What changed in this filing

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Item 1. Business

2021-11-18 compared with 2020-11-20 · 197 added, 210 removed, 260 unchanged (61% of the section changed)

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We are an important vendor for a number of oil and gas exploration and production companies, but we focus primarily on the drilling segment of the oil and gas production value chain.

Our technology services focus on developing, promoting and commercializing technologies designed to improve the efficiency and accuracy of drilling operations, as well as wellbore quality and placement.

Our global business is composed of three reportable business segments:

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

During the third quarter of fiscal year 2020, as part of our restructuring efforts (see Note 19—Restructuring Charges to our Consolidated Financial Statements) and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, we implemented organizational changes.

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

Operations previously reported within the former U.S.

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

During the fiscal year ended September 30, 2020 , our North America Solutions operations were primarily located in Colorado, Ohio, Oklahoma, New Mexico, North Dakota, Pennsylvania, Texas, West Virginia and Wyoming.

During the fiscal year ended September 30, 2021, our North America Solutions operations were primarily located in Colorado, Louisiana, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

Our Offshore Gulf of Mexico operations were conducted in Louisiana and in U.S.

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Argentina, Bahrain, Colombia and United Arab Emirates (“U.A.E.”).

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

Our real estate investments, which are located exclusively within Tulsa, Oklahoma, include a shopping center containing approximately 389,000 leasable square feet and approximately 210 acres of undeveloped real estate.

We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma.

Our real estate investments include a shopping center containing approximately 390,000 leasable square feet and approximately 176 acres of undeveloped real estate.

Our research and development endeavors include both internal development and external acquisition of developing technologies.

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.

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 wholly-owned captive insurance companies (the “Captives”) are used to insure the deductibles for our workers’ compensation, general liability and automobile liability insurance programs.

The Company and the Captives 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 real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other."

2021 FORM 10-K | 5

Drilling Fleet

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NORTH AMERICA SOLUTIONS FLEET

Current Location

Super-Spec FlexRig ® (1)

Location Super-Spec FlexRig ® 1

Non Super-Spec FlexRig ® 2

Total Available

Rigs Contracted

Total Available

Rigs Contracted

Total Available

Rigs Contracted

Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted

TX 139 66 3 — 142 66

NM 36 26 — — 36 26

OK 25 10 1 — 26 10

ND 8 6 — — 8 6

LA 5 5 — — 5 5

OH 4 1 — — 4 1

PA 4 2 — — 4 2

UT 3 3 — — 3 3

CO 1 1 2 2 3 3

WV 2 2 — — 2 2

MT 1 1 — — 1 1

NV 1 1 — — 1 1

WY 1 1 — — 1 1

Totals 230 125 6 2 236 127

(1) AC drive, minimum of 1,500 horsepower drawworks, minimum of 750,000 lbs.

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hookload rating, 5,000 or 7,500 psi mud circulating system, may or may not have multiple-well pad capability.

2021 FORM 10-K | 6

The following table sets forth certain information concerning our Offshore Gulf of Mexico drilling rigs as of September 30, 2021:

OFFSHORE GULF OF MEXICO FLEET

Shallow Water (1)

Deep Water (1)

Total Available

Rigs Contracted

Total Available

Rigs Contracted

Total Available

Rigs Contracted

Louisiana (2)

Location Shallow Water 1

Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted

Gulf of Mexico 1 1 3 3 4 4

Totals 4 1 3 3 7 4

(1) Deep water rigs operate on floating facilities and shallow water rigs operate on fixed facilities.

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INTERNATIONAL SOLUTIONS FLEET

Current Location

AC (FlexRig ® 3) (1)

Location AC (FlexRig ® 3) 1

AC (FlexRig ® 4) 2

Total Available

Rigs Contracted

Total Available (1)

Rigs Contracted

Total Available (1)

Rigs Contracted

Total Available (1)

Rigs Contracted

Total Available

Rigs Contracted

Other than one super–spec rig (as described above) in Argentina, the FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb.

Other AC SCR 3

Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted

Argentina 12 3 4 — — — 4 — 20 3

Colombia 2 — 2 — 1 — 2 — 7 —

Bahrain — — 3 3 — — — — 3 3

Totals 14 3 9 3 1 — 6 — 30 6

(1) Other than four super–spec rigs in Argentina, the FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb.

hookload rating.

It can be equipped with an optional skid or walking system, third mud pump, and 7,500 psi high pressure mud system.

The other 11 rigs in Argentina are equipped with skid systems.

The other eight rigs in Argentina are equipped with skid systems.

(2) The FlexRig ® 4 model has a small footprint and is designed to be highly mobile.

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Range 3 drill pipe is used without setback.

The rig is capable of horizontal and vertical drilling.

The rig is capable of horizontal and vertical drilling, but is primarily used for vertical drilling.

(3) A silicon-controlled-rectifier (“SCR”) system converts alternate current (“AC”) produced by one or more AC generator sets into direct current (“DC”).

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Operating principally in North and South America, we specialize in shale and unconventional resource plays, drilling challenging and complex wells in oil and gas producing basins in the United States and in international locations.

In the United States, we have a diverse mix of customers consisting of large independent, major, mid-sized and small cap oil companies and private independent companies (including private equity-backed companies) that are focused on unconventional shale basins.

In South America and the Middle East, our customers primarily include major international and national oil companies.

We do not operate any legacy mechanical rigs.

We had revenues from individual customers, within our North America Solutions segment, that constituted 10 percent or more of our total revenues as follows:

(in thousands)

EOG Resources, Inc.

We did not have any individual customers that represented 10% or more of our total consolidated revenues in fiscal years 2021, 2020, or 2019.

2021 FORM 10-K | 7

The following table presents our average active rigs per day (a measure of activity and utilization over the fiscal year) and average utilization for the fiscal years 2021, 2020, and 2019:

Year Ended September 30,

North America Solutions

Offshore Gulf of Mexico

International Solutions

North America Solutions Offshore Gulf of Mexico International Solutions

Average active rigs per day 1

107.4 134.3 224.1 4.3 5.3 5.9 5.0 12.6 17.6

Average utilization 2

At the beginning of the third quarter of fiscal year 2020, the fleet was downsized by 37 rigs.

See Note 5—Property, Plant and Equipment to our Consolidated Financial Statements.

At the end of the third quarter of fiscal year 2019, the fleet was downsized by 51 rigs.

See Note 5—Property, Plant and Equipment to our Consolidated Financial Statements.

At the end of the third quarter of fiscal year 2019, the fleet was downsized by two rigs.

43 % 47 % 67 % 59 % 66 % 74 % 16 % 40 % 55 %

(1) Includes the impact of downsizing our fleet and/or rigs that have been reclassified to assets held-for-sale.

See Note 4—Property, Plant and Equipment to our Consolidated Financial Statements.

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North America Solutions Segment

We believe we operate the largest technologically advanced AC drive drilling rig fleet in North America and have a presence in most of the U.S.

We believe we operate the largest and most technologically advanced AC drive drilling rig fleet in North America and have a presence in most of the U.S.

shale and unconventional basins.

We have a leading market share in the three most active oil basins, which include the Permian Basin, Eagle Ford Shale, and Woodford Shale.

We have the leading market share in at least three of the most active oil basins, which include the Permian Basin, Eagle Ford Shale, and Woodford Shale.

Nearly all of our active rigs are drilling horizontal or directional wells.

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land drilling.

In the United States, we have the industry's largest super-spec fleet with 234 rigs, of which 67 were under contract at September 30, 2020.

In the United States, we have the industry's largest super-spec fleet wit h 230 rigs, of which 125 were under contract at September 30, 2021.

In total, 127 of our 236 marketed rigs were under contract, 73 were under fixed‑term contracts, and 54 were working well-to-well as of September 30, 2021.

Our drilling technology solutions within this segment enables a holistic solution-based approach that includes products, services and capabilities.

This approach provides performance-driven drilling services intended to deliver greater levels of accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores.

Our drilling technology within this segment enables a solutions-based approach that provides performance-driven drilling services designed to help deliver greater levels of accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores with lower overall risk.

This technology is intended to address our customers' unique challenges and should result in less wellbore tortuosity and reduce positional uncertainty in the directional drilling process.

During fiscal year 2019, we released AutoSlide ® , which integrates the MOTIVE Bit Guidance System ® and several FlexApps to function within the FlexRig ® operating system and fully automates the control of mud motors while sliding during the vertical, the curve, and the lateral hole sections during horizontal drilling operations.

Currently, our AutoSlide® application is commercially available in all U.S.

oil and gas basins.

Many components of our digital technology, including the MOTIVE Bit Guidance System ® technology and MagVar TM survey correction, can be used on any rig, regardless of the drilling or service provider, allowing our customers to benefit from these technologies on all rigs.

Our North America Solutions segment contributed approximately 84.2 percent ($1.0 billion) of our consolidated operating revenues during fiscal year 2021, compared to approximately 83.1 percent ($1.5 billion) and 86.7 percent ($2.4 billion) of our consolidated operating revenues during fiscal years 2020 and 2019, respectively.

In North America, our customers are primarily from the major oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies).

In North America, our customers are primarily from the major integrated oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies).

Revenue from drilling services performed for our largest North America Solutions drilling customer totaled approximately 11.5 percent ($118.4 million) of the North America Solutions segment revenues during fiscal year 2021.

Offshore Gulf of Mexico Segment

Our Offshore Gulf of Mexico segment has been in operation since 1968 and currently consists of eight platform rigs in the Gulf of Mexico.

Our Offshore Gulf of Mexico segment has been in operation since 1968 and currently consists of seven platform rigs in the Gulf of Mexico.

We supply the rig equipment and crews and the operator, who owns the platform, will typically provide production equipment or other necessary facilities.

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Additionally, we provide management contract services to customer platforms where the customer owns the drilling rig.

As of September 30, 2020 , five of the eight offshore rigs were under contract.

As of September 30, 2021, four of the seven offshore rigs were under contract.

Our Offshore Gulf of Mexico operations contributed approximately 10.4 percent ($126.4 million) of our consolidated operating revenues during fiscal year 2021, compared to approximately 8.1 percent ($143.1 million) and 5.3 percent ($147.6 million) of our consolidated operating revenues during fiscal years 2020 and 2019, respectively.

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International Solutions Segment

Our International Solutions segment operates primarily in Argentina, Colombia, Bahrain and U.A.E.

During the fourth quarter of fiscal year 2018, we ceased operations in Ecuador.

As of September 30, 2020 , we had 5 land rigs contracted for work in locations outside of the United States.

Our International Solutions segment primarily conducts operations in Argentina, Colombia, Bahrain and U.A.E.

As of September 30, 2021, we had six land rigs contracted for work in locations outside of the United States.

Our International Solutions operations contributed approximately 4.8 percent ($57.9 million) of our consolidated operating revenues during fiscal year 2021, compared to approximately 8.1 percent ($144.2 million) and 7.6 percent ($211.7 million) of our consolidated operating revenues during fiscal years 2020 and 2019, respectively.

2021 FORM 10-K | 8

Argentina As of September 30, 2021, we had 20 rigs in Argentina.

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All of our revenues in Bahrain are from a partner of the local national oil company.

United Arab Emirates As of September 30, 2020 , we had two rigs in the U.A.E.

Revenues generated by U.A.E.

drilling operations contributed approximately 1.4 percent ( $24.7 million ) of our consolidated operating revenues in fiscal year 2020 , compared to approximately 0.2 percent ( $4.7 million ) in fiscal year 2019 and nominal amounts in fiscal year 2018 .

United Arab Emirates In September 2021, we sold two rigs we had in country as part of a larger rig package sale to ADNOC Drilling Company P.J.S.C.

As a result of this transaction, we did not have any rigs located in the U.A.E.

as of September 30, 2021.

See Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments” and Note 4—Property, Plant and Equipment to our Consolidated Financial Statements included in this Form 10‑K for additional information.

Prior to the sale, revenues generated by our U.A.E.

drilling operations contributed approximately 0.1 percent ($1.0 million) of our consolidated operating revenues in fiscal year 2021, compared to approximately 1.4 percent ($24.7 million) and 0.2 percent ($4.7 million) of our consolidated operating revenues during fiscal years 2020 and 2019, respectively.

All of our revenues in U.A.E.

are from a subsidiary of the national oil company.

Other Operations

Other Operations include additional non-reportable operating segments.

We own, develop 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.

On October 1, 2019, we elected to utilize the Captive to insure the deductibles for our workers’ compensation, general liability and automobile liability insurance programs.

We own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma.

Our real estate investments include a shopping center and undeveloped real estate.

On October 1, 2019, we elected to utilize the Captives 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.

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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.

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

The Company is also utilizing the Captive to provide stop-loss coverage over its self-insured employee health plan, which covers insured claims in excess of employee deductibles.

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

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

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

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

The Company did not previously purchase any stop-loss coverage.

During the third quarter of fiscal year 2019, the Company established an incubator program for new research and development projects, the results of which have been included in "Other" within our segment disclosures.

During fiscal year 2019, the Company established an incubator program for new research and development projects, the results of which have been included in "Other" within our segment disclosures.

Rigs, Equipment, R&D, and Facilities

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Our first FlexRig ® drilling rig entered the market in 1998.

The original 18 rigs were designated as FlexRig ® 1 and FlexRig ® 2 rigs and were designed to drill wells with a depth of between 8,000 and 18,000 feet.

From 2002 to 2004, we designed, built and delivered 32 of the next generation, AC drive rigs, known as “FlexRig ® 3 rigs,” which incorporated new drilling technology and improved the safety and environmental design.

The FlexRig ® 3 rigs found immediate success by delivering higher value wells to the customer and marked the beginning of the AC land rig revolution.

We continued to innovate and in 2002 introduced our first AC drive rigs, which incorporated new drilling technology and improved safety and environmental design.

These rigs found immediate success by delivering higher value wells to the customer and marked the beginning of the AC land rig revolution.

2021 FORM 10-K | 9

We also changed our pricing and contracting strategy, and beginning in 2005, predominantly all new FlexRig ® drilling rigs were built supported by a firm contract and attractive returns.

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These upgrades included, but were not limited to, enhanced drilling control systems and software, skid and walking systems for drilling multiple well pads, 7,500 psi mud systems, set back capacity to accommodate the pipe that the longer laterals demanded, and additional mud system capacity.

H&P has a strategic advantage due to our ability to utilize our AC rig design and operational and engineering expertise to exploit different well depths and designs that customers demand.

In 2006, we introduced the FlexRig ® 4 drilling rig, which was designed to efficiently drill shallower wells on multi-well pads.

The FlexRig ® 4 design offers two options that include trailerized or multi-well pad drilling capability, both of which incorporate additional environmental and safety by design improvements.

While the trailerized FlexRig ® 4 design provides for more efficient moves between individual well pads, the multi-well pad design uses a skidding capability that allows for drilling multiple wells from a single pad, which results in significantly reduced environmental impact and increased production from a smaller footprint.

In 2011, we announced the introduction of the FlexRig ® 5 drilling rig.

The FlexRig ® 5 drilling rig was designed for deeper wells than the FlexRig ® 4 drilling rig and long lateral drilling of multiple wells from a single location and is designed for drilling horizontally in unconventional shale reservoirs.

The new design preserves the key performance features of the FlexRig ® 3 rig design but adds a bi-directional skidding system and equipment capacities suitable for wells in excess of 25,000 feet of measured depth.

In 2016, we saw the progression of longer lateral wells and the technical challenges involved in drilling longer lateral wells.

At that time, we began delivering rigs to the market that were equipped and capable of drilling the longer lateral wells.

In 2011, we introduced a FlexRig ® design for long lateral drilling of multiple wells from a single location and for drilling horizontally in unconventional shale reservoirs.

The new design preserved the key performance features of earlier designs but added a bi-directional skidding system and equipment capacities suitable for drilling long lateral wells.

In 2016, we saw the further progression of longer lateral wells, which brought additional technical challenges.

At that time, we began delivering rigs to the market that were equipped and capable of drilling these longer lateral wells.

The industry would later refer to these rigs as super-spec rigs, which have the following specific characteristics:

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Additionally, our competency in design and construction as well as our financial strength enabled us to efficiently upgrade our other existing rigs to super-spec, resulting in what we believe to be the largest fleet of super-spec rigs in the world.

As of September 30, 2020 , we held approximately 29 percent of the super-spec market share in the U.S.

land drilling market with 234 super-spec rigs.

In 2017, we introduced our first walking rig by reconfiguring our skid designed FlexRig ® 3 drilling rigs.

As of September 30, 2021, we had 230 super-spec rigs.

In 2017, we introduced our first walking rig by reconfiguring some of our uni-directional skid designed FlexRig ® drilling rigs.

Since then, we have reconfigured, converted, and upgraded a total of 49 FlexRig ® drilling rigs to super-spec walking rigs.

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A long-standing challenge in our industry is providing high quality and consistent results.

In addressing the challenge of providing safe, high quality and consistent results, we utilize process excellence techniques that are developed internally.

In addressing this challenge, we utilize process excellence techniques that are developed internally.

We provide experienced drilling and maintenance support for our operations, which provides value by reducing nonproductive time in our operations and improving drilling performance through our Rig Systems Monitoring and Support Center (“RSMS”) and Remote Operations Centers ("ROCs").

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These facilities utilize lean manufacturing processes to enhance quality and efficiency as well as provide important insights in the maintenance and wear of equipment on our rigs.

Our assembly facility is located near Houston, Texas.

Our facility near Tulsa, Oklahoma is utilized for overhauling, recertification, and repairs.

During fiscal year 2020, we continued to see adoption and growth with our technologies and automation focused solutions.

Our FlexApp solutions, which layer on top of our FlexRig ® drilling control system, continue to add value for our customers.

Our AutoSlide ® service, which is powered by our Motive Bit Guidance System ® technology, continued to grow in commercial feet steered, new customer adoption and the number of deployments.

Our MagVar TM , Drillscan ® and Motive Bit Guidance System ® solutions continue to be available on both H&P and third - party rigs.

These solutions continue to provide differentiated value for our customers in the areas of drilling engineering, wellbore placement, and wellbore quality.

Our path to autonomous drilling continues to evolve with several solutions in Alpha and Beta testing.

All of our automation focused solutions and applications are enabled by our uniform digital fleet and are designed to provide additional value to our customers' well programs by providing a platform for machine-human collaboration during the drilling process to improve efficiency.

Our facility located in Galena Park, Texas is primarily utilized for overall rig assembly, overhaul, recommissioning and recertification while our facility near Tulsa, Oklahoma is primarily utilized for modular rig component overhauls and repairs.

During fiscal year 2021, we continued to see adoption and growth with our technologically enabled automation solutions.

We designed our automation solutions to address challenges within our customers’ businesses as much of the drilling process is heavily dependent on human decision making to design, execute and optimize crude oil and natural gas extraction.

Utilizing these technologies, we are able to deploy a more science-based solution compared to human decisions and execution, thereby reducing variability and the costs around achieving optimal outcomes.

These solutions continue to provide differentiated value for our customers through enhanced wellbore quality and placement, improved cost performance and well economics, and better consistency at reduced risk.

Our automation focused solutions and applications are enabled by our uniform digital fleet and are designed to provide additional value to our customers' well programs by providing a platform for machine-human collaboration during the drilling process to improve efficiency.

Our path to autonomous drilling continues to evolve with several solutions in various stages of commercial testing.

All of our technologies play an important role in developing our strategy as we head towards autonomous drilling.

The technologies that are currently in use include the following:

Application Name

Hardware and software designed to decrease downhole drilling vibration and "slip-stick" during drilling.

This helps with drilling efficiency and is intended to help extend bit and downhole tool life to help reduce costly nonproductive time.

Flex-Oscillator 2.0™

Rig control software that automates drill string rotation during directional "slide" operations, which helps reduce downhole drag and the potential for stuck pipe.

It also helps support more effective directional drilling.

Software to engage and disengage the bit during connections in an established controlled and consistent manner that is intended to help extend bit and downhole tool life, better drilling parameters and less costly bit trips out of the hole.

FlexDrill 1.0™

Software licensed from ExxonMobil to help maximize the bit's rate of penetration, which we have automated, that is intended to allow the drilling control system to achieve the ideal mechanical specific energy at the bit.

Powered by Motive’s Bit Guidance System ® technology and utilizes machine learning and automation to help interface with FlexRig ® control systems to allow for automatic slide drilling via computer control.

Solution intended to help improve surveying accuracy and contribute to increased horizontal well economics while reducing collision risk.

Industry leader in physics-based modeling software to help select bottom hole assemblies and help provide real-time drilling dynamics evaluation.

MOTIVE Bit Guidance System ®

Automated directional drilling guidance system that helps improve wellbore quality with a scalable, repeatable data driven platform approach to help increase horizontal well economics and help reduce risk.

2021 FORM 10-K | 10

We have historically offered ancillary services, which are now referred to as FlexServices ® .

These services include trucking, surface equipment, casing running services and pipe rental.

Subsequent to September 30, 2021, we sold the assets associated with two lower margin service offerings, trucking and casing running services, which contributed approximately 2.8 percent to our consolidated revenues during fiscal year 2021, in two separate transactions.

The sale of our trucking services was completed on November 3, 2021 while the sale of our casing running services was completed on November 15, 2021 for combined cash consideration less costs to sell of $5.8 million in addition to the possibility of future earnout revenue.

Markets and Competition

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For further information concerning risks associated with our business, including volatility surrounding oil and natural gas prices and the impact of low oil prices on our business, see Item 1A— “Risk Factors” and Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Form 10‑K.

Our industry is highly competitive, and we strive to differentiate our services based upon the quality of our FlexRig ® drilling rigs and our engineering design expertise, operational efficiency, software technologies, safety and environmental awareness.

The number of available rigs generally exceeds demand in many of our markets, resulting in significant price competition.

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Our contracts vary in their terms and rates depending on the nature of the operations to be performed, the duration of the work, the amount and type of equipment and services provided, the geographic areas involved, market conditions and other variables.

In many instances, our contracts cover multi‑well and multi‑year projects.

In many instances, our contracts cover multi‑well or pad and multi‑year projects.

Except for a limited number of rigs operated under master agreements, each drilling rig operates under a separate drilling contract.

During fiscal year 2020 , a majority of our drilling services were performed on a “daywork” contract basis, under which we charged a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market.

We may also enter into contracts where we charge a fixed rate per foot of hole drilled to a stated depth, with a fixed rate per day for the remainder of the hole.

Contracts performed on a “footage” basis generally involve a greater element of risk to H&P compared to contracts performed on a “daywork” basis.

Also, we may enter into “lump-sum” contracts under which we charge a fixed sum to deliver a hole to a stated depth and agree to furnish services such as testing, coring and casing the hole which are not normally done on a “footage” basis.

“Lump-sum” contracts entail varying degrees of risk greater than the usual “footage” contract.

We also actively pursue “performance daywork” contracts, pursuant to which we are compensated based upon our performance against a mutually agreed upon set of predetermined targets.

These contracts typically have a lower base dayrate but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets.

The risks associated with these contracts relate to the failure to reach the agreed upon performance targets.

If we do not meet these targets, we will not receive additional compensation beyond the base dayrate and will recognize less overall drilling services revenue than we would by utilizing other types of contracts.

We are seeing a growing adoption of performance contracts by our customers and we expect this trend to continue.

The duration of our drilling contracts are generally either “well‑to‑well” or for a fixed term.

The duration of our drilling contracts are generally either “well‑to‑well/pad-to-pad” or for a fixed term.

“Well‑to‑well” contracts can be terminated at the option of either party upon the completion of drilling of any one well.

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In most instances, contracts provide for additional payments for mobilization and demobilization of the rig.

Daywork Contracts

Daywork contracts are contracts under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market.

During fiscal year 2021, a majority of our drilling services were performed on a “daywork” contract basis.

Footage Contracts

Footage contracts are contracts where we charge a fixed rate per foot of hole drilled to a stated depth, with a fixed rate per day for the remainder of the hole.

Contracts performed on a "footage" basis generally involve a greater element of risk to the Company compared to contracts performed on a "daywork" basis.

Lump-sum Contracts

Lump-sum contract are contracts under which we charge a fixed sum to deliver a hole to a stated depth and agree to furnish services such as testing, coring and casing the hole which are not normally done on a "footage" basis.

"Lump-sum" contracts entail varying degrees of risk greater than the usual "footage" contract.

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Performance-based Contracts

Performance-based contracts are contracts pursuant to which we are compensated based upon our performance against a mutually agreed upon set of predetermined targets.

These contract types are relatively new to the industry and typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers.

For example, some performance targets are set based upon days to drill a well or the number of lateral feet drilled in zone per day.

We often use our automated technology solutions to assist in achieving the performance targets.

The risks associated with these contracts relate to the failure to reach the agreed upon performance targets.

If we do not meet these targets, we will not receive additional compensation above what we have received utilizing a "daywork" contract.

Based on our operational track record throughout fiscal year 2021 and drilling expertise, our performance-based contracts have produced a positive risk-reward outcome.

We are seeing a growing adoption of performance contracts by our customers and we expect this trend to continue.

Contract Backlog

Drilling contract backlog is the expected future dayrate revenue from executed contracts.

We calculate backlog as the total expected revenue from fixed-term contracts and do not include any anticipated contract renewals as part of its calculation.

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

In addition to depicting the total expected revenue from fixed-term contracts, backlog is indicative of expected future cash flow that the Company expects to receive regardless of whether a customer honors the fixed-term contract to expiration of a contract or decides to terminate the contract early and pay an early termination payment.

In the event of an early termination payment, the timing of the recognition of backlog and the total amount of revenue may differ;

however, the overall associated cash flow is preserved.

As such, management finds backlog a useful metric for future planning and budgeting, whereas investors consider it in estimating future revenue and cash flows of the Company.

As of September 30, 2020 , and 2019 , our drilling contract backlog was $0.7 billion and $1.2 billion , respectively.

The decrease in backlog at September 30, 2020 from September 30, 2019 is primarily due to prevailing market conditions causing a decline in the number of drilling contracts executed and to some extent an increase in the number of early terminations of contracts.

Approximately 33.3 percent of the total September 30, 2020 backlog is reasonably expected to be filled in fiscal year 2022 and thereafter.

Fixed-term contracts customarily provide for termination at the election of the customer, with an early termination payment to be paid to us if a contract is terminated prior to the expiration of the fixed term.

As a result of the depressed market conditions and negative outlook for the near term, beginning in the second quarter of fiscal year 2020, certain of our customers, as well as those of our competitors, have opted to renegotiate or early terminate existing drilling contracts.

Such renegotiations have included requests to lower the contract dayrate in exchange for additional terms, temporary stacking of the rig, and other proposals.

During the fiscal years ended September 30, 2020 and 2019 , early termination revenue associated with term contracts was $73.4 million and $11.3 million , respectively.

In response to the current market conditions, several operators included in our North America Solutions operating segment have opted to place their rigs in an idle-but-contracted state as an alternative to early termination.

This includes "warm stacking" and "cold stacking." Warm stacking occurs when a rig remains on-site while pausing drilling activity, while cold stacking occurs when a rig is demobilized and returned to the yard temporarily until next steps are determined.

When rigs are stacked, they remain under the terms of the contract but typically pay a reduced rate, where the remaining term days are generally not reduced, but our operating expenses are reduced.

In many instances for stacked rigs, for the total days stacked there are proportional days added to the original contract length at the original contracted rate.

As of September 30, 2020 , there are five rigs that are warm stacked, five rigs that are cold stacked within the North America Solutions segment.

The following table sets forth the total backlog by reportable segment as of September 30, 2020 and 2019 , and the percentage of the September 30, 2020 backlog reasonably expected to be filled in fiscal year 2022 and thereafter:

Total Backlog Revenue

Percentage Reasonably Expected to be Filled in Fiscal Year 2022 and Thereafter

(in billions)

September 30, 2020

September 30, 2019

North America Solutions

Offshore Gulf of Mexico

International Solutions

The early termination of a contract may result in a rig being idle for an extended period of time, which could adversely affect our financial condition, results of operations and cash flows.

In some limited circumstances, such as sustained unacceptable performance by us, no early termination payment would be paid to us.

Early terminations could cause the actual amount of revenue earned to vary from the backlog reported.

See Item 1A— “Risk Factors — Our current backlog of drilling services and solutions revenue may continue to decline and may not be ultimately realized as fixed‑term contracts and may, in certain instances, be terminated without an early termination payment " within this Form 10-K regarding fixed-term contract risk.

Additionally, see Item 1A— “Risk Factors — The impact and effects of public health crises, pandemics and epidemics, such as the ongoing outbreak of COVID-19, have adversely affected and are expected to continue to adversely affect our business, financial condition and results of operations " within this Form 10-K.

As of September 30, 2021 and 2020, our drilling contract backlog was $572.0 million and $658.0 million, respectively.

Approximately 22.9 percent of the September 30, 2021 backlog is reasonably expected to be fulfilled in fiscal year 2023 and thereafter.

See Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations — Contract Backlog" included in this Form 10-K for additional information pertaining to backlog.

As of September 30, 2021, we had 5,444 employees within the United States and 488 employees in our international operations.

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We strive to create a culture and work environment that enables us to attract, train, promote, and retain a diverse group of talented employees who together can help us gain a competitive advantage.

Our recruiting practices and decisions on whom to hire are among our most important activities.

In a downturn year such as fiscal year 2020, we maintain relationships with former employees and prioritize recalling our most experienced people for field positions.

In addition, we utilize social media, local job fairs and educational organizations across the United States to find diverse, motivated and responsible employees.

Core Values and Culture

"The H&P Way" defines our purpose, core values, and the behaviors that drive our culture.

What we endeavor to do is anchored in our purpose, improving lives through efficient and responsible energy.

Fostering and maintaining a strong, healthy culture is a key strategic focus.

Our core values reflect who we are and the way our employees interact with one another, our customers, partners and shareholders.

Our core values serve to inform who we are and the way our employees interact with one another, our customers, partners and shareholders.

Our core value of Actively C.A.R.E.

means that we treat one another with respect.

We care about each other, and from a safety perspective, our employees are committed to Controlling and Removing Exposures for themselves and others.

We care about each other, and from a safety perspective, our employees are committed to Controlling and Removing Exposures ("C.A.R.E.") for themselves and others.

Our core value of Service Attitude means that we do our part and more for those around us.

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We collaborate to achieve results and focus on success for our customers and shareholders.

Finally, we do the right thing.

Finally, we strive to do the right thing.

That means we are honest and transparent.

We tackle tough situations, make decisions, and speak up when needed.

To further encourage living out our core values, during fiscal year 2020, an average of 10 organizational health sessions per month were conducted with employee teams.

Talent Attraction & Retention

Our recruiting practices and decisions on whom we hire are among our most important activities.

Our Workforce Staffing team provides full staffing services to ensure consistent staffing levels on our rigs.

This team sources, hires, onboards, trains, assigns and reassigns rig-based employees.

In downturn years, we maintain relationships with former employees and prioritize recalling our most experienced people for field positions.

In fiscal year 2021, we recalled approximately 1,800 employees.

In addition, we utilize social media, local job fairs, employee referral bonuses, and educational organizations across the United States to find diverse, motivated and responsible employees.

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Education and Training

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Our training starts right at the beginning with on-boarding procedures that focus on safety, responsibility, ethical conduct and inclusive teamwork.

In addition to on–boarding training, we provide extensive ongoing training and career development focused on:

compliance with our Code of Business Conduct and Ethics and laws applicable to our business

skills and competencies directly related to employees' positions;

responsibility for personal safety and the safety of fellow employees, others on location and the environment.

H&P’s strong commitment to our employees’ growth is demonstrated through our formal organizational development team, which oversees talent management, training and development.

In addition to career and safety training efforts, the team creates, manages and implements enhancements to development and succession plans, change management initiatives and diversity, equity and inclusion ("DE&I") programs.

H&P offers a variety of training programs ranging from job specific programs to leadership development.

Some of the prominent training programs that we offer are:

• New Employment Safety Training - onboarding program for new hires in safety sensitive positions.

The purpose of the program is to prepare employees to work safely on our rigs and provide necessary certifications to do so;

including all Occupational Safety and Health Administration ("OSHA") and IADC training, as well as Company culture education.

• Short Service Employee - specialized training program that is a continuation of New Employment Introduction basics and is intended to provide the technical on-the-job training guided by a mentor.

• Ethics and Compliance Training – comprised of several specific training programs, including Code of Conduct, Insider Trading, Anti-Discrimination & Harassment, Data Privacy, Trade Compliance, and Anti-Corruption.

• Change Champions - teaches employees to solve complex problems using structured processes, tools and data to drive results while emphasizing leadership and public speaking.

• Leadership Series - accessible online to all leaders and covers a variety of topics related to leading The H&P Way.

Safety Training and Serious Injury and/or Fatality ("SIF") Reduction Program

Over the last three years, 94% of our Rig Managers and 91% of Drillers received in-field coaching from a Safety Leadership Coach and employees received, on average, 26 hours of training.

One of our most critical responsibilities is the safety of our employees and the employees of our customers.

Traditional approaches to safety focused on lagging indicators that centered on reacting to injuries after they occurred.

However, we believe the best approach is to focus on exposures (leading indicators) and controlling and removing them, thus helping prevent injuries before they occur.

Accordingly, we have moved to tracking potential SIFs with annual goals targeted at reducing SIFs.

In calendar year 2019, we focused on reducing the number of SIF incidents by improving pre-job planning tools as a means for reducing incidents with SIF potential, year-over-year reduction in incidents related to handling of tubulars and year-over-year increase in seatbelt usage among employees based on self-reported seatbelt use.

Educational Assistance Plan

We offer an Educational Assistance Plan for eligible employees pursuing an undergraduate degree and, in some cases, post-graduate degrees.

Health and Welfare

We support our employees’ and their families’ health by offering full medical, dental, and vision insurance for employees and their families, life insurance and long-term disability plans, and health and dependent care flexible spending accounts.

We foster teamwork and a sense of community amongst our employees through our H&P Way Fund that provides assistance to employees and their families experiencing emergencies.

We provide a variety of resources and services to help our employees for Retirement.

H&P offers a comprehensive retiree medical plan for those who meet eligibility requirements.

In addition, we provide a 401(k) plan with a company match.

We are committed to creating a culture highlighted by an Actively Caring workforce.

We strive to Actively C.A.R.E.

• our own safety and health;

• the safety and health of others;

• the protection of our environment.

Fundamental to our Actively C.A.R.E.

culture is every individual's willingness to provide immediate open feedback to others regarding safe and unsafe work practices and to proactively correct recognized exposures that threaten one's health and safety.

Through training and accountability, H&P educates our employees on the negative consequences of taking health and safety risks.

Our success will only be determined by demonstrated action and continuous improvement.

Safety Leadership

For more than 20 years, H&P measured safety success the same way other companies in our industry did – the absence of OSHA recordable injuries, declining lost time, restricted duty and medical treatment cases, declining total recordable injury rates ("TRIR") and the number of active rig years worked without an OSHA recordable injury or lost-time injury.

We now believe that measuring safety in this manner can be destructive to management’s efforts to build trust with field employees.

We have redefined safety success as the Control and Removal of Exposures (C.A.R.E.) for self and others and encourage employees to report near miss incidents with serious, life-altering or fatal injury potential, identifying and reporting serious injury exposures for which employees are personally recognized and rewarding monetarily for exemplifying our Actively C.A.R.E culture.

We believe trust is key to organizational health, as well as safety and operational success.

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We are committed to controlling and removing SIF exposures on any H&P location or operation.

H&P safety data shows that approximately 10 to 15 percent of all OSHA recordable injuries are events in which valuable lessons learned are produced and inform mitigation efforts to reduce potential serious injury in the future.

The remaining recordable cases may not provide the necessary learning opportunities to prevent future serious injury.

Similarly, the data also indicates that SIF potential incidents, all of which provide information to help prevent future serious injury or fatality, occur approximately 1.5 times more than the traditional TRIR.

We continue to track traditional safety metrics like TRIR and lost time injury rates in order to be responsive to client requests and to benchmark against existing industry data but we will have a proportionate response to these antiquated metrics.

Our safety success at H&P will be based on key performance indicators related to the controlling and removing of SIF exposure, such as SIF potential and SIF mitigated rates, and our vision for the future of safety at H&P will be guided by these principles.

Diversity, Equity & Inclusion

We believe that creating an environment where our employees feel valued and respected drives engagement, better leverages the unique talents and perspectives of our people to innovate and enhances our ability to attract and retain a diverse workforce.

H&P has employed a DE&I specialist, implemented a thriving Women of H&P Employee Resource Group, and established a DE&I Advisory Council with global employee representation.

Our commitments are evidenced by formalized policies regarding equal opportunity and a discrimination-free workplace.

We are actively tracking diversity data to better understand demographics within the organization.

Employee Benefits, Health and Wellness

H&P values its employees and believes benefit packages are essential to prioritizing the well-being of its staff and offering competitive compensation.

Select highlights of our benefits programs include:

• Medical, dental and vision insurance for all full-time employees, and all part-time employees working more than 20 hours per week, and their dependents;

• A 401(k) plan with Company match incentive for all full-time employees, and all part-time employees working more than 20 hours per week;

• Employer paid life insurance benefits, which include a life assistance program, identity theft protection, and travel assistance plan;

• The Employee Assistance Plan, which offers wellness support with counseling, legal assistance, financial coaching, and identity theft resolution;

• The H&P Way Fund, which provides financial assistance to H&P employees during unavoidable emergencies;

• Employee discounts for phone, computer, personal vehicle, car rental, and hotel purchases;

• An Educational Assistance Plan, which offers reimbursement of tuition fees for any employee pursuing an undergraduate degree and, in some cases, post-graduate degrees.

Insurance and Risk Management

Our operations are subject to a number of operational risks, including personal injury and death, environmental, and weather risks, which could expose us to significant losses and damage claims.

Our operations are subject to a number of operational risks, including personal injury and death, environmental, cyber, and weather risks, which could expose us to significant losses and damage claims.

We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.

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We also carry insurance with varying deductibles and coverage limits with respect to stacked rigs, offshore platform rigs, and “named wind storm” risk in the Gulf of Mexico.

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We have insurance coverage for comprehensive general liability, automobile liability, workers’ compensation and employer’s liability, and certain other specific risks.

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Environmental laws and regulations that apply to our operations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), the Resource Conservation and Recovery Act (each, as amended) and similar laws that provide for responses to, and liability for, air emissions, water discharges or releases of oil or hazardous substances into the environment, including damages to natural resources.

Applicable environmental laws and regulations also include similar foreign, state or local counterparts to the above-mentioned federal laws, which regulate air emissions, water discharges and hazardous substances and waste.

Environmental laws can have a material adverse effect on the drilling industry, including our operations, and compliance with such laws may require us to make significant capital expenditures, such as the installation of costly equipment or operational changes, and may affect the resale values or useful lives of our drilling rigs.

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Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business.

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We are also subject to the jurisdiction of the U.S.

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Sustainability

We marked our 100 year anniversary in 2020 in a cyclical industry that at times has proven to be highly volatile.

Much planning and work goes into our Company by all its employees, both past and present, to ensure our sustainability.

The Company continues to refine its comprehensive sustainability strategy rooted in our core value to "do the right thing," as discussed under "— Human Capital Objectives and Programs — Core Values and Culture." This strategy uses data to better understand our impacts in areas like emissions, diversity, and safety so we can make any necessary improvements.

Improving Lives Through Affordable and Responsible Energy

We believe affordable and responsible energy improves lives globally.

With a focus on leading-edge technology, we strive to deliver industry-leading efficiency, safety, and value while continuing to reduce the environmental impact of our solutions.

Energy has been essential to human life, but the forms of energy that have been relied on have evolved over time.

People have relied upon and harnessed energy from resources like fire, water, wind, horsepower, fossil fuels, nuclear, solar, and more, with each having its own unique societal benefits and costs.

At a certain point, the continued growth of the world’s population highlighted a need to capture more concentrated forms of energy, making a reliance on fossil fuels increasingly central.

H&P has helped its customers supply energy for more than a century, and we continue to innovate and improve the ways in which we can provide energy safely, reliably, and efficiently.

Through our work and the work of our customers, we have used our unique position and expertise to advance energy production, reliability, and affordability to people across the globe.

The Company continues to evolve and refine its comprehensive sustainability strategy rooted in our core value to "do the right thing," as discussed under "— Human Capital Objectives and Programs — Core Values and Culture." Our sustainability strategy uses data to better understand our impacts in areas like emissions, diversity, and safety.

Improving Lives Through Efficient and Responsible Energy

We believe efficient and responsible energy improves lives globally.

With a focus on leading-edge technology, we strive to deliver industry-leading efficiency, safety, and value while continuing to reduce our environmental impact.

Society’s general well-being relies on the energy industry to supply the power that sustains and drives our lives.

People have relied upon and harnessed energy from resources like fire, water, wind, animals both domesticated and wild, fossil fuels, nuclear, solar, and more, with each having its own unique societal benefits and costs.

Over time, the continued growth of the world’s population highlighted a need to capture more concentrated forms of energy, making a reliance on fossil fuels increasingly central.

Over the last several decades, those responsible for producing fossil fuels gained more expertise and became more specialized.

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Focused on Safer and More Efficient Drilling

We design, build and operate rigs that make drilling for oil and gas safer and more efficient.

We provide performance-driven drilling solutions that are intended to make oil and gas recovery safer and more economical or our customers.

Focused on the drilling segment of the oil and gas production value chain, we provide the expertise, technology and equipment to drill oil and gas wells for our customers - the exploration and production ("E&P") companies.

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Although many of the environmental and safety risks associated with the oil and gas sector fall outside of our operations, we remain committed to utilizing our expertise and advancing our technologies to aid our customers in minimizing personal and environmental risks and maximizing industry sustainability efforts.

Our customers are looking specifically to our expertise and technologies to help them minimize their environmental impact, reduce risks, and achieve their ESG performance targets.

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Below is a description of the roles that H&P plays, in the oil and gas value chain, as a drilling solutions provider in comparison to the roles that participants in other sectors of the oil and gas industry play.

• makes drilling for oil safer and more efficient;

build and renovates drilling rigs at two industrial facilities in Texas and Oklahoma;

• builds and renovates drilling rigs at two industrial facilities in Texas and Oklahoma;

• oversees drilling operations on its rigs on customer sites;

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• makes significant and impactful investments in research and development and new technologies;

employs over 4,100 people;

provides robust benefit plans to protect the physical and financial health of its valued employees.

OTHER SECTORS OF THE OIL AND GAS INDUSTRY:

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Human Capital

For a description of our recruiting practices, education and training for employees, and employee benefits, see "— Human Capital Programs and Objectives" above.

For a description of our recruiting practices, education and training for employees, and employee benefits, see "— Human Capital Objectives and Programs" above.

Available Information

Our website is located at www.hpinc.com.

Our website is located at www.helmerichpayne.com.

Annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K, and amendments to those reports, earnings releases, and financial statements are made available free of charge on the investor relations section of our website as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission ("SEC").

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Annual reports, quarterly reports, current reports, amendments to those reports, earnings releases, financial statements and our various corporate governance documents are also available free of charge upon written request.

Investors and others should note that we announce material financial information to our investors using our investor relations website (https://helmerichandpayneinc.gcs-web.com/), SEC filings, press releases, public conference calls and webcasts.

Investors and others should note that we announce material financial information to our investors using our investor relations website (https://ir.helmerichpayne.com/websites/helmerichandpayne/English/0/investor-relations.html), SEC filings, press releases, public conference calls and webcasts.

We use these channels as well as social media to communicate with our stockholders and the public about our company, our services and other issues.

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Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website.

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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-K

Item 1. Business