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Item 1. Financial Statements

2021-02-09 compared with 2020-07-29 · 353 added, 577 removed, 508 unchanged (65% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

December 31, September 30,

(in thousands except share data and per share amounts) 2020 2020

3 unchanged sentences

Accounts receivable, net of allowance of $ 1,618 and $ 1,820 , respectively

233,623 192,623

Inventories of materials and supplies, net 99,353 104,180

Prepaid expenses and other

Prepaid expenses and other, net 95,946 89,305

Total current assets 952,724 963,327

Investments 34,018 31,585

Property, plant and equipment, net 3,552,107 3,646,341

Other Noncurrent Assets:

Goodwill 45,653 45,653

Intangible assets, net 79,226 81,027

Operating lease right-of-use asset 42,920 44,583

Other assets, net 20,105 17,105

Total other noncurrent assets 187,904 188,368

Total assets $ 4,726,753 $ 4,829,621

Liabilities and Shareholders’ Equity

7 unchanged sentences

Deferred income taxes 635,443 650,675

Other 151,070 147,180

Noncurrent liabilities - discontinued operations 5,874 13,389

2 unchanged sentences

Shareholders' Equity:

Common stock, $.10 par value, 160,000,000 shares authorized,112,151,563 and 112,080,262 shares issued as of June 30, 2020 and September 30, 2019, respectively, and 107,471,295 and 108,437,904 shares outstanding as of June 30, 2020 and September 30, 2019, respectively

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of December 31, 2020 and September 30, 2020, respectively, and 107,854,368 and 107,488,242 shares outstanding as of December 31, 2020 and September 30, 2020, respectively

11,222 11,215

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

2 unchanged sentences

Accumulated other comprehensive loss ( 25,731 ) ( 26,188 )

Treasury stock, at cost, 4,680,268 shares and 3,642,358 shares as of June 30, 2020 and September 30, 2019, respectively

Treasury stock, at cost, 4,368,497 shares and 4,663,321 shares as of December 31, 2020 and September 30, 2020, respectively

( 183,535 ) ( 198,153 )

Total shareholders’ equity 3,224,918 3,318,514

4 unchanged sentences

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts) 2020 2019

Operating revenues

Contract drilling services

Drilling services $ 244,781 $ 611,398

Other 1,596 3,259

246,377 614,657

Operating costs and expenses

Contract drilling services operating expenses, excluding depreciation and amortization

Drilling services operating expenses, excluding depreciation and amortization 198,689 399,329

Other operating expenses 1,362 1,422

2 unchanged sentences

Selling, general and administrative 39,303 49,808

Asset impairment charge

Restructuring charges 138 —

Gain on sale of assets ( 12,336 ) ( 4,279 )

Operating loss from continuing operations

339,600 583,289

Operating income (loss) from continuing operations ( 93,223 ) 31,368

Other income (expense)

1 unchanged sentence

Interest expense ( 6,139 ) ( 6,100 )

Gain (loss) on investment securities

Gain on investment securities 2,924 2,821

Gain on sale of subsidiary — 14,963

Loss from continuing operations before income taxes

Income tax benefit

Loss from continuing operations

Other ( 1,480 ) ( 399 )

( 2,816 ) 13,499

Income (loss) from continuing operations before income taxes ( 96,039 ) 44,867

Income tax provision (benefit) ( 18,115 ) 14,138

Income (loss) from continuing operations ( 77,924 ) 30,729

Income from discontinued operations before income taxes 7,493 7,457

1 unchanged sentence

Income (loss) from discontinued operations 7,493 ( 124 )

Basic loss per common share:

Loss from continuing operations

Loss from discontinued operations

Diluted loss per common share:

Loss from continuing operations

Loss from discontinued operations

Net income (loss) $ ( 70,431 ) $ 30,605

Basic income (loss) per common share:

Income (loss) from continuing operations $ ( 0.73 ) $ 0.27

Income from discontinued operations 0.07 —

Net income (loss) $ ( 0.66 ) $ 0.27

Diluted income (loss) per common share:

Income (loss) from continuing operations $ ( 0.73 ) $ 0.27

Income from discontinued operations 0.07 —

Net income (loss) $ ( 0.66 ) $ 0.27

Weighted average shares outstanding:

Basic 107,617 108,555

Diluted 107,617 108,724

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended

Nine Months Ended

(in thousands) 2020 2019

Net income (loss) $ ( 70,431 ) $ 30,605

Other comprehensive income, net of income taxes:

Minimum pension liability adjustments, net of income taxes of ($0.3) million and ($0.6) million for the three and nine months ended June 30, 2020, respectively, and ($0.1) million and ($0.2) million for the three and nine months ended June 30, 2019, respectively

Amortization of actuarial losses, net of income taxes of $( 0.1 ) million and $( 0.2 ) million, respectively

Other comprehensive income 457 516

Comprehensive loss

Comprehensive income (loss) $ ( 69,974 ) $ 31,121

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

Three Months Ended December 31, 2020 and 2019

(in thousands, except per share amounts) Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Treasury Stock

Income (Loss) Treasury Stock

Shares Amount Shares Amount Total

Balance, September 30, 2020 112,151 $ 11,215 $ 521,628 $ 3,010,012 $ ( 26,188 ) 4,663 $ ( 198,153 ) $ 3,318,514

Comprehensive income:

Net loss — — — ( 70,431 ) — — — ( 70,431 )

Other comprehensive income — — — — 457 — — 457

Dividends declared ($ 0.25 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

— — — ( 27,324 ) — — — ( 27,324 )

Vesting of restricted stock awards, net of shares withheld for employee taxes 72 7 ( 16,742 ) — — ( 295 ) 14,618 ( 2,117 )

Stock-based compensation — — 7,451 — — — — 7,451

Cumulative effect adjustment for adoption of ASU No.

2016-13 — — — ( 1,251 ) — — — ( 1,251 )

Other — — ( 381 ) — — — — ( 381 )

Balance, December 31, 2020 112,223 $ 11,222 $ 511,956 $ 2,911,006 $ ( 25,731 ) 4,368 $ ( 183,535 ) $ 3,224,918

Comprehensive income:

Other comprehensive income

Dividends declared ($0.71 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Share repurchases

Balance, March 31, 2020

Comprehensive income:

Other comprehensive income

Dividends declared ($0.25 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Balance, June 30, 2020

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended June 30, 2019

(in thousands, except per share amounts)

(in thousands, except per share amounts) Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Treasury Stock

Income (Loss) Treasury Stock

Shares Amount Shares Amount Total

Balance, September 30, 2019 112,080 $ 11,208 $ 510,305 $ 3,714,307 $ ( 28,635 ) 3,642 $ ( 194,962 ) $ 4,012,223

Comprehensive income:

Net income — — — 30,605 — — — 30,605

Other comprehensive income — — — — 516 — — 516

Dividends declared ($ 0.71 per share)

— — — ( 78,652 ) — — — ( 78,652 )

Exercise of employee stock options, net of shares withheld for employee taxes — — ( 3,103 ) — — ( 110 ) 7,148 4,045

1 unchanged sentence

Stock-based compensation — — 10,201 — — — — 10,201

Cumulative effect adjustment for adoption of ASC 606

Cumulative effect adjustment for adoption of ASU No.

Balance, December 31, 2019 112,151 $ 11,215 $ 499,277 $ 3,666,260 $ ( 28,119 ) 3,274 $ ( 173,096 ) $ 3,975,537

Comprehensive income:

Other comprehensive income

Dividends declared ($0.71 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Balance, March 31, 2019

Comprehensive income:

Other comprehensive income

Dividends declared ($0.71 per share)

Exercise of employee stock options, net of shares withheld for employee taxes

Vesting of restricted stock awards, net of shares withheld for employee taxes

Stock-based compensation

Reclassification of stranded tax effect for adoption of ASU No.

Balance, June 30, 2019

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2020 2019

Cash flows from operating activities:

Net income (loss) $ ( 70,431 ) $ 30,605

Adjustment for (income) loss from discontinued operations ( 7,493 ) 124

Loss from continuing operations

Adjustments to reconcile net loss to net cash provided by operating activities:

Income (loss) from continuing operations ( 77,924 ) 30,729

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 106,861 130,131

Asset impairment charges

Restructuring charges

Amortization of debt discount and debt issuance costs 460 444

Provision for bad debt

Provision for credit loss ( 465 ) ( 2,069 )

Provision for obsolete inventory 216 693

Stock-based compensation 7,451 10,201

Loss on investment securities

Gain on investment securities ( 2,924 ) ( 2,821 )

Gain on sale of assets ( 12,336 ) ( 4,279 )

1 unchanged sentence

Deferred income tax benefit ( 15,016 ) ( 7,966 )

Other 1,458 ( 139 )

Change in assets and liabilities:

5 unchanged sentences

Accrued liabilities ( 6,674 ) ( 8,093 )

Deferred income tax liability

Other noncurrent liabilities 1,834 ( 2,178 )

Net cash provided by operating activities from continuing operations

Net cash provided by (used in) operating activities from continuing operations ( 19,601 ) 111,781

Net cash used in operating activities from discontinued operations ( 3 ) —

Net cash provided by operating activities

Net cash provided by (used in) operating activities ( 19,604 ) 111,781

Cash flows from investing activities:

Capital expenditures ( 13,985 ) ( 46,021 )

Purchase of short-term investments

Payment for acquisition of business, net of cash acquired

Proceeds from sale of short-term investments

Purchase of investments ( 95,151 ) ( 28,948 )

Proceeds from sale of investments 37,097 25,000

Proceeds from sale of subsidiary — 15,056

3 unchanged sentences

Dividends paid ( 26,918 ) ( 77,602 )

Debt issuance costs paid

Proceeds from stock option exercises — 4,100

1 unchanged sentence

Payment of contingent consideration from acquisition of business ( 250 ) —

Share repurchases

Other — ( 445 )

Net cash used in financing activities ( 29,287 ) ( 77,402 )

Net increase in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash ( 114,094 ) 11,344

Cash and cash equivalents and restricted cash, beginning of period 536,747 382,971

3 unchanged sentences

Interest paid $ 77 $ 46

Income tax paid, net

Income tax paid (received), net ( 190 ) 934

Payments for operating leases 3,986 4,877

Non-cash operating and investing activities:

Changes in accounts payable and accrued liabilities related to purchases of property, plant and equipment ( 369 ) ( 1,339 )

Changes in accounts receivable, property, plant and equipment and other noncurrent assets related to the sale of equipment 9,290 —

Cumulative effect adjustment for adoption of ASU No.

2016-13 ( 1,251 ) —

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4 unchanged sentences

(“H&P,” which, together with its subsidiaries, is identified as the “Company,” “we,” “us,” or “our,” except where stated or the context requires otherwise) through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

During the third quarter of fiscal year 2020, we restructured our operations (see Note 18—Restructuring Charges ) to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies.

Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our contract drilling services operations were organized into the following reportable operating business segments:

During the third quarter of fiscal year 2020, we restructured our operations to accommodate scale during an industry downturn and re-organized our operations to align to new marketing and management strategies.

This is consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources.

Operations previously reported within the former U.S.

Land and H&P Technologies operating and reportable segments are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our drilling services operations were organized into the following reportable operating business segments:

North America Solutions, Offshore Gulf of Mexico and International Solutions.

1 unchanged sentence

Our real estate operations, our incubator program for new research and development projects and our wholly-owned captive insurance companies are included in "Other." Refer to Note 15—Business Segments and Geographic Information for further details on our reportable segments.

Our North America Solutions operations are primarily located in Colorado, Louisiana, Ohio, Oklahoma, New Mexico, North Dakota, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

Additionally, Offshore Gulf of Mexico operations are conducted in the Gulf of Mexico and our International Solutions operations have rigs primarily located in four international locations:

Our North America Solutions operations are primarily located in Colorado, Ohio, Oklahoma, New Mexico, North Dakota, Texas, West Virginia and Wyoming.

Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S.

federal waters in the Gulf of Mexico and our International Solutions operations have rigs primarily located in four international locations:

Argentina, Bahrain, Colombia and United Arab Emirates.

We also own, develop and operate limited commercial real estate properties.

Our real estate investments, which are located exclusively within Tulsa, Oklahoma, include a shopping center, multi-tenant industrial warehouse properties, and undeveloped real estate.

Our real estate investments, which are located exclusively within Tulsa, Oklahoma, include a shopping center and undeveloped real estate.

Fiscal Year 2020 Dispositions

3 unchanged sentences

As a result of the sale, 100 % of TerraVici's outstanding capital stock was transferred to the purchaser in exchange for approximately $ 15.1 million, resulting in a total gain on the sale of TerraVici of approximately $ 15.0 million.

Prior to the sale, TerraVici was a component of the H&P Technologies reportable segment, which transitioned to the North America Solutions operating segment.

This transaction does not represent a strategic shift in our operations and will not have a significant effect on our operations and financial results going forward.

Prior to the sale, TerraVici was a component of the North America Solutions operating segment.

This transaction did not represent a strategic shift in our operations and will not have a significant effect on our operations and financial results going forward.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RISKS AND UNCERTAINTIES

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The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.

To conform to current period presentation, certain operating expenses of $ 10.1 million, previously reported in the Unaudited Condensed Consolidated Statement of Operations for the three months ended December 31, 2019 as other operating expenses were reclassified to drilling services operating expenses, excluding depreciation and amortization.

The reclassification had no impact on consolidated net income, comprehensive income or shareholders' equity.

Principles of Consolidation

2 unchanged sentences

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.

Specifically, income and expenses of a subsidiary acquired or disposed of during the fiscal year are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Specifically, income and expenses of a subsidiary acquired or disposed of during the fiscal year are included in the Unaudited Condensed Consolidated Statements of Operations and Statements of Comprehensive Income (Loss) from the date the Company gains control until the date when the Company ceases to control the subsidiary.

All significant intercompany accounts and transactions have been eliminated in consolidation.

COVID-19 and OPEC+ Production Impacts

The recent outbreak of a novel strain of coronavirus (“COVID-19”) and its development into a pandemic have resulted in significant global economic disruption, including North America and many of the other geographic areas where we operate, or where our customers are located, or suppliers or vendors operate.

The outbreak of a novel strain of coronavirus (“COVID-19”) and its development into a pandemic has resulted in significant global economic disruption, including North America and many of the other geographic areas where we operate, or where our customers are located, or suppliers or vendors operate.

Actions taken to prevent the spread of COVID-19 by governmental authorities around the world, including imposing mandatory closures of all non-essential business facilities, seeking voluntary closures of such facilities and imposing restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions, have significantly reduced global economic activity, thereby resulting in lower demand for crude oil.

In particular, the travel restrictions in certain countries where we operate, including the closure of their borders to travel into the country, have resulted in an inability to effectively staff or rotate personnel at, and thereby operate, certain of our rigs and could lead to an inability to fulfill our contractual obligations under contracts with customers.

State and local authorities have also implemented multi-step policies with the goal of re-opening.

However, certain jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases, which has resulted in us experiencing further disruptions to our business operations.

In addition, the perceived risk of infection and health risk associated with COVID-19, and the illness of many individuals across the globe, has and will continue to alter behaviors of consumers, and policies of companies around the world, resulting in many of the same effects intended by such governmental authorities to stop the spread of COVID-19, such as self-imposed or voluntary social distancing and quarantining and remote work policies.

Governmental authorities have also implemented multi-step policies with the goal of re-opening various sectors of the economy.

However, certain jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases, while other jurisdictions are continuing to re-open or have nearly completed the re-opening process despite increases in COVID-19 cases.

The COVID-19 outbreak may significantly worsen during the upcoming months, which may cause governmental authorities to reconsider restrictions on business and social activities.

In the event governmental authorities increase restrictions, the re-opening of the economy may be further curtailed.

We have experienced, and expect to continue to experience, some disruptions to our business operations, as these restrictions have significantly impacted, and may continue to impact, many sectors of the economy.

such altered behaviors and policies have many of the same effects intended by governmental authorities to stop the spread of COVID-19, such as self-imposed or voluntary social distancing, quarantining, and remote work policies.

We are complying with local governmental jurisdiction policies and procedures where our operations reside.

2 unchanged sentences

In early March 2020, the increase in crude oil supply resulting from production escalations from the Organization of the Petroleum Exporting Countries and other oil producing nations (“OPEC+”) combined with a decrease in crude oil demand stemming from the global response and uncertainties surrounding the COVID-19 pandemic resulted in a sharp decline in crude oil prices.

Consequently, we have seen a significant decrease in customer 2020 capital budgets and a corresponding dramatic decline in the demand for land rigs.

Further, in April 2020, OPEC+ finalized an agreement to cut oil production by 9.7 million barrels per day during May and June 2020.

On June 6, 2020, OPEC+ agreed to extend such production cuts until the end of July 2020.

However, prices in the oil and gas market have remained depressed, as the oversupply and lack of demand in the market persist.

Oil and natural gas prices are expected to continue to be volatile as a result of the near-term production instability and the ongoing COVID-19 outbreaks and as changes in oil and natural gas inventories, industry demand and global and national economic performance are reported.

Consequently, we saw a significant decrease in customer 2020 capital budgets and a corresponding dramatic decline in the demand for land rigs.

Although OPEC+ agreed in April 2020 to cut oil production and has extended such production cuts through March 2021, production cuts for future months will be determined on a monthly basis, and there is no assurance that the agreement will continue or be observed by its parties.

Despite the production cuts, prices in the oil and gas market have remained depressed, as the oversupply and lack of demand in the market persist.

Oil and natural gas prices are expected to continue to be volatile as a result of the near-term production instability and the ongoing COVID-19 outbreak and as changes in oil and natural gas inventories, industry demand and global and national economic performance are reported.

These events have had, and could continue to have, an adverse impact on numerous aspects of our business, financial condition and results of operations.

The ultimate extent of the impact of COVID-19 and prolonged excess oil supply on our business, financial condition and results of operations will depend largely on future developments, including the duration and spread of the COVID-19 outbreak within the United States and the parts of the world in which we operate and the related impact on the oil and gas industry, all of which are highly uncertain and cannot be predicted with certainty at this time.

The ultimate extent of the impact of COVID-19 and prolonged excess oil supply on our business, financial condition and results of operations will depend largely on future developments, including the duration and spread of the COVID-19 outbreak within the United States and the parts of the world in which we operate and the related impact on the oil and gas industry, the impact of governmental actions designed to prevent the spread of COVID-19 and the development, availability and timely distribution of effective treatments and vaccines worldwide, all of which are highly uncertain and cannot be predicted with certainty at this time.

From a financial perspective, we believe the Company is operationally and financially well positioned to continue operating even through a more protracted disruption caused by COVID-19, oil oversupply and low oil prices.

At June 30, 2020, the Company had cash and cash equivalents and short-term investments of $ 492.0 million .

At December 31, 2020, the Company had cash and cash equivalents and short-term investments of $ 523.8 million.

The 2018 Credit Facility (as defined within Note 6—Debt) has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit.

As of June 30, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of December 31, 2020, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

We currently do not anticipate the need to draw on the 2018 Credit Facility.

Furthermore, the Company 2025 Notes (as defined within Note 8—Debt ) do not come due until March 19, 2025.

Furthermore, the Company 2025 Notes (as defined within Note 6—Debt) do not mature until March 19, 2025.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original maturities of three months or less.

Approximately $ 376.1 million of cash and cash equivalents resides in accounts in the United States and the remaining $ 50.1 million are in other countries.

Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits.

We had restricted cash of $ 50.0 million and $ 34.3 million at June 30, 2020 and 2019 , respectively, and $ 35.0 million and $ 41.8 million at September 30, 2019 and 2018 , respectively.

Of the total at June 30, 2020 and September 30, 2019 , $ 1.9 million and $ 3.0 million , respectively, is related to the acquisition of drilling technology companies, $ 2.0 million as of both fiscal period ends is from the additional capitalization of our wholly-owned captive insurance company, $ 46.1 million and $ 30.0 million , respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies, and $ 0.03 million at June 30, 2020 is for other restricted purposes.

The restricted amounts are primarily invested in federally insured deposit accounts.

The restricted cash and cash equivalents are reflected within the following line items on the Unaudited Condensed Consolidated Balance Sheets:

September 30,

We had restricted cash of $ 48.7 million and $ 39.3 million at December 31, 2020 and 2019, respectively, and $ 48.9 million and $ 35.0 million at September 30, 2020 and 2019, respectively.

Of the total at December 31, 2020 and September 30, 2020, $ 3.2 million and $ 3.6 million, respectively, is related to the acquisition of drilling technology companies, $ 2.0 million as of both fiscal period ends is from the initial capitalization of the captive insurance companies, and $ 43.4 million and $ 43.1 million, respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

The restricted amounts are primarily invested in short-term money market securities.

The cash, cash equivalents, and restricted cash are reflected within the following line items on the Unaudited Condensed Consolidated Balance Sheets:

December 31, September 30,

(in thousands) 2020 2019 2020 2019

Cash and cash equivalents $ 373,980 $ 355,010 $ 487,884 $ 347,943

Restricted cash

Prepaid expenses and other

Prepaid expenses and other, net 45,688 35,618 45,577 31,291

Other assets, net 2,985 3,687 3,286 3,737

Total cash, cash equivalents, and restricted cash $ 422,653 $ 394,315 $ 536,747 $ 382,971

We lease various offices, warehouses, equipment and vehicles.

Rental contracts are typically made for fixed periods of 1 to 15 years but may have extension options.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Up until the end of fiscal year 2019, leases of property, plant and equipment were classified as either finance or operating leases.

Payments made under operating leases (net of any incentives received from the lessor) were charged to the income statement on a straight-line basis over the period of the lease (“levelized lease cost”).

Beginning October 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability within accrued liabilities and other non-current liabilities at the date at which the leased asset is available for use by the Company.

Each lease payment is allocated between the liability and finance cost.

The finance cost is recognized over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis for finance type leases and as the difference between the levelized lease cost and the finance cost for operating leases.

Assets and liabilities arising from a lease are initially measured on a present value basis.

Lease liabilities include the net present value of the following lease payments:

Fixed payments (including in-substance fixed payments), less any lease incentives receivable

Variable lease payments that are based on an index or a rate

Amounts expected to be payable by the lessee under residual value guarantees

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease.

If that rate cannot be determined, the lessee’s incremental borrowing rate is used, which is the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost and are comprised of the following:

The amount of the initial measurement of lease liability

Any lease payments made at or before the commencement date less any lease incentives received

Any initial direct costs, and

Asset retirement obligations related to that lease, as applicable.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss.

Short-term leases are leases with a lease term of 12 months or less.

Low-value assets are comprised of IT-equipment and office furniture.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.

Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The assessment is reviewed if a significant event or a significant change in circumstances occurs and is within the control of the lessee.

Refer to Note 6—Leases for additional information regarding our leases.

Recently Issued Accounting Updates

6 unchanged sentences

Recently Adopted Accounting Pronouncements

2016-02, Leases (Topic 842) and related ASUs issued subsequent

2016-02 requires organizations that lease assets — referred to as “lessees” — to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months.

Lessor accounting remains substantially similar to current U.S.

In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information.

2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

ASU 2016-02 mandates a modified retrospective transition method of adoption with an option to use certain practical expedients.

October 1, 2019

We adopted this ASU during the first quarter of fiscal year 2020, as required.

Refer to Note 6—Leases for additional information.

2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

This ASU aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement.

2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

This update is effective for annual and interim periods beginning after December 15, 2019.

The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Early adoption is permitted.

October 1, 2019

We early adopted this ASU during the first quarter of fiscal year 2020 on a prospective basis.

The prospective impact was not material to our unaudited condensed consolidated financial statements and disclosures.

Standards that are not yet adopted as of June 30, 2020

2016-13, Financial Instruments – Credit Losses (Topic 326) and related ASUs issued subsequent

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(1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and certain other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income (loss), and (4) beneficial interests in securitized financial assets.

This update is effective for annual and interim periods beginning after December 15, 2019.

This update is effective for annual periods beginning after December 15, 2019.

October 1, 2020

We are currently evaluating the impact the new guidance may have on our unaudited condensed consolidated financial statements and disclosures.

We adopted this ASU during the first quarter of fiscal year 2021, as required.

Refer to "—Allowance for Credit Losses" below for additional information.

Standards that are not yet adopted as of December 31, 2020

2018-14, Compensation – Retirement Benefits – Defined Benefit Plans—General (Topic 715-20):

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This ASU amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit, pension and other postretirement plans.

This update is effective for annual and interim periods ending after December 15, 2020.

This update is effective for annual periods ending after December 15, 2020.

October 1, 2021

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Additionally, an entity that elects early adoption must adopt all the amendments in the same period.

Upon adoption, the amendments addressed in this ASU will be applied either prospectively, retrospectively or on a modified retrospective basis through a cumulative effect adjustment to retained earnings.

This update is effective for annual periods beginning after December 15, 2020.

October 1, 2021

We are currently evaluating the impact the new guidance may have on our unaudited condensed consolidated financial statements and disclosures.

Allowance for Credit Losses

On October 1, 2020, we adopted ASU 2016-13 on a modified retrospective basis through a cumulative-effect adjustment without restating comparative periods, as permitted under the adoption provisions.

Upon adoption, we recognized a $ 1.6 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $ 1.3 million.

This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable.

Pursuant to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

Self-Insurance

We have accrued a liability for estimated workers' compensation and other casualty claims incurred based upon cash reserves plus an estimate of loss development and incurred but not reported claims.

The estimate is based upon historical trends.

Insurance recoveries related to such liability are recorded when considered probable.

We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability.

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Insurance is purchased over deductibles to reduce our exposure to catastrophic events.

Estimates are recorded for incurred outstanding liabilities for workers’ compensation, general liability claims and claims that are incurred but not reported.

Estimates are recorded for incurred outstanding liabilities for workers’ compensation, general, and automobile liability claims that are incurred but not reported.

Estimates are based on adjusters' estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable.

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On October 1, 2019, we elected to utilize a wholly-owned insurance captive (“Captive”) to insure the deductibles for our workers’ compensation, general liability and automobile liability insurance programs.

Casualty claims occurring prior to October 1, 2019 will remain on the operating segment books and future adjustments to these claims will continue to be reflected within the operating segments.

Casualty claims occurring prior to October 1, 2019 will remain recorded within each of the operating segments and future adjustments to these claims will continue to be reflected within the operating segments.

Reserves for legacy claims occurring prior to October 1, 2019, will remain as liabilities in our operating segments until they have been resolved.

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The Company and the Captive maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs.

Our operating subsidiaries are paying premiums to the Captive, typically on a monthly basis, for the estimated losses based on the external actuarial analysis.

Our operating subsidiaries are paying premiums to the Captive, typically on a monthly basis, for the estimated losses based on an external actuarial analysis.

These premiums are currently held in a restricted account, resulting in a transfer of risk from our operating subsidiaries to the Captive.

The actuarial estimated underwriting expenses for the three and nine months ended June 30, 2020 was approximately $ 1.1 million and $ 15.8 million , respectively, and was recorded within contract drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations.

Intercompany premium revenues and expenses during the three and nine months ended June 30, 2020 amounted to $ 10.4 million and $ 28.9 million , respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." The Company previously self-insured employee health plan exposures in excess of employee deductibles.

Direct operating costs consisted primarily of adjustments to accruals for estimated losses of approximately $ 0.5 million and $ 8.5 million allocated to the Captive during the three months ended December 31, 2020 and 2019, respectively, and were recorded within drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations.

Intercompany premium revenues recorded by the Captive during the three months ended December 31, 2020 and 2019 amounted to $ 7.1 million and $ 7.7 million, respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." The Company self-insures employee health plan exposures in excess of employee deductibles.

Starting in the second quarter of fiscal year 2020, the Captive insurer issued a stop-loss program that will reimburse the Company's health plan for claims that exceed $ 50,000 .

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Argentina also has a history of implementing currency controls which restrict the conversion and repatriation of U.S.

dollars, including controls that were implemented in September 2019 and are presently in effect.

dollars, including controls that were implemented in September 2019.

In September 2020, Argentina implemented additional currency controls in an effort to preserve Argentina's U.S.

dollar reserves.

As a result of these currency controls, our ability to remit funds from our Argentine subsidiary to its U.S.

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These price controls and an exchange rate freeze could be instituted again in the future.

In addition, in 2020, the Argentine government introduced labor regulations that prohibit employee dismissals or suspensions without just cause, for lack of (or reduction in) work or due to force majeure, subject to certain exceptions that may result in the payment of compensation to suspended employees and/or increased severance costs to the company.

In addition, in March 2020, the Argentine government introduced labor regulations that prohibit employee dismissals or suspensions without just cause, for lack of (or reduction in) work or due to force majeure, subject to certain exceptions that may result in the payment of compensation to suspended employees and/or increased severance costs to the company.

These prohibitions have resulted in significant challenges for our Argentine operations and it remains uncertain for how long they will be in effect.

Further, there are ongoing concerns regarding Argentina's debt burden, as Argentina defaulted on some of its international debt obligations in May 2020.

Further, there are additional concerns regarding Argentina's debt burden, notwithstanding Argentina's restructuring deal with international bondholders in August 2020, as Argentina attempts to manage its substantial sovereign debt issues.

These concerns could further negatively impact Argentina's economy and adversely affect our Argentine operations.

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dollars with gains and losses resulting from foreign currency transactions included in current results of operations.

For the three and nine months ended June 30, 2020 , we experienced aggregate foreign currency losses of $ 3.2 million and $ 6.0 million , respectively.

For the three and nine months ended June 30, 2019 , we recorded aggregate foreign currency losses of $ 0.1 million and $ 4.6 million , respectively.

For the three months ended December 31, 2020 and 2019, we recorded an aggregate foreign currency loss of $ 1.8 million and an aggregate foreign currency gain of $ 1.0 million, respectively.

In the future, we may incur larger currency devaluations, foreign exchange restrictions or other difficulties repatriating U.S.

dollars from Argentina or elsewhere, which could have a material adverse impact on our business, financial condition and results of operations.

As of June 30, 2020 , our cash balance in Argentina was $ 38.6 million .

As of December 31, 2020, our cash balance in Argentina was $ 23.8 million.

Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities.

While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and nine months ended June 30, 2020 , approximately 7.3 percent and 7.9 percent , respectively, of our operating revenues were generated from international locations in our contract drilling business compared to 6.8 percent and 7.7 percent during the three and nine months ended June 30, 2019 , respectively.

During the three and nine months ended June 30, 2020 , approximately 33.2 percent and 68.2 percent , respectively, of operating revenues from international locations were from operations in South America compared to 95.1 percent and 92.1 percent during the three and nine months ended June 30, 2019 , respectively.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three months ended December 31, 2020, approximately 4.4 percent of our operating revenues were generated from international locations in our drilling business compared to 7.8 percent during the three months ended December 31, 2019.

During the three months ended December 31, 2020, approximately 18.1 percent of operating revenues from international locations were from operations in South America compared to 87.0 percent during the three months ended December 31, 2019.

Substantially all of the South American operating revenues were from Argentina and Colombia.

The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operati ons.

NOTE 3 BUSINESS COMBINATIONS

Fiscal Year 2019 Acquisitions

On August 21, 2019, we completed an acquisition of an unaffiliated company, DrillScan Energy SAS and its subsidiaries ("DrillScan"), which is now a wholly-owned subsidiary of the Company, for total consideration of approximately $ 32.7 million , which includes $ 17.7 million of contingent consideration.

The fair value of the total assets acquired, and liabilities assumed, as of the acquisition date, were $ 36.3 million and $ 3.6 million , respectively, including goodwill of $ 14.9 million .

Of the total assets acquired, $ 19.1 million was allocated to identifiable intangible assets.

DrillScan is a leading provider of proprietary drilling engineering software, well engineering services and training for the oil and gas industry.

The operations of DrillScan are included in the North America Solutions reportable segment.

The acquisition of DrillScan was accounted for as a business combination in accordance with FASB ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their acquisition date fair values.

In accordance with GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination.

During the second quarter of fiscal year 2020, as a result of new information identified related to the acquisition of DrillScan, the acquisition date fair value of the contingent consideration and goodwill increased by approximately $ 1.2 million .

This acquisition's measurement period closed during the quarter ended June 30, 2020 and, as a result, the purchase price accounting was finalized.

On November 1, 2018, we completed an acquisition of an unaffiliated company, Angus Jamieson Consulting (“AJC”), which is now a wholly-owned subsidiary of the Company, for total consideration of approximately $ 3.4 million .

AJC is a software-based training and consultancy company based in Inverness, Scotland and is widely recognized as an industry leader in wellbore positioning.

The operations of AJC are included in the North America Solutions reportable segment.

The acquisition of AJC has been accounted for as a business combination in accordance with FASB ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their acquisition date fair values.

The allocation of the purchase price included goodwill of $ 3.1 million .

NOTE 3 DISCONTINUED OPERATIONS

Current and noncurrent liabilities from discontinued operations consist of municipal and income taxes payable and social obligations due within the country of Venezuela.

Noncurrent liabilities from discontinued operations is an uncertain tax liability related to the country of Venezuela.

Expenses incurred for in-country obligations are reported as discontinued operations within our Unaudited Condensed Consolidated Statements of Operations.

The activity for the three and nine months ended June 30, 2020 was primarily due to the remeasurement of uncertain tax liabilities as a result of the devaluation of the Venezuela Bolivar.

The activity for the three months ended December 31, 2020 was primarily due to the remeasurement of uncertain tax liabilities as a result of the devaluation of the Venezuela Bolivar.

Early in 2018, the Venezuelan government announced that it changed the existing dual-rate foreign currency exchange system by eliminating its heavily subsidized foreign exchange rate, which was 10 Bolivars per United States dollar, and relaunched an exchange system known as DICOM.

The Venezuela government also established a new currency called the “Sovereign Bolivar,” which was determined by the elimination of five zeros from the old currency.

The DICOM floating rate was approximately 204,418 Bolivars per United States dollar at June 30, 2020 .

The DICOM floating rate was approximately 1,107,199 Bolivars per United States dollar at December 31, 2020, compared to 436,677 and 46,621 Bolivars per United States dollar at September 30, 2020, and December 31, 2019, respectively.

The DICOM floating rate might not reflect the barter market exchange rates.

NOTE 4 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of June 30, 2020 and September 30, 2019 consisted of the following:

(in thousands)

Estimated Useful Lives

June 30, 2020

September 30, 2019

Contract drilling services equipment

Real estate properties

10 - 45 years

Property, plant and equipment as of December 31, 2020 and September 30, 2020 consisted of the following:

(in thousands) Estimated Useful Lives December 31, 2020 September 30, 2020

Drilling services equipment 4 - 15 years

$ 7,255,178 $ 7,313,234

Tubulars 4 years 612,431 615,281

Real estate properties 10 - 45 years

43,365 43,389

Other 2 - 23 years

465,205 464,704

Construction in progress (1)

53,630 49,592

8,429,809 8,486,200

Accumulated depreciation ( 4,877,702 ) ( 4,839,859 )

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As these various projects are completed, the costs are then classified to their appropriate useful life category.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 108.4 million and $ 141.9 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 366.8 million and $ 423.7 million for the nine months ended June 30, 2020 and 2019 , respectively.

Included in depreciation expenses is abandonments of $ 0.9 million and $ 1.4 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 2.6 million and $ 6.8 million for the nine months ended June 30, 2020 and 2019 , respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 105.1 million and $ 128.2 million, including $ 0.3 million and $ 0.8 million in abandonments, for the three months ended December 31, 2020 and 2019, respectively.

Gain on Sale of Assets

We had gains on sales of assets of $ 4.2 million and $ 10.0 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 18.8 million and $ 27.1 million for the nine months ended June 30, 2020 and 2019 , respectively.

These gains were primarily related to reimbursement for drill pipe damaged or lost in drilling operations.

Consistent with our policy, we evaluate our drilling rigs and related equipment for impairment whenever events or changes in circumstances indicate the carrying value of these assets may exceed the estimated undiscounted future net cash flows.

Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of specific rigs’ asset group.

During the second quarter of fiscal year 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with the decrease in the demand due to the COVID-19 pandemic.

To maintain a competitive edge in a challenging market, the Company’s management introduced a new strategy focused on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

This resulted in grouping the super-spec rigs of our legacy Domestic FlexRig3 asset group with our FlexRig5 asset group creating a new "Domestic super-spec FlexRig" asset group, while combining the legacy Domestic conventional asset group, FlexRig4 asset group and FlexRig3 non-super-spec rigs into one asset group (Domestic non-super-spec asset group).

Given the current and projected low utilization for our Domestic non-super-spec asset group and all International asset groups, we considered these economic factors to be indicators that these asset groups may be impaired.

As a result of these indicators, we performed impairment testing at March 31, 2020 on each of our Domestic non super-spec and International conventional, FlexRig3, and FlexRig4 asset groups which had an aggregate net book value of $ 605.8 million .

We concluded that the net book value of each asset group is not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $ 441.4 million in the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2020.

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the North America Solutions and International Solutions segments, respectively.

No further impairments were recognized in the third quarter of fiscal year 2020.

Impairment was measured as the amount by which the net book value of each asset group exceeds its fair value.

The most significant assumptions used in our undiscounted cash flow model include timing on awards of future drilling contracts, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition.

These assumptions are classified as Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts.

In determining the fair value of each asset group, we utilized a combination of income and market approaches.

The significant assumptions in the valuation are based on those of a market participant and are classified as Level 2 and Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures.

As of March 31, 2020, the Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $ 44.9 million and $ 38.6 million , respectively, which had aggregate book values of $ 68.4 million and $ 38.6 million , respectively, in the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2020.

Of the $ 83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $ 75.8 million and $ 7.7 million was recorded in the North America Solutions and International Solutions segments, respectively.

We had a gain on sale of assets of $ 12.3 million and $ 4.3 million for the three months ended December 31, 2020 and 2019, respectively.

During the three months ended December 31, 2020, we closed on the sale of an offshore platform rig within our Offshore Gulf of Mexico operating segment for total consideration of $ 12.0 million with an aggregate net book value of $ 2.8 million, resulting in a gain of $ 9.2 million, which is included within Gain on Sale of Assets on our Unaudited Condensed Consolidated Statements of Operations.

We also had gains on asset sales related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations.

Decommissioning

While the crude oil market imbalance is a global phenomenon, it has more acutely impacted the U.S.

market as a result of storage limitations during the three months ended June 30, 2020.

The abruptness of and the overall size of the decrease in demand for refined products, such as gasoline and diesel, has created an abundance of supply for such products which has caused the inventory levels of crude oil and its related refined products to become greatly elevated, reaching the high end of storage capabilities.

This has greatly reduced the need, or in some cases, entirely eliminated the ability of refineries to use crude oil as a feedstock.

As such, E&P companies, our customers, may have limited opportunities to offload their production and even then, the selling price could be at very low, uneconomical prices.

Consequently, some E&P companies have chosen to shut-in and stop production, not complete additional wells drilled and/or not drill any more wells until the market imbalance corrects and it is economical to resume production and drilling wells.

During the three months ended June 30, 2020, we decommissioned two rigs and 35 rigs from our legacy Domestic Conventional asset group and FlexRig3 asset group, respectively.

During the fiscal year ended September 30, 2020, we decommissioned two rigs and 35 rigs from our legacy Domestic Conventional asset group and FlexRig3 ® asset group, respectively.

The decommissioned rigs were impaired as of March 31, 2020.

NOTE 6 LEASES

ASC 842 Adoption

On October 1, 2019, we adopted ASC 842, retrospectively through a cumulative-effect adjustment without restating comparative periods for the 2019 and 2018 fiscal years as permitted under the specific transitional provisions in ASC 842.

The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on October 1, 2019.

Upon the adoption of ASC 842, we recognized lease liabilities in relation to leases that had previously been classified as operating leases under the principles of ASC 840.

These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of October 1, 2019, as most of our contracts do not provide an implicit rate.

The weighted average lessee’s incremental borrowing rate applied to the operating lease liabilities on October 1, 2019 was approximately 2.9 % .

The change in accounting policy affected the following items in the balance sheet on October 1, 2019:

(in thousands)

September 30, 2019

October 1, 2019

Other Noncurrent Assets:

Operating lease right-of-use asset

Current Liabilities:

Accrued liabilities

Noncurrent Liabilities:

As of June 30, 2020 , segment assets and liabilities have all increased from September 30, 2019 as a result of the change in accounting policy.

All reportable segments were affected by the change in policy.

In applying ASC 842 for the first time, we have used the following practical expedients permitted by the topic:

The use of a single discount rate to a portfolio of leases with reasonably similar characteristics,

Not to reassess whether a contract is, or contains a lease at the date of initial application;

instead, for contracts entered into before the transition date, we relied on our assessment in which we applied ASC 840 prior to the adoption date,

The option to not reassess initial direct cost for existing leases, and

The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

We have made the accounting policy election to not recognize a right-of-use asset and corresponding liability for leases with a term of 12 months or less and leases of low-value.

Additionally, ASC 842 provides lessors with a practical expedient, by class of underlying asset, to not separate lease and non-lease components and account for the combined component under ASC 606 when the non-lease component is the predominant element of the combined component.

The lessor practical expedient is limited to circumstances in which the lease, if accounted for separately, would be classified as an operating lease under ASC 842.

With respect to our drilling service contracts that commenced or were amended during the nine months ended June 30, 2020 , we concluded that our drilling contracts contain a lease component and that the non-lease component is the predominant element of the combined component of such contracts.

As such, we elected to apply the practical expedient to not separate the lease and non-lease components and account for the combined component under ASC 606.

Therefore, we do not expect any change in our revenue recognition patterns or disclosures as a result of our adoption of ASC 842.

Lease Position

(in thousands)

October 1, 2019

June 30, 2020

Operating lease commitments disclosed

Discounted using the lessee's incremental borrowing rate at the date of initial application

short-term leases recognized on a straight-line basis as expense

Lease liability recognized

Current lease liabilities

Non-current lease liabilities

The recognized right-of-use assets relate to the following types of assets:

(in thousands)

October 1, 2019

June 30, 2020

Total right-of-use assets

The right-of-use assets were measured at the amount equal to the lease liability, adjusted for the amount of any prepaid or accrued lease payments recognized on the balance sheet at September 30, 2019.

The following table presents certain information related to the lease costs for our operating leases:

(in thousands)

Three Months Ended

June 30, 2020

Nine Months Ended

June 30, 2020

Operating lease cost

Short-term lease cost

Total lease cost

Lease Terms and Discount Rates

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases as of June 30, 2020 .

June 30, 2020

Weighted average remaining lease term

Weighted average discount rate

Lease Obligations

Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at June 30, 2020 (in thousands) are as follows:

Total rent expense was $ 4.3 million and $ 3.9 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 13.9 million and $ 11.6 million for the nine months ended June 30, 2020 and 2019 , respectively.

The future minimum lease payments for our Tulsa corporate office and our Tulsa industrial facility represent a material portion of the amounts shown in the table above.

The lease agreement for our Tulsa corporate office commenced on May 30, 2003 and has subsequently been amended, most recently on March 12, 2018.

The agreement will expire on January 31, 2025;

however, we have two five -year renewal options, which were not recognized as part of our right-of-use assets and lease liabilities.

The lease agreement for our Tulsa industrial facility, where we perform maintenance and assembly of FlexRig components commenced on December 21, 2018 and will expire on June 30, 2025;

however, we have two two -year renewal options which were recognized as part of our right-of-use assets and lease liabilities.

We did not decommission any rigs during the three months ended December 31, 2020.

NOTE 5 GOODWILL AND INTANGIBLE ASSETS

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All of our goodwill is within our North America Solutions reportable segment.

The following is a summary of changes in goodwill (in thousands):

Balance at September 30, 2019

Balance at June 30, 2020

During the three months ended December 31, 2020, we had no additions or impairments to goodwill.

As of December 31, 2020 and September 30, 2020, the goodwill balance was $ 45.7 million .

Intangible Assets

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Intangible assets consisted of the following:

June 30, 2020

September 30, 2019

(in thousands)

Weighted Average Estimated Useful Lives

December 31, 2020 September 30, 2020

(in thousands) Weighted Average Estimated Useful Lives Gross

Amount Accumulated

Amortization Net Gross

Amount Accumulated

Amortization Net

Finite-lived intangible asset:

Developed technology

Intellectual property

Customer relationships

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million and $ 1.4 million for the three months ended June 30, 2020 and 2019 , respectively, and $ 5.5 million and $ 4.2 million for nine months ended June 30, 2020 and 2019 , respectively.

I ntangible amortization is estimated to be approximately $ 1.8 million for the remainder of fiscal year 2020 , approximately $ 7.2 million for fiscal years 2021 and 2022 , approximately $ 6.5 million for fiscal year 2023 and approximately $ 6.4 million for fiscal year 2024 .

Consistent with our policy, we test goodwill annually for impairment in the fourth quarter of our fiscal year, or more frequently if there are indicators that goodwill might be impaired.

Due to the market conditions described in Note 5—Property, Plant and Equipment , during the second quarter of fiscal year 2020, we concluded that goodwill might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated, for recoverability.

This resulted in a non-cash impairment charge of $ 38.3 million recorded in the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2020 .

The recoverable amount of the H&P Technologies reporting unit is determined based on a fair value calculation which uses cash flow projections based on the Company’s financial projections presented to the board of directors covering a five-year period, and a discount rate of 14 percent .

Cash flows beyond that five-year period have been extrapolated using the fifth-year data with no implied growth factor.

The reporting unit level is defined as an operating segment or one level below an operating segment.

The recoverable amount of the intangible assets tested for impairment within the H&P Technologies reporting unit is determined based on undiscounted cash flow projections using the Company’s financial projections presented to the board of directors covering a five-year period, and extrapolated for the remaining weighted average useful lives of the intangible assets.

The most significant assumptions used in our cash flow model include timing on awards of future contracts, commercial pricing terms, utilization, discount rate, and the terminal value.

Although we believe the assumptions used in our analysis and the probability-weighted average of expected future cash flows are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion.

Developed technology 15 years $ 89,096 $ 17,716 $ 71,380 $ 89,096 $ 16,222 $ 72,874

Intellectual property 13 years 1,500 131 1,369 1,500 103 1,397

Trade name 20 years 5,865 921 4,944 5,865 842 5,023

Customer relationships 5 years 4,000 2,467 1,533 4,000 2,267 1,733

$ 100,461 $ 21,235 $ 79,226 $ 100,461 $ 19,434 $ 81,027

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million and $ 1.9 million for the three months ended December 31, 2020 and 2019, respectively.

A mortization is estimated to be approximately $ 5.4 million for the remainder of fiscal year 2021, approximately $ 7.2 million for fiscal year 2022, approximately $ 6.5 million for fiscal year 2023, and approximately $ 6.4 million for fiscal years 2024 and 2025.

We had the following unsecured long-term debt outstanding with maturities shown in the following table:

June 30, 2020

September 30, 2019

(in thousands)

December 31, 2020 September 30, 2020

(in thousands) Face

Amount Unamortized

Discount and Debt Issuance

Amount Unamortized

Discount and Debt Issuance

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Due March 19, 2025 $ 487,148 $ ( 5,961 ) $ 481,187 $ 487,148 $ ( 6,421 ) $ 480,727

487,148 ( 5,961 ) 481,187 487,148 ( 6,421 ) 480,727

Less long-term debt due within one year — — — — — —

Long-term debt $ 487,148 $ ( 5,961 ) $ 481,187 $ 487,148 $ ( 6,421 ) $ 480,727

HPIDC 2025 Notes

On March 19, 2015, our subsidiary, Helmerich & Payne International Drilling Co.

("HPIDC") issued $ 500.0 million of 4.65 percent unsecured senior notes due 2025 of HPIDC (the "HPIDC 2025 Notes"), which were redeemed in full on September 27, 2019 as described under "––Exchange Offer, Consent Solicitation and Redemption." Interest on the HPIDC 2025 Notes was payable semi-annually on March 15 and September 15.

The debt discount was being amortized to interest expense using the effective interest method.

The debt issuance costs were being amortized straight-line over the stated life of the obligation, which approximated the effective interest method.

Exchange Offer, Consent Solicitation and Redemption

On December 20, 2018 , we settled an offer to exchange (the “Exchange Offer”) any and all outstanding HPIDC 2025 Notes for (i) up to $ 500.0 million aggregate principal amount of new 4.65 percent unsecured senior notes due 2025 of the Company (the “Company 2025 Notes”), with registration rights, and (ii) cash, pursuant to which we issued approximately $ 487.1 million in aggregate principal amount of Company 2025 Notes.

On December 20, 2018, we issued approximately $ 487.1 million in aggregate principal amount of 4.65 percent unsecured senior notes due 2025 (the"Company 2025 Notes").

Interest on the Company 2025 Notes is payable semi-annually on March 15 and September 15 of each year, commencing March 15, 2019.

The debt issuance costs are being amortized straight-line over the stated life of the obligation, which approximates the effective interest method.

Following the consummation of the Exchange Offer, HPIDC had outstanding approximately $ 12.9 million in aggregate principal amount of HPIDC 2025 Notes.

On December 20, 2018 , HPIDC, the Company and Wells Fargo Bank, National Association, as trustee, entered into a supplemental indenture to the indenture governing the HPIDC 2025 Notes to adopt certain proposed amendments pursuant to a consent solicitation conducted concurrently with the Exchange Offer.

On September 27, 2019, we redeemed the remaining approximately $ 12.9 million in aggregate principal amount of HPIDC 2025 Notes for approximately $ 14.6 million , including accrued interest and a prepayment premium.

Simultaneously with the redemption of the HPIDC 2025 Notes, HPIDC was released as a guarantor under the Company 2025 Notes and the 2018 Credit Facility (as defined herein).

As a result of such release, H&P is the only obligor under the Company 2025 Notes and the 2018 Credit Facility.

Credit Facilities

On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), which is set to mature on November 13, 2024.

On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that is set to mature on November 13, 2024.

The 2018 Credit Facility has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit.

The 2018 Credit Facility also permits aggregate commitments under the facility to be increased by $ 300.0 million , subject to the satisfaction of certain conditions and the procurement of additional commitments from new or existing lenders.

The borrowings under the 2018 Credit Facility accrue interest at a spread over either the London Interbank Offered Rate ("LIBOR") or the Base Rate.

We also pay a commitment fee on the unused balance of the facility.

Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s.

The spread over LIBOR ranges from 0.875 percent to 1.500 percent per annum and commitment fees range from 0.075 percent to 0.200 percent per annum.

There is a financial covenant in the 2018 Credit Facility that requires us to maintain a total debt to total capitalization ratio of less than or equal to 50 percent .

The 2018 Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company.

As of June 30, 2020 , there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of June 30, 2020 , we had two outstanding letters of credit with banks, in the amounts of $ 24.8 million and $ 2.1 million , respectively.

As of June 30, 2020 , we also had a $ 20.0 million unsecured standalone line of credit facility, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 20.0 million , $ 14.3 million of financial guarantees were outstanding as of June 30, 2020 .

As of December 31, 2020, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

For a full description of the 2018 Credit Facility, see Note 8—Debt to the consolidated financial statements in our 2020 Annual Report on Form 10-K.

As of December 31, 2020, we had three separate outstanding letters of credit with banks, in the amounts of $ 24.8 million, $ 0.5 million and $ 2.1 million.

As of December 31, 2020, we also had a $ 20.0 million unsecured standalone line of credit facility, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 20.0 million, $ 1.8 million of financial guarantees were outstanding as of December 31, 2020.

The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality.

At June 30, 2020 , we were in compliance with all debt covenants .

At December 31, 2020, we were in compliance with all debt covenants.

NOTE 7 INCOME TAXES

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") became law.

The CARES Act, among other things, includes certain income tax provisions for corporations;

however, as of June 30, 2020, we are not anticipating any of the benefits to significantly impact the Company’s income tax provision.

We use an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods.

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Adjustments to the effective tax rate and estimates will occur as information and assumptions change.

Our income tax benefit from continuing operations for the three months ended June 30, 2020 and 2019 was $ 17.6 million and $ 32.0 million , respectively, resulting in effective tax rates of 27.6 percent and 17.2 percent , respectively.

Our income tax benefit from continuing operations for the nine months ended June 30, 2020 and 2019 was $ 116.9 million and $ 5.6 million , respectively, resulting in effective tax rates of 21.1 percent and 7.0 percent , respectively.

The discrete adjustments for the three and nine months ended June 30, 2020 and 2019 relate to decreases in our deferred state income tax rate, return to provision adjustments, and reversals of uncertain tax liabilities.

Our income tax provision (benefit) from continuing operations for the three months ended December 31, 2020 and 2019 was $( 18.1 ) million and $ 14.1 million, respectively, resulting in effective tax rates of 18.9 percent and 31.5 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three months ended December 31, 2020 and 2019 primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments.

Additionally, the effective tax rate for the three months ended December 31, 2020 includes a federal tax benefit arising from the ability to carryback the projected fiscal year 2021 federal net operating loss to a year when the statutory rate was 35.0 percent.

The discrete adjustments for the three months ended December 31, 2020 and 2019 are primarily due to tax expense related to equity compensation of $ 4.1 million and $ 2.4 million, respectively.

For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax positions associated with our U.S.

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NOTE 8 SHAREHOLDERS’ EQUITY

The Company has authorization from the Board of Directors (the "Board") for the repurchase of up to four million common shares per calendar year.

The Company has an evergreen authorization from the Board of Directors (the "Board") for the repurchase of up to four million common shares in any calendar year.

The repurchases may be made using our cash and cash equivalents or other available sources.

We had no purchases of common shares during the three months ended June 30, 2020 .

During the nine months ended June 30, 2020 , we purchased 1.5 million common shares at an aggregate cost of $ 28.5 million , which are held as treasury shares.

We had no purchases of common shares during the three and nine months ended June 30, 2019 .

A cash dividend of $ 0.71 per share was declared on March 4, 2020 for shareholders of record on May 11, 2020 and was paid on June 1, 2020.

An additional cash dividend of $ 0.25 per share was declared on June 3, 2020 for shareholders of record on August 17, 2020, payable on August 31, 2020.

As a result, we recorded a dividend payable of $ 27.2 million within Dividends Payable on our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2020 .

We had no purchases of common shares during the three months ended December 31, 2020 and 2019.

A cash dividend of $ 0.25 per share was declared on September 9, 2020 for shareholders of record on November 13, 2020 and was paid on December 1, 2020.

An additional cash dividend of $ 0.25 per share was declared on December 11, 2020 for shareholders of record on February 12, 2021, payable on March 1, 2021.

As a result, we recorded a dividend payable of $ 27.4 million within Dividends Payable on our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands)

(in thousands) December 31,

2020 September 30,

Pre-tax amounts:

Unrealized actuarial loss

Unrecognized net actuarial loss $ ( 33,333 ) $ ( 33,923 )

$ ( 33,333 ) $ ( 33,923 )

After-tax amounts:

Unrealized actuarial loss

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three and nine months ended June 30, 2020 :

(in thousands)

Three Months Ended June 30, 2020

Nine Months Ended June 30, 2020

Balance at beginning of period

Unrecognized net actuarial loss $ ( 25,731 ) $ ( 26,188 )

$ ( 25,731 ) $ ( 26,188 )

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three months ended December 31, 2020:

(in thousands) Three Months Ended December 31, 2020

Balance at September 30, 2020 $ ( 26,188 )

Activity during the period

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Net current-period other comprehensive income 457

Balance at June 30, 2020

Balance at December 31, 2020 $ ( 25,731 )

NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract Drilling Services Revenue

Due to the sharp decline in the price of oil during the second quarter of fiscal year 2020, our customers have reduced their drilling activity and we have received rig release notifications for rigs under term and well-to-well contracts.

The releases for rigs under term contracts result in early termination compensation owed to us, while releases for rigs under well-to-well contracts given outside the notification window per the contract result in notification fees owed to us.

During the three months ended June 30, 2020 and 2019 , early termination revenue associated with term contracts was approximately $ 49.5 million and $ 0.8 million , respectively, and $ 57.8 million and $ 9.1 million , respectively, for the nine months ended June 30, 2020 and 2019 .

During the three months ended June 30, 2020 and 2019 , notification fee revenue related to well-to-well contracts was approximately $ 0.9 million and $ 0.8 million , respectively, and $ 3.0 million and $ 1.0 million for the nine months ended June 30, 2020 and 2019 , respectively.

As a result of the depressed market conditions and negative outlook for the near term, certain of our customers have opted to renegotiate existing drilling contracts.

During the second quarter of fiscal year 2020, we agreed to certain price concessions on some of our existing drilling contracts;

however, the total impact on current and future periods is not material.

Drilling Services Revenue

During the three months ended December 31, 2020 and 2019, early termination revenue associated with term contracts was approximately $ 5.8 million and $ 0.1 million, respectively.

Contract Costs

We had capitalized fulfillment costs of $ 6.3 million and $ 13.9 million as of June 30, 2020 and September 30, 2019 , respectively.

We had capitalized fulfillment costs of $ 5.8 million and $ 6.2 million as of December 31, 2020 and September 30, 2020, respectively.

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of June 30, 2020 was approximately $ 650.7 million , of which approximately $ 173.3 million is expected to be recognized during the remainder of fiscal year 2020 , approximately $ 331.8 million during fiscal year 2021 , and approximately $ 145.6 million during fiscal year 2022 and thereafter.

These amounts do not include anticipated contract renewals.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of December 31, 2020 was approximately $ 526.6 million, of which approximately $ 338.0 million is expected to be recognized during the remainder of fiscal year 2021, approximately $ 130.4 million during fiscal year 2022, and approximately $ 58.2 million during fiscal year 2023 and thereafter.

These amounts do not include anticipated contract renewals or expected performance bonuses.

Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations.

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Contract Assets and Liabilities

The following tables summarize the balances of our contract assets and liabilities:

(in thousands)

June 30, 2020

September 30, 2019

The following tables summarize the balances of our contract assets and liabilities at the dates indicated below:

(in thousands) December 31, 2020 September 30, 2020

Contract assets $ 3,389 $ 2,367

(in thousands)

June 30, 2020

(in thousands) December 31, 2020

Contract liabilities balance at September 30, 2020 $ 8,636

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Revenue recognized during the period ( 6,208 )

Contract liabilities balance at June 30, 2020

Contract liabilities balance at December 31, 2020 $ 8,154

NOTE 10 STOCK-BASED COMPENSATION

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2016 Omnibus Incentive Plan (the "2016 Plan").

The 2020 Plan is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units, share bonuses, other share-based awards and cash awards.

The 2020 Plan is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units (including performance share units), share bonuses, other share-based awards and cash awards.

Restricted stock may be granted for no consideration other than prior and future services.

The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant.

Stock options expire ten years after the grant date.

Awards outstanding under the Helmerich & Payne, Inc.

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Beginning with fiscal year 2019, we replaced stock options with performance share units as a component of our executives’ long-term equity incentive compensation.

As a result, there were no new non-qualified stock options granted during the nine months ended June 30, 2020 .

As a result, there were no stock options granted during the three months ended December 31, 2020 and 2019.

We have also eliminated stock options as an element of our non-employee director compensation program.

The Board has determined to award stock-based compensation to non-employee directors solely in the form of restricted stock.

During the nine months ended June 30, 2020 , 727,009 shares of restricted stock awards and 258,857 performance share units were granted under the 2016 Plan and 54,118 shares of restricted stock awards were granted under the 2020 Plan.

A summary of compensation cost for stock-based payment arrangements recognized in contract drilling services operating expense and selling, general and administrative expense is as follows:

Three Months Ended June 30,

Nine Months Ended June 30,

During the three months ended December 31, 2020, 631,166 shares of restricted stock awards and 312,600 performance share units were granted under the 2020 Plan.

A summary of compensation cost for stock-based payment arrangements recognized in drilling services operating expense, research and development expense and selling, general and administrative expense during the three months ended December 31, 2020 and 2019 is as follows:

Three Months Ended December 31,

(in thousands) 2020 2019

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Performance share units 1,122 2,260

Stock-based compensation benefit included in restructuring charges

Of the total stock-based compensation expense, for the three and nine months ended June 30, 2020 , $ 2.4 million and $ 7.6 million , respectively, was recorded in contract drilling services operating expenses on our Unaudited Condensed Consolidated Statements of Operations.

For the three and nine months ended June 30, 2019 , $ 1.9 million and $ 5.4 million , respectively, was recorded in contract drilling services operating expenses.

Of the total stock-based compensation expense, for the three and nine months ended June 30, 2020 , $ 8.7 million and $ 24.5 million , respectively, was recorded in selling, general and administrative expense on our Unaudited Condensed

Consolidated Statements of Operations.

For the three and nine months ended June 30, 2019 , $ 6.9 million and $ 20.1 million , respectively, was recorded in selling, general and administrative expense.

$ 7,451 $ 10,201

Of the total stock-based compensation expense, during the three months ended December 31, 2020, $ 1.8 million was recorded in drilling services operating expense, $ 0.3 million was recorded in research and development expense, and $ 5.4 million was recorded in selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations.

Of the total stock-based compensation expense, during the three months ended December 31, 2019, $ 2.4 million was recorded in drilling services operating expense and $ 7.8 million was recorded in selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations.

Stock Options

A summary of stock option activity under all existing long-term incentive plans for the three and nine months ended June 30, 2020 is presented in the following tables:

Three Months Ended June 30, 2020

(in thousands, except per share amounts and years)

Term in Years

Outstanding at March 31, 2020

Forfeited/Expired

Outstanding at June 30, 2020

Vested and expected to vest at June 30, 2020

Exercisable at June 30, 2020

Nine Months Ended June 30, 2020

(in thousands, except per share amounts and years)

A summary of stock option activity under all existing long-term incentive plans for the three months ended December 31, 2020 is presented in the following table:

(in thousands, except per share amounts and years) Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value

Outstanding at September 30, 2020 2,863 $ 62.41

Exercised — —

Forfeited/Expired ( 174 ) 48.17

Outstanding at June 30, 2020

No options were exercised during the three months ended June 30, 2020.

The total intrinsic value of options exercised during the three months ended June 30, 2019 was $ 0.3 million .

The total intrinsic value of options exercised during the nine months ended June 30, 2020 and 2019 was $ 0.3 million and $ 7.9 million , respectively.

As of June 30, 2020 , the unrecognized compensation cost related to stock options was $ 1.6 million , which is expected to be recognized over a weighted-average period of 1.4 years .

Outstanding at December 31, 2020 2,689 $ 63.34 4.54 $ —

Vested or expected to vest at December 31, 2020 158 $ 59.28 6.93 $ —

Exercisable at December 31, 2020 2,531 $ 63.59 4.39 $ —

No options were exercised during the three months ended December 31, 2020.

The total intrinsic value of options exercised during the three months ended December 31, 2019 was $ 0.3 million.

As of December 31, 2020, the unrecognized compensation cost related to stock options was $ 0.9 million, which is expected to be recognized over a weighted-average period of 1.0 years.

Restricted Stock

Restricted stock awards consist of our common stock and are time-vested over four years .

Restricted stock awards consist of our common stock.

Awards granted prior to September 30, 2020 are time-vested over four years , and awards granted after September 30, 2020 are time vested over three years .

Non-forfeitable dividends are paid on non-vested shares of restricted stock.

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The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date.

As of June 30, 2020 , there was $ 38.8 million of total unrecognized compensation cost related to unvested restricted stock awards.

As of December 31, 2020, there was $ 41.6 million of total unrecognized compensation cost related to unvested restricted stock awards.

That cost is expected to be recognized over a weighted-average period of 2.6 years.

A summary of the status of our restricted stock awards as of June 30, 2020 and changes in non-vested restricted stock outstanding during the nine months then ended is presented below:

Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

Weighted Average

Grant Date Fair

Value per Share

A summary of the status of our restricted stock awards as of December 31, 2020 and changes in non-vested restricted stock outstanding during the three months then ended is presented below:

(in thousands, except per share amounts) Shares (1)

Weighted Average Grant Date Fair Value per Share

Non-vested restricted stock outstanding at September 30, 2020 1,280 $ 49.81

Non-vested restricted stock outstanding at June 30, 2020

The number of restricted stock awards granted includes phantom shares that confer the benefits of owning company stock without the actual ownership or transfer of any shares.

The number of phantom shares granted for the nine months ended June 30, 2020 was 20,616 .

Granted 631 25.29

( 466 ) 55.93

Forfeited ( 2 ) 49.07

Non-vested restricted stock outstanding at December 31, 2020 1,443 $ 37.08

(1) The beginning balance of restricted stock shares includes phantom shares that confer the benefits of owning company stock without the actual ownership or transfer of any shares.

There were no phantom shares granted during the three months ended December 31, 2020.

There were 20,616 phantom shares granted during fiscal year 2020.

(2) The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

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We have made awards to certain employees that are subject to market-based performance conditions ("performance share units").

Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2016 Plan, grants of performance share units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals.

Subject to the terms and conditions set forth in the applicable performance share unit award agreements, the 2016 Plan and the 2020 Plan, grants of performance share units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals.

Such performance share unit awards consist of two separate components.

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The vesting of the performance share units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance share unit award throughout the Vesting Period.

At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance share units.

The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date.

Additional performance share units are credited based on the amount of cash dividends on our common shares divided by the market value of our common shares on the date such dividend is paid.

Such dividend equivalents are subject to the same terms and conditions and are settled or forfeited in the same manner and at the same time as the performance share units to which they were credited.

The grant date fair value of performance share units was determined through use of the Monte Carlo simulation method.

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The valuation model assumes dividends are immediately reinvested.

As of June 30, 2020 , there was $ 8.5 million of unrecognized compensation cost related to unvested performance share units.

As of December 31, 2020, there was $ 14.6 million of unrecognized compensation cost related to unvested performance share units.

That cost is expected to be recognized over a weighted-average period of 2.6 years.

A summary of the status of our performance share units as of June 30, 2020 and changes in non-vested performance share units outstanding during the nine months then ended is presented below:

Nine Months Ended June 30, 2020

(in thousands, except per share amounts)

Weighted Average

Grant Date Fair

Value per Share

A summary of the status of our performance share units as of December 31, 2020 and changes in non-vested performance share units outstanding during the three months then ended is presented below:

(in thousands, except per share amounts) Shares Weighted Average Grant Date Fair Value per Share

Non-vested performance share units outstanding at September 30, 2020 337 $ 51.09

Non-vested performance share units outstanding at June 30, 2020

The weighted-average fair value calculation for performance share units granted during the nine months ended June 30, 2020 is based on the following weighted-average assumptions set forth in the table below.

Nine Months Ended June 30, 2020

Granted 313 29.77

Reinvested dividends 42 52.85

Non-vested performance share units outstanding at December 31, 2020 692 $ 41.58

The weighted-average fair value calculation for performance share units granted during the three months ended December 31, 2020 is based on the following weighted-average assumptions set forth in the table below.

Three Months Ended December 31, 2020

Risk-free interest rate (1)

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Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.

The following table sets forth the computation of basic and diluted loss per share:

The following table sets forth the computation of basic and diluted earnings (loss) per share:

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts) 2020 2019

Loss from continuing operations

Income (loss) from continuing operations $ ( 77,924 ) $ 30,729

Income (loss) from discontinued operations 7,493 ( 124 )

Adjustment for basic loss per share

Loss allocated to unvested shareholders

Numerator for basic loss per share:

Net income (loss) ( 70,431 ) 30,605

Adjustment for basic earnings (loss) per share

Earnings allocated to unvested shareholders ( 361 ) ( 991 )

Numerator for basic earnings (loss) per share:

From continuing operations ( 78,285 ) 29,738

From discontinued operations 7,493 ( 124 )

Adjustment for diluted loss per share:

( 70,792 ) 29,614

Adjustment for diluted earnings (loss) per share:

Effect of reallocating undistributed earnings of unvested shareholders — —

Numerator for diluted loss per share:

Numerator for diluted earnings (loss) per share:

From continuing operations ( 78,285 ) 29,738

From discontinued operations 7,493 ( 124 )

Denominator for basic loss per share - weighted-average shares

$ ( 70,792 ) $ 29,614

Denominator for basic earnings (loss) per share - weighted-average shares 107,617 108,555

Effect of dilutive shares from stock options, restricted stock and performance share units — 169

Denominator for diluted loss per share - adjusted weighted-average shares

Basic loss per common share:

Loss from continuing operations

Loss from discontinued operations

Diluted loss per common share:

Loss from continuing operations

Loss from discontinued operations

We had a net loss for the three and nine months ended June 30, 2020 and 2019.

Denominator for diluted earnings (loss) per share - adjusted weighted-average shares 107,617 108,724

Basic earnings (loss) per common share:

Income (loss) from continuing operations $ ( 0.73 ) $ 0.27

Income from discontinued operations 0.07 —

Net income (loss) $ ( 0.66 ) $ 0.27

Diluted earnings (loss) per common share:

Income (loss) from continuing operations $ ( 0.73 ) $ 0.27

Income from discontinued operations 0.07 —

Net income (loss) $ ( 0.66 ) $ 0.27

We had a net loss for the three months ended December 31, 2020.

Accordingly, our diluted earnings per share calculation this period was equivalent to our basic earnings per share calculation since diluted earnings per share excluded any assumed exercise of equity awards.

These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period.

The following average shares attributable to outstanding equity awards were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive:

The following potentially dilutive average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings (loss) per share because their inclusion would have been anti-dilutive:

Three Months Ended

Nine Months Ended

(in thousands, except per share amounts)

Shares excluded from calculation of diluted loss per share

Potentially dilutive shares excluded as anti-dilutive 4,494 3,413

Weighted-average price per share $ 55.61 $ 61.02

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This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value, which totaled $ 16.3 million at June 30, 2020 and $ 15.7 million at September 30, 2019 .

The assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value and totaled $ 22.0 million at December 31, 2020 and $ 19.8 million at September 30, 2020.

The assets are comprised of mutual funds that are measured using Level 1 inputs.

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The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those investments.

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at June 30, 2020 and September 30, 2019 .

The following table summarizes our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 :

(in thousands)

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at December 31, 2020 and September 30, 2020.

The following table summarizes our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheet as of December 31, 2020:

(in thousands) Fair Value Level 1 Level 2 Level 3

Recurring fair value measurements:

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Cash and cash equivalents 373,980 373,980 — —

Investments 12,049 10,206 343 1,500

Other current assets 45,688 45,688 — —

Other assets 2,985 2,985 — —

Total assets measured at fair value $ 584,524 $ 437,889 $ 145,135 $ 1,500

Contingent earnout liability $ 8,973 $ — $ — $ 8,973

At June 30, 2020 , our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

At December 31, 2020, our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

Agency issued debt securities, equity securities with active markets and money market funds that are classified as restricted assets.

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For these items, quoted current market prices are readily available.

At June 30, 2020 , assets measured at fair value using Level 2 inputs include certificates of deposit, municipal bonds and corporate bonds measured using broker quotations that utilize observable market inputs.

Our financial instruments measured using Level 3 unobservable inputs consist of potential earnout payments primarily associated with our business acquisitions in fiscal year 2019.

The following table presents a reconciliation of changes in the fair value of our financial assets and liabilities classified as Level 3 fair value measurements in the fair value hierarchy for the indicated periods:

At December 31, 2020, assets measured at fair value using Level 2 inputs include certificates of deposit, municipal bonds and corporate bonds measured using broker quotations that utilize observable market inputs.

Our financial instruments measured using Level 3 unobservable inputs primarily consist of potential earnout payments primarily associated with our business acquisitions in fiscal year 2019.

The following table presents a reconciliation of changes in the fair value of our financial liabilities classified as Level 3 fair value measurements in the fair value hierarchy for the indicated periods:

Three Months Ended

Nine Months Ended

(in thousands) 2020 2019

Net liabilities at beginning of period

Net liabilities at September 30, $ 9,123 $ 18,373

Additions — 1,500

Total gains or losses:

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Settlements (1)

Net liabilities at June 30,

Net liabilities at December 31, $ 8,973 $ 19,873

(1) Settlements represent earnout payments that have been paid or earned during the period.

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs at June 30, 2020 :

Valuation Technique

Unobservable Input

Weighted Average (1)

Monte Carlo simulation

Discount rate

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs related to our financial liabilities at December 31, 2020:

Fair Value Valuation Technique Unobservable Input Unobservable Input Range Weighted Average (1)

$ 1,000 Monte Carlo simulation Discount rate 1.1 %

Revenue Volatility 46.7 %

Risk free rate 1.4 %

Probability Analysis

Discount rate

$ 7,973 Probability analysis Discount rate 1.0 %

Payment amounts $ 5,250 - $ 7,000

$3,000 - $7,000

Probabilities 40 % - 60 %

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It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

The following information presents the supplemental fair value information about long-term fixed-rate debt at June 30, 2020 and September 30, 2019 :

(in millions)

June 30, 2020

September 30, 2019

The following information presents the supplemental fair value information about long-term fixed-rate debt at December 31, 2020 and September 30, 2020:

(in millions) December 31, 2020 September 30, 2020

Carrying value of long-term fixed-rate debt $ 481.2 $ 480.7

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The notes are classified within Level 2 as they are not actively traded in markets.

The estimated fair value of our investments, reflected on our Unaudited Condensed Consolidated Balance Sheets as Investments, is based on Level 1 inputs.

As a result of the change in the fair value of our investments, we recorded a gain of $ 2.3 million and a loss of $ 7.3 million for the three and nine months ended June 30, 2020 , respectively.

The estimated fair value of our investments, reflected on our Unaudited Condensed Consolidated Balance Sheets as Investments, is primarily based on Level 1 inputs.

As a result of the change in the fair value of our investments, we recorded a gain of $ 2.9 million for the three months ended December 31, 2020.

NOTE 13 EMPLOYEE BENEFIT PLANS

Components of Net Periodic Benefit Cost

The following provides information at June 30, 2020 and 2019 , related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc.

The following provides information at December 31, 2020 and 2019, related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc.

Employee Retirement Plan (the “Pension Plan”):

Three Months Ended

Nine Months Ended

(in thousands) 2020 2019

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Recognized net actuarial loss 590 669

Settlement 1,015 —

Net pension expense $ 1,391 $ 385

According to ASC 715, Compensation—Retirement Benefits, if the lump sum distributions made during a plan year exceed the total of the projected service cost and interest cost for the plan year, settlement accounting is required.

Lump sum payments exceeded this threshold during both the three and nine months ended June 30, 2019 and three and nine months ended June 30, 2020.

Accordingly, we recognized settlement expense of $ 1.5 million for the three and nine months ended June 30, 2019, and settlement expense of $ 1.8 million for the three and nine months ended June 30, 2020 in other expense within our Condensed Consolidated Statements of Operations.

Lump sum payments exceeded this threshold during the three months ended December 31, 2020.

Accordingly, we recognized settlement expense of $ 1.0 million for the three months ended December 31, 2020, in other expense within our Unaudited Condensed Consolidated Statements of Operations.

Employer Contributions

We did no t contribute to the Pension Plan during the nine months ended June 30, 2020 .

We did no t make any contributions to the Pension Plan during the three months ended December 31, 2020.

For the remainder of fiscal year 2021, we do not expect minimum contributions required by law to be needed.

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Equipment, parts and supplies are ordered in advance to promote efficient construction and capital improvement progress.

At June 30, 2020 , we had purchase commitments for equipment, parts and supplies of approximately $ 11.2 million .

Lease Obligations

Refer to Note 6—Leases for additional information on our lease obligations.

At December 31, 2020, we had purchase commitments for equipment, parts and supplies of approximately $ 16.5 million.

Guarantee Arrangements

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The property and equipment of our Venezuelan subsidiary was seized by the Venezuelan government on June 30, 2010.

HPIDC, our wholly-owned subsidiary and the parent company of our Venezuelan subsidiary, has a lawsuit pending in the United States District Court for the District of Columbia against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A.

and PDVSA Petroleo, S.A., seeking damages for the taking of their Venezuelan drilling business in violation of international law.

Our wholly-owned subsidiaries, HPIDC and Helmerich & Payne de Venezuela, C.A., filed a lawsuit in the United States District Court for the District of Columbia on September 23, 2011 against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A.

and PDVSA Petroleo, S.A., seeking damages for the taking of their Venezuelan drilling business in violation of international law and for breach of contract.

While there exists the possibility of realizing a recovery, we are currently unable to determine the timing or amounts we may receive, if any, or the likelihood of recovery.

In October 2017, an employee of HPIDC suffered personal injury and subsequently brought a lawsuit against the operator.

Pursuant to the terms of the drilling contract between HPIDC and the operator, HPIDC indemnified the operator in the lawsuit,

subject to certain limitations.

A settlement agreement was reached with the operator.

As of September 30, 2019, we accrued $ 9.5 million for this lawsuit, which was subsequently paid out during the nine months ended June 30, 2020 .

The Company and its subsidiaries are parties to various other pending legal actions arising in the ordinary course of our business.

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onshore basins as well as South America and the Middle East.

Our contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies.

Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies.

We believe we are the recognized industry leader in drilling as well as technological innovation.

During the third quarter of fiscal year 2020, as part of our restructuring efforts (see Note 18—Restructuring Charges ) and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources we implemented organizational changes.

We are moving from a product-based offering, such as a rig or separate technology package, to an integrated solution-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations.

Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our contract drilling services operations are organized into the following reportable operating business segments:

During the third quarter of fiscal year 2020, as part of our restructuring efforts and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources we implemented organizational changes.

We have moved from a product-based offering, such as a rig or separate technology package, to an integrated solution-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations.

Operations previously reported within the former U.S.

Land and H&P Technologies operating and reportable segments are now managed and presented within the North America Solutions reportable segment.

As a result, beginning with the third quarter of fiscal year 2020, our drilling services operations are organized into the following reportable operating business segments:

North America Solutions, Offshore Gulf of Mexico and International Solutions.

All segment disclosures have been recast for these segment changes.

Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." Consolidated revenues and expenses reflect the elimination of intercompany transactions.

All prior period segment disclosures have been recast for these segment changes.

Consolidated revenues and expenses reflect the elimination of intercompany transactions.

Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

Other includes additional non-reportable operating segments.

External revenues included in “Other” primarily consist of rental income.

Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." External revenues included in “Other” primarily consist of rental income.

Segment Performance

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• Allocated general and administrative costs

Asset impairment charges

• Restructuring charges

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General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.

Summarized financial information of our reportable segments for the three months ended June 30, 2020 and 2019 is shown in the following tables:

Three Months Ended June 30, 2020

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International

External Sales

Segment Operating Income (Loss)

Three Months Ended June 30, 2019

(in thousands)

North America Solutions (1)

Offshore Gulf of Mexico

International

Summarized financial information of our reportable segments for the three months ended December 31, 2020 and 2019 is shown in the following tables:

Three Months Ended December 31, 2020

(in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Eliminations Total

External sales $ 201,990 $ 32,273 $ 10,518 $ 1,596 $ — $ 246,377

Intersegment — — — 7,122 ( 7,122 ) —

Total sales 201,990 32,273 10,518 8,718 ( 7,122 ) 246,377

Segment operating income (loss) ( 72,928 ) 2,742 ( 8,357 ) 4,111 ( 2,126 ) ( 76,558 )

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

Summarized financial information of our reportable segments for the nine months ended June 30, 2020 and 2019 is shown in the following tables:

Nine Months Ended June 30, 2020

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International

Three Months Ended December 31, 2019

(in thousands) North America Solutions (1)

Offshore Gulf of Mexico International Solutions Other Eliminations Total

External sales $ 524,681 $ 40,255 $ 46,462 $ 3,259 $ — $ 614,657

Intersegment — — — 7,740 ( 7,740 ) —

Total sales 524,681 40,255 46,462 10,999 ( 7,740 ) 614,657

Segment operating income (loss) 52,139 6,328 3,115 ( 1,237 ) — 60,345

Nine Months Ended June 30, 2019

(in thousands)

North America Solutions (1)

Offshore Gulf of Mexico

International

External Sales

Segment Operating Income

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

(1) Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

The following table reconciles segment operating income (loss) per the tables above to income (loss) from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

Three Months Ended June 30,

Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2020 2019

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Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges ( 29,001 ) ( 33,256 )

Operating loss from continuing operations

Operating income (loss) from continuing operations ( 93,223 ) 31,368

Other income (expense)

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Interest expense ( 6,139 ) ( 6,100 )

Gain (loss) on investment securities

Gain on investment securities 2,924 2,821

Gain on sale of subsidiary — 14,963

Other ( 1,480 ) ( 399 )

Total unallocated amounts ( 2,816 ) 13,499

Loss from continuing operations before income taxes

Income (loss) from continuing operations before income taxes $ ( 96,039 ) $ 44,867

The following table presents total assets by reportable segment:

(in thousands)

(in thousands) December 31,

2020 September 30,

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North America Solutions (2)

$ 3,749,435 $ 3,812,718

Offshore Gulf of Mexico 98,712 93,501

International Solutions 170,151 181,181

Other 81,683 22,144

4,099,981 4,109,544

Investments and corporate operations 626,772 720,077

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Discontinued operations — —

$ 4,726,753 $ 4,829,621

(1) Assets by segment exclude investments in subsidiaries and intersegment activity.

Prior period information has been restated to reflect the transition of the H&P Technologies reportable segment to the North America Solutions reportable segment.

(2) Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

The following table presents revenues from external customers by country based on the location of service provided:

Three Months Ended June 30,

Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2020 2019

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United States $ 235,444 $ 566,815

Argentina 1,553 40,609

Bahrain 7,549 4,684

United Arab Emirates 990 173

Colombia 429 996

Other Foreign 412 1,380

Total $ 246,377 $ 614,657

Refer to Note 9—Revenue from Contracts with Customers for additional information regarding the recognition of revenue upon adoption of ASC 606.

NOTE 18 RESTRUCTURING CHARGES

Beginning in the third quarter of fiscal year 2020, we implemented cost controls and began evaluating further measures to respond to the combination of weakened commodity prices, uncertainties related to the COVID-19 pandemic, and the resulting market volatility.

We restructured our operations to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies.

We commenced a number of restructuring efforts as a result of this evaluation, which included, among other things a reduction in our capital allocation plans, changes to our organizational structure, and a reduction of staffing levels.

Costs incurred, as of June 30, 2020 , in connection with the restructuring are comprised of one-time severance benefits to employees who are voluntarily or involuntarily terminated, benefits related to forfeitures and costs related to modification of stock-based compensation awards.

The following table summarizes the Company's restructuring charges incurred during the nine months ended June 30, 2020 :

(in thousands)

North America Solutions

Offshore Gulf of Mexico

International Solutions

Corporate G&A

Employee termination benefits

Stock-based compensation benefit

Total restructuring charges

The following table summarizes the Company's accrual for restructuring charges for the nine months ended June 30, 2020 :

(in thousands)

Employee Termination Benefits

Accrued restructuring charges at September 30, 2019

Cash payments

Accrued restructuring charges at June 30, 2020

These expenses are recorded within restructuring charges on our Unaudited Condensed Consolidated Statements of Operations and the related liability is recorded within accounts payable on our Unaudited Condensed Consolidated Balance Sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements