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Item 1. Financial Statements

2025-02-05 compared with 2024-07-25 · 275 added, 351 removed, 583 unchanged (52% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, September 30,

December 31, September 30,

(in thousands except share data) 2024 2024

7 unchanged sentences

Prepaid expenses and other, net 70,898 76,419

Assets held-for-sale — 645

Total current assets 1,224,831 1,192,069

Investments 292,229 264,947

Investments, net 101,652 100,567

Property, plant and equipment, net 3,009,360 3,016,277

3 unchanged sentences

Operating lease right-of-use assets 67,510 67,076

Restricted cash 1,242,124 1,242,417

Other assets, net 72,944 63,692

14 unchanged sentences

Shareholders' Equity:

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of June 30, 2024 and September 30, 2023, and 98,755,412 and 99,426,526 shares outstanding as of June 30, 2024 and September 30, 2023, respectively

Common stock, $ 0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of December 31, 2024 and September 30, 2024, and 99,186,843 and 98,755,412 shares outstanding as of December 31, 2024 and September 30, 2024, respectively

11,222 11,222

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Accumulated other comprehensive loss ( 5,987 ) ( 6,350 )

Treasury stock, at cost, 13,467,453 shares and 12,796,339 shares as of June 30, 2024 and September 30, 2023, respectively

Treasury stock, at cost, 13,036,022 shares and 13,467,453 shares as of December 31, 2024 and September 30, 2024, respectively

( 473,181 ) ( 489,393 )

6 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts) 2024 2023

9 unchanged sentences

Selling, general and administrative 63,062 56,577

Asset impairment charges — — — 12,097

Acquisition transaction costs 10,535 —

Gain on reimbursement of drilling equipment ( 9,403 ) ( 7,494 )

6 unchanged sentences

Interest expense ( 22,298 ) ( 4,372 )

Gain (loss) on investment securities 389 ( 18,538 ) 102 6,123

Loss on investment securities ( 13,367 ) ( 4,034 )

Other 360 ( 543 )

14 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2024 2023

Net income $ 54,772 $ 95,173

Other comprehensive income (loss), net of income taxes:

Net change related to employee benefit plans, net of income taxes of $( 39.5 ) thousand and $( 118.5 ) thousand for the three and nine months ended June 30, 2024, respectively, and $( 59.6 ) thousand and $( 209.8 ) thousand for the three and nine months ended June 30, 2023, respectively

134 255 402 767

Unrealized loss on available-for-sale debt security, net of income taxes of $ 270.9 thousand for the three and nine months ended June 30, 2024, respectively

( 920 ) — ( 920 ) —

Other comprehensive income (loss)

( 786 ) 255 ( 518 ) 767

Other comprehensive income, net of income taxes:

Net change related to employee benefit plans, net of income taxes of $( 15.7 ) thousand and $( 39.5 ) thousand for the three months ended December 31, 2024 and 2023, respectively

Unrealized gain on available-for-sale debt security, net of income taxes of $( 91.0 ) thousand for the three months ended December 31, 2024

Other comprehensive income 363 134

Comprehensive income $ 55,135 $ 95,307

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three and Nine Months Ended June 30, 2024

Three Months Ended December 31, 2024

Common Stock Additional

8 unchanged sentences

Other comprehensive income — — — — 363 — — 363

Dividends declared ($ 0.25 base per share, $ 0.34 supplemental per share)

Dividends declared ($ 0.25 per share)

— — — ( 25,151 ) — — — ( 25,151 )

1 unchanged sentence

Stock-based compensation — — 6,851 — — — — 6,851

Share repurchases — — — — — 1,298 ( 47,654 ) ( 47,654 )

Other — — ( 293 ) — — — — ( 293 )

Balance at December 31, 2024 112,222 $ 11,222 $ 501,516 $ 2,913,211 $ ( 5,987 ) 13,036 $ ( 473,181 ) $ 2,946,781

Comprehensive income:

Net income — — — 84,831 — — — 84,831

Other comprehensive income — — — — 134 — — 134

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

— — — ( 42,130 ) — — — ( 42,130 )

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

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

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

Other — — ( 503 ) — — — — ( 503 )

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

Comprehensive income:

Net income — — — 88,685 — — — 88,685

Other comprehensive loss

— — — — ( 786 ) — — ( 786 )

Dividends declared ($ 0.25 base per share.

$ 0.17 supplemental per share)

— — — ( 42,044 ) — — — ( 42,044 )

Vesting of restricted stock awards, net of shares withheld for employee taxes — — ( 123 ) — — ( 4 ) 123 —

Stock-based compensation — — 7,676 — — — — 7,676

Other — — 240 — — — — 240

Balance at June 30, 2024

112,222 $ 11,222 $ 510,379 $ 2,833,136 $ ( 8,499 ) 13,467 $ ( 489,393 ) $ 2,856,845

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

Q3 FY24 FORM 10-Q | 6

Three and Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Common Stock Additional

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

Comprehensive income:

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

Other comprehensive income — — — — 256 — — 256

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

— — — ( 50,046 ) — — — ( 50,046 )

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

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

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

Other — — 615 — — — 615

Balance at March 31, 2023 112,222 $ 11,222 $ 509,205 $ 2,608,100 $ ( 11,560 ) 9,638 $ ( 361,161 ) $ 2,755,806

Comprehensive income:

Net income — — — 95,293 — — — 95,293

Other comprehensive income — — — — 255 — — 255

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

— — — ( 48,106 ) — — — ( 48,106 )

Stock-based compensation — — 8,180 — — — — 8,180

Share repurchases — — — — — 3,158 ( 103,221 ) ( 103,221 )

Other — — ( 126 ) — — — — ( 126 )

Balance at June 30, 2023

112,222 $ 11,222 $ 517,259 $ 2,655,287 $ ( 11,305 ) 12,796 $ ( 464,382 ) $ 2,708,081

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

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended June 30,

Three Months Ended December 31,

(in thousands) 2024 2023

3 unchanged sentences

Depreciation and amortization 99,080 93,991

Asset impairment charges — 12,097

Provision for credit loss ( 213 ) 2,165

Amortization of debt discount and debt issuance costs 2,390 148

Stock-based compensation 6,851 7,672

Gain on investment securities

( 102 ) ( 6,123 )

Loss on investment securities 13,367 4,034

Gain on reimbursement of drilling equipment ( 9,403 ) ( 7,494 )

1 unchanged sentence

1,673 ( 2,443 )

Deferred income tax expense (benefit) ( 23,634 ) 4,197

Deferred income tax benefit ( 9,923 ) ( 7,829 )

Other ( 381 ) 305

6 unchanged sentences

Accrued liabilities 8,915 19,022

Deferred income tax liability 390 ( 695 )

Other noncurrent liabilities 9,328 ( 5,970 )

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Proceeds from asset sales 12,120 11,929

Net cash used in investing activities ( 353,998 ) ( 191,044 )

Net cash provided by (used in) investing activities 52,651 ( 113,067 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid ( 25,021 ) ( 42,294 )

Debt issuance costs ( 1,216 ) —

Payments for employee taxes on net settlement of equity awards ( 6,913 ) ( 8,820 )

1 unchanged sentence

Share repurchases — ( 47,364 )

Other — ( 540 )

Net cash used in financing activities ( 33,150 ) ( 98,728 )

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

Our real estate operations, our incubator program for new research and development projects and our wholly-owned captive insurance companies are included in "Other." Refer to Note 12—Business Segments and Geographic Information for further details on our reportable segments.

Our real estate operations and our wholly-owned captive insurance companies are included in "Other." Refer to Note 13—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, and West Virginia.

Colorado, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, and West Virginia.

Our International Solutions operations have rigs and/or services primarily located in five international locations:

Argentina, Australia, Bahrain, Colombia and the United Arab Emirates.

Additionally, we are preparing to commence operations in Saudi Arabia.

Argentina, Australia, Bahrain, Colombia, and Saudi Arabia.

Our Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S.

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

KCA Deutag Acquisition

On January 16, 2025 (the “Closing Date”), H&P completed its acquisition of the entire issued share capital (the "Acquisition") of KCA Deutag International Limited (KCA Deutag") pursuant to the Sale and Purchase Agreement (the "Purchase Agreement").

H&P paid aggregate cash consideration of approximately $ 2.0 billion, which consisted of the share purchase price of $ 0.9 billion and $ 1.1 billion which was used to contemporaneously repay or redeem certain of KCA Deutag existing debt, including, as applicable, the payment of all accrued and unpaid interest, premiums, and fees.

For additional information regarding the completion of the Acquisition, refer to Note 14—Subsequent Events.

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

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

Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations during the three and nine months ended June 30, 2023.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations, which were not material, to Other within Other income (expense) on our Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2023.

Q1 FY25 FORM 10-Q | 8

Principles of Consolidation

3 unchanged sentences

All intercompany accounts and transactions have been eliminated upon consolidation.

Q3 FY24 FORM 10-Q | 9

Cash, Cash Equivalents, and Restricted Cash

1 unchanged sentence

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

We recorded restricted cash of $ 78.4 million and $ 61.4 million at June 30, 2024 and 2023, respectively, and $ 59.1 million and $ 36.9 million at September 30, 2023 and 2022, respectively.

All restricted cash at June 30, 2024 represents an amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies.

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

We recorded restricted cash of $ 1.3 billion and $ 65.1 million at December 31, 2024 and 2023, respectively, and $ 1.3 billion and $ 59.1 million at September 30, 2024 and 2023, respectively.

Of the total at December 31, 2024 and September 30, 2024, $ 1.2 billion represents net proceeds from senior notes issued in fiscal year 2024 to finance the purchase price of the Acquisition and to repay certain of KCA Deutag's outstanding indebtedness, and $ 73.2 million and $ 68.9 million represents the amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies at December 31, 2024 and September 30, 2024 respectively.

The restricted amounts are primarily invested in short-term money market securities.

Subsequent to December 31, 2024, $ 1.2 billion of restricted cash was used to fund the Acquisition.

For additional information regarding the completion of the Acquisition, refer to Note 14—Subsequent Events.

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

June 30, September 30,

December 31, September 30,

(in thousands) 2024 2023 2024 2023

6 unchanged sentences

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 Resources Corporation ("Tamboran Corp.") in exchange for depository interests in Tamboran Corp.

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.

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Concurrent with the October 2022 investment agreement, we entered into a fixed-term drilling services agreement with Tamboran Resources.

As of June 30, 2024, we recorded $ 1.5 million in receivables and $ 4.5 million in contract liabilities on our Unaudited Condensed Consolidated Balance Sheets.

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

We recorded $ 2.9 million and $ 9.9 million in revenue on our Unaudited Condensed Consolidated Statement of Operations during the three and nine months ended June 30, 2024, respectively, related to the drilling services agreement with Tamboran Resources, which commenced drilling services during the fourth fiscal quarter of 2023.

We expect to earn $ 32.8 million in revenue over the remaining contract term, and, as such, this amount is included within our contract backlog as of June 30, 2024.

As of December 31, 2024, we recorded $ 1.0 million in receivables and $ 3.4 million in contract liabilities on our Unaudited Condensed Consolidated Balance Sheet.

As of September 30, 2024, we recorded $ 5.0 million in receivables and $ 3.9 million in contract liabilities on our Consolidated Balance Sheet.

We recognized $ 4.8 million and $ 4.3 million in revenue on our Unaudited Condensed Consolidated Statement of Operations during the three months ended December 31, 2024, and 2023 respectively, related to the drilling services agreement with Tamboran Resources.

We expect to earn $ 35.0 million in revenue over the remaining contract term, and, as such, this amount is included within our contract backlog as of December 31, 2024.

Q1 FY25 FORM 10-Q | 9

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ASUs not listed below were assessed and determined to be either not applicable, clarifications of ASUs listed below, immaterial, or already adopted by the Company.

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

The following table provides a brief description of recently adopted accounting pronouncements and our analysis of the effects on our Unaudited Condensed Consolidated Financial Statements:

Standard Description Date of

1 unchanged sentence

Statements or Other Significant Matters

Standards that are not yet adopted as of June 30, 2024

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

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.

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 FY 2025 Form 10-K.

September 30, 2025 We plan to adopt this ASU, as required, during fiscal year 2025, with the first disclosure enhancements reflected in our Form 10-K.

We are currently evaluating the impact this ASU will have on our disclosures.

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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 FY 2026 Form 10-K.

September 30, 2026 We plan to adopt this ASU, as required, during fiscal year 2026, with the first disclosure enhancements reflected in our fiscal year 2026 Form 10-K.

We are currently evaluating the impact this ASU will have on our disclosures.

2024-03, Income Statement -- Reporting Comprehensive Income -- Expense Disaggregation Disclosure (Subtopic 220-40) This ASU enhances disclosure requirements for certain costs and expenses.

The amendments in this update enhance annual and interim disclosure requirements, certain liability-related expenses, expense reimbursements related to a cost-sharing or cost-reimbursement arrangement with another entity, and the disaggregation of relevant expense captions.

This update gives entities the ability to use estimates or other methods that produce a reasonable approximation of the amounts required to be disclosed.

This update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

Upon adoption, the amendments shall be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements.

September 30, 2028 We plan to adopt this ASU, as required, during fiscal year 2028 with the first disclosure enhancements reflected in our 2028 fiscal year Form 10-K.

We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.

Q1 FY25 FORM 10-Q | 10

Self-Insurance

2 unchanged sentences

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

Direct operating costs primarily consisted of adjustments of $ 5.3 million and $ 5.5 million to accruals for estimated losses for the three months ended June 30, 2024 and 2023, respectively, and $ 10.4 million and $ 10.2 million for the nine months ended June 30, 2024 and 2023, respectively, and rig and casualty insurance premiums of $ 9.5 million and $ 9.7 million during the three months ended June 30, 2024 and 2023, respectively, and $ 28.5 million and $ 30.6 million for the nine months ended June 30, 2024 and 2023, respectively.

Direct operating costs primarily consisted of adjustments to accruals for estimated losses of $ 3.9 million and $ 3.5 million and rig and casualty insurance premiums of $ 10.5 million and $ 9.1 million during the three months ended December 31, 2024 and 2023, respectively.

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

Intercompany premium revenues recorded by the Captives during the three months ended June 30, 2024 and 2023 amounted to $ 14.7 million and $ 17.4 million, respectively, and $ 45.7 million and $ 51.4 million during the nine months ended June 30, 2024 and 2023, respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, International Solutions, and Offshore Gulf of Mexico reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the three months ended June 30, 2024 and 2023 were $ 4.1 million and $ 2.1 million, respectively, and $ 11.4 million and $ 7.4 million for the nine months ended June 30, 2024 and 2023, respectively.

Q3 FY24 FORM 10-Q | 11

Intercompany premium revenues recorded by the Captives during the three months ended December 31, 2024 and 2023 amounted to $ 16.6 million and $ 15.2 million, respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, International Solutions, and Offshore Gulf of Mexico reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the three months ended December 31, 2024 and 2023 were $ 5.2 million and $ 4.1 million, respectively.

International Solutions Drilling Risks

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dollars, we are paid the equivalent in Argentine pesos.

The Central Bank of Argentina maintains certain currency controls that limit our ability to access U.S.

dollars and remit funds from our Argentine operations.

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.

Argentina also has a history of implementing currency controls that restrict the conversion and repatriation of U.S.

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.

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

We recorded aggregate foreign currency losses of $ 2.1 million and $ 4.5 million for the three and nine months ended June 30, 2024, respectively, and $ 1.4 million and $ 1.7 million for the three and nine months ended June 30, 2023, respectively .

The aggregate foreign currency loss for three and nine months ended June 30, 2024 was primarily due to Argentina's devaluation of its peso relative to the U.S.

dollar by approximately 55 percent in December 2023 .

We recorded aggregate foreign currency losses of $ 0.9 million and $ 1.8 million for the three months ended December 31, 2024 and 2023, respectively.

Following Argentina's devaluation of i ts peso relative to the U.S.

dollar by approximately 55 percent in December 2023, the peso continued to depreciate during the calendar year 2024.

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

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

As of June 30, 2024, our cash balance in Argentina was the U.S.

dollar equivalent of $ 9.2 million in Argentine Pesos.

As mentioned above, the Central Bank of Argentina's currency controls continue to 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 three and nine months ended June 30, 2024 , we entered into a Blue Chip Swap transaction, which resulted in a $ 7.1 million loss on investment recorded in Gain (loss) on investment securities within our Unaudited Condensed Consolidated Statements of Operations.

As a result of the Blue Chip Swap transaction, $ 13.8 million of net cash was repatriated to the U.S.

during the period.

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

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

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and nine months ended June 30, 2024, approximately 7.0 percent and 7.4 percent of our operating revenues were generated from international locations compared to 6.8 percent and 7.3 percent during the three and nine months ended June 30, 2023, respectively.

During the three and nine months ended June 30, 2024, approximately 77.9 percent and 77.1 percent of operating revenues from international locations were from operations in South America compared to 84.8 percent and 87.3 percent during the three and nine months ended June 30, 2023, respectively.

Q1 FY25 FORM 10-Q | 11

Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three months ended December 31, 2024, approximately 7.2 percent of our operating revenues were generated from international locations compared to 8.2 percent during the three months ended December 31, 2023, respectively.

During the three months ended December 31, 2024, approximately 71.3 percent of operating revenues from international locations were from operations in South America compared to 78.5 percent during the three months ended December 31, 2023, respectively.

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

The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations .

Q3 FY24 FORM 10-Q | 12

NOTE 3 PROPERTY, PLANT AND EQUIPMENT

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

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

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

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

Drilling services equipment 4 - 15 years

11 unchanged sentences

Property, plant and equipment, net $ 3,009,360 $ 3,016,277

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.

1 unchanged sentence

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

Depreciation expense during the three months ended June 30, 2024 and 2023 was $ 96.2 million and $ 93.2 million, including abandonments of $ 0.1 million and $ 0.2 million, respectively.

During the three months ended June 30, 2024, depreciation expense included $ 2.7 million of accelerated depreciation for components on rigs that are scheduled for conversion in fiscal year 2024 as compared to $ 0.4 million for three months ended June 30, 2023.

Depreciation expense during the nine months ended June 30, 2024 and 2023 was $ 291.5 million and $ 282.7 million, including abandonments of $ 3.2 million and $ 2.4 million, respectively.

During the nine months ended June 30, 2024 , depreciation expense included $ 10.9 million of accelerated depreciation for components on rigs that are scheduled for conversion in fiscal year 2024 as compared to $ 2.1 million for nine months ended June 30, 2023.

Depreciation expense during the three months ended December 31, 2024 and 2023 was $ 97.0 million and $ 92.4 million, including abandonments of $ 0.7 million and $ 0.5 million, respectively.

During the three months ended December 31, 2024, depreciation expense included $ 1.2 million of accelerated depreciation for components on rigs that are scheduled for conversion in fiscal year 2025 compared to $ 0.9 million in the three months ended December 31, 2023.

These expenses are recorded within Depreciation and amortization on our Unaudited Condensed 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 Unaudited Condensed Consolidated Statement of Operations for the nine months ended June 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 nine months ended June 30, 2024 , we recognized a gain on involuntary conversion of the rig of $ 5.5 million and fully collected $ 5.5 million in proceeds.

The total insurance proceeds received during the period exceeds the recognized loss and therefore was recognized as a gain within operating income during the nine months ended June 30, 2024 .

Impairment Charges

Fiscal Year 2024 Activity

We did not record any impairment charges during the three and nine months ended June 30, 2024.

Fiscal Year 2023 Activity

During the nine months ended June 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 nine months ended June 30, 2023.

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

The aggregate net book value of the equipment of $ 1.4 million was written down to its estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.3 million during the nine months ended June 30, 2023.

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

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During the nine months ended June 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 Unaudited Condensed Consolidated Balance Sheets as of June 30, 2023.

The rigs’ aggregate net book value of $ 8.8 million was written down to the estimated scrap value of $ 0.7 million, which resulted in a non-cash impairment charge of $ 8.1 million within our International Solutions segment and recorded in our Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2023.

Gain on Reimbursement of Drilling Equipment

We recognized gains of $ 9.7 million and $ 24.7 million during the three and nine months ended June 30, 2024, respectively, and $ 10.6 million and $ 37.9 million during the three and nine months ended June 30, 2023, respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe.

Gains related to these asset sales are recorded in Gains on reimbursement of drilling equipment within our Unaudited Condensed Consolidated Statements of Operations.

We recognized a gain of $ 9.4 million and $ 7.5 million during the three months ended December 31, 2024 and 2023, respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe.

Gains related to these asset sales are recorded in Gain on reimbursement of drilling equipment within our Unaudited Condensed Consolidated Statements of Operations.

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NOTE 4 GOODWILL AND INTANGIBLE ASSETS

During the three and nine months ended June 30, 2024, there were no additions or impairments to goodwill.

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

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

Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis in the fourth fiscal quarter, or when indications of potential impairment exist.

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

During the three months ended December 31, 2024, there were no additions or impairments to goodwill.

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

Intangible Assets

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

June 30, 2024 September 30, 2023

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:

December 31, 2024 September 30, 2024

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

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$ 96,961 $ 44,414 $ 52,547 $ 96,961 $ 42,814 $ 54,147

Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $ 1.6 million for the three months ended June 30, 2024 and 2023, respectively and $ 4.8 million and $ 5.0 million for the nine months ended June 30, 2024 and 2023, respectively.

Amortization expense is estimated to be approximately $ 1.6 million for the remainder of fiscal year 2024, and approximately $ 6.4 million for fiscal year 2025 through 2028.

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

June 30, 2024 September 30, 2023

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

As of December 31, 2024 and September 30, 2024, we had the following unsecured long-term debt outstanding with maturity shown in the following table:

December 31, 2024 September 30, 2024

(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 $ ( 3,066 ) $ 346,934 $ 350,000 $ ( 2,907 ) $ 347,093

Due December 1, 2029

350,000 ( 3,932 ) 346,068 350,000 ( 3,703 ) 346,297

Due September 29, 2031 550,000 ( 4,112 ) 545,888 550,000 ( 4,262 ) 545,738

Due December 1, 2034

550,000 ( 7,216 ) 542,784 550,000 ( 6,946 ) 543,054

Long-term debt $ 1,800,000 $ ( 18,326 ) $ 1,781,674 $ 1,800,000 $ ( 17,818 ) $ 1,782,182

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

persons in transactions outside the United States pursuant to Regulation S under the Securities Act (“Regulation S”).

Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.

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Senior Notes Issued in Fiscal Year 2024

On September 17, 2024, we completed a private offering of $ 1.25 billion aggregate principal amount of senior notes, comprised of the following tranches (collectively, the "Notes"):

$ 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.

Interest on the Notes is payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2025.

On January 16, 2025, H&P completed the Acquisition, and the Company used the net proceeds of the Notes, together with the proceeds of its term loan credit agreement (discussed below) and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag’s outstanding indebtedness, and to pay related fees and expenses.

For additional information regarding the completion of the Acquisition, refer to Note 14—Subsequent Events.

The net proceeds reduced the commitments under the Company’s Bridge Loan Facility (discussed herein) for purposes of financing 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 (the "Registration Rights Agreement'), 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 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.

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

Credit Facility

On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that was set to mature on November 13, 2024.

On April 16, 2021, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 13, 2024 to November 12, 2025.

No other terms of the 2018 Credit Facility were amended in connection with this extension.

On March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.

Additionally, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026.

On February 10, 2023, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 11, 2026 to November 12, 2027.

The remaining $ 70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date.

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

As of June 30, 2024, there were no borrowings or letters of credit outstanding, leaving $ 750.0 million available to borrow under the 2018 Credit Facility.

For a full description of the 2018 Credit Facility, see Note 6—Debt to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K.

As of June 30, 2024, we had $ 120.0 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 $ 120.0 million, $ 41.7 million was outstanding as of June 30, 2024.

Term Loan Credit Agreement

On August 14, 2024, the Company entered into a unsecured term loan credit agreement (the "Term Loan Credit Agreement"), dated as of August 14, 2024, among the Company, Morgan Stanley Senior Funding, Inc.

(“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 herein) 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.

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The benchmark rate is the Secured Overnight Financing Rate ("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 December 31, 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 December 31, 2024.

On January 16, 2025, H&P completed the Acquisition, and the Company used the proceeds from the Term Loan Credit Agreement, together with the net proceeds from the sale of the Notes and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag's outstanding indebtedness, and to pay related fees and expenses.

For additional information regarding the completion of the Acquisition, refer to Note 14—Subsequent Events.

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 would, if drawn, be 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 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, we recognized the remaining $ 1.4 million of commitment fees within Interest expense on the Unaudited Condensed Consolidated Statement of Operations during the three months ended December 31, 2024.

Revolving Credit Facility

On August 14, 2024, the Company entered into an Amended and Restated Credit Agreement (the "Amended Credit Facility") with the lenders party thereto (the "Revolving Credit Agreement Lenders"), the issuing lenders party thereto and Wells Fargo, National Association ("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.

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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 December 31, 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 December 31, 2024, there were no borrowings or letters of credit outstanding, leaving $ 950.0 million available to borrow under the Amended Credit Facility.

As of December 31, 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, $ 47.2 million was outstanding as of December 31, 2024.

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

In total, we had $ 46.7 million outstanding as of June 30, 2024.

In total, we had $ 52.2 million outstanding as of December 31, 2024.

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

At June 30, 2024, we were in compliance with all debt covenants.

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

NOTE 6 INCOME TAXES

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

Our income tax expense for the three months ended June 30, 2024 and 2023 was $ 33.7 million and $ 40.7 million, respectively, resulting in effective tax rates of 27.5 percent and 29.9 percent, respectively.

Our income tax expense for the nine months ended June 30, 2024 and 2023 was $ 96.0 million and $ 124.2 million, respectively, resulting in effective tax rates of 26.3 percent and 25.9 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three months ended June 30, 2024, primarily due to state and foreign income taxes, permanent non-deductible items and a discrete benefit of $ 0.8 million primarily related to provision to return adjustments.

The effective tax rate for the nine months ended June 30, 2024 differs from U.S.

federal statutory rate of 21.0 percent primarily due to state and foreign income taxes, permanent non-deductible items and a discrete tax benefit of $ 1.6 million primarily related to equity compensation and provision to return adjustments.

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Our income tax expense from continuing operations for the three months ended December 31, 2024 and 2023 was $ 21.6 million and $ 30.1 million, respectively, resulting in effective tax rates of 28.3 percent and 24.0 percent, respectively.

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent for the three months ended June 30, 2023 primarily due to state and foreign income taxes, permanent non-deductible items and discrete tax expense of $ 2.4 million primarily related to an increase in our deferred state income tax rate.

The effective tax rate for the nine months ended June 30, 2023, differs from the U.S.

federal statutory rate of 21.0 percent primarily due to state and foreign income taxes, permanent non-deductible items and a discrete tax expense of $ 2.3 million primarily related to an increase in deferred state income tax rate and equity compensation.

As of June 30, 2024, we have recorded unrecognized tax benefits and related interest and penalties of approximately $ 0.7 million.

During the three months ended June 30, 2024, $ 2.7 million of the unrecognized tax benefits, interest and penalties was recognized as a result of a lapse of the statute of limitations.

federal statutory rate of 21.0 percent for the three months ended December 31, 2024 and 2023 primarily due to state and foreign income taxes, permanent non-deductible items, and discrete adjustments.

The discrete adjustments for the three months ended December 31, 2024 and 2023 are primarily due to tax expense (benefit) related to equity compensation of $ 0.7 million and $( 0.9 ) million, respectively.

As of December 31, 2024, we have recorded unrecognized tax benefits and related interest and penalties of approximately $ 0.6 million.

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

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

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

We did not make any share repurchases during the three months ended June 30, 2024.

During the nine months ended June 30, 2024, we repurchased 1.4 million common shares at an aggregate cost of $ 51.6 million, including excise tax of $ 0.3 million.

During the three and nine months ended June 30, 2023, we repurchased 3.2 million and 6.5 million common shares at an aggregate cost of $ 103.2 million and $ 249.0 million, including excise tax of $ 1.0 million and $ 1.8 million, respectively.

During the three and nine months ended June 30, 2024, we declared $ 42.0 million and $ 143.3 million, respectively, in cash dividends.

A base cash dividend of $ 0.25 per share and a supplemental dividend of $ 0.17 per share was declared on June 5, 2024 for shareholders of record on August 16, 2024, payable on August 30, 2024.

As a result, we recorded a Dividend payable of $ 42.0 million on our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024.

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

We did not make any share repurchases during the three months ended December 31, 2024.

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

A cash dividend of $ 0.25 per share was declared on December 11, 2024 for shareholders of record on February 14, 2025, payable on February 28, 2025.

As a result, we recorded a Dividend payable of $ 25.2 million on our Unaudited Condensed Consolidated Balance Sheet as of December 31, 2024.

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Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

June 30, September 30,

December 31, September 30,

(in thousands) 2024 2024

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( 262 ) ( 662 )

$ ( 7,825 ) $ ( 8,294 )

After-tax amounts:

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( 203 ) ( 512 )

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 (loss) and reported in other comprehensive income (loss).

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, for the three and nine months ended June 30, 2024:

Three Months Ended June 30, 2024

(in thousands) Unrealized Loss on Available-for-Sale Securities

Defined Benefit Pension Plan Total

Balance at beginning of period $ — $ ( 7,713 ) $ ( 7,713 )

Other comprehensive loss before reclassifications

$ ( 5,987 ) $ ( 6,350 )

Amounts reclassified from accumulated other comprehensive income — 134 134

Net current-period other comprehensive loss

( 920 ) 134 ( 786 )

Balance at June 30 2024 $ ( 920 ) $ ( 7,579 ) $ ( 8,499 )

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Nine Months Ended June 30, 2024

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.

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, for the three months ended December 31, 2024:

Three Months Ended December 31, 2024

(in thousands) Unrealized Loss on Available-for-Sale Securities

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Balance at beginning of period $ ( 512 ) $ ( 5,838 ) $ ( 6,350 )

Other comprehensive loss before reclassifications

( 920 ) — ( 920 )

Amounts reclassified from accumulated other comprehensive income — 402 402

Net current-period other comprehensive loss

( 920 ) 402 ( 518 )

Balance at June 30 2024 $ ( 920 ) $ ( 7,579 ) $ ( 8,499 )

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Net current-period other comprehensive income

Balance at December 31 $ ( 203 ) $ ( 5,784 ) $ ( 5,987 )

NOTE 8 REVENUE FROM CONTRACTS WITH CUSTOMERS

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

Total revenue recognized from performance contracts, including performance bonuses, was $ 294.4 million and $ 880.4 million, of which $ 11.8 million and $ 37.4 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2024, respectively.

Total revenue recognized from performance contracts, including performance bonuses, was $ 316.2 million and $ 883.3 million, of which $ 11.4 million and $ 33.0 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2023, respectively.

Total revenue recognized from performance contracts, including performance bonuses, was $ 305.8 million and $ 298.2 million, of which $ 16.9 million and $ 15.2 million was related to performance bonuses recognized due to the achievement of performance targets during the three months ended December 31, 2024 and 2023, respectively.

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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 expiration of their fixed terms, contractual provisions customarily require early termination amounts to be paid to us.

Revenues from early terminated contracts are recognized when all contractual requirements have been met.

During the three months ended December 31, 2024 and 2023 , early termination revenue associated with term contracts was $ 1.4 million and $ 5.4 million, respectively.

Contract Costs

We had capitalized fulfillment costs of $ 11.6 million and $ 11.4 million as of June 30, 2024 and September 30, 2023, respectively.

As of December 31, 2024 and September 30, 2024, we had capitalized fulfillment costs of $ 29.9 million and $ 19.2 million, respectively.

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of June 30, 2024 was approximately $ 1.5 billion, of which approximately $ 0.3 billion is expected to be recognized during the remainder of fiscal year 2024, approximately $ 0.6 billion during fiscal year 2025, and approximately $ 0.6 billion in fiscal year 2026 and thereafter.

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of December 31, 2024 was approximately $ 1.5 billion, of which approximately $ 0.8 billion is expected to be recognized during the remainder of fiscal year 2025, approximately $ 0.7 billion during fiscal year 2026 and thereafter.

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

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

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Contract Assets and Liabilities

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

(in thousands) June 30, 2024 September 30, 2023

(in thousands) December 31, 2024 September 30, 2024

Contract assets, net $ 4,439 $ 4,563

(in thousands) June 30, 2024

(in thousands) December 31, 2024

Contract liabilities balance at September 30, 2024

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Revenue recognized during the period ( 14,905 )

Contract liabilities balance at June 30, 2024

Contract liabilities balance at December 31, 2024

NOTE 9 ACQUISITION TRANSACTION COSTS

During the three months ended December 31, 2024, we recognized approximately $ 10.5 million in acquisition transaction costs associated with the Acquisition.

These non-recurring costs are primarily related to third-party legal, consulting and advisory services and are included in Acquisition transaction costs on the Unaudited Condensed Consolidated Statements of Operations.

NOTE 10 EARNINGS PER COMMON SHARE

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

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

To conform with the current fiscal year presentation, basic and diluted earnings per share for continuing and discontinued operations are presented in the aggregate, for the three and nine months ended June 30, 2023, as presented below.

Q1 FY25 FORM 10-Q | 18

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Three Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts) 2024 2023

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Three Months Ended

June 30, Nine Months Ended

(in thousands, except per share amounts) 2024 2023

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

June 30, 2024

December 31, 2024

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

Short-term investments:

Money market mutual funds $ 72,305 $ 72,305 $ — $ —

Corporate and municipal debt securities 26,234 — 26,234 —

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Non-qualified supplemental savings plan 16,275 16,275 — —

Investment in ADNOC Drilling 178,235 178,235 — —

Investment in Tamboran 19,810 19,810 — —

Debt securities:

Investment in Galileo 36,751 — — 36,751

Geothermal debt securities 2,000 — — 2,000

Investment in Galileo, net 27,499 — — 27,499

Geothermal debt securities, net 2,000 — — 2,000

Other debt securities 4,988 4,738 — 250

Total 70,572 40,823 — 29,749

Nonrecurring fair value measurements 1 :

Other equity securities 4,071 — — 4,071

Total 4,071 — — 4,071

Total $ 264,769 $ 221,697 $ — $ 43,072

Contingent consideration $ 5,000 $ — $ — $ 5,000

(1) As of June 30, 2024, our equity security investments in geothermal energy totaled $ 27.2 million and our debt security investments in held to maturity bonds totaled $ 0.3 million.

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

The investments are measured at cost, less any impairments.

Q3 FY24 FORM 10-Q | 20

As of December 31, 2024, our equity security investments in geothermal energy were $ 26.2 million, of which $ 0.5 million was measured at fair value as of December 31, 2024.

The remaining $ 25.7 million is measured at cost, less any impairments.

Our other equity security investments totaled $ 4.6 million and our debt security investments in held to maturity bonds totaled $ 0.2 million.

These investments are measured at cost, less any impairments.

September 30, 2024

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government and federal agency securities 53,490 53,490 — —

Investment in ADNOC Drilling 205,616 205,616 — —

Total 292,919 259,106 33,813 —

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Non-qualified supplemental savings plan 15,633 15,633 — —

Investment in ADNOC Drilling 174,758 174,758 — —

Investment in Tamboran 20,958 20,958 — —

Debt securities:

Investment in Galileo 35,434 — — 35,434

Geothermal debt securities 2,006 — — 2,006

Total 236,715 199,275 — 37,440

Nonrecurring fair value measurements 1 :

Other equity securities 2

2,430 — — 2,430

Total 2,430 — — 2,430

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

Contingent consideration $ 9,455 $ — $ — $ 9,455

(1) As of September 30, 2023, our equity security investments in geothermal energy totaled $ 25.2 million.

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

The investments are measured at cost, less any impairments.

(2) As of September 30, 2023, our other equity securities subject to measurement at fair value on a nonrecurring basis totaled $ 3.0 million, of which $ 2.4 million has been marked to fair value.

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.

Q1 FY25 FORM 10-Q | 20

Recurring Fair Value Measurements

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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.

Level 2 inputs include corporate and municipal bonds measured using broker quotations that utilize observable market 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 Unaudited Condensed Consolidated Balance Sheet.

During the three months ended December 31, 2024, we sold our equity securities of 159.7 million shares in ADNOC Drilling and received net proceeds of approximately $ 193.3 million.

During the three months ended December 31, 2024, we recognized a loss of $ 12.4 million on our Unaudited Condensed Consolidated Statements of Operations, related to this investment, of which $ 8.4 million is associated with the change in the fair value of the investment and $ 4.0 million relates to transaction fees associated with the sale of the securities.

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

This investment was classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange, and was measured at fair value with any losses recorded within Loss on investment securities on our Unaudited Condensed Consolidated Statements of Operations.

Long-term Investments

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

Q3 FY24 FORM 10-Q | 21

ADNOC Drilling’s initial public offering was completed on October 3, 2021, and its shares are listed and traded on the Abu Dhabi Securities Exchange.

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

Consistent with the provisions of ASU No.

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

During the three and nine months ended June 30, 2024, we recognized gains of $ 5.6 million and $ 3.5 million, respectively, on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment compared to gain (loss) of $( 17.0 ) million and $ 7.4 million during the three and nine months ended June 30, 2023, respectively.

This investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange.

Equity Securities with Fair Value Option In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources.

In December 2023, all shares of Tamboran Resources were transferred to Tamboran Resources Corporation ("Tamboran Corp.") in exchange for depository interests in Tamboran Corp.

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.

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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 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.

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

Our shares received in this initial public offering were subject to a 180 -day lockup period.

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 June 30, 2024, our combined equity ownership was approximately 7.2 percent representing 1.0 million common shares in Tamboran Corp.

As of December 31, 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 three and nine months ended June 30, 2024, we recognized gains of $ 1.9 million and $ 3.7 million, respectively, recorded within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment compared to a loss of $ 1.5 million during the three and nine months ended June 30, 2023, respectively.

During the three months ended December 31, 2024 and 2023 , we recognized a gain (loss) of $( 1.1 ) million and $ 6.3 million, respectively, recorded within Loss on investment securities on our Unaudited Condensed Consolidated Statements of Operations, as a result of the change in fair value of the investment.

Q1 FY25 FORM 10-Q | 21

Debt Securities During April 2022, the Company made a $ 33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of notes with an option to convert into common shares of the parent of Galileo Holdco 2 ("Galileo parent").

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

As of June 30, 2024, the fair value of the convertible note was approximately equal to the cost basis.

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

June 30, 2024

Fair Value Valuation Technique Unobservable Inputs

$ 36,751 Black-Scholes-Merton model Discount rate 20.8 %

Risk-free rate 4.3 %

Equity volatility 105.0 %

Q3 FY24 FORM 10-Q | 22

The above significant unobservable inputs are subject to change based on changes in economic and market conditions.

As of December 31, 2024 and September 30, 2024, our net debt security investment in Galileo was $ 27.5 million and $ 27.0 million, respectively.

The significant unobservable inputs related to the valuation of our debt security investment with Galileo 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.

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

During the three months ended December 31, 2024, there were no changes to the Level 3 unobservable significant inputs.

A majority of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and are measured using Level 3 unobservable inputs based on the absence of market activity.

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Three Months Ended

June 30, Nine Months Ended

(in thousands) 2024 2023

Assets at beginning of period $ 29,294 $ 37,440

Purchases — 41 250 2,116

Accrued interest 455 433

Transfers out — — — ( 500 )

Reserves — — ( 5 ) —

Total losses:

Included in earnings — ( 5 )

Assets at end of period $ 29,749 $ 37,868

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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 price changes in identical or similar investments from the same issuer occur.

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:

The following table reconciles changes in the balance of our equity securities, without readily determinable fair values, including investments that have been marked to fair value on a nonrecurring basis, for the periods presented below:

Three Months Ended

June 30, Nine Months Ended

(in millions) 2024 2023

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Purchases 646 291

— — ( 616 ) —

Included in earnings 109 —

Assets at end of period $ 30,845 $ 28,523

Q1 FY25 FORM 10-Q | 22

Contingent Consideration

Other financial instruments measured using Level 3 unobservable inputs primarily consist of potential 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 Unaudited Condensed Consolidated Balance Sheets based on the expected timing of milestone achievements.

The following table reconciles changes in the fair value of our Level 3 liabilities for the periods presented below:

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2024 2023 2024 2023

Liabilities at beginning of period $ 14,000 $ 5,030 $ 9,455 $ 4,022

Additions — — — 500

Total gains or losses:

Included in earnings 1,000 4,050 6,670 5,808

Settlements 1

( 10,000 ) ( 500 ) ( 11,125 ) ( 1,750 )

Liabilities at end of period $ 5,000 $ 8,580 $ 5,000 $ 8,580

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

Other Financial Instruments

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Government and in federally insured deposit accounts.

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

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

(in millions) June 30, 2024 September 30, 2023

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

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

December 31, September 30,

(in millions) 2024 2024

Long-term debt, net

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Fair value 1,666.5 1,702.9

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

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

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

NOTE 12 COMMITMENTS AND CONTINGENCIES

Lease Obligations

During the nine months ended June 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 Unaudited Condensed Consolidated Balance Sheet.

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

This contract is accounted for as an operating lease.

Purchase Commitments

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

At June 30, 2024, we had purchase commitments for equipment, parts and supplies of approximately $ 99.6 million.

At December 31, 2024, we had purchase commitments for equipment, parts and supplies of approximately $ 129.6 million.

Guarantee Arrangements

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

Q3 FY24 FORM 10-Q | 24

Contingencies

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

Q1 FY25 FORM 10-Q | 23

NOTE 13 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

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Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

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

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

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• Revenues from external and internal customers

• Direct operating expenses

• Direct operating costs

• Depreciation and amortization

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• Allocated general and administrative expenses

• Asset impairment charges

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

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

General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods may be used which we believe to be a reasonable reflection of the utilization of services provided.

Q3 FY24 FORM 10-Q | 25

Summarized financial information of our reportable segments for the three and nine months ended June 30, 2024 and 2023 is shown in the following tables:

Three Months Ended June 30, 2024

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

External sales $ 620,040 $ 47,882 $ 27,218 $ 2,584 $ — $ 697,724

Intersegment — — — 14,677 ( 14,677 ) —

Total sales 620,040 47,882 27,218 17,261 ( 14,677 ) 697,724

Segment operating income (loss)

$ 163,359 $ ( 4,844 ) $ 5,010 $ ( 4,791 ) $ ( 616 ) $ 158,118

Three Months Ended June 30, 2023

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

Three Months Ended December 31, 2024

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

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$ 151,994 $ ( 15,170 ) $ 3,505 $ 774 $ 102 $ 141,205

Nine Months Ended June 30, 2024

Three Months Ended December 31, 2023

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

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$ 144,490 $ 5,423 $ 3,052 $ ( 67 ) $ 334 $ 153,232

Nine Months Ended June 30, 2023

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

External sales $ 1,944,555 $ 159,383 $ 101,364 $ 7,513 $ — $ 2,212,815

Intersegment — — — 51,423 ( 51,423 ) —

Total sales 1,944,555 159,383 101,364 58,936 ( 51,423 ) 2,212,815

Segment operating income $ 496,945 $ 4,132 $ 18,138 $ 13,604 $ 4,513 $ 537,332

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

Three Months Ended

June 30, Nine Months Ended

(in thousands) 2024 2023

Segment operating income $ 141,205 $ 153,232

Acquisition transaction costs ( 10,535 ) —

Gain on reimbursement of drilling equipment 9,403 7,494

Other gain (loss) on sale of assets ( 1,673 ) 2,443

( 2,730 ) ( 4,504 ) ( 2,718 ) 394

Corporate selling, general and administrative costs and corporate depreciation ( 48,417 ) ( 39,701 )

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Interest expense ( 22,298 ) ( 4,372 )

Gain (loss) on investment securities 389 ( 18,538 ) 102 6,123

Loss on investment securities ( 13,367 ) ( 4,034 )

Other 360 ( 543 )

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Income before income taxes $ 76,419 $ 125,253

Q3 FY24 FORM 10-Q | 26

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

(in thousands) June 30, 2024 September 30, 2023

(in thousands) December 31, 2024 September 30, 2024

Total assets 1

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Three Months Ended

June 30, Nine Months Ended

(in thousands) 2024 2023

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Argentina 34,660 35,876

Colombia 31 9,433 8,976 39,454

Bahrain 4,848 4,497

United Arab Emirates 2,287 2,401 8,082 7,280

Australia 4,757 4,312

Saudi Arabia 3,231 —

Colombia — 7,703

United Arab Emirates — 2,365

Other foreign 1,126 777

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

NOTE 13 SUBSEQUENT EVENTS

On July 25, 2024, H&P entered into a Sale and Purchase Agreement (the “Purchase Agreement”), among the Majority Sellers named therein (the "Majority Sellers"), the Management Seller named therein (the "Management Seller"), Ocorian Limited, a private company limited by shares incorporated in Jersey (together with the Majority Sellers and the Management Seller, the "Lead Sellers"), HP Global Holdings Limited, a private company limited by shares incorporated in Jersey and a wholly owned subsidiary of H&P (the "Purchaser"), and, for certain purposes set forth therein, KCA Deutag International Limited, a private company limited by shares incorporated in Jersey (“KCA Deutag”).

Pursuant to the terms of the Purchase Agreement, we have agreed to acquire the entire issued share capital of KCA Deutag (such purchase and sale, together with the other transactions contemplated by the Purchase Agreement, the “Acquisition”) for an aggregate cash purchase price of approximately $ 946.4 million (the “Unadjusted Purchase Price”), which is subject to customary downward adjustments at the closing for certain items of leakage occurring from December 31, 2023 to the closing, transaction costs and transaction-related bonuses.

In addition, to the extent certain German tax obligations of KCA Deutag remain outstanding prior to closing, a portion of the Unadjusted Purchase Price equal to EUR € 75.4 million plus interest on such amount at an annual rate of 1.8 percent from October 1, 2024 until closing will be deposited into escrow at closing until such tax obligations are finally settled.

The Majority Sellers collectively own approximately 60.581 percent of KCA Deutag's outstanding shares, and the Purchaser will acquire the remaining minority shares of KCA Deutag through the exercise of a drag-along right.

The consummation of the Acquisition is subject to the satisfaction or waiver of a number of conditions set forth in the Purchase Agreement, including, (i) the receipt of certain antitrust approvals necessary to consummate the Acquisition, (ii) the accuracy of the warranties set forth in the Purchase Agreement and that certain Deed of Warranty, dated as of July 25, 2024, among the warrantors named therein and the Purchaser, (iii) the absence of a material adverse change with respect to KCA Deutag and its wholly owned subsidiaries and (iv) the compliance by the Lead Sellers and KCA Deutag in all material respects of their obligations under the Purchase Agreement.

Subject to the satisfaction of the conditions in the Purchase Agreement, the consummation of the Acquisition is expected to occur prior to the end of the 2024 calendar year.

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In connection with the Acquisition, we entered into a debt commitment letter dated July 25, 2024 with Morgan Stanley Senior Funding, Inc.

(“MSSF”), pursuant to which MSSF has committed, subject to satisfaction of standard conditions, to provide us with an unsecured bridge loan facility in an aggregate principal amount of $ 1.9725 billion (the “Bridge Loan Facility”).

We currently intend to fund the Acquisition and related fees, costs and expenses with a combination of cash on hand, borrowings and through one or more debt capital markets or loan facility transactions, subject to market conditions and other factors, and utilize, only to the extent necessary, borrowings under the Bridge Loan Facility.

NOTE 14 SUBSEQUENT EVENTS

On January 16, 2025 (the “Closing Date”), H&P completed the Acquisition of KCA Deutag pursuant to the Purchase Agreement.

Of the $ 0.9 billion, approximately $ 80.0 million was deposited into a customary escrow on the Closing Date pending the resolution of certain potential tax obligations of KCA Deutag.

On the Closing Date, the Company drew an aggregate principal amount of $ 400.0 million under the Term Loan Credit Agreement for p urposes of financing the Acquisition as further described in Note 5—Debt .

The cash consideration was funded through a combination of net proceeds from the Company’s September 2024 senior notes offering, net proceeds from the funding of the Company’s Term Loan Credit Agreement, cash on hand, and monetization of our investment in ADNOC Drilling.

The $ 1.1 billion repayment or redemption of certain KCA Deutag existing debt consisted of (a) the redemption in full of all of (i) KCA Deutag UK Finance PLC’s outstanding $ 500 million aggregate principal amount of 9.875 % Senior Secured Notes due 2025, (ii) KCA Deutag UK Finance PLC’s outstanding $ 250 million aggregate principal amount of Senior Secured Floating Rate Notes due 2025 and (iii) KCA Deutag PIKCO PLC’s outstanding $ 272.2 million aggregate principal amount (which includes approximately $ 72.2 million of accrued and capitalized interest) of 15.0 %/ 17.5 % Payment-In-Kind Notes due 2027, and (b) the repayment of all of the (i) approximately $ 50 million of outstanding borrowings under KCA Deutag’s Senior Secured Guarantee and Revolving Credit Facilities provided by Barclays Bank plc and (ii) approximately $ 50 million of outstanding borrowings under KCA Deutag’s Senior Secured Revolving Credit Facilities provided by Deutsche Bank AG, in each case including, as applicable, the payment of all accrued and unpaid interest, premiums and fees in connection with each such redemption or repayment.

To date, the initial accounting for the Acquisition is incomplete.

Due to the limited time since the Closing Date, it is impracticable for the Company to include business combination disclosures related to the Acquisition.

The Company is still gathering the necessary information to provide such disclosures in future filings.

Effective January 16, 2025, and as a result of the Acquisition, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions.

Q1 FY25 FORM 10-Q | 26

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

What changed 10-Q

Item 1. Financial Statements