In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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The acquisition of KCAD has positioned Helmerich & Payne Inc (NYSE:HP) as a global leader with the largest active rig count in the industry.
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The integration of KCAD is progressing well, with significant value being delivered to customers.
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Helmerich & Payne Inc (NYSE:HP) remains the most efficient driller in the US and aims to replicate this success in international markets.
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The company's offshore solutions segment continues to produce strong and steady cash flows, with significant scale and geographic expansion.
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Helmerich & Payne Inc (NYSE:HP) is focused on providing customer-centric solutions, with over 50% of customers preferring performance-based contracts and technology solutions.
Negative Points
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There are headwinds in the industry due to OPEC plus production increases and US tariff initiatives, creating global economic uncertainty.
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Softer oil prices are expected to lower the industry rig count, impacting potential incremental demand.
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Challenges were faced in Saudi operations with startup delays and rig suspensions, impacting quarterly results.
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The international solutions segment's direct margins are expected to fall short in the third fiscal quarter.
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There is uncertainty regarding the duration and impact of rig suspensions in Saudi Arabia, affecting future operations.
Q & A Highlights
Q: What is your sense of the Saudi market today, and do you think the suspension cycle is complete? A: John Lindsay, President and CEO: We don't have direct insight into whether the suspensions are complete. Historically, there have been rig suspensions followed by rigs going back to work, but we can't guarantee when or if that will happen again. Conversations with Aramco suggest that rigs may return to work over time, but there's no clear timeline.
Q: Can you provide more color on how the international segment should play out for fiscal Q4, considering the recent suspensions and legacy HP rigs starting up? A: Kevin Van, Senior Vice President and CFO: The full operational impact of the 8 rigs in Saudi will be seen in Q4, leading to a positive inflection in margins. Rig suspensions will affect Q3, but assuming no more suspensions, we expect stabilization and improved cost management by Q4.
Q: What is the ultimate contribution expected from the 8 rigs in Saudi once startup costs are behind? A: Kevin Van, Senior Vice President and CFO: Historically, we've estimated around $25 million annually for those 8 rigs. This number could increase due to operational synergies from the KCAD team, which may help reduce overhead costs.