What changed in this filing

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Item 1. Financial Statements

2021-07-28 compared with 2021-04-29 · 220 added, 220 removed, 699 unchanged (39% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, September 30,

June 30, September 30,

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

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Shareholders' Equity:

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

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of June 30, 2021 and September 30, 2020, respectively, and 107,898,782 and 107,488,242 shares outstanding as of June 30, 2021 and September 30, 2020, respectively

11,222 11,215

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Accumulated other comprehensive loss ( 24,814 ) ( 26,188 )

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

Treasury stock, at cost, 4,324,083 shares and 4,663,321 shares as of June 30, 2021 and September 30, 2020, respectively

( 181,641 ) ( 198,153 )

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

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

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Income tax provision — 8,743 — 22,463

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

Income from discontinued operations 1,150 408 10,936 212

Net loss $ ( 55,555 ) $ ( 45,599 ) $ ( 246,989 ) $ ( 435,534 )

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands) 2021 2020 2021 2020

1 unchanged sentence

Other comprehensive income, net of income taxes:

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

Minimum pension liability adjustments, net of income taxes of $( 0.2 ) million and $( 0.5 ) million for the three and nine months ended June 30, 2021, respectively, and $( 0.3 ) million and $( 0.6 ) million for the three and nine months ended June 30, 2020, respectively

460 521 1,374 1,553

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Condensed Consolidated Statements of Shareholders’ Equity

Three and Six Months Ended March 31, 2021

Three and Nine Months Ended June 30, 2021

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

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

Comprehensive income:

Net loss — — — ( 55,555 ) — — — ( 55,555 )

Other comprehensive income — — — — 460 — — 460

Dividends declared ($ 0.25 per share)

— — — ( 27,321 ) — — — ( 27,321 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 257 ) — — ( 5 ) 216 ( 41 )

Stock-based compensation — — 6,963 — — — — 6,963

Other — — ( 295 ) — — — — ( 295 )

Balance, June 30, 2021 112,223 $ 11,222 $ 523,281 $ 2,679,859 $ ( 24,814 ) 4,324 $ ( 181,641 ) $ 3,007,907

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 Six Months Ended March 31, 2020

Three and Nine Months Ended June 30, 2020

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

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Balance, March 31, 2020 112,151 $ 11,215 $ 509,928 $ 3,168,966 $ ( 27,603 ) 4,733 $ ( 201,500 ) $ 3,461,006

Comprehensive income:

Net income — — — ( 45,599 ) — — — ( 45,599 )

Other comprehensive income — — — — 521 — — 521

Dividends declared ($ 0.25 per share)

— — — ( 27,199 ) — — — ( 27,199 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 2,879 ) — — ( 53 ) 2,583 ( 296 )

Stock-based compensation — — 7,624 — — — — 7,624

Balance, June 30, 2020

112,151 $ 11,215 $ 514,673 $ 3,096,168 $ ( 27,082 ) 4,680 $ ( 198,917 ) $ 3,396,057

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2021 2020

1 unchanged sentence

Net loss $ ( 246,989 ) $ ( 435,534 )

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

Adjustment for income from discontinued operations ( 10,936 ) ( 212 )

Loss from continuing operations ( 257,925 ) ( 435,746 )

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

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

Depreciation and amortization 317,771 372,298

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Provision for credit loss 8 4,151

Provision for obsolete inventory 423 684

Stock-based compensation 21,240 32,059

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Net cash used in financing activities ( 84,944 ) ( 265,976 )

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

Net increase (decrease) in cash and cash equivalents and restricted cash ( 114,875 ) 93,253

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

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(“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 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.

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:

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." Refer to Note 14—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, Texas, West Virginia and Wyoming.

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

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

Additionally, our 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:

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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.

All intercompany accounts and transactions have been eliminated in consolidation.

COVID-19 and OPEC+ Production Impacts

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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.

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, vaccine hesitancy 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.

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

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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 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.

Although OPEC+ agreed in April 2020 to cut oil production, OPEC+ has been gradually reducing such cuts and in July 2021, agreed to further reduce such cuts on a monthly basis with a goal of phasing out all production cuts towards the end of 2022.

There is no assurance that the most recent OPEC+ agreement will be observed by its parties and OPEC+ may change its agreement depending upon market conditions.

Although crude oil prices have recovered since March 2020, oil and natural gas prices are expected to continue to be volatile as a result of near-term production instability, the ongoing COVID-19 outbreak, changes in oil and natural gas inventories, industry demand, global and national economic performance, and the actions of OPEC+.

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, 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 March 31, 2021, the Company had cash and cash equivalents and short-term investments of $ 561.7 million.

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

At June 30, 2021, the Company had cash and cash equivalents and short-term investments of $ 557.8 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 March 31, 2021, 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, 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.

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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.

Refer to Note 6—Debt for further details.

We lease various offices, warehouses, equipment and vehicles.

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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.

During the nine months ended June 30, 2021, we downsized and relocated our Houston assembly facility to a new location.

Refer to Note 15—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.

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

This contract was accounted for as an operating lease resulting in an operating lease right-of-use asset and minimum lease liability of $ 16.4 million as of June 30, 2021.

Cash, Cash Equivalents, and Restricted Cash

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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 $ 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.

We had restricted cash of $ 51.3 million and $ 50.0 million at June 30, 2021 and 2020, respectively, and $ 48.9 million and $ 35.0 million at September 30, 2020 and 2019, respectively.

Of the total at June 30, 2021 and September 30, 2020, $ 1.5 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 $ 47.8 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:

March 31, September 30,

June 30, September 30,

(in thousands) 2021 2020 2020 2019

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

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

Standards that are not yet adopted as of June 30, 2021

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

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This update is effective for annual periods ending 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.

We plan to adopt this ASU, as required, during the fourth quarter of fiscal year 2021.

We do not believe the adoption of this ASU will have a material effect on our consolidated financial statements and disclosures.

2019-12, Financial Instruments – Income Taxes (Topic 740):

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October 1, 2021

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

We plan to adopt this ASU, as required, in the first quarter of fiscal year 2022.

Although we are currently evaluating the impact the new guidance may have on our unaudited condensed consolidated financial statements and disclosures, we do not believe the adoption will have a material effect thereon.

Allowance for Credit Losses

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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.

Generally, deductibles range from $ 1 million to $ 10 million per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States.

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

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.

We have also engaged a third-party actuary to perform a review of our domestic casualty losses as well as losses in our captive insurance companies.

Nonetheless, insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices.

Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.

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 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.

Changes in those reserves will be reflected in segment earnings as they occur.

We will continue to utilize the Captive to finance the risk of loss to equipment and rig property assets.

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 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.

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.

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 .

This program will also be reviewed at the end of each policy year by an outside actuary.

One hundred percent of the stop-loss premium is being set aside by the Captive as reserves.

The stop-loss program does not have a material impact on a consolidated basis.

Our wholly-owned insurance captive ("Captive") incurred direct operating costs consisting primarily of adjustments to accruals for estimated losses of $ 6.0 million and $ 1.1 million allocated to the Captive during the three months ended June 30, 2021 and 2020, respectively, and $ 8.8 million and $ 15.8 million for the nine months ended June 30, 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 June 30, 2021 and 2020 amounted to $ 9.4 million and $ 10.4 million, respectively, and $ 25.2 million and $ 28.9 million during the nine months ended June 30, 2021 and 2020, respectively, which were eliminated upon consolidation.

International Solutions Drilling Risks

International Solutions drilling operations may significantly contribute to our revenues and net operating income.

International Solutions drilling operations may significantly contribute to our revenues and net operating income (loss).

There can be no assurance that we will be able to successfully conduct such operations, and a failure to do so may have an adverse effect on our financial position, results of operations, and cash flows.

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Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations.

Many of the countries in which we operate have implemented measures in response to the COVID-19 pandemic.

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.

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

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.

For the three and nine months ended June 30, 2021, we recorded aggregate foreign currency losses of $ 0.7 million and $ 4.9 million , respectively.

Comparatively, for the three and nine months ended June 30, 2020, we recorded aggregate foreign currency losses of $ 3.2 million and $ 6.0 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 March 31, 2021, our cash balance in Argentina was $ 22.2 million.

As of June 30, 2021, our cash balance in Argentina was $ 19.6 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 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.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during both the three and nine months ended June 30, 2021, approximately 4.8 percent of our operating revenues was generated from international locations in our drilling business compared to 7.3 percent and 7.9 percent during the three and nine months ended June 30, 2020, respectively.

During the three and nine months ended June 30, 2021, approximately 52.2 percent and 43.1 percent of operating revenues from international locations were from operations in South America, compared to 33.2 percent and 68.2 percent during the three and nine months ended June 30, 2020, respectively.

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

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NOTE 3 DISCONTINUED OPERATIONS

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

Noncurrent liabilities from discontinued operations consist of 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 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.

The activity for the three and nine months ended June 30, 2021 was primarily due to the remeasurement of an uncertain tax liability 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 1,987,185 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 was approximately 3,220,598 Bolivars per United States dollar at June 30, 2021, compared to 436,677 and 204,418 Bolivars per United States dollar at September 30, 2020, and June 30, 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 March 31, 2021 and September 30, 2020 consisted of the following:

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

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

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

Drilling services equipment 4 - 15 years

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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 $ 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.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 102.7 million and $ 108.4 million, including $ 1.3 million and $ 0.9 million in abandonments, for the three months ended June 30, 2021 and 2020, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 312.4 million and $ 366.8 million, including $ 1.7 million and $ 2.6 million in abandonments for the nine months ended June 30, 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.

The following table summarizes the balance (in thousands) of our assets held-for-sale at the dates indicated below:

Balance at September 30, 2020 $ —

Asset additions 13,516

Sale of assets held-for-sale ( 3,428 )

Balance at June 30, 2021 $ 10,088

In March 2021, the Company's leadership continued the execution of 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 71 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 book values of those assets were written down to their fair value less cost to sell of $ 13.5 million, and were reclassified as held-for-sale in the second and third quarter of fiscal year 2021.

As a result, we recognized a non-cash impairment charge of $ 2.1 million and $ 56.4 million, during the three and nine months ended June 30, 2021, respectively,, in the Unaudited Condensed Consolidated Statement of Operations.

During the three months ended June 30, 2021, we completed the sale of assets with a net book value of $ 3.4 million that were classified as held-for-sale during the second quarter of fiscal year 2021.

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.

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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.

We had a gain on sale of assets of $ 3.4 million and $ 4.2 million for the three months ended June 30, 2021 and 2020, respectively, a loss of $ 2.7 million and a gain of $ 18.8 million for the nine months ended June 30, 2021 and 2020, respectively.

Of the total $ 3.4 million gain recognized during the three months ended June 30, 2021, $ 1.4 million was related to the sale of assets previously classified as held-for-sale on our Unaudited Condensed Consolidated Balance Sheets and the remaining $ 2.0 million was primarily related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations.

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 nine months ended June 30, 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.

Additionally, we recorded various gains on asset sales related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations.

NOTE 5 GOODWILL AND INTANGIBLE ASSETS

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

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 .

During the three and nine months ended June 30, 2021, we had no additions or impairments to goodwill.

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

Intangible Assets

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Intangible assets consist of the following:

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

(in thousands) Weighted Average Estimated Useful Lives Gross

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$ 100,461 $ 24,827 $ 75,634 $ 100,461 $ 19,434 $ 81,027

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.

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million for both the three months ended June 30, 2021 and 2020, and $ 5.4 million and $ 5.5 million for the nine months ended June 30, 2021 and 2020, respectively.

A mortization is estimated to be approximately $ 1.8 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:

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

(in thousands) Face

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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, 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.

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.

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 March 31, 2021, 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, 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.

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.

As of June 30, 2021, we had two separate outstanding letters of credit with banks, in the amounts of $ 24.8 million and $ 2.1 million.

As of June 30, 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 June 30, 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 March 31, 2021, we were in compliance with all debt covenants.

At June 30, 2021, we were in compliance with all debt covenants.

NOTE 7 INCOME TAXES

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In calculating our estimated annual effective tax rate, we consider forecasted annual pre-tax income and estimated permanent book versus tax differences.

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 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.

Adjustments to the effective tax rate and estimates will occur during the year as information and assumptions change which could include, but are not limited to, changes to forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates.

Our income tax benefit from continuing operations for the three months ended June 30, 2021 and 2020 was $ 23.7 million and $ 17.6 million, respectively, resulting in effective tax rates of 29.4 percent and 27.6 percent, respectively.

Our income tax benefit from continuing operations for the nine months ended June 30, 2021 and 2020 was $ 78.4 million and $ 116.9 million, respectively, resulting in effective tax rates of 23.3 percent and 21.1 percent, respectively.

Effective tax rates differ from the U.S.

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.

federal statutory rate of 21.0 percent for the three and nine months ended June 30, 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 nine months ended June 30, 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 nine months ended June 30, 2021 and 2020 are primarily due to decreases in our deferred state income tax rate, return to provision adjustments, and equity compensation.

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.

and international operations that could result in increases or decreases of our unrecognized tax benefits.

However, we do not expect the increases or decreases to have a material effect on our results of continuing operations or financial position.

However, we do not expect these increases or decreases to have a material effect on our results of continuing operations or financial position.

NOTE 8 SHAREHOLDERS’ EQUITY

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

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.

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.

There were no purchases of common shares during the nine months ended June 30, 2021.

A cash dividend of $ 0.25 per share was declared on March 3, 2021 for shareholders of record on May 17, 2021, and was paid on June 1, 2021.

An additional cash dividend of $ 0.25 per share was declared on June 2, 2021 for shareholders of record on August 17, 2021, payable on August 31, 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 June 30, 2021.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands) March 31,

(in thousands) June 30,

2021 September 30,

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$ ( 24,814 ) $ ( 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

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, 2021:

(in thousands) Three Months Ended June 30, 2021 Nine Months Ended

June 30, 2021

Balance at beginning of period $ ( 25,274 ) $ ( 26,188 )

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Net current-period other comprehensive income 460 1,374

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

Balance at June 30, 2021 $ ( 24,814 ) $ ( 24,814 )

NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS

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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.

During the three months ended June 30, 2021, we recognized no early termination revenue associated with term contracts compared to $ 49.5 million during the three months ended June 30, 2020.

During the nine months ended June 30, 2021 and 2020, we recognized $ 7.7 million and $ 57.8 million, respectively, in early termination revenue.

During the three and nine months ended June 30, 2021, we recognized no notification fee revenue.

Comparatively, during the three and nine months ended June 30, 2020, we recognized $ 0.9 million and $ 3.0 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.

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Contract Costs

We had capitalized fulfillment costs of $ 5.1 million and $ 6.2 million as of March 31, 2021 and September 30, 2020, respectively.

We had capitalized fulfillment costs of $ 3.6 million and $ 6.2 million as of June 30, 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 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.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of June 30, 2021 was approximately $ 582.5 million, of which approximately $ 203.0 million is expected to be recognized during the remainder of fiscal year 2021, approximately $ 210.9 million during fiscal year 2022, and approximately $ 168.6 million during fiscal year 2023 and thereafter.

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

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

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

(in thousands) June 30, 2021 September 30, 2020

Contract assets $ 6,577 $ 2,367

(in thousands) March 31, 2021

(in thousands) June 30, 2021

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

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Revenue recognized during the period ( 21,630 )

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

Contract liabilities balance at June 30, 2021 $ 6,754

NOTE 10 STOCK-BASED COMPENSATION

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,

Three Months Ended June 30, Nine Months Ended June 30,

(in thousands) 2021 2020 2021 2020

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Restricted Stock

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:

A summary of the status of our restricted stock awards as of June 30, 2021 and changes in non-vested restricted stock outstanding during the nine months then ended is presented below:

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

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Forfeited ( 27 ) 35.49

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

Non-vested restricted stock outstanding at June 30, 2021 1,417 $ 37.38

(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.

During the nine months ended June 30, 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 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:

A summary of the status of our performance-vested restricted share units (performance units) as of June 30, 2021 and changes in non-vested performance units outstanding during the nine months then ended is presented below:

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

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Forfeited ( 11 ) 43.40

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

Non-vested performance units outstanding at June 30, 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 87,626 performance units which is calculated based on the payout percentage for the completed performance period.

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

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

Loss from continuing operations $ ( 56,705 ) $ ( 46,007 ) $ ( 257,925 ) $ ( 435,746 )

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

Income from discontinued operations 1,150 408 10,936 212

Net loss ( 55,555 ) ( 45,599 ) ( 246,989 ) ( 435,534 )

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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.

Accordingly, our diluted earnings (loss) per share calculation was equivalent to our basic earnings (loss) 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.

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts)

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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 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.

The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S.

Government and in federally insured deposit accounts.

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

Short-term investments include securities classified as trading securities.

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The securities are recorded at fair value.

Our long-term investments primarily include equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan").

Our equity securities primarily include our investment in Schlumberger, Ltd., which is classified as Level 1 and based on the quoted stock price.

We also hold various other equity securities without readily determinable fair values that are classified as Level 3.

These equity securities are measured at cost, less any impairments.

Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs.

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 $ 2.4 million and $ 7.9 million for the three and nine months ended June 30, 2021.

Our non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value when acquired in a business combination or when an impairment charge is recognized.

If measured at fair value in the Unaudited Condensed Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy.

The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S.

Government and in federally insured deposit accounts.

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 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:

Refer to Note 4—Property, Plant and Equipment for additional disclosure on the fair value of our assets classified as held-for-sale as of June 30, 2021.

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at June 30, 2021 and September 30, 2020.

The following tables summarize our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2021 and September 30, 2020:

June 30, 2021

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

Recurring fair value measurements:

Cash and cash equivalents 370,553 370,553 $ — $ —

Short-term investments:

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Total short-term investments 187,256 7,833 179,423 —

Other current assets 48,434 48,434 — —

Non-qualified supplemental savings plan 18,556 18,556 — —

Debt and equity securities 18,330 14,965 — 3,365

Total investments 36,886 33,521 — 3,365

Other assets 2,885 2,885 — —

Total assets measured at fair value $ 646,014 $ 463,226 $ 179,423 $ 3,365

Contingent earnout liability $ 9,796 $ — $ — $ 9,796

September 30, 2020

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

Recurring fair value measurements:

Cash and cash equivalents $ 487,884 $ 487,884 $ — $ —

Investments 14,623 12,711 412 1,500

Short-term investments:

Certificates of deposit 1,370 — 1,370 —

Corporate debt securities 78,156 — 78,156 —

government and federal agency securities 7,817 7,817 — —

Other 1,992 1,992 — —

Total short-term investments 89,335 9,809 79,526 —

Other current assets 45,577 45,577 — —

Non-qualified supplemental savings plan 19,819 19,819 — —

Debt and equity securities 11,766 7,274 3,992 500

Total investments 31,585 27,093 3,992 500

Other assets 3,286 3,286 — —

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Contingent earnout liability $ 9,123 $ — $ — $ 9,123

At March 31, 2021, our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

At June 30, 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.

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

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.

At June 30, 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 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

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands) 2021 2020 2021 2020

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(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 March 31, 2021:

The following table provides quantitative information (in thousands) about our Level 3 unobservable inputs related to our financial liabilities at June 30, 2021:

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

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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 March 31, 2021 and September 30, 2020:

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

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

(in millions) June 30, 2021 September 30, 2020

Carrying value of long-term fixed-rate debt $ 481.0 $ 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 primarily based on Level 1 inputs.

As a result of the change in the fair value of our investments, we recorded a gain of $ 2.5 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 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

Interest cost $ 753 $ 1,097 $ 1,506 $ 2,194

Expected return on plan assets ( 967 ) ( 1,381 ) ( 1,934 ) ( 2,762 )

Recognized net actuarial loss 590 669 1,180 1,338

Settlement 398 — 1,413 —

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 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 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.

However, we may make contributions during the remainder of fiscal year 2021, if needed, to fund unexpected distributions in lieu of liquidating pension assets.

NOTE 13 COMMITMENTS AND CONTINGENCIES

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

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

At June 30, 2021, we had purchase commitments for equipment, parts and supplies of approximately $ 34.9 million.

Guarantee Arrangements

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

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

onshore oil and 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.

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 and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, we implemented organizational changes.

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.

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:

We focus 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.

Our drilling services operations are organized into the following reportable operating business segments:

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

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.

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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 and six months ended March 31, 2021 and 2020 is shown in the following tables:

Three Months Ended March 31, 2021

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

Summarized financial information of our reportable segments for the three and nine months ended June 30, 2021 and 2020 is shown in the following tables:

Three Months Ended June 30, 2021

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

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Segment operating income (loss) ( 43,743 ) 5,707 ( 3,538 ) ( 4,670 ) ( 3,298 ) ( 49,542 )

Three Months Ended March 31, 2020

(in thousands) North America Solutions (1)

Offshore Gulf of Mexico International Solutions Other Eliminations Total

Three Months Ended June 30, 2020

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

External sales $ 254,434 $ 37,494 $ 22,477 $ 2,959 $ — $ 317,364

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Segment operating income (loss) ( 25,157 ) 3,013 ( 9,540 ) 4,389 — ( 27,295 )

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

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

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

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Segment operating income (loss) ( 226,505 ) 11,427 ( 15,353 ) ( 1,631 ) ( 8,857 ) ( 240,919 )

Six Months Ended March 31, 2020

(in thousands) North America Solutions (1)

Offshore Gulf of Mexico International Solutions Other Eliminations Total

Nine Months Ended June 30, 2020

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

External sales $ 1,325,076 $ 110,828 $ 120,189 $ 9,567 $ — $ 1,565,660

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Segment operating income (loss) ( 315,705 ) 6,022 ( 158,894 ) 3,704 — ( 464,873 )

(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,

Three Months Ended June 30, Nine Months Ended June 30,

(in thousands) 2021 2020 2021 2020

12 unchanged sentences

The following table presents total assets by reportable segment:

(in thousands) March 31,

(in thousands) June 30,

2021 September 30,

6 unchanged sentences

Investments and corporate operations 637,546 720,077

Total assets from continuing operations 4,588,104 4,829,621

Discontinued operations — —

$ 4,495,285 $ 4,829,621

1 unchanged sentence

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

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

Three Months Ended June 30, Nine Months Ended June 30,

(in thousands) 2021 2020 2021 2020

9 unchanged sentences

NOTE 15 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

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

Cost incurred as of June 30, 2021 in connection with the restructuring are primarily comprised of one-time severance benefits to employees who were involuntarily terminated.

The termination date of some of the employees extend beyond June 30, 2021, and such employees are required to render service through their respective termination date in order to receive the one-time severance benefit.

During the third quarter of fiscal year 2021, we commenced a voluntary separation program at our local office in Argentina for which we incurred one-time severance charges for employees who were voluntarily terminated.

Additionally, we continue to take measures to lower our cost structure based on activity levels.

During the second and third quarter of fiscal year 2021, we incurred one-time moving related expenses due to the downsizing and relocation of our Houston assembly facility and storage yards.

These charges are included in other restructuring expenses within the tables below.

The following table summarizes the Company's restructuring charges incurred during the three and nine months ended June 30, 2021, respectively:

Three Months Ended June 30, 2021

(in thousands) North America Solutions International Solutions Corporate Total

Employee termination benefits $ 10 $ 207 $ 516 $ 733

Moving related expenses 1,564 — 1,564

Other restructuring expenses 1,377 — — 1,377

Total restructuring charges $ 1,387 207 $ 516 $ 2,110

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.

Nine Months Ended June 30, 2021

(in thousands) North America Solutions International Solutions Corporate Total

Employee termination benefits $ 28 $ 207 $ 680 $ 915

Other restructuring expenses 2,941 — — 2,941

Total restructuring charges $ 2,969 207 $ 680 $ 3,856

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 were primarily comprised of one-time severance benefits to employees who were 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 three and nine months ended June 30, 2020:

Three and Nine Months Ended June 30, 2020

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

Employee termination benefits $ 10,273 $ 1,440 $ 2,308 $ 328 $ 4,629 $ 18,978

Stock-based compensation benefit ( 3,036 ) ( 178 ) ( 11 ) ( 61 ) ( 197 ) ( 3,483 )

Total restructuring charges $ 7,237 $ 1,262 $ 2,297 $ 267 $ 4,432 $ 15,495

These expenses are recorded within restructuring charges on our Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2021 and 2020 .

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