Helmerich & Payne, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10‑Q (“Form 10‑Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Form 10-Q are forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “project,” “target,” “continue,” or the negative thereof or similar terminology, and such statements include, but are not limited to, statements regarding the Acquisition (as defined herein) and the anticipated benefits; and impact of such transaction, the timing and terms of recommencement of suspended rigs related to the Acquisition, our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. Forward-looking statements are based upon current plans, estimates, and expectations that are subject to risks, uncertainties, and assumptions, many of which are beyond our control and any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The inclusion of such statements should not be regarded as a representation that such plans, estimates, or expectations will be achieved. Factors that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements include, but are not limited to: • our ability to achieve the strategic and other objectives relating to the Acquisition; • the risk that we are unable to integrate KCA Deutag International Limited's ("KCA Deutag") operations in a successful manner and in the expected time period; • the volatility of future oil and natural gas prices; • contracting of our rigs and actions by current or potential customers; • the effects of actions by, or disputes among or between, members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing nations (together, “OPEC+”) with respect to production levels or other matters related to the prices of oil and natural gas; • changes in future levels of drilling activity and capital expenditures by our customers, whether as a result of global capital markets and liquidity, changes in prices of oil and natural gas or otherwise, which may cause us to idle or stack additional rigs, or increase our capital expenditures and the construction, upgrade or acquisition of rigs; • changes in worldwide rig supply and demand, competition, or technology; • possible cancellation, suspension, renegotiation or termination (with or without cause) of our contracts as a result of general or industry-specific economic conditions, mechanical difficulties, performance or other reasons; • expansion and growth of our business and operations; • our belief that the final outcome of our legal proceedings will not materially affect our financial results; • the impact of federal, state and foreign legislative and regulatory actions and policies, affecting our costs and increasing operating restrictions or delay and other adverse impacts on our business; • environmental or other liabilities, risks, damages or losses, whether related to storms or hurricanes (including wreckage or debris removal), collisions, grounding, blowouts, fires, explosions, other accidents, terrorism or otherwise, for which insurance coverage and contractual indemnities may be insufficient, unenforceable or otherwise unavailable; • the impact of geopolitical developments and tensions, war and uncertainty involving or in the geographic region of oil-producing countries (including the ongoing armed conflicts between Russia and Ukraine and conflicts in Israel, and any related political or economic responses and counter-responses or otherwise by various global actors or the general effect on the global economy); Q3 FY25 FORM 10-Q | 40 Table of Contents • global economic conditions, such as a general slowdown in the global economy, supply chain disruptions, inflationary pressures, the impact of new or additional tariffs, currency fluctuations, and instability of financial institutions, and their impact on the Company; • our financial condition and liquidity; • tax matters, including our effective tax rates, tax positions, results of audits, changes in tax laws, treaties and regulations, tax assessments and liabilities for taxes; • the occurrence of security incidents, including breaches of security, or other attack, destruction, alteration, corruption, or unauthorized access to our information technology systems or destruction, loss, alteration, corruption or misuse or unauthorized disclosure of or access to data; • potential impacts on our business resulting from climate change, greenhouse gas regulations, and the impact of climate change related changes in the frequency and severity of weather patterns; • potential long-lived asset impairments; and • our sustainability strategy, including expectations, plans, or goals related to corporate responsibility, sustainability and environmental matters, and any related reputational risks as a result of execution of this strategy. Additional factors that could cause actual results to differ materially from our expectations or results discussed in the forward‑looking statements are disclosed in our 2024 Annual Report on Form 10‑K under Part I, Item 1A— “Risk Factors” and Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All subsequent written and oral forward‑looking statements, express or implied, are expressly qualified in their entirety by such cautionary statements. All forward-looking statements speak only as of the date they are made and are based on information available at that time. Because of the underlying risks and uncertainties, we caution you against placing undue reliance on these forward-looking statements. We assume no duty to update or revise these forward‑looking statements based on changes in internal estimates, expectations or otherwise, except as required by law. Executive Summary H&P through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies. During the second quarter of fiscal year 2025, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions. Beginning on the Closing Date, Offshore Solutions now includes the results from the acquired KCA Deutag offshore management contract operations. Similarly, our International Solutions segment now includes the results from the acquired KCA Deutag land operations. Operating results related to KCA Deutag's Kenera business unit are included in "Other" along with results from our real estate operations and our wholly-owned captive insurance companies. Our North America Solutions operating segment remains unchanged. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination. 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 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. As we move forward, we believe that our rig fleet, technology offerings, financial strength, contract backlog and strong customer and employee base position us very well to respond to continued cyclical and often times, volatile market conditions and to take advantage of future opportunities. Market Outlook Our revenues are primarily derived from the capital expenditures of companies involved in the exploration, development and production of crude oil and natural gas (“E&Ps”). 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 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. Q3 FY25 FORM 10-Q | 41 Table of Contents 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 KCA Deutag Acquisition On the Closing Date, H&P completed the Acquisition of KCA Deutag pursuant to 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. 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. 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 Nothern 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 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 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 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. Q3 FY25 FORM 10-Q | 42 Table of Contents 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 : North America Solutions $ 0.5 $ 0.7 International Solutions 3.9 0.8 Offshore Solutions 1.0 — 5.4 1.5 Optional contract extension periods: International Solutions 2 0.5 — Offshore Solutions 1.4 — 1.9 — Total backlog $ 7.3 $ 1.5 (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 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, 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 June 30, 2025 and 2024 Consolidated Results of Operations 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. Q3 FY25 FORM 10-Q | 43 Table of Contents 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. 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 (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 June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 592,214 $ 620,040 (4.5) % Direct operating expenses 326,042 342,564 (4.8) Depreciation and amortization 88,078 89,207 (1.3) Research and development 7,617 10,623 (28.3) Selling, general and administrative expense 10,972 14,239 (22.9) Acquisition transaction costs 7 — — Restructuring charges 1,849 — — Segment operating income $ 157,649 $ 163,407 (3.5) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 266,172 $ 277,476 (4.1) Revenue days 3 13,400 13,683 (2.1) Average active rigs 4 147 150 (2.0) Number of active rigs at the end of period 5 141 146 (3.4) Number of available rigs at the end of period 224 232 (3.4) Reimbursements of "out-of-pocket" expenses $ 73,268 $ 74,915 (2.2) (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $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. Q3 FY25 FORM 10-Q | 44 Table of Contents 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 June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 265,803 $ 47,882 455.1 % Direct operating expenses 231,695 45,352 410.9 Depreciation and amortization 66,734 2,797 2,285.9 Selling, general and administrative expense 5,014 2,481 102.1 Acquisition transaction costs 141 — — Asset impairment charges 128,352 — — Restructuring charges 380 — — Segment operating loss $ (166,513) $ (2,748) (5,959.4) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 34,108 $ 2,530 1,248.1 Revenue days 3 6,573 1,067 516.0 Average active rigs 4 72 12 500.0 Number of active rigs at the end of period 5 69 12 475.0 Number of available rigs at the end of period 137 23 495.7 Reimbursements of "out-of-pocket" expenses $ 10,736 $ 2,069 418.9 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $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. Q3 FY25 FORM 10-Q | 45 Table of Contents Offshore Solutions Three Months Ended June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 161,777 $ 27,218 494.4 % Direct operating expenses 139,004 19,611 608.8 Depreciation and amortization 12,681 1,798 605.3 Selling, general and administrative expense 1,294 799 62.0 Restructuring charges 29 — — Segment operating income $ 8,769 $ 5,010 75.0 Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 22,773 $ 7,607 199.4 Revenue days 3 273 273 — Average active rigs 4 3 3 — Number of active rigs at the end of period 5 3 3 — Number of available rigs at the end of period 7 7 — Reimbursements of "out-of-pocket" expenses $ 23,043 $ 7,746 197.5 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $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 $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. Q3 FY25 FORM 10-Q | 46 Table of Contents Other Operations Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows: Three Months Ended June 30, (in thousands) 2025 2024 % Change Operating revenues $ 42,898 $ 17,261 148.5 % Direct operating expenses 63,000 21,413 194.2 Depreciation 2,010 277 625.6 Research and development 212 — — Selling, general and administrative expense 2,383 362 558.3 Asset impairment charges 44,907 — — Restructuring charges 390 — — Operating loss $ (70,004) $ (4,791) (1,361.2) Operating Revenues We continue to use our Captive insurance companies to insure the deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the Company's international casualty and rig property programs. Operating revenues of $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 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 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 (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 Table of Contents 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. 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 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 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 Table of Contents North America Solutions Nine Months Ended June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 1,790,053 $ 1,827,661 (2.1) % Direct operating expenses 992,462 1,022,702 (3.0) Depreciation and amortization 263,565 273,799 (3.7) Research and development 26,560 32,318 (17.8) Selling, general and administrative expense 42,266 43,812 (3.5) Acquisition transaction costs 41 — — Asset impairment charges 1,507 — — Restructuring charges 1,849 — — Segment operating income $ 461,803 $ 455,030 1.5 Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 797,591 $ 804,959 (0.9) Revenue days 3 40,523 41,516 (2.4) Average active rigs 4 148 152 (2.6) Number of active rigs at the end of period 5 141 146 (3.4) Number of available rigs at the end of period 224 232 (3.4) Reimbursements of "out-of-pocket" expenses $ 219,302 $ 218,227 0.5 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. 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 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. Q3 FY25 FORM 10-Q | 49 Table of Contents International Solutions Nine Months Ended June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 561,192 $ 148,512 277.9 % Direct operating expenses 507,106 125,023 305.6 Depreciation and amortization 128,715 7,549 1,605.1 Selling, general and administrative expense 12,268 7,334 67.3 Acquisition transaction costs 351 — — Asset impairment charges 128,352 — — Restructuring charges 380 — — Segment operating income (loss) $ (215,980) $ 8,606 (2,609.6) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 54,086 $ 23,489 130.3 Revenue days 3 14,460 3,278 341.1 Average active rigs 4 53 12 341.7 Number of active rigs at the end of period 5 69 12 475.0 Number of available rigs at the end of period 137 23 495.7 Reimbursements of "out-of-pocket" expenses $ 21,325 $ 7,417 187.5 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. 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. 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 $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. Q3 FY25 FORM 10-Q | 50 Table of Contents Offshore Solutions Nine Months Ended June 30, (in thousands, except operating statistics) 2025 2024 % Change Operating revenues $ 340,067 $ 78,662 332.3 % Direct operating expenses 284,569 62,200 357.5 Depreciation and amortization 22,438 5,807 286.4 Selling, general and administrative expense 3,322 2,515 32.1 Acquisition transaction costs 60 — — Restructuring charges 29 — — Segment operating income $ 29,649 $ 8,140 264.2 Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 55,498 $ 16,462 237.1 Revenue days 3 819 835 (1.9) Average active rigs 4 3 3 — Number of active rigs at the end of period 5 3 3 — Number of available rigs at the end of period 7 7 — Reimbursements of "out-of-pocket" expenses $ 57,204 $ 24,430 134.2 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. (2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin. (3) Defined as the number of contractual days we recognized revenue for during the period. (4) Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. 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 $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. Q3 FY25 FORM 10-Q | 51 Table of Contents Other Operations Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows: Nine Months Ended June 30, (in thousands) 2025 2024 % Change Operating revenues $ 107,704 $ 53,628 100.8 % Direct operating expenses 123,825 53,412 131.8 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 21 — — Asset impairment charges 44,907 — — Restructuring charges 390 — — Operating loss $ (70,605) $ (2,073) (3,305.9) 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 $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 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 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 Sources of Liquidity Our sources of available liquidity include existing cash balances on hand, cash flows from operations, and availability under the Amended Credit Facility. Our liquidity requirements include meeting ongoing working capital needs, funding our capital expenditure projects, paying dividends declared, repaying our outstanding indebtedness, and funding the Acquisition. Historically, we have financed operations primarily through internally generated cash flows. During periods when internally generated cash flows are not sufficient to meet liquidity needs, we may utilize cash on hand, borrow from available credit sources, access capital markets or sell our investments. Likewise, if we are generating excess cash flows or have cash balances on hand beyond our near-term needs, we may return cash to shareholders through dividends or share repurchases, or we may invest in highly rated short-term money market and debt securities. These investments can include U.S. Treasury securities, U.S. Agency issued debt securities, highly rated corporate bonds and commercial paper, certificates of deposit and money market funds. However, in some international locations we may make short-term investments that are less conservative, as equivalent highly rated investments are unavailable. We may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity as necessary, fund our additional purchases, exchange or redeem senior notes, or repay any amounts under the Amended Credit Facility. 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. Q3 FY25 FORM 10-Q | 52 Table of Contents Cash Flows 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 $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 June 30, (in thousands) 2025 2024 Net cash provided by (used in): Operating activities $ 336,000 $ 515,907 Investing activities (1,872,510) (353,998) Financing activities 220,654 (196,145) Effect of exchange rate changes on cash, cash equivalents and restricted cash 14,322 — Net decrease in cash, cash equivalents and restricted cash $ (1,301,534) $ (34,236) Operating Activities 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 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. 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 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 $0.75 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. Q3 FY25 FORM 10-Q | 53 Table of Contents Debt Issuance Proceeds and Payment On January 16, 2025, we received $400.0 million of proceeds from 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. Repurchase of Shares The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. 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 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 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 3—Business Combination. 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 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; 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% 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 as amended (the "Securities Act") and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022. In June 2022, we settled a registered exchange offer (the “2022 Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes. All of the 2031 Notes were exchanged in the Registered Exchange Offer. The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes. Q3 FY25 FORM 10-Q | 54 Table of Contents Term Loan Credit Agreement 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. On the Closing Date, the Company drew an aggregate principal amount of $400.0 million, which reduced the commitments under the Company's bridge loan facility (refer to Note 7—Debt for additional information regarding the Bridge Loan Facility) 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. 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 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 3—Business Combination. 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"). 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 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 In connection with the completion of the Acquisition, KCA Deutag Energy LLC (“KCAD Energy”) became a wholly-owned subsidiary of the Company. On April 25, 2024, KCAD Energy entered into the 2024 Oman Facility, which is fully drawn. 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. 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. The value of these borrowings in Omani rial is OMR $17.6 million. The commitments under the 2024 Oman Facility mature December 31, 2034. There is an annual financial covenant in the 2024 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. The 2024 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. 2023 Oman Facility In connection with the completion of the Acquisition, KCAD Energy became a wholly-owned subsidiary of the Company. On June 19, 2023, KCAD Energy entered into the 2023 Oman Facility, which is fully drawn. 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 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. The value of these borrowings in Omani rial is OMR $17.6 million. The commitments under the 2023 Oman Facility mature December 31, 2033. There is an annual financial covenant in the 2023 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. 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. Q3 FY25 FORM 10-Q | 55 Table of Contents Amended 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. $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. 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 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 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 $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 June 30, 2025, we were in compliance with all debt covenants. Future Cash Requirements Our operating cash requirements, scheduled debt repayments, interest payments, any declared dividends, and estimated capital expenditures for fiscal year 2025 are expected to be funded through current cash and cash to be provided from operating activities. However, there can be no assurance that we will continue to generate cash flows at current levels. 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 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 $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. Q3 FY25 FORM 10-Q | 56 Table of Contents 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. Future levels of capital expenditures and results of operations will determine the timing and amount of future cash tax payments. 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 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 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. 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 In addition to the critical accounting policies and estimates previously disclosed, due to the Acquisition, we also consider estimates used in applying the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations , to be part of our critical accounting policies and estimates due to the high degree of judgment and complexity in its application. The acquisition method of accounting involves the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process involves the use of estimates and assumptions made in connection with estimating the fair value of assets acquired and liabilities assumed including cash flows expected to be derived from the use of the asset, the timing of such cash flows, the remaining useful life of assets, estimated asset replacement costs, and applicable discount rates. Acquisition accounting allows for up to one year to obtain the information necessary to finalize the fair value of all assets acquired and liabilities assumed at January 16, 2025. Refer to Note 3—Business Combination to the accompanying condensed consolidated financial statements for additional information about accounting for the Acquisition. 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. Q3 FY25 FORM 10-Q | 57 Table of Contents 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 See Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties to the Unaudited Condensed Consolidated Financial Statements for new accounting standards not yet adopted. Non-GAAP Measurements Direct Margin Direct margin is considered a non-GAAP metric. We define "Direct margin" as operating revenues less direct operating expenses. Direct margin is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. Direct margin is not a substitute for financial measures prepared in accordance with U.S. GAAP and should therefore be considered only as supplemental to such U.S. GAAP financial measures. Q3 FY25 FORM 10-Q | 58 Table of Contents 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. Three Months Ended Nine Months Ended June 30, June 30, June 30, June 30, (in thousands) 2025 2024 2025 2024 NORTH AMERICA SOLUTIONS Segment operating income $ 157,649 $ 163,407 $ 461,803 $ 455,030 Add back: Depreciation and amortization 88,078 89,207 263,565 273,799 Research and development 7,617 10,623 26,560 32,318 Selling, general and administrative expense 10,972 14,239 42,266 43,812 Acquisition transaction costs 7 — 41 — Asset impairment charges — — 1,507 — Restructuring charges 1,849 — 1,849 — Direct margin (Non-GAAP) $ 266,172 $ 277,476 $ 797,591 $ 804,959 INTERNATIONAL SOLUTIONS Segment operating income (loss) $ (166,513) $ (2,748) $ (215,980) $ 8,606 Add back: Depreciation and amortization 66,734 2,797 128,715 7,549 Selling, general and administrative expense 5,014 2,481 12,268 7,334 Acquisition transaction costs 141 — 351 — Asset impairment charges 128,352 — 128,352 — Restructuring charges 380 — 380 — Direct margin (Non-GAAP) $ 34,108 $ 2,530 $ 54,086 $ 23,489 OFFSHORE SOLUTIONS Segment operating income $ 8,769 $ 5,010 $ 29,649 $ 8,140 Add back: Depreciation and amortization 12,681 1,798 22,438 5,807 Selling, general and administrative expense 1,294 799 3,322 2,515 Acquisition transaction costs — — 60 — Restructuring charges 29 — 29 — Direct margin (Non-GAAP) $ 22,773 $ 7,607 $ 55,498 $ 16,462