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Item 1. Financial Statements

2023-04-26 compared with 2023-01-30 · 223 added, 161 removed, 699 unchanged (35% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30,

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

March 31, September 30,

(in thousands except share data and share amounts) 2023 2022

Current Assets:

27 unchanged sentences

Other 113,156 114,927

Noncurrent liabilities - discontinued operations 800 1,540

Total noncurrent liabilities 1,196,206 1,195,249

1 unchanged sentence

Shareholders' Equity:

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of December 31, 2022 and September 30, 2022, and 104,898,566 and 105,293,662 shares outstanding as of December 31, 2022 and September 30, 2022, respectively

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of March 31, 2023 and September 30, 2022, and 102,584,517 and 105,293,662 shares outstanding as of March 31, 2023 and September 30, 2022, respectively

11,222 11,222

3 unchanged sentences

Accumulated other comprehensive loss ( 11,560 ) ( 12,072 )

Treasury stock, at cost, 7,324,299 shares and 6,929,203 shares as of December 31, 2022 and September 30, 2022, respectively

Treasury stock, at cost, 9,638,348 shares and 6,929,203 shares as of March 31, 2023 and September 30, 2022, respectively

( 361,161 ) ( 235,528 )

5 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended December 31,

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

18 unchanged sentences

Interest expense ( 4,239 ) ( 4,390 ) ( 8,594 ) ( 10,504 )

Gain (loss) on investment securities ( 15,091 ) 47,862

Gain on investment securities 39,752 22,132 24,661 69,994

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

23 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended December 31,

Three Months Ended

March 31, Six Months Ended

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Other comprehensive income, net of income taxes:

Net change related to employee benefit plans, net of income taxes of $( 0.1 ) million for the three months ended December 31, 2022 and 2021

Net change related to employee benefit plans, net of income taxes of $( 0.1 ) million and $( 0.2 ) million for the three and six months ended March 31, 2023, respectively, and $( 0.1 ) million and $( 0.2 ) million for the three and six months ended March 31, 2022, respectively

256 394 512 788

Other comprehensive income 256 394 512 788

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended December 31, 2022 and 2021

Three and Six Months Ended March 31, 2023

Common Stock Additional

15 unchanged sentences

Balance at December 31, 2022 112,222 $ 11,222 $ 512,928 $ 2,494,106 $ ( 11,816 ) 7,324 $ ( 261,295 ) $ 2,745,145

Comprehensive income:

Net income — — — 164,040 — — — 164,040

Other comprehensive income — — — — 256 — — 256

Dividends declared ($ 0.25 base per share, $ 0.235 supplemental per share)

— — — ( 50,046 ) — — — ( 50,046 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 11,769 ) — — ( 229 ) 6,842 ( 4,927 )

Stock-based compensation — — 7,431 — — — — 7,431

Share repurchases — — — — — 2,543 ( 106,708 ) ( 106,708 )

Other — — 615 — — — — 615

Balance at March 31, 2023

112,222 $ 11,222 $ 509,205 $ 2,608,100 $ ( 11,560 ) 9,638 $ ( 361,161 ) $ 2,755,806

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

Q2FY23 FORM 10-Q | 6

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)

Three and Six Months Ended March 31, 2022

Common Stock Additional

8 unchanged sentences

Other comprehensive income — — — — 394 — — 394

Dividends declared ($ 0.25 per share)

Dividends declared ($ 0.25 base per share)

— — — ( 26,807 ) — — — ( 26,807 )

3 unchanged sentences

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

Comprehensive income (loss):

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

Other comprehensive income — — — — 394 — — 394

Dividends declared ($ 0.25 base per share)

— — — ( 26,565 ) — — — ( 26,565 )

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

Stock-based compensation — — 7,945 — — — — 7,945

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

Other — — ( 946 ) — — — ( 946 )

Balance at March 31, 2022

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

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

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended December 31,

Six Months Ended March 31,

(in thousands) 2023 2022

3 unchanged sentences

Income (loss) from continuing operations 260,328 ( 55,955 )

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

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

Depreciation and amortization 192,910 203,374

4 unchanged sentences

Stock-based compensation 15,704 14,163

(Gain) loss on investment securities 15,091 ( 47,862 )

Gain on investment securities ( 24,661 ) ( 69,994 )

Gain on reimbursement of drilling equipment ( 27,298 ) ( 11,702 )

11 unchanged sentences

Other noncurrent liabilities 3,006 ( 16,777 )

Net cash provided by (used in) operating activities from continuing operations 185,397 ( 3,705 )

Net cash provided by operating activities from continuing operations 326,305 18,938

Net cash used in operating activities from discontinued operations ( 51 ) ( 42 )

Net cash provided by (used in) operating activities 185,375 ( 3,718 )

Net cash provided by operating activities 326,254 18,896

CASH FLOWS FROM INVESTING ACTIVITIES:

13 unchanged sentences

Share repurchases ( 145,013 ) ( 76,999 )

Other ( 540 ) ( 587 )

Net cash used in financing activities ( 263,154 ) ( 680,915 )

Net increase (decrease) in cash and cash equivalents and restricted cash 2,649 ( 684,057 )

Net decrease in cash and cash equivalents and restricted cash ( 56,106 ) ( 707,340 )

Cash and cash equivalents and restricted cash, beginning of period 269,009 936,716

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Three months ended December 31,

Six Months Ended March 31,

(in thousands) 2023 2022

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period:

Cash paid during the period:

Interest paid $ 8,919 $ 10,798

Income tax paid (received), net ( 21,876 ) 97

Income tax paid 118,090 695

Income tax received 25,687 62

Cash paid for amounts included in the measurement of lease liabilities:

21 unchanged sentences

Our real estate investments include a shopping center and undeveloped real estate.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RISKS AND UNCERTAINTIES

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED RISKS AND UNCERTAINTIES

Interim Financial Information

13 unchanged sentences

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

We had restricted cash of $ 42.5 million and $ 18.5 million at December 31, 2022 and 2021, respectively, and $ 36.9 million and $ 19.2 million at September 30, 2022 and 2021, respectively.

Of the total at December 31, 2022 and September 30, 2022, $ 0.7 million and $ 1.1 million, respectively, is related to the acquisition of drilling technology companies, and $ 41.8 million and $ 35.8 million, respectively, represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

We had restricted cash of $ 53.2 million and $ 27.2 million at March 31, 2023 and 2022, respectively, and $ 36.9 million and $ 19.2 million at September 30, 2022 and 2021, respectively.

Of the total at March 31, 2023 and September 30, 2022, $ 0.6 million and $ 1.1 million, respectively, is related to the acquisition of drilling technology companies, and $ 52.6 million and $ 35.8 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.

1 unchanged sentence

Cash, cash equivalents, and restricted cash are reflected on the Unaudited Condensed Consolidated Balance Sheets as follows:

December 31, September 30,

March 31, September 30,

(in thousands) 2023 2022 2022 2021

31 unchanged sentences

Self-Insurance

Our wholly-owned insurance captives (the "Captives") incurred direct operating costs consisting primarily of adjustments to accruals for estimated losses of $ 2.9 million and $( 2.2 ) million and rig and casualty insurance premiums of $ 10.0 million and $ 8.8 million during the three months ended December 31, 2022 and 2021 respectively.

Our wholly-owned insurance captives (the "Captives") incurred direct operating costs consisting primarily of adjustments to accruals for estimated losses of $ 1.7 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, respectively, and $ 4.7 million and $( 0.4 ) million for the six months ended March 31, 2023 and 2022, respectively, and rig and casualty insurance premiums of $ 10.9 million and $ 7.9 million during the three months ended March 31, 2023 and 2022 respectively, and $ 20.9 million and $ 16.7 million for the six months ended March 31, 2023 and 2022.

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

Intercompany premium revenues recorded by the Captives during the three months ended December 31, 2022 and 2021 amounted to $ 16.4 million and $ 13.6 million respectively, which were eliminated upon consolidation.

Intercompany premium revenues recorded by the Captives during the three months ended March 31, 2023 and 2022 amounted to $ 17.7 million and $ 13.2 million respectively, and $ 34.1 million and $ 26.9 million during the six months ended March 31, 2023 and 2022, respectively, which were eliminated upon consolidation.

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

1 unchanged sentence

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

Our medical stop loss operating expenses for the three months ended December 31, 2022 and 2021 were $ 2.8 million and $ 3.2 million, respectively.

Our medical stop loss operating expenses for the three months ended March 31, 2023 and 2022 were $ 2.5 million and $ 3.6 million, respectively, and $ 5.3 million and $ 6.9 million for the six months ended March 31, 2023 and 2022, respectively.

International Solutions Drilling Risks

24 unchanged sentences

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

We recorded aggregate foreign currency losses of $ 0.2 million and $ 1.0 million for the three months ended December 31, 2022 and 2021 respectively.

We recorded aggregate foreign currency losses of $ 0.1 million and $ 0.3 million for the three and six months ended March 31, 2023 respectively, and $ 2.4 million and $ 3.3 million for the three and six months ended March 31, 2022 , respectively.

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

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

As of December 31, 2022, our cash balance in Argentina was $ 19.7 million.

As of March 31, 2023, our cash balance in Argentina was $ 16.3 million.

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

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

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three months ended December 31, 2022, approximately 7.7 percent of our operating revenues were generated from international locations compared to 9.3 percent during the three months ended December 31, 2021.

During the three months ended December 31, 2022, approximately 90.5 percent of operating revenues from international locations were from operations in South America compared to 77.1 percent during the three months ended December 31, 2021.

Q2FY23 FORM 10-Q | 12

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and six months ended March 31, 2023, approximately 7.4 percent and 7.5 percent of our operating revenues were generated from international locations compared to 5.9 percent and 7.5 percent during the three and six months ended March 31, 2022, respectively.

During the three and six months ended March 31, 2023, approximately 86.3 percent and 88.4 percent of operating revenues from international locations were from operations in South America compared to 75.8 percent and 76.6 percent during the three and six months ended March 31, 2022, respectively.

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 .

Q1FY23 FORM 10-Q | 11

NOTE 3 PROPERTY, PLANT AND EQUIPMENT

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

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

Property, plant and equipment as of March 31, 2023 and September 30, 2022 consisted of the following:

(in thousands) Estimated Useful Lives March 31, 2023 September 30, 2022

Drilling services equipment 4 - 15 years

15 unchanged sentences

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

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 94.9 million and $ 98.6 million including abandonments of $ 1.2 million and $ 1.3 million for the three months ended December 31, 2022 and 2021, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 94.6 million and $ 101.1 million including abandonments of $ 1.0 million and $ 2.5 million for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $ 189.5 million and $ 199.8 million including abandonments of $ 2.1 million and $ 3.8 million for the six months ended March 31, 2023 and 2022, respectively.

I n November 2022, a fire at a wellsite caused substantial damage to one of our super spec-rigs within our North America Solutions segment.

2 unchanged sentences

The insurance recovery is expected to exceed the net book value of the components written off.

The loss of $ 9.2 million is recorded as abandonment expense within Depreciation and Amortization in our Unaudited Condensed Consolidated Statement of Operations for the three months ended December 31, 2022 and is offset by an insurance recovery that was also recognized within Depreciation and Amortization for the same amount as the loss.

The loss of $ 9.2 million is recorded as abandonment expense within Depreciation and amortization in our Unaudited Condensed Consolidated Statement of Operations for the six months ended March 31, 2023 and is offset by an insurance recovery that was also recognized within Depreciation and Amortization for the same amount as the loss.

Any insurance proceeds in excess of the loss will be recognized once it is collected.

5 unchanged sentences

Impairment expense ( 2,733 )

Balance at December 31, 2022

Fiscal Year 2023 Activity

During the three months ended December 31, 2022, the Company initiated a plan to decommission and scrap four international FlexRig ® drilling rigs and four conventional drilling rigs located in Argentina that are not suitable for unconventional drilling.

As a result, these rigs were reclassified to Assets Held-for-Sale on our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022.

The rigs’ aggregate net book value of $ 8.8 million was written down to the estimated scrap value of $ 0.7 million, which resulted in a non-cash impairment charge of $ 8.1 million within our International Solutions segment and recorded in our Unaudited Condensed Consolidated Statement of Operations during the three months ended December 31, 2022.

Balance at March 31, 2023

Q2FY23 FORM 10-Q | 13

During the three months ended December 31, 2022, our North America Solutions assets that were previously classified as Assets Held-for-Sale at September 30, 2022 were either sold or written down to scrap value.

The aggregate net book value of these remaining assets was $ 3.0 million, which exceeded the estimated scrap value of $ 0.3 million, resulting in a non-cash impairment charge of $ 2.7 million during the three months ended December 31, 2022.

During the three months ended December 31, 2022, we also identified additional equipment that met the asset held-for-sale criteria and was reclassified as Assets Held-for-Sale on our Unaudited Condensed Consolidated Balance Sheets.

The aggregate net book value of the equipment of $ 1.4 million was written down to its estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.3 million during the three months ended December 31, 2022.

These impairment charges are recorded within our North America Solutions segment in our Unaudited Condensed Consolidation Statement of Operations.

Fiscal Year 2023 Activity

During the three months ended December 31, 2021, we closed on the sale of our trucking and casing running assets 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.

We identified two partial rig substructures that met the asset held-for-sale criteria and were reclassified as Assets Held-for-Sale on our Unaudited Condensed Consolidated Balance Sheets.

The combined net book value of the rig substructures of $ 2.0 million were written down to their estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.9 million within our North America Solutions segment and recorded in the Unaudited Condensed Consolidated Statement of Operations for the three months ended December 31, 2021.

During the six months ended March 31, 2023, the Company initiated a plan to decommission and scrap four international FlexRig ® drilling rigs and four conventional drilling rigs located in Argentina that are not suitable for unconventional drilling.

As a result, these rigs were reclassified to Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023.

During the six months ended March 31, 2023, our North America Solutions assets that were previously classified as Assets held-for-sale at September 30, 2022 were either sold or written down to scrap value.

The aggregate net book value of these remaining assets was $ 3.0 million, which exceeded the estimated scrap value of $ 0.3 million, resulting in a non-cash impairment charge of $ 2.7 million.

During the same period, we also identified additional equipment that met the asset held-for-sale criteria and was reclassified as Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

These impairment charges are recorded within our North America Solutions segment in our Unaudited Condensed Consolidated Statement of Operations.

Fiscal Year 2022 Activity

During the six months ended March 31, 2022, we closed on the sale of our trucking and casing running assets 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 recorded in Other (gain) loss on sale of assets within our Unaudited Condensed Consolidated Statements of Operations.

During the six months ended March 31, 2022 and 2023 we recognized $ 0.3 million and $ 1.2 million, respectively, in earnout proceeds associated with the sale of our trucking services assets within Other (gain) loss on sale of assets on the Unaudited Condensed Consolidated Statements of Operations.

During the six months ended March 31, 2022, we identified two partial rig substructures that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

During the second quarter of fiscal year 2022, we completed the sale of these assets with a net book value of approximately $ 0.1 million, resulting in no gain or loss as a result of the sale.

Two international FlexRig ® drilling rigs located in Colombia were identified that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

In conjunction with establishing a plan to sell the two international FlexRig ® drilling rigs, we recognized a non-cash impairment charge of $ 2.5 million within our International Solutions segment and recorded in the Unaudited Condensed Consolidated Statement of Operations during the three months ended December 31, 2021, 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.

In conjunction with establishing a plan to sell the two international FlexRig ® drilling rigs, we recognized a non-cash impairment charge of $ 2.5 million within our International Solutions segment and recorded in the Unaudited Condensed Consolidated Statement of Operations during the six months ended March 31, 2022, as the rigs aggregate net book value of $ 3.4 million exceeded the fair value of the rigs less estimated cost to sell of $ 0.9 million.

During the second quarter of fiscal year 2022, we completed the sale of the two international FlexRig ® drilling rigs for total consideration of $ 0.9 million, resulting in no gain or loss as a result of the sale.

During the six months ended March 31, 2022, ADNOC Drilling accepted delivery of two rigs located in the U.A.E.

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

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

The 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.

Q2FY23 FORM 10-Q | 14

(Gain)/Loss on Sale of Assets

Gain on Reimbursement of Drilling Equipment

During the three months ended December 31, 2022 and 2021 we recognized a gain of $ 15.7 million and $ 5.3 million respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe.

During the three and six months ended March 31, 2023 and 2022 we recognized a gain of $ 11.6 million, $ 27.3 million, $ 6.4 million, and $ 11.7 million, 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 Unaudited Condensed Consolidated Statements of Operations.

Other (Gain)/Loss on Sale of Assets

During the three months ended December 31, 2022 and 2021 we recognized a (gain) loss of $( 2.4 ) million and $ 1.0 million, respectively, related to the sale of rig equipment and other capital assets.

During the three and six months ended March 31, 2023 and 2022 we recognized a (gain) loss of $( 2.5 ) million, $( 4.9 ) million, $( 0.7 ) million, and $ 0.3 million, 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 Unaudited Condensed Consolidated Statements of Operations.

Fiscal Year 2023 During the first quarter of fiscal year 2023 , we recognized a gain of $ 1.1 million in earnout proceeds associated with the sale of our trucking and casing services assets during the fiscal year ended September 30, 2022, as mentioned above.

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

NOTE 4 GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

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

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

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

Q1FY23 FORM 10-Q | 13

During the three and six months ended March 31, 2023, we had no additions or impairments to goodwill.

As of March 31, 2023 and September 30, 2022, the goodwill balance was $ 45.7 million.

Intangible Assets

1 unchanged sentence

All of our intangible assets are within our North America Solutions reportable segment and consist of the following:

December 31, 2022 September 30, 2022

March 31, 2023 September 30, 2022

(in thousands) Weighted Average Estimated Useful Lives Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

5 unchanged sentences

$ 100,961 $ 37,171 $ 63,790 $ 100,961 $ 33,807 $ 67,154

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.8 million for both the three months ended December 31, 2022 and 2021 and is estimated to be approximately $ 4.8 million for the remainder of fiscal year 2023 , and approximately $ 6.4 million for fiscal year 2024 through 2027.

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.6 million and $ 1.8 million for the three months ended March 31, 2023 and 2022 respectively and $ 3.4 million and $ 3.6 million for the six months ended March 31, 2023 and 2022 respectively.

Amortization expense is estimated to be approximately $ 3.2 million for the remainder of fiscal year 2023, and approximately $ 6.4 million for fiscal year 2024 through 2027.

Q2FY23 FORM 10-Q | 15

We had the following unsecured long-term debt outstanding with maturities shown in the following table:

December 31, 2022 September 30, 2022

March 31, 2023 September 30, 2022

(in thousands) Face Amount Unamortized Discount and Debt Issuance Cost Book Value Face Amount Unamortized Discount and Debt Issuance Cost Book Value

9 unchanged sentences

In June 2022, we settled a registered exchange offer (the “Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes.

One hundred percent of the 2031 Notes were exchanged in the Registered Exchange Offer.

All of the 2031 Notes were exchanged in the Registered Exchange Offer.

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;

2 unchanged sentences

The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes.

Q1FY23 FORM 10-Q | 14

4.65 % Senior Notes due 2025 On October 27, 2021, we redeemed all of the outstanding 2025 Notes.

As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on Extinguishment of Debt on our Unaudited Condensed Consolidated Statements of Operations during the three months ended December 31, 2021.

Credit Facilities

As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on extinguishment of debt on our Unaudited Condensed Consolidated Statements of Operations during the six months ended March 31, 2022.

Credit Facility

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.

1 unchanged sentence

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.

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.

Additionally, 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 12, 2025 to November 11, 2026.

On February 10, 2023, 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 11, 2026 to November 12, 2027.

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.

Q2FY23 FORM 10-Q | 16

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

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

As of March 31, 2023, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

For a full description of the 2018 Credit Facility, see Note 7—Debt to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K.

As of December 31, 2022, we had $ 95.0 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 $ 95.0 million, $ 40.0 million was outstanding as of December 31, 2022.

As of March 31, 2023, we had $ 95.0 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 $ 95.0 million, $ 40.0 million was outstanding as of March 31, 2023.

Separately, we had $ 2.1 million in standby letters of credit and bank guarantees outstanding.

In total, we had $ 42.1 million outstanding as of December 31, 2022.

In total, we had $ 42.1 million outstanding as of March 31, 2023.

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

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

At March 31, 2023, we were in compliance with all debt covenants.

NOTE 6 INCOME TAXES

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In calculating our estimated annual effective tax rate, we consider forecasted annual pre-tax income and estimated permanent book versus tax differences.

Adjustments to the effective tax rate and estimates could occur during the year as information and assumptions change which could include, but are not limited to, changes to forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates.

Our income tax expense (benefit) from continuing operations for the three months ended December 31, 2022 and 2021 was $ 32.4 million and $( 7.6 ) million, respectively, resulting in effective tax rates of 25.1 percent and 12.8 percent, respectively.

Adjustments to the effective tax rate and estimates could occur during the year as information and assumptions change which could include, but are not limited to, changes to the forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates.

For the three and six months ended March 31, 2022 we used a discrete effective tax rate method to calculate income taxes as it was determined the estimated annual effective tax rate method would not provide a reliable estimate.

Our income tax provision from continuing operations for the three months ended March 31, 2023 and 2022 was $ 51.1 million and $ 2.7 million, respectively, resulting in effective tax rates of 23.8 percent and ( 136.9 ) percent, respectively.

Our income tax provision (benefit) from continuing operations for the six months ended March 31, 2023 and 2022 was $ 83.5 million and $( 4.9 ) million, respectively, resulting in effective tax rates of 24.3 percent and 8.0 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three months ended December 31, 2022 and 2021 primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments.

The discrete adjustments for the three months ended December 31, 2022 and 2021 are primarily due to tax expense related to equity compensation of $ 0.2 million and $ 3.5 million, respectively.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2023 primarily due to state and foreign income taxes, and permanent non-deductible items.

Additionally, the effective tax rate for the six months ended March 31, 2023 differs from the U.S.

federal statutory rate of 21.0 percent due to a discrete tax adjustment of $ 0.2 million related to equity compensation.

Effective tax rates differ from the U.S.

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

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

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

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

In December 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares, effective on January 1, 2023.

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

During the three months ended December 31, 2022 and 2021, we repurchased 0.8 million common shares at an aggregate cost of $ 39.1 million and 2.5 million common shares at an aggregate cost of $ 60.4 million, respectively, which are held as treasury shares.

In December 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares, effective January 1, 2023.

The repurchases may be made using our cash and cash equivalents or other available sources and are held as treasury shares on our Unaudited Condensed Consolidated Balance Sheets.

During the three and six months ended March 31, 2023, we repurchased 2.5 million and 3.4 million common shares, at an aggregate cost of $ 106.7 million and $ 145.8 million (including excise tax of $ 0.8 million), respectively.

We repurchased 0.6 million and 3.2 million common shares at an aggregate cost of $ 16.6 million and $ 77.0 million, respectively, during the three and six months ended March 31, 2022.

A base cash dividend of $ 0.25 per share and a supplemental dividend of $ 0.235 per share was declared on December 9, 2022 for shareholders of record on February 14, 2023, and was paid on February 28, 2023.

On March 1, 2023, the Board of Directors declared a base cash dividend of $ 0.25 per share and a supplemental cash dividend of $ 0.235 per share for shareholders of record on May 18, 2023, payable on June 1, 2023.

As a result, we recorded Dividends Payable of $ 50.4 million on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023.

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A cash dividend of $ 0.25 per share was declared on September 7, 2022 and a supplemental dividend of $ 0.235 per share was declared on October 17, 2022, both for shareholders of record on November 15, 2022, and was paid on December 1, 2022.

On December 9, 2022, the Board of Directors declared a quarterly cash dividend of $ 0.25 per share and a quarterly supplemental cash dividend of $ 0.235 per share for shareholders of record on February 14, 2023, payable on February 28, 2023.

As a result, we recorded Dividends Payable of $ 51.5 million on our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

December 31, September 30,

March 31, September 30,

(in thousands) 2023 2022

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Unrealized actuarial loss $ ( 15,041 ) $ ( 15,703 )

( 15,041 ) ( 15,703 )

After-tax amounts:

Unrealized actuarial loss $ ( 11,560 ) $ ( 12,072 )

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

(in thousands) Defined Benefit Pension Plan

Balance at September 30, 2022

$ ( 11,560 ) $ ( 12,072 )

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, related to the defined benefit pension plan for the three and six months ended March 31, 2023:

(in thousands) Three Months Ended March 31, 2023 Six Months Ended March 31, 2023

Balance at beginning of period $ ( 11,816 ) $ ( 12,072 )

Activity during the period:

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Net current-period other comprehensive income 256 512

Balance at December 31, 2022 $ ( 11,816 )

Balance at March 31, 2023 $ ( 11,560 ) $ ( 11,560 )

NOTE 8 REVENUE FROM CONTRACTS WITH CUSTOMERS

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

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.

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 an amount for which the entity has a right to invoice, as permitted by ASC 606.

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.

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In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued disputed amounts.

Total revenue recognized as a result of the settlement in the amount of $ 16.4 million is included in Drilling Services Revenue within the International Solutions segment on our Unaudited Condensed Consolidated Statements of Operations for the three months ended December 31, 2021.

Contract Costs

We had capitalized fulfillment costs of $ 9.4 million and $ 6.3 million as of December 31, 2022 and September 30, 2022, respectively.

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We had capitalized fulfillment costs of $ 12.6 million and $ 6.3 million as of March 31, 2023 and September 30, 2022, respectively.

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of December 31, 2022 was approximately $ 1.4 billion, of which approximately $ 1.0 billion is expected to be recognized during the remainder of fiscal year 2023 , approximately $ 0.3 billion during fiscal year 2024, and approximately $ 0.1 billion in fiscal year 2025 and thereafter.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of March 31, 2023 was approximately $ 1.3 billion, of which approximately $ 0.7 billion is expected to be recognized during the remainder of fiscal year 2023, approximately $ 0.5 billion during fiscal year 2024, and approximately $ 0.1 billion in fiscal year 2025 and thereafter.

These amounts do not include anticipated contract renewals.

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

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Contract Assets and Liabilities

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) December 31, 2022 September 30, 2022

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

(in thousands) March 31, 2023 September 30, 2022

Contract assets, net $ 7,125 $ 6,319

(in thousands)

(in thousands) March 31, 2023

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

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Revenue recognized during the period ( 34,083 )

Contract liabilities balance at December 31, 2022 $ 25,681

Contract liabilities balance at March 31, 2023 $ 34,677

NOTE 9 STOCK-BASED COMPENSATION

A summary of compensation expense for stock-based payment arrangements recognized in Drilling services operating expense, Research and development expense and Selling, general and administrative expense on our Unaudited Condensed Consolidated Statements of Operations, is as follows:

Three Months Ended December 31,

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

(in thousands) 2023 2022 2023 2022

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Restricted Stock

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

(shares in thousands) Shares 1

A summary of the status of our restricted stock awards as of March 31, 2023 and changes in non-vested restricted stock outstanding during the six months then ended is presented below:

(in thousands, except per share amounts) Shares 1

Weighted-Average Grant Date Fair Value per Share

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Forfeited ( 8 ) 33.93

Non-vested restricted stock outstanding at December 31, 2022 1,385 $ 35.02

Non-vested restricted stock outstanding at March 31, 2023

1,365 $ 35.12

(1) Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan.

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

During the three months ended December 31, 2022, no restricted phantom stock units were granted and no restricted phantom stock units vested.

During the six months ended March 31, 2023, 12,591 restricted phantom stock units were granted and 14,199 restricted phantom stock units vested.

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

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Performance Units

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

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

A summary of the status of our performance-vested restricted share units ("performance units") as of March 31, 2023 and changes in non-vested performance units outstanding during the six months then ended is presented below:

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

Non-vested performance units outstanding at September 30, 2022

Granted 144 54.30

Dividend rights performance units credited 7 33.67

Non-vested performance units outstanding at December 31, 2022 1

Vested ( 286 ) 43.40

Dividend equivalent rights performance units credited and performance factor adjustment 1

Non-vested performance units outstanding at March 31, 2023 2

(1) 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 total shareholder return ("TSR") relative to the TSR of the Peer Group on the vesting date .

(2) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 225,308 performance units which is calculated based on the payout percentage for the completed performance period.

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

The vesting of the performance units is generally dependent on (i) the achievement of the Company’s TSR performance goals relative to the TSR achievement of a peer group of companies over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period.

The Vesting Period for performance units granted in November 2019 ended on December 31, 2022 and the performance units eligible to vest were settled in shares of common stock in January 2023.

Stock-based compensation expense related to these grants has been fully recognized as of December 31, 2022.

NOTE 10 EARNINGS (LOSSES) PER COMMON SHARE

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Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

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Adjustment for basic earnings (loss) per share

Losses allocated to unvested shareholders ( 992 ) ( 374 )

Earnings allocated to unvested shareholders ( 2,237 ) ( 396 ) ( 3,511 ) ( 770 )

Numerator for basic earnings (loss) per share:

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161,803 ( 5,372 ) 257,674 ( 57,108 )

Adjustment for diluted earnings (loss) per share

Effect of reallocating undistributed earnings of unvested shareholders 6 — 6 —

Numerator for diluted earnings (loss) per share:

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Denominator for basic earnings (loss) per share - weighted-average shares 103,968 105,393 104,615 106,494

Effect of dilutive shares from stock options, restricted stock and performance share units 856 —

Effect of dilutive shares from restricted stock and performance share units 395 — 388 —

Denominator for diluted earnings (loss) per share - adjusted weighted-average shares 104,363 105,393 105,003 106,494

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Net income (loss) $ 1.55 $ ( 0.05 ) $ 2.46 $ ( 0.53 )

We had a net loss for the three months ended December 31, 2021.

Accordingly, our diluted earnings per share calculation for that period was equivalent to our basic earnings per share calculation since diluted earnings per share excluded any assumed exercise of equity awards.

We had a net loss for the three and six months ended March 31, 2022.

These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period.

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Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

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Weighted-average price per share $ 62.03 $ 60.26 $ 61.74 $ 59.58

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NOTE 11 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

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• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

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• Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets;

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The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which we classify the fair value measurement.

December 31, 2022

March 31, 2023

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

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Contingent consideration $ 5,030 $ — $ — $ 5,030

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September 30, 2022

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

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Short-term Investments

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ADNOC Drilling’s initial public offering 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 Unaudited Condensed Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income (loss) and recorded within Gain (Loss) on Investment Securities on our Unaudited Condensed Consolidated Statement of Operations.

During the three months ended December 31, 2022, we early adopted ASU No.

Our investment is classified as a long-term equity investment within Investments on our Unaudited Condensed Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income (loss) and recorded within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statements of Operations.

During the six months ended March 31, 2023, we early adopted ASU No.

2022-03 which states that the contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

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2022-03 were consistent with our historical accounting for our investment in ADNOC Drilling.

During the three months ended December 31, 2022, we recognized a loss of $ 18.2 million on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment compared to a gain of $ 47.8 million during the three months ended December 31, 2021.

As of December 31, 2022, this investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange.

Equity Securities with Fair Value Option In October 2022, we purchased a $ 14.1 million equity investment, representing 106.0 million common shares (approximately 7.5 percent ownership stake), in Tamboran Resources Limited ("Tamboran"), a publicly traded company on the Australian Securities Exchange Ltd under the ticker "TBN." Tamboran is focused on playing a constructive role in the global energy transition towards a lower carbon future, by developing a significantly low CO 2 gas resource within Australia's Beetaloo Sub-basin.

During the three and six months ended March 31, 2023, we recognized a gain of $ 42.6 million and $ 24.4 million respectively, on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment compared to a gain of $ 16.7 million and $ 64.5 million during the three and six months ended March 31, 2022 respectively.

As of March 31, 2023, this investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange.

Equity Securities with Fair Value Option In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares (approximately 7.5 percent ownership stake), in Tamboran Resources Limited ("Tamboran"), a publicly traded company on the Australian Securities Exchange Ltd under the ticker "TBN." Tamboran is focused on playing a constructive role in the global energy transition towards a lower carbon future, by developing a significantly low CO 2 gas resource within Australia's Beetaloo Sub-basin.

Concurrent with the investment agreement, we entered into a fixed-term drilling services agreement with the same investee for which mobilization is expected to commence later this fiscal year.

Approximately $ 30.3 million in revenue is expected to be earned over the term of the contract, and, as such, this amount is included within our contract backlog as of December 31, 2022.

We believe we have a significant influence but not control or joint control over the investee due to several factors, including our ownership percentage, operational involvement and our role as an observer on the investee's board of directors.

Approximately $ 30.3 million in revenue is expected to be earned over the term of the contract, and, as such, this amount is included within our contract backlog as of March 31, 2023.

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We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage, operational involvement and role on the investee's board of directors.

We consider this investment to have a readily determinable fair value and have elected to account for this investment using the fair value option with any changes in fair value recognized through net income (loss).

Our investment is classified as a long-term equity investment within Investments in our Unaudited Condensed Consolidated Balance Sheet as of December 31, 2022.

Our investment is classified as a long-term equity investment within Investments on our Unaudited Condensed Consolidated Balance Sheet as of March 31, 2023.

Under the guidance, Topic 820, Fair Value Measurement, this investment is classified as a Level 1 investment based on the quoted stock price which is publicly available.

During the three months ended December 31, 2022, we recognized a gain of $ 3.1 million recorded within Gain (Loss) on Investment Securities on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.

During the three and six months ended March 31, 2023, we recognized a gain (loss) of $( 3.0 ) million and $ 0.1 million, respectively, recorded within Gain on investment securities on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.

Debt Securities During April 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.

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

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

As of December 31, 2022, the fair value of the convertible note was approximately equal to the cost basis.

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

As of March 31, 2023, 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:

Three Months Ended December 31,

Three Months Ended

March 31, Six Months Ended

(in thousands) 2023 2022 2023 2022

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Transfers out 1

— — ( 500 ) —

Assets at end of period $ 35,140 $ 3,500 $ 35,140 $ 3,500

(1) We reclassified a portion of our long-term debt securities to short-term notes receivable and is recorded in accounts receivable on the Unaudited Condensed Consolidated Balance Sheets.

The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at December 31, 2022 and September 30, 2022:

The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at March 31, 2023:

Fair Value Valuation Technique Unobservable Inputs

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

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.

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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.

Contingent consideration is recorded in Accrued liabilities and Other noncurrent liabilities on the Unaudited Condensed 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:

Three Months Ended December 31,

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

(in thousands) 2023 2022 2023 2022

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

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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, on a nonrecurring basis.

As of December 31, 2022 and 2021, the aggregate balance of these equity securities was $ 25.8 million and $ 8.9 million, respectively.

During the three months ended December 31, 2022 and 2021, we did not record any impairments on these investments.

Other Equity Securities We also hold various other equity securities without readily determinable fair values, primarily comprised of geothermal investments.

These equity securities are measured at cost, less any impairments, and will be marked to fair value when observable price changes in identical or similar investments from the same issuer occur.

As of March 31, 2023 and 2022, and September 30, 2022, the aggregate balance of these equity securities was $ 26.3 million, $ 14.0 million, and $ 23.7 million, respectively.

During the three and six months ended March 31, 2023 and 2022, we did not record any impairments on these investments.

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

Three Months Ended December 31,

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

(in thousands) 2023 2022 2023 2022

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Geothermal Investments

As of December 31, 2022 and September 30, 2022 the aggregate balance of our debt and equity security investments in geothermal energy was $ 25.3 million and $ 23.7 million, respectively.

As of March 31, 2023 and September 30, 2022 the aggregate balance of our debt and equity security investments in geothermal energy was $ 27.3 million and $ 23.7 million, respectively.

These investments include assets measured on both a recurring and nonrecurring basis (discussed in the subsections above).

In circumstances where we are required to revalue these investments based on observable changes in fair market value, these investments would be classified Level 3 based on the absence of market activity.

In circumstances where we are required to revalue these investments based on observable changes in fair market value, these investments would be classified as Level 3 based on the absence of market activity.

Other Financial Instruments

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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 December 31, 2022 and September 30, 2022.

The following information presents the supplemental fair value information for our long-term fixed-rate debt at December 31, 2022 and September 30, 2022:

(in millions) December 31, 2022 September 30, 2022

The carrying value of accounts receivable, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at March 31, 2023 and September 30, 2022.

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The following information presents the supplemental fair value information for our long-term fixed-rate debt at March 31, 2023 and September 30, 2022:

(in millions) March 31, 2023 September 30, 2022

Long-term debt, net

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Fair value 456.4 430.7

The fair values of the long-term fixed-rate debt is based on broker quotes at December 31, 2022 and September 30, 2022.

The fair values of the long-term fixed-rate debt is based on broker quotes at March 31, 2023 and September 30, 2022.

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

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

At December 31, 2022, we had purchase commitments for equipment, parts and supplies of approximately $ 159.9 million.

At March 31, 2023, we had purchase commitments for equipment, parts and supplies of approximately $ 145.8 million.

Guarantee Arrangements

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We have agreed to indemnify the sureties for any payments made by them in respect of such bonds.

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Contingencies

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

As of December 31, 2022, we have incurred expenses, mainly legal fees, against the insurance deductible.

As of March 31, 2023, 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.

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We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed.

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Significant Lease Not Yet Commenced

During the three months ended December 31, 2022, we entered into a new lease agreement for our new Tulsa corporate office.

During the six months ended March 31, 2023, we entered into a lease agreement for our new Tulsa corporate office.

This lease is expected to commence sometime during the first half of calendar year 2024.

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

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Segment Performance

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• Asset impairment charges

• Restructuring charges

but excludes gain on reimbursement of drilling equipment, other (gain) loss on sale of assets, 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 three months ended December 31, 2022 and 2021 is shown in the following tables:

Three Months Ended December 31, 2022

Summarized financial information of our reportable segments for the three and six months ended March 31, 2023 and 2022 is shown in the following tables:

Three Months Ended March 31, 2023

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

3 unchanged sentences

Segment operating income $ 182,149 $ 6,687 $ 3,955 $ 6,823 $ ( 2,267 ) $ 197,347

Three Months Ended December 31, 2021

Q2FY23 FORM 10-Q | 27

Three Months Ended March 31, 2022

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

3 unchanged sentences

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

Six Months Ended March 31, 2023

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

External sales $ 1,302,943 $ 70,143 $ 110,691 $ 5,082 $ — $ 1,488,859

Intersegment — — — 34,064 ( 34,064 ) —

Total sales 1,302,943 70,143 110,691 39,146 ( 34,064 ) 1,488,859

Segment operating income $ 327,446 $ 13,433 $ 5,529 $ 11,500 $ 43 $ 357,951

Six Months Ended March 31, 2022

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

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

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

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

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

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

Three Months Ended December 31,

Three Months Ended

March 31, Six Months Ended

(in thousands) 2023 2022 2023 2022

7 unchanged sentences

Interest expense ( 4,239 ) ( 4,390 ) ( 8,594 ) ( 10,504 )

Gain (loss) on investment securities ( 15,091 ) 47,862

Gain on investment securities 39,752 22,132 24,661 69,994

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

4 unchanged sentences

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

(in thousands) December 31, 2022 September 30, 2022

(in thousands) March 31, 2023 September 30, 2022

Total assets 1

8 unchanged sentences

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

Three Months Ended December 31,

Three Months Ended

March 31, Six Months Ended

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

Refer to Note 8—Revenue from Contracts with Customers for additional information regarding the recognition of revenue.

NOTE 14 SUBSEQUENT EVENTS

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

In December 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares, effective on January 1, 2023.

From January 1, 2023 through January 27, 2023, the Company repurchased approximately 0.4 million common shares at an aggregate cost of approximately $ 20.5 million, which are held as treasury shares.

Q2FY23 FORM 10-Q | 29

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

What changed 10-Q

Item 1. Financial Statements