Helmerich & Payne Q3 Earnings Call Highlights

Key Points

• Helmerich & Payne exceeded fiscal Q3 2026 guidance across all three segments, with revenue above $1 billion, adjusted EBITDA of $236 million and free cash flow of $98 million.
• North American drilling strengthened: the company reactivated 10 rigs, exited the quarter with 147 Lower 48 rigs working and raised full-year rig-count guidance; super-spec utilization reached 95%.
• Deleveraging and cost reduction remain priorities. H&P repaid its $400 million term loan early, targets $40 million in annual corporate-cost savings by 2027 and plans more than $160 million in asset sales while maintaining its dividend.

Helmerich & Payne NYSE: HP reported fiscal third-quarter 2026 results that exceeded the midpoint of its guidance across all three operating segments, supported by a rebound in U.S. drilling activity, stronger Latin American performance and performance-related bonuses in its offshore business.

Adjusted EBITDA totaled $236 million for the quarter, while revenue exceeded $1 billion, up 11% sequentially. The company generated $98 million in free cash flow and reported net income of $0.74 per diluted share. Excluding the gain on the sale of Utica Square and other select items, Helmerich & Payne recorded a loss of $0.11 per share, CFO Todd Scruggs said.

President and CEO Trey Adams said the company’s results demonstrated the strength of its operational execution and diversified portfolio despite commodity-price volatility and disruption from the conflict in the Middle East.

North America activity and margins rise

North America Solutions was a key contributor during the quarter. The segment averaged 142 contracted rigs and generated direct margin of $241 million, reaching the high end of company guidance. Direct margin averaged $18,700 per day, up more than $1,000 per day sequentially.

The company reactivated 10 rigs during the quarter and exited the period with 147 rigs working in the Lower 48. Adams said private and smaller independent operators accounted for most recent rig additions, while larger operators have generally focused on adding contract term and technology to existing rigs.

Helmerich & Payne said super-spec fleet utilization is trending at 95%, which management believes could support further market tightening and direct-margin improvement. The company has roughly 10 additional rigs that could be returned to work relatively quickly at maintenance-capital levels or less, although some could be deployed outside the Lower 48.

For the fiscal fourth quarter, the company expects North America Solutions to operate 145 to 151 rigs and generate direct margin of $245 million to $255 million. It raised full-year North American rig-count guidance to a range of 140 to 144 rigs.

Management said the second Flex Robotics package has been deployed to a rig for a supermajor customer in the Permian Basin. Mike Lennox, executive vice president of the Western Hemisphere, said the first robotic rig has performed above the company’s initial P50 expectation and is currently the customer’s top-performing rig in a fleet of rigs in the high 20s. Helmerich & Payne expects to have five robotic rigs deployed by February.

International growth offsets Middle East disruption

International Solutions produced $31 million in direct margin during the quarter, also at the high end of guidance. The result benefited from Latin American operations and a lower-than-expected impact from Middle East disruption as travel routes and logistics incrementally improved.

In Saudi Arabia, Helmerich & Payne completed four rig reactivations by quarter-end, while a fifth began drilling early in the fourth quarter. The company now has 22 rigs operating in the kingdom and expects to maintain that activity level through the fiscal fourth quarter. Operations on two previously suspended rigs in Bahrain resumed during the fourth quarter.

Management said it remains focused on reaching an International Solutions quarterly direct-margin run rate of at least $45 million, with growth in Argentina expected to offset some near-term changes in the Middle East. For the fourth quarter, International Solutions is expected to operate 60 to 70 rigs and produce direct margin of $25 million to $45 million. The wide range reflects possible outcomes related to the ongoing conflict in the region.

Argentina’s Vaca Muerta basin was a major area of growth. Helmerich & Payne currently operates nine rigs there, representing approximately 25% market share, and expects to activate its 10th and 11th rigs by the end of August. The company has contracted its final FlexRig already in Argentina and plans to export three more rigs from the United States later this year, which would bring its Argentine fleet to 15 FlexRigs. Management expects all 15 to be drilling by this time next year.

Adams said the company recently drilled a record-setting Vaca Muerta well 13% faster than the operator’s prior record and 15% below the operator’s budget under a performance-based contract. The company also deployed AutoSlide automation on a project that enabled zero manual slides.

In Australia, Helmerich & Payne received an award for a third rig to be exported from the U.S. for work in the Beetaloo Basin. The company also cited expanding geothermal activity, with agreements signed for three additional U.S. geothermal rigs. Management said it was working toward a double-digit geothermal rig count across the U.S. and Europe, though it did not provide a specific timeline.

Offshore continues to provide stable cash flow

Offshore Solutions generated $29 million of direct margin, above the high end of guidance, aided by several performance-related bonuses. The segment had three active rigs and 30 management contracts in operation during the quarter.

The company secured a multimillion-dollar, four-year contract renewal with an operator in Norway and is pursuing potential multiyear renewals and possible rig mobilizations in the Gulf of Mexico. For the fourth quarter, it expects 30 to 35 management contracts and operating rigs, with direct margin of $26 million to $30 million.

Given year-to-date performance, Helmerich & Payne raised its full-year Offshore Solutions direct-margin guidance to $113 million to $117 million.

Debt reduction and cost initiatives

Scruggs said Helmerich & Payne is targeting net debt-to-EBITDA of one turn and has already repaid its $400 million term loan ahead of schedule. The company is now focused on retiring a $350 million bond due at the end of 2027.

The company plans to streamline central functions, reduce duplication, standardize regional operating practices and harmonize enterprise resource planning systems. Management expects those efforts to reduce annualized corporate costs by $40 million by the end of 2027.

Helmerich & Payne also plans to exit non-core geographies and monetize assets where possible, targeting more than $160 million of asset sales by the end of fiscal 2027, if not sooner. The company said it will maintain its dividend during the deleveraging period, which it estimated at roughly $100 million annually.

Gross capital expenditures were $70 million in the third quarter, below anticipated spending because of deferred North America projects and delays in Middle East rig reactivations. The company expects spending to increase sequentially in the fourth quarter but remain within its full-year capital-expenditure guidance of $270 million to $310 million. It increased expected cash-tax payments to $150 million to $180 million, reflecting the tax impact from the Utica Square sale and stronger North American financial performance.

Looking ahead, Adams said management remains optimistic about fiscal 2027, citing constructive customer discussions, expected upstream spending growth and demand for the company’s drilling technology. The outlook, however, remains dependent on commodity prices remaining supportive and on developments in the Middle East.

About Helmerich & Payne (NYSE:HP)

Helmerich & Payne, Inc is a leading provider of contract drilling services to the oil and gas industry, specializing primarily in onshore drilling operations. The company designs, engineers and operates a fleet of advanced drilling rigs, including its proprietary FlexRigs, which are engineered for high efficiency, safety and rapid mobilization. Alongside core drilling services, Helmerich & Payne offers well intervention, workover and coiled tubing services, positioning itself as a comprehensive drilling solutions partner for exploration and production companies worldwide.

Founded in 1920 and headquartered in Tulsa, Oklahoma, Helmerich & Payne has grown through innovation and strategic expansion to serve diverse hydrocarbon basins.

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