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Helmerich & Payne, Inc. Announces Fiscal Fourth Quarter & Fiscal Year Results

Helmerich & Payne, Inc. (NYSE: HP) reported a net loss of $79 million, or $(0.74) per diluted share, from operating revenues of $344 million for the quarter ended September 30, 2021, compared to a net loss of $56 million, or $(0.52) per diluted share, on revenues of $332 million for the quarter ended June 30, 2021. The net losses per diluted share for the fourth and third quarters of fiscal year 2021 include $(0.12) and $0.05 of after-tax losses and gains, respectively, comprised of select items(2). For the fourth quarter of fiscal year 2021, select items(2) were comprised of:

  • $0.03 of after-tax gains pertaining to the sale of equipment
  • $(0.15) of after-tax losses pertaining to a non-cash impairment for the fair market adjustments to equipment held for sale, closing costs associated with the ADNOC Drilling transactions, restructuring charges, a non-cash fair market adjustment to our equity investment and an inventory write-down

Net cash provided by operating activities was $47 million for the fourth quarter of fiscal year 2021 compared to $31 million for the third quarter of fiscal year 2021.

For fiscal year 2021, the Company reported a net loss of $326 million, or $(3.04) per diluted share, from operating revenues of $1.2 billion. The net loss per diluted share includes $(0.44) of after-tax losses comprised of select items(2). Net cash provided by operating activities was $136 million in fiscal year 2021 compared to $539 million in fiscal year 2020.

President and CEO John Lindsay commented, "As we head towards 2022 we expect that the demand for H&P's drilling solutions will continue to improve, and capital discipline, along with the help of strong commodity prices, will strengthen the industry. I am confident we are well-positioned to deliver value in this environment.

"As contemplated, rig activity increases were more measured during our fiscal fourth quarter as we realized more rig churn among customers. Regardless, we are pleased with the 5% incremental rig count increase we experienced during the quarter and are optimistic as we look ahead to the fourth calendar quarter, where we expect to see our rig count increase sequentially at a higher pace as customers begin to reset their annual capital budgets. We are already experiencing increased rig activity with 141 rigs working in North America today. That said, we believe the market will remain disciplined, but customers' budgets will be set based on the higher commodity price environment. We expect utilization of readily available rigs to remain very high and our projected increase in rig demand will be more than we can accommodate with our current active fleet, meaning we will have to reactivate more long-idled rigs to satisfy demand.

"The tightness in the supply of readily available rigs and the sizeable costs associated with rig reactivations have begun to move contract pricing upward in the market. This will likely become even more pronounced in the coming months and we expect pricing to continue to improve as rig demand picks up heading into 2022. It is my belief H&P's new commercial models and digital technology solutions will also continue to drive economic returns higher, not only for our customers, but also for ourselves.

"International activity tends to lag the U.S.; however, we expect to see activity improve in these markets in the coming quarters as well. For example, we recently signed agreements with YPF to put four rigs to work under term contracts in Argentina commencing at different dates in fiscal 2022. Additionally, our recent transactions to sell eight rigs to the Middle East's largest(4) land driller, ADNOC Drilling, and the subsequent $100 million cornerstone investment in the company's recent initial public offering, provides H&P with a unique opportunity going forward. This is just the beginning of what we look forward to being a fruitful alliance with ADNOC Drilling and represents an initial step in our international expansion plans."

Senior Vice President and CFO Mark Smith also commented, "We expect the Company's strong financial position will be bolstered by improving rig activity levels and pricing, which will give us flexibility to take advantage of additional opportunities. Looking out into fiscal 2022, we have set our initial capex budget to range between $250 and $270 million, representing a substantial sequential increase that tracks with expected activity levels.

"Just prior to our fiscal year end, the Company closed on an upsized $550 million senior notes offering. The notes' coupon of 2.90% represents a record low for a BBB(3) rated 10-year or longer tenor from an oilfield service company. Due to the Company's already strong balance sheet, we were able to take advantage of the historically low interest rate environment, securing low cost, long-term capital and extend our refinancing horizon, which provides us greater financial agility and reduced risk."

John Lindsay concluded, “Those who have worked in this industry know it is resilient, and that it has delivered reliable, affordable energy which has been critical to global progress and prosperity. The industry has made significant progress in reducing the environmental impact of its operational emissions and will continue to do so in the future. At H&P, we are optimistic about the future, and we believe our rigs, digital technology, solid financial position, and the commitment of our people position us to lead the recovery by delivering value-added solutions and services to our customers and partners."

Operating Segment Results for the Fourth Quarter of Fiscal Year 2021

North America Solutions:

This segment had an operating loss of $60.7 million compared to an operating loss of $43.7 million during the previous quarter. The increase in the operating loss was primarily due to impairments related to fair market adjustments for equipment held for sale. Absent the select items(2) for the quarters, this segment's operating loss declined by $4.1 million on a sequential basis.

Operating gross margins(1) decreased by $5.8 million to $69.1 million. Throughout this fiscal year, we prudently managed our expenses and inventory levels, utilizing previously expensed consumable inventory harvested during stacking activities in 2020 rather than fully costed inventory or purchasing new inventory. However, rig activity levels have increased and remain elevated, while previously expensed inventory has been exhausted, causing the need to issue average cost inventory as well as begin purchasing additional inventory to replenish stock levels. This occurrence, along with costs associated with reactivating rigs, adversely impacted operating results during the quarter. Rig reactivation costs were $6.6 million in the fourth fiscal quarter compared to $5.9 million in the third fiscal quarter.

International Solutions:

This segment had an operating loss of $5.7 million compared to an operating loss of $3.5 million during the previous quarter due to higher SG&A expenses associated with the ADNOC Drilling transactions. Operating gross margins(1) improved slightly to a negative $0.4 million from a negative $1.4 million in the previous quarter. Current quarter results included a $0.7 million foreign currency loss primarily related to our South American operations compared to a $0.6 million foreign currency loss in the third quarter of fiscal year 2021.

Offshore Gulf of Mexico:

This segment had operating income of $4.5 million compared to operating income of $5.7 million during the previous quarter. Operating gross margins(1) for the quarter were $7.7 million compared to $9.2 million in the prior quarter.

Operational Outlook for the First Quarter of Fiscal Year 2022

North America Solutions:

  • We expect North America Solutions operating gross margins(1) to be between $75-$85 million, which includes approximately $15 million in estimated reactivation costs
  • We expect to exit the quarter at between 152-157 contracted rigs

International Solutions:

  • We expect International Solutions operating gross margins(1) to be between $(2)-$0 million, exclusive of any foreign exchange gains or losses

Offshore Gulf of Mexico:

  • We expect Offshore Gulf of Mexico operating gross margins(1) to be between $6-$8 million

Other Estimates for Fiscal Year 2022

  • Gross capital expenditures are expected to be approximately $250 to $270 million; approximately 50% expected for maintenance, including tubular purchases, roughly 35% expected for skidding to walking conversions and approximately 15% for corporate and information technology. Ongoing asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are expected to total approximately $40 million in fiscal year 2022.
  • Depreciation for fiscal year 2022 is expected to be approximately $405 million
  • Research and development expenses for fiscal year 2022 are expected to be roughly $25 million
  • General and administrative expenses for fiscal year 2022 are expected to be approximately $170 million of which roughly $45-$48 million is expected for the first fiscal quarter

Select Items Included in Net Income per Diluted Share

Fourth quarter of fiscal year 2021 net loss of $(0.74) per diluted share included $(0.12) in after-tax losses comprised of the following:

  • $0.03 of after-tax gains related to the sale of equipment
  • $(0.01) of non-cash after-tax losses related to fair market value adjustments to equity investments
  • $(0.01) of non-cash after-tax losses related to an inventory write-down
  • $(0.01) of after-tax losses related to restructuring charges
  • $(0.02) of after-tax losses related to closing costs associated with the ADNOC Drilling transactions
  • $(0.10) of after-tax losses related to the non-cash impairment for fair market value adjustments to equipment that is held for sale

Third quarter of fiscal year 2021 net loss of $(0.52) per diluted share included $0.05 in after-tax gains comprised of the following:

  • $0.01 of non-cash after-tax gains from discontinued operations related to adjustments resulting from currency fluctuations
  • $0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $0.05 of income tax adjustments related to certain discrete tax items
  • $(0.01) of after-tax losses related to the non-cash impairment for fair market value adjustments to decommissioned rigs that are held for sale
  • $(0.01) of after-tax losses related to restructuring charges
  • $(0.01) of after-tax losses related to the change in the fair values of certain contingent liabilities

Fiscal year 2021 net loss of $(3.04) per diluted share included $(0.44) in after-tax losses comprised of the following:

  • $0.05 of income tax adjustments related to certain discrete tax items
  • $0.05 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $0.10 of non-cash after-tax gains from discontinued operations related to adjustments resulting from currency fluctuations
  • $0.10 of after-tax gains pertaining to the sale of an offshore platform rig and equipment
  • $(0.01) of non-cash after-tax losses related to an inventory write-down
  • $(0.01) of after-tax losses related to the change in the fair values of certain contingent liabilities
  • $(0.02) of after-tax losses related to closing costs associated with the ADNOC Drilling transactions
  • $(0.03) of after-tax losses related to restructuring charges
  • $(0.17) of after-tax losses pertaining to the sale of excess drilling equipment and spares
  • $(0.50) of after-tax losses related to non-cash impairment for fair market value adjustments to decommissioned rigs and equipment that are held for sale

Conference Call

A conference call will be held on Thursday, November 18, 2021 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s fourth quarter fiscal year 2021 results. Dial-in information for the conference call is (800) 895-3361 for domestic callers or (785) 424-1062 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet by logging on to the Company’s website at http://www.helmerichpayne.com and accessing the corresponding link through the investor relations section by clicking on “Investors” and then clicking on “News and Events - Events & Presentations” to find the event and the link to the webcast.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. At September 30, 2021, H&P's fleet included 236 land rigs in the United States, 30 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s future financial position, operations outlook, business strategy, dividends, budgets, projected costs and plans and objectives of management for future operations are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s SEC filings, including but not limited to its annual report on Form 10‑K and quarterly reports on Form 10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.

We use our Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on our Investor Relations website at www.helmerichpayne.com.

Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, which may be registered or trademarked in the United States and other jurisdictions.

(1) Operating gross margin is defined as operating revenues less direct operating expenses.
(2) See the corresponding section of this release for details regarding the select items. The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside of the Company's core business operations.
(3) Investment grade rating of BBB+ from S&P Global and Baa1 from Moody's.
(4) Largest in terms of fleet size.

HELMERICH & PAYNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Year Ended

(in thousands, except per share

amounts)

September 30,

June 30,

September 30,

September 30,

2021

2021

2020

2021

2020

OPERATING REVENUES

Drilling services

$

342,219

$

329,774

$

205,621

$

1,210,800

$

1,761,714

Other

1,588

2,439

2,646

7,768

12,213

343,807

332,213

208,267

1,218,568

1,773,927

OPERATING COSTS AND EXPENSES

Drilling services operating expenses, excluding depreciation and amortization

268,127

255,471

162,518

952,600

1,184,788

Other operating expenses

1,021

1,481

1,491

5,138

5,777

Depreciation and amortization

101,955

104,493

109,587

419,726

481,885

Research and development

5,197

5,610

4,915

21,724

21,645

Selling, general and administrative

51,824

41,719

32,619

172,195

167,513

Asset impairment charge

14,436

2,130

70,850

563,234

Restructuring charges

2,070

2,110

552

5,926

16,047

Gain on sale of assets

(3,787

)

(3,434

)

(27,985

)

(1,042

)

(46,775

)

440,843

409,580

283,697

1,647,117

2,394,114

OPERATING LOSS FROM CONTINUING OPERATIONS

(97,036

)

(77,367

)

(75,430

)

(428,549

)

(620,187

)

Other income (expense)

Interest and dividend income

2,029

1,527

753

10,254

7,304

Interest expense

(6,094

)

(5,963

)

(6,154

)

(23,955

)

(24,474

)

Gain (loss) on investment securities

(1,126

)

2,409

(1,395

)

6,727

(8,720

)

Gain on sale of subsidiary

14,963

Other

(2,630

)

(970

)

(1,673

)

(5,657

)

(5,384

)

(7,821

)

(2,997

)

(8,469

)

(12,631

)

(16,311

)

Loss from continuing operations before income taxes

(104,857

)

(80,364

)

(83,899

)

(441,180

)

(636,498

)

Income tax benefit

(25,323

)

(23,659

)

(23,253

)

(103,721

)

(140,106

)

Loss from continuing operations

(79,534

)

(56,705

)

(60,646

)

(337,459

)

(496,392

)

Income from discontinued operations before income taxes

373

1,150

7,905

11,309

30,580

Income tax provision

6,222

28,685

Income from discontinued operations

373

1,150

1,683

11,309

1,895

NET LOSS

$

(79,161

)

$

(55,555

)

$

(58,963

)

$

(326,150

)

$

(494,497

)

Basic earnings (loss) per common share:

Loss from continuing operations

$

(0.74

)

$

(0.53

)

$

(0.57

)

$

(3.14

)

$

(4.62

)

Income from discontinued operations

0.01

0.02

0.10

0.02

Net loss

$

(0.74

)

$

(0.52

)

$

(0.55

)

$

(3.04

)

$

(4.60

)

Diluted earnings (loss) per common share:

Loss from continuing operations

$

(0.74

)

$

(0.53

)

$

(0.57

)

$

(3.14

)

$

(4.62

)

Income from discontinued operations

0.01

0.02

0.10

0.02

Net loss

$

(0.74

)

$

(0.52

)

$

(0.55

)

$

(3.04

)

$

(4.60

)

Weighted average shares outstanding (in thousands):

Basic

107,899

107,896

107,484

107,818

108,009

Diluted

107,899

107,896

107,484

107,818

108,009

HELMERICH & PAYNE, INC.

CONSOLIDATED BALANCE SHEETS

September 30,

September 30,

(in thousands except share data and share amounts)

2021

2020

ASSETS

Current Assets:

Cash and cash equivalents

$

917,534

$

487,884

Short-term investments

198,700

89,335

Accounts receivable, net of allowance of $2,068 and $1,820, respectively

228,894

192,623

Inventories of materials and supplies, net

84,057

104,180

Prepaid expenses and other, net

85,928

89,305

Assets held-for-sale

71,453

Total current assets

1,586,566

963,327

Investments

135,444

31,585

Property, plant and equipment, net

3,127,287

3,646,341

Other Noncurrent Assets:

Goodwill

45,653

45,653

Intangible assets, net

73,838

81,027

Operating lease right-of-use asset

49,187

44,583

Other assets, net

16,153

17,105

Total other noncurrent assets

$

184,831

$

188,368

Total assets

$

5,034,128

$

4,829,621

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

71,996

36,468

Dividends payable

27,332

27,226

Current portion of long-term debt

483,486

Accrued liabilities

283,492

155,442

Total current liabilities

866,306

219,136

Noncurrent Liabilities:

Long-term debt, net

541,997

480,727

Deferred income taxes

563,437

650,675

Other

147,757

147,180

Noncurrent liabilities - discontinued operations

2,013

13,389

Total noncurrent liabilities

1,255,204

1,291,971

Shareholders' Equity:

Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of September 30, 2021 and 2020, respectively, and 107,898,859 and 107,488,242 shares outstanding as of September 30, 2021 and 2020, respectively

11,222

11,215

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

Additional paid-in capital

529,903

521,628

Retained earnings

2,573,375

3,010,012

Accumulated other comprehensive loss

(20,244

)

(26,188

)

Treasury stock, at cost, 4,324,006 shares and 4,663,321 shares as of September 30, 2021 and 2020, respectively

(181,638

)

(198,153

)

Total shareholders’ equity

$

2,912,618

$

3,318,514

Total liabilities and shareholders' equity

$

5,034,128

$

4,829,621

HELMERICH & PAYNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended September 30,

(in thousands)

2021

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(326,150

)

$

(494,497

)

$

(33,656

)

Adjustment for (income) loss from discontinued operations

(11,309

)

(1,895

)

1,146

Loss from continuing operations

(337,459

)

(496,392

)

(32,510

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

419,726

481,885

562,803

Asset impairment charge

70,850

563,234

224,327

Amortization of debt discount and debt issuance costs

1,423

1,817

1,732

Provision for credit loss

203

2,203

2,321

Stock-based compensation

27,858

36,329

34,292

Loss (gain) on investment securities

(6,727

)

8,720

54,488

Gain on sale of assets

(1,042

)

(46,775

)

(39,691

)

Gain on sale of subsidiary

(14,963

)

Deferred income tax benefit

(89,752

)

(157,555

)

(44,554

)

Other

13,793

(2,423

)

4,431

Changes in assets and liabilities

37,614

162,848

88,174

Net cash provided by operating activities from continuing operations

136,488

538,928

855,813

Net cash used in operating activities from discontinued operations

(48

)

(47

)

(62

)

Net cash provided by operating activities

136,440

538,881

855,751

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(82,148

)

(140,795

)

(458,402

)

Purchase of investments

(417,601

)

(134,641

)

(97,652

)

Payment for acquisition of business, net of cash acquired

(16,163

)

Proceeds from sale of investments

207,716

94,646

98,764

Proceeds from sale of subsidiary

15,056

Proceeds from asset sales

43,515

78,399

50,817

Cash received in advance of property, plant and equipment sale

86,524

Other

(550

)

Net cash used in investing activities

(161,994

)

(87,885

)

(422,636

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid

(109,130

)

(260,335

)

(313,421

)

Proceeds from debt issuance

548,719

Debt issuance costs

(3,935

)

(3,912

)

Proceeds from stock option exercises

4,100

3,053

Payments for employee taxes on net settlement of equity awards

(2,162

)

(3,784

)

(6,418

)

Payment of contingent consideration from acquisition of business

(7,250

)

(8,250

)

Payments for early extinguishment of long-term debt

(12,852

)

Share repurchase

(28,505

)

(42,779

)

Other

(719

)

(446

)

Net cash provided by (used in) financing activities

425,523

(297,220

)

(376,329

)

Net increase in cash and cash equivalents and restricted cash

399,969

153,776

56,786

Cash and cash equivalents and restricted cash, beginning of period

536,747

382,971

326,185

Cash and cash equivalents and restricted cash, end of period

$

936,716

$

536,747

$

382,971

HELMERICH & PAYNE, INC.

SEGMENT REPORTING

Three Months Ended

Year Ended

September 30,

June 30,

September 30,

September 30,

(in thousands, except operating statistics)

2021

2021

2020

2021

2020

NORTH AMERICA SOLUTIONS

Operating revenues

$

293,303

$

281,132

$

149,304

$

1,026,364

$

1,474,380

Direct operating expenses

224,185

206,172

110,048

773,507

942,277

Segment gross margin (2)

69,118

74,960

39,256

252,857

532,103

Depreciation and amortization

95,177

96,997

101,941

392,415

438,039

Research and development

5,411

5,605

4,828

21,811

20,699

Selling, general and administrative expense

13,866

12,583

10,916

51,089

53,714

Asset impairment charge

14,436

2,130

70,850

406,548

Restructuring charges

899

1,388

(232

)

3,868

7,005

Segment operating loss

$

(60,671

)

$

(43,743

)

$

(78,197

)

$

(287,176

)

$

(393,902

)

Operating Statistics (1):

Average active rigs

124

119

65

107

134

Number of active rigs at the end of period

127

121

69

127

69

Number of available rigs at the end of period

236

242

262

236

262

Reimbursements of "out-of-pocket" expenses

$

34,536

$

33,282

$

6,915

$

113,897

$

171,455

INTERNATIONAL SOLUTIONS

Operating revenues

$

17,308

$

15,278

$

23,996

$

57,917

$

144,185

Direct operating expenses

17,741

16,690

25,157

68,672

124,791

Segment gross margin (2)

(433

)

(1,412

)

(1,161

)

(10,755

)

19,394

Depreciation

652

573

897

2,013

17,531

Selling, general and administrative expense

4,565

1,346

733

8,028

4,565

Asset impairment charge

156,686

Restructuring charges

207

683

207

2,980

Segment operating loss

$

(5,650

)

$

(3,538

)

$

(3,474

)

$

(21,003

)

$

(162,368

)

Operating Statistics (1):

Average active rigs

6

5

5

5

13

Number of active rigs at the end of period

6

6

5

6

5

Number of available rigs at the end of period

30

32

32

30

32

Reimbursements of "out-of-pocket" expenses

$

1,369

$

1,152

$

3,224

$

6,693

$

10,099

OFFSHORE GULF OF MEXICO

Operating revenues

$

31,488

$

33,364

$

32,321

$

126,399

$

143,149

Direct operating expenses

23,797

24,127

27,711

97,249

119,371

Segment gross margin (2)

7,691

9,237

4,610

29,150

23,778

Depreciation

2,420

2,938

3,090

10,557

11,681

Selling, general and administrative expense

729

592

72

2,624

3,365

Restructuring charges

(8

)

1,254

Segment operating income

$

4,542

$

5,707

$

1,456

$

15,969

$

7,478

Operating Statistics (1):

Average active rigs

4

4

5

4

5

Number of active rigs at the end of period

4

4

5

4

5

Number of available rigs at the end of period

7

7

8

7

8

Reimbursement of "out-of-pocket" expenses

$

5,985

$

8,342

$

5,548

$

27,388

$

30,436

(1)

These operating metrics allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. Beginning in the first quarter of fiscal year 2021, these operating metrics replaced previously used per day metrics. As a result, prior year comparative information is also provided above.

 

(2)

Segment gross margin and operating income/loss have limitations and should not be used as alternatives to revenues, expenses, or operating income/loss, which are performance measures determined in accordance with GAAP.

Segment reconciliation amounts were as follows:

Three Months Ended September 30, 2021

(in thousands)

North America
Solutions

Offshore Gulf
of Mexico

International
Solutions

Other

Eliminations

Total

Operating revenue

$

293,303

31,488

$

17,308

$

1,708

$

$

343,807

Intersegment

10,235

(10,235

)

Total operating revenue

$

293,303

31,488

$

17,308

$

11,943

$

(10,235

)

$

343,807

Direct operating expenses

214,696

18,019

17,320

19,113

269,148

Intersegment

9,489

5,778

421

114

(15,802

)

Total drilling services & other operating expenses

$

224,185

23,797

$

17,741

$

19,227

$

(15,802

)

$

269,148

Year Ended September 30, 2021

(in thousands)

North America
Solutions

Offshore Gulf
of Mexico

International
Solutions

Other

Eliminations

Total

Operating revenue

$

1,026,364

$

126,399

$

57,917

$

7,888

$

$

1,218,568

Intersegment

35,416

(35,416

)

Total operating revenue

$

1,026,364

$

126,399

$

57,917

$

43,304

$

(35,416

)

$

1,218,568

Direct operating expenses

755,193

85,062

67,803

49,680

957,738

Intersegment

18,314

12,187

869

384

(31,754

)

Total drilling services & other operating expenses

$

773,507

$

97,249

$

68,672

$

50,064

$

(31,754

)

$

957,738

Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses, corporate restructuring charges, and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

The following table reconciles operating income (loss) per the information above to loss from continuing operations before income taxes as reported on the Consolidated Statements of Operations:

Three Months Ended

Year Ended

September 30,

June 30,

September 30,

September 30,

(in thousands)

2021

2021

2020

2021

2020

Operating income (loss)

North America Solutions

$

(60,671

)

$

(43,743

)

$

(78,197

)

$

(287,176

)

$

(393,902

)

International Solutions

(5,650

)

(3,538

)

(3,474

)

(21,003

)

(162,368

)

Offshore Gulf of Mexico

4,542

5,707

1,456

15,969

7,478

Other

(8,073

)

(4,670

)

699

(9,704

)

4,403

Eliminations

7,277

(3,298

)

(1,580

)

Segment operating loss

$

(62,575

)

$

(49,542

)

$

(79,516

)

$

(303,494

)

$

(544,389

)

Gain on sale of assets

3,787

3,434

27,985

1,042

46,775

Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges

(38,248

)

(31,259

)

(23,889

)

(126,097

)

(122,573

)

Operating loss

$

(97,036

)

$

(77,367

)

$

(75,420

)

$

(428,549

)

$

(620,187

)

Other income (expense):

Interest and dividend income

2,029

1,527

753

10,254

7,304

Interest expense

(6,094

)

(5,963

)

(6,154

)

(23,955

)

(24,474

)

Gain (loss) on investment securities

(1,126

)

2,409

(1,395

)

6,727

(8,720

)

Gain on sale of subsidiary

14,963

Other

(2,630

)

(970

)

(1,673

)

(5,657

)

(5,384

)

Total unallocated amounts

(7,821

)

(2,997

)

(8,469

)

(12,631

)

(16,311

)

Loss from continuing operations before income taxes

$

(104,857

)

$

(80,364

)

$

(83,889

)

$

(441,180

)

$

(636,498

)

SUPPLEMENTARY STATISTICAL INFORMATION

Unaudited

U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS

 

November 17,

September 30,

June 30,

Q4FY21

2021

2021

2021

Average

U.S. Land Operations

Term Contract Rigs

82

73

64

67

Spot Contract Rigs

59

54

57

57

Total Contracted Rigs

141

127

121

124

Idle or Other Rigs

95

109

121

116

Total Marketable Fleet

236

236

242

240

H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS

Number of Rigs Already Under Long-Term Contracts(*)

(Estimated Quarterly Average — as of 9/30/21)

 

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Segment

FY22

FY22

FY22

FY22

FY23

FY23

FY23

U.S. Land Operations

81.9

77.2

55.5

41.9

29.4

7.0

5.5

International Land Operations

1.0

1.0

1.0

1.0

1.0

1.0

1.0

Offshore Operations

Total

82.9

78.2

56.5

42.9

30.4

8.0

6.5

 

(*) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.

SELECT ITEMS(**)

 

Three Months Ended September 30, 2021

(in thousands, except per share data)

Pretax

Tax

Net

EPS

Net loss (GAAP basis)

$

(79,161

)

$

(0.74

)

(-) Gains related to the sale of equipment

$

4,348

$

810

$

3,538

$

0.03

(-) Adjustment to future value earn out for acquisitions

$

(200

)

$

(49

)

$

(151

)

$

(-) Fair market value adjustments to equity investments

$

(1,130

)

$

(246

)

$

(884

)

$

(0.01

)

(-) Inventory write-down

$

(1,714

)

$

(403

)

$

(1,311

)

$

(0.01

)

(-) Restructuring charges

$

(2,074

)

$

(499

)

$

(1,575

)

$

(0.01

)

(-) Closing costs of the ADNOC Drilling transactions

$

(2,634

)

$

(617

)

$

(2,017

)

$

(0.02

)

(-) Impairment for fair market value adjustments to equipment held for sale

$

(14,436

)

$

(3,562

)

$

(10,874

)

$

(0.10

)

Adjusted net loss

$

(65,887

)

$

(0.62

)

Three Months Ended June 30, 2021

(in thousands, except per share data)

Pretax

Tax

Net

EPS

Net loss (GAAP basis)

$

(55,555

)

$

(0.52

)

(-) Adjustment for tax position

$

5,777

$

5,777

$

0.05

(-) Fair market adjustment to equity investments

$

2,253

$

593

$

1,660

$

0.02

(-) Gain from discontinued ops. - currency fluctuation adjustments

$

1,150

$

$

1,150

$

0.01

(-) Restructuring charges

$

(2,110

)

$

(512

)

$

(1,598

)

$

(0.01

)

(-) Adjustment to future value earnout for acquisitions

$

(823

)

$

(191

)

$

(632

)

$

(0.01

)

(-) Impairment for fair market value adjustments to decomm. rigs

$

(2,131

)

$

(1,200

)

$

(931

)

$

(0.01

)

Adjusted net loss

$

(60,981

)

$

(0.57

)

Twelve Months Ended September 30, 2021

(in thousands, except per share data)

Pretax

Tax

Net

EPS

Net loss (GAAP basis)

$

(326,150

)

$

(3.04

)

(-) Gain from discontinued ops. - currency fluctuation adjustments

$

10,936

$

$

10,936

$

0.10

(-) Fair market adjustment to equity investments

$

6,572

$

1,545

$

5,027

$

0.05

(-) Adjustment for tax position

$

$

(5,777

)

$

5,777

$

0.05

(-) Losses related to an inventory write-down

$

(1,714

)

$

(403

)

$

(1,311

)

$

(0.01

)

(-) Adjustment to future value earn out for acquisitions

$

(1,023

)

$

(240

)

$

(783

)

$

(0.01

)

(-) Losses related to closing costs associated with the ADNOC Drilling transaction

$

(2,637

)

$

(620

)

$

(2,017

)

$

(0.02

)

(-) Restructuring charges

$

(5,930

)

$

(1,393

)

$

(4,537

)

$

(0.03

)

(-) Net loss on the sale of excess drilling equipment and spares

$

(9,493

)

$

(2,231

)

$

(7,262

)

$

(0.07

)

(-) Impairment for fair market value adjustments to equipment held for sale

$

(70,850

)

$

(16,650

)

$

(54,200

)

$

(0.50

)

Adjusted net loss

$

(277,780

)

$

(2.60

)

(**)The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future period results. Select items are excluded as they are deemed to be outside of the Company's core business operations.

Contacts:

Dave Wilson, Vice President of Investor Relations
investor.relations@hpinc.com
(918) 588‑5190

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