Helmerich & Payne, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE Management’s Report on Internal Control over Financial Reporting 55 Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 00042) 56 Consolidated Financial Statements: Consolidated Balance Sheets at September 30, 2022 and 2021 59 Consolidated Statements of Operations for the Years Ended September 30, 2022 , 2021 and 2020 60 Consolidated Statements of Comprehensive Income ( Loss ) for the Years Ended September 30, 2022 , 2021 and 2020 61 Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2022 , 2021 and 2020 62 Consolidated Statements of Cash Flows for the Years Ended September 30, 2022 , 2021 and 2020 63 Notes to Consolidated Financial Statements 65 2022 FORM 10-K | 54 Table of Contents Management’s Report on Internal Control over Financial Reporting Management of Helmerich & Payne, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a‑15(f) or 15d‑15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting was designed under the supervision of the Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and the Board of Directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2022. In making this assessment, management used the criteria established in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria in Internal Control-Integrated Framework (2013) , management has concluded that the Company maintained effective internal control over financial reporting as of September 30, 2022. Ernst & Young LLP , an independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2022, as stated in their report which appears herein. Helmerich & Payne, Inc. by /s/ John W. Lindsay /s/ Mark W. Smith John W. Lindsay Director, President and Chief Executive Officer Mark W. Smith Senior Vice President and Chief Financial Officer November 16, 2022 November 16, 2022 2022 FORM 10-K | 55 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Helmerich & Payne, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Helmerich & Payne, Inc. (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. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 16, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters 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 Description of the Matter The Company's self-insurance liability for workers’ compensation and other casualty claims was $72.3 million at September 30, 2022. As described in Note 2—Summary of Significant Accounting Policies, Risks and Uncertainties to the Consolidated Financial Statements, this liability is based on a third-party actuarial analysis, which includes an estimate for incurred but not reported claims. The actuarial analysis considers a variety of factors, including third-party adjusters’ estimates, historic experience, and statistical methods commonly used within the insurance industry. Auditing the Company's reserve for self-insured risks for worker’s compensation and other casualty claims is complex and required us to use our actuarial specialists due to the significant measurement uncertainty associated with the estimate, management’s application of significant judgment, and the use of various actuarial methods. 2022 FORM 10-K | 56 Table of Contents How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of the Company’s controls over the workers’ compensation and other casualty claims accrual process, including management’s review controls over the significant assumptions used in the calculation and the completeness and accuracy of the data underlying the reserve. To test the self-insurance liability for worker’s compensation and other casualty claims, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data provided to management’s actuary and obtaining legal confirmation letters to evaluate the reserves recorded on significant litigated matters. 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 estimates to ranges of estimates independently developed by our actuarial specialists. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1994. Tulsa, Oklahoma November 16, 2022 2022 FORM 10-K | 57 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Helmerich & Payne, Inc. Opinion on Internal Control over Financial Reporting We have audited Helmerich & Payne, Inc.’s internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Helmerich & Payne, Inc. (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, 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 The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tulsa, Oklahoma November 16, 2022 2022 FORM 10-K | 58 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED BALANCE SHEETS September 30, (in thousands except share data and per share amounts) 2022 2021 ASSETS Current Assets: Cash and cash equivalents $ 232,131 $ 917,534 Restricted cash 36,246 18,350 Short-term investments 117,101 198,700 Accounts receivable, net of allowance of $ 2,975 and $ 2,068 , respectively 458,713 228,894 Inventories of materials and supplies, net 87,957 84,057 Prepaid expenses and other, net 66,463 67,578 Assets held-for-sale 4,333 71,453 Total current assets 1,002,944 1,586,566 Investments 218,981 135,444 Property, plant and equipment, net 2,960,809 3,127,287 Other Noncurrent Assets: Goodwill 45,653 45,653 Intangible assets, net 67,154 73,838 Operating lease right-of-use assets 39,064 49,187 Other assets, net 20,926 16,153 Total other noncurrent assets 172,797 184,831 Total assets $ 4,355,531 $ 5,034,128 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 126,966 $ 71,996 Dividends payable 26,693 27,332 Current portion of long-term debt, net — 483,486 Accrued liabilities 241,151 283,492 Total current liabilities 394,810 866,306 Noncurrent Liabilities: Long-term debt, net 542,610 541,997 Deferred income taxes 537,712 563,437 Other 113,387 147,757 Noncurrent liabilities - discontinued operations 1,540 2,013 Total noncurrent liabilities 1,195,249 1,255,204 Commitments and Contingencies (Note 16) Shareholders' Equity: 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 Preferred stock, no par value, 1,000,000 shares authorized, no shares issued — — Additional paid-in capital 528,278 529,903 Retained earnings 2,473,572 2,573,375 Accumulated other comprehensive loss ( 12,072 ) ( 20,244 ) Treasury stock, at cost, 6,929,203 shares and 4,324,006 shares as of September 30, 2022 and 2021, respectively ( 235,528 ) ( 181,638 ) Total shareholders’ equity 2,765,472 2,912,618 Total liabilities and shareholders' equity $ 4,355,531 $ 5,034,128 The accompanying notes are an integral part of these consolidated financial statements. 2022 FORM 10-K | 59 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended September 30, (in thousands, except per share amounts) 2022 2021 2020 OPERATING REVENUES Drilling services $ 2,049,841 $ 1,210,800 $ 1,761,714 Other 9,103 7,768 12,213 2,058,944 1,218,568 1,773,927 OPERATING COSTS AND EXPENSES Drilling services operating expenses, excluding depreciation and amortization 1,426,589 952,600 1,184,788 Other operating expenses 4,638 5,138 5,777 Depreciation and amortization 403,170 419,726 481,885 Research and development 26,563 21,724 21,645 Selling, general and administrative 182,366 172,195 167,513 Asset impairment charges 4,363 70,850 563,234 Restructuring charges 838 5,926 16,047 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 OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS 45,292 ( 428,549 ) ( 620,187 ) Other income (expense) Interest and dividend income 18,090 10,254 7,304 Interest expense ( 19,203 ) ( 23,955 ) ( 24,474 ) Gain (loss) on investment securities 57,937 6,727 ( 8,720 ) 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 ) 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 from discontinued operations 401 11,309 1,895 NET INCOME (LOSS) $ 6,953 $ ( 326,150 ) $ ( 494,497 ) Basic earnings (loss) per common share: 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: 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: Basic 105,891 107,818 108,009 Diluted 106,555 107,818 108,009 The accompanying notes are an integral part of these consolidated financial statements. 2022 FORM 10-K | 60 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year ended September 30, (in thousands) 2022 2021 2020 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 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. 2022 FORM 10-K | 61 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock (in thousands, except per share amounts) Shares Amount Shares Amount Total Balance at September 30, 2019 112,080 $ 11,208 $ 510,305 $ 3,714,307 $ ( 28,635 ) 3,642 $ ( 194,962 ) $ 4,012,223 Comprehensive income (loss): Net loss — — — ( 494,497 ) — — — ( 494,497 ) Other comprehensive income — — — — 2,447 — — 2,447 Dividends declared ($ 1.92 per share) — — — ( 209,798 ) — — — ( 209,798 ) 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 ( 21,855 ) — — ( 329 ) 18,119 ( 3,729 ) Stock-based compensation — — 36,329 — — — — 36,329 Share repurchases — — — — — 1,460 ( 28,505 ) ( 28,505 ) Balance at September 30, 2020 112,151 $ 11,215 $ 521,628 $ 3,010,012 $ ( 26,188 ) 4,663 $ ( 198,153 ) $ 3,318,514 Comprehensive income (loss): Net loss — — — ( 326,150 ) — — — ( 326,150 ) Other comprehensive income — — — — 5,944 — — 5,944 Dividends declared ($ 1.00 per share) — — — ( 109,236 ) — — — ( 109,236 ) 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 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: Net Income — — — 6,953 — — — 6,953 Other comprehensive income — — — — 8,172 — — 8,172 Dividends declared ($ 1.00 per share) — — — ( 106,756 ) — — — ( 106,756 ) Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 28,608 ) — — ( 550 ) 23,109 ( 5,499 ) Stock-based compensation — — 28,032 — — — — 28,032 Share repurchases — — — — — 3,155 ( 76,999 ) ( 76,999 ) Other — — ( 1,049 ) — — — ( 1,049 ) Balance at September 30, 2022 112,222 $ 11,222 $ 528,278 $ 2,473,572 $ ( 12,072 ) 6,929 $ ( 235,528 ) $ 2,765,472 The accompanying notes are an integral part of these consolidated financial statements. 2022 FORM 10-K | 62 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended September 30, (in thousands) 2022 2021 2020 CASH FLOWS FROM 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 Asset impairment charges 4,363 70,850 563,234 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 Stock-based compensation 28,032 27,858 36,329 Loss (gain) on investment securities ( 57,937 ) ( 6,727 ) 8,720 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 ) Deferred income tax benefit ( 28,488 ) ( 89,752 ) ( 157,555 ) Other 6,533 13,794 ( 2,423 ) Change in assets and liabilities: Accounts receivable ( 235,562 ) ( 28,416 ) 300,807 Inventories of materials and supplies ( 5,228 ) 19,847 9,420 Prepaid expenses and other 6,224 ( 21,400 ) ( 5,506 ) Other noncurrent assets 2,581 2,772 2,820 Accounts payable 53,242 31,027 ( 9,414 ) Accrued liabilities 45,069 33,957 ( 138,414 ) Deferred income tax liability 447 1,101 908 Other noncurrent liabilities ( 22,501 ) ( 1,274 ) 2,227 Net cash provided by operating activities from continuing operations 233,986 136,488 538,928 Net cash used in operating activities from discontinued operations ( 73 ) ( 48 ) ( 47 ) Net cash provided by operating activities 233,913 136,440 538,881 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 250,894 ) ( 82,148 ) ( 140,795 ) 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 Proceeds from asset sales 62,304 43,515 78,399 Advance payment for sale of property, plant and equipment — 86,524 — Other ( 7,500 ) — — Net cash used in investing activities ( 167,315 ) ( 161,994 ) ( 87,885 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid ( 107,395 ) ( 109,130 ) ( 260,335 ) Proceeds from debt issuance — 548,719 — Debt issuance costs — ( 3,935 ) — Proceeds from stock option exercises — — 4,100 Payments for employee taxes on net settlement of equity awards ( 5,505 ) ( 2,162 ) ( 3,784 ) Payment of contingent consideration from acquisition of business ( 250 ) ( 7,250 ) ( 8,250 ) Payments for early extinguishment of long-term debt ( 487,148 ) — — Make-whole premium payment ( 56,421 ) — — Share repurchases ( 76,999 ) — ( 28,505 ) Other ( 587 ) ( 719 ) ( 446 ) Net cash provided by (used in) financing activities ( 734,305 ) 425,523 ( 297,220 ) 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 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Year Ended September 30, (in thousands) 2022 2021 2020 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period: Interest paid $ 18,909 $ 26,706 $ 22,928 Income tax paid (received), net 17,669 ( 32,462 ) 46,700 Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases 11,233 17,266 18,646 Non-cash operating and investing activities: Changes in accounts payable and accrued liabilities related to purchases of property, plant and equipment ( 2,425 ) ( 1,526 ) 3,123 Changes in accounts receivable, property, plant and equipment and other noncurrent assets related to the sale of equipment — 9,290 — Cumulative effect adjustment for adoption of ASU No. 2016-13 — ( 1,251 ) — The accompanying notes are an integral part of these consolidated financial statements. 2022 FORM 10-K | 64 Table of Contents HELMERICH & PAYNE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 NATURE OF OPERATIONS Helmerich & Payne, Inc. (“H&P,” which, together with its subsidiaries, is identified as the “Company,” “we,” “us,” or “our,” except where stated or the context requires otherwise) through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, Offshore Gulf of Mexico and International Solutions. 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 Texas, but traditionally also operate in other states, depending on demand. Such states include: Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming. Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S. federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in four international locations: Argentina, Bahrain, Colombia and United Arab Emirates. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center and undeveloped real estate. Fiscal Year 2020 Dispositions In December 2019, we closed on the sale of a wholly-owned subsidiary of Helmerich & Payne International Drilling Co. ("HPIDC"), TerraVici Drilling Solutions, Inc. ("TerraVici"). As a result of the sale, 100 % of TerraVici's outstanding capital stock was transferred to the purchaser in exchange for approximately $ 15.1 million, resulting in a total gain on the sale of TerraVici of approximately $ 15.0 million. Prior to the sale, TerraVici was a component of the North America Solutions operating segment. This transaction did not represent a strategic shift in our operations and will not have a significant effect on our operations and financial results going forward. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RISKS AND UNCERTAINTIES Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). We classified our former Venezuelan operation as a discontinued operation in the third quarter of fiscal year 2010, as more fully described in Note 3—Discontinued Operations. Unless indicated otherwise, the information in the Notes to Consolidated Financial Statements relates only to our continuing operations. Principles of Consolidation The Consolidated Financial Statements include the accounts of Helmerich & Payne, Inc. and its domestic and foreign subsidiaries. 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, 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 Our functional currency, together with all our foreign subsidiaries, is the U.S. dollar. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated at exchange rates in effect at the end of the period, and the resulting gains and losses are recorded on our Consolidated Statements of Operations. 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 Table of Contents Use of Estimates The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits. We had restricted cash of $ 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. Cash, cash equivalents, and restricted cash are reflected in the Consolidated Balance Sheets as follows: September 30, (in thousands) 2022 2021 2020 Cash and cash equivalents $ 232,131 $ 917,534 $ 487,884 Restricted cash 36,246 18,350 45,577 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 Accounts receivable represents valid claims against our customers for our services rendered, net of allowances for credit losses. We perform credit evaluations of customers and do not typically require collateral in support for trade receivables. We provide an allowance for credit losses, when necessary, to cover estimated credit losses. 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 Inventories are primarily replacement parts and supplies held for consumption in our drilling operations. Inventories are valued at the lower of cost or net realizable value. Cost is determined on a weighted average basis and includes the cost of materials, shipping, duties and labor. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The reserves for excess and obsolete inventory were $ 28.0 million and $ 29.3 million for fiscal years 2022 and 2021, respectively. Investments We maintain investments in equity and debt securities of certain publicly traded and private companies. We recognize our equity securities that have readily determinable fair values at fair value, with changes in such values reflected in net income. 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 Table of Contents Property, Plant, and Equipment 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. The amount of depreciation expense we record is dependent upon certain assumptions, including an asset’s estimated useful life, rate of consumption, and corresponding salvage value. We periodically review these assumptions and may change one or more of these assumptions. Changes in our assumptions may require us to recognize, on a prospective basis, increased or decreased depreciation expense. 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, 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. Cash flows are estimated by management considering factors such as prospective market demand, margins, recent changes in rig technology and its effect on each rig’s marketability, any investment required to make a rig operational, suitability of rig size and make up to existing platforms, and competitive dynamics including industry utilization. Long-lived assets that are held for sale are recorded at the lower of carrying value or the fair value less costs to sell. 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 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. If an impairment is determined to exist, an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value is recognized, limited to the total amount of goodwill allocated to that reporting unit. The reporting unit level is defined as an operating segment or one level below an operating segment. Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows, generally estimated to be 5 to 20 years, and are evaluated for impairment in accordance with our policies for valuation of long-lived assets. Drilling Revenues 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 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. Reimbursements received for out-of-pocket expenses are recorded as both revenues and direct costs. Reimbursements for fiscal years 2022, 2021 and 2020 were $ 263.1 million, $ 148.0 million and $ 212.0 million, respectively. For fixed-term contracts that are terminated by customers prior to the expirations, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. 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 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 generally range from three to ten years . Minimum rents are recognized on a straight-line basis over the term of the related leases. Overage and percentage rents are based on tenants’ sales volume. Recoveries from tenants for property taxes and operating expenses are recognized in other operating revenues in the Consolidated Statements of Operations. 2022 FORM 10-K | 67 Table of Contents Our rent revenues are as follows: Year Ended September 30, (in thousands) 2022 2021 2020 Minimum rents $ 6,362 $ 5,589 $ 9,245 Overage and percentage rents 773 726 656 At September 30, 2022, minimum future rental income to be received on noncancellable operating leases was as follows: Fiscal Year Amount (in thousands) 2023 $ 5,214 2024 4,519 2025 3,733 2026 2,820 2027 1,575 Thereafter 2,241 Total $ 20,102 Leasehold improvement allowances are capitalized and amortized over the lease term. At September 30, 2022 and 2021, the cost and accumulated depreciation for real estate properties were as follows: September 30, (in thousands) 2022 2021 Real estate properties $ 45,557 $ 43,302 Accumulated depreciation ( 30,510 ) ( 28,846 ) $ 15,047 $ 14,456 Income Taxes Current income tax expense is the amount of income taxes expected to be payable for the current fiscal year. Deferred income taxes are computed using the liability method and are provided on all temporary differences between the financial basis and the tax basis of our assets and liabilities. We take tax positions in our tax returns from time to time that may not ultimately be allowed by the relevant taxing authority. When we take such positions, we evaluate the likelihood of sustaining those positions and determine the amount of tax benefit arising from such positions, if any, that should be recognized in our financial statements. We recognize uncertain tax positions we believe have a greater than 50 percent likelihood of being sustained. Tax benefits not recognized by us are recorded as a liability for unrecognized tax benefits, which represents our potential future obligation to various taxing authorities if the tax positions are not sustained. See Note 8—Income Taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. We recognize accrued interest related to unrecognized tax benefits in interest expense and penalties in other expense in the Consolidated Statements of Operations. Earnings per Common Share Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, nonvested restricted stock and performance share units. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under Accounting Standards Codification ("ASC") 260, Earnings Per Share . As such, we have included these grants in the calculation of our basic earnings per share. Stock-Based Compensation Stock-based compensation expense is determined using a fair-value-based measurement method for all awards granted. 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. The Monte Carlo simulation method requires the use of highly subjective assumptions. 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. 2022 FORM 10-K | 68 Table of Contents 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. 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. Treasury Stock Treasury stock purchases are accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in capital using the average-cost method. Treasury stock may be issued under the Helmerich & Payne, Inc. 2020 Omnibus Incentive Plan. Comprehensive Income or Loss Other comprehensive income or loss refers to revenues, expenses, gains, and losses that are included in comprehensive income or loss but excluded from net income or loss. We report the components of other comprehensive income or loss, net of tax, by their nature and disclose the tax effect allocated to each component in the Consolidated Statements of Comprehensive Income (Loss). Leases We lease various offices, warehouses, equipment and vehicles. Rental contracts are typically made for fixed periods of one to 15 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. 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. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis for finance type leases. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable • Variable lease payments that are based on an index or a rate • Amounts expected to be payable by the lessee under residual value guarantees • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, our incremental borrowing rate is used, which is the rate that we would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost and are comprised of the following: • The amount of the initial measurement of lease liability • Any lease payments made at or before the commencement date less any lease incentives received • Any initial direct costs, and • Asset retirement obligations related to that lease, as applicable. 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. 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. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs and is within our control. Refer to Note 5—Leases for additional information regarding our leases. 2022 FORM 10-K | 69 Table of Contents 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 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 a recently adopted accounting pronouncement and our analysis of the effects on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters Recently Adopted Accounting Pronouncements ASU No. 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. The ASU also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This update is effective for annual and interim periods beginning after December 15, 2020. Early adoption of the amendment is permitted, including adoption in any interim period for public entities for periods for which financial statements have not yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. 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. 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 ASU No. 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. ASU No. 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. 2022 FORM 10-K | 70 Table of Contents Allowance for Credit Losses On October 1, 2020, we adopted ASU 2016-13 on a modified retrospective basis through a cumulative-effect adjustment without restating comparative periods, as permitted under the adoption provisions. Upon adoption, we recognized a $ 1.6 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $ 1.3 million. This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable. Pursuant to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports. Concentration of Credit Risk 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. However, we believe that the credit risk posed by this industry concentration is offset by the creditworthiness of our customer base. 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 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. International sales also present various risks including governmental activities that may limit or disrupt markets and restrict the movement of funds. Most of our international sales, however, are to large international or government-owned national oil companies. Volatility of Market Our operations can be materially affected by oil and gas prices. Oil and natural gas prices have been historically volatile and difficult to predict with any degree of certainty. While current energy prices are important contributors to positive cash flow for customers, expectations about future prices and price volatility are generally more important for determining a customer’s future spending levels. This volatility, along with the difficulty in predicting future prices, can lead many exploration and production companies to base their capital spending on more conservative estimates of commodity prices. As a result, demand for drilling services is not always purely a function of the movement of commodity prices. In addition, customers may finance their exploration activities through cash flow from operations, the incurrence of debt or the issuance of equity. Any deterioration in the credit and capital markets may cause difficulty for customers to obtain funding for their capital needs. A reduction of cash flow resulting from declines in commodity prices or a reduction of available financing may result in a reduction in customer spending and the demand for our services. This reduction in spending could have a material adverse effect on our operations. Self-Insurance We have accrued a liability for estimated workers’ compensation and other casualty claims incurred based upon case reserves plus an estimate of loss development and incurred but not reported claims. The estimate is based upon historical trends. Insurance recoveries related to such liability are recorded when considered probable. We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability. Generally, deductibles range from $ 1 million to $ 10 million per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States. Insurance is purchased over deductibles to reduce our exposure to catastrophic events. Estimates are recorded for incurred outstanding liabilities for workers’ compensation, general, and automobile liability claims that are incurred but not reported. Estimates are based on adjusters’ estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable. We have also engaged a third-party actuary to perform a review of our casualty losses as well as losses in our captive insurance companies. Nonetheless, insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs. 2022 FORM 10-K | 71 Table of Contents On October 1, 2019, we elected to capitalize a new Captive insurance company to insure the deductibles for our domestic workers’ compensation, general liability and automobile liability claims programs, and to continue the practice of insuring deductibles from the Company's international casualty and rig property programs. Casualty claims occurring prior to October 1, 2019 will remain recorded within each of the operating segments and future adjustments to these claims will continue to be reflected within the operating segments. Reserves for legacy claims occurring prior to October 1, 2019, will remain as liabilities in our operating segments until they have been resolved. Changes in those reserves will be reflected in segment earnings as they occur. We will continue to utilize the Captives to finance the risk of loss to equipment and rig property assets. The Company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs. Our operating subsidiaries are paying premiums to the Captives, typically on a monthly basis, for the estimated losses based on an external actuarial analysis. 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 $ 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, 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 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 International Solutions drilling operations may significantly contribute to our revenues and net operating income (loss). There can be no assurance that we will be able to successfully conduct such operations, and a failure to do so may have an adverse effect on our financial position, results of operations, and cash flows. Also, the success of our International Solutions operations will be subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws. 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 specific to our Argentine operations. In Argentina, while our dayrate is denominated in U.S. dollars, we are paid the equivalent in Argentine pesos. The Argentine branch of one of our second-tier subsidiaries remits U.S. dollars to its U.S. parent by converting the Argentine pesos into U.S. dollars through the Argentine Foreign Exchange Market and repatriating the U.S. dollars. Argentina also has a history of implementing currency controls that restrict the conversion and repatriation of U.S. dollars. In September 2020, Argentina implemented additional currency controls in an effort to preserve Argentina's U.S. dollar reserves. As a result of these currency controls, our ability to remit funds from our Argentine subsidiary to its U.S. parent has been limited. In the past, the Argentine government has also instituted price controls on crude oil, diesel and gasoline prices and instituted an exchange rate freeze in connection with those prices. These price controls and an exchange rate freeze could be instituted again in the future. 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. These concerns could further negatively impact Argentina's economy and adversely affect our Argentine operations. Argentina’s economy is considered highly inflationary, which is defined as cumulative inflation rates exceeding 100 percent in the most recent three-year period based on inflation data published by the respective governments. Nonetheless, all of our foreign subsidiaries use the U.S. dollar as the functional currency and local currency monetary assets and liabilities are remeasured into U.S. 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. While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us. 2022 FORM 10-K | 72 Table of Contents 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. Substantially all of the South American operating revenues were from Argentina and Colombia. The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations. NOTE 3 DISCONTINUED OPERATIONS 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 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. The Venezuela government also established a new currency called the “Sovereign Bolivar,” which was determined by the elimination of five zeros from the old currency. The DICOM floating rate was approximately 4,181,782 , and 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. NOTE 4 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of September 30, 2022 and 2021 consisted of the following: (in thousands) Estimated Useful Lives September 30, 2022 September 30, 2021 Drilling services equipment 4 - 15 years $ 6,369,888 $ 6,229,011 Tubulars 4 years 569,496 573,900 Real estate properties 10 - 45 years 45,557 43,302 Other 2 - 23 years 422,479 459,741 Construction in progress 1 70,119 47,587 7,477,539 7,353,541 Accumulated depreciation ( 4,516,730 ) ( 4,226,254 ) Property, plant and equipment, net $ 2,960,809 $ 3,127,287 Assets held-for-sale $ 4,333 $ 71,453 (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 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. Impairments - Fiscal Year 2020 Consistent with our policy, we evaluate our drilling rigs and related equipment for impairment whenever events or changes in circumstances indicate the carrying value of these assets may exceed the estimated undiscounted future net cash flows. Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of specific rigs’ asset group. During the second quarter of fiscal year 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with the decrease in the demand due to the COVID-19 pandemic. To maintain a competitive edge in a challenging market, the Company’s management introduced a new strategy focused on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet. This resulted in grouping the super-spec rigs of our legacy Domestic FlexRig ® 3 asset group and our FlexRig ® 5 asset group creating a new "Domestic super-spec FlexRig ® " asset group, while combining the legacy Domestic conventional asset group, FlexRig ® 4 asset group and FlexRig ® 3 non-super-spec rigs into one asset group (Domestic non-super-spec asset group). Given the current and projected low utilization for our Domestic non-super-spec asset group and all International asset groups, we considered these economic factors to be indicators that these asset groups may be impaired. 2022 FORM 10-K | 73 Table of Contents 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 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 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. These assumptions are classified as Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts. In determining the fair value of each asset group, we utilized a combination of income and market approaches. The significant assumptions in the valuation are based on those of a market participant and are classified as Level 2 and Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures. As of March 31, 2020, the Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $ 44.9 million and $ 38.6 million, respectively, which had aggregate book values of $ 68.4 million and $ 38.6 million, respectively, in the Consolidated Statement of Operations for the fiscal year ended September 30, 2020. Of the $ 83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $ 75.8 million and $ 7.7 million was recorded in the North America Solutions and International Solutions segments, respectively. Depreciation 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. Assets Held-for-Sale The following table summarizes the balance (in thousands) of our assets held-for-sale at the dates indicated below: Balance at September 30, 2020 $ — Plus: Asset additions 77,929 Less: Sale of assets held-for-sale ( 6,476 ) Balance at September 30, 2021 71,453 Plus: Asset additions 2,580 Less: Sale of assets held-for-sale ( 67,592 ) Reclassification to assets held and used ( 2,108 ) Balance at September 30, 2022 $ 4,333 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 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, 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. 2022 FORM 10-K | 74 Table of Contents During September 2021, the Company agreed to sell eight FlexRig land rigs with an aggregate net book value of $ 55.6 million to ADNOC Drilling Company P.J.S.C. ("ADNOC Drilling") for $ 86.5 million. Two of the eight rigs were already located in the U.A.E where ADNOC Drilling is domiciled with the remaining six rigs to be shipped from the United States. We received the $ 86.5 million in cash consideration in advance of delivering the rigs. As part of the sales agreement, the rigs 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 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)/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. 2022 FORM 10-K | 75 Table of Contents 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 Lease Position (in thousands) September 30, 2022 September 30, 2021 Operating lease commitments, including probable extensions 1 $ 44,769 $ 56,667 Discounted using the lessee's incremental borrowing rate $ 41,002 $ 52,372 (Less): short-term leases recognized on a straight-line basis as expense ( 1,052 ) ( 1,761 ) (Less): other ( 218 ) ( 123 ) Lease liability recognized $ 39,732 $ 50,488 Of which: Current lease liabilities $ 12,382 $ 12,624 Non-current lease liabilities 27,350 37,864 (1) Our future minimal rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future, those probable extensions are included in the operating lease liability balance. The recognized right-of-use assets relate to the following types of assets: (in thousands) September 30, 2022 September 30, 2021 Properties $ 38,925 $ 48,176 Equipment 125 935 Other 14 76 Total right-of-use assets $ 39,064 $ 49,187 Lease Costs The following table presents certain information related to the lease costs for our operating leases: Year ended September 30, (in thousands) 2022 2021 Operating lease cost $ 9,687 $ 13,686 Short-term lease cost 1,546 3,580 Total lease cost $ 11,233 $ 17,266 2022 FORM 10-K | 76 Table of Contents 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:. September 30, 2022 September 30, 2021 Weighted average remaining lease term 5.9 6.7 Weighted average discount rate 2.5 % 2.5 % Lease Obligations Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at September 30, 2022 (in thousands) are as follows: Fiscal Year Amount 2023 $ 9,767 2024 7,801 2025 4,501 2026 2,033 2027 2,046 Thereafter 5,465 Total 1 $ 31,613 (1) Our future minimal rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future, those probable extensions are included in the operating lease liability balance. Total rent expense was $ 11.2 million, $ 17.3 million and $ 18.6 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively. The future minimum lease payments for our Tulsa corporate office and our Tulsa industrial facility represent a material portion of the amounts shown in the table above. The lease agreement for our Tulsa corporate office commenced on May 30, 2003 and has subsequently been amended, most recently on April 1, 2021. The agreement will expire on January 31, 2025; however, we have two five-year renewal options, which were not recognized as part of our right-of-use assets and lease liabilities. The lease agreement for our Tulsa industrial facility, where we perform maintenance and assembly of FlexRig ® components commenced on December 21, 2018 and will expire on June 30, 2025; however, we have two two-year renewal options which were recognized as part of our right-of-use assets and lease liabilities. During the fiscal year ended September 30, 2021, we downsized and relocated our Houston assembly facility to a new location. Refer to Note 18—Restructuring Charges for additional details. As a result, and during fiscal year 2021, we entered into a lease agreement for a new assembly facility located in Galena Park, Texas. This lease agreement commenced on January 1, 2021 and will expire on December 31, 2030; however, we have one 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 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 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 in the fourth fiscal quarter, or when indications of potential impairment exist. All of our goodwill is within our North America Solutions reportable segment. 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 . 2022 FORM 10-K | 77 Table of Contents Intangible Assets Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows and are evaluated for impairment in accordance with our policies for valuation of long-lived assets. All of our intangible assets are within our North America Solutions reportable segment. Intangible assets consisted of the following: September 30, 2022 September 30, 2021 (in thousands) Weighted Average Estimated Useful Lives Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible asset: Developed technology 15 years $ 89,096 $ 28,137 $ 60,959 $ 89,096 $ 22,182 $ 66,914 Intellectual property 13 years 2,000 328 1,672 1,500 216 1,284 Trade name 20 years 5,865 1,475 4,390 5,865 1,158 4,707 Customer relationships 5 years 4,000 3,867 133 4,000 3,067 933 $ 100,961 $ 33,807 $ 67,154 $ 100,461 $ 26,623 $ 73,838 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 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. This resulted in a goodwill only non-cash impairment charge of $ 38.3 million recorded in the Consolidated Statement of Operations during the fiscal year ended September 30, 2020. The recoverable amount of the H&P Technologies reporting unit was determined based on a fair value calculation which uses cash flow projections based on the Company's financial projections presented to the Board covering a five -year period, and a discount rate of 14.0 percent. Cash flows beyond that five -year period were extrapolated using the fifth-year data with no implied growth factor. The reporting unit level is defined as an operating segment or one level below an operating segment. The recoverable amount of the intangible assets tested for impairment within the H&P Technologies reporting unit is determined based on undiscounted cash flow projections using the Company's financial projections presented to the Board covering a five-year period and extrapolated for the remaining weighted average useful lives of the intangible assets. The most significant assumptions used in our cash flow model include timing of awarded future contracts, commercial pricing terms, utilization, discount rate, and the terminal value. These assumptions are classified as Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts. Although we believe the assumptions used in our analysis and the probability-weighted average of expected future cash flows are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion. 2022 FORM 10-K | 78 Table of Contents NOTE 7 DEBT We had the following unsecured long-term debt outstanding with maturities shown in the following table: September 30, 2022 September 30, 2021 (in thousands) Face Amount Unamortized Discount and Debt Issuance Cost Book Value Face Amount Unamortized Discount and Debt Issuance Cost Book Value Unsecured senior notes: Due March 19, 2025 1 $ — $ — $ — $ 487,148 $ ( 3,662 ) $ 483,486 Due September 29, 2031 550,000 ( 7,390 ) 542,610 550,000 ( 8,003 ) 541,997 550,000 ( 7,390 ) 542,610 1,037,148 ( 11,665 ) 1,025,483 Less: long-term debt due within one year $ — — — ( 487,148 ) 3,662 ( 483,486 ) Long-term debt $ 550,000 $ ( 7,390 ) $ 542,610 $ 550,000 $ ( 8,003 ) $ 541,997 (1) Debt was extinguished prior to maturity date. Refer to 'Senior Notes' section below. Senior Notes 2.90 % Senior Notes due 2031 On September 29, 2021, we issued $ 550.0 million aggregate principal amount of the 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act (“Regulation S”). Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022. The 2031 Notes will mature on September 29, 2031 and bear interest at a rate of 2.90 percent per annum. The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes. 4.65 % Senior Notes due 2025 On December 20, 2018, we issued approximately $ 487.1 million in aggregate principal amount of the 2025 Notes. The debt issuance cost was being amortized straight-line over the stated life of the obligation, which approximated the effective interest method. On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 2025 Notes at a redemption price calculated in accordance with the indenture governing the 2025 Notes, plus accrued and unpaid interest on the 2025 Notes to be redeemed. The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand. The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021. On October 27, 2021, we redeemed all of the outstanding 2025 Notes. As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on Extinguishment of Debt on our Consolidated Statements of Operations during the fiscal year ended September 30, 2022. Credit Facilities On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that was set to mature on November 13, 2024. On April 16, 2021, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 13, 2024 to November 12, 2025. No other terms of the 2018 Credit Facility were amended in connection with this extension. Additionally, on March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate. Lenders with $ 680.0 million of commitments under the 2018 Credit Facility also exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026. The remaining $ 70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date. 2022 FORM 10-K | 79 Table of Contents The 2018 Credit Facility has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit. 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. 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 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. The 2018 Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company. 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, 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. At September 30, 2022, we were in compliance with all debt covenants. At September 30, 2022, aggregate maturities of long-term debt are as follows (in thousands): Year ending September 30, 2023 $ — 2024 — 2025 — 2026 — 2027 — Thereafter - Due 2031 550,000 $ 550,000 NOTE 8 INCOME TAXES Income Tax (Benefit) Provision and Rate The components of the provision (benefit) for income taxes are as follows: Year Ended September 30, (in thousands) 2022 2021 2020 Current: Federal $ 40,245 $ ( 15,466 ) $ 15,431 Foreign 10,703 772 1,495 State 1,906 725 523 52,854 ( 13,969 ) 17,449 Deferred: Federal ( 32,382 ) ( 81,760 ) ( 127,096 ) Foreign ( 1,310 ) 4,106 ( 12,390 ) State 5,204 ( 12,098 ) ( 18,069 ) ( 28,488 ) ( 89,752 ) ( 157,555 ) Total provision (benefit) $ 24,366 $ ( 103,721 ) $ ( 140,106 ) 2022 FORM 10-K | 80 Table of Contents The amounts of domestic and foreign income (loss) before income taxes are as follows: Year Ended September 30, (in thousands) 2022 2021 2020 Domestic $ ( 14,411 ) $ ( 412,556 ) $ ( 458,364 ) Foreign 45,329 ( 28,624 ) ( 178,134 ) $ 30,918 $ ( 441,180 ) $ ( 636,498 ) The reconciliation of our effective income tax rates to the U.S. Federal income tax rate is as follows: Year Ended September 30, 2022 2021 2020 U.S. Federal income tax rate 21.0 % 21.0 % 21.0 % Effect of foreign taxes 31.7 0.1 ( 0.2 ) State income taxes, net of federal tax benefit 21.7 2.6 2.8 Other impact of foreign operations 3.5 — ( 0.5 ) Non-deductible meals and entertainment 1.0 ( 0.1 ) ( 0.2 ) Equity compensation 9.6 ( 0.8 ) ( 0.3 ) Excess officer's compensation 3.8 — ( 0.2 ) Foreign derived intangible income ( 13.8 ) — — Other 0.3 0.7 ( 0.4 ) Effective income tax rate 78.8 % 23.5 % 22.0 % Effective tax rates differ from the U.S. federal statutory rate of 21.0 percent due to state and foreign income taxes and the tax effect of non-deductible expenditures. Deferred Taxes 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. The carrying value of the net deferred tax assets is based on management’s judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future. The components of our net deferred tax liabilities are as follows: September 30, (in thousands) 2022 2021 Deferred tax liabilities: Property, plant and equipment $ 558,293 $ 598,798 Marketable securities 9,766 1,669 Other 24,460 26,244 Total deferred tax liabilities 592,519 626,711 Deferred tax assets: Pension reserves 4,811 5,791 Self-insurance reserves 7,333 7,862 Net operating loss, foreign tax credit, and other federal tax credit carryforwards 8,673 25,474 Financial accruals 31,022 31,910 Other 13,678 17,963 Total deferred tax assets 65,517 89,000 Valuation allowance ( 10,710 ) ( 25,726 ) Net deferred tax assets 54,807 63,274 Net deferred tax liabilities $ 537,712 $ 563,437 The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement. 2022 FORM 10-K | 81 Table of Contents 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 $ 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, 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 Unrecognized tax benefits at October 1, $ 1,678 $ 13,440 $ 15,759 Gross decreases - current period effect of tax positions ( 718 ) ( 11,648 ) ( 2,338 ) Gross increases - current period effect of tax positions — — 20 Expiration of statute of limitations for assessments — ( 114 ) ( 1 ) Unrecognized tax benefits at September 30, $ 960 $ 1,678 $ 13,440 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. The liabilities for unrecognized tax benefits and related interest and penalties are included in other noncurrent liabilities in our Consolidated Balance Sheets. For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax position associated with our U.S. and international operations that could result in increases or decreases of our unrecognized tax benefits. However, we do not expect any such increases or decreases to have a material effect on our results of operations or financial position. Tax Returns We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal years 2018 through 2021, with exception of certain state jurisdictions currently under audit. The tax years remaining open to examination by foreign jurisdictions include 2003 through 2021. NOTE 9 SHAREHOLDERS’ EQUITY 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, 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. As a result, we recorded a Dividend Payable of $ 26.7 million on our Consolidated Balance Sheets as of September 30, 2022. 2022 FORM 10-K | 82 Table of Contents Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss were as follows: September 30, (in thousands) 2022 2021 2020 Pre-tax amounts: Unrealized actuarial loss ( 15,703 ) ( 26,268 ) ( 33,923 ) $ ( 15,703 ) $ ( 26,268 ) $ ( 33,923 ) After-tax amounts: Unrealized actuarial loss ( 12,072 ) ( 20,244 ) ( 26,188 ) $ ( 12,072 ) $ ( 20,244 ) $ ( 26,188 ) The following is a summary of the changes in accumulated other comprehensive loss, net of tax, by component for the fiscal year ended September 30, 2022: (in thousands) Defined Benefit Pension Plan Balance at September 30, 2021 $ ( 20,244 ) Activity during the period Amounts reclassified from accumulated other comprehensive loss 8,172 Net current-period other comprehensive income 8,172 Balance at September 30, 2022 $ ( 12,072 ) NOTE 10 REVENUE FROM CONTRACTS WITH CUSTOMERS Drilling Services Revenue The majority of our drilling services are performed on a “daywork” contract basis, under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market. These drilling services, including our technology solutions, represent a series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. 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. For contracts that are terminated by customers prior to the expirations of their fixed terms, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. 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. 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. Many of these costs are variable, or dependent upon the activity that is performed each day under the related contract. Accordingly, reimbursements that we receive for out-of-pocket expenses are recorded as revenues and the out-of-pocket expenses for which they relate are recorded as operating costs during the period to which they relate within the series of distinct time increments. All of our revenues are recognized net of sales taxes, when applicable. 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. 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. 2022 FORM 10-K | 83 Table of Contents Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the contract term. The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced or no payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. 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 Mobilization costs include certain direct costs incurred for mobilization of contracted rigs. These costs relate directly to a contract, enhance resources that will be used in satisfying the future performance obligations, and are expected to be recovered. These costs are capitalized when incurred and recorded as current or noncurrent contract fulfillment cost assets (depending on the length of the initial contract term), and are amortized on a systematic basis consistent with the pattern of the transfer of the goods or services to which the asset relates which typically includes the initial term of the related drilling contract or a period longer than the initial contract term if management anticipates a customer will renew or extend a contract, which we expect to benefit from the cost of mobilizing the rig. 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, 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. These costs are capitalized as property, plant and equipment and depreciated over the estimated useful life of the improvement. Remaining Performance Obligations 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. Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations. Our contracts are subject to cancellation or modification at the election of the customer; however, due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past. Contract Assets and Liabilities Amounts owed from our customers under our revenue contracts are typically billed on a monthly basis as the service is being provided and are due within 30 days of billing. Such amounts are classified as accounts receivable on our Consolidated Balance Sheets. 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. 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 (net of allowance for estimated credit losses) and liabilities at the dates indicated: (in thousands) September 30, 2022 September 30, 2021 Contract assets, net $ 6,319 $ 4,513 2022 FORM 10-K | 84 Table of Contents (in thousands) September 30, 2022 Contract liabilities balance at October 1, 2020 $ 8,636 Payment received/accrued and deferred 30,721 Revenue recognized during the period ( 30,071 ) Contract liabilities balance at September 30, 2021 9,286 Payment received/accrued and deferred 58,202 Revenue recognized during the period ( 46,842 ) Contract liabilities balance at September 30, 2022 $ 20,646 NOTE 11 STOCK-BASED COMPENSATION On March 3, 2020, the Helmerich & Payne, Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”) was approved by our stockholders. The 2020 Plan is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units (including performance share units), share bonuses, other share-based awards and cash awards. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. Awards outstanding under the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan and the Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan") remain subject to the terms and conditions of those plans. Beginning with fiscal year 2019, we replaced stock options with performance share units as a component of our executives' long-term equity incentive compensation. As a result, there were no stock options granted during the fiscal years ended September 30, 2022, 2021, and 2020. We have also eliminated stock options as an element of our non-employee director compensation program. 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. A summary of compensation cost for stock-based payment arrangements recognized in Drilling Services Operating Expense, Research and Development Expense and Selling, General and Administrative Expense on our Consolidated Statements of Operations, in fiscal years 2022, 2021 and 2020 is as follows: September 30, (in thousands) 2022 2021 2020 Stock-based compensation expense Drilling services operating $ 5,142 $ 5,927 $ 9,086 Research and development 1,551 1,271 765 Selling, general and administrative 21,339 20,660 29,960 Restructuring charges 1 — — ( 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 Restricted stock awards consist of our common stock. Awards granted prior to September 30, 2020 are time-vested over four years , and awards granted after September 30, 2020 are time vested over three years . Non-forfeitable dividends are paid on non-vested shares of restricted stock. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date. As of September 30, 2022, there was $ 24.8 million of total unrecognized compensation cost related to unvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.7 years. 2022 FORM 10-K | 85 Table of Contents 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 1 Weighted-Average Grant Date Fair Value per Share 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 Granted 744 25.83 701 25.61 781 39.99 Vested 2 ( 610 ) 39.81 ( 534 ) 51.79 ( 501 ) 59.46 Forfeited ( 53 ) 30.98 ( 35 ) 35.76 ( 85 ) 48.98 Non-vested restricted stock outstanding at September 30, 1,493 $ 30.85 1,412 $ 37.36 1,280 $ 49.81 (1) Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan. These phantom stock units confer the economic benefits of owning company stock without the actual ownership, transfer or issuance of any shares. 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. Performance Units We have made awards to certain employees that are subject to market-based performance conditions ("performance units"). Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2020 Plan, grants of performance units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals. Such performance unit grants consist of two separate components. Performance units that comprise the first component are subject to a three-year performance cycle. Performance units that comprise the second component are further divided into three separate tranches, each of which is subject to a separate one-year performance cycle within the full three-year performance cycle. The vesting of the performance units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period. The Vesting Period for 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. The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date. The grant date fair value of performance units was determined through use of the Monte Carlo simulation method. The Monte Carlo simulation method requires the use of highly subjective assumptions. Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined Peer Group companies' stock, risk free rate of return and cross-correlations between the Company and our Peer Group companies. The valuation model assumes dividends are immediately reinvested. As of September 30, 2022, there was $ 8.9 million of unrecognized compensation cost related to unvested performance units. That cost is expected to be recognized over a weighted-average period of 1.8 years. 2022 FORM 10-K | 86 Table of Contents 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: 2022 2021 2020 (in thousands, except per share amounts) 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 Non-vested performance units outstanding at October 1, 699 $ 41.55 337 $ 51.09 145 $ 62.66 Granted 227 30.12 313 29.77 259 43.40 Vested 1 ( 161 ) 62.66 — — — — Dividend rights performance units credited 15 32.82 60 49.64 — — Forfeited ( 54 ) 34.16 ( 11 ) 43.40 ( 67 ) 46.35 Non-vested performance units outstanding September 30, 2 726 $ 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. The vesting and number of the remainder of non-vested performance units reflected at the end of the period is contingent upon our achievement of specified target performance criteria. If we meet the specified maximum performance criteria, approximately 1,145,726 additional performance units could vest or become eligible to vest. The weighted-average fair value calculations for performance units granted within the fiscal period are based on the following weighted-average assumptions set forth in the table below. 2022 2021 2020 Risk-free interest rate 1 1.0 % 0.2 % 1.6 % Expected stock volatility 2 67.3 % 62.3 % 34.8 % Expected term (in years) 3 3 3 (1) The risk-free interest rate is based on U.S. Treasury securities for the expected term of the performance units. (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. NOTE 12 EARNINGS (LOSS) PER COMMON SHARE ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, non-vested restricted stock and performance units. 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. 2022 FORM 10-K | 87 Table of Contents The following table sets forth the computation of basic and diluted earnings (loss) per share: September 30, (in thousands, except per share amounts) 2022 2021 2020 Numerator: 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 Losses allocated to unvested shareholders ( 1,508 ) ( 1,350 ) ( 2,647 ) Numerator for basic earnings (loss) per share: From continuing operations 5,044 ( 338,809 ) ( 499,039 ) From discontinued operations 401 11,309 1,895 5,445 ( 327,500 ) ( 497,144 ) Numerator for diluted earnings (loss) per share: From continuing operations 5,044 ( 338,809 ) ( 499,039 ) From discontinued operations 401 11,309 1,895 $ 5,445 $ ( 327,500 ) $ ( 497,144 ) Denominator: Denominator for basic earnings (loss) per share - weighted-average shares 105,891 107,818 108,009 Effect of dilutive shares from stock options, restricted stock and performance share units 664 — — Denominator for diluted earnings (loss) per share - adjusted weighted-average shares 106,555 107,818 108,009 Basic earnings (loss) per common share: 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: 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. Accordingly, our diluted earnings per share calculation for those years were equivalent to our basic earnings per share calculation since diluted earnings per share excluded any assumed exercise of equity awards. These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period. 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 Potentially dilutive shares excluded as anti-dilutive 2,543 3,894 4,004 Weighted-average price per share $ 62.36 $ 57.23 $ 60.72 NOTE 13 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use the fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. 2022 FORM 10-K | 88 Table of Contents • 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. 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 Assets Short-term investments: Corporate debt securities $ 98,264 — 98,264 — U.S. government and federal agency securities 18,837 18,837 — — Total short-term investments 117,101 18,837 98,264 — Investments: Non-qualified supplemental savings plan 14,301 14,301 — — 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 Liabilities Contingent consideration $ 4,022 $ — $ — $ 4,022 September 30, 2021 (in thousands) Fair Value Level 1 Level 2 Level 3 Assets Short-term investments: Corporate debt securities $ 192,950 $ — $ 192,950 $ — U.S. government and federal agency securities 5,750 5,750 — — Total short-term investments 198,700 5,750 192,950 — Investments: Non-qualified supplemental savings plan 18,221 18,221 — — 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 Liabilities Contingent consideration $ 2,996 $ — $ — $ 2,996 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. 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. 2022 FORM 10-K | 89 Table of Contents 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: Year Ended (in thousands) 2022 2021 Assets at beginning of period $ 500 $ 500 Purchases 36,065 — Transfers out 1 ( 3,000 ) — 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. 2022 FORM 10-K | 90 Table of Contents Contingent Consideration 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 Liabilities at beginning of period $ 2,996 $ 9,123 Additions 1,500 — Total gains or losses: Included in earnings ( 224 ) 1,123 Settlements 1 ( 250 ) ( 7,250 ) 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: Year Ended September 30, (in thousands) 2022 2021 Assets at beginning of period $ 2,865 $ — Purchases 15,177 2,865 Transfers in 1 3,000 — 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. 2022 FORM 10-K | 91 Table of Contents 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, net 1 Carrying value $ — $ 483.5 Fair value — 541.6 Long-term debt, net Carrying value 542.6 542.0 Fair value 430.7 554.3 (1) On October 27, 2021 we redeemed the outstanding 2025 Notes. See Note 7—Debt to our Consolidated Financial Statements. 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. NOTE 14 EMPLOYEE BENEFIT PLANS We maintain a domestic noncontributory defined benefit pension plan covering certain U.S. employees who meet certain age and service requirements. In July 2003, we revised the Helmerich & Payne, Inc. Employee Retirement Plan (“Pension Plan”) to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen. 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 Accumulated benefit obligation $ 60,463 $ 110,352 Changes in projected benefit obligations: Projected benefit obligation at beginning of year $ 110,352 $ 116,146 Interest cost 2,537 2,925 Actuarial (gain) loss ( 16,260 ) 7,111 Benefits paid ( 36,166 ) ( 15,749 ) Other — ( 81 ) Projected benefit obligation at end of year $ 60,463 $ 110,352 Change in plan assets: Fair value of plan assets at beginning of year $ 87,255 $ 86,103 Actual return on plan assets ( 14,324 ) 11,835 Employer contribution 5,000 5,066 Benefits paid ( 36,167 ) ( 15,749 ) Fair value of plan assets at end of year $ 41,764 $ 87,255 Funded status of the plan at end of year $ ( 18,699 ) $ ( 23,097 ) 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 Accrued liabilities $ — $ — Noncurrent liabilities-other ( 18,699 ) ( 23,097 ) Net amount recognized $ ( 18,699 ) $ ( 23,097 ) 2022 FORM 10-K | 92 Table of Contents 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: September 30, 2022 2021 2020 Discount rate for net periodic benefit costs 2.75 % 2.66 % 3.16 % Discount rate for year-end obligations 5.44 % 2.75 % 2.66 % Expected return on plan assets 4.25 % 3.50 % 4.65 % 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. Components of the net periodic pension expense were as follows: Year Ended September 30, (in thousands) 2022 2021 2020 Interest cost $ 2,537 $ 2,925 $ 3,598 Expected return on plan assets 1 ( 2,481 ) ( 3,722 ) ( 4,784 ) Recognized net actuarial loss 2,080 3,205 2,718 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): Year Ended September 30, 2023 2024 2025 2026 2027 2028 – 2032 Total $ 5,479 $ 5,049 $ 5,614 $ 5,088 $ 5,376 $ 22,827 $ 49,433 Investment Strategy and Asset Allocation Our investment policy and strategies are established with a long-term view in mind. The investment strategy is intended to help pay the cost of the Pension Plan while providing adequate security to meet the benefits promised under the Pension Plan. We maintain a diversified asset mix to minimize the risk of a material loss to the portfolio value that might occur from devaluation of any single investment. In determining the appropriate asset mix, our financial strength and ability to fund potential shortfalls are considered. Pension Plan assets are invested in portfolios of diversified public-market equity securities and fixed income securities. The Pension Plan does not directly hold securities of the Company. 2022 FORM 10-K | 93 Table of Contents 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 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, Asset Category 2023 2022 2021 U.S. equities 17 % 18 % 46 % International equities 12 11 17 Fixed income 71 71 37 Total 100 % 100 % 100 % Plan Assets 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: September 30, 2022 (in thousands) Total Level 1 Level 2 Level 3 Short-term investments $ 555 $ 555 $ — $ — Mutual funds: Domestic stock funds 7,318 7,318 — — Bond funds 29,093 29,093 — — International stock funds 4,739 4,739 — — Total mutual funds 41,150 41,150 — — Oil and gas properties 59 — — 59 Total $ 41,764 $ 41,705 $ — $ 59 September 30, 2021 (in thousands) Total Level 1 Level 2 Level 3 Short-term investments $ 2,444 $ 2,444 $ — $ — Mutual funds: Domestic stock funds 35,212 35,212 — — Bond funds 17,679 17,679 — — Balanced funds 17,520 17,520 — — International stock funds 14,379 14,379 — — Total mutual funds 84,790 84,790 — — Oil and gas properties 21 — — 21 Total $ 87,255 $ 87,234 $ — $ 21 As of September 30, 2022 and 2021, the Pension Plan’s financial assets utilizing Level 1 inputs are valued based on quoted prices in active markets for identical securities. As of September 30, 2022 and 2021, the Pension Plan’s assets utilizing Level 3 inputs consist of oil and gas properties. The fair value of oil and gas properties is determined by Wells Fargo Bank, N.A., based upon actual revenue received for the previous twelve-month period and experience with similar assets. Defined Contribution Plan Substantially all employees on the U.S. payroll may elect to participate in our 401(k)/Thrift Plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first five percent of the participant’s compensation subject to certain limitations. 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. 2022 FORM 10-K | 94 Table of Contents 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 Reserve for credit losses: Balance at October 1, $ 2,068 $ 1,820 $ 9,927 Provision for credit loss 1,077 203 2,203 (Write-off) recovery of credit loss ( 170 ) 45 ( 10,310 ) Balance at September 30, $ 2,975 $ 2,068 $ 1,820 2022 FORM 10-K | 95 Table of Contents 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, (in thousands) 2022 2021 Accounts receivable, net of reserve: Trade receivables $ 430,944 $ 204,424 Income tax receivable 27,769 24,470 Total accounts receivable, net of reserve $ 458,713 $ 228,894 Prepaid expenses and other current assets, net: Deferred mobilization $ 5,048 $ 3,734 Prepaid insurance 7,498 7,313 Prepaid value added tax 6,628 7,682 Prepaid maintenance and rent 13,092 5,540 Accrued demobilization, net 6,319 4,513 Prepaid operating expenses — 17,959 Prepaid equipment 10,091 — Other 17,787 20,837 Total prepaid expenses and other current assets, net $ 66,463 $ 67,578 Accrued liabilities: Accrued operating costs $ 26,539 $ 20,872 Payroll and employee benefits 58,604 69,311 Taxes payable, other than income tax 26,786 25,329 Self-insurance liabilities 38,422 40,060 Deferred income 19,821 8,546 Advance payment for sale of property, plant and equipment — 86,524 Deferred mobilization revenue 8,959 4,662 Accrued income taxes 40,833 881 Contingent liability 2,750 5,985 Operating lease liability 12,382 12,624 Other 6,055 8,698 Total accrued liabilities $ 241,151 $ 283,492 Noncurrent liabilities — Other: Pension and other non-qualified retirement plans $ 40,423 $ 47,263 Self-insurance liabilities 38,422 40,910 Contingent liability 1,272 1,759 Deferred revenue 3,162 1,003 Uncertain tax positions including interest and penalties 2,381 2,578 Operating lease liability 27,350 37,864 Payroll tax deferral 1 — 15,424 Other 377 956 Total noncurrent liabilities — other $ 113,387 $ 147,757 (1) Deferral related to the provisions within the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020, which allows for the deferral of the employer share of Social Security tax. NOTE 16 COMMITMENTS AND CONTINGENCIES Purchase Commitments Equipment, parts and supplies are ordered in advance to promote efficient construction and capital improvement progress. At September 30, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 148.6 million. Lease Obligations Refer to Note 5—Leases for additional information on our lease obligations. 2022 FORM 10-K | 96 Table of Contents Guarantee Arrangements We are contingently liable to sureties in respect of bonds issued by the sureties in connection with certain commitments entered into by us in the normal course of business. We have agreed to indemnify the sureties for any payments made by them in respect of such bonds. Contingencies During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain or loss contingency. We account for gain contingencies in accordance with the provisions of ASC 450, Contingencies, and, therefore, we do not record gain contingencies or recognize income until realized. The property and equipment of our Venezuelan subsidiary was seized by the Venezuelan government on June 30, 2010. 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 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. We maintain insurance against certain business risks subject to certain deductibles. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate resolution of such items will not have a material adverse impact on our financial condition, cash flows, or results of operations. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed. NOTE 17 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION Description of the Business We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S. onshore oil and gas producing basins as well as South America and the Middle East. Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. We believe we are the recognized industry leader in drilling as well as technological innovation. We focus on offering our customers an integrated solutions-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations rather than a product-based offering, such as a rig or separate technology package. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, Offshore Gulf of Mexico and International Solutions. Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions. 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. 2022 FORM 10-K | 97 Table of Contents Segment Performance We evaluate segment performance based on income or loss from continuing operations (segment operating income (loss)) before income taxes which includes: • Revenues from external and internal customers • Direct operating costs • Depreciation and amortization • Allocated general and administrative costs • Asset impairment charges • Restructuring charges 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. Summarized financial information of our reportable segments for the fiscal years ended September 30, 2022, 2021 and 2020 is shown in the following tables: September 30, 2022 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Eliminations Total External sales $ 1,788,167 $ 125,465 $ 136,072 $ 9,240 $ — $ 2,058,944 Intersegment — — — 57,047 ( 57,047 ) — Total sales 1,788,167 125,465 136,072 66,287 ( 57,047 ) 2,058,944 Segment operating income (loss) 121,893 23,214 ( 138 ) 12,720 ( 6,422 ) 151,267 Depreciation and amortization 375,250 9,175 4,156 1,701 — 390,282 September 30, 2021 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Eliminations Total External sales $ 1,026,364 $ 126,399 $ 57,917 $ 7,888 $ — $ 1,218,568 Intersegment — — — 35,416 ( 35,416 ) — Total sales 1,026,364 126,399 57,917 43,304 ( 35,416 ) 1,218,568 Segment operating income (loss) ( 287,176 ) 15,969 ( 21,003 ) ( 9,704 ) ( 1,580 ) ( 303,494 ) Depreciation and amortization 392,415 10,557 2,013 1,426 — 406,411 2022 FORM 10-K | 98 Table of Contents September 30, 2020 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Eliminations Total External sales $ 1,474,380 $ 143,149 $ 144,185 $ 12,213 $ — $ 1,773,927 Intersegment — — — 36,901 ( 36,901 ) — Total sales 1,474,380 143,149 144,185 49,114 ( 36,901 ) 1,773,927 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 The following table reconciles segment operating income (loss) per the tables above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations: Year Ended September 30, (in thousands) 2022 2021 2020 Segment operating income (loss) $ 151,267 $ ( 303,494 ) $ ( 544,389 ) 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 ) Operating income (loss) from continuing operations 45,292 ( 428,549 ) ( 620,187 ) Other income (expense) Interest and dividend income 18,090 10,254 7,304 Interest expense ( 19,203 ) ( 23,955 ) ( 24,474 ) Gain (loss) on investment securities 57,937 6,727 ( 8,720 ) 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 ) 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: Year Ended September 30, (in thousands) 2022 2021 Total assets 1 North America Solutions $ 3,406,824 $ 3,418,569 Offshore Gulf of Mexico 80,993 84,580 International Solutions 330,974 269,820 Other 120,305 95,398 3,939,096 3,868,367 Investments and corporate operations 416,435 1,165,761 Total assets from continuing operations $ 4,355,531 $ 5,034,128 (1) Assets by segment exclude investments in subsidiaries and intersegment activity. 2022 FORM 10-K | 99 Table of Contents The following table presents revenues from external customers by country based on the location of service provided: Year Ended September 30, (in thousands) 2022 2021 2020 Operating revenues United States $ 1,920,026 $ 1,158,230 $ 1,626,407 Argentina 91,385 27,855 84,402 Bahrain 16,986 27,435 28,653 United Arab Emirates 5,698 957 24,716 Colombia 22,003 1,674 6,414 Other foreign 2,846 2,417 3,335 Total $ 2,058,944 $ 1,218,568 $ 1,773,927 The following table presents property, plant and equipment by country based on the location of service provided: Year Ended September 30, (in thousands) 2022 2021 Property, plant and equipment, net United States $ 2,872,145 $ 3,042,140 Argentina 54,789 50,944 Colombia 21,809 22,959 Other foreign 12,066 11,244 Total $ 2,960,809 $ 3,127,287 NOTE 18 RESTRUCTURING CHARGES During the second quarter of fiscal year 2021, we reorganized our IT operations and moved select IT functions to a managed service provider. 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 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 table below. The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2021: Year Ended September 30, 2021 (in thousands) North America Solutions International Solutions Corporate Total Employee termination benefits $ 54 $ 207 $ 1,215 $ 1,476 Other restructuring expenses 3,815 — 635 $ 4,450 Total restructuring charges $ 3,869 207 $ 1,850 $ 5,926 Beginning in the third quarter of fiscal year 2020, we implemented cost controls and began evaluating further measures to respond to the combination of weakened commodity prices, uncertainties related to the COVID-19 pandemic, and the resulting market volatility. We restructured our operations to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies. We commenced a number of restructuring efforts as a result of this evaluation, which included, among other things, a reduction in our capital allocation plans, changes to our organizational structure, and a reduction of staffing levels. Costs incurred 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. 2022 FORM 10-K | 100 Table of Contents The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2020: Year Ended September 30, 2020 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Corporate G&A Total Employee termination benefits $ 10,041 $ 1,432 $ 2,991 $ 321 $ 4,745 $ 19,530 Stock-based compensation benefit ( 3,036 ) ( 178 ) ( 11 ) ( 61 ) ( 197 ) ( 3,483 ) Total restructuring charges $ 7,005 $ 1,254 $ 2,980 $ 260 $ 4,548 $ 16,047 These expenses are recorded within restructuring charges on our Consolidated Statements of Operations for the fiscal years ended September 30, 2021 and 2020. NOTE 19 SUBSEQUENT EVENTS 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. 2022 FORM 10-K | 101 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.