We’ve all heard it’s important to write down your goals. Did you know that statistically you’re 42% more likely to achieve any goal by simply writing it down? At H&P, we encourage writing down personal and professional goals, and we also believe in setting goals for the organization. But we can’t stop after that first step!

Organizational goals set clear expectations of company priorities. We’re all familiar with the quote, “If everything is a priority, then nothing is a priority.” Without clear expectations, how can you hold one another accountable? Accountability and clear expectations are key to successful team results (see our Transforming Feedback and Accountability article Here).

Let’s follow the progression of H&P’s yearly Actively C.A.R.E. Goals to see why each of these steps are important.

Whether you’re on a rig, in a vehicle, or in an office, safety always comes first. The expectation is a culture focused on safety and environmental stewardship. Each year as we build out actionable goals for the year ahead, a team is dedicated to setting the goals, communicating the expectations, and holding teams accountable – with the intent of delivering quality, meaningful results.

Goals

At H&P, our Safety Leadership Team (SLT) is comprised of representatives across multiple departments and all business units. Their multidisciplinary perspective uniquely qualifies the group to have a direct influence on controlling and removing serious injury or fatality (SIF) exposures at H&P locations around the world.

By analyzing HSE data, reports, and feedback from field operations, the SLT uses this critical information to establish H&P’s Actively C.A.R.E. Goals for the upcoming year. Once the prioritized safety and environmental goals are set, cross-functional steering teams are formed and chaired by SLT members.

Expectations

Continuous collaboration ensures strategic and tactical alignment, and expectations across H&P while representing all stakeholders impacted by the development, implementation and sustainability of core HSE processes. Ensuring effective communication of the expectations is key. As goals are more frequently and intentionally cascaded across all levels of the company, from weekly tactical meetings to everyday conversations, it becomes an essential expectation to prioritize the goal.

Accountability

The SLT also monitors key safety metrics, removes organizational barriers to change and success, and monitors and supports the effectiveness of Actively C.A.R.E. Goals, particularly at the rig level. Their successful outcomes continue to cultivate and sustain a culture of safety that sets a high standard for reducing exposure. The progress achieved with each year informs future goals as continuous improvement is pursued across the company.

Results

Setting and achieving goals is not just a personal or individual endeavor; it’s a collective effort that resonates throughout an entire organization. At H&P, we understand the significance of this principle, as exemplified by our Safety Leadership Team’s commitment to Actively C.A.R.E. Goals. By prioritizing safety, establishing clear expectations, and fostering a culture of accountability, we’ve seen remarkable results in our quest for a safer and more environmentally responsible workplace.

As we move forward, let us all remember the transformative power of setting and pursuing our objectives. Whether on the rig, behind the wheel, or in the office, the journey to success begins with a well-defined destination. By embracing these principles, we can not only enhance safety and environmental stewardship but also achieve greater heights in every facet of our professional lives. Together, we can achieve success by setting goals and making our shared vision a reality.

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Abstract

The hydraulic effects on torque and drag modelling have been thoroughly studied in the past, yet their interpretation still causes a lot of misunderstandings and confusions. Historical models disregard the circulation effects and focus on the fluid mass by employing buoyancy forces based on Archimedes principle. On the other hand, the reference model including the fluid circulation effects, introduced by R. F. Mitchell in the 1990s, consists in computing the forces due to internal and external fluids along the drill-string. The first type of models called Archimedes method directly produces an effective tension, while the second one generally called pressure area method produces a true tension that must be further transformed to get the effective tension. These different forms of tensions add even more confusion.

By returning to the basic equations of the fluid effects on the drill string, an equivalency between Archimedes and pressure area models has been found for the case with no circulation. Furthermore, with the same principle, an Archimedes-like model is deduced for the case of fluid circulation, where the effects of fluid pressures, frictions, and flows could be more easily interpreted. These two hydraulic models, after implementation in a true stiff-string 3D model enable then to fairly compare the two approaches in terms of forces applied on the structure.

The comparison of this Archimedes formulation with pressure area model gave sensibly the same results for various scenarios, proving the equivalency of the two approaches even with the case of circulating fluid. In addition to the model-to-model comparisons, torque and drag results are compared to field experiments at different depths. Flow rate was varied while reciprocating the drill string up and down, and the hook load was recorded for each flow rate and each tripping direction. The model-todata comparisons showed a good agreement between the theoretical results and experimental data.

An advanced Archimedes method with all fluid circulation effect has been developed. By tackling the problem of circulating fluid in the drill string using two different approaches and proving their equivalency, a better understanding of the hydraulic effects can be achieved, which in terms can help settle the possible debates and confusions that might arise by drilling engineers.

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Third-Quarter Earnings Highlights

• The North America Solutions segment exited the third quarter of fiscal year 2022 with 175 active rigs
• Quarterly North America Solutions operating income increased $56 million sequentially, while direct margins increased $53 million to $168 million sequentially, as revenues increased by $77 million to $486 million and expenses increased by $24 million to $318 million
• A fiscal third quarter net income of $0.16 per diluted share was reported; including select items of $(0.11) per diluted share
• North America Solutions revenue per day increased approximately $1,950 per day or 8% to $26,500 per day on a sequential basis, while direct margins per day increased approximately $2,850 per day or 37% to $10,600 per day
• On May 31, 2022, the Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on September 1, 2022 to stockholders of record at the close of business on August 17, 2022

Earnings Call – Thursday, July 28th

A conference call will be held with John Lindsay, President and CEO; Mark Smith, Senior Vice President and CFO; and Dave Wilson, Vice President of Investor Relations, to discuss the third-quarter results.

When: 11 a.m. ET (10 a.m. CT), Thursday, July 28, 2022

Via Phone: Domestic: 877-830-2596 Access Code: Helmerich | International: 785-424-1881 Access Code: Helmerich

Via Internet: Webcast

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Paid on Performance

Our performance-based contracts align our success with yours. We tie H&P compensation to the outcomes that matter to you – fostering collaboration and delivering better wells.

Explore our performance contracts

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Helmerich & Payne, Inc. (NYSE: HP) reported net income of $55 million, or $0.54 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2024, compared to net income of $75 million, or $0.76 per diluted share, from operating revenues of $694 million for the quarter ended September 30, 2024. The net income per diluted share for the first quarter of fiscal 2025 and fourth quarter of fiscal year 2024 include net $(0.17) and $0.00 of after-tax gains and losses, respectively, comprised of select items⁽¹⁾.

Net cash provided by operating activities was $158 million for the first quarter of fiscal year 2025 compared to net cash provided by operating activities of $169 million for the fourth quarter of fiscal year 2024.

Quarter Highlights

• H&P reported fiscal first quarter Adjusted EBITDA⁽²⁾ of $199 million
• The North America Solutions (“NAS”) segment exited the first quarter of fiscal year 2025 with 148 active rigs and recognized revenue per day of $38,600/day with associated direct margins⁽³⁾ per day of $19,400 day during the quarter
• Quarterly NAS operating income decreased $4 million to $152 million, from the fourth fiscal quarter of 2024; while direct margins⁽³⁾ decreased by $9 million to $266 million as revenues decreased by $20 million to $598 million and expenses decreased by $11 million to $333 million
• Completed the exportation of eight super-spec FlexRigs into our Saudi Arabia operations
• On December 11, 2024, the Board of Directors of H&P declared a quarterly cash dividend of $0.25 per share, payable on February 28, 2025 to stockholders of record at the close of business on February 14, 2025

On January 16th, H&P completed the acquisition of KCA Deutag, which establishes H&P as a global leader in onshore drilling and positions H&P for value-creation opportunities in the years ahead. Key highlights of the acquisition include:

• An increase in our contracted rig count in key Middle Eastern markets from 11 to 65, with significant sources of cash flows in Saudi Arabia, Oman, Kuwait, and Bahrain
• Substantial growth in our offshore business, with exposure now to stable markets in the North Sea, U.S. Gulf of Mexico, the Caspian Sea, and offshore Canada
• Growth in key customer relationships, with legacy KCA Deutag activity already generating incremental new commercial interest for H&P’s leading technology solution offerings
• The addition of approximately $5.5⁽⁴⁾ billion in backlog with high-quality, investment-grade customers
• Maintenance of H&P’s own strong, investment-grade credit profile, with additional cash flow diversification to provide stability across a variety of market environments
• Enhances geographic footprint, with the Company levered to the most resilient basins in the world

Commentary

President and CEO John Lindsay commented, “During the first fiscal quarter of 2025, the Company executed at a high level on multiple fronts. Our NAS segment maintained its industry-leading position with a financial performance and a stable rig count reflecting the value proposition we are providing to customers. In our International Solutions segment, we completed the exportation of eight rigs into Saudi Arabia during the quarter, three of which have spud. We are looking forward to more of those rigs commencing operations in the coming months.

“Crude oil prices and industry rig counts were relatively steady during the quarter, but market sentiment remained cautious in the face of a multitude of economic and geopolitical uncertainties that have materialized over the past several quarters. Contractual churn in our NAS rig count continues to characterize the market, yet we have been successful in managing that volatility by consistently delivering drilling performance and efficiencies for our customers. Looking through the remainder of the second fiscal quarter we expect our NAS rig count to remain relatively flat and exit the quarter in a range of 146-152 active rigs.

“Results in our International Solutions and Offshore Solutions segments were in line with recent quarter norms but are poised to increase significantly in the second fiscal quarter. In addition to the direct margin contributions from KCA Deutag’s core Middle East operations, the eight rigs recently delivered into Saudi Arabia are also expected to be a factor in improving this segment’s overall direct margins and collectively position the Company as a leading land driller in the region. In terms of magnitude, KCA Deutag’s core Middle East assets drive H&P’s rig count in the Middle East from 11 rigs contracted as of December 31, 2024, to approximately 65 rigs contracted at the end of March 31, 2025. In South America, tendering activity has increased and we see the potential to add 1-3 rigs later in calendar 2025. Regarding the Offshore Solutions segment, the addition of approximately 30 management contracts from the KCA Deutag acquisition will meaningfully increase this segment’s contribution to the overall Company as well.”

Senior Vice President and CFO Kevin Vann also commented, “As John mentioned, we are excited about the recent completion of the KCA Deutag acquisition as it substantially accelerates our international growth, and we are looking forward to the benefits of being a larger and more diversified company. We expect operations in our North America Solutions segment to continue generating significant levels of cash flow. We believe that cash generation combined with a lower capex outlook for fiscal 2025 for H&P’s legacy operations relative to fiscal 2024 and the inclusion of KCA Deutag’s cash flow from operations, will create free cash flow that we intend to use to service our near-term debt reduction goals as well as continue to provide a competitive dividend to our shareholders.”

John Lindsay concluded, “Over the past several months H&P and KCA Deutag employees have been working on integration planning, and now with the acquisition complete that integration is underway. I have been impressed by the hard work of our employees while maintaining our focus on safety. We realize that it may take several months to fully harmonize the new organization, but we believe the leadership and plans are in place to achieve that end. During this time of internal integration, our external focus will remain on our customers. We will continue to have a customer-centric approach, putting safety and value creation at the forefront of our operations.”

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Permian Operator Compares Experienced Human Directional Drillers and Automation Technology – and the Variables Held Constant

Challenge

Hunt Oil was drilling several wells in the Permian Basin with identical bit andmotor profiles and a lateral length between 10,300 and 10,700 feet, all within a 3-mile radius. Inconsistencies in toolface orientation and precision were causing long slide times and they were not reaching the maximum footage in their target geological zone. With so many variables for a driller to constantly consider and then react to in real-time – it was clear that technology was needed to empower the driller to be able to work more efficiently and without so much manual effort.

Solution

H&P recommended an integrated autonomous solution that would help make economic-driven decisions to reduce drilling time, reduce slide percentage, and deliver a smoother more accurate wellbore.

With H&P’s Bit Guidance System, the operator would be able to employ advanced computer algorithms to make steering decisions automatically, with more consistency, speed, and reliability than human directional drillers alone. This technology helps to remove variability around the directional driller’s decision making, reducing the chance for significant variations in performance. The intelligence from the Bit Guidance System is then automatically executed by AutoSlide® technology, an automated digital control module designed to continuously compensate for formation variability and for the effects of reactive torque.

Outcome

The operator compared the performance outcomes from wells drilled with the slide control module to similar wells drilled without it and found that on average, the wells with H&P technology realized a 14% decrease in the time it took to drill the lateral section – which equates to 16.4 hours per well. The primary reason for the reduction in drilling time was due to a reduction in the sliding percentage in the later section, an outcome created from more precise toolface control. With sliding rates of penetration (ROP) much lower than rotating ROPs, reductions in slide percentage not only led to a less tortuous well, but also directly lowered cost by reducing drilling time.

It is important to note that the only change in this well as compared to the control wells was adding AutoSlide technology.

Outcomes Achieved: Increased Reservoir Contact and Reduced Time to Target
· Lateral drill time decreased on average 16.4 hrs./well
· Slide footage was reduced on average 100 ft./well
· Slide time decreased 11.6 hrs./well
· Slide percentage by time decreased from 29% to 22.4%
· Slide percentage by footage decreased from 8.8% to 8.0%
· Toolface quality increased from 87.64% to 90.63%

By using advanced, integrated H&P technology, the operator realized a higher quality wellbore executed in a more efficient manner. Higher toolface precision reduced slide time and slide footage, ultimately producing a smoother wellbore than what can be done manually. Together, Hunt Oil and H&P realized increased reservoir contact and reduced time to target.

_{^{Past performance is not a guarantee of future results. Any statements regarding past performance are not guarantees of future performance and actual results may differ materially. © 10/2021 HPCS014}}

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TULSA, Okla.–(BUSINESS WIRE)– Helmerich & Payne, Inc. (NYSE: HP) reported net income of $85 million, or $0.84 per diluted share, from operating revenues of $688 million for the quarter ended March 31, 2024, compared to net income of $95 million, or $0.94 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2023. The net income per diluted share for the second and first quarters of fiscal year 2024 include net $0.00 and net $(0.03) of after-tax gains and losses, respectively, comprised of select items⁽¹⁾. For the second quarter of fiscal year 2024, select items were comprised of:

• $0.03 of after-tax gains related to the non-cash fair market value adjustments to our equity investments.
• $(0.03) of after-tax losses related to research and development expenses associated with an asset acquisition.

Net cash provided by operating activities was $144 million for the second quarter of fiscal year 2024 compared to net cash provided by operating activities of $175 million for the first quarter of fiscal year 2024.

President and CEO John Lindsay commented, “Fiscal second-quarter results are reflective of the Company’s continual focus on commercial economics through value delivery in our North America Solutions segment. The direct margins we have been generating in what has been, and continues to be, a somewhat choppy North America Solutions market are a testament to the value creation we provide for our customers. From our perspective, there has been a pronounced and necessary shift in the industry’s historical behavior, that is moving its fiscal foundation toward a more sustainable and investable future. Along those lines, we are extremely pleased with the announcement we made during the quarter regarding expanding our presence in the Middle East, with the finalization of the contractual terms with Saudi Aramco for a seven-rig tender award.

“In the U.S. market, contractual churn is still prevalent and pushed our rig count just below the projected exit rate late in the quarter. This churn has been a product of the volatility created by a weaker natural gas market, some recent E&P consolidations, and a variety of other factors. Some of this natural gas volatility is reminiscent of this time last year; however, we believe the impact on our overall activity will be less this year going forward. That said, we do expect the underlying factors causing the churn in the market currently to persist resulting in what we expect to be a fairly stable outlook for our rig count through the third fiscal quarter. Furthermore, we expect stability and resiliency in our direct margins on a per-day basis as well. We will remain focused on direct margins and believe the consistent and reliable drilling outcomes we provide to customers are what ultimately drive our market share.

“Regarding the International Solutions segment, our first rig awarded by Saudi Aramco last August is expected to arrive and commence operations later this summer. For the more recent seven-rig tender award, preparations are ongoing from both a rig and operational perspective with expectations that a majority of these rigs will arrive in Saudi Arabia during the fourth calendar quarter of 2024, and commence operations shortly thereafter. During these preparations, we will continue to spend our 2024 budgeted capex towards this project and incur start-up operational expenses, which may disproportionately impact near-term international segment margins. We are looking forward to working with Saudi Aramco and believe we are at the beginning of a longer-term presence in the region. The Company’s other international operations in South America and Australia are expected to remain relatively stable over the next quarter, as well as our Offshore Gulf of Mexico operations.”

Senior Vice President and CFO Mark Smith also commented, “Returning cash to shareholders remains a capital allocation priority as the Company provided roughly $46 million in shareholder returns under its fiscal 2024 supplemental shareholder return plan during the quarter. There was approximately $4 million worth of shares repurchased during the quarter and $42 million paid to shareholders in the form of base and supplemental dividends, representing over a 4% yield. That said, we are cognizant that the current higher interest rate environment may be masking some of the longer-term attractiveness of our dividend yield and flexibility embedded in our supplemental shareholder return plan.

“Currently, we expect our rig count in the third fiscal quarter to average in the high-140 range, which is lower compared to the 155 rig average realized during the second fiscal quarter. To reiterate, this lower activity is a result of contractual churn and a weaker natural gas environment and as such has not deterred the Company’s approach to pricing or the use of performance contracts to better recognize the total value H&P provides to our customers. We believe our commitment to preserving contract economics is reflected in our direct margin guidance for the upcoming quarter.”

John Lindsay concluded, “Working closely with our customers and collaborating through the use of performance contracts is really driving improved and more reliable outcomes. Our people, FlexRigs, and technology solutions are key components of this success and will continue to be drivers of that success in the future.”

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Abstract

The Piceance Basin, located in Western Colorado, is a 6,000-square-mile basin consisting of vertically stacked sand-shale sequences. Gas-in-place estimates exceed 200 trillion cubic feet. The operator started developing its acreage in 1982 with 160-acre bottom-hole spacing. Over time, dictated by reservoir performance and enabled by drilling and completion technology, such as PDC bits and directional drilling, field development migrated to 10-acre bottom-hole spacing with surface locations consisting of three to four wells per pad. Historically, pricing pressures dictated the use of conventional mechanical drilling rigs. In recent years, as product prices increased and as well inventory in easily accessible areas became drilled up, the need to drill many wells from a single remote surface location became apparent. These purpose-built rigs facilitate this, plus bring multiple performance improvements, environmental benefits, and well cost reduction to the asset. This paper will be presented by E.S. Kolstad at the 2007 SPE/IADC Drilling Conference held in Amsterdam, The Netherlands, 20–22 February 2007.

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H&P, Inc. (NYSE: HP) reported net income of $95 million, or $0.94 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2023, compared to net income of $78 million, or $0.77 per diluted share, from operating revenues of $660 million for the quarter ended September 30, 2023. The net income per diluted share for the first quarter of fiscal 2024 and fourth quarter of fiscal 2023 include $(0.03) and $0.08 of after-tax losses and gains, respectively, comprised of select items⁽²⁾. For the first quarter of fiscal year 2024, select items were comprised of:

• $(0.03) of after-tax losses related to the non-cash fair market value adjustments to our equity investments

Net cash provided by operating activities was $175 million for the first quarter of fiscal year 2024 compared to net cash provided by operating activities of $215 million for the fourth quarter of fiscal year 2023.

President and CEO John Lindsay commented, “The Company performed well both operationally and financially during the first fiscal quarter of 2024 despite the persistent volatility in crude oil and natural gas prices. During the quarter, the Company’s stock price continued to trade as it has historically, with a strong correlation to crude oil prices and industry rig count. Decoupling from these traditional macro measures will require proving our ability to maintain returns above our cost of capital through the cycles, and I believe our fiscal first quarter results are another step in that direction.

“Expectations for modest incremental rig adds during the quarter were further tempered to some extent by the ongoing churn we are experiencing in the market and, as a result, we exited the December quarter at 151 active rigs, towards the lower end of our guidance range. We expect this churn to continue in the March quarter as E&P budgets are being reset in a relatively weaker commodity price environment, particularly on the natural gas side. From a North America Solutions margin perspective, the Company delivered direct margins that were higher on a sequential basis, indicating that our direct margins, like our rig count, may have experienced a trough during our fourth fiscal quarter of 2023. Looking out, we project our North America Solutions direct margins to remain relatively flat to up slightly during the March quarter.

“In our International Solutions segment, we are very excited regarding recent developments that are tangible proof of the execution of our international expansion strategy. The Company recently received preliminary notification, subject to finalization of contractual agreements, that it has been awarded seven super-spec FlexRigs for work in a drilling campaign in the Middle East. These rigs are expected to commence operations shortly after delivery, which is currently scheduled for the first half of fiscal 2025. Additionally, these rigs will be sourced from our idle super-spec rigs in the U.S., converted to walking configurations, and further equipped to suit contractual specifications. Furthermore, in the Middle East, we have been successful in contracting an additional rig in Bahrain. The super-spec rig to be utilized for this work is already located in the region as part of our Middle East hub and it is expected to commence operations during the summer of 2024. These are positive outcomes in our Middle East expansion strategy, and we look forward to further growth in the future.”

Senior Vice President and CFO Mark Smith also commented, “During the quarter, we executed on our fiscal 2024 supplemental shareholder return plan, returning approximately $42 million to shareholders in the form of base and supplemental dividends. Additionally, we exhausted our calendar 2023 share repurchase authorization of 7 million shares by repurchasing roughly 1.3 million shares for approximately $47 million. At the start of the new calendar year, our share repurchase authorization was reset to 4 million shares. These actions demonstrate our prioritization of returning cash to shareholders and highlight our shareholder capital allocation strategy.

“Given the outlook for a lower level of crude oil production growth in the U.S. in 2024, combined with the recent volatility in commodity prices, we expect our rig count will only grow modestly in fiscal 2024. That is something we had already contemplated as part of our fiscal 2024 capex budget, so we do not currently believe we need to modify our capex plans. We believe current conditions highlight the continued need to remain focused on our NAS margins and reinforce support for the international expansion strategy we are undertaking. Along those lines, the planned capex for the recent seven-rig award was included in our fiscal 2024 capex budget that we announced last October. Furthermore, this award supports our goals of not only expanding internationally, but also reducing the available supply of our idle super-spec rigs in the U.S. market.”

John Lindsay concluded, “Every year in this industry new challenges arise, many resulting from supply and demand dynamics that ultimately result in crude oil and natural gas price volatility. As difficult as it is to manage in these times, we also see these headwinds as opportunities to showcase the exceptional capabilities of our fleet and to demonstrate the value our technology, processes and people bring to providing drilling solutions for our customers. For our part, we will remain focused on our goals and execute toward their achievement in the long term. Our recent successes on the international front are evidence of this with our announcement of securing work for eight rigs in the Middle East, subject to finalization of contractual agreements. Including the one rig contracted in August 2023, we now have plans to put nine additional rigs to work in the Middle East, which when they begin operations will nearly double our existing international active rig count.”

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Helmerich & Payne, Inc. (NYSE: HP) reported net income of $75 million, or $0.76 per diluted share, from operating revenues of $694 million for the quarter ended September 30, 2024, compared to net income of $89 million, or $0.88 per diluted share, from operating revenues of $698 million for the quarter ended June 30, 2024. The net income per diluted share for the fourth and third quarters of fiscal year 2024 include $0.00 and net $(0.04) of after-tax gains and losses, respectively, comprised of select items². For the fourth quarter of fiscal year 2024, select items² were comprised of:

• $0.10 of after-tax gains related to the non-cash fair market value adjustments to our equity investments
• $(0.10) of after-tax losses related to acquisition transaction and integration costs and fees associated with acquisition financing

Net cash provided by operating activities was $169 million for the fourth quarter of fiscal year 2024 compared to $197 million for the third quarter of fiscal year 2024.

For fiscal year 2024, the Company reported net income of $344 million, or $3.43 per diluted share, from operating revenues of $2.8 billion. The net income per diluted share includes $(0.07) of after-tax losses comprised of select items(2). Net cash provided by operating activities was $685 million in fiscal year 2024 compared to $834 million in fiscal year 2023.

President and CEO John Lindsay commented, “The Company delivered on another strong year in fiscal 2024. Our North America Solutions segment was able to maintain its rig count within a relatively narrow-band, accrete market share, and achieve another year of solid economic performance, all despite a roughly 5% decline in the overall U.S. rig count. These results continue to exemplify our relentless focus on creating value for our customers. In our International Solutions segment, fiscal 2024 was historic for a couple of reasons. First, after years of effort and preparation, we won a sizeable tender award with Saudi Aramco and delivered our first rig to Saudi Arabia. Second, we announced our intentions to acquire KCA Deutag, which we believe firmly positions H&P as a global leader in onshore drilling.”

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Operating and Financial Highlights for the Quarter Ended June 30^th, 2025

• H&P realized a consolidated net loss of $(163) million, or $(1.64) per share, which includes the impact of a non-cash goodwill impairment charge of $173 million. Adjusted for this and other non-recurring one-time items, earnings were $22 million, or $0.22 per share.
• North America Solutions (NAS) segment reported operating income of $158 million during the quarter compared to $152 million during the prior quarter. NAS maintained industry-leading direct margins⁽¹⁾ of $266 million during the quarter, yielding an associated margin⁽¹⁾ per day of $19,860.
• International Solutions segment realized an operating loss of $(167) million during the quarter, the first to include the full impact of our acquisition of KCA Deutag (KCAD), compared to an operating loss of $(35) million in the prior quarter. These results include a one-time goodwill impairment of $(128) million. However, International Solutions exceeded fiscal second quarter guidance midpoint expectations with direct margins⁽¹⁾ of approximately $34 million.
• H&P realized consolidated adjusted EBITDA of $268 million.
• All eight unconventional FlexRigs in Saudi Arabia have now commenced operations with margins improving as we quickly integrate operations with KCAD.
• Significant progress was made toward our goal of capturing synergies from the KCAD transaction and reducing the combined company cost structure by $50-$75 million, with approximately $50 million identified to date, and additional progress expected.
• As of the end of July, the Company has repaid $120 million on its existing $400 million term loan and now expects to repay a total of $200 million by the end of calendar year 2025, up from the prior expectation of $175 million.
• Approximately $25 million returned to shareholders as part of the Company’s ongoing dividend program.

Management Commentary

“I am pleased with our fiscal third quarter operating results despite a challenging macro environment. Total direct margin⁽¹⁾ across our three operating segments was at the high end of our guidance ranges, reflecting the hard work from our operations and sales teams to deliver collaborative solutions with customers,” commented President and CEO John Lindsay.

“In NAS, our market share and financial performance remain the highest among our drilling peers, underscoring H&P’s strong customer partnerships and focus on sustainable economic returns. Our resilient direct margins reflect the incorporation of our operational and technical performance with a dynamic, customer-centric commercial model and the continued use of mutually beneficial solutions such as our innovative performance contracts. While we expect a slight reduction in activity during our fiscal fourth quarter, we’re confident our NAS segment will continue to deliver market-leading results and solutions for our customers.

“Internationally, our expanded geographic footprint positions us as the premier land drilling company across the globe. We operate in the most prolific oil and gas producing regions in the world. In Saudi Arabia, our FlexRig unconventional startup has gained momentum, and we’re enthusiastic about showcasing our combined capabilities throughout our global operations. Meanwhile, our Offshore Solutions segment continues to generate steady cash flows, reflecting H&P’s position as the leading global offshore operation and platform maintenance provider in the world.”

Senior Vice President and CFO Kevin Vann also commented, “I am pleased with the progress being made to reduce our cost structure by $50-$75 million going forward. To date, we have identified approximately $50 million and additional progress is expected.

“As reflected in our quarterly results, we recorded an impairment to the goodwill recognized at the close of the KCAD acquisition. Although required by accounting guidelines, the impairment does not represent how we feel about the value we expect to capture with the KCAD assets over the long haul.

“We have now repaid $120 million on the $400 million two-year term loan and expect to repay a total of approximately $200 million by end of calendar 2025, up from prior expectations of $175 million. H&P maintains an investment-grade credit rating, ended the quarter with $187 million of cash and short-term investments, and has an undrawn $950 million credit facility. This strong financial foundation supports our growing operations, funds our dividend, and enables continued deleveraging.”

John Lindsay concluded, “Oil and natural gas will remain central to the global energy landscape, and we are optimistic about the sector’s long-term prospects. Economic growth will demand more drilling, and H&P’s global scale, innovative commercial models, and advanced technology will continue to differentiate the Company moving forward. We’re confident our employees, safety-focused culture, mix of conventional and unconventional assets, and digital solutions will continue to deliver consistent results for years to come.”

Operating Segment Results for the Third Quarter of Fiscal Year 2025

North America Solutions: Realized operating income of $158 million, compared to $152 million during the previous quarter, representing an increase of $6 million. Direct margin⁽¹⁾ exceeded the guidance range, totaling approximately $266 million, which was approximately flat with the previous quarter despite slightly lower average rig activity. On a per day basis, direct margin was approximately $19,860 with an average of 147 rigs running. Approximately 50% of the NAS active rigs utilized performance contracts during the quarter, and the performance model remains an integral and differentiating component of H&P’s overall strategy.

International Solutions: This segment had operating loss of $(167) million, compared to a loss of approximately $(35) million during the previous quarter. Not including the impairment of $(128) million, the segment’s operating loss was $(38) million. This was the first quarter with the full impact of operations from our acquisition of KCA Deutag. Without the non-cash impairment of goodwill, direct margin⁽¹⁾ totaled approximately $34 million compared to approximately $27 million during the previous quarter. Importantly, during the third fiscal quarter, the last of eight exported FlexRigs commenced operations in Saudi Arabia, marking an important step in establishing our unconventional drilling presence within the region.

Offshore Solutions: Contributed operating income of approximately $9 million, compared to approximately $17 million during the previous quarter, representing a decrease of $8 million. Direct margin⁽¹⁾ totaled approximately $23 million compared to approximately $26 million in the previous quarter. The inclusion of the legacy KCAD offshore business has added scale and geographic expansion to our offshore segment. We now have the benefit of a larger, blue-chip customer base, low capital intensity, and steady cash flow from our offshore operations.

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