Helmerich & Payne (H&P), one of North America’s largest land drilling contractors, believes the U.S. drilling market has reached its low point and is entering the early stages of a multi-year recovery. During its fiscal Q2 2026 earnings call, company executives said improving commodity prices, declining drilled but uncompleted (DUC) inventories, tightening availability of super-spec drilling rigs, and increased customer activity are creating a stronger outlook for the second half of 2026 and beyond.
The company expects North America Solutions to continue improving after averaging 136 contracted rigs during the second quarter. H&P exited the quarter with 137 active rigs and quickly increased to 138 rigs, prompting management to raise its full-year guidance. Executives described the second quarter as the “trough” for both rig counts and margins, with continued sequential growth expected into 2027.
DUC Inventories Point to More Drilling Ahead
One of management’s strongest messages centered on the shrinking inventory of drilled but uncompleted wells. H&P estimates that approximately 15,000 new wells must be drilled each year simply to maintain Lower 48 production. While operators have recently increased completion activity by drawing down existing DUC inventories, management believes those inventories are approaching historic lows and will eventually require operators to return to the drill bit.
Tight Super-Spec Rig Supply Benefits Contractors
H&P also believes the supply of premium super-spec drilling rigs is becoming increasingly constrained. Industry utilization is already above 80%, and the company estimates that only a limited number of idle rigs can be economically returned to service. With approximately 138 operating super-spec rigs and another 20 that can be reactivated at relatively low cost, H&P believes it is better positioned than competitors to capture additional market share as demand strengthens.
Technology Continues to Differentiate H&P
Management also highlighted strong customer interest in its FlexRobotics drilling technology. The company’s first robotic drilling rig in the Permian Basin has exceeded expectations, leading customers to order four additional systems. H&P believes robotics, automation, and digital drilling applications will continue improving drilling consistency, safety, and operational efficiency while helping operators drill increasingly complex horizontal wells.
H&P U.S. Drilling Activity (Current Year)
Total Wells Drilled
| Metric | Count |
|---|---|
| Total Wells Spud | 1,875 |
Wells by State
| State | Wells |
|---|---|
| Texas | 1,052 |
| New Mexico | 470 |
| North Dakota | 71 |
| Colorado | 69 |
| Oklahoma | 49 |
| West Virginia | 44 |
| Ohio | 43 |
| Louisiana | 43 |
| Utah | 17 |
| Pennsylvania | 9 |
| Federal Offshore Gulf | 7 |
| Wyoming | 1 |
Wells by Play / Basin
| Play / Basin | Wells |
|---|---|
| Permian Basin | 1,214 |
| Eagle Ford | 245 |
| Other / Unclassified | 198 |
| Williston Basin (Bakken) | 71 |
| Haynesville | 43 |
| Anadarko Basin | 41 |
| DJ Basin | 36 |
| Appalachian Basin | 27 |
Top Five Operator Customers
| Operator | Wells |
|---|---|
| Exxon (XTO) | 364 |
| Devon Energy Corporation | 166 |
| EOG Resources, Inc. | 165 |
| OXY USA Inc. | 150 |
| Permian Resources Corporation | 142 |
Industry Impact
H&P’s outlook aligns with increasing optimism across the U.S. oilfield services sector. The company expects higher Lower 48 drilling activity as DUC inventories decline, premium rig availability tightens, and operators begin expanding drilling programs. With nearly two-thirds of H&P’s current-year drilling concentrated in the Permian Basin and Texas accounting for more than half of all wells drilled, suppliers of drilling services, completion equipment, chemicals, tubulars, automation technologies, and midstream infrastructure should continue to see the strongest opportunities in the Permian over the coming quarters.
Author: phinds