Helmerich & Payne, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE Management’s Report on Internal Control over Financial Reporting 63 Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 00042) 64 Consolidated Financial Statements: Consolidated Balance Sheets at September 30, 2024 and 2023 67 Consolidated Statements of Operations for the Years Ended September 30, 2024 , 2023 and 2022 68 Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2024 , 2023 and 2022 69 Consolidated Statements of Shareholders’ Equity for the Years Ended September 30, 2024 , 2023 and 2022 70 Consolidated Statements of Cash Flows for the Years Ended September 30, 2024 , 2023 and 2022 71 Notes to Consolidated Financial Statements 73 2024 FORM 10-K | 62 Table of Contents Management’s Report on Internal Control over Financial Reporting Management of Helmerich & Payne, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a‑15(f) or 15d‑15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting was designed under the supervision of the Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and the Board of Directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024. In making this assessment, management used the criteria established in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria in Internal Control-Integrated Framework (2013) , management has concluded that the Company maintained effective internal control over financial reporting as of September 30, 2024. Ernst & Young LLP , the independent registered public accounting firm that also audited the Company's consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024, as stated in their report which appears herein. Helmerich & Payne, Inc. by /s/ John W. Lindsay /s/ J. Kevin Vann John W. Lindsay Director, President and Chief Executive Officer J. Kevin Vann Senior Vice President and Chief Financial Officer November 13, 2024 November 13, 2024 2024 FORM 10-K | 63 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Helmerich & Payne, Inc. Opinion on Internal Control over Financial Reporting We have audited Helmerich & Payne, Inc.’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Helmerich & Payne, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes and our report dated November 13, 2024 expressed an unqualified opinion thereon. We have audited Helmerich & Payne, Inc.’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Helmerich & Payne, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria.. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tulsa, Oklahoma November 13, 2024 2024 FORM 10-K | 64 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Helmerich & Payne, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Helmerich & Payne, Inc. (the Company) as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 13, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Self-Insurance Accruals Description of the Matter The Company's liability for self-insured risks for workers’ compensation and other casualty claims was $76.3 million at September 30, 2024. As described in Note 2 to the consolidated financial statements, this liability is based on a third-party actuarial analysis and includes an estimate for incurred but not reported claims. The actuarial analysis considers a variety of factors, including third-party adjusters’ estimates, historical experience, and statistical methods commonly used within the insurance industry. Auditing the Company's liability for self-insured risks for worker’s compensation and other casualty claims is complex and required us to use our actuarial specialists due to the measurement uncertainty associated with the estimate, management’s application of significant judgment, and the use of various actuarial methods. 2024 FORM 10-K | 65 Table of Contents How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of the Company’s controls over the workers’ compensation and other casualty claims accrual process, including management’s review controls over the significant assumptions used in the calculation and the completeness and accuracy of the data underlying the reserve. To test the liability for self-insured risks for workers’ compensation and other casualty claims, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data provided to management’s actuary and obtaining legal confirmation letters to evaluate the reserves recorded on significant litigated matters. Additionally, we involved our actuarial specialists to assist in our evaluation of the methodologies applied by management’s actuary in establishing the actuarially determined reserve. We compared the Company’s estimates to ranges of estimates independently developed by our actuarial specialists. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1994. Tulsa, Oklahoma November 13, 2024 2024 FORM 10-K | 66 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED BALANCE SHEETS September 30, (in thousands except share data and per share amounts) 2024 2023 ASSETS Current Assets: Cash and cash equivalents $ 217,341 $ 257,174 Restricted cash 68,902 59,064 Short-term investments 292,919 93,600 Accounts receivable, net of allowance of $ 2,977 and $ 2,688 , respectively 418,604 404,188 Inventories of materials and supplies, net 117,884 94,227 Prepaid expenses and other, net 76,419 97,727 Assets held-for-sale — 645 Total current assets 1,192,069 1,006,625 Investments, net 100,567 264,947 Property, plant and equipment, net 3,016,277 2,921,695 Other Noncurrent Assets: Goodwill 45,653 45,653 Intangible assets, net 54,147 60,575 Operating lease right-of-use assets 67,076 50,400 Restricted cash 1,242,417 — Other assets, net 63,692 32,061 Total other noncurrent assets 1,472,985 188,689 Total assets $ 5,781,898 $ 4,381,956 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 135,084 $ 130,852 Dividends payable 25,024 25,194 Accrued liabilities 286,841 262,885 Total current liabilities 446,949 418,931 Noncurrent Liabilities: Long-term debt, net 1,782,182 545,144 Deferred income taxes 495,481 517,809 Other 140,134 128,129 Total noncurrent liabilities 2,417,797 1,191,082 Commitments and Contingencies (Note 16) Shareholders' Equity: Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of September 30, 2024 and 2023, and 98,755,412 and 99,426,526 shares outstanding as of September 30, 2024 and 2023, respectively 11,222 11,222 Preferred stock, no par value, 1,000,000 shares authorized, no shares issued — — Additional paid-in capital 518,083 525,369 Retained earnings 2,883,590 2,707,715 Accumulated other comprehensive loss ( 6,350 ) ( 7,981 ) Treasury stock, at cost, 13,467,453 shares and 12,796,339 shares as of September 30, 2024 and 2023, respectively ( 489,393 ) ( 464,382 ) Total shareholders’ equity 2,917,152 2,771,943 Total liabilities and shareholders' equity $ 5,781,898 $ 4,381,956 The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 67 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended September 30, (in thousands, except per share amounts) 2024 2023 2022 OPERATING REVENUES Drilling services $ 2,746,128 $ 2,862,677 $ 2,049,841 Other 10,479 9,744 9,103 2,756,607 2,872,421 2,058,944 OPERATING COSTS AND EXPENSES Drilling services operating expenses, excluding depreciation and amortization 1,630,225 1,715,098 1,426,589 Other operating expenses 4,483 4,477 4,638 Depreciation and amortization 397,344 382,314 403,170 Research and development 40,967 30,046 26,563 Selling, general and administrative 244,877 206,657 182,366 Asset impairment charges — 12,097 4,363 Restructuring charges — — 838 Acquisition transaction costs 14,982 — — Gain on reimbursement of drilling equipment ( 33,309 ) ( 48,173 ) ( 29,443 ) Other (gain) loss on sale of assets 5,139 8,016 ( 5,432 ) 2,304,708 2,310,532 2,013,652 OPERATING INCOME 451,899 561,889 45,292 Other income (expense) Interest and dividend income 41,168 28,393 18,090 Interest expense ( 29,093 ) ( 17,283 ) ( 19,203 ) Gain on investment securities 13,953 11,299 57,937 Loss on extinguishment of debt — — ( 60,083 ) Other 3,093 9,081 ( 10,714 ) 29,121 31,490 ( 13,973 ) Income before income taxes 481,020 593,379 31,319 Income tax expense 136,855 159,279 24,366 NET INCOME $ 344,165 $ 434,100 $ 6,953 Basic earnings per common share $ 3.43 $ 4.18 $ 0.05 Diluted earnings per common share $ 3.43 $ 4.16 $ 0.05 Weighted average shares outstanding: Basic 98,857 102,447 105,891 Diluted 99,067 102,852 106,555 The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 68 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year ended September 30, (in thousands) 2024 2023 2022 Net income $ 344,165 $ 434,100 $ 6,953 Other comprehensive income, net of income taxes: Net change related to employee benefit plans, net of income taxes of $ 0.6 million, $ 1.2 million, and $ 2.3 million at September 30, 2024, 2023, and 2022, respectively. 2,143 4,091 8,172 Unrealized loss on available-for-sale debt security, net of income taxes of $ 0.2 million at September 30, 2024 ( 512 ) — — Other comprehensive income 1,631 4,091 8,172 Comprehensive income $ 345,796 $ 438,191 $ 15,125 The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 69 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock (in thousands, except per share amounts) Shares Amount Shares Amount Total Balance at September 30, 2021 112,222 $ 11,222 $ 529,903 $ 2,573,375 $ ( 20,244 ) 4,324 $ ( 181,638 ) $ 2,912,618 Comprehensive income: Net income — — — 6,953 — — — 6,953 Other comprehensive income — — — — 8,172 — — 8,172 Dividends declared ($ 1.00 per share) — — — ( 106,756 ) — — — ( 106,756 ) Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 28,608 ) — — ( 550 ) 23,109 ( 5,499 ) Stock-based compensation — — 28,032 — — — — 28,032 Share repurchases — — — — — 3,155 ( 76,999 ) ( 76,999 ) Other — — ( 1,049 ) — — — — ( 1,049 ) Balance at September 30, 2022 112,222 $ 11,222 $ 528,278 $ 2,473,572 $ ( 12,072 ) 6,929 $ ( 235,528 ) $ 2,765,472 Comprehensive income: Net income — — — 434,100 — — — 434,100 Other comprehensive income — — — — 4,091 — — 4,091 Dividends declared ($ 1.00 base per share, $ 0.94 supplemental per share) — — — ( 199,957 ) — — — ( 199,957 ) Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 34,545 ) — — ( 678 ) 20,135 ( 14,410 ) Stock-based compensation — — 32,456 — — — — 32,456 Share repurchases — — — — — 6,545 ( 248,989 ) ( 248,989 ) Other — — ( 820 ) — — — — ( 820 ) Balance at September 30, 2023 112,222 $ 11,222 $ 525,369 $ 2,707,715 $ ( 7,981 ) 12,796 $ ( 464,382 ) $ 2,771,943 Comprehensive income: Net income — — — 344,165 — — — 344,165 Other comprehensive income — — — — 1,631 — — 1,631 Dividends declared ($ 1.00 base per share, $ 0.68 supplemental per share) — — — ( 168,290 ) — — — ( 168,290 ) Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 38,797 ) — — ( 729 ) 26,620 ( 12,177 ) Stock-based compensation — — 31,198 — — — — 31,198 Share repurchases — — — — — 1,400 ( 51,631 ) ( 51,631 ) Other — — 313 — — — — 313 Balance at September 30, 2024 112,222 $ 11,222 $ 518,083 $ 2,883,590 $ ( 6,350 ) 13,467 $ ( 489,393 ) $ 2,917,152 The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 70 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended September 30, (in thousands) 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 344,165 $ 434,100 $ 6,953 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 397,344 382,314 403,170 Asset impairment charges — 12,097 4,363 Amortization of debt discount and debt issuance costs 10,560 1,079 1,200 Loss on extinguishment of debt — — 60,083 Stock-based compensation 31,198 32,456 28,032 Gain on investment securities ( 13,953 ) ( 11,299 ) ( 57,937 ) Gain on reimbursement of drilling equipment ( 33,309 ) ( 48,173 ) ( 29,443 ) Other (gain) loss on sale of assets 5,139 8,016 ( 5,432 ) Deferred income tax benefit ( 23,191 ) ( 20,400 ) ( 28,488 ) Other 5,132 8,979 7,140 Change in assets and liabilities: Accounts receivable ( 10,744 ) 56,281 ( 235,562 ) Inventories of materials and supplies ( 20,764 ) ( 7,826 ) ( 5,228 ) Prepaid expenses and other 3,370 ( 1,803 ) 6,224 Other noncurrent assets ( 20,740 ) ( 11,135 ) 2,581 Accounts payable ( 2,291 ) 4,237 53,242 Accrued liabilities 16,798 ( 10,139 ) 45,069 Other noncurrent liabilities ( 4,051 ) 4,898 ( 22,054 ) Net cash provided by operating activities 684,663 833,682 233,913 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 495,072 ) ( 395,460 ) ( 250,894 ) Other capital expenditures related to assets held-for-sale — — ( 21,645 ) Purchase of short-term investments ( 200,653 ) ( 180,993 ) ( 165,109 ) Purchase of long-term investments ( 9,120 ) ( 20,748 ) ( 51,241 ) Proceeds from sale of short-term investments 204,152 195,311 244,728 Proceeds from sale of long-term investments — — 22,042 Proceeds from asset sales 46,412 70,085 62,304 Insurance proceeds from involuntary conversion 5,533 9,221 — Other ( 10,000 ) — ( 7,500 ) Net cash used in investing activities ( 458,748 ) ( 322,584 ) ( 167,315 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid ( 168,459 ) ( 201,456 ) ( 107,395 ) Proceeds from debt issuance 1,247,629 — — Debt issuance costs ( 22,934 ) — — Payments for employee taxes on net settlement of equity awards ( 12,177 ) ( 14,410 ) ( 5,505 ) Payment of contingent consideration from acquisition of business ( 6,250 ) ( 250 ) ( 250 ) Payments for early extinguishment of long-term debt — — ( 487,148 ) Make-whole premium payment — — ( 56,421 ) Share repurchases ( 51,302 ) ( 247,213 ) ( 76,999 ) Other — ( 540 ) ( 587 ) Net cash provided by (used in) financing activities 986,507 ( 463,869 ) ( 734,305 ) Net increase (decrease) in cash and cash equivalents and restricted cash 1,212,422 47,229 ( 667,707 ) Cash and cash equivalents and restricted cash, beginning of period 316,238 269,009 936,716 Cash and cash equivalents and restricted cash, end of period $ 1,528,660 $ 316,238 $ 269,009 The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 71 Table of Contents HELMERICH & PAYNE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Year Ended September 30, (in thousands) 2024 2023 2022 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period: Interest paid $ 15,947 $ 17,099 $ 18,909 Income tax paid 181,349 199,139 17,731 Income tax received ( 1,224 ) ( 26,809 ) ( 62 ) Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases 13,260 12,441 11,233 Non-cash operating and investing activities: Changes in accounts payable and accrued liabilities related to purchases of property, plant and equipment ( 20,454 ) ( 2,554 ) ( 2,425 ) The accompanying notes are an integral part of these consolidated financial statements. 2024 FORM 10-K | 72 Table of Contents HELMERICH & PAYNE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 NATURE OF OPERATIONS H&P through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, International Solutions and Offshore Gulf of Mexico. Our real estate operations and our wholly-owned captive insurance companies are included in "Other." Refer to Note 17—Business Segments and Geographic Information for further details on our reportable segments. Our North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Such states include: Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia, and Wyoming. Our International Solutions operations have rigs and/or services primarily located in five international locations: Argentina, Australia, Bahrain, Colombia and the U.A.E. Additionally, we commenced operations in Saudi Arabia in the first quarter of fiscal 2025. Our Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S. federal waters in the Gulf of Mexico. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center and undeveloped real estate. Pending KCA Deutag Acquisition On July 25, 2024, H&P and certain of its wholly owned subsidiaries entered into the Purchase Agreement to acquire KCA Deutag for total cash consideration of approximately $ 2.0 billion, which consists of the $ 0.9 billion unadjusted share purchase price and $ 1.1 billion to contemporaneously repay or redeem certain of KCA Deutag's existing debt upon consummation of the Acquisition. Total consideration is subject to adjustment as set forth in the Purchase Agreement. The transaction is expected to close prior to calendar 2024 year end, subject to customary closing conditions and regulatory approvals. KCA Deutag is a diverse global drilling company. The company has a significant land drilling presence in the Middle East, which represents approximately two-thirds of the company’s calendar year 2023 Operating EBITDA, with additional operations in South America, Europe and Africa. In addition to its land operations, KCA Deutag has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada, with super major customers and long-term earnings visibility through a robust backlog. KCA Deutag’s Kenera segment comprises manufacturing and engineering businesses, including Bentec, with three facilities serving the energy industry, representing a longer-term growth opportunity. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RELATED RISKS AND UNCERTAINTIES Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The Consolidated Financial Statements include the accounts of H&P and its domestic and foreign subsidiaries. Consolidation of a subsidiary begins when the Company gains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income, expenses and other comprehensive income or loss of a subsidiary acquired or disposed of during the fiscal year are included in the Consolidated Statements of Operations and Comprehensive Income from the date the Company gains control until the date when the Company ceases to control the subsidiary. All intercompany accounts and transactions have been eliminated upon consolidation. Foreign Currencies Our functional currency, together with all our foreign subsidiaries, is the U.S. dollar. Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated at exchange rates in effect at the end of the period, and the resulting gains and losses are recorded on our Consolidated Statements of Operations. Aggregate foreign currency losses of $ 5.5 million, $ 6.4 million and $ 5.9 million in fiscal years 2024, 2023 and 2022, respectively, are included in Drilling services operating expenses. 2024 FORM 10-K | 73 Table of Contents Use of Estimates The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits. We had restricted cash of $ 1.3 billion and $ 59.1 million at September 30, 2024 and 2023, respectively. Of the total at September 30, 2024, $ 1.2 billion represents net proceeds from senior notes issued in fiscal year 2024 to finance the purchase price for the Acquisition and to repay certain of KCA Deutag's outstanding indebtedness, and $ 68.9 million represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies. Of the total at September 30, 2023, $ 58.4 million, represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies. The restricted amounts are primarily invested in short-term money market As of September 30, 2024, $ 1.2 billion of restricted cash was classified as long-term. As noted above, this balance primarily represents net proceeds from senior notes issued in fiscal year 2024 to finance the purchase price for the Acquisition and to repay certain of KCA Deutag's outstanding indebtedness. We have applied the guidance in ASC 210-10, concluding that cash restricted for expenditure in the acquisition of noncurrent assets or the liquidation of long-term debts are to be classified as long-term. Cash, cash equivalents, and restricted cash are reflected on the Consolidated Balance Sheets as follows: September 30, (in thousands) 2024 2023 2022 Cash and cash equivalents $ 217,341 $ 257,174 $ 232,131 Restricted cash 68,902 59,064 36,246 Restricted cash - long-term: Restricted cash 1,242,417 — — Other assets, net — — 632 Total cash, cash equivalents, and restricted cash $ 1,528,660 $ 316,238 $ 269,009 Accounts Receivable Accounts receivable represents valid claims against our customers for our services rendered, net of allowances for credit losses. We perform credit evaluations of customers and do not typically require collateral in support for trade receivables. We provide an allowance for credit losses, when necessary, to cover estimated credit losses. Outstanding customer receivables are reviewed regularly for possible nonpayment indicators. We estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable, through a review of several factors, including historical collection experience, current aging status of the customer accounts, and current financial strength and liquidity of our customers. We evaluate our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports. Inventories of Materials and Supplies Inventories are primarily replacement parts and supplies held for consumption in our drilling operations. Inventories are valued at weighted average cost and include the cost of materials, shipping, duties and labor, less an allowance for excess and obsolete items. We estimate the allowance for excess and obsolete items based on historical experience and expectations for future use of the materials and supplies. The allowance for excess and obsolete inventory was $ 19.5 million and $ 22.4 million for fiscal years 2024 and 2023, respectively. 2024 FORM 10-K | 74 Table of Contents Investments We maintain strategic investments in equity and debt securities of certain publicly traded and private companies together with short-term investments to manage liquidity in U.S. government, federal agency and corporate debt securities. We recognize our equity securities that have readily determinable fair values at fair value, with changes in such values reflected in net income. Our equity securities without readily determinable fair values are measured at cost, less any impairments and marked to fair value once observable changes in identical or similar investments from the same issuer occur. Debt securities classified as available-for-sale are reported at fair value and subject to impairment testing. Impairment losses on available-for-sale debt securities due to credit related factors are recognized through net income and recorded within Gain on investment securities on our Consolidated Statements of Operations. During the year ended September 30, 2024, we recorded an allowance for credit loss of $ 10.2 million, as a result of the change in fair value of our investment in Galileo due to credit related factors. Refer to Note 13—Fair Value Measurement of Financial Instruments for additional information related to Galileo investment. Other than credit related impairment losses, unrealized gains/losses on available-for-sale debt securities are recognized, net of the related tax effect, in other comprehensive income. Upon sale, realized gains/losses are reported in net income. Related Party Transactions In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources Limited ("Tamboran Resources"). In December 2023, all shares of Tamboran Resources were transferred to Tamboran Corp. in exchange for depository interests in Tamboran Corp. Depository interests, referred to as CHESS Depository Interests, each representing beneficial interests of 1/200th of a share of Tamboran Corp. common stock, are listed on the Australian Stock Exchange under the ticker symbol "TBN." Tamboran Corp. is focused on developing a natural gas resource in Australia's Beetaloo Sub-basin. On June 4, 2024, the Company entered into a convertible note agreement with Tamboran Corp. This note was utilized to relieve Tamboran's outstanding accounts receivable balance owed to the Company, and therefore no cash was exchanged as part of the transaction. The convertible note agreement provided that the notes converted into shares of common stock of Tamboran Corp. under certain circumstances in connection with an initial public offering in which its stock was listed on the NYSE or NASDAQ Stock Exchange. On June 26, 2024, Tamboran Corp. completed an initial public offering of its common stock on the NYSE and its common stock is listed on the NYSE, under the ticker "TBN". As a result of this offering, the convertible note of $ 9.4 million was converted into 0.5 million common shares in Tamboran Corp. Additionally and separately, one of our executive officers serves as a director of Tamboran Corp. Refer to Note 13—Fair Value Measurement of Financial Instruments for additional information related to our investment. Concurrent with the October 2022 investment agreement, we entered into a fixed-term drilling services agreement with Tamboran Resources. As of September 30, 2024, we recorded $ 5.0 million in receivables and $ 3.9 million as a contract liability on our Consolidated Balance Sheets. As of September 30, 2023, we recorded $ 2.8 million in receivables, $ 8.0 million in other assets, and $ 6.6 million as a contract liability on our Consolidated Balance Sheets. We recorded $ 14.1 million and $ 3.4 million in revenue on our Consolidated Statement of Operations during the fiscal years ending September 30, 2024 and 2023, respectively, related to the drilling services agreement with Tamboran Resources, which commenced drilling services during the fourth fiscal quarter of 2023. We expect to earn $ 30.0 million in revenue over the term of the contract, and, as such, this amount is included within our contract backlog as of September 30, 2024. Property, Plant, and Equipment Property, plant and equipment are carried at cost less accumulated depreciation. Substantially all property, plant and equipment are depreciated using the straight-line method based on the estimated useful lives of the assets after deducting their salvage values. The amount of depreciation expense we record is dependent upon certain assumptions, including an asset’s estimated useful life, rate of consumption, and corresponding salvage value. We periodically review these assumptions and may change one or more of these assumptions. Changes in our assumptions may require us to recognize, on a prospective basis, increased or decreased depreciation expense. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Changes that could prompt such an assessment include a significant decline in revenue or cash margin per day, extended periods of low rig asset group utilization, changes in market demand for a specific asset, obsolescence, restructuring of our drilling fleet, and/or overall general market conditions. If the review of the long-lived assets indicates that the carrying value of these assets/asset groups is more than the estimated undiscounted future cash flows projected to be realized from the use of the asset and its eventual disposal an impairment charge is recognized, as required, to adjust the carrying value down to the estimated fair value of the asset. The estimated fair value is determined based upon either an income approach using estimated discounted future cash flows, a market approach considering factors such as recent market sales of rigs of other companies and our own sales of rigs, appraisals and other factors, a cost approach utilizing reproduction costs new as adjusted for the asset age and condition, and/or a combination of multiple approaches. 2024 FORM 10-K | 75 Table of Contents Cash flows are estimated by management considering factors such as prospective market demand, margins, recent changes in rig technology and its effect on each rig’s marketability, any investment required to make a rig operational, suitability of rig size and make up to existing platforms, and competitive dynamics including industry utilization. Long-lived assets that are held for sale are recorded at the lower of carrying value or the fair value less costs to sell. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combinat ion, at the date of acquisition. Goodwill is not amortized, but is tested for potential impairment at the reporting unit level at a minimum on an annual basis in the fourth fiscal quarter of each fiscal year or when it is more likely than not that the carrying value may exceed fair value. If an impairment is determined to exist, an impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value is recognized, limited to the total amount of goodwill allocated to that reporting unit. The reporting unit level is defined as an operating segment or one level below an operating segment. Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows, generally estimated to be 5 to 20 years, and are evaluated for impairment in accordance with our policies for valuation of long-lived assets. Drilling Revenues Drilling services revenues are primarily comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured. For certain contracts, we receive payments contractually designated for the mobilization of rigs and other drilling equipment. Revenues associated with mobilization and demobilization and direct costs incurred for the mobilization, are deferred and recognized on a straight-line basis as the drilling service is provided. Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred. Reimbursements received for out-of-pocket expenses are recorded as both revenues and direct costs. Reimbursements for fiscal years 2024, 2023 and 2022 were $ 334.6 million, $ 345.5 million and $ 263.1 million, respectively. For fixed-term contracts that are terminated by customers prior to the expirations, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. Early termination revenue for fiscal years 2024, 2023 and 2022 was approximately $ 13.4 million, $ 2.3 million and $ 0.7 million, respectively. Income Taxes Current income tax expense is the amount of income taxes expected to be payable for the current fiscal year. Deferred income taxes are computed using the liability method and are provided on all temporary differences between the financial basis and the tax basis of our assets and liabilities. We take tax positions in our tax returns from time to time that may not ultimately be allowed by the relevant taxing authority. When we take such positions, we evaluate the likelihood of sustaining those positions and determine the amount of tax benefit arising from such positions, if any, that should be recognized in our financial statements. We recognize uncertain tax positions we believe have a greater than 50 percent likelihood of being sustained. Tax benefits not recognized by us are recorded as a liability for unrecognized tax benefits, which represents our potential future obligation to various taxing authorities if the tax positions are not sustained. See Note 7—Income Taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. We recognize accrued interest related to unrecognized tax benefits in interest expense and penalties in other expense in the Consolidated Statements of Operations. Earnings per Common Share Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for nonvested restricted stock and performance share units. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under Accounting Standards Codification ("ASC") 260, Earnings Per Share . As such, we have included these grants in the calculation of our basic earnings per share. Stock-Based Compensation Stock-based compensation expense is determined using a fair-value-based measurement method for all awards granted. The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date. The grant date fair value of performance share units is determined through the use of the Monte Carlo simulation method. The Monte Carlo simulation method requires the use of highly subjective assumptions. Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined peer group of companies’ (the "Peer Group") stock, risk free rate of return, dividend yields and cross-correlations between the Company and our Peer Group. 2024 FORM 10-K | 76 Table of Contents Stock-based compensation is recognized on a straight-line basis over the requisite service periods of the stock awards, which is generally the vesting period. Stock-based compensation expense is recorded as a component of drilling services operating expenses, research and development expenses and selling, general and administrative expenses in the Consolidated Statements of Operations. See Note 10—Stock-based Compensation for additional discussion on stock-based compensation. Treasury Stock Treasury stock purchases are accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in capital using the average-cost method. Treasury stock may be issued for awards under our omnibus incentive plans. Comprehensive Income or Loss Other comprehensive income or loss refers to revenues, expenses, gains, and losses that are included in comprehensive income or loss but excluded from net income or loss. We report the components of other comprehensive income or loss, net of tax, by their nature and disclose the tax effect allocated to each component in the Consolidated Statements of Comprehensive Income. Leases We lease various offices, warehouses, equipment and vehicles. Rental contracts are typically made for fixed periods of one to 15 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Leases are recognized as a right-of-use asset and a corresponding liability within accrued liabilities and other non-current liabilities at the date at which the leased asset is available for use by the Company. Operating lease expense is recognized on a straight-line basis over the life of the lease. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis for finance type leases. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable • Variable lease payments that are based on an index or a rate • Amounts expected to be payable by the lessee under residual value guarantees • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, our incremental borrowing rate is used, which is the rate that we would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost and are comprised of the following: • The amount of the initial measurement of lease liability • Any lease payments made at or before the commencement date less any lease incentives received • Any initial direct costs, and • Asset retirement obligations related to that lease, as applicable. Payments associated with short-term leases are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs and is within our control. Refer to Note 4—Leases for additional information regarding our leases. 2024 FORM 10-K | 77 Table of Contents Recently Issued Accounting Updates Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates ("ASUs") to the FASB Accounting Standards Codification ("ASC"). We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable, clarifications of ASUs listed below, immaterial, or already adopted by the Company. The following table provides a brief description of recently adopted accounting pronouncements and our analysis of the effects on our financial statements: Standard Description Date of Adoption Effect on the Financial Statements or Other Significant Matters Standards that are not yet adopted as of September 30, 2024 ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update enhance annual and interim disclosure requirements, determine significant segment expense, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. This update is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendments is permitted. Upon adoption, the amendments shall be applied retrospectively to all prior periods presented in the financial statements. October 1, 2024 We plan to adopt this ASU, as required, during fiscal year 2025, with the first disclosure enhancements reflected in our 2025 fiscal year Form 10-K. We are currently evaluating the impact this ASU will have on our disclosures. ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures This ASU enhances income tax disclosure requirements. Under the ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). Specific categories that must be included in the reconciliation for each annual reporting period are specified in the amendment. This update is effective for annual periods beginning after December 15, 2024. Early adoption of the amendments is permitted. Upon adoption, the amendments shall be applied on a prospective basis. Retrospective application is permitted. October 1, 2025 We plan to adopt this ASU, as required, during fiscal year 2026, with the first disclosure enhancements reflected in our 2026 fiscal year Form 10-K. We are currently evaluating the impact this ASU will have on our disclosures. Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of temporary cash investments, short and long-term investments, and trade receivables. The industry concentration has the potential to impact our overall exposure to market and credit risks, either positively or negatively, in that our customers could be affected by similar changes in economic, industry or other conditions. However, we believe that the credit risk posed by this industry concentration is offset by the creditworthiness of our customer base. Revenue from drilling services performed for our largest drilling customer totaled approximately 11.0 percent ($ 302.6 million) of our total consolidated revenues during fiscal year 2024. In fiscal years 2023 and 2022, no individual customers constituted 10 percent or more of our total consolidated revenues. We place cash in excess of our immediate needs in the United States with established financial institutions and primarily invest in a diversified portfolio of highly rated, short-term instruments. Our trade receivables, primarily with established companies in the oil and gas industry, may impact credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions. International sales also present various risks including governmental activities that may limit or disrupt markets and restrict the movement of funds. Most of our international sales, however, are to large international, majority state-owned, or government-owned national oil companies. 2024 FORM 10-K | 78 Table of Contents Volatility of Market Our operations can be materially affected by oil and gas prices. Oil and natural gas prices have been historically volatile and difficult to predict with any degree of certainty. While current energy prices are important contributors to positive cash flow for customers, expectations about future prices and price volatility are generally more important for determining a customer’s future spending levels. This volatility, along with the difficulty in predicting future prices, can lead many exploration and production companies to base their capital spending on more conservative estimates of commodity prices. As a result, demand for drilling services is not always purely a function of the movement of commodity prices. In addition, customers may finance their exploration activities through cash flow from operations, the incurrence of debt or the issuance of equity. Any deterioration in the credit and capital markets may cause difficulty for customers to obtain funding for their capital needs. A reduction of cash flow resulting from declines in commodity prices or a reduction of available financing may result in a reduction in customer spending and the demand for our services. This reduction in spending could have a material adverse effect on our operations. Self-Insurance We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability. Generally, deductibles range from $ 1 million to $ 10 million per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States. Insurance is purchased over deductibles to reduce our exposure to catastrophic events. Estimates are recorded for incurred outstanding liabilities for workers’ compensation, general, and automobile liability, including claims that are incurred but not reported. Estimates are based on adjusters’ estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable. Insurance recoveries related to such liabilities are recorded when considered probable. We have also engaged a third-party actuary to perform a review of our casualty losses as well as losses in our captive insurance companies. Nonetheless, insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs. The Company also self-insures employee health plan exposures in excess of employee deductibles. This program is also reviewed at the end of each policy year by a third-party actuary. 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 property programs. Our operating subsidiaries are paying premiums to the Captives, typically on a monthly basis, for the estimated losses based on an external actuarial analysis. These premiums are currently held in a restricted cash account, resulting in a transfer of risk from our operating subsidiaries to the Captives. Direct operating costs consisted primarily of adjustments to accruals for estimated losses of $ 11.4 million, $ 12.5 million, and $ 7.0 million and rig and casualty insurance premiums of $ 37.6 million, $ 39.7 million, and $ 35.6 million during the fiscal years ended September 30, 2024, 2023, and 2022, respectively. These operating costs were recorded within drilling services operating expenses in our Consolidated Statement of Operations. Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2024, 2023, and 2022 amounted to $ 61.2 million, $ 67.4 million, and $ 57.0 million, respectively, which were eliminated upon consolidation. These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the fiscal year ended September 30, 2024, 2023, and 2022 were $ 15.5 million, $ 10.6 million, and $ 11.8 million, respectively. International Solutions Drilling Risks International Solutions drilling operations may significantly contribute to our revenues and net operating income. There can be no assurance that we will be able to successfully conduct such operations, and a failure to do so may have an adverse effect on our financial position, results of operations, and cash flows. Also, the success of our International Solutions operations will be subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, geopolitical developments and tensions, war and uncertainty in oil producing countries, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws. Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations. 2024 FORM 10-K | 79 Table of Contents We have also experienced certain risks specific to our Argentine operations. In Argentina, while our dayrate is denominated in U.S. dollars, we are paid the equivalent in Argentine pesos. The Argentine branch of one of our second-tier subsidiaries remits U.S. dollars to its U.S. parent by converting the Argentine pesos into U.S. dollars through the Argentine Foreign Exchange Market and repatriating the U.S. dollars. Argentina also has a history of implementing currency controls that restrict the conversion and repatriation of U.S. dollars. In September 2020, Argentina implemented additional currency controls in an effort to preserve Argentina's U.S. dollar reserves. As a result of these currency controls, our ability to remit funds from our Argentine subsidiary to its U.S. parent has been limited. In the past, the Argentine government has also instituted price controls on crude oil, diesel and gasoline prices and instituted an exchange rate freeze in connection with those prices. These price controls and an exchange rate freeze could be instituted again in the future. Further, there are additional concerns regarding Argentina's debt burden, notwithstanding Argentina's restructuring deal with international bondholders in August 2020, as Argentina attempts to manage its substantial sovereign debt issues. These concerns could further negatively impact Argentina's economy and adversely affect our Argentine operations. Argentina’s economy is considered highly inflationary, which is defined as cumulative inflation rates exceeding 100 percent in the most recent three-year period based on inflation data published by the respective governments. All of our foreign subsidiaries use the U.S. dollar as the functional currency and local currency monetary assets and liabilities are remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations. We recorded aggregate foreign currency losses of $ 5.5 million, $ 6.4 million, and $ 5.9 million during the fiscal years ended September 30, 2024, 2023, and 2022 respectively. The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip Swaps effectively results in a parallel U.S. dollar exchange rate. During the fiscal year ended 2024 and 2023, we entered into a Blue Chip Swap transaction, which resulted in a $ 7.1 million and $ 12.2 million loss on investment recorded in Gain on investment securities within our Consolidated Statements of Operations, respectively. 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. during 2024 and 2023, respectively. Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities. While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us. Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the fiscal year ended September 30, 2024, approximately 7.2 percent of our operating revenues were generated from international locations compared to 7.5 percent during the fiscal year ended September 30, 2023. During the fiscal year ended September 30, 2024, approximately 76.7 percent of operating revenues from international locations were from operations in South America compared to 85.3 percent during the fiscal year ended September 30, 2023. Substantially all of the South American operating revenues were from Argentina. The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations. NOTE 3 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of September 30, 2024 and 2023 consisted of the following: (in thousands) Estimated Useful Lives September 30, 2024 September 30, 2023 Drilling services equipment 4 - 15 years $ 6,671,975 $ 6,396,612 Tubulars 4 years 552,773 564,032 Real estate properties 10 - 45 years 48,617 47,313 Other 2 - 23 years 460,857 443,366 Construction in progress 1 106,183 97,374 7,840,405 7,548,697 Accumulated depreciation ( 4,824,128 ) ( 4,627,002 ) Property, plant and equipment, net $ 3,016,277 $ 2,921,695 Assets held-for-sale $ — $ 645 (1) Included in construction in progress are costs for projects in progress to upgrade or refurbish certain rigs in our existing fleet. Additionally, we include other advances for capital maintenance purchase-orders that are open/in process. As these various projects are completed, the costs are then classified to their appropriate useful life category. 2024 FORM 10-K | 80 Table of Contents Depreciation Depreciation in the Consolidated Statements of Operations of $ 390.9 million, $ 375.7 million and $ 396.0 million includes abandonments of $ 6.5 million, $ 3.3 million and $ 6.6 million for the fiscal years 2024, 2023 and 2022, respectively. Depreciation expense for the fiscal year 2024 included $ 12.7 million of accelerated depreciation for components on rigs that were scheduled for conversion in fiscal year 2024 compared to $ 2.4 million for fiscal year 2023. These expenses are recorded within Depreciation and amortization on our Consolidated Statements of Operations. 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. The loss of $ 9.2 million was recorded as abandonment expense within Depreciation and amortization in our Consolidated Statement of Operations for the fiscal year ended September 30, 2023 and was offset by an insurance recovery that was also recognized within Depreciation and amortization for the same amount as the loss. During the fiscal year ended September 30, 2023, we collected $ 9.2 million of the total expected insurance proceeds. During the fiscal year ended September 30, 2024, we collected proceeds of $ 5.5 million and recognized a gain on involuntary conversion of the rig of $ 5.5 million. The total insurance proceeds received during the period exceeds the recognized loss and therefore was recognized as a gain within operating income during the year ended September 30, 2024. Impairment Charges Fiscal Year 2024 Activity We did not record any impairment changes during the fiscal year ending September 30, 2024. Fiscal Year 2023 Activity During the fiscal year ended September 30, 2023, our North America Solutions assets that were previously classified as Assets held-for-sale at September 30, 2022 were either sold or written down to scrap value. The aggregate net book value of these remaining assets was $ 3.0 million, which exceeded the estimated scrap value of $ 0.3 million, resulting in a non-cash impairment charge of $ 2.7 million. During the same period, we also identified additional equipment that met the asset held-for-sale criteria and was reclassified to Assets held-for-sale on our 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 fiscal year ended September 30, 2023. These impairment charges are recorded in Asset impairment charges within our North America Solutions segment in our Consolidated Statement of Operations. During the fiscal year ended September 30, 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 Consolidated Balance Sheets. The rigs’ aggregate net book value of $ 8.8 million was written down to the estimated scrap value of $ 0.7 million, which resulted in a non-cash impairment charge of $ 8.1 million within our International Solutions segment and recorded in Asset impairment charges within our Consolidated Statement of Operations during the fiscal year ended September 30, 2023. Fiscal Year 2022 Activity During the fiscal year ended September 30, 2022, we closed on the sale of our trucking and casing running assets for total consideration less costs to sell of $ 6.0 million, in addition to the possibility of future earnout proceeds, resulting in a loss of $ 3.4 million recorded in Other (gain) loss on sale of assets within our Consolidated Statements of Operations. We recognized earnout proceeds associated with the sale of our trucking and casing running assets of $ 0.8 million, $ 1.6 million and $ 1.1 million during the fiscal years ended September 30, 2024, 2023 and 2022, respectively, in Other (gain) loss on sale of assets within our Consolidated Statements of Operations. During the first quarter of fiscal year 2022, we identified two partial rig substructures that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Consolidated Balance Sheets. The combined net book value of the rig substructures of $ 2.0 million were written down to their estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.9 million within our North America Solutions segment and recorded in the Consolidated Statement of Operations for fiscal year ended September 30, 2022. During the second quarter of fiscal year 2022, we completed the sale of these assets, resulting in no gain or loss as a result of the sale. During the same period, we identified two international FlexRig ® drilling rigs located in Colombia that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Consolidated Balance Sheets. In conjunction with establishing a plan to sell the two international FlexRig ® drilling rigs, we recognized a non-cash impairment charge of $ 2.5 million within our International Solutions segment and recorded in the Consolidated Statement of Operations during the fiscal year ended September 30, 2022, as the rigs aggregate net book value of $ 3.4 million exceeded the fair value of the rigs less estimated cost to sell of $ 0.9 million. During the second quarter of fiscal year ended September 30, 2022, we completed the sale of the two international FlexRig ® drilling rigs for total consideration of $ 0.9 million, resulting in no gain or loss as a result of the sale. 2024 FORM 10-K | 81 Table of Contents During the fiscal year ended September 30, 2022, ADNOC Drilling accepted delivery of eight rigs with an aggregate net book value of $ 55.6 million. As a result, we recognized a gain of $ 3.1 million, after incurring $ 27.8 million of selling costs, during the fiscal year ended September 30, 2022 in Other (gain) loss on sale of assets within our Consolidated Statement of Operations. Upon final acceptance of delivery, these rigs were removed from assets classified as held-for-sale as of September 30, 2022. We paid approximately $ 21.6 million in cash charges attributable to selling costs for the eight rigs during fiscal year 2022. The significant assumptions utilized in the valuations of held-for-sale assets were based on our intended method of disposal, historical sales of similar assets, and market quotes and are classified as Level 2 and Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures. Although we believe the assumptions used in our analysis are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion. (Gain)/Loss on Sale of Assets Gain on Reimbursement of Drilling Equipment We recognized a gain of $ 33.3 million, $ 48.2 million, $ 29.4 million in fiscal years 2024, 2023 and 2022, respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe. Gains related to these asset sales are recorded in Gains on reimbursement of drilling equipment within our Consolidated Statements of Operations. Other (Gain)/Loss on Sale of Assets We recognized a (gain)/loss of $ 5.1 million, $ 8.0 million and $( 5.4 ) million in fiscal years 2024, 2023 and 2022, respectively, related to the sale of rig equipment and other capital assets. These amounts are recorded in Other (gain) loss on sale of assets within our Consolidated Statements of Operations. NOTE 4 LEASES Lease Position (in thousands) September 30, 2024 September 30, 2023 Operating lease commitments, including probable extensions 1 $ 104,535 $ 65,970 Discounted using the lessee's incremental borrowing rate $ 77,316 $ 55,894 (Less): short-term leases recognized on a straight-line basis as expense ( 404 ) ( 877 ) (Less): other ( 182 ) ( 207 ) Lease liability recognized $ 76,730 $ 54,810 Of which: Current lease liabilities $ 16,997 $ 13,772 Non-current lease liabilities 59,733 41,038 (1) Our future minimal rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future. Those probable extensions are included in the operating lease liability balance. The recognized right-of-use assets relate to the following types of assets: (in thousands) September 30, 2024 September 30, 2023 Properties $ 66,842 $ 50,080 Equipment 234 318 Other — 2 Total right-of-use assets $ 67,076 $ 50,400 2024 FORM 10-K | 82 Table of Contents Lease Costs The following table presents certain information related to the lease costs for our operating leases: Year ended September 30, (in thousands) 2024 2023 2022 Operating lease cost $ 11,693 $ 11,004 $ 9,687 Short-term lease cost 1,567 1,437 1,546 Total lease cost $ 13,260 $ 12,441 $ 11,233 Lease Terms and Discount Rates The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases: September 30, 2024 September 30, 2023 Weighted average remaining lease term 11.6 7.6 Weighted average discount rate 5.1 % 3.6 % Lease Obligations Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at September 30, 2024 (in thousands) are as follows: Fiscal Year Amount 2025 $ 9,443 2026 8,126 2027 7,646 2028 7,045 2029 6,862 Thereafter 33,910 Total 1 $ 73,032 (1) Our future minimal rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future. Those probable extensions are included in the operating lease liability balance. During the fiscal year ended September 30, 2024, we amended the lease for our Tulsa industrial facility. As part of the amendment, we extended the lease term, now continuing through June 30, 2035 with two five-year renewal options, resulting in an increase of $ 18.1 million to the right-of-use assets and lease liability on our Consolidated Balance Sheet. We recognized one of the five-year renewal options as part of our right-of-use assets and lease liabilities. This contract is accounted for as an operating lease. The future minimum lease payments for the Tulsa industrial facility represent a material portion of the amounts shown in the table above. During the fiscal year ended September 30, 2023, we entered into a lease agreement to relocate our Tulsa corporate headquarters to a new office space. This lease commenced during the fourth fiscal quarter of 2023 and resulted in a $ 17.6 million increase to right-of-use assets and lease liability on our Consolidated Balance Sheets. In addition, we began amortizing the right of use asset over the initial lease term of approximately 12 years. We also have two unpriced five-year extension options that were not recognized as part of the right-of-use asset and lease liability. During the fiscal year ended September 30, 2024, we amended the lease for our Tulsa corporate headquarters, resulting in a $ 5.9 million increase to right-of-use assets and lease liability on our Consolidated Balance Sheets. The additional right of use asset will be amortized over the remaining 11 years of the original lease term. The future minimum lease payments for our corporate headquarters office space represent a material portion of the amounts shown in the table above. 2024 FORM 10-K | 83 Table of Contents NOTE 5 GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in a business combination, at the date of acquisition. Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis in the fourth fiscal quarter, or when indications of potential impairment exist. All of our goodwill is within our North America Solutions reportable segment. During the fiscal years ended September 30, 2024 and 2023, we had no additions or impairments to goodwill. As of September 30, 2024 and September 30, 2023 , the goodwill balance was $ 45.7 million . Intangible Assets Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows and are evaluated for impairment in accordance with our policies for valuation of long-lived assets. Our intangible assets are within our North America Solutions reportable segment and consist of the following: September 30, 2024 September 30, 2023 (in thousands) Weighted Average Estimated Useful Lives Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible asset: Developed technology 15 years $ 89,096 $ 40,047 $ 49,049 $ 89,096 $ 34,092 $ 55,004 Intellectual property 13 years 2,000 662 1,338 2,000 503 1,497 Trade name 20 years 5,865 2,105 3,760 5,865 1,791 4,074 $ 96,961 $ 42,814 $ 54,147 $ 96,961 $ 36,386 $ 60,575 Amortization expense in the Consolidated Statements of Operations was $ 6.4 million for fiscal year 2024, $ 6.6 million for fiscal year 2023 and $ 7.2 million for fiscal year 2022; and is estimated to be $ 6.4 million for fiscal year 2025, and approximately $ 25.6 million for fiscal year 2026 through 2029 . NOTE 6 DEBT We have the following unsecured long-term debt outstanding with maturities shown in the following table: September 30, 2024 September 30, 2023 (in thousands) Face Amount Unamortized Discount and Debt Issuance Cost Book Value Face Amount Unamortized Discount and Debt Issuance Cost Book Value Unsecured senior notes: Due December 1, 2027 $ 350,000 $ ( 2,907 ) $ 347,093 $ — $ — $ — Due December 1, 2029 350,000 ( 3,703 ) 346,297 — — — Due September 29, 2031 550,000 ( 4,262 ) 545,738 550,000 ( 4,856 ) 545,144 Due December 1, 2034 550,000 ( 6,946 ) 543,054 — — — Long-term debt $ 1,800,000 $ ( 17,818 ) $ 1,782,182 $ 550,000 $ ( 4,856 ) $ 545,144 Senior Notes Issued in Fiscal Year 2024 On September 17, 2024, we completed a private offering of $ 1.25 billion aggregate principal amount of the Notes, comprised of the following tranches: $ 350.0 million aggregate principal amount of 4.65 percent senior notes due 2027 issued at a price equal to 99.958 percent of their face value, $ 350.0 million aggregate principal amount of 4.85 percent senior notes due 2029 issued at a price equal to 99.883 percent of their face value and $ 550.0 million aggregate principal amount of 5.50 percent senior notes due 2034 issued at a price equal to 99.670 percent of their face value. The Company intends to use the net proceeds, together with the proceeds of its term loan credit facility (discussed below) and cash on hand, to finance the purchase price for the Acquisition, to repay certain of KCA Deutag’s outstanding indebtedness, and to pay related fees and expenses. The net proceeds reduced the commitments under the Company’s bridge loan facility (discussed below) for purposes of financing the Acquisition. 2024 FORM 10-K | 84 Table of Contents The Notes are subject to a “special mandatory redemption,” which would require the Company to redeem the Notes at a special mandatory redemption price equal to 101.0 percent of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon in the event that (i) the consummation of the Acquisition does not occur on or before October 25, 2025, (or such later date as the Company may agree to extend the "Long Stop Date" under the Purchase Agreement), (ii) the Purchase Agreement is terminated without the consummation of the Acquisition or (iii) if the Company otherwise notifies the trustee of the Notes that it will not pursue the consummation of the Acquisition. In connection with the issuance of the Notes, the Company also entered into a Registration Rights Agreement, dated as of September 17, 2024, with the initial purchasers of the Notes named therein. Under the Registration Rights Agreement, the Company agreed, among other things, to: (i) file a registration statement (the “Exchange Offer Registration Statement”) with the SEC to register an offer to exchange each series of the Notes for freely tradable notes having terms identical in all material respects to each such series of Notes (the “Registered Exchange Offer”); (ii) use commercially reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act not later than the later of (x) the 30th day following the Company’s filing of a Current Report on Form 8-K or an amendment thereto including the financial statements of KCA Deutag and pro forma financial information related to the Company’s acquisition of KCA Deutag required by Items 9.01(a) and 9.01(b) of Form 8-K (the “KCA Deutag Financials Form 8-K”) and (y) June 16, 2025; and (iii) use commercially reasonable efforts to cause the Registered Exchange Offer to be completed not later than the later of (x) the 60th day following the Company’s filing of the KCA Deutag Financials Form 8-K and (y) July 14, 2025 (the “Exchange Offer Closing Deadline”), subject to certain limitations. If, among other events, the Registered Exchange Offer is not completed by the Exchange Offer Closing Deadline, then special additional interest will accrue in an amount equal to 0.25 percent per annum of the principal amount of the Notes, from and including the date on which such default shall occur to but excluding the date on which such default is cured. The indenture governing the Notes contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the Notes also contains customary events of default with respect to the Notes. Senior Notes Extinguished in Fiscal Year 2022 On December 20, 2018, we issued approximately $ 487.1 million in aggregate principal amount of the 4.65 percent senior notes due 2025 (the "2025 Notes"). On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 2025 Notes at a redemption price calculated in accordance with the indenture governing the 2025 Notes, plus accrued and unpaid interest on the 2025 Notes to be redeemed. The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes (discussed below), together with cash on hand. The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021. On October 27, 2021, we redeemed all of the outstanding 2025 Notes. As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on extinguishment of debt on our Consolidated Statements of Operations during the fiscal year ended September 30, 2022. Senior Notes Issued in Fiscal Year 2021 On September 29, 2021, we issued $ 550.0 million aggregate principal amount of the 2.90 percent senior notes due 2031 (the "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 and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022. In June 2022, we settled a registered exchange offer (the “2022 Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes. All of the 2031 Notes were exchanged in the 2022 Registered Exchange Offer. The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes. 2024 FORM 10-K | 85 Table of Contents Term Loan Credit Agreement On August 14, 2024, the Company entered into the Term Loan Credit Agreement, dated as of August 14, 2024, among the Company, MSSF as administrative agent, and the other lenders party thereto. Under the Term Loan Credit Agreement, the Company may obtain unsecured term loans in a single delayed draw in an aggregate principal amount up to $ 400.0 million, which reduced the commitments under the Company's bridge loan facility (discussed below) for purposes of financing the Acquisition. The Term Loan Credit Agreement matures at the two -year anniversary of the funding of the term loans unless earlier terminated pursuant to the terms of the Term Loan Credit Agreement. We expect to use the proceeds from the Term Loan Credit Agreement, together with the net proceeds from the sale of Notes and cash on hand, to finance the purchase price for the Acquisition, to repay certain of KCA Deutag's outstanding indebtedness, and to pay related fees and expenses. The benchmark rate is the SOFR. We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent , or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 1.0 percent to 1.625 percent per annum and zero to 0.625 percent per annum, respectively. Commitment fees for both rates range from 0.10 percent to 0.250 percent per annum. Based on the unsecured debt rating of the Company on September 30, 2024, the spread over SOFR would have been 1.375 percent had borrowings been outstanding under the Term Loan Credit Agreement and commitment fees would have been 0.175 percent. The funding of the term loans had not occurred as of September 30, 2024. Bridge Loan Facility In connection with, and concurrently with the entry into, the Purchase Agreement, the Company entered into a debt commitment letter dated July 25, 2024 with MSSF, pursuant to which MSSF committed, subject to satisfaction of standard conditions, to provide the Company with an unsecured 364 -day bridge loan facility in an aggregate principal amount of approximately $ 2.0 billion (the “Bridge Loan Facility”) the proceeds of which, if drawn, would have been used to fund the Acquisition. In connection with the Bridge Loan Facility, the Company incurred approximately $ 10.6 million in commitment fees during the fiscal year ended September 30, 2024. Due to the execution of the other financing arrangements discussed above, the commitments under the Bridge Loan Facility were reduced to $ 335.3 million as of September 30, 2024. As a result, we recognized approximately $ 9.2 million of commitment fees recorded within Interest expense on the Consolidated Statement of Operations during fiscal year 2024. As of September 30, 2024, approximately $ 1.4 million in commitment fees were deferred and included in Prepaid assets and other, net within the Consolidated Balance Sheet. On October 15, 2024, the remaining commitments under the Bridge Loan Facility were reduced such that there were no remaining commitments available, and the Bridge Loan Facility was automatically terminated in accordance with its terms. Upon termination of the facility, the remaining commitment fees of approximately $ 1.4 million will be recognized in Interest expense during the first fiscal quarter of 2025. Revolving Credit Facility On August 14, 2024, the Company entered into the Amended Credit Facility with the Revolving Credit Agreement Lenders, the issuing lenders party thereto and Wells Fargo, as administrative agent, swing line lender and issuing lender, which amended and restated the Credit Agreement, dated as of November 13, 2018 (as amended through Amendment No. 2 to the Credit Agreement dated as of March 8, 2022, the “Existing Credit Agreement”), among the Company, the lenders party thereto and Wells Fargo, as administrative agent, swing line lender and issuing lender. Under the terms of the Amended Credit Facility, the Company may obtain unsecured revolving loans in an aggregate principal amount not to exceed $ 950.0 million outstanding at any time (the “Revolving Credit Facility”). $ 775.0 million of the revolving commitments under the Amended Credit Facility expire on November 12, 2028 and $ 175.0 million of the revolving commitments mature on November 10, 2027 (the “Stated Maturity Date”), but the Company may request two one -year extensions of the Stated Maturity Date, subject to satisfaction of certain conditions. Commitments under the Amended Credit Facility may be increased by up to $ 100.0 million, subject to the agreement of the Company and new or existing Revolving Credit Agreement Lenders. The proceeds of the loans made under the Amended Credit Facility may be used by the Company for (i) working capital and other general corporate purposes, (ii) for the payment of fees and expenses related to the entering into of the Amended Credit Facility and the other credit documents and (iii) for the refinancing of the extensions of credit under the Existing Credit Agreement. 2024 FORM 10-K | 86 Table of Contents The benchmark rate is the SOFR. We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 0.875 percent to 1.500 percent per annum and zero to 0.50 percent per annum, respectively. Commitment fees for both rates range from 0.075 percent to 0.200 percent per annum. Based on the unsecured debt rating of the Company on September 30, 2024, the spread over SOFR would have been 1.250 percent had borrowings been outstanding under the Amended Credit Facility and commitment fees would have been 0.150 percent. There is a financial covenant in the Amended Credit Facility that requires us to maintain a total funded debt to total capitalization ratio of less than or equal to 55.0 percent. The Amended Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company. As of September 30, 2024, there were no borrowings or letters of credit outstanding, leaving $ 950.0 million available to borrow under the Amended Credit Facility. As of September 30, 2024, we had $ 160.0 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 $ 160.0 million, $ 39.7 million was outstanding as of September 30, 2024. Separately, we had $ 5.0 million in standby letters of credit and bank guarantees outstanding. In total, we had $ 44.7 million outstanding as of September 30, 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 September 30, 2024, we were in compliance with all debt covenants. NOTE 7 INCOME TAXES Income Tax Provision and Rate The components of the provision for income taxes are as follows: Year Ended September 30, (in thousands) 2024 2023 2022 Current: Federal $ 136,110 $ 150,273 $ 40,245 Foreign 7,756 12,883 10,703 State 16,180 16,523 1,906 160,046 179,679 52,854 Deferred: Federal ( 18,785 ) ( 20,337 ) ( 32,382 ) Foreign ( 2,102 ) ( 1,254 ) ( 1,310 ) State ( 2,304 ) 1,191 5,204 ( 23,191 ) ( 20,400 ) ( 28,488 ) Total provision $ 136,855 $ 159,279 $ 24,366 The amounts of domestic and foreign income (loss) before income taxes are as follows: Year Ended September 30, (in thousands) 2024 2023 2022 Domestic $ 433,553 $ 584,891 $ ( 14,411 ) Foreign 47,467 8,488 45,730 $ 481,020 $ 593,379 $ 31,319 2024 FORM 10-K | 87 Table of Contents The reconciliation of our effective income tax rates to the U.S. Federal income tax rate is as follows: Year Ended September 30, 2024 2023 2022 U.S. Federal income tax rate 21.0 % 21.0 % 21.0 % Effect of foreign taxes 1.3 2.1 31.3 State income taxes, net of federal tax benefit 2.2 2.4 21.4 Other impact of foreign operations 1.7 0.2 3.2 Non-deductible meals and entertainment 0.9 0.6 1.0 Equity compensation ( 0.1 ) ( 0.1 ) 9.5 Excess officer's compensation 0.8 0.4 3.7 Foreign derived intangible income — — ( 13.7 ) Other 0.7 0.2 0.4 Effective income tax rate 28.5 % 26.8 % 77.8 % Deferred Taxes Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. Recoverability of any tax assets are evaluated and necessary valuation allowances are provided. The carrying value of the net deferred tax assets is based on management’s judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future. The components of our net deferred tax liabilities are as follows: September 30, (in thousands) 2024 2023 Deferred tax liabilities: Property, plant and equipment $ 534,161 $ 532,827 Marketable securities 18,877 14,626 Other 29,044 27,980 Total deferred tax liabilities 582,082 575,433 Deferred tax assets: Pension reserves 1,477 3,083 Self-insurance reserves 4,619 6,235 Net operating loss, foreign tax credit, and other federal tax credit carryforwards 11,296 6,770 Accrued liabilities 47,838 29,449 Other 33,126 21,647 Total deferred tax assets 98,356 67,184 Valuation allowance ( 11,755 ) ( 9,560 ) Net deferred tax assets 86,601 57,624 Net deferred tax liabilities $ 495,481 $ 517,809 The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement. As of September 30, 2024, we had federal, state and foreign tax net operating loss carryforwards of approximately $ 1.1 million, $ 4.4 million and $ 37.0 million, respectively, and federal and foreign research and development tax credits of approximately $ 0.4 million and $ 1.1 million, respectively, which will expire in fiscal 2025 through 2044 and some of which can be carried forward indefinitely. Certain of these carryforwards are subject to various rules which impose limitations on their utilization. The valuation allowance is primarily attributable to foreign net operating loss carryforwards of $ 5.2 million and equity compensation of $ 6.5 million which more likely than not will not be utilized. 2024 FORM 10-K | 88 Table of Contents Unrecognized Tax Benefits We recognize accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the Consolidated Statements of Operations. As of September 30, 2024, 2023 and 2022, we had accrued interest and penalties of $ 0.6 million, $ 2.9 million and $ 3.0 million, respectively. A reconciliation of the change in our gross unrecognized tax benefits are as follows: (in thousands) 2024 2023 2022 Unrecognized tax benefits at October 1, $ 247 $ 960 $ 1,678 Gross decreases - current period effect of tax positions ( 14 ) ( 534 ) ( 718 ) Gross increases - current period effect of tax positions — 6 — Expiration of statute of limitations for assessments ( 77 ) ( 185 ) — Unrecognized tax benefits at September 30, $ 156 $ 247 $ 960 As of September 30, 2024, we have recorded approximately $ 0.8 million of unrecognized tax benefits, interest, and penalties. We cannot predict with certainty if we will achieve ultimate resolution of any additional uncertain tax positions associated with our U.S. and international operations resulting in any additional material increases or decreases of our unrecognized tax benefits for the next twelve months. Tax Returns We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal years 2020 through 2023 with exception of certain state jurisdictions currently under audit. The tax years remaining open to examination by foreign jurisdictions include 2014 through 2023. NOTE 8 SHAREHOLDERS’ EQUITY The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. The repurchases are made using our cash and cash equivalents or other available sources and are held as treasury shares on our Consolidated Balance Sheets. During the fiscal years ended September 30, 2024 and 2023, we repurchased 1.4 million and 6.5 million common shares at an aggregate cost of $ 51.6 million and $ 249.0 million, including excise tax of $ 0.3 million and $ 1.8 million, respectively. During the fiscal year ended September 30, 2022, we repurchased 3.2 million common shares at an aggregate cost of $ 77.0 million. Repurchased common shares are held as treasury shares. During the year ended September 30, 2024, we declared $ 168.3 million in cash dividends. A cash dividend of $ 0.25 per share was declared on September 11, 2024 for shareholders of record on November 18, 2024, payable on December 2, 2024. As a result, we recorded a Dividend Payable of $ 25.0 million on our Consolidated Balance Sheets as of September 30, 2024. Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss were as follows: September 30, (in thousands) 2024 2023 2022 Pre-tax amounts: Unrealized pension actuarial loss $ ( 7,632 ) $ ( 10,407 ) $ ( 15,703 ) Unrealized loss on available-for-sale debt security ( 662 ) — — $ ( 8,294 ) $ ( 10,407 ) $ ( 15,703 ) After-tax amounts: Unrealized pension actuarial loss $ ( 5,838 ) $ ( 7,981 ) $ ( 12,072 ) Unrealized loss on available-for-sale debt security ( 512 ) — — $ ( 6,350 ) $ ( 7,981 ) $ ( 12,072 ) Fluctuations in pension actuarial gains and losses are primarily due to changes in the discount rate and investment returns related to the defined benefit pension plan. Investments classified as available-for-sale debt securities are reported at fair value with unrealized gains and losses excluded from net income and reported in other comprehensive income (loss). 2024 FORM 10-K | 89 Table of Contents The following is a summary of the changes in accumulated other comprehensive loss, net of tax, for the fiscal year ended September 30, 2024: (in thousands) Unrealized Loss on Available-for-Sale Securities Defined Benefit Pension Plan Total Balance at September 30, 2023 $ — $ ( 7,981 ) $ ( 7,981 ) Activity during the period Other comprehensive loss before reclassifications ( 512 ) — ( 512 ) Amounts reclassified from accumulated other comprehensive income — 2,143 2,143 Net current-period other comprehensive income (loss) ( 512 ) 2,143 1,631 Balance at September 30, 2024 $ ( 512 ) $ ( 5,838 ) $ ( 6,350 ) NOTE 9 REVENUE FROM CONTRACTS WITH CUSTOMERS Drilling Services Revenue The majority of our drilling services are performed on a “daywork” contract basis, under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market. These drilling services, including our technology solutions, represent a series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Because our customers benefit equally throughout the service period and our efforts in providing drilling services are incurred relatively evenly over the period of performance, revenue is recognized over time using a time-based input measure as we provide services to the customer. For any contracts that include a provision for pooled term days at contract inception, followed by the assignment of days to specific rigs throughout the contract term, we have elected, as a practical expedient, to recognize revenue in the amount for which the entity has a right to invoice, as permitted by ASC 606. Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets. These types of contracts are relatively new to the industry and typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers. The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets. Total revenue recognized from performance contracts, including performance bonuses, was $ 1.2 billion, $ 1.2 billion and $ 0.7 billion during the fiscal years ended September 30, 2024, 2023 and 2022, respectively, of which, $ 56.6 million, $ 47.3 million and $ 38.8 million was related to performance bonuses recognized due to the achievement of performance targets during the fiscal years ended September 30, 2024, 2023 and 2022, respectively. Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer. For contracts that are terminated by customers prior to the expirations of their fixed terms, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. During the fiscal years ended September 30, 2024, 2023 and 2022, early termination revenue associated with term contracts was $ 13.4 million, $ 2.3 million and $ 0.7 million, respectively. We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, primarily related to rig move trucking services, for which we incur costs and earn revenues. Many of these costs are variable, or dependent upon the activity that is performed each day under the related contract. Accordingly, reimbursements that we receive for out-of-pocket expenses are recorded as revenues and the out-of-pocket expenses for which they relate are recorded as operating costs during the period to which they relate within the series of distinct time increments. All of our revenues are recognized net of sales taxes, when applicable. With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenue associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service. These revenues are deferred and recognized ratably over the related contract term that drilling services are provided. Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the contract term. The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced or no payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised. 2024 FORM 10-K | 90 Table of Contents On November 12, 2021, we settled a drilling contract dispute related to drilling services provided from fiscal years 2016 through 2019 with YPF S.A. (Argentina) ("YPF"). The settlement required that YPF make a one-time cash payment to H&P in the amount of $ 11.0 million and enter into drilling service contracts for three drilling rigs, each with multi-year terms. In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued disputed amounts. Total revenue recognized as a result of the settlement in the amount of $ 16.4 million is included in Drilling services revenue within the International Solutions segment on our Consolidated Statements of Operations for the fiscal year ended September 30, 2022. Contract Costs Mobilization costs include certain direct costs incurred for mobilization of contracted rigs. These costs relate directly to a contract, enhance resources that will be used in satisfying the future performance obligations, and are expected to be recovered. These costs are capitalized when incurred and recorded as current or noncurrent contract fulfillment cost assets (depending on the length of the initial contract term), and are amortized on a systematic basis consistent with the pattern of the transfer of the goods or services to which the asset relates, which typically includes the initial term of the related drilling contract or a period longer than the initial contract term if management anticipates a customer will renew or extend a contract, which we expect to benefit from the cost of mobilizing the rig. Abnormal mobilization costs are fulfillment costs that are incurred from excessive resources, wasted or spoiled materials, and unproductive labor costs that are not otherwise anticipated in the contract price and are expensed as incurred. As of September 30, 2024 and 2023, we capitalized fulfillment costs of $ 19.2 million and $ 11.4 million respectively, which is included within Prepaid expenses and Other noncurrent assets on our Consolidated Balance Sheets. If capital modification costs are incurred for rig modifications or if upgrades are required for a contract, these costs are considered to be capital improvements. These costs are capitalized as property, plant and equipment and depreciated over the estimated useful life of the improvement. Remaining Performance Obligations The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of September 30, 2024 was approximately $ 1.5 billion, of which $ 0.8 billion is expected to be recognized during fiscal year 2025, and approximately $ 0.7 billion in fiscal year 2026 and thereafter. These amounts do not include anticipated contract renewals or expected performance bonuses as part of its calculation. Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations. Our contracts are subject to cancellation or modification at the election of the customer; however, due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past. Contract Assets and Liabilities Amounts owed from our customers under our revenue contracts are typically billed on a monthly basis as the service is being provided and are due within 30 days of billing. Such amounts are classified as accounts receivable on our Consolidated Balance Sheets. Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within Prepaid expenses and Other current assets within our Consolidated Balance Sheets. In some instances, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within Accrued liabilities and Other noncurrent liabilities in our Consolidated Balance Sheets. Contract balances are presented at the net amount at a contract level. The following table summarizes the balances of our contract assets (net of allowance for estimated credit losses) and liabilities at the dates indicated: (in thousands) September 30, 2024 September 30, 2023 Contract assets, net $ 4,563 $ 6,560 (in thousands) Contract liabilities balance at September 30, 2022 $ 20,646 Payment received/accrued and deferred 76,756 Revenue recognized during the period ( 68,520 ) Contract liabilities balance at September 30, 2023 28,882 Payment received/accrued and deferred 61,773 Revenue recognized during the period ( 61,603 ) Contract liabilities balance at September 30, 2024 $ 29,052 2024 FORM 10-K | 91 Table of Contents NOTE 10 STOCK-BASED COMPENSATION The Helmerich & Payne, Inc. 2024 Omnibus Incentive Plan (the “2024 Plan”) approved by our stockholders is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units (including performance share units), share bonuses, other share-based awards and cash awards. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire ten years after the grant date. The 2024 Plan governs all of our stock-based awards granted on or after February 27, 2024. Awards outstanding under the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan, the Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan and the Helmerich & Payne, Inc. Amended and Restated 2020 Omnibus Incentive Plan (the "2020 Plan") remain subject to the terms and conditions of those plans. Beginning with fiscal year 2019, we replaced stock options with performance share units as a component of our executives' long-term equity incentive compensation. As a result, no stock options were granted after the 2018 fiscal year. We have also eliminated stock options as an element of our non-employee director compensation program. At September 30, 2024, we had $ 1.9 million outstanding exercisable stock options with a weighted-average exercise price of $ 63.55 . During the fiscal year ended September 30, 2024, 794,828 shares of restricted stock awards were granted under the 2024 Plan and the 2020 Plan, and 223,100 performance share units were granted under the 2020 Plan. A summary of compensation cost for stock-based payment arrangements recognized in Drilling services operating expense, Research and development expense and Selling, general and administrative expense on our Consolidated Statements of Operations is as follows: September 30, (in thousands) 2024 2023 2022 Stock-based compensation expense Drilling services operating $ 5,904 $ 5,919 $ 5,142 Research and development 2,033 1,905 1,551 Selling, general and administrative 23,261 24,632 21,339 $ 31,198 $ 32,456 $ 28,032 . During the fiscal years ended September 30, 2024, 2023 and 2022, we recognized income tax benefits related to stock-based compensation expense of $ 7.1 million, $ 7.4 million and $ 6.4 million, respectively. Restricted Stock Restricted stock awards consist of our common stock. Awards granted after September 30, 2020 are time vested over three years . Non-forfeitable dividends are paid on non-vested shares of restricted stock. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date. As of September 30, 2024, there was $ 30.1 million of total unrecognized compensation cost related to unvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of 1.8 years. A summary of the status of our restricted stock awards as of September 30, 2024, and of changes in restricted stock outstanding during the fiscal years ended September 30, 2024, 2023 and 2022, is as follows: 2024 2023 2022 (shares in thousands) Shares 1 Weighted-Average Grant Date Fair Value per Share Shares 1 Weighted-Average Grant Date Fair Value per Share Shares 1 Weighted-Average Grant Date Fair Value per Share Non-vested restricted stock outstanding as of the beginning of period 1,362 $ 35.11 1,493 $ 30.85 1,412 $ 37.36 Granted 795 35.44 592 44.48 744 25.83 Vested 2 ( 777 ) 33.60 ( 708 ) 33.95 ( 610 ) 39.81 Forfeited ( 19 ) 36.54 ( 15 ) 36.25 ( 53 ) 30.98 Non-vested restricted stock outstanding at September 30, 1,361 $ 36.14 1,362 $ 35.11 1,493 $ 30.85 (1) Restricted stock shares include restricted phantom stock units under our Director Deferred Compensation Plan. These phantom stock units confer the economic benefits of owning company stock without the actual ownership, transfer or issuance of any shares. Phantom stock units are subject to a vesting period of one year from the grant date. During the fiscal years ended September 30, 2024, 2023, and 2022, 18,700 , 12,591 , and 14,199 restricted phantom stock units were granted, respectively, and 12,591 , 14,199 and 18,906 restricted phantom stock units vested, respectively. (2) The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements. 2024 FORM 10-K | 92 Table of Contents Performance Units We have made awards to certain employees that are subject to market-based performance conditions ("performance units"). Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2020 Plan, grants of performance units are subject to a vesting period of three years (the “Vesting Period”) that is dependent on the achievement of certain performance goals. Such performance unit grants consist of two separate components. Performance units that comprise the first component are subject to a three-year performance cycle. Performance units that comprise the second component are further divided into three separate tranches, each of which is subject to a separate one-year performance cycle within the full three-year performance cycle. The vesting of the performance units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period and (iii) for performance units granted beginning in December 2022, the application of the ROIC Modifier (as defined herein). The Vesting Period for performance units granted in November 2020 ended on December 31, 2023 and the performance units eligible to vest were settled in shares of common stock in January 2024. Additional performance units are credited based on the amount of cash dividends on our common stock divided by the market value of our common stock on the date such dividend is paid. Such dividend equivalents are subject to the same terms and conditions as the underlying performance units and are settled or forfeited in the same manner and at the same time as the performance units to which they were credited. The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date. Based on the Company's return on invested capital ("ROIC") performance over a full three-year performance cycle, the Human Resources Committee may increase or decrease by 25 percent the number of performance units that otherwise would be paid out solely based on the achievement of relative TSR performance over a full three-year performance cycle (the "ROIC Modifier"). The grant date fair value of performance units was determined through use of the Monte Carlo simulation method. The Monte Carlo simulation method requires the use of highly subjective assumptions. Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined Peer Group companies' stock, risk free rate of return and cross-correlations between the Company and our Peer Group companies. The valuation model assumes dividends are immediately reinvested. As of September 30, 2024, there was $ 10.2 million of unrecognized compensation cost related to unvested performance units. That cost is expected to be recognized over a weighted-average period of 1.8 years. A summary of the status of our performance units and changes in non-vested performance units outstanding is presented below: 2024 2023 2022 (in thousands, except per share amounts) Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share Non-vested performance units outstanding as of the beginning of period 796 $ 34.51 726 $ 33.67 699 $ 41.55 Granted 223 39.86 144 54.30 227 30.12 Vested 1 ( 303 ) 29.77 ( 286 ) 43.40 ( 161 ) 62.66 Dividend equivalent rights credited and performance factor adjustment 2 ( 106 ) 34.09 212 35.94 15 32.82 Forfeited ( 7 ) 38.67 — — ( 54 ) 34.16 Non-vested performance units outstanding September 30, 3 603 $ 38.90 796 $ 34.51 $ 726 $ 33.67 (1) The number of performance units vested includes units that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements. (2) At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance units. The vesting of units ranges from zero to 200 percent of the units granted depending on the Company's TSR relative to the TSR of the Peer Group on the vesting date. (3) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 91,496 performance units which is calculated based on the payout percentage for the completed performance period. The vesting and number of the remainder of non-vested performance units reflected at the end of the period is contingent upon our achievement of specified target performance criteria. If we meet the specified maximum performance criteria, approximately 330,331 additional performance units could vest or become eligible to vest. 2024 FORM 10-K | 93 Table of Contents The weighted-average fair value calculations for performance units granted within the fiscal period are based on the following weighted-average assumptions set forth in the table below. 2024 2023 2022 Risk-free interest rate 1 4.3 % 4.1 % 1.0 % Expected stock volatility 2 52.5 % 71.6 % 67.3 % Expected term (in years) 3 3 3 (1) The risk-free interest rate is based on U.S. Treasury securities for the expected term of the performance units. (2) Expected volatilities are based on the daily closing price of our stock based upon historical experience over a period which approximates the expected term of the performance units. NOTE 11 ACQUISITION TRANSACTION COSTS During the fiscal year ended September 30, 2024, we recognized approximately $ 15.0 million in acquisition transaction costs associated with the Acquisition. These non-recurring costs are primarily related to third-party legal and advisory services and are included in Acquisition transaction costs on the Consolidated Statements of Operations. NOTE 12 EARNINGS PER COMMON SHARE ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, non-vested restricted stock and performance units. Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities. 2024 FORM 10-K | 94 Table of Contents The following table sets forth the computation of basic and diluted earnings per share: September 30, (in thousands, except per share amounts) 2024 2023 2022 Numerator: Net income $ 344,165 $ 434,100 $ 6,953 Adjustment for basic earnings per share: Earnings allocated to unvested shareholders ( 4,726 ) ( 5,863 ) ( 1,508 ) Numerator for basic earnings per share 339,439 428,237 5,445 Adjustment for diluted earnings per share: Effect of reallocating undistributed earnings of unvested shareholders 5 12 — Numerator for diluted earnings per share $ 339,444 $ 428,249 $ 5,445 Denominator: Denominator for basic earnings per share - weighted-average shares 98,857 102,447 105,891 Effect of dilutive shares from restricted stock and performance share units 210 405 664 Denominator for diluted earnings per share - adjusted weighted-average shares 99,067 102,852 106,555 Basic earnings per common share $ 3.43 $ 4.18 $ 0.05 Diluted earnings per common share $ 3.43 $ 4.16 $ 0.05 The following potentially dilutive average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive: (in thousands, except per share amounts) 2024 2023 2022 Potentially dilutive shares excluded as anti-dilutive 2,355 2,451 2,543 Weighted-average price per share $ 60.28 $ 62.08 $ 62.36 NOTE 13 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use the following fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. • Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. 2024 FORM 10-K | 95 Table of Contents Fair Value Measurements The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which we classify the fair value measurement as of the dates indicated below. September 30, 2024 (in thousands) Fair Value Level 1 Level 2 Level 3 Assets Short-term investments: Corporate debt securities $ 33,813 $ — $ 33,813 $ — U.S. government and federal agency securities 53,490 53,490 — — Investment in ADNOC Drilling 205,616 205,616 — — Total 292,919 259,106 33,813 — Long-term investments: Recurring fair value measurements: Equity securities: Non-qualified supplemental savings plan 15,633 15,633 — — Investment in Tamboran 20,958 20,958 — — Debt securities: Investment in Galileo, net 27,044 — — 27,044 Geothermal debt securities, net 2,000 — — 2,000 Other debt securities 4,588 4,338 — 250 Total $ 70,223 $ 40,929 $ — $ 29,294 As of September 30, 2024, our equity security investments in geothermal energy were $ 25.8 million, of which $ 0.1 million was measured at fair value as of September 30, 2024. The remaining $ 25.7 million is measured at cost, less any impairments. Our other equity security investments totaled $ 4.3 million and our debt security investments in held to maturity bonds totaled $ 0.3 million. These investments are measured at cost, less any impairments. September 30, 2023 (in thousands) Fair Value Level 1 Level 2 Level 3 Assets Short-term investments: Corporate debt securities $ 48,764 $ — $ 48,764 $ — U.S. government and federal agency securities 44,836 44,836 — — Total $ 93,600 $ 44,836 $ 48,764 $ — Long-term investments: Recurring fair value measurements: Equity securities: Non-qualified supplemental savings plan 14,597 14,597 — — Investment in ADNOC Drilling 174,758 174,758 — — Investment in Tamboran 9,920 9,920 — — Debt securities: Investment in Galileo 35,434 — — 35,434 Geothermal debt securities, net 2,006 — — 2,006 Total $ 236,715 $ 199,275 $ — $ 37,440 Liabilities Contingent consideration $ 9,455 $ — $ — $ 9,455 As of September 30, 2023, our equity security investments in geothermal energy were $ 25.2 million. These investments are measured at cost, less any impairments. Our other equity securities subject to measurement at fair value on a nonrecurring basis was $ 3.0 million, of which $ 2.4 million were measured at fair value as of September 30, 2023. The remaining $ 0.6 million is measured at cost, less any impairments. . 2024 FORM 10-K | 96 Table of Contents Recurring Fair Value Measurements Short-term Investments Short-term investments primarily include securities classified as trading securities. Both realized and unrealized gains and losses on trading securities are included in other income (expense) in the Consolidated Statements of Operations. These securities are recorded at fair value. Level 1 inputs include U.S. agency issued debt securities with active markets and money market funds. For these items, quoted current market prices are readily available. Level 2 inputs include corporate bonds measured using broker quotations that utilize observable market inputs. Long-term Investments Equity Securities Our long-term investments include debt and equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan") and are recorded within Investments on our Consolidated Balance Sheets. Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs. During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced initial public offering, representing 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake and subject to a three-year lockup period. ADNOC Drilling’s initial public offering was completed on October 3, 2021, and its shares are listed and traded on the Abu Dhabi Securities Exchange. During September 2024, the three-year lockup period expired and the balance was reclassified to Short-term investments on our Consolidated Balance Sheets. This investment is measured at fair value with any gains or losses recorded within Gain on investment securities on our Consolidated Statements of Operations. During the fiscal year ended September 30, 2024, 2023 and 2022, we recognized a gain of $ 30.9 million, $ 27.4 million and $ 47.4 million on our Consolidated Statements of Operations for each period respectively, as a result of the change in fair value of the investment during the period. As of September 30, 2024, this investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange. During the fiscal year ended September 30, 2022, we sold our remaining equity securities of approximately 467.5 thousand shares in Schlumberger, Ltd. and received proceeds of approximately $ 22.0 million. For the fiscal year ended September 30, 2022, we recorded a gain of $ 8.2 million related to this investment, which includes a $ 0.5 million gain recognized upon the sale of our investment and a $ 7.7 million gain as a result of the change in fair value of the investment during the period. This activity is reported in Gain on investment securities in our Consolidated Statements of Operations. Equity Securities with Fair Value Option In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources. In December 2023, all shares of Tamboran Resources were transferred to Tamboran Corp. in exchange for depository interests in Tamboran Corp. Depository interests, referred to as CHESS Depository Interests, each representing beneficial interests of 1/200th of a share of Tamboran Corp. common stock, are listed on the Australian Stock Exchange under the ticker symbol "TBN." Tamboran Corp. is focused on developing a natural gas resource in Australia's Beetaloo Sub-basin. On June 4, 2024, the Company entered into a convertible note agreement with Tamboran Corp. This note was utilized to relieve Tamboran's outstanding accounts receivable balance owed to the Company, and therefore no cash was exchanged as part of the transaction. The convertible note agreement provided that the notes converted into shares of common stock of Tamboran Corp. under certain circumstances in connection with an initial public offering in which its stock was listed on the NYSE or NASDAQ Stock Exchange. On June 26, 2024, Tamboran Corp. completed an initial public offering of its common stock on the NYSE and its common stock is listed on the NYSE, under the ticker "TBN". As a result of this offering, the convertible note of $ 9.4 million was converted into 0.5 million common shares in Tamboran Corp. Our investment is classified as a long-term equity investment within Investments on our Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income and recorded within Gain on investment securities on our Consolidated Statements of Operations. Our shares received in this initial public offering are subject to a 180 -day lockup period. Consistent with the provisions of ASU No. 2022-03, contractual sale restrictions are not considered in the fair value measurement of our investment in Tamboran Resources Corporation. We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage, operational involvement and role on the investee's board of directors. As of September 30, 2024, our combined equity ownership was approximately 7.2 percent representing 1.0 million common shares in Tamboran Corp. We consider this investment to have a readily determinable fair value and have elected to account for this investment using the fair value option with any changes in fair value recognized through net income. Under the guidance, Topic 820, Fair Value Measurement, this investment is classified as a Level 1 investment based on the quoted stock price which is publicly available. During the year ended September 30, 2024 and 2023, we recognized gains (loss) of $ 1.6 million and $( 4.2 ) million, respectively, recorded within Gain on investment securities on our Consolidated Statements of Operations, as a result of the change in fair value of the investment. 2024 FORM 10-K | 97 Table of Contents Debt Securities During April 2022, the Company made a $ 33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of notes with an option to convert into common shares of the parent of Galileo Holdco 2 ("Galileo Parent"). Galileo specializes in liquification, natural gas compression and re-gasification modular systems and technologies to make the production, transportation, and consumption of natural gas, biomethane, and hydrogen more economically viable. The convertible note bears interest at 5.0 percent per annum with a maturity date of the earlier of April 2027 or an exit event (as defined in the agreement as either an initial public offering or a sale of Galileo). During the fiscal year ended September 30, 2023, our convertible note agreement was amended to include any interest which has accrued but not yet compounded or issued as a note. As a result, we have included accrued interest in our total investment balance. We do not intend to sell this investment prior to its maturity date or an exit event. During the year ended September 30, 2024, we recorded an allowance for credit loss of $ 10.2 million, as a result of the change in fair value of the investment due to credit related factors. The loss was recognized through net income and recorded within Gain on investment securities on our Consolidated Statements of Operations. The following table provides quantitative information about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at the dates included below: September 30, 2024 Fair Value (in thousands) Valuation Technique Unobservable Inputs $ 27,044 Black-Scholes-Merton model Discount rate 18.7 % Risk-free rate 3.5 % Equity volatility 66.0 % September 30, 2023 Fair Value (in thousands) Valuation Technique Unobservable Inputs $ 35,434 Black-Scholes-Merton model Discount rate 19.2 % Risk-free rate 4.3 % Equity volatility 92.0 % The above significant unobservable inputs are subject to change based on changes in economic and market conditions. The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. Significant increases or decreases in the discount rate, risk-free rate, and equity volatility in isolation would result in a significantly lower or higher fair value measurement. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values. All of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and are measured using Level 3 unobservable inputs based on the absence of market activity. The following table reconciles changes in the fair value of our Level 3 assets for the periods presented below: Year Ended September 30, (in thousands) 2024 2023 Assets at beginning of period $ 37,440 $ 33,565 Purchases 250 2,122 Accrued interest 1 1,771 2,434 Total gains or (losses): Included in earnings 2 ( 10,167 ) ( 681 ) Assets at end of period $ 29,294 $ 37,440 (1) During the fiscal year ended September 30, 2023, our convertible note agreement with Galileo was amended to include any interest which has accrued but not yet compounded or issued as a funding note. As a result, we have included accrued interest in our total investment balance. (2) During the fiscal years ended September 30, 2024 and September 30, 2023, we recorded an allowance for credit loss related to our Galileo investment and one of our geothermal debt securities as the balance is deemed to be uncollectible. Nonrecurring Fair Value Measurements We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these nonfinancial assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired. These assets generally include property, plant and equipment, goodwill, intangible assets, and operating lease right-of-use assets. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy. Further details on any changes in valuation of these assets is provided in their respective footnotes. 2024 FORM 10-K | 98 Table of Contents Equity Securities We also hold various other equity securities without readily determinable fair values, primarily comprised of geothermal investments. These equity securities are initially measured at cost, less any impairments, and will be marked to fair value once observable changes in identical or similar investments from the same issuer occur. All of our long-term equity securities are measured using Level 3 unobservable inputs based on the absence of market activity. The following table reconciles changes in the balance of our equity securities, without readily determinable fair values, including investments that have been subsequently marked to fair value, for the periods presented below: Year Ended September 30, (in thousands) 2024 2023 Assets at beginning of period $ 28,232 $ 23,745 Purchases 3,870 4,487 Disposals ( 616 ) — Total gains or (losses): Included in earnings ( 1,396 ) — Assets at end of period $ 30,090 $ 28,232 Contingent Consideration Other financial instruments measured using Level 3 unobservable inputs primarily consist of earnout payments associated with our business acquisition in fiscal year 2019 (for which the measurement period concluded as of June 30, 2024). Contingent consideration is recorded in Accrued liabilities on the Consolidated Balance Sheets based on the expected timing of milestone achievements. The following table reconciles changes in the fair value of our Level 3 liabilities for the periods presented below: (in thousands) 2024 2023 Liabilities at beginning of period $ 9,455 $ 4,022 Additions — 500 Total gains or losses: Included in earnings 6,670 7,808 Settlements 1 ( 16,125 ) ( 2,875 ) Liabilities at end of period $ — $ 9,455 (1) Settlements represent earnout payments that have been paid or earned during the period. Other Financial Instruments The carrying amount of cash and cash equivalents and restricted cash approximates fair value due to the short-term nature of these items. The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S. Government and in federally insured deposit accounts. The carrying value of accounts receivable, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at September 30, 2024 and 2023. The following information presents the supplemental fair value information for our long-term fixed-rate debt at September 30, 2024 and 2023: September 30, (in millions) 2024 2023 Long-term debt, net Carrying value 1,782.2 545.1 Fair value 1,702.9 435.5 The fair values of the long-term fixed-rate debt is based on broker quotes at September 30, 2024 and 2023. The notes are classified within Level 2 of the fair value hierarchy as they are not actively traded in markets. 2024 FORM 10-K | 99 Table of Contents NOTE 14 EMPLOYEE BENEFIT PLANS We maintain a domestic noncontributory defined benefit pension plan covering certain U.S. employees who meet certain age and service requirements. In July 2003, we revised the Helmerich & Payne, Inc. Employee Retirement Plan (“Pension Plan”) to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen. The following table provides a reconciliation of the changes in the pension benefit obligations and fair value of Pension Plan assets over the two-year period ended September 30, 2024 and a statement of the funded status as of September 30, 2024 and 2023: September 30, (in thousands) 2024 2023 Accumulated benefit obligation $ 57,154 $ 54,646 Changes in projected benefit obligations: Projected benefit obligation at beginning of year $ 54,646 $ 60,463 Interest cost 3,009 3,086 Actuarial loss (gain) 2,885 ( 4,940 ) Benefits paid ( 3,386 ) ( 3,963 ) Projected benefit obligation at end of year $ 57,154 $ 54,646 Change in plan assets: Fair value of plan assets at beginning of year $ 43,780 $ 41,764 Actual return on plan assets 7,127 979 Employer contribution 6,000 5,000 Benefits paid ( 3,386 ) ( 3,963 ) Fair value of plan assets at end of year $ 53,521 $ 43,780 Funded status of the plan at end of year $ ( 3,633 ) $ ( 10,866 ) Fluctuations in actuarial gains and losses during the period are primarily due to changes in the discount rate and investment returns. The mortality table issued by the Society of Actuaries in October 2021 was used for the September 30, 2024 pension calculation. The net pension liability at September 30, 2024 and 2023 was $ 3.6 million and $ 10.9 million, respectively. These liabilities are recorded within other noncurrent liabilities in our Consolidated Balance Sheets. The net actuarial loss recognized in Accumulated other comprehensive income (loss) at September 30, 2024 and 2023, and not yet reflected in net periodic benefit cost, was $ 7.6 million and $ 10.4 million respectively. Unrecognized actuarial gains/losses outside of a corridor of the greater of: 1) 10 percent of the Projected Benefit Obligation, or 2) the fair value of assets, are amortized into expense for the year on a straight-line basis over the average remaining service years of participants. Amortization is not carried from year-to-year as the calculation resets each year. The weighted average assumptions used for the pension calculations were as follows: September 30, 2024 2023 2022 Discount rate for net periodic benefit costs 5.77 % 5.44 % 2.75 % Discount rate for year-end obligations 4.84 % 5.77 % 5.44 % Expected return on plan assets 4.40 % 4.50 % 4.25 % We made a voluntary contribution of $ 6.0 million in fiscal year 2024 and a voluntary contribution $ 5.0 million in both fiscal year 2023 and 2022. In fiscal year 2025, we do not expect minimum contributions required by law to be needed. However, we may make contributions in fiscal year 2025 if needed to fund unexpected distributions in lieu of liquidating pension assets. 2024 FORM 10-K | 100 Table of Contents Components of the net periodic pension expense were as follows: Year Ended September 30, (in thousands) 2024 2023 2022 Interest cost $ 3,009 $ 3,086 $ 2,537 Expected return on plan assets 1 ( 2,080 ) ( 1,762 ) ( 2,481 ) Recognized net actuarial loss 612 1,139 2,080 Settlement expense — — 9,031 Net pension expense $ 1,541 $ 2,463 $ 11,167 (1) The Company uses the fair value of plan assets in determining the expected return on plan assets. We record settlement expense when benefit payments exceed the total annual interest costs. During March 2022, the Company's domestic noncontributory defined benefit pension plan was amended to include a limited lump sum distribution option and a special eligibility window to be available to certain participants. During the period beginning on May 2, 2022 and ending on June 30, 2022, these participants could elect the limited lump sum distribution. This one-time lump sum was subsequently paid in August 2022 and resulted in a pension settlement charge of $ 7.8 million during the year ended September 30, 2022. The following table reflects the expected benefits to be paid from the Pension Plan in each of the next five fiscal years, and in the aggregate for the five years thereafter (in thousands): Year Ended September 30, 2025 2026 2027 2028 2029 2030 – 2034 Total $ 5,786 $ 5,232 $ 5,339 $ 4,721 $ 3,980 $ 21,094 $ 46,152 Investment Strategy and Asset Allocation Our investment policy and strategies are established with a long-term view in mind. The investment strategy is intended to help pay the cost of the Pension Plan while providing adequate security to meet the benefits promised under the Pension Plan. We maintain a diversified asset mix to minimize the risk of a material loss to the portfolio value that might occur from devaluation of any single investment. In determining the appropriate asset mix, our financial strength and ability to fund potential shortfalls are considered. Pension Plan assets are invested in portfolios of diversified public-market equity securities and fixed income securities. The Pension Plan does not directly hold securities of the Company. The expected long-term rate of return on Pension Plan assets is based on historical and projected rates of return for current and planned asset classes in the Pension Plan’s investment portfolio after analyzing historical experience and future expectations of the return and volatility of various asset classes. During the 2021 fiscal year, we implemented a glide-path strategy with a goal to reduce risk as certain funded levels are achieved and began aligning our fixed income exposure with our pension liabilities. The target allocation for 2025 and the asset allocation for the Pension Plan at the end of fiscal years 2024 and 2023, by asset category, were as follows: Target Allocation September 30, Asset Category 2025 2024 2023 U.S. equities 4 % 10 % 17 % International equities 5 5 12 Fixed income 91 85 71 Total 100 % 100 % 100 % 2024 FORM 10-K | 101 Table of Contents Plan Assets The fair value of Pension Plan assets at September 30, 2024 and 2023, summarized by level within the fair value hierarchy described in Note 13—Fair Value Measurement of Financial Instruments, are as follows: September 30, 2024 (in thousands) Total Level 1 Level 2 Level 3 Short-term investments $ 3,369 $ 3,369 $ — $ — Mutual funds: Domestic stock funds 5,223 5,223 — — Bond funds 41,950 41,950 — — International stock funds 2,887 2,887 — — Total mutual funds 50,060 50,060 — — Oil and gas properties 92 — — 92 Total $ 53,521 $ 53,429 $ — $ 92 September 30, 2023 (in thousands) Total Level 1 Level 2 Level 3 Short-term investments $ 1,018 $ 1,018 $ — $ — Mutual funds: Domestic stock funds 7,299 7,299 — — Bond funds 30,319 30,319 — — International stock funds 5,120 5,120 — — Total mutual funds 42,738 42,738 — — Oil and gas properties 24 — — 24 Total $ 43,780 $ 43,756 $ — $ 24 As of September 30, 2024 and 2023, the Pension Plan’s financial assets utilizing Level 1 inputs are valued based on quoted prices in active markets for identical securities. As of September 30, 2024 and 2023, the Pension Plan’s assets utilizing Level 3 inputs consist of oil and gas properties. The fair value of oil and gas properties is determined by Wells Fargo Bank, N.A., based upon actual revenue received for the previous twelve-month period and experience with similar assets. Defined Contribution Plan Substantially all employees on the U.S. payroll may elect to participate in our 401(k)/Thrift Plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first five percent of the participant’s compensation subject to certain limitations. The annual expense incurred for this defined contribution plan was $ 26.9 million, $ 25.8 million and $ 24.8 million in fiscal years 2024, 2023 and 2022, respectively. NOTE 15 SUPPLEMENTAL BALANCE SHEET INFORMATION The following reflects the activity in our allowance for expected credit losses on trade receivables for fiscal years 2024, 2023 and 2022: Year Ended September 30, (in thousands) 2024 2023 2022 Allowance for credit losses: Balance at October 1, $ 2,688 $ 2,975 $ 2,068 Provision for credit loss 289 534 1,077 (Write-off) recovery of credit loss — ( 821 ) ( 170 ) Balance at September 30, $ 2,977 $ 2,688 $ 2,975 2024 FORM 10-K | 102 Table of Contents Accounts receivable, prepaid expenses and other current assets, net, accrued liabilities and noncurrent liabilities —other at September 30, 2024 and 2023 consist of the following: Year Ended September 30, (in thousands) 2024 2023 Accounts receivable, net of allowance: Trade receivables $ 418,586 $ 403,091 Income tax receivable 18 1,097 Total accounts receivable, net of allowance $ 418,604 $ 404,188 Prepaid expenses and other current assets, net: Deferred mobilization $ 8,329 $ 7,873 Prepaid insurance 10,277 11,160 Prepaid value added tax 5,644 7,867 Prepaid maintenance and rent 12,802 12,278 Accrued demobilization, net 4,563 6,560 Prepaid equipment 23,249 21,821 Insurance recoverable 6,706 28,129 Other 4,849 2,039 Total prepaid expenses and other current assets, net $ 76,419 $ 97,727 Accrued liabilities: Accrued operating costs $ 60,179 $ 20,618 Payroll and employee benefits 73,744 55,596 Taxes payable, other than income tax 36,339 32,537 Self-insurance liabilities 41,040 60,921 Deferred income 23,542 23,441 Deferred mobilization revenue 8,626 10,247 Accrued income taxes 7,020 24,495 Contingent consideration — 9,455 Operating lease liability 16,997 13,772 Litigation and claims 5,881 4,518 Other 13,473 7,285 Total accrued liabilities $ 286,841 $ 262,885 Noncurrent liabilities — Other: Pension and other non-qualified retirement plans $ 28,277 $ 33,048 Self-insurance liabilities 41,040 42,285 Deferred revenue 10,123 8,135 Uncertain tax positions including interest and penalties 790 3,136 Operating lease liability 59,733 41,038 Other 171 487 Total noncurrent liabilities — other $ 140,134 $ 128,129 NOTE 16 COMMITMENTS AND CONTINGENCIES Purchase Commitments Equipment, parts and supplies are ordered in advance to promote efficient construction and capital improvement progress. At September 30, 2024, we had purchase commitments for equipment, parts and supplies of approximately $ 116.3 million. Lease Obligations Refer to Note 4—Leases for additional information on our lease obligations. 2024 FORM 10-K | 103 Table of Contents Guarantee Arrangements We are contingently liable to sureties in respect of bonds issued by the sureties in connection with certain commitments entered into by us in the normal course of business. We have agreed to indemnify the sureties for any payments made by them in respect of such bonds. Contingencies During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain or loss contingency. We account for gain contingencies in accordance with the provisions of ASC 450, Contingencies, and, therefore, we do not record gain contingencies or recognize income until realized. The property and equipment of our Venezuelan subsidiary was seized by the Venezuelan government on June 30, 2010. Our wholly-owned subsidiaries, Helmerich & Payne International Drilling Co. ("HPIDC"), and Helmerich & Payne de Venezuela, C.A. filed a lawsuit in the United States District Court for the District of Columbia on September 23, 2011 against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A. and PDVSA Petroleo, S.A., seeking damages for the seizure of their Venezuelan drilling business in violation of international law and for breach of contract. While there exists the possibility of realizing a recovery on HPIDC's expropriation claims, we are currently unable to determine the timing or amounts we may receive, if any, or the likelihood of recovery. The Company and its subsidiaries are parties to various other pending legal actions arising in the ordinary course of our business. We maintain insurance against certain business risks subject to certain deductibles. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate resolution of such items will not have a material adverse impact on our financial condition, cash flows, or results of operations. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed. NOTE 17 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION Description of the Business We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S. onshore oil and gas producing basins as well as South America, the Middle East and Australia. Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. We believe we are the recognized industry leader in drilling as well as technological innovation. We focus on offering our customers an integrated solutions-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations rather than a product-based offering, such as a rig or separate technology package. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, International Solutions, and Offshore Gulf of Mexico. Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions. Our real estate operations and our wholly-owned captive insurance companies are included in "Other." External revenues included in “Other” primarily consist of rental income. Segment Performance We evaluate segment performance based on income, segment operating income (loss) before income taxes which includes: • Revenues from external and internal customers • Direct operating costs • Depreciation and amortization • Allocated general and administrative costs • Asset impairment charges • Restructuring charges but excludes acquisition transaction costs, gain on reimbursement of drilling equipment, other (gain) loss on sale of assets, corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges. General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods may be used which we believe to be a reasonable reflection of the utilization of services provided. 2024 FORM 10-K | 104 Table of Contents Summarized financial information of our reportable segments for the fiscal years ended September 30, 2024, 2023 and 2022 is shown in the following tables: September 30, 2024 (in thousands) North America Solutions International Solutions Offshore Gulf of Mexico Other Eliminations Total External sales $ 2,445,946 $ 193,975 $ 106,207 $ 10,479 $ — $ 2,756,607 Intersegment — — — 61,151 ( 61,151 ) — Total sales 2,445,946 193,975 106,207 71,630 ( 61,151 ) 2,756,607 Segment operating income (loss) 610,674 ( 949 ) 12,415 ( 1,359 ) 1,261 622,042 Depreciation and amortization 366,446 10,863 7,530 1,627 — 386,466 September 30, 2023 (in thousands) North America Solutions International Solutions Offshore Gulf of Mexico Other Eliminations Total External sales $ 2,519,743 $ 212,566 $ 130,244 $ 9,868 $ — $ 2,872,421 Intersegment — — — 67,428 ( 67,428 ) — Total sales 2,519,743 212,566 130,244 77,296 ( 67,428 ) 2,872,421 Segment operating income (loss) 625,467 ( 891 ) 22,806 15,876 4,671 667,929 Depreciation and amortization 353,976 7,615 7,622 2,014 — 371,227 September 30, 2022 (in thousands) North America Solutions International Solutions Offshore Gulf of Mexico Other Eliminations Total External sales $ 1,788,167 $ 136,072 $ 125,465 $ 9,240 $ — $ 2,058,944 Intersegment — — — 57,047 ( 57,047 ) — Total sales 1,788,167 136,072 125,465 66,287 ( 57,047 ) 2,058,944 Segment operating income (loss) 121,893 ( 138 ) 23,214 12,720 ( 6,422 ) 151,267 Depreciation and amortization 375,250 4,156 9,175 1,701 — 390,282 The following table reconciles segment operating income per the tables above to income before income taxes as reported on the Consolidated Statements of Operations: Year Ended September 30, (in thousands) 2024 2023 2022 Segment operating income $ 622,042 $ 667,929 $ 151,267 Acquisition transaction costs ( 14,982 ) — — Gain on reimbursement of drilling equipment 33,309 48,173 29,443 Other gain (loss) on sale of assets ( 5,139 ) ( 8,016 ) 5,432 Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges ( 183,331 ) ( 146,197 ) ( 140,850 ) Operating income 451,899 561,889 45,292 Other income (expense) Interest and dividend income 41,168 28,393 18,090 Interest expense ( 29,093 ) ( 17,283 ) ( 19,203 ) Gain on investment securities 13,953 11,299 57,937 Loss on extinguishment of debt — — ( 60,083 ) Other 3,093 9,081 ( 10,714 ) Total unallocated amounts 29,121 31,490 ( 13,973 ) Income before income taxes $ 481,020 $ 593,379 $ 31,319 2024 FORM 10-K | 105 Table of Contents The following table reconciles segment total assets to total assets as reported on the Consolidated Balance Sheets: Year Ended September 30, (in thousands) 2024 2023 Total assets 1 North America Solutions $ 3,225,410 $ 3,320,203 International Solutions 685,833 407,143 Offshore Gulf of Mexico 73,119 73,319 Other 157,877 154,290 4,142,239 3,954,955 Investments and corporate operations 1,639,659 427,001 Total assets $ 5,781,898 $ 4,381,956 (1) Assets by segment exclude investments in subsidiaries and intersegment activity. The following table presents revenues from external customers by country based on the location of service provided: Year Ended September 30, (in thousands) 2024 2023 2022 Operating revenues United States $ 2,558,814 $ 2,656,617 $ 1,920,026 Argentina 142,451 137,420 91,385 Bahrain 17,990 15,401 16,986 Australia 14,112 3,350 — United Arab Emirates 10,165 9,716 5,698 Columbia 9,254 46,720 22,003 Other foreign 3,821 3,197 2,846 Total $ 2,756,607 $ 2,872,421 $ 2,058,944 The following table presents property, plant and equipment by country based on the location of service provided: Year Ended September 30, (in thousands) 2024 2023 Property, plant and equipment, net United States $ 2,752,325 $ 2,813,707 Saudi Arabia 1 149,472 — Argentina 62,533 57,168 Bahrain 19,807 7,657 Columbia 19,243 20,835 Australia 9,227 10,673 United Arab Emirates 2,419 10,373 Other foreign 1,251 1,282 Total $ 3,016,277 $ 2,921,695 (1) We commenced operations in Saudi Arabia in the first quarter of fiscal 2025. NOTE 18 SUBSEQUENT EVENTS As previously disclosed in Note 13—Fair Value Measurement of Financial Instruments, we made a $ 100.0 million cornerstone investment in ADNOC Drilling for 159.7 million shares of ADNOC Drilling (the “Shares”). In October 2024, we sold the Shares for aggregate proceeds of approximately $ 197.3 million. The Company intends to use the proceeds from the sale of the Shares to fund a portion of the Acquisition. As previously disclosed in Note 6—Debt, in July 2024 we entered into an unsecured 364 -day bridge loan facility in an aggregate principal amount of approximately $ 2.0 billion with MSSF. On October 15, 2024, the remaining commitments under the Bridge Loan Facility were reduced such that there were no remaining commitments available, and the Bridge Loan Facility was automatically terminated in accordance with its terms. As of September 30, 2024, approximately $ 1.4 million in commitment fees were deferred and included in Prepaid assets and other, net within the Consolidated Balance Sheet. Upon termination of the facility, the remaining commitment fees of approximately $ 1.4 million will be recognized in Interest expense during the first fiscal quarter of 2025. 2024 FORM 10-K | 106 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.