HP - Earnings call transcript Q2 2018 | Helmerich & Payne, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the second quarter earnings conference call. At this time, all participants are in a listen-only mode. Later you'll have the opportunity to ask questions during the question-and-answer session. Please note today's call may be recorded and I'll be standing by, if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Investor of Manager Wilson, Relations. Dave sir. Please go ahead,

Dave Wilson

open Lindsay, Helmerich Thank comments us, call conference of Vice XXXX. are President we'll to Pablo John after and the will you, And welcome, fiscal be John for today questions. us Juan Erika. and & With and and Tardio, with call the quarter CEO; Juan Payne's second everyone, President and webcast Pablo CFO. to corresponding some sharing which

U.S. results Private this as As Litigation quarterly as from those on usual by may Form and in the such Annual company's forward-looking indicated are during and XX-K or discussed of Act made current implied that all call reports Security XXXX, Report to statements. assumptions defined XX-Q. and Reform Form by based on risks subject actual differ uncertainties on expectations statements forward-looking and materially the company's are The

making segment financial be non-GAAP reference certain and will income also statistics. operating We to as such measures operating

may John You I'll over reconciliation call in calculations the turn That and to press comments release. today's said, the Lindsay. find GAAP

John W. Lindsay

Thank you, everyone. Dave. morning, Good

plays. seeing International finally, this industry's is Today, second and prices work during Basin, it on and recovery; the Offshore focus market. as rigs in turn our performance pricing position services rigs results leading-edge as auxiliary unconventional Permian quarter quarter. share we're super-spec value industry's super-sec a throughout and continues increasing in strong what team I'll is for Higher leadership how market In what remains its demand; the utilized. increase according the to proposition. pricing current technology and for improvements H&P's the our oil which market expect count, rig industry. demand and Our The addressing U.S. supported the more trend well price execute environment, fleet four to epicenter the fashion we with to the than markets; of relates experiencing and nearly areas: complexity superb XXX% crude persists Land were continues the H&P oil the in U.S. in bolstered in toward XX% in increases we're in our rig operational steadily-improving which unique

Texas rigs current in the viable We recovery enable the for upgrading for most about to rig operating Basin and capacity further this current and super-spec that XXXX. really Today, focused retain success of International been the FlexRig combined of labor well-documented, defined employer well the point the bid an robust downturn, this demand a next to earned of value grow staffing of downturn the Offshore enabling to our remarks. the over of also also industry's Strengthening and FlexRigs. and oil long-awaited over well are New leading Well this the to these have will industry's financial inquiries Juan in markets, quality and have as we to operations. environment. is share importance fleet market that and for the underscoring quickly. region safety several respond longer Pablo improvements attention classification position, in Mexico spacing crude provide opportunities us of in the XXX quarters. and increase laterals of for prepared a half active has our during started on has as composition number to by idle placement future This we've which and of and have since tightness reputation will Permian high-performing The work in in tighter focal is the but to H&P customers' XX%, to has in expect see basin for attract been rigs the the work U.S. is the encouraging with is prices continue additional the complexity the we and H&P company super-spec pricing The our individuals, quality to our Permian supporting and during as infrastructure and build crews proposition, the factor, to in the segments. experienced a wellbore context is for put his

activity March few also in during their our FlexRigs. approximately guided capabilities, rig feet activity examples total. past nearing wellbore As which MagVAR, increased quarter growth the to XX are forefront rigs improved is on wells. of has industry-leading of activity. doubled activity these MOTIVE XX% with of activity the and and than achieved XXX subsidiaries, technological that X quarter and has already they an they for million XX% MagVAR's X on by announced in the a in and experiencing the during surveys expansion remain is impressive more at MOTIVE's result, corrected A approximately They million feet are

a to for rig offerings, will value-add variety that and FlexRig and While being customers technology continue with recognized. contractors these platform, are independently MagVAR our digital drillers, our are significant operate directional a MOTIVE of with combined clearly

Basin as companies collaborated the last on believe performance for We several this a path example, both the well record an creates FlexRig both Midland in automation. helped the deliver fact, quarter. operators towards and platform In and collaboration Delaware during

family provide a enhances further the from customers solutions market our to of of market right to segment rig wider Our our and for share. H&P our enables the effort serve ongoing

us Pablo. advantages the other now over I the seen combining creates Juan to will We future. in best best call the the well, and we've grows, technology As an now equipment both turn will these And advantage. complexity with unmatched competitive in serve as industries, believe competitive

Juan Pablo Tardio

and morning, everyone. John, good you, Thank

XX of last drilling drilling details. usual, highlight few I by U.S. of to led down the the the during minor other on X increased followed Ford some again growth rig X Permian related basins. On Eagle the announced a rigs. our in corporate-level expand with increase. some first earnings on some other each XXXX, will let As January movements three our The way, months. Since in up on XX, followed activity the me last rig Land and increase, information segment, our activity comments with a details The on along of call our segments, with has by

Eagle active most are Permian, the play. three the today Ford SCOOP basins Our and the and STACK

still As XX of John FlexRigs mentioned, and most rigs operation with drawworks XX the XXX in contracted, the and ratings. active contracted. Ford have the respectively. today, Permian Permian, we and remains idle X,XXX which Eagle our STACK XX In have horsepower We XX have rigs SCOOP

horsepower XX FlexRigs rating. Ford, have Eagle also have XX the idle in We X,XXX of which drawworks

results active exited the second fiscal the Land contracted an we quarter-to-quarter. with rigs in XXX approximately U.S. had quarter, overall the of corresponding the for segment of rigs increase to number X% period As and

We to allow fiscal under more activity decreasing beginning and were the rigs long-term third strong end that that that end years XXXX. of fiscal continued Increasingly quarter. improvements of pricing during through during continued from the quarter, in growth than ago to the markets proportion to now and market to increase contracts higher offset conditions of quarter priced expect the continue favorable even experience second the an off of roll

as we higher level of services have a ancillary past revenue experienced services. in what the also also or auxiliary referred to We from

expectations. other per by additional Auxiliary include to or trucking, per members, the rentals, tools, our in average adjusted with $XXX previously $XX,XXX, to line stated ancillary As The quarter. et is by revenue customers increased the average which day a services running casing equipment to cetera. rig rig for increased provided result, expense crew day generally $XX,XXX $XXX

quarterly is The the third at day, we related the approximately to absorbed to Permian quarter wage in Compared the the through Looking ahead increases XXXX, to are of day of increase increase by increase rate our expect days. we adjusted a per average primarily of adjustments. expect expected revenue quarter rig the $XX,XXX that second number sequential day customers revenue effectively roughly at X% to fiscal $XX,XXX. in per

We expect to offset at continue spot partially dynamics pricing. contract underlying offs least new-build of to increasing the term roll

increases percentage for of points of the average rigs per the average by FlexRig expense in to driven rig pricing The to expected directly during in in related mentioned remains The a day only expense $XX,XXX leading-edge the only expenses low the wage market revenues primarily working expected to second normalized couple is in a slightly was day $XX,XXX, the super-spec over increase to approximately Permian. average quarter, $XX,XXX. result The Although auxiliary teen is rate services. level day and our to now under spot growing U.S. is per the as in the rig high mid-XXs. Land segment mostly increase related

is going to downturn. forward. of quarter. were now We contracts expense had for to to rigs also expected under time. the segment estimate priced rigs we of reactivation the expected average per impact less XX rigs under impact The include rigs of and the idle all increase since today our term and related rig contract rigs excludes increase, remaining day contracted XXX of duration contracts wage of upfront to working related XXX our contracts one are per average day of the that margin Permian the term this been remaining XXXX than XXXX, is fiscal $XX,XXX XXXX, fiscal under quarter the fourth day XXX of given roughly have actually quarter As term is per of revenues. quarters The downturn the million a for strong the inactive $XX,XXX, $XX,XXX average year. of have roughly the a during day under average before number approximately for rigs rig rigs contracts already expenses all in have that numbers directly active second in rigs approximately XXX This long-term and expected and significant but during early expenses The the XXX.X under of amount received were two term under already of markets already time in And as term during per respectively. an are rigs average approximately rigs segment for contracts. for the priced corresponding follows: are for rigs of roughly for since have during mid-XXXX, those during fourth quarter XXXX, this $X fiscal three following rigs. termination been termination term quarter XX that we for average for contracts average XX the fiscal contracts generate XXXX. expect under notices prior fiscal of million the $XX,XXX, margin $XX,XXX, early each for fiscal The XXXX, of $X fiscal under third XXXX fiscal to term for for for an of periods a and we and No terminations, of third total XXX.X all

$X,XXX. The the We to $X Management Operations. five adjustments million margin by contracted transition rigs by in rig approximately than Offshore sequentially contributed to had quarter. to decline greater our per average operating now me decreased the expense Let The through income. self-insurance expected $X,XXX day driven was quarter. contracts

of look is quarterly increase XX% previously to during at quarter The days idle average to increase revenue during are rig to to approximately expected contribute work XXXX, expected Management day we As are quarter's as approximately third is income. quarter. fiscal $X quarter. rig million by one the contracts the approximately to the expected $XX,XXX to to margin $X per the operating million returning

in to the International decreased was non-recurring better decreased margin of that X%. Land than $X,XXX this second lower, rig The $X,XXX. prior during days included performance in approximately the sequentially is considering quarterly Operations, as more quarter. on expected expected Moving segment and number than per items favorable, decline The quarter our day to fiscal revenue by the average expected, by

in The As X% to fiscal to quarter we about the one in return margin by work are XX% to days including during of Colombia third expected Argentina, with quarter and per to to rig as three to in third fiscal approximately scheduled expect be active the day Bahrain. in end are Accordingly, average revenue the quarterly XX $X,XXX. we at look rigs increase XX Colombia is segment, the three quarter. expected rigs XXXX, in

on level corporate now me comment details. Let

XX% have FlexRigs been range to tubulars. and estimated increasing of upgrade last of capacity to have opportunities is and that of activity an Roughly in during adjusted few pleased accordingly, super-spec the our maintenance to range continued including CapEx CapEx, to $XXX estimates, attributable We be $XXX see level million to months to million. the

contract of strong dividend at liquidity plenty pursue level sustaining and and great backlog Our term flexibility the provide remains time to opportunities, same current while balance levels. sheet,

compares million upgrades. roughly abandonment FlexRig charges. of $XX with along in super-spec to million, $XXX estimates XXXX. total X% $XXX adjustments level, corresponding million some in increasing our to Our depreciation including million increase estimate an upgrades, original roughly related million, is to abandonments resulted depreciation Depreciation fiscal CapEx plus of The for by FlexRig primarily expected $XX to in to approximately estimate $XXX

for resources than result $XXX G&A and of now and general be approximately XXXX great in Our value increasingly greater a the a administrative and technology. enhancing and is primarily fiscal to second higher quarter in capabilities of believe support initiatives We differentiated as offering. were expenses expect expected, million. innovation fiscal our applied that promoting level of We our organizational there expenses

the As mentioned on press a slight deferred to liability, in law. continue income we federal the to made the tax new we income adjustment and impact release, tax work of favorable our as

for our is year, XXXX our As rate we approximately tax mentioned the XX to to year. and statutory expected XX% last fiscal XXXX fiscal for XX%, is U.S. quarter, federal end, year income our given September move

of of to tax state course, not an to relatively overall fiscal Nevertheless, XX% during a for as tax total statutory have is estimate rate are statutory It also and income useful XXXX be a small mentioned expected In rate fiscal before that income during taxes around blended there the income number. addition and rates, to consider. quarter's foreign those XXXX, beyond. given income taxes is be and we not provide to to would surprised call, last

me Let the John. back call turn to now

John W. Lindsay

We Juan of and is The very the believe high rates. continue upgraded over super-spec level And is which remains utilization tight. higher this and XXX% market includes fleet, should rigs, super-spec available XX% both capable to day Thank fleet Pablo. super-spec you, upgradable effectively utilized. industry drive rigs readily for at utilization, the

to our As XX return super-spec require range. call, for low we January mid-$XX,XXX contract on a requirements discussed upgrades XX-month and day term our in FlexRig to rates the

investing purpose customers. value support upgrading higher the our capital operational our even to capabilities with of FlexRigs for our been in of the have also significant along We the since investing in fall of services delivering XXXX,

including will As we move in mid-$XX,XXX rates next those spot low that the is our the forward, expectation market, super-spec day to our the within months. in FlexRigs, range have few

for H&P and call to blessings And to CFO thanks I years. our to Before Q&A, last this everyone like be the of would will as contributions past for company Pablo's the opening like XX H&P. would acknowledge extend Juan call for that the at his

set Juan Pablo, remember JP IR director, you those the that here, industry-leading took Pablo family differentiator long-term not of new before that community We journey. and tone as the transformed hand. he award-winning. has ago. as prolific effort and you that For and best appreciate times, IR your took helm steady appreciate and equally the we for JP years him followed at you industry most XX around company company's in prolific and profile into over JP, provided CFO shareholders. a spurts. the Through lower IR employees, it as one of growth before the during has had nothing we were Juan you fun we and on took would the out all, call it the wish collapse. effort and a that key but been leadership XXXX the been JP, you for Those this as over your we recognized set He

thank So, very appreciate much. We that. you

Juan Pablo Tardio

you Thank much Very very very, that. much, John. appreciate

John W. Lindsay

for now the Erika, to turn Q&A. you And, call to up open we'll over

Operator

Holt. Please from Thank go line Byron you. We'll of Pickering, to the Pope Tudor, first go ahead.

Byron K. Pope

guys. Good morning,

John W. Lindsay

Good morning, Byron.

Byron K. Pope

at of I'm Helmerich the us & Juan be side will Payne, also you'll Pablo, you. sell missed on sure those obviously miss there but

man, You're on retirement. your a so congratulations good

Juan Pablo Tardio

appreciated. Thank Very much you very Byron. much,

Byron K. Pope

to Permian your upgradeable a so super-spec obviously, expecting shifting time. as that place some and the sense, But customer we you share And capacity to you the made your you you Just you one there, just Permian see given have you've speak conversations share that as think comment basin. idle that makes question the and rigs? and about as do evolves the it you mix about the grow just in the you, independents could maybe to market market – of got over to in in the the leading larger basin, super-spec market, think to mix, John, customer continue share, speak incremental guys toward how of or smaller? have for lion's the the customer more capacity you

John W. Lindsay

of the think good and several it only I I the to I rigs we than one times, an heard the a Byron, you at you've with. thing us the which of is we Sure. to work a XXX customers – And had is have this that downturn for customers that things see say in when about opportunity you lot XX didn't had gives running. work more can have today previously U.S. XXXX we peak in think opportunity Land,

so that lot access they and of technology, smaller drilling technology And companies both, be going then a have need FlexRig companies, and traditional the also drilling I companies, previously in but of seeing us. combination because I of it's customers, some cases, think, for our adding think, that types rigs, they're We're really of FlexRig really, we're wells were fortunately a new the the versus wells didn't today. types we're didn't seeing to

to structure for value support construct, time of spent to that provide the H&P again, a highest as of it's have opportunity the to our just organizational not we in the a effort see that heard performance support it about and at can not talk as us, also we the that I continue and super-spec years, built So, having to for rig, grow. classification levels lot rig, great And it's we've customers. a just to you've it's field

companies think technology, you because So, because much or about And that. have haven't they competitive us that don't just either gives of also the as smaller the just – some think do resources because good as and new smaller STACK to they're the invested I advantage. that particularly, in a

So, gives well. opportunity I think that as us an

Byron K. Pope

Thanks, Appreciate John. the color.

John W. Lindsay

Thank you.

Operator

of you. go from ahead. go We'll Colin Please line Bernstein. the Thank next Davies to

Colin Davies

echo Pablo, let with you and comments. a and wish all you Juan great happy very long best Byron's me working for the Yeah, very it's been retirement.

Juan Pablo Tardio

you Thank much. Colin. so

Colin Davies

like the skiddable the it CapEx guidance, that through as Just fair so is a upgrades CapEx about guidance the talking up If the about still upgrade work continued. moved cheaper, obviously seems Is of pace far, I upgrades. steadily pace XX% the comment? the

Juan Pablo Tardio

rigs. We certainly than have packages with more rigs skidding upgraded with walking

rigs walking to We this have as compared fiscal year year. more upgraded last

And there We're encouraging. so, is rate the seeing demand. increase of

to with of offering. type gain that continue share expect market to We

As the we've a cadence been the more per forward, XX of as upgraded quarter. far. past, the we XX or expecting move less to mentioned so see it's have mentioned in we past, that were good that In we we've

think in able I or out. to put of we more greater most less prepared to well but and demand continue a direction, level to importantly, be more potentially that react rigs

in And at increase to continue Certainly, improve, if might this so, range, that estimate our level be forward. expect CapEx going but flexible remains to conditions that time. CapEx

Colin Davies

if Yeah. fiscal CapEx, the the the the And is continue likely just through – the half up of as the of XX cadence a for of CapEx creep year the half but first against expect we up, that? that against to to around walkables the second through to go follow-on, percentage

Juan Pablo Tardio

year, certainly point, for some we that. increase that level to granularity. speaking, on I give we of walking to of upgrades. that end have of that a a expect upgrades. the prefer have more Competitively hesitate walking in skidding have upgrades to not But continuing think do provide at firm But will demand the you I'd than to we we your to answer assumptions related because level

John W. Lindsay

overbuilding what last additional is valid that's avoid on little a add the we about that color talked want might I that super-spec still we to capacity. is call which today, Colin,

in that's we're don't type going keep rigs going to we're that things rig. while I of that high amount so, demand there's the I quarter, per of it. we projecting sight we're that make to continue And one don't to of assuming add that certain goes be demand levels as of to that away, the well. for but see see

Colin Davies

Yeah.

Juan Pablo Tardio

to probably give Juan a About have been a thirds if and sense, a little third under may than upgrades. the more that. third, two I this of add And rigs, XX a walking upgrades, just skidding to then you Pablo, package is

Colin Davies

or in walkables plays? still there Juan helpful, Thank you. are are into Is into that's the other Okay, difference going? going Permian the any where Are they they Pablo. going

John W. Lindsay

being other those I draw for the the where of is Permian, just as are we in and most areas majority demand think well. by the of of super-spec virtue have do the rigs, is but going Permian to them

the have We some in northeast.

Haynesville. have We

mentioned I Three four in Eagle So, the or Ford. Utica.

So, going want into there's probably definitely are of half some to I the about say pull. demand Permian. them

Colin Davies

much. That's very very helpful. Thank I'll turn you back. it

John W. Lindsay

Thank you.

Operator

go Moll Thank to Tommy ahead. you. next We'll go from Stephens. line of Please the

Tommy Moll

Good morning. question. my taking Thanks for

John W. Lindsay

Good morning.

Juan Pablo Tardio

morning, Tommy. Good

Tommy Moll

you you said fleet, So, rigs. XX% XX% plus to you to about is in upgradable needs terms think super-spec the firmly where in a in rates we the think before market next the utilized mid-XXs? Where go that day leg of current get up do we're

John W. Lindsay

not a what the great I'm is. that's number certain Well, question.

think think I at and overall you if where the the look utilization this historically I has when a and fleet, capacity we would but market is. that's available cycles, fleet, fleet, with the typically the look super-spec clearly, previous bifurcation demand at, of in – speaking,

really past so begin And to power. XX% think in see you recognizing reset hurdle is you when when so, or pricing I cycles

just time. think function I it's So, function and of a of a that

of easier. calls, bottom, the bit mentioned coming obviously it's think I a downturn, environment, we've of a on out in rates it's get but off challenging previous moving little to a stronger

part for very we're investing don't other we home not of. that certain we of capital, think lose customers. we the also to thing of a that And think I that continue only lot providing make sight externally we that's high of a to dollars, drive the have and value us levels is, for internally I are lot

willing that our so, value proposition. are pay And for to customers experience is,

whole exact strategy recognize improve. but to a question I So, our have we I that your lot go behind pricing on don't the answer, or needs to into answer strategy a in the pricing it's not direct know general, because timing can't

Tommy Moll

OpEx ask remarks and both the the And I if the in wanted a the the that to one any $X,XXX for increase, the have in current the I Did follow-up. hear could daily gross Thank level, about to prepared of fleet. And particularly driver we Okay. in talk the correctly get in quarter, U.S. I you. do profit back is visibility into day Thanks. quarter when, range? Permian? into you past also, labor, the related the at primary could

Juan Pablo Tardio

this not increases the wage a The Tommy, quarter Juan to of quarter, the difference the primarily that the did until third the increase spoke little third in by apply QX. between be guess, that Pablo. Permian. which that is beginning expected or The would – second increases to I fiscal driven quarter, over from approximately this and is $XX,XXX we wage apply fiscal to not $XX,XXX, QX the a difference transition does little about under so

I first that addresses So, think question. your

rate Of let adjustments. the clarify are, in through that me in also course, passed those day through customer, to our essence, increases total expenses

per to we we so, the increase. comments, during be mentioned this affected day rig our wage revenue as increase And also expect average in by

relates three the your so, do to next your question, question of come analyst quarters model, to with of cannot to the we guidance the margin provide I somebody's foundation What able the third we expectations And require to or immediately-following to not other be the all that would would be, quarter, future anybody the two, this into allows fiscal second directly. is information that quarter; than provide do be As pricing years related and to answer continued assumptions depending in case, improvement average try during might course. on what activity, the quarters, corresponding up in which accordingly.

in we've I at drive think been to increases hope acceleration, and and spot with Absolutely. have We're John market that. we see, certainly encouraged that to mentioned, past and, continuing continued is possible? higher the seen that as we market levels in do as the So, tightening conditions. market the pricing we expected given that mean, much may improvements, continue the

as we very terms rest in that, year. to the very So, favorable that and the of we're see pleased of see

Tommy Moll

Great. That's Thank for you. me. all

Juan Pablo Tardio

Thank you.

John W. Lindsay

you. Thank

Operator

from Thank of you. Guggenheim. And next we'll line the Lamotte go to Michael

Michael Lamotte

Thanks. my Pablo, Good morning, offer guys. let me Juan also congratulations. And,

be You're missed. going to

Juan Pablo Tardio

Appreciate that. much, you so Thank Michael.

Michael Lamotte

I And day for Of course. prior largely days for rates costs is build because performance rig And ROP and your generally If in reflected rightly well. not were often by reduction the performance. question, at measured look new capturing peers or and on that the criticized is rigs. wrongly, cycles, you per John, value rig

definition performance shifts efficiency of wellbore the does itself As effectively quality the capture placement, from sort and more the the of and with value from losing rig insulate HP share and customer? towards there more capture how itself protect better value

John W. Lindsay

on question. We have that's No years day rate looking we're five ROP the facts Michael, great well. a seen lot still at; last a opportunity days great on doubt the and in that the the and drilling models not a the are, position side, model different think I has impressive. over to talk that we've the in of performance obviously, been deal business do with that. per there's the But

any Now, not basin. in

drilling one of lot the drilling them, as environment. for opportunity. very Eagle a Ford an and in that basins areas, been use a time fast other Some of still being Permian long, long a horizontal – it's wells we've there and But there's example,

lower So, I think the I better high per think placement is less higher combined wellbore with combination – of tortuosity, days well, levels very of important. very is together ROP, combination wellbore quality, in

a I an placement in industry, terms and not of great wellbore think, overall, there's recognition quality overall actual. just of as

opportunity. an that's think I So,

I answer not can here, question as we but your do that provide and see hear a I direct So, recognize an it it and opportunity.

Michael Lamotte

service key there, rate, And and because I fixed discrete it's an sort a performance whether whatever. I of think fee, think that's – to opportunity differentiating price the opportunity I versus point it think, is effectively day separate risk, is from or that's

John W. Lindsay

Right.

Michael Lamotte

interesting unfolds. to how It'll see be that

on International where follow-up, a speak know, quick not or specifically about the green a it's don't quick, As of shoots, bit more you can little I maybe order so and magnitude?

John W. Lindsay

FlexRigXs Michael, in one immediate into Argentina. Argentina, sending anyone, is International, see surprise the are in that additional probably South America. opportunities, to opportunity, terms most we of number no the of

XXXX. back getting there's send I clear for rigs this think them of opportunity to to great in not is a reactivated. if year into that's a opportunities this, on terms great and work, quite additional as opportunity get Colombia. rigs great Colombia I'm into

to I opportunities, very still Middle experience, you've those is probably there. go well, a some a opportunities of and take least There at time in seen least it not a materialize, that's to our event as see – think can XXXX happen I but H&P. we to bit hard are East have going XXXX. long we little say for and at it's opportunities, time really to think be but well, It we safely see would

Michael Lamotte

Okay, it. Thanks. appreciate

John W. Lindsay

Thanks, Michael. Okay.

Operator

And of next go Hancock Howard line Blake you. Thank from to the Weil. we'll

K. Blake Hancock

Thank morning. you. Good

Juan Pablo Tardio

Good morning.

John W. Lindsay

Blake. morning Good

K. Blake Hancock

John, the we increases? upgrades. You're talk about of cadence of first, the activity kind maybe same can maintaining

XX for competitors' to those Just On in have and that of forward, to you about on do going quarter that or either are kind here the us of net the rig rigs can couch performance opinion what talk visibility? count this this in seeing? all Are you're we're rigs the because replacing trying adding you super-spec? they kind net your from or

John W. Lindsay

it's primarily provide AC provide be – as a to to a I calendar in of rigs, overall – because can't some interesting rigs result work XX what, I think, rigs, year, satisfy count's think XX being able go enough the this may we slight that this can't have of it's legacy rig the the up, And we rigs It's Yeah. actually industry demand. seen because year. or rigs to SCR XX increase

a what no think is, mix. it's surprise, you've described I

a depending I rig on bumping In or examples cases the end two it a bottom. that with lower-performing we that the we're it replacing think ultimately And rigs becomes we cases, to the displacing fairly in additional quality of and or are then, flattish outlook, in off replaced, they still fall tier and where the see more rig, rigs. And even lower of kind would may high-quality a rigs flat, think up count see rig you overall rigs. even super-spec where coming does customer's rigs, a then some But a gets to flat, question that in – I or rig than customer's fleet. rig some other a adding two go?

the rigs industry the then drive bring rigs XX responding very others we needs to with can year, for with go a different think rest to well-positioned super-spec of route. and if in rig H&P, to will Now, whatever XXX market. that through we I grow respond Obviously, be count can have the will to we're AC the another

K. Blake Hancock

maybe That's could Latin the be of perfect. American us on XXXX follow-up number added of already Kind opportunities would the that of rigs the there view and the magnitude year, halfway the still And then or to those – do we're help in questions the that more International commentary, or see from with you through XXXX? timing you potentially.

John W. Lindsay

this we U.S. if could out year, in fiscal of make of well, it – not think happen, as to example, the I make probably we say, in terms in I calendar to moving rigs think, an can it happen year Argentina. – this

– that's at month I rigs probably we year, do rigs in least fiscal imagine, effort. type getting would into additional a country, terms six South reactivate America this think I of additional a of in but

would half towards this then the of it into So, be XXXX. year back hopefully and

K. Blake Hancock

guys. Thank great. That's you,

John W. Lindsay

Thanks, Blake.

Operator

to the of JPMorgan. from Meakim line We'll go next Sean Thank you.

Sean C. Meakim

everyone. morning, Hey,

Juan Pablo Tardio

Morning, Sean.

Sean C. Meakim

Juan best Really luck And Pablo, of years. all next steps. the appreciate your over in insights the

Juan Pablo Tardio

that. Thank much, Appreciate you Sean. very

Sean C. Meakim

items So here. just couple smaller a

those your about your are for sorry, contracts? is of – ratchet Just the upgraded I'm provisions today, contracts day rigs, would fleet thinking say much are how And on just XX any dispersion thinking are then to new you upgrades building months, in that we just the about the direction contracted rates in rates firm book XX in there the or either contracts?

Juan Pablo Tardio

is This of a we Pablo. Sean. wide U.S. the under you, term Land array contracts have Thank rigs in segment. Juan Yeah,

rolling type think of roll of less remaining. legacy after comments, term contracts before new going XX year – We'll negotiated after downturn negotiated XXXX. meaning off Those rigs, rigs over a than were day we type from the rates. that favorable be downturn secured term of the see the contracts we've those a contracts those to at off mentioned obviously, the impact still have downturn. that contracted have on because, expect I of those duration, I little into some higher and And the are average, my build we least, during rigs on, in that pricing As the rest we

though trajectory, for coming with We're even day and great. pleased down general, with margin overall we're In is the rig that has revenue rigs the So, under contract. been per rig pleased that. average term average

under As of them, that a rigs of than at not term if contract low all, higher rigs When are the and mid-XXs. spot news we great is contracts. to result, to that in work Many mentioned. those put a result continue we as John pricing, rigs, upgrade to we

term so, and continue get contracts to better. better And those

I have on contracts. fixed fixed contracts fluctuation, new if new that In having may most the on to performance-driven certain you a terms be many contracts I'm John, of may prepared have not I'm we have have There rates, those. of not (XX:XX). those. few sure believe term rates. that of day comment some a depending variables, those day some

John W. Lindsay

Yeah.

In some there metrics, be some small standard but may very some well, of on a (XX:XX) may upside oil provision. term think there general, I be price as that's number. and performance contract a they're kind

Sean C. Meakim

Thank feedback. you maybe it. share, customer focused capital needs, No, been market capturing make right helpful. that's for very about executing now, you've you're obviously, and thinking on Got that sense, just allocation, meeting well. which And

more promising, guess near-term certainly we go, I there's So, further uncertainty. the but out looks

see if flow forward, So, dividend versus about your looking in on just cash you coverage growth allocation? dividend I'm any progressing you updated how coverage curious towards and think thoughts how capital balancing

Juan Pablo Tardio

Pablo you, This is again. Thank Juan Sean.

optimistic next next the conditions in before, years. the the few and we market actually, of are mentioned As trajectory year, during we've of during terms

liquidity – level and And and sustain prepared so, for dividend to the to at have even we as to have, see current might it as potentially in basis. flow continue potential generation we pleased are annual what good years look of and be, position and how increase might to an that evolve course, the cash we our level CapEx so we on many we're of our that

flexibility Obviously, opportunities over capital what allocation, hand, of who far a through great pursue significant so other other upgrades, might dividend only years not continue the emerge. we to amount been are the but but pay to On opportunities focusing knows few last have on business. what through we've growing the the

we've our well. companies technology offering course, very complements that acquired Of two very,

think move capital-restrained. are we that forward, don't we we As

be a given And tap great have balance right into. We that glad to can sheet we'll opportunity, do we so. the

our pleased position to only as in move very expectations see we that and of So, the favorable regard forward possibilities. in terms

John W. Lindsay

couldn't I more. Sean, agree Yeah,

continuing opportunities space a in acquisitions and in that we're additional looking the to business. some think we'll And technology see. great I there's to the forward for again, hopefully, grow place

Sean C. Meakim

you very That's Understood. fair. Thank much. all

John W. Lindsay

you. Thank

Juan Pablo Tardio

Thank you.

Operator

go We'll the from line you. Bianchi of next Company. Thank Marc to Cowen &

Juan Pablo Tardio

Hi, Marc?

John W. Lindsay

you Are Marc. Hi, there?

Operator

Marc, have And the your open. left looks line is queue. may like he

go next we'll FBR. B. So, to Tom Riley from of the line Curran

Thomas Curran

morning, guys. Good

John W. Lindsay

Good morning. Tom.

Juan Pablo Tardio

Tom. morning. Good

Thomas Curran

all please Pablo, add this to and chorus. everything Juan Hey, the Thanks for call's voice my best.

Juan Pablo Tardio

appreciate that. Thank I you, Tom. Thanks.

Thomas Curran

try to crisper want market the you fine-tuning just how I believe John, around some to super-spec has put evolved.

were total September has XXX since of So, XXX go time rigs? It and it fleet rest industry to back that added potential the about XXX total fleet around and know has essentially at the that Does XX, around that if sounds then the to mean the sounds end if to upgrades put that grown fiscal total eligible industry, upgrades. over upgraded has XXXX, estimate just the with like we we HP of XX industry you HP industry now that XX. as super-spec XXX you at at

John W. Lindsay

me. Does low that – that sounds to

Dave Wilson

it sounds – year December you from from I end not or XX? talking – yeah, are Yeah, I'm think sure. September Tom,

Thomas Curran

what X, industry from XX, right? super-spec release, highlight That to the the super-spec you've September rigs in fleet. XX you talking Correct? October press I'm added So upgraded right? since that's

Dave Wilson

And many their the so as as added ours to as But others isn't Correct. well. then, industry add as in we before, capacity said as also have great.

super-spec – adds compared from versus them less seeing you're So, to classification the to us.

Thomas Curran

sense. That makes

Juan Pablo Tardio

I a what and may ballpark continues assumption is upgrade If that Pablo. greater we've add, that because as very Juan H&P at else others in have rigs is we conceptually, can terms the as of rigs super-spec of in just to Dave capacity seen that limited. compared the this your rate than is are, that think I Tom, to that to much mentioned, of to anybody availability do

Thomas Curran

I try make as want and towards the steps, the the is to digital take this And the between and sure Dave progress ballpark. the the internal tune Okay. hardware the R&D, pursue Center occurring MagVAR in software platform creating these path steps, broader sides? And this does a technologically, and automation. more Excellence of with offline on to can acquisitions What just to at to you're MOTIVE next in major point, I mentioned HP's numbers. after collaboration John, if was I a the additional likely seem how be automation, those you fine would path combination? or it on call to both

John W. Lindsay

automation the capability, there's think current Well, I MOTIVE with current MagVAR and are a and there. Tom, steps lot our with I of think – the of

It's You steering heard us seven you or two. step. that or path. vehicles the say down probably one wheel It's entirely autonomous the where in is automation step the six step a iterative unlike remove not don't

where And enhance reliability, of are large we're will the functions to done by we pretty will That, get way. human. to in automating course, so, in position enhance a think performance are with more capacity point I today the that that of the

have based is does demands time, customers So, I do of question that change the on need. automation you the and, package address capacity what we which how kind technologies I that question, ultimately that's over would think think The what have? internal. other

are think we are. I we where now, pretty feel we about right where good

Thomas Curran

Okay. Thanks guys. squeezing the in. me I answers, appreciate for

John W. Lindsay

All right. Thank you.

Juan Pablo Tardio

Tom. you, Thank

Operator

Chase And you. Thank Research. with Mulvehill to go we'll Wolfe next

Chase Mulvehill

for move get weather. time get warmer to thanks Hey, Juan me enjoy in. in Pablo, retirement. to south some squeezing Hopefully, and spend some you

Juan Pablo Tardio

forward Appreciate Chase. Thank sir. to it. look right. I you, that, All

Chase Mulvehill

customer lateral about if of would driving in demand you guess, think had I penetration first of if we it for kind super-spec, length? it be quality, rank to or what's the of importance, order super-spec, on rate question wellbore

John W. Lindsay

pad the little are drivers primary length and is around lateral believe, average well lateral, the rigs. think capability, as super-spec I I X,XXX. of penetration, over the a rate maybe for X,XXX, as The

mud-pumping I see think of the to where out. of to maxed X,XXX-psi that's system begin point the you kind being traditional get

well circulate your And because like associated to drops you're piece risk so, the the pad can't really rate XXXX-psi. you're need off, be lowering reliability said, enhancing the getting you like with designed then, the rigs, I with associated offering. run is, if And and penetration you to. Those right able should properly, stuck when capability. you that's your other and of have risk And

that other portion it much probably what talked going about isn't I as The far you quality, as that forward. as be as mentioned, Chase, wellbore will think

think do to customers I also one so, not the is better that's And MagVAR work lower-cost and things of about quality but only it drill MOTIVE placement. wellbore ROP excited wells, highly-reliable, and to we're with really wells, ability high with better the with

Chase Mulvehill

All the since little bit that. I That's a follow-up, one Appreciate all hour. quick over color. we're great right. guess,

rig Could count see that in where you anywhere. today release the today, I end you give Your us and didn't it'll rig press the of count kind the quarter? think

Juan Pablo Tardio

segment, you're our U.S. about Land So, Chase? talking

Chase Mulvehill

Sorry.

Land. Yes, U.S. Sorry.

Juan Pablo Tardio

rigs to fiscal is believe I between or are third for XXX. an mentioned days. X% What – think of we close course, XXX is we're in And I closer we excited XXX revenue average we XXX. increase that is suggest hopefully, exit to of a quarter, that and about, would terms that to at what the number XXX quarter-to-quarter an

that helps. hopefully, So

Chase Mulvehill

it turn over. That helps. All righty. We'll

Juan Pablo Tardio

everybody. Well, much, thank very you right. All

are of time. I out think we

turn to John for closing we'll call So, remarks. some the back

John W. Lindsay

and just to, on driving their safety you thank performance for customers. attending. for of commitment wanted level I people all of quickly. first real all, focus thank Again, our Yeah, for high and

we're to FlexRigs the to well in continue upgrading our to add business to You going customers. innovate very super-spec. going to by to positioned to think services, that value are grow continue say continue our invest us before. technology and new We're heard differentiating support We our to drive to

today. I attendance So, your all you. Thank again. thank of you appreciate

Juan Pablo Tardio

Thank you day. good have and a

Operator

participation conference at like disconnect today's line feel to any time. Please on thank for free We'd everybody your call. their to

Helmerich & Payne (HP) 26 Apr 182018 Q2 Earnings call transcript