Helmerich & Payne (HP)·Q1 2026 Earnings Summary

Helmerich & Payne Beats on EBITDA as FlexRobotics Debuts; Stock Hits 52-Week High

February 5, 2026 · by Fintool AI Agent

Helmerich & Payne (NYSE: HP) reported Q1 FY2026 results that exceeded expectations on EBITDA, with the drilling solutions company posting Adjusted EBITDA of $230M against consensus estimates. The stock rose 2.0% on earnings day to $36.41, touching a new 52-week high of $36.73. The quarter was marked by the first commercial deployment of FlexRobotics Technology with a Super Major in the Permian Basin, a milestone that CEO John Lindsay called a "game-changing" development for rig floor automation.

Did Helmerich & Payne Beat Earnings?

H&P delivered a mixed but generally positive quarter. Adjusted EBITDA of $230M came in ahead of consensus expectations, while revenue of $1.02B was essentially flat quarter-over-quarter.

²Proforma = Legacy H&P + Legacy KCAD

The GAAP loss of $0.98 per share was primarily impacted by a non-cash impairment charge of $103M ($0.80 per share after-tax). Excluding impairments, restructuring, and acquisition costs, adjusted net loss was $14M or ($0.15) per share.

How Did the Stock React?

HP shares rose 2.0% on earnings day (February 4, 2026) to close at $36.41, touching a 52-week high of $36.73 intraday. This continues a strong rally since Q4 FY2025 earnings in November 2025 when the stock traded around $26.

The stock has significantly outperformed over the past 12 months, rising from a 52-week low of $14.65 to current levels—a gain of over 140%. Key drivers of the rally include successful integration of the KCA Deutag acquisition, improving international margins, and progress on debt reduction.

What Did Management Say About Segment Performance?

All three operating segments exceeded or met guidance midpoints:

North America Solutions

The NAS segment delivered direct margin of $239M, slightly exceeding guidance midpoint, despite a softening market environment.

CEO Lindsay noted: "Our NAS segment continued to hold its industry-leading position... We effectively managed basin-level activity churn, including in the Permian, where we maintain leading market share."

International Solutions

The International segment exceeded guidance high-end with direct margin of $29M.

Seven rigs are being reactivated in Saudi Arabia—two masts are already raised, with a third ready imminently. Six of seven reactivations are expected by mid-2026, with the seventh still being scheduled. Each reactivated rig is expected to contribute approximately $5M in annualized EBITDA. The FlexRig fleet in Saudi is also improving, with management expecting $20-25M in annualized EBITDA contribution from those rigs at full run rate. Once reactivations complete, management expects International Solutions direct margin to exceed $45M per quarter.

Offshore Solutions

Offshore Solutions delivered direct margin of $31M, consistent with expectations.

H&P holds approximately 30% of the global platform operations and maintenance market.

What Changed From Last Quarter?

Key developments this quarter:

1. FlexRobotics Technology Deployment: H&P's new automation system was deployed with a Super Major customer in the Permian Basin across 3 pads. After drilling 10 wells, the system is achieving P40 performance—better than the P50 target initially set with the customer. The system uses three off-the-shelf robotic arms and is retrofit-ready for any active rig. Management noted "several inbounds on our latest innovation" from interested customers.

2. Accelerated Debt Reduction: The company has repaid $260M of its $400M term loan as of January 2026, ahead of schedule. Full repayment is expected by the end of Q3 FY2026.

3. CEO Transition: John Lindsay announced he will retire in March 2026 after 39 years at H&P and 12 years as CEO, with President Trey Adams set to lead the company. Adams outlined four strategic priorities: (1) International growth and Eastern Hemisphere expansion, (2) Maintaining North America leadership, (3) Deleveraging and fiscal discipline, and (4) Enterprise optimization.

4. Impairment Charges: The quarter included $103M in asset impairment charges, primarily in North America Solutions ($98M).

5. Capex Guidance Reduction: FY2026 gross capital expenditure guidance was trimmed to $270-310M.

6. Geothermal Expansion: H&P added a second rig in North America for geothermal and signed an LOI for a third. In Europe, the company received three geothermal contract awards in Germany, Denmark, and the Netherlands.

7. Portfolio Optimization: Management has line of sight on over $100M of divestments as part of post-acquisition streamlining.

What Did Management Guide?

Management provided the following guidance for Q2 FY2026 and full year:

Q2 FY2026 Guidance:

FY2026 Guidance:

Q2 guidance reflects typical seasonality and Saudi reactivation timing. Management noted that reactivation costs expected in Q1 slipped into Q2, creating "some lumpiness between quarters." CFO Kevin Vann stated: "What you're going to see... is a material step up in gross margin coming out of our International Solutions segment from the second to third quarter." Management remains comfortable with the full-year outlook, expecting NAS rig count to approach the midpoint of the 132-148 guide in the back half.

What Is the Macro Outlook?

President Trey Adams provided the strategic perspective:

• Energy Demand: "We firmly believe that in the future, the world will require significantly more energy than it consumes today, driven by expanding population and growing prosperity in emerging markets, along with the rising power needs from AI advancements."
• 2026 Outlook: Global upstream investment expected to be "flattish overall" with notable regional variations.
• North America: "Likely to remain the most restrained market in the quarter ahead" with activity expected to gradually improve through the year and strengthen into 2027.
• Gas Markets: "The outlook for gas markets is more robust. Structural growth continues, fueled by demand for LNG and surging AI-led power demand."
• International: Demonstrating greater resilience with "a clear uptick in activity in the Middle East."

What Were the Key Q&A Highlights?

On North America Pricing Discipline:

"We're still staying true. We're not wavering from the 45%-50% direct margins... We're not chasing market share. And really, why 45%-50% direct margins? It's what we need as an organization to continue to invest back in the organization and to achieve the outcomes that our customers are looking to achieve."

On Private E&P Activity:

"Private E&Ps, compared to a couple of years ago, definitely didn't load to the wagon in the fourth quarter and into the first quarter like they had been over the past couple of years."

On Venezuela Opportunity:

"The potential reopening of Venezuela could offer meaningful growth for H&P in the medium term. We have a long and distinguished heritage of operating in the country, and with the right operator, commercial framework, and returns profile in place, we could mobilize relatively quickly."

On International Growth Vision (Incoming CEO Trey Adams):

"We are very, very focused on continuing to build our Eastern Hemisphere land exposure, the Middle East and North Africa... We believe we're in the early innings of a really long game here and a long great growth story in the international market."

On Impairment Details: The $103M impairment covered 30 rigs that were mostly already decommissioned and hadn't worked since COVID or earlier. Components from these rigs have been reused across the active fleet, including driller cabins and Level 1 automation equipment.

Balance Sheet and Liquidity

H&P maintains a strong liquidity position of $1.2B:

Debt Schedule:

The company is targeting approximately 1x Net Debt/EBITDA while retaining investment grade status. CFO Kevin Vann confirmed the remaining $140M term loan balance is expected to be repaid "by the end of our third quarter" purely from organic cash flow.

Key Risks and Concerns

1. Sustained Impairments: Three consecutive quarters of significant impairment charges ($103M this quarter, $19M last quarter) raise questions about asset valuations.

2. North America Softness: Average working rigs in NAS declined from 149 a year ago to 143 this quarter, with guidance suggesting further decline to 132-138 in Q2.

3. Saudi Arabia Timing: 7 rigs are being reactivated, with 6 expected by mid-2026 and the 7th still being scheduled. The balance of reactivation costs shifting from Q1 to Q2 is creating margin volatility.

4. CEO Transition: While management emphasized continuity, leadership changes during a challenging market environment introduce execution risk.

Investment Thesis Summary

Bull Case:

• Industry-leading margins in North America with $18,193 margin per day
• FlexRobotics technology creates differentiation and potential pricing power
• Accelerated debt paydown improving balance sheet flexibility
• International reactivations provide growth catalyst for 2H26/2027
• 30% market share in offshore platform operations provides stable cash flows

Bear Case:

• Continued softness in North American drilling activity
• Significant impairment charges suggest overcapacity
• Integration of KCA Deutag still in progress
• Oil price sensitivity and customer capital discipline headwinds

Other Notable Developments

• Australia Expansion: H&P is adding a second rig in Australia.
• Argentina Technology Investment: During a temporary activity moderation, H&P is investing in technology and digital applications in Argentina to enhance fleet capabilities.
• Oman Digital Rollout: H&P is deploying its technology and digital solutions in Oman for key IOC clients.
• SG&A Synergies: Since the KCA Deutag acquisition closed, H&P has reduced SG&A by over $50M relative to pre-merger standalone run rates.

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View the full Q1 FY2026 Earnings Presentation | HP Company Profile