What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-11-17 compared with 2021-11-18 · 418 added, 375 removed, 1260 unchanged (39% of the section changed)

2 unchanged sentences

Management’s Report on Internal Control over Financial Reporting

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 00042)

Consolidated Financial Statements:

1 unchanged sentence

Consolidated Statements of Operations for the Years Ended September 30, 2022 , 2021 and 2020

Consolidated Statements of Comprehensive Loss for the Years Ended September 30, 2021 , 2020 and 2019

Consolidated Statements of Comprehensive Income ( Loss ) for the Years Ended September 30, 2022 , 2021 and 2020

Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2022 , 2021 and 2020

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We have audited the accompanying consolidated balance sheets of Helmerich & Payne, Inc.

(the Company) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, shareholders' equity and cash flows for each of the three years in the period ended September 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended September 30, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2022, in conformity with U.S.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Self-Insurance Accruals

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Additionally, we involved our actuarial specialists to assist in our evaluation of the methodologies applied by management’s actuary in establishing the actuarially determined reserve.

We compared the Company’s assumptions to ranges of assumptions independently developed by our actuarial specialists.

Valuation of Assets Held-for-Sale

Description of the Matter

As more fully described in Note 4—Property, Plant and Equipment to the consolidated financial statements, during 2021 the Company committed to a plan to sell 71 non-super spec rigs.

This action resulted in classification of the assets as held-for-sale.

The Company measured these assets at fair value less cost to sell, resulting in a $56.4 million impairment charge.

Auditing the Company's valuation of the assets-held-for-sale was complex and required subjective judgment and involvement of a valuation specialist in evaluating management’s assumptions used in determining the fair value less costs to sell.

Significant assumptions used in the Company’s estimate included management’s use of market quotes.

How We Addressed the Matter in Our Audit

We evaluated the design and tested the operating effectiveness of controls over the Company's process to estimate fair value less costs to sell.

For example, we tested management's review controls over the significant assumptions underlying the fair value analysis.

Our testing of the Company’s held-for-sale analysis included, among other procedures, evaluating management’s selection of valuation methodologies, evaluating the significant assumptions used and testing the completeness and accuracy of the underlying data.

For example, we compared the market quotes used in the analysis to external documentation.

We also performed sensitivity analyses of the assumptions to evaluate the change in the fair value resulting from changes in assumptions.

We involved our valuation specialists to assist in our procedures.

We compared the Company’s estimates to ranges of estimates independently developed by our actuarial specialists.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2021, and the related notes and our report dated November 18, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2022, and the related notes and our report dated November 16, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Cash and cash equivalents $ 232,131 $ 917,534

Restricted cash 36,246 18,350

Short-term investments 117,101 198,700

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Intangible assets, net 67,154 73,838

Operating lease right-of-use asset 49,187 44,583

Operating lease right-of-use assets 39,064 49,187

Other assets, net 20,926 16,153

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Dividends payable 26,693 27,332

Current portion of long-term debt 483,486 —

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

Accrued liabilities 241,151 283,492

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Shareholders' Equity:

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of September 30, 2021 and 2020, respectively, and 107,898,859 and 107,488,242 shares outstanding as of September 30, 2021 and 2020, respectively

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of September 30, 2022 and 2021, and 105,293,662 and 107,898,859 shares outstanding as of September 30, 2022 and 2021, respectively

11,222 11,222

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Selling, general and administrative 182,366 172,195 167,513

Asset impairment charge 70,850 563,234 224,327

Asset impairment charges 4,363 70,850 563,234

Restructuring charges 838 5,926 16,047

Gain on sale of assets ( 1,042 ) ( 46,775 ) ( 39,691 )

Gain on reimbursement of drilling equipment ( 29,443 ) ( 12,322 ) ( 26,959 )

Other (gain) loss on sale of assets ( 5,432 ) 11,280 ( 19,816 )

2,013,652 1,647,117 2,394,114

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Gain on sale of subsidiary — — 14,963

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

Other ( 11,115 ) ( 5,657 ) ( 5,384 )

( 14,374 ) ( 12,631 ) ( 16,311 )

Loss from continuing operations before income taxes ( 441,180 ) ( 636,498 ) ( 51,222 )

Income tax benefit ( 103,721 ) ( 140,106 ) ( 18,712 )

Loss from continuing operations ( 337,459 ) ( 496,392 ) ( 32,510 )

Income (loss) from continuing operations before income taxes 30,918 ( 441,180 ) ( 636,498 )

Income tax expense (benefit) 24,366 ( 103,721 ) ( 140,106 )

Income (loss) from continuing operations 6,552 ( 337,459 ) ( 496,392 )

Income from discontinued operations before income taxes 401 11,309 30,580

Income tax provision — — 28,685

Income (loss) from discontinued operations 11,309 1,895 ( 1,146 )

NET LOSS $ ( 326,150 ) $ ( 494,497 ) $ ( 33,656 )

Income from discontinued operations 401 11,309 1,895

NET INCOME (LOSS) $ 6,953 $ ( 326,150 ) $ ( 494,497 )

Basic earnings (loss) per common share:

Loss from continuing operations $ ( 3.14 ) $ ( 4.62 ) $ ( 0.33 )

Income (loss) from discontinued operations 0.10 0.02 ( 0.01 )

Net loss $ ( 3.04 ) $ ( 4.60 ) $ ( 0.34 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Diluted earnings (loss) per common share:

Loss from continuing operations $ ( 3.14 ) $ ( 4.62 ) $ ( 0.33 )

Income (loss) from discontinued operations 0.10 0.02 ( 0.01 )

Net loss $ ( 3.04 ) $ ( 4.60 ) $ ( 0.34 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Weighted average shares outstanding:

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HELMERICH & PAYNE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year ended September 30,

(in thousands) 2022 2021 2020

Net loss $ ( 326,150 ) $ ( 494,497 ) $ ( 33,656 )

Other comprehensive income (loss), net of income taxes:

Net income (loss) $ 6,953 $ ( 326,150 ) $ ( 494,497 )

Other comprehensive income, net of income taxes:

Net change related to employee benefit plans, net of income taxes of $ 2.3 million at September 30, 2022, $ 1.8 million at September 30, 2021 and $ 0.8 million at September 30, 2020

8,172 5,944 2,447

Other comprehensive income (loss) 5,944 2,447 ( 11,875 )

Comprehensive loss $ ( 320,206 ) $ ( 492,050 ) $ ( 45,531 )

Other comprehensive income 8,172 5,944 2,447

Comprehensive income (loss) $ 15,125 $ ( 320,206 ) $ ( 492,050 )

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

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112,080 $ 11,208 $ 510,305 $ 3,714,307 $ ( 28,635 ) 3,642 $ ( 194,962 ) $ 4,012,223

Comprehensive loss:

Comprehensive income (loss):

Net loss — — — ( 494,497 ) — — — ( 494,497 )

Other comprehensive loss — — — — ( 11,875 ) — — ( 11,875 )

Other comprehensive income — — — — 2,447 — — 2,447

Dividends declared ($ 1.92 per share)

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Share repurchases — — — — — 1,460 ( 28,505 ) ( 28,505 )

Cumulative effect adjustment for adoption of ASU No.

2014-09 — — — ( 38 ) — — — ( 38 )

Cumulative effect adjustment for adoption of ASU No.

2016-01 — — — 29,071 ( 29,071 ) — — —

Reclassification of stranded tax effect for adoption of ASU No.

2018-02 — — — 4,239 ( 4,239 ) — — —

Balance at September 30, 2020

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— — — ( 109,236 ) — — — ( 109,236 )

Exercise of employee stock options, net of shares withheld for employee taxes — — ( 3,151 ) — — ( 110 ) 7,195 4,044

Vesting of restricted stock awards, net of shares withheld for employee taxes 71 7 ( 18,683 ) — — ( 339 ) 16,515 ( 2,161 )

Stock-based compensation — — 27,858 — — — — 27,858

Share repurchases — — — — — 1,460 ( 28,505 ) ( 28,505 )

Cumulative effect adjustment for adoption of ASU No.

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

Other — — ( 900 ) — — — — ( 900 )

Balance at September 30, 2021

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

Comprehensive income (loss):

Net loss — — — ( 326,150 ) — — — ( 326,150 )

Comprehensive income:

Net Income — — — 6,953 — — — 6,953

Other comprehensive income — — — — 8,172 — — 8,172

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Stock-based compensation — — 28,032 — — — — 28,032

Cumulative effect adjustment for adoption of ASU No.

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

Share repurchases — — — — — 3,155 ( 76,999 ) ( 76,999 )

Other — — ( 1,049 ) — — — ( 1,049 )

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 326,150 ) $ ( 494,497 ) $ ( 33,656 )

Adjustment for (income) loss from discontinued operations ( 11,309 ) ( 1,895 ) 1,146

Loss from continuing operations ( 337,459 ) ( 496,392 ) ( 32,510 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 6,953 $ ( 326,150 ) $ ( 494,497 )

Adjustment for income from discontinued operations ( 401 ) ( 11,309 ) ( 1,895 )

Income (loss) from continuing operations 6,552 ( 337,459 ) ( 496,392 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 403,170 419,726 481,885

1 unchanged sentence

Amortization of debt discount and debt issuance costs 1,200 1,423 1,817

Loss on extinguishment of debt 60,083 — —

Provision for credit loss 1,081 203 2,203

1 unchanged sentence

Loss (gain) on investment securities ( 57,937 ) ( 6,727 ) 8,720

Gain on sale of assets ( 1,042 ) ( 46,775 ) ( 39,691 )

Gain on reimbursement of drilling equipment ( 29,443 ) ( 12,322 ) ( 26,959 )

Other (gain) loss on sale of assets ( 5,432 ) 11,280 ( 19,816 )

Gain on sale of subsidiary — — ( 14,963 )

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Capital expenditures ( 250,894 ) ( 82,148 ) ( 140,795 )

Purchase of investments ( 417,601 ) ( 134,641 ) ( 97,652 )

Payment for acquisition of business, net of cash acquired — — ( 16,163 )

Proceeds from sale of investments 207,716 94,646 98,764

Other capital expenditures related to assets held-for-sale ( 21,645 ) — —

Purchase of short-term investments ( 165,109 ) ( 315,078 ) ( 134,641 )

Purchase of long-term investments ( 51,241 ) ( 102,523 ) ( 550 )

Proceeds from sale of short-term investments 244,728 207,716 94,646

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

Proceeds from sale of subsidiary — — 15,056

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

Make-whole premium payment ( 56,421 ) — —

Share repurchases ( 76,999 ) — ( 28,505 )

1 unchanged sentence

Net cash provided by (used in) financing activities ( 734,305 ) 425,523 ( 297,220 )

Net increase in cash and cash equivalents and restricted cash 399,969 153,776 56,786

Net increase (decrease) in cash and cash equivalents and restricted cash ( 667,707 ) 399,969 153,776

Cash and cash equivalents and restricted cash, beginning of period 936,716 536,747 382,971

Cash and cash equivalents and restricted cash, end of period $ 269,009 $ 936,716 $ 536,747

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

2022 FORM 10-K | 63

HELMERICH & PAYNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Year Ended September 30,

(in thousands) 2022 2021 2020

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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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 17—Business Segments and Geographic Information for further details on our reportable segments.

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

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.

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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 Consolidated Statements of Operations and Comprehensive Loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.

All intercompany accounts and transactions have been eliminated in consolidation.

2021 FORM 10-K | 66

COVID-19 and OPEC+ Production Impacts

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

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

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

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

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

Despite the increased availability of vaccines in certain jurisdictions, the COVID-19 pandemic may continue unabated or worsen during the upcoming months, including as a result of the emergence of more infectious strains of the virus, vaccine hesitancy or increased business and social activities, which may cause governmental authorities to reconsider restrictions on business and social activities.

In the event governmental authorities increase restrictions, the reopening of the economy may be curtailed.

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

Depressed economic conditions exacerbated by COVID-19 restrictions in one foreign jurisdiction where we operate have led to an increase in community strikes which have resulted in periodic suspensions of our operations.

In addition, the perceived risk of infection and health risk associated with COVID-19, and the illness of many individuals across the globe, has and will continue to alter behaviors of consumers and policies of companies around the world;

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

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

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

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

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

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

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

Although crude oil prices have recovered since March 2020, oil and natural gas prices are expected to continue to be volatile as a result of near-term production instability, the ongoing COVID-19 pandemic, changes in oil and natural gas inventories, industry demand, global and national economic performance, and the actions of OPEC+.

These events have had, and could continue to have, an adverse impact on numerous aspects of our business, financial condition and results of operations.

The ultimate extent of the impact of COVID-19 on our business, financial condition and results of operations will depend largely on future developments, including the duration and spread of COVID-19 within the United States and the parts of the world in which we operate and the related impact on the oil and gas industry, the impact of governmental actions designed to prevent the spread of COVID-19 and the development, availability, timely distribution and acceptance of effective treatments and vaccines worldwide, all of which are highly uncertain and cannot be predicted with certainty at this time.

At September 30, 2021, the Company had cash and cash equivalents and short-term investments of $ 1.1 billion.

The 2018 Credit Facility (as defined within Note 7—Debt) has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit.

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

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.

On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 4.65 % 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 % 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 and accrued interest of $ 58.1 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million will be recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 redemption.

Refer to Note 7—Debt for further details.

2021 FORM 10-K | 67

Specifically, income, expenses and other comprehensive income or loss of a subsidiary acquired or disposed of during the fiscal year are included in the Consolidated Statements of Operations and Comprehensive Income 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.

Foreign Currencies

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Aggregate foreign currency losses of $ 5.9 million, $ 5.3 million and $ 8.8 million in fiscal years 2022, 2021 and 2020, respectively, are included in drilling services operating expenses.

2022 FORM 10-K | 65

Use of Estimates

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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 and cash equivalents of $ 19.2 million and $ 48.9 million at September 30, 2021 and 2020, respectively.

Of the total at September 30, 2021 and 2020, $ 1.5 million and $ 3.6 million, respectively, is related to the acquisition of drilling technology companies, $ 2.0 million as of both fiscal year ends is from the initial capitalization of the captive insurance companies, and $ 17.7 million and $ 43.1 million, respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

We had restricted cash of $ 36.9 million and $ 19.2 million at September 30, 2022 and 2021, respectively.

Of the total at September 30, 2022 and 2021, $ 1.1 million and $ 1.5 million, respectively, is related to the acquisition of drilling technology companies, and $ 35.8 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.

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(in thousands) 2022 2021 2020

Cash $ 917,534 $ 487,884 $ 347,943

Cash and cash equivalents $ 232,131 $ 917,534 $ 487,884

Restricted cash 36,246 18,350 45,577

Prepaid expenses and other 18,350 45,577 31,291

Other assets 832 3,286 3,737

Restricted cash - long-term:

Other assets, net 632 832 3,286

Total cash, cash equivalents, and restricted cash $ 269,009 $ 936,716 $ 536,747

During the fiscal year ended September, 30, 2022, and to conform with the current year presentation, we reclassified $ 18.4 million and $ 45.6 million of restricted cash that was previously included in Prepaid expenses and other in our Consolidated Balance Sheets as of September 30, 2021 and 2020, respectively.

Accounts Receivable

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We provide an allowance for credit losses, when necessary, to cover estimated credit losses.

Outstanding customer receivables are reviewed regularly for possible nonpayment indicators, and allowances for credit losses are recorded based upon management’s estimate of expected credit losses.

Refer to "Allowance for Credit Losses" below and Note 15—Supplemental Balance Sheet Information for additional information.

Outstanding customer receivables are reviewed regularly for possible nonpayment indicators.

We estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable.

We evaluate our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

Inventories of Materials and Supplies

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Our equity securities without readily determinable fair values are measured at cost, less any impairments.

Debt securities classified as available-for-sale are reported at fair value and subject to impairment testing.

Other than impairment losses, unrealized gains/losses are recognized, net of the related tax effect, in other comprehensive income.

Upon sale, realized gains/losses are reported in net income.

2022 FORM 10-K | 66

Property, Plant, and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation.

Property, plant and equipment are carried at cost less accumulated depreciation.

Substantially all property, plant and equipment are depreciated using the straight-line method based on the estimated useful lives of the assets after deducting their salvage values.

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Changes in our assumptions may require us to recognize, on a prospective basis, increased or decreased depreciation expense.

We capitalize interest on major projects during construction.

Interest is capitalized based on the average interest rate on related debt.

We had no capitalized interest during fiscal years 2021, 2020 and 2019.

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Changes that could prompt such an assessment include a significant decline in revenue or cash margin per day, extended periods of low rig asset group utilization, changes in market demand for a specific asset, obsolescence, completion of specific contracts, restructuring of our drilling fleet, and/or overall general market conditions.

If the review of the long-lived assets indicates that the carrying value of these assets/asset groups is more than the estimated undiscounted future cash flows projected to be realized from the use of the asset and its eventual disposal an impairment charge is made, as required, to adjust the carrying value down to the estimated fair value of the asset.

Changes that could prompt such an assessment include a significant decline in revenue or cash margin per day, extended periods of low rig asset group utilization, changes in market demand for a specific asset, obsolescence, restructuring of our drilling fleet, and/or overall general market conditions.

If the review of the long-lived assets indicates that the carrying value of these assets/asset groups is more than the estimated undiscounted future cash flows projected to be realized from the use of the asset and its eventual disposal an impairment charge is recognized, as required, to adjust the carrying value down to the estimated fair value of the asset.

The estimated fair value is determined based upon either an income approach using estimated discounted future cash flows, a market approach considering factors such as recent market sales of rigs of other companies and our own sales of rigs, appraisals and other factors, a cost approach utilizing reproduction costs new as adjusted for the asset age and condition, and/or a combination of multiple approaches.

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Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination, at the date of acquisition.

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combinat ion, at the date of acquisition.

Goodwill is not amortized, but is tested for potential impairment at the reporting unit level at a minimum on an annual basis in the fourth fiscal quarter of each fiscal year or when it is more likely than not that the carrying value may exceed fair value.

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Drilling Revenues

Drilling services revenues are comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured.

Drilling services revenues are primarily comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured.

For certain contracts, we receive payments contractually designated for the mobilization of rigs and other drilling equipment.

Revenues associated with mobilization and lump-sum demobilization and direct costs incurred for the mobilization, are deferred and recognized on a straight-line basis as the drilling service is provided.

Revenues associated with mobilization and demobilization and direct costs incurred for the mobilization, are deferred and recognized on a straight-line basis as the drilling service is provided.

Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred.

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Early termination revenue for fiscal years 2022, 2021 and 2020 was approximately $ 0.7 million, $ 7.7 million and $ 73.4 million, respectively.

Rent Revenues

Rent Revenues and Related Property

We enter into leases with tenants in our rental properties consisting primarily of retail space.

The lease terms of tenants occupying space in the retail centers and warehouse buildings generally range from three to ten years .

The lease terms of tenants occupying space in the retail centers generally range from three to ten years .

Minimum rents are recognized on a straight-line basis over the term of the related leases.

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Overage and percentage rents 773 726 656

At September 30, 2021, minimum future rental income to be received on noncancelable operating leases was as follows:

At September 30, 2022, minimum future rental income to be received on noncancellable operating leases was as follows:

Fiscal Year Amount

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Stock-based compensation expense is determined using a fair-value-based measurement method for all awards granted.

Beginning in fiscal year 2019, we replaced stock options with performance share units as a component of our executives’ long-term equity incentive compensation.

We have also eliminated stock options as an element of our non-employee director compensation program.

The Board of Directors (the "Board") has determined to award stock-based compensation to non-employee directors solely in the form of restricted stock.

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The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date.

The grant date fair value of performance share units is determined through the use of the Monte Carlo simulation method.

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Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined peer group of companies’ (the "Peer Group") stock, risk free rate of return, dividend yields and cross-correlations between the Company and our Peer Group.

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Stock-based compensation is recognized on a straight-line basis over the requisite service periods of the stock awards, which is generally the vesting period.

Compensation expense is recorded as a component of drilling services operating expenses, research and development expenses and selling, general and administrative expenses in the Consolidated Statements of Operations.

Stock-based compensation expense is recorded as a component of drilling services operating expenses, research and development expenses and selling, general and administrative expenses in the Consolidated Statements of Operations.

See Note 11—Stock-based Compensation for additional discussion on stock-based compensation.

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

Up until the end of fiscal year 2019, leases of property, plant and equipment were classified as either capital or operating leases.

Payments made under operating leases (net of any incentives received from the lessor) were charged to the income statement on a straight-line basis over the period of the lease (“levelized lease cost”).

Beginning October 1, 2019, leases are recognized as a right-of-use asset and a corresponding liability within accrued liabilities and other non-current liabilities at the date at which the leased asset is available for use by the Company.

Leases are recognized as a right-of-use asset and a corresponding liability within accrued liabilities and other non-current liabilities at the date at which the leased asset is available for use by the Company.

Operating lease expense is recognized on a straight-line basis over the life of the lease.

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• Asset retirement obligations related to that lease, as applicable.

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Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss.

Payments associated with short-term leases are recognized on a straight-line basis as an expense in profit or loss.

Short-term leases are leases with a lease term of 12 months or less.

Low-value assets are comprised of IT-equipment and office furniture.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.

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Refer to Note 5—Leases for additional information regarding our leases.

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Recently Issued Accounting Updates

Changes to U.S.

GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates ("ASUs") to the FASB ASC.

GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates ("ASUs") to the FASB Accounting Standards Codification ("ASC").

We consider the applicability and impact of all ASUs.

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

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

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

Standard Description Date of

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Recently Adopted Accounting Pronouncements

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

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

The new model will apply to:

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

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

October 1, 2020

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

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

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

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

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

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

September 30, 2021

We adopted this ASU during the fourth quarter of fiscal year 2021.

The adoption did not have a material effect on our consolidated financial statements and disclosures.

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

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

Simplifying the Accounting for Income Taxes

This ASU simplifies the accounting for income taxes by removing certain exceptions related to Topic 740.

Simplifying the Accounting for Income Taxes This ASU simplifies the accounting for income taxes by removing certain exceptions related to Topic 740.

The ASU also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

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Upon adoption, the amendments addressed in this ASU will be applied either prospectively, retrospectively or on a modified retrospective basis through a cumulative effect adjustment to retained earnings.

The update is effective for annual periods beginning after December 15, 2020.

October 1, 2021

We plan to adopt this ASU, as required, in the first quarter of fiscal year 2022.

Although we are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures, we do not believe the adoption will have a material effect thereon.

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

October 1, 2021 We adopted this ASU, as required, during the first quarter of fiscal year 2022.

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

Standards that are not yet adopted as of September 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):

Accounting For Convertible Instruments and Contracts In An Entity’s Own Equity This ASU reduces the complexity of accounting for convertible debt and other equity-linked instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

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

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

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.

We do not believe the adoption will have a material effect on our Consolidated Financial Statements and disclosures.

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.

We do not believe the adoption will have a material effect on our Consolidated Financial Statements and disclosures.

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Concentration of Credit Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of temporary cash investments, short-term investments and trade receivables.

Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of temporary cash investments, short and long-term investments, and trade receivables.

The industry concentration has the potential to impact our overall exposure to market and credit risks, either positively or negatively, in that our customers could be affected by similar changes in economic, industry or other conditions.

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In fiscal years 2022, 2021 and 2020, no individual customers constituted 10 percent or more of our total consolidated revenues.

We place temporary cash investments in the United States with established financial institutions and invest in a diversified portfolio of highly rated, short-term money market instruments.

We place temporary cash investments in the United States with established financial institutions and primarily invest in a diversified portfolio of highly rated, short-term instruments.

Our trade receivables, primarily with established companies in the oil and gas industry, may impact credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions.

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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.

Direct operating costs consisted primarily of adjustments to accruals for estimated losses of $ 12.6 million and $ 16.4 million allocated to the Captives and rig and casualty insurance premiums of $ 21.9 million and $ 6.7 million during the fiscal years ended September 30, 2021 and 2020, respectively.

Direct operating costs consisted primarily of adjustments to accruals for estimated losses of $ 7.0 million, $ 12.6 million, and $ 16.4 million and rig and casualty insurance premiums of $ 35.6 million, $ 21.9 million, and $ 6.7 million during the fiscal years ended September 30, 2022, 2021, and 2020 respectively.

These operating costs were recorded within drilling services operating expenses in our Consolidated Statement of Operations.

Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2021 and 2020 amounted to $ 35.4 million and $ 36.9 million, respectively, which were eliminated upon consolidation.

Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2022, 2021, and 2020 amounted to $ 57.0 million, $ 35.4 million, and $ 36.9 million 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 .

This program will also be reviewed at the end of each policy year by an outside actuary.

Our medical stop loss operating expenses for the fiscal year ended September 30, 2021 and 2020 were $ 12.0 million and $ 8.0 million, respectively.

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

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

Our medical stop loss operating expenses for the fiscal year ended September 30, 2022, 2021, and 2020 were $ 11.8 million, $ 12.0 million, and $ 8.0 million respectively.

International Solutions Drilling Risks

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Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations.

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

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

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

dollars, we are paid in 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.

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

dollar reserves.

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

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

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

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

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

We recorded aggregate foreign currency losses of $ 5.9 million, $ 5.3 million, and $ 8.8 million the fiscal years ended September 30, 2022, 2021, and 2020 respectively.

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.

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Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the fiscal year ended September 30, 2021, approximately 5.0 percent of our operating revenues were generated from international locations in our drilling services business compared to 8.3 percent during the fiscal year ended September 30, 2020.

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the fiscal year ended September 30, 2022, approximately 6.7 percent of our operating revenues were generated from international locations compared to 5.0 percent during the fiscal year ended September 30, 2021.

During the fiscal year ended September 30, 2022, approximately 81.6 percent of operating revenues from international locations were from operations in South America compared to 48.9 percent during the fiscal year ended September 30, 2021.

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NOTE 3 DISCONTINUED OPERATIONS

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

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

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

The activity for the fiscal year ended September 30, 2021 was primarily due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuela Bolivar.

The activity for each fiscal year presented was due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuela Bolivar.

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

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The DICOM floating rate was approximately 4,181,782 , and 436,677 Bolivars per United States dollar at September 30, 2021 and 2020, 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 September 30, 2022, the DICOM floating rate was approximately eight Bolivars per United States dollar.

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

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(1) Included in construction in progress are costs for projects in progress to upgrade or refurbish certain rigs in our existing fleet.

Additionally, we include other capital maintenance purchase-orders that are open/in process.

Additionally, we include other advances for capital maintenance purchase-orders that are open/in process.

As these various projects are completed, the costs are then classified to their appropriate useful life category.

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As a result of these indicators, we performed impairment testing at March 31, 2020 on each of our Domestic non super-spec and International conventional, FlexRig ® 3, and FlexRig ® 4 asset groups, which had an aggregate net book value of $ 605.8 million.

We concluded that the net book value of each asset group is not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $ 441.4 million in the Consolidated Statement of Operations for the fiscal year ended September 30, 2020.

We concluded that the net book value of each asset group was not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $ 441.4 million in the Consolidated Statement of Operations for the fiscal year ended September 30, 2020.

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the North America Solutions and International Solutions segments, respectively.

No further impairments were recognized in fiscal year 2020.

Impairment was measured as the amount by which the net book value of each asset group exceeds its fair value.

Impairment was measured as the amount by which the net book value of each asset group exceeded its fair value as of the assessment date.

The most significant assumptions used in our undiscounted cash flow model include timing on awards of future drilling contracts, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition.

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

Impairment - Fiscal Year 2019

During the third quarter of fiscal year 2019, the Company's management performed a detailed assessment, considering a number of approaches, to maximize the utilization and enhance the margins of the domestic and international FlexRig® 4 asset groups.

In June 2019, this assessment concluded that marketing a smaller fleet of these two asset groups would provide the best economic outcome.

As such, the decision was made to downsize the number of domestic and international FlexRig® 4 drilling rigs, to be marketed to our customers, from 71 rigs to 20 domestic rigs and from 10 rigs to 8 international rigs and utilize the major interchangeable components of the decommissioned drilling rigs within these asset groups as capital spares for all of our remaining rig fleet.

This reduced the aggregate net book values of the FlexRig®4 asset groups as of June 30, 2019 from $ 317.8 million to $ 107.5 million for domestic rigs and from $ 55.7 million to $ 47.8 million for international rigs.

Following the downsizing process, we performed a detailed study to optimize the quantities of capital spares and drilling support equipment required to support the future operations of our rig fleet going forward.

These decisions and analysis resulted in a write down of excess capital spares and drilling support equipment, which had an aggregate net book value of $ 235.3 million, to their estimated proceeds to ultimately be received on sale or disposal based on our historical experience with sales and disposals of similar assets, resulting in an impairment of $ 224.3 million, which was recorded in our Consolidated Statement of Operations for the fiscal year ended September 30, 2019.

Of the $ 224.3 million total impairment charge recorded, $ 216.9 million and $ 7.4 million was recorded in our North America Solutions and International Solutions segments, respectively.

The significant assumptions in the valuation are classified as Level 2 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.

Due to the downsizing of our domestic and international FlexRig ® 4 asset groups, at June 30, 2019, we performed impairment testing on these two asset groups.

We concluded that the net book values of the asset groups were recoverable through estimated undiscounted cash flows with a surplus.

The most significant assumptions used in our undiscounted cash flow model include timing on awards of future drilling contracts, operating dayrates, operating costs, rig reactivation costs, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition.

The assumptions are consistent with the Company's internal forecasts for future years.

Depreciation in the Consolidated Statements of Operations of $ 396.0 million, $ 412.5 million and $ 474.7 million includes abandonments of $ 6.6 million, $ 2.0 million and $ 4.0 million for the fiscal years 2022, 2021 and 2020, respectively.

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Assets Held-for-Sale

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Balance at September 30, 2021

Asset additions 2,580

Sale of assets held-for-sale ( 67,592 )

Reclassification to assets held and used ( 2,108 )

Balance at September 30, 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.

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 cost to sell, and were reclassified as held-for-sale in the second and third quarters of fiscal year 2021.

As a result, the Company developed 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 represented their fair value less estimated cost to sell as of the assessment date, and were reclassified as held-for-sale in the second and third quarters of fiscal year 2021.

As a result, we recognized a non-cash impairment charge of $ 56.4 million during the fiscal year ended September 30, 2021 in the Consolidated Statement of Operations.

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.

During the fiscal year ended September 30, 2022 and September 30, 2021 , we completed the sale of assets with a net book value of $ 2.6 million and $ 6.5 million, respectively, that were originally classified as held-for-sale during the second and third quarters of fiscal year 2021.

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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.

No rigs have been delivered to ADNOC Drilling as of September 30, 2021 and, therefore, the total cash proceeds of $ 86.5 million is recorded in Accrued Liabilities within our Consolidated Balance Sheets as of September 30, 2021.

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

The rigs' fair value less estimated cost to sell of $ 29.0 million, including approximately $ 24.0 million of cash costs to be incurred, approximated their net book values at September 30, 2021.

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

No rigs were delivered to ADNOC Drilling as of September 30, 2021 and, therefore, the total cash proceeds of $ 86.5 million was recorded in Accrued Liabilities within our Consolidated Balance Sheets as of September 30, 2021.

As of September 30, 2022, ADNOC Drilling accepted delivery of all eight rigs resulting in a gain of $ 3.1 million, after $ 27.8 million of selling costs, during the fiscal year ended September 30, 2022.

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

The gain is recorded in Other (Gain) Loss on Sale of Assets within our Consolidated Statement of Operations for the fiscal year ended September 30, 2022 .

We paid approximately $ 21.6 million in cash charges attributable to selling costs for the eight rigs during fiscal year 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 services, which contributed approximately 2.8 percent to our consolidated revenue during fiscal year 2021, all within our North America Solutions segment.

The combined net book values of these assets of $ 23.2 million were written down to their combined fair value less estimated cost to sell of $ 8.8 million, and were reclassified as held-for-sale in the Consolidated Balance Sheets as of September 30.

As a result, we recognized a non-cash impairment charge of $ 14.4 million in the Consolidated Statement of Operations during the year ended September 30, 2021.

Subsequent to September 30, 2021, we closed on the sale of these assets 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.

The significant assumptions utilized in the held-for-sale valuations 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.

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 on the Consolidated Balance Sheets as of September 30, 2021 .

As a result, we recognized a non-cash impairment charge of $ 14.4 million in the Consolidated Statements of Operations during the year ended September 30, 2021 .

During the fiscal year ended September 30, 2022, we closed on the sale of these assets 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 fiscal year ended September 30, 2022.

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

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.

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 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 Consolidated Statement of Operations for fiscal year ended September 30, 2022.

During the second quarter of fiscal year 2022, we completed the sale of these assets, 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 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 Consolidated Statement of Operations during the fiscal year ended September 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 ended September 30, 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 valuations of held-for-sale were based on our intended method of disposal, historical sales of similar assets, and market quotes and are classified as Level 2 and Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.

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

Gain on Sale of Assets

We had an aggregate gain on sale of assets of $ 1.0 million, $ 46.8 million and $ 39.7 million in fiscal years 2021, 2020 and 2019, respectively, which are included within Gain on Sale of Assets on the Consolidated Statement of Operations.

During the fiscal year ended September 30, 2021, we closed on the sale of an offshore platform rig within our Offshore Gulf of Mexico operating segment for total consideration of $ 12.0 million with an aggregate net book value of $ 2.8 million, resulting in a gain of $ 9.2 million.

Additionally during the fiscal year ended September 30, 2021, we sold excess drilling equipment and spares, which resulted in a loss of $ 31.2 million and we also sold assets previously classified as held-for-sale, which resulted in a $ 3.1 million gain.

Furthermore, we recognized a $ 14.4 million gain on asset sales related to customer reimbursement for the replacement value of drill pipe damaged or lost in drilling operations during the fiscal year ended September 30, 2021.

(Gain)/Loss on Sale of Assets

Prior to the fiscal year ended September 30, 2022, Gain on Reimbursement of Drilling Equipment and Other (Gain) Loss on Sale of Assets was presented in the aggregate as Gain (Loss) on Sale of Assets on our Consolidated Statements of Operations.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in the Gain (Loss) on Sale of Assets during the years ended September 30, 2021 and 2020, as presented below.

Gain on Reimbursement of Drilling Equipment

We recognized a gain of $ 29.4 million, $ 12.3 million, $ 27.0 million in fiscal years 2022, 2021 and 2020, respectively, related to customer reimbursement for the current 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 Consolidated Statements of Operations.

Other (Gain)/Loss on Sale of Assets

We recognized a (gain) loss of $( 5.4 ) million, $ 11.3 million and $( 19.8 ) million in fiscal years 2022, 2021 and 2020, respectively, related to the sale of rig equipment and other capital assets.

These amounts are recorded in Other (Gain) Loss on Sale of Assets within our Consolidated Statements of Operations.

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During the fiscal year ended September 30, 2020, we closed on the sale of a portion of our real estate investment portfolio, including six industrial sites, for total consideration, net of selling related expenses, of $ 40.7 million and an aggregate net book value of $ 13.5 million, resulting in a gain of $ 27.2 million.

Additionally, we recorded a gain of $ 27.0 million related to the customer reimbursement for replacement value of lost or damaged drill pipe.

During the fiscal year ended September 30, 2019, our $ 39.7 million gain on sale of assets was primarily related to customer reimbursement for the replacement value of lost or damaged drill pipe.

Fiscal Year 2022 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.

We also recognized a gain of $ 1.1 million in earnout proceeds associated with the sale of our trucking services assets during the fiscal year ended September 30, 2022.

During the same fiscal period, ADNOC Drilling accepted delivery of all eight rigs resulting in an aggregate gain of $ 3.1 million, as mentioned above.

We also recognized a gain of $ 4.2 million related to the sale of other held-for-sale assets (discussed above) during the fiscal year ended September 30, 2022.

Fiscal Year 202 1 During the fiscal year ended September 30, 2021 , we closed on the sale of an offshore platform rig within our Offshore Gulf of Mexico operating segment for total consideration of $ 12.0 million with an aggregate net book value of $ 2.8 million, resulting in a gain of $ 9.2 million.

Additionally during the fiscal year ended September 30, 2021 , we sold excess drilling equipment and spares, which resulted in a loss of $ 31.2 million and we also sold assets previously classified as held-for-sale, which resulted in a $ 3.1 million gain.

Fiscal Year 2020 During the fiscal year ended September 30, 2020, we closed on the sale of a portion of our real estate investment portfolio, including six industrial sites, for total consideration, net of selling related expenses, of $ 40.7 million and an aggregate net book value of $ 13.5 million, resulting in a gain of $ 27.2 million.

NOTE 5 LEASES

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$ 44,769 $ 56,667

Discounted using the lessee's incremental borrowing rate at the date of initial application $ 52,372 $ 46,706

Discounted using the lessee's incremental borrowing rate $ 41,002 $ 52,372

short-term leases recognized on a straight-line basis as expense ( 1,052 ) ( 1,761 )

Low value lease contracts $ ( 123 ) —

other ( 218 ) ( 123 )

Lease liability recognized $ 39,732 $ 50,488

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Total lease cost $ 11,233 $ 17,266

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Lease Terms and Discount Rates

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases as of September 30, 2021.

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases:.

September 30, 2022 September 30, 2021

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Weighted average discount rate 2.5 % 2.5 %

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Lease Obligations

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Fiscal Year Amount

2022 $ 10,596

Thereafter 5,465

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however, we have one unpriced renewal option for a minimum of five years and a maximum of 10 years, which was not recognized as part of our right-of-use assets and lease liabilities.

This contract was accounted for as an operating lease resulting in an operating lease right-of-use asset of $ 16.0 million and minimum lease liability of $ 16.2 million as of September 30, 2021.

This contract is accounted for as an operating lease resulting in an operating lease right-of-use asset of $ 12.2 million and $ 16.0 million, and minimum lease liability of $ 12.5 million and $ 16.2 million, as of September 30, 2022 and 2021, respectively.

NOTE 6 GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in a business combination, at the date of acquisition.

Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis, or when indications of potential impairment exist.

Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis in the fourth fiscal quarter, or when indications of potential impairment exist.

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

The following is a summary of changes in goodwill (in thousands):

Balance at September 30, 2019

Additions 1,200

Impairment ( 38,333 )

Balance at September 30, 2020

Balance at September 30, 2021

During fiscal year 2020, as a result of new information identified related to the acquisition of DrillScan ® , the acquisition date fair value of the contingent consideration and goodwill increased by approximately $ 1.2 million.

During the fiscal years ended September 30, 2022 and 2021, we had no additions or impairments to goodwill.

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

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$ 100,961 $ 33,807 $ 67,154 $ 100,461 $ 26,623 $ 73,838

Amortization expense in the Consolidated Statements of Operations was $ 7.2 million, $ 7.2 million and $ 5.8 million for fiscal years 2021, 2020 and 2019, respectively, and is estimated to be $ 7.2 million for fiscal year 2022, approximately $ 6.5 million for fiscal year 2023 and approximately $ 6.4 million for fiscal years 2024, 2025 and 2026.

Amortization expense in the Consolidated Statements of Operations was $ 7.2 million for fiscal years 2022, 2021 and 2020, and is estimated to be $ 6.6 million for fiscal year 2023, and approximately $ 6.4 million for fiscal year 2024 through 2027.

Impairment - Fiscal Year 2020

Consistent with our policy, we test goodwill annually for impairment in the fourth quarter of our fiscal year, or more frequently if there are indicators that goodwill might be impaired.

Due to the market conditions described in Note 4—Property, Plant and Equipment, during the second quarter of fiscal year 2020, we concluded that goodwill and intangible assets might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated and the intangible assets are recorded, for recoverability.

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Due September 29, 2031 550,000 ( 7,390 ) 542,610 550,000 ( 8,003 ) 541,997

Total notes payable 1,037,148 ( 11,665 ) 1,025,483 487,148 ( 6,421 ) 480,727

550,000 ( 7,390 ) 542,610 1,037,148 ( 11,665 ) 1,025,483

long-term debt due within one year $ — — — ( 487,148 ) 3,662 ( 483,486 )

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

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

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

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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.

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 Consolidated Statements of Operations during the fiscal year ended September 30, 2022.

Credit Facilities

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

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

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

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

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The 2018 Credit Facility also permits aggregate commitments under the facility to be increased by $ 300.0 million, subject to the satisfaction of certain conditions and the procurement of additional commitments from new or existing lenders.

The borrowings under the 2018 Credit Facility accrue interest at a spread over either the London Interbank Offered Rate ("LIBOR") or an adjusted base rate (as defined in the credit agreement).

In March 2022, the 2018 Credit Facility was amended to change the benchmark rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR").

Following the amendment, we can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin.

The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum.

The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent.

We also pay a commitment fee on the unused balance of the facility.

Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s.

The spread over LIBOR ranges from 0.875 percent to 1.500 percent per annum and commitment fees range from 0.075 percent to 0.200 percent per annum.

Based on the unsecured debt rating of the Company on September 30, 2021, the spread over LIBOR would have been 1.125 percent had borrowings been outstanding under the 2018 Credit Facility and commitment fees are 0.125 percent.

The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 0.875 percent to 1.500 percent per annum and zero to 0.50 percent per annum, respectively.

Commitment fees for both rates range from 0.075 percent to 0.200 percent per annum.

Based on the unsecured debt rating of the Company on September 30, 2022, the spread over SOFR would have been 1.125 percent had borrowings been outstanding under the 2018 Credit Facility and commitment fees would have been 0.125 percent.

There is a financial covenant in the 2018 Credit Facility that requires us to maintain a total funded debt to total capitalization ratio of less than or equal to 50 percent.

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As of September 30, 2022, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

As of September 30, 2021, we had three separate outstanding letters of credit with banks, in the amounts of $ 24.8 million, $ 3.0 million, and $ 2.1 million.

As of September 30, 2021, we also had a $ 20.0 million unsecured standalone line of credit facility, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

As of September 30, 2022, we had $ 55.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 55.0 million, $ 38.1 million of financial guarantees were outstanding as of September 30, 2022.

Separately, we had $ 2.0 million in standby letters of credit and bank guarantees outstanding.

In total, we had $ 40.1 million outstanding as of September 30, 2022.

In October 2022, we increased one of our standby letters of credit by $ 1.9 million.

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.

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Income Tax (Benefit) Provision and Rate

The components of the benefit for income taxes are as follows:

The components of the provision (benefit) for income taxes are as follows:

Year Ended September 30,

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( 28,488 ) ( 89,752 ) ( 157,555 )

Total benefit $ ( 103,721 ) $ ( 140,106 ) $ ( 18,712 )

Total provision (benefit) $ 24,366 $ ( 103,721 ) $ ( 140,106 )

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The amounts of domestic and foreign loss before income taxes are as follows:

The amounts of domestic and foreign income (loss) before income taxes are as follows:

Year Ended September 30,

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$ 30,918 $ ( 441,180 ) $ ( 636,498 )

Effective income tax rates as compared to the U.S.

Federal income tax rate are as follows:

The reconciliation of our effective income tax rates to the U.S.

Federal income tax rate is as follows:

Year Ended September 30,

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Excess officer's compensation 3.8 — ( 0.2 )

Contingent consideration adjustment — — 4.5

Foreign derived intangible income ( 13.8 ) — —

Other 0.3 0.7 ( 0.4 )

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Deferred Taxes

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities.

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities.

Recoverability of any tax assets are evaluated and necessary valuation allowances are provided.

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As of September 30, 2021, we had federal, state and foreign tax net operating loss carryforwards of approximately $ 7.3 million, $ 56.2 million and $ 32.0 million, respectively, federal and foreign research and development tax credits of approximately $ 1.0 million and $ 0.3 million, respectively, and foreign tax credit carryforwards of approximately $ 10.6 million (of which $ 9.3 million is reflected as a deferred tax asset in our Consolidated Balance Sheets prior to consideration of our valuation allowance), which will expire in fiscal years 2022 through 2041 and some of which can be carried forward indefinitely.

As of September 30, 2022, we had federal, state and foreign tax net operating loss carryforwards of approximately $ 4.5 million, $ 45.7 million and $ 14.3 million, respectively, federal and foreign research and development tax credits of approximately $ 0.4 million and $ 0.5 million, respectively, and foreign tax credit carryforwards of approximately $ 0.9 million which will expire in fiscal 2023 through 2042 and some of which can be carried forward indefinitely.

Certain of these carryforwards are subject to various rules which impose limitations on their utilization.

The valuation allowance is primarily attributable to foreign net operating loss carryforwards of $ 9.5 million, foreign tax credit carryforwards of $ 9.3 million, equity compensation of $ 5.4 million, and foreign minimum tax credit carryforwards of $ 1.4 million which more likely than not will not be utilized.

The valuation allowance is primarily attributable to foreign net operating loss carryforwards of $ 3.1 million, foreign tax credit carryforwards of $ 0.9 million, and equity compensation of $ 6.8 million which more likely than not will not be utilized.

Unrecognized Tax Benefits

We recognize accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the Consolidated Statements of Operations.

As of September 30, 2021 and 2020, we had accrued interest and penalties of $ 2.9 million and $ 2.8 million, respectively.

A reconciliation of the change in our gross unrecognized tax benefits for the fiscal years ended September 30, 2021 and 2020 is as follows:

As of September 30, 2022, 2021 and 2020, we had accrued interest and penalties of $ 3.0 million, $ 2.9 million and $ 2.8 million, respectively.

A reconciliation of the change in our gross unrecognized tax benefits are as follows:

(in thousands) 2022 2021 2020

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Unrecognized tax benefits at September 30, $ 960 $ 1,678 $ 13,440

As of September 30, 2021 and 2020, our liability for unrecognized tax benefits includes $ 1.4 million and $ 13.0 million, respectively, of unrecognized tax benefits related to discontinued operations that, if recognized, would not affect the effective tax rate.

As of September 30, 2022, 2021 and 2020, our liability for unrecognized tax benefits includes $ 0.7 million and $ 1.4 million and $ 13.0 million, respectively, of unrecognized tax benefits related to discontinued operations that, if recognized, would not affect the effective tax rate.

The remaining unrecognized tax benefits would affect the effective tax rate if recognized.

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NOTE 9 SHAREHOLDERS’ EQUITY

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

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

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

During the fiscal year ended September 30, 2021, we purchased no common shares.

We purchased 1.5 million and 1.0 million common shares at an aggregate cost of $ 28.5 million and $ 42.8 million, which are held as treasury shares, during the fiscal years ended September 30, 2020 and 2019, respectively.

As of September 30, 2021, we declared $ 109.2 million in cash dividends.

During the fiscal year ended September 30, 2022 and 2020, we repurchased 3.2 million common shares at an aggregate cost of $ 77.0 million and 1.5 million common shares at an aggregate cost of $ 28.5 million, respectively, which are held as treasury shares.

There were no repurchases of common shares during the fiscal year ended September 30, 2021.

During the year ended September 30, 2022, we declared $ 106.8 million in cash dividends.

A cash dividend of $ 0.25 per share was declared on September 7, 2022 for shareholders of record on November 15, 2022, payable on December 1, 2022.

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Amounts reclassified from accumulated other comprehensive loss 8,172

Net current-period other comprehensive loss 5,944

Net current-period other comprehensive income 8,172

Balance at September 30, 2022

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Because our customers benefit equally throughout the service period and our efforts in providing drilling services are incurred relatively evenly over the period of performance, revenue is recognized over time using a time-based input measure as we provide services to the customer.

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

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

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During the fiscal years ended September 30, 2022, 2021 and 2020, early termination revenue associated with term contracts was approximately $ 0.7 million, $ 7.7 million and $ 73.4 million, respectively.

During the fiscal year ended September 30, 2021, we recognized no notification fee revenue related to well-to-well contracts.

During the fiscal years ended September 30, 2020 and 2019, notification fee revenue related to well-to-well contracts was approximately $ 2.9 million and $ 1.2 million, respectively.

We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, for which we incur costs and earn revenues.

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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.

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

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 on a straight-line basis over the related contract term that drilling services are provided.

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Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.

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

(Argentina) ("YPF").

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

In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued 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 Consolidated Statements of Operations for the fiscal year ended September 30, 2022.

Contract Costs

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Abnormal mobilization costs are fulfillment costs that are incurred from excessive resources, wasted or spoiled materials, and unproductive labor costs that are not otherwise anticipated in the contract price and are expensed as incurred.

As of September 30, 2021 and 2020, we had capitalized fulfillment costs of $ 4.3 million and $ 6.2 million, respectively.

As of September 30, 2022 and 2021, we capitalized fulfillment costs of $ 6.3 million and $ 4.3 million respectively, which is included within Prepaid Expenses and Other Assets on our Consolidated Balance Sheets.

If capital modification costs are incurred for rig modifications or if upgrades are required for a contract, these costs are considered to be capital improvements.

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Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of September 30, 2021 was approximately $ 572.0 million, of which $ 440.8 million is expected to be recognized during fiscal year 2022, and approximately $ 131.2 million in fiscal year 2023 and thereafter.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of September 30, 2022 was approximately $ 1.2 billion, of which $ 0.8 billion is expected to be recognized during fiscal year 2023, and approximately $ 0.4 billion in fiscal year 2024 and thereafter.

These amounts do not include anticipated contract renewals.

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

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

Contract Assets and Liabilities

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Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within Prepaid expenses and Other current assets within our Consolidated Balance Sheets.

Under certain of our contracts, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract.

In some instances, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract.

We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within Accrued liabilities and Other noncurrent liabilities in our Consolidated Balance Sheets.

Contract balances are presented at the net amount at a contract level.

The following table summarizes the balances of our contract assets and liabilities at the dates indicated:

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

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

Contract assets $ 4,513 $ 2,367

Contract assets, net $ 6,319 $ 4,513

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(in thousands) September 30, 2022

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Contract liabilities balance at September 30, 2022 $ 20,646

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NOTE 11 STOCK-BASED COMPENSATION

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We have also eliminated stock options as an element of our non-employee director compensation program.

At September 30, 2021, we had 2.7 million outstanding stock options and 2.5 million exercisable stock options with weighted-average exercise prices of $ 63.34 and $ 63.57 , respectively.

At September 30, 2022, we had 2.4 million outstanding exercisable stock options with weighted-average exercise prices of $ 63.90 .

During the fiscal year ended September 30, 2022, 743,920 shares of restricted stock awards and 227,385 performance share units were granted under the 2020 Plan.

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— — ( 3,482 )

$ 28,032 $ 27,858 $ 36,329

(1) These restructuring charges are specific to the stock-based compensation benefit which resulted from the recognition of forfeitures in fiscal year 2020.

Refer to Note 18—Restructuring Charges to our Consolidated Financial Statements for details.

Restricted Stock

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That cost is expected to be recognized over a weighted-average period of 1.7 years.

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A summary of the status of our restricted stock awards as of September 30, 2022, and of changes in restricted stock outstanding during the fiscal years ended September 30, 2022, 2021 and 2020, is as follows:

2022 2021 2020

(shares in thousands) Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share

(shares in thousands) Shares 1

Weighted-Average Grant Date Fair Value per Share Shares 1

Weighted-Average Grant Date Fair Value per Share

Non-vested restricted stock outstanding at October 1, 1,412 $ 37.36 1,280 $ 49.81 1,085 $ 61.28

701 25.61 781 39.99 475 58.45

Granted 744 25.83 701 25.61 781 39.99

( 610 ) 39.81 ( 534 ) 51.79 ( 501 ) 59.46

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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 fiscal year ended September 30, 2021 , 18,906 restricted phantom stock units were granted and 20,616 restricted phantom stock units vested during the same period.

Phantom stock units are subject to a vesting period of one year from the grant date.

During the fiscal years ended September 30, 2022, 2021, and 2020, 14,199 , 18,906 , and 20,616 restricted phantom stock units were granted, respectively.

During the fiscal years ended September 30, 2022, and 2021, 18,906 and 20,616 restricted phantom stock units vested during the period, respectively.

There were no restricted phantom stock units that vested during fiscal year 2020, as it was the first year that restricted phantom stock units were granted.

(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.

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Performance Units

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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 (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period.

The Vesting Period for 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.

At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance units.

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That cost is expected to be recognized over a weighted-average period of 1.8 years.

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A summary of the status of our performance units as of September 30, 2022, 2021 and 2020 and changes in non-vested performance units outstanding during the fiscal years ended September 30, 2022, 2021 and 2020 is presented below:

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Granted 227 30.12 313 29.77 259 43.40

( 161 ) 62.66 — — — —

Dividend rights performance units credited 15 32.82 60 49.64 — —

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726 $ 33.67 699 $ 41.55 $ 337 $ 51.09

(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 96,819 performance units which is calculated based on the payout percentage for the completed performance period.

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(2) Expected volatilities are based on the daily closing price of our stock based upon historical experience over a period which approximates the expected term of the performance units.

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NOTE 12 EARNINGS (LOSS) PER COMMON SHARE

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Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.

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The following table sets forth the computation of basic and diluted earnings (loss) per share:

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(in thousands, except per share amounts) 2022 2021 2020

Loss from continuing operations $ ( 337,459 ) $ ( 496,392 ) $ ( 32,510 )

Income (loss) from discontinued operations 11,309 1,895 ( 1,146 )

Net loss ( 326,150 ) ( 494,497 ) ( 33,656 )

Income (loss) from continuing operations $ 6,552 $ ( 337,459 ) $ ( 496,392 )

Income from discontinued operations 401 11,309 1,895

Net income (loss) 6,953 ( 326,150 ) ( 494,497 )

Adjustment for basic earnings (loss) per share

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Basic earnings (loss) per common share:

Loss from continuing operations $ ( 3.14 ) $ ( 4.62 ) $ ( 0.33 )

Income (loss) from discontinued operations 0.10 0.02 ( 0.01 )

Net loss $ ( 3.04 ) $ ( 4.60 ) $ ( 0.34 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Diluted earnings (loss) per common share:

Loss from continuing operations $ ( 3.14 ) $ ( 4.62 ) $ ( 0.33 )

Income (loss) from discontinued operations 0.10 0.02 ( 0.01 )

Net loss $ ( 3.04 ) $ ( 4.60 ) $ ( 0.34 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

We had a net loss for fiscal years 2021 and 2020.

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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.

The following potentially dilutive average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings (losses) per share because their inclusion would have been anti-dilutive:

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The following potentially dilutive average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings (loss) per share because their inclusion would have been anti-dilutive:

(in thousands, except per share amounts) 2022 2021 2020

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or other inputs that are observable or can be corroborated by observable market data.

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• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

At September 30, 2021, our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S.

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

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

Our restricted assets consist of cash equivalents with the current portion included in prepaid expenses and other, and the noncurrent portion included in other assets.

At September 30, 2021, assets measured at fair value using Level 2 inputs include corporate bonds measured using broker quotations that utilize observable market inputs.

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

Our non-financial assets, such as intangible assets and property, plant and equipment, are recorded at fair value when acquired in a business combination or when an impairment charge is recognized.

If measured at fair value in the Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy.

Refer to Note 4—Property, Plant and Equipment for additional disclosure on the fair value of our assets classified as held-for-sale as of September 30, 2021.

The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at September 30, 2021 and 2020.

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The following table summarizes our assets and liabilities measured at fair value presented in our Consolidated Balance Sheets:

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

Recurring Fair Value Measurements

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.

September 30, 2022

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

Recurring fair value measurements:

Cash and cash equivalents $ 917,534 $ 917,534 $ — $ —

Short-term investments:

2 unchanged sentences

Total short-term investments 117,101 18,837 98,264 —

Other current assets 18,350 18,350 — —

Non-qualified supplemental savings plan 14,301 14,301 — —

Debt and equity securities 17,223 13,858 — 3,365

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

Equity investment in ADNOC Drilling 147,370 147,370 — —

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

Other debt securities 565 — — 565

Total investments 195,236 161,671 — 33,565

Other assets 832 832 — —

Total assets measured at fair value $ 1,270,860 $ 1,074,545 $ 192,950 $ 3,365

Contingent consideration $ 4,022 $ — $ — $ 4,022

1 unchanged sentence

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

Recurring fair value measurements:

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

Short-term investments:

Certificates of deposit 1,370 — 1,370 —

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

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

Other 1,992 1,992 — —

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

Other current assets 45,577 45,577 — —

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

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

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

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

Total investments 132,579 132,079 — 500

Other assets 3,286 3,286 — —

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

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

Cash Equivalents and Investments (Short and Long-Term)

The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S.

Government and in federally insured deposit accounts.

The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those investments.

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Short-term investments include securities classified as trading securities.

Short-term Investments Short-term investments primarily include securities classified as trading securities.

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

The securities are recorded at fair value.

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

These securities are recorded at fair value.

Level 1 inputs include U.S.

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

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

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

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 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.

We also hold various other equity securities without readily determinable fair values that are classified as Level 3.

These equity securities are measured at cost, less any impairments.

As a result of the change in the fair value of our long-term investments, we recorded a gain of $ 6.7 million for the year ended September 30, 2021.

During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced IPO.

ADNOC Drilling’s IPO completed on October 3, 2021 and our $ 100.0 million investment represents 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake.

Our investment is subject to a three-year lockup period and is classified as a long-term investment within Investments in our Consolidated Balance Sheets.

As of September 30, 2021, this investment was classified as a Level 1 investment.

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

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

Our investment is classified as a long-term equity investment within Investments in our 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 the contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

During the fiscal year ended September 30, 2022, we recognized a gain of $ 47.4 million on our Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.

As of September 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 fiscal year ended September 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 ("Galileo Parent").

We do not intend to sell this investment prior to its maturity date or an exit event.

As of September 30, 2022, the fair value of the convertible note was approximately equal to the cost basis.

All of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and are measured using Level 3 unobservable inputs 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:

(in thousands) 2022 2021

Assets at beginning of period $ 500 $ 500

Purchases 36,065 —

Transfers out 1

Assets at end of period $ 33,565 $ 500

(1) Conversion from debt to equity security

The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at September 30, 2022:

Fair Value Valuation Technique Unobservable Inputs

$ 33,000 Black-Scholes-Merton model Discount rate 22.4 %

Risk-free rate 4.0 %

Equity volatility 92.5 %

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

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

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

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

During the fiscal year ended September 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 fiscal year ended September 30, 2022, we recorded a total gain of $ 8.2 million related to this investment, which included a $ 0.5 million gain recognized upon the sale of our investment and a $ 7.7 million gain as a result of the change in fair value of the investment during the period.

This activity is reported in Gain (Loss) on Investment Securities in our Consolidated Statements of Operations.

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

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Contingent Consideration

The following table presents a reconciliation of changes in the fair value of our financial liabilities classified as Level 3 fair value measurements in the fair value hierarchy for fiscal years 2021 and 2020:

Other financial instruments 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.

Contingent consideration is recorded in Accrued Liabilities and Other Noncurrent Liabilities on the Consolidated Balance Sheets based on the expected timing of milestone achievements.

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

(in thousands) 2022 2021

Net liabilities at beginning of period $ 9,123 $ 18,373

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

Additions 1,500 —

3 unchanged sentences

( 250 ) ( 7,250 )

Net liabilities at end of period $ 2,996 $ 9,123

(1) Settlements represent earnout payments that have been earned or paid during the period.

Supplemental Fair Value Information

The following information presents the supplemental fair value information about current and long-term fixed-rate debt at September 30, 2021 and 2020:

Liabilities at end of period $ 4,022 $ 2,996

(1) Settlements represent earnout payments that have been paid or earned during the period.

Nonrecurring Fair Value Measurements

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

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

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

If measured at fair value in the Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy.

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

Other Equity Securities

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

These equity securities are measured at cost, less any impairments, and recorded within Investments on our Consolidated Balance Sheets.

As of September 30, 2022 and 2021, the aggregate balance of these equity securities was $ 23.7 million and $ 2.9 million, respectively.

During the fiscal year ended September 30, 2022 and 2021, 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:

September 30,

(in thousands) 2022

Assets at beginning of period $ 2,865 $ —

Purchases 15,177 2,865

Transfers in 1

Unrealized gain included in earnings 2,703 —

Assets at end of period $ 23,745 $ 2,865

(1) Conversion from debt to equity security

Geothermal Investments

As of September 30, 2022 and 2021 the aggregate balance of our debt and equity security investments in geothermal energy was $ 23.7 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 (discussed in the subsections above).

Other Financial Instruments

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

The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S.

Government and in federally insured deposit accounts.

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

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

September 30,

(in millions) 2022 2021

Current portion of long-term debt

Current portion of long-term debt, net 1

Carrying value $ — $ 483.5

3 unchanged sentences

Fair value 430.7 554.3

(1) As of September 30, 2021 we reclassified the outstanding 2025 Notes to Current Portion of Long-Term Debt on our Consolidated Balance Sheets.

On October 27, 2021, we redeemed these notes.

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

See Note 7—Debt to our Consolidated Financial Statements.

The fair value for the $ 541.6 million current portion of fixed-rate debt and the $ 554.3 million of long-term fixed-rate debt are based on broker quotes at September 30, 2021.

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

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

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NOTE 14 EMPLOYEE BENEFIT PLANS

4 unchanged sentences

The following table provides a reconciliation of the changes in the pension benefit obligations and fair value of Pension Plan assets over the two-year period ended September 30, 2022 and a statement of the funded status as of September 30, 2022 and 2021:

September 30,

(in thousands) 2022 2021

3 unchanged sentences

Interest cost 2,537 2,925

Actuarial loss 7,111 4,310

Actuarial (gain) loss ( 16,260 ) 7,111

Benefits paid ( 36,166 ) ( 15,749 )

8 unchanged sentences

Funded status of the plan at end of year $ ( 18,699 ) $ ( 23,097 )

Fluctuations in actuarial losses during the period are primarily due to changes in the discount rate, interest rates, and the mortality table.

Fluctuations in actuarial gains and losses during the period are primarily due to changes in the discount rate and investment returns.

The mortality table issued by the Society of Actuaries in October 2021 was used for the September 30, 2022 pension calculation.

The amounts recognized in the Consolidated Balance Sheets at September 30, 2022 and 2021 are as follows:

September 30,

(in thousands) 2022 2021

2 unchanged sentences

Net amount recognized $ ( 18,699 ) $ ( 23,097 )

The amounts recognized in Accumulated Other Comprehensive Loss at September 30, 2021 and 2020, and not yet reflected in net periodic benefit cost, are as follows:

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The amounts recognized in Accumulated Other Comprehensive Income (Loss) at September 30, 2022 and 2021, and not yet reflected in net periodic benefit cost, are as follows:

September 30,

(in thousands) 2022 2021

Net actuarial loss $ 15,703 $ 26,268

Unrecognized actuarial gains/losses outside of a corridor of the greater of:

1) 10 percent of the Projected Benefit Obligation, or 2) the fair value of assets, are amortized into expense for the year on a straight-line basis over the average remaining service years of participants.

Amortization is not carried from year-to-year as the calculation resets each year.

The weighted average assumptions used for the pension calculations were as follows:

4 unchanged sentences

Expected return on plan assets 4.25 % 3.50 % 4.65 %

We made a voluntary contribution of $ 5.0 million in fiscal year 2021.

We made a voluntary contribution of $ 5.0 million in both fiscal year 2022 and fiscal year 2021.

In fiscal year 2023, we do not expect minimum contributions required by law to be needed.

However, we may make contributions in fiscal year 2023 if needed to fund unexpected distributions in lieu of liquidating pension assets.

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Components of the net periodic pension expense were as follows:

3 unchanged sentences

Expected return on plan assets 1

( 2,481 ) ( 3,722 ) ( 4,784 )

Recognized net actuarial loss 2,080 3,205 2,718

Settlement 3,448 3,001 1,953

Settlement expense 9,031 3,448 3,001

Other — ( 81 ) —

Net pension expense $ 11,167 $ 5,775 $ 4,533

(1) The Company uses the fair value of plan assets in determining the expected return on plan assets.

We record settlement expense when benefit payments exceed the total annual interest costs.

During March 2022, the Company's domestic noncontributory defined benefit pension plan was amended to include a limited lump sum distribution option and a special eligibility window to be available to certain participants.

During the period beginning on May 2, 2022 and ending on June 30, 2022, these participants could elect the limited lump sum distribution.

This one-time lump sum was subsequently paid in August 2022 and resulted in a pension settlement charge of $ 7.8 million during the year ended September 30, 2022.

The following table reflects the expected benefits to be paid from the Pension Plan in each of the next five fiscal years, and in the aggregate for the five years thereafter (in thousands):

2 unchanged sentences

$ 5,479 $ 5,049 $ 5,614 $ 5,088 $ 5,376 $ 22,827 $ 49,433

Included in the Pension Plan is an unfunded supplemental executive retirement plan.

Investment Strategy and Asset Allocation

5 unchanged sentences

The Pension Plan does not directly hold securities of the Company.

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The expected long-term rate of return on Pension Plan assets is based on historical and projected rates of return for current and planned asset classes in the Pension Plan’s investment portfolio after analyzing historical experience and future expectations of the return and volatility of various asset classes.

During the 2021 fiscal year, we implemented a glide-path strategy with a goal to reduce risk as certain funded levels are achieved and began aligning our fixed income exposure with our pension liabilities.

The target allocation for 2022 and the asset allocation for the Pension Plan at the end of fiscal years 2021 and 2020, by asset category, follows:

The target allocation for 2023 and the asset allocation for the Pension Plan at the end of fiscal years 2022 and 2021, by asset category, were as follows:

Target Allocation September 30,

4 unchanged sentences

Total 100 % 100 % 100 %

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The fair value of Pension Plan assets at September 30, 2022 and 2021, summarized by level within the fair value hierarchy described in Note 13—Fair Value Measurement of Financial Instruments, are as follows:

5 unchanged sentences

Bond funds 29,093 29,093 — —

Balanced funds 17,520 17,520 — —

International stock funds 4,739 4,739 — —

21 unchanged sentences

The annual expense incurred for this defined contribution plan was $ 24.8 million, $ 13.6 million and $ 23.8 million in fiscal years 2022, 2021 and 2020, respectively.

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NOTE 15 SUPPLEMENTAL BALANCE SHEET INFORMATION

The following reflects the activity in our reserve for expected credit losses on trade receivables for fiscal years 2022, 2021 and 2020:

September 30,

(in thousands) 2022 2021 2020

5 unchanged sentences

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Accounts receivable, prepaid expenses and other current assets, accrued liabilities and long-term liabilities at September 30, 2021 and 2020 consist of the following:

Accounts receivable, prepaid expenses and other current assets, net, accrued liabilities and noncurrent liabilities —other at September 30, 2022 and 2021 consist of the following:

September 30,

4 unchanged sentences

Total accounts receivable, net of reserve $ 458,713 $ 228,894

Prepaid expenses and other current assets:

Restricted cash $ 18,350 $ 45,577

Prepaid expenses and other current assets, net:

Deferred mobilization $ 5,048 $ 3,734

4 unchanged sentences

Prepaid operating expenses — 17,959

Prepaid equipment 10,091 —

Other 17,787 20,837

Total prepaid expenses and other current assets $ 85,928 $ 89,305

Total prepaid expenses and other current assets, net $ 66,463 $ 67,578

Accrued liabilities:

7 unchanged sentences

Accrued income taxes 40,833 881

Escrow 138 138

Litigation and claims 1,463 393

Contingent liability 2,750 5,985

Operating lease liability 12,382 12,624

Accrued interest 930 937

Other 6,055 8,698

8 unchanged sentences

Payroll tax deferral 1

15,424 10,205

Other 377 956

5 unchanged sentences

At September 30, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 148.6 million.

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Lease Obligations

Refer to Note 5—Leases for additional information on our lease obligations.

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Guarantee Arrangements

5 unchanged sentences

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

Our wholly-owned subsidiaries, HPIDC, and Helmerich & Payne de Venezuela, C.A.

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

("HPIDC"), and Helmerich & Payne de Venezuela, C.A.

filed a lawsuit in the United States District Court for the District of Columbia on September 23, 2011 against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A.

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

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

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

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

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

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

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

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

In April 2022, the Company and its insurers filed post-trial motions, 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 September 30, 2022, we have incurred expenses, 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.

15 unchanged sentences

Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." External revenues included in “Other” primarily consist of rental income.

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Segment Performance

6 unchanged sentences

• Restructuring charges

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

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

General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods may be used which we believe to be a reasonable reflection of the utilization of services provided.

14 unchanged sentences

Depreciation and amortization 392,415 10,557 2,013 1,426 — 406,411

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September 30, 2020

3 unchanged sentences

Total sales 1,474,380 143,149 144,185 49,114 ( 36,901 ) 1,773,927

Segment operating income 80,898 19,594 5,366 3,375 — 109,233

Segment operating income (loss) ( 393,902 ) 7,478 ( 162,368 ) 4,403 — ( 544,389 )

Depreciation and amortization 438,039 11,681 17,531 1,241 — 468,492

3 unchanged sentences

Segment operating income (loss) $ 151,267 $ ( 303,494 ) $ ( 544,389 )

Gain on sale of assets 1,042 46,775 39,691

Gain on reimbursement of drilling equipment 29,443 12,322 26,959

Other gain (loss) on sale of assets 5,432 ( 11,280 ) 19,816

Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges ( 140,850 ) ( 126,097 ) ( 122,573 )

5 unchanged sentences

Gain on sale of subsidiary — — 14,963

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

Other ( 11,115 ) ( 5,657 ) ( 5,384 )

Total unallocated amounts ( 14,374 ) ( 12,631 ) ( 16,311 )

Loss from continuing operations before income taxes $ ( 441,180 ) $ ( 636,498 ) $ ( 51,222 )

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Income (loss) from continuing operations before income taxes $ 30,918 $ ( 441,180 ) $ ( 636,498 )

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

10 unchanged sentences

(1) Assets by segment exclude investments in subsidiaries and intersegment activity.

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

21 unchanged sentences

Costs incurred as of September 30, 2021 in connection with the restructuring are primarily comprised of one-time severance benefits to employees who were involuntarily terminated.

During the third quarter of fiscal year 2021, we commenced a voluntary separation program at our local office in Argentina for which we incurred one-time severance charges for employees who were voluntarily terminated.

Additionally, we continue to take measures to lower our cost structure based on activity levels.

During the third quarter of fiscal year 2021, we commenced a voluntary separation program at our local office in Argentina for which we incurred severance charges for employees who were voluntarily terminated.

Additionally, during fiscal year 2021, we continued to take measures to lower our cost structure based on activity levels.

During fiscal year 2021, we incurred one-time moving related expenses primarily due to the downsizing and relocation of our Houston assembly facility and various storage yards used for idle rigs.

These charges are included in other restructuring expenses within the tables below.

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These charges are included in other restructuring expenses within the table below.

The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2021:

7 unchanged sentences

We commenced a number of restructuring efforts as a result of this evaluation, which included, among other things, a reduction in our capital allocation plans, changes to our organizational structure, and a reduction of staffing levels.

Costs incurred as of September 30, 2020 in connection with the restructuring were primarily comprised of one-time severance benefits to employees who were voluntarily or involuntarily terminated, benefits related to forfeitures and costs related to modification of stock-based compensation awards.

Costs incurred during the fiscal year ended September 30, 2020 in connection with the restructuring were primarily comprised of severance benefits to employees who were voluntarily or involuntarily terminated, benefits related to forfeitures and costs related to modification of stock-based compensation awards.

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The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2020:

6 unchanged sentences

NOTE 19 SUBSEQUENT EVENTS

On October 27, 2021, we redeemed all of the outstanding 2025 Notes, which resulted in the principal payment of $ 487.1 million, a make-whole premium and accrued interest payment of $ 58.1 million and the write off of unamortized discount and debt issuance costs of $ 3.7 million, which will be recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 redemption.

Additional details are fully discussed in Note 7—Debt.

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.

On November 12, 2021, we settled a drilling contract dispute with YPF S.A.

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

As part of our commitment to return cash to shareholders, on October 17, 2022, the Board of Directors of the Company declared a quarterly cash supplemental dividend of $ 0.235 per share on the Company’s common stock, payable on December 1, 2022, to stockholders of record at the close of business on November 15, 2022.

The payable date and record date of this supplemental dividend coincides with the dates applicable to the Company’s base dividend of $ 0.25 per share, which was declared on September 7, 2022.

In October 2022, we purchased a $ 14.1 million equity investment, representing approximately 106 million shares, in Tamboran Resources Limited ("Tamboran").

Tamboran's shares are listed and publicly traded on the Australian Securities Exchange.

Additionally, during September 2022, we entered into a fixed-term drilling services agreement with Tamboran.

The expected $ 30.3 million of revenue to be earned over the term of the contract is included within our contract backlog as of September 30, 2022, as mobilization is expected to commence in fiscal year 2023.

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1 unchanged sentence

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 8. Financial Statements and Supplementary Data