Good day, everyone, and welcome to today's Helmerich & Payne's Third 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 this call is being recorded. I'll be standing by, if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Dave Wilson, Director of Investor Relations. Please go ahead. Dave Wilson - Helmerich & Payne, Inc.: Thank you, Wendy, and welcome, everyone, to Helmerich & Payne's conference call and webcast corresponding to the third quarter of fiscal 2018. With us today are John Lindsay, President and CEO; and Mark Smith, Vice President and CFO. John and Mark will be sharing some comments with us, after which we'll open the call for questions. As usual and as defined by the U.S. Private Securities Litigation Reform Act of 1995, all forward-looking statements made during this call are based on current expectations and assumptions that are subject to risks and uncertainties as discussed in the company's Annual Report on Form 10-K and quarterly reports on Form 10-Q. The company's actual results may differ materially from those indicated or implied by such forward-looking statements. We also will be making reference to certain non-GAAP financial measures such as segment operating income and operating statistics. You may find the GAAP reconciliation and comments and calculations in yesterday's press release. With that said, I'll now turn the call over to John Lindsay. John W. Lindsay - Helmerich & Payne, Inc.: Good morning, everyone. Thank you for joining us on the call this morning. I'm going to begin by welcoming Mark Smith to the H&P team. Today is, of course, his first conference call with H&P. So glad to have you onboard…

And we will take our first question from Tommy Moll with Stephens, Inc. Please go ahead. Your line is open.

Good morning. Thanks for taking my questions. John W. Lindsay - Helmerich & Payne, Inc.: Good morning, Tommy.

I wanted to follow up on your comment about the Flex4 upgrade potential. I think you called out seven Flex4s where you think there's a potential upgrade to super-spec with the capital investments and were in line with the Flex3 walking upgrades. Am I right that that's about the $8 million range under the two-year term and mid-20s provide efficient returns or with the basic parameters that the contract need to be more attractive? John W. Lindsay - Helmerich & Payne, Inc.: Yeah. Tommy, that is, so it's a Flex4 that we're doing a conversion on. So we're converting the Flex4 to the Flex3 walking. And yes, that is ballpark $8 million. And our expectation would be that it's in line with how we've described these upgrades two-year term contracts and mid-20s pricing.

Great. And just as a follow-up, have you peeked at the remainder of the Flex4 fleet to think about how deep you could go in there for upgrades? Or was it just at first look you found seven, but could potentially go back later? John W. Lindsay - Helmerich & Payne, Inc.: Yeah. I think we've kind of talked about this over time. We haven't spent a whole lot of time on this just simply because we haven't had the time and we've had, of course, all of the upgrades on the FlexRig3s. So, our engineering group did some work, came up with these seven. We haven't done any additional work on the others. There'll be more to come on that, but it's kind of hard to say what the timeline would be.

Fair enough. And then shifting to technology, your advantage there goes back a number of years with the original FlexRig capability. More recently, we've seen it with the acquisition of MOTIVE of MagVAR, which suggests now the curve is more in terms of data and automation. Can you update us on how those integrations are going? What anecdotes you're getting from customers? And do you see other kinds of technological capabilities you might want to add to the portfolio? Thanks. John W. Lindsay - Helmerich & Payne, Inc.: You're welcome. Sure. The integration of both companies has been really good. It's been a strong integration. Really similar cultures, which is important I think to success. I think what really speaks to the success is, if you look at the rig count growth, MOTIVE is I think around 30 or so rigs and I think when we made the acquisition, we were probably at 10 or so. So there is some adoption. As you know, in our business, technology adoption can be somewhat slow. But it's got some real upside, it's got some real opportunities. You heard us talk about wellbore quality and wellbore placement being more and more important. So MOTIVE plays a big role in that, as does MagVAR. And again, MagVAR has over 240 rigs that they're working on today. I want to say H&P is about a third of both the companies in terms of FlexRigs. So that's important. And then to kind of highlight the automation piece, MOTIVE is playing a large role in that in working with the H&P team and getting, like I said, to kind of that level three automation, so we're excited about that as well. So I think both acquisitions have been strategic. Are there other opportunities out there? Obviously, we're always keeping our eyes open looking for other opportunities. The data side is an important side of the equation as well. So, yeah, we're feeling pretty good about it.

Great. Thank you. That's all for me. John W. Lindsay - Helmerich & Payne, Inc.: Take care.

And we'll take our next question from Brad Handler with Jefferies. Please go ahead.

Thanks. Good morning, guys. John W. Lindsay - Helmerich & Payne, Inc.: Good morning, Brad. Mark W. Smith - Helmerich & Payne, Inc.: Good morning.

I guess, let's talk some numbers, please. So, with 126 rigs contracted versus the 106 that you talked about in mid-May, can you tell us a little about the term on those 20 rigs and some color on the rates as they may have compared with contracts earlier in the year? John W. Lindsay - Helmerich & Payne, Inc.: Yes, Brad.

Okay. I was afraid for a minute I got cut off. Mark W. Smith - Helmerich & Payne, Inc.: The average term of those is really about a year, I would say. And our rates, as John had alluded to in his prepared comments, are approaching mid-20s.

Presumably I think we're supposed to believe that they were higher than contracts made through, say, the first calendar quarter or even in April or something? I mean, have we seen progression through the course of the year? John W. Lindsay - Helmerich & Payne, Inc.: We have, Brad. I think Mark's reference to one year is the average that's on those 120. The most recent contracts we're entering into are between one year and two year. If there are upgrades, we're requiring two years. So that's obviously a factor. The most recent term contracts we're entering into are higher than the average for those non-new-build term contracts.

Got it. Okay, thank you. And then, I guess, I'm going to ask for your perspective on some of the industry and the upgrade opportunities to super-spec. I'm actually just coming off a call where we've heard about one of your competitors taking 1,000 horsepower rigs and putting a fair amount of capital, I guess, it was about $15 million apiece to upgrade four rigs to super-spec capability. How much are you hearing that around the industry? And has it changed your perspective? I think if we rewind to your recent comments, we were still talking about roughly 100 rigs that you thought could be upgraded fairly easily to super-spec. Is that number growing now? Again, I reference one example from today and your own example, of course, from the Flex4s. But is that number starting to grow? And if so, have you tabulated it? John W. Lindsay - Helmerich & Payne, Inc.: Brad, I don't know that that number is growing that much. And the reason why is because in our calculation, if you're using the pure super-spec definition that we use, we think there's around 450 that are running today that have been upgraded. There's another 200 or so that we think can be upgraded. We have I think around or close to half of those, maybe it's 40% now, and I think half of those 200 are working. So I think the question still remains, outside of the H&P fleet, which of those rigs that fit kind of the description are actually going to be able to be upgraded at a reasonable price. And then to the rest of your question is, well, what about the 1,000 horsepower. So it's interesting that some contractors are taking I think the strategy of looking at some of the lower-end horsepower rigs and upgrading them to a higher capacity. And then others, some of those 1,500 horsepower rigs they may deem are just not economic to upgrade to put back into the marketplace. I'm not certain we have enough information right now. I still think – I think we've been pretty consistent in saying that the total upgradable fleet we thought was probably in the 600 to 700 range. In the pure kind of classic definition, like I said, is anywhere from 600 to 650 and then there's another 50 to 100 that are out there that I think are probably captured in the rigs that you're describing.

Got you. Got you. Okay. Mark W. Smith - Helmerich & Payne, Inc.: Brad, I would just remind that the place we're in and the market here at Helmerich & Payne is a good place to be relative to the numbers you threw out. With essentially 75 FlexRig3s and the 7 FlexRig4 conversions John mentioned in his prepared comments, we have 82 that we can take to super-spec that cost us $8 million or less essentially depending on the type of multi-pad capability that we put on the vessel.

I understand that point, for sure, but thanks for pointing that out. Okay. Very good, guys. I'll turn it back. Thanks. John W. Lindsay - Helmerich & Payne, Inc.: Thanks, Brad.

And we'll take our next question from Colin Davies with Bernstein. Please go ahead. Colin Davies - Sanford C. Bernstein & Co. LLC: Thank you. Good morning. John W. Lindsay - Helmerich & Payne, Inc.: Good morning, Colin. Colin Davies - Sanford C. Bernstein & Co. LLC: Good morning. Just I'd like to talk a little bit more about this Permian issue. And obviously, it's very encouraging in the prepared remarks that you've got line of sight to increased activity in the next quarter and beyond as well. But as we think about this fundamentally temporary phenomenon in the play with the takeaway capacity issue, can you give some color as to sort of where does your line of sight or confidence in that outlook start to wither a little bit? I mean, are we talking middle of next year or beginning of next year or the end of next year? John W. Lindsay - Helmerich & Payne, Inc.: Colin, I don't know that we have enough clear insight and to go out that far out into the future and which is why we try to keep our prepared remarks to the rest of this quarter, the rest of this calendar year, I even mentioned I think Q1 of 2019 and primarily the reason with Q1 – calendar Q1 of 2019. And the primary reason I mentioned that is because we have some customers that are committing to and contracting rigs, super-spec rigs that are taking upgrades in that first calendar quarter and in the Permian Basin. So we haven't seen any behavior change from customers. Again, we think that today's activity is a function of a $50 to $55 oil price, not a $65 to low $70 oil price that we've actually been experiencing. So our customers have been…

And we will take our next question from Kurt Hallead with RBC. Please go ahead.

Hey, good morning. John W. Lindsay - Helmerich & Payne, Inc.: Good morning, Kurt. Mark W. Smith - Helmerich & Payne, Inc.: Good morning.

Hey Mark. And welcome aboard, Mark. Mark W. Smith - Helmerich & Payne, Inc.: Thank you. It's good to be here.

So, hey, John, obviously, I think you definitely peaked my interest in what you said about launching a dual-derrick land drilling rig. Obviously, the dual-derrick concept has been deployed on drillships primarily offshore. So it's kind of the first foray of that into the land drilling business. So maybe give us some context, John, if possible, to kind of get a sense as to what kind of adoption rate you might expect for the dual-derrick concept over time? And do you see it evolving potentially in the same way that the FlexRig evolved when Helmerich & Payne first launched that concept back in the early – in mid-2000s? John W. Lindsay - Helmerich & Payne, Inc.: Kurt, I think it's very, very early in the game to try to really understand what kind of application it's going to have onshore. This is something that we've kind of talked about internal for a while. We had a customer that had a lot of interest in trying it and I think we kind of work together and help make that happen. I think there's still a lot of – again, the rig's just been out since mid-June, so there's still a lot of opportunity for learning. But when you start thinking about some of the advantages that – minimizing flat time, NPT, some of the economics and just some of the simultaneous operations that might be able to go on have some capability. But again, I think they're looking at as kind of multi-functionality, the rigs can work together, they can also work offline from one another. So I think it is different than the Offshore model. There's probably some similarities, but I think there's also some additional capacity. Obviously, we're not limited by a footprint of the structure, of the ship, whether it's a drillship or whether it's a platform. We do have the ability to have those rigs work together and then also kind of independently. So it's got some features. I think from an H&P perspective, it's a FlexRig5 and a FlexRig4. We obviously have the capability to do more of those – these types of rigs, these type of projects with the fleet that we have. But again, I think we're probably a couple of quarters in trying to figure out what that's going to look like. We thought it would make a lot of sense to get out and talk about it. Again, it hit Instagram and Facebook pretty hard, so we thought we'd at least get out there and talk about it a little bit.

Interesting. Interesting concept. Okay. That's great. So, I guess, my follow-up question would be along the lines of – outside the Permian, can you talk a little bit about what you're seeing in terms of potential rig demand? And I just wondered if you might be able to put that into context I think there's been some discussions that I've had with varying investors that say, okay, it's unlikely to see any increase or potential significant increase in drilling outside the Permian because E&P companies have pretty much bet the motherload on acreage in the Permian and don't have a whole lot to kind of go after outside the Permian. I just wondered if you could provide some perspective on that. John W. Lindsay - Helmerich & Payne, Inc.: Yes, Kurt. Our rig count is up slightly in the Eagle Ford, a couple or two or three rigs. We got a couple rigs that went to work in SCOOP/STACK play. We've had some commitments in the Bakken, which are positive. Again, I think kind of the underlying theme here is that with budgets set with a $50 to $55 oil price environment and with budgets being reset towards the end of the year going into 2019. And if it is a $60 to $65 or $65 to $70 oil price environment outlook, I think you have to believe that you're going to see some additional activity in many of these basins that have oil production. And again, the great news for H&P as part of the growth story is that we have rigs in those basins that are idle that can be upgraded to super-spec and then some that are idle that probably won't need to be upgraded to super-spec in some cases because that's part of what we see today. I think we still have 26 or 27 FlexRigs that are running today that aren't upgraded to super-spec and we have I think eight Flex4s that are running that, again, in a stronger oil price environment probably find their way into finding additional work. Because, again, if you think about that Flex4 rig competing against an SCR or a mechanical rig drilling a horizontal well, I like our chances to be able to compete in that sort of environment.

Got it. And if I just may close out with one additional follow-up on the operating cost side. I know, Mark, you went through and gave us a revision on kind of the normalizing operating cost around $13,700 per day. I just wondered if you guys can put that into a context as it relates to at what level or what number of working rigs would it take to get that operating cost to that normalized level? How should we think about that? Mark W. Smith - Helmerich & Payne, Inc.: The $13,700 normalized is, I mean, we're there. The incremental cost or essentially the reactivation costs and the idling cost approximately $1,000 that get you from $13,700 to $14,700. So we think the $13,700 is a number where we will hold.

So that would assume no additional upgrades, you'd be kind of maxed out on what you could provide to the market. I guess, that's what I was trying to – I was just trying to kind of get that into – trying to figure out that concept. Is that right? Mark W. Smith - Helmerich & Payne, Inc.: I don't know if I'm following that last part of your question, Kurt.

That's all right. That's all right. I'll follow up offline. That's fine. Mark W. Smith - Helmerich & Payne, Inc.: Thank you.

I appreciate it. Thanks. Thank you, Mark. Mark W. Smith - Helmerich & Payne, Inc.: Appreciate the call. John W. Lindsay - Helmerich & Payne, Inc.: Thanks, Kurt.

And we'll go next to John Daniel with Simmons & Company. Please go ahead. John Daniel - Simmons & Company International: Guys, just a couple hopefully easier ones for me. John, can you just provide a bit more color on customer demand and ideally share with us what you perceive to be the mindset of the sort of customer sub-segments, private versus small cap versus large cap E&P players? I mean, I know it's a generalization, but any color would be appreciated. John W. Lindsay - Helmerich & Payne, Inc.: John, I don't know that I have a clear differentiating view between one versus the other. I think clearly what the larger companies, the public companies, it's clear that they're having a high level of capital discipline and they've made their budgets, they're sticking to their budgets, they're being very thoughtful in their decisions and what they're doing. I think what the smaller companies and you probably heard me say this over time is that one of the only good things about the downturn is it gives us an opportunity to work for customers that we previously never would have had an opportunity work for. So I think we have 70 customers today. We didn't have 70 customers when we had 300 rigs running in 2014. So we've expanded our customer base and we do have exposure. But I don't really have a sense for really anything other than that. Is there anything, Dave or Mark you can think of? Mark W. Smith - Helmerich & Payne, Inc.: No, I think the new rigs that we've been putting to work this last quarter and some of the commitments we have, as John had alluded to, into the next couple of quarters, we still see a mix across various types of…

And we'll take our next question from Taylor Zurcher with Tudor, Pickering & Holt. Please go ahead. Taylor Zurcher - Tudor, Pickering, Holt & Co. Securities, Inc.: Hey, guys. Thanks for squeezing me in. John W. Lindsay - Helmerich & Payne, Inc.: Sure. Taylor Zurcher - Tudor, Pickering, Holt & Co. Securities, Inc.: John, in the period from June 30 to today, your contracted rig count in U.S. Land has obviously moved higher, but it seems like there's been a slight mix shift from term contracted rigs, some of those rolling to spot. And so just curious if you think that's indicative of some customers trying to preserve some flexibility into year-end or perhaps just noise in the numbers or some underlying dynamic at play? John W. Lindsay - Helmerich & Payne, Inc.: In terms of having more rigs under term contract? Taylor Zurcher - Tudor, Pickering, Holt & Co. Securities, Inc.: In terms of having less rigs under term contract. If I look at June 30, you had 136 rigs and today, looks like 129. So just curious if that's just some noise or if you...? John W. Lindsay - Helmerich & Payne, Inc.: Yeah, it's just a little bit of noise. I'm sure it mostly had to do with just a large number of rigs that rolled off during the quarter and we just didn't enter into as many rigs that were rolling off as we were entering into. That's really what the function was. So I think we went from 60% of our rigs term to 55% or 56%. I mean, it's very, very small change. Mark W. Smith - Helmerich & Payne, Inc.: And some of those rolling off, I'll just add, were some of our older contracts that were actually entered into pre the downturn.…

And we'll go next to Sean Meakim with JP Morgan. Please go ahead.

Thank you. John W. Lindsay - Helmerich & Payne, Inc.: Hi Sean.

John, I wanted to ask about super-spec rigs either upgrades or those that can roll off contract. Just at this point, can you talk about your appetite for greater term versus higher rates as you're signing incremental contracts? And how you view your customers in terms of how they value that same trade off in terms of you're looking for lower price versus the optionality of shorter term? Just how do you characterize both sides of the table? John W. Lindsay - Helmerich & Payne, Inc.: Well, I think we've got a balanced approach. I mean, we've talked about on the last call – last couple of calls, I guess, that we're in a position where as kind of the swing producer in the super-spec, we don't want to overbuild it, if at all possible, so we want to make certain the customer actually needs a super-spec and not just wants a super-spec and actually that's what we're seeing. We have high levels of demand. We also have high levels of usage. The customers that have super-spec are – 85% to 90% of the wells they're drilling are super-spec requirement type wells. So that's a good thing. So, at this stage of the cycle, we think two years and the mid-20s is a great place to be. And I think that would be our pricing model. For right now, that's our strategy right now. We're really not in a position to share anything past that. But I think that's a good place to be.

And how about customers? John W. Lindsay - Helmerich & Payne, Inc.: In terms of their desire for?

Yeah, the similar tradeoff on their side, yes? John W. Lindsay - Helmerich & Payne, Inc.: Yeah. I think most of the customers we're working for have multiple rigs running and they have their rigs staggered on term. And so I think it's a good balance on their part as well. The fact of the matter for us is, is that we're not going to put a super-spec rig out without a two-year term contract and attractive pricing. And if they need that sort of a rig and capability, they're obviously willing to pay that. I think maybe another part of your question is they're thinking about this longer term, I don't get any feel that, oh my gosh, I'm really concerned if I got to lock into a two-year term contract. They've got a pretty long horizon. What they wouldn't want to do is, of course, lock every rig in their fleet up on two years. But to have a mix I don't think is not problematic at all.

Understood. That makes a lot of sense. Just, obviously, you've your hands full in the U.S. right now, but the International Land cycle maybe just getting some momentum here. We just discussed Argentina a little bit. But thinking about the rest of the world, is there appetite for you to at some point really scale up your International fleet or any markets that are – you think are particularly attractive to target in the next cycle here? John W. Lindsay - Helmerich & Payne, Inc.: Well, you followed us a long time, you know we have the desire – we have the desire, we have the capability, we have the balance sheet to do it. We have skill sets to do it. It's just finding those right markets where you can get a reasonable rate of return for the capital that you are investing. And then also I think it's important when you're investing the kind of money that some of these projects require is that you do get a firm term take-or-pay type contract. Sometimes that's problematic internationally. If we can get that then I think there is a high likelihood that H&P grows. That's why I think Argentina is probably the most logical place right now. I do think there's some opportunities in the near future in the Middle East. But again, I think those are 2019, 2020 type opportunities. We've got a long view on it. We've been working on this for a long time and want to continue to exploit those opportunities. But the fact of the matter is that the best area to invest your capital from a drilling contractor perspective for the last 10 years has been in the U.S. market and it's still a good place right now. And like you say, hopefully, there's opportunities internationally as well.

No doubt. That's very helpful. Thanks, John. John W. Lindsay - Helmerich & Payne, Inc.: Thanks, Sean.

And this will conclude today's Q&A. I'll hand it back to our presenters for any closing remarks. John W. Lindsay - Helmerich & Payne, Inc.: Okay, Wendy, thank you. So thanks, again, to all of you for participating on this third quarter earnings call. I'm going to close by thanking our folks for everything they do for the company, high levels of service attitude and this continued drive in pursuit of providing value for customers. Those consistent behaviors and the drive to satisfy the customer is a key component of what makes us the leader in the industry. I want to thank all of them and again thank you for participating today. Have a good day.

This does conclude today's call. Thank you again for your participation. You may disconnect.