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What changed in Helmerich & Payne, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Helmerich & Payne, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+346 added−365 removedSource: 10-K (2023-11-08) vs 10-K (2022-11-17)

Top changes in Helmerich & Payne, Inc.'s 2023 10-K

346 paragraphs added · 365 removed · 278 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+10 added−8 removed72 unchanged
Biggest changeInvestors and others should note that we announce material financial information to our investors using our investor relations website (https://ir.helmerichpayne.com/websites/helmerichandpayne/English/0/investor-relations.html), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our stockholders and the public about our company, our services and other issues.
Biggest changeAnnual reports, quarterly reports, current reports, amendments to those reports, earnings releases, financial statements and our various corporate governance documents are also available free of charge upon written request. 2023 FORM 10-K | 17 Table of Contents Investors and others should note that we announce material financial information to our investors using our investor relations website (https://ir.helmerichpayne.com/websites/helmerichandpayne/English/0/investor-relations.html), SEC filings, press releases, public conference calls and webcasts.
Our North America Solutions operations are primarily located in Texas, but traditionally also operate in other states, depending on demand. Such states include: Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming.
Our North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Such states include: Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming.
H&P has employed a DE&I specialist, implemented a thriving Women of H&P Employee Resource Group, and established a DE&I Advisory Council with global employee representation. Our commitments are evidenced by formalized policies regarding equal opportunity and a discrimination-free workplace. We are actively tracking diversity data to better understand demographics within the organization.
H&P has employed a DE&I Principal Specialist, implemented a thriving Women of H&P Employee Resource Group, and established a DE&I Advisory Council with global employee representation. Our commitments are evidenced by formalized policies regarding equal opportunity and a discrimination-free workplace. We are actively tracking diversity data to better understand demographics within the organization.
Our customers and other third parties may also dispute these indemnification provisions, or we may be unable to transfer these risks to our drilling customers or other third parties by contract or indemnification agreements. We insure working land rigs and related equipment at values that approximate the current replacement costs on the inception date of the policies.
Our customers and other third parties may also dispute these indemnification provisions, or we may be unable to transfer these risks to our drilling customers or other third parties by contract or indemnification agreements. We insure working land rigs and related property and equipment at values that approximate the current replacement costs on the inception date of the policies.
(2) AC drive, 1,500 horsepower drawworks, 500,000 or 750,000 lbs. hookload rating, 5,000 or 7,500 psi mud circulating system, may or may not have multiple-well pad capability. 2022 FORM 10-K | 7 Table of Contents The following table sets forth certain information concerning our Offshore Gulf of Mexico drilling rigs as of September 30, 2022: OFFSHORE GULF OF MEXICO FLEET Location Shallow Water 1 Deep Water 1 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Louisiana 2 3 — — — 3 — Gulf of Mexico 1 1 3 3 4 4 Totals 4 1 3 3 7 4 (1) Deep water rigs operate on floating facilities and shallow water rigs operate on fixed facilities.
(2) AC drive, 1,500 horsepower drawworks, 500,000 or 750,000 lbs. hookload rating, 5,000 or 7,500 psi mud circulating system, may or may not have multiple-well pad capability. 2023 FORM 10-K | 7 Table of Contents The following table sets forth certain information concerning our Offshore Gulf of Mexico drilling rigs as of September 30, 2023: OFFSHORE GULF OF MEXICO FLEET Location Shallow Water 1 Deep Water 1 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Louisiana 2 3 — — — 3 — Gulf of Mexico 1 1 3 3 4 4 Totals 4 1 3 3 7 4 (1) Deep water rigs operate on floating facilities and shallow water rigs operate on fixed facilities.
In some areas of the world, government activity has adversely affected the amount of exploration and development work done by oil and gas companies and influenced their need for drilling services, and likely will continue to do so. 2022 FORM 10-K | 16 Table of Contents In addition, we are subject to a variety of other U.S. and foreign laws and regulations, including, but not limited to, the U.S.
In some areas of the world, government activity has adversely affected the amount of exploration and development work done by oil and gas companies and influenced their need for drilling services, and likely will continue to do so. 2023 FORM 10-K | 16 Table of Contents In addition, we are subject to a variety of other U.S. and foreign laws and regulations, including, but not limited to, the U.S.
In addition, we utilize social media, local job fairs, employee referral bonuses, and educational organizations across the United States to find diverse, motivated and responsible employees. 2022 FORM 10-K | 13 Table of Contents Education and Training We are committed to the continual training and development of our employees, especially of those in field operations, to help ensure we can develop future managers and leaders from within our organization.
In addition, we utilize social media, local job fairs, employee referral bonuses, and educational organizations across the United States to find diverse, motivated and responsible employees. 2023 FORM 10-K | 13 Table of Contents Education and Training We are committed to the continual training and development of our employees, especially of those in field operations, to help ensure we can develop future managers and leaders from within our organization.
See Note 4—Property, Plant and Equipment to our Consolidated Financial Statements. (3) Defined as the number of rigs generating revenue at the applicable end date of the time period.
See Note 3—Property, Plant and Equipment to our Consolidated Financial Statements. (3) Defined as the number of rigs generating revenue at the applicable end date of the time period.
The purpose of the program is to prepare employees to work safely on our rigs and provide necessary certifications to do so; including all Occupational Safety and Health Administration ("OSHA") and IADC training, as well as Company culture education. • Short Service Employee Training - specialized training program that is a continuation of New Employment Introduction basics and is intended to provide the technical on-the-job training guided by a mentor. • Ethics and Compliance Training – comprised of several specific training programs, including Code of Conduct, Insider Trading, Anti-Discrimination & Harassment, Data Privacy, Trade Compliance, and Anti-Corruption. • Change Champions Training - teaches employees to solve complex problems using structured processes, tools and data to drive results while emphasizing leadership and public speaking. • Leadership Series Training - accessible online to all leaders and covers a variety of topics related to leading The H&P Way.
The purpose of the program is to prepare employees to work safely on our rigs and provide necessary certifications to do so; including all Occupational Safety and Health Administration ("OSHA") and International Association of Drilling Contractors ("IADC") training, as well as Company culture education. • Short Service Employee Training - specialized training program that is a continuation of New Employment Introduction basics and is intended to provide technical on-the-job training guided by a mentor. • Ethics and Compliance Training – comprised of several specific training programs, including Code of Conduct, Insider Trading, Anti-Discrimination & Harassment, Data Privacy, Trade Compliance, and Anti-Corruption. • Change Champions Training - teaches employees to solve complex problems using structured processes, tools and data to drive results while emphasizing leadership and public speaking. • Leadership Series Training - accessible online to all leaders and covers a variety of topics related to leading The H&P Way.
Employee Benefits, Health and Wellness H&P values its employees and believes benefit packages are essential to prioritizing the well-being of its staff and offering competitive compensation.
Employee Benefits, Health and Wellness H&P values its employees and believes competitive compensation and benefit packages are essential to prioritizing the well-being of its staff.
We currently have two facilities that provide vertically integrated solutions for drilling rig manufacturing, upgrades, retrofits and modifications, as well as overhauling, recertification, and repairs as it relates to our rigs and equipment. These facilities utilize lean manufacturing processes to enhance quality and efficiency as well as provide important insights in the maintenance and wear of equipment on our rigs.
We currently have two facilities that provide vertically integrated solutions for drilling rig manufacturing, upgrades, retrofits and modifications, as well as overhauling, recertification, and repairs as it relates to our rigs and equipment. These facilities utilize lean manufacturing processes to enhance quality and efficiency as well as provide important insights into the maintenance and wear of equipment on our rigs.
The OHSA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in our operations and that this information be provided to employees, state and local governments, emergency responders and citizens.
The OSHA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in our operations and that this information be provided to employees, state and local governments, emergency responders and citizens.
Our offshore rig fleet operates on conventional fixed leg platforms and floating platforms attached to the sea floor with mooring lines, such as Spars and Tension Leg Platforms. Additionally, we provide management contract services to customer platforms where the customer owns the drilling rig. As of September 30, 2022, four of the seven offshore rigs were under contract.
Our offshore rig fleet operates on conventional fixed leg platforms and floating platforms attached to the sea floor with mooring lines, such as Spars and Tension Leg Platforms. Additionally, we provide management contract services to customer platforms where the customer owns the drilling rig. As of September 30, 2023, four of the seven offshore rigs were under contract.
We have made and will continue to make the required expenditures to comply with current and future regulatory requirements. We do not anticipate that compliance with currently applicable rules and regulations and required controls will significantly change our competitive position, capital spending or earnings during fiscal year 2023.
We have made and will continue to make the required expenditures to comply with current and future regulatory requirements. We do not anticipate that compliance with currently applicable rules and regulations and required controls will significantly change our competitive position, capital spending or earnings during fiscal year 2024.
High levels of uniformity in crew training and rotation and our ability to control and remove safety exposures across a more standard fleet allow us to deliver higher performance in a safer and more reliable manner for the customer.
High levels of uniformity in crew training and rotation and our ability to identify and remove safety exposures across a more standard fleet allow us to deliver higher performance in a safer and more reliable manner for the customer.
We have redefined safety success as the Control and Removal of Exposures (C.A.R.E.) for self and others and encourage employees to report near miss incidents with serious, life-altering or fatal injury potential, identifying and reporting serious injury exposures for which employees are personally recognized and rewarded monetarily for exemplifying our Actively C.A.R.E culture.
Starting in 2015, we have redefined safety success as the Control and Removal of Exposures (C.A.R.E.) for self and others and encourage employees to report near miss incidents with serious, life-altering or fatal injury potential, identifying and reporting serious injury exposures for which employees are personally recognized and rewarded monetarily for exemplifying our Actively C.A.R.E culture.
The Occupational Health and Safety Act (“OSHSA”) and other similar laws and regulations govern the protection of the health and safety of employees.
The Occupational Safety and Health Act and other similar laws and regulations govern the protection of the health and safety of employees.
Each drilling rig operates under a separate drilling contract and, in some instances, these contracts are part of an over-arching term agreement known as a FlexPool. These agreements are with a limited number of customers that operate multiple rigs, often times across multiple basins in the U.S.
Each drilling rig operates under a separate drilling contract and, in some instances, these contracts are part of an over-arching term agreement known as a FlexPool. These agreements are with a limited number of customers that operate multiple rigs, oftentimes across multiple basins in the U.S.
We have the leading market share in at least three of the most active oil basins, which include the Permian Basin, Eagle Ford Shale, and Woodford Shale. Nearly all of our active rigs are capable of drilling horizontal or directional wells.
We have the leading market share in at least two of the most active oil basins, which include the Permian Basin and Eagle Ford Shale. All of our active rigs are capable of drilling horizontal or directional wells.
Revenues generated by Argentine drilling operations contributed approximately 4.4 percent ($91.4 million) of our consolidated operating revenues during fiscal year 2022 compared to approximately 2.3 percent ($27.9 million) and 4.8 percent ($84.4 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.
Revenues generated by Argentine drilling operations contributed approximately 4.8 percent ($137.4 million) of our consolidated operating revenues during fiscal year 2023 compared to approximately 4.4 percent ($91.4 million) and 2.3 percent ($27.9 million) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively.
Revenues generated by Colombian drilling operations contributed approximately 1.1 percent ($22.0 million) of our consolidated operating revenues in fiscal year 2022, compared to approximately 0.1 percent ($1.7 million) and 0.4 percent ($6.4 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.
Revenues generated by Colombian drilling operations contributed approximately 1.6 percent ($46.7 million) of our consolidated operating revenues in fiscal year 2023, compared to approximately 1.1 percent ($22.0 million) and 0.1 percent ($1.7 million) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively.
In North America, our customers are primarily from the major integrated oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies). Revenue from drilling services performed for our largest North America Solutions drilling customer totaled approximately 7.9 percent ($141.0 million) of the North America Solutions segment revenues during fiscal year 2022.
In North America, our customers are primarily from the major integrated oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies). Revenue from drilling services performed for our largest North America Solutions drilling customer totaled approximately 9.5 percent ($238.7 million) of the North America Solutions segment revenues during fiscal year 2023.
Foreign Corrupt Practices Act and other anti-bribery and anti-corruption laws. The U.S. Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.
Foreign Corrupt Practices Act, other anti-bribery and anti-corruption laws, and data privacy, data security and consumer protection laws. The U.S. Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.
Incidents that do not result in an injury, but have the potential for a serious injury or fatality provide many more learning opportunities for preventing future serious injuries or fatalities. Based on this data we have a proportionate response approach to incident investigations and corrective actions.
Incidents that do not result in an injury, but have the potential for a serious injury or fatality provide many more learning opportunities for preventing future serious injuries or fatalities. Based on this data we have a guided approach to incident investigations and corrective actions. Incidents that have the potential to cause a serious injury or fatality are escalated.
Revenues from drilling services performed for our two largest customers in Argentina totaled approximately 3.5 percent of our consolidated operating revenues and approximately 53.3 percent of our international operating revenues during fiscal year 2022. The Argentine drilling contracts are primarily with large international or national oil companies. Colombia As of September 30, 2022, we had five available rigs in Colombia.
Revenues from drilling services performed for our two largest customers in Argentina totaled approximately 3.0 percent of our consolidated operating revenues and approximately 40.2 percent of our international operating revenues during fiscal year 2023. The Argentine drilling contracts are primarily with large international or national oil companies. Colombia As of September 30, 2023, we had five available rigs in Colombia.
Revenues from drilling services performed for our two largest customers in Colombia totaled approximately 1.1 percent of our consolidated operating revenues and approximately 16.2 percent of our international operating revenues during fiscal year 2022. The Colombian drilling contracts are primarily with large international or national oil companies. Bahrain As of September 30, 2022, we had three available rigs in Bahrain.
Revenues from drilling services performed for our two largest customers in Colombia totaled approximately 1.6 percent of our consolidated operating revenues and approximately 22.0 percent of our international operating revenues during fiscal year 2023. The Colombian drilling contracts are primarily with large international or national oil companies. Bahrain As of September 30, 2023, we had three available rigs in Bahrain.
Our North America Solutions segment contributed approximately 86.8 percent ($1.8 billion) of our consolidated operating revenues during fiscal year 2022, compared to approximately 84.2 percent ($1.0 billion) and 83.1 percent ($1.5 billion) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.
Our North America Solutions segment contributed approximately 87.7 percent ($2.5 billion) of our consolidated operating revenues during fiscal year 2023, compared to approximately 86.8 percent ($1.8 billion) and 84.2 percent ($1.0 billion) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively.
We have overseen the design and assembly of all of our AC FlexRig ® drilling rigs, and our different rig classes share many common components. We co-designed the control systems for our rigs and have the right to make any changes or modifications to those systems that we desire.
One key advantage is fleet uniformity. We have overseen the design and assembly of all of our AC FlexRig ® drilling rigs, and our different rig classes share many common components. We co-designed the control systems for our rigs and have the right to make any changes or modifications to those systems that we desire.
See Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations — Contract Backlog" included in this Form 10-K for additional information pertaining to backlog. Employees As of September 30, 2022, we had approximately 7,000 employees within the United States and approximately 1,000 employees in our international operations.
See Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations — Contract Backlog" included in this Form 10-K for additional information pertaining to backlog. Employees As of September 30, 2023, we had approximately 6,200 employees within the United States and approximately 900 employees in our international operations.
Our Offshore Gulf of Mexico operations contributed approximately 6.1 percent ($125.5 million) of our consolidated operating revenues during fiscal year 2022, compared to approximately 10.4 percent ($126.4 million) and 8.1 percent ($143.1 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.
Our Offshore Gulf of Mexico operations contributed approximately 4.5 percent ($130.2 million) of our consolidated operating revenues during fiscal year 2023, compared to approximately 6.1 percent ($125.5 million) and 10.4 percent ($126.4 million) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively.
We did not have any individual customers that represented 10% or more of our total consolidated revenues in fiscal years 2022, 2021, or 2020. 2022 FORM 10-K | 8 Table of Contents The following table presents operating statistics for the fiscal years 2022, 2021, and 2020: Year Ended September 30, North America Solutions Offshore Gulf of Mexico International Solutions 2022 2021 2020 2022 2021 2020 2022 2021 2020 Revenue days 1 59,672 39,199 49,003 1,460 1,552 1,922 3,036 1,815 4,605 Average active rigs 2 163 107 134 4 4 5 8 5 13 Number of active rigs at the end of period 3 176 127 69 4 4 5 12 6 5 Number of available rigs at the end of period 236 236 262 7 7 8 28 30 32 (1) Defined as the number of contractual days we recognized revenue during the period.
We did not have any individual customers that represented 10% or more of our total consolidated revenues in fiscal years 2023, 2022, or 2021. 2023 FORM 10-K | 8 Table of Contents The following table presents operating statistics for the fiscal years 2023, 2022, and 2021: Year Ended September 30, North America Solutions Offshore Gulf of Mexico International Solutions 2023 2022 2021 2023 2022 2021 2023 2022 2021 Revenue days 1 61,814 59,672 39,199 1,460 1,460 1,552 4,788 3,036 1,815 Average active rigs 2 169 163 107 4 4 4 13 8 5 Number of active rigs at the end of period 3 147 176 127 4 4 4 13 12 6 Number of available rigs at the end of period 233 236 236 7 7 7 22 28 30 (1) Defined as the number of contractual days we recognized revenue during the period.
Our International Solutions operations contributed approximately 6.6 percent ($136.1 million) of our consolidated operating revenues during fiscal year 2022, compared to approximately 4.8 percent ($57.9 million) and 8.1 percent ($144.2 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively. Argentina As of September 30, 2022, we had 20 available rigs in Argentina.
Our International Solutions operations contributed approximately 7.4 percent ($212.6 million) of our consolidated operating revenues during fiscal year 2023, compared to approximately 6.6 percent ($136.1 million) and 4.8 percent ($57.9 million) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively. Argentina As of September 30, 2023, we had 12 available rigs in Argentina.
Our facility located in Galena Park, Texas is primarily utilized for overall rig assembly, overhaul, recommissioning and recertification while our facility near Tulsa, Oklahoma is primarily utilized for modular rig component overhauls and repairs. 2022 FORM 10-K | 11 Table of Contents We continue to see adoption and growth with our technologically enabled automation solutions.
Our facility located in Galena Park, Texas is primarily utilized for overall rig assembly, overhaul, recommissioning and recertification while our facility near Tulsa, Oklahoma is primarily utilized for modular rig component overhauls and repairs. We continue to see adoption and growth with our technologically enabled automation solutions.
Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other" within our segment disclosures. 2022 FORM 10-K | 10 Table of Contents Rigs, Equipment, R&D, and Facilities During the late 1990’s, we undertook a strategic initiative to develop a new generation drilling rig that would be the safest, fastest-moving and highest performing rig in the land drilling market.
Our real estate operations, our incubator program, and our wholly-owned captive insurance companies are included in "Other" within our segment disclosures. Rigs, Equipment, R&D, and Facilities During the late 1990’s, we undertook a strategic initiative to develop a new generation drilling rig that would be the safest, fastest-moving and highest performing rig in the land drilling market.
As of September 30, 2022, we had twelve land rigs contracted for work in locations outside of the United States.
As of September 30, 2023, we had thirteen land rigs contracted for work in locations outside of the United States.
Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." 2022 FORM 10-K | 6 Table of Contents Drilling Fleet The following map shows the number of available rigs by basin in our North America Solutions reportable segment as of September 30, 2022: The following table sets forth certain information concerning our North America Solutions drilling rigs as of September 30, 2022: NORTH AMERICA SOLUTIONS FLEET Location Super-Spec FlexRig ® 1 Non Super-Spec FlexRig ® 2 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted TX 132 96 3 — 135 96 NM 40 34 — — 40 34 OK 21 13 1 — 22 13 LA 11 9 — — 11 9 ND 11 10 — — 11 10 PA 5 4 — — 5 4 CO 1 1 2 2 3 3 WV 3 3 — — 3 3 UT 3 3 — — 3 3 OH 2 — — — 2 — WY 1 1 — — 1 1 Totals 230 174 6 2 236 176 (1) AC drive, minimum of 1,500 horsepower drawworks, minimum of 750,000 lbs. hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability.
Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." 2023 FORM 10-K | 6 Table of Contents Drilling Fleet The following map shows the number of available rigs by basin in our North America Solutions reportable segment as of September 30, 2023: The following table sets forth certain information concerning our North America Solutions drilling rigs as of September 30, 2023: NORTH AMERICA SOLUTIONS FLEET Location Super-Spec FlexRig ® 1 Non Super-Spec FlexRig ® 2 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted TX 140 86 — — 140 86 NM 39 33 — — 39 33 OK 17 — — — 17 — ND 9 6 — — 9 6 LA 6 4 — — 6 4 UT 6 6 — — 6 6 OH 5 3 — — 5 3 PA 3 1 — — 3 1 CO 1 1 2 2 3 3 WV 2 2 — — 2 2 WY 3 3 — — 3 3 Totals 231 145 2 2 233 147 (1) AC drive, minimum of 1,500 horsepower drawworks, minimum of 750,000 lbs. hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability.
Revenues generated by Bahrain drilling operations contributed approximately 0.8 percent ($17.0 million) of our consolidated operating revenues in fiscal year 2022, compared to approximately 2.3 percent ($27.4 million) and 1.6 percent ($28.7 million) of our consolidated operating revenues during fiscal years 2021 and 2020, respectively.
Revenues generated by Bahrain drilling operations contributed approximately 0.5 percent ($15.4 million) of our consolidated operating revenues in fiscal year 2023, compared to approximately 0.8 percent ($17.0 million) and 2.3 percent ($27.4 million) of our consolidated operating revenues during fiscal years 2022 and 2021, respectively.
We believe trust is key to organizational health, as well as safety and operational success. 2022 FORM 10-K | 14 Table of Contents SIF Strategy We are committed to controlling and removing SIF exposures at any H&P rig or facility.
We believe trust is key to organizational health, as well as safety and operational success. SIF Strategy We are committed to controlling and removing SIF exposures at any H&P rig or facility.
During fiscal year 2022, a majority of our drilling services were performed on a “daywork” contract basis. Performance-based Contracts Performance-based contracts are contracts pursuant to which we are compensated based upon our performance against a mutually agreed upon set of predetermined targets.
During fiscal year 2023, a majority of our drilling services were performed on a “daywork” contract basis. 2023 FORM 10-K | 12 Table of Contents Performance-based Contracts Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets.
An important part of our strategy was to design a rig that could support continuous improvement through upgrade capability of the hardware and software on the rigs to take advantage of technology improvements and lengthening the industry rig replacement cycle.
To date, we have built over 200 FlexRig ® rigs that align with this strategy. An important part of our strategy was to design a rig that could support continuous improvement through upgrade capability of the hardware and software on the rigs to take advantage of technology improvements and lengthening the industry rig replacement cycle.
Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 76.6 percent ($96.1 million) of offshore revenues during fiscal year 2022. 2022 FORM 10-K | 9 Table of Contents International Solutions Segment Our International Solutions segment primarily conducts operations in Argentina, Colombia, Bahrain and U.A.E.
Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 84.0 percent ($109.4 million) of offshore revenues during fiscal year 2023. 2023 FORM 10-K | 9 Table of Contents International Solutions Segment Our International Solutions segment conducts operations in Argentina, Colombia, Bahrain, U.A.E., and Australia.
We also carry insurance with varying deductibles and coverage limits with respect to stacked rigs, offshore platform rigs, and “named wind storm” risk in the Gulf of Mexico. 2022 FORM 10-K | 15 Table of Contents We have insurance coverage for comprehensive general liability, automobile liability, workers’ compensation and employer’s liability, and certain other specific risks.
However, we self-insure large deductibles under these policies. We also carry insurance with varying deductibles and coverage limits with respect to stacked rigs, offshore platform rigs, and “named wind storm” risk in the Gulf of Mexico. We have insurance coverage for comprehensive general liability, automobile liability, workers’ compensation and employer’s liability, and certain other specific risks.
All of our technologies play an important role in developing our strategy as we head towards autonomous drilling. We have historically offered ancillary services, which are now referred to as FlexServices ® . These services include trucking, surface equipment, casing running services and pipe rental.
All of our technologies play an important role in developing our strategy as we head towards autonomous drilling. 2023 FORM 10-K | 11 Table of Contents We have historically offered ancillary services, which are now referred to as FlexServices ® . Currently, these services include surface equipment rental, pipe rental and additional rig crew.
In the Gulf of Mexico platform rig market, we primarily compete with Nabors Industries Ltd. and Blake International Rigs, LLC. Drilling Contracts Our drilling contracts are obtained through competitive bidding or as a result of direct negotiations with customers.
In the Gulf of Mexico platform rig market, we primarily compete with Nabors Industries Ltd. and Blake International Rigs, LLC. For further information concerning risks associated with competition in our industry, see Item 1A—Risk Factors—Business and Operating Risks. Drilling Contracts Our drilling contracts are obtained through competitive bidding or as a result of direct negotiations with customers.
The following table sets forth certain information concerning our International Solutions drilling rigs as of September 30, 2022: INTERNATIONAL SOLUTIONS FLEET Location AC (FlexRig ® 3) 1 AC (FlexRig ® 4) 2 Other AC SCR 3 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Argentina 12 8 4 — — — 4 — 20 8 Colombia 2 — — — 1 1 2 2 5 3 Bahrain — — 3 1 — — — — 3 1 Totals 14 8 7 1 1 1 6 2 28 12 (1) Other than four super–spec rigs in Argentina, the FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb. hookload rating.
The following table sets forth certain information concerning our International Solutions drilling rigs as of September 30, 2023: INTERNATIONAL SOLUTIONS FLEET Location AC (FlexRig ® 3) 1 AC (FlexRig ® 4) 2 Other AC SCR 3 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Argentina 12 9 — — — — — — 12 9 Colombia 2 — — — 1 1 2 — 5 1 Bahrain — — 3 2 — — — — 3 2 Australia 1 1 — — — — — — 1 1 United Arab Emirates 1 — — — — — — — 1 — Totals 16 10 3 2 1 1 2 — 22 13 (1) The FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb. hookload rating.
All of our revenues in Bahrain are from a partner of the local national oil company. United Arab Emirates During the year ended September 30, 2022, our operations in U.A.E. consisted of services provided to ADNOC Drilling Company P.J.S.C. ("ADNOC Drilling"), primarily in the form of secondment labor, as part of the strategic alliance that was announced in September 2021.
All of our revenues in Bahrain are from a partner of the local national oil company. United Arab Emirates During the years ended September 30, 2023 and 2022, our operations in U.A.E. consisted of services provided to ADNOC Drilling Company P.J.S.C.
No assurance can be given that all or a portion of our coverage will not be canceled, that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss.
As a result, we retain the risk for any loss in excess of these limits. No assurance can be given that all or a portion of our coverage will not be canceled, that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss.
As of September 30, 2022, we had approximately 22 percent of the total market share in U.S. land drilling and approximately 34 percent of the super-spec market share in U.S. land drilling. In the United States, we have the industry's largest super-spec fleet wit h 230 rigs, of which 174 were under contract at September 30, 2022.
As of September 30, 2023, we had approximately 23.6 percent of the total market share in U.S. land drilling and approximately 33.4 percent of the super-spec market share in U.S. land drilling. In the United States, we have the industry's largest super-spec fleet with 231 rigs, of which 145 were under contract at September 30, 2023.
It can be equipped with an optional skid or walking system, third mud pump, and 7,500 psi high pressure mud system. (2) The FlexRig ® 4 model has a small footprint and is designed to be highly mobile. The rig is equipped with a 300,000 lb. mast, 400HP top drive and two mud pumps.
It can be equipped with an optional skid or walking system, third mud pump, and 7,500 psi high pressure mud system. Nine rigs in Argentina are equipped with skid systems, a third mud pump and 7,500 psi high pressure mud systems. (2) The FlexRig ® 4 model has a small footprint and is designed to be highly mobile.
We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage. Our insurance may not in all situations provide sufficient funds to protect us from all liabilities that could result from our operations. Our coverage includes aggregate policy limits. As a result, we retain the risk for any loss in excess of these limits.
We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage. 2023 FORM 10-K | 15 Table of Contents Our insurance may not in all situations provide sufficient funds to protect us from all liabilities that could result from our operations. Our coverage includes aggregate policy limits.
Our real estate investments include a shopping center containing approximately 366,000 leasable square feet and approximately 176 acres of undeveloped real estate. Our research and development endeavors include both internal development and external acquisition of developing technologies.
We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center containing approximately 365,000 leasable square feet and approximately 176 acres of undeveloped real estate. Our research and development endeavors include both internal development and external acquisition of developing technologies.
In total, 176 of our 236 marketed rigs were active under contract, 119 were under fixed‑term contracts, and 57 were working well-to-well as of September 30, 2022.
In total, 147 of our 233 marketed rigs were active under contract, 85 were under fixed‑term contracts, and 62 were working well-to-well as of September 30, 2023.
Our first FlexRig ® drilling rig entered the market in 1998. We continued to innovate and in 2002 introduced our first AC drive rigs, which incorporated new drilling technology and improved safety and environmental design. These rigs found immediate success by delivering higher value wells to the customer and marked the beginning of the AC land rig revolution.
Our first FlexRig ® drilling rig entered the market in 1998. We continued to innovate and in 2002 introduced our first AC drive rigs, which incorporated new drilling technology and improved safety and environmental design.
Failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines, penalties or other sanctions. For more information, see Item 1A— “Risk Factors — Failure to comply with the U.S. Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business. ” We are also subject to the jurisdiction of the U.S.
Failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines, penalties or other sanctions. For more information, see Item 1A— “Risk Factors — Failure to comply with the U.S.
Such regulations regarding exports and imports of covered goods or dealings with sanctioned countries, persons or entities include licensing, recordkeeping and reporting requirements. Failure to comply with applicable laws and regulations relating to customs, tariffs, sanctions and export controls may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.
Failure to comply with applicable laws and regulations relating to customs, tariffs, sanctions and export controls may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets.
Diversity, Equity & Inclusion We believe that creating an environment where our employees feel valued and respected drives engagement, better leverages the unique talents and perspectives of our people to innovate and enhances our ability to attract and retain a diverse workforce.
Our vision for the future of safety at H&P will be guided by these principles. 2023 FORM 10-K | 14 Table of Contents Diversity, Equity & Inclusion We believe that creating an environment where our employees feel valued and respected drives engagement, better leverages the unique talents and perspectives of our people to innovate and enhances our ability to attract and retain a diverse workforce.
Safety Leadership For more than 20 years, H&P measured safety success the same way other companies in our industry did – the absence of OSHA recordable injuries and declining total recordable injury rates ("TRIR"). We now believe that measuring safety in this manner can be destructive to management’s efforts to build trust with field employees.
Safety Leadership For more than 20 years, H&P measured safety success the same way other companies in our industry did – the absence of OSHA recordable injuries and declining total recordable injury rates ("TRIR").
The level of capital spending has traditionally been correlated to oil and gas prices. Oil and gas prices can be volatile at times depending upon both near and long-term supply and demand factors. Sustained increases or decreases in the prices of oil and natural gas generally have a material impact on the exploration and production activities of our customers.
Markets and Competition Our business largely depends on the level of capital spending by oil and gas companies for exploration and production activities. The level of capital spending has traditionally been correlated to oil and gas prices. Oil and gas prices can be volatile at times depending upon both near and long-term supply and demand factors.
Since then, we have reconfigured, converted, and upgraded a total of 59 FlexRig ® drilling rigs to super-spec walking rigs. Years of designing and building our fleet of AC drive FlexRig ® drilling rigs has given us many competitive benefits. One key advantage is fleet uniformity.
In 2017, we introduced our first walking rig by reconfiguring some of our uni-directional skid designed FlexRig ® drilling rigs. Since then, we have reconfigured, converted, and upgraded a total of 68 FlexRig ® drilling rigs to super-spec walking rigs. Years of designing and building our fleet of AC drive FlexRig ® drilling rigs has given us many competitive benefits.
Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S. federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in four international locations: Argentina, Bahrain, Colombia and United Arab Emirates. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma.
Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S. federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in five international locations: Argentina, Bahrain, Colombia, the United Arab Emirates ("U.A.E."), and Australia. Our operations in Australia commenced in the fourth fiscal quarter of 2023.
If we do not meet these targets, we will not receive additional compensation above what we have received utilizing a "daywork" contract. Based on our operational track record throughout fiscal year 2022 and drilling expertise, our performance-based contracts have produced a positive risk-reward outcome.
If we do not meet these targets, we will not receive additional compensation above the base dayrate. Based on our operational track record throughout fiscal year 2023 and drilling expertise, our performance-based contracts have produced a positive risk-reward outcome. We are seeing a growing adoption of performance contracts by our customers and we expect this trend to continue.
It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website. 2022 FORM 10-K | 17 Table of Contents
Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website.
If any provisions are violated, as in a customer operating below the minimum number of rigs, early termination payments may apply. 2022 FORM 10-K | 12 Table of Contents Daywork Contracts Daywork contracts are contracts under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market.
Daywork Contracts Daywork contracts are contracts under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market.
H&P's alliance with ADNOC Drilling includes several accretive projects, in addition to general consulting services, that leverage H&P's expertise and technologies to help deliver more competitive well completion times, greater drilling efficiencies, and improved well economics. Currently, H&P does not own any drilling rigs within U.A.E.
("ADNOC Drilling"), primarily in the form of secondment labor, as part of the strategic alliance that was announced in September 2021. H&P's alliance with ADNOC Drilling includes several accretive projects, in addition to general consulting services, that leverage H&P's expertise and technologies to help deliver more competitive well completion times, greater drilling efficiencies, and improved well economics.
Of the six SCR rigs, one is equipped with 2,100 horsepower drawworks and the remaining five are equipped with 3,000 horsepower drawworks to drill deep conventional wells. Drilling Services and Solutions General We are the largest provider of super-spec AC drive land rigs in the Western Hemisphere.
(3) A silicon-controlled-rectifier (“SCR”) system converts alternate current (“AC”) produced by one or more AC generator sets into direct current (“DC”). The SCR rigs are equipped with 3,000 horsepower drawworks to drill deep conventional wells. Drilling Services and Solutions General We are the largest provider of super-spec AC drive land rigs in the Western Hemisphere.
Priority is given to those incidents that have the potential to cause a serious injury or fatality. Our safety success at H&P will be based on key performance indicators related to the removal of SIF exposures, such as SIF Potential and SIF Mitigated rates. Our vision for the future of safety at H&P will be guided by these principles.
Our safety success at H&P will be based on key performance indicators related to the removal of SIF exposures, such as SIF Potential and SIF Mitigated rates.
In addition to career and safety training efforts, the team creates, manages and implements enhancements to development and succession plans, change management initiatives and diversity, equity and inclusion ("DE&I") programs. The three training programs include: • Introduction to Diversity, Equity, and Inclusion and Traits of Inclusive Teams; • Unconscious Bias and Microaggressions; and • Allyship and Privilege.
In addition to career and safety training efforts, the team creates, manages and implements enhancements to development and succession plans, change management initiatives and diversity, equity and inclusion ("DE&I") programs. H&P offers a variety of training programs ranging from job specific programs to leadership development.
Other Operations We own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center and undeveloped real estate. On October 1, 2019, we elected to utilize the Captives to insure the deductibles for our workers’ compensation, general liability and automobile liability insurance programs.
Other Operations We own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center and undeveloped real estate.
These solutions are designed to continue to help provide differentiated value for our customers through enhanced wellbore quality and placement, improved cost performance and well economics, and better consistency at reduced risk.
Utilizing these technologies, we are able to deploy a more data-driven solution compared to human decisions and execution, thereby reducing variability and the costs around achieving optimal outcomes. These solutions are designed to continue to help provide differentiated value for our customers through enhanced wellbore quality and placement, improved cost performance and well economics, and better consistency at reduced risk.
During the year ended September 30, 2022 we recognized $1.1 million in earnout proceeds associated with the sale of our trucking services assets within Other (Gain) Loss on Sale of Assets on the Consolidated Statements of Operations. Markets and Competition Our business largely depends on the level of capital spending by oil and gas companies for exploration and production activities.
We recognized earnout proceeds associated with the sale of our trucking and casing running assets of $1.6 million and $1.1 million during the fiscal year ended September 30, 2023 and 2022, respectively, within Other (gain) loss on sale of assets on the Consolidated Statements of Operations.
As a result of these investments, today the vast majority of our current domestic fleet is comprised of super spec rigs. As of September 30, 2022, we had a total of 234 super-spec rigs. In 2017, we introduced our first walking rig by reconfiguring some of our uni-directional skid designed FlexRig ® drilling rigs.
As a result of these investments, today the vast majority of our current domestic fleet is comprised of super-spec rigs and half the rigs in our international fleet are super-spec rigs. As of September 30, 2023, we had a total of 242 super-spec rigs.
We are seeing a growing adoption of performance contracts by our customers and we expect this trend to continue. Contract Backlog As of September 30, 2022 and 2021, our drilling contract backlog was $1.2 billion and $0.6 billion, respectively. Approximately 30.8 percent of the September 30, 2022 backlog is reasonably expected to be fulfilled in fiscal year 2024 and thereafter.
Refer to Note 9—Revenue from Contracts with Customers for additional information related to performance-based contracts. Contract Backlog As of September 30, 2023 and 2022, our drilling contract backlog was $1.4 billion and $1.2 billion, respectively. Approximately 33.8 percent of the September 30, 2023 backlog is reasonably expected to be fulfilled in fiscal year 2025 and thereafter.
Treasury Department’s Office of Foreign Assets Control, the U.S. Commerce Department’s Bureau of Industry and Security, the U.S. Customs and Border Protection and other U.S. and non-U.S. laws and regulations governing the international trade of goods, services and technology.
Commerce Department’s Bureau of Industry and Security, the U.S. Customs and Border Protection and other U.S. and non-U.S. laws and regulations governing the international trade of goods, services and technology. Such regulations regarding exports and imports of covered goods or dealings with sanctioned countries, persons or entities include licensing, recordkeeping and reporting requirements.
We also changed our pricing and contracting strategy, and beginning in 2005, predominantly all new FlexRig ® drilling rigs were built, supported by a firm contract, and generated attractive returns. To date, we have built over 200 FlexRig ® rigs that align with this strategy.
These rigs found immediate success by delivering higher value wells to the customer and marked the beginning of the AC land rig revolution. 2023 FORM 10-K | 10 Table of Contents We also changed our pricing and contracting strategy, and beginning in 2005, predominantly all new FlexRig ® drilling rigs were built, supported by a firm contract, and generated attractive returns.
As such, significant declines in the prices of oil and natural gas may have a material adverse effect on our business, financial condition and results of operations. As of September 30, 2022, we had 192 active rigs under contract, compared to 137 and 79 rigs under contract as of September 30, 2021 and 2020, respectively.
Sustained increases or decreases in the prices of oil and natural gas generally have a material impact on the exploration and production activities of our customers. As such, significant declines in the prices of oil and natural gas may have a material adverse effect on our business, financial condition and results of operations.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Annual reports, quarterly reports, current reports, amendments to those reports, earnings releases, financial statements and our various corporate governance documents are also available free of charge upon written request.
The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Range 3 drill pipe is used without setback. The rig is capable of horizontal and vertical drilling, but is primarily used for vertical drilling. (3) A silicon-controlled-rectifier (“SCR”) system converts alternate current (“AC”) produced by one or more AC generator sets into direct current (“DC”).
The rig is equipped with a 300,000 lb. mast, 400HP top drive and two mud pumps. Range 3 drill pipe is used without setback. The rig is capable of horizontal and vertical drilling, but is primarily used for vertical drilling.
Removed
Casualty claims occurring prior to October 1, 2019 will remain recorded within each of the operating segments and future adjustments to these claims will continue to be reflected within the operating segments. Reserves for legacy claims occurring prior to October 1, 2019, will remain as liabilities in our operating segments until they have been resolved.
Added
As of September 30, 2023, we had one available rig in the U.A.E. Australia During the year ended September 30, 2023, we commenced drilling operations in Australia. All of our revenue in Australia is from one customer Tamboran, a publicly traded company. As of September 30, 2023, we had one available rig in Australia.
Removed
Changes in those reserves will be reflected in segment earnings as they occur. We will continue to utilize the Captives to finance the risk of loss to equipment and rig property assets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeComplying with varying jurisdictional requirements is becoming increasingly complex and could increase the costs and difficulty of compliance, and violations of applicable data protection laws, including but not limited to the European Union General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”) and California Privacy Rights Act ("CPRA"), which will amend the CCPA in January 2023 to provide for additional privacy protections, as well as similar laws enacted by other states, could result in significant penalties.
Biggest changeFurthermore, violations of applicable data protection laws, including but not limited to the GDPR and the CCPA as amended by the CPRA, as well as other U.S. sector-specific and new comprehensive state data privacy laws, could result in significant penalties.
Examples of such factors include: (1) the extent our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (2) the availability and cost of low- or non-carbon-based energy sources and technologies, (3) evolving regulatory requirements affecting sustainability standards or disclosures, (4) the availability of suppliers that can meet our sustainability and other standards.
Examples of such factors include: (1) the extent our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (2) the availability and cost of low- or non-carbon-based energy sources and technologies, (3) evolving regulatory requirements affecting sustainability standards or disclosures, and (4) the availability of suppliers that can meet our sustainability and other standards.
The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this Form 10-K, may have a significant impact on the market price of our common stock: • changes in customer needs, expectations or trends and our ability to maintain relationships with key customers; • our ability to implement our business strategy; • changes in our capital structure, including the issuance of additional debt; • public announcements (including the timing of these announcements) regarding our business, financial performance and prospects or new products or services, product enhancements, technological advances or strategic actions, such as acquisitions, restructurings or significant contracts, by our competitors or us; • trading activity in our stock, including portfolio transactions in our stock by us, our executive officers and directors, and significant stockholders or trading activity that results from the ordinary course rebalancing of stock indices in which we may be included; • short-interest in our common stock, which could be significant from time to time; • our inclusion in, or removal from, any stock indices; • investor perception of us and the industry and markets in which we operate; • increased focus by the investment community on sustainability practices at our company and in the oil and natural gas industry generally; • changes in earnings estimates or buy/sell recommendations by securities analysts; • whether or not we meet earnings estimates of securities analysts who follow us; • regulatory or legal developments in the United States and foreign countries where we operate; and • general financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity markets. 2022 FORM 10-K | 33 Table of Contents Certain provisions of our corporate governing documents could make an acquisition of our company more difficult.
The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this Form 10-K, may have a significant impact on the market price of our common stock: • changes in customer needs, expectations or trends and our ability to maintain relationships with key customers; • our ability to implement our business strategy; • changes in our capital structure, including the issuance of additional debt; • public announcements (including the timing of these announcements) regarding our business, financial performance and prospects or new products or services, product enhancements, technological advances or strategic actions, such as acquisitions, restructurings or significant contracts, by our competitors or us; • trading activity in our stock, including portfolio transactions in our stock by us, our executive officers and directors, and significant stockholders or trading activity that results from the ordinary course rebalancing of stock indices in which we may be included; • short-interest in our common stock, which could be significant from time to time; • our inclusion in, or removal from, any stock indices; • investor perception of us and the industry and markets in which we operate; • increased focus by the investment community on sustainability practices at our company and in the oil and natural gas industry generally; • changes in earnings estimates or buy/sell recommendations by securities analysts; • whether or not we meet earnings estimates of securities analysts who follow us; • regulatory or legal developments in the United States and foreign countries where we operate; and • general financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity markets. 2023 FORM 10-K | 33 Table of Contents Certain provisions of our corporate governing documents could make an acquisition of our company more difficult.
The volatility in prices and production levels are impacted by many factors beyond our control, including: • the domestic and foreign supply of, and demand for, oil, natural gas and related products; • the cost of exploring for, developing, producing and delivering oil and natural gas; • uncertainty in capital and commodities markets and the ability of oil and natural gas producers to access capital; • the availability of and constraints in storage and transportation capacity, including, for example, takeaway constraints experienced in the Permian Basin over the past several years; • the worldwide economy; • expectations about future oil and natural gas prices and production levels; • local and international political, economic, health and weather conditions, especially in oil and natural gas producing countries, including, for example, the impacts of local and international pandemics and other disasters; • actions of OPEC, its members and other oil producing nations, such as Russia, relating to oil price and production levels, including announcements of potential changes to such levels; • the levels of production of oil and natural gas of non-OPEC countries; • the continued development of shale plays which may influence worldwide supply and prices; • tax policies of the United States and other countries involved in global energy markets; • political and military conflicts, hostilities or perceived hostilities in oil producing regions or other geographical areas or acts of terrorism in the United States or elsewhere; • technological advances that are related to oil and natural gas recovery or that affect the global demand for energy; • the development, exploitation and market acceptance of alternative energy sources as part of a transition to a lower carbon economy; 2022 FORM 10-K | 18 Table of Contents • increased focus by the investment community on sustainability practices in the oil and natural gas industry; • legal and other limitations or restrictions on exportation and/or importation of oil and natural gas; • laws and governmental regulations affecting the use of oil and natural gas; and • the environmental and other laws and governmental regulations affecting exploration and development of oil and natural gas reserves.
The volatility in prices and production levels are impacted by many factors beyond our control, including: • the domestic and foreign supply of, and demand for, oil, natural gas and related products; • the cost of exploring for, developing, producing and delivering oil and natural gas; • uncertainty in capital and commodities markets and the ability of oil and natural gas producers to access capital; • the availability of and constraints in storage and transportation capacity, including, for example, takeaway constraints experienced in the Permian Basin over the past several years; • the worldwide economy; • expectations about future oil and natural gas prices and production levels; • local and international political, economic, health and weather conditions, especially in oil and natural gas producing countries, including, for example, the impacts of local and international pandemics and other disasters; • actions of OPEC, its members and other oil producing nations, such as Russia, relating to oil price and production levels, including announcements of potential changes to such levels; • the levels of production of oil and natural gas of non-OPEC countries; • the continued development of shale plays which may influence worldwide supply and prices; • tax policies of the United States and other countries involved in global energy markets; • political and military conflicts, hostilities or perceived hostilities in oil producing regions or other geographical areas or acts of terrorism in the United States or elsewhere; 2023 FORM 10-K | 18 Table of Contents • technological advances that are related to oil and natural gas recovery or that affect the global demand for energy; • the development, exploitation and market acceptance of alternative energy sources as part of a transition to a lower carbon economy; • increased focus by the investment community on sustainability practices in the oil and natural gas industry; • legal and other limitations or restrictions on exportation and/or importation of oil and natural gas; • laws and governmental regulations affecting the use of oil and natural gas; and • the environmental and other laws and governmental regulations affecting exploration and development of oil and natural gas reserves.
The likelihood that dividends will be reduced or suspended is increased during periods of prolonged market weakness or uncertainty, such as the recent downturn as a result of the COVID-19 pandemic and the oil price collapse in 2020. In addition, our ability to pay dividends may be limited by agreements governing our indebtedness now or in the future.
The likelihood that dividends will be reduced or suspended is increased during periods of prolonged market weakness or uncertainty, such as the downturn as a result of the COVID-19 pandemic and the oil price collapse in 2020. In addition, our ability to pay dividends may be limited by agreements governing our indebtedness now or in the future.
Our business and results of operations may be adversely affected by foreign political, economic and social instability risks, foreign currency restrictions and devaluation, and various local laws associated with doing business in certain foreign countries. We currently have drilling operations in South America (primarily Argentina and Colombia) and the Middle East.
Our business and results of operations may be adversely affected by foreign political, economic and social instability risks, foreign currency restrictions and devaluation, and various local laws associated with doing business in certain foreign countries. We currently have drilling operations in South America (primarily Argentina and Colombia), the Middle East and Australia.
In addition, the United States is currently a member of the “Paris Agreement” that requires member countries to review and “represent a progression” in their intended nationally determined GHG contributions, which set GHG emission reduction goals every five years beginning in 2020. 2022 FORM 10-K | 27 Table of Contents The aim of the Paris Agreement is to hold the increase in the average global temperature to well below 2ºC (3.6ºF) above pre-industrial levels with efforts to limit the rise to 1.5ºC (2.7ºF) to protect against the more severe consequences of climate change forecasted by scientific studies.
In addition, the United States is currently a member of the “Paris Agreement” that requires member countries to review and “represent a progression” in their intended nationally determined GHG contributions, which set GHG emission reduction goals every five years beginning in 2020. 2023 FORM 10-K | 27 Table of Contents The aim of the Paris Agreement is to hold the increase in the average global temperature to well below 2ºC (3.6ºF) above pre-industrial levels with efforts to limit the rise to 1.5ºC (2.7ºF) to protect against the more severe consequences of climate change forecasted by scientific studies.
Beyond financial and regulatory impacts, the projected severe effects of climate change have the potential to directly affect our facilities and operations and those of our customers, which could result in more frequent and severe disruptions to our business and those of our customers, increased costs to repair damaged facilities or maintain or resume operations, and increased insurance costs.
Beyond financial and regulatory impacts, the projected severe effects of climate change have the potential to directly affect our facilities and operations and those of our customers and suppliers, which could result in more frequent and severe disruptions to our business and those of our customers and suppliers, increased costs to repair damaged facilities or maintain or resume operations, and increased insurance costs.
Such an accident or other event and subsequent crisis management efforts could cause us to incur substantial expenses in connection with investigation and remediation as well as cause lasting damage to our reputation, loss of customers and an inability to obtain insurance. 2022 FORM 10-K | 20 Table of Contents Our Offshore Gulf of Mexico operations are also subject to potentially significant risks and liabilities attributable to or resulting from adverse environmental conditions, including pollution of offshore waters and related negative impact on wildlife and habitat, adverse sea conditions and platform damage or destruction due to collision with aircraft or marine vessels.
Such an accident or other event and subsequent crisis management efforts could cause us to incur substantial expenses in connection with investigation and remediation as well as cause lasting damage to our reputation, loss of customers and an inability to obtain insurance. 2023 FORM 10-K | 20 Table of Contents Our Offshore Gulf of Mexico operations are also subject to potentially significant risks and liabilities attributable to or resulting from adverse environmental conditions, including pollution of offshore waters and related negative impact on wildlife and habitat, adverse sea conditions and platform damage or destruction due to collision with aircraft or marine vessels.
There have been intensifying efforts within the investment community (including investment advisors, investment fund managers, sovereign wealth funds, public pension funds, universities and individual investors) to promote the divestment of, or limit investment in, the stock of companies in the oil and gas industry.
There have been efforts within the investment community (including investment advisors, investment fund managers, sovereign wealth funds, public pension funds, universities and individual investors) to promote the divestment of, or limit investment in, the stock of companies in the oil and gas industry.
To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict drilling in areas where we operate or impose additional environmental protection requirements that result in increased costs to the oil and gas industry, in general, or the drilling industry, in particular, our business or prospects could be materially adversely affected. 2022 FORM 10-K | 32 Table of Contents RISKS RELATED TO OUR COMMON STOCK AND CORPORATE STRUCTURE We may reduce or suspend our dividend in the future.
To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict drilling in areas where we operate or impose additional environmental protection requirements that result in increased costs to the oil and gas industry, in general, or the drilling industry, in particular, our business or prospects could be materially adversely affected. 2023 FORM 10-K | 32 Table of Contents RISKS RELATED TO OUR COMMON STOCK AND CORPORATE STRUCTURE We may reduce or suspend our dividend in the future.
Any litigation or claims, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public, and make it more difficult for us to compete effectively or obtain adequate insurance in the future. 2022 FORM 10-K | 31 Table of Contents Additional tax liabilities, limitations on our use of net operating losses and tax credits and/or our significant net deferred tax liability could affect our financial condition, income tax provision, net income, and cash flows.
Any litigation or claims, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public, and make it more difficult for us to compete effectively or obtain adequate insurance in the future. 2023 FORM 10-K | 31 Table of Contents Additional tax liabilities, limitations on our use of net operating losses and tax credits and/or our significant net deferred tax liability could affect our financial condition, income tax provision, net income, and cash flows.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation. 2022 FORM 10-K | 29 Table of Contents Failure to comply with the U.S.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation. 2023 FORM 10-K | 29 Table of Contents Failure to comply with the U.S.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.” 2022 FORM 10-K | 28 Table of Contents New legislation and regulatory initiatives relating to hydraulic fracturing or other aspects of the oil and gas industry could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.” 2023 FORM 10-K | 28 Table of Contents New legislation and regulatory initiatives relating to hydraulic fracturing or other aspects of the oil and gas industry could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
Any violation of these laws or harm to our reputation could have a material adverse effect on our business, financial condition, results of operations and prospects. 2022 FORM 10-K | 30 Table of Contents Government policies, mandates, and regulations specifically affecting the energy sector and related industries, regulatory policies or matters that affect a variety of businesses, taxation polices, and political instability could adversely affect our financial condition and results of operations.
Any violation of these laws or harm to our reputation could have a material adverse effect on our business, financial condition, reputation, or results of operations and prospects. 2023 FORM 10-K | 30 Table of Contents Government policies, mandates, and regulations specifically affecting the energy sector and related industries, regulatory policies or matters that affect a variety of businesses, taxation polices, and political instability could adversely affect our financial condition and results of operations.
Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, measuring, and reporting such metrics, including sustainability-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, quantifying, and reporting such metrics, including sustainability-related disclosures that may be required of public companies by the SEC, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions appear likely based on the findings set forth in the 2018 and 2021 IPCC Reports and any such future laws and regulations could result in increased compliance costs, additional operating restrictions or affect the demand for our customers' products and, accordingly, our services.
However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions appear likely based on the findings set forth in the IPCC Reports and any such future laws and regulations could result in increased compliance costs, additional operating restrictions or affect the demand for our customers' products and, accordingly, our services.
We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of drilling rigs or other assets. Our business is subject to complex and evolving laws and regulations regarding privacy and data protection.
We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of drilling rigs or other assets. Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection.
As of September 30, 2022, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes were not subject to an annual limitation (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017).
As of September 30, 2023, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes were not subject to an annual limitation (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017).
The drilling services and solutions business is highly cyclical. During periods of increased demand for drilling services and solutions and periods of supply chain disruption, delays in delivery and shortages of drilling equipment and supplies can occur and it may take longer for our vendors to service drilling components.
The drilling services and solutions business is highly cyclical. During periods of increased demand for drilling services and solutions and periods of supply chain disruption, delays in delivery and shortages of drilling equipment and supplies can occur and it may take longer for our suppliers to service drilling components.
To date, as an industry leader, we have effectively managed these delays, disruptions, and shortages by engaging in near and long-term demand planning with multiple vendors who provide and service key rig components, parts and equipment.
To date, as an industry leader, we have effectively managed these delays, disruptions, and shortages by engaging in near and long-term demand planning with multiple suppliers who provide and service key rig components, parts and equipment.
In the future, our Board of Directors may, without advance notice, determine to reduce or suspend our dividend in order to maintain our financial flexibility and best position the Company for long‑term success.
In the future, our Board of Directors may, without advance notice, determine to reduce or suspend our dividends in order to maintain our financial flexibility and best position the Company for long‑term success.
As of September 30, 2022, 79 of our available rigs were not under contract. 2022 FORM 10-K | 19 Table of Contents Further, as a result of a significant reduction in the demand for oil and natural gas services, certain of our competitors may engage in bankruptcy proceedings, debt refinancing transactions, management changes, or other strategic initiatives in an attempt to reduce operating costs to maintain a position in the market.
As of September 30, 2023, 98 of our available rigs were not under contract. 2023 FORM 10-K | 19 Table of Contents Further, as a result of a significant reduction in the demand for oil and natural gas services, certain of our competitors may engage in bankruptcy proceedings, debt refinancing transactions, management changes, or other strategic initiatives in an attempt to reduce operating costs to maintain a position in the market.
Nonetheless, all of our foreign operations use the U.S. dollar as the functional currency and local currency monetary assets and liabilities are remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations. For fiscal year 2022, we recognized aggregate foreign currency losses of $5.4 million in Argentina.
Nonetheless, all of our foreign operations use the U.S. dollar as the functional currency and local currency monetary assets and liabilities are remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations. For fiscal year 2023, we recognized aggregate foreign currency losses of $7.4 million in Argentina.
Cybersecurity risks could include, but are not limited to, ransomware attacks, denial-of-service attacks, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, employee or insider error, interruptions in communication, loss of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology, loss or damage to our data delivery systems, or other cybersecurity and infrastructure systems, including our property and equipment.
Cybersecurity risks could include, but are not limited to, Security Incidents, such as ransomware attacks, denial-of-service attacks, phishing attacks, malicious software, attempts to gain unauthorized access to our data and the unauthorized release, corruption or loss of our data and personal information, employee or insider error, interruptions in communication, loss of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology, loss or damage to our data delivery systems, or other cybersecurity and infrastructure systems, including our property and equipment.
At September 30, 2022, we had approximately 35 rigs placed on federal land and four rigs in federal waters. Any new laws, regulations or permitting requirements regarding hydraulic fracturing could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
At September 30, 2023, we had approximately 24 rigs placed on federal land and four rigs in federal waters. Any new laws, regulations or permitting requirements regarding hydraulic fracturing could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
Demand for our services and the rates we are able to charge for such services depend on oil and natural gas industry exploration and production activity and expenditure levels, which are directly affected by trends in oil and natural gas prices and market expectations regarding such prices.
Demand for our services and the rates we are able to charge for such services depend on oil and natural gas industry exploration and production activity and expenditure levels, which are directly affected by both long- and short-term trends in oil and natural gas prices and market expectations regarding such prices.
Our aggregate foreign currency losses across all of our operations for fiscal years 2022 and 2021 were $5.9 million and $5.3 million, respectively.
Our aggregate foreign currency losses across all of our operations for fiscal years 2023, 2022 and 2021 were $6.4 million, $5.9 million and $5.3 million, respectively.
If a significant accident or other event occurs and is not fully covered by insurance or an enforceable or recoverable indemnity from a customer, it could have a material adverse effect on our business, financial condition and results of operations. Our business is subject to cybersecurity risks. Our operations depend on effective and secure information technology systems.
If a significant accident or other event occurs and is not fully covered by insurance or an enforceable or recoverable indemnity from a customer, it could have a material adverse effect on our business, financial condition and results of operations. Our business is subject to cybersecurity and information technology system disruption risks.
Competition in drilling services and solutions involves such factors as price, efficiency, condition, type and operational capability of equipment, reputation, operating safety, environmental impact, customer relations, rig availability and excess rig capacity in the industry. Competition is primarily on a regional basis and may vary significantly by region at any particular time.
Competition in drilling services and solutions involves such factors as price, efficiency, condition, type and operational capability of equipment, reputation, operating safety, environmental impact, customer relations, rig availability and excess rig capacity in the industry. Competition may vary significantly by region at any particular time.
However, if we are not able to effectively manage these disruptions and delays in the future, they could have a material adverse effect on our business, financial condition and results of operations. Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility.
However, if we are not able to effectively manage these disruptions and delays in the future, they could have a material adverse effect on our business, financial condition and results of operations. 2023 FORM 10-K | 24 Table of Contents Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility.
Oil prices are particularly sensitive to actual and perceived threats to geopolitical stability and to changes in production from OPEC+ member states.
Oil prices are particularly sensitive to actual and perceived threats to geopolitical stability, global economic conditions, and to changes in production from OPEC+ member states.
For example, the ongoing conflict, and the continuation of, or any increase in the severity of, the conflict between Russia and Ukraine, has led and may continue to lead to an increase in the volatility of global oil and gas prices, which could have a corresponding negative impact on the capital expenditure of oil and gas companies as a result of the higher perceived risk.
For example, the ongoing armed conflicts between Russia and Ukraine and Israel and Hamas and the continuation of, or any escalation in the severity of, these conflicts, has led and may continue to lead to an increase in the volatility of global oil and gas prices, which could have a corresponding negative impact on the capital expenditure of oil and gas companies as a result of the higher perceived risk.
Our inability or the inability of our customers to perform under our or their contractual obligations may have a material adverse impact on our business, financial condition and results of operations. 2022 FORM 10-K | 23 Table of Contents Our contracts with national oil companies may expose us to greater risks than we normally assume in contracts with non-governmental customers.
Our inability or the inability of our customers to perform under our or their contractual obligations may have a material adverse impact on our business, financial condition and results of operations. Our contracts with national oil companies may expose us to greater risks than we normally assume in contracts with non-governmental customers.
In addition, the unexpected loss of members of management, qualified personnel or a significant number of employees due to disease, disability, or death, could have a detrimental effect on us. The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations.
The loss of members of management or the inability to attract and retain qualified personnel could have a material adverse effect on our business, financial condition and results of operations. In addition, the unexpected loss of members of management, qualified personnel or a significant number of employees due to disease, disability, or death, could have a detrimental effect on us.
In 2021, the Company introduced full-time or part-time remote work as a permanent option for select employees. A significant number of our office employees work remotely.
In 2021, the Company introduced full-time or part-time remote work as a permanent option for select employees and a significant number of our corporate employees now work remotely.
We have allocated a portion of the purchase price of certain acquisitions to goodwill and other intangible assets. The amount allocated to goodwill is the excess of the purchase price over the net identifiable assets acquired. At September 30, 2022, we had goodwill of $45.7 million and other intangible assets, net of $67.2 million.
We have allocated a portion of the purchase price of certain acquisitions to goodwill and other intangible assets. The amount allocated to goodwill is the excess of the purchase price over the net identifiable assets acquired. At September 30, 2023, we had goodwill of $45.7 million and other intangible assets, net of $60.6 million.
A number of disruptions and delays across the global supply chain have occurred in recent years, which have created delays in servicing key components, and a tightening of supplies and shortages in a number of areas, ranging from basic raw materials to semiconductors, and increasing costs, and we expect such disruptions and delays could continue in the near term and possibly beyond.
A number of disruptions and delays across the global supply chain have occurred in recent years, which have created delays in servicing key components, and a tightening of supplies and shortages in a number of areas, ranging from basic raw materials to component parts, and increasing costs, and it is possible such disruptions and delays could continue in the near term and possibly beyond.
Our business may also face increased scrutiny from investors and other stakeholders related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
Our business may also face increased scrutiny from investors and other stakeholders, including from parties that oppose environmental, social, and governance initiatives, related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
A significant loss in value of our investments would negatively impact our debt ratio and financial strength. 2022 FORM 10-K | 26 Table of Contents We may not be able to generate cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations.
A significant loss in value of our investments would negatively impact our debt ratio and financial strength. We may not be able to generate cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations.
However, under certain limited circumstances, such as destruction of a drilling rig, our bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us.
However, in the event of default, such as destruction of a drilling rig, our bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us.
The facts and circumstances included in our impairment assessments are described in Part II, Item 8—"Financial Statements and Supplementary Data." A downgrade in our credit ratings could negatively impact our cost of and ability to access capital.
The facts and circumstances included in our impairment assessments are described in Part II, Item 8—"Financial Statements and Supplementary Data." 2023 FORM 10-K | 26 Table of Contents A downgrade in our credit ratings could negatively impact our cost of and ability to access capital.
Our operations are subject to the many hazards inherent in the business, including inclement weather, blowouts, explosions, well fires, loss of well control, equipment failure, pollution, and reservoir damage.
Our operations are subject to the many hazards inherent in the business, including inclement weather, unplanned power outages, blowouts, explosions, well fires, loss of well control, equipment failure, computer system disruptions, pollution, and reservoir damage.
As of September 30, 2022, our drilling services backlog was approximately $1.2 billion for future revenues under firm commitments.
As of September 30, 2023, our drilling services backlog was approximately $1.4 billion for future revenues under firm commitments.
As a result, we are exposed to certain political, economic and other uncertainties not encountered in U.S. operations, including increased risks of social unrest, strikes, terrorism, war, kidnapping of employees, nationalization, forced negotiation or modification of contracts, difficulty resolving disputes (including technology disputes) and enforcing contract provisions, expropriation of equipment as well as expropriation of oil and gas exploration and drilling rights, taxation policies, foreign exchange restrictions and restrictions on repatriation of income and capital, currency rate fluctuations, increased governmental ownership and regulation of the economy and industry in the markets in which we operate, economic and financial instability of national oil companies, and restrictive governmental regulation, bureaucratic delays and general hazards associated with foreign sovereignty over certain areas in which operations are conducted.
As a result, we are exposed to several political, economic and other uncertainties not encountered in U.S. operations, including increased risks of social unrest, strikes, terrorism, war, kidnapping of employees, nationalization, and forced negotiation or modification of contracts; difficulty resolving disputes (including technology disputes) and enforcing contract provisions, expropriation of equipment as well as expropriation of oil and gas exploration and drilling rights; taxation policies; foreign exchange restrictions and restrictions on repatriation of income and capital; currency rate fluctuations; increased governmental ownership and regulation of the economy and industry in the markets in which we operate; economic and financial instability of national oil companies; restrictive governmental regulation; bureaucratic delays; and general hazards associated with foreign sovereignty over certain areas in which operations are conducted. 2023 FORM 10-K | 25 Table of Contents South American countries, in particular, have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and general economic and political instability.
As interpretation and enforcement of the GDPR evolves, it creates a range of new compliance obligations, which could cause us to incur costs or require us to change our business practices in a manner adverse to our business.
As interpretation and enforcement of the GDPR evolves, it creates a range of new compliance obligations, which could cause us to incur costs and require us to change our business practices in a manner that does not align with our business objectives.
Failure to comply could result in significant penalties of up to a maximum of four percent of our global turnover or up to $20.0 million Euro, which may materially adversely affect our business, reputation, results of operations, and cash flows.
Failure to comply could result in significant penalties of up to a maximum of four percent of our total global turnover of the preceding financial year or up to €20.0 million, which may materially adversely affect our business, reputation, results of operations, and revenue.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks, including unauthorized access to sensitive information as a result of increased remote access and other cybersecurity related incidents.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks.
However, if we were to experience ownership changes in the future as a result of subsequent shifts in our stock ownership, our ability to use certain pre-change tax attributes could potentially accelerate or permanently increase our future tax liabilities.
However, if we were to experience ownership changes in the future as a result of subsequent shifts in our stock ownership, our ability to use certain pre-change tax attributes could potentially accelerate or permanently increase our future tax liabilities. Additionally, our future effective tax rates could be adversely affected by changes in tax laws (including tax treaties) or their interpretation.
Oil and natural gas prices and production levels, as well as market expectations regarding such prices and production levels, have been volatile, which has had, and may in the future have, adverse effects on our business and operations.
Similarly, the COVID-19 pandemic resulted in a sharp decline in oil prices and drilling activity in 2020. Oil and natural gas prices and production levels, as well as market expectations regarding such prices and production levels, have been volatile, which has had, and may in the future have, adverse effects on our business and operations.
Other effects of the pandemic include and may continue to include, significant volatility and disruption of the global financial markets; continued volatility of crude oil prices and related uncertainties around OPEC+ production; disruption of our operations, including suspension of drilling activities; impact to costs; loss of workers; labor shortages; supply chain disruptions or equipment shortages; logistics constraints; customer demand for our services and industry demand generally; capital spending by oil and gas companies; our liquidity; the price of our securities and trading markets with respect thereto; our ability to access capital markets; asset impairments and other accounting changes; certain of our customers experiencing bankruptcy or otherwise becoming unable to pay vendors, including us; and employee impacts from illness, travel restrictions, including border closures and other community response measures.
Such public health crises, pandemics and epidemics are continuously evolving, and we are not able to enumerate all potential risks to our business from such events, including the COVID-19 pandemic; however, we believe that in addition to the impacts described above, other current and potential impacts include, but are not limited to: significant volatility and disruption of the global financial markets; continued volatility of crude oil prices and related uncertainties around OPEC+ production; disruption of our operations, including suspension of drilling activities; impact to costs; loss of workers; labor shortages; supply chain disruptions or equipment shortages; logistics constraints; customer demand for our services and industry demand generally; capital spending by oil and gas companies; our liquidity; the price of our securities and trading markets with respect thereto; our ability to access capital markets; asset impairments and other accounting changes; certain of our customers experiencing bankruptcy or otherwise becoming unable to pay vendors, including us; and employee impacts from illness, travel restrictions, including border closures and other community response measures.
While we do not currently expect the IRA to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible that the IRA could have a material adverse effect on our tax liability.
We are in the process of evaluating the potential impacts of Pillar Two. While we do not currently expect Pillar Two to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible Pillar Two could have a material adverse effect on our tax liability.
If we experience future negative changes in our business climate or our results of operations such that we determine that goodwill or intangible assets are impaired, we will be required to record impairment charges with respect to such assets. 2022 FORM 10-K | 22 Table of Contents Technology disputes could negatively impact our operations or increase our costs.
If we experience future negative changes in our business climate or our results of operations such that we determine that goodwill or intangible assets are impaired, we will be required to record impairment charges with respect to such assets. 2023 FORM 10-K | 22 Table of Contents Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold.
It is possible that our business, financial and other systems, as well as those of our third-party vendors, could be compromised, which could go unnoticed for a prolonged period of time.
It is possible that our business, financial and other systems, as well as those of our third-party vendors, could be compromised.
In fiscal year 2022, we received approximately 45.5 percent of our consolidated operating revenues from our ten largest drilling services and solutions customers and approximately 19.0 percent of our consolidated operating revenues from our three largest customers (including their affiliates).
In fiscal year 2023, we received approximately 50.4 percent of our consolidated operating revenues from our ten largest drilling services and solutions customers and approximately 24.2 percent of our consolidated operating revenues from our three largest customers (including their affiliates).
Such public health crises, pandemics and epidemics are continuously evolving and the extent to which our business operations and financial results continue to be affected depends on various factors beyond our control, such as the duration, severity and sustained geographic resurgence of the COVID-19 virus; the emergence, severity and spread of new variants of the virus; the impact and effectiveness of governmental actions to contain and treat such outbreaks, including government policies and restrictions; vaccine hesitancy, vaccine mandates, and voluntary or mandatory quarantines; and the global response surrounding such uncertainties.
The full extent of the impact of public health crises, pandemics and epidemics on our business operations and financial results will depend largely on future developments and various factors beyond our control, such as the duration, severity and sustained geographic spread, and the impact and effectiveness of governmental actions to contain and treat such outbreaks, including government policies and restrictions; vaccine hesitancy, vaccine mandates, and voluntary or mandatory quarantines; and the global response surrounding such uncertainties.
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.
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. Fixed‑term drilling contracts customarily provide for a termination by the customer for convenience, default, or extended force majeure.
As a result, any technology disputes involving us or our customers or supplying vendors could have a material adverse impact on our business, financial condition and results of operations. Unexpected events could disrupt our business and adversely affect our results of operations.
As a result, any technology disputes or limitations on our ability to protect or enforce our intellectual property rights could have a material adverse impact on our business, financial condition and results of operations. Unexpected events could disrupt our business and adversely affect our results of operations.
Drilling rigs in our fleet may become impaired in the future if oil and gas prices decline or remain low for a prolonged period of time or if market conditions deteriorate or if we restructure our drilling fleet.
Drilling rigs in our fleet may become impaired in the future if oil and gas prices decline or remain low for a prolonged period of time or if market conditions deteriorate or if we restructure our drilling fleet. For example, in fiscal year 2021 we recognized impairment charges of $70.9 million related to tangible assets and equipment.
Furthermore, geopolitical tensions or conflicts, such as Russia's invasion of Ukraine, may further heighten the risk of cybersecurity attacks. 2022 FORM 10-K | 21 Table of Contents Cybersecurity incidents involving our own systems or those of our third-party vendors, could: • disrupt our rig operations including operational technologies as well as our corporate information technology systems, • negatively impact our ability to compete, • enable the theft or misappropriation of funds, • cause the loss, corruption or misappropriation of proprietary or confidential information, • expose us to litigation, regulatory action, and potential liability, and • result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate cybersecurity events.
Our information technology systems and those of our third party vendors are also subject to disruptions due to occurrences other than Security Incidents, such as natural disasters or power outages. 2023 FORM 10-K | 21 Table of Contents Security Incidents or other disruptions involving our own systems or those of our third-party vendors, could: • disrupt our operations including operational technologies as well as our corporate information technology systems, • negatively impact our ability to compete, • result in the theft or misappropriation of funds, • cause the loss, corruption or misappropriation of personal, proprietary or confidential information, • expose us to litigation, regulatory action, and potential liability, and • result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate Security Incidents or other disruptions.
Fixed‑term drilling contracts customarily provide for termination at the election of the customer, with an “early termination payment” to be paid to us if a contract is terminated prior to the expiration of the fixed term.
An “early termination payment” is typically paid to us if a contract is terminated prior to the expiration of the fixed term.
Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations.
Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations. Fuel conservation measures, alternative fuel requirements and increasing consumer demand for alternatives to oil and natural gas could reduce demand for oil and natural gas.
In the normal course of business, we and our third-party partners may collect, process, and store data that is subject to those specific laws and regulations governing personal data.
In the normal course of business, we and our third-party partners may collect, process, and store data that is subject to those specific laws and regulations governing personal data. Complying with the varying regulatory requirements outlined in foreign, federal, state, and local regulations is becoming increasingly complex, and could increase the costs and difficulty of compliance.
The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change. New laws and regulations governing data privacy and the unauthorized disclosure of confidential information pose increasingly complex compliance challenges and potentially elevate our costs.
The regulatory environment surrounding data privacy, data security and consumer protection is rapidly evolving and subject to constant change. New laws and regulations in this space pose increasingly complex compliance challenges and potentially elevate our costs.
Further, as cyber incidents continue to evolve, we may be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of cyber incidents.
A Security Incident or other disruption could have a material adverse effect on our business, financial condition and operations. Further, as Security Incidents continue to evolve, we may be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of Security Incidents.
Further, actions or decisions we have taken or may take as a consequence of COVID-19 may result in investigations, litigation or legal claims against us. Lawsuits or claims against us could have a material adverse effect on our business, financial condition and results of operations.
Lawsuits or claims against us could have a material adverse effect on our business, financial condition and results of operations.
These lawsuits have resulted, and may result in the future, in the payment of substantial settlements or damages and increases in our insurance costs. In addition, during periods of depressed market conditions we may be subject to an increased risk of our customers, vendors, former employees and others initiating legal proceedings against us.
In addition, during periods of depressed market conditions we may be subject to an increased risk of our customers, vendors, former employees and others initiating legal proceedings against us. Further, actions or decisions we have taken or may take as a consequence of COVID-19 may result in investigations, litigation or legal claims against us.
See above “— Technology disputes could negatively impact our operations or increase our costs ." The Company also owns and operates a large fleet of motor vehicles, which creates an increased exposure to motor vehicle accidents. Also, we may be subject, and have been subject in the past, to litigation resulting from accidents involving motor vehicles.
See above “— Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold ." The Company also owns and operates a large fleet of motor vehicles, which creates an increased exposure to motor vehicle accidents.
In addition, we may lose a competitive advantage in the event we are unsuccessful in enforcing our rights against third parties, or third parties are successful in enforcing their rights against us.
In addition, we may lose a competitive advantage in the event we are unsuccessful in enforcing our rights against third parties, third parties are successful in enforcing their rights against us, or our competitors are able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets.
There has also been pressure on lenders and other financial services companies to limit or curtail financing of companies in the oil and gas industry. Because we operate within the oil and gas industry, if these efforts continue or expand, our stock price and our ability to raise capital may be negatively impacted.
There has also been pressure on lenders and other financial services companies to limit or curtail financing of companies in the oil and gas industry.
We could also be subject to litigation from persons or corporations allegedly affected by data protection violations. In addition, we are also subject to the possibility of cyber incidents or attacks, potentially resulting in a violation of the laws mentioned above.
We could also be subject to litigation from persons or corporations allegedly affected by violations of these laws.
For example, in November 2018 and August 2019, we completed the acquisitions of Angus Jamieson Consulting and DrillScan Energy SAS, respectively. These strategic transactions, among others, are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk.
These strategic transactions, among others, are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk. Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock.
Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock. These transactions may also affect our liquidity, consolidated results of operations and consolidated financial condition.
These transactions may also affect our liquidity, consolidated results of operations and consolidated financial condition.
Similar legislation has been adopted in Virginia, Colorado, Utah and Connecticut, all of which will go into effect in 2023. Non-compliance with these and other data protection laws could expose us to regulatory investigations, which could result in fines and penalties. In addition to imposing fines, regulators may also issue orders to stop processing personal data, which could disrupt operations.
Non-compliance with these and other data privacy, data security, and consumer protection laws could also expose us to regulatory investigations, which could require significant expenses for resolution and potentially result in fines and prospective relief, necessitating additional resources for implementation. In addition, regulators may issue orders to stop processing personal data, which could disrupt operations.
The CCPA, which came into effect on January 1, 2020, and, effective January 2023, will be amended by the CPRA, gives California residents specific rights in relation to their personal information, requires that companies take certain actions, including notifications for security incidents and may apply to activities regarding personal information that is collected by us, directly or indirectly, from California residents.
The CCPA, which came into effect on January 1, 2020, was amended by the CPRA, which went into effect January 1, 2023. The CCPA and CPRA give California residents certain rights in relation to their personal information, and impose obligations on certain entities that do business in California to protect those rights, which may apply to us.
For example, worker strikes of short duration are common in Argentina and our operations have experienced such strikes in the past.
For example, worker strikes of short duration are common in Argentina and our operations have experienced such strikes in the past. Union expansion, if successful, new collective bargaining agreements or work stoppages could materially increase our labor costs, reduce our revenues or limit our operational flexibility.
There can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms we find acceptable. 2022 FORM 10-K | 25 Table of Contents The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations.
There can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms we find acceptable.
South American countries, in particular, have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and general economic and political instability. From time to time, these risks have impacted our business. For example, in Argentina, while our dayrate is denominated in U.S. dollars, we are paid in Argentine pesos.
From time to time, these risks have impacted our business. For example, in Argentina, while our dayrate is denominated in U.S. dollars, we are paid in Argentine pesos and Argentina has a history of implementing currency controls, which limit our ability to access U.S. Dollars in Argentina and repatriate cash from our Argentina operations.
Additionally, members of the investment community may screen companies such as ours for ESG disclosures and performance before investing in our stock. Over the past few years, there has also been an acceleration in investor demand for ESG investing opportunities, and many large institutional investors have committed to increasing the percentage of their portfolios that are allocated towards ESG investments.
See above "— Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks." Additionally, members of the investment community may screen companies such as ours for ESG disclosures and performance before investing in our stock and many large institutional investors have committed to allocating a percentage of their investment products towards ESG investments.
Members of the investment community are increasing their focus on ESG practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, DE&I initiatives, and heightened governance standards. As a result, we may continue to face increasing pressure regarding our ESG disclosures and practices.
Because we operate within the oil and gas industry, if these efforts continue or expand, our stock price and our ability to raise capital may be negatively impacted. 2023 FORM 10-K | 34 Table of Contents Some members of the investment community have increased their focus on ESG practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, DE&I initiatives, and heightened governance standards.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we lease a fabrication and assembly facility in Galena Park, Texas as well as a maintenance and overhaul facility near Tulsa, Oklahoma. We also own a limited number of commercial real estate properties located in Tulsa, Oklahoma for investment purposes.
Biggest changeIn addition, we lease a fabrication and assembly facility in Galena Park, Texas as well as a maintenance and overhaul facility near Tulsa, Oklahoma. We also own a limited number of commercial real estate properties located in Tulsa, Oklahoma for investment purposes. Our real estate investments include a shopping center and undeveloped real estate.
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Our real estate investments include a shopping center and undeveloped real estate. 2022 FORM 10-K | 34 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph The following performance graph reflects the yearly percentage change in our cumulative total stockholder return on common stock as compared with the cumulative total return on the S&P 600 Index, Dow Jones U.S. Select Oil Equipment & Services Index, and Philadelphia Stock Exchange Oil Service Sector Index.
Biggest changePayment of future dividends will depend on earnings and other factors and is subject to Board approval. Performance Graph The following performance graph reflects the yearly percentage change in our cumulative total stockholder return on common stock as compared with the cumulative total return on the S&P 600 Index, Dow Jones U.S.
Select Oil Equipment & Services Index 100.00 102.00 52.00 22.00 42.00 45.00 Philadelphia Stock Exchange Oil Service Sector Index 100.00 107.00 48.00 21.00 43.00 46.00 2022 FORM 10-K | 36 Table of Contents The above performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
Select Oil Equipment & Services Index 100.00 50.00 22.00 41.00 44.00 75.00 Philadelphia Stock Exchange Oil Service Sector Index 100.00 45.00 19.00 40.00 43.00 70.00 2023 FORM 10-K | 36 Table of Contents The above performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
All cumulative returns assume an initial investment of $100, the reinvestment of dividends and are calculated on a fiscal year basis ending on September 30 of each year.
Select Oil Equipment & Services Index, and Philadelphia Stock Exchange Oil Service Sector Index. All cumulative returns assume an initial investment of $100, the reinvestment of dividends and are calculated on a fiscal year basis ending on September 30 of each year.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividends The principal market on which our common stock is traded is the New York Stock Exchange under the symbol “HP.” As of November 9, 2022, there were 369 record holders of our common stock as listed by our transfer agent’s records.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividends The principal market on which our common stock is traded is the New York Stock Exchange under the symbol “HP.” As of November 1, 2023, there were 359 record holders of our common stock as listed by our transfer agent’s records. 2023 FORM 10-K | 35 Table of Contents We have paid quarterly cash dividends on our common stock during the past two fiscal years.
Indexed Returns Base Period Years Ending Company / Index Sep 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Helmerich & Payne, Inc. $ 100.00 $ 137.00 $ 88.00 $ 43.00 $ 70.00 $ 90.00 S&P 600 Index 100.00 120.00 108.00 100.00 157.00 127.00 Dow Jones U.S.
Indexed Returns Base Period Years Ending Company / Index Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Sep 2023 Helmerich & Payne, Inc. $ 100.00 $ 62.00 $ 29.00 $ 49.00 $ 64.00 $ 75.00 S&P 600 Index 100.00 91.00 83.00 131.00 106.00 117.00 Dow Jones U.S.
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We have paid quarterly cash dividends on our common stock during the past two fiscal years. Payment of future dividends will depend on earnings and other factors and is subject to Board approval.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDuring the fiscal year ended September 30, 2021, we recorded no impairment charges. 2022 FORM 10-K | 44 Table of Contents Other Operations Results of our other operations, excluding corporate selling, general and administrative costs, corporate restructuring, and corporate depreciation, are as follows: (in thousands) 2022 2021 % Change Operating revenues $ 66,287 $ 43,304 53.1 % Direct operating expenses 50,683 50,064 1.2 Depreciation 1,701 1,426 19.3 Research and development — 127 (100.0) Selling, general and administrative expense 1,183 1,205 (1.8) Restructuring charges — 186 (100.0) Operating income (loss) $ 12,720 $ (9,704) (231.1) 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.
Biggest changeThis resulted in a non-cash impairment charge of $2.5 million recorded in Asset impairment charges within our Consolidated Statement of Operations during the fiscal year ended September 30, 2022, as the rigs aggregate net book value of $3.4 million exceeded the fair value of the rigs less estimated cost to sell of $0.9 million. 2023 FORM 10-K | 44 Table of Contents Other Operations Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows: (in thousands) 2023 2022 % Change Operating revenues $ 77,296 $ 66,287 16.6 % Direct operating expenses 57,944 50,683 14.3 Depreciation 2,014 1,701 18.4 Selling, general and administrative expense 1,462 1,183 23.6 Operating income $ 15,876 $ 12,720 24.8 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.
Historically there has been a strong correlation between crude oil and natural gas prices and the demand for drilling rigs with the rig count increasing and decreasing with the up and down movements in the commodity prices.
Historically there has been a strong correlation between crude oil and natural gas prices and the demand for drilling rigs with the rig count increasing and decreasing with the up and down movements in commodity prices.
Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial 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.
(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.
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.
Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial 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.
(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.
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.
Advance Payment for Sale of Property, Plant and Equipment During September 2021, the Company agreed to sell eight FlexRig land rigs with an aggregate net book value of $55.6 million to ADNOC Drilling for $86.5 million. We received the $86.5 million in cash consideration in advance of delivering the rigs.
Advance Payment for Sale of Property, Plant and Equipment During September 2021, the Company agreed to sell eight FlexRig land rigs with an aggregate net book value of $55.6 million to ADNOC Drilling for $86.5 million. We received $86.5 million in cash consideration in advance of delivering the rigs.
Additionally, on March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.
On March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.
We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments. New Accounting Standards See Note 2—Summary of Significant Accounting Policies, Risks and Uncertainties to our Consolidated Financial Statements for recently adopted accounting standards and new accounting standards not yet adopted. Non-GAAP Measurements Direct Margin Direct margin is considered a non-GAAP metric.
We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments. New Accounting Standards See Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties to our Consolidated Financial Statements for recently adopted accounting standards and new accounting standards not yet adopted. Non-GAAP Measurements Direct Margin Direct margin is considered a non-GAAP metric.
Credit Facilities On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that was set to mature on November 13, 2024.
Credit Facility On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that was set to mature on November 13, 2024.
Critical Accounting Policies and Estimates Accounting policies that we consider significant are summarized in Note 2—Summary of Significant Accounting Policies, Risks and Uncertainties to our Consolidated Financial Statements included in Part II, Item 8—"Financial Statements and Supplementary Data" of this Form 10-K. The preparation of our financial statements in conformity with U.S.
Critical Accounting Policies and Estimates Accounting policies that we consider significant are summarized in Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties to our Consolidated Financial Statements included in Part II, Item 8—"Financial Statements and Supplementary Data" of this Form 10-K. The preparation of our financial statements in conformity with U.S.
Our levels of 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.
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.
As we move forward, we believe that our advanced uniform 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. 2022 FORM 10-K | 37 Table of Contents 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”).
As we move forward, we believe that our advanced uniform 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. 2023 FORM 10-K | 37 Table of Contents 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”).
Direct margin is not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures. 2022 FORM 10-K | 51 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 GAAP that is most directly comparable to direct margin.
Direct margin is not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures. 2023 FORM 10-K | 51 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 GAAP that is most directly comparable to direct margin.
An actuary reviews the loss reserves retained by the Company and the captives on an annual basis. 2022 FORM 10-K | 50 Table of Contents Revenue Recognition Drilling services revenues are primarily comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured.
An actuary reviews the loss reserves retained by the Company and the captives on an annual basis. 2023 FORM 10-K | 50 Table of Contents Revenue Recognition Drilling services revenues are primarily comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured.
The following is a discussion of the critical accounting policies and estimates used in our financial statements. 2022 FORM 10-K | 49 Table of Contents Property, Plant and Equipment Property, plant and equipment, including renewals and betterments, are capitalized at cost, while maintenance and repairs are expensed as incurred.
The following is a discussion of the critical accounting policies and estimates used in our financial statements. 2023 FORM 10-K | 49 Table of Contents Property, Plant and Equipment Property, plant and equipment, including renewals and betterments, are capitalized at cost, while maintenance and repairs are expensed as incurred.
The effective rates differ from the U.S. federal statutory rate (21.0 percent for the fiscal years 2022 and 2021) primarily due to non-deductible permanent items, the foreign derived intangible income deduction (in fiscal year 2022), state and foreign income taxes, and adjustments to the deferred state income tax rate.
The effective rates differ from the U.S. federal statutory rate (21.0 percent for the fiscal years 2023 and 2022) primarily due to non-deductible permanent items, the foreign derived intangible income deduction (in fiscal year 2022), state and foreign income taxes, and adjustments to the deferred state income tax rate.
Results of Operations for the Fiscal Years Ended September 30, 2021 and 2020 A discussion of our results of operations for the fiscal year ended September 30, 2021 compared to the fiscal year ended September 30, 2020 is included in Part II, Item 7— "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, filed with the Securities and Exchange Commission ("SEC") on November 18, 2021 .
Results of Operations for the Fiscal Years Ended September 30, 2022 and 2021 A discussion of our results of operations for the fiscal year ended September 30, 2022 compared to the fiscal year ended September 30, 2021 is included in Part II, Item 7— "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, filed with the Securities and Exchange Commission ("SEC") on November 16, 2022 .
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $1.8 billion and $1.0 billion in fiscal year 2022 and 2021, respectively.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $2.5 billion and $1.8 billion in fiscal year 2023 and 2022, respectively.
The capital budgets for calendar year 2023 have not yet been established by many of our customers; however, based upon the crude oil and natural gas pricing environment and many of our customers' desire to at least maintain their current production levels, we expect the level of capital spending and activity in calendar year 2023 to be similar to modestly higher than that experienced in calendar year 2022.
The capital budgets for calendar year 2024 have not yet been established by many of our customers; however, based upon the crude oil and natural gas pricing environment and many of our customers' desire to at least maintain their current production levels, we expect the level of capital spending and activity in calendar year 2024 to be similar to that experienced in calendar year 2023.
The debt issuance cost was being amortized straight-line over the stated life of the obligation, which approximated the effective interest method.
The debt issuance cost were being amortized straight-line over the stated life of the obligation, which approximated the effective interest method.
Asset Impairment Charges During the fiscal year ended September 30, 2022, we identified two international FlexRig® drilling rigs that met the asset held-for-sale criteria and were reclassified as assets held-for-sale on our Consolidated Balance Sheets.
During the fiscal year ended September 30, 2022, we identified two international FlexRig® drilling rigs that met the asset held-for-sale criteria and were reclassified to Assets held-for-sale on our Consolidated Balance Sheets.
Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2022 and 2021 amounted to $57.0 million and $35.4 million, respectively, which were eliminated upon consolidation.
Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2023 and 2022 amounted to $67.4 million and $57.0 million, respectively, which were eliminated upon consolidation.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $125.5 million and $126.4 million in the fiscal year ended September 30, 2022 and 2021, respectively.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $130.2 million and $125.5 million in the fiscal year ended September 30, 2023 and 2022, respectively.
Direct Operating Expenses Direct operating expenses consisted primarily of $7.0 million and $12.6 million in adjustments to accruals for estimated losses allocated to the Captives and rig and casualty insurance premiums of $35.6 million and $21.9 million during the fiscal years ended September 30, 2022 and 2021, respectively.
Direct Operating Expenses Direct operating expenses consisted primarily of $12.5 million and $7.0 million in adjustments to accruals for estimated losses allocated to the Captives and rig and casualty insurance premiums of $39.7 million and $35.6 million during the fiscal years ended September 30, 2023 and 2022, respectively.
We self‑insure a significant portion of expected losses relating to workers’ compensation, general liability, employer’s liability and automobile liability. Generally, deductibles range from $1 million to $10 million per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States.
We self‑insure a significant portion of expected losses relating to workers’ compensation, general liability, employer’s liability, auto liability, as well as other insurance coverages. Generally, deductibles range from $1 million to $10 million per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States.
Debt issuance fees paid as of September 30, 2021 were $3.9 million. 2022 FORM 10-K | 47 Table of Contents Redemption of 4.65% Senior Notes due 2025 On October 27, 2021, we redeemed all of the outstanding 2025 Notes, resulting in a cash outflow of $487.1 million.
Debt issuance fees paid as of September 30, 2021 were $3.9 million. Redemption of 4.65% Senior Notes due 2025 On October 27, 2021, we redeemed all of the outstanding 2025 Notes, resulting in a cash outflow of $487.1 million.
As a result, the associated make-whole premium of $56.4 million was paid during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment. The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand. Additional details are fully discussed in Note 7—Debt.
As a result, the associated make-whole premium of $56.4 million was paid during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment. The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand.
At the close of fiscal year 2022, we had 192 active contracted rigs, of which 125 were under a fixed-term contract and 67 were working well-to-well, compared to 137 contracted rigs at September 30, 2021. Our long-term strategy remains focused on innovation, technology, safety, operational excellence and reliability.
At the close of fiscal year 2023, we had 164 active contracted rigs, of which 91 were under a fixed-term contract and 73 were working well-to-well, compared to 192 contracted rigs at September 30, 2022. Our long-term strategy remains focused on innovation, technology, safety, operational excellence and reliability.
Generally, the level of capital expenditures is dictated by current and expected future prices of crude oil and natural gas, which are determined by various supply and demand factors. Both commodities have historically been, and we expect them to continue to be, cyclical and highly volatile.
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. Both commodities have historically been, and we expect them to continue to be, cyclical and highly volatile.
Both the estimated useful lives and salvage values require the use of management estimates. Assets held-for-sale are reported at the lower of the carrying amount or fair value less estimated costs to sell. Our estimate of fair value represents our best estimate based on industry trends and reference to market transactions and is subject to variability.
Assets held-for-sale are reported at the lower of the carrying amount or fair value less estimated costs to sell. Our estimate of fair value represents our best estimate based on industry trends and reference to market transactions and is subject to variability.
As of September 30, 2022, our drilling rig fleet included a total of 271 drilling rigs. Our reportable operating business segments consist of the North America Solutions segment with 236 rigs, the Offshore Gulf of Mexico segment with seven offshore platform rigs and the International Solutions segment with 28 rigs as of September 30, 2022.
As of September 30, 2023, our drilling rig fleet included a total of 262 drilling rigs. Our reportable operating business segments consist of the North America Solutions segment with 233 rigs, the Offshore Gulf of Mexico segment with seven offshore platform rigs and the International Solutions segment with 22 rigs as of September 30, 2023.
Senior Notes 2.90% Senior Notes due 2031 On September 29, 2021, we issued $550.0 million aggregate principal amount of the 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act (“Regulation S”).
Additional details are fully discussed in Note 6—Debt. 2023 FORM 10-K | 47 Table of Contents Senior Notes 2.90% Senior Notes due 2031 On September 29, 2021, we issued $550.0 million aggregate principal amount of the 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act (“Regulation S”).
However, beginning in 2021, rig activity has not moved in tandem with crude oil prices to the same extent it had historically as a large portion of our customers instituted a more disciplined approach to their operations and capital spending in order to enhance their own financial returns.
While that correlation remains for a segment of the market, beginning in 2021, a portion of rig activity has not moved in tandem with crude oil prices to the same extent as a large portion of our customers instituted a more disciplined approach to their operations and capital spending in order to enhance their own financial returns.
Selling, General and Administrative Expense Selling, general and administrative expenses increased to $182.4 million in the fiscal year ended September 30, 2022 compared to $172.2 million in the fiscal year ended September 30, 2021.
Selling, General and Administrative Expense Selling, general and administrative expenses increased to $206.7 million in the fiscal year ended September 30, 2023 compared to $182.4 million in the fiscal year ended September 30, 2022.
Purchases of Long-Term Investments Our net purchases of long-term investments were $29.2 million, $102.5 million and $0.6 million in fiscal years 2022, 2021 and 2020, respectively.
Net Purchases of Long-Term Investments Our net purchases of long-term investments were $20.7 million, $29.2 million and $102.5 million in fiscal years 2023, 2022 and 2021, respectively.
The change in cash provided by operating activities between fiscal years 2022 and 2021 is primarily driven by higher activity and rates, partially offset by changes in working capital. The decrease in cash provided by operating activities between fiscal years 2021 and 2020 was primarily driven by lower operating activity and lower pricing.
The increase in cash provided by operating activities between fiscal years 2023 and 2022 is primarily driven by higher activity and pricing. The increase in cash provided by operating activities between fiscal years 2022 and 2021 was primarily driven by higher activity and pricing, and is partially offset by changes in operating net working capital.
As of September 30, 2022 and 2021, our contract drilling backlog was $1.2 billion and $0.6 billion, respectively. The increase in backlog at September 30, 2022 from September 30, 2021 is primarily due to an increase in the number of fixed term drilling contracts executed.
As of September 30, 2023 and 2022, our contract drilling backlog was $1.4 billion and $1.2 billion, respectively. The increase in backlog at September 30, 2023 from 2022 is primarily due to an increase in the number of contracts executed under FlexPool agreements.
Sale of Assets Our proceeds from asset sales totaled $62.3 million, $43.5 million and $78.4 million in fiscal year 2022, 2021 and 2020, respectively. The increase in proceeds between fiscal years 2022 and 2021 is mainly driven by higher rig activity which drives higher reimbursement from customers for lost or damaged drill pipe.
Sale of Assets Our proceeds from asset sales totaled $70.1 million, $62.3 million and $43.5 million in fiscal year 2023, 2022 and 2021, respectively. The increase in proceeds is largely driven by higher rig activity which drives higher reimbursement from customers for lost or damaged drill pipe and other used drilling equipment.
One hundred percent of the 2031 Notes were exchanged in the Registered Exchange Offer.
All of the 2031 Notes were exchanged in the Registered Exchange Offer.
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.
In total, we had $42.1 million outstanding as of September 30, 2023. 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.
However, in some international locations we may make short-term investments that are less conservative, as equivalent highly rated investments are unavailable. See—Note 2—Summary of Significant Accounting Policies, Risks and Uncertainties—International Solutions Drilling Risks.
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. See—Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties—International Solutions Drilling Risks.
See Note 7—Debt to our Consolidated Financial Statements. (2) See Note 5—Leases to our Consolidated Financial Statements. (3) See Note 16—Commitments and Contingencies to our Consolidated Financial Statements.
See Note 6—Debt to our Consolidated Financial Statements. (2) See Note 4—Leases to our Consolidated Financial Statements. (3) See Note 15—Commitments and Contingencies to our Consolidated Financial Statements.
This metric is considered a non-GAAP measure of the Company's liquidity. The Company considers operating net working capital to be a supplemental measure for presenting and analyzing trends in our cash flows from operations over time.
Operating net working capital was $239.6 million, $271.8 million and $129.9 million as of September 30, 2023, 2022 and 2021, respectively. This metric is considered a non-GAAP measure of the Company's liquidity. The Company considers operating net working capital to be a supplemental measure for presenting and analyzing trends in our cash flows from operations over time.
The following table sets forth the total backlog by reportable segment as of September 30, 2022 and 2021, and the percentage of the September 30, 2022 backlog reasonably expected to be fulfilled in fiscal year 2024 and thereafter: (in millions) September 30, 2022 September 30, 2021 Percentage Reasonably Expected to be Fulfilled in Fiscal Year 2024 and Thereafter North America Solutions $ 863.6 $ 429.6 26.0 % Offshore Gulf of Mexico 7.6 17.2 — International Solutions 301.2 125.2 45.3 $ 1,172.4 $ 572.0 The early termination of a contract 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.
Approximately 33.8 percent of the September 30, 2023 total backlog is reasonably expected to be fulfilled in fiscal year 2025 and thereafter. 2023 FORM 10-K | 39 Table of Contents The following table sets forth the total backlog by reportable segment as of September 30, 2023 and 2022, and the percentage of the September 30, 2023 backlog reasonably expected to be fulfilled in fiscal year 2025 and thereafter: (in billions) September 30, 2023 September 30, 2022 Percentage Reasonably Expected to be Fulfilled in Fiscal Year 2025 and Thereafter North America Solutions $ 1.1 $ 0.9 29.0 % Offshore Gulf of Mexico $ — $ — — International Solutions $ 0.3 $ 0.3 52.7 $ 1.4 $ 1.2 The early termination of a contract 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.
Direct Operating Expenses Direct operating expenses decreased to $90.4 million during the fiscal year ended September 30, 2022 as compared to $97.2 million during the fiscal year ended September 30, 2021.
Direct Operating Expenses Direct operating expenses increased to $96.8 million during the fiscal year ended September 30, 2023 as compared to $90.4 million during the fiscal year ended September 30, 2022.
Likewise, if we are generating excess cash flows or have cash balances on hand beyond our near-term needs, 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.
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.
Operating revenues increased $0.8 billion in fiscal year 2022 compared to fiscal year 2021. This increase is primarily driven by higher pricing and higher activity levels. Direct Operating Expenses Direct operating expenses increased to $1.2 billion during the fiscal year ended September 30, 2022 as compared to $0.8 billion during the fiscal year ended September 30, 2021.
Operating revenues increased $0.7 billion in fiscal year 2023 primarily due to higher pricing and a 3.6 percent increase in activity levels. Direct Operating Expenses Direct operating expenses increased to $1.4 billion during the fiscal year ended September 30, 2023 as compared to $1.2 billion during the fiscal year ended September 30, 2022.
The 0.7 percent decrease in operating revenue is primarily driven by lower reimbursable expenses and the mix of rigs working at full rates as opposed to being on lower standby or mobilization rates, partially offset by pricing increases which occurred in the later portion of the 2022 fiscal year.
The 3.8 percent increase in operating revenue was largely driven by pricing increases and wage increase pass-throughs which occurred in the latter portion of fiscal year 2022 partially offset by the mix of rigs being on lower standby or mobilization rates as opposed to working at full rates.
Our cash flows for the fiscal years ended September 30, 2022, 2021 and 2020 are presented below: Year Ended September 30, (in thousands) 2022 2021 2020 Net cash provided by (used in): Operating activities $ 233,913 $ 136,440 $ 538,881 Investing activities (167,315) (161,994) (87,885) Financing activities (734,305) 425,523 (297,220) Net increase (decrease) in cash and cash equivalents and restricted cash $ (667,707) $ 399,969 $ 153,776 Operating Activities Our operating net working capital (non-GAAP) as of September 30, 2022, 2021, and 2020 is presented below: Year Ended September 30, (in thousands) 2022 2021 2020 Total current assets $ 1,002,944 $ 1,586,566 $ 963,327 Less: Cash and cash equivalents 232,131 917,534 487,884 Short-term investments 117,101 198,700 89,335 Assets held-for-sale 4,333 71,453 — 649,379 398,879 386,108 Total current liabilities 394,810 866,306 219,136 Less: Dividends payable 26,693 27,332 27,226 Current portion of long-term debt, net — 483,486 — Advance payment for sale of property, plant and equipment 600 86,524 — $ 367,517 $ 268,964 $ 191,910 Operating net working capital (non-GAAP) $ 281,862 $ 129,915 $ 194,198 Cash flows provided by operating activities were approximately $233.9 million, $136.4 million, and $538.9 million for the fiscal year ended September 30, 2022, 2021, and 2020 respectively.
Our cash flows for the fiscal years ended September 30, 2023, 2022 and 2021 are presented below: Year Ended September 30, (in thousands) 2023 2022 2021 Net cash provided by (used in): Operating activities $ 833,682 $ 233,913 $ 136,440 Investing activities (322,584) (167,315) (161,994) Financing activities (463,869) (734,305) 425,523 Net increase (decrease) in cash and cash equivalents and restricted cash $ 47,229 $ (667,707) $ 399,969 Operating Activities Our operating net working capital (non-GAAP) as of September 30, 2023, 2022, and 2021 is presented below: Year Ended September 30, (in thousands) 2023 2022 2021 Total current assets $ 1,006,625 $ 1,002,944 $ 1,586,566 Less: Cash and cash equivalents 257,174 232,131 917,534 Short-term investments 93,600 117,101 198,700 Assets held-for-sale 645 4,333 71,453 Prepaid property, plant and equipment 21,821 10,091 — 633,385 639,288 398,879 Total current liabilities 418,931 394,810 866,306 Less: Dividends payable 25,194 26,693 27,332 Current portion of long-term debt, net — — 483,486 Advance payment for sale of property, plant and equipment — 600 86,524 $ 393,737 $ 367,517 $ 268,964 Operating net working capital (non-GAAP) $ 239,648 $ 271,771 $ 129,915 Cash flows provided by operating activities were approximately $833.7 million, $233.9 million, and $136.4 million for the fiscal year ended September 30, 2023, 2022, and 2021 respectively.
For the purpose of understanding the impact on our cash flows from operating activities, operating net working capital is calculated as current assets, excluding cash and cash equivalents, short-term investments, and assets held-for-sale, less current liabilities, excluding dividends payable, short-term debt and advance payments for sale of property, plant and equipment. 2022 FORM 10-K | 46 Table of Contents Operating net working capital was $281.9 million, $129.9 million and $194.2 million as of September 30, 2022, 2021 and 2020, respectively.
For the purpose of understanding the impact on our cash flows from operating activities, operating net working capital is calculated as current assets, excluding cash and cash equivalents, short-term investments, assets held-for-sale, and prepaid property, plant and equipment, less current liabilities, excluding dividends payable, short-term debt and advance payments for sale of property, plant and equipment.
Offshore Gulf of Mexico The following table presents certain information with respect to our Offshore Gulf of Mexico reportable segment: (in thousands, except operating statistics) 2022 2021 % Change Operating revenues $ 125,465 $ 126,399 (0.7) % Direct operating expenses 90,415 97,249 (7.0) Depreciation 9,175 10,557 (13.1) Selling, general and administrative expense 2,661 2,624 1.4 Segment operating income $ 23,214 $ 15,969 45.4 Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 35,050 $ 29,150 20.2 Revenue days 3 1,460 1,552 (5.9) Average active rigs 4 4 4 — Number of active rigs at the end of period 5 4 4 — Number of available rigs at the end of period 7 7 — Reimbursements of "out-of-pocket" expenses $ 26,077 $ 27,388 (4.8) (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.
This increase was largely driven by a $10.8 million increase in professional services fees. 2023 FORM 10-K | 42 Table of Contents Offshore Gulf of Mexico The following table presents certain information with respect to our Offshore Gulf of Mexico reportable segment: (in thousands, except operating statistics) 2023 2022 % Change Operating revenues $ 130,244 $ 125,465 3.8 % Direct operating expenses 96,781 90,415 7.0 Depreciation 7,622 9,175 (16.9) Selling, general and administrative expense 3,035 2,661 14.1 Segment operating income $ 22,806 $ 23,214 (1.8) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 33,463 $ 35,050 (4.5) Revenue days 3 1,460 1,460 — Average active rigs 4 4 4 — Number of active rigs at the end of period 5 4 4 — Number of available rigs at the end of period 7 7 — Reimbursements of "out-of-pocket" expenses $ 30,445 $ 26,077 16.8 (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.
Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022. The 2031 Notes will mature on September 29, 2031 and bear interest at a rate of 2.90 percent annum.
Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.
The decrease was primarily driven by a $6.3 million favorable adjustment in self-insurance liabilities related to prior period claims coupled with the factors described above. 2022 FORM 10-K | 43 Table of Contents International Solutions The following table presents certain information with respect to our International Solutions reportable segment: (in thousands, except operating statistics) 2022 2021 % Change Operating revenues $ 136,072 $ 57,917 134.9 % Direct operating expenses 120,780 68,672 75.9 Depreciation 4,156 2,013 106.5 Selling, general and administrative expense 8,779 8,028 9.4 Asset impairment charges 2,495 — — Restructuring charges — 207 (100.0) Segment operating loss $ (138) $ (21,003) (99.3) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 15,292 $ (10,755) (242.2) Revenue days 3 3,036 1,815 67.3 Average active rigs 4 8 5 60.0 Number of active rigs at the end of period 5 12 6 100.0 Number of available rigs at the end of period 28 30 (6.7) Reimbursements of "out-of-pocket" expenses $ 4,910 $ 6,693 (26.6) (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.
The increase was primarily driven by the factors described above. 2023 FORM 10-K | 43 Table of Contents International Solutions The following table presents certain information with respect to our International Solutions reportable segment: (in thousands, except operating statistics) 2023 2022 % Change Operating revenues $ 212,566 $ 136,072 56.2 % Direct operating expenses 187,292 120,780 55.1 Depreciation 7,615 4,156 83.2 Selling, general and administrative expense 10,401 8,779 18.5 Asset impairment charges 8,149 2,495 226.6 Segment operating loss $ (891) $ (138) (545.7) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 25,274 $ 15,292 65.3 Revenue days 3 4,788 3,036 57.7 Average active rigs 4 13 8 62.5 Number of active rigs at the end of period 5 13 12 8.3 Number of available rigs at the end of period 22 28 (21.4) Reimbursements of "out-of-pocket" expenses $ 10,227 $ 4,910 108.3 (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.
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. 2022 FORM 10-K | 45 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.
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.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues increased $78.2 million in fiscal year 2022 compared to fiscal year 2021.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 365 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $212.6 million and $136.1 million in the fiscal years ended September 30, 2023 and 2022, respectively.
Likewise, the Company believes that operating net working capital is useful to investors because it provides a means to evaluate the operating performance of the business using criteria that are used by our internal decision makers. The increase in operating net working capital between fiscal years 2022 and 2021 was primarily driven by higher rig activity and rates.
Likewise, the Company believes that operating net working capital is useful to investors because it provides a means to evaluate the operating performance of the business using criteria that are used by our internal decision makers. Investing Activities Capital Expenditures Our capital expenditures were $395.5 million, $250.9 million and $82.1 million in fiscal years 2023, 2022 and 2021, respectively.
Lenders with $680.0 million of commitments under the 2018 Credit Facility also exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026. The remaining $70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date.
The remaining $70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date.
As of September 30, 2022, we had a $537.7 million deferred tax liability on our Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.
Our indebtedness under our unsecured senior notes totaled $550.0 million at September 30, 2023 and matures on September 29, 2031. As of September 30, 2023, we had a $517.8 million deferred tax liability on our Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment.
Year Ended September 30, 2022 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Segment operating income (loss) $ 121,893 $ 23,214 $ (138) Add back: Depreciation and amortization 375,250 9,175 4,156 Research and development 26,728 — — Selling, general and administrative expense 43,796 2,661 8,779 Asset impairment charges 1,868 — 2,495 Restructuring charges 498 — — Direct margin (Non-GAAP) $ 570,033 $ 35,050 $ 15,292 Year Ended September 30, 2021 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Segment operating income (loss) $ (287,176) $ 15,969 $ (21,003) Add back: Depreciation and amortization 392,415 10,557 2,013 Research and development 21,811 — — Selling, general and administrative expense 51,089 2,624 8,028 Asset impairment charges 70,850 — — Restructuring charges 3,868 — 207 Direct margin (Non-GAAP) $ 252,857 $ 29,150 $ (10,755)
Year Ended September 30, 2023 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Segment operating income (loss) $ 625,467 $ 22,806 $ (891) Add back: Depreciation and amortization 353,976 7,622 7,615 Research and development 30,457 — — Selling, general and administrative expense 58,367 3,035 10,401 Asset impairment charges 3,948 — 8,149 Direct margin (Non-GAAP) $ 1,072,215 $ 33,463 $ 25,274 Year Ended September 30, 2022 (in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Segment operating income (loss) $ 121,893 $ 23,214 $ (138) Add back: Depreciation and amortization 375,250 9,175 4,156 Research and development 26,728 — — Selling, general and administrative expense 43,796 2,661 8,779 Asset impairment charges 1,868 — 2,495 Restructuring charges 498 — — Direct margin (Non-GAAP) $ 570,033 $ 35,050 $ 15,292
We calculate backlog as the total expected revenue from fixed-term contracts and do not include any anticipated contract renewals or expected performance bonuses as part of its calculation. Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations.
Contract Backlog Drilling contract backlog is the expected future dayrate revenue from executed contracts. We calculate backlog as the total expected revenue from fixed-term contracts and do not include any anticipated contract renewals or expected performance bonuses as part of its calculation.
This increase is primarily driven by higher activity levels. Additionally, in the first quarter of fiscal year 2022, we recognized $16.4 million in revenue related to the settlement of a contract drilling dispute related to drilling services provided from fiscal years 2016 through 2019 with YPF S.A. Refer to Note 10—Revenue from Contracts with Customers for additional details.
The $76.5 million increase in fiscal year 2023 from fiscal year 2022 was primarily driven by a 57.7 percent increase in activity levels. Additionally, during the year ended September 30, 2022, we recognized $16.4 million in revenue related to the settlement of a contract drilling dispute related to drilling services provided from fiscal year 2016 through 2019 with YPF S.A.
During the fiscal year ended September 30, 2022, we recognized a gain of $47.4 million on our Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.
During the year ended September 30, 2023, we recognized a loss of $4.2 million, recorded within Gain (loss) on investment securities on our Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period. Concurrent with the investment agreement, we entered into a fixed-term drilling services agreement with Tamboran.
The impairment charge was recorded in the Consolidated Statement of Operations for the fiscal year ended September 30, 2022.
The remaining $4.0 million is recorded within the North America Solutions segment. The impairment charge was recorded in the Consolidated Statement of Operations for the fiscal year ended September 30, 2023.
The 2018 Credit Facility has $750.0 million in aggregate availability with a maximum of $75.0 million available for use as letters of credit. As of September 30, 2022, there were no borrowings or letters of credit outstanding, leaving $750.0 million available to borrow under the 2018 Credit Facility.
As of September 30, 2023, there were no borrowings or letters of credit outstanding, leaving $750.0 million available to borrow under the 2018 Credit Facility. For a full description of the 2018 Credit Facility, see Note 6—Debt to the Consolidated Financial Statements.
Depreciation and amortization includes amortization of intangible assets of $7.2 million in fiscal years 2022 and 2021, and abandonments of equipment of $6.6 million and $2.0 million in fiscal years 2022 and 2021, respectively.
The decrease is reflective of lower capital expenditures over the last several years. Depreciation and amortization includes amortization of intangible assets of $6.6 million and $7.2 million in fiscal years 2023 and 2022, and abandonments of equipment of $3.3 million and $6.6 million in fiscal years 2023 and 2022, respectively.
North America Solutions The following table presents certain information with respect to our North America Solutions reportable segment: (in thousands, except operating statistics) 2022 2021 % Change Operating revenues $ 1,788,167 $ 1,026,364 74.2 % Direct operating expenses 1,218,134 773,507 57.5 Depreciation and amortization 375,250 392,415 (4.4) Research and development 26,728 21,811 22.5 Selling, general and administrative expense 43,796 51,089 (14.3) Asset impairment charges 1,868 70,850 (97.4) Restructuring charges 498 3,868 (87.1) Segment operating income (loss) $ 121,893 $ (287,176) (142.4) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 570,033 $ 252,857 125.4 Revenue days 3 59,672 39,199 52.2 Average active rigs 4 163 107 52.3 Number of active rigs at the end of period 5 176 127 38.6 Number of available rigs at the end of period 236 236 — Reimbursements of "out-of-pocket" expenses $ 232,092 $ 113,897 103.8 (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.
See Note 7—Income Taxes to our Consolidated Financial Statements for additional income tax disclosures. 2023 FORM 10-K | 41 Table of Contents North America Solutions The following table presents certain information with respect to our North America Solutions reportable segment: (in thousands, except operating statistics) 2023 2022 % Change Operating revenues $ 2,519,743 $ 1,788,167 40.9 % Direct operating expenses 1,447,528 1,218,134 18.8 Depreciation and amortization 353,976 375,250 (5.7) Research and development 30,457 26,728 14.0 Selling, general and administrative expense 58,367 43,796 33.3 Asset impairment charges 3,948 1,868 111.3 Restructuring charges — 498 (100.0) Segment operating income $ 625,467 $ 121,893 413.1 Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 1,072,215 $ 570,033 88.1 Revenue days 3 61,814 59,672 3.6 Average active rigs 4 169 163 3.7 Number of active rigs at the end of period 5 147 176 (16.5) Number of available rigs at the end of period 233 236 (1.3) Reimbursements of "out-of-pocket" expenses $ 304,870 $ 232,092 31.4 (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.
Including discontinued operations, we recorded net income of $7.0 million ($0.05 per diluted share) for the fiscal year ended September 30, 2022 compared to a net loss of $326.2 million ($3.04 loss per diluted share) for the fiscal year ended September 30, 2021.
Results of Operations for the Fiscal Years Ended September 30, 2023 and 2022 Consolidated Results of Operations Net Income We recorded net income of $434.1 million ($4.16 per diluted share) for the fiscal year ended September 30, 2023 compared to net income of $7.0 million ($0.05 per diluted share) for the fiscal year ended September 30, 2022.
The combined net book value of these assets of $2.0 million were written down to their estimated scrap value of $0.1 million, resulting in a non-cash impairment charge of $1.9 million during the fiscal year ended September 30, 2022 in the Consolidated Statement of Operations.
The rigs’ aggregate net book value of $8.8 million was written down to the estimated scrap value of $0.7 million, which resulted in a non-cash impairment charge of $8.1 million recorded in Asset impairment charges within our Consolidated Statement of Operations during the fiscal year ended September 30, 2023.
Future Cash Requirements Our operating cash requirements, scheduled debt repayments, interest payments, any declared dividends, and estimated capital expenditures for fiscal year 2023 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.
At September 30, 2023, we were in compliance with all debt covenants. 2023 FORM 10-K | 48 Table of Contents Future Cash Requirements Our operating cash requirements, scheduled debt repayments, interest payments, any declared dividends, and estimated capital expenditures for fiscal year 2024 are expected to be funded through current cash and cash to be provided from operating activities.
Gain on Investment Securities During the fiscal year ended September 30, 2022, we recognized an aggregate gain of $57.9 million on investment securities. This gain was primarily comprised of a $47.4 million gain on our equity investment in ADNOC Drilling caused by an increase in the fair market value of the stock.
This gain was mainly comprised of a $47.4 million gain on our equity investment in ADNOC Drilling, caused by an increase in the fair market value of the stock, and a gain of $8.2 million on the sale of our equity investment in Schlumberger, Ltd.
The interest expense applicable to the construction of qualifying assets is capitalized as a component of the cost of such assets. We account for the depreciation of property, plant and equipment using the straight‑line method over the estimated useful lives of the assets considering the estimated salvage value of the property, plant and equipment.
We account for the depreciation of property, plant and equipment using the straight‑line method over the estimated useful lives of the assets considering the estimated salvage value of the property, plant and equipment. Both the estimated useful lives and salvage values require the use of management estimates.
Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses in fiscal year 2022 were $1.4 billion, compared with $1.0 billion in fiscal year 2021.
Refer to segment results below for further details. Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses in fiscal year 2023 were $1.7 billion, compared to direct operating expenses of $1.4 billion in fiscal year 2022.
The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand.
The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes, together with cash on hand. The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021.
Depreciation and Amortization Depreciation expense decreased to $375.3 million during the fiscal year ended September 30, 2022 as compared to $392.4 million during the fiscal year ended September 30, 2021.
Depreciation and Amortization Depreciation and amortization expense decreased to $354.0 million during the fiscal year ended September 30, 2023 as compared to $375.3 million during the fiscal year ended September 30, 2022. The decrease is reflective of lower capital expenditures over the last several years.
Consequently, there have been additional costs incurred to bring those long-idled rigs back into working condition, which contributed to upward pricing for super-spec rigs. This supply-demand dynamic combined with the value proposition we provide our customers through our drilling expertise, high-quality FlexRig ® fleet, and automation technology resulted in an improvement in our underlying contract economics.
This supply-demand dynamic combined with the value proposition we provide our customers through our drilling expertise, high-quality FlexRig® fleet, and automation technology is expected to result in an improvement in our underlying contract economics.
Material Commitments Our contractual obligations as of September 30, 2022 are summarized in the table below: Obligations due by year (in thousands) Total 2023 2024 2025 2026 2027 Thereafter Long-term debt 550,000 — — — — — 550,000 Interest 1 144,724 16,066 16,069 16,073 16,076 16,080 64,360 Operating leases 2 31,613 9,767 7,801 4,501 2,033 2,046 5,465 Purchase obligations 3 148,600 148,600 — — — — — Total contractual obligations $ 874,937 $ 174,433 $ 23,870 $ 20,574 $ 18,109 $ 18,126 $ 619,825 (1) Interest on fixed-rate 2031 Notes was estimated based on principal maturities.
Material Commitments Our contractual obligations as of September 30, 2023 are summarized in the table below: Obligations due by year (in thousands) Total 2024 2025 2026 2027 2028 Thereafter Long-term debt 550,000 — — — — — 550,000 Interest 1 128,658 16,069 16,073 16,076 16,080 16,084 48,276 Operating leases 2 54,421 10,534 7,552 5,390 5,055 4,499 21,391 Purchase obligations 3 130,694 130,694 — — — — — Total contractual obligations $ 863,773 $ 157,297 $ 23,625 $ 21,466 $ 21,135 $ 20,583 $ 619,667 (1) Interest on fixed-rate 2031 Notes was estimated based on principal maturities.
The increase in fiscal year 2022 from fiscal year 2021 was primarily driven by an increase in average rig pricing and activity levels in our North America Solutions segment and increased activity levels in our International Solutions segment. Refer to segment results below for further details.
Operating Revenue Consolidated operating revenues were $2.9 billion and $2.1 billion during fiscal years 2023 and 2022, respectively. The $0.8 billion increase in fiscal year 2023 from fiscal year 2022 was primarily driven by an increase in average rig pricing and activity levels in our North America Solutions segment and increased activity levels in our International Solutions segment.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese securities are subject to a wide variety and number of market‑related risks that could substantially reduce or increase the fair value of our holdings. At November 9, 2022, the total fair value of our equity securities decreased to approximately $147.0 million.
Biggest changeA hypothetical 10 percent decrease in the market price for our marketable equity securities as of September 30, 2023 would decrease the fair value by $18.5 million. These securities are subject to a wide variety and number of market‑related risks that could substantially reduce or increase the fair value of our holdings.
As a result, demand for drilling services and solutions is not always purely a function of the movement of commodity prices. 2022 FORM 10-K | 52 Table of Contents Credit and Capital Market Risk Customers may finance their exploration activities through cash flow from operations, the incurrence of debt or the issuance of equity.
As a result, demand for drilling services and solutions is not always purely a function of the movement of commodity prices. 2023 FORM 10-K | 52 Table of Contents Credit and Capital Market Risk Customers may finance their exploration activities through cash flow from operations, the incurrence of debt or the issuance of equity.
At September 30, 2022, a hypothetical decrease in value of 10 percent would result in a decrease in value of our monetary assets and liabilities denominated in Argentine pesos by approximately $0.4 million.
At September 30, 2023, a hypothetical decrease in value of 10 percent would result in a decrease in value of our monetary assets and liabilities denominated in Argentine pesos by approximately $0.4 million.
There were no outstanding borrowings under this facility at September 30, 2022, and our outstanding debt consisted of $550.0 million (face amount) in senior unsecured notes, which have a fixed rate of 2.90 percent and an estimated fair value of $430.7 million and $554.3 million as of September 30, 2022 and 2021, respectively.
There were no outstanding borrowings under this facility at September 30, 2023, and our outstanding debt consisted of $550.0 million (face amount) in senior unsecured notes, which have a fixed rate of 2.90 percent and an estimated fair value of $435.5 million and $430.7 million as of September 30, 2023 and 2022, respectively.
Equity Price Risk As of September 30, 2022, we had equity securities in ADNOC Drilling with a total fair value of $147.4 million. As of September 30, 2021 we had equity securities in Schlumberger Ltd. with a total fair value of $13.9 million. Our investment in ADNOC Drilling is subject to a three-year lockup period.
Equity Price Risk As of September 30, 2023, we had equity securities in Tamboran with a total fair value of $9.9 million. As of September 30, 2023 and 2022 we had equity securities in ADNOC Drilling with a total fair value of $174.8 million and $147.4 million, respectively. Our investment in ADNOC Drilling is subject to a three-year lockup period.
We continually monitor the fair value of the investments but are unable to predict future market volatility and any potential impact to the Consolidated Financial Statements. 2022 FORM 10-K | 53 Table of Contents
At November 1, 2023, the total fair value of our equity securities decreased to approximately $174.0 million. We continually monitor the fair value of the investments but are unable to predict future market volatility and any potential impact to the Consolidated Financial Statements. 2023 FORM 10-K | 53 Table of Contents
Removed
During the fiscal year ended September 30, 2022, we sold our remaining equity securities of approximately 467.5 thousand shares in Schlumberger, Ltd. and received proceeds of approximately $22.0 million. A hypothetical 10 percent decrease in the market price for our marketable equity securities as of September 30, 2022 would decrease the fair value by $14.7 million.

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