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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 232 added, 217 removed, 693 unchanged (39% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, September 30,

June 30, 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 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

Common stock, $ .10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of both June 30, 2022 and September 30, 2021, and 105,290,017 and 107,898,859 shares outstanding as of June 30, 2022 and September 30, 2021, respectively

11,222 11,222

3 unchanged sentences

Accumulated other comprehensive loss ( 19,067 ) ( 20,244 )

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

Treasury stock, at cost, 6,932,848 shares and 4,324,006 shares as of June 30, 2022 and September 30, 2021, respectively

( 235,652 ) ( 181,638 )

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

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

14 unchanged sentences

516,511 409,580 1,459,118 1,206,274

OPERATING LOSS FROM CONTINUING OPERATIONS ( 22,617 ) ( 160,923 ) ( 65,228 ) ( 254,146 )

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS 33,722 ( 77,367 ) ( 31,506 ) ( 331,513 )

Other income (expense)

1 unchanged sentence

Interest expense ( 4,372 ) ( 5,963 ) ( 14,876 ) ( 17,861 )

Gain on investment securities 22,132 2,520 69,994 5,444

Gain (loss) on investment securities ( 14,310 ) 2,409 55,684 7,853

Loss on extinguishment of debt — — ( 60,083 ) —

1 unchanged sentence

( 14,517 ) ( 2,997 ) ( 10,140 ) ( 4,810 )

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

Income (loss) from continuing operations before income taxes 19,205 ( 80,364 ) ( 41,646 ) ( 336,323 )

Income tax expense (benefit) 1,730 ( 23,659 ) ( 3,166 ) ( 78,398 )

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

Income (loss) from continuing operations 17,475 ( 56,705 ) ( 38,480 ) ( 257,925 )

Income (loss) from discontinued operations before income taxes 277 1,150 ( 106 ) 10,936

1 unchanged sentence

Income (loss) from discontinued operations 277 1,150 ( 106 ) 10,936

NET LOSS $ ( 4,976 ) $ ( 121,003 ) $ ( 56,338 ) $ ( 191,434 )

NET INCOME (LOSS) $ 17,752 $ ( 55,555 ) $ ( 38,586 ) $ ( 246,989 )

Basic earnings (loss) per common share:

Loss from continuing operations $ ( 0.05 ) $ ( 1.15 ) $ ( 0.53 ) $ ( 1.87 )

Income (loss) from continuing operations $ 0.16 $ ( 0.53 ) $ ( 0.37 ) $ ( 2.40 )

Income from discontinued operations — 0.01 — 0.10

Net loss $ ( 0.05 ) $ ( 1.13 ) $ ( 0.53 ) $ ( 1.78 )

Net income (loss) $ 0.16 $ ( 0.52 ) $ ( 0.37 ) $ ( 2.30 )

Diluted earnings (loss) per common share:

Loss from continuing operations $ ( 0.05 ) $ ( 1.15 ) $ ( 0.53 ) $ ( 1.87 )

Income (loss) from continuing operations $ 0.16 $ ( 0.53 ) $ ( 0.37 ) $ ( 2.40 )

Income from discontinued operations — 0.01 — 0.10

Net loss $ ( 0.05 ) $ ( 1.13 ) $ ( 0.53 ) $ ( 1.78 )

Net income (loss) $ 0.16 $ ( 0.52 ) $ ( 0.37 ) $ ( 2.30 )

Weighted average shares outstanding:

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HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands) 2022 2021 2022 2021

Net loss $ ( 4,976 ) $ ( 121,003 ) $ ( 56,338 ) $ ( 191,434 )

Net income (loss) $ 17,752 $ ( 55,555 ) $ ( 38,586 ) $ ( 246,989 )

Other comprehensive income, net of income taxes:

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.

Net change related to employee benefit plans, net of income taxes of $( 41.7 ) thousand and $( 0.3 ) million for the three and nine months ended June 30, 2022, respectively, and $( 0.2 ) million and $( 0.5 ) million for the three and nine months ended June 30, 2021.

389 460 1,177 1,374

Other comprehensive income 389 460 1,177 1,374

Comprehensive loss $ ( 4,582 ) $ ( 120,546 ) $ ( 55,550 ) $ ( 190,520 )

Comprehensive income (loss) $ 18,141 $ ( 55,095 ) $ ( 37,409 ) $ ( 245,615 )

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

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three and Six Months Ended March 31, 2022

Three and Nine Months Ended June 30, 2022

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

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

Comprehensive income (loss):

Comprehensive loss:

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

6 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:

Comprehensive loss:

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

5 unchanged sentences

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

Other — — ( 946 ) — — — — ( 946 )

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

Comprehensive income:

Net income — — — 17,752 — — — 17,752

Other comprehensive income — — — — 389 — — 389

Dividends declared ($ 0.25 per share)

— — — ( 26,691 ) — — — ( 26,691 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 136 ) — — ( 5 ) 140 4

Stock-based compensation — — 7,051 — — — — 7,051

Other — — ( 247 ) — — — — ( 247 )

Balance, June 30, 2022 112,222 $ 11,222 $ 521,439 $ 2,454,726 $ ( 19,067 ) 6,932 $ ( 235,652 ) $ 2,732,668

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

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three and Six Months Ended March 31, 2021

Three and Nine Months Ended June 30, 2021

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

1 unchanged sentence

Earnings Accumulated

Comprehensive

Income (Loss) Treasury Stock

Comprehensive Loss Treasury Stock

Shares Amount Shares Amount Total

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

Comprehensive income (loss):

Comprehensive 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:

Comprehensive loss:

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

6 unchanged sentences

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

Comprehensive loss:

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

Other comprehensive income — — — — 460 — — 460

Dividends declared ($ 0.25 per share)

— — — ( 27,321 ) — — — ( 27,321 )

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

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

Other — — ( 295 ) — — — — ( 295 )

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

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

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

Nine Months Ended June 30,

(in thousands) 2022 2021

9 unchanged sentences

Provision for credit loss 1,022 8

Provision for obsolete inventory ( 761 ) 423

Stock-based compensation 21,214 21,240

1 unchanged sentence

Gain on reimbursement of drilling equipment ( 21,597 ) ( 10,207 )

Other loss on sale of assets 313 12,118

Other (gain) loss on sale of assets ( 2,762 ) 12,952

Deferred income tax benefit ( 36,614 ) ( 66,102 )

18 unchanged sentences

Proceeds from sale of short-term investments 161,766 139,430

Proceeds from sale of long-term investments 22,042 —

Proceeds from asset sales 50,260 26,775

Other ( 7,500 ) —

Net cash used in investing activities ( 123,146 ) ( 119,752 )

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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, Nevada, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming.

Our North America Solutions operations are primarily located in Texas, but traditionally also operate in other states, depending upon demand.

Such states include:

Colorado, Louisiana, New Mexico, Nevada, North Dakota, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming.

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

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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.

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 Income (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 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.

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 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'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.

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 six months ended March 31, 2022.

Refer to Note 6—Debt for further details.

Cash, Cash Equivalents, and Restricted Cash

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

We had restricted cash of $ 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.

We had restricted cash of $ 33.9 million and $ 51.3 million at June 30, 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 June 30, 2022 and September 30, 2021, $ 1.1 million and $ 1.5 million, respectively, is related to the acquisition of drilling technology companies, and $ 32.8 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:

March 31, September 30,

June 30, September 30,

(in thousands) 2022 2021 2021 2020

4 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 222,589 $ 421,872 $ 936,716 $ 536,747

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.

During the nine months ended June 30, 2022, our cash, cash equivalents, and restricted cash balance decreased approximately $ 714.1 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 during the nine months ended June 30, 2022.

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.

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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

Standards that are not yet adopted as of June 30, 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):

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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.

This update is effective for annual and interim periods beginning after December 15,2021.

Early adoption of the amendment is permitted.

October 1, 2022 We plan to adopt this ASU, as required, during the first quarter of fiscal year 2023.

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.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions The amendments in this update clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value (i.e., the entity would not apply a discount related to the contractual sale restriction).

Furthermore, an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

The following disclosures for equity securities subject to contractual sale restrictions will be required:

(1) the fair value of the equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restriction(s), and (3) the circumstances that could cause a lapse in the restriction(s).

This update is effective for annual and interim periods beginning after December 15, 2023.

Early adoption of the amendment is permitted for both interim and annual financial statements.

October 1, 2022 We plan to early adopt this ASU during the first quarter of fiscal year 2023.

Self-Insurance

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.

Our wholly-owned insurance captives ("Captives") incurred direct operating costs consisting primarily of adjustments to accruals for estimated losses of $ 3.1 million and $ 6.0 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.7 million and $ 8.8 million for the nine months ended June 30, 2022 and 2021, respectively, and rig casualty insurance premiums of $ 9.4 million and $ 5.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 26.2 million and $ 13.1 million for the nine months ended June 30, 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 $ 14.7 million and $ 9.4 million during the three months ended June 30, 2022 and 2021, respectively, and $ 41.6 million and $ 25.2 million during the nine months ended June 30, 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.

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 .

Starting in the second quarter of fiscal year 2020, the Captives 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 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.

Our medical stop loss operating expenses for the three months ended June 30, 2022 and 2021 were $ 3.8 million and $ 3.2 million, respectively, and $ 10.6 million and $ 8.7 million for the nine months ended June 30, 2022 and 2021, respectively.

International Solutions Drilling Risks

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

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

dollars, we are paid the equivalent in Argentine pesos.

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

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dollars through the Argentine Foreign Exchange Market and repatriating the U.S.

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

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

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

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

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.

We recorded aggregate foreign currency losses of $ 1.2 million and $ 0.7 million for the three months ended June 30, 2022 and 2021, and $ 4.5 million and $ 4.9 million for the nine months ended June 30, 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 March 31, 2022, our cash balance in Argentina was $ 43.2 million.

As of June 30, 2022, our cash balance in Argentina was $ 3.8 million.

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

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

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

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and nine months ended June 30, 2022, approximately 5.4 percent and 6.7 percent of our operating revenues were generated from international locations in our drilling business compared to 4.8 percent during both the three and nine months ended June 30, 2021.

During the three and nine months ended June 30, 2022, approximately 82.6 percent and 78.4 percent of operating revenues from international locations were from operations in South America, compared to 52.2 percent and 43.1 percent during the three and nine months ended June 30, 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 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.

The activity for the three and nine months ended June 30, 2022 and 2021 was primarily due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuelan 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 4,181,782 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 Venezuelan 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 4,181,782 and 3,220,598 Bolivars per United States dollar at September 30, 2021, and June 30, 2021, respectively.

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

As such, as of June 30, 2022, the DICOM floating rate was approximately six 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 March 31, 2022 and September 30, 2021 consisted of the following:

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

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

(in thousands) Estimated Useful Lives June 30, 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 $ 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.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 97.5 million and $ 102.7 million, including $ 1.4 million and $ 1.3 million in abandonments, for the three months ended June 30, 2022 and 2021, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 293.5 million and $ 312.4 million, including $ 5.2 million and $ 1.7 million in abandonments for the nine months ended June 30, 2022 and 2021, respectively.

Assets Held-for-Sale

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

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

Balance at September 30, 2021 $ 71,453

Asset additions 1,459

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

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.

Additions 1,459

Sales ( 47,308 )

Balance at June 30, 2022

In March 2021, the Company's leadership continued the execution of the current strategy 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 $ 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.

The book values of those assets were written down to $ 13.5 million, which represented 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 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.

Additionally, during the nine months ended June 30, 2022, we completed the sale of a portion of the remaining assets with a net book value of $ 1.9 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.

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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.

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.

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

As of June 30, 2022, ADNOC Drilling accepted delivery of five rigs with an aggregate net book value of $ 34.5 million and, as a result, we recognized a gain of $ 1.1 million, after incurring $ 15.7 million of selling costs, during the nine months ended June 30, 2022.

Upon final acceptance of delivery, these rigs were removed from assets classified as held-for-sale as of June 30, 2022.

The gains are recorded in Other (Gain) Loss on Sale of Assets within our Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended June 30, 2022.

The remaining cash proceeds received in advance of rig delivery and acceptance of $ 35.3 million is recorded in Accrued Liabilities within our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2022.

Additionally, the three remaining rigs not yet delivered and accepted 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 $ 12.9 million, including approximately $ 6.9 million of expenses incurred during the nine months ended June 30, 2022, and approximately $ 6.0 million of expenses to be incurred in future periods.

We paid approximately $ 18.2 million in cash charges related to costs to sell for the eight rigs during the nine months ended June 30, 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 six months ended March 31, 2022, we closed on the sale of these assets in two separate transactions.

During the nine months ended June 30, 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.

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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 second quarter of fiscal year 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.

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 nine months ended June 30, 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 second quarter of fiscal year 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.

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(Gain)/Loss on Sale of Assets

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.

We had a gain of $ 9.9 million and $ 21.6 million, during the three and nine months ended June 30, 2022, respectively, and $ 4.3 million and $ 10.2 million, during the three and nine months ended June 30, 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 three and nine months ended June 30, 2022, we had a gain of $ 3.1 million and $ 2.8 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.

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

During the third quarter of fiscal year 2022, ADNOC Drilling accepted delivery of three rigs which resulted in a nominal loss of $ 26.6 thousand.

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 three and nine months ended June 30, 2021, we had a loss of $ 0.8 million and $ 13.0 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.

The gains and losses 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

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

During the three and six months ended March 31, 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 .

During the three and nine months ended June 30, 2022, we had no additions or impairments to goodwill.

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

Intangible Assets

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Intangible assets consist of the following:

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

(in thousands) Weighted Average Estimated Useful Lives Gross

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$ 100,961 $ 32,011 $ 68,950 $ 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 March 31, 2022 and 2021, and $ 3.6 million for both the six months ended March 31, 2022 and 2021.

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million for both the three months ended June 30, 2022 and 2021, and $ 5.4 million for both the nine months ended June 30, 2022 and 2021.

A mortization is estimated to be approximately $ 1.8 million for the remainder of fiscal year 2022, approximately $ 6.6 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:

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

(in thousands) Face

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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 during the six months ended March 31, 2022.

Credit Facilities

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

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.

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.

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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 March 31, 2022, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of June 30, 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 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.

As of June 30, 2022, we had four separate bi-lateral credit facilities with banks with an aggregate outstanding balance of $ 33.8 million.

As of June 30, 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 June 30, 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 March 31, 2022, we were in compliance with all debt covenants.

At June 30, 2022, we were in compliance with all debt covenants.

NOTE 7 INCOME TAXES

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 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.

Although in the second quarter of fiscal year 2022 we anticipated using the discrete effective tax method to calculate income taxes for the remainder of the fiscal year, we used the estimated annual effective tax rate to calculate the income tax provision for the three and nine months ended June 30, 2022 as the estimated annual effective tax rate provides a reliable estimate.

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, including, but not limited to, changes to the forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates.

Our income tax expense (benefit) from continuing operations for the three months ended June 30, 2022 and 2021 was $ 1.7 million and $( 23.7 ) million, respectively, resulting in effective tax rates of 9.0 percent and 29.4 percent, respectively.

Our income tax expense (benefit) from continuing operations for the nine months ended June 30, 2022 and 2021 was $( 3.2 ) million and $( 78.4 ) million, respectively, resulting in effective tax rates of 7.6 percent and 23.3 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2021 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.

federal statutory rate of 21.0 percent for the three and nine months ended June 30, 2022 and 2021 primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments.

The discrete adjustments for the nine months ended June 30, 2022 and 2021 are primarily due to changes in our deferred state income tax rate, return to provision adjustments, and equity compensation.

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

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

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.

During the nine months ended June 30, 2022, we repurchased 3.2 million common shares at an aggregate cost of $ 77.0 million, respectively, which are held as treasury shares.

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

A cash dividend of $ 0.25 per share was declared on March 2, 2022 for shareholders of record on May 13, 2022, and was paid on May 27, 2022.

An additional cash dividend of $ 0.25 per share was declared on May 31, 2022 for shareholders of record on August 17, 2022, payable on September 1, 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 June 30, 2022.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

(in thousands) March 31,

(in thousands) June 30,

2022 September 30,

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$ ( 19,067 ) $ ( 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 six months ended March 31, 2022:

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

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, 2022:

(in thousands) Three Months Ended June 30, 2022 Nine Months Ended June 30, 2022

Balance at beginning of period $ ( 19,456 ) $ ( 20,244 )

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Net current-period other comprehensive income 389 1,177

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

Balance at June 30, 2022 $ ( 19,067 ) $ ( 19,067 )

NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS

Drilling Services Revenue

The releases for rigs under term contracts result in early termination compensation owed to us, while releases for rigs under well-to-well contracts given outside the notification window provided for in the contract result in notification fees owed to us.

During the three months ended March 31, 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.

The releases for rigs under term contracts result in early termination compensation owed to us.

During the three months ended June 30, 2022 and 2021, we recognized no early termination revenue associated with term contracts, compared to $ 0.7 million and $ 7.7 million recognized during the nine months ended June 30, 2022 and 2021 respectively.

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

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

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

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

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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.

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 six months ended March 31, 2022.

Contract Costs

We had capitalized fulfillment costs of $ 8.1 million and $ 4.3 million as of March 31, 2022 and September 30, 2021, respectively.

We had capitalized fulfillment costs of $ 7.9 million and $ 4.3 million as of June 30, 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 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.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of June 30, 2022 was approximately $ 862.2 million, of which approximately $ 338.7 million is expected to be recognized during the remainder of fiscal year 2022, approximately $ 408.6 million during fiscal year 2023, and approximately $ 114.9 million during fiscal year 2024 and thereafter.

These amounts do not include anticipated contract renewals.

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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) March 31, 2022 September 30, 2021

(in thousands) June 30, 2022 September 30, 2021

Contract assets, net $ 5,772 $ 4,513

(in thousands) March 31, 2022

(in thousands) June 30, 2022

Contract liabilities balance at September 30, 2021

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Revenue recognized during the period ( 28,610 )

Contract liabilities balance at March 31, 2022

Contract liabilities balance at June 30, 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 March 31, Six Months Ended March 31,

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

(in thousands) 2022 2021 2022 2021

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Restricted Stock

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:

A summary of the status of our restricted stock awards as of June 30, 2022 and changes in non-vested restricted stock outstanding during the nine months then ended is presented below:

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

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Forfeited ( 53 ) 30.82

Non-vested restricted stock outstanding at March 31, 2022

Non-vested restricted stock outstanding at June 30, 2022

1,497 $ 30.85

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

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

During the nine months ended June 30, 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 March 31, 2022 and changes in non-vested performance units outstanding during the six months ended is presented below:

A summary of the status of our performance-vested restricted share units ("performance units") as of June 30, 2022 and changes in non-vested performance units outstanding during the nine 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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Forfeited ( 54 ) 34.16

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

Non-vested performance units outstanding at June 30, 2022 (2)

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

(2) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 96,197 performance units which is calculated based on the payout percentage for the completed performance cycle.

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If we meet the specified maximum performance criteria, approximately 1,097,404 additional performance units could vest or become eligible to vest.

(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.

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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.

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 second quarter of fiscal year 2022.

NOTE 11 EARNINGS (LOSSES) PER COMMON SHARE

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

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

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

Income (loss) from continuing operations $ 17,475 $ ( 56,705 ) $ ( 38,480 ) $ ( 257,925 )

Income (loss) from discontinued operations 277 1,150 ( 106 ) 10,936

Net loss ( 4,976 ) ( 121,003 ) ( 56,338 ) ( 191,434 )

Net income (loss) 17,752 ( 55,555 ) ( 38,586 ) ( 246,989 )

Adjustment for basic earnings (loss) per share

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Basic earnings (loss) per common share:

Loss from continuing operations $ ( 0.05 ) $ ( 1.15 ) $ ( 0.53 ) $ ( 1.87 )

Income (loss) from continuing operations $ 0.16 $ ( 0.53 ) $ ( 0.37 ) $ ( 2.40 )

Income from discontinued operations — 0.01 — 0.10

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Diluted earnings (loss) per common share:

Loss from continuing operations $ ( 0.05 ) $ ( 1.15 ) $ ( 0.53 ) $ ( 1.87 )

Income (loss) from continuing operations $ 0.16 $ ( 0.53 ) $ ( 0.37 ) $ ( 2.40 )

Income from discontinued operations — 0.01 — 0.10

Net loss $ 0.16 $ ( 0.52 ) $ ( 0.37 ) $ ( 2.30 )

We had a net loss for all periods presented above.

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.

We had a net loss for all periods presented above except for the three months ended June 30, 2022.

Accordingly, our diluted loss per share calculation for these periods were 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

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts)

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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.

March 31, 2022

June 30, 2022

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

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Non-qualified supplemental savings plan 15,594 15,594 — —

Equity and debt securities 22,812 19,312 — 3,500

Debt securities 3,524 — — 3,524

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

Debt security investment in Galileo 33,000 — — 33,000

Total investments 199,904 163,380 — 36,524

11 unchanged sentences

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

Short-term investments include securities classified as trading securities.

Short-term 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.

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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").

Long-term Investments Our long-term investments include debt and equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan") and are recorded within Investments on our Unaudited Condensed Consolidated Balance Sheets.

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 the three months ended June 30, 2022, the Company made a $ 33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of a convertible note.

Galileo specializes in liquification, natural gas compression and re-gasification modular systems and technologies to make the production, transportation, and consumption of natural gas, biomethane, and hydrogen more economically viable.

The convertible note bears interest at 5.0 percent per annum with a maturity date of the earlier of April 2027 or an exit event (as defined in the agreement as either an initial public offering or a sale of Galileo).

If the conversion option is exercised, the note would convert into common shares of the parent of Galileo Holdco 2.

All of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and considered a Level 3 input based on the absence of market activity.

The following table reconciles changes in the fair value of our Level 3 assets for the periods presented below:

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2022 2021 2022 2021

Assets at beginning of period $ 3,500 $ 500 $ 500 $ 500

Additions 33,024 — 36,024 —

Assets at end of period $ 36,524 $ 500 $ 36,524 $ 500

During the three months ended June 30, 2022, we sold our remaining equity securities of approximately 467.5 thousand shares in Schlumberger, Ltd.

and received proceeds of approximately $ 22.0 million.

For the three months ended June 30, 2022, we recorded a gain of $ 2.7 million related to this investment, which included a $ 0.5 million gain recognized upon the sale of our investment and a $ 2.2 million gain related to valuation adjustments.

This activity is reported in Gain (loss) on investment securities in our Unaudited Condensed Consolidated Statement of Operations.

This investment was classified as Level 1 and based on the quoted stock price.

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.

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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 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.

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:

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 the contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

During the three and nine months ended June 30, 2022, we recognized a gain (loss) of $( 17.0 ) million and $ 47.8 million, respectively, in our Unaudited Condensed Consolidated Statement of Operations.

As of June 30, 2022, this investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange.

During the three months ended June 30, 2022, we also received dividends in the amount of $ 3.2 million as a result of this investment.

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

The following table reconciles changes in the fair value of our Level 3 liabilities for the periods presented below:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands) 2022 2021 2022 2021

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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.

These assets generally include 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.

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These equity securities are measured at cost, less any impairments, on a nonrecurring basis.

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:

As of June 30, 2022 and June 30, 2021, the aggregate balance of these equity securities was $ 14.1 million and $ 2.9 million, respectively.

During the three and nine months ended June 30, 2022, we did not record any impairments on these investments.

The following table reconciles changes in the balance of our equity securities, without readily determinable fair values, for the periods presented below:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

(in thousands) 2022 2021 2022 2021

Assets at beginning of period $ 13,990 $ 1,000 $ 2,865 $ —

Purchases 5,109 — 11,125 1,000

Additions 62 1,865 11,187 2,865

Assets at end of period $ 14,052 $ 2,865 $ 14,052 $ 2,865

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.

Geothermal Investments

As of June 30, 2022 and September 30, 2021 the aggregate balance of our debt and equity security investments in geothermal energy was $ 17.0 million and $ 2.7 million, respectively.

All of our geothermal investments are considered a Level 3 input based on the absence of market activity.

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

3 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 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

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

The following information presents the supplemental fair value information for our current and long-term fixed-rate debt at June 30, 2022 and September 30, 2021:

(in millions) June 30, 2022

September 30, 2021

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(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 March 31, 2022 and September 30, 2021.

See Note 6—Debt.

The fair values of the current and long-term fixed-rate debt is based on broker quotes as of June 30, 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 March 31, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 79.6 million.

At June 30, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 106.6 million.

Guarantee Arrangements

14 unchanged sentences

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.

In April 2022, the Company and its insurers filed post-trial motions, none of which were granted by the trial judge.

However, on June 23, 2022, Plaintiffs' counsel filed a Voluntary Remittitur with the trial court, which formally reduced the verdict to $ 60.0 million.

The Company and its insurers are currently filing motions to appeal the judgement.

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.

As of June 30, 2022, we have accrued a total of $ 3.0 million, and currently have incurred some expense, mainly legal fees, against the insurance deductible.

At this time, we believe our insurance policies will be responsive to the amounts over our $ 3.0 million insurance deductible and that foreseeable exposures to the Company exceeding the deductible will be recovered through insurance.

Accordingly, we do not believe this exposure will exceed our insurance coverage limits.

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

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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 six months ended March 31, 2022 and 2021 is shown in the following tables:

Three Months Ended March 31, 2022

Summarized financial information of our reportable segments for the three and nine months ended June 30, 2022 and 2021 is shown in the following tables:

Three Months Ended June 30, 2022

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

3 unchanged sentences

Segment operating income (loss) 57,353 5,872 ( 6,550 ) 1,965 ( 2,140 ) 56,500

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

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

3 unchanged sentences

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

Six Months Ended March 31, 2022

Nine Months Ended June 30, 2022

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

3 unchanged sentences

Segment operating income (loss) 29,757 16,616 651 9,061 ( 5,453 ) 50,632

Six Months Ended March 31, 2021

Nine Months Ended June 30, 2021

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

3 unchanged sentences

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

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,

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

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

(in thousands) 2022 2021 2022 2021

3 unchanged sentences

Corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges ( 35,748 ) ( 31,259 ) ( 106,497 ) ( 87,849 )

Operating loss from continuing operations ( 22,617 ) ( 160,923 ) ( 65,228 ) ( 254,146 )

Operating income (loss) from continuing operations 33,722 ( 77,367 ) ( 31,506 ) ( 331,513 )

Other income (expense)

1 unchanged sentence

Interest expense ( 4,372 ) ( 5,963 ) ( 14,876 ) ( 17,861 )

Gain on investment securities 22,132 2,520 69,994 5,444

Gain (loss) on investment securities ( 14,310 ) 2,409 55,684 7,853

Loss on extinguishment of debt — — ( 60,083 ) —

1 unchanged sentence

Total unallocated amounts ( 14,517 ) ( 2,997 ) ( 10,140 ) ( 4,810 )

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

Income (loss) from continuing operations before income taxes $ 19,205 $ ( 80,364 ) $ ( 41,646 ) $ ( 336,323 )

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

(in thousands) March 31,

(in thousands) June 30,

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 March 31, Six Months Ended March 31,

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

(in thousands) 2022 2021 2022 2021

8 unchanged sentences

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

NOTE 15 SUBSEQUENT EVENTS

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