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What changed in Helmerich & Payne, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Helmerich & Payne, Inc.'s 2023 and 2024 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 2024 report.

+451 added−357 removedSource: 10-K (2024-11-13) vs 10-K (2023-11-08)

Top changes in Helmerich & Payne, Inc.'s 2024 10-K

451 paragraphs added · 357 removed · 272 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

73 edited+17 added−13 removed73 unchanged
Biggest changeOur 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.
Biggest changeDrilling Fleet The following map shows the number of available rigs by basin in our North America Solutions reportable segment as of September 30, 2024: 2024 FORM 10-K | 7 Table of Contents The following table sets forth certain information concerning our North America Solutions drilling rigs as of September 30, 2024: 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 124 84 — — 124 84 NM 45 36 — — 45 36 OK 17 5 — — 17 5 ND 11 8 — — 11 8 LA 11 3 — — 11 3 WV 5 4 — — 5 4 CO 3 3 2 1 5 4 UT 4 3 — — 4 3 PA 4 2 — — 4 2 OH 2 2 — — 2 2 Totals 226 150 2 1 228 151 (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 technology services focus on developing, promoting and commercializing technologies designed to improve the efficiency and accuracy of drilling operations, as well as wellbore quality and placement. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, Offshore Gulf of Mexico and International Solutions.
Our technology services focus on developing, promoting and commercializing technologies designed to improve the efficiency and accuracy of drilling operations, as well as wellbore quality and placement. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, International Solutions and Offshore Gulf of Mexico.
These upgrades included, but were not limited to, enhanced drilling control systems and software, skid and walking systems for drilling multiple well pads, 7,500 psi mud systems, set back capacity to accommodate the pipe that the longer laterals demanded, and additional mud system capacity.
These upgrades included, but were not limited to, enhanced drilling control systems and software, skid and walking systems for drilling multiple well pads, 7,500 psi mud systems, set back capacity to accommodate the pipe that longer laterals demanded, and additional mud system capacity.
(2) Active rigs generate revenue for the Company; accordingly 'average active rigs' represents the average number of rigs generating revenue during the applicable period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 365 days). This includes the impact of downsizing our fleet and/or rigs that have been reclassified to assets held-for-sale.
(2) Active rigs generate revenue for the Company; accordingly 'average active rigs' represents the average number of rigs generating revenue during the applicable period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 366 days). This includes the impact of downsizing our fleet and/or rigs that have been reclassified to assets held-for-sale.
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.
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 2025.
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.
Starting in 2015, we have redefined safety success as the 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.
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.
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, 2024, we had a total of 242 super-spec rigs.
Select highlights of our benefits programs include: • Medical, dental and vision insurance for all full-time employees, and all part-time employees working more than 20 hours per week, and their dependents; • A 401(k) plan with Company match incentive for all full-time employees, and all part-time employees working more than 20 hours per week; • Employer paid life insurance benefits, which include a life assistance program, identity theft protection, and travel assistance plan; • The Employee Assistance Plan, which offers wellness support with counseling, legal assistance, financial coaching, and identity theft resolution; • The H&P Way Fund, which provides financial assistance to H&P employees during unavoidable emergencies; • Employee discounts for phone, computer, personal vehicle, car rental, and hotel purchases; and • An Educational Assistance Plan, which offers reimbursement of tuition fees for any employee pursuing an undergraduate degree and, in some cases, post-graduate degrees.
Select highlights of our benefits programs for US-based employees include: • Medical, dental and vision insurance for all full-time employees, and all part-time employees working more than 20 hours per week, and their dependents; • A 401(k) plan with Company match incentive for all full-time employees, and all part-time employees working more than 20 hours per week; • Employer paid life and accidental and dismemberment and employer subsidized long-term disability; • The Employee Assistance Plan, which offers wellness support with counseling, legal assistance, financial coaching, and identity theft resolution; • The H&P Way Fund, which provides financial assistance to H&P employees during unavoidable emergencies; • Employee discounts for phone, computer, personal vehicle, car rental, and hotel purchases; and • An Educational Assistance Plan, which offers reimbursement of tuition fees for any employee pursuing an undergraduate degree and, in some cases, post-graduate degrees.
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.
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.
Data privacy, data security, and consumer protection laws in the U.S. that apply to our operations include the Critical Infrastructure Act and the CAN-SPAM Act, and at the state level, the California Consumer Privacy Act (“CCPA”) as amended by the California Privacy Rights Act (“CPRA”).
Data privacy, data security, and consumer protection laws in the U.S. that apply to our operations include the Critical Infrastructure Act and the CAN-SPAM Act, and at the state level, the California Consumer Privacy Act (“CCPA”) as amended by the California Privacy Rights Act (“CPRA”), as well as similar laws enacted in other states.
Human Capital Objectives and Programs We strive to create a culture and work environment that enables us to attract, train, promote, and retain a diverse group of talented employees who together can help us gain a competitive advantage. Core Values and Culture "The H&P Way" defines our purpose, core values, and the behaviors that drive our culture.
Human Capital Objectives and Programs We strive to create a culture and work environment that enables us to attract, train, promote, and retain a diverse group of talented employees who together can help us gain a competitive advantage. 2024 FORM 10-K | 13 Table of Contents Core Values and Culture "The H&P Way" defines our purpose, core values, and the behaviors that drive our culture.
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.
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.
Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business and Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection. ” We are also subject to the jurisdiction of the U.S. Treasury Department’s Office of Foreign Assets Control, the U.S.
Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business and Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection. ” 2024 FORM 10-K | 17 Table of Contents We are also subject to the jurisdiction of the U.S. Treasury Department’s Office of Foreign Assets Control, the U.S.
Further, our fleet is supported by a cost-effective Company-owned supply chain that provides standardized materials directly to the rigs from our regional warehouses. A long-standing challenge in our industry is providing high quality and consistent results. In addressing this challenge, we utilize process excellence techniques that are developed internally.
Further, our fleet is supported by a cost-effective Company-owned supply chain that provides standardized materials directly to the rigs from our regional warehouses. 2024 FORM 10-K | 11 Table of Contents A long-standing challenge in our industry is providing high quality and consistent results. In addressing this challenge, we utilize process excellence techniques that are developed internally.
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 International Solutions operations contributed approximately 7.0 percent ($194.0 million) of our consolidated operating revenues during fiscal year 2024, compared to approximately 7.4 percent ($212.6 million) and 6.6 percent ($136.1 million) of our consolidated operating revenues during fiscal years 2023 and 2022, respectively. Argentina As of September 30, 2024, we had 12 available rigs in Argentina.
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.
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, 2024, we had approximately 6,200 employees within the United States and approximately 800 employees in our international operations.
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.
Our North America Solutions segment contributed approximately 88.7 percent ($2.4 billion) of our consolidated operating revenues during fiscal year 2024, compared to approximately 87.7 percent ($2.5 billion) and 86.8 percent ($1.8 billion) of our consolidated operating revenues during fiscal years 2023 and 2022, respectively.
For further information concerning risks associated with our business, including volatility surrounding oil and natural gas prices and the impact of low oil prices on our business, see Item 1A— “Risk Factors” and Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Form 10‑K.
For further information concerning risks associated with our business, including volatility surrounding oil and natural gas prices and the impact of low oil prices on our business, see Item 1A—Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10‑K.
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.
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. 2024 FORM 10-K | 14 Table of Contents Safety Training and Serious Injury and/or Fatality ("SIF") Reduction Program We are committed to creating a culture highlighted by an Actively Caring workforce.
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.
Revenues generated by Bahrain drilling operations contributed approximately 0.7 percent ($18.0 million) of our consolidated operating revenues in fiscal year 2024, compared to approximately 0.5 percent ($15.4 million) and 0.8 percent ($17.0 million) of our consolidated operating revenues during fiscal years 2023 and 2022, respectively.
A uniform fleet creates an adaptive environment to reach maximum efficiency for employees, equipment and technology and is critical to our ability to provide consistent, safe and reliable operations in increasingly complex basins.
A uniform fleet creates an adaptive environment to reach maximum efficiency for employees, equipment and technology and is critical to our ability to provide consistent, safe and reliable operations in unconventional drilling applications.
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.
Our Offshore Gulf of Mexico operations contributed approximately 3.9 percent ($106.2 million) of our consolidated operating revenues during fiscal year 2024, compared to approximately 4.5 percent ($130.2 million) and 6.1 percent ($125.5 million) of our consolidated operating revenues during fiscal years 2023 and 2022, respectively.
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.
The following table sets forth certain information concerning our International Solutions drilling rigs as of September 30, 2024: INTERNATIONAL SOLUTIONS FLEET Location AC (FlexRig ® 3) 1 AC (FlexRig ® 3WA) 2 AC (FlexRig ® 4) 3 Other AC SCR 4 Total Fleet Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Total Available Rigs Contracted Argentina 12 7 — — — — — — — — 12 7 Saudi Arabia — — 5 5 — — — — — — 5 5 Colombia 2 — — — — — 1 — 2 — 5 — Bahrain 1 1 — — 3 2 — — — — 4 3 Australia 1 1 — — — — — — — — 1 1 Totals 16 9 5 5 3 2 1 — 2 — 27 16 (1) The FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb. hookload rating.
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 Argentine drilling operations contributed approximately 5.2 percent ($142.5 million) of our consolidated operating revenues during fiscal year 2024 compared to approximately 4.8 percent ($137.4 million) and 4.4 percent ($91.4 million) of our consolidated operating revenues during fiscal years 2023 and 2022, 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 9.5 percent ($238.7 million) of the North America Solutions segment revenues during fiscal year 2023.
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 12.2 percent ($299.3 million) of the North America Solutions segment revenues during fiscal year 2024.
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 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.
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 Argentina totaled approximately 3.4 percent of our consolidated operating revenues and approximately 48.6 percent of our international operating revenues during fiscal year 2024. The Argentine drilling contracts are primarily with large international or national oil companies. Bahrain As of September 30, 2024, we had four available rigs in Bahrain.
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.
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.
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.
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.
Government Regulations Our operations are affected from time to time and in varying degrees by foreign and domestic political developments and a variety of federal, state, foreign, regional and local laws, rules and regulations, including those relating to: • drilling of oil and natural gas wells; • directional drilling services; • protection of the environment; • workplace health and safety; • labor and employment; • data privacy; • taxation; • exportation or importation of equipment, technology and software; • currency conversion and repatriation; • global anti-corruption laws; and • government sanctions and embargo listing.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us. 2024 FORM 10-K | 16 Table of Contents Government Regulations Our operations are affected from time to time and in varying degrees by foreign and domestic political developments and a variety of federal, state, foreign, regional and local laws, rules and regulations, including those relating to: • drilling of oil and natural gas wells; • directional drilling services; • protection of the environment; • workplace health and safety; • labor and employment; • data privacy; • taxation; • exportation or importation of equipment, technology and software; • currency conversion and repatriation; • global anti-corruption laws; and • government sanctions and embargo listing.
For further information see Item 1A—Risk Factors—Business and Operating Risks—Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.
For further information see Item 1A—Risk Factors—Business and Operating Risks—Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims.
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.
(3) 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. Range 3 drill pipe is used without setback. The rig is capable of horizontal and vertical drilling, but is primarily used for vertical drilling.
These contracts customarily provide for termination at the election of the customer, but may include an “early termination payment” to be paid to us if the contract is terminated prior to the expiration of the fixed term.
Fixed-term contracts generally have a minimum term of at least six months up to multiple years. These contracts customarily provide for termination at the election of the customer, but may include an “early termination payment” to be paid to us if the contract is terminated prior to the expiration of the fixed term.
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.
Colombia As of September 30, 2024, we had five available rigs in Colombia. Revenues generated by Colombian drilling operations contributed approximately 0.3 percent ($9.3 million) of our consolidated operating revenues in fiscal year 2024, compared to approximately 1.6 percent ($46.7 million) and 1.1 percent ($22.0 million) of our consolidated operating revenues during fiscal years 2023 and 2022, respectively.
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.
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.
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.
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 73 FlexRig ® drilling rigs to super-spec walking rigs.
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.
United Arab Emirates During the years ended September 30, 2024, 2023 and 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.
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.
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.
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.
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.
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.
Our real estate investments include a shopping center containing approximately 371,000 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.
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.
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.
We continue to use our captive insurance subsidiaries ("the Captives") 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. The Company's incubator program includes activity related to investments in emerging technology companies.
We continue to use our captive insurance subsidiaries 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. Our real estate operations and our wholly-owned captive insurance companies are included in "Other" within our segment disclosures.
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.
The following table presents operating statistics for the fiscal years 2024, 2023, and 2022: Year Ended September 30, North America Solutions International Solutions Offshore Gulf of Mexico 2024 2023 2022 2024 2023 2022 2024 2023 2022 Revenue days 1 55,387 61,814 59,672 4,614 4,788 3,036 1,111 1,460 1,460 Average active rigs 2 151 169 163 13 13 8 3 4 4 Number of active rigs at the end of period 3 151 147 176 16 13 12 3 4 4 Number of available rigs at the end of period 228 233 236 27 22 28 7 7 7 (1) Defined as the number of contractual days we recognized revenue during the period.
Some of the prominent training programs that we offer are: • New Employment Safety Training - onboarding program for new hires in safety sensitive positions.
H&P offers a variety of training programs ranging from job specific programs to leadership development. Some of the prominent training programs that we offer are: • New Employment Safety Training - onboarding program for new hires in safety sensitive positions.
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.
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 first FlexRig ® drilling rig entered the market in 1998.
These contract types are relatively new to the industry and typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers.
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. These types of contracts typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers.
(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.
The SCR rigs are equipped with 3,000 horsepower drawworks to drill deep conventional wells. 2024 FORM 10-K | 8 Table of Contents The following table sets forth certain information concerning our Offshore Gulf of Mexico drilling rigs as of September 30, 2024: 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 — 3 3 4 3 Totals 4 — 3 3 7 3 (1) Shallow water rigs operate on fixed facilities and deep water rigs operate on floating facilities.
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.
Based on our operational track record throughout fiscal year 2024 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. Refer to Note 9—Revenue from Contracts with Customers for additional information related to performance-based contracts.
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.
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. 2024 FORM 10-K | 18 Table of Contents
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 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.
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 are actively tracking diversity data to better understand demographics within the organization. 2024 FORM 10-K | 15 Table of Contents 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.
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.
All of our revenues in Bahrain are from a partner of the local national oil company. Australia Our operations in Australia commenced in the fourth fiscal quarter of 2023. All of our revenue in Australia is from one customer, Tamboran Resources Corporation, a publicly traded company ("Tamboran Corp."). As of September 30, 2024, we had one available rig in Australia.
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.
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.
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.
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.
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.
Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 97.3 percent ($103.3 million) of offshore revenues during fiscal year 2024. 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.
Insurance and Risk Management Our operations are subject to a number of operational risks, including personal injury and death, environmental, cyber, and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.
We also provide supplemental non-statutory benefits to our international employees that are customary and competitive to each specific region. Insurance and Risk Management Our operations are subject to a number of operational risks, including personal injury and death, environmental, cyber, and weather risks, which could expose us to significant losses and damage claims.
Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer. In most instances, contracts provide for additional payments for mobilization and demobilization of the rig. The duration of our drilling contracts are generally either “well‑to‑well/pad-to-pad” or for a fixed term.
In most instances, contracts provide for additional payments for mobilization and demobilization of the rig. 2024 FORM 10-K | 12 Table of Contents The duration of our drilling contracts are generally either “well‑to‑well/pad-to-pad” or for a fixed term. “Well‑to‑well” contracts can be terminated at the option of either party upon the completion of drilling of any one well.
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.
H&P’s strong commitment to our employees’ growth is demonstrated through our formal organizational development team, which oversees talent management, training and development. 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.
Safety Training and Serious Injury and/or Fatality ("SIF") Reduction Program We are committed to creating a culture highlighted by an Actively Caring workforce. We strive to Actively C.A.R.E. for: • our own safety and health; • the safety and health of others; and • the protection of our environment.
We strive to Actively C.A.R.E. for: • our own safety and health; • the safety and health of others; and • the protection of our environment.
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.
Our International Solutions operations have rigs and/or services primarily located in five international locations: Argentina, Australia, Bahrain, Colombia and the United Arab Emirates ("U.A.E."). Additionally, we commenced operations in Saudi Arabia in the first quarter of fiscal 2025. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma.
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.
Contract Backlog Our contract drilling backlog was $1.5 billion and $1.4 billion as of September 30, 2024 and 2023, respectively. Approximately 53.3 percent of the September 30, 2024 backlog is reasonably expected to be fulfilled in fiscal year 2025. See Item 7.
Our drilling technology within this segment enables a solutions-based approach that provides performance-driven drilling services designed to help deliver greater levels of drilling efficiency, accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores with lower overall risk.
In the United States, we have the industry's largest super-spec fleet and had 151 of our 228 marketed rigs active under contract as of September 30, 2024 of which 88 were under fixed‑term contracts, and 63 were working well-to-well. 2024 FORM 10-K | 9 Table of Contents Our drilling technology within this segment enables a solutions-based approach that provides performance-driven drilling services designed to help deliver greater levels of drilling efficiency, accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores with lower overall risk.
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.
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.
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.
All of our technologies play an important role in developing our strategy as we head towards autonomous drilling. 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.
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.
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, 2024, we had 170 active rigs under contract, compared to 164 and 192 rigs under contract as of September 30, 2023 and 2022, respectively.
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.
As of September 30, 2024, we had approximately 26.1 percent of the total market share in U.S. land drilling and approximately 34.6 percent of the super-spec market share in U.S. land drilling.
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.
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.
In downturn years, we maintain relationships with former employees and prioritize recalling our most experienced people for field positions.
In downturn years, we maintain relationships with former employees and prioritize recalling our most experienced people for field positions. 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.
(2) Rigs are idle, stacked on land and not in state waters.
(2) Rigs are idle, stacked on land and not in state waters. Drilling Services and Solutions General We are the largest provider of super-spec AC drive land rigs in the Western Hemisphere.
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. 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.
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. 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.
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.
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. Our training starts with on-boarding procedures that focus on safety, responsibility, ethical conduct and inclusive teamwork.
(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.
(4) A silicon-controlled-rectifier (“SCR”) system converts alternate current (“AC”) produced by one or more AC generator sets into direct current (“DC”).
As of September 30, 2023, we had thirteen land rigs contracted for work in locations outside of the United States.
International Solutions Segment Our International Solutions segment conducts operations primarily in Argentina, Bahrain, Australia, U.A.E. and Colombia. Additionally, we commenced operations in Saudi Arabia in the first quarter of fiscal 2025. As of September 30, 2024, we had 16 land rigs contracted for work in locations outside of the United States.
Removed
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.
Added
Our real estate operations and our wholly-owned captive insurance companies are included in "Other." 2024 FORM 10-K | 6 Table of Contents Pending KCA Deutag Acquisition On July 25, 2024, H&P and certain of its wholly owned subsidiaries entered into a Sale and Purchase Agreement (the "Purchase Agreement") to acquire KCA Deutag for total cash consideration of approximately $2.0 billion, which consists of the $0.9 billion unadjusted share purchase price and $1.1 billion to contemporaneously repay or redeem certain of KCA Deutag's existing debt upon consummation of the acquisition (the "Acquisition").
Removed
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.
Added
Total consideration is subject to adjustment as set forth in the Purchase Agreement. The transaction is expected to close prior to calendar 2024 year end, subject to customary closing conditions and regulatory approvals. KCA Deutag is a diverse global drilling company.
Removed
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.
Added
The company has a significant land drilling presence in the Middle East, which represents approximately two-thirds of the company’s calendar year 2023 Operating EBITDA, with additional operations in South America, Europe and Africa.
Removed
("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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

96 edited+80 added−19 removed166 unchanged
Biggest changeIn 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.
Biggest changeThe 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 many new goals, including GHG emission reduction goals every five years beginning in 2020.
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.
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 or abatement 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. 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 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. 2024 FORM 10-K | 35 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; 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 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; 2024 FORM 10-K | 19 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.
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.
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; 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.
If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected.
If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees or customers, and our attractiveness as an investment or business partner could be negatively affected.
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.
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 employees now work remotely.
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.
For example, the ongoing armed conflicts between (i) Russia and Ukraine and (ii) the conflicts in Israel 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 aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks. We have developed, and will continue to develop and set, goals, targets, or other objectives related to sustainability matters.
Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks. We have developed, and may continue to develop and set, goals, targets, or other objectives related to sustainability matters.
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.
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. 2024 FORM 10-K | 34 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. 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.
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. 2024 FORM 10-K | 33 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.
Additionally, California residents whose personal information has been impacted by a Security Incident as a result of the entity’s failure to implement and maintain reasonable security procedures and practices have been granted a private right of action, which could result in damages of up to $750 per incident, where the entity failed to encrypt or redact personal information.
Additionally, California residents whose personal data has been impacted by a cybersecurity incident as a result of the entity’s failure to implement and maintain reasonable security procedures and practices have been granted a private right of action, which could result in damages of up to $750 per incident where the entity failed to encrypt or redact personal data.
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.
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. 2024 FORM 10-K | 31 Table of Contents Failure to comply with the U.S.
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.
In the normal course of business, we and our third-party partners collect, process, and store data that is subject to those specific laws and regulations. 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.
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.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us..” 2024 FORM 10-K | 30 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.
With respect to any of these investors, our ESG disclosures and efforts may not satisfy the investor requirements or their requirements may not be made known to us.
With respect to any of these investors or ratings agencies, our ESG disclosures and efforts may not satisfy the investor requirements or their requirements may not be made known to us.
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.
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, which may elevate our costs.
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.
Non-compliance with these and other privacy, data security, and consumer protection laws could also expose us to regulatory investigations, which could require significant resources for resolution and potentially result in fines and prospective relief. In addition, regulators may issue orders to stop processing personal data, which could disrupt operations.
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.
At September 30, 2024, we had approximately 25 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.
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.
Any violation of these laws or harm to our reputation could have a material adverse effect to our business, financial condition, reputation, or results of operations and prospects. 2024 FORM 10-K | 32 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.
We also lease a fabrication facility near the Houston, Texas ship channel, and our principal fabricator and other vendors are also located in the gulf coast region and could be exposed to damage or disruption by hurricanes and other extreme weather conditions, including coastal flooding, which in turn could result in increased operating costs or decreases in revenues and adversely affect our business, financial condition and results of operations.
We also lease a fabrication facility near the Houston, Texas ship channel, regularly have land drilling operations proximate to the gulf coast, and our principal fabricator and other vendors are also located in the gulf coast region, all of which could be exposed to damage or disruption by hurricanes and other extreme weather conditions, including coastal flooding, which in turn could result in increased operating costs or decreases in revenues and adversely affect our business, financial condition, and results of operations.
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.
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 and ratings agencies may screen companies such as ours for ESG disclosures and performance before investing in or rating our stock or other securities and many large institutional investors have committed to allocating a percentage of their investment products towards ESG investments.
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).
As of September 30, 2024, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes was not subject to an annual limitation (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017).
Our current debt agreements pertaining to certain long‑term unsecured debt and our unsecured revolving credit facility contain, and our future financing arrangements likely will contain, various covenants that may in certain instances restrict our ability to, among other things, incur, assume or guarantee additional indebtedness, incur liens, sell or otherwise dispose of all or substantially all of our assets, enter into new lines of business, and merge or consolidate.
Our current debt agreements pertaining to certain long‑term unsecured debt, our unsecured Amended and Restated Credit Agreement (the "Amended Credit Facility") and our unsecured term loan credit agreement (the "Term Loan Credit Agreement") contain, and our future financing arrangements likely will contain, various covenants that may in certain instances restrict our ability to, among other things, incur, assume or guarantee additional indebtedness, incur liens, sell or otherwise dispose of all or substantially all of our assets, enter into new lines of business, and merge or consolidate.
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.
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 or in-scope companies under U.S. state regulations, 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.
Congress are analyzing, and a number of federal agencies have historically been requested to review, and, under the current administration, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing and the possibility of more stringent regulation.
Congress are analyzing, and a number of federal agencies have historically been requested to review, and, under the current or future administrations, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing and the possibility of more stringent regulation.
Furthermore, 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.
Furthermore, violations of applicable privacy and data security laws, including but not limited to the GDPR, the CCPA as amended by the CPRA, and other U.S. sector-specific and comprehensive state privacy and data security laws, could result in significant penalties.
We may also see corporate consolidations among our competitors, which could significantly alter industry conditions and competition within the industry, and have a material adverse effect on our business, financial condition and results of operations.
We may also see corporate consolidations among our competitors and customers, which could significantly alter industry conditions and competition within the industry, and have a material adverse effect on our business, financial condition and results of operations. Consolidation in our industry may impact our results of operations.
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.
As of September 30, 2024, 92 of our available rigs were not under contract. 2024 FORM 10-K | 20 Table of Contents Further, as a result of any 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.
These transactions also involve risks, and we cannot ensure that: • any acquisitions we attempt will be completed on the terms announced, or at all; • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits; • any acquisitions would be successfully integrated into our operations and internal controls, including those related to financial reporting, disclosure and cyber and information security; • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, or that we will appropriately quantify the exposure from known risks; • any disposition would not result in decreased earnings, revenue, or cash flow; • use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses; or • any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
These transactions may also affect our liquidity, consolidated results of operations and consolidated financial condition. 2024 FORM 10-K | 23 Table of Contents These transactions also involve risks, and we cannot ensure that: • any acquisitions we attempt will be completed on the terms announced, or at all; • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits; • any acquisitions would be successfully integrated into our operations and internal controls, including those related to financial reporting, disclosure and cyber and information security; • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, or that we will appropriately quantify the exposure from known risks; • any disposition would not result in decreased earnings, revenue, or cash flow; • use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses; or • any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
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.
Our aggregate foreign currency losses across all of our operations for fiscal years 2024, 2023 and 2022 were $5.5 million, $6.4 million and $5.9 million, respectively.
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.
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 2024, we recognized aggregate foreign currency losses of $5.1 million in Argentina.
Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of such events have adversely impacted and may continue to adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our services.
Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of such events have adversely impacted and may in the future again adversely impact our operations, the operations of our customers and the global economy, including worldwide demand for oil and natural gas and the level of demand for our services.
Our ability to access capital markets for financing could be limited by oil and gas prices, our existing capital structure, our credit ratings, the state of the economy, the health or market perceptions of the drilling and overall oil and gas industry, the liquidity of the capital markets and other factors.
Our ability to access capital markets for financing could be limited by oil and gas prices, our existing capital structure, our credit ratings, the state of the economy, the health or market perceptions of the drilling and overall oil and gas industry, ESG-related regulatory and investor requirements, the liquidity of the capital markets and other factors.
Our customers and other third parties may also dispute, or be unable to meet, their contractual indemnification obligations to us. Accordingly, we may be unable to transfer these risks to our customers and other third parties by contract or indemnification agreements.
Our customers and other third parties may also dispute, or be unable to meet, their contractual indemnification obligations to us due to financial, legal or other reasons. Accordingly, we may be unable to transfer these risks to our customers and other third parties by contract or indemnification agreements.
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.
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. 2024 FORM 10-K | 22 Table of Contents Our business is subject to cybersecurity and information technology system disruption risks.
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.
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.
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.
However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions have occurred and may continue based on the findings set forth in the IPCC Reports and any such future laws and regulations could result in increased compliance costs, reduce our return on investment, or additional operating restrictions or affect the demand for our customers' products and, accordingly, our services.
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.
Cybersecurity threats could include, but are not limited to, cybersecurity incidents, such as ransomware attacks, denial-of-service attacks, phishing attacks, malicious software; unauthorized or unlawful access, release, corruption or loss of our data; employee or insider error; interruptions in communication; loss of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology; or loss or damage to our data delivery systems or other cybersecurity and infrastructure systems, including our property and equipment.
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.
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, 2024, we had goodwill of $45.7 million and other intangible assets, net of $54.1 million.
It is not possible at this time to predict the timing and effect of climate change or whether additional GHG legislation, regulations or other measures will be adopted at the federal, state or local levels.
It is not possible at this time to predict the timing and effect of climate change or the extent and contents of any additional GHG legislation, regulations or other measures adopted at the federal, state or local levels.
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.
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.
As of September 30, 2023, our drilling services backlog was approximately $1.4 billion for future revenues under firm commitments.
As of September 30, 2024, our drilling services backlog was approximately $1.5 billion for future revenues under firm commitments.
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.
A Security incident or other cybersecurity threat could have a material adverse effect on our business, financial condition, cash flows, results of operations, and reputation. Further, as cybersecurity incidents continue to evolve, we will be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of cybersecurity incidents.
Our operations depend on effective and secure information technology systems, including our own systems and the systems of third party vendors upon which we rely, such as those providing cloud services to us. Threats to information technology systems, including as a result of Security Incidents, continue to grow.
Our operations depend on effective and secure information technology systems, including our own systems and the systems of third party vendors upon which we rely, such as those providing cloud services to us.
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 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; increased compliance costs; and general hazards associated with foreign sovereignty over certain areas in which operations are conducted.
Such restrictions may limit our ability to successfully execute our business plans, which may have adverse consequences on our operations. We may be required to record impairment charges with respect to our drilling rigs and other assets.
Such restrictions may limit our ability to successfully execute our business plans, which may have adverse consequences on our operations. 2024 FORM 10-K | 28 Table of Contents We may be required to record impairment charges with respect to our drilling rigs and other assets.
As a result, we retain the risk for any loss in excess of these limits. No assurance can be given that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss. In addition, our insurance may not cover losses associated with pandemics such as the COVID-19 pandemic.
No assurance can be given that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss. In addition, our insurance may not cover losses associated with pandemics such as the COVID-19 pandemic.
While various procedures and controls are being utilized to mitigate exposure to such risk, there can be no assurance that the procedures and controls that we implement, or which we cause third party service providers to implement, will be sufficient to protect our systems, information or other property.
While various procedures and controls are being utilized to mitigate exposure to such risk, there can be no assurance that the procedures and controls that we implement, or which we cause third party service providers to implement, will be sufficient to protect our systems, data or other property. See Item 1C—Cybersecurity for a description of cybersecurity controls and procedures.
In addition, our credit facility requires us to maintain a funded leverage ratio (as defined therein) of less than or equal to 50 percent and certain priority debt (as defined therein) may not exceed 17.5 percent of our net worth (as defined therein).
In addition, the Amended Credit Facility and the Term Loan Credit Agreement require us to maintain a funded leverage ratio (as defined therein) of less than or equal to 55 percent and certain priority debt (as defined therein) may not exceed 17.5 percent of our net worth (as defined therein).
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.
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. 2024 FORM 10-K | 25 Table of Contents Our contracts with NOCs may expose us to greater risks than we normally assume in contracts with non-governmental customers.
From time to time, we or our customers or supplying vendors become involved in disputes over infringement of intellectual property rights relating to equipment or technology owned or used by us.
The majority of the intellectual property rights relating to our drilling rigs and technology services are owned by us or certain of our supplying vendors. From time to time, we or our customers or supplying vendors become involved in disputes over infringement of intellectual property rights relating to equipment or technology owned or used by us.
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).
In fiscal year 2024, we received approximately 58.2 percent of our consolidated operating revenues from our ten largest drilling services and solutions customers and approximately 27.3 percent of our consolidated operating revenues from our three largest customers (including their affiliates).
Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as other general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating or financial performance.
This market volatility, as well as other general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating or financial performance.
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.
Cybersecurity threats, such as cybersecurity 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 cybersecurity incidents or other cybersecurity threats.
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.
As a result, any technology disputes involving us or our customers or supplying vendors 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. 2024 FORM 10-K | 24 Table of Contents Unexpected events could disrupt our business and adversely affect our results of operations.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors. 2024 FORM 10-K | 36 Table of Contents Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock.
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.
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.
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.
Future acquisitions or dispositions may also impact our reporting, process, and progress on such goals. Our business may also face increased scrutiny from investors and other stakeholders, including from parties that oppose ESG initiatives, related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them.
As interpretation and enforcement of the CCPA and CPRA evolve, new compliance obligations are created, which could cause us to incur costs and shift our business practices in a manner that does not align with our business objectives.
As the interpretation and enforcement of the CCPA/CPRA evolve, new compliance obligations emerge and may modify understanding regarding obligations imposed under the laws and regulations. Complying with these obligations could cause us to incur costs and shift our business practices in a manner that does not align with our business objectives.
We are aware of the increasing focus of local, state, regional, national and international regulatory bodies on GHG emissions and climate change issues. Legislation to regulate GHG emissions has periodically been introduced in the U.S. Congress and such legislation may be proposed or adopted in the future.
There has been an increasing focus of international, national, state, regional and local regulatory bodies on emissions of certain gases, commonly referred to as “greenhouse gases” (“GHGs”) including carbon dioxide and methane, and climate change issues. Legislation to regulate GHG emissions has periodically been introduced in the U.S. Congress and such legislation may be proposed or adopted in the future.
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.
We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us. Our operations are subject to many hazards inherent in the business in which we operate, including inclement weather, unplanned power outages, blowouts, explosions, well fires, loss of well control, equipment failure, computer system disruptions, pollution, and reservoir damage.
Our deferred tax liability associated with property, plant and equipment is significant, which could materially increase the amount of cash income taxes that we pay in the future and, thus, adversely affect our cash flows.
We have evaluated the potential impacts of Pillar Two and do not believe it will have a material adverse effect on our tax liability. Our deferred tax liability associated with property, plant and equipment is significant, which could materially increase the amount of cash income taxes that we pay in the future and, thus, adversely affect our cash flows.
Even if an early termination payment is owed to us, during depressed market conditions or due to other factors, a customer may be unable or may refuse to pay the early termination payment and may seek to suspend, negotiate, or terminate the contract. 2023 FORM 10-K | 23 Table of Contents Regardless of the reason for an early termination or suspension of a contract, such termination or suspension may result in a drilling rig being idle for an extended period of time if we are unable to secure new contracts on a timely basis and on substantially similar terms, which could have a material adverse effect on our business, financial condition and results of operations.
Regardless of the reason for an early termination or suspension of a contract, such termination or suspension may result in a drilling rig being idle for an extended period of time if we are unable to secure new contracts on a timely basis and on substantially similar terms, which could have a material adverse effect on our business, financial condition and results of operations.
Our drilling services operating expense includes all direct and indirect costs associated with the operation, maintenance and support of our drilling equipment, which is often not affected by changes in dayrates and utilization. During periods of reduced revenue and/or activity, certain of our fixed costs (such as depreciation) may not decline and often we may incur additional costs.
Our drilling services operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates. Our drilling services operating expense includes all direct and indirect costs associated with the operation, maintenance and support of our drilling equipment, which is often not affected by changes in dayrates and utilization.
Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would be a default (if not waived) and would likely result in a reduction of our credit rating, which could harm our ability to seek additional capital or restructure or refinance our indebtedness.
Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would be a default (if not waived) and would likely result in a reduction of our credit rating, which could harm our ability to seek additional capital or restructure or refinance our indebtedness. 2024 FORM 10-K | 29 Table of Contents LEGAL AND REGULATORY RISKS The physical effects of climate change and the regulation of greenhouse gases and climate change could have a negative impact on our business.
Following periods of downturn in our industry, there may be substantially more drilling rigs available than necessary to meet demand even as oil and natural gas prices, and drilling activity, rebound.
Various factors within our industry could cause there to be substantially more drilling rigs available than necessary to meet demand even as oil and natural gas prices, and drilling activity, increase.
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.
The CCPA, as amended by the CPRA gives California residents certain rights in relation to their personal data, and imposes obligations on certain entities that do business in California to protect those rights, which may apply to us.
Many of the factors that affect our ability to access capital markets are outside of our control. No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could have a material adverse impact on our business, financial condition and results of operations.
See “—Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock. ” No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could have a material adverse impact on our business, financial condition and results of operations.
Incurring a liability for which we are not fully indemnified or insured could have a material adverse effect on our business, financial condition and results of operations. We insure working land rigs and related equipment at values that approximate the current replacement cost on the inception date of the policies.
Incurring a liability for which we are not fully indemnified or insured could have a material adverse effect on our business, financial condition and results of operations.
An “early termination payment” is typically paid to us if a contract is terminated prior to the expiration of the fixed term.
Fixed‑term drilling contracts customarily provide for a termination by the customer for convenience, default, or extended force majeure. An “early termination payment” is typically paid to us if a contract is terminated prior to the expiration of the fixed term.
We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage. Our insurance will not in all situations provide sufficient funds to protect us from all losses and liabilities that could result from our operations. Our coverage includes aggregate policy limits.
Our insurance will not in all situations provide sufficient funds to protect us from all losses and 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.
Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations.
Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations. 2024 FORM 10-K | 27 Table of Contents 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.
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.
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. 2024 FORM 10-K | 26 Table of Contents Continuing inflation and cost increases may impact our sales margins and profitability.
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.
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. Any impairment could have a material adverse effect on our consolidated financial statements.
The CCPA, presently enforceable (as CPRA enforcement has been delayed until July 1, 2023, and enforcement is not retroactive), provides for civil penalties of up to $7,500 per intentional violation and $2,500 per unintentional violation.
The CCPA/CPRA provides for civil penalties of up to $7,500 per intentional violation and $2,500 per unintentional violation.
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.
See “—Consolidation in our industry may impact our results of operations” for additional disclosure regarding consolidations in our industry. 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.
Additionally, new technologies, services or standards could render some of our services, drilling rigs or equipment obsolete, which could reduce our competitiveness and have a material adverse impact on our business, financial condition and results of operations.
Additionally, new technologies, services or standards could render some of our services, drilling rigs or equipment obsolete, which could reduce our competitiveness and have a material adverse impact on our business, financial condition and results of operations. 2024 FORM 10-K | 21 Table of Contents Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims.
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.
These strategic transactions, among others, are intended to (but may not) result in access to new markets, 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 and the failure to achieve such intended benefits could have a material adverse effect on our business.
If we experience future negative changes in our business climate such that we determine that one or more of our asset groups are impaired, we will be required to record additional impairment charges with respect to such asset groups. Any impairment could have a material adverse effect on our consolidated financial statements.
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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor further information on the status of our drilling fleet, see Item 1— “Business — Drilling Fleet.” Real Property We own or lease office and yard space to support our ongoing operations, including field and district offices in the United States and internationally.
Biggest changeFor further information on the status of our drilling fleet, see Item 1—Business—"Drilling Fleet.” Real Property We own or lease office and yard space to support our ongoing operations, including field and district offices in the United States and internationally.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET 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.
Biggest changeMARKET 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 ticker symbol “HP.” As of November 6, 2024, there were 331 record holders of our common stock as listed by our transfer agent’s records.
Payment 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.
Payment of future dividends will depend on earnings and other factors and is subject to Board approval. 2024 FORM 10-K | 43 Table of Contents 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 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.
Select Oil Equipment & Services Index 100.00 43.00 82.00 87.00 148.00 126.00 Philadelphia Stock Exchange Oil Service Sector Index 100.00 43.00 90.00 97.00 155.00 128.00 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.
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.
Indexed Returns Base Period Years Ending Company / Index Sep 2019 Sep 2020 Sep 2021 Sep 2022 Sep 2023 Sep 2024 Helmerich & Payne, Inc. $ 100.00 $ 43.00 $ 77.00 $ 103.00 $ 121.00 $ 96.00 S&P 600 Index 100.00 92.00 145.00 117.00 129.00 163.00 Dow Jones U.S.
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We have paid quarterly cash dividends on our common stock during the past two fiscal years.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeOther Operations Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows: (in thousands) 2024 2023 % Change Operating revenues $ 71,630 $ 77,296 (7.3) % Direct operating expenses 69,756 57,944 20.4 Depreciation 1,627 2,014 (19.2) Selling, general and administrative expense 1,606 1,462 9.8 Operating income (loss) $ (1,359) $ 15,876 (108.6) 2024 FORM 10-K | 51 Table of Contents 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.
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.
During the fiscal year ended September 30, 2023, we repurchased 6.5 million common shares at an aggregate cost of $249.0 million, including accrued excise tax of $1.8 million, resulting in a net cash outflow of $247.2 million. During the fiscal year ended September 30, 2022, we repurchased 3.2 million common shares at an aggregate cost of $77.0 million.
During the fiscal year ended September 30, 2023, we repurchased 6.5 million common shares at an aggregate cost of $249.0 million, including excise tax of $1.8 million, resulting in a net cash outflow $247.2 million. During the fiscal year ended September 30, 2022, we repurchased 3.2 million common shares at an aggregate cost of $77.0 million.
This gain was mainly comprised of a $27.4 million gain on our equity investment in ADNOC Drilling, partially offset against a $4.2 million loss on our investment in Tamboran; both of which were a result of fluctuations in the fair market value of the stocks.
This gain was mainly comprised of a $27.4 million gain on our equity investment in ADNOC Drilling, partially offset against a $4.2 million loss on our investment in Tamboran Corp.; both of which were a result of fluctuations in the fair market value of the stocks.
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 capital budgets for calendar year 2025 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 2025 to be similar to that experienced in calendar year 2024.
In June 2022, we settled a registered exchange offer (the “Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes.
In June 2022, we settled a registered exchange offer (the “2022 Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes.
We may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity as necessary, fund our additional purchases, exchange or redeem senior notes, or repay any amounts under the 2018 Credit Facility.
We may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity as necessary, fund our additional purchases, exchange or redeem senior notes, or repay any amounts under the Amended Credit Facility.
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.
The Company financed the redemption of the 2025 Notes with the net proceeds from the offering of the 2031 Notes (discussed below), together with cash on hand. The Company’s obligation to redeem the 2025 Notes was conditioned upon the prior consummation of the issuance of the 2031 Notes, which was satisfied on September 29, 2021.
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.
We self‑insure a significant portion of expected losses relating to workers’ compensation, general liability, employer’s liability, auto liability, and certain 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with Part I of this Form 10‑K as well as the Consolidated Financial Statements and related notes thereto included in Part II, Item 8— “Financial Statements and Supplementary Data” of this Form 10‑K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with Part I of this Form 10‑K as well as the Consolidated Financial Statements and related notes thereto included in Part II, Item 8— Financial Statements and Supplementary Data of this Form 10‑K.
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.
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 $495.1 million, $395.5 million and $250.9 million in fiscal years 2024, 2023 and 2022, respectively.
During the fiscal year ended September 30, 2023, our activity was primarily driven by a $14.1 million equity investment in Tamboran Resources Limited, $4.1 million in debt and equity security investments in various geothermal energy companies, and $2.5 million investments in other equity securities.
Our activity during the fiscal year ended September 30, 2023, was driven by a $14.1 million equity investment in Tamboran Resources Corporation, $4.1 million in debt and equity security investments in various geothermal energy companies, and $2.5 million investments in other equity securities.
All of the 2031 Notes were exchanged in the Registered Exchange Offer.
All of the 2031 Notes were exchanged in the 2022 Registered Exchange Offer.
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 following is a discussion of the critical accounting policies and estimates used in our financial statements. 2024 FORM 10-K | 57 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.
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.
Operating net working capital was $236.6 million, $239.6 million and $271.8 million as of September 30, 2024, 2023 and 2022, 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.
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.
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. 2024 FORM 10-K | 59 Table of Contents The following table reconciles direct margin to segment operating income, which we believe is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to direct margin.
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.
See Note 6—Debt to our Consolidated Financial Statements. (2) See Note 4—Leases to our Consolidated Financial Statements. (3) See Note 16—Commitments and Contingencies to our Consolidated Financial Statements.
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.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 366 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $106.2 million and $130.2 million in the fiscal year ended September 30, 2024 and 2023, respectively.
Liquidity and Capital Resources Sources of Liquidity Our sources of available liquidity include existing cash balances on hand, cash flows from operations, and availability under the 2018 Credit Facility. Our liquidity requirements include meeting ongoing working capital needs, funding our capital expenditure projects, paying dividends declared, and repaying our outstanding indebtedness.
Liquidity and Capital Resources Sources of Liquidity Our sources of available liquidity include existing cash balances on hand, cash flows from operations, and availability under the Amended Credit Facility. Our liquidity requirements include meeting ongoing working capital needs, funding our capital expenditure projects, paying dividends declared, repaying our outstanding indebtedness, and funding the pending acquisition of KCA Deutag.
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 .
Results of Operations for the Fiscal Years Ended September 30, 2023 and 2022 A discussion of our results of operations for the fiscal year ended September 30, 2023 compared to the fiscal year ended September 30, 2022 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, 2023, filed with the SEC on November 8, 2023 .
The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes. 4.65% Senior Notes due 2025 On December 20, 2018, we issued approximately $487.1 million in aggregate principal amount of the 2025 Notes.
The indenture governing the Notes also contains customary events of default with respect to the Notes. Senior Notes Extinguished in Fiscal Year 2022 On December 20, 2018, we issued approximately $487.1 million in aggregate principal amount of the 4.65 percent senior notes due 2025 (the "2025 Notes").
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.
As of September 30, 2024, our drilling rig fleet included a total of 262 drilling rigs. Our reportable operating business segments consist of the North America Solutions segment with 228 rigs, the International Solutions segment with 27 rigs, and the Offshore Gulf of Mexico segment with seven offshore platform rigs as of September 30, 2024.
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.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 366 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $2.4 billion and $2.5 billion in fiscal year 2024 and 2023, 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 $212.6 million and $136.1 million in the fiscal years ended September 30, 2023 and 2022, respectively.
This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 366 days). (5) Defined as the number of rigs generating revenue at the applicable end date of the time period. Operating Revenues Operating revenues were $194.0 million and $212.6 million in the fiscal years ended September 30, 2024 and 2023, respectively.
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.
At the close of fiscal year 2024, we had 170 active contracted rigs, of which 100 were under a fixed-term contract and 70 were working well-to-well, compared to 164 contracted rigs at September 30, 2023. Our long-term strategy remains focused on innovation, technology, safety, operational excellence and reliability.
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.
Generally, the level of capital expenditures is dictated by capital budgets set to achieve respective production targets in relation to current and expected future prices of crude oil and natural gas, which are determined by various supply and demand factors and have historically been volatile.
Insurance is purchased over deductibles to reduce our exposure to catastrophic events but there can be no assurance that such coverage will apply or be adequate in all circumstances. Estimates are recorded for incurred outstanding liabilities for workers’ compensation and other casualty claims. Retained losses are estimated and accrued based upon our estimates of the aggregate liability for claims incurred.
Insurance is purchased over deductibles to reduce our exposure to catastrophic events but there can be no assurance that such coverage will apply or be adequate in all circumstances. Estimates are recorded for incurred outstanding liabilities for workers’ compensation and other casualty claims.
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.
The following table sets forth the total backlog by reportable segment as of September 30, 2024 and 2023, and the percentage of the September 30, 2024 backlog reasonably expected to be fulfilled in fiscal year 2025: (in billions) September 30, 2024 September 30, 2023 Percentage Reasonably Expected to be Fulfilled in Fiscal Year 2025 North America Solutions $ 0.7 $ 1.1 82.8 % International Solutions 0.8 0.3 25.9 Offshore Gulf of Mexico — — — $ 1.5 $ 1.4 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.
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.
Selling, General and Administrative Expense Selling, general and administrative expenses increased to $244.9 million in the fiscal year ended September 30, 2024 compared to $206.7 million in the fiscal year ended September 30, 2023.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased to $58.4 million during the fiscal year ended September 30, 2023 as compared to $43.8 million during the fiscal year ended September 30, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased to $61.1 million during the fiscal year ended September 30, 2024 as compared to $58.4 million during the fiscal year ended September 30, 2023.
If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.
If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. See Note 5—Goodwill and Intangible Assets for additional discussion of goodwill and intangible assets.
Estimates for liabilities and retained losses are based on adjusters’ estimates, our historical loss experience and statistical methods commonly used within the insurance industry that we believe are reliable. We also engage a third-party actuary to perform a periodic review of our casualty losses.
These estimates are based on adjusters’ estimates, our historical loss experience and statistical methods commonly used within the insurance industry that we believe are reliable. 2024 FORM 10-K | 58 Table of Contents We also engage a third-party actuary to perform a periodic review of our casualty losses.
Any further reversals or payments of the liability cannot be estimated at this time. The long‑term debt to total capitalization ratio was 16.6 percent as of September 30, 2023 and 2022. For additional information regarding debt agreements, refer to Note 6—Debt to the Consolidated Financial Statements. There were no other significant changes in our financial position since September 30, 2022.
The long‑term debt to total capitalization ratio was 38.2 percent and 16.6 percent as of September 30, 2024 and 2023. For additional information regarding debt agreements, refer to Note 6—Debt to the Consolidated Financial Statements. There were no other significant changes in our financial position since September 30, 2023.
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.
The change in cash provided by operating activities between fiscal years 2024 and 2023 is primarily driven by lower activity levels partially offset by higher average pricing levels. The increase in cash provided by operating activities between fiscal years 2023 and 2022 was primarily driven by higher activity and pricing.
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”).
Senior Notes Issued in Fiscal Year 2021 On September 29, 2021, we issued $550.0 million aggregate principal amount of the 2.90 percent senior notes due 2031 (the "2031 Notes") in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act.
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.
Direct Operating Expenses Direct operating expenses of $69.8 million and $57.9 million during the fiscal years ended September 30, 2024 and 2023, respectively, primarily consisted of $11.4 million and $12.5 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $37.6 million and $39.7 million, respectively, and medical stop loss expenses of $15.5 million and $10.6 million, respectively.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in this Form 10-K under “Cautionary Note regarding Forward-Looking Statements” and Item 1A— “Risk Factors.” Accordingly, past results and trends should not be used by investors to anticipate future results or trends.
Our future operating results may be affected by various trends and factors which are beyond our control. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in this Form 10-K under “Cautionary Note regarding Forward-Looking Statements” and Item 1A—Risk Factors.
If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future.
If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future. See Note 7—Income Taxes to our Consolidated Financial Statements for additional income tax disclosures.
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 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. Acquisition Transaction Costs During the fiscal year ended September 30, 2024, we recognized approximately $15.0 million in acquisition transaction costs associated with the acquisition of KCA Deutag.
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.
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) 2024 2023 % Change Operating revenues $ 106,207 $ 130,244 (18.5) % Direct operating expenses 82,668 96,781 (14.6) Depreciation 7,530 7,622 (1.2) Selling, general and administrative expense 3,594 3,035 18.4 Segment operating income $ 12,415 $ 22,806 (45.6) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 23,539 $ 33,463 (29.7) Revenue days 3 1,111 1,460 (23.9) Average active rigs 4 3 4 (23.9) Number of active rigs at the end of period 5 3 4 (25.0) Number of available rigs at the end of period 7 7 — Reimbursements of "out-of-pocket" expenses $ 31,717 $ 30,445 4.2 (1) These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results.
During the fiscal year ended 2023, we entered into a Blue Chip Swap transaction, which resulted in a $12.2 million loss on investment recorded in Gain on investment securities within our Consolidated Statements of Operations. As a result of the Blue Chip Swap transaction, $9.8 million of net cash was repatriated to the U.S. during the period.
During the fiscal year ended 2024 and 2023, we entered into a Blue Chip Swap transaction, which resulted in a $7.1 million and $12.2 million loss on investment recorded in Gain on investment securities within our Consolidated Statements of Operations, respectively.
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.
The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality. At September 30, 2024, we were in compliance with all debt covenants.
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.
Our cash flows for the fiscal years ended September 30, 2024, 2023 and 2022 are presented below: Year Ended September 30, (in thousands) 2024 2023 2022 Net cash provided by (used in): Operating activities $ 684,663 $ 833,682 $ 233,913 Investing activities (458,748) (322,584) (167,315) Financing activities 986,507 (463,869) (734,305) Net increase (decrease) in cash and cash equivalents and restricted cash $ 1,212,422 $ 47,229 $ (667,707) 2024 FORM 10-K | 52 Table of Contents Operating Activities Our operating net working capital (non-GAAP) as of September 30, 2024, 2023, and 2022 is presented below: Year Ended September 30, (in thousands) 2024 2023 2022 Total current assets $ 1,192,069 $ 1,006,625 $ 1,002,944 Less: Cash and cash equivalents 217,341 257,174 232,131 Short-term investments 292,919 93,600 117,101 Assets held-for-sale — 645 4,333 Prepaid property, plant and equipment 23,249 21,821 10,091 $ 658,560 $ 633,385 $ 639,288 Total current liabilities 446,949 418,931 394,810 Less: Dividends payable 25,024 25,194 26,693 Advance payment for sale of property, plant and equipment — — 600 $ 421,925 $ 393,737 $ 367,517 Operating net working capital (non-GAAP) $ 236,635 $ 239,648 $ 271,771 Cash flows provided by operating activities were approximately $684.7 million, $833.7 million, and $233.9 million for the fiscal year ended September 30, 2024, 2023, and 2022 respectively.
Our wholly‑owned captive insurance companies finance a significant portion of the physical damage risk on company‑owned drilling rigs as well as casualty deductibles.
Our wholly‑owned captive insurance companies finance a significant portion of the physical damage risk on company‑owned drilling rigs as well as casualty deductibles and other risk retentions. An actuary reviews the loss reserves retained by the Company and the Captives on an annual basis.
This estimate includes normal capital maintenance requirements, information technology spending, and skidding to walking conversions for up to 14 rigs. 2023 FORM 10-K | 46 Table of Contents Net Purchases & Sales of Short-Term Investments Our net sales of short-term investments during fiscal year 2023 were $14.3 million compared to net sales of $79.6 million and net purchases $107.4 million in fiscal years 2022 and 2021, respectively.
This estimate includes normal capital maintenance requirements, planned rig-related equipment upgrades, and skidding to walking conversions for up to six rigs. Net Sales of Short-Term Investments Our net sales of short-term investments during fiscal year 2024 were $3.5 million compared to net sales of $14.3 million and $79.6 million in fiscal years 2023 and 2022, respectively.
Additionally, the aggregate gain was offset by a $12.2 million loss on investment recognized during the fiscal year ended September 30, 2023 as a result of a Blue Chip Swap transaction that occurred during the period. See—Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties—International Solutions Drilling Risks for additional information related to the Blue Chip Swap.
See Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties—International Solutions Drilling Risks for additional details related to the Blue Chip Swap. During the fiscal year ended September 30, 2023, we recognized an aggregate gain of $11.3 million on investment securities.
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.
North America Solutions The following table presents certain information with respect to our North America Solutions reportable segment: (in thousands, except operating statistics) 2024 2023 % Change Operating revenues $ 2,445,946 $ 2,519,743 (2.9) % Direct operating expenses 1,366,414 1,447,528 (5.6) Depreciation and amortization 366,446 353,976 3.5 Research and development 41,305 30,457 35.6 Selling, general and administrative expense 61,107 58,367 4.7 Asset impairment charges — 3,948 (100.0) Segment operating income $ 610,674 $ 625,467 (2.4) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 1,079,532 $ 1,072,215 0.7 Revenue days 3 55,387 61,814 (10.4) Average active rigs 4 151 169 (10.4) Number of active rigs at the end of period 5 151 147 2.7 Number of available rigs at the end of period 228 233 (2.1) Reimbursements of "out-of-pocket" expenses $ 294,375 $ 304,870 (3.4) (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.
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.
As of September 30, 2024, we had a $495.5 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.
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.
International Solutions The following table presents certain information with respect to our International Solutions reportable segment: (in thousands, except operating statistics) 2024 2023 % Change Operating revenues $ 193,975 $ 212,566 (8.7) % Direct operating expenses 174,634 187,292 (6.8) Depreciation 10,863 7,615 42.7 Selling, general and administrative expense 9,427 10,401 (9.4) Asset impairment charges — 8,149 (100.0) Segment operating loss $ (949) $ (891) (6.5) Financial Data and Other Operating Statistics 1 : Direct margin (Non-GAAP) 2 $ 19,341 $ 25,274 (23.5) Revenue days 3 4,614 4,788 (3.6) Average active rigs 4 13 13 (3.6) Number of active rigs at the end of period 5 16 13 23.1 Number of available rigs at the end of period 27 22 22.7 Reimbursements of "out-of-pocket" expenses $ 8,482 $ 10,227 (17.1) (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 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.
The effective rates differ from the U.S. federal statutory rate (21.0 percent for the fiscal years 2024 and 2023) primarily due to non-deductible permanent items and state and foreign income taxes. Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities.
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
Year Ended September 30, 2024 (in thousands) North America Solutions International Solutions Offshore Gulf of Mexico Segment operating income (loss) $ 610,674 $ (949) $ 12,415 Add back: Depreciation and amortization 366,446 10,863 7,530 Research and development 41,305 — — Selling, general and administrative expense 61,107 9,427 3,594 Direct margin (Non-GAAP) $ 1,079,532 $ 19,341 $ 23,539 Year Ended September 30, 2023 (in thousands) North America Solutions International Solutions Offshore Gulf of Mexico Segment operating income (loss) $ 625,467 $ (891) $ 22,806 Add back: Depreciation and amortization 353,976 7,615 7,622 Research and development 30,457 — — Selling, general and administrative expense 58,367 10,401 3,035 Asset impairment charges 3,948 8,149 — Direct margin (Non-GAAP) $ 1,072,215 $ 25,274 $ 33,463
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”).
As we move forward, we believe that our rig fleet, technology offerings, financial strength, contract backlog and strong customer and employee base position us very well to respond to continued cyclical and often times volatile market conditions and to take advantage of future opportunities.
Additionally, see Item 1A—"Risk Factors— The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations" within this Form 10-K.
Additionally, see Item 1A—Risk Factors—" The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations." within this Form 10-K. 2024 FORM 10-K | 47 Table of Contents Results of Operations for the Fiscal Years Ended September 30, 2024 and 2023 Consolidated Results of Operations Net Income We recorded income of $344.2 million ($3.43 per diluted share) for the fiscal year ended September 30, 2024 compared to income of $434.1 million ($4.16 per diluted share) for the fiscal year ended September 30, 2023.
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.
Operating Expenses Direct operating expenses decreased to $174.6 million during the fiscal year ended September 30, 2024 as compared to $187.3 million during the fiscal year ended September 30, 2023.
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.
Operating revenues of $71.6 million and $77.3 million during the fiscal years ended September 30, 2024 and 2023, respectively, primarily consisted of $61.2 million and $67.4 million, respectively, in intercompany premium revenues recorded by the Captives. These revenues were eliminated upon consolidation.
As of September 30, 2023, we had $95.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds. Of the $95.0 million, $40.0 million was outstanding as of September 30, 2023. Separately, we had $2.1 million in standby letters of credit and bank guarantees outstanding.
As of September 30, 2024, there were no borrowings or letters of credit outstanding, leaving $950.0 million available to borrow under the Amended Credit Facility. As of September 30, 2024, we had $160.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.
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.
During the same period, we also identified additional equipment that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Consolidated Balance Sheets.
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.
Future Cash Requirements Our operating cash requirements, scheduled debt repayments, interest payments, any declared dividends, and estimated capital expenditures for fiscal year 2025 are expected to be funded through current cash and cash to be provided from operating activities. However, there can be no assurance that we will continue to generate cash flows at current levels.
The $24.3 million increase in fiscal year 2023 is primarily due to an increase in professional fees of $12.0 million and an increase in labor and labor-related expenses of $8.6 million.
The $38.2 million increase in fiscal year 2024 is primarily due to a $19.6 million increase in labor and labor-related expenses; and a $8.9 million increase in IT related and professional service expenses.
With most drilling contracts, we receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenue associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service.
Revenue associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service. These revenues are deferred and recognized ratably over the related contract term that drilling services are provided.
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.
This supply-demand dynamic combined with the value proposition we provide our customers through our drilling expertise, high-quality FlexRig® fleet, and automation technology remains constructive for our underlying contract economics. With regard to our North America Solutions segment, our rig count remained relatively range-bound during fiscal 2024 despite a decline in the overall industry rig count.
Financing Activities Repurchase of Shares The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. In December 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares.
Repurchase of Shares The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. The repurchases may be made using our cash and cash equivalents or other available sources.
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.
Operating Revenue Consolidated operating revenues were $2.8 billion and $2.9 billion during fiscal years 2024 and 2023, respectively. The $0.1 billion decrease was primarily driven by lower activity levels. Direct Operating Expenses, Excluding Depreciation and Amortization Direct operating expenses in fiscal year 2024 were $1.6 billion, compared to direct operating expenses of $1.7 billion in fiscal year 2023.
The effective income tax rate was 26.8 percent in fiscal year 2023 compared to 77.8 percent in fiscal year 2022.
Income Taxes We had an income tax expense of $136.9 million in fiscal year 2024 compared to an income tax expense of $159.3 million in fiscal year 2023. The effective income tax rate was 28.5 percent in fiscal year 2024 compared to 26.8 percent in fiscal year 2023.
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 $73.8 million decrease in operating revenues was primarily due to a 10.4 percent decrease in activity levels partially offset by higher average pricing levels. Direct Operating Expenses Direct operating expenses decreased by $81.1 million during fiscal year ended September 30, 2024.
Asset Impairment Charges During the fiscal year ended September 30, 2023, the Company initiated a plan to decommission and scrap four international FlexRig ® drilling rigs and four conventional drilling rigs located in Argentina that are not suitable for unconventional drilling. As a result, these rigs were reclassified to Assets held-for-sale on our Consolidated Balance Sheets.
This decrease was primarily driven by a 3.6 percent decrease in activity levels and decreases in per revenue day materials and supplies expense. 2024 FORM 10-K | 50 Table of Contents Asset Impairment Charges During the fiscal year ended September 30, 2023, the Company initiated a plan to decommission and scrap four international FlexRig ® drilling rigs and four conventional drilling rigs located in Argentina that are not suitable for unconventional drilling.
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.
As a result of the Blue Chip Swap transactions, $13.8 million and $9.8 million of net cash was repatriated to the U.S. during 2024 and 2023, respectively. Net Purchases of Long-Term Investments Our net purchases of long-term investments were $9.1 million, $20.7 million and $29.2 million in fiscal years 2024, 2023 and 2022, respectively.
The decrease in net purchases between fiscal years 2022 and 2021 is primarily driven by our $100.0 million cornerstone investment in ADNOC Drilling purchased during fiscal year 2021, the $22.0 million of proceeds received from the liquidation of our remaining equity securities in Schlumberger, Ltd, during the fiscal year ended September 30, 2022, offset by the purchase of a $33.0 million cornerstone investment in a convertible note in Galileo Holdco 2 and the purchase of $18.2 million in various geothermal investments during fiscal year 2022.
Our activity during the fiscal year ended September 30, 2022, was driven by a $33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies and the purchase of $18.2 million in various geothermal investments, offset by $22.0 million of proceeds received from the liquidation of our remaining equity securities in Schlumberger, Ltd. 2024 FORM 10-K | 53 Table of Contents Insurance Proceeds from Involuntary Conversion In November 2022, a fire at a wellsite caused substantial damage to one of our super-spec rigs within our North America Solutions segment.
As our revenues increase, operating net working capital is typically a use of capital, while conversely, as our revenues decrease, operating net working capital is typically a source of capital.
As our revenues increase, operating net working capital is typically a use of capital, while conversely, as our revenues decrease, operating net working capital is typically a source of capital. As of September 30, 2024 and 2023, we had cash and cash equivalents of $217.3 million and $257.2 million and short-term investments of $292.9 million and $93.6 million, respectively.
Furthermore, we still believe the supply and demand dynamics surrounding our North America Solutions segment remain constructive for future activity and pricing levels.
The rig market was pressured by continued weakness in natural gas prices as well as other non-commodity price related factors, such as customer capital budgets, drilling plans, production levels and customer consolidations. We still believe the supply and demand dynamics surrounding our North America Solutions segment remain constructive for future activity and pricing levels.
This increase was primarily driven by an increase of $33.3 million in labor and labor-related expense and an increase of $17.6 million in materials and supplies as a result of higher activity levels.
The decrease was primarily driven by a decrease in activity levels as described above, partially offset by an increase in per revenue day materials and supplies expense.
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.
As of September 30, 2024 and 2023, our contract drilling backlog was $1.5 billion and $1.4 billion, respectively. The increase in backlog at September 30, 2024 compared to 2023 is primarily due to the Company finalizing contractual terms with Saudi Aramco for a seven super-spec FlexRig® tender award for work in the Kingdom of Saudi Arabia.
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.
Depreciation and amortization includes amortization of intangible assets of $6.4 million and $6.6 million and abandonments of equipment of $6.5 million and $3.3 million in fiscal years 2024 and 2023, respectively. Research and Development Expense Research and development expense was $41.0 million and $30.0 million in fiscal years 2024 and 2023, respectively.
The increase in capital expenditures is largely driven by higher activity levels and increased costs associated with rig upgrades, including walking rig conversions. Our fiscal year 2024 capital spending is currently estimated to be between $450 million and $500 million.
The increase in capital expenditures is driven by the timing of procurement associated with equipment overhauls and certain long-term projects including the procurement of long lead items for international expansion projects. Our fiscal year 2025 capital spending is currently estimated to be between $290 million and $325 million.
Executive Summary Helmerich & Payne, Inc. (“H&P,” which, together with its subsidiaries, is identified as the “Company,” “we,” “us,” or “our,” except where stated or the context requires otherwise) through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.
Accordingly, past results and trends should not be used by investors to anticipate future results or trends. 2024 FORM 10-K | 44 Table of Contents Executive Summary H&P through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.

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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 changeEquity 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.
Biggest changeConsistent with the provisions of ASU No. 2022-03, contractual sale restrictions are not considered in the fair value measurement of our investment in Tamboran Resources Corporation. As of September 30, 2024 and 2023 we had equity securities in ADNOC Drilling with a total fair value of $205.6 million and $174.8 million, respectively.
Any fluctuations in market conditions causing increased prices in materials and supplies could have a material adverse effect on future operating costs. Interest Rate Risk Our interest rate risk exposure results primarily from short‑term rates, mainly SOFR‑based, on any borrowings from our revolving credit facility.
Any fluctuations in market conditions causing increased prices in materials and supplies could have a material adverse effect on future operating costs. Interest Rate Risk Our interest rate risk exposure results primarily from short‑term rates, mainly SOFR‑based, on any borrowings from the Amended credit facility.
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.
As a result, demand for drilling services and solutions is not always purely a function of the movement of commodity prices. 2024 FORM 10-K | 60 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, 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.
At September 30, 2024, 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 $0.6 million.
A 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.
A hypothetical 10 percent decrease in the market price for our marketable equity securities of Tamboran Corp and ADNOC Drilling as of September 30, 2024 would decrease the fair value by $22.7 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.
Commodity Price Risk The demand for drilling services and solutions is derived from exploration and production companies spending money to explore and develop drilling prospects in search of crude oil and natural gas. Their spending is driven by their cash flow and financial strength, which is affected by trends in crude oil and natural gas commodity prices.
Commodity Price Risk The demand for drilling services and solutions is derived from exploration and production companies spending money to explore and develop drilling prospects in search of crude oil and natural gas.
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
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. 2024 FORM 10-K | 61 Table of Contents
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.
There were no outstanding borrowings under this facility at September 30, 2024 and our outstanding debt consisted of $1.8 billion (face amount) in senior unsecured notes, and an estimated fair value of $1.7 billion as of September 30, 2024.
Added
Their spending is driven by their cash flow, financial strength, and desires to return excess cash to shareholders, which is affected by trends in crude oil and natural gas commodity prices.
Added
The $1.8 billion (face amount) in senior unsecured notes at September 30, 2024 comprised of the following: $350.0 million aggregate principal amount of 4.65 percent senior notes due 2027, $350.0 million aggregate principal amount of 4.85 percent senior notes due 2029, $550.0 million aggregate principal amount of 2.90 percent senior notes due 2031 and $550.0 million aggregate principal amount of 5.50 percent senior notes due 2034.
Added
Equity Price Risk As of September 30, 2024 and 2023, we had equity securities in Tamboran Corp. with a total fair value of $21.0 million and $9.9 million, respectively. On June 4, 2024, the Company entered into a convertible note agreement with Tamboran Corp.
Added
This note was utilized to relieve Tamboran's outstanding accounts receivable balance owed to the Company, and therefore no cash was exchanged as part of the transaction.
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The convertible note agreement provided that the notes converted into shares of common stock of Tamboran Corp. under certain circumstances in connection with an initial public offering in which its stock was listed on the New York Stock Exchange ("NYSE") or NASDAQ Stock Exchange.
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On June 26, 2024,Tamboran Corp. completed an initial public offering of its common stock on the NYSE and as a result of this offering, our convertible note of $9.4 million was converted into 0.5 million common shares in Tamboran Corp. Our shares received in this initial public offering are subject to a 180-day lockup period.
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Our investment in ADNOC Drilling was subject to a three-year lockup period, which expired during September 2024.
Added
Subsequent to the 2024 fiscal year end, we sold our shares of ADNOC Drilling for aggregate proceeds of approximately $197.3 million. Refer to Note 18—Subsequent Events. At November 6, 2024, the total fair value of our remaining equity securities in Tamboran Corp. decreased to approximately $19.1 million.

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