What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-29 compared with 2021-02-09 · 283 added, 225 removed, 636 unchanged (44% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

December 31, September 30,

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

March 31, September 30,

(in thousands except share data and share amounts) 2021 2020

Current Assets:

5 unchanged sentences

Prepaid expenses and other, net 97,857 89,305

Assets held-for-sale 13,076 —

Total current assets 978,573 963,327

22 unchanged sentences

Shareholders' Equity:

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

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of March 31, 2021 and September 30, 2020, respectively, and 107,893,998 and 107,488,242 shares outstanding as of March 31, 2021 and September 30, 2020, respectively

11,222 11,215

3 unchanged sentences

Accumulated other comprehensive loss ( 25,274 ) ( 26,188 )

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

Treasury stock, at cost, 4,328,867 shares and 4,663,321 shares as of March 31, 2021 and September 30, 2020, respectively

( 181,857 ) ( 198,153 )

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2021 2020 2021 2020

9 unchanged sentences

Selling, general and administrative 39,349 41,978 78,652 91,786

Asset impairment charge 54,284 563,234 54,284 563,234

Restructuring charges 1,608 — 1,746 —

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

(Gain) loss on sale of assets 18,515 ( 10,310 ) 6,179 ( 14,589 )

457,094 1,152,180 796,694 1,735,469

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

Operating loss from continuing operations ( 160,923 ) ( 518,541 ) ( 254,146 ) ( 487,173 )

Other income (expense)

1 unchanged sentence

Interest expense ( 5,759 ) ( 6,095 ) ( 11,898 ) ( 12,195 )

Gain on investment securities 2,924 2,821

Gain (loss) on investment securities 2,520 ( 12,413 ) 5,444 ( 9,592 )

Gain on sale of subsidiary — — — 14,963

1 unchanged sentence

1,003 ( 15,340 ) ( 1,813 ) ( 1,841 )

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

Loss from continuing operations before income taxes ( 159,920 ) ( 533,881 ) ( 255,959 ) ( 489,014 )

Income tax benefit ( 36,624 ) ( 113,413 ) ( 54,739 ) ( 99,275 )

Loss from continuing operations ( 123,296 ) ( 420,468 ) ( 201,220 ) ( 389,739 )

Income from discontinued operations before income taxes 2,293 6,067 9,786 13,524

1 unchanged sentence

Income (loss) from discontinued operations 2,293 ( 72 ) 9,786 ( 196 )

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

Basic income (loss) per common share:

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

Net loss $ ( 121,003 ) $ ( 420,540 ) $ ( 191,434 ) $ ( 389,935 )

Basic earnings (loss) per common share:

Loss from continuing operations $ ( 1.15 ) $ ( 3.88 ) $ ( 1.87 ) $ ( 3.61 )

Income from discontinued operations 0.02 — 0.09 —

Net income (loss) $ ( 0.66 ) $ 0.27

Diluted income (loss) per common share:

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

Net loss $ ( 1.13 ) $ ( 3.88 ) $ ( 1.78 ) $ ( 3.61 )

Diluted earnings (loss) per common share:

Loss from continuing operations $ ( 1.15 ) $ ( 3.88 ) $ ( 1.87 ) $ ( 3.61 )

Income from discontinued operations 0.02 — 0.09 —

Net income (loss) $ ( 0.66 ) $ 0.27

Net loss $ ( 1.13 ) $ ( 3.88 ) $ ( 1.78 ) $ ( 3.61 )

Weighted average shares outstanding:

3 unchanged sentences

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended

March 31, Six Months Ended

(in thousands) 2021 2020 2021 2020

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

Net loss $ ( 121,003 ) $ ( 420,540 ) $ ( 191,434 ) $ ( 389,935 )

Other comprehensive income, net of income taxes:

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

Minimum pension liability adjustments, net of income taxes of $( 0.1 ) million and $( 0.3 ) million for the three and six months ended March 31, 2021, respectively, and $( 0.2 ) million and $( 0.3 ) million for the three and six months ended March 31, 2020, respectively

457 516 914 1,032

Other comprehensive income 457 516 914 1,032

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

Comprehensive loss $ ( 120,546 ) $ ( 420,024 ) $ ( 190,520 ) $ ( 388,903 )

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

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

Three Months Ended December 31, 2020 and 2019

Three and Six Months Ended March 31, 2021

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

16 unchanged sentences

Balance, December 31, 2020

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

Comprehensive income:

Net loss — — — ( 121,003 ) — — — ( 121,003 )

Other comprehensive income — — — — 457 — — 457

Dividends declared ($ 0.25 per share)

— — — ( 27,268 ) — — — ( 27,268 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 1,678 ) — — ( 39 ) 1,678 —

Stock-based compensation — — 6,826 — — — — 6,826

Other — — ( 234 ) — — — — ( 234 )

Balance, March 31, 2021 112,223 $ 11,222 $ 516,870 $ 2,762,735 $ ( 25,274 ) 4,329 $ ( 181,857 ) $ 3,083,696

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 Six Months Ended March 31, 2020

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

14 unchanged sentences

Balance, December 31, 2019

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

Comprehensive income:

Net income — — — ( 420,540 ) — — — ( 420,540 )

Other comprehensive income — — — — 516 — — 516

Dividends declared ($ 0.71 per share)

— — — ( 76,754 ) — — — ( 76,754 )

Exercise of employee stock options, net of shares withheld for employee taxes — — ( 47 ) — — — 47 —

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 53 ) — — ( 1 ) 53 —

Stock-based compensation — — 10,751 — — — — 10,751

Share repurchases — — — — — 1,460 ( 28,504 ) ( 28,504 )

Balance, March 31, 2020

112,151 11,215 509,928 3,168,966 ( 27,603 ) 4,733 ( 201,500 ) 3,461,006

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands) 2021 2020

Cash flows from operating activities:

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

Net loss $ ( 191,434 ) $ ( 389,935 )

Adjustment for (income) loss from discontinued operations ( 9,786 ) 196

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

Loss from continuing operations ( 201,220 ) ( 389,739 )

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

Depreciation and amortization 213,278 262,137

Asset impairment charge 54,284 563,234

Amortization of debt discount and debt issuance costs 920 900

2 unchanged sentences

Stock-based compensation 14,277 20,952

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

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

(Gain) loss on investment securities ( 5,444 ) 9,592

(Gain) loss on sale of assets 6,179 ( 14,589 )

Gain on sale of subsidiary — ( 14,963 )

9 unchanged sentences

Other noncurrent liabilities 6,939 ( 4,642 )

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

Net cash provided by operating activities from continuing operations 58,827 232,670

Net cash used in operating activities from discontinued operations ( 25 ) ( 28 )

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

Net cash provided by operating activities 58,802 232,642

Cash flows from investing activities:

4 unchanged sentences

Proceeds from asset sales 13,419 24,799

Other — ( 51 )

Net cash used in investing activities ( 60,315 ) ( 46,950 )

4 unchanged sentences

Payment of contingent consideration from acquisition of business ( 250 ) ( 4,250 )

Share repurchases — ( 28,504 )

Other — ( 445 )

Net cash used in financing activities ( 56,599 ) ( 188,444 )

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

Net decrease in cash and cash equivalents and restricted cash ( 58,112 ) ( 2,752 )

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

4 unchanged sentences

Income tax paid (received), net ( 31,965 ) 43,509

Cash paid for amounts included in the measurement of lease liabilities:

Payments for operating leases 8,970 9,626

10 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 to accommodate scale during an industry downturn and re-organized our operations to align to new marketing and management strategies.

During the third quarter of fiscal year 2020, we restructured our operations to accommodate scale during an industry downturn and reorganized 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.

5 unchanged sentences

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, Ohio, Oklahoma, New Mexico, North Dakota, Texas, West Virginia and Wyoming.

Our North America Solutions operations are primarily located in Colorado, Louisiana, 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.

1 unchanged sentence

Argentina, Bahrain, Colombia and United Arab Emirates.

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

We also own and operate limited commercial real estate properties.

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

12 unchanged sentences

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 Statements of 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 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.

3 unchanged sentences

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.

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.

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

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

Despite the increased availability of vaccines in certain jurisdictions, the COVID-19 outbreak may worsen during the upcoming months, including as a result of the emergence of more infectious strains of the virus or increased business and social activities, which may cause governmental authorities to reconsider restrictions on business and social activities.

In the event governmental authorities increase restrictions, the reopening 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.

Depressed economic conditions exacerbated by COVID-19 restrictions in one foreign jurisdiction where we operate have led to an increase in community strikes which resulted in a suspension of our 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;

1 unchanged sentence

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

In some cases, policies and procedures are more stringent in our foreign operations than in our North America operations and this has resulted in a complete suspension, for a certain period of time, of all drilling operations in at least one foreign jurisdiction.

In addition, a customer in one foreign jurisdiction has claimed force majeure resulting in zero chargeable revenues during the suspension period.

In some cases, policies and procedures are more stringent in our foreign operations than in our North America operations

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 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.

Although OPEC+ agreed in April 2020 to cut oil production and has extended production cuts through July 2021 with gradual reductions in cuts from May to July, there is no assurance that the agreement will continue or be observed by its parties.

Although crude oil prices have modestly recovered since March 2020, 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.

1 unchanged sentence

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

At March 31, 2021, the Company had cash and cash equivalents and short-term investments of $ 561.7 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 December 31, 2020, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of March 31, 2021, 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 6—Debt) do not mature until March 19, 2025.

On April 16, 2021, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 13, 2024 to November 12, 2025.

See Note 17—Subsequent Events.

We lease various offices, warehouses, equipment and vehicles.

Rental contracts are typically made for fixed periods of one 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.

As we continue to take measures to adjust our cost structure lower based on activity levels, during the three months ended March 31, 2021, we downsized and relocated our Houston assembly facility to a new location.

Refer to Note 16—Restructuring Charges for additional details.

As a result, during the second quarter of fiscal year 2021, we entered into a lease agreement for a new assembly facility located in Texas.

This lease agreement commenced on January 1, 2021 and will expire on December 31, 2030;

however, we have one renewal option for a minimum of five years and a maximum of 10 years, which was not recognized as part of our right-of-use assets and lease liabilities.

This contract was accounted for as an operating lease resulting in an operating lease right-of-use asset and minimum lease liability of approximately $ 15.5 million as of March 31, 2021.

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

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 $ 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.

We had restricted cash of $ 51.4 million and $ 44.1 million at March 31, 2021 and 2020, respectively, and $ 48.9 million and $ 35.0 million at September 30, 2020 and 2019, respectively.

Of the total at March 31, 2021 and September 30, 2020, $ 3.2 million and $ 3.6 million, respectively, is related to the acquisition of drilling technology companies, $ 3.1 million and $ 2.0 million, respectively, is from the initial capitalization of the captive insurance companies, and $ 45.1 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,

March 31, September 30,

(in thousands) 2021 2020 2020 2019

20 unchanged sentences

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

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

Standards that are not yet adopted as of March 31, 2021

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

41 unchanged sentences

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

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.

Direct operating costs consisted primarily of adjustments to accruals for estimated losses of $ 2.3 million and $ 6.0 million allocated to the Captive during the three months ended March 31, 2021 and 2020, respectively, and $ 2.8 million and $ 14.7 million for the six months ended March 31, 2021 and 2020, 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 March 31, 2020 and 2020 amounted to $ 8.7 million and $ 10.5 million, respectively, and $ 15.8 million and $ 18.2 million during the six months ended March 31, 2021 and 2020, 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.

11 unchanged sentences

These measures, 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.

For example, our rigs in the United Arab Emirates remain stacked due to the COVID-19 pandemic-induced downturn and continuing oil demand uncertainties.

The travel restrictions in certain countries where we operate, including the closure of their borders to travel into the country, have, at times, also 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.

We have also experienced certain risks related to our Argentine operations.

21 unchanged sentences

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

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.

For the three and six months ended March 31, 2021, we recorded aggregate foreign currency losses of $ 2.4 million and $ 4.2 million, respectively.

For the three and six months ended March 31, 2020, we recorded aggregate foreign currency losses of $ 3.4 million and $ 2.8 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 December 31, 2020, our cash balance in Argentina was $ 23.8 million.

As of March 31, 2021, our cash balance in Argentina was $ 22.2 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 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.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and six months ended March 31, 2021, approximately 5.2 percent and 4.9 percent of our operating revenues were generated from international locations in our drilling business compared to 8.2 percent and 8.0 percent during the three and six months ended March 31, 2020, respectively.

During the three and six months ended March 31, 2021, approximately 51.4 percent and 37.6 percent of operating revenues from international locations were from operations in South America, compared to 66.4 percent and 76.2 percent during the three and six months ended March 31, 2020, respectively.

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 DISCONTINUED OPERATIONS

1 unchanged sentence

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

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.

The activity for the three and six months ended March 31, 2021 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 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 was approximately 1,987,185 Bolivars per United States dollar at March 31, 2021, compared to 436,677 and 80,946 Bolivars per United States dollar at September 30, 2020, and March 31, 2020, 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 December 31, 2020 and September 30, 2020 consisted of the following:

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

Property, plant and equipment as of March 31, 2021 and September 30, 2020 consisted of the following:

(in thousands) Estimated Useful Lives March 31, 2021 September 30, 2020

Drilling services equipment 4 - 15 years

10 unchanged sentences

Property, plant and equipment, net $ 3,374,235 $ 3,646,341

Assets held-for-sale $ 13,076 $ —

(1) Included in construction in progress are costs for projects in progress to upgrade or refurbish certain rigs in our existing fleet.

1 unchanged sentence

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 $ 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 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

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.

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

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 104.6 million and $ 130.2 million, including $ 0.5 million and $ 0.9 million in abandonments, for the three months ended March 31, 2021 and 2020, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 209.7 million and $ 258.5 million, including $ 0.4 million and $ 1.7 million in abandonments for the six months ended March 31, 2021 and 2020, respectively.

Assets Held-for-Sale

In March 2021, the Company's leadership executed the current strategy, which was initially introduced in 2019, focusing on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

As a result, the Company has undertaken a plan to sell 68 Domestic non-super-spec rigs, all within our North America Solutions segment, the majority of which were previously decommissioned, written down and/or held as capital spares.

The book values of those assets were written down to their net realizable value of $ 13.1 million, and were reclassified as held-for-sale on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2021.

As a result, we recognized a non-cash impairment charge of $ 54.3 million, during the three months ended March 31, 2021, in the Unaudited Condensed Consolidated Statement of Operations.

The significant assumptions utilized in the valuation were based on our intended method of disposal, historical sales of similar assets, and market quotes and are classified as Level 2 and Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.

Although we believe the assumptions used in our analysis are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion.

During the three months ended March 31, 2020, several significant economic events took place that severely impacted the demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with a 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 low utilization, previously projected, 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.

At March 31, 2020, we performed impairment testing on 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 was 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 three and six months ended March 31, 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 segment, respectively.

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

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 three and six months ended March 31, 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 segment, respectively.

(Gain) Loss on Sale of Assets

We had a (gain) loss on sale of assets of $ 18.5 million and $( 10.3 ) million for the three months ended March 31, 2021 and 2020, respectively, and $ 6.2 million and $( 14.6 ) million for the six months ended March 31, 2021 and 2020, respectively.

During the second quarter of fiscal year 2021, we sold excess drilling equipment and spares, which resulted in a net loss of $ 23.0 million for the three months ended March 31, 2021.

This loss was offset by various gains on asset sales related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations.

During the first quarter of fiscal year 2021, 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.

NOTE 5 GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

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

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 .

During the three and six months ended March 31, 2021, we had no additions or impairments to goodwill.

As of March 31, 2021 and September 30, 2020, the goodwill balance was $ 45.7 million .

Intangible Assets

1 unchanged sentence

All of our intangible assets are within our North America Solutions reportable segment.

Intangible assets consisted of the following:

December 31, 2020 September 30, 2020

Intangible assets consist of the following:

March 31, 2021 September 30, 2020

(in thousands) Weighted Average Estimated Useful Lives Gross

9 unchanged sentences

$ 100,461 $ 23,031 $ 77,430 $ 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.

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million for both the three months ended March 31, 2021 and 2020, respectively, and $ 3.6 million and $ 3.7 million for the six months ended March 31, 2021 and 2020, respectively.

A mortization is estimated to be approximately $ 3.6 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.

During the three months ended March 31, 2020, due to the market conditions described in Note 4—Property, Plant and Equipment, we concluded that goodwill and intangible assets might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated and the intangible assets are recorded, for recoverability.

This resulted in a goodwill only non-cash impairment charge of $ 38.3 million recorded in asset impairment charge on the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020.

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

December 31, 2020 September 30, 2020

March 31, 2021 September 30, 2020

(in thousands) Face

14 unchanged sentences

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.

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.

As of March 31, 2021, 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.

See Note 17—Subsequent Events.

As of March 31, 2021, we had two separate outstanding letters of credit with banks, in the amounts of $ 24.8 million and $ 2.1 million.

As of March 31, 2021, 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 March 31, 2021.

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

At March 31, 2021, we were in compliance with all debt covenants.

NOTE 7 INCOME TAXES

2 unchanged sentences

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

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.

Our income tax benefit from continuing operations for the three months ended March 31, 2021 and 2020 was $ 36.6 million and $ 113.4 million, respectively, resulting in effective tax rates of 22.9 percent and 21.2 percent, respectively.

Our income tax benefit from continuing operations for the six months ended March 31, 2021 and 2020 was $ 54.7 million and $ 99.3 million, respectively, resulting in effective tax rates of 21.4 percent and 20.3 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.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2021 and 2020 primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments.

Additionally, the effective tax rate for the three and six months ended March 31, 2021 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 six months ended March 31, 2021 and 2020 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.

2 unchanged sentences

NOTE 8 SHAREHOLDERS’ EQUITY

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 Company has an evergreen authorization from the Board of Directors 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 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.

We had no purchases of common shares during the six months ended March 31, 2021 and 2020.

A cash dividend of $ 0.25 per share was declared on December 11, 2020 for shareholders of record on February 12, 2021 and was paid on March 1, 2021.

An additional cash dividend of $ 0.25 per share was declared on March 3, 2021 for shareholders of record on May 17, 2021, payable on June 1, 2021.

As a result, we recorded a dividend payable of $ 27.3 million within dividends payable on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2021.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands) December 31,

(in thousands) March 31,

2021 September 30,

5 unchanged sentences

$ ( 25,274 ) $ ( 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 )

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 six months ended March 31, 2021:

(in thousands) Three Months Ended March 31, 2021 Six Months Ended

March 31, 2021

Balance at beginning of period $ ( 25,731 ) $ ( 26,188 )

Activity during the period

Amounts reclassified from accumulated other comprehensive income 457

Amounts reclassified from accumulated other comprehensive loss 457 914

Net current-period other comprehensive income 457 914

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

Balance at March 31, 2021 $ ( 25,274 ) $ ( 25,274 )

NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS

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.

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 provided for in the contract result in notification fees owed to us.

During the three months ended March 31, 2021 and 2020, early termination revenue associated with term contracts was approximately $ 1.9 million and $ 8.2 million, respectively, and $ 7.7 million and $ 8.3 million for the six months ended March 31, 2021 and 2020, respectively.

During the three and six months ended March 31, 2021, we recognized no notification fee revenue and during the three and six months ended March 31, 2020, we recognized $ 2.2 million and $ 2.1 million, in notification revenue, respectively.

With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site.

Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service.

These revenues are deferred and recognized ratably over the related contract term that drilling services are provided.

For any contracts that include a provision for pooled term days at contract inception, followed by the assignment of days to specific rigs throughout the contract term, we have elected, as a practical expedient, to recognize revenue in the amount to which the entity has a right to invoice, as permitted by ASC 606.

Contract Costs

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

We had capitalized fulfillment costs of $ 5.1 million and $ 6.2 million as of March 31, 2021 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 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.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of March 31, 2021 was approximately $ 435.3 million, of which approximately $ 217.5 million is expected to be recognized during the remainder of fiscal year 2021, approximately $ 154.0 million during fiscal year 2022, and approximately $ 63.8 million during fiscal year 2023 and thereafter.

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

5 unchanged sentences

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

(in thousands) March 31, 2021 September 30, 2020

Contract assets $ 5,228 $ 2,367

(in thousands) December 31, 2020

(in thousands) March 31, 2021

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

1 unchanged sentence

Revenue recognized during the period ( 13,653 )

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

Contract liabilities balance at March 31, 2021 $ 7,841

NOTE 10 STOCK-BASED COMPENSATION

On March 3, 2020, the Helmerich & Payne, Inc.

2020 Omnibus Incentive Plan (the “2020 Plan”) was approved by our stockholders.

The 2020 Plan replaces our stockholder-approved Helmerich & Payne, Inc.

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 (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.

2005 Long-Term Incentive Plan, the Helmerich & Payne, Inc.

2010 Long-Term Incentive Plan and the 2016 Plan remain subject to the terms and conditions of those plans.

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 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 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,

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 on our Unaudited Condensed Consolidated Statements of Operations is as follows:

Three Months Ended March 31, Six Months Ended March 31,

(in thousands) 2021 2020 2021 2020

Stock-based compensation expense

Stock options $ 318 $ 571

Restricted stock 6,011 7,370

Performance share units 1,122 2,260

Drilling services operating $ 1,529 $ 2,651 $ 3,292 $ 4,887

Research and development 271 181 607 347

Selling, general and administrative 5,026 7,918 10,378 15,718

$ 6,826 $ 10,750 $ 14,277 $ 20,952

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 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 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.

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.

We recognize compensation expense on a straight-line basis over the vesting period.

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

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 December 31, 2020 and changes in non-vested restricted stock outstanding during the three months then ended is presented below:

A summary of the status of our restricted stock awards as of March 31, 2021 and changes in non-vested restricted stock outstanding during the six months then ended is presented below:

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

4 unchanged sentences

Forfeited ( 17 ) 36.18

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.

Non-vested restricted stock outstanding at March 31, 2021 1,433 $ 37.45

(1) Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan.

These phantom stock units confer the economic benefits of owning company stock without the actual ownership, transfer or issuance of any shares.

During the six months ended March 31, 2021, 18,906 restricted phantom stock units were granted and 20,616 restricted phantom stock units vested during the same period.

(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.

Performance Share Units

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, 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.

Performance share units that comprise the first component are subject to a three-year performance cycle.

Performance share units that comprise the second component are further divided into three separate tranches, each of which is subject to a separate one-year performance cycle within the full three-year performance cycle.

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.

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.

The Monte Carlo simulation method requires the use of highly subjective assumptions.

Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined Peer Group companies’ stock, risk free rate of return and cross-correlations between the Company and our Peer Group companies.

The valuation model assumes dividends are immediately reinvested.

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 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

Performance Units

A summary of the status of our performance-vested restricted share units (performance units) as of March 31, 2021 and changes in non-vested performance units outstanding during the six months then ended is presented below:

(in thousands, except per share amounts) Performance Units Weighted Average Grant Date Fair Value per Performance Unit

Non-vested performance units outstanding at September 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)

Expected stock volatility (2)

Expected term (in years) 3.1

(1) The risk-free interest rate is based on U.S.

Treasury securities for the expected term of the performance share units.

(2) Expected volatilities are based on the daily closing price of our stock based upon historical experience over a period which approximates the expected term of the performance share units.

Dividend equivalent right performance units credited 48 51.79

Forfeited ( 11 ) 43.40

Non-vested performance units outstanding at March 31, 2021 (1)

(1) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 86,904 performance units which is calculated based on the payout percentage for the completed performance period.

The vesting and number of the remainder of non-vested performance units reflected at the end of the period is contingent upon our achievement of specified target performance criteria.

If we meet the specified maximum performance criteria, approximately 644,188 additional performance units could vest or become eligible to vest.

NOTE 11 EARNINGS (LOSSES) PER COMMON SHARE

5 unchanged sentences

Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, non-vested restricted stock and performance share units.

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.

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2021 2020 2021 2020

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

Loss from continuing operations $ ( 123,296 ) $ ( 420,468 ) $ ( 201,220 ) $ ( 389,739 )

Income (loss) from discontinued operations 2,293 ( 72 ) 9,786 ( 196 )

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

Net loss ( 121,003 ) ( 420,540 ) ( 191,434 ) ( 389,935 )

Adjustment for basic earnings (loss) per share

11 unchanged sentences

Denominator for basic earnings (loss) per share - weighted-average shares 107,861 108,557 107,738 108,556

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

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

Denominator for diluted earnings (loss) per share - adjusted weighted-average shares 107,861 108,557 107,738 108,556

Basic earnings (loss) per common share:

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

Loss from continuing operations $ ( 1.15 ) $ ( 3.88 ) $ ( 1.87 ) $ ( 3.61 )

Income from discontinued operations 0.02 — 0.09 —

Net income (loss) $ ( 0.66 ) $ 0.27

Net loss $ ( 1.13 ) $ ( 3.88 ) $ ( 1.78 ) $ ( 3.61 )

Diluted earnings (loss) per common share:

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

Loss from continuing operations $ ( 1.15 ) $ ( 3.88 ) $ ( 1.87 ) $ ( 3.61 )

Income from discontinued operations 0.02 — 0.09 —

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.

Net loss $ ( 1.13 ) $ ( 3.88 ) $ ( 1.78 ) $ ( 3.61 )

We had a net loss for all periods presented above .

Accordingly, our diluted earnings (loss) per share calculation 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.

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts)

2021 2020 2021 2020

Potentially dilutive shares excluded as anti-dilutive 3,920 4,579 4,146 3,579

10 unchanged sentences

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 and totaled $ 22.0 million at December 31, 2020 and $ 19.8 million at September 30, 2020.

The assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value and totaled $ 19.9 million at March 31, 2021 and $ 19.8 million at September 30, 2020.

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

7 unchanged sentences

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 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:

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at March 31, 2021 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 March 31, 2021:

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

1 unchanged sentence

Short-term investments:

Certificates of deposit $ 12 $ — $ 12 $ —

Corporate and municipal debt securities 144,780 — 144,780 —

Corporate debt securities 129,467 — 129,467 —

government and federal agency securities 5,024 5,024 — —

6 unchanged sentences

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

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

At March 31, 2021, 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.

1 unchanged sentence

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

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.

At March 31, 2021, assets measured at fair value using Level 2 inputs include 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.

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

(in thousands) 2021 2020 2021 2020

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

Net liabilities at beginning of period $ 8,973 $ 19,873 $ 9,123 $ 18,373

Additions — — — 1,500

2 unchanged sentences

Settlements (1)

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

— ( 4,250 ) ( 250 ) ( 4,250 )

Net liabilities at end of period $ 8,973 $ 11,823 $ 8,973 $ 11,823

(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 related to our financial liabilities at December 31, 2020:

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs related to our financial liabilities at March 31, 2021:

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

15 unchanged sentences

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 December 31, 2020 and September 30, 2020:

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

The following information presents the supplemental fair value information about long-term fixed-rate debt at March 31, 2021 and September 30, 2020:

(in millions) March 31, 2021 September 30, 2020

Carrying value of long-term fixed-rate debt $ 481.6 $ 480.7

3 unchanged sentences

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.

As a result of the change in the fair value of our investments, we recorded a gain of $ 2.5 million and $ 5.4 million for the three and six months ended March 31, 2021.

NOTE 13 EMPLOYEE BENEFIT PLANS

Components of Net Periodic Benefit Cost

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

The following provides information at March 31, 2021 and 2020, related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc.

Employee Retirement Plan (the “Pension Plan”):

Three Months Ended

March 31, Six Months Ended

(in thousands) 2021 2020 2021 2020

4 unchanged sentences

Net pension expense $ 774 $ 385 $ 2,165 $ 770

We recognized net pension expense of $ 0.8 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively, and $ 2.2 million and $ 0.8 million for the six months ended March 31, 2021 and 2020, respectively, in other expense within our Unaudited Condensed Consolidated Statements of Operations.

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 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.

Lump sum payments exceeded this threshold during the three and six months ended March 31, 2021.

Accordingly, we recognized settlement expense of $ 0.4 million and $ 1.4 million for the three and six months ended March 31, 2021, respectively, in other expense within our Unaudited Condensed Consolidated Statements of Operations.

Employer Contributions

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

We did no t make any contributions to the Pension Plan during the six months ended March 31, 2021.

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

3 unchanged sentences

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

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

At March 31, 2021, we had purchase commitments for equipment, parts and supplies of approximately $ 16.6 million.

Guarantee Arrangements

17 unchanged sentences

We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S.

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

onshore oil ang gas producing basins as well as South America and the Middle East.

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

1 unchanged sentence

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.

We are now focused on offering our customers an integrated solutions-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations rather than a product-based offering, such as a rig or separate technology package.

Operations previously reported within the former U.S.

12 unchanged sentences

• Allocated general and administrative costs

• Asset impairment charges

• Restructuring charges

but excludes gain on sale of assets and corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

but excludes (gain) loss on sale of assets and corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

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 December 31, 2020 and 2019 is shown in the following tables:

Three Months Ended December 31, 2020

Summarized financial information of our reportable segments for the three and six months ended March 31, 2021 and 2020 is shown in the following tables:

Three Months Ended March 31, 2021

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

3 unchanged sentences

Segment operating income (loss) ( 109,834 ) 2,978 ( 3,458 ) ( 1,072 ) ( 3,433 ) ( 114,819 )

Three Months Ended December 31, 2019

Three Months Ended March 31, 2020

(in thousands) North America Solutions (1)

5 unchanged sentences

(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 December 31,

(in thousands) 2020 2019

Six Months Ended March 31, 2021

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

External sales $ 451,929 $ 61,547 $ 25,331 $ 3,741 $ — $ 542,548

Intersegment — — — 15,802 ( 15,802 ) —

Total sales 451,929 61,547 25,331 19,543 ( 15,802 ) 542,548

Segment operating income (loss) ( 182,762 ) 5,720 ( 11,815 ) 3,039 ( 5,559 ) ( 191,377 )

Gain on sale of assets 12,336 4,279

Six Months Ended March 31, 2020

(in thousands) North America Solutions (1)

Offshore Gulf of Mexico International Solutions Other Eliminations Total

External sales $ 1,070,642 $ 73,334 $ 97,712 $ 6,608 $ — $ 1,248,296

Intersegment — — — 18,545 ( 18,545 ) —

Total sales 1,070,642 73,334 97,712 25,153 ( 18,545 ) 1,248,296

Segment operating income (loss) ( 290,528 ) 3,009 ( 149,354 ) ( 705 ) — ( 437,578 )

(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 loss per the tables above to loss from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

Three Months Ended March 31, Six Months Ended March 31,

(in thousands) 2021 2020 2021 2020

Segment operating loss $ ( 114,819 ) $ ( 498,079 ) $ ( 191,377 ) $ ( 437,578 )

Gain (loss) on sale of assets ( 18,515 ) 10,310 ( 6,179 ) 14,589

Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges ( 27,589 ) ( 30,772 ) ( 56,590 ) ( 64,184 )

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

Operating loss from continuing operations ( 160,923 ) ( 518,541 ) ( 254,146 ) ( 487,173 )

Other income (expense)

1 unchanged sentence

Interest expense ( 5,759 ) ( 6,095 ) ( 11,898 ) ( 12,195 )

Gain on investment securities 2,924 2,821

Gain (loss) on investment securities 2,520 ( 12,413 ) 5,444 ( 9,592 )

Gain on sale of subsidiary — — — 14,963

1 unchanged sentence

Total unallocated amounts 1,003 ( 15,340 ) ( 1,813 ) ( 1,841 )

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

Loss from continuing operations before income taxes $ ( 159,920 ) $ ( 533,881 ) $ ( 255,959 ) $ ( 489,014 )

The following table presents total assets by reportable segment:

(in thousands) December 31,

(in thousands) March 31,

2021 September 30,

1 unchanged sentence

North America Solutions $ 3,610,225 $ 3,812,718

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

Offshore Gulf of Mexico 90,530 93,501

7 unchanged sentences

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

(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 December 31,

Three Months Ended March 31, Six Months Ended March 31,

(in thousands) 2021 2020 2021 2020

8 unchanged sentences

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

NOTE 16 RESTRUCTURING CHARGES

During the second quarter of fiscal 2021, we reorganized our IT operations and moved select IT functions to a managed service provider.

Cost incurred, as of March 31, 2021, in connection with the restructuring are comprised of one-time severance benefits to employees who were involuntarily terminated.

The termination date of some of the employees extend beyond March 31, 2021, and such employees are required to render service through their respective termination date in order to receive the one-time severance benefit.

Additionally, as we continue to take measures to adjust our cost structure lower based on activity levels, during the three months ended March 31, 2021, we incurred one-time moving related expenses due to the downsizing and relocation of our Houston assembly facility.

The following table summarizes the restructuring charges incurred during the six months ended March 31, 2021:

(in thousands) North America Solutions Corporate Total

Employee termination benefits $ 17 $ 165 $ 182

Moving related expenses 1,564 — 1,564

Total restructuring charges $ 1,581 $ 165 $ 1,746

The following table summarizes the Company's accrual for restructuring charges for the six months ended March 31, 2021:

(in thousands) Accounts Payable Accrued Liabilities

Accrued restructuring charges at September 30, 2020 $ 551 $ —

Charges 1,539 207

Cash payments ( 1,716 ) ( 43 )

Accrued restructuring charges at March 31, 2021 $ 374 $ 164

These expenses are recorded within restructuring charges on our Unaudited Condensed Consolidated Statements of Operations for the six months ended March 31, 2021 and the related liability is recorded within accounts payable and accrued liabilities on our Unaudited Condensed Consolidated Balance Sheets at March 31, 2021.

NOTE 17 SUBSEQUENT EVENTS

No other terms of the 2018 Credit Facility were amended in connection with this extension.

The remaining $ 70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date.

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