What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-27 compared with 2022-01-31 · 232 added, 162 removed, 678 unchanged (37% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30,

March 31, September 30,

(in thousands except share data and share amounts) 2022 2021

32 unchanged sentences

Shareholders' Equity:

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

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of both March 31, 2022 and September 30, 2021, and 105,285,460 and 107,898,859 shares outstanding as of March 31, 2022 and September 30, 2021, respectively

11,222 11,222

3 unchanged sentences

Accumulated other comprehensive loss ( 19,456 ) ( 20,244 )

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

Treasury stock, at cost, 6,937,405 shares and 4,324,006 shares as of March 31, 2022 and September 30, 2021, respectively

( 235,792 ) ( 181,638 )

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2022 2021 2022 2021

23 unchanged sentences

Loss from continuing operations before income taxes ( 1,952 ) ( 159,920 ) ( 60,851 ) ( 255,959 )

Income tax benefit ( 7,568 ) ( 18,115 )

Income tax expense (benefit) 2,672 ( 36,624 ) ( 4,896 ) ( 54,739 )

Loss from continuing operations ( 4,624 ) ( 123,296 ) ( 55,955 ) ( 201,220 )

18 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands) 2022 2021 2022 2021

1 unchanged sentence

Other comprehensive income, net of income taxes:

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

Net change related to employee benefit plans, net of income taxes of $( 0.1 ) million and $( 0.2 ) million for the three and six months ended March 31, 2022, respectively, and $( 0.1 ) million and $( 0.3 ) million for the three and six months ended March 31, 2021.

394 457 788 914

Other comprehensive income 394 457 788 914

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended December 31, 2021 and 2020

Three and Six Months Ended March 31, 2022

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

14 unchanged sentences

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

Comprehensive income:

Net loss — — — ( 4,976 ) — — — ( 4,976 )

Other comprehensive income — — — — 394 — — 394

Dividends declared ($ 0.25 per share)

— — — ( 26,565 ) — — — ( 26,565 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — ( 7,197 ) — — ( 161 ) 5,805 ( 1,392 )

Stock-based compensation — — 6,999 — — — — 6,999

Share repurchases — — — — — 607 ( 16,641 ) ( 16,641 )

Balance, March 31, 2022 112,222 $ 11,222 $ 514,771 $ 2,463,665 $ ( 19,456 ) 6,937 $ ( 235,792 ) $ 2,734,410

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

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three and Six Months Ended March 31, 2021

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

5 unchanged sentences

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

Comprehensive income:

Comprehensive income (loss):

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

8 unchanged sentences

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

Comprehensive income:

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

Other comprehensive income — — — — 457 — — 457

Dividends declared ($ 0.25 per share)

— — — ( 27,268 ) — — — ( 27,268 )

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

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

Other — — ( 234 ) — — — — ( 234 )

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

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

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands) 2022 2021

13 unchanged sentences

Gain on reimbursement of drilling equipment ( 11,702 ) ( 5,939 )

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

Other loss on sale of assets 313 12,118

Deferred income tax benefit ( 11,597 ) ( 46,068 )

9 unchanged sentences

Other noncurrent liabilities ( 16,777 ) 6,912

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

Net cash provided by operating activities from continuing operations 18,938 58,827

Net cash used in operating activities from discontinued operations ( 42 ) ( 25 )

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

Net cash provided by operating activities 18,896 58,802

CASH FLOWS FROM INVESTING ACTIVITIES:

13 unchanged sentences

Share repurchases ( 76,999 ) —

Other ( 587 ) —

Net cash used in financing activities ( 680,915 ) ( 56,599 )

22 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, Montana, New Mexico, North Dakota, Nevada, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

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

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

15 unchanged sentences

All intercompany accounts and transactions have been eliminated upon consolidation.

COVID-19 and OPEC+ Production Impacts

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.

COVID-19 and Russia-Ukraine Conflict

The direct impacts of the COVID-19 pandemic on the Company have diminished significantly as health guidelines and restrictions have eased in most jurisdictions in which we operate.

Since the COVID-19 outbreak began, no rigs have been fully shut down (other than temporary shutdowns for disinfecting and the suspension for a certain period of time on one of our international rigs) and these temporary shutdowns did not have a significant impact on service.

The COVID-19 pandemic is predicted to continue and increases in infection rates may cause governmental authorities in highly impacted areas to impose more rigorous restrictions on business and social activities.

We have experienced, and may experience in the future, some periodic disruptions to our business operations from government restrictions.

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.

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

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

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

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

Although crude oil prices have recovered since March 2020, oil and natural gas prices are expected to continue to be volatile as a result of near-term production instability, the ongoing COVID-19 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 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.

More recently, the Russian Federation's invasion of Ukraine and the related international reaction to the invasion, including sanctions, have introduced additional volatility in commodity prices.

As we have no operations in the impacted regions of this conflict, we do not expect any direct impact to our operations.

Additionally, we do not source supplies from these regions;

however, the far-reaching ramifications of this conflict could result in some inflationary pressure within our supply chain.

From a financial perspective, we believe the Company is well positioned to manage through events, even protracted ones, that may result from market disruptions and the related commodity price volatility.

More recent events, like the COVID-19 global pandemic and the Russian invasion into the Ukraine, have elevated commodity price volatility and have other far reaching global market ramifications.

At March 31, 2022, the Company had cash and cash equivalents and short-term investments of $ 350.6 million.

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

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

As of March 31, 2022, 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 2031 Notes (as defined within Note 6—Debt) do not mature until September 29, 2031.

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

On March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.

Lenders with $ 680.0 million of commitments under the 2018 Credit Facility also exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026.

Refer to Note 6—Debt for further details.

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.

5 unchanged sentences

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.

These amounts were recorded in Loss on Extinguishment of Debt in our Unaudited Condensed Consolidated Statements of Operations during the six months ended March 31, 2022.

Refer to Note 6—Debt for further details.

2 unchanged sentences

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 $ 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.

We had restricted cash of $ 27.2 million and $ 51.4 million at March 31, 2022 and 2021, respectively, and $ 19.2 million and $ 48.9 million at September 30, 2021 and 2020, respectively.

Of the total restricted cash at March 31, 2022 and September 30, 2021, $ 1.1 million and $ 1.5 million, respectively, is related to the acquisition of drilling technology companies, and $ 25.9 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:

December 31, September 30,

March 31, September 30,

(in thousands) 2022 2021 2021 2020

4 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 229,376 $ 478,635 $ 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.

During the six months ended March 31, 2022, our cash, cash equivalents, and restricted cash balance decreased approximately $ 707.3 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.

7 unchanged sentences

Effect on the Financial Statements or Other Significant Matters

Recently Adopted Accounting Pronouncements

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

11 unchanged sentences

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

Standards that are not yet adopted as of March 31, 2022

2020-06, Debt with conversion and other options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own equity (subtopic 815-40):

Accounting For Convertible Instruments and Contracts In An Entity’s Own Equity

This ASU reduces the complexity of accounting for convertible debt and other equity-linked instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

October 1, 2022 We are currently evaluating the impact of this ASU on our Unaudited Condensed Consolidated Financial Statements and disclosures.

Self-Insurance

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.

Our wholly-owned insurance captives ("Captives") incurred direct operating costs consisting primarily of adjustments to accruals for estimated losses of $ 1.8 million and $ 2.3 million for the three months ended March 31, 2022 and 2021, respectively, and $( 0.4 ) million and $ 2.8 million for the six months ended March 31, 2022 and 2021, respectively, and rig casualty insurance premiums of $ 7.9 million and $ 5.0 million for the three months ended March 31, 2022 and 2021, respectively, and $ 16.7 million and $ 7.5 million for the six months ended March 31, 2022 and 2021, respectively, and were recorded within drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations.

Intercompany premium revenues recorded by the Captives amounted to $ 13.2 million and $ 8.7 million during the three months ended March 31, 2022 and 2021, respectively, and $ 26.9 million and $ 15.8 million during the six months ended March 31, 2022 and 2021, respectively, which were eliminated upon consolidation.

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

1 unchanged sentence

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.

Our medical stop loss operating expenses for the three months ended March 31, 2022 and 2021 were $ 3.6 million and $ 3.1 million, respectively, and $ 6.9 million and $ 5.4 million for the six months ended March 31, 2022 and 2021, respectively.

International Solutions Drilling Risks

6 unchanged sentences

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

dollars, we are paid in Argentine pesos.

dollars, we are paid in the equivalent of Argentine pesos.

The Argentine branch of one of our second-tier subsidiaries remits U.S.

3 unchanged sentences

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

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

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

dollar reserves.

9 unchanged sentences

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

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

We recorded aggregate foreign currency losses of $ 2.4 million for both the three months ended March 31, 2022 and 2021, and $ 3.3 million and $ 4.2 million for the six months ended March 31, 2022 and 2021, respectively.

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

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

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

As of March 31, 2022, our cash balance in Argentina was $ 43.2 million.

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

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

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three months ended December 31, 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.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and six months ended March 31, 2022, approximately 5.9 percent and 7.5 percent of our operating revenues were generated from international locations in our drilling business compared to 5.2 percent and 4.9 percent during the three and six months ended March 31, 2021, respectively.

During the three and six months ended March 31, 2022, approximately 75.8 percent and 76.6 percent of operating revenues from international locations were from operations in South America, compared to 51.4 percent and 37.6 percent during the three and six months ended March 31, 2021, respectively.

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

3 unchanged sentences

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

The activity for the three months ended December 31, 2021 and 2020 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 and six months ended March 31, 2022 and 2021 was primarily due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuela Bolivar.

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

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

The DICOM floating rate was approximately 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 was approximately 4,181,782 and 1,987,185 Bolivars per United States dollar at September 30, 2021, and March 31, 2021, respectively.

In October 2021, the Venezuela government launched another monetary overhaul by cutting six zeros from the Bolivar in response to hyperinflation and to simplifying accounting.

As such, as of March 31, 2022, the DICOM floating rate was approximately 4.38 Bolivars per United States dollar.

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

NOTE 4 PROPERTY, PLANT AND EQUIPMENT

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

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

Property, plant and equipment as of March 31, 2022 and September 30, 2021 consisted of the following:

(in thousands) Estimated Useful Lives March 31, 2022 September 30, 2021

Drilling services equipment 4 - 15 years

14 unchanged sentences

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 $ 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.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 101.1 million and $ 104.6 million, including $ 2.5 million and $ 0.5 million in abandonments, for the three months ended March 31, 2022 and 2021, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 199.8 million and $ 209.7 million, including $ 3.8 million and $ 0.4 million in abandonments for the six months ended March 31, 2022 and 2021, respectively.

Assets Held-for-Sale

3 unchanged sentences

Sale of assets held-for-sale ( 15,539 )

Balance at December 31, 2021

Balance at March 31, 2022

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.

1 unchanged sentence

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 the fiscal year ended September 30, 2021, we completed the sale of a portion of the assets with a net book value of $ 6.5 million that were originally classified as held-for-sale during the second and third quarters of fiscal year 2021.

Additionally, during the six months ended March 31, 2022, we completed the sale of a portion of the remaining assets with a net book value of $ 1.6 million that were originally classified as held-for-sale during the second and third quarters of fiscal year 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.

3 unchanged sentences

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.

During the second quarter of fiscal year 2022, ADNOC Drilling accepted delivery of the two rigs located in the U.A.E.

with a net book value of $ 4.1 million and, as a result, we recognized a gain of $ 1.2 million, after incurring $ 2.4 million of selling costs, during the three months ended March 31, 2022 and the rigs were removed from assets classified as held-for-sale as of March 31, 2022.

The gain of $ 1.2 million is recorded in Other (Gain) Loss on Sale of Assets within our Unaudited Condensed Consolidated Statement of Operations for the three and six months ended March 31, 2022.

The remaining cash proceeds received in advance of rig delivery and acceptance of $ 78.8 million is recorded in Accrued Liabilities within our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2022.

Additionally, the six remaining rigs in the United States are classified as held-for-sale in the Unaudited Condensed Consolidated Balance Sheets until each rig is delivered and accepted, at which time any related gain/loss on the sale will be recognized in the Unaudited Condensed Consolidated Statement of Operations.

Estimated cost to sell related to the remaining rigs is approximately $ 26.6 million, including approximately $ 11.2 million of expenses incurred during the six months ended March 31, 2022, and approximately $ 15.4 million of expenses to be incurred in future periods.

We paid approximately $ 10.6 million in cash charges related to these costs during the six months ended March 31, 2022.

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 revenues 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.

During the six months ended March 31, 2022, 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.

During the first quarter of fiscal year 2022, we identified two partial rig substructures 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 and recorded in the Unaudited Condensed Consolidated Statement of Operations for the six months ended March 31, 2022.

During the three months ended March 31, 2022, we completed the sale of a portion of the assets with a net book value of approximately $ 0.1 million, resulting in no gain or loss as a result of the sale.

During the first quarter of fiscal year 2022, we identified two international FlexRig ® drilling rigs located in Colombia that met the asset held-for-sale criteria and were reclassified as assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

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 and recorded in the Unaudited Condensed Consolidated Statement of Operations during the six months ended March 31, 2022, 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.

During the three months ended March 31, 2022, we completed the sale of the two international FlexRig ® drilling rigs for total consideration of $ 0.9 million, resulting in no gain or loss as a result of the sale.

The significant assumptions utilized in the valuation of assets held-for-sale 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.

(Gain)/Loss on Sale of Assets

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.

We had a gain of $ 6.4 million and $ 11.7 million, during the three and six months ended March 31, 2022, respectively, and $ 3.8 million and $ 5.9 million, during the three and six months ended March 31, 2021, respectively, related to customer reimbursement for the replacement value of lost or damaged drill pipe.

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

During the three and six months ended March 31, 2022, we had a (gain) loss of $( 0.7 ) million and $ 0.3 million, respectively, related to the sale of rig equipment and other capital assets.

During the first quarter of fiscal year 2022, we closed on the sale of our trucking and casing running assets resulting in a loss of $ 3.4 million, as mentioned above.

During the second quarter of fiscal year 2022, ADNOC Drilling accepted delivery of two rigs resulting in a gain of $ 1.2 million, as mentioned above.

The (gain) loss 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 and six months ended March 31, 2021, we had a loss of $ 22.3 million and $ 12.1 million, respectively, related to sale of rig equipment and other capital assets.

During the first quarter of fiscal year 2021, we completed the sale of an offshore platform rig within our Offshore Gulf of Mexico operating segment resulting in a gain of $ 9.2 million.

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.

The (gain) loss related to these asset sales were recorded in Other (Gain) Loss on Sale of Assets within our Unaudited Condensed Consolidated Statements of Operations.

NOTE 5 GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

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

During the three months ended December 31, 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 .

During the three and six months ended March 31, 2022, we had no additions or impairments to goodwill.

As of March 31, 2022 and September 30, 2021, the goodwill balance was $ 45.7 million .

Intangible Assets

2 unchanged sentences

Intangible assets consist of the following:

December 31, 2021 September 30, 2021

March 31, 2022 September 30, 2021

(in thousands) Weighted Average Estimated Useful Lives Gross

9 unchanged sentences

$ 100,461 $ 30,215 $ 70,246 $ 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 December 31, 2021 and 2020.

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million for both the three months ended March 31, 2022 and 2021, and $ 3.6 million for both the six months ended March 31, 2022 and 2021.

A mortization is estimated to be approximately $ 3.6 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:

December 31, 2021 September 30, 2021

March 31, 2022 September 30, 2021

(in thousands) Face

24 unchanged sentences

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

1 unchanged sentence

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.

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

Additionally, on March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.

Lenders with $ 680.0 million of commitments under the 2018 Credit Facility also exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026.

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

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

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

As of March 31, 2022, 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 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.

As of March 31, 2022, we had four separate bi-lateral credit facilities with banks with an aggregate outstanding balance of $ 33.8 million.

As of March 31, 2022, 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 March 31, 2022.

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

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

At March 31, 2022, we were in compliance with all debt covenants.

NOTE 7 INCOME TAXES

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

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 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.

We have historically calculated our provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full year to pre-tax income or loss, excluding discrete items, for the reporting period.

We used a discrete effective tax rate method to calculate income taxes for the three and six months ended March 31, 2022.

We determined that, since small changes in estimated "ordinary" income would result in significant changes in the estimated annual effective tax rate the historical annualized effective rate method would not provide a reliable estimate for the three and six months ended March 31, 2022.

We anticipate utilizing the discrete effective tax rate method to calculate the provision for income taxes for the remainder of this fiscal year.

Our income tax provision (benefit) from continuing operations for the three months ended March 31, 2022 and 2021 was $ 2.7 million and $( 36.6 ) million, respectively, resulting in effective tax rates of ( 136.9 ) percent and 22.9 percent, respectively.

Our income tax (benefit) from continuing operations for the six months ended March 31, 2022 and 2021 was $( 4.9 ) million and $( 54.7 ) million, respectively, resulting in effective tax rates of 8.0 percent and 21.4 percent, respectively.

Effective tax rates differ from the U.S.

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.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2022 primarily due to state and foreign income taxes and permanent non-deductible items.

Additionally, the effective tax rate for the three months ended March 31, 2022 differs from the statutory rate due to the adjustments required to reflect the change in methodology to calculate the provision for income taxes as discussed above.

Effective tax rates differ from the U.S.

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

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

The discrete adjustments for the six months ended March 31, 2021 is primarily due to tax expense related to equity compensation of $ 4.1 million.

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

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

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

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

NOTE 8 SHAREHOLDERS’ EQUITY

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

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

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

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.

During the three and six months ended March 31, 2022, we repurchased 0.6 million and 3.2 million common shares at an aggregate cost of $ 16.6 million and $ 77.0 million, respectively, which are held as treasury shares.

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

A cash dividend of $ 0.25 per share was declared on December 10, 2021 for shareholders of record on February 11, 2022, and was paid on February 28, 2022.

An additional cash dividend of $ 0.25 per share was declared on March 2, 2022 for shareholders of record on May 13, 2022, payable on May 27, 2022.

As a result, we recorded a dividend payable of $ 26.7 million within Dividends Payable on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2022.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands) December 31,

(in thousands) March 31,

2022 September 30,

5 unchanged sentences

$ ( 19,456 ) $ ( 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 months ended December 31, 2021:

(in thousands) Defined Benefit Pension Plan

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three and six months ended March 31, 2022:

(in thousands) Three Months Ended March 31, 2022 Six Months Ended March 31, 2022

Balance at beginning of period $ ( 19,850 ) $ ( 20,244 )

2 unchanged sentences

Net current-period other comprehensive income 394 788

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

Balance at March 31, 2022 $ ( 19,456 ) $ ( 19,456 )

NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS

1 unchanged sentence

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 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.

During the three months ended March 31, 2022, we recognized $ 0.7 million in early termination revenue associated with term contracts compared to $ 1.9 million during the three months ended March 31, 2021.

During the six months ended March 31, 2022, we also recognized $ 0.7 million in early termination revenue associated with term contracts compared to $ 7.7 million during the six months ended March 31, 2021.

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.

5 unchanged sentences

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.

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 contingent liabilities for disputed amounts.

Contract Costs

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

We had capitalized fulfillment costs of $ 8.1 million and $ 4.3 million as of March 31, 2022 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 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.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of March 31, 2022 was approximately $ 727.7 million, of which approximately $ 437.8 million is expected to be recognized during the remainder of fiscal year 2022, approximately $ 226.4 million during fiscal year 2023, and approximately $ 63.5 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.

Our contracts are subject to cancellation or modification at the election of the customer;

however, due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past.

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.

Our contracts are subject to cancellation or modification at the election of the customer, but also carry certain early termination provisions customers abide by in cases of cancellation or modification.

Due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past.

Contract Assets and Liabilities

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

(in thousands) March 31, 2022 September 30, 2021

Contract assets, net $ 5,166 $ 4,513

(in thousands) December 31, 2021

(in thousands) March 31, 2022

Contract liabilities balance at September 30, 2021

1 unchanged sentence

Revenue recognized during the period ( 20,113 )

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

Contract liabilities balance at March 31, 2022

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 December 31,

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

(in thousands) 2022 2021 2022 2021

5 unchanged sentences

Restricted Stock

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:

A summary of the status of our restricted stock awards as of March 31, 2022 and changes in non-vested restricted stock outstanding during the six months then ended is presented below:

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

1 unchanged sentence

Non-vested restricted stock outstanding at September 30, 2021

1,412 $ 37.36

Granted 744 25.83

1 unchanged sentence

Forfeited ( 38 ) 31.51

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

Non-vested restricted stock outstanding at March 31, 2022

1,516 $ 30.86

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

During the six months ended March 31, 2022, 14,199 restricted phantom stock units were granted and 18,906 restricted phantom stock units vested during the same period.

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

Performance Units

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

A summary of the status of our performance-vested restricted share units ("performance units") as of March 31, 2022 and changes in non-vested performance units outstanding during the six months ended is presented below:

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

1 unchanged sentence

Granted 227 30.12

( 161 ) 62.66

Dividend equivalent right performance units credited 7 31.82

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.

Forfeited ( 46 ) 35.11

Non-vested performance units outstanding at March 31, 2022 (1)

(1) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 97,097 performance units which is calculated based on the payout percentage for the completed performance cycle.

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

If we meet the specified maximum performance criteria, approximately 910,492 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.

(2) The number of performance units vested includes units that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

Subject to the terms and conditions set forth in the applicable performance 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.

1 unchanged sentence

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.

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 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 performance units granted in December 2018 ended on December 31, 2021 and the performance units earned were settled in shares of common stock during the three months ended March 31, 2022.

NOTE 11 EARNINGS (LOSSES) PER COMMON SHARE

9 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2022 2021 2022 2021

28 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts)

2022 2021 2022 2021

Potentially dilutive shares excluded as anti-dilutive 2,675 3,920 2,856 4,146

13 unchanged sentences

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

March 31, 2022

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

34 unchanged sentences

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.

During the three and six months ended March 31, 2022, we recognized a gain of $ 16.7 million and $ 64.5 million, respectively, in our Unaudited Condensed Consolidated Statement of Operations.

As of March 31, 2022, 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.

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands) 2022 2021 2022 2021

13 unchanged sentences

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.

We also hold various other equity securities without readily determinable fair values.

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:

During the three and six months ended March 31, 2022, we did not have any impairments on these investments.

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

Three Months Ended

March 31, Six Months Ended

(in thousands) 2022 2021 2022 2021

2 unchanged sentences

Assets at end of period $ 13,990 $ 1,000 $ 13,990 $ 1,000

As of March 31, 2022 and September 30, 2021 the aggregate balance of our debt and equity security investments in geothermal energy was $ 16.9 million and $ 2.7 million, respectively.

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

Other Financial Instruments

2 unchanged sentences

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

The carrying value of accounts receivables, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at March 31, 2022 and September 30, 2021.

The following information presents the supplemental fair value information about current and long-term fixed-rate debt at March 31, 2022 and September 30, 2021:

(in millions) March 31, 2022

September 30, 2021

Current portion of long-term debt

Current portion of long-term debt, net 1

Carrying value $ — $ 483.5

5 unchanged sentences

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 fair values of the current and long-term fixed-rate debt is based on broker quotes as of March 31, 2022 and September 30, 2021.

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

2 unchanged sentences

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

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

At March 31, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 79.6 million.

Guarantee Arrangements

5 unchanged sentences

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

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

Our wholly-owned subsidiaries, Helmerich & Payne International Drilling Co.

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

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

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

In May 2018, an employee of our subsidiary, HPIDC, was involved in a car accident in his personal vehicle while not clocked in for work.

The accident resulted in a fatality of a passenger in the other vehicle.

The estate of the victim, his widow and children subsequently brought a lawsuit against the employee and HPIDC in Texas State District Court in January 2020.

In February 2022, trial began in the matter and the jury reached a verdict against HPIDC and our employee for approximately $ 126.0 million, including interest.

In March 2022, the court entered a judgment consistent with the findings of the jury.

In April 2022, the Company and its insurers filed post-trial motions and if unsuccessful, the Company and its insurers plan to appeal the judgment.

Accordingly, the Company cannot make an estimate of the possible loss at this time.

As of March 31, 2022, we have accrued a total of $ 3.0 million, and currently have incurred some expense, mainly legal fees, against the deductible.

However, as our insurance carriers are responsible for amounts over our insurance deductible up to a coverage amount, we believe any foreseeable exposure to the Company at this time above the $ 3.0 million will be paid for by insurance recoveries.

Accordingly, we do not believe it is reasonably possible that our exposure will exceed our insurance coverage amount.

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

25 unchanged sentences

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

Three Months Ended December 31, 2021

Summarized financial information of our reportable segments for the three and six months ended March 31, 2022 and 2021 is shown in the following tables:

Three Months Ended March 31, 2022

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

3 unchanged sentences

Segment operating income (loss) 1,297 5,278 ( 848 ) 3,167 ( 2,031 ) 6,863

Three Months Ended December 31, 2020

Three Months Ended March 31, 2021

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

3 unchanged sentences

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

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 December 31,

Six Months Ended March 31, 2022

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

External sales $ 749,848 $ 58,461 $ 64,581 $ 4,489 $ — $ 877,379

Intersegment — — — 26,852 ( 26,852 ) —

Total sales 749,848 58,461 64,581 31,341 ( 26,852 ) 877,379

Segment operating income (loss) ( 27,596 ) 10,744 7,201 7,096 ( 3,313 ) ( 5,868 )

Six Months Ended March 31, 2021

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

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

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

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

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

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

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

(in thousands) 2022 2021 2022 2021

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

Segment operating income (loss) $ 6,863 $ ( 114,819 ) $ ( 5,868 ) $ ( 191,377 )

Gain on reimbursement of drilling equipment 6,448 3,748 11,702 5,939

11 unchanged sentences

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

(in thousands) December 31,

(in thousands) March 31,

2022 September 30,

9 unchanged sentences

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

Three Months Ended December 31,

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

(in thousands) 2022 2021 2022 2021

9 unchanged sentences

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.

During April 2022, the Company made a $ 33.0 million cornerstone investment in an affiliate of Galileo Technologies ("Galileo") in the form of a convertible note.

Galileo is a world leader in natural gas compression and re-gasification modular systems and technologies.

The company creates and manufactures innovative products providing cost-effective solutions for its customers.

The convertible note bears interest at 5 % per annum and matures on April 2027.

If the conversion option is exercised, the note would convert into common shares of Galileo.

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