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Oil prices are particularly sensitive to actual and perceived threats to geopolitical stability, global economic conditions, and to changes in production from OPEC+ member states.
−Removed: For example, the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas and the continuation of, or any escalation in the severity of, these conflicts, has led and may continue to lead to an increase in the volatility of global oil and gas prices, which could have a corresponding negative impact on the capital expenditure of oil and gas companies as a result of the higher perceived risk.
−Removed: Similarly, the COVID-19 pandemic resulted in a sharp decline in oil prices and drilling activity in 2020.
+Added: For example, the ongoing armed conflicts between (i) Russia and Ukraine and (ii) the conflicts in Israel and the continuation of, or any escalation in the severity of, these conflicts, has led and may continue to lead to an increase in the volatility of global oil and gas prices, which could have a corresponding negative impact on the capital expenditure of oil and gas companies as a result of the higher perceived risk.
Oil and natural gas prices and production levels, as well as market expectations regarding such prices and production levels, have been volatile, which has had, and may in the future have, adverse effects on our business and operations.
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• political and military conflicts, hostilities or perceived hostilities in oil producing regions or other geographical areas or acts of terrorism in the United States or elsewhere;
−Removed: 2023 FORM 10-K | 18
• technological advances that are related to oil and natural gas recovery or that affect the global demand for energy;
• the development, exploitation and market acceptance of alternative energy sources as part of a transition to a lower carbon economy;
+Added: 2024 FORM 10-K | 19
• increased focus by the investment community on sustainability practices in the oil and natural gas industry;
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The inability to maintain our pricing and to increase our pricing as costs increase to offset rising costs and capital expenditures could adversely affect our rig utilization and profit margins.
−Removed: Following periods of downturn in our industry, there may be substantially more drilling rigs available than necessary to meet demand even as oil and natural gas prices, and drilling activity, rebound.
+Added: Various factors within our industry could cause there to be substantially more drilling rigs available than necessary to meet demand even as oil and natural gas prices, and drilling activity, increase.
In the event of a surplus of available and more competitive drilling rigs, we may continue to experience difficulty in replacing fixed‑term contracts, extending expiring contracts or obtaining new contracts in the spot market, and new contracts may contain lower dayrates and substantially less favorable terms, which could have a material adverse effect on our business, financial condition and results of operations.
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2024 FORM 10-K | 20
−Removed: Further, as a result of a significant reduction in the demand for oil and natural gas services, certain of our competitors may engage in bankruptcy proceedings, debt refinancing transactions, management changes, or other strategic initiatives in an attempt to reduce operating costs to maintain a position in the market.
+Added: Further, as a result of any significant reduction in the demand for oil and natural gas services, certain of our competitors may engage in bankruptcy proceedings, debt refinancing transactions, management changes, or other strategic initiatives in an attempt to reduce operating costs to maintain a position in the market.
This could result in such competitors emerging with stronger or healthier balance sheets and in turn an improved ability to compete with us in the future.
−Removed: We may also see corporate consolidations among our competitors, which could significantly alter industry conditions and competition within the industry, and have a material adverse effect on our business, financial condition and results of operations.
+Added: We may also see corporate consolidations among our competitors and customers, which could significantly alter industry conditions and competition within the industry, and have a material adverse effect on our business, financial condition and results of operations.
+Added: Consolidation in our industry may impact our results of operations.
+Added: Business consolidations within the oil and gas industry in recent years have resulted in some of our largest customers combining and using their size and purchasing power to seek economies of scale and pricing concessions.
+Added: Continuing consolidation within the industry may result in reduced capital spending by some of our customers or the acquisition of one or more of our primary customers, which may lead to decreased demand for our products and services.
+Added: There is no assurance that we will be able to maintain our level of sales to a customer after its consolidation with another company or replace that revenue with increased business activity with other customers.
+Added: Additionally, corporate consolidations among our competitors could significantly alter industry conditions and competition within the industry.
+Added: As a result, the acquisition of one or more of our primary customers or consolidations among our competitors may have a significant adverse impact on our business, results of operations, financial condition and cash flows.
+Added: We are unable to predict what effect consolidations in the industry may have on prices, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customers.
New technologies may cause our drilling methods and equipment to become less competitive and it may become necessary to incur higher levels of capital expenditures in order to keep pace with the disruptive trends in the drilling industry.
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Additionally, new technologies, services or standards could render some of our services, drilling rigs or equipment obsolete, which could reduce our competitiveness and have a material adverse impact on our business, financial condition and results of operations.
+Added: 2024 FORM 10-K | 21
Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.
−Removed: Our operations are subject to the many hazards inherent in the business, including inclement weather, unplanned power outages, blowouts, explosions, well fires, loss of well control, equipment failure, computer system disruptions, pollution, and reservoir damage.
+Added: Our operations are subject to many hazards inherent in the business in which we operate, including inclement weather, unplanned power outages, blowouts, explosions, well fires, loss of well control, equipment failure, computer system disruptions, pollution, and reservoir damage.
These hazards could cause significant environmental and reservoir damage, personal injury and death, suspension of operations, serious damage or destruction of equipment and property and substantial damage to producing formations and surrounding lands and waters.
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Such an accident or other event and subsequent crisis management efforts could cause us to incur substantial expenses in connection with investigation and remediation as well as cause lasting damage to our reputation, loss of customers and an inability to obtain insurance.
−Removed: 2023 FORM 10-K | 20
Our Offshore Gulf of Mexico operations are also subject to potentially significant risks and liabilities attributable to or resulting from adverse environmental conditions, including pollution of offshore waters and related negative impact on wildlife and habitat, adverse sea conditions and platform damage or destruction due to collision with aircraft or marine vessels.
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Moreover, we may experience disruptions in operations due to damage to customer platforms and other related facilities in the area.
−Removed: We also lease a fabrication facility near the Houston, Texas ship channel, and our principal fabricator and other vendors are also located in the gulf coast region and could be exposed to damage or disruption by hurricanes and other extreme weather conditions, including coastal flooding, which in turn could result in increased operating costs or decreases in revenues and adversely affect our business, financial condition and results of operations.
+Added: We also lease a fabrication facility near the Houston, Texas ship channel, regularly have land drilling operations proximate to the gulf coast, and our principal fabricator and other vendors are also located in the gulf coast region, all of which could be exposed to damage or disruption by hurricanes and other extreme weather conditions, including coastal flooding, which in turn could result in increased operating costs or decreases in revenues and adversely affect our business, financial condition, and results of operations.
It is customary in our business to have mutual indemnification agreements with customers on a “knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel, subcontractors, and property.
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Furthermore, other states may enact similar oilfield anti-indemnity acts.
−Removed: Our customers and other third parties may also dispute, or be unable to meet, their contractual indemnification obligations to us.
+Added: Our customers and other third parties may also dispute, or be unable to meet, their contractual indemnification obligations to us due to financial, legal or other reasons.
Accordingly, we may be unable to transfer these risks to our customers and other third parties by contract or indemnification agreements.
Incurring a liability for which we are not fully indemnified or insured could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We insure working land rigs and related equipment at values that approximate the current replacement cost on the inception date of the policies.
−Removed: We also carry insurance with varying deductibles and coverage limits with respect to stacked rigs, offshore platform rigs, and “named wind storm” risk in the Gulf of Mexico.
−Removed: In addition, we have insurance coverage for comprehensive general liability, automobile liability, workers’ compensation and employer’s liability, and certain other specific risks.
−Removed: Insurance is purchased over deductibles to reduce our exposure to catastrophic events.
−Removed: In some cases, we self-insure large deductibles on certain insurance policies.
−Removed: We retain a significant portion of our expected losses under our workers’ compensation, general liability and automobile liability programs.
−Removed: The Company self‑insures a number of other risks, including loss of earnings and business interruption.
−Removed: We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage.
+Added: In addition, we maintain insurance coverage of the types and in the amounts that we believe to be customary in the industry, but we do not insure against all risks, either because insurance is not available or because it is not commercially justifiable.
+Added: See Item 1—Business—"Insurance and Risk Management” for a description of our insurance coverage.
Our insurance will not in all situations provide sufficient funds to protect us from all losses and liabilities that could result from our operations.
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If a significant accident or other event occurs and is not fully covered by insurance or an enforceable or recoverable indemnity from a customer, it could have a material adverse effect on our business, financial condition and results of operations.
+Added: 2024 FORM 10-K | 22
Our business is subject to cybersecurity and information technology system disruption risks.
Our operations depend on effective and secure information technology systems, including our own systems and the systems of third party vendors upon which we rely, such as those providing cloud services to us.
−Removed: Threats to information technology systems, including as a result of Security Incidents, continue to grow.
−Removed: Cybersecurity risks could include, but are not limited to, Security Incidents, such as ransomware attacks, denial-of-service attacks, phishing attacks, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, employee or insider error, interruptions in communication, loss of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology, loss or damage to our data delivery systems, or other cybersecurity and infrastructure systems, including our property and equipment.
−Removed: In 2021, the Company introduced full-time or part-time remote work as a permanent option for select employees and a significant number of our corporate employees now work remotely.
+Added: Potential unauthorized occurrences on or through our information technology systems, including as a result of cybersecurity incidents, that may result in adverse effects on the confidentiality, integrity, and availability of these systems and data residing therein continue to grow.
+Added: Cybersecurity threats could include, but are not limited to, cybersecurity incidents, such as ransomware attacks, denial-of-service attacks, phishing attacks, malicious software;
+Added: unauthorized or unlawful access, release, corruption or loss of our data;
+Added: employee or insider error;
+Added: interruptions in communication;
+Added: loss of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology;
+Added: or loss or damage to our data delivery systems or other cybersecurity and infrastructure systems, including our property and equipment.
+Added: In 2021, the Company introduced full-time or part-time remote work as a permanent option for select employees and a significant number of our employees now work remotely.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks.
−Removed: Furthermore, geopolitical tensions or conflicts, such as the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas, may further heighten the risk of cybersecurity attacks.
−Removed: Our information technology systems and those of our third party vendors are also subject to disruptions due to occurrences other than Security Incidents, such as natural disasters or power outages.
−Removed: 2023 FORM 10-K | 21
−Removed: Security Incidents or other disruptions involving our own systems or those of our third-party vendors, could:
+Added: This risk is exacerbated with the advancement of technologies like artificial intelligence, which malicious third parties are using to create new, sophisticated and more frequent attacks.
+Added: Furthermore, geopolitical tensions or conflicts, such as the ongoing armed conflicts between Russia and Ukraine and the conflicts in Israel, may further heighten the risk of cybersecurity attacks.
+Added: Our information technology systems and those of our third party vendors are also subject to disruptions due to occurrences other than cybersecurity incidents, such as natural disasters or power outages.
+Added: Cybersecurity threats, such as cybersecurity incidents or other disruptions involving our own systems or those of our third-party vendors, could:
• disrupt our operations including operational technologies as well as our corporate information technology systems,
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• expose us to litigation, regulatory action, and potential liability, and
−Removed: • result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate Security Incidents or other disruptions.
+Added: • result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate cybersecurity incidents or other cybersecurity threats.
It is possible that our business, financial and other systems, as well as those of our third-party vendors, could be compromised.
−Removed: While various procedures and controls are being utilized to mitigate exposure to such risk, there can be no assurance that the procedures and controls that we implement, or which we cause third party service providers to implement, will be sufficient to protect our systems, information or other property.
−Removed: A Security Incident or other disruption could have a material adverse effect on our business, financial condition and operations.
−Removed: Further, as Security Incidents continue to evolve, we may be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of Security Incidents.
+Added: While various procedures and controls are being utilized to mitigate exposure to such risk, there can be no assurance that the procedures and controls that we implement, or which we cause third party service providers to implement, will be sufficient to protect our systems, data or other property.
+Added: See Item 1C—Cybersecurity for a description of cybersecurity controls and procedures.
+Added: A Security incident or other cybersecurity threat could have a material adverse effect on our business, financial condition, cash flows, results of operations, and reputation.
+Added: Further, as cybersecurity incidents continue to evolve, we will be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of cybersecurity incidents.
Our acquisitions, dispositions and investments may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our liquidity, consolidated results of operations and consolidated financial condition.
We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests.
−Removed: These strategic transactions, among others, are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk.
+Added: For example, in 2024 we entered into the Purchase Agreement related to the Acquisition (see below “KCA Deutag Acquisition Related Risks” for a description of additional risks specific to the Acquisition).
+Added: These strategic transactions, among others, are intended to (but may not) result in access to new markets, the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk and the failure to achieve such intended benefits could have a material adverse effect on our business.
Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock.
These transactions may also affect our liquidity, consolidated results of operations and consolidated financial condition.
+Added: 2024 FORM 10-K | 23
These transactions also involve risks, and we cannot ensure that:
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• any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
+Added: While we generally seek to obtain indemnities for liabilities arising from events occurring before such acquisitions, we may be unable to do so, and any indemnities we do obtain will be limited in amount and duration, may be held to be unenforceable or the seller may not be able to indemnify us.
We have allocated a portion of the purchase price of certain acquisitions to goodwill and other intangible assets.
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If we experience future negative changes in our business climate or our results of operations such that we determine that goodwill or intangible assets are impaired, we will be required to record impairment charges with respect to such assets.
−Removed: 2023 FORM 10-K | 22
Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold.
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As a result, we may lose access to important equipment or technology, be required to cease use of some equipment or technology, be forced to modify our drilling rigs or technology, or be required to pay license fees or royalties for the use of equipment or technology.
+Added: Regardless of the merits, any such claims generally result in significant legal and other costs, including reputational harm, and may distract management from running our business.
There can also be no assurance that the steps we take to obtain, maintain, protect, and enforce our intellectual property rights will be adequate.
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In addition, we may lose a competitive advantage in the event we are unsuccessful in enforcing our rights against third parties, third parties are successful in enforcing their rights against us, or our competitors are able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets.
−Removed: As a result, any technology disputes or limitations on our ability to protect or enforce our intellectual property rights could have a material adverse impact on our business, financial condition and results of operations.
+Added: As a result, any technology disputes involving us or our customers or supplying vendors or limitations on our ability to protect or enforce our intellectual property rights could have a material adverse impact on our business, financial condition and results of operations.
+Added: 2024 FORM 10-K | 24
Unexpected events could disrupt our business and adversely affect our results of operations.
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Further, consolidation among oil and natural gas exploration and production companies may reduce the number of available customers.
+Added: See “—Consolidation in our industry may impact our results of operations” for additional disclosure regarding consolidations in our industry.
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.
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Even if an early termination payment is owed to us, during depressed market conditions or due to other factors, a customer may be unable or may refuse to pay the early termination payment and may seek to suspend, negotiate, or terminate the contract.
−Removed: 2023 FORM 10-K | 23
Regardless of the reason for an early termination or suspension of a contract, such termination or suspension may result in a drilling rig being idle for an extended period of time if we are unable to secure new contracts on a timely basis and on substantially similar terms, which could have a material adverse effect on our business, financial condition and results of operations.
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Our inability or the inability of our customers to perform under our or their contractual obligations may have a material adverse impact on our business, financial condition and results of operations.
−Removed: Our contracts with national oil companies may expose us to greater risks than we normally assume in contracts with non-governmental customers.
+Added: 2024 FORM 10-K | 25
+Added: Our contracts with NOCs may expose us to greater risks than we normally assume in contracts with non-governmental customers.
We currently own and operate rigs and have deployed technology under contracts with foreign national oil companies.
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Risks that accompany contracts with national oil companies could ultimately have a material adverse impact on our business, financial condition and results of operations.
+Added: Control of oil and natural gas reserves by NOCs may affect the demand for our services and products and create additional risks in our operations.
+Added: Much of the world’s oil and natural gas reserves are controlled by NOCs, which may require their contractors to meet local content requirements or other local standards, such as conducting our operations through joint ventures with local partners that could be difficult or undesirable for us to meet.
+Added: The failure to meet the local content requirements and other local standards may adversely affect our operations in those countries.
+Added: In addition, our ability to work with NOCs is subject to our ability to negotiate and agree upon acceptable contract terms.
Our drilling services operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates.
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Further, certain key rig components, parts and equipment are also either purchased from, fabricated or serviced by a limited number of vendors, which, in some cases, may be thinly capitalized and disproportionately affected by any loss of business, downturn in the energy industry, supply chain disruptions, or reduction or availability of credit.
−Removed: A number of disruptions and delays across the global supply chain have occurred in recent years, which have created delays in servicing key components, and a tightening of supplies and shortages in a number of areas, ranging from basic raw materials to component parts, and increasing costs, and it is possible such disruptions and delays could continue in the near term and possibly beyond.
+Added: The failure of one or more third-party suppliers, manufacturers or service providers to provide equipment, components, parts or services, whether due to capacity constraints, labor shortages or other labor-related difficulties, production or delivery disruptions, price increases, quality control issues, recalls or other decreased availability of parts and equipment, is beyond our control and could materially disrupt our operations or result in the delay, renegotiation or cancellation of drilling contracts, thereby causing a loss of contract drilling backlog and/or revenues to us, as well as an increase in operating costs.
To date, as an industry leader, we have effectively managed these delays, disruptions, and shortages by engaging in near and long-term demand planning with multiple suppliers who provide and service key rig components, parts and equipment.
1 unchanged sentence
2024 FORM 10-K | 26
+Added: Continuing inflation and cost increases may impact our sales margins and profitability.
+Added: Increases in the cost of labor, materials, parts, equipment, global transportation and logistics costs and other operational components has the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers for our services.
+Added: In addition, our customers are also affected by inflation and the rising costs of goods and services used in their businesses, which could negatively impact their ability to purchase our services, which could adversely impact our revenue and profitability.
+Added: There is no guarantee that we can increase selling prices, replace lost revenue, or reduce costs to fully mitigate the effect of inflation on our costs and business, which may adversely impact our sales margins and profitability.
Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility.
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The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of such events have adversely impacted and may continue to adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our services.
−Removed: Such public health crises, pandemics and epidemics are continuously evolving, and we are not able to enumerate all potential risks to our business from such events, including the COVID-19 pandemic;
+Added: Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of such events have adversely impacted and may in the future again adversely impact our operations, the operations of our customers and the global economy, including worldwide demand for oil and natural gas and the level of demand for our services.
+Added: Such public health crises, pandemics and epidemics are continuously evolving, and we are not able to enumerate all potential risks to our business from such events;
however, we believe that in addition to the impacts described above, other current and potential impacts include, but are not limited to:
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Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations.
+Added: 2024 FORM 10-K | 27
Our business and results of operations may be adversely affected by foreign political, economic and social instability risks, foreign currency restrictions and devaluation, and various local laws associated with doing business in certain foreign countries.
We currently have drilling operations in South America (primarily Argentina and Colombia), the Middle East and Australia.
+Added: We expect the Acquisition to increase the geographic reach of our operations.
In the future, we may further expand the geographic reach of our operations.
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bureaucratic delays;
+Added: increased compliance costs;
and general hazards associated with foreign sovereignty over certain areas in which operations are conducted.
−Removed: 2023 FORM 10-K | 25
South American countries, in particular, have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and general economic and political instability.
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dollar exchange rate.
−Removed: During the fiscal year ended 2023, we entered into a Blue Chip Swap transaction, which resulted in a $12.2 million loss on investment recorded in Gain on investment securities within our Consolidated Statements of Operations.
−Removed: As a result of the Blue Chip Swap transaction, $9.8 million of net cash was repatriated to the U.S.
−Removed: during the period.
+Added: During fiscal years 2024 and 2023, we entered into Blue Chip Swap transactions, which resulted in $7.1 million and $12.2 million losses on investments recorded in Gain on investment securities within our Consolidated Statements of Operations.
+Added: As a result of the Blue Chip Swap transactions, $13.8 million and $9.8 million of net cash was repatriated to the U.S.
+Added: during fiscal years 2024 and 2023, respectively.
Additionally, there can be no assurance that there will not be changes in local laws, regulations and administrative requirements or the interpretation thereof, which could have a material adverse effect on the profitability of our operations or on our ability to continue operations in certain areas.
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Covenants in our debt agreements restrict our ability to engage in certain activities.
−Removed: Our current debt agreements pertaining to certain long‑term unsecured debt and our unsecured revolving credit facility contain, and our future financing arrangements likely will contain, various covenants that may in certain instances restrict our ability to, among other things, incur, assume or guarantee additional indebtedness, incur liens, sell or otherwise dispose of all or substantially all of our assets, enter into new lines of business, and merge or consolidate.
−Removed: In addition, our credit facility requires us to maintain a funded leverage ratio (as defined therein) of less than or equal to 50 percent and certain priority debt (as defined therein) may not exceed 17.5 percent of our net worth (as defined therein).
+Added: Our current debt agreements pertaining to certain long‑term unsecured debt, our unsecured Amended and Restated Credit Agreement (the "Amended Credit Facility") and our unsecured term loan credit agreement (the "Term Loan Credit Agreement") contain, and our future financing arrangements likely will contain, various covenants that may in certain instances restrict our ability to, among other things, incur, assume or guarantee additional indebtedness, incur liens, sell or otherwise dispose of all or substantially all of our assets, enter into new lines of business, and merge or consolidate.
+Added: In addition, the Amended Credit Facility and the Term Loan Credit Agreement require us to maintain a funded leverage ratio (as defined therein) of less than or equal to 55 percent and certain priority debt (as defined therein) may not exceed 17.5 percent of our net worth (as defined therein).
Such restrictions may limit our ability to successfully execute our business plans, which may have adverse consequences on our operations.
+Added: 2024 FORM 10-K | 28
We may be required to record impairment charges with respect to our drilling rigs and other assets.
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Drilling rigs in our fleet may become impaired in the future if oil and gas prices decline or remain low for a prolonged period of time or if market conditions deteriorate or if we restructure our drilling fleet.
−Removed: For example, in fiscal year 2021 we recognized impairment charges of $70.9 million related to tangible assets and equipment.
−Removed: If we experience future negative changes in our business climate such that we determine that one or more of our asset groups are impaired, we will be required to record additional impairment charges with respect to such asset groups.
Any impairment could have a material adverse effect on our consolidated financial statements.
The facts and circumstances included in our impairment assessments are described in Part II, Item 8—Financial Statements and Supplementary Data.
−Removed: 2023 FORM 10-K | 26
A downgrade in our credit ratings could negatively impact our cost of and ability to access capital.
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From time to time, we may need to access capital markets to obtain financing.
−Removed: Our ability to access capital markets for financing could be limited by oil and gas prices, our existing capital structure, our credit ratings, the state of the economy, the health or market perceptions of the drilling and overall oil and gas industry, the liquidity of the capital markets and other factors.
+Added: Our ability to access capital markets for financing could be limited by oil and gas prices, our existing capital structure, our credit ratings, the state of the economy, the health or market perceptions of the drilling and overall oil and gas industry, ESG-related regulatory and investor requirements, the liquidity of the capital markets and other factors.
Many of the factors that affect our ability to access capital markets are outside of our control.
+Added: There have been efforts within the investment community (including investment advisors, investment fund managers, sovereign wealth funds, public pension funds, universities and individual investors) to promote the divestment of, or limit investment in, the stock of companies in the oil and gas industry, which, if successful, could limit our ability to access capital markets.
+Added: See “—Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock.
” No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could have a material adverse impact on our business, financial condition and results of operations.
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Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would be a default (if not waived) and would likely result in a reduction of our credit rating, which could harm our ability to seek additional capital or restructure or refinance our indebtedness.
+Added: 2024 FORM 10-K | 29
LEGAL AND REGULATORY RISKS
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The physical and regulatory effects of climate change and a global transition to a low carbon economy could have a negative impact on our operations, our customers’ operations and the overall demand for our customers' products and services.
−Removed: Scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases” (“GHGs”) and including carbon dioxide and methane, may be contributing to warming of the earth’s atmosphere and other climatic changes.
−Removed: In response to such studies, the issue of climate change and the effect of GHG emissions, in particular emissions from fossil fuels, is attracting increasing attention worldwide and there are a number of political and technological initiatives aimed at reducing the use of hydrocarbons.
−Removed: We are aware of the increasing focus of local, state, regional, national and international regulatory bodies on GHG emissions and climate change issues.
+Added: There has been an increasing focus of international, national, state, regional and local regulatory bodies on emissions of certain gases, commonly referred to as “greenhouse gases” (“GHGs”) including carbon dioxide and methane, and climate change issues.
Legislation to regulate GHG emissions has periodically been introduced in the U.S.
Congress and such legislation may be proposed or adopted in the future.
−Removed: In addition, the United States is currently a member of the “Paris Agreement” that requires member countries to review and “represent a progression” in their intended nationally determined GHG contributions, which set GHG emission reduction goals every five years beginning in 2020.
−Removed: 2023 FORM 10-K | 27
−Removed: The aim of the Paris Agreement is to hold the increase in the average global temperature to well below 2ºC (3.6ºF) above pre-industrial levels with efforts to limit the rise to 1.5ºC (2.7ºF) to protect against the more severe consequences of climate change forecasted by scientific studies.
−Removed: These consequences include increased coastal flooding, droughts and associated wildfires, heavy precipitation events, stresses on water supply and agriculture, increased poverty, and negative impacts on health.
−Removed: In connection with the decision to adopt the Paris Agreement, the Intergovernmental Panel on Climate Change (the “IPCC”) prepared a special report focused on the impacts of an increase in the average global temperature of 1.5ºC above pre-industrial levels and related GHG emission pathways.
−Removed: The 2018 IPCC Report concludes that the measures set forth in the Paris Agreement are insufficient and that more aggressive targets and measures will be needed.
−Removed: According to the 2023 IPCC Report, all global modelled pathways limiting warming to 1.5ºC or 2ºC requires rapid and deep and, in most cases, immediate greenhouse gas emissions reductions in all sectors this decade.
−Removed: It is not possible at this time to predict the timing and effect of climate change or whether additional GHG legislation, regulations or other measures will be adopted at the federal, state or local levels.
−Removed: However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions appear likely based on the findings set forth in the IPCC Reports and any such future laws and regulations could result in increased compliance costs, additional operating restrictions or affect the demand for our customers' products and, accordingly, our services.
+Added: These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG reporting, tracking programs, attestation requirements and regulations that directly limit GHG emissions from certain sources.
+Added: Some of the proposals would require industries to meet stringent new standards that would require substantial reductions in carbon emissions.
+Added: Those reductions could be costly and difficult to implement.
+Added: The United States is currently a member of the “Paris Agreement” that requires member countries to review and “represent a progression” in their intended nationally determined GHG contributions, which set many new goals, including GHG emission reduction goals every five years beginning in 2020.
+Added: In 2023, the United States joined the international community at the 28th Conference of the Parties (COP28), where the U.S.
+Added: and nearly 200 other countries renewed their commitment to deliver on the aims of the 2015 Paris Agreement.
+Added: It is not possible at this time to predict the timing and effect of climate change or the extent and contents of any additional GHG legislation, regulations or other measures adopted at the federal, state or local levels.
+Added: However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions have occurred and may continue based on the findings set forth in the IPCC Reports and any such future laws and regulations could result in increased compliance costs, reduce our return on investment, or additional operating restrictions or affect the demand for our customers' products and, accordingly, our services.
In addition, increasing attention to the risks of climate change has resulted in an increased possibility of litigation or investigations brought by public and private entities against oil and gas companies in connection with their GHG emissions.
10 unchanged sentences
For example, the Inflation Reduction Act ("IRA") of 2022 contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies.
−Removed: Also, in 2022, California mandated that all new passenger cars and light trucks sold in the state be electric vehicles or other emissions-free models by 2035.
+Added: Also, in 2022, California mandated that all new passenger cars and light trucks sold in the state be electric vehicles or other emissions-free models by 2035, and other jurisdictions have adopted or considered adopting similar measures.
If these future laws and regulations result in customers reducing their production of oil and gas, they could ultimately have an adverse effect on our business and prospects.
12 unchanged sentences
Members of the U.S.
−Removed: Congress are analyzing, and a number of federal agencies have historically been requested to review, and, under the current administration, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing and the possibility of more stringent regulation.
+Added: Congress are analyzing, and a number of federal agencies have historically been requested to review, and, under the current or future administrations, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing and the possibility of more stringent regulation.
At September 30, 2024, we had approximately 25 rigs placed on federal land and four rigs in federal waters.
4 unchanged sentences
In recent years, Oklahoma has experienced an increase in earthquakes.
−Removed: Although the extent of any correlation has been and remains the subject of studies of both federal and state agencies, some parties believe that there is a correlation between hydraulic fracturing related activities and the increased occurrence of seismic activity.
+Added: Studies are ongoing, but some parties believe that there is a correlation between hydraulic fracturing related activities and the increased occurrence of seismic activity.
As a result, federal and state legislatures and agencies may seek to further regulate, restrict or prohibit hydraulic fracturing activities.
1 unchanged sentence
Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks.
−Removed: We have developed, and will continue to develop and set, goals, targets, or other objectives related to sustainability matters.
+Added: We have developed, and may continue to develop and set, goals, targets, or other objectives related to sustainability matters.
Statements related to these goals, targets and objectives reflect our current plans and do not constitute a guarantee that they will be achieved.
2 unchanged sentences
Examples of such factors include:
−Removed: (1) the extent our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (2) the availability and cost of low- or non-carbon-based energy sources and technologies, (3) evolving regulatory requirements affecting sustainability standards or disclosures, and (4) the availability of suppliers that can meet our sustainability and other standards.
+Added: (1) the extent our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (2) the availability and cost of low- or non-carbon-based energy sources and technologies or abatement technologies, (3) evolving regulatory requirements affecting sustainability standards or disclosures, and (4) the availability of suppliers that can meet our sustainability and other standards.
In addition, standards for tracking and reporting on sustainability matters, including climate-related matters, have not been harmonized and continue to evolve.
−Removed: Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, quantifying, and reporting such metrics, including sustainability-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
−Removed: Our business may also face increased scrutiny from investors and other stakeholders, including from parties that oppose environmental, social, and governance initiatives, related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
−Removed: If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected.
+Added: Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, quantifying, and reporting such metrics, including sustainability-related disclosures that may be required of public companies by the SEC or in-scope companies under U.S.
+Added: state regulations, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
+Added: Future acquisitions or dispositions may also impact our reporting, process, and progress on such goals.
+Added: Our business may also face increased scrutiny from investors and other stakeholders, including from parties that oppose ESG initiatives, related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
+Added: If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees or customers, and our attractiveness as an investment or business partner could be negatively affected.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
10 unchanged sentences
The regulatory environment surrounding data privacy, data security and consumer protection is rapidly evolving and subject to constant change.
−Removed: New laws and regulations in this space pose increasingly complex compliance challenges and potentially elevate our costs.
−Removed: In the normal course of business, we and our third-party partners may collect, process, and store data that is subject to those specific laws and regulations governing personal data.
+Added: New laws and regulations in this space pose increasingly complex compliance challenges, which may elevate our costs.
+Added: In the normal course of business, we and our third-party partners collect, process, and store data that is subject to those specific laws and regulations.
Complying with the varying regulatory requirements outlined in foreign, federal, state, and local regulations is becoming increasingly complex, and could increase the costs and difficulty of compliance.
−Removed: Furthermore, violations of applicable data protection laws, including but not limited to the GDPR and the CCPA as amended by the CPRA, as well as other U.S.
−Removed: sector-specific and new comprehensive state data privacy laws, could result in significant penalties.
+Added: Furthermore, violations of applicable privacy and data security laws, including but not limited to the GDPR, the CCPA as amended by the CPRA, and other U.S.
+Added: sector-specific and comprehensive state privacy and data security laws, could result in significant penalties.
The GDPR applies to entities operating in the EU that process personal data and entities outside the EU that process personal data to provide goods or services to EU residents, directly or indirectly through vendors and subcontractors.
1 unchanged sentence
Failure to comply could result in significant penalties of up to a maximum of four percent of our total global turnover of the preceding financial year or up to €20.0 million, which may materially adversely affect our business, reputation, results of operations, and revenue.
−Removed: The CCPA, which came into effect on January 1, 2020, was amended by the CPRA, which went into effect January 1, 2023.
−Removed: The CCPA and CPRA give California residents certain rights in relation to their personal information, and impose obligations on certain entities that do business in California to protect those rights, which may apply to us.
−Removed: As interpretation and enforcement of the CCPA and CPRA evolve, new compliance obligations are created, which could cause us to incur costs and shift our business practices in a manner that does not align with our business objectives.
−Removed: The CCPA, presently enforceable (as CPRA enforcement has been delayed until July 1, 2023, and enforcement is not retroactive), provides for civil penalties of up to $7,500 per intentional violation and $2,500 per unintentional violation.
−Removed: Additionally, California residents whose personal information has been impacted by a Security Incident as a result of the entity’s failure to implement and maintain reasonable security procedures and practices have been granted a private right of action, which could result in damages of up to $750 per incident, where the entity failed to encrypt or redact personal information.
−Removed: The possibility for these significant financial penalties for noncompliance may materially adversely affect our business, reputation, results of operations, and revenue.
−Removed: Similar legislation has been adopted in Virginia, Colorado, and Connecticut, which have gone into effect, and Utah which will go into effect at the end of 2023.
−Removed: Non-compliance with these and other data privacy, data security, and consumer protection laws could also expose us to regulatory investigations, which could require significant expenses for resolution and potentially result in fines and prospective relief, necessitating additional resources for implementation.
+Added: The CCPA, as amended by the CPRA gives California residents certain rights in relation to their personal data, and imposes obligations on certain entities that do business in California to protect those rights, which may apply to us.
+Added: As the interpretation and enforcement of the CCPA/CPRA evolve, new compliance obligations emerge and may modify understanding regarding obligations imposed under the laws and regulations.
+Added: Complying with these obligations could cause us to incur costs and shift our business practices in a manner that does not align with our business objectives.
+Added: The CCPA/CPRA provides for civil penalties of up to $7,500 per intentional violation and $2,500 per unintentional violation.
+Added: Additionally, California residents whose personal data has been impacted by a cybersecurity incident as a result of the entity’s failure to implement and maintain reasonable security procedures and practices have been granted a private right of action, which could result in damages of up to $750 per incident where the entity failed to encrypt or redact personal data.
+Added: These significant financial penalties for noncompliance may materially adversely affect our business, results of operations and revenue.
+Added: Similar legislation has been adopted in a number of other states, and is being considered by others.
+Added: Non-compliance with these and other privacy, data security, and consumer protection laws could also expose us to regulatory investigations, which could require significant resources for resolution and potentially result in fines and prospective relief.
In addition, regulators may issue orders to stop processing personal data, which could disrupt operations.
We could also be subject to litigation from persons or corporations allegedly affected by violations of these laws.
−Removed: It is also possible we could be subject to a Security Incident, which in addition to potential losses from fraudulent wire transfers, are costly to investigate and remediate and could result in a violation of data privacy and consumer protection laws (in addition to data security laws).
−Removed: Any violation of these laws or harm to our reputation could have a material adverse effect on our business, financial condition, reputation, or results of operations and prospects.
+Added: Any violation of these laws or harm to our reputation could have a material adverse effect to our business, financial condition, reputation, or results of operations and prospects.
2024 FORM 10-K | 32
2 unchanged sentences
Governmental policies affecting the energy industry, such as taxes, tariffs, duties, price controls, subsidies, incentives, foreign exchange rates, economic sanctions and import and export restrictions, can influence the viability and volume of production of certain commodities, the volume and types of imports and exports, whether unprocessed or processed commodity products are traded, and industry profitability.
−Removed: For example, the decision of the U.S.
−Removed: government to impose tariffs on certain Chinese imports and the resulting retaliation by the Chinese government imposing a 25 percent tariff on U.S.
−Removed: liquefied natural gas have disrupted aspects of the energy market.
Disruptions of this sort can affect the price of oil and natural gas and may cause our customers to change their plans for exploration and production levels, in turn reducing the demand for our services.
19 unchanged sentences
Our ownership and use of proprietary technology and equipment could also result in infringement of intellectual property claims against us.
−Removed: See above “— Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold ." The Company also owns and operates a large fleet of motor vehicles, which creates an increased exposure to motor vehicle accidents.
+Added: See above “ —Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold.
+Added: ." The Company also owns and operates a large fleet of motor vehicles, which creates an increased exposure to motor vehicle accidents.
Also, we may be subject, and have been subject in the past, to litigation resulting from accidents involving motor vehicles.
17 unchanged sentences
An ownership change generally occurs if one or more shareholders (or groups of shareholders) that are each deemed to own at least 5 percent of our stock change their ownership by more than 50 percentage points over their lowest ownership percentage during a rolling three-year period.
−Removed: As of September 30, 2023, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes were not subject to an annual limitation (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017).
+Added: As of September 30, 2024, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes was not subject to an annual limitation (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017).
However, if we were to experience ownership changes in the future as a result of subsequent shifts in our stock ownership, our ability to use certain pre-change tax attributes could potentially accelerate or permanently increase our future tax liabilities.
4 unchanged sentences
The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework expected in the near future.
−Removed: We are in the process of evaluating the potential impacts of Pillar Two.
−Removed: While we do not currently expect Pillar Two to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible Pillar Two could have a material adverse effect on our tax liability.
+Added: We have evaluated the potential impacts of Pillar Two and do not believe it will have a material adverse effect on our tax liability.
Our deferred tax liability associated with property, plant and equipment is significant, which could materially increase the amount of cash income taxes that we pay in the future and, thus, adversely affect our cash flows.
16 unchanged sentences
We have paid a quarterly dividend for many years and commencing in fiscal 2023 paid a quarterly supplemental dividend in addition to the established base dividend as part of a supplemental capital allocation plan.
−Removed: The supplemental capital allocation plan is refreshed on an annual basis and the supplemental dividends are proposed and approved on a quarterly basis with record and payment dates that coincide with the base dividends that are also proposed and approved on a quarterly basis.
+Added: On July 25, 2024, we announced that we would suspend our supplemental dividend in fiscal year 2025 as a part of the Acquisition announced July 25, 2024.
Our most recent quarterly base dividend declared was $0.25 per share.
−Removed: Subsequent to September 30, 2023, we also declared a supplemental quarterly dividend of $0.17 per share as part of our fiscal 2024 supplemental shareholder return plan announced in October 2023.
In the future, our Board of Directors may, without advance notice, determine to reduce or suspend our dividends in order to maintain our financial flexibility and best position the Company for long‑term success.
The declaration and amount of future dividends is at the discretion of our Board of Directors and will depend on our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements and other factors and restrictions our Board of Directors deems relevant.
−Removed: The likelihood that dividends will be reduced or suspended is increased during periods of prolonged market weakness or uncertainty, such as the downturn as a result of the COVID-19 pandemic and the oil price collapse in 2020.
+Added: In addition, any elimination of, or downward revision in our dividend payments could have an adverse effect on the market price of our common stock.
+Added: The likelihood that dividends will be reduced or suspended is increased during periods of prolonged market weakness or uncertainty.
In addition, our ability to pay dividends may be limited by agreements governing our indebtedness now or in the future.
35 unchanged sentences
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
+Added: 2024 FORM 10-K | 36
Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock.
2 unchanged sentences
Because we operate within the oil and gas industry, if these efforts continue or expand, our stock price and our ability to raise capital may be negatively impacted.
−Removed: 2023 FORM 10-K | 34
Some members of the investment community have increased their focus on ESG practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, DE&I initiatives, and heightened governance standards.
As a result, we may continue to face pressure regarding our ESG disclosures and practices.
−Removed: See above "— Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks." Additionally, members of the investment community may screen companies such as ours for ESG disclosures and performance before investing in our stock and many large institutional investors have committed to allocating a percentage of their investment products towards ESG investments.
−Removed: With respect to any of these investors, our ESG disclosures and efforts may not satisfy the investor requirements or their requirements may not be made known to us.
+Added: See above "— Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks." Additionally, members of the investment community and ratings agencies may screen companies such as ours for ESG disclosures and performance before investing in or rating our stock or other securities and many large institutional investors have committed to allocating a percentage of their investment products towards ESG investments.
+Added: With respect to any of these investors or ratings agencies, our ESG disclosures and efforts may not satisfy the investor requirements or their requirements may not be made known to us.
If we or our securities are unable to meet the ESG standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us, our cost of capital may increase, and our stock price may be negatively impacted.
−Removed: UNRESOLVED STAFF COMMENTS
−Removed: We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of fiscal year 2023.
+Added: KCA DEUTAG ACQUISITION RELATED RISKS
+Added: We have incurred a substantial amount of additional debt to complete the Acquisition.
+Added: Our debt level may limit our financial and business flexibility.
+Added: We expect to fund the cash purchase price for the Acquisition, as well as the refinancing, prepayment, replacement, redemption, repurchase, discharge and/or defeasance of certain existing indebtedness of KCA Deutag and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, with a combination of cash on hand and through the incurrence of approximately $1.65 billion of new indebtedness, including $1.25 billion aggregate principal amount of senior notes we issued in a private offering completed in September 2024 (collectively, the "Notes") and up to $400.0 million we may borrow under the Term Loan Credit Agreement.
+Added: Subject to the limitations contained in our existing and any future debt instruments, we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisition, or for other purposes.
+Added: If we do so, the risks related to our debt level could increase.
+Added: Our ability to repay all the forgoing obligations will depend on, among other things, our financial position and performance, as well as prevailing market conditions and other factors beyond our control.
+Added: Our increased indebtedness could have important consequences.
+Added: • we may be required to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate matters, including dividend payments and stock repurchases;
+Added: • we may not be able to generate sufficient cash flow to meet our substantial debt service obligations or to fund our other liquidity needs.
+Added: If this occurs, we may have to take actions such as selling assets, selling equity, or reducing or delaying capital expenditures, strategic acquisitions, investments and joint ventures, or restructuring our debt;
+Added: • as a result of the amount of our outstanding indebtedness and the restrictive covenants to which we are or may become subject, if we determine that we require additional financing to fund future working capital, capital investments, or other business activities, we may not be able to obtain such financing on commercially reasonable terms, or at all;
+Added: • our flexibility in planning for, or reacting to, changes in our business and industry may be limited, thereby placing us at a competitive disadvantage compared with our competitors that have less indebtedness.
+Added: 2024 FORM 10-K | 37
+Added: The Acquisition is subject to a number of conditions, which, if not fulfilled, or not fulfilled in a timely manner, may delay or reduce the anticipated benefits of the Acquisition, result in additional expenditures of money and resources, or result in termination of the Purchase Agreement.
+Added: The Purchase Agreement contains a number of conditions to the consummation of the Acquisition.
+Added: We may not be able to consummate the Acquisition on the terms contemplated, or at all, if the applicable regulatory approvals are not obtained and/or other customary closing conditions are not satisfied.
+Added: If any of these conditions are not satisfied or waived prior to October 25, 2025, it is possible that the Purchase Agreement may be terminated.
+Added: Additionally, under certain circumstances, including failure to consummate the Acquisition on or before October 25, 2025 (or such later date as we may agree to extend the “Long Stop Date” under the Purchase Agreement), we will be required to redeem the Notes at a special mandatory redemption price equal to 101% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon.
+Added: Further, satisfying the conditions to and the consummation of the Acquisition may take longer and could cost more than we expect.
+Added: Many of the conditions to the consummation of the Acquisition are not within the parties’ control, and the parties cannot predict when or if these conditions will be satisfied.
+Added: Any delay in completing the Acquisition may adversely affect the cost savings and other benefits that we expect to achieve if the Acquisition and the integration of KCA Deutag’s business are completed within the expected timeframe.
+Added: There can be no assurance that the conditions to the closing of the Acquisition will be satisfied or waived or that the Acquisition will be completed.
+Added: Any difficulties with respect to the consummation of the Acquisition may adversely affect our business, financial condition or results of operations.
+Added: In addition, failure to consummate the Acquisition on the terms contemplated may adversely affect our intended strategy of geographic expansion and may impact management’s focus on such strategy.
+Added: If the Acquisition is consummated, we may be unable to successfully integrate KCA Deutag’s business or achieve the anticipated benefits of the Acquisition, or the anticipated benefits attributable to the Acquisition may vary from our expectations.
+Added: Our ability to achieve the anticipated benefits of the Acquisition will depend in part upon whether we can integrate KCA Deutag's business into our existing business in an efficient and effective manner.
+Added: We may not be able to accomplish this integration process successfully.
+Added: The integration process may be subject to delays or changed circumstances, and we can give no assurance that KCA Deutag’s assets will perform in accordance with our expectations or that our expectations with respect to integration or cost savings as a result of the Acquisition will materialize.
+Added: The success of the Acquisition will depend, in significant part, on the Company’s ability to successfully integrate the acquired business, grow the revenue of the Company and realize the anticipated strategic benefits from the Acquisition.
+Added: Additionally, the integration process may result in the disruption of ongoing business and there could be potential unknown liabilities and unforeseen expenses associated with the Acquisition that were not discovered in the course of performing due diligence.
+Added: The integration may also require significant time and focus from management following the Acquisition which may disrupt the Company’s business and results of operations.
+Added: The Company believes that the addition of KCA Deutag will complement its strategy and provide operational and financial scale.
+Added: This growth and the anticipated benefits of the Acquisition may not be realized fully or at all or may take longer to realize than expected.
+Added: Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or may take longer to achieve than anticipated.
+Added: If the Company is not able to achieve or realize the anticipated benefits expected from the Acquisition within the anticipated timing or at all, its business and operating results may be adversely affected.
+Added: Potential difficulties in realizing the anticipated benefits of the Acquisition include, but are not limited to:
+Added: (i) disruptions of relationships with customers, distributors, suppliers, vendors and other business partners as a result of uncertainty associated with the Acquisition;
+Added: (ii) difficulties integrating KCA Deutag’s operations with our own in a manner that permits us to achieve the full revenue and cost savings anticipated from the transaction;
+Added: (iii) complexities associated with managing a larger and more complex business, including difficulty addressing possible inconsistencies in standards, controls or operational philosophies and the challenge of integrating complex systems, technology, networks and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
+Added: (iv) difficulties integrating personnel, vendors and business partners;
+Added: (v) loss of key employees who are critical to our future operations due to uncertainty about their roles within the Company following the Acquisition or other concerns regarding the Acquisition;
+Added: (vi) potential unknown liabilities and unforeseen expenses;
+Added: (vii) performance shortfalls at one or more of the companies as a result of the diversion of management’s attention to integration efforts;
+Added: and (viii) disruption of, or the loss of momentum in, each company’s ongoing business.
+Added: Moreover, our guidance or projections with respect to the combined company speak only as of the date made and subsequent events, including suspension of rigs or increased operating costs, may cause actual results to be worse than those previously projected.
+Added: Our future success will depend, in part, on our ability to manage our expanded business by, among other things, integrating the assets, operations and personnel of KCA Deutag in an efficient and timely manner, consolidating systems and management controls and successfully integrating relationships with customers, vendors and business partners.
+Added: Failure to successfully manage the combined operations may have an adverse effect on our business, reputation, financial condition and results of operations.
+Added: 2024 FORM 10-K | 38
+Added: Our business relationships may be subject to disruption due to uncertainty associated with the Acquisition, which could have a material adverse effect on our results of operations, cash flows and financial position pending and following the Acquisition.
+Added: Parties with which we do business may experience uncertainty associated with the Acquisition, including with respect to current or future business relationships with us.
+Added: Our business relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider entering into business relationships with parties other than us or KCA Deutag.
+Added: These disruptions could have a material adverse effect on our results of operations, cash flows and financial position, regardless of whether the Acquisition is completed, as well as a material adverse effect on our ability to realize the expected cost savings and other benefits of the Acquisition.
+Added: The risk and adverse effect of any disruption could be exacerbated by a delay in completion of the Acquisition or the termination of the Purchase Agreement.
+Added: Uncertainties associated with the Acquisition may cause a loss of management personnel and other key employees, which could adversely affect our future business and operations.
+Added: We are dependent on the experience and industry knowledge of our officers and other key employees to execute our business plans.
+Added: Our success after the Acquisition will depend in part upon our ability to retain key management personnel and other key employees.
+Added: Current and prospective employees may experience uncertainty about their roles within the combined company or other concerns regarding the timing and completion of the Acquisition or the operations of the combined company following the Acquisition, any of which may have an adverse effect on our ability to retain or attract key management and other key personnel.
+Added: In addition, the loss of key personnel could diminish the anticipated benefits of the Acquisition and the integration of the companies may be more difficult.
+Added: Furthermore, we may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of the companies.
+Added: No assurance can be given that we will be able to retain or attract key management personnel and other key employees of KCA Deutag to the same extent that we have previously been able to retain or attract our own employees.
+Added: Failure to complete the Acquisition could negatively impact our stock price and have a material adverse effect on our results of operations, cash flows and financial position.
+Added: If the Acquisition is not completed for any reason, including as a result of failure to obtain all requisite regulatory approvals, our ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the Acquisition, we would be subject to a number of risks, including the following:
+Added: (i) we may experience negative reactions from the financial markets, including negative impacts on our stock price;
+Added: (ii) we may experience negative reactions from our customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners;
+Added: (iii) we will still be required to pay certain significant costs relating to the Acquisition, such as legal, accounting, consulting, financial advisor and printing fees;
+Added: (iv) matters relating to the Acquisition (including integration planning) requires substantial commitments of time and resources by our management, which may have resulted in the distraction of our management from ongoing business operations and pursuing other opportunities that could have been beneficial to us;
+Added: and (v) litigation related to any failure to complete the Acquisition or related to any enforcement proceeding commenced against us to perform our obligations pursuant to the Purchase Agreement.
+Added: If the Acquisition is not completed, these risks may materialize and they may have a material adverse effect on our results of operations, cash flows, financial position and stock price.
+Added: We will incur significant transaction costs in connection with the Acquisition.
+Added: We have incurred and are expected to continue to incur a number of non-recurring costs associated with the Acquisition, combining the operations of KCA Deutag with ours and realizing the expected benefits of the transaction.
+Added: A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors.
+Added: Some of these costs are payable by us regardless of whether the Acquisition is completed.
+Added: There are also a large number of processes, policies, procedures, operations, technologies and systems that may or must be integrated in connection with the Acquisition and the integration of operations with ours.
+Added: While we have assumed that a certain level of expenses would be incurred in connection with the Acquisition, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.
+Added: Although we expect that the elimination of duplicative costs, as well as the realization of expected benefits related to the integration of KCA Deutag’s assets, should allow us to offset these transaction costs over time, this net benefit may not be achieved in the near term or at all.
+Added: There may also be additional unanticipated significant costs in connection with the Acquisition that we may not recoup.
+Added: These costs and expenses could reduce the realization of efficiencies, strategic benefits and additional income we expect to achieve from the Acquisition.
+Added: 2024 FORM 10-K | 39
+Added: The Acquisition represents an expansion outside of our current geographic regions, and we may encounter new obstacles operating in different geographic regions.
+Added: Our operations have historically focused on North America and the Offshore Gulf of Mexico, and we also have existing operations internationally in Argentina, Bahrain, Colombia, the U.A.E.
+Added: and Australia.
+Added: The Acquisition represents an expansion into Europe and Africa and a broader presence in the Middle East.
+Added: Certain aspects related to operating in these new regions may not be as familiar to us as our current operating regions.
+Added: As a result, we may encounter obstacles that may cause us not to achieve the expected results of the Acquisition.
+Added: These obstacles may include a less familiar geopolitical landscape, new customers with whom we have no established relationship, pressure from local governments to hire local employees, use local suppliers or to direct business to nationalized companies, unfamiliar operating conditions and a distinct regulatory environment.
+Added: Our future success will depend, in part, upon our ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and geographies and associated increased costs and complexity.
+Added: We may also face increased scrutiny from governmental authorities as a result of the increase in the size of our business.
+Added: Additionally, KCA Deutag has significant operations in developing countries and other nations which are high on the Corruptions Perceptions Index published by Transparency International.
+Added: Such operations inherently pose a heightened risk of potential violations of anti-corruption laws, which violations could subject us to civil and criminal penalties or other sanctions, which could have a material adverse impact on our business, financial condition and results of operations.
+Added: Any adverse conditions, regulations or developments related to our expansion into or within these regions may have a negative impact on our business, financial condition and results of operations.
+Added: The pendency of the Acquisition could adversely affect the Company’s business, results of operations and financial condition.
+Added: The pendency of the Acquisition could cause disruptions in the Company’s business, which could have an adverse effect on the Company’s business, results of operations and financial condition.
+Added: In particular, the attention of the Company’s management may be directed towards the Acquisition, including obtaining required approvals and other transaction-related considerations and may be diverted from the day-to-day business operations of the Company and matters related to the Acquisition may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to the Company.
+Added: Any of these matters could adversely affect the businesses of, or harm the results of operations, financial condition or cash flows of the Company before and even after the Acquisition is consummated.
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.