Helmerich & Payne Inc (HP) Q3 2025 Earnings Call Highlights: Strong Performance Amid Market ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Helmerich & Payne Inc (NYSE:HP) reported strong operating performance with industry-leading North American solutions results.
The company achieved a significant milestone with daily margins of $19,860 per day in its North American solutions segment.
HP is making substantial progress on debt and cost reduction goals, with $50 million in cost savings identified so far.
The integration of the KCAD acquisition is progressing well, unlocking meaningful cost synergies across corporate functions.
HP's international and offshore solutions segments are expanding, with growth opportunities in South America and other key markets.
Negative Points
Volatile oil and natural gas prices, driven by tariffs and geopolitical factors, present ongoing challenges to HP's strategic initiatives.
The company recorded an impairment of goodwill due to a drop in equity price, reflecting market sentiment around the energy sector.
HP is still absorbing the impact of rig suspensions in Saudi Arabia, affecting international operations.
The fiscal Q4 guidance for North American Solutions indicates a potential decline in contracted rigs, reflecting broader market conditions.
HP faces industry-wide pricing pressures, impacting rig rates and requiring competitive pricing strategies.
Q & A Highlights
Warning! GuruFocus has detected 3 Warning Sign with HP.
Q: John, you mentioned you're committed to further growth in Saudi Arabia and the Middle East more broadly. Can you provide more color on how H&P might start to grow the international business from the fiscal 4th quarter level? A: John Lindsay, President and CEO: There are opportunities in Saudi Arabia, including a tender that may be out now. We expect growth opportunities in 2026. Our value proposition is attractive to NOCs and IOCs globally, and we are well-positioned with the right people and assets in the region.
Q: Are there any ongoing conversations about when the suspended rigs might go back to work? A: John Lindsay, President and CEO: We hear that the worst is behind us, but the timing is uncertain, likely due to budgeting issues. We anticipate a 2026 timeframe for these rigs to return to work.
Q: Could you highlight what types of customers have been the primary adopters of performance contracts and where the next leg of adoption might be? A: Mike Lennox, SVP, Americas: Performance contracts are adopted by all types of customers, including small privates, mids, and large majors. We align with their desired outcomes, and this tool will continue to be used. Trey Adams, SVP, Global Commercial Sales and Marketing: Our performance contract percentage has been around 50% for about eight quarters, but this doesn't fully encompass the value we're providing across customer conversations.
Q: Are there any pockets internationally where you're having conversations about performance-based contracting models? A: Trey Adams, SVP, Global Commercial Sales and Marketing: Yes, we are having these conversations internationally, including early-stage agreements in the Middle East. There's interest from IOCs and NOCs globally in translating U.S. shale success abroad.
Q: Your rig count in the lower 48 is relatively stable compared to industry-wide declines. What factors contribute to this resilience? A: Mike Lennox, SVP, Americas: Our resilience is due to a great customer mix and alignment with their outcomes. We've invested in drilling more complex, longer lateral wells, positioning us well in the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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