HP - Earnings call transcript Q1 2020 | Helmerich & Payne, Inc.

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Operator

Good day everyone and welcome to today's program Fiscal First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call maybe recorded. [Operator Instructions]

pleasure of the Investor my David over now Director Wilson, Relations. is to conference turn to It Please go ahead.

David Wilson

open first which, XXXX. Thank Mark John you, call Mark call comments the Smith, conference some Helmerich are will & of we Nikki, and questions. and us, the President with welcome be and everyone John Lindsay, Senior call webcast sharing CEO; on Vice us for and today With to will President Payne's quarter after the fiscal and for CFO. and

we our guarantees that expectations management's Securities on Forward-Looking future of defined Before begin will based prepared remind not and the this Statements as performance. remarks, everyone of under Laws. I are information include Such this statements call date, will current are as and

that certain to Forward-looking risks, difficult assumptions and uncertainties are involve predict. statements

outcomes As results materially. differ could such, our and

about our our our can risks quarterly You on Report XX-K, other Form reports these more XX-Q and on filings. Form learn in SEC Annual

not on should undue reliance update statements. and to obligation forward-looking publicly place we no forward-looking You undertake statements

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

will GAAP find and comments in press You release. reconciliation yesterday's calculations the

call With will I now turn to that John Lindsay. the said, over

John Lindsay

and we morning, is good to new you, This Dave, contribute partnerships a and is for challenging ways results. year industry innovation. XXXX Thank and of experiencing and what overall, these when embrace everyone. to it our stronger together our create was seasons the thinking during it but are can industry comes

Company's future and customers, conditions increasingly incremental to improve market and and to about ability H&P's the position continue both drilling. additional difficult advance performance of context some share of deliver adapt which automation the value to simultaneously will of how we Today, for because leadership

we our and are and value going what ability production and about from to begin customers the This companies shared talking quarter's remain with focused and results reflect drivers. of to our experience H&P Company's on stakeholders. for agile the customers seeing successes with exploration momentum results I'm

are Our for experience best customers market looking partner with are every that They best environment. today's and to the can transcend challenging invest seeking the optimally. opportunity expertise

We technology. customers to through objective with and better returns align to performance strive enhance ourselves the economic

hard this all are our decision partnerships. making forefront We put focus the shared to at and of working of

Our and technology building of strategy and strengthening along is focused all creation current the our value gas relationships on be catalyst will We operations. way. upstream customer for oil believe automation in and the more

for we predictability power the provided seeing are that repeatable believe us one through payoff for and gaining There I continue our why reasons customers. concerted to process This are and is H&P performance apart automation. set of traction. it by is and reliable will and And in we excellence effort

We capture platform. from our opportunities see significant value autonomous drilling resulting

cycle to normalized maturing basins For drawing advantages wellbore quality delivers. more the well and attention our customers that are times

value drivers automated automation solutions are our directional competing while differentiation The numerous primary today. in most is Our specifically AutoSlide, economics have tuned services which and AutoSlide each in wellbore drilling sliding market of is customers' differentiation with algorithms and the customer-centric from mind. points

time hydrocarbon algorithms these [Indiscernible]. the drilling zone Specifically, trade-off wellbore optimize days, the between in and

the allows impact As the will key automation enabler. found life to focused well. key drilling, What the continues other the this we is that positively like industry drivers migrate factory be economically predictability have optimizations to total for of of

push production techniques and new an to envelope the Examples lead costs that associated with methods completions completion. on and opportunity are and ultimately lower to optimizing increases providing

rig and more ways a fewer we And thus, improved the our for customers to the our value creating the value at as unlocking back footprint. rig. extraction, to precise smaller technologies more site, with environmental In by driving reduce through addition and even rig creating well drilling of the safer de-man impacts to economics, operations exposures and forth environmental at maximize

Since XXXX, our roadmap. our complete technology added have team we expertise strategy to and have digital to acquisitions digital significant technology several made

first we autonomous of during The strategy to step focused levels economically and plan AutoSlide, that our platform of more XXXX. launch is and automation with wellbore quality

have need the and further expertise of capabilities industry We power paramount believe process that today the next we stakeholders. value for we future step Last take predictability oil is models automation year, to drives capture The acquisitions. a the and our without for win-win on for gas. where H&P we commercial of our and creating the introduced for focused are customers new for

Given between reflect budgets, develop to new focused our and investment to approach, at equitable we growing an we continuing customers. on solutions portion spending reinforce of within is share our are enabling the customer that partnership H&P the are solutions us pricing value optimizing delivering. and These value, to

contracts, contracts. announced performance-based quarter, of new which have nontraditional up of quarter, approximately made Last we XX% first contract contracts during that of approximately commercial are the active mix, XX% majority rate although our fiscal we today, fleet under FlexRig contracted day the our

discuss remarks, compensation As detail in these and and the for commensurate the goals aligns a performance of distribution value contracts Mark incremental H&P's will performance-based provide his in customers more with creation.

indicating rigs momentum We super-spec the rigs. rig and performing performance relative deliver primary U.S. growing drilling our segments, business count as fell and these grew preference market approximately during AC SCR for to legacy over H&P's lower land XX% risks across are from a share rigs to XX%, XXXX, seeing

market the experienced was rig thing a which average our and of remain share modest increase calendar look our capital with ending previous will current by expect half believe Along sequentially discipline we the count. to a end industry implies to XXXX, from quarters We during second prevailing levels. the customers quarter level higher gains, count activity than similar rig

are but from is capability continues an attributable improve, costs progress significant related worth a higher trade-off performance and this X,XXX added to costs and and gains horsepower comp, more rigs, well PSI it. capacity, pad multi-well to of daily requirements, portion capital As these third of to effect awful drilling are capacity efficiencies higher a the maintenance capabilities super-spec mud that

super-spec a of of a that than drilling more over super-spec that XX% capacity safety a number shows for the Moreover, non-super-spec FlexRig (Ph) incorporates reduce experience can location. trend environmental at three-year that and the impact XX% FlexRig rigs. drill to employees Our improve and enhancements [space]

That revenues for the that our increased of order and that and for rig continued to in as supply solutions gains demand. costs, said, cost cover value optimized E&Ps to services and to reflect as drilling provide well shareholders efficiency returns need increase maintenance capital

basins pricing remains high is in remarks, U.S. strong, of of delivering Super-spec the levels are rigs will it. utilization completely address in why for and active in the for and performance customers. details Mark but FlexRigs firm shouldn't especially the his more prepared pricing value land and most

oil another and shifting during H&P Before companies. to our a was for our success international with partnerships gas XXXX segment, growing major

We market to is continue best from partnerships positioned our have with grow Company share to the fleet FlexRig grown at of beginning majors XX% the believe and X% to XXXX. IOCs. the we our And

So let's international our to shift segments.

This quarter also of we seeing put remain proved our work to to in we Colombia. to U.S. about in were pleased outside back for the opportunities be the a are business the optimistic Middle rig positive We East and

additional drilling further would now in rigs growth East the of encouraging FlexRig satisfy from are likely any fully rigs the U.S. Other and exporting this the in prospects are for and utilized to in region result Middle demand.

expertise in to in our experience, great plays about Middle As in grow our we the South future. position us East put and America, the and our will hear resource technologies continue to a unconventional

dividend annualized paid financial maintaining industries cash from apart share closing, peers. strong for in XXXX the year. last sheet has many of per balance discipline So dividend and H&P hallmarks the since the year, and Company to consecutive increased and a XXth are set we us shareholders

In culture apart company set and an thinking how industry. a about can that in

is centennial some the year of reflect at and H&P. momentous time XXXX our midst history. We our this using we are a in to year of are

will So this primarily, In trusted at productivity as focused innovation. maintaining and looking with and position most are our we the forward. path technological industry's remain on keeping partner drilling our we milestone,

Our and of know are technology to And through the combined downs long-term our our continued key solutions employees, with and our to the our helping ups business been people have fleet rig success. industry. always we that our dedicated

Smith. And I over turn call now to Mark will the

Mark Smith

XXXX the fiscal XXXX position. and for year will john. first financial Today, our quarter provide on Thanks, results, I appropriate comment review quarter, full guidance update operating as guidance second fiscal our

start $XXX million working for of quarterly with the revenue $XXX versus U.S. is highlights a The the as Company in expected. us of recently revenues previous in rigs Let generated completed quarter. primarily to average land the decrease first decrease number million quarter. in in the segment due quarterly The

quarter in-line for administrative activity $XX $XXX quarter costs first our The the decline. primarily totaled expectations. attributable operating for the were and is incurred the previous $XXX million for million first Total expenses quarter. to the aforementioned million decrease General with versus

guided approximately range effective higher QX which discrete is was slightly our due Our a to expense. tax XX%, tax rate than

H&P Summarizing incurred profit per previous $X.XX is the quarter. share diluted profit the overall versus earning a in quarter, of results of this $X.XX

earnings Release. quarter Press a in positively as of by per were First $X.XX per highlighted our net impacted share select items share

quarter $XX earnings quarter implied the versus of Capital were $X.XX due select of first guided XXXX million, $X.XX first the during expenditures diluted an items, our the fiscal rate projects. to the adjusted the various Absent were timing under amount share per adjusted is this for fourth in quarter. run fiscal

mentioned, segment. fiscal XXX We contracted which Turning segments, XXXX first to as U.S. four increase since John activity. we with rigs, the sequential first the a in seen time our have Land was, year beginning calendar that with exited quarter the

XX% to sidelining U.S. industry. capable market Land increased H&P its share less due of end the in quarter continued legacy the rigs by to

a during we increase quarter. see modest discussed, expect second John count in fiscal As to rig the

$XX,XXX our revenue in first slightly early Pricing space above the rig guidance. the increased quarter, excluding day during quarter, revenue super-spec our market the average remains per firm was to termination fiscal which for

November segment. a our excludes are call, in figure H&P FlexApps included which reminder Technology from now As our offerings, our this

as Helmerich per our share. we due as hydrocarbon economics differentiated & unique evidenced supply and John to value to from market Payne’s underlying average rig competitive Further, by basin-to-basin our both due the day is dynamics. deliver pricing our customers varies stated, pricing leading

are dynamics market, including variations pricing In other coverage term specific addition to customer the by and each variables driven also concentration. to

Our XX,XXX remains an to with overall the in low mid-XXs around current day. per pricing average

rental additive to day in rate As trucking, including cetera running, are et $XX,XXX. of are casing, and a day per revenue reminder, equipment, Flex included services

a as shifting contracts is John larger ground, this gaining portion discussed, are performance fleet to our the commercial of model. As

value such average reducing participates and These approximately creation. our produced. $XXX spread As rate day and more their to overall customers now generating are contracts H&P savings our performance that in as by day, margins costs than well model H&P margin in provides per

plan medical this expenses is medical incurred to self-insured per previously in guided range, final increased rig fourth quarter of higher-than-expected the The is the quarter, due above our $XX,XXX average the year. adjusted which expense to day calendar primarily

fiscal there first to of ahead Land, to quarter we right. XXX rigs in XXXX Customer XXX have with turning compared the the lead calendar XX% to spend CapEx working Looking level. will exited calendar us second believe we quarter that the for XXXX conversations to of in rigs decrease approximately XXXX currently a be U.S. and

of This this implies approximate decline wells a the XX% that see calendar drilled the count the end. an XXXX, the from expect accretion exiting modest X,XXX some of by year would in rig year the decrease. XX,XXX to in number XXXX wells gap, drilled we calendar to would during close To

budgeted we are calendar also a more year. rate will spend rig customers caveat, this that and even throughout that our With CapEx anticipating

result XXX quarter. expect in XXX during days, quarterly of count to would sequential to that, rig exit active revenue with Given XXX and which second second rigs. a rigs the increase This average an the we quarter between number approximately translates in the of modest

rigs work. to is tightens when if arise, investment. market that the are our and rigs idle that conditions initial XX currently Also, As to displace we have super-spec warrant put objective super-spec XX as back upgradable to we still legacy opportunities market have the FlexRigs and to

range in at per Compared to $XX,XXX same per first day also term at average a spot super-spec range leading to $XX,XXX to and adjusted $XX,XXX.Our rig rate the that markets both remains pricing is the lowmid-XXs we quarter the the FlexRig edge average from expect and in day day, revenue be within level.

expense rig a to in average The day $XX,XXX is range of second quarter. expected for per be to $XX,XXX the

we stabilized, idle has incur count churn rigs to to ordinary basins. costs active and/or due rig out stack re-commission across rig the overall to our continue will rig While

is occurring. the The and cost the for market on the dynamics considerably type depending can vary basins of activity per day in rig the here

We will our associated with also now continue portion to incur maintaining of fleet. costs a

programs general up workers' from At October liability the compensation, this ensure year, we of liability insurance to for our start captive forward. owned fiscal the elected deductibles a automobile set X, and insurance to wholly XXXX

subsidiaries Our risk on The deductibles the captive based is from operating to analysis. a pay which of premiums result self-insurance the external the our actuarial operating segments our is transfer for losses retention. monthly the captive estimated for to

expect segment expenses in ongoing of intersegments a this significant do day as non-reportable shift. We the are included result segment any premiums not the operating insurance changes The our per and and in sales are included other in expenses segment.

premium revenues $X.X actuarial three estimated for line ended consolidation. The expenses our expenses million was eliminated December item intercompany the consolidated in approximately statement and recorded and These months operating was within other the operations. expenses of and are audited condensed XX, underwriting

that of average an term under had our and of XXX first or working quarter rigs remains about contract XXX rigs. We the fiscal XX% today active during number XXX

rigs earning term contract last three average XXXX. XXX in and of contract fiscal quarters expect remain average of under the fiscal We quarter have to current under XXX rigs rate. second and currently day term through the an of

International by associated primarily was our is in first our quarterly some guidance. above of revenue anticipated other flat to the The the increase rigs margin in due increased than segment, relatively our quarter, Argentina fiscal rig with fiscal cost $XXXX among Regarding quarter. of in number to slightly Lands per in adjusted factors. day days segment the average The $XXXX first lower the

to quarter toward an count look in decrease approximately days the of rig second second XXXX average quarter rigs segment. active approximately quarterly the X% we for International, of are As to expected fiscal revenue with XX XX

of five We have East. all in redeploying we rigs have currently in middle the the successful been

international there additions be to work. in that in contract opportunities mitigate while incremental optimistic these count. rolled They put to have We rig the have back And our not have to Argentina to been served will remain that rigs off Argentina. rigs

is timing uncertain. the However,

fiscal range than offset as day margin of startup per average by decreasing during expected the quarter, in of more impact their East to $X,XXX to off idling is second year the decrease Middle contracts. five a cost The Argentina rolling rigs rig to the $X,XXX the are of NFC

maintenance unplanned during phase incurred expenses work an startup rig we idle Columbia. to Additionally, the of back in putting

Operations We quarter. with first Offshore quarter the contracted platform We to working exited six segment. averaged fiscal the in rigs Turning six rigs.

the since then day rate quarter. previous the However, incurred mobilized. and per one The has rig released unexpected to sequentially increased average due margin maintenance downtime in

of quarter second currently we we the of rigs look As our contracted. fiscal Segment, offshore right XXXX the for toward of Offshore have five

is expected One Mexico rig the to recommence range to second of due a activity. decrease in is of five rigs XX,XXX as to XX,XXX shipyard, The to one day during March. transitions late margin it quarter, from to operations those Gulf customer of another to the reduced average per is in the and expected drilling

million. research with Finally, income $X $X at our our operating segment, of looking when largely revenues HPT Technology in-line expectations. HPT was H&P were approximately excluding development million, cost and

inclusive expecting revenue are to We $XX be QX million to FlexApps. $XX million HPT of between

a continued growth we successes, recent rig leverage increasing in stable expect customer count modestly environment. teams our to As adoption during

sale on Solutions Drilling XXXX, million. sale in on of we resulting a $XX In TerraVici of closed Inc gain approximately the December

quarter in fourth a intangibles off As wrote XXXX. we related reminder, TerraVici of the the to fiscal

early $XXX let me million was call, backlog on the quarter remainder as U.S. of Now end, December under for from segment year. of with fiscal items and roughly forward and termination revenue today's contract Land At second corporate rigs look our fiscal term this our year the for provisions.

between $XX XX% for rate reminder Capital which $XXX our the of procurement million fiscal approximately are based year to of million as expected full fiscal to XXXX, first due a expenditures the than differences to reduction is on We outlook implied is the (Ph) our project a for timing CapEx. current still XXXX range run which in quarter, activities guidance quarterly progression. less to million and XXXX [expected] $XXX

sales drilling Release, portion As of purchase we operations. CapEx. damaged large our reimbursement offset during tubular assets mentioned replacement for hole Press These the value drill customer that of bucket are or a sales in primarily the lost pipe in of is

communicated expenses, are development depreciation Our effective XXXX fiscal expenses, previously research rates unchanged. full and for expectations administrative and tax general and

had XXXX. position. cash a financial We December and operations from flow $XXX our at approximately & versus $XXX Helmerich at and million fiscal looking million approximately earned $XXX of investments short-term Now, XX, as million Payne XX, cash of QX. September

some including that cash decrease factors the accrued sequential payment in and conversion plan, disclosed was settlement in was reduced seasonal The and flow accrued collections our annual due of the payment receivable holiday down of of the to slow compensation quarter. previous incentive activity, short-term of legal

of expect the We to in fiscal be operations our cash higher quarters from year. remaining flows

amongst which reminder maturing a A quarter Our debt XXXX. measurements best-in-class no peer XX% continued until debt-to-capital is at of group. have our we end

XXXX costs, Our accreting and expenditures expectations modestly to operating our debt current of administrative free planned fiscal for cover cash-on-hand. flow expenses, general generate and pricing include capital remainder to dividends selling sufficient our the activity cash levels service and while

level term and of H&P market long capital sheet balance to returning and take provide our shareholders our Our contract conditions, the through opportunities flexibility to maintain adapt strength, attractive advantage dividend. to practice of backlog liquidity

prepared fiscal That quarter. for the our first comments concludes

Let me call to for the turn now Nikki over questions.

Operator

And Instructions] question from take will from Jacob Suisse. our [Operator Lundberg Credit we first

Your line is open.

Jacob Lundberg

morning good guys. Hey,

John Lindsay

Good morning.

Jacob Lundberg

on percent quickly I performance us about off, Could to start think of you contracts help grow the you to that just your how drill can work. mix that mentioned. based total as a Just down wanted

continue? your performance-based You anything you desired then had Do anticipate could of helpful. be increase of in mix would And you traditional a provide XQ. versus that nice in to terms fiscal

John Lindsay

their approach differently. at to at things, customer sure know you mix. we is every program obviously is where can customer the costs, these at particular know taking we looks looks bit little do models centric a looks about new positive this John. commercial Jacob, Okay. feel impact It that to hard What how I is a for are

trying are their we been with are. align to of these, Most contracts contracts. based have So what drivers performance it

an a So case. for true there win-win in is the customer and this both H&P

is be we of that. able will continue hope our that to So do more to

way think entering generally the types of under as into it most are to those potential in that One to about term the the market rigs these is that of contracts already contract. have of are rigs, opposed spot

us an more. I think is to for again, opportunity there But do

said, a you improvement. we As had nice

to continues adapt to salesforce this. Our

infrastructure lots contracts. made have create these the We organization to the need investments to types we of manage in of that

to is hope So again, it. to grow our continue

I the that as be As mature well. into get our will to more benefits is far enter But, that total we see more we as and those. again, as suspect say mix, that hard customers able the of to

Jacob Lundberg

do was you on market And go still maintain have some like base structure? desire performance ultimate the a there mix? you pure of to you or the would traditional the if fleet Would to portion

John Lindsay

you associated I it average remarks Obviously, you that, revenue contracts. Mark think, in performance-based had some Well, risk, are know, mentioned on higher that. do we his taking when our our is

You doing what a terms know, to say but more. in kind in total, again, are is it definitely we of mix interested hard of

of of to type or the likelihood, least on model commercial the some reality other at it, soon rate, performance the fleet think have achievable, whole probably isn't I anytime besides realistically. day

Jacob Lundberg

a positive average seeing more some more on maybe somewhere that follow-up jobs like? Okay. look the performance rate Presumably impact XXX it the contracts? even And what those don't could, think do look day and go total does on about imagine negative I then you on contracts, spread? So than are incremental on significantly maybe would where $XXX you spread a it there and is that that if Could day And way spread is I talk contracts. bring you that your average like? can just overtime, is there then the does performance-based a what you if based

John Lindsay

tough is a that Yes, one.

You accurate in are that.

performance if to going you are contract. about not are We talking achieve,

rate not of with end Obviously what You going achieve revenue to to able is, the are would it higher time. day, the we contract. be have every a goal a achieve at the day to than

early we though a we even this still at year. in the stages, are have So, for been

is some respects pretty, stress to on this. with in industry want Our like things that our slow it customer. a moves really partnership pretty I

able negotiate for that be with have to these to pretty of is types You have with in are and a and only going you true get sorts contracts something again both win-win customers arrangements if good parties. relationship are of a to able

Jacob Lundberg

number be to would to Do that, you think the an is it though? say overtime there fair increase $XXX ability

John Lindsay

But at of sure where mean, data, I again, don't I has examples thousand an your are of lot do that a obviously a lot for those hope information. dollars would have that work way reason one have we you so. another. at organization we several or

I to customers drill we more continue can to our wells that help effectively. think

Jacob Lundberg

quarter Alright. Great Thank you. I appreciate it. guys.

John Lindsay

Thank you.

Operator

We from question will Inc. take from Steven our Moll next Tommy

Your line is open.

Tommy Moll

thanks and taking for morning, my questions. Good

John Lindsay

Sure, Tommy.

Tommy Moll

discipline specifically you capital a wanted now you as getting on the rig do early start AutoSlide? slow? for macro in H&P are we maybe customers. on and Technology, the where an environment feel basins. to like but going still this How it to do we So, days uptake forward among you AutoSlide, expect point? slight looks like In Are feel you adoption for in inflection which Or continue closer about the count, six is adoption year indicated rates

John Lindsay

in Tommy, a we have Well, think XX. improvement adoption since September nice I had

count rig XX AutoSlide today. is at Our

seven. think around I we are

since more XX. we So doubled have September than

There before, I some adverse then as it because that change we other with is capital of effects discipline have workflow the respects we have significant end up you adoption. nice side. at the is dealing said And I side. had the is in adoption some a think there some just pretty on are in think So rig and side

there for is need real change a management. So

most active obviously success. in success. But the lot they having achieved are are and we have months over basins we And a basins we of said, several as some you today, six the are last

getting So some adoptions. are we

our that We for on workflow But the we be in a we really the are quickly eight changing are quarter. successive and you. we ultimate continue - adapt are What while depends situation to cases. that demanding to and we layout most customers to is much can how that grow. expectation being love AutoSlide so our So of would

AutoSlide as rig, the being thing. great exposure, we not the XX% is industry, or of a but It it disruptive. for is great as think XX% the a I piece, a thing for driller are have of great the today thing the is because fully is far directional which jobs less It de-manned reliability on customer. the

Tommy Moll

to the And XXXX some John. give that of think sticking full just pieces you releases your of coming different details have right even with we drilling with the on high drilling I technology you for expect some autonomous there autonomous that in us for get more theme, any of Thank the the mentioned you remarks be to on solutions? process just the in are wait those, press announcements but theme. could could level you some will disruption

John Lindsay

I rig are right I that lot out at people right Tommy prefer clarity that variability like And able fact the that are of in there and to performance are things what is - automation, to add to things think roll the give highly little algorithms on a in human they the is and with a more outcome. are and oriented I a to that interaction wait there of the developing are are for obviously. factory for done what would replace right there it be because site now. some do is greater But you

that be think commercial with to more come in another or the wish exactly next I two, I So, But, there will announcement could have I we when will we on tell will is. able be AutoSlide. quarter that. roll nicely in to that you

Tommy Moll

Okay.

tuned We will will I the Thank you. back. and stay for turn updates it

John Lindsay

Tommy. Thanks, Alright.

Operator

our take next will JP Morgan. go Sean question with We Meakim ahead. Please

Sean Meakim

morning. good Hi, Thanks.

Mark Smith

morning, Good Sean.

John Lindsay

morning. Good

Sean Meakim

to R&D going in separated? to considerations? you talk of tough Are for understand change quarter-over-quarter? just be are to it fundamentals, to that probably guess trying driving Just quarterly that how going little higher just trying we absorption about there the think about, mixed and I bit a buckets be it navigate how would volumes, to guiding is is Technologies investors is H&P I'm the profitability change, think the about Can forward? the

Mark Smith

your Sean. morning. speaking in keep for John parts really has of Thanks, the top guidance are item. near-term of at and new this There several moving especially that To there, because is that some adoption there to are increased line a AutoSlide going we been our revenue the product of point, products,

rate You also on day AutoSlide as models. model. different have price importantly work not we with some unit a accretion basis on is per contracting a

through have and land will forms the we customer these contract move beneficial various days, of mutually forms of on some that ourselves. probably best early to as We contract are the few and we of

to goals, until more much So, those a process. moving get guidance. we top-line discreet of it is Obviously, a have sort we point, really this more well but internal learn that we through are as as

Sean Meakim

relative very is us the helpful. on That quarter prior to Are hindsight that? give one to color you able any the before

Mark Smith

Not at this stage, Sean. Not at this stage.

Sean Meakim

enough. Okay. Fair Maybe.

number be you middle are XX between contract relative something? next you So timeframes the opportunity set an switching to could months that international, East? exported in whatever U.S. how And see what could of over Latin rigs those to with, of terms you of prior terms maybe just America the sense give are latest us is or a comfortable from looking curious just and

Mark Smith

our mentioned, in discussions are Columbia John a a that in put excited as Argentina new We rig back as as country. the the country. unconventional basis and customers long-term have marketing to that we and Well, to to being work in dynamics through we are there still play are are in on sort patient excited we about continue

the year, we had related rigs. through rest five-year and of discussions have of those YPF in other be calendar to rolling and of we redeployment been this to original contracts continue players the But, rigs with off do in the IOCs and

cautious, trying if guidance. a it more be I the relates As bit to to will, specific provide Middle would East, any in you

to participate plays some numerous We is very shape excited unconventional and in East various in a as the really have in are take began that scale in being about to they there. countries able Middle at discussion happening countries

super-specs to opportunities but early through excited XX to they it preliminary of So, fruition. in of the are the all range be participating come idle discussions. candidates discussions, type some the States those from great those we to put days, And Tinder when is to that United discussions to in way have

Sean Meakim

So you or level markets? wouldn't be rates those across able any at of to characterize term in changes high

Mark Smith

The of we can could with discussed really some knows, happening who FlexRigs add we HPT And the have And as previous yet. No. we Not through. also products we speak there rig as the calls Technology well. pull think as have the middle Technology value some in a be in trials HPT East.

Sean Meakim

Right.

Okay. a lot. Thanks

John Lindsay

Sean. Thanks

Operator

comes from Marc question next from Cowen. Bianchi Our

open. is line Your

Marc Bianchi

you. Thank

mid this to kind you to points us $XXX and else appreciate if profit. there. to quarters, from offshore up $XX had the your I new I don't any most wondering take and in kind at we that we have gross perhaps of insurance just G&A that we of I and of R&D the need U.S. EBITDA? HPT your give following all want profit quarter of to get I'm Because what that Just deduct and get the assume million million a Land bucks question obviously guidance, then guidance. recent thing got on this that profitability. International and but from to gross and item of I is what

Mark Smith

into question built things There is there, several Marc. your

there. captive. let insurance the those change the premiums From first captive. operating just perspective no the As it just me relates there segment all, of is is to of expense a to - address It transferring

consolidation. in intersegment eliminated and is a is the And retention big deductible. self-insurance and to it captive, which Again it revenue is

that segment But really expense change. managing the a perspective, no are differently captive. we so retention a bit from through And

HPT? to relates it As

Marc Bianchi

you are I on Mark, just go piece. that it Sorry, the clarify on insurance ahead. just can because

to to the additional XXX segments. make the to So your no to gross of I as EBITDA get profit, need that that relates of it to that is deduction in would that all is insurance. There

Mark Smith

reconciliation, see be that the later the release segment XX-Q the filed and can press in is which in today. will You in

John Lindsay

we And Marc, can of reconciliation through walk the kind you offline. the

Marc Bianchi

Yes, I getting is of it think live, a talk it. questions to cause about about lot it I'm good

the investors to about and interested. perhaps very R&D. were you So other G&A going talk Mark, are the

Mark Smith

G&A. the Yes,

your there. to the question Marc particular EBITDA have we think number. more I details within all on to but to really, specific your components any HPT get in

we before said service. base, as growing We the are have really and it, software excited revenue have because technology about a we is

deployments, in are we getting initial really started. So these

but bit accretive HPT in operating of portion fixed what a is related The of be business well. through have as the the a a expect we R&D time, particular pretty talked G&A is margin to that have we and is really variable to We expenditures, about.

opening through I the technology changes through has obviously. have mentioned R&D any we comments, in will that As my drop-off the time roadmap have articulated, Once full-year John we get guidance. don't we to

opposed to horizon. software. move the go But you that a software, sort our to in version-to-version if once on you maintenance, will so out new as And a planning bit is you from of

if stick to in the R&D So, able and to with you numbers get for your you will be mentioned G&A EBITDA. November et cetera, we yearly

Marc Bianchi

release ample comment it. on did I I is Got of the flexibility just then Got in any more if caught could kind it. about M&A investment of That the kind comment press And don't Mark. of to out build opportunities. the Thanks. make capability, additional take you that you M&A, to great, having but advantage to the need automation do

to help So might you know, and for expectations referring set some I'm be M&A for maybe what curious, just us. that

John Lindsay

Well, is heard have Marc. consolidation perspective, any to do, an plan don't we in rigs M&A From as industry, far go. as which what the the past you in

we obviously as based I making be continuing that the there grow investments the think the the be customer enhance demands investing. potential internationally to to side, on where is Mark and upon that we going is that fleet are to mentioned, will are technology

Marc Bianchi

it. Got

will very turn Thanks I it much. Okay. back.

John Lindsay

Thanks Marc.

Operator

next Anderson from comes with Barclays. Our David question

Your line is open.

David Anderson

So, talking about how talking also - about John, improve and contracts. your performance AutoSlide to are we

your AutoSlide wondering how Are new work on commercial in is you any models. those yet? XX% contracts which just of two business, I'm of employing the of the these together kind So

John Lindsay

grow You know, particular the right of the there is now point, But had discussion. functionality and bids lot definitely it have overlap been does made. think AutoSlide in we we some sense to have. any I To that a speak automation as we general. it I make your in in can't that

think I potential that there. is there

David Anderson

customer And skewed curious XX%. mix. if operators? I'm are you also little Is kind of about talked curious bit the those then, also noted we more I'm just just your wondering of to types the of of just certainly that that, I'm the towards gone share related. talk I because a which up. that had bigger how about are majors receptive customers more

John Lindsay

first small now to the related not to and equation. have I answer contracts going side contracts and question the major expect your interest on have the right the of E&Ps, of to part These performance large we is, Really and is the with that that into are growth go continue.

out mean, enhance it rule are not they only I but overall value-oriented I at the ways lifecycle time-based value. and I look think face the But, as it, let's value, well very of wouldn't longer-term. value, much majors to

I have opportunity we of lot think there. to a grow

opportunity some gives So, forward. hopefully that going us

David Anderson

if think elaborate Yes, certainly I would the about so. just wonder growth in bit Middle the just East. opportunity little could a you I

UAE. also little have an I you just remember saw, Saudi, announcement how are of couple and I if rigs working in which major ever also idle just wonder think last the It wondering Bahrain don't a you five said rigs wouldn't came East, play I just countries that you you if in are looks you Could big reactivating GCC there? about East telling the operating about operating unconventional mind Could UAE. is time today. a us in And saw in just talk are? couple just UAE, like We Middle bit related. rigs I particularly you tell we all of qualified in if us just in out the in a where a qualified Middle those Saudi? you you at

John Lindsay

with you the off it specifically. that mentioned start five just will I

developing Bahrain, our and a that same play really And Bahrain a countries several rigs in going there. we have in Dhabi working, two closed we operations Ecuador as now idle And you what interestingly this visit exciting to in and And many and that we opportunities them went year a in the rig there size I back sensing those are that is perspective the open as one including of all UAE. we if Abu could subscale ago size five countries and marketing year because think be idle unconventional yes to continue venues, Abu those kept have last customers well. to is its purposely there had working coming time Dhabi. fruition, of at operation to

David Anderson

you What qualified there? about Saudi? Are

John Lindsay

have have And do at entity We an should in the East. Saudi countries we Arabia, I entity the in various actually entities Middle say. legal

David Anderson

Thank you.

Operator

Citigroup. Our next Gruber with Scott from comes question

Your line is open.

Scott Gruber

morning. Good Yes.

John Lindsay

Good Scott. morning.

Scott Gruber

for capital working on Mark. Question

have like Do us whether any going for the working cash improve should for full-year? it color a capital working will drag So HP sounds forward. it benefit on you a capital be or for

Mark Smith

It should improve, as the I in mentioned comments.

level. to be we activity going stable are relatively I think

So or I being relatively honestly. think to capital will stable be as a benefit appose as drag well big working

H&P successful at at projects rock we can we that, we this over of working capital said more have and we last turn inventory trying Having every had levels. to still assessment an looking including year fiscal year. are are we that some And our

Scott Gruber

the just has Got on smaller primary to and some not it think widened rate like do the your players, appears relative and on to competitors. just premium Land, Land of relative bigger, even you U.S. but your U.S. in back

a actually think premium there? bit You widened has your rate

Mark Smith

least drilling have I widened. know our the yet. data at to don't know other they of reported is I believe details I have don't the if Scott, it peers,

our have I we general think discipline pricing sector. in had in

level lot of As value. a are the mentioned, performing adding and I have rigs at a high

harder, to there again, in made, to and those expenses. think reasonable cover everyone's of cost is an best general for there keep that the I because an in I side revenues pricing levels so, think of be element or And argument to is the working in is today's to equation And increasing rigs it that at interest levels. continue order

Scott Gruber

for the Got it. That is it for me. color. Thank you. Thanks

Mark Smith

Scott. Thanks

John Lindsay

Thanks.

Operator

Mulvelhill comes Bank America. of Chase with question from next Our

line Your open. is

Chase Mulvelhill

back base of me for come the are in. new that squeezing the performance the to pushing market. to models out I to Thanks commercial wanted Hey. you

services. if it walks the some saving, like XX,XXX through kind drilling of of be kind So, the Could back kind you looks you other you drilling XX,XXX for cost pieces we people How off much of of do kind customer? well. it versus are you of per your that maybe savings different faster to of of the saving envelope are or math, some is of cannibalizing taking may

of your the So, just understand, the different kind value buckets help customer. proposition us to for

John Lindsay

total of days, those simple I those between would a time, the you you two savings two shared related savings. days XX-day is real spread of say rate example Chase, to total share are and a $XXX,XXX and look and at essentially savings, as and most well then of

say you split So, savings. let's the

of So, $X,XXX well, type a additional on you have a XX-day day revenue. got

other a to the where want KPI type to tip specific now. at right are give trying as well. type during performance course you well, key items indicator the all on of I'm There the example. those customers - I don't simple of models my have focus tongue

by perform rate. a they But peer do essentially and/or for to challenges what lower then doing higher of than are and are bit little and most are areas level a rate those would opportunity earning and to be able higher that come an in having a we that at our there going is us with in

Chase Mulvelhill

Got it.

follow-up third-party service risk risks we If know, baseline of the then providers, there? trying yourself contracts, about are what how you are also, think of of performance the kind about, quick on absorbing continues performance-based it kind the you If performance-based how side? the protect just to do And as improve. A on you you Okay. think contracts. seems to attack resetting always like with perpetual a you

you how as on do So yourself element well? protect that

John Lindsay

Well, question. that is a very good

or third-parties. You there framework contracts and negative resetting result as types either of obviously these results a the seen be overtime some of can

data we as look experience we expertise think the that have. and at I set and our

the handle particularly been that particularly have have good a pretty past. a we the obviously in that of have pretty customer we we areas know, or partnership that the are good problem on with, working share those are a You understanding

the drillers obviously Internally drilling. one obviously is expertise in AutoSlide of a We directional component. significant directional directional the algorithms. and those drilling with then And have obviously

we data of before. didn't have our at that lots So fingertips previously

So that jointly I working some work us customers our even location. with are think high-grade potentially it the with helps on us to actually third-parties of

the of you third-party that or not equation. the just piece out is have concerned by Obviously something in the reset overly the to I'm mentioned work overall, bothered that contract. So you

our industry win. our we more customers. And together working win in we about if obviously how changed think I and they I with improved and us because have as think overtime they Right. really again, win partners But we want that that as are to

And opportunity a so to in out better both come parties an there is for place.

Chase Mulvelhill

Good are Awesome. your with work customers John. hear to to willing Thanks you. to that Alright.

John Lindsay

Alright Chase. Thank you.

Operator

to back closing program the turn for now John will any I Lindsay And remarks.

John Lindsay

the today. on Alright, thanks you and Nikki, really us We for everyone joining it. call to thank appreciate

looking is all to are what looking day. our future, earlier, bright as you have said great XXXX, ahead forward we I We Centennial to and that. are thank And, forward doing during looking but a really to our celebrating

Operator

concludes does today's This conference.

You everyone. good may disconnect your line. And day. have a

Helmerich & Payne (HP) 4 Feb 202020 Q1 Earnings call transcript