Helmerich & Payne CEO: $2 billion purchase of overseas company could be 'transformative' (2024)

When John Lindsay began working at Tulsa-based Helmerich & Payne 37 years ago, it took about three months for a straight-down oil drilling well to hit possible pay dirt.

Black gold. Texas tea.

But unlike Jed “shootin’ at some food,” in the popular 1960s TV show with those words in its theme song, times have changed — radically — for both fans of “The Beverly Hillbillies” and the oil and gas industry.

Lindsay — who has a petroleum engineering degree from the University of Tulsa — for the last 10 years has been president and CEO of H&P, a multibillion-dollar oil and gas drilling company that will mark its 100th year in Tulsa in 2026.

Helmerich and Payne Inc. announced in July by far the largest acquisition in the company’s history — the purchase of KCA Deutag International Limited for $1.97 billion in cash.

KCA Deutag is a diverse global drilling company with a significant land-drilling presence in the Middle East, with additional operations in South America, Europe and Africa.

The company was founded in Germany in 1888 and is now headquartered in Portlethen, Aberdeenshire, Scotland.

“Obviously for us, you make this acquisition at almost $2 billion and then you look at the upside potential of two companies. … We obviously feel like we’ve got some significant growth opportunities ahead,” Lindsay said.

“We’re proud to be a Tulsa company. I really think this acquisition is transformative in taking H&P to the next level in terms of a global company.”

H&P has about 7,000 employees in nine countries (about 850 in Oklahoma and 450 in Tulsa); KCA Deutag has about 11,000 employees in 26 countries.

Why H&P is expanding

For decades, Lindsay said, Helmerich & Payne has been at the forefront of oil- and gas-drilling technology.

During a tour of the company’s new headquarters at the former WPX building in downtown Tulsa last week, Lindsay showed the Tulsa World H&P’s Remote Operating (or “control”) Center, in which experts can pull up real-time data on each of the company’s 150 or so U.S. land wells.

The room is something like a scene out of the 1983 movie “War Games,” except the multitude of monitors are in various positions and sizes and are in detailed high-definition color.

The screens show a plethora of real-time data for various client wells, such as drilling depth and location, and progress of lateral drilling.

Some monitors show a drill-bit assembly turning and how it is progressing, thousands of feet underground.

Each well can be accessed on individual screens to determine whether there is a drilling issue, and, if so, employees with different expertise in various areas can collaborate on how to fix it.

Much of the drilling technology displayed on the screens was directly developed by H&P.

The ability to display it was either purchased from — or was a collaboration with — less than a handful of tech companies, he said.

The wells that Lindsay worked on when he started at the company have been replaced with those that can go 8,000 to 12,000 feet underground and then drill laterally for 2 to 4 miles.

The process to drill down now takes 10 days to two weeks, as opposed to 90 days when Lindsay started at H&P, he said.

Current rigs can move 15 or 20 feet, without having to be disassembled and then reassembled at the next location, he said.

“Whenever you’re finished drilling, … we move the rig down — we move it off. Our customer (then) comes in with a completion crew and hydraulically fractures the well, but they will do like six to eight wells back to back.

“It’s a totally different business today than it was 20 years ago,” Lindsay said.

H&P’s customers include ExxonMobile, ConocoPhillips and EOG Resources.

“We couldn’t grow (H&P) fast enough internationally,” Lindsay said. “So the only way that you could get the scale that we need and have the diversification of revenue and the diversification of locations around the world is you had to make an acquisition.”

“We’ve done a lot of research on it. We’ve looked at a lot of different opportunities, and we felt like this was by far the best opportunity,” adding that the companies have “very little overlap in our operations.”

Perceptions about the oil and gas industry

Lindsay said he agrees with Pierce Norton II, president and CEO of ONEOK, regarding many aspects of future energy needs around the planet.

Tulsa-based ONEOK, a midstream company (transporting and storing of oil and natural gas) recently purchased Tulsa-based Magellan Midstream Partners for $18.8 billion.

Norton has spoken about increasing energy needs globally and said the world is going to need “a lot of it” as standards of living continue to rise in many countries, in addition to a continuing increase in global population.

While what Norton says is true, Lindsay said, there remains a continued misperception regarding the oil and gas industry, which he said has made major strides in the last several decades in trying to reduce carbon emissions.

“We tend to not be able to have a good conversation about the potential that we have for our energy sources,” Lindsay said.

Many people, he said, especially based on something they read or saw on social media or the internet, “describe it as ‘the fossil fuel problem.’ …

“Well, coal is a fossil fuel. Oil and natural gas are. But those are all three different types of energy, and natural gas is very, very clean, and coal has a lot of particulates.”

“But … it all goes into the same atmosphere,” pointing to what Norton also has said.

No matter what carbon-emission reduction measures the U.S. has — which are some of the best in the world, Lindsay said — the fact that China and India are continuing to build less-efficient and more environmentally damaging coal plants for energy will not help.

However, Lindsay said, “if we would look at our resources that we have in the U.S., … we have a lot of natural gas here, and we have the ability to export a lot of LNG (liquid natural gas), which we are doing, and we will have even more opportunities to do that in the future.

“We’re blessed with having resources that most countries don’t have,” Lindsay said.

“It’s like you really can’t have a good (energy) debate or discussion with the facts. Everybody wants to go immediately to what they read on some Twitter post or whatever, because their information, in many cases, is not all that great,” he said.

There needs to be a more comprehensive discussion, he said, “than what ends up happening, because you really can’t have a good debate or discussion about this.”

Sustainability and company culture

Hemerich & Payne, Lindsay said, has made sustainability — the concept of helping both the environment and the effect that a business has on society — a priority for the company.

In addition to a goal of reducing emissions, H&P has expanded operations to include geothermal drilling, he said.

H&P issued its first sustainability report in 2021 and in 2023 created its “30 by 30” goal of reducing its carbon emissions by 30% by 2030.

“And we are well on our way,” he said. “And part of the reason is technology.”

But technology alone is not what makes H&P the company it is, he said, adding that many people spend more time with co-workers than they do with family.

“Why in the world would you want to spend a large portion of your life in an environment that you don’t enjoy the company (of co-workers) that you’re keeping?” he asked.

“I want to work in an environment that is filled with a lot of people who are talking about ‘we’ as opposed to ‘I,’” Lindsay said.

“This is about teamwork, because that’s how you deliver the best value to customers and service to customers.”

“At the end of the day, it’s really caring about people.”

He said innovation is imperative as an approach for both leaders and employees of a company.

“How do you make your job better? How do you make the customers’ life easier and better?”

About the merger

H&P’s acquisition of KCA Deutag should be finalized by the end of this year or early next year.

Many details will still have to be worked out, including whether KCA will be a subsidiary of H&P, which is a publicly traded company; KCA is a private company.

Lindsay said that based on both formal and informal gatherings among people from both companies, H&P and KCA have a nearly identical business culture.

“I know there’ll be some surprises, but when we get our leadership team and their leadership team together, it will be pretty amazing.”

He said the oil and gas industry has a long history of high volatility in financial markets that is not likely to end but that “I feel good about where we’ll be in the future with this acquisition.

“This, ultimately, will be a great thing for Tulsa.”

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