What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-09 · 251 added, 191 removed, 436 unchanged (50% of the section changed)

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For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.

As of March 31, 2025, our drilling rig fleet included a total of 384 drilling rigs.

Our reportable operating business segments consist of the North America Solutions segment with 224 rigs, the International Solutions segment with 153 rigs, and the Offshore Solutions segment with seven offshore platform rigs as of March 31, 2025.

As of June 30, 2025, our drilling rig fleet included a total of 368 drilling rigs.

Our reportable operating business segments consist of the North America Solutions segment with 224 rigs, the International Solutions segment with 137 rigs, and the Offshore Solutions segment with seven offshore platform rigs as of June 30, 2025.

Although the Offshore Solutions segment has a fleet of platform rigs, the majority of its revenues are derived from asset-light management contracts.

At the close of the second quarter of fiscal year 2025, we had 229 active contracted rigs, of which 157 were under a fixed-term contract and 72 were working well-to-well, compared to 170 contracted rigs at September 30, 2024.

At the close of the third quarter of fiscal year 2025, we had 213 active contracted rigs, of which 140 were under a fixed-term contract and 73 were working well-to-well, compared to 170 contracted rigs at September 30, 2024.

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

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

Furthermore, E&Ps have become more fiscally disciplined in their level of capital expenditures relative to commodity price fluctuations, which has resulted in less volatility within the oilfield service businesses, including our operations.

Furthermore, E&Ps have become more fiscally disciplined in their level of capital expenditures relative to commodity price fluctuations and the amount of free cash flows that can be returned to their shareholders, which has resulted in less volatility within the oilfield service businesses, including our operations.

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In April 2025, the announcements by the U.S.

government regarding the implementation of global tariffs and OPEC+ regarding the planned increase of crude oil supply have both created a high level of uncertainty in the global energy markets.

Additionally, the announcement and subsequent suspension or modification of certain tariffs has increased uncertainty regarding the ultimate effect on any tariffs on economic conditions.

Although we do not anticipate that these announcements, particularly the tariff announcements, will have a direct material impact on the Company's operations or financial results, we believe the indirect effects could lead to reduced activity and profitability for the remainder of fiscal 2025, or until the global economic impacts are fully realized.

Since these announcements, both crude oil and natural gas prices have become more volatile and have declined significantly.

Such volatility could lead E&Ps to adjust their capital budgets lower and reduce planned capital expenditures, which could ultimately impact our business through lower expected activity levels.

Earlier in calendar 2025, the announcements by the U.S.

government regarding the implementation of global tariffs and OPEC+ regarding the planned increase of crude oil supply created a high level of uncertainty in the global energy markets.

More recently, heightened geopolitical tensions in the Middle East have perpetuated and elevated the level of uncertainty further.

Although we do not anticipate that these announcements and events, particularly the tariff announcements and the armed conflict in the Middle East, will have a direct material impact on the Company's operations or financial results, we believe the indirect effects could lead to reduced activity and profitability for the remainder of fiscal 2025, or possibly even further, until the global economic impacts of these events are fully realized.

Since these announcements, both crude oil and natural gas prices have fluctuated more with crude oil prices lower than levels a year ago.

Such volatility could lead E&Ps to adjust their capital budgets lower and reduce planned capital expenditures, which could ultimately impact our business through lower than expected activity levels.

Recent Developments

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KCA Deutag is a diverse global drilling company.

The company derives a significant portion of its revenues and cash flow from its land operations and has a substantial land drilling presence in the Middle East with additional operations in South America, Europe, and Africa.

In addition to its land operations, the company has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada.

Management contract operations provide services to customer platforms where the customer owns the drilling rig.

KCA Deutag’s Kenera business unit comprises manufacturing and engineering operations, including Bentec, with three facilities serving the energy industry.

See Note 3—Business Combination for additional details related to the Acquisition.

Subsequent to the announcement of the Acquisition in July 2024 through April 2025, KCA Deutag and the Company have received notifications of contract suspensions for rigs from the legacy KCA Deutag rig fleet operating in Saudi Arabia.

Through March 31, 2025, the Company's total rig suspensions were 14 rigs;

however, subsequent to March 31, 2025, the Company has received notification of three additional rigs suspended bringing the total rigs suspensions in country to 17 rigs.

Subsequent to the announcement of the Acquisition in July 2024 through July 2025, KCA Deutag and the Company have received notifications of contract suspensions for rigs from the legacy KCA Deutag rig fleet operating in Saudi Arabia.

Through June 30, 2025, the Company's total rig suspensions were 26 rigs;

however, subsequent to June 30, 2025, the Company has received notification of one additional rig suspended bringing the total rigs suspensions in country to 27 rigs.

At the time the Acquisition was announced, we initially expected to realize approximately $25 million in synergies.

Since that time, we have been able to conduct a more detailed analysis of possible synergies, and we also launched a broader review of our enterprise cost structure.

We now anticipate realizing in excess of $25 million in expense synergies associated with the Acquisition that when combined with other permanent cost-saving initiatives identified, we would expect our overall cost structure to be reduced by approximately $50 to $70 million.

We now anticipate realizing in excess of $25 million of cost savings from the combination of synergies associated with the Acquisition and other permanent cost-saving initiatives (such as our workforce reduction plan discussed in Note 16—Restructuring Charges) and anticipate reducing our overall cost structure by approximately $50 to $75 million.

We believe these cost-saving efforts will become increasingly evident in the forthcoming quarters.

Contract Backlog

As of March 31, 2025 and September 30, 2024, our total contract drilling backlog, being the expected future dayrate revenue from executed contracts, was $7.6 billion and $1.5 billion, respectively.

The increase in backlog from September 30, 2024 to March 31, 2025 is primarily due to the completion of the Acquisition.

Approximately 13.3 percent of the March 31, 2025 total backlog is reasonably expected to be fulfilled during the remainder of fiscal year 2025.

As of June 30, 2025 and September 30, 2024, our total contract drilling backlog, being the expected future dayrate revenue from executed contracts, was $7.3 billion and $1.5 billion, respectively.

The increase in backlog from September 30, 2024 to June 30, 2025 is primarily due to the completion of the Acquisition.

Approximately 27.8 percent of the June 30, 2025 total backlog is reasonably expected to be fulfilled through fiscal year 2026, as a majority of our contracts are long term.

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

(in billions) March 31, 2025 September 30, 2024 Percentage Reasonably

Expected to be Fulfilled in Fiscal Year 2025

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

(in billions) June 30, 2025 September 30, 2024

Firm contracts 1 :

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Total backlog

$ 7.6 $ 1.5 13.3 %

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

(2) Included in the International Solutions reportable segment's backlog balance at March 31, 2025 is $0.2 billion of expected revenue from certain contracts in Saudi Arabia that have been temporarily suspended and are expected to gradually resume operations.

The information presented in the table above reflects the fact that we expect these contracts to be extended for a period of time at least equal to the suspension period.

The total backlog figures for the International Solutions and Offshore Solutions reporting segments, as of March 31, 2025 include $3.6 billion and $2.5 billion, respectively, attributed to our recently acquired subsidiary, KCA Deutag International Limited.

(2) Included in the International Solutions reportable segment's backlog balance at June 30, 2025 is $236.0 million of expected revenue from certain contracts in Saudi Arabia that have been temporarily suspended and are expected to gradually resume operations.

The information presented in the table above reflects the fact that we expect these contracts to be extended for a period of time at least equal to the expected suspension period.

The total backlog figures for the International Solutions and Offshore Solutions reporting segments, as of June 30, 2025 include $3.5 billion and $2.4 billion, respectively, attributed to our recently acquired subsidiary, KCA Deutag.

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

The agreements within our recently acquired subsidiary, KCA Deutag International, contain provisions for optional early termination or suspension without any associated early termination fees.

The agreements within our recently acquired subsidiary, KCA Deutag, contain provisions for optional early termination or suspension without any associated early termination fees.

Early terminations could cause the actual amount of revenue earned to significantly vary from the backlog reported.

See Item 1A—"Risk Factors— Our current backlog of drilling services and solutions revenue may decline and may not be ultimately realized as fixed‑term contracts and may, in certain instances, be terminated without an early termination payment ” and Item 1A—Risk Factors—" The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations ” within our 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), regarding fixed term contract risk.

Results of Operations for the Three Months Ended March 31, 2025 and 2024

It is important to note that results presented for the three months ended March 31, 2025 reflect a full 90 days of H&P operations and 75 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025.

Results of Operations for the Three Months Ended June 30, 2025 and 2024

Consolidated Results of Operations

Net Income Attributable to Helmerich & Payne Inc.

We reported income of $1.7 million ($0.01 diluted share) for the three months ended March 31, 2025 compared to income of $84.8 million ($0.84 diluted share) for the three months ended March 31, 2024.

Operating Revenue During the three months ended March 31, 2025 and 2024, consolidated operating revenues were $1.0 billion and $687.9 million, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $320.6 million of revenue during the three months ended March 31, 2025.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $705.1 million and $402.3 million for the three months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $260.7 million in direct operating expenses during the three months ended March 31, 2025.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $157.7 million during the three months ended March 31, 2025 compared to $104.5 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $57.1 million in depreciation and amortization expense during the three months ended March 31, 2025.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $80.8 million during the three months ended March 31, 2025 compared to $61.2 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $19.6 million in selling, general and administrative expenses during the three months ended March 31, 2025.

Net Income (Loss) Attributable to Helmerich & Payne Inc.

We reported a loss of $162.8 million ($(1.64) diluted share) for the three months ended June 30, 2025 compared to income of $88.7 million ($0.88 diluted share) for the three months ended June 30, 2024.

Operating Revenue During the three months ended June 30, 2025 and 2024, consolidated operating revenues were $1.0 billion and $0.7 billion, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $348.6 million of revenue during the three months ended June 30, 2025.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $735.3 million and $416.0 million for the three months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $290.4 million in direct operating expenses during the three months ended June 30, 2025.

Other Operating Expenses Other operating expenses were $31.1 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $20.6 million of costs associated with Kenera's manufacturing and engineering operations.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $179.5 million during the three months ended June 30, 2025 compared to $97.8 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $74.3 million in depreciation and amortization expense during the three months ended June 30, 2025.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $65.5 million during the three months ended June 30, 2025 compared to $60.2 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $13.3 million in selling, general and administrative expenses during the three months ended June 30, 2025.

The increase was partially offset by a $7.9 million decrease in professional services, consulting, and IT related expenses.

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Acquisition Transaction Costs During the three months ended March 31, 2025 and 2024, we recognized $29.9 million and $0.9 million, respectively, in acquisition transaction costs associated with the Acquisition.

These non-recurring costs are primarily related to third-party legal and advisory services.

Acquisition Transaction Costs During the three months ended June 30, 2025 and 2024, we recognized $8.6 million and $6.7 million, respectively, in acquisition transaction costs associated with the Acquisition.

These non-recurring costs are primarily related to third-party legal, advisory and valuation services.

See Note 3—Business Combination for additional details related to the Acquisition.

Interest Expense Interest expenses were $28.3 million and $4.3 million for the three months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by accrued interest associated with our September 2024 senior notes offering and Term Loan Credit Agreement.

Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $173.3 million associated with our International Solutions and Kenera reporting units.

See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.

Interest Expense Interest expenses were $29.2 million and $4.3 million for the three months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by interest associated with our September 2024 senior notes offering and Term Loan Credit Agreement.

See Note 7—Debt for additional details related to our debt agreements.

Gain on Investment Securities During the three months ended March 31, 2025, we recognized an aggregate gain of $27.8 million on investment securities.

The aggregate gain primarily consisted of $14.4 million, $10.2 million, and $3.2 million of gains on various geothermal equity investments, our investment in Galileo, and our investment in Tamboran, respectively, due to changes in the fair value of the investments.

During the three months ended March 31, 2024, we recognized a gain of $3.7 million on investment securities.

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

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

Income Taxes For the three months ended March 31, 2025, we recorded income tax expense of $41.5 million compared to income tax expense of $32.2 million for the three months ended March 31, 2024.

Gain (Loss) on Investment Securities During the three months ended June 30, 2025, we recognized an aggregate loss of $0.3 million on investment securities.

The aggregate loss primarily consisted of a $0.8 million loss on our investment in Tamboran, partially offset by a $0.6 million gain on a geothermal equity investment due to changes in the fair value of the investments.

During the three months ended June 30, 2024, we recognized a gain of $0.4 million on investment securities.

The gain consisted of a $5.6 million gain and $1.9 million gain on our equity investments in ADNOC Drilling and Tamboran Corp., respectively;

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

These gains were offset by a $7.1 million loss recognized during the three months ended June 30, 2024 as a result of a Blue Chip Swap transaction that occurred during the period.

Income Taxes For the three months ended June 30, 2025, we had income tax expense of $29.0 million (which includes a discrete tax expense of $1.3 million primarily related to return to provision adjustments, a decrease to the deferred state income tax rate and certain foreign taxes) compared to income tax expense of $33.7 million for the three months ended June 30, 2024 (which includes a discrete tax benefit of $0.8 million related to return to provision adjustments).

Our statutory federal income tax rate for fiscal year 2025 and 2024 is 21.0 percent (before incremental state and foreign taxes).

North America Solutions

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except operating statistics) 2025 2024 % Change

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Acquisition transaction costs

Asset impairment charges 1,507 — —

Restructuring charges 1,849 — —

Segment operating income $ 157,649 $ 163,407 (3.5)

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

Operating Revenues Operating revenues were $599.7 million and $613.3 million in the three months ended March 31, 2025 and 2024, respectively.

The decrease in operating revenues was primarily due to lower activity levels partially offset by higher pricing levels.

Direct Operating Expenses Direct operating expenses decreased to $334.1 million during the three months ended March 31, 2025 as compared to $341.9 million during the three months ended March 31, 2024.

This decrease was primarily driven by a decrease in per revenue day materials and supplies expense.

Operating Revenues Operating revenues were $592.2 million and $620.0 million in the three months ended June 30, 2025 and 2024, respectively.

The decrease in operating revenues was primarily due to lower activity levels and per revenue day pricing levels.

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Depreciation and Amortization Expense Depreciation and amortization expense decreased $10.4 million to $87.2 million during the three months ended March 31, 2025 as compared to $97.6 million during the three months ended March 31, 2024.

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

Asset Impairment Charges During the three months ended March 31, 2025, we identified a domestic drilling rig that met the asset held-for-sale criteria.

The rig's net book value of $1.7 million The rig's net book value of $1.7 million was written down to its estimated scrap value of $0.2 million, resulting in a non-cash impairment charge of $1.5 million in our North America Solutions segment during the three and six months ended March 31, 2025.

Direct Operating Expenses Direct operating expenses decreased to $326.0 million during the three months ended June 30, 2025 as compared to $342.6 million during the three months ended June 30, 2024.

This decrease was primarily due to lower activity levels and a decrease in per revenue day material and supplies expense.

International Solutions

Three Months Ended March 31,

(in thousands, except operating statistics) 2025

2024 % Change

Three Months Ended June 30,

(in thousands, except operating statistics) 2025 2024 % Change

Operating revenues $ 265,803 $ 47,882 455.1 %

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Acquisition transaction costs

Segment operating income (loss)

Asset impairment charges 128,352 — —

Restructuring charges 380 — —

Segment operating loss

$ (166,513) $ (2,748) (5,959.4)

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

Operating Revenues Operating revenues were $247.9 million and $45.9 million in the three months ended March 31, 2025 and 2024, respectively.

The $202.0 million increase in operating revenues was primarily driven by an additional $181.2 million in revenue generated from expanded operations following the Acquisition and increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Direct Operating Expenses Direct operating expenses increased to $221.0 million during the three months ended March 31, 2025 as compared to $37.0 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $146.3 million in direct operating expenses during the three months ended March 31, 2025 and a result of start up costs associated with our increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024..

Depreciation and Amortization Expense Depreciation expense increased to $57.2 million during the three months ended March 31, 2025 compared to $2.4 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $49.5 million in depreciation and amortization expense during the three months ended March 31, 2025.

Operating Revenues Operating revenues were $265.8 million and $47.9 million in the three months ended June 30, 2025 and 2024, respectively.

The $217.9 million increase in operating revenues was primarily driven by an additional $194.1 million in revenue generated from expanded operations following the Acquisition.

Additionally, the increase in operating revenues was attibutable to increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Direct Operating Expenses Direct operating expenses increased to $231.7 million during the three months ended June 30, 2025 as compared to $45.4 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $159.9 million in direct operating expenses during the three months ended June 30, 2025.

Additionally, the increase in direct operating expenses was attributable to start up costs associated with our increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Depreciation and Amortization Expense Depreciation expense increased to $66.7 million during the three months ended June 30, 2025 compared to $2.8 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $53.3 million in depreciation and amortization expense during the three months ended June 30, 2025.

Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $128.4 million associated with our International Solutions reporting unit.

See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.

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Offshore Solutions

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except operating statistics) 2025 2024 % Change

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Selling, general and administrative expense 1,294 799 62.0

Acquisition transaction costs

Restructuring charges 29 — —

Segment operating income

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Revenue days 3

270 273 (1.1)

Average active rigs 4

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

Operating Revenues Operating revenues were $149.1 million and $25.9 million in the three months ended March 31, 2025 and 2024, respectively.

Operating Revenues Operating revenues were $161.8 million and $27.2 million in the three months ended June 30, 2025 and 2024, respectively.

The $134.6 million increase in operating revenues was primarily driven by an additional $135.9 million in revenue generated from expanded operations following the Acquisition.

Direct Operating Expenses Direct operating expenses increased to $122.9 million during the three months ended March 31, 2025 as compared to $23.0 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $102.2 million in direct operating expenses during the three months ended March 31, 2025.

Depreciation and Amortization Expense Depreciation expense increased to $7.8 million during the three months ended March 31, 2025 compared to $1.9 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $6.1 million in depreciation and amortization expense during the three months ended March 31, 2025.

Direct Operating Expenses Direct operating expenses increased to $139.0 million during the three months ended June 30, 2025 as compared to $19.6 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $119.8 million in direct operating expenses during the three months ended June 30, 2025.

Depreciation and Amortization Expense Depreciation expense increased to $12.7 million during the three months ended June 30, 2025 compared to $1.8 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $11.1 million in depreciation and amortization expense during the three months ended June 30, 2025.

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Other Operations

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

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2025 2024 % Change

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Depreciation 2,010 277 625.6

Research and development 212 — —

Selling, general and administrative expense 2,383 362 558.3

Acquisition transaction costs

Operating income (loss)

Asset impairment charges

Restructuring charges 390 — —

Operating loss

$ (70,004) $ (4,791) (1,361.2)

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

Operating revenues of $45.5 million and $18.6 million during the three months ended March 31, 2025 and 2024, respectively, primarily consisted of $17.9 million and $15.8 million, respectively, in intercompany premium revenues recorded by the Captives.

Operating revenues of $42.9 million and $17.3 million during the three months ended June 30, 2025 and 2024, respectively, primarily consisted of $16.3 million and $14.7 million, respectively, in intercompany premium revenues recorded by the Captives.

These revenues were eliminated upon consolidation.

During the three months ended March 31, 2025, operating revenues also consisted of $24.7 million from Kenera's manufacturing and engineering operations.

Of which, $7.9 million is related to intercompany revenues that were eliminated upon consolidation.

Direct Operating Expenses Direct operating expenses of $43.1 million and $14.9 million during the three months ended March 31, 2025 and 2024, respectively, primarily consisted of $10.3 million and $1.6 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $11.2 million and $9.9 million, respectively, and medical stop loss expenses of $5.2 million and $3.2 million, respectively.

During the three months ended June 30, 2025, operating revenues also consisted of $23.7 million from Kenera's manufacturing and engineering operations, of which, $4.5 million is related to intercompany revenues that were eliminated upon consolidation.

Direct Operating Expenses Direct operating expenses of $63.0 million and $21.4 million during the three months ended June 30, 2025 and 2024, respectively, primarily consisted of $29.3 million and $5.3 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $10.1 million and $9.5 million, respectively, and medical stop loss expenses of $4.4 million and $4.1 million, respectively.

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

During the three months ended March 31, 2025, direct operating expenses also consisted of $12.2 million from Kenera's manufacturing and engineering operations.

Results of Operations for the Six Months Ended March 31, 2025 and 2024

It is important to note that results presented for the six months ended March 31, 2025 reflect a full 182 days of H&P operations and 75 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025.

During the three months ended June 30, 2025, direct operating expenses also consisted of $20.6 million from Kenera's manufacturing and engineering operations.

Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $44.9 million associated with our Kenera reporting unit.

See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.

Results of Operations for the Nine Months Ended June 30, 2025 and 2024

The Compnay's results presented for the nine months ended June 30, 2025 reflect a full 273 days of legacy H&P operations and 166 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025.

Consolidated Results of Operations

Net Income We reported income of $56.4 million ($0.56 per diluted share) for the six months ended March 31, 2025 compared to income of $180.0 million ($1.79 per diluted share) for the six months ended March 31, 2024.

Operating Revenue Consolidated operating revenues were $1.7 billion and $1.4 billion for the six months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $320.6 million of revenue during the six months ended March 31, 2025.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $1.1 billion and $804.9 million for the six months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $260.7 million in direct operating expenses during the six months ended March 31, 2025.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $256.7 million during the six months ended March 31, 2025 compared to $198.5 million during the six months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $57.1 million in depreciation and amortization expense during the six months ended March 31, 2025.

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $143.9 million during the six months ended March 31, 2025 compared to $117.8 million during the six months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $19.6 million in selling, general and administrative expenses during the six months ended March 31, 2025.

Acquisition Transaction Costs During the six months ended March 31, 2025 and 2024, we recognized approximately $40.4 million and $0.9 million, respectively, in acquisition transaction costs associated with the Acquisition.

These non-recurring costs are primarily related to third-party legal and advisory services.

Net Income (Loss) Attributable to Helmerich & Payne Inc.

We reported a loss of $106.3 million ($(1.08) per diluted share) for the nine months ended June 30, 2025 compared to income of $268.7 million ($2.67 per diluted share) for the nine months ended June 30, 2024.

Operating Revenue Consolidated operating revenues were $2.7 billion and $2.1 billion for the nine months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $669.2 million of revenue during the nine months ended June 30, 2025.

Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses were $1.9 billion and $1.2 billion for the nine months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $551.1 million in direct operating expenses during the nine months ended June 30, 2025.

Other Operating Expenses Other operating expenses were $35.7 million and $3.3 million for the nine months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $32.8 million of costs associated with Kenera's manufacturing and engineering operations.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $436.2 million during the nine months ended June 30, 2025 compared to $296.4 million during the nine months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $131.4 million in depreciation and amortization expense during the nine months ended June 30, 2025.

Q3 FY25 FORM 10-Q | 47

Selling, General and Administrative Expense Selling, general and administrative expenses increased to $209.4 million during the nine months ended June 30, 2025 compared to $178.0 million during the nine months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $32.9 million in selling, general and administrative expenses during the nine months ended June 30, 2025.

Acquisition Transaction Costs During the nine months ended June 30, 2025 and 2024, we recognized approximately $49.0 million and $7.5 million, respectively, in acquisition transaction costs associated with the Acquisition.

These non-recurring costs are primarily related to third-party legal, advisory and valuation services.

See Note 3—Business Combination for additional details related to the Acquisition.

Interest Expense Interest expenses were $50.6 million and $8.6 million for the six months ended March 31, 2025 and 2024, respectively.

The increase was primarily driven by accrued interest associated with our September 2024 senior notes offering and Term Loan Credit Agreement.

Asset Impairment Charges During the nine months ended June 30, 2025, we recorded asset impairment charges of $175.1 million primarily driven by a non-cash goodwill impairment charge of $173.3 million associated with our International Solutions and Kenera reporting units.

See Note 6—Goodwill and Intangible Assets for additional details related to the impairment charges.

Interest Expense Interest expenses were $79.8 million and $13.0 million for the nine months ended June 30, 2025 and 2024, respectively.

The increase was primarily driven by interest expense associated with our September 2024 senior notes offering and Term Loan Credit Agreement.

See Note 7—Debt for additional details related to our debt agreements.

Gain (Loss) on Investment Securities During the six months ended March 31, 2025, we recognized an aggregate gain of $14.4 million on investment securities.

Gain on Investment Securities During the nine months ended June 30, 2025, we recognized an aggregate gain of $14.1 million on investment securities.

The aggregate gain consisted of $15.0 million, $10.2 million and $1.3 million of gains on various geothermal equity investments, our investment in Galileo, and our investment in Tamboran, respectively, due to changes in the fair value of the investments.

The gain was partially offset by a $12.4 million loss on our sale of equity securities in ADNOC Drilling, 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 six months ended March 31, 2024, we recognized an aggregate loss of $0.3 million on investment securities.

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

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

Q2 FY25 FORM 10-Q | 42

Income Taxes For the six months ended March 31, 2025 we had income tax expense of $63.1 million (which includes a discrete tax expense of $0.7 million primarily related to equity compensation) compared to income tax expense of $62.3 million (which includes a discrete tax benefit of $0.9 million related to equity compensation) for the six months ended March 31, 2024.

During the nine months ended June 30, 2024, we recognized an aggregate gain of $0.1 million on investment securities.

The gains consisted of $3.7 million and $3.5 million of gains on our equity investments in Tamboran Corp.

and ADNOC Drilling, respectively;

both of which were results of increases in the fair market values of the stock.

The gains on our equity investments in Tamboran and ADNOC Drilling were offset by a $7.1 million loss recognized as a result of the Blue Chip Swap transaction that occurred during the period.

Income Taxes For the nine months ended June 30, 2025 we had income tax expense of $92.1 million (which includes a discrete tax expense of $2.1 million primarily related to equity compensation, return to provision adjustments, a decrease to the deferred state income tax rate and certain foreign taxes) compared to income tax expense of $96.0 million (which includes a discrete tax benefit of $1.6 million related to equity compensation and return to provision adjustments) for the nine months ended June 30, 2024.

Our statutory federal income tax rate for fiscal year 2025 and 2024 is 21.0 percent (before incremental state and foreign taxes).

Q3 FY25 FORM 10-Q | 48

North America Solutions

Six Months Ended March 31,

Nine Months Ended

(in thousands, except operating statistics) 2025 2024 % Change

6 unchanged sentences

Asset impairment charges 1,507 — —

Restructuring charges 1,849 — —

Segment operating income $ 461,803 $ 455,030 1.5

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

Operating Revenues During the six months ended March 31, 2025, operating revenue decreased by $9.8 million compared to the same period in 2024.

This decrease was mainly driven by reduced activity levels, although it was partially offset by an increase in ancillary service revenues.

Direct Operating Expenses Direct operating expenses decreased to $666.4 million during the six months ended March 31, 2025 as compared to $680.1 million during the six months ended March 31, 2024.

Operating Revenues During the nine months ended June 30, 2025, operating revenue decreased by $37.6 million compared to the same period in 2024.

This decrease was mainly driven by reduced activity levels.

Direct Operating Expenses Direct operating expenses decreased to $992.5 million during the nine months ended June 30, 2025 as compared to $1.0 billion during the nine months ended June 30, 2024.

This decrease was primarily driven by a decrease in rig activity.

Depreciation and Amortization Expense Depreciation and amortization expense increased to $175.5 million during the six months ended March 31, 2025 as compared to $184.6 million during the six months ended March 31, 2024.

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

Asset Impairment Charges During the six months ended March 31, 2025, we identified a domestic drilling rig that met the asset held-for-sale criteria.

The rig's net book value of $1.7 million was written down to its estimated scrap value of $0.2 million, resulting in a non-cash impairment charge of $1.5 million in our North America Solutions segment during the three and six months ended March 31, 2025.

Depreciation and Amortization Expense Depreciation and amortization expense decreased to $263.6 million during the nine months ended June 30, 2025 as compared to $273.8 million during the nine months ended June 30, 2024.

The decrease was primarily driven by $10.9 million of accelerated depreciation recognized during the nine months ended June 30, 2024 for components on rigs that were scheduled for conversion.

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International Solutions

Six Months Ended March 31,

Nine Months Ended

(in thousands, except operating statistics) 2025 2024 % Change

4 unchanged sentences

Acquisition transaction costs

Asset impairment charges 128,352 — —

Restructuring charges 380 — —

Segment operating income (loss)

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

Operating Revenues Operating revenues were $295.4 million and $100.6 million in the six months ended March 31, 2025 and 2024, respectively.

The $194.8 million increase in operating revenues was primarily driven by an additional $181.2 million in revenue generated from expanded operations following the Acquisition and increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Direct Operating Expenses Direct operating expenses increased to $275.4 million during the six months ended March 31, 2025 as compared to $79.7 million during the six months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $146.3 million in direct operating expense during the six months ended March 31, 2025 and a result of start up costs associated with our increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Depreciation and Amortization Expense Depreciation expense increased to $62.0 million during the six months ended March 31, 2025 compared to $4.8 million during the six months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $49.5 million in depreciation and amortization expense during the six months ended March 31, 2025.

Operating Revenues Operating revenues were $561.2 million and $148.5 million in the nine months ended June 30, 2025 and 2024, respectively.

The $412.7 million increase in operating revenues was primarily driven by an additional $375.3 million in revenue generated from expanded operations following the Acquisition.

Additionally, the increase in operating revenues was attributable to increased FlexRig ® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.

Direct Operating Expenses Direct operating expenses increased to $507.1 million during the nine months ended June 30, 2025 as compared to $125.0 million during the nine months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $306.2 million in direct operating expense during the nine months ended June 30, 2025.

Depreciation and Amortization Expense Depreciation expense increased to $128.7 million during the nine months ended June 30, 2025 compared to $7.5 million during the nine months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $102.8 million in depreciation and amortization expense during the nine months ended June 30, 2025.

Asset Impairment Charges During the nine months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $128.4 million associated with our International Solutions reporting unit.

See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.

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Offshore Solutions

Six Months Ended March 31,

Nine Months Ended

(in thousands, except operating statistics) 2025 2024 % Change

4 unchanged sentences

Acquisition transaction costs

Restructuring charges 29 — —

Segment operating income $ 29,649 $ 8,140 264.2

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

Operating Revenues Operating revenues were $178.3 million and $51.4 million in the six months ended March 31, 2025 and 2024, respectively.

Operating Revenues Operating revenues were $340.1 million and $78.7 million in the nine months ended June 30, 2025 and 2024, respectively.

The $261.4 million increase in operating revenues was primarily driven by an additional $258.6 million in revenue generated from expanded operations following the Acquisition.

Direct Operating Expenses Direct operating expenses increased to $145.6 million during the six months ended March 31, 2025 as compared to $42.6 million during the six months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $102.2 million in direct operating expense during the six months ended March 31, 2025.

Depreciation and Amortization Expense Depreciation expense increased to $9.8 million during the six months ended March 31, 2025 compared to $4.0 million during the three months ended March 31, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $6.1 million in depreciation and amortization expense during the six months ended March 31, 2025.

Direct Operating Expenses Direct operating expenses increased to $284.6 million during the nine months ended June 30, 2025 as compared to $62.2 million during the nine months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $222.0 million in direct operating expense during the nine months ended June 30, 2025.

Depreciation and Amortization Expense Depreciation expense increased to $22.4 million during the nine months ended June 30, 2025 compared to $5.8 million during the three months ended June 30, 2024.

The increase was primarily driven by the completion of the Acquisition, resulting in an additional $17.2 million in depreciation and amortization expense during the nine months ended June 30, 2025.

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Other Operations

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

Six Months Ended March 31,

Nine Months Ended

(in thousands) 2025 2024 % Change

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Depreciation 3,943 1,224 222.1

Research and development 212 — —

Selling, general and administrative expense 5,011 1,065 370.5

Acquisition transaction costs

Operating income (loss)

Asset impairment charges

Restructuring charges 390 — —

Operating loss

$ (70,605) $ (2,073) (3,305.9)

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Operating revenues of $64.8 million and $36.4 million during the six months ended March 31, 2025 and 2024, respectively, primarily consisted of $34.5 million and $31.0 million, respectively, in intercompany premium revenues recorded by the Captives.

Operating revenues of $107.7 million and $53.6 million during the nine months ended June 30, 2025 and 2024, respectively, primarily consisted of $50.8 million and $45.7 million, respectively, in intercompany premium revenues recorded by the Captives.

These revenues were eliminated upon consolidation.

During the six months ended March 31, 2025, operating revenues also consisted of $24.7 million from Kenera's manufacturing and engineering operations.

Of which, $7.9 million is related to intercompany revenues that were eliminated upon consolidation.

Direct Operating Expenses Direct operating expenses of $60.8 million and $32.0 million during the six months ended March 31, 2025 and 2024, respectively, primarily consisted of $14.2 million and $5.1 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $21.7 million and $19.0 million, respectively, and medical stop loss expenses of $10.4 million and $7.3 million, respectively.

During the nine months ended June 30, 2025, operating revenues also consisted of $48.3 million from Kenera's manufacturing and engineering operations, of which, $12.4 million is related to intercompany revenues that were eliminated upon consolidation.

Direct Operating Expenses Direct operating expenses of $123.8 million and $53.4 million during the nine months ended June 30, 2025 and 2024, respectively, primarily consisted of $43.5 million and $10.4 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $31.8 million and $28.5 million, respectively, and medical stop loss expenses of $14.8 million and $11.4 million, respectively.

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

During the six months ended March 31, 2025, direct operating expenses also consisted of $12.2 million from Kenera's manufacturing and engineering operations.

During the nine months ended June 30, 2025, direct operating expenses also consisted of $32.8 million from Kenera's manufacturing and engineering operations.

Asset Impairment Charges During the nine months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $44.9 million associated with our Kenera reporting unit.

See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.

Liquidity and Capital Resources

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Our ability to access the debt and equity capital markets depends on a number of factors, including our credit rating, market and industry conditions and market perceptions of our industry, general economic conditions, our revenue backlog and our capital expenditure commitments.

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Our cash flows fluctuate depending on a number of factors, including, among others, the number of our drilling rigs under contract, the revenue we receive under those contracts, the efficiency with which we operate our drilling rigs, the timing of collections on outstanding accounts receivable, the timing of payments to our vendors for operating costs, and capital expenditures.

As our revenues increase, net working capital is typically a use of capital, while conversely, as our revenues decrease, net working capital is typically a source of capital.

Net working capital (defined as current assets less current liabilities) was $605.6 million and $745.1 million as of March 31, 2025 and September 30, 2024, respectively.

As of March 31, 2025, we had cash and cash equivalents of $174.8 million, restricted cash of $70.3 million and short-term investments of $20.8 million.

Our cash flows for the six months ended March 31, 2025, and 2024 are presented below:

Six Months Ended March 31,

Net working capital (defined as current assets less current liabilities) was $680.7 million and $745.1 million as of June 30, 2025 and September 30, 2024, respectively.

As of June 30, 2025, we had cash and cash equivalents of $166.1 million, restricted cash of $61.1 million and short-term investments of $21.3 million.

Our cash flows for the nine months ended June 30, 2025, and 2024 are presented below:

Nine Months Ended

(in thousands) 2025 2024

6 unchanged sentences

$ (1,301,534) $ (34,236)

Q2 FY25 FORM 10-Q | 46

Operating Activities

Cash flows provided by operating activities were approximately $214.4 million and $318.5 million for the six months ended March 31, 2025 and 2024, respectively.

Cash flows provided by operating activities was $336.0 million and $515.9 million for the nine months ended June 30, 2025 and 2024, respectively.

The change in cash provided by operating activities is primarily driven by start-up costs associated with our commencement of our operations in Saudi Arabia and acquisition transaction costs associated with the Acquisition.

Net cash outflows related to the change in working capital was $101.9 million and $30.0 million for the nine months ended June 30, 2025 and 2024, respectively.

Investing Activities

Capital Expenditures Our capital expenditures during the six months ended March 31, 2025 were $265.2 million compared to $254.7 million during the six months ended March 31, 2024.

The increase in capital expenditures is driven by the completion of the Acquisition, resulting in an additional $42.5 million of capital expenditures during the six months ended March 31, 2025.

Net Sales of Short-Term Investments Our net sales of short-term investments during the six months ended March 31, 2025 were $261.6 million compared to net sales of $12.4 million during the six months ended March 31, 2024.

Capital Expenditures Our capital expenditures during the nine months ended June 30, 2025 were $362.2 million compared to $389.1 million during the nine months ended June 30, 2024.

The decrease in capital expenditures is driven by the lower equipment overhauls and certain long-term projects including skidding to walking rig conversions.

Net Sales of Short-Term Investments Our net sales of short-term investments during the nine months ended June 30, 2025 were $261.4 million compared to net sales of $3.6 million during the nine months ended June 30, 2024.

The increase in activity is primarily driven by $193.3 million of net proceeds received from the liquidation of shares in ADNOC Drilling and our ongoing liquidity management.

Payment for the Acquisition of Business, Net of Cash Received During the six months ended March 31, 2025, H&P completed the Acquisition by paying approximately $2.0 billion in cash.

Net Sales of Long-Term Investments Our net sales of long-term investments during the nine months ended June 30, 2025 were $29.9 million compared to net purchases of $9.2 million during the nine months ended June 30, 2024.

The increase in net sales activity is primarily driven by $27.1 million and $4.9 million of proceeds received from the liquidation of one of our equity security investments and one of our debt security investments, respectively.

Payment for the Acquisition of Business, Net of Cash Received During the nine months ended June 30, 2025 H&P completed the Acquisition by paying approximately $2.0 billion in cash.

This included acquiring $196.7 million in cash and cash equivalents, resulting in a net cash payment of $1.8 billion.

For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.

Sale of Assets Our proceeds from asset sales during the six months ended March 31, 2025 were $26.1 million compared to proceeds of $20.9 million during the six months ended March 31, 2024.

The increase in proceeds is mainly driven by higher reimbursement from customers for lost or damaged drill pipe and other used drilling equipment.

Sale of Assets Our proceeds from asset sales during the nine months ended June 30, 2025 were $34.9 million compared to proceeds of $35.1 million during the nine months ended June 30, 2024.

Financing Activities

Dividends We paid cash dividends of $0.50 per share during the six months ended March 31, 2025.

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

Total dividends paid were $50.3 million and $84.4 million during the six months ended March 31, 2025 and 2024, respectively.

Dividends We paid cash dividends of $0.75 per share during the nine months ended June 30, 2025.

Comparatively, during the nine months ended June 30, 2024, we paid dividends of $1.26 per share, comprising of a base cash dividend of $0.75 and a supplemental cash dividend of $0.51.

Total dividends paid were $75.5 million and $126.4 million during the nine months ended June 30, 2025 and 2024, respectively.

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Debt Issuance Proceeds and Payment On January 16, 2025, we received $400.0 million of proceeds from the Term Loan Credit Agreement.

During the three months ended March 31, 2025, the Company repaid $25.0 million of the outstanding balance on the Term Loan Credit Agreement.

During the nine months ended June 30, 2025, the Company repaid $73.0 million of the outstanding balance on the Term Loan Credit Agreement.

For additional information regarding debt issuance and repayment, refer to Note 7—Debt.

1 unchanged sentence

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 six months ended March 31, 2025.

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

We did not make any share repurchases during the nine months ended June 30, 2025.

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

Senior Notes Issued in Fiscal Year 2024

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For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.

The net proceeds reduced the commitments under the Company’s Bridge Loan Facility (refer to Note 6—Debt for additional information regarding the Bridge Loan Facility) for purposes of financing the Acquisition.

Q2 FY25 FORM 10-Q | 47

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.

Under the Registration Rights Agreement, the Company agreed, among other things, to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange each series of the Notes for freely tradable notes (“Registered Notes”) having terms identical in all material respects to each such series of Notes (the “Registered Exchange Offer”).

Accordingly, on May 15, 2025, the Company filed a registration statement on Form S-4 with the SEC, which was declared effective on May 28, 2025.

On May 28, 2025, the Company launched the Registered Exchange Offer, which expired on July 10, 2025.

Substantially all of the Notes were tendered and exchanged for Registered Notes in the Exchange Offer.

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;

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

Q3 FY25 FORM 10-Q | 54

Term Loan Credit Agreement

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

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

(“MSSF”) as administrative agent, and the other lenders party thereto.

3 unchanged sentences

For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.

During the three months ended March 31, 2025, the Company repaid $25.0 million of the outstanding balance on the Term Loan Credit Agreement.

As such, the outstanding balance as of March 31, 2025, was $375.0 million .

Q2 FY25 FORM 10-Q | 48

During the three and nine months ended June 30, 2025, the Company repaid $48.0 million and $73.0 million , respectively, of the outstanding balance on the Term Loan Credit Agreement.

As such, the outstanding balance as of June 30, 2025, was $327.0 million .

In July 2025, we repaid $47.0 million, decreasing the outstanding balance on the Term Loan Credit Agreement to $280.0 million.

The benchmark rate is the Secured Overnight Financing Rate ("SOFR").

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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 March 31, 2025, the spread over SOFR was 1.375 percent and commitment fees were 0.175 percent.

As of March 31, 2025 , the interest rate on the Term Loan was 5.660 percent per annum.

The weighted average variable interest rate on all amounts outstanding under the Term Loan was 5.659 percent for the three months ended March 31, 2025 .

Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR was 1.375 percent and commitment fees were 0.175 percent .

As of June 30, 2025 , the interest rate on the Term Loan was 5.793 percent per annum.

The weighted average variable interest rate on all amounts outstanding under the Term Loan was 5.796 percent and 5.731 percent for the three and nine months ended June 30, 2025 .

2024 Oman Facility

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The 2024 Oman Facility provides for term loan borrowings of $45.5 million, which bear interest payable quarterly at a fixed rate of 7.00 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2024 Oman Facility plus 2.60 percent.

During the three months ended March 31, 2025, the Company received the final draw down of $1.4 million and repaid $0.9 million of the outstanding balance on the facility.

Of the $44.8 million borrowings outstanding at March 31, 2025, a total of $3.4 million is payable within one year.

On February 9, 2025, we received the final draw down of $1.4 million.

During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively.

Of the $43.9 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year.

These secured bank loans are wholly denominated in Omani rial.

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The 2023 Oman Facility provides for term loan borrowings of $45.6 million, which bear interest payable quarterly at a fixed rate of 6.25 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2023 Oman Facility plus 2.79 percent.

During the three months ended March 31, 2025, the Company repaid $0.9 million of the outstanding balance on the facility.

Of the $41.5 million borrowings outstanding at March 31, 2025, a total of $3.4 million is payable within one year.

During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively.

Of the $40.6 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year.

These secured bank loans are wholly denominated in Omani rial.

3 unchanged sentences

The 2023 Oman Facility and related agreements contain additional terms, conditions, restrictions and covenants that we believe are usual and customary in secured debt arrangements for companies of similar size and credit quality.

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Amended Credit Facility

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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.

$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 2 one-year extensions of the Stated Maturity Date, subject to satisfaction of certain conditions.

$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.

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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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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 March 31, 2025, the spread over SOFR would have been 1.25 percent had borrowings been outstanding under the Amended Credit Facility and commitment fees would have been 0.15 percent.

Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR would have been 1.25 percent had borrowings been outstanding under the Amended Credit Facility and commitment fees would have been 0.15 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 March 31, 2025, there were no borrowings or letters of credit outstanding, leaving $950.0 million available to borrow under the Amended Credit Facility.

As of March 31, 2025, we had $375.0 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 $375.0 million, $153.4 million was outstanding as of March 31, 2025.

As of June 30, 2025, there were no borrowings or letters of credit outstanding, leaving $950.0 million available to borrow under the Amended Credit Facility.

As of June 30, 2025, we had $400.0 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 $400.0 million, $175.3 million was outstanding as of June 30, 2025.

Separately, we had $44.9 million in standby letters of credit and bank guarantees outstanding.

In total, we had $200.5 million outstanding as of March 31, 2025.

In total, we had $220.2 million outstanding as of June 30, 2025.

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 March 31, 2025, we were in compliance with all debt covenants.

At June 30, 2025, we were in compliance with all debt covenants.

Future Cash Requirements

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If needed, we may decide to obtain additional funding from our $950.0 million Amended Credit Facility.

Our indebtedness under our unsecured senior notes totaled $1.8 billion at March 31, 2025 and comprised of the following maturities:

Our indebtedness under our unsecured senior notes totaled $1.8 billion at June 30, 2025 and comprised of the following maturities:

$350.0 million due December 2027, $350.0 million due December 2029, $550.0 million due September 2031, and $550.0 million due December 2034.

Our indebtedness under our unsecured term loan credit agreement totaled $375.0 million at March 31, 2025 and matures in January 2027.

Our indebtedness under our secured term loan credit agreements totaled $86.3 million at March 31, 2025, of which $6.8 million is due within one year, and the remaining balance is comprised of the following maturities:

$38.1 million due December 2033 and $41.4 million due December 2034.

Our indebtedness under our unsecured term loan credit agreement totaled $327.0 million at June 30, 2025 and matures in January 2027.

Our indebtedness under our secured term loan credit agreements totaled $84.6 million at June 30, 2025, of which $6.9 million is due within one year, and the remaining balance is required to be paid on a quarterly basis through the respective maturity dates of December 2033 and December 2034.

This debt is allocated specifically to finance the ongoing rig construction activities in Oman.

As of March 31, 2025, we had a $646.2 million deferred tax liability on our Unaudited Condensed Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.

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As of June 30, 2025, we had a $614.6 million deferred tax liability on our Unaudited Condensed Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.

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

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

As of March 31, 2025, we have recorded unrecognized tax benefits and related interest and penalties of approximately $23.9 million.

As of June 30, 2025, we have recorded unrecognized tax benefits and related interest and penalties of approximately $24.5 million.

Material Commitments

Material commitments as reported in our 2024 Annual Report on Form 10-K have not changed significantly as of March 31, 2025, other than those disclosed in Note 3—Business Combination, Note 6—Debt, and Note 13—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements.

Material commitments as reported in our 2024 Annual Report on Form 10-K have not changed significantly as of June 30, 2025, other than those disclosed in Note 3—Business Combination, Note 5—Leases, Note 7—Debt, and Note 14—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Our accounting policies and estimates that are critical or the most important to understand our financial condition and results of operations, and that require management to make the most difficult judgments, are described in our 2024 Annual Report on Form 10-K.

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Based on management's evaluation, except as discussed below there have been no material changes in these critical accounting policies and estimates.

Fair Value Estimates in Business Combination Accounting

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Refer to Note 3—Business Combination to the accompanying condensed consolidated financial statements for additional information about accounting for the Acquisition.

Based on management's evaluation, there have been no material changes in these critical accounting policies and estimates.

Impairment of Long-lived Assets, Goodwill and Other Intangible Assets

Management assesses the potential impairment of our long‑lived assets and finite-lived intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Changes that could prompt such an assessment may include equipment obsolescence, changes in the market demand, periods of relatively low rig utilization, declining revenue per day, declining cash margin per day, completion of specific contracts, change in technology and/or overall changes in general market conditions.

If a review of the long‑lived assets and finite-lived intangibles indicates that the carrying value of certain of these assets or asset groups is more than the estimated undiscounted future cash flows, an impairment charge is made, as required, to adjust the carrying value to the estimated fair value.

Cash flows are estimated by management considering factors such as prospective market demand, recent changes in rig technology and its effect on each rig’s marketability, any cash investment required to make a rig marketable, suitability of rig size and makeup to existing platforms, and competitive dynamics including utilization.

The fair value of drilling rigs is determined based upon either an income approach using estimated discounted future cash flows, a market approach considering factors such as recent market sales of rigs of other companies and our own sales of rigs, appraisals and other factors, a cost approach utilizing new reproduction costs adjusted for the asset age and condition, and/or a combination of multiple approaches.

The use of different assumptions could increase or decrease the estimated fair value of assets and could therefore affect any impairment measurement.

We review goodwill for impairment annually in the fourth fiscal quarter or more frequently if events or changes in circumstances indicate it is more likely than not that the carrying amount of the reporting unit holding such goodwill may exceed its fair value.

We initially assess goodwill for impairment based on qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying amount.

If further testing is necessary or a quantitative test is elected, we quantitatively compare the fair value of a reporting unit with its carrying amount, including goodwill.

If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess;

however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

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During the third fiscal quarter of 2025, due primarily to the sustained decline in our share price and market capitalization, we identified indicators of potential impairment of goodwill and performed an interim impairment test.

We estimated the fair value of each reporting unit using a market approach, incorporating significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

We employed a combination of the guideline public company method and the guideline transactions method, leveraging company comparisons and analyst reports from the energy industry, which supported a range of fair values derived from annualized earnings before interest, income taxes, depreciation and amortization ("EBITDA") multiples between 2.5x and 5.5x for guideline public companies and between 3.9x and 9.8x for guideline transactions.

We then derived an estimated fair value of each reporting unit based on an EBITDA multiple at or below the peer-median trading multiple.

Based on our interim goodwill impairment test as of June 30, 2025, we concluded that the International Solutions and Kenera reporting units' carrying value exceeded their respective estimated fair value.

As a result, we recorded a non-cash goodwill impairment charge of $128.4 million and $44.9 million, respectively, during the three months ended June 30, 2025, which represented a full impairment of the goodwill allocated to these reporting units.

The estimated fair values of our H&P Technologies and Offshore Solutions reporting units as of June 30, 2025 exceeded their respective carrying values by approximately 75.8 percent and 20.3 percent, respectively.

These estimates reflect management’s best judgments as of June 30, 2025;

however, changes in key assumptions or market conditions could yield materially different outcomes.

We will continue to monitor events and circumstances that may affect fair values.

Due to the goodwill impairment described above, we also considered whether there was an indicator of impairment of our long-lived assets (including our finite-lived intangible assets) as of June 30, 2025.

For the period ended June 30, 2025, we evaluated the suspension of land rigs in Saudi Arabia and the finite-lived intangible assets of our Saudi Arabia and Kenera operations for potential indicators of impairment and determined that further impairment analysis was unnecessary.

These determinations are based on conditions as of June 30, 2025;

should circumstances change, our conclusions could materially differ.

As of June 30, 2025, total goodwill was $166.6 million and property, plant and equipment, net was $4.4 billion.

We will continue to monitor market and operational conditions and perform further impairment testing if triggering events arise.

Recently Issued Accounting Standards

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GAAP financial measures.

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

GAAP that is most directly comparable to direct margin.

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Three Months Ended Six Months Ended

March 31, March 31, March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30, June 30, June 30,

(in thousands) 2025 2024 2025 2024

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Asset impairment charges

Restructuring charges

1,849 — 1,849 —

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Acquisition transaction costs

Asset impairment charges

128,352 — 128,352 —

Restructuring charges

Direct margin (Non-GAAP) $ 34,108 $ 2,530 $ 54,086 $ 23,489

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Acquisition transaction costs

Restructuring charges

Direct margin (Non-GAAP) $ 22,773 $ 7,607 $ 55,498 $ 16,462

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis