Helmerich & Payne : Earnings Call Prepared Remarks (Fiscal 2Q 2026 Helmerich Payne Prepared Remarks )

Published: 2026-05-08 11:09:09 ET HP

Published on 05/08/2026 at 11:09 am EDT

Welcome everyone to Helmerich & 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 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. 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 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.

Trey Adams

President and Chief Executive Officer

Thank you, Kris, ……. 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.

Second Quarter Call Highlights

A resilient operational quarter, with great progress made on portfolio optimization & de-leveraging

⯈ Solid performance and strengthening outlook in NAS

NAS delivered direct margins around the midpoint of the guidance range

⯈ Offshore performed ahead of expectations

Performance based contract bonuses enhance the Offshore Solutions direct margin profile

⯈ Robust execution in Middle East despite conflict

Ensured the safety and security of personnel and maintained continuity of service on most rig operations

⯈ Expanding deployment of FlexRobotics technology

Deploying four additional FlexRoboticsTM systems led by customer demand

⯈ Sale of Utica Square enables early term-loan retirement

After tax proceeds exceeded $100M expectation and enabled early repayment of remaining term-loan balance

Rapidly changing macro landscape enhances our outlook for the rest of the year

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 remained 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 have been able to spud three out of the seven rigs. Two more are 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 we expected. We remain confident in achieving the 58-68 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. FlexRoboticsTM continues to perform ahead of expectations with our first rig now operating on 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 FlexRobotics 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 in the Caspian Sea which could exceed 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 turn target.

Macro Outlook

Middle East conflict has exposed the fragility of the energy complex and fundamentally changed the outlook

⯈ The effective closure of the Strait of Hormuz has caused sigfiific6fit supply disruptiofi 6fid ificre6sifig risk of fie6r−term dem6fid destructiofi

⯈ Long-term energy demand outlook unchanged, increased bifurcation & energy security concerns support the view that we m6y fieed evefi more supply

⯈ Expect overall 2026 upstream investment to pick up ifi the b6ck h6lf of the ye6r

and strengthen into 2027

bust a

RIG MARKET DYNAMICS

North Americ6 tightefiifig quickly

Ifiterfi6tiofi6l resiliefit despite MENA uficert6ifity

Offshore rem6ifis robust 6fid could 6cceler6te

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 12-14 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 activity sooner than we anticipated.

Looking at the rest of this 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 DUC 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 a 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.

Commercial Dynamics

Commercial momentum in NAS and Argentina intensify - expanding deployment of FlexRoboticsTM _ commercial tailwinds remain in the Middle East despite conflict

North America Solutions International Solutions International Solutions Offshore Solutions

NAS backlog continues to strengthen with sever6l term extensions & rig pickups

Strong string of work developing in Austr6li6 as activity gathers pace in the Beetaloo Basin & Taroom Trough

Potential for multi−ye6r contr6ct renew6ls on sever6l offshore pl6tforms

Potential for rig mobilizations in Gulf of Americ6

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 smaller private and independent

operators. As a result, we now have over 55% of our operating fleet on term vs. spot contracts, up from just over 50% in the prior quarter.

As I mentioned earlier, we plan to deploy an additional four FlexRobotics systems. This is another great example of our technology leadership in onshore drilling solutions and testament to the dedication of our engineering and R&D teams. We have received several in bounds from a variety of customers and are excited by the potential to deploy FlexRobotics at scale across our Super-Spec rig fleet.

Beyond traditional oil and gas, we're also seeing encouraging traction in 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 the 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 Vaca Muerta accelerated, driven by both the host NOC and domestic independents. We currently have nine rigs operating in the Vaca Muerta today and see a path to being 100% utilized with all 12 rigs in country active. Meanwhile, discussions in Venezuela remain active and represent a 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 continued 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 Beetaloo Basin and the Taroom Trough in Queensland.

Lastly, in our Offshore Solutions segment, as previously mentioned, we secured a major win with a long-term contract renewal from bp in the Caspian Sea. The renewal carries a firm five-year term with three additional one-year extension options. We also continued to progress several prospects, including potential multi-year contract renewals, which would further strengthen the resilience of our offshore portfolio.

North America Solutions

Uniquely positioned to expand our leadership in the Lower 48

15K+ wells needed online annually to hold production flat

~13.5m b/d

PUD Production1

~8m b/d

Inventory of DUCs2 are at historical lows

~7,500

The Super-Spec rig market is extremely tight

>30% H&P

Mkt Share

~65 Super-Spec Rigs available within 6 months3

Permian

Eagle Ford

~2,000

~500

Super-Spec Rig Market

>80%

Utilized

PDP Production1

Bakken

2014

2020

2026

2030

2020

2023

2026

~430 Super-Spec

Rigs active today

Afid it's gettifig h6rder……

Sigfiific6fit ificre6se ifi drillifig

6 iofi

ctivity required to grow product

40%+ of H&P NAS wells 6re 3−mile l6ter6ls or longer

Efficiency gains have largely offset the underlying decline in rock qu6lity

Exh6ustion of high−qu6lity inventory suggests service intensity will need to increase

Less th6n 2,000 oil weighted DUCs in inventory

Increase in completion activity will deplete

oper6tors will need to 6cceler6te drilling to maintain production

H&P h6s more Super−Spec rigs th6t c6fi mobilize withifi 6 mofiths th6fi 6fiyofie else

>30% mkt sh6re of Super-Spec rig market with 20+ rigs that can mobilize at around m6inten6nce c6pex levels within 6 months

M6rgin premium driven by pricing discipline, contracting innovation and continuous investment in performance enhancing technology

Source: Enverus Intelligence Research: PDP = Proved Developed Producing / PUD = Proved Undeveloped

Source: U.S. Energy Information Administration (March 2026): DUC = drilled uncompleted wells

Source: H&P company estimates & Daniel Energy Partners Industry Survey (Average of 57 -73 range)

Given the elevated importance of North America 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 well bore 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 FlexRobotics we are driving greater consistency and truly getting closer to manufacturing mode at scale.

As we enter this higher price 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 DUC 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 industry wide, utilization is currently well above 80% and tightening fast. In a recent industry survey, it

was estimated that around ~65 idle rigs could be brought back 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 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.

I will start by reviewing our second quarter operating results and providing details on the performance of our segments. I will then spend some time walking through our capital allocation framework and conclude by outlining our guidance for the fiscal third quarter and full year before handing it back to Trey.

Financials1

2Q'26

1Q'26

2Q'252

Revenue ($M)

$932

$1,017

$1,143

Operating Costs ($M)

$969

$1,077

$1,098

SG&A ($M)

$71

$70

$81

Adjusted EBITDA ( M)

178

230

267

Adjusted EBITDA Margin

19%

23%

Net Income (Loss) ($M)

$(59)

$(97)

Diluted EPS ($/share)

$(0.59)

$(0.98)

$0.01

Adjusted EPS ( /sh6re)

(0.38)

(0.15)

0.02

Effective Tax Rate

(20)%

(13.4)%

93.3%

Free C6sh Flow ( M)

Free Cash Flow excl. WC

(15)

$74

126 (25)

$144 $(34)

Free Cash Flow Conversion

(8)%

55% (10)%

Net Capital Expenditure ($M)

$52

$57 $239

2Q'26 Financial Results

$932M

Revenue reflecting solid performance despite a dynamic macro environment

$l78M

Adjusted EBITDA, aligns with lower-end to mid-point of implied guidance

$74M

Free Cash Flow excluding Working Capital3

Solid second quarter operational performance in dynamic environment

Direct Margin, Adjusted EBITDA, Adjusted EPS, and Net Capex are non-GAAP financial measures; see the Appendix for GAAP reconciliations

Proforma = Legacy H&P + Legacy KCAD

Change in working capital during the quarter was ~$(90)M. The elevated consumption of cash was due to the timing lag between the collection of some receivables versus disbursements made on payables.

Let me start with highlights for the recently completed quarter on slide 9, where we delivered resilient financial performance in the face of a very dynamic situation in the Middle East.

Alongside our continued operational performance, we were delighted to conclude the sale of Utica Square with the after-tax proceeds exceeding our divestiture target of $100 million. This in-turn helped accelerate the full repayment of the remaining balance of our term loan well ahead of schedule.

During the quarter the company generated revenues of $932 million.

We also generated $178 million of adjusted EBITDA, coming in between the low end and the midpoint of our

implied guidance range. As Trey mentioned, we prioritized speed and returns in the face of growing supply chain constraints in the Middle East, which resulted in the refurbishment of existing equipment. This decision led to

the allocation of rig reactivation capital expenditures to operating expense. This had an approximately $3 million impact on International Solutions' direct margins during the quarter.

On EPS, we reported a net loss of $0.59 per diluted share. These results were impacted by a non-cash

impairment charge of approximately $26 million. Absent those items, we generated a loss of $0.38 per share.

Capital expenditure for the second quarter were $63 million, which continued to trend below anticipated spending levels. This was attributable to the reclassification of CAPEX to OPEX in the Middle East, resequencing of capital expenditures from the second to the third and fourth quarters and continued improvement in capital efficiency across the portfolio.

While Free Cash Flow came in negatively during the quarter. The variance was driven by a very rare, at least for us, timing lag between the collection of some receivables versus disbursements made on payables. This was

largely related to a handful of large customers where payments were made in April and will therefore normalize during our third quarter. Excluding changes to working capital, free cash flow during the quarter was $74 million.

Key Metrics 1

2Q'26

1Q'26 2Q'25

Revenue ($M)

$517

564 600

Direct M6rgin ( M)

215

239 266

Segment Operating Income ($M)

$111

$36 $152

Average Working Rigs

136

143 149

Revenue Days

12,208

13,126 13,416

Margin Per Day ($)

17,628

18,193 19,799

2Q'26 - North America Solutions

Resilient performance in a softer market

85%

l36

Average rigs operating during the quarter - slightly ahead of expectations

$2l†M

Direct margin came in close to the mid-point of our guidance range

809

Wells drilled by our Super-Spec

rigs in 2Q'26. On track to drill

~30% of Lower 48 wells this year

1. Direct Margin is a non-GAAP measure

$215M

Direct Margin

Let me now break that down by segment, starting with North America Solutions on slide 10. We averaged 136 contracted rigs during the second quarter, slightly above the midpoint of our activity expectations.

Segment direct margin for North America Solutions was $215 million, which came in close to the midpoint of our guidance range. This was driven by the anticipated step down in rig count and our total direct margin tapering

slightly to $17,600 per day. Day rates remained relatively stable, while operating costs increased slightly, as a result of reduced absorption of overheads from operating less rigs during the quarter.

As Trey pointed out earlier, we firmly believe that this will be the quarter where a trough occurred for both the rig count and direct margin. We exited the quarter at 137 rigs and as of last week 138 rigs were working. We are also experiencing strong contracting trends within our operating fleet as customers look to extend the duration of contracts as the capacity to add new super-spec rigs to the market remains extremely tight.

Key Metrics 1

2Q'26

1Q'26 2Q'252

Revenue ($M)

$218

$234 $275

Direct M6rgin ( M)

11.5

29 30

Segment Operating (Loss) ($M)

$(100)

$(55) $(42)

Average Working Rigs

59 69

Revenue Days

5,492

5,444 6,198

Margin Per Day ($)

2,093

5,275 4,344

2Q'26 - International Solutions

Maintained continuity of operations during the quarter

Offshore Solutions

International Solutions

North America Solutions

Average rigs operating during the quarter

Rigs reactivated in Saudi. Two more expected to commence drilling imminently

†

Rigs in Oman awarded contract extensions for six years

Direct Margin is a non-GAAP measure

Proforma = Legacy H&P + Legacy KCAD

$11.5M

Direct Margin

Turning to International Solutions on slide 11, the segment ended the second quarter with 61 rigs working and generated approximately $11.5 million in direct margins, coming in around the low end of the guidance range.

Again, this was largely the result of the decision to allocate rig reactivation expenditure to OPEX as we navigated supply chain constraints in the Middle East and impacted direct margin during the quarter by approximately $3 million.

Regarding the unexpected and elevated costs caused by the ensuing conflict in the Middle East, we estimate that the impact on direct margins in the quarter was approximately $3.5 million. This includes costs related to the

crisis management response, supply chain cost inflation, slower than anticipated start of drilling activities from reactivated rigs and the suspension of a rig in Iraq.

At this stage, we see most of the cost impacts incurred being discreet to the quarter, particularly regarding the elevated OPEX. We expect continued cost-inflation pressures as supply chains remain constrained. At the midpoint of our guidance range, we anticipate an approximate $6 million impact to third-quarter results, assuming the Strait of Hormuz remains effectively closed. This is also inclusive of the impact of the rigs suspended in Iraq and Bahrain.

Key Metrics 1

2Q'26

1Q'26 2Q'252

Revenue ($M)

$171

$188 $185

Direct M6rgin ( M)

31 36

Segment Operating Income ($M)

$14

$16 $26

Average Working Rigs

3 3

Average Management Contracts

33 33

2Q'26 - Offshore Solutions

Executing well in a stable environment

Offshore Solutions

International Solutions

11%

North America Solutions

Average rigs and mgmt. contracts

operating during the quarter

$27M

Ahead of the mid-point of our

first quarter guidance range

$3.†B

Total contract backlog including firm contracts and options3

1. Direct Margin is a non-GAAP measure

2.Proforma = Legacy H&P + Legacy KCAD

3. Backlog split 40% firm contracts, 60% optional contract renewals

$27M

Direct Margin

Lastly, with our Offshore Solutions segment on slide 12, we generated a direct margin of approximately $27 million during the quarter, which came in ahead of the midpoint of our guidance range.

We had three active rigs and 30 management contracts in operation during the quarter.

We were excited to announce the extension of our contract with bp in the Caspian Sea, and it is a great example of the types of projects we undertake in Offshore Solutions. The long duration of these contracts is a testament to the strong relationships and performance we have delivered for these operators on a consistent basis for many years.

As with our International Solutions business, we are starting to layer in elements of performance contracts to Offshore. This has already started to help enhance the direct margin profile and we continue to innovate in contracting structures to create win-win solutions for our customers.

We are excited about this business and the consistent and stable results that it delivers. It requires minimal capital and generates steady cash flow and provides good diversification from the more cyclical and capital-depending nature of our onshore portfolio.

Capital Allocation Framework

Committed to de-leveraging the Balance Sheet

Balance

Sheet

Cost

Optimization

Portfolio

Optimization

Investment

Shareholder

Returns

STRATEGY

Maintain strong balance Drive integration sheet - current liquidity synergies & enhance

of $1.1B cost structure

Optimization of non-core & non scalable assets

Maintain capital-dis to

ciplined approach

capital & R&D investments

Maintain base dividend through de-leveraging phase

STATUS

$4OOM1 $5OM+

Term-loan repaid FY'26 estimated as of April'26 reduction in SG&A2

$1OOM+ 2O%−3O% 34YRS

Divestments closed Targeted reduction in Of consistently year-to-date Capex vs. FY'25 paying a dividend

Term Loan repayment as of 04/30/2026

FY26 SG&A guidance is over $50M lower than relative proforma annualized FY25

Enh6nced sh6reholder returns post de-leveraging

270M− 310M of gross capital expenditures in FY'26

Additional monetiz6tion opportunities over time

Targeting ~ 75M of post deal cost synergies

Targeting ~1X Net Debt/ EBITDA & retaining Investment Grade Status

TARGET

Turning to slide 13. I want to provide an update on our capital allocation framework. Our focus remains unchanged, with the top priority being continued deleveraging and maintaining our investment-grade status.

In a relatively short time, we've made great progress reducing our post-acquisition leverage and are very pleased to have achieved our near-term goal of paying off our term loan of $400 million ahead of schedule.

Our focus now shifts to our $350 million bond due at the end of 2027. In anticipation of that repayment, we plan to build cash as well as continuing to pay our base dividend. With the combination of lower debt and the

anticipated expansion of EBITDA, we are confident in achieving our one turn leverage target.

At the end of the fiscal second quarter, we had cash and short-term investments of approximately $199 million. Including the availability under our revolving credit facility, our total liquidity is approximately $1.15 billion.

We will balance our near-term de-leveraging goals with potential investment opportunities that may arise as drilling activity increases. Our disciplined approach will ensure capital is directed to the highest return opportunities.

At the same time, we are making steady progress on several Enterprise Optimization initiatives. We have reduced our SG&A expenses by more than $50 million compared to pre-merger standalone run rates and will continue to identify opportunities to further streamline our cost structure and harmonize processes and systems across our Western and Eastern hemisphere operations. These ongoing efforts will support the long-term, cost-conscious

culture at H&P.

While we have completed the heavy lifting on portfolio optimization, with the closing of the Utica Square transaction, we will continue to seek to monetize non-core and underutilized assets.

Lastly on shareholder returns, a key element is the dividend. We view the base dividend as a core commitment to shareholders, and we remain confident in its sustainability. The dividend is well covered by cash flow, and our capital allocation decisions are structured to support it across commodity cycles.

Direct Margin ($M)1,2

$24 - $28

$100 - $115

Average Rigs / Mgmt. Cont.

30 - 35

Direct Margin ($M)1

$0 - $3

3Q & FY 2026 Guidance

North Americ6 Solutions

Intern6tion6l Solutions

offshore Solutions

other3

Upgrading Full Year guidance outlook - led by strengthening activity in NAS

Direct Margin is a non-GAAP measure

At the midpoint of our guidance range, we anticipate an approximate $6 million impact to third quarter results, assuming the Strait of Hormuz remains effectively closed. This is also inclusive of the impact of rigs suspended in Iraq and Bahrain.

Our "Other" operations is comprised of our BENTEC manufacturing and engineering activities, our real estate operations, and our wholly-owned captive insurance companies.

Guidance 3Q'26 FY'26

Guidance

FY'26

Gross Capital Expenditures ($M)

$270 - $310

Depreciation

~$700

Research and Development

~$28

Selling, General & Administrative

$265 - $285

Cash Taxes

$125 - $150

Interest Expense

~$100

Direct Margin ($M)1

$230 - $240

Average Rigs

137 - 143

138 - 144

Direct Margin ($M)1

$12 - $32

Average Rigs

58 - 68

Now, I want to transition to our third quarter and full year guidance on slide 14.

Looking ahead to the second half of fiscal 2026 for North America Solutions, we expect our margins and operated rig count to show solid growth as we start to see activity ramp in the Lower 48.

As a result, we expect direct margins in our third quarter to range between $230 to $240 million based on an anticipated rig count of between 137 to 143 rigs in the third quarter.

Given the strength of the pickup in activity, we are also raising our full-year rig count range to 138 to 144 rigs and see a positive inflection in margin rates. As we have said, we see our second fiscal quarter as a trough for the NAS market and see continued momentum into 2027.

For International, we anticipate the rig count to average between 58 to 68 rigs in the third quarter and full year, which includes the remaining rigs being reactivated in Saudi and more rigs being activated in Argentina. This will partially be offset by rig suspensions in Iraq and Bahrain due to the Middle East conflict and the end of near-term geothermal drilling programs in Europe.

We expect International Solutions to generate a direct margin between $12 to $32 million. As Trey mentioned, we expect to have six of the seven rigs reactivated in Saudi by the end of the quarter. We also expect continued improvement in FlexRig margins and growth in Latin America.

The wider guidance range for International Solutions reflects the broad range of possible outcomes in the Middle East. At the mid-point we are anticipating an approximate $6 million impact on direct margins due to supply chain constraints and cost inflation if the Strait of Hormuz is to remain effectively closed for the duration of the quarter.

For offshore, we anticipate an average of 30 to 35 management contracts and operating rigs. We expect the direct margin rate in the fiscal third quarter to range between $24 and $28 million.

As we progress through the remainder of the year, we anticipate the margin rate to step back up and remain confident in the $100 to $115 million direct margin full-year guidance we shared previously.

Given the anticipated ramp up in activity in NAS, the deployment of additional FlexRobotics systems and

reactivations in Argentina, we now expect our 2026 gross capital expenditure budget to align more closely with the high end of the range of between $270 to $310 million. In line with this, and delayed second quarter capital expenditure, we expect third quarter spending levels to be in the region of $100 - $130 million.

It is important to note that our capital guidance does not include spending in relation to additional reactivations beyond what has been announced. We are also only including spending on the four FlexRobotics packages that will begin deployment this year.

As a result of the Utica Square sale, we now expect cash taxes to come in higher than previously anticipated and will now range between $125 to $150 million.

With cash taxes, capital expenditures, and working-capital outflows all running higher than expected, our

free-cash-flow conversion for the year will trend lower but still represents a significant improvement from the prior year.

In summary, while there were a lot of transitory items in the quarter regarding direct margins, CAPEX / OPEX dynamics and free cash flow generation, we successfully paid off our term loan and our outlook for the back half of the year and beyond has improved significantly.

We are seeing a clear strengthening of tailwinds both in the Lower 48 as well as in our international portfolio and believe we are at the start of a multi-year-upcycle for the OFS sector.

On that positive note I will now sign off as CFO for H&P.

It has been an honor to play a small part in the evolution of this remarkable company. I am excited to pass the baton to Todd Scruggs, someone who I have worked with throughout my career.

With Trey and Todd at the helm, you're in good hands with a leadership team full of passion, energy and

dedication - ready to capture the significant opportunities that lie ahead as H&P continues its journey as the world's largest and most advanced onshore drilling solutions provider.

And with that I will hand it back to Trey for some closing remarks.

Thank you, Kevin. It's been an honor working with you. The stability you provided during the KCAD transaction closure, as well as your substantial contributions to our financial function and balance sheet, have been invaluable. Everyone at H&P sincerely appreciates your service and extends their best wishes for your

retirement.

H&P Investment Thesis

A Differentiated Global Drilling Business

Technology Leader

Enterprise Optimization

Operating the most sophisticated onshore drilling rigs in the world delivering differentiated customer outcomes

Several portfolio & organizational programs underway to enhance execution, cost structure & deliver on de-leveraging

Committed to delivering differentiated long-term shareholder value

Global Scale

Operating >200 land rigs with scale, geographic diversity & portfolio flexibility to capture rising global onshore drilling activity

Now turning to slide 16. I'd like to conclude by refocusing on the opportunity we have in front of us and the compelling investment thesis H&P offers.

We are unrivalled in our scale, technology leadership and geographic diversity to capture rising drilling activity both in North America and International.

We have witnessed a fundamental change to the energy system over the past two months and believe we are at the very early stages of a multi-year upcycle in which H&P is ideally positioned.

At the same time, we continue on our journey of enterprise optimization with several programs underway to streamline our portfolio, cost structure and deliver on the full potential of the KCA Deutag acquisition.

Our near-term commitment remains on de-leveraging our balance sheet and we are confident in repaying our

$350 million note ahead of schedule. Beyond that, we believe we will have financial strength and flexibility to enhance our attractive shareholder return profile and further differentiate our portfolio.

Lastly, I am proud of the performance of the team during the quarter, particularly our team members working in the Middle East. Despite all of the disruption and elevated threat level, they have been able to maintain continuity of operations in all of our core operating countries. We believe this will only strengthen the relationships we have with customers in the region and is a testament to the commitment of our teams.

While we may face some ongoing timing and market dynamics in the Middle East our commitment is unwavering, and we believe that we will see strong growth from the region over time. We also believe the Lower 48 is set to accelerate and as result expect North America Solutions to exceed our original full year guidance.

I want to thank the employees of H&P for all their efforts and look forward to what we can achieve together this year and beyond.

That concludes our prepared remarks for the quarter and will now turn it back to the operator for questions.

Disclaimer

H&P - Helmerich & Payne Inc. published this content on May 08, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 08, 2026 at 15:08 UTC.