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Item 1. Financial Statements

2024-04-24 compared with 2024-01-29 · 199 added, 199 removed, 649 unchanged (38% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30,

March 31, September 30,

(in thousands except share data) 2024 2023

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Shareholders' Equity:

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of December 31, 2023 and September 30, 2023, and 98,623,747 and 99,426,526 shares outstanding as of December 31, 2023 and September 30, 2023, respectively

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of March 31, 2024 and September 30, 2023, and 98,752,018 and 99,426,526 shares outstanding as of March 31, 2024 and September 30, 2023, respectively

11,222 11,222

3 unchanged sentences

Accumulated other comprehensive loss ( 7,713 ) ( 7,981 )

Treasury stock, at cost, 13,599,118 shares and 12,796,339 shares as of December 31, 2023 and September 30, 2023, respectively

Treasury stock, at cost, 13,470,847 shares and 12,796,339 shares as of March 31, 2024 and September 30, 2023, respectively

( 489,516 ) ( 464,382 )

6 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

11 unchanged sentences

Gain on reimbursement of drilling equipment ( 7,461 ) ( 11,574 ) ( 14,955 ) ( 27,298 )

Other gain on sale of assets ( 2,443 ) ( 2,379 )

Other (gain) loss on sale of assets 2,431 ( 2,519 ) ( 12 ) ( 4,898 )

577,371 594,017 1,131,050 1,169,431

3 unchanged sentences

Interest expense ( 4,261 ) ( 4,239 ) ( 8,633 ) ( 8,594 )

Loss on investment securities ( 4,034 ) ( 15,091 )

Gain (loss) on investment securities 3,747 39,752 ( 287 ) 24,661

Other 400 ( 604 ) ( 143 ) ( 546 )

14 unchanged sentences

Three Months Ended

March 31, Six Months Ended

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

Other comprehensive income, net of income taxes:

Net change related to employee benefit plans, net of income taxes of $( 39.5 ) thousand and $( 75.1 ) thousand for the three months ended December 31, 2023 and 2022, respectively

Net change related to employee benefit plans, net of income taxes of $( 39.5 ) thousand and $( 79.0 ) thousand for the three and six months ended March 31, 2024, respectively, and $( 75.0 ) thousand and $( 150.1 ) thousand for the three and six months ended March 31, 2023, respectively

134 256 268 512

Other comprehensive income 134 256 268 512

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended December 31, 2023

Three and Six Months Ended March 31, 2024

Common Stock Additional

15 unchanged sentences

Balance at December 31, 2023 112,222 $ 11,222 $ 506,672 $ 2,743,794 $ ( 7,847 ) 13,599 $ ( 494,195 ) $ 2,759,646

Three Months Ended December 31, 2022

Comprehensive income:

Net income — — — 84,831 — — — 84,831

Other comprehensive income — — — — 134 — — 134

Dividends declared ( $ 0.25 base per share, $ 0.17 supplemental per share)

— — — ( 42,130 ) — — — ( 42,130 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 12,012 ) — — ( 230 ) 8,656 ( 3,356 )

Stock-based compensation — — 8,429 — — — — 8,429

Share repurchases — — — — — 102 ( 3,977 ) ( 3,977 )

Other — — ( 503 ) — — — — ( 503 )

Balance at March 31, 2024 112,222 $ 11,222 $ 502,586 $ 2,786,495 $ ( 7,713 ) 13,471 $ ( 489,516 ) $ 2,803,074

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

Q2FY24 FORM 10-Q | 6

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.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands) 2024 2023

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Stock-based compensation 16,101 15,704

Loss on investment securities 4,034 15,091

(Gain) loss on investment securities 287 ( 24,661 )

Gain on reimbursement of drilling equipment ( 14,955 ) ( 27,298 )

17 unchanged sentences

Proceeds from sale of short-term investments 87,122 97,744

Insurance proceeds from involuntary conversion

Proceeds from asset sales 20,898 47,718

3 unchanged sentences

Payments for employee taxes on net settlement of equity awards ( 12,176 ) ( 14,410 )

Payment of contingent consideration from acquisition of business ( 250 ) ( 250 )

Share repurchases ( 51,302 ) ( 145,013 )

Other ( 250 ) ( 790 )

Net cash used in financing activities ( 148,099 ) ( 263,154 )

Net increase (decrease) in cash and cash equivalents and restricted cash ( 36,997 ) 2,649

Net decrease in cash and cash equivalents and restricted cash

( 54,055 ) ( 56,106 )

Cash and cash equivalents and restricted cash, beginning of period 316,238 269,009

Cash and cash equivalents and restricted cash, end of period $ 262,183 $ 212,903

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

Q1FY24 FORM 10-Q | 7

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

Three Months Ended December 31,

(in thousands) 2023 2022

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information.

Accordingly, these interim financial statements do not include all information or footnote disclosures required by GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our 2023 Annual Report on Form 10-K and other current filings with the SEC.

Accordingly, these interim financial statements do not include all information or footnote disclosures required by U.S.

GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our 2023 Annual Report on Form 10-K and other current filings with the SEC.

In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included.

The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.

Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations during the three months ended December 31, 2022.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations, which were not material, to Other within Other income (expense) on our Unaudited Condensed Consolidated Statements of Operations for the three months ended December 31, 2022.

Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations during the three and six months ended March 31, 2023.

Principles of Consolidation

3 unchanged sentences

All intercompany accounts and transactions have been eliminated upon consolidation.

Q2FY24 FORM 10-Q | 9

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

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.

Q1FY24 FORM 10-Q | 9

We recorded restricted cash of $ 65.1 million and $ 42.5 million at December 31, 2023 and 2022, respectively, and $ 59.1 million and $ 36.9 million at September 30, 2023 and 2022, respectively.

All restricted cash at December 31, 2023 represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

We recorded restricted cash of $ 68.5 million and $ 53.2 million at March 31, 2024 and 2023, respectively, and $ 59.1 million and $ 36.9 million at September 30, 2023 and 2022, respectively.

All restricted cash at March 31, 2024 represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

Of the total at September 30, 2023, $ 0.7 million is related to the acquisition of drilling technology companies, and $ 58.4 million represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

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) 2024 2023 2023 2022

13 unchanged sentences

Concurrent with the investment agreement, we entered into a fixed-term drilling services agreement with Tamboran Resources.

As of December 31, 2023, we recorded $ 2.8 million in receivables, $ 8.0 million in other assets and $ 5.8 million in contract liabilities on our Unaudited Condensed Consolidated Balance Sheets.

As of March 31, 2024, we recorded $ 2.7 million in receivables, $ 8.1 million in other assets and $ 5.1 million in contract liabilities on our Unaudited Condensed Consolidated Balance Sheets.

As of September 30, 2023, we recorded $ 2.8 million in receivables, $ 8.0 million in other assets and $ 6.6 million in contract liabilities on our Consolidated Balance Sheets.

We recorded $ 4.3 million in revenue on our Unaudited Condensed Consolidated Statement of Operations during the three months ended December 31, 2023 related to the drilling services agreement with Tamboran Resources, which commenced drilling services during the fourth fiscal quarter of 2023.

We expect to earn $ 32.2 million in revenue over the remainder of term of the contract, and, as such, this amount is included within our contract backlog as of December 31, 2023.

We recorded $ 2.7 million and $ 7.0 million in revenue on our Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2024, respectively, related to the drilling services agreement with Tamboran Resources, which commenced drilling services during the fourth fiscal quarter of 2023.

We expect to earn $ 33.7 million in revenue over the remaining contract term, and, as such, this amount is included within our contract backlog as of March 31, 2024.

Q2FY24 FORM 10-Q | 10

Recently Issued Accounting Updates

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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.

Q1FY24 FORM 10-Q | 10

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

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Statements or Other Significant Matters

Standards that are not yet adopted as of December 31, 2023

Standards that are not yet adopted as of March 31, 2024

2023-07, Segment Reporting (Topic 280):

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

Direct operating costs primarily consisted of adjustments to accruals for estimated losses of $ 3.5 million and $ 2.9 million and rig and casualty insurance premiums of $ 9.1 million and $ 10.0 million during the three months ended December 31, 2023 and 2022, respectively.

Direct operating costs primarily consisted of adjustments of $ 1.6 million and $ 1.7 million to accruals for estimated losses for the three months ended March 31, 2024 and 2023, respectively, and $ 5.1 million and $ 4.7 million for the six months ended March 31, 2024 and 2023, respectively, and rig and casualty insurance premiums of $ 9.9 million and $ 10.9 million during the three months ended March 31, 2024 and 2023, respectively, and $ 19.0 million and $ 20.9 million for the six months ended March 31, 2024 and 2023, respectively.

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, 2023 and 2022 amounted to $ 15.2 million and $ 16.4 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." Our medical stop loss operating expenses for the three months ended December 31, 2023 and 2022 were $ 4.1 million and $ 2.8 million, respectively.

Intercompany premium revenues recorded by the Captives during the three months ended March 31, 2024 and 2023 amounted to $ 15.8 million and $ 17.7 million, respectively, and $ 31.0 million and $ 34.1 million during the six months ended March 31, 2024 and 2023, respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, International Solutions, and Offshore Gulf of Mexico reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the three months ended March 31, 2024 and 2023 were $ 3.2 million and $ 2.5 million, respectively, and $ 7.3 million and $ 5.3 million for the six months ended March 31, 2024 and 2023, respectively.

Q2FY24 FORM 10-Q | 11

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

We recorded aggregate foreign currency losses of $ 1.8 million and $ 0.2 million for the three months ended December 31, 2023 and 2022, respectively.

The aggregate foreign currency loss for the three months ended December 31, 2023 was primarily due to Argentina's devaluation of its peso relative to the U.S.

dollar by approximately 55 percent during the quarter.

We recorded aggregate foreign currency losses of $ 0.6 million and $ 2.4 million for the three and six months ended March 31, 2024, respectively, and $ 0.1 million and $ 0.3 million for the three and six months ended March 31, 2023, respectively .

The aggregate foreign currency loss for three and six months ended March 31, 2024 was primarily due to Argentina's devaluation of its peso relative to the U.S.

dollar by approximately 55 percent in December 2023 .

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, 2023, our cash balance in Argentina was the U.S.

As of March 31, 2024, our cash balance in Argentina was the U.S.

dollar equivalent of $ 13.0 million in Argentine Pesos.

1 unchanged sentence

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, 2023, approximately 8.2 percent of our operating revenues were generated from international locations compared to 7.7 percent during the three months ended December 31, 2022.

During the three months ended December 31, 2023, approximately 78.5 percent of operating revenues from international locations were from operations in South America compared to 90.5 percent during the three months ended December 31, 2022.

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, 2024, approximately 6.9 percent and 7.5 percent of our operating revenues were generated from international locations compared to 7.4 percent and 7.5 percent during the three and six months ended March 31, 2023, respectively.

During the three and six months ended March 31, 2024, approximately 74.6 percent and 76.7 percent of operating revenues from international locations were from operations in South America compared to 86.3 percent and 88.4 percent during the three and six months ended March 31, 2023, respectively.

Substantially all of the South American operating revenues were from Argentina and Colombia.

2 unchanged sentences

NOTE 3 PROPERTY, PLANT AND EQUIPMENT

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

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

Property, plant and equipment as of March 31, 2024 and September 30, 2023 consisted of the following:

(in thousands) Estimated Useful Lives March 31, 2024 September 30, 2023

Drilling services equipment 4 - 15 years

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

Depreciation expense during the three months ended December 31, 2023 and 2022 was $ 92.4 million and $ 94.9 million, including abandonments of $ 0.5 million and $ 1.2 million, respectively.

Depreciation expense during the three months ended March 31, 2024 and 2023 was $ 102.9 million and $ 94.6 million, including abandonments of $ 2.6 million and $ 1.0 million, respectively.

During the three months ended March 31, 2024, depreciation expense included $ 7.3 million of accelerated depreciation for components on rigs that are scheduled for conversion in fiscal year 2024 as compared to $ 0.8 million for three months ended March 31, 2023.

Depreciation expense during the six months ended March 31, 2024 and 2023 was $ 195.3 million and $ 189.5 million, including abandonments of $ 3.1 million and $ 2.1 million, respectively.

During the six months ended March 31, 2024 , depreciation expense included $ 8.2 million of accelerated depreciation for components on rigs that are scheduled for conversion in fiscal year 2024 as compared to $ 1.7 million for six months ended March 31, 2023.

These expenses are recorded within Depreciation and amortization on our Unaudited Condensed Consolidated Statements of Operations.

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At the time of the loss, the rig was fully insured under replacement cost insurance.

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 was offset by an insurance recovery that was also recognized within Depreciation and amortization for the same amount as the loss.

Future proceeds in excess of the recognized loss will be recognized once all contingencies related to the insurance claim have been resolved.

The loss of $ 9.2 million was 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 was offset by an insurance recovery that was also recognized within Depreciation and amortization for the same amount as the loss.

During the fiscal year ended September 30, 2023, we collected $ 9.2 million of the total expected insurance proceeds.

During the three months ended March 31, 2024, we recognized a gain on involuntary conversion of the rig of $ 5.5 million.

We collected $ 5.0 million of insurance proceeds during the period, with an outstanding receivable of $ 0.5 million as of March 31, 2024.

The total insurance proceeds received during the period exceeds the recognized loss and therefore was recognized as a gain within operating income during the three months ended March 31, 2024.

Impairment Charges

Fiscal Year 2024 Activity

We did not record any impairment charges during the three months ended December 31, 2023.

We did not record any impairment charges during the three and six months ended March 31, 2024.

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.

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.

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.

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.

Q2FY24 FORM 10-Q | 13

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.

Gain on Reimbursement of Drilling Equipment

We recognized gains of $ 7.5 million and $ 15.7 million during the three months ended December 31, 2023 and 2022, respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe.

We recognized gains of $ 7.5 million and $ 15.0 million during the three and six months ended March 31, 2024, respectively, and $ 11.6 million and $ 27.3 million during the three and six months ended March 31, 2023, 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.

NOTE 4 GOODWILL AND INTANGIBLE ASSETS

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

Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis 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 three months ended December 31, 2023, we had no additions or impairments to goodwill.

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

During the three and six months ended March 31, 2024, we had no additions or impairments to goodwill.

As of March 31, 2024 and September 30, 2023, the goodwill balance was $ 45.7 million.

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 and consist of the following:

December 31, 2023 September 30, 2023

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

March 31, 2024 September 30, 2023

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

4 unchanged sentences

$ 96,961 $ 39,601 $ 57,360 $ 96,961 $ 36,386 $ 60,575

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

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.6 million for the three months ended March 31, 2024 and 2023, respectively and $ 3.2 million and $ 3.4 million for the six months ended March 31, 2024 and 2023, respectively.

Amortization expense is estimated to be approximately $ 3.2 million for the remainder of fiscal year 2024, and approximately $ 6.4 million for fiscal year 2025 through 2028.

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

December 31, 2023 September 30, 2023

We have the following unsecured long-term debt outstanding with maturity shown in the following table:

March 31, 2024 September 30, 2023

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

21 unchanged sentences

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, 2023, 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, 2024, 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 6—Debt to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K.

As of December 31, 2023, we had $ 102.0 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 $ 102.0 million, $ 40.0 million was outstanding as of December 31, 2023.

As of March 31, 2024, 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, 2024.

Separately, we had $ 5.0 million in standby letters of credit and bank guarantees outstanding.

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

In total, we had $ 45.0 million outstanding as of March 31, 2024.

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, 2023, we were in compliance with all debt covenants.

At March 31, 2024, we were in compliance with all debt covenants.

NOTE 6 INCOME TAXES

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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.

Our income tax expense for the three months ended December 31, 2023 and 2022 was $ 30.1 million and $ 32.4 million, respectively, resulting in effective tax rates of 24.0 percent and 25.0 percent, respectively.

Our income tax expense for the three months ended March 31, 2024 and 2023 was $ 32.2 million and $ 51.1 million, respectively, resulting in effective tax rates of 27.5 percent and 23.8 percent, respectively.

Our income tax expense for the six months ended March 31, 2024 and 2023 was $ 62.3 million and $ 83.5 million, respectively, resulting in effective tax rates of 25.7 percent and 24.2 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three months ended December 31, 2023 and 2022 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, 2023 and 2022 are primarily due to tax expense (benefit) related to equity compensation of $( 0.9 ) million and $ 0.2 million, respectively.

As of December 31, 2023, we have recorded approximately $ 3.4 million of unrecognized tax benefits, interest, and penalties.

federal statutory rate of 21.0 percent for the three and six months ended March 31, 2024 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, 2024 differs from U.S.

federal statutory rate of 21.0 percent due to a discrete tax benefit of $ 0.9 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, 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 expense of $ 0.2 million related to equity compensation.

Q2FY24 FORM 10-Q | 15

As of March 31, 2024, we have recorded unrecognized tax benefits and related interest and penalties of approximately $ 3.4 million.

We believe it is reasonably possible that up to $ 2.8 million of the unrecognized tax benefits, interest and penalties will be recognized as of June 30, 2024 as a result of a lapse of the statute of limitations.

We cannot predict with certainty if we will achieve ultimate resolution of any additional uncertain tax positions associated with our U.S.

and international operations resulting in additional material increases or decreases of our unrecognized tax benefits for the next twelve months.

Q1FY24 FORM 10-Q | 15

and international operations resulting in any additional material increases or decreases of our unrecognized tax benefits for the next twelve months.

NOTE 7 SHAREHOLDERS’ EQUITY

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 and again on June 7, 2023, to seven million shares.

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

We repurchased 1.3 million common shares at an aggregate cost of $ 47.7 million, including excise tax of $ 0.3 million, during the three months ended December 31, 2023, compared to 0.8 million common shares at an aggregate cost of $ 39.1 million during the three months ended December 31, 2022.

During calendar year 2023 we repurchased substantially all of the seven million total shares authorized for repurchase.

During the three months ended December 31, 2023, we declared $ 59.1 million in cash dividends consisting of two $ 0.17 per share supplemental dividends and a base cash dividend of $ 0.25 per share.

One of the supplemental dividends, declared in October 2023, was paid in December 2023.

The second supplemental dividend and base cash dividend, declared in December 2023, is payable in February 2024, resulting in a Dividend payable of $ 42.0 million on our Unaudited Condensed Consolidated Balance Sheets as of December 31, 2023.

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 three and six months ended March 31, 2024, we repurchased 0.1 million and 1.4 million common shares at an aggregate cost of $ 4.0 million and $ 51.6 million, respectively, including excise tax of $ 0.3 million for the six months ended March 31, 2024.

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 in both periods), respectively.

During the three and six months ended March 31, 2024, we declared $ 42.1 million and $ 101.2 million, respectively, in cash dividends.

A base cash dividend of $ 0.25 per share and a supplemental dividend of $ 0.17 per share was declared on February 28, 2024 for shareholders of record on May 17, 2024, payable on May 31, 2024.

As a result, we recorded a Dividend payable of $ 42.0 million on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024.

Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

December 31, September 30,

March 31, September 30,

(in thousands) 2024 2023

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Fluctuations in actuarial gains and losses are primarily due to changes in the discount rate and investment returns related to the defined benefit pension plan.

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, 2023:

(in thousands) Three Months Ended December 31, 2023

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, 2024:

(in thousands) Three Months Ended March 31, 2024 Six Months Ended March 31, 2024

Balance at beginning of period $ ( 7,847 ) $ ( 7,981 )

Activity during the period:

Amounts reclassified from accumulated other comprehensive loss 134

Net current-period other comprehensive income 134 268

Balance at December 31, 2023 $ ( 7,847 )

Balance at March 31, 2024 $ ( 7,713 ) $ ( 7,713 )

NOTE 8 REVENUE FROM CONTRACTS WITH CUSTOMERS

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The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets.

Total revenue recognized from performance contracts, including performance bonuses, was $ 298.2 million and $ 270.0 million during the three months ended December 31, 2023 and 2022, respectively, of which, $ 15.2 million and $ 10.1 million was related to performance bonuses recognized due to the achievement of performance targets during the three months ended December 31, 2023 and 2022, respectively.

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 three months ended December 31, 2023 and 2022, early termination revenue associated with term contracts was $ 5.4 million and $ 0.7 million, respectively.

Total revenue recognized from performance contracts, including performance bonuses, was $ 287.8 million and $ 586.0 million, of which $ 10.4 million and $ 25.6 million was related to performance bonuses recognized due to the achievement of performance targets during the three and six months ended March 31, 2024, respectively.

Total revenue recognized from performance contracts, including performance bonuses, was $ 297.2 million and $ 567.2 million, of which $ 11.5 million and $ 21.6 million was related to performance bonuses recognized due to the achievement of performance targets during the three and six months ended March 31, 2023, respectively.

Contract Costs

We had capitalized fulfillment costs of $ 12.4 million and $ 11.4 million as of December 31, 2023 and September 30, 2023, respectively.

We had capitalized fulfillment costs of $ 10.6 million and $ 11.4 million as of March 31, 2024 and September 30, 2023, respectively.

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of December 31, 2023 was approximately $ 1.3 billion, of which approximately $ 0.7 billion is expected to be recognized during the remainder of fiscal year 2024, approximately $ 0.4 billion during fiscal year 2025, and approximately $ 0.2 billion in fiscal year 2026 and thereafter.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of March 31, 2024 was approximately $ 1.7 billion, of which approximately $ 0.6 billion is expected to be recognized during the remainder of fiscal year 2024, approximately $ 0.5 billion during fiscal year 2025, and approximately $ 0.6 billion in fiscal year 2026 and thereafter.

These amounts do not include anticipated contract renewals or expected performance bonuses as part of its calculation.

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

(in thousands) December 31, 2023 September 30, 2023

(in thousands) March 31, 2024 September 30, 2023

Contract assets, net $ 4,772 $ 6,560

(in thousands) December 31, 2023

(in thousands) March 31, 2024

Contract liabilities balance at September 30, 2023 $ 28,882

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Revenue recognized during the period ( 31,320 )

Contract liabilities balance at December 31, 2023 $ 25,735

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,

(in thousands) 2023 2022

Stock-based compensation expense

Drilling services operating $ 1,397 $ 1,385

Research and development 473 426

Selling, general and administrative 5,802 6,462

$ 7,672 $ 8,273

Q1FY24 FORM 10-Q | 17

Restricted Stock

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

(in thousands, except per share amounts) Shares 1

Weighted-Average Grant Date Fair Value per Share

Non-vested restricted stock outstanding at September 30, 2023

1,362 $ 35.11

Granted 746 35.24

( 734 ) 33.08

Forfeited ( 1 ) 44.65

Non-vested restricted stock outstanding at December 31, 2023

1,373 $ 36.25

(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 three months ended December 31, 2023, no restricted phantom stock units were granted and no 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.

Performance Units

A summary of the status of our performance-vested restricted share units ("performance units") as of December 31, 2023 and changes in non-vested performance units outstanding during the three 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, 2023

Granted 223 39.86

Dividend equivalent rights performance units credited and performance factor adjustment 1

( 115 ) 35.11

Non-vested performance units outstanding at December 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 401,904 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 relative TSR performance criteria at target, approximately 503,371 additional performance units could vest or become eligible to vest.

Beginning with performance units granted in December 2022, performance units include an additional return on invested capital (“ROIC”) performance metric.

Based on the Company's ROIC performance over a full three-year performance period, the Human Resources Committee may increase or decrease by 25 percent the number of performance units that otherwise would be paid out solely based on the achievement of relative TSR performance over a full three-year performance period (the "ROIC Modifier").

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 TSR performance goals relative to the TSR achievement of a peer group of companies (over the applicable performance cycle), (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period, and (iii) for performance units granted beginning in December 2022, the application of the ROIC Modifier.

The Vesting Period for performance units granted in December 2020 ended on December 31, 2023 and the performance units eligible to vest were settled in shares of common stock in January 2024.

Stock-based compensation expense related to these grants has been fully recognized as of December 31, 2023.

Q1FY24 FORM 10-Q | 18

Contract liabilities balance at March 31, 2024 $ 26,804

NOTE 9 EARNINGS PER COMMON SHARE

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

During the first quarter of fiscal year 2023, Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations.

To conform with the current fiscal year presentation, basic and diluted earnings per share for continuing and discontinued operations are presented in the aggregate, for the three months ended December 31, 2022, as presented below.

Q2FY24 FORM 10-Q | 17

During the second quarter of fiscal year 2023, Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations.

To conform with the current fiscal year presentation, basic and diluted earnings per share for continuing and discontinued operations are presented in the aggregate, for the three and six months ended March 31, 2023, as presented below.

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

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

13 unchanged sentences

$ 0.84 $ 1.55 $ 1.79 $ 2.46

Q1FY24 FORM 10-Q | 19

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

Three Months Ended

March 31, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

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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.

Q2FY24 FORM 10-Q | 18

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.

Fair Value Measurements

The following tables summarize our financial assets and liabilities measured at fair value and indicate the level in the fair value hierarchy in which we classify the fair value measurement as of the dates indicated below:

December 31, 2023

March 31, 2024

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

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Geothermal debt securities 2,000 — — 2,000

Other debt securities

5,250 5,000 — 250

Total 244,070 205,519 — 38,551

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Contingent consideration $ 14,000 $ — $ — $ 14,000

(1) As of December 31, 2023, our equity security investments in geothermal energy totaled $ 25.2 million.

(1) As of March 31, 2024, our equity security investments in geothermal energy totaled $ 27.2 million and our debt security investments in held to maturity bonds totaled $ 0.2 million.

None of these investments were marked to fair value during the period.

The investments are measured at cost, less any impairments.

(2) As of December 31, 2023, our other equity securities subject to measurement at fair value on a nonrecurring basis totaled $ 3.3 million, of which $ 2.7 million has been marked to fair value.

The remaining $ 0.6 million is measured at cost, less any impairments.

Q2FY24 FORM 10-Q | 19

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Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs.

Q2FY24 FORM 10-Q | 20

During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced initial public offering, 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 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 on our Unaudited Condensed Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income and recorded within Loss on investment securities on our Unaudited Condensed Consolidated Statements of Operations.

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 and recorded within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statements of Operations.

Consistent with the provisions of ASU No.

2022-03, contractual sale restrictions are not considered in the fair value measurement of our investment in ADNOC Drilling.

During the three months ended December 31, 2023 and 2022, we recognized losses of $ 10.4 million and $ 18.2 million, respectively, on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment.

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

Q1FY24 FORM 10-Q | 22

During the three and six months ended March 31, 2024, we recognized gain (loss) of $ 8.3 million and $( 2.1 ) million, respectively, on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment compared to gain of $ 42.6 million and $ 24.4 million during the three and six months ended March 31, 2023, respectively.

As of March 31, 2024, 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 in Tamboran Resources Limited.

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is publicly traded on the Australian Securities Exchange under the ticker "TBN" and is focused on developing a natural gas resource in Australia's Beetaloo Sub-basin.

We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage (approximately 5.1 percent as of December 31, 2023), operational involvement and role on the investee's board of directors.

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

We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage (approximately 5.1 percent as of March 31, 2024), operational involvement and role on the investee's board of directors.

Our investment is classified as a long-term equity investment within Investments on our Unaudited Condensed Consolidated Balance Sheet as of March 31, 2024.

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.

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, 2023 and 2022, we recognized gains of $ 6.3 million and $ 3.1 million, respectively, recorded within 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, 2024, we recognized gain (loss) of $( 4.5 ) million and $ 1.8 million, respectively, 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 compared to a gain (loss) of $( 3.0 ) million and $ 0.1 million during the three and six months ended March 31, 2023, respectively.

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 notes with an option to convert into common shares of the parent of Galileo Holdco 2 ("Galileo parent").

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As a result, we include accrued interest in our total investment balance.

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

As of December 31, 2023, the fair value of the convertible note was approximately equal to the cost basis.

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

As of March 31, 2024, the fair value of the convertible note was approximately equal to the cost basis.

The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at the dates included below:

December 31, 2023

March 31, 2024

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.

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.

Q2FY24 FORM 10-Q | 21

A majority 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

March 31, Six Months Ended

(in thousands) 2024 2023 2024 2023

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Assets at end of period $ 38,551 $ 35,140 $ 38,551 $ 35,140

Q1FY24 FORM 10-Q | 23

Nonrecurring Fair Value Measurements

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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

(in millions) 2024 2023 2024 2023

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Purchases 2,245 501 2,536 2,556

( 616 ) — ( 616 ) —

Assets at end of period $ 30,152 $ 26,301 $ 30,152 $ 26,301

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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

(in thousands) 2024 2023 2024 2023

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

Q2FY24 FORM 10-Q | 22

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, 2023 and September 30, 2023.

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

(in millions) December 31, 2023 September 30, 2023

The carrying value of accounts receivable, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at March 31, 2024 and September 30, 2023.

The following information presents the supplemental fair value information for our long-term fixed-rate debt at March 31, 2024 and September 30, 2023:

(in millions) March 31, 2024 September 30, 2023

Long-term debt, net

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Fair value 461.2 435.5

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

The fair values of the long-term fixed-rate debt is based on broker quotes at March 31, 2024 and September 30, 2023.

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

Q1FY24 FORM 10-Q | 24

NOTE 11 COMMITMENTS AND CONTINGENCIES

Lease Obligations

During the three months ended December 31, 2023, we amended the lease for our Tulsa industrial facility.

As a result, we extended the lease term, now continuing through June 30, 2035 with two five year renewal options.

During the six months ended March 31, 2024, we amended the lease for our Tulsa industrial facility.

As part of the amendment, we extended the lease term, now continuing through June 30, 2035 with two five year renewal options, resulting in an increase of $ 18.1 million to the right-of-use assets and lease liability on our Unaudited Condensed Consolidated Balance Sheet.

We recognized one of the five year renewal options as part of our right-of-use assets and lease liabilities.

This contract was accounted for as an operating lease resulting in an increase of $ 18.1 million to the right-of-use assets and lease liability on our Unaudited Condensed Consolidated Balance Sheet as of December 31, 2023.

This contract is accounted for as an operating lease.

Purchase Commitments

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

At December 31, 2023, we had purchase commitments for equipment, parts and supplies of approximately $ 121.7 million.

At March 31, 2024, we had purchase commitments for equipment, parts and supplies of approximately $ 153.2 million.

Guarantee Arrangements

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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.

Q2FY24 FORM 10-Q | 23

NOTE 12 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

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

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

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

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.

Q1FY24 FORM 10-Q | 25

Segment Performance

We evaluate segment performance based on income (segment operating income (loss)) before income taxes which includes:

We evaluate segment performance based on income (segment operating income) before income taxes which includes:

• Revenues from external and internal customers

• Direct operating costs

• Direct operating expenses

• Depreciation and amortization

• Allocated general and administrative costs

• Research and development

• Allocated general and administrative expenses

• Asset impairment charges

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

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

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, 2023 and 2022 is shown in the following tables:

Three Months Ended December 31, 2023

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

Summarized financial information of our reportable segments for the three and six months ended March 31, 2024 and 2023 is shown in the following tables:

Three Months Ended March 31, 2024

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

External sales $ 613,339 $ 45,878 $ 25,913 $ 2,813 $ — $ 687,943

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Total sales 613,339 45,878 25,913 18,559 ( 15,746 ) 687,943

Segment operating income (loss) $ 144,490 $ 3,052 $ 5,423 $ ( 67 ) $ 334 $ 153,232

Three Months Ended December 31, 2022

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

Segment operating income

$ 147,130 $ 3,569 $ 78 $ 2,785 $ ( 772 ) $ 152,790

Three Months Ended March 31, 2023

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

External sales $ 675,780 $ 55,890 $ 34,979 $ 2,573 $ — $ 769,222

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

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

Q2FY24 FORM 10-Q | 24

Six Months Ended March 31, 2024

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

External sales $ 1,207,621 $ 100,630 $ 51,444 $ 5,395 $ — $ 1,365,090

Intersegment — — — 30,972 ( 30,972 ) —

Total sales 1,207,621 100,630 51,444 36,367 ( 30,972 ) 1,365,090

Segment operating income

$ 291,620 $ 8,992 $ 3,130 $ 2,718 $ ( 438 ) $ 306,022

Six Months Ended March 31, 2023

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

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

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

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

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

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

Three Months Ended

March 31, Six Months Ended

(in thousands) 2024 2023 2024 2023

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Gain on reimbursement of drilling equipment 7,461 11,574 14,955 27,298

Other gain on sale of assets 2,443 2,379

Other gain (loss) on sale of assets

( 2,431 ) 2,519 12 4,898

Corporate selling, general and administrative costs and corporate depreciation ( 47,248 ) ( 36,235 ) ( 86,949 ) ( 70,719 )

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Interest expense ( 4,261 ) ( 4,239 ) ( 8,633 ) ( 8,594 )

Loss on investment securities ( 4,034 ) ( 15,091 )

Gain (loss) on investment securities 3,747 39,752 ( 287 ) 24,661

Other 400 ( 604 ) ( 143 ) ( 546 )

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Income before income taxes $ 117,025 $ 215,169 $ 242,278 $ 344,709

Q1FY24 FORM 10-Q | 26

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

(in thousands) December 31, 2023 September 30, 2023

(in thousands) March 31, 2024 September 30, 2023

Total assets 1

North America Solutions $ 3,375,674 $ 3,320,203

Offshore Gulf of Mexico 76,294 73,319

International Solutions 468,982 407,143

Offshore Gulf of Mexico 73,983 73,319

Other 152,179 154,290

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

Q2FY24 FORM 10-Q | 25

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

Three Months Ended

March 31, Six Months Ended

(in thousands) 2024 2023 2024 2023

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

What changed 10-Q

Item 1. Financial Statements