HP – No CDS, Base Case iCDS 257bps, Negative Case iCDS 311bps, 2025 4.650% Bond YTW of 1.676%, iYTW of 3.406%, Baa1 Rating from Moody’s, HY2 (equivalent to B2) Rating from Valens, Low Refinancing Need

• Credit markets are materially understating credit risk with a YTW of 1.676% relative to an Intrinsic YTW of 3.406% and Intrinsic CDS of 257bps. Meanwhile, Moody’s is materially understating HP’s fundamental credit risk with its Baa1 credit rating seven notches higher Valens’ HY2 (B2) credit rating
• Earnings Call Forensics™ analysis of the firm’s Q2 2021 earnings call highlights that management may have concerns about labor reduction decisions arising from their North America reorganization, potential early termination revenue from their North America Solutions segment, and their idle super-spec fleet. Also, they may lack confidence in their ability to improve customer experience, respond to changing priorities in an evolving economic environment, and maintain cost consistency in their AutoSlide expansion initiatives. Furthermore, management may be overstating the potential of performance-based contracts and the progress of their domestic non super-spec rig disposals. Moreover, they may lack confidence in their ability to continue investing in cleaner and more efficient energy, achieve operating gross margin expectations for their Offshore segment, and sustain accounts receivable days declines