success we've seen in drilling longer, more complex laterals. I mentioned earlier, but, you know, we've made in previous years investments in our rig fleet, and specifically in automation, our, engine, power solutions that we have and in tubulars that'll continue to have upside with that with that revenue. And then on the expense side, you know, we've been having a lot of focus, as Kevin had mentioned, just on the cost efficiency efforts. And so we're starting to to bear some of those fruits now, and we're leveraging our scale, our scale domestically, our scale as a global organization. We're gonna continue to do that.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

So I think they're staying power within those those margins for North American Solutions.

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

Thank you. Appreciate that. And then on the free cash flow cadence, you increased the pay down targets also assuming that most of that is free cash flow. Was there any asset sale baked into that? And what's a reasonable way to expect the CapEx and free cash flow cadence of conversion, you know, going forward, let's say, into the next year?

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

I know it's early, but any directional comments you can provide?

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Yeah. The additional term loan extinguishment that we're expecting by the end of the year, you know, raising that from a 175 to 200, that's just coming from organic operational cash flows. No asset sales in there. That's just our base business generating. As Mike mentioned, know, as we as we focus, you know, not only on the revenue side, but we're focused on the cost side.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

We're we're we're gonna be able to generate a little a little higher cash flows that we're gonna obviously, as we stated before, our primary, objective at this point, is to not only create customer value, but it's to get the balance sheet back down to about a turn of leverage. You know, when you think about again, we're not giving guidance for 2026. But when you think about where we're gonna end this year, we've got a clear line of sight of paying off the additional 200,000,000 on that term loan, call it by the third calendar year of next year. And then we've got another, you know, our first tranche of bonds will be due in in December 2027. You know, we won't we won't sit around long.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

We're we've already got that insight. And so, again, the long term goal is to get our overall leverage down to about a turn. And so, you know, one of the drivers, and I said it in my prepared remarks, but one of the drivers is is just our CapEx spends coming down, You know, without giving, you know, clear articulation into what 2026 is gonna look like from a capital spend, I know from the maintenance side, you know, we we came down this year. We're getting down to levels that I think were kind of the pre COVID levels as and I I could let Mike elaborate a little bit more on this. But, you know, just the overall kind of necessary capital spend and the level of rig activity that we're anticipating for next year, our overall capital spend is going to moderate quite a bit next year.

[Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs]

Thank you. Appreciate that.

[Operator]

Our next question comes from Jeff LeBlanc with TPH. Your line is open.

[Jeff LeBlanc, Director - Equity Research at TPH&Co]

Good morning, John and team. Thank you for taking my question. I just wanna see if you could provide some color the rate churn in the North American market. And then specifically, the public data would suggest that you have been able to add a couple of rigs to new customers on a go forward basis. I'm just trying to speak to that success.

[Jeff LeBlanc, Director - Equity Research at TPH&Co]

And if you think those opportunities should continue over the balance of the year? Thank you.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Sure. Well, that's why I've got these guys here to talk more about that because there is a lot of churn. Teams are doing great work in keeping rigs working. And do you have any any

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. On the on the churn front, I mean, we're we're seeing it really from all, but but I would primary primarily categorize it as with the privates. But the good thing is we've been able to find those homes, a lot of those rich homes with either privates or others that are looking to high grade.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. This is Trey. I'll just comment and say our teams do a fantastic job of of stringing together programs. There's a a lot of short term duration programs that are out there that are well timed, but you have to have the conversation and relationship and rapport with those clients to to be well positioned in the front of the queue to to grab that opportunity. Our teams stay in front of those and do a great job.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

And then as you think about new clients and customers in the in The US or forty eight, many of those relationships have been formed up over the last ten to twenty years. There's a lot of new companies and but there's a a relatively constrained E and P community. And so we keep a good be in our team stay very focused on maintaining those key relationships. So we don't expect that to change, and we think there will be continued churn, and we feel like we're well suited to to manage it.

[Jeff LeBlanc, Director - Equity Research at TPH&Co]

Okay. Thanks for the color. I'll hand the call back to the operator. Thank you.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Yeah.

[Operator]

Our next question comes from Keith Mackie with RBC. Your line is open.

[Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets]

Oh, hi. Good morning, and thanks for taking my question. Jumping around a little bit between calls, so apologies if this has been answered. But the guidance of, you know, up to a 144 rigs for fiscal q four obviously implies that you could potentially add some rigs on average. So would this if this were to, you know, be the case, would that be more a result of better churn management?

[Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets]

Or do you think you'd actually be adding net new rigs in the lower 48?

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. I'll I'll take that one. I think it's a combination. Right? We're gonna obviously have to manage churn really, really well in the near term to hit the upper end of that guide.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

In addition to that, right, we're we have opportunities out there that we're chasing, and we're continuing to stay close to. So there's some incremental ads that we've baked into that higher number. Obviously, if the commodity price range holds firm, we feel comfortable that we'll be able to continue to accrete, you know. But that's where that number comes from. It comes from great churn management in the addition of a a handful of rigs that that we're having conversations currently with.

[Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets]

Okay. Understood. And can you just talk a little bit about what you're seeing in the competitive landscape in the lower 48? And we've been hearing of rig rates still in that low to mid 30 range, although there's, you know, lots of variation within that within that range and and around that range. Can you just talk about what you're seeing as far as, you know, are you being asked to compete on price more than you normally would based on competitive bids and things like that?

[Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets]

Or or or what does the landscape really look like in in in this environment?

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. I'll start. We're we're not immune to the industry wide pricing pressures. But, again, we're pricing our rigs based on the value that we're delivering for our our customers. And so we can align with commercial performance based contracts to align to those, and that rewards us when we perform above our peers.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. And the other other nugget I'll share is is the market for for super spec and top end rig performance remains pretty constrained. And if you look at any filter inactive rigs, inactive super specs for the last year, super spec utilization rate's still above 80%. And if you go basin to basin, that super speculization rate even climbs further from there. In addition to that, you know, 70% of those inactive rigs are in the hands of of four primary drilling providers in The US lower 48.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

So we feel like what we provide, and going back to Mike's comment, is differentiated. We align the value, and, we're focused on our customer through every part of the conversation and equation.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

I mean, this has been a a a result of many, years of our strategy and focusing on delivering better outcomes, leveraging technology, leveraging digital solutions. You know, there's a there's a huge safety component and element here and the things that we're working on. So it's it's really a a function of just the overall teams and our people being able to continue to deliver for customers. It's been it's been fun to be a part of.

[Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets]

Understood. Thanks very much.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank

[Operator]

Our next question comes from Blake McLean with Daniel Energy Partners. Your line is open.

[Blake McLean, Managing Director at Daniel Energy Partners]

Hey. Good morning, y'all.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Good morning.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Hey, Blaine.

[Blake McLean, Managing Director at Daniel Energy Partners]

So, look, a lot of good color. Appreciate that. A lot of good detailed questions have been have been asked. So maybe I'll just here in the back of the queue, maybe I'll just ask you guys kind of a bigger picture question. And specifically on crude, I mean, we talked about natural gas and things people feeling better there both domestically and internationally.

[Blake McLean, Managing Director at Daniel Energy Partners]

I was hoping maybe you could just riff a little bit on customer mindset on the crude side. A ton of moving parts and volatility over the last kinda quarter or or so. I was just hoping you could share do you feel like folks are generally more comfortable kinda oil outlook back half of this year into next year than they were, say, a quarter ago? Just anything you would share on customer conversations and and how they're thinking about crude.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Yeah. I'll start, and then others can can lean in. I think it it's it differs from conversation with customer to customer. Right? And you have many of our large customers that are looking through cycles and planning through cycles, identifying the right partners who they know will be there and be foundational elements to their value creation over time.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

And so those customers and conversations are are looking beyond the end of calendar 2025 and much further out. Obviously, with privates, those those conversations are a little bit more sensitive in terms of what crude outlook you have. But the longer that crude continues to remain relatively stable and range bound, it gives those customers, you know, comfort to keep their programs going and and to bring rigs online. So I think it's varied dramatically from customer architect to customer architect.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

And I think also if you look at where the 26 curve is trading versus where it was trading, you know, where the spot price was three months ago when we had our second quarter earnings call. I mean, again, you know, I think everyone's still, you know, sitting and waiting, thinking about their '26 budgets. You know, we still have some time that will will pass between now and once they formalize them. But I think, you know, just overall, it's a bit much more constructive environment, you know, and having one set on the E and P side, you know, you feel a whole lot better when crude's trading in the, you know, mid to high sixties than he did in, I think, three months ago when we were sub 60.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Well, and you you know, different reports you you you see on the outlook for crude production in The US and and and it you know, does it continue to increase? Does it does it begin to flatten out and decline? And there's some prediction that the that the production begins to decline. So a lot of a lot of variables out there.

[Blake McLean, Managing Director at Daniel Energy Partners]

Yep. Yep. Agree. Lot of moving parts. But it does feel I mean, we it does feel like people are a bit more bit more comfortable now than they were certainly the last time you guys reported.

[Blake McLean, Managing Director at Daniel Energy Partners]

Anyway, thank you guys very much for the time. Really appreciate it.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you.

[Operator]

Our next question comes from Mark Bianchi with TD Cowen. Your line is open.

[Marc Bianchi, Managing Director at TD Cowen]

Hey. Thanks for squeezing me in, guys. I I was curious about the North America margin performance. It's it's been really good versus your guidance the last couple quarters, and you talked about some execution and and some some performance contracts up driving that, I think. But, you know, maybe you could talk to us a little bit about kind of how you put the outlook together.

[Marc Bianchi, Managing Director at TD Cowen]

Is there sort of a base case assumption and then, you know, it's been a lot of performance surprising performance contract stuff, or do you just take a a more conservative view on performance? And if you can if you can beat that, that's great. Just maybe help us understand kind of the the base case going into fiscal four q and and the variables that could could cause it to be above or below.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

I'll start and then hand it over. But, really, I wanna start with thanking our employees. We have they have been executing. We set goals, and they have far exceeded those goals. And so really proud of our our teams that are out there.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

And and I mentioned some cost efficiency efforts. We continue to see some of those will hang around, and some of them won't. Maybe they're they're on a timing seasonal timing is the way I'd maybe describe that. But but really proud of how they're executing, and so I'll turn it over to somebody else, maybe get more on the details on how we form it up.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Yeah. I think the key there is, you know, we do start from a bottoms up bottoms up approach. You know, there we have firm contracts. We've been into conversations with our customers. As Trey mentioned, we're sitting, you know, on the same side of the table as they are trying to figure out what the desired outcomes are.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

And so when when you think about the overall market sentiment, obviously, as we we're just talking about, it's improved since the last quarter. I mean, there's still some, you know, some headwinds that we're facing. And and so the the slight guide down is a reflection of of, you know, the overall value proposition that we're providing. Some of that may have shifted from a day rate to performance bonus incentive. And some and when we're estimating those performance bonus incentives, you know, we we can't count on achieving the top end of that that bonus range every single time.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

And so, you know, again, we we think that the if you were to do the math and look at the average kind of margin, what we're anticipating for the, fourth quarter, we think it's reasonable. But, you know, anytime you throw a target out to Mike and his team, they they seem to always find a way to beat it. But, you know, we can't always count on that. But, you know, quarter after quarter after quarter, his team continues to deliver.

[Marc Bianchi, Managing Director at TD Cowen]

Yep. Yep. It's great to see. On the on the international side, one really simplistic question, then I have another broader one. But just on the on the rig count guide for the fiscal four q, what is the exit rate there?

[Marc Bianchi, Managing Director at TD Cowen]

Just so we can kinda understand what's happening with, you know, maybe the KCA rigs that are dropping off and then what else is happening within the portfolio.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

I know. I think 62.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Yeah. 62 is the extra rate.

[Blake McLean, Managing Director at Daniel Energy Partners]

Got it.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

And I can touch on on just some general activity. Right? So, obviously, there's a lot going on right now. And and if you think broadly across our international fleet, you know, we continue to see a good amount of of tender activity and opportunities in The Middle East. Over over the near term, you'll see increase and improved activity in in some of our other focused areas and markets.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

Right? We have some activity increases planned in South America. As we sit here today, we're gonna have another rig going into Australia. We're we're looking at growth in regions outside of The Middle East right now. I mean, we're having great conversations with IOCs outside of The Middle East as well.

[Trey Adams, SVP - Global Commercial, Sales and Marketing at Helmerich & Payne]

So, you know, there's where some of that fluctuation variability comes in that guide. But what I'll reinforce is is that the difference of of H and P today where we were six, eight months ago is that we're a truly global company and and have a lot of opportunities that we're tracking across geographies. And and so we're gonna continue to see movement in in wins in some geographies that may not hit the headline like US or or The Middle East, but we're we're continuing to chase and find ways to accrete activity.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Yeah. And I think if you think about the number of rigs that we're operating during the third quarter, it was it didn't include the additional nine rigs that we announced that were suspended back in early June. Those went off work in in July, call it July 1. And to Trey's point, you know, the guidance isn't a a complete one for one down as a result of those suspensions. We're actually seeing some really positive kind of work and and and wins coming out of all the various countries that that Trey just mentioned.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Some really good stuff going down in Argentina. Mike and his team aren't leading those efforts, and, you know, I think the conversations are really good with customers down there.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Yeah. Absolutely. Maybe to expand on Argentina. We have nine rigs operating today in Argentina. Lots of conversation.

[Michael Lennox, SVP - Americas Operations at Helmerich & Payne]

Some of y'all know as they build out the infrastructure to get the get the gas out of that the Vaca Muerta there. We're positioned. We've got four rigs down there, very well suited flex rigs that can can go to work. So we're in a good position, and I'd say we're early innings down there where as we as they're adopting technology and continue to to start using that down there, I think we'll have some good good, wind behind ourselves.

[Marc Bianchi, Managing Director at TD Cowen]

Oh, okay. That's great. Maybe just to to follow on to that real quick. On the on the margin side, so, you know, there's a lot of moving pieces with I thought the Saudi KCA rigs were were pretty good margin and those are dropping off, but you've got these other rigs that are picking up. And then we've got the the flex rigs in Saudi where there were some start up costs, and it seems like that's maybe gone away or in the process of going away.

[Marc Bianchi, Managing Director at TD Cowen]

Should we view this sort of September quarter margin in international as as a low point and it it has good chance of getting better from here? Or how how does that dynamic look as we roll through the next four few quarters?

[Eddie Kim, VP - Equity Research at Barclays]

Yeah. I I this

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

is Kevin. And I do think I I wouldn't, you know I hate to call it a low point, but I definitely feel like we're at an inflection point in terms of just the amount of of gross margin that can be generated out of that international business. Obviously, with the with the rig suspensions and there's all the work that Trey mentioned earlier that, you know, we're currently chasing across the the whole Middle East, but really chasing across the globe. We do have we do see a line of sight in improving the margins that we're real realizing on our flex rig business in Saudi. And so there's just it seems like there's a lot of positive momentum outside of just, you know, absolute number of rigs working over there.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

But there's, you know, just the work that we're doing and improving, as we continue to integrate, you know, all the operations, in in in Saudi. We're we're seeing a lot of pretty good improvement. It'll it might take a few more quarters to get it up to, like, the full, you know, what's the expected ongoing run rate. But those teams, you know, across across the case or the historical legacy KCAD employees and then the the FlexRig startup employees that we had, you know, had been working on getting those margins, you know, going, getting that business started. It just continues to improve quarter after quarter.

[Marc Bianchi, Managing Director at TD Cowen]

Great. Thanks so much. I'll turn it back.

[Operator]

Our next question comes from David Smith with Pickering Energy Partners. Your line is open.

[David Smith, Director at Pickering Energy Partners]

Hey, good morning, and thank you for taking my question.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Good morning, Dave.

[David Smith, Director at Pickering Energy Partners]

Starting with a housekeeping question, and wanted to make sure I understood correctly that fiscal year CapEx guidance is $380,000,000 to $3.95 and 362,000,000 was spent in the first nine months of fiscal twenty five. That kind of implies a step down to, like, '25 or 26,000,000 at the midpoint for fiscal q four, which makes me feel like I'm missing something obvious.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

No. I no. You're not. We were we the the CapEx for for 2025 was heavily, heavily weighted to the first two or three quarters. You know, we won't be spending much in terms of CapEx really on the North American side during the fourth quarter.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

And what rolls through the fourth quarter will primarily be related to some stuff that we've got going on international. You know, it's not dollar for dollar commensurate decline as these rigs are being, you know, in terms of level of and rig activity, there was some money that was being spent that's still coming through associated with the the rig activity that we had prior to these suspensions. But it's coming to a, you know, a pretty quick halt and decline during the fourth quarter. So, no, you're not missing anything, but it is you know, we do feel comfortable about the guidance.

[David Smith, Director at Pickering Energy Partners]

I appreciate that. I I wanna extrapolate that through through '26 even though you said '26 is coming down. I also wanted to circle back on the the cost reduction targets for for 50 to 75,000,000. Your your q three fiscal q three s g and a was basically in line with the trailing four quarter average be before the merger closed. It was 15,000,000 lower than than last quarter with the merger closing in in mid January.

[David Smith, Director at Pickering Energy Partners]

I just wanted to clarify how we should think about that 50 to, you know, maybe maybe get into 75,000,000 of identified cost savings relative to what's actually been achieved in the the fiscal q three performance.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

Yeah. The fiscal q three performance, obviously, we had a we had some some severance cost and other cost that we recorded as restructuring cost. And so you'll see those separate in another line item on the income statement. But the you know, that run rate of 66,000,000 is obviously a reflection of not only some of the reductions that we've already had, the synergies that we've already captured, but it also, I think, speaks to what the possibility is for 2026, which again, we've we've clearly identified 50,000,000 of of run rate savings in '22 that we will implement and have effective effectively executed all the decisions that we need in order to start 10/01 with a $50,000,000 run rate. There's still more meat on that bone.

[J. Kevin Vann, SVP & CFO at Helmerich & Payne]

You know, we still have some more work to do, some more analysis to do. I think that will be a combination of synergies and just overall cost cost reductions as we think about what's the right necessary corporate structures to support the business going forward. But, you know, I can't you know, I'm I'm claiming victory on the 50,000,000. I don't wanna claim victory on anything above 75,000,000, but I think, you know, somewhere in between 50 and 75 is is is pretty achievable as what we're given what we're thinking now.

[David Smith, Director at Pickering Energy Partners]

Very much appreciate it. I'll turn it back.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you.

[Operator]

It appears we have no further questions at this time. I'll turn the call back to John Lindsay for closing remarks.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

Thank you, Risa. Thank you again for joining us today. Again, just to reiterate, we believe our global scale and innovative solutions are differentiating in the market. We've seen examples of that. And those capabilities, we believe, will continue to expand globally along with our investment grade balance sheet, sharp focus on cost and debt reduction, and a long standing sustainable dividend is a unique value proposition in our industry.

[John Lindsay, Director, President & CEO at Helmerich & Payne]

So again, thank you for joining us today. Thank you.

[Operator]

This concludes today's program. Thank you for participation. You may disconnect at any time.

Participants

Executives

• Todd Scruggs, VP - Corporate Finance & Treasury
• John Lindsay, Director, President & CEO
• Trey Adams, SVP - Global Commercial, Sales and Marketing
• J. Kevin Vann, SVP & CFO
• Michael Lennox, SVP - Americas Operations

Analysts

• Douglas Becker, Analyst at Capital One
• Grant Hynes, Equity Research Associate at JP Morgan
• Eddie Kim, VP - Equity Research at Barclays
• Derek Podhaizer, Director & Senior Research Analyst at Piper Sandler Companies
• Atidrip Modak, Vice President - Energy Services & E&Ps at Goldman Sachs
• Jeff LeBlanc, Director - Equity Research at TPH&Co
• Keith Mackey, Director, Global Equity Research, Oil & Gas Services at RBC Capital Markets
• Blake McLean, Managing Director at Daniel Energy Partners
• Marc Bianchi, Managing Director at TD Cowen
• David Smith, Director at Pickering Energy Partners