H&P Fiscal Q3 2026 Earnings: Asset Sale Drives GAAP Profit

Helmerich & Payne (NYSE: HP) reported fiscal third-quarter 2026 revenue of $1.035 billion, down approximately 0.6% from $1.041 billion a year earlier, while diluted EPS improved to $0.74 from a $1.64 loss. A roughly $115 million gain from the Utica Square sale materially lifted GAAP earnings; excluding select items, H&P recorded an adjusted net loss of $10 million, or $0.11 per share, while adjusted EBITDA totaled $236 million.

Core Earnings Data

Revenue was nearly unchanged year over year but increased about 11% from the preceding quarter’s $932.4 million. The much larger improvement in reported profit primarily reflected asset-sale gains and substantially lower impairment charges rather than comparable revenue growth.

Adjusted net income and adjusted EBITDA are non-GAAP measures. The reported operating margin also includes the effect of asset-sale and other gains.

Business and Segment Performance

North America Solutions

North America Solutions generated operating income of $140 million, up from $111 million in the preceding quarter. Direct margin increased to $241 million from $215 million, with an average of 142 active rigs and direct margin of $18,669 per day.

H&P deployed 10 additional rigs as private and smaller independent operators increased drilling activity. Daily margin also rose by more than $1,000 sequentially, showing that the additional activity did not come at the expense of per-day economics.

International Solutions

International Solutions remained unprofitable, but its operating loss narrowed to approximately $54 million from $100 million in the preceding quarter, which had included a $26 million impairment. Direct margin increased to $31 million from $11 million, with an average of 65 rigs working.

Argentina was an important source of commercial momentum. H&P secured contracts for five additional rigs tied to Vaca Muerta development, including three rigs scheduled to be exported from the United States later in 2026. The company also continued rig reactivations in Saudi Arabia.

Offshore Solutions

Offshore Solutions reported approximately $17 million of operating income, compared with $14 million in the preceding quarter. Direct margin rose to $29 million from $27 million, helped by performance-related bonuses. The segment operated three active rigs and 30 management contracts.

A four-year Norwegian contract renewal increased offshore backlog to $3.6 billion, including firm and optional contract periods. This long-term contract portfolio provides greater revenue visibility than the company’s more activity-sensitive land drilling businesses.

Asset-Sale Gain Drives GAAP Profit While Adjusted Earnings Remain Negative

The difference between H&P’s positive GAAP EPS and adjusted loss is the quarter’s central earnings-quality issue. GAAP EPS of $0.74 included a net $0.85-per-share benefit from select items, led by a $0.88-per-share after-tax gain related to the real estate sale. Removing those items produces the adjusted loss of $0.11 per share.

The year-over-year profit comparison was also helped by the absence of the prior-year impairment burden. Asset impairment charges fell to $1.2 million from $173.3 million, while the current quarter included $120.0 million of other gains on asset sales and a $13.6 million gain on involuntary conversion. As a result, the improvement in GAAP operating income was substantially larger than the movement in revenue or underlying adjusted earnings.

Cash Flow and Balance Sheet

For the nine months ended June 30, 2026, operating cash flow increased to $372.7 million from $336.0 million in the comparable prior-year period. Capital expenditures declined to $200.2 million from $362.2 million, while real estate asset sales generated $127.7 million of proceeds. These are nine-month figures and should not be treated as standalone quarterly cash flow.

Cash and cash equivalents were $204.4 million at quarter-end, compared with $196.8 million at September 30, 2025. Total debt was approximately $1.86 billion, down from approximately $2.06 billion, reflecting a $200 million payment on unsecured long-term debt. H&P also returned approximately $25 million to shareholders through dividends during the quarter.

Fiscal Q4 and Full-Year Guidance

H&P’s fiscal fourth-quarter outlook points to another sequential increase in North American direct margin at the midpoint. International guidance is wider, while the Offshore midpoint is close to the third quarter’s $29 million result. The release did not provide previous guidance ranges for comparison.

At the midpoint, North America’s fourth-quarter direct-margin guidance is $250 million, above the third quarter’s $241 million. International’s $35 million midpoint is also above the third-quarter result, although the $25 million-to-$45 million range indicates greater uncertainty.

Management’s View

Management said demand from private North American operators remains constructive and highlighted technology adoption and super-spec rig opportunities in Argentina. However, it described near-term market conditions as fluid, particularly in the Middle East.

H&P is also beginning company-wide initiatives to reduce costs, increase efficiency, simplify its portfolio, and streamline support functions. CFO Todd Scruggs said the intended outcomes are higher margins, stronger free cash flow, and faster debt reduction, while preserving the base dividend and funding selected growth opportunities.

Recent Insider Transactions

The supplied six-month insider summary shows 39,548 shares acquired across seven transactions and 92,116 shares sold across three transactions, resulting in net sales of 52,568 shares. Insiders held 3.84 million shares in total, and the net reduction represented 1.40% of those holdings.

The latest 10 reported records consist of three officer sales and seven director stock awards. All were reported as direct transactions; the data alone does not establish the insiders’ reasons for selling.

Risks Investors Should Monitor

• Adjusted earnings remain negative: The $115 million Utica Square gain lifted reported profit, but H&P still recorded an adjusted net loss of $10 million.
• International execution remains uncertain: International direct margin improved, but the segment still posted a $54 million operating loss and issued a relatively wide fourth-quarter margin range.
• Middle East conditions are fluid: Saudi rig reactivations are underway, but management specifically identified near-term Middle East market conditions as uncertain.
• North American demand may change: Recent growth came primarily from private and smaller independent operators, while management said super-spec rig supply-and-demand conditions continue to evolve.
• Debt and interest costs remain material: Total debt was approximately $1.86 billion, and full-year interest expense is expected to be about $100 million, making deleveraging and cash generation important.

Summary

H&P’s fiscal third quarter showed better sequential operating momentum in North America, a substantial improvement in International direct margin, and stable Offshore contributions. However, the return to GAAP profitability was driven largely by the Utica Square sale and lower impairment charges, while adjusted earnings remained slightly negative. The next areas to monitor are whether North American activity reaches the fourth-quarter guidance range, whether International converts improving direct margins into lower operating losses, and whether cost initiatives and cash generation support continued debt reduction.

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