What changed in this filing

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Item 1. Business

2022-11-17 compared with 2021-11-18 · 102 added, 128 removed, 329 unchanged (41% of the section changed)

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("H&P," which, together with its subsidiaries, is identified as the “Company,” “we,” “us” or “our,” except where stated or the context requires otherwise) was incorporated under the laws of the State of Delaware on February 3, 1940 and is successor to a business originally organized in 1920.

We provide performance-driven drilling solutions that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

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

We provide performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

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

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

Our global business is composed of three reportable business segments:

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

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

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

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

federal waters in the Gulf of Mexico.

Our International Solutions operations had rigs located in four international locations during fiscal year 2021:

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

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

Such states include:

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

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

federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in four international locations:

Argentina, Bahrain, Colombia and United Arab Emirates.

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

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

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

Our wholly-owned captive insurance companies (the “Captives”) are primarily used to insure the deductibles for our workers’ compensation, general liability, automobile liability, rig property and a medical stop-loss program.

The Company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs.

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Drilling Fleet

The following map shows the number of working rigs by basin in our North America Solutions reportable segment as of September 30, 2021:

The following map shows the number of available rigs by basin in our North America Solutions reportable segment as of September 30, 2022:

The following table sets forth certain information concerning our North America Solutions drilling rigs as of September 30, 2022:

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OK 21 13 1 — 22 13

ND 8 6 — — 8 6

LA 11 9 — — 11 9

OH 4 1 — — 4 1

ND 11 10 — — 11 10

PA 5 4 — — 5 4

UT 3 3 — — 3 3

CO 1 1 2 2 3 3

WV 3 3 — — 3 3

MT 1 1 — — 1 1

NV 1 1 — — 1 1

UT 3 3 — — 3 3

OH 2 — — — 2 —

WY 1 1 — — 1 1

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

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

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

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2022 FORM 10-K | 8

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

The following table presents operating statistics for the fiscal years 2022, 2021, and 2020:

Year Ended September 30,

North America Solutions Offshore Gulf of Mexico International Solutions

Average active rigs per day 1

Revenue days 1

59,672 39,199 49,003 1,460 1,552 1,922 3,036 1,815 4,605

Average utilization 2

Average active rigs 2

163 107 134 4 4 5 8 5 13

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

Number of active rigs at the end of period 3

176 127 69 4 4 5 12 6 5

Number of available rigs at the end of period 236 236 262 7 7 8 28 30 32

(1) Defined as the number of contractual days we recognized revenue during the period.

(2) Active rigs generate revenue for the Company;

accordingly 'average active rigs' represents the average number of rigs generating revenue during the applicable period.

This metric is calculated by dividing revenue days by total days in the applicable period (i.e.

This includes the impact of downsizing our fleet and/or rigs that have been reclassified to assets held-for-sale.

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

(2) A rig is considered to be utilized when it is operating (or otherwise deployed for a customer) or being moved, assembled or dismantled pursuant to a drilling contract, or stacked under contract.

(3) Defined as the number of rigs generating revenue at the applicable end date of the time period.

North America Solutions Segment

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

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

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

As of September 30, 2022, we had approximately 22 percent of the total market share in U.S.

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In the United States, we have the industry's largest super-spec fleet wit h 230 rigs, of which 174 were under contract at September 30, 2022.

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

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

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

In total, 176 of our 236 marketed rigs were active under contract, 119 were under fixed‑term contracts, and 57 were working well-to-well as of September 30, 2022.

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

This technology is intended to address our customers' unique challenges based upon their goals and desired outcomes which will often vary from well to well, basin to basin.

Our North America Solutions segment contributed approximately 86.8 percent ($1.8 billion) of our consolidated operating revenues during fiscal year 2022, compared to approximately 84.2 percent ($1.0 billion) and 83.1 percent ($1.5 billion) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.

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Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 76.6 percent ($96.1 million) of offshore revenues during fiscal year 2022.

2022 FORM 10-K | 9

International Solutions Segment

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

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

As of September 30, 2022, we had twelve land rigs contracted for work in locations outside of the United States.

Our International Solutions operations contributed approximately 6.6 percent ($136.1 million) of our consolidated operating revenues during fiscal year 2022, compared to approximately 4.8 percent ($57.9 million) and 8.1 percent ($144.2 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.

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

Argentina As of September 30, 2022, we had 20 available rigs in Argentina.

Revenues generated by Argentine drilling operations contributed approximately 4.4 percent ($91.4 million) of our consolidated operating revenues during fiscal year 2022 compared to approximately 2.3 percent ($27.9 million) and 4.8 percent ($84.4 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.

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The Argentine drilling contracts are primarily with large international or national oil companies.

Colombia As of September 30, 2021, we had seven rigs in Colombia.

Colombia As of September 30, 2022, we had five available rigs in Colombia.

Revenues generated by Colombian drilling operations contributed approximately 1.1 percent ($22.0 million) of our consolidated operating revenues in fiscal year 2022, compared to approximately 0.1 percent ($1.7 million) and 0.4 percent ($6.4 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.

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The Colombian drilling contracts are primarily with large international or national oil companies.

Bahrain As of September 30, 2021, we had three rigs in Bahrain.

Bahrain As of September 30, 2022, we had three available rigs in Bahrain.

Revenues generated by Bahrain drilling operations contributed approximately 0.8 percent ($17.0 million) of our consolidated operating revenues in fiscal year 2022, compared to approximately 2.3 percent ($27.4 million) and 1.6 percent ($28.7 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.

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

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

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

as of September 30, 2021.

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

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

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

All of our revenues in U.A.E.

are from a subsidiary of the national oil company.

United Arab Emirates During the year ended September 30, 2022, our operations in U.A.E.

consisted of services provided to ADNOC Drilling Company P.J.S.C.

("ADNOC Drilling"), primarily in the form of secondment labor, as part of the strategic alliance that was announced in September 2021.

H&P's alliance with ADNOC Drilling includes several accretive projects, in addition to general consulting services, that leverage H&P's expertise and technologies to help deliver more competitive well completion times, greater drilling efficiencies, and improved well economics.

Currently, H&P does not own any drilling rigs within U.A.E.

Other Operations

Other Operations include additional non-reportable operating segments.

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

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

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.

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

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

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

The Company's incubator program includes the activity related to new research and development projects.

Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other" within our segment disclosures.

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Rigs, Equipment, R&D, and Facilities

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

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

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

To date, we have built over 200 FlexRig ® rigs that align with this strategy.

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

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

As a result of these investments, today the vast majority of our current domestic fleet is comprised of super spec rigs.

As of September 30, 2022, we had a total of 234 super-spec rigs.

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

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

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

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We continue to see adoption and growth with our technologically enabled automation solutions.

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

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

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

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

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

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

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

2021 FORM 10-K | 10

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

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

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

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

During the first quarter of fiscal year 2022, we sold the assets associated with two lower margin service offerings, trucking and casing running services, which contributed approximately 2.8 percent to our consolidated revenues during fiscal year 2021, in two separate transactions.

The sale of our trucking services assets was completed on November 3, 2021 while the sale of our casing running services 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 proceeds, resulting in a loss of $3.4 million.

During the year ended September 30, 2022 we recognized $1.1 million in earnout proceeds associated with the sale of our trucking services assets within Other (Gain) Loss on Sale of Assets on the Consolidated Statements of Operations.

Markets and Competition

Our business largely depends on the level of capital spending by oil and gas companies for exploration and production activities.

The level of capital spending is correlated to oil and gas prices.

The level of capital spending has traditionally been correlated to oil and gas prices.

Oil and gas prices can be volatile at times depending upon both near and long-term supply and demand factors.

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As such, significant declines in the prices of oil and natural gas may have a material adverse effect on our business, financial condition and results of operations.

As of September 30, 2021, we had 137 rigs under contract, compared to 79 and 218 rigs under contract as of September 30, 2020 and 2019, respectively.

As of September 30, 2022, we had 192 active rigs under contract, compared to 137 and 79 rigs under contract as of September 30, 2021 and 2020, respectively.

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

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We compete against many drilling companies, some of whom are present in more than one of our operating regions.

In the United States, we compete with Nabors Industries Ltd., Patterson-UTI Energy, Inc.

and many other competitors with regional operations.

In the United States, we compete with Nabors Industries Ltd., Patterson-UTI Energy, Inc., Precision Drilling Corporation, and many other competitors with regional operations.

Internationally, we compete directly with various contractors at each location where we operate.

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

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

Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer.

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

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

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However, under certain limited circumstances such as destruction of a drilling rig, bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us.

Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer.

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

Each drilling rig operates under a separate drilling contract and, in some instances, these contracts are part of an over-arching term agreement known as a FlexPool.

These agreements are with a limited number of customers that operate multiple rigs, often times across multiple basins in the U.S.

Under the FlexPool agreements, customers enter into a fixed term contract covering a minimum amount of drilling days, utilizing a minimum number of drilling rigs and have the flexibility to employ more or fewer rigs as long as the minimum number of rigs (outlined in the agreement) is maintained.

If any provisions are violated, as in a customer operating below the minimum number of rigs, early termination payments may apply.

2022 FORM 10-K | 12

Daywork Contracts

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During fiscal year 2022, a majority of our drilling services were performed on a “daywork” contract basis.

Footage Contracts

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

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

Lump-sum Contracts

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

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

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Performance-based Contracts

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Contract Backlog

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

As of September 30, 2022 and 2021, our drilling contract backlog was $1.2 billion and $0.6 billion, respectively.

Approximately 30.8 percent of the September 30, 2022 backlog is reasonably expected to be fulfilled in fiscal year 2024 and thereafter.

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

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

As of September 30, 2022, we had approximately 7,000 employees within the United States and approximately 1,000 employees in our international operations.

The number of employees fluctuates depending on the current and expected demand for our services.

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

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

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

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

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

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

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

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Education and Training

We are dedicated to the continual training and development of our employees, especially of those in field operations, to ensure we can develop future managers and leaders from within our organization.

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

We are committed to the continual training and development of our employees, especially of those in field operations, to help ensure we can develop future managers and leaders from within our organization.

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

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

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

The three training programs include:

• Introduction to Diversity, Equity, and Inclusion and Traits of Inclusive Teams;

• Unconscious Bias and Microaggressions;

• Allyship and Privilege.

These three courses take employees through an exploratory and educational journey to discover how unique perspectives and curiosity can create an environment to understand, welcome, respect, and value one another.

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

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

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

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

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

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

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

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

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

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

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

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

Safety Leadership

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

For more than 20 years, H&P measured safety success the same way other companies in our industry did – the absence of OSHA recordable injuries and declining total recordable injury rates ("TRIR").

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

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

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

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

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

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

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

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

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

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

We are committed to controlling and removing SIF exposures at any H&P rig or facility.

We continue to track traditional safety metrics, such as TRIR, to be responsive to customer requests and industry benchmarking, but do not use these metrics as the foundation for our safety culture.

H&P data shows that only a small portion of OSHA recordable incidents provide value in preventing potential serious injuries.

Incidents that do not result in an injury, but have the potential for a serious injury or fatality provide many more learning opportunities for preventing future serious injuries or fatalities.

Based on this data we have a proportionate response approach to incident investigations and corrective actions.

Priority is given to those incidents that have the potential to cause a serious injury or fatality.

Our safety success at H&P will be based on key performance indicators related to the removal of SIF exposures, such as SIF Potential and SIF Mitigated rates.

Our vision for the future of safety at H&P will be guided by these principles.

Diversity, Equity & Inclusion

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We have indemnification agreements with many of our customers and we also maintain liability and other forms of insurance.

In general, our drilling contracts contain provisions requiring our customers to indemnify us for, among other things, pollution and reservoir damage.

In general, our drilling contracts contain provisions requiring our customers to indemnify us for, among other things, well control events and reservoir damage.

However, our contractual rights to indemnification may be unenforceable or limited due to negligent or willful acts by us, or subcontractors and/or suppliers or by reason of state anti-indemnity laws.

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• currency conversion and repatriation;

• global anti-corruption laws;

• government sanctions and embargo listing.

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

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

The Occupational Safety and Health Act (“OSHA”) and other similar laws and regulations govern the protection of the health and safety of employees.

The OSHA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in our operations and that this information be provided to employees, state and local governments, emergency responders and citizens.

The Occupational Health and Safety Act (“OSHSA”) and other similar laws and regulations govern the protection of the health and safety of employees.

The OHSA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in our operations and that this information be provided to employees, state and local governments, emergency responders and citizens.

A number of countries actively regulate and control the importation and/or exportation of oil and gas and other aspects of the oil and gas industries in their countries.

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In some areas of the world, government activity has adversely affected the amount of exploration and development work done by oil and gas companies and influenced their need for drilling services, and likely will continue to do so.

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In addition, we are subject to a variety of other U.S.

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

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

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Department of Labor, which sets employment practice standards for workers.

In addition, we are subject to certain requirements to contribute to retirement funds or other benefit plans, and laws in some jurisdictions restrict our ability to dismiss employees.

In addition, we are subject to certain requirements to contribute to retirement funds or other benefit plans, and laws in some jurisdictions may require payment of statutorily calculated amounts to employees upon termination of employment.

We monitor our compliance with applicable governmental rules and regulations in each country of operation.

We have made and will continue to make the required expenditures to comply with current and future regulatory requirements.

We do not anticipate that compliance with currently applicable rules and regulations and required controls will significantly change our competitive position, capital spending or earnings during 2022.

We believe we are in material compliance with applicable rules and regulations and, to date, the cost of such compliance has not been material to our business or financial condition.

We believe we are materially compliant with applicable rules and regulations and, to date, the cost of such compliance has not been material to our business or financial condition.

However, future events such as additional laws and regulations, changes in existing laws and regulations or their interpretation or more vigorous enforcement policies of regulatory agencies, may require additional expenditures by us, which may be material.

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

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

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

Improving Lives Through Efficient and Responsible Energy

We believe efficient and responsible energy improves lives globally.

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

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

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

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

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

A “service sector” developed to supply the most scientific and technologically specialized needs of the oil and gas sector.

We provide highly specialized services in this narrow segment of the very broad and constantly evolving energy sector.

We continue to innovate in an effort to increase efficiency for our customers and provide continued societal benefits with less impact to the environment.

Focused on Safer and More Efficient Drilling

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

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

Our E&P customers then determine if and when to extract those resources from the ground, following completion of the well.

H&P and the Fossil Fuel Value Chain

While we do play an important role in helping our customers make overall production as safe and efficient as possible, our most critical responsibility is ensuring the safety of our employees and the employees of our customers.

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

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

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

• makes drilling for oil safer and more efficient;

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

• oversees drilling operations on its rigs on customer sites;

• drills predominantly on-shore in the United States (86 percent of available rigs are on onshore);

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

OTHER SECTORS OF THE OIL AND GAS INDUSTRY:

• buy, lease, prepare, manage or restore land or are responsible for the protection of wildlife on or biodiversity of property;

• engage in hydraulic fracturing;

• pump oil or gas from the ground;

• procure, transport or pump water underground, or treat or remove wastewater from the site, or arrange for its disposal;

• assume responsibility for the prevention of fugitive releases or emissions associated with the oil and gas production process;

• engage in oil and gas transport, refining or storage;

• engage in downstream operations.

Human Capital

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

The Company continues to evolve and refine its comprehensive sustainability strategy rooted in our core value to "do the right thing," as discussed above.

Our sustainability strategy uses data to better understand our impacts in areas like emissions, diversity, and safety.

Additional information on our sustainability strategy and programs can be obtained by reviewing our Sustainability Reports and related information, located on our website.

Available Information

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

The information contained on our website, or accessible from our website, is not incorporated into, and should not be considered part of, this Form 10‑K or any other documents we file with, or furnish to, the SEC.

The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

The information contained on our website, or accessible from our website, including our Sustainability Reports and related information, is not incorporated into, and should not be considered part of, this Form 10‑K or any other documents we file with, or furnish to, the SEC.

The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business