What changed in this filing

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Item 1. Financial Statements

2022-01-31 compared with 2021-07-28 · 294 added, 373 removed, 546 unchanged (55% of the section changed)

1 unchanged sentence

HELMERICH & PAYNE, INC.

Condensed Consolidated Balance Sheets

June 30, September 30,

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30,

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

13 unchanged sentences

Intangible assets, net 72,042 73,838

Operating lease right-of-use asset 53,116 44,583

Operating lease right-of-use assets 47,356 49,187

Other assets, net 12,559 16,153

1 unchanged sentence

Total assets $ 4,392,254 $ 5,034,128

Liabilities and Shareholders’ Equity

LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities:

1 unchanged sentence

Dividends payable 26,819 27,332

Current portion of long-term debt, net — 483,486

Accrued liabilities 263,125 283,492

8 unchanged sentences

Shareholders' Equity:

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of 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

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of both December 31, 2021 and September 30, 2021, and 105,731,795 and 107,898,859 shares outstanding as of December 31, 2021 and September 30, 2021, respectively

11,222 11,222

3 unchanged sentences

Accumulated other comprehensive loss ( 19,850 ) ( 20,244 )

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

Treasury stock, at cost, 6,491,070 shares and 4,324,006 shares as of December 31, 2021 and September 30, 2021, respectively

( 224,956 ) ( 181,638 )

3 unchanged sentences

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Operations

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts) 2021 2020

11 unchanged sentences

Restructuring charges 742 138

(Gain) loss on sale of assets ( 3,434 ) ( 4,201 ) 2,745 ( 18,790 )

Gain on reimbursement of drilling equipment ( 5,254 ) ( 2,191 )

Other (gain) loss on sale of assets 1,029 ( 10,145 )

452,393 339,600

3 unchanged sentences

Interest expense ( 6,114 ) ( 6,139 )

Gain (loss) on investment securities 2,409 2,267 7,853 ( 7,325 )

Gain on sale of subsidiary — — — 14,963

Gain on investment securities 47,862 2,924

Loss on extinguishment of debt ( 60,083 ) —

Other ( 542 ) ( 1,480 )

3 unchanged sentences

Loss from continuing operations ( 51,331 ) ( 77,924 )

Income from discontinued operations before income taxes 1,150 9,151 10,936 22,675

Income (loss) from discontinued operations before income taxes ( 31 ) 7,493

Income tax provision — —

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

Income (loss) from discontinued operations ( 31 ) 7,493

NET LOSS $ ( 51,362 ) $ ( 70,431 )

12 unchanged sentences

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Comprehensive Loss

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2021 2020

1 unchanged sentence

Other comprehensive income, net of income taxes:

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

Net change related to employee benefit plans, net of income taxes of $( 0.1 ) million for the three months ended December 31, 2021 and 2020

Other comprehensive income 394 457

2 unchanged sentences

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended June 30, 2021

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended December 31, 2021 and 2020

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

5 unchanged sentences

Balance, September 30, 2021 112,222 $ 11,222 $ 529,903 $ 2,573,375 $ ( 20,244 ) 4,324 $ ( 181,638 ) $ 2,912,618

Comprehensive income:

Comprehensive income (loss):

Net loss — — — ( 51,362 ) — — — ( 51,362 )

4 unchanged sentences

Stock-based compensation — — 6,218 — — — — 6,218

Cumulative effect adjustment for adoption of ASU No.

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

Other — — ( 381 ) — — — — ( 381 )

Share repurchases — — — — — 2,548 ( 60,358 ) ( 60,358 )

Balance, December 31, 2021 112,222 $ 11,222 $ 514,969 $ 2,495,206 $ ( 19,850 ) 6,491 $ ( 224,956 ) $ 2,776,591

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

Comprehensive income:

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

Other comprehensive income — — — — 457 — — 457

Dividends declared ($ 0.25 per share)

— — — ( 27,268 ) — — — ( 27,268 )

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

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

Other — — ( 234 ) — — — — ( 234 )

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

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

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended June 30, 2020

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

6 unchanged sentences

Comprehensive income:

Net income — — — 30,605 — — — 30,605

Other comprehensive income — — — — 516 — — 516

Dividends declared ($ 0.71 per share)

— — — ( 78,652 ) — — — ( 78,652 )

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

Vesting of restricted stock awards, net of shares withheld for employee taxes 71 7 ( 18,126 ) — — ( 258 ) 14,718 ( 3,401 )

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

Balance, December 31, 2019

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

Comprehensive income:

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

Other comprehensive income — — — — 516 — — 516

Dividends declared ($ 0.71 per share)

— — — ( 76,754 ) — — — ( 76,754 )

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

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

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

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

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

Comprehensive income:

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

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

Other comprehensive income — — — — 457 — — 457

3 unchanged sentences

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

Balance, June 30, 2020

Cumulative effect adjustment for adoption of ASU No.

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

Other — — ( 381 ) — — — ( 381 )

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

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

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Cash Flows

Nine Months Ended June 30,

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

(in thousands) 2021 2020

1 unchanged sentence

NET LOSS $ ( 51,362 ) $ ( 70,431 )

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

Adjustment for (income) loss from discontinued operations 31 ( 7,493 )

Loss from continuing operations ( 51,331 ) ( 77,924 )

3 unchanged sentences

Amortization of debt discount and debt issuance costs 239 460

Loss on extinguishment of debt 60,083 —

Provision for credit loss ( 112 ) ( 465 )

Provision for obsolete inventory ( 708 ) 216

Stock-based compensation 6,218 7,451

(Gain) loss on investment securities ( 7,853 ) 7,325

(Gain) loss on sale of assets 2,745 ( 18,790 )

Gain on sale of subsidiary — ( 14,963 )

Gain on investment securities ( 47,862 ) ( 2,924 )

Gain on reimbursement of drilling equipment ( 5,254 ) ( 2,191 )

Other (gain) loss on sale of assets 1,029 ( 10,145 )

Deferred income tax benefit ( 17,750 ) ( 15,016 )

7 unchanged sentences

Accrued liabilities ( 17,592 ) ( 6,674 )

Deferred income tax liability 69 16

Other noncurrent liabilities ( 18,675 ) 1,818

Net cash provided by operating activities from continuing operations 89,862 446,291

Net cash used in operating activities from continuing operations ( 3,705 ) ( 19,601 )

Net cash used in operating activities from discontinued operations ( 13 ) ( 3 )

Net cash provided by operating activities 89,821 446,253

Net cash used in operating activities ( 3,718 ) ( 19,604 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 44,014 ) ( 13,985 )

Purchase of investments ( 236,784 ) ( 78,303 )

Proceeds from sale of investments 139,430 66,033

Proceeds from sale of subsidiary — 15,056

Other capital expenditures related to assets held-for-sale ( 3,877 ) —

Purchase of short-term investments ( 47,083 ) ( 94,151 )

Purchase of long-term investments ( 9,015 ) ( 1,000 )

Proceeds from sale of short-term investments 37,777 37,097

Proceeds from asset sales 21,483 6,836

Other — ( 50 )

Net cash used in investing activities ( 44,729 ) ( 65,203 )

1 unchanged sentence

Dividends paid ( 27,320 ) ( 26,918 )

Proceeds from stock option exercises — 4,100

Payments for employee taxes on net settlement of equity awards ( 4,113 ) ( 2,119 )

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

Payments for early extinguishment of long-term debt ( 487,148 ) —

Make-whole premium payment ( 56,421 ) —

Share repurchases ( 60,358 ) —

Other ( 719 ) ( 446 )

Net cash used in financing activities ( 635,610 ) ( 29,287 )

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

Net decrease in cash and cash equivalents and restricted cash ( 684,057 ) ( 114,094 )

Cash and cash equivalents and restricted cash, beginning of period 936,716 536,747

20 unchanged sentences

Our real estate operations, our incubator program for new research and development projects and our wholly-owned captive insurance companies are included in "Other." Refer to Note 14—Business Segments and Geographic Information for further details on our reportable segments.

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

Our North America Solutions operations are primarily located in Colorado, Louisiana, Montana, New Mexico, North Dakota, Nevada, 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:

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

Argentina, Bahrain, Colombia and United Arab Emirates.

We also own and operate limited commercial real estate properties.

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

Fiscal Year 2020 Dispositions

In December 2019, we closed on the sale of a wholly-owned subsidiary of Helmerich & Payne International Drilling Co.

("HPIDC"), TerraVici Drilling Solutions, Inc.

("TerraVici").

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

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

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

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

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RISKS AND UNCERTAINTIES

7 unchanged sentences

and its domestic and foreign subsidiaries.

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

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

All intercompany accounts and transactions have been eliminated in consolidation.

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

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

All intercompany accounts and transactions have been eliminated upon consolidation.

COVID-19 and OPEC+ Production Impacts

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

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

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

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

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

Despite the increased availability of vaccines in certain jurisdictions, the COVID-19 outbreak may worsen during the upcoming months, including as a result of the emergence of more infectious strains of the virus, 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 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;

The ongoing COVID-19 pandemic has resulted in significant global economic disruption, including North America and many of the other geographic areas where we operate, or where our customers are located, or suppliers or vendors operate.

As the global economy and demand for crude oil continues to recover from the global impact of the COVID-19 pandemic, the persistent effects from new variants, including Delta and Omicron, have further constrained recovery of global economic activity and levels of crude oil demand.

In addition, the reinstatement of travel restrictions in certain countries where we operate, including the temporary closure of some international borders, has resulted in periodic travel delays and cancellations for some of our staff and rotator personnel.

To date, these personnel delays have not impacted our ability to fulfill our contractual obligations under contracts with customers, but could potentially impact these contracts in the future.

While many governmental authorities have implemented multi-step policies towards the goal of reopening their economies, certain jurisdictions have experienced reinstated certain restrictions due to a rise in COVID-19 cases.

Overall this impact has been uneven, as other jurisdictions have not adjusted reopening initiatives and have completed the reopening process despite increases in COVID-19 cases.

Despite the increased availability of vaccines in most jurisdictions, the COVID-19 pandemic is predicted to continue through the upcoming months, specifically as a result of the proliferation of the Omicron variant and its high transmission rate.

Vaccine hesitancy by some portions of the population and a full return to pre-pandemic business and social activities, may cause some governmental authorities in highly impacted areas to further reconsider restrictions on business and social activities.

In the event that some governmental authorities increase or reinstate restrictions, the successful reopening of the economy may be curtailed.

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

Depressed economic conditions exacerbated by COVID-19 restrictions in several foreign jurisdictions where we operate have led to an increase in community protests and labor strikes that have interrupted transportation or other services, which have resulted in periodic short-term suspensions of our operations.

With the global spread of the Omicron variant, this type of temporary impact may continue to occur from time to time as a result of persistent social unrest and reaction to governmental restrictions.

In addition, the risk of infection and associated health risks with the new variants of COVID-19, has altered and will continue to alter behaviors of consumers and policies of companies around the world.

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

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

We work to comply with all regulations of governmental authorities in the jurisdictions where our operations reside.

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

3 unchanged sentences

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+.

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 pandemic, 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 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 ultimate extent of the impact of COVID-19 on our business, financial condition and results of operations will depend largely on future developments, including the duration and spread of COVID-19 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, timely distribution and acceptance of effective treatments and vaccines worldwide, all of which are highly uncertain and cannot be predicted with certainty at this time.

At December 31, 2021, the Company had cash and cash equivalents and short-term investments of $ 441.3 million.

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

As of June 30, 2021, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of December 31, 2021, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

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

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

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

Furthermore, the Company 2031 Notes (as defined within Note 6—Debt) do not mature until September 29, 2031.

On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 4.65 percent unsecured senior notes due 2025 (the "2025 Notes") at a redemption price calculated in accordance with the indenture governing the 2025 Notes, plus accrued and unpaid interest on the 2025 Notes to be redeemed.

On September 29, 2021, we issued $ 550.0 million aggregate principal amount of the 2.90 percent unsecured senior notes due 2031 (the "2031 Notes").

The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021.

The 2031 Notes mature on September 29, 2031.

On October 27, 2021, we redeemed all of the outstanding 2025 Notes.

As a result, these notes were included in the current portion of long-term debt on our Consolidated Balance Sheets as of September 30, 2021.

The associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment.

These amounts were recorded in Loss on Extinguishment of Debt in our Unaudited Condensed Consolidated Statements of Operations during the three months ended December 31, 2021.

Refer to Note 6—Debt for further details.

We lease various offices, warehouses, equipment and vehicles.

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

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

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

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 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 $ 16.4 million as of June 30, 2021.

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

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

We had restricted cash of $ 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.

We had restricted cash of $ 18.5 million and $ 48.7 million at December 31, 2021 and 2020, respectively, and $ 19.2 million and $ 48.9 million at September 30, 2021 and 2020, respectively.

Of the total restricted cash at December 31, 2021 and September 30, 2021, $ 1.1 million and $ 1.5 million, respectively, is related to the acquisition of drilling technology companies, and $ 17.4 million and $ 17.7 million, respectively, represents an 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:

June 30, September 30,

December 31, September 30,

(in thousands) 2021 2020 2021 2020

4 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 252,659 $ 422,653 $ 936,716 $ 536,747

During the three months ended December 31, 2021, our cash, cash equivalents, and restricted cash balance decreased approximately $ 684.1 million compared to our balance at September 30, 2021.

This change was primarily driven by the redemption of all the outstanding 2025 Notes, resulting in a cash outflow of $ 487.1 million.

Additionally, the associated make-whole premium of $ 56.4 million was paid during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment.

Recently Issued Accounting Updates

3 unchanged sentences

ASUs not listed below were assessed and determined to be either not applicable, clarifications of ASUs listed below, immaterial, or already adopted by the Company.

The following table provides a brief description of recent accounting pronouncements and our analysis of the effects on our financial statements:

The following table provides a brief description of a recently adopted accounting pronouncement and our analysis of the effects on our financial statements:

Effect on the Financial Statements or Other Significant Matters

Recently Adopted Accounting Pronouncements

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

This ASU introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses.

The new model will apply to:

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

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

October 1, 2020

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

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

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

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

Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans

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

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

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):

9 unchanged sentences

October 1, 2021

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

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

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

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

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

We adopted this ASU during the first quarter of fiscal year 2022.

The adoption did not have a material effect on our Unaudited Condensed Consolidated Financial Statements and disclosures.

Self-Insurance

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.

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."

Our wholly-owned insurance captives ("Captives") incurred direct operating costs consisting primarily of $( 2.2 ) million and $ 0.5 million in adjustments to accruals for estimated losses allocated to the Captives and rig casualty insurance premiums of $ 8.8 million and $ 2.5 million during the three months ended December 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 Captives during the three months ended December 31, 2021 and 2020 amounted to $ 13.6 million and $ 7.1 million, respectively, which were eliminated upon consolidation.

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 .

This program is reviewed at the end of each policy year by an outside actuary.

Our medical stop loss operating expenses for the three months ended December 31, 2021 and 2020 were $ 3.2 million and $ 2.3 million, respectively.

International Solutions Drilling Risks

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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.

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

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

In Argentina, while our dayrate is denominated in U.S.

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

dollars, including controls that were implemented in September 2019.

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

From September 2019 through 2021, Argentina implemented additional currency controls in an effort to preserve Argentina's U.S.

dollar reserves.

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

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

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

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

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

For the three and nine months ended June 30, 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.

For the three months ended December 31, 2021 and 2020, we recorded aggregate foreign currency losses of $ 1.0 million and $ 1.8 million , respectively.

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

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

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

As of December 31, 2021, our cash balance in Argentina was $ 39.6 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 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.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three months ended December 31, 2021, approximately 9.3 percent of our operating revenues were generated from international locations in our drilling business compared to 4.4 percent during the three months ended December 31, 2020.

During the three months ended December 31, 2021, approximately 77.1 percent of operating revenues from international locations were from operations in South America, compared to 18.1 percent during the three months ended December 31, 2020.

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 consist of an uncertain tax liability related to the country of Venezuela.

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

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

The activity for the three and nine months ended June 30, 2021 was primarily due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuela Bolivar.

The activity for the three months ended December 31, 2021 and 2020 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 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 was approximately 4,597,200 Bolivars per United States dollar at December 31, 2021, compared to 4,181,782 and 1,107,199 Bolivars per United States dollar at September 30, 2021, and December 31, 2020, respectively.

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

NOTE 4 PROPERTY, PLANT AND EQUIPMENT

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

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

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

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

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 $ 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.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 98.6 million and $ 105.1 million, including $ 1.3 million and $ 0.3 million in abandonments, for the three months ended December 31, 2021 and 2020, respectively.

Assets Held-for-Sale

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Sale of assets held-for-sale ( 9,657 )

Balance at June 30, 2021 $ 10,088

Balance at December 31, 2021

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 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 book values of those assets were written down to $ 13.5 million, which represents their fair value less estimated costs to sell, and were reclassified as held-for-sale in the second and third quarters of fiscal year 2021.

During the three months ended December 31, 2021, we completed the sale of a portion of the assets with a net book value of $ 0.9 million that were classified as held-for-sale as September 30, 2021.

During September 2021, the Company agreed to sell eight FlexRig ® land rigs with an aggregate net book value of $ 55.6 million to ADNOC Drilling Company P.J.S.C.

("ADNOC Drilling") for $ 86.5 million.

Two of the eight rigs were already located in the U.A.E where ADNOC Drilling is domiciled with the remaining six rigs to be shipped from the United States.

We received the $ 86.5 million in cash consideration in advance of delivering the rigs.

As part of the sales agreement, the rigs will be delivered and commissioned in stages over a twelve-month period subject to acceptance upon successful completion of final inspection on customary terms and conditions.

No rigs have been delivered to ADNOC Drilling as of December 31, 2021 and, therefore, the total cash proceeds of $ 86.5 million are recorded in Accrued Liabilities within our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2021.

As a result, these rigs are classified as held-for-sale in the Unaudited Condensed Consolidated Balance Sheets until each rig is delivered, at which time any related gain/loss on the sale will be recognized in the Unaudited Condensed Consolidated Statement of Operations.

The rigs' fair value less estimated cost to sell of $ 29.0 million, including approximately $ 24.0 million of cash costs to be incurred, approximated their net book values at December 31, 2021.

Of the estimated $ 24.0 million of cash costs to be incurred, we paid approximately $ 3.9 million in cash charges during the three months ended December 31, 2021.

During the fiscal year ended September 30, 2021, we formalized a plan to sell assets related to two of our lower margin service offerings, trucking and casing running assets, which contributed approximately 2.8 percent to our consolidated revenue during fiscal year 2021, all within our North America Solutions segment.

The combined net book values of these assets of $ 23.2 million were written down to their combined fair value less estimated cost to sell of $ 8.8 million, and were reclassified as held-for-sale during the fourth quarter of fiscal year 2021.

During the three months ended December 31, 2021, we closed on the sale of these assets in two separate transactions.

The sale of our trucking assets was completed on November 3, 2021 while the sale of our casing running assets was completed on November 15, 2021 for total consideration less costs to sell of $ 6.0 million, in addition to the possibility of future earnout revenue, resulting in a loss of $ 3.4 million.

Losses related to the sale of these assets are recorded in Other (Gain) Loss on Sale of Assets within our Unaudited Condensed Consolidated Statements of Operations.

During the three months ended December 31, 2021, we identified two partial rig substructures and two international FlexRig ® drilling rigs that met the asset held-for-sale criteria and were reclassified as assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

The combined net book value of the rig substructures of $ 2.0 million were written down to their estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.9 million within our North America Solutions segment during the three months ended December 31, 2021 in the Unaudited Condensed Consolidated Statement of Operations.

In conjunction with establishing a plan to sell the two international FlexRig ® drilling rigs, we recognized a non-cash impairment charge of $ 2.5 million within our International Solutions segment during the three months ended December 31, 2021 in the Unaudited Condensed Consolidated Statement of Operations, as the rigs aggregate net book value of $ 3.4 million exceeded the fair value of the rigs less estimated cost to sell of $ 0.9 million.

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

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

During the three months ended March 31, 2020, several significant economic events took place that severely impacted the demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with a decrease in the demand due to the COVID-19 pandemic.

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

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

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

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

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

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the North America Solutions and International Solutions 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 nine months ended June 30, 2020.

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

Gain/Loss on Sale of Assets

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 during the nine months ended June 30, 2021.

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.

During the three months ended December 31, 2021, we had a gain of $ 5.3 million related to customer reimbursement for the replacement value of lost or damaged drill pipe.

Gains related to these asset sales are recorded in Gain on Reimbursement of Drilling Equipment within our Unaudited Condensed Consolidated Statements of Operations.

During the same fiscal period, we also closed on the sale of our trucking and casing running assets as mentioned above.

During the three months ended December 31, 2020, completed 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 and recorded in Other (Gain) Loss on Sale of Assets within our Unaudited Condensed Consolidated Statements of Operations.

We also had a gain of $ 2.2 million on asset sales related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations.

Gains related to these asset sales are recorded in Gain on Reimbursement of Drilling Equipment within our Unaudited Condensed Consolidated Statements of 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 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 .

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

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

Intangible Assets

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Intangible assets consist of the following:

June 30, 2021 September 30, 2020

December 31, 2021 September 30, 2021

(in thousands) Weighted Average Estimated Useful Lives Gross

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$ 100,461 $ 28,419 $ 72,042 $ 100,461 $ 26,623 $ 73,838

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 nine months ended June 30, 2020.

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

A mortization is estimated to be approximately $ 5.4 million for the remainder of fiscal year 2022, approximately $ 6.5 million for fiscal year 2023, and approximately $ 6.4 million for fiscal years 2024, 2025 and 2026.

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

June 30, 2021 September 30, 2020

December 31, 2021 September 30, 2021

(in thousands) Face

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Due March 19, 2025 $ — $ — $ — $ 487,148 $ ( 3,662 ) $ 483,486

Due September 29, 2031 550,000 ( 7,764 ) 542,236 550,000 ( 8,003 ) 541,997

550,000 ( 7,764 ) 542,236 1,037,148 ( 11,665 ) 1,025,483

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Long-term debt $ 550,000 $ ( 7,764 ) $ 542,236 $ 550,000 $ ( 8,003 ) $ 541,997

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

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

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

2.90 % Senior Notes due 2031 On September 29, 2021, we issued $ 550.0 million aggregate principal amount of 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S.

persons in transactions outside the United States pursuant to Regulation S under the Securities Act (“Regulation S”).

Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.

The 2031 Notes will mature on September 29, 2031 and bear interest at a rate of 2.90 percent per annum.

The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens;

engage in sale and lease-back transactions;

and consolidate, merge or transfer all or substantially all of the assets of the Company.

The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes.

4.65 % Senior Notes due 2025 On December 20, 2018, we issued approximately $ 487.1 million in aggregate principal amount of the 2025 Notes.

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

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

On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 2025 Notes at a redemption price calculated in accordance with the indenture governing the 2025 Notes, plus accrued and unpaid interest on the 2025 Notes to be redeemed.

The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand.

The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021.

On October 27, 2021, we redeemed all of the outstanding 2025 Notes.

As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on Extinguishment of Debt on our Unaudited Condensed Consolidated Statements of Operations.

Credit Facilities

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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 June 30, 2021, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of December 31, 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 7—Debt to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K.

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.

As of December 31, 2021, we had five separate bi-lateral credit facilities with banks with an aggregate outstanding balance of $ 30.4 million.

As of December 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, $ 5.8 million of financial guarantees were outstanding as of December 31, 2021.

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

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

At December 31, 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 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.

Adjustments to the effective tax rate and estimates could 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 December 31, 2021 and 2020 was $ 7.6 million and $ 18.1 million, respectively, resulting in effective tax rates of 12.8 percent and 18.9 percent, respectively.

Effective tax rates differ from the U.S.

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.

federal statutory rate of 21.0 percent for the three months ended December 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 months ended December 31, 2021 includes a federal tax benefit from the foreign-derived intangible income deduction.

The discrete adjustments for the three months ended December 31, 2021 and 2020 are primarily due to tax expense related to equity compensation of $ 3.5 million and $ 4.1 million, respectively.

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

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

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

However, we do not expect the 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.

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.

During the three months ended December 31, 2021, we repurchased 2.5 million common shares at an aggregate cost of $ 60.4 million, which are held as treasury shares.

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

A cash dividend of $ 0.25 per share was declared on September 1, 2021 for shareholders of record on November 23, 2021, and was paid on December 1, 2021.

An additional cash dividend of $ 0.25 per share was declared on December 10, 2021 for shareholders of record on February 11, 2022, payable on February 28, 2022.

As a result, we recorded a dividend payable of $ 26.8 million within Dividends Payable on our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2021.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands) June 30,

(in thousands) December 31,

2021 September 30,

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$ ( 19,850 ) $ ( 20,244 )

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

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three months ended December 31, 2021:

(in thousands) Defined Benefit Pension Plan

Balance at beginning of period $ ( 20,244 )

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Net current-period other comprehensive income 394

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

Balance at December 31, 2021 $ ( 19,850 )

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 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.

During the three months ended December 31, 2021, we recognized no early termination revenue associated with term contracts compared to $ 5.8 million during the three months ended December 31, 2020.

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

On November 12, 2021, we settled a drilling contract dispute related to drilling services provided from fiscal years 2016 through 2019 with YPF S.A.

(Argentina) ("YPF").

The settlement required that YPF make a one-time cash payment to H&P in the amount of $ 11.0 million and enter into drilling service contracts for three drilling rigs, each with multi-year terms.

In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued disputed amounts.

Total revenue recognized as a result of the settlement in the amount of $ 16.4 million is included in Drilling Services Revenue within the International Solutions segment on our Unaudited Condensed Consolidated Statements of Operations for the three months ended December 31, 2021.

Contract Costs

We had capitalized fulfillment costs of $ 3.6 million and $ 6.2 million as of June 30, 2021 and September 30, 2020, respectively.

We had capitalized fulfillment costs of $ 7.0 million and $ 4.3 million as of December 31, 2021 and September 30, 2021, respectively.

Remaining Performance Obligations

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.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of December 31, 2021 was approximately $ 723.5 million, of which approximately $ 499.6 million is expected to be recognized during the remainder of fiscal year 2022, approximately $ 168.7 million during fiscal year 2023, and approximately $ 74.9 million during fiscal year 2024 and thereafter.

These amounts do not include anticipated contract renewals.

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

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However, the impact of the COVID-19 pandemic is inherently uncertain, and, as a result, the Company is unable to reasonably estimate the duration and ultimate impacts of the pandemic, including the effect it may have on our contractual obligations with our customers.

Subsequent to December 31, 2021, we received notice from an International Solutions customer of their intent to early terminate a fixed-term drilling services contract.

Due to the notification being received subsequent to December 31, 2021, the backlog as of December 31, 2021 includes approximately $ 22.0 million of future dayrate revenue related to this contract.

Contract Assets and Liabilities

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

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

Contract assets $ 6,577 $ 2,367

(in thousands) June 30, 2021

The following tables summarize the balances of our contract assets (net of allowance for estimated credit losses) and liabilities at the dates indicated below:

(in thousands) December 31, 2021 September 30, 2021

Contract assets, net $ 4,784 $ 4,513

(in thousands) December 31, 2021

Contract liabilities balance at September 30, 2021 $ 9,286

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Revenue recognized during the period ( 11,073 )

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

Contract liabilities balance at December 31, 2021 $ 12,431

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 June 30, Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2021 2020

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Restricted Stock

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:

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

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

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Forfeited ( 3 ) 28.70

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

Non-vested restricted stock outstanding at December 31, 2021 1,563 $ 30.54

(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 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.

During the three months ended December 31, 2021, no restricted phantom stock units were granted or vested.

(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 June 30, 2021 and changes in non-vested performance units outstanding during the nine months then ended is presented below:

A summary of the status of our performance-vested restricted share units ("performance units") as of December 31, 2021 and changes in non-vested performance units outstanding during the three months 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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Dividend equivalent right performance units credited 9 41.55

Forfeited ( 11 ) 43.40

Non-vested performance units outstanding at June 30, 2021 (1)

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

(1) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 291,786 performance units which is calculated based on the payout percentage for the completed performance period.

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If we meet the specified maximum performance criteria, approximately 341,233 additional performance units could vest or become eligible to vest.

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

Such performance unit grants consist of two separate components.

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

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

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

The vesting period for the performance share units granted in December 2018 ended on December 31, 2021 and the performance units eligible to vest were settled in shares of common stock in January 2022.

Stock-based compensation expense related to these grants has been fully recognized as of December 31, 2021.

NOTE 11 EARNINGS (LOSSES) PER COMMON SHARE

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Three Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts) 2021 2020

Loss from continuing operations $ ( 51,331 ) $ ( 77,924 )

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

Income (loss) from discontinued operations ( 31 ) 7,493

Net loss ( 51,362 ) ( 70,431 )

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( 51,736 ) ( 70,792 )

Adjustment for diluted earnings (loss) per share:

Effect of reallocating undistributed earnings of unvested shareholders — — — —

Numerator for diluted earnings (loss) per share:

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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 (loss) per share calculation since diluted earnings per share excluded any assumed exercise of equity awards.

Accordingly, our diluted loss per share calculation was equivalent to our basic loss per share calculation since diluted loss 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

June 30, Nine Months Ended

(in thousands, except per share amounts)

2021 2020 2021 2020

Potentially dilutive shares excluded as anti-dilutive 2,891 4,494

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

Both realized and unrealized gains and losses on trading securities are included in other income (expense) in the Unaudited Condensed Consolidated Statements of Operations.

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.

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

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Recurring Fair Value Measurements

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

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which we classify the fair value measurement.

December 31, 2021

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

Short-term investments:

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Total short-term investments 207,068 3,667 203,401 —

Other current assets 48,434 48,434 — —

Non-qualified supplemental savings plan 19,455 19,455 — —

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

Equity and debt securities 17,502 14,002 — 3,500

Equity investment in ADNOC Drilling 147,786 147,786 — —

Total investments 184,743 181,243 — 3,500

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

Contingent consideration $ 3,096 $ — $ — $ 3,096

September 30, 2021

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

Recurring fair value measurements:

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

Short-term investments:

Certificates of deposit 1,370 — 1,370 —

Corporate debt securities $ 192,950 $ — $ 192,950 $ —

government and federal agency securities 5,750 5,750 — —

Other 1,992 1,992 — —

Total short-term investments 198,700 5,750 192,950 —

Other current assets 45,577 45,577 — —

Non-qualified supplemental savings plan 18,221 18,221 — —

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

Equity and debt securities 14,358 13,858 — 500

Cornerstone investment in ADNOC Drilling 100,000 100,000 — —

Total investments 132,579 132,079 — 500

Other assets 3,286 3,286 — —

Total assets measured at fair value $ 657,667 $ 573,649 $ 83,518 $ 500

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

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.

The current portion of restricted amounts are included in prepaid expenses and other, and the noncurrent portion is included in other assets.

Contingent consideration $ 2,996 $ — $ — $ 2,996

Short-term investments include securities classified as trading securities.

Both realized and unrealized gains and losses on trading securities are included in other income (expense) in the Unaudited Condensed Consolidated Statements of Operations.

The securities are recorded at fair value.

Level 1 inputs include U.S.

agency issued debt securities with active markets and money market funds.

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

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:

Level 2 inputs included corporate bonds measured using broker quotations that utilize observable market inputs.

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

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

Additionally we hold equity securities in Schlumberger, Ltd., which is classified as Level 1 and based on the quoted stock price.

Our long-term debt securities are classified as available-for-sale and considered a Level 3 input based on the absence of market activity.

During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced IPO, representing 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake and subject to a three-year lockup period.

ADNOC Drilling's IPO was completed on October 3, 2021 and its shares are listed and traded on the Abu Dhabi Securities Exchange (ADX).

Our investment is classified as a long-term equity investment within Investments in our Unaudited Condensed Consolidated Balance Sheets.

We have applied the guidance in Topic 820, Fair Value Measurement, in the initial accounting of the transaction and the subsequent revaluation of the investment balance, concluding that a contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

During the three months ended December 31, 2021, we recognized a gain of $ 47.8 million in our Unaudited Condensed Consolidated Statement of Operations.

As of December 31, 2021, this investment is classified as a Level 1 investment and based on the quoted stock price on the Abu Dhabi Securities Exchange, without applying a discount factor.

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

The contingent considerations are recorded in Accrued Liabilities and Other Noncurrent Liabilities in the Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the milestone achievement.

The following table reconciles changes in the fair value for the periods presented below:

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2021 2020

Net liabilities at beginning of period $ 8,973 $ 11,823 $ 9,123 $ 18,373

Liabilities at beginning of period $ 2,996 $ 9,123

Additions 500 —

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( 250 ) ( 250 )

Net liabilities at end of period $ 9,796 $ 12,723 $ 9,796 $ 12,723

Liabilities at end of period $ 3,096 $ 8,973

(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 June 30, 2021:

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

$ 700 Monte Carlo simulation Discount rate 1.2 %

Revenue Volatility 18.4 %

Risk free rate 2.0 %

$ 9,096 Probability analysis Discount rate 0.5 %

Payment amounts $ 5,250 - $ 9,096

Probabilities 5 % - 95 %

(1) The weighted average of the payment amounts and the probabilities (Level 3 unobservable inputs), associated with the contingent consideration valued using probability analysis, were weighted by the relative undiscounted fair value of payment amounts and of probability payment amounts, respectively.

The above significant unobservable inputs are subject to change based on changes in economic and market conditions.

The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date.

The significant unobservable inputs used in the fair value measurement of the contingent consideration using Monte Carlo simulation are (i) discount rate, (ii) revenue volatility and (iii) risk-free rate.

Significant increases or decreases in the discount rate and risk-free rate in isolation would result in a significantly lower or higher fair value measurement.

Significant changes in revenue volatility in isolation would result in a significantly lower or higher fair value measurement.

The significant unobservable inputs used in the fair value measurement of the contingent consideration using probability analysis are (i) discount rate, (ii) payment amounts and (iii) probabilities.

Significant increases or decreases in the discount rate in isolation would result in a significantly lower or higher fair value measurement.

Significant increases or decreases in the payment amounts or probabilities in isolation would result in a significantly higher or lower fair value measurement.

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

The following information presents the supplemental fair value information about long-term fixed-rate debt at June 30, 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

Fair value of long-term fixed-rate debt 542.4 534.5

The fair value for the $ 542.4 million fixed-rate debt is based on broker quotes.

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

Nonrecurring Fair Value Measurements

We have certain assets that are subject to measurement at fair value on a nonrecurring basis.

For these nonfinancial assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired.

These assets generally include assets held-for-sale, property, plant and equipment, goodwill, intangible assets, and operating lease right-of-use assets.

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.

Further details on any changes in valuation of these assets is provided in their respective footnotes.

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 on a nonrecurring basis.

As of December 31, 2021, the carrying value of these assets were equal to their fair value as no impairments have been taken to date.

The following tables summarize our financial assets measured at fair value on a non-recurring basis:

December 31, 2021

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

Equity securities $ 8,881 $ — $ — $ 8,881

September 30, 2021

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

Equity securities $ 2,865 $ — $ — $ 2,865

As of December 31, 2021 and September 30, 2021 the aggregate balance of our debt and equity security investments in geothermal was $ 11.8 million and $ 2.7 million, respectively.

These investments include assets measured on both a recurring and nonrecurring basis.

The following table reconciles changes in the fair value for our equity securities without readily determinable fair values that are classified as Level 3 for the periods presented below:

Three Months Ended

(in thousands) 2021 2020

Assets at beginning of period $ 2,865 $ —

Purchases 6,016 1,000

Assets at end of period $ 8,881 $ 1,000

Other Financial Instruments

The carrying amount of cash and cash equivalents and restricted cash approximates fair value due to the short-term nature of these items.

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 value of accounts receivables, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at December 31, 2021 and September 30, 2021.

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

(in millions) December 31, 2021 1

September 30, 2021

Current portion of long-term debt

Carrying value $ — $ 483.5

Fair value — 541.6

Long-term debt, net

Carrying value 542.2 542.0

Fair value 542.5 554.3

(1) On October 27, 2021 we redeemed the outstanding 2025 Notes.

See Note 6—Debt to our Consolidated Financial Statements

The fair values of the current and long-term fixed-rate debt is based on broker quotes as of December 31, 2021 and September 30, 2021.

The notes are classified within Level 2 of the fair value hierarchy as they are not actively traded in markets.

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

At December 31, 2021, we had purchase commitments for equipment, parts and supplies of approximately $ 62.9 million.

Guarantee Arrangements

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• Restructuring charges

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

but excludes gain on reimbursement of drilling equipment, other (gain) loss on sale of assets, 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, 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

External sales $ 281,132 $ 33,364 $ 15,278 $ 2,439 $ — $ 332,213

Intersegment — — — 9,379 ( 9,379 ) —

Total sales 281,132 33,364 15,278 11,818 ( 9,379 ) 332,213

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

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

Intersegment — — — 10,384 ( 10,384 ) —

Total sales 254,434 37,494 22,477 13,343 ( 10,384 ) 317,364

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

Nine Months Ended June 30, 2021

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

Three Months Ended December 31, 2021

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

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Segment operating income (loss) ( 28,893 ) 5,466 8,049 3,929 ( 1,282 ) ( 12,731 )

Nine Months Ended June 30, 2020

Three Months Ended December 31, 2020

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

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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 June 30, Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2021 2020

Segment operating loss $ ( 12,731 ) $ ( 76,558 )

Gain (loss) on sale of assets 3,434 4,201 ( 2,745 ) 18,790

Gain on reimbursement of drilling equipment 5,254 2,191

Other gain (loss) on sale of assets ( 1,029 ) 10,145

Corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges ( 34,105 ) ( 29,001 )

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Interest expense ( 6,114 ) ( 6,139 )

Gain (loss) on investment securities 2,409 2,267 7,853 ( 7,325 )

Gain on sale of subsidiary — — — 14,963

Gain on investment securities 47,862 2,924

Loss on extinguishment of debt ( 60,083 ) —

Other ( 542 ) ( 1,480 )

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Loss from continuing operations before income taxes $ ( 58,899 ) $ ( 96,039 )

The following table presents total assets by reportable segment:

(in thousands) June 30,

The following table reconciles segment total assets as reported on the Unaudited Condensed Consolidated Balance Sheets:

(in thousands) December 31,

2021 September 30,

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

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

Three Months Ended December 31,

(in thousands) 2021 2020

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Total $ 409,782 $ 246,377

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

NOTE 15 RESTRUCTURING CHARGES

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

Other restructuring expenses 1,377 — — 1,377

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

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 .

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

NOTE 15 SUBSEQUENT EVENTS

Subsequent to December 31, 2021, we received notice from an International Solutions customer of their intent to early terminate a fixed-term drilling services contract.

Due to the notification being received subsequent to December 31, 2021, the backlog as of December 31, 2021 includes approximately $ 22.0 million of future dayrate revenue related to this contract.

From January 1, 2022 through January 28, 2022, the Company repurchased approximately 600 thousand common shares at an aggregate cost of approximately $ 16.4 million, which are held as treasury shares.

Under our evergreen authorization from the Board of Directors we are authorized to repurchase up to four million common shares in any calendar year.

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