What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-04-24 compared with 2024-01-29 · 279 added, 133 removed, 264 unchanged (61% of the section changed)

39 unchanged sentences

(“H&P,” which, together with its subsidiaries, is identified as the “Company,” “we,” “us,” or “our,” except where stated or the context requires otherwise) through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

As of December 31, 2023, our drilling rig fleet included a total of 262 drilling rigs.

Our reportable operating business segments consist of the North America Solutions segment with 233 rigs, the Offshore Gulf of Mexico segment with seven offshore platform rigs and the International Solutions segment with 22 rigs as of December 31, 2023.

At the close of the first quarter of fiscal year 2024, we had 166 active contracted rigs, of which 95 were under a fixed-term contract and 71 were working well-to-well, compared to 164 contracted rigs at September 30, 2023.

As of March 31, 2024, our drilling rig fleet included a total of 262 drilling rigs.

Our reportable operating business segments consist of the North America Solutions segment with 233 rigs, the International Solutions segment with 22 rigs, and the Offshore Gulf of Mexico segment with seven offshore platform rigs as of March 31, 2024.

At the close of the second quarter of fiscal year 2024, we had 166 active contracted rigs, of which 102 were under a fixed-term contract and 64 were working well-to-well, compared to 164 contracted rigs at September 30, 2023.

Our long-term strategy remains focused on innovation, technology, safety, operational excellence, and reliability.

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Market Outlook

Our revenues are primarily derived from the capital expenditures of companies involved in the exploration, development and production of crude oil and natural gas.

Generally, the level of capital expenditures is dictated by capital budgets set to achieve respective production targets in relation to current and expected future prices of crude oil and natural gas, which are determined by various supply and demand factors.

Both commodities have historically been, and we expect them to continue to be, cyclical and highly volatile.

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

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

With respect to North America Solutions, the resurgence of oil and natural gas production coming from the United States brought about by unconventional shale drilling for oil has significantly impacted the supply of oil and natural gas and the type of rig utilized in the U.S.

land drilling industry.

The technical requirements of drilling longer lateral unconventional shale wells often necessitate the use of rigs that are commonly referred to in the industry as super-spec rigs and have the following specific characteristics:

AC drive, minimum of 1,500 horsepower drawworks, minimum of 750,000 lbs.

hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability.

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There is a strong customer preference for super-spec rigs not only due to the higher rig specifications that enable more technical drilling but also due to the drilling efficiencies gained in utilizing a super-spec rig.

As a result, there has been a structural decline in the use of non-super-spec rigs across the industry.

We are the largest provider of super-spec rigs in the industry and, accordingly, we believe we are well positioned to respond to various market conditions.

Historically there has been a strong correlation between crude oil and natural gas prices and the demand for drilling rigs with the rig count increasing and decreasing with the up and down movements in the commodity prices.

While that correlation remains for a segment of the market, beginning in 2021, a portion of rig activity has not moved in tandem with crude oil prices to the same extent as a large portion of our customers instituted a more disciplined approach to their operations and capital spending in order to enhance their own financial returns.

Those customers established capital budgets based upon commodity price assumptions for the upcoming year and adhered to them, not adjusting activity plans as commodity prices moved.

Based upon the crude oil and natural gas pricing environment and many of our customers' desire to at least maintain their current production levels, we expect the average level of capital spending by our customers in calendar year 2024 to remain flat to down by approximately 5% relative to calendar year 2023.

With regards to our North America Solutions segment, we believe the current crude oil pricing environment and the desire of many of our customers to at least maintain their present production levels are supportive of current rig activity.

In contrast, the weakened natural gas pricing environment that began in calendar 2023 has caused some customers to keep their natural gas activity relatively low, and in some cases to further pull back on their planned activity levels in calendar 2024.

While the Company does have some exposure to customers drilling for natural gas, we believe our exposure to be limited.

In total, we expect the average level of capital spending by our customers in calendar year 2024 to remain flat to down by approximately 5% relative to calendar year 2023.

As such, we do not expect much change in activity levels in calendar 2024 from where they are currently;

we exited December 31, 2023 with 151 active rigs in our North America Solutions segment.

we exited March 31, 2024 with 152 active rigs in our North America Solutions segment.

During the past few quarters, there has been an increasing number of customer consolidations within the industry with larger E&P operators acquiring or merging with smaller E&P operators.

We have seen this phenomenon having a near-term modestly negative affect on overall rig demand as the consolidated entity moves forward with fewer rigs than the two previous entities would have on a stand alone basis.

We believe we are less impacted by these consolidations as it appears the demand for super-spec rigs is to a lesser extent affected by these consolidations than the demand for non-super-spec rigs.

Furthermore, due to the make-up of our customer base, we typically have an incumbent position with customers that tend to be the acquirers in these transactions.

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The overall demand for super-spec rigs in the U.S.

remains relatively strong and while some readily available idle super-spec capacity exists in the market, we do not believe it is to a level that would have a material negative impact on rig pricing.

remains relatively strong and while some readily available idle super-spec capacity exists in the market, we do not believe it is to a level that would have a significant impact on our rig pricing.

We expect this supply-demand dynamic combined with the value proposition we provide our customers through our drilling expertise, high-quality FlexRig® fleet, and automation technology to result in our ability to maintain and possibly improve upon current contract economics.

With regards to our North America Solutions segment, volatility in natural gas prices and the related reduced rig demand contributed to an increased level of rig releases in the market during the first half of calendar year 2023.

During the second half of calendar year 2023, other non-commodity price related factors, such as customer capital budgets, drilling plans, productions levels and customer consolidations, also led some customers to release rigs as well.

For our fiscal year 2024, we believe our rig activity will increase modestly during the first half of the fiscal year as customers reset their capital budgets for 2024.

We experienced an increase of just four rigs during the first fiscal quarter of 2024 and expect another 3 to 8 incremental adds during the second fiscal quarter of 2024.

From there we believe our rig count will likely remain at a relatively stable level during the second half of the fiscal year.

This is similar to the rig activity patterns we have experienced during the last few years as well.

During fiscal year 2023, the Company employed a fiscally prudent approach to deploying capital and prioritizing economic margins over rig utilization, and we plan to maintain this approach in fiscal year 2024.

Furthermore, we still believe the supply and demand dynamics surrounding our North America Solutions segment remain constructive for future activity and pricing levels.

Collectively, our other business segments, Offshore Gulf of Mexico and International Solutions, are exposed to the same macro commodity price environment affecting our North America Solutions segment;

Collectively, our other business segments, International Solutions and Offshore Gulf of Mexico, are exposed to the same macro commodity price environment affecting our North America Solutions segment;

however, activity levels in the International Solutions segment are also subject to other various geopolitical and financial factors specific to the countries of our operations.

We are currently pursuing an international expansion strategy with the aim to provide growth and diversification for the Company with the understanding that such a strategy will take time and capital to execute.

During fiscal year 2024, we plan to continue to devote capital to our international expansion strategy and, in particular, to a recent preliminary notification of an award for seven super-spec rigs in the Middle East.

During fiscal year 2024, we plan to continue to devote capital to our international expansion strategy and, in particular, to a recent contract award for seven super-spec rigs in the Kingdom of Saudi Arabia.

We had contemplated the capital spending necessary to prepare these rigs for export as part of our fiscal year 2024 capital expenditure budget.

A majority of these rigs are currently scheduled for delivery during our first half of fiscal year 2025 and thus will have no revenue impact on fiscal year 2024 results.

Currently, activity levels in the International Solutions and Offshore Gulf of Mexico business segments look to remain relatively steady at current levels for the remainder of fiscal year 2024.

A majority of these rigs are currently scheduled for delivery and customer acceptance during our first half of fiscal year 2025 and thus will have no revenue impact on fiscal year 2024 results.

Currently, activity levels in the International Solutions and Offshore Gulf of Mexico business segments are expected to remain relatively steady at current levels for the remainder of fiscal year 2024.

Over the past two years, the Company has experienced inflationary pressures related to labor and consumable inventory and more recently as a result of cost-acceleration related to running our rig fleet harder to achieve the well designs, lateral lengths and drilling efficiencies our customers demand.

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As a consequence of these pressures, we continue to project an increase in our selling, general and administrative expenses during fiscal year 2024.

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Recent Developments

International Revenue Contracts

Subsequent to December 31, 2023, the Company received preliminary notice, subject to finalization of contractural agreements, that it has been awarded seven super-spec FlexRig®'s for work in the Middle East.

During the three months ended March 31, 2024, the Company finalized the contractual terms with Saudi Aramco for a seven super-spec FlexRig® tender award for work in the Kingdom of Saudi Arabia.

These rigs are expected to commence operations shortly after delivery, which is currently scheduled for the first half of fiscal year 2025.

These rigs will be sourced from our idle super-spec rigs in the U.S., converted to walking configurations, and further equipped to suit contractual specifications.

Additionally, in the Middle East we have been successful in contracting one additional super-spec rig in Bahrain.

The rig to be utilized for this work is already located in the region as part of our Middle East hub and is expected to commence operations during the second half of fiscal year 2024.

Additionally, in the Middle East we were successful in contracting one additional super-spec rig in Bahrain.

The rig to be utilized for this work is already located in the region as part of our Middle East hub and is expected to commence operations during the first half of fiscal year 2025.

Contract Backlog

As of December 31, 2023 and September 30, 2023, our contract drilling backlog, being the expected future dayrate revenue from executed contracts, was $1.3 billion and $1.4 billion, respectively.

As of March 31, 2024 and September 30, 2023, our contract drilling backlog, being the expected future dayrate revenue from executed contracts, was $1.7 billion and $1.4 billion, respectively.

The increase in backlog from September 30, 2023 to March 31, 2024 is due to the Company finalizing contractual terms with Saudi Aramco for a seven super-spec FlexRig® tender award for work in the Kingdom of Saudi Arabia.

These amounts do not include anticipated contract renewals or expected performance bonuses.

Approximately 42.8 percent of the December 31, 2023 total backlog is reasonably expected to be fulfilled in fiscal year 2025 and thereafter.

The following table sets forth the total backlog by reportable segment as of December 31, 2023 and September 30, 2023, and the percentage of the December 31, 2023 backlog reasonably expected to be fulfilled in fiscal year 2025 and thereafter:

(in billions) December 31, 2023 September 30, 2023 Percentage Reasonably

Approximately 66.6 percent of the March 31, 2024 total backlog is reasonably expected to be fulfilled in fiscal year 2025 and thereafter.

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The following table sets forth the total backlog by reportable segment as of March 31, 2024 and September 30, 2023, and the percentage of the March 31, 2024 backlog reasonably expected to be fulfilled in fiscal year 2025 and thereafter:

(in billions) March 31, 2024 September 30, 2023 Percentage Reasonably

Expected to be Fulfilled in Fiscal Year 2025

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North America Solutions $ 1.0 $ 1.1 47.6 %

Offshore Gulf of Mexico — — —

International Solutions

Offshore Gulf of Mexico

The early termination of a contract may result in a rig being idle for an extended period of time, which could adversely affect our financial condition, results of operations and cash flows.

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See Item 1A—"Risk Factors— Our current backlog of drilling services and solutions revenue may decline and may not be ultimately realized as fixed‑term contracts and may, in certain instances, be terminated without an early termination payment ” within our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), regarding fixed term contract risk.

Results of Operations for the Three Months Ended December 31, 2023 and 2022

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Consolidated Results of Operations

Net Income We reported income of $95.2 million ($0.94 per diluted share) for the three months ended December 31, 2023 compared to income of $97.1 million ($0.91 per diluted share) for the three months ended December 31, 2022.

Operating Revenue Consolidated operating revenues were $677.1 million and $719.6 million for the three months ended December 31, 2023 and 2022, respectively.

The decrease is primarily driven by lower activity levels in our North America Solutions and Offshore Gulf of Mexico segments.

Net Income We reported income of $84.8 million ($0.84 per diluted share) for the three months ended March 31, 2024 compared to income of $164.0 million ($1.55 per diluted share) for the three months ended March 31, 2023.

Operating Revenue Consolidated operating revenues were $687.9 million and $769.2 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease was primarily driven by lower activity levels in our North America Solutions and Offshore Gulf of Mexico segments.

Refer to segment results below for further details.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $404.4 million and $429.4 million for the three months ended December 31, 2023 and 2022, respectively.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $402.9 million and $450.3 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease was primarily attributable to the aforementioned lower activity levels.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $56.6 million during the three months ended December 31, 2023 compared to $48.5 million during the three months ended December 31, 2022.

The increase is primarily due to a $7.1 million increase in labor and labor-related expenses.

Asset Impairment Charges During the three months ended December 31, 2022, we recorded $12.1 million in asset impairment charges as the Company initiated a plan to decommission, scrap and/or sell certain assets including four international FlexRig® drilling rigs, four international conventional drilling rigs, and additional equipment.

The aggregate net book value of these assets of $13.2 million was written down to their estimated scrap value of $1.1 million.

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Loss on Investment Securities During the three months ended December 31, 2023, we recognized an aggregate loss of $4.0 million on investment securities.

The loss was mainly comprised of a $10.4 million loss on our equity investment in ADNOC Drilling, partially offset against a $6.3 million gain on our investment in Tamboran Corp.;

During the three months ended March 31, 2024, we recognized approximately $5.7 million in direct operating expenses associated with the fair value adjustment of contingent consideration related to potential earnout payments associated with our business acquisitions in fiscal year 2019, partially offset by a gain on involuntary conversion of a rig of approximately $5.5 million.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $62.0 million during the three months ended March 31, 2024 compared to $52.9 million during the three months ended March 31, 2023.

The increase was primarily due to a $4.8 million increase in labor and labor-related expenses.

Gain on Investment Securities During the three months ended March 31, 2024, we recognized an aggregate gain of $3.7 million on investment securities.

The gain was primarily due to a $8.3 million gain on our equity investment in ADNOC Drilling, partially offset by a $4.5 million loss on our investment in Tamboran Corp.;

both of which were a result of fluctuations in the fair market value of the stocks.

During the three months ended December 31, 2022, we recognized an aggregate loss of $15.1 million on investment securities.

The loss was mainly comprised of a $18.2 million loss on our equity investment in ADNOC Drilling, partially offset against a $3.1 million gain on our investment in Tamboran Corp.;

During the three months ended March 31, 2023, we recognized an aggregate gain of $39.8 million on investment securities.

The gain was primarily due to a $42.6 million gain on our equity investment in ADNOC Drilling, partially offset by a $3.0 million loss on our investment in Tamboran Corp.;

both of which were a result of fluctuations in the fair market value of the stocks.

Income Taxes We had income tax expense of $30.1 million for the three months ended December 31, 2023 (which includes a discrete tax benefit of $0.9 million related to equity compensation) compared to income tax expense of $32.4 million (which includes a discrete tax expense of $0.2 million related to equity compensation) for the three months ended December 31, 2022.

Our statutory federal income tax rate for fiscal year 2024 is 21.0 percent (before incremental state and foreign taxes).

Income Taxes For the three months ended March 31, 2024, we had income tax expense of $32.2 million compared to income tax expense of $51.1 million for the three months ended March 31, 2023.

Our statutory federal income tax rate for fiscal year 2024 and 2023 is 21.0 percent (before incremental state and foreign taxes).

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North America Solutions

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

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Selling, general and administrative expense 13,692 16,212 (15.5)

Asset impairment charges — 3,948 (100.0)

Segment operating income $ 147,130 $ 182,149 (19.2)

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

Operating Revenues Operating revenues were $594.3 million and $627.2 million in the three months ended December 31, 2023 and 2022, respectively.

The $32.9 million decrease in operating revenue is primarily due to a 17.3 percent decrease in activity levels partially offset by higher average pricing levels.

Direct Operating Expenses Direct operating expenses decreased to $338.2 million during the three months ended December 31, 2023 as compared to $366.9 million during the three months ended December 31, 2022.

Operating Revenues Operating revenues were $613.3 million and $675.8 million in the three months ended March 31, 2024 and 2023, respectively.

The $62.5 million decrease in operating revenue was primarily due to a 14.3 percent decrease in activity levels partially offset by higher average pricing levels.

Direct Operating Expenses Direct operating expenses decreased to $341.9 million during the three months ended March 31, 2024 as compared to $379.6 million during the three months ended March 31, 2023.

This decrease was primarily driven by lower activity levels, partially offset by an increase in per revenue day labor and materials and supplies expense.

Selling, General and Administrative Expense Selling, general and administrative expense increased to $15.9 million during the three months ended December 31, 2023 as compared to $14.2 million during the three months ended December 31, 2022.

The slight increase was driven by a $1.9 million increase in in labor expenses.

Asset Impairment Charges During the three months ended December 31, 2022, assets that were previously classified as Assets held-for-sale 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 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.

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.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $97.6 million during the three months ended March 31, 2024 as compared to $89.1 million during the three months ended March 31, 2023.

The increase was primarily driven by $7.3 million of accelerated depreciation recognized during the three months ended March 31, 2024 for components on rigs that are scheduled for conversion in fiscal year 2024.

Research and Development Expense Research and development expense increased to $13.0 million during the three months ended March 31, 2024 as compared to $8.7 million during the three months ended March 31, 2023.

The increase was driven by an associated asset acquisition that occurred during the three months ended March 31, 2024.

Selling, General and Administrative Expense Selling, general and administrative expense decreased to $13.7 million during the three months ended March 31, 2024 as compared to $16.2 million during the three months ended March 31, 2023.

The decrease was driven by a $3.5 million decrease in professional service fees.

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International Solutions

Three Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

Operating revenues $ 45,878 $ 55,890 (17.9) %

Direct operating expenses 37,514 47,275 (20.6)

Depreciation 2,418 1,652 46.4

Selling, general and administrative expense 2,377 3,008 (21.0)

Segment operating income $ 3,569 $ 3,955 (9.8)

Financial Data and Other Operating Statistics 1 :

Direct margin (Non-GAAP) 2

$ 8,364 $ 8,615 (2.9)

Revenue days 3

1,038 1,263 (17.8)

Average active rigs 4

Number of active rigs at the end of period 5

Number of available rigs at the end of period 22 22 —

Reimbursements of "out-of-pocket" expenses $ 1,964 $ 2,789 (29.6)

(1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results.

Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.

(2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time.

See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.

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

(4) Active rigs generate revenue for the Company;

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

This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days).

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

Operating Revenues Operating revenues were $45.9 million and $55.9 million in the three months ended March 31, 2024 and 2023, respectively.

The $10.0 million decrease in operating revenue was primarily due to a 17.8 percent decrease in activity levels.

Direct Operating Expenses Direct operating expenses decreased to $37.5 million during the three months ended March 31, 2024 as compared to $47.3 million during the three months ended March 31, 2023.

This decrease was also primarily driven by a 17.8 percent decrease in activity levels.

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Offshore Gulf of Mexico

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

22 unchanged sentences

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

Operating Revenues Operating revenues were $25.5 million and $35.2 million in the three months ended December 31, 2023 and 2022, respectively.

The $9.7 million decrease in operating revenue is primarily due to a 21.5 percent decrease in activity levels and the mix of rigs being on lower standby rates as opposed to working at full rates during the three months ended December 31, 2023.

Direct Operating Expenses Direct operating expenses decreased to $19.6 million during the three months ended December 31, 2023 as compared to $25.7 million during the three months ended December 31, 2022.

This decrease is primarily driven by a decrease in activity levels as described above.

Operating Revenues Operating revenues were $25.9 million and $35.0 million in the three months ended March 31, 2024 and 2023, respectively.

The $9.1 million decrease in operating revenue was primarily due to a 24.2 percent decrease in activity.

Direct Operating Expenses Direct operating expenses decreased to $23.0 million during the three months ended March 31, 2024 as compared to $25.7 million during the three months ended March 31, 2023.

This decrease was primarily driven by a decrease in activity levels as described above partially offset by a decrease in per revenue day labor and materials and supplies expense.

Other Operations

Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows:

Three Months Ended March 31,

(in thousands) 2024 2023 % Change

Operating revenues $ 18,559 $ 20,235 (8.3) %

Direct operating expenses 14,910 12,656 17.8

Depreciation 475 456 4.2

Selling, general and administrative expense 389 300 29.7

Operating income $ 2,785 $ 6,823 (59.2)

Operating Revenues We continue to use our Captive insurance companies to insure the deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the Company's international casualty and rig property programs.

Operating revenues of $18.6 million and $20.2 million during the three months ended March 31, 2024 and 2023, respectively, primarily consisted of $15.8 million and $17.7 million, respectively, in intercompany premium revenues recorded by the Captives.

These revenues were eliminated upon consolidation.

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Direct Operating Expenses Direct operating expenses of $14.9 million and $12.7 million during the three months ended March 31, 2024 and 2023, respectively, primarily consisted of $1.6 million and $1.7 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $9.9 million and $10.9 million, respectively, and medical stop loss expenses of $3.2 million and $2.5 million, respectively.

The change to accruals for estimated losses was primarily due to actuarial valuation adjustments by our third-party actuary.

Results of Operations for the Six Months Ended March 31, 2024 and 2023

Consolidated Results of Operations

Net Income We reported income of $180.0 million ($1.79 per diluted share) for the six months ended March 31, 2024 compared to income of $261.2 million ($2.46 per diluted share) for the six months ended March 31, 2023.

Operating Revenue Consolidated operating revenues were $1.4 billion and $1.5 billion for the six months ended March 31, 2024 and 2023, respectively.

The decrease was primarily driven by lower activity levels in our North America Solutions and Offshore Gulf of Mexico segments.

Refer to segment results below for further details.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $807.3 million and $879.7 million for the six months ended March 31, 2024 and 2023, respectively.

The decrease was primarily attributable to the aforementioned lower activity levels.

During the six months ended March 31, 2024, we recognized $5.7 million in direct operating expenses associated with the fair value adjustment of contingent consideration related to potential earnout payments associated with our business acquisitions in fiscal year 2019, partially offset by a gain on involuntary conversion of a rig of approximately $5.5 million.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $118.6 million during the six months ended March 31, 2024 compared to $101.3 million during the six months ended March 31, 2023.

The increase was primarily due to a $11.9 million increase in labor and labor-related expenses.

Asset Impairment Charges During the six months ended March 31, 2023, we recorded $12.1 million in asset impairment charges as the Company initiated a plan to decommission, scrap and/or sell certain assets including four international FlexRig® drilling rigs and four international conventional drilling rigs, and assets previously classified as Assets held-for-sale and additional equipment were written down to scrap value.

Refer to segment results below for further details.

Gain (Loss) on Investment Securities During the six months ended March 31, 2024, we recognized an aggregate loss of $0.3 million on investment securities.

The loss was primarily due to a $2.1 million loss on our equity investment in ADNOC Drilling, partially offset by a $1.8 million gain on our investment in Tamboran Corp.;

both of which were a result of fluctuations in the fair market value of the stocks.

During the six months ended March 31, 2023, we recognized an aggregate gain of $24.7 million on investment securities.

The gain was primarily due to a $24.4 million gain on our equity investment in ADNOC Drilling caused by an increase in the fair market value of the stock.

Income Taxes For the six months ended March 31, 2024 we had income tax expense of $62.3 million (which includes a discrete tax benefit of $0.9 million related to equity compensation) compared to income tax expense of $83.5 million (which includes a discrete tax expense of $0.2 million related to equity compensation) for the six months ended March 31, 2023.

Our statutory federal income tax rate for fiscal year 2024 and 2023 is 21.0 percent (before incremental state and foreign taxes).

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North America Solutions

Six Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

Operating revenues $ 1,207,621 $ 1,302,943 (7.3) %

Direct operating expenses 680,146 746,466 (8.9)

Depreciation and amortization 184,592 178,884 3.2

Research and development 21,695 15,797 37.3

Selling, general and administrative expense 29,568 30,402 (2.7)

Asset impairment charges — 3,948 (100.0)

Segment operating income $ 291,620 $ 327,446 (10.9)

Financial Data and Other Operating Statistics 1 :

Direct margin (Non-GAAP) 2

527,475 556,477 (5.2)

Revenue days 3

27,834 33,067 (15.8)

Average active rigs 4

152 182 (15.8)

Number of active rigs at the end of period 5

152 179 (15.1)

Number of available rigs at the end of period 233 233 —

Reimbursements of "out-of-pocket" expenses $ 143,312 $ 156,601 (8.5)

Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.

See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.

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

(4) Active rigs generate revenue for the Company;

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

This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 183 days).

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

Operating Revenues Operating revenues were $1.2 billion and $1.3 billion in the six months ended March 31, 2024 and 2023, respectively.

The $0.1 billion decrease in operating revenue was primarily due to a 15.8 percent decrease in activity levels partially offset by higher average pricing levels.

Direct Operating Expenses Direct operating expenses decreased to $680.1 million during the six months ended March 31, 2024 as compared to $746.5 million during the six months ended March 31, 2023.

This decrease was primarily driven by lower activity levels, partially offset by a decrease in per revenue day labor and materials and supplies expense.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $184.6 million during the six months ended March 31, 2024 as compared to $178.9 million during the six months ended March 31, 2023.

The increase was primarily driven by $8.2 million of accelerated depreciation recognized during the six months ended March 31, 2024 for components on rigs that are scheduled for conversion in fiscal year 2024.

Research and Development Expense Research and development expense increased to $21.7 million during the six months ended March 31, 2024 as compared to $15.8 million during the six months ended March 31, 2023.

The increase was driven by an associated asset acquisition that occurred during the six months ended March 31, 2024.

Asset Impairment Charges During the six months ended March 31, 2023, assets that were previously classified as Assets held-for-sale 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 were reclassified as Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets.

Q2FY24 FORM 10-Q | 35

International Solutions

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

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

Operating Revenues Operating revenues were $54.8 million during both the three months ended December 31, 2023 and 2022.

Revenue remained flat due to increased activity, offset by the mix of rigs working.

Direct Operating Expenses Direct operating expenses increased to $44.5 million during the three months ended December 31, 2023 as compared to $41.0 million during the three months ended December 31, 2022.

This increase was primarily driven by a 2.9 percent increase in activity levels as well as higher per revenue day labor and labor-related expenses.

Asset Impairment Charges 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 during the three months ended December 31, 2022.

Operating Revenues Operating revenues were $100.6 million and $110.7 million in the six months ended March 31, 2024 and 2023, respectively.

The $10.1 million decrease in operating revenue was primarily due to an 8.0 percent decrease in activity levels partially offset by higher average pricing levels.

Direct Operating Expenses Direct operating expenses decreased to $82.0 million during the six months ended March 31, 2024 as compared to $88.3 million during the six months ended March 31, 2023.

This decrease was also primarily driven by a 8.0 percent decrease in activity levels.

Asset Impairment Charges 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.

Q2FY24 FORM 10-Q | 36

Offshore Gulf of Mexico

Six Months Ended March 31,

(in thousands, except operating statistics) 2024 2023 % Change

Operating revenues $ 51,444 $ 70,143 (26.7) %

Direct operating expenses 42,589 51,379 (17.1)

Depreciation 4,009 3,798 5.6

Selling, general and administrative expense 1,716 1,533 11.9

Segment operating income $ 3,130 $ 13,433 (76.7)

Financial Data and Other Operating Statistics 1 :

Direct margin (Non-GAAP) 2

8,855 18,764 (52.8)

Revenue days 3

562 728 (22.8)

Average active rigs 4

Number of active rigs at the end of period 5

Number of available rigs at the end of period 7 7 —

Reimbursements of "out-of-pocket" expenses $ 16,684 $ 15,183 9.9

Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.

See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.

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

(4) Active rigs generate revenue for the Company;

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

This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 183 days).

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

Operating Revenues Operating revenues were $51.4 million and $70.1 million in the six months ended March 31, 2024 and 2023, respectively.

The $18.7 million decrease in operating revenue was primarily due to a 22.8 percent decrease in activity levels.

Direct Operating Expenses Direct operating expenses decreased to $42.6 million during the six months ended March 31, 2024 as compared to $51.4 million during the six months ended March 31, 2023.

This decrease was primarily driven by a decrease in activity levels as described above.

Other Operations

Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows:

Three Months Ended December 31,

Six Months Ended March 31,

(in thousands) 2024 2023 % Change

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Selling, general and administrative expense 703 488 44.1

Operating income (loss) $ (67) $ 4,677 (101.4)

Q1FY24 FORM 10-Q | 34

Operating income

2,718 11,500 (76.4)

Operating revenues of $17.8 million and $18.9 million during the three months ended December 31, 2023 and 2022, respectively, primarily consisted of $15.2 million and $16.4 million, respectively, in intercompany premium revenues recorded by the Captives.

Operating revenues of $36.4 million and $39.1 million during the six months ended March 31, 2024 and 2023, respectively, primarily consisted of $31.0 million and $34.1 million, respectively, in intercompany premium revenues recorded by the Captives.

These revenues were eliminated upon consolidation.

Direct Operating Expenses Direct operating expenses of $17.1 million and $13.6 million during the three months ended December 31, 2023 and 2022, respectively, primarily consisted of $3.5 million and $2.9 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $9.1 million and $10.0 million, respectively, and medical stop loss expenses of $4.1 million and $2.8 million, respectively.

The change to accruals for estimated losses is primarily due to actuarial valuation adjustments by our third-party actuary.

Direct Operating Expenses Direct operating expenses of $32.0 million and $26.2 million during the six months ended March 31, 2024 and 2023, respectively, primarily consisted of $5.1 million and $4.7 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $19.0 million and $20.9 million, respectively, and medical stop loss expenses of $7.3 million and $5.3 million, respectively.

The change to accruals for estimated losses was primarily due to actuarial valuation adjustments by our third-party actuary.

Q2FY24 FORM 10-Q | 37

Liquidity and Capital Resources

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To date, general inflationary trends have not had a material effect on our operating margins or cash flows as we have been able to offset these cumulative cost trends with rate increases.

As of December 31, 2023, we had cash and cash equivalents of $214.1 million, restricted cash of $65.1 million and short-term investments of $84.1 million.

Our cash flows for the three months ended December 31, 2023, and 2022 are presented below:

Three Months Ended December 31,

As of March 31, 2024, we had cash and cash equivalents of $193.6 million , restricted cash of $68.5 million and short-term investments of $83.4 million .

Our cash flows for the six months ended March 31, 2024, and 2023 are presented below:

Six Months Ended March 31,

(in thousands) 2024 2023

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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)

Q2FY24 FORM 10-Q | 38

Operating Activities

Our operating net working capital (non-GAAP) as of December 31, 2023 and September 30, 2023 is presented below:

December 31, September 30,

Our operating net working capital (non-GAAP) as of March 31, 2024 and September 30, 2023 is presented below:

March 31, September 30,

(in thousands) 2024 2023

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Assets held-for-sale — 645

Prepayments - nonrecurring 23,483 21,821

Prepaid property, plant and equipment

12,823 21,821

658,931 633,385

Total current liabilities 438,837 418,931

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Operating net working capital (non-GAAP) $ 262,141 $ 239,648

Cash flows provided by operating activities were approximately $174.8 million and $185.4 million for the three months ended December 31, 2023 and 2022, respectively.

The change in cash provided by operating activities is primarily driven by lower activity levels partially offset by higher average pricing levels.

For the purpose of understanding the impact on our cash flows from operating activities, operating net working capital is calculated as current assets, excluding cash and cash equivalents, short-term investments, assets held-for-sale, and nonrecurring prepayments, less current liabilities, excluding dividends payable.

Operating net working capital was $240.0 million and $239.6 million as of December 31, 2023 and September 30, 2023, respectively.

Cash flows provided by operating activities were approximately $318.5 million and $326.3 million for the six months ended March 31, 2024 and 2023, respectively.

The change in cash provided by operating activities is primarily driven by lower activity levels partially offset by higher average pricing levels and a reduced negative impact from increases in operating net working capital.

For the purpose of understanding the impact on our cash flows from operating activities, operating net working capital is calculated as current assets, excluding cash and cash equivalents, short-term investments, assets held-for-sale, and prepaid property, plant and equipment, less current liabilities, excluding dividends payable.

Operating net working capital was $262.1 million and $239.6 million as of March 31, 2024 and September 30, 2023, respectively.

This metric is considered a non-GAAP measure of the Company's liquidity.

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Investing Activities

Capital Expenditures Our capital expenditures during the three months ended December 31, 2023 were $136.4 million compared to $96.0 million during the three months ended December 31, 2022.

The increase in capital expenditures is driven by the timing of procurement associated with equipment overhauls and certain long-term projects.

Net Purchases & Sales of Short-Term Investments Our net sales of short-term investments during the three months ended December 31, 2023 were $11.7 million compared to net purchases of $0.9 million during the three months ended December 31, 2022.

Capital Expenditures Our capital expenditures during the six months ended March 31, 2024 were $254.7 million compared to $181.5 million during the six months ended March 31, 2023.

The increase in capital expenditures is driven by the timing of procurement associated with equipment overhauls and certain long-term projects including the procurement of long lead items for international expansion projects.

Net Sales of Short-Term Investments Our net sales of short-term investments during the six months ended March 31, 2024 were $12.4 million compared to net sales of $33.3 million during the six months ended March 31, 2023.

The change in activity is driven by our ongoing liquidity management.

Purchases of Long-Term Investments Our purchases of long-term investments during the three months ended December 31, 2023 were $0.3 million compared to $16.2 million during the three months ended December 31, 2022.

During the three months ended December 31, 2023, our activity was driven by $0.3 million in purchases of various equity securities.

The activity during the three months ended December 31, 2022 was driven by our $14.1 million equity investment in Tamboran Corp.

Sale of Assets Our proceeds from asset sales during the three months ended December 31, 2023 were $11.9 million compared to proceeds of $31.0 million during the three months ended December 31, 2022.

Purchases of Long-Term Investments Our purchases of long-term investments during the six months ended March 31, 2024 were $8.0 million compared to $18.8 million during the six months ended March 31, 2023.

During the six months ended March 31, 2024, our activity was driven by $8.0 million in purchases of various equity and debt securities.

The activity during the six months ended March 31, 2023 was driven by our $14.1 million equity investment in Tamboran Corp.

Insurance Proceeds from Involuntary Conversion 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.

The major components were destroyed beyond repair and considered a total loss, and, as a result, these assets were written off and the rig was removed from our available rig count.

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

During the six months ended March 31, 2024, we collected $5.0 million of the total expected insurance proceeds.

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.

Sale of Assets Our proceeds from asset sales during the six months ended March 31, 2024 were $20.9 million compared to proceeds of $47.7 million during the six months ended March 31, 2023.

The decrease in proceeds is mainly driven by lower rig activity which drives lower reimbursement from customers for lost or damaged drill pipe and other used drilling equipment.

Financing Activities

Dividends We paid dividends of $0.42 per share, comprised of a base cash dividend of $0.25 and a supplemental cash dividend of $0.17, during the three months ended December 31, 2023.

Comparatively, during the three months ended December 31, 2022, we paid dividends of $0.485 per share, comprising of a base cash dividend of $0.25 and a supplemental cash dividend of $0.235.

Total dividends paid were $42.3 million and $51.8 million during the three months ended December 31, 2023 and 2022, respectively.

Q2FY24 FORM 10-Q | 39

Financing Activities

Dividends We paid dividends of $0.84 per share, comprised of a base cash dividend of $0.50 and a supplemental cash dividend of $0.34, during the six months ended March 31, 2024.

Comparatively, during the six months ended March 31, 2023, we paid dividends of $0.97 per share, comprising of a base cash dividend of $0.50 and a supplemental cash dividend of $0.47.

Total dividends paid were $84.4 million and $102.9 million during the six months ended March 31, 2024 and 2023, respectively.

Repurchase of Shares 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.

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

During the six months ended March 31, 2024, we repurchased 1.4 million common shares at an aggregate cost of $51.6 million, including excise tax of $0.3 million.

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

2.90% Senior Notes due 2031 On September 29, 2021, we issued $550.0 million aggregate principal amount of the 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S.

16 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.

Q2FY24 FORM 10-Q | 40

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We currently do not anticipate the need to draw on the 2018 Credit Facility.

Our indebtedness under our unsecured senior notes totaled $550.0 million at December 31, 2023 and matures on September 29, 2031.

As of December 31, 2023, we had a $510.0 million deferred tax liability on our Unaudited Condensed Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.

Our indebtedness under our unsecured senior notes totaled $550.0 million at March 31, 2024 and matures on September 29, 2031.

As of March 31, 2024, we had a $502.1 million deferred tax liability on our Unaudited Condensed Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.

Our capital expenditures over the last several years have been subject to accelerated depreciation methods (including bonus depreciation) available under the Internal Revenue Code of 1986, as amended, enabling us to defer a portion of cash tax payments to future years.

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We expect to be able to meet any such obligations utilizing cash and investments on hand, as well as cash generated from ongoing operations.

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

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.

Any further reversals or payments of the liability cannot be estimated at this time.

A base cash dividend of $0.25 per share and a quarterly supplemental cash dividend of $0.17 per share were declared in December 2023 and 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 long‑term debt to total capitalization ratio was 16.6 percent at December 31, 2023 and September 30, 2023.

A base cash dividend of $0.25 per share and a quarterly supplemental cash dividend of $0.17 per share were declared on February 28, 2024 for shareholders of record on May 17, 2024, payable on May 31, 2024, resulting in a Dividend payable of $42.0 million on our Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024.

The long‑term debt to total capitalization ratio was 16.4 percent and 16.6 percent at March 31, 2024 and September 30, 2023, respectively.

For additional information regarding debt agreements, refer to Note 5—Debt to the Unaudited Condensed Consolidated Financial Statements.

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Material Commitments

Material commitments as reported in our 2023 Annual Report on Form 10-K have not changed significantly as of December 31, 2023, other than those disclosed in Note 12—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements.

Material commitments as reported in our 2023 Annual Report on Form 10-K have not changed significantly as of March 31, 2024, other than those disclosed in Note 11—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

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Direct margin is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time.

Direct margin is not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures.

Direct margin is not a substitute for financial measures prepared in accordance with U.S.

GAAP and should therefore be considered only as supplemental to such U.S.

GAAP financial measures.

Q2FY24 FORM 10-Q | 41

The following table reconciles direct margin to segment operating income, which we believe is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to direct margin.

Three Months Ended December 31, 2023

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

The following table reconciles direct margin to segment operating income, which we believe is the financial measure calculated and presented in accordance with U.S.

GAAP that is most directly comparable to direct margin.

Three Months Ended March 31, 2024

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

Segment operating income $ 147,130 $ 3,569 $ 78

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Direct margin (Non-GAAP) $ 271,401 $ 8,364 $ 2,903

Three Months Ended December 31, 2022

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

Three Months Ended March 31, 2023

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

Segment operating income $ 182,149 $ 3,955 $ 6,687

2 unchanged sentences

Selling, general and administrative expense 16,212 3,008 700

Direct margin (Non-GAAP) $ 296,169 $ 8,615 $ 9,291

Six Months Ended March 31, 2024

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

Segment operating income $ 291,620 $ 8,992 $ 3,130

Depreciation and amortization 184,592 4,752 4,009

Research and development 21,695 — —

Selling, general and administrative expense 29,568 4,853 1,716

Direct margin (Non-GAAP) $ 527,475 $ 18,597 $ 8,855

Six Months Ended March 31, 2023

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

Segment operating income $ 327,446 $ 5,529 $ 13,433

Depreciation and amortization 178,884 3,044 3,798

Research and development 15,797 — —

Selling, general and administrative expense 30,402 5,717 1,533

Asset impairment charges 3,948 8,149 —

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis