QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4221
HELMERICH & PAYNE, INC.
(Exact name of registrant as specified in its charter)
Delaware
73-0679879
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
222 North Detroit Avenue,Tulsa, Oklahoma74120
(Address of principal executive offices) (Zip Code)
(918) 742-5531
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock ($0.10 par value)
HP
New York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒
Accounts receivable, net of allowance of $16,803 and $2,977, respectively
782,625
418,604
Inventories of materials and supplies, net
329,985
117,884
Prepaid expenses and other, net
116,853
76,419
Assets held-for-sale
14,238
—
Total current assets
1,490,512
1,192,069
Investments, net
102,448
100,567
Property, plant and equipment, net
4,408,156
3,016,277
Other Noncurrent Assets:
Goodwill
166,559
45,653
Intangible assets, net
493,795
54,147
Operating lease right-of-use assets
120,213
67,076
Restricted cash
1,640
1,242,417
Other assets, net
78,680
63,692
Total other noncurrent assets
860,887
1,472,985
Total assets
$
6,862,003
$
5,781,898
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
240,864
$
135,084
Dividends payable
25,204
25,024
Accrued liabilities
536,842
286,841
Current portion of long-term debt, net
6,859
—
Total current liabilities
809,769
446,949
Noncurrent Liabilities:
Long-term debt, net
2,184,836
1,782,182
Deferred income taxes
614,633
495,481
Retirement benefit obligations
119,603
6,524
Other
266,435
133,610
Total noncurrent liabilities
3,185,507
2,417,797
Commitments and Contingencies (Note 14)
Shareholders' Equity:
Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of June 30, 2025 and September 30, 2024, and 99,434,289 and 98,755,412 shares outstanding as of June 30, 2025 and September 30, 2024, respectively
11,222
11,222
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued
—
—
Additional paid-in capital
505,657
518,083
Retained earnings
2,701,649
2,883,590
Accumulated other comprehensive income (loss)
9,501
(6,350)
Treasury stock, at cost,12,788,576 shares and 13,467,453 shares as of June 30, 2025 and September 30, 2024, respectively
(464,069)
(489,393)
Non-controlling interest
102,767
—
Total shareholders’ equity
2,866,727
2,917,152
Total liabilities and shareholders' equity
$
6,862,003
$
5,781,898
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 NATURE OF OPERATIONS
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.
KCA Deutag Acquisition
On January 16, 2025 (the “Closing Date” or "Acquisition Date"), H&P completed its acquisition of the entire issued share capital (the "Acquisition") of KCA Deutag International Limited ("KCA Deutag") pursuant to the Sale and Purchase Agreement (the "Purchase Agreement"). H&P paid aggregate cash consideration of approximately $2.0 billion, which consisted of the share purchase price of $0.9 billion and $1.1 billion which was used to contemporaneously repay or redeem certain of KCA Deutag's existing debt, including, as applicable, the payment of all accrued and unpaid interest, premiums, and fees. The Company's results presented for the nine months ended June 30, 2025 reflect a full 273 days of legacy H&P operations and 166 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025.
KCA Deutag is a diverse global drilling company. The company derives a significant portion of its revenues and cash flow from its land operations and has a substantial land drilling presence in the Middle East with additional operations in South America, Europe, and Nothern Africa. In addition to its land operations, the company has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada. Management contract operations provide services to customer platforms where the customer owns the drilling rig. KCA Deutag’s Kenera business unit comprises manufacturing and engineering operations, including Bentec, with three facilities serving the energy industry.
For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
Segments of the Business
During the second quarter of fiscal year 2025, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions. Beginning on the Closing Date, Offshore Solutions now includes the results from the acquired KCA Deutag offshore management contract operations. Similarly, our International Solutions segment now includes the results from the acquired KCA Deutag land operations. Operating results related to KCA Deutag's Kenera business unit are included in "Other" along with results from our real estate operations and our wholly-owned captive insurance companies. Our North America Solutions operating segment remains unchanged. Refer to Note 15—Business Segments and Geographic Information for further details on our reportable segments.
Our North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Our International Solutions operations are conducted in major international oil and gas markets, primarily in the Middle East and Latin America. Our Offshore Solutions operations is comprised of asset-light offshore management contracts and contracted rig platforms located in U.S. federal waters, the North Sea, Norwegian Sea, Caspian Sea and other international waters.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RELATED RISKS AND UNCERTAINTIES
Interim Financial Information
The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Accordingly, these interim financial statements do not include all information or footnote disclosures required by U.S. GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our 2024 Annual Report on Form 10-K and other current filings with the SEC. In the opinion of management, all adjustments, consisting of those of a normal recurring nature, necessary to present fairly the results of the periods presented have been included. The results of operations for the interim periods presented may not necessarily be indicative of the results to be expected for the full year.
The Unaudited Condensed Consolidated Financial Statements include the accounts of H&P and its domestic and foreign subsidiaries. Consolidation of a subsidiary begins when the Company gains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income, expenses and other comprehensive income or loss of a subsidiary acquired or disposed of during the fiscal year are included in the Unaudited Condensed Consolidated Statements of Operations and Unaudited Condensed Consolidated Statements of Comprehensive Income from the date the Company gains control until the date when the Company ceases to control the subsidiary. The equity attributable to non-controlling interests in subsidiaries is shown separately in the accompanying Unaudited Condensed Consolidated Balance Sheets. All intercompany accounts and transactions have been eliminated upon consolidation.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits.
As of June 30, 2025 and September 30, 2024, restricted cash was $61.1 million and $1.3 billion, respectively. Of the total at June 30, 2025 and September 30, 2024, $59.4 million and $68.9 million, respectively, represents the amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance companies. Additionally, of the total at September 30, 2024, $1.2 billion represents net proceeds from senior notes issued in fiscal year 2024 to finance the purchase price of the Acquisition and to repay certain of KCA Deutag's outstanding indebtedness and was subsequently used during the nine months ended June 30, 2025 to fund the Acquisition. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination. The restricted amounts are primarily invested in short-term money market securities.
Cash, cash equivalents, and restricted cash are reflected on the Unaudited Condensed Consolidated Balance Sheets as follows:
June 30,
September 30,
(in thousands)
2025
2024
2024
2023
Current Assets:
Cash and cash equivalents
$
166,074
$
203,633
$
217,341
$
257,174
Restricted cash
59,412
78,369
68,902
59,064
Other Noncurrent Assets:
Restricted cash
1,640
—
1,242,417
—
Total cash, cash equivalents, and restricted cash
$
227,126
$
282,002
$
1,528,660
$
316,238
Related Party Transactions
In October 2022, we made a $14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources Limited ("Tamboran Resources"). In December 2023, all shares of Tamboran Resources were transferred to Tamboran Corp. in exchange for depository interests in Tamboran Corp. Depository interests, referred to as CHESS Depository Interests, each representing beneficial interests of 1/200th of a share of Tamboran Corp. common stock, are listed on the Australian Stock Exchange under the ticker symbol "TBN." Tamboran Corp. is focused on developing a natural gas resource in Australia's Beetaloo Sub-basin.
On June 4, 2024, the Company entered into a convertible note agreement with Tamboran Corp. 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. 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. On June 26, 2024, Tamboran Corp. completed an initial public offering of its common stock on the NYSE and its common stock is listed on the NYSE, under the ticker "TBN". As a result of this offering, the convertible note of $9.4 million was converted into 0.5 million common shares of Tamboran Corp. Additionally and separately, one of our executive officers served as a director of Tamboran Corp until his resignation in July 2025. Refer to Note 12—Fair Value Measurement of Financial Instruments for additional information related to our investment.
Concurrent with the October 2022 investment agreement, we entered into a fixed-term drilling services agreement with Tamboran Resources. As of June 30, 2025, we recorded $0.9 million in receivables and $4.3 million in contract liabilities on our Unaudited Condensed Consolidated Balance Sheets. As of September 30, 2024, we recorded $5.0 million in receivables and $3.9 million in contract liabilities on our Consolidated Balance Sheets. We recognized $3.1 million and $11.3 million in revenue on our Unaudited Condensed Consolidated Statement of Operations during the three and nine months ended June 30, 2025, respectively, related to the drilling services agreement with Tamboran Resources, compared to $2.9 million and $9.9 million for the three and nine months ended June 30, 2024, respectively. We expect to earn $30.7 million in revenue over the remaining contract term, and, as such, this amount is included within our contract backlog as of June 30, 2025.
Change in Accounting Estimate
In accordance with its policy, the Company reviews the estimated useful lives of its fixed assets and intangible assets on an ongoing basis. As a result of this review, based on events occurring during the three months ended June 30, 2025, the Company adjusted the estimated useful life of the intangible assets arising from the Acquisition. The weighted average useful life for customer relationships decreased from 15 years to 9 years. This change was effective and accounted for prospectively beginning on April 1, 2025. The effects of this change in the estimated useful life for the three and nine months ended June 30, 2025, was an increase in amortization expense of $7.8 million, a decrease in net income of $6.2 million, and a decrease to basic and diluted earnings per share of $0.06.
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates ("ASUs") to the FASB Accounting Standards Codification ("ASC"). We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable, clarifications of ASUs listed below, immaterial, or already adopted by the Company.
The following table provides a brief description of recent accounting pronouncements and our analysis of the effects on our financial statements:
Standard
Description
Date of Adoption
Effect on the Financial Statements or Other Significant Matters
Standards that are not yet adopted as of June 30, 2025
This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update enhance annual and interim disclosure requirements, determine significant segment expense, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. This update is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.
September 30, 2025
We plan to adopt this ASU, as required, during fiscal year 2025, with the first disclosure enhancements reflected in our fiscal year 2025 Form 10-K. The adoption requires us to provide additional disclosures related to our segments, but otherwise it does not materially impact our financial statements.
ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
This ASU enhances income tax disclosure requirements. Under the ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). Specific categories that must be included in the reconciliation for each annual reporting period are specified in the amendment. This update is effective for annual periods beginning after December 15, 2024. Early adoption of the amendments is permitted. Upon adoption, the amendments shall be applied on a prospective basis. Retrospective application is permitted.
September 30, 2026
We plan to adopt this ASU, as required, during fiscal year 2026, with the first disclosure enhancements reflected in our fiscal year 2026 Form 10-K. We are currently evaluating the impact this ASU will have on our disclosures.
ASU No. 2024-03, Income Statement -- Reporting Comprehensive Income -- Expense Disaggregation Disclosure (Subtopic 220-40)
This ASU enhances disclosure requirements for certain costs and expenses. The amendments in this update enhance annual and interim disclosure requirements, certain liability-related expenses, expense reimbursements related to a cost-sharing or cost-reimbursement arrangement with another entity, and the disaggregation of relevant expense captions. This update gives entities the ability to use estimates or other methods that produce a reasonable approximation of the amounts required to be disclosed. This update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. Upon adoption, the amendments shall be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements.
September 30, 2028
We plan to adopt this ASU, as required, during fiscal year 2028 with the first disclosure enhancements reflected in our 2028 fiscal year Form 10-K. We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.
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 property programs. Our operating subsidiaries are paying premiums to the Captives, typically on a monthly basis, for the estimated losses based on an external actuarial analysis. These premiums are currently held in a restricted cash account, resulting in a transfer of risk from our operating subsidiaries to the Captives. Direct operating costs primarily consisted of adjustments of $29.3 million and $5.3 million to accruals for estimated losses for the three months ended June 30, 2025 and 2024, respectively, and $43.5 million and $10.4 million for the nine months ended June 30, 2025 and 2024, respectively, and rig and casualty insurance premiums of $10.1 million and $9.5 million during the three months ended June 30, 2025 and 2024, respectively, and $31.8 million and $28.5 million for the nine months ended June 30, 2025 and 2024, respectively. These operating costs were recorded within Drilling services operating expenses in our Unaudited Condensed Consolidated Statement of Operations. Intercompany premium revenues recorded by the Captives during the three months ended June 30, 2025 and 2024 amounted to $16.3 million and $14.7 million, respectively, and $50.8 million and $45.7 million for the nine months ended June 30, 2025 and 2024, respectively, which were eliminated upon consolidation. These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, International Solutions, and Offshore Solutions reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the three months ended June 30, 2025 and 2024 were $4.4 million and $4.1 million, respectively, and $14.8 million and $11.4 million for the nine months ended June 30, 2025 and 2024, respectively.
Foreign Currencies
The reporting and functional currency of the parent company, H&P, is the United States Dollar ("USD"). Our foreign subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the functional currency). For some of our foreign subsidiaries, functional currency is not measured in U.S. Dollars, and, instead, is equal to the local currency. On consolidation, the assets and liabilities of our non U.S. Dollar functional entities are translated at exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates prevailing during the reporting period. Translation adjustments are recorded as a separate component of stockholders’ equity and are included in Other comprehensive income or loss on the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss).
For foreign subsidiaries where the functional currency is the USD, monetary assets and liabilities are remeasured at the exchange rate in effect at the balance sheet date, while non-monetary items are remeasured at historical exchange rates. Revenues and expenses are remeasured at the average exchange rates prevailing during the reporting period. Gains and losses resulting from remeasurement are included within Foreign currency loss on the Unaudited Condensed Consolidated Statements of Operations.
Prior to the three months ended March 31, 2025, foreign currency exchange gains and losses were presented in the operating costs and expense line items to which they relate, namely within Drilling services operating expenses, on our Consolidated Statements of Operations. To conform with the current period presentation, we reclassified amounts previously presented in separate line items within operating costs and expenses to the Foreign currency exchange loss line on our Consolidated Statements of Operations for the three and nine months ended June 30, 2024. The impact of this change was not material to any period presented.
International Drilling Risks
International drilling operations may significantly contribute to our revenues and net operating income (loss). There can be no assurance that we will be able to successfully conduct such operations, and a failure to do so may have an adverse effect on our financial position, results of operations, and cash flows. Also, the success of our international operations will be subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, geopolitical developments and tensions, war and uncertainty in oil-producing countries, fluctuations in currency exchange rates, foreign currency exchange restrictions and other difficulties repatriating cash from foreign countries, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws. Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations.
Because of the impact of local laws, some of our current operations and potential future operations in certain areas may be conducted through entities in which local citizens own interests. Additionally, these operations might involve entities (including joint ventures) where we hold only a minority interest or where operations are carried out under contracts with local entities. While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us.
During the three and nine months ended June 30, 2025, approximately 36.7 percent and 31.4 percentof our total consolidated operating revenues were generated from international locations compared to 7.0 percent and 7.4 percentduring the three and nine months ended June 30, 2024, respectively. Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the three and nine months ended June 30, 2025, approximately 16.1 percent and 13.2 percentof our total consolidated operating revenues were from operations in the Middle East compared to 1.0 percent and 1.1 percentduring the three and nine months ended June 30, 2024, respectively. The majority of our operating revenues in the Middle East were from operations in Saudi Arabia and Oman. During the three and nine months ended June 30, 2025, a single customer in Saudi Arabia accounted for 10.0 percent and 7.4 percent of our total consolidated operating revenues, respectively. This customer has the ability to suspend rigs and a portion of our rigs with this customer are currently suspended. The Company's results presented for the nine months ended June 30, 2025 reflect a full 273 days of legacy H&P operations and 166 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025. The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations.
NOTE 3 BUSINESS COMBINATION
On January 16, 2025 (the “Closing Date” or "Acquisition Date"), H&P and certain of its wholly owned subsidiaries completed the previously announced agreement to acquire KCA Deutag. Upon closing, H&P paid aggregate cash consideration of approximately $2.0 billion, which consisted of the share purchase price of $0.9 billion and $1.1 billion which was used to contemporaneously repay or redeem certain of KCA Deutag's existing debt, including, as applicable, the payment of all accrued and unpaid interest, premiums, and fees.
Of the $0.9 billion, approximately $80.0 million was deposited into a customary escrow on the Closing Date pending the resolution of certain potential tax obligations of KCA Deutag. In May 2025, these escrowed funds were subsequently released to the shareholders following a determination that KCA Deutag would not be liable for the identified obligations. As part of this release, H&P received approximately $5.2 million, primarily attributable to favorable movements in the euro foreign exchange rate since the Closing Date. This amount is reported within Foreign currency exchange loss in our Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2025.
To finance the purchase price and to pay related fees and expenses, we completed a private offering of $1.25 billion aggregate principal amount of senior notes, together with the proceeds of a term loan credit agreement, cash on hand, and monetization of our investment in ADNOC Drilling. Refer to Note 7—Debt for further details on the senior notes and term loan credit agreement.
The Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their Acquisition Date fair values. Determining the fair value of acquired assets and liabilities assumed requires the use of independent valuation specialists and the use of significant estimates and assumptions with respect to future rig counts, estimated economic useful lives, operating and capital cost estimates, and a weighted average discount rate reflecting the cost of capital for market participants of 11.0 percent. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, deferred income, contingent liabilities, and provisions and other payables approximate their fair values due to their nature. The remaining assets acquired and liabilities assumed are based on inputs that are not observable in the market and thus represent Level 3 inputs. The purchase price allocation presented below is preliminary, as certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the final valuation of assets acquired and liabilities assumed, working capital adjustments, and valuation of deferred taxes. Management is also evaluating certain assumptions of assets acquired and liabilities assumed and may adjust the allocation in subsequent periods. The final valuation will be completed no later than one year from the Acquisition Date.
The following table summarizes the preliminary purchase price and the fair values of assets acquired and liabilities assumed at the Acquisition Date:
(in thousands)
Total cash consideration
$
2,035,523
Allocation of purchase price
Current assets acquired:
Cash and cash equivalents
196,667
Short-term investments
33
Accounts receivable, net1
367,168
Inventories of materials and supplies, net
195,599
Noncurrent assets acquired:
Investments, net
1,146
Property, plant and equipment, net
1,460,732
Intangible assets, net
470,663
Operating lease right-of-use assets
47,277
Total assets acquired
2,739,285
Current liabilities assumed:
Accounts payable and accrued liabilities
478,274
Current portion of long-term debt, net
6,755
Noncurrent liabilities assumed:
Long-term debt, net
78,188
Deferred income taxes
184,849
Retirement benefit obligations
99,043
Other
34,756
Total liabilities assumed
881,865
Estimated preliminary fair value of net assets
$
1,857,420
Add: Estimated preliminary fair value of non-controlling interests acquired
116,061
Goodwill
$
294,164
(1)The preliminary estimated fair value of accounts receivable is $367.2 million, with the gross contractual amount being $381.3 million. The Company estimates $14.1 million to be uncollectible.
Inventory
Inventory includes materials, supplies and spare parts used as part of contract drilling operations and was valued at fair value using a replacement cost approach.
During the three months ended June 30, 2025, we recorded a measurement period adjustment that increased the estimated fair value of inventory by $2.0 million.
Property, Plant and Equipment
Property, plant and equipment consists primarily of drilling rigs and equipment and will be depreciated on a straight-line basis over the estimated useful lives of the assets. These assets were valued using a combination of replacement cost and a market approach.
Intangible assets included in the Acquisition consist of developed technology, customer relationships, a trade name, and in-process research and development. The fair values were determined using a combination of the income and market approach. During the three months ended June 30, 2025, we recorded a measurement period adjustment that increased the estimated fair value of intangible assets by $2.0 million.
These assets will be amortized over their respective periods of expected benefit. Refer to Note 6—Goodwill and Intangible Assets for estimated amortization expense over the next five years. The preliminary values assigned to each intangible asset and the corresponding preliminary useful lives, as of the Acquisition Date, are as follows:
(in thousands)
Amount
Weighted Average Useful life
(Years)
Customer relationships
$
432,200
9 years
Trade name
10,860
10 years
Developed technology
21,420
11 years
In-process research and development
6,183
Indefinite
Estimated fair value of acquired intangible assets
$
470,663
As of June 30, 2025, the acquired customer relationships had a weighted average remaining term of 2.7 years until their next contract renewal or extension.
Operating Lease Right-of-Use Assets
In connection with the Acquisition, we acquired operating lease right-of-use assets and a corresponding current and noncurrent liability as summarized below:
(in thousands)
Amount
Real estate properties
$
35,333
Drilling equipment
11,944
Total Operating lease right-of-use asset
47,277
Current portion of lease liabilities within Accounts payable and Accrued liabilities
$
19,964
Noncurrent portion of operating lease liabilities within Other noncurrent liabilities
36,920
We measured the lease liability at the present value of the remaining lease payments, applying a weighted average discount rate of 5.6 percent, as if the acquired lease was a new lease of H&P at the Acquisition Date. The right-of-use asset was measured at the same amount as the lease liability and adjusted by $9.8 million to reflect unfavorable terms of the leases when compared to market terms. We have elected to apply the short-term lease measurement and recognition exemption to leases that have a remaining lease term of 12 months or less at the Acquisition Date. The weighted average remaining lease term for the acquired leases is approximately 10.8 years as of June 30, 2025 .
Goodwill
The amount of goodwill recognized in the Acquisition represents the excess of the gross consideration transferred and the amount of any non-controlling interest over the fair value of the underlying net tangible and identifiable intangible assets acquired and liabilities assumed. Goodwill is attributed to the assembled workforce, anticipated operational synergies, and the allocation of proceeds in excess of the fair value of net identifiable assets acquired. Goodwill arising from the Acquisition is not expected to be deductible for tax reporting purposes. During the three months ended June 30, 2025, certain measurement period adjustments were made to the fair value of inventory and intangible assets (as discussed above) resulting in a $4.0 million decrease in goodwill. Separately, during the same period, we recognized an impairment of a portion of the goodwill arising from the Acquisition. Refer to Note 6—Goodwill and Intangible Assets for additional details.
Long-Term Debt
As discussed above, we paid $1.1 billion to contemporaneously repay or redeem certain of KCA Deutag's existing debt upon consummation of the acquisition. As of the Closing Date, we assumed an aggregate $84.9 million in secured term loan borrowings comprised of two separate agreements as summarized in Note 7—Debt—2024 KCA Deutag Oman Facility and —2023 KCA Deutag Oman Facility.
As a result of the Acquisition, we assumed a liability of $39.6 million related to end-of-service benefit plans. This liability arises from KCA Deutag's compliance with local legislation in various Middle Eastern and South American countries, where end-of-service benefit plans are mandated. These plans require payments to employees upon the conclusion of their service, calculated based on their most recent salary and years of service. These plans are not pre-funded. A significant portion of this liability stems from operations in the Middle East for which we relied on independent actuaries to assess the value of these obligations. The primary costs associated with these plans include the present value of benefits accrued for an additional year of service and the interest on the obligation related to employee service in previous years. This liability is presented within Accrued liabilities on our Unaudited Condensed Consolidated Balance Sheets.
Defined Benefit Pension Plans
As a result of the Acquisition, we now maintain pension plans in Germany and the United Kingdom "UK". Refer to Note 13—Employee Benefit Plans for additional details.
Non-controlling Interest
The non-controlling interests acquired represents the portion of certain consolidated subsidiaries that are owned by third-parties and are recorded at estimated fair market value. The non-controlling interests are presented as a separate component of equity in our Unaudited Condensed Consolidated Balance Sheets and the consolidated net income attributable to non-controlling interests is disclosed separately in the Unaudited Condensed Consolidated Statements of Operations.
Results of Operations
KCA Deutag's results of operations for its land operations and offshore management contract operations are reported within our International Solutions and Offshore Solutions operating segments, respectively. KCA Deutag's manufacturing and engineering operations results are included in "Other". The results of operations attributable to the Acquisition have been included in our Unaudited Condensed Consolidated Financial Statements since the date of the acquisition, on January 16, 2025, through June 30, 2025. Revenue and net loss attributable to the net assets acquired for the period January 16, 2025 through June 30, 2025, were $669.2 million and $253.2 million, respectively.
During the three and nine months ended June 30, 2025, we recognized approximately $8.6 million and $49.0 million, respectively, in acquisition transaction costs associated with the Acquisition, as compared to $6.7 million and $7.5 million for the three and nine months ended June 30, 2024, respectively. These non-recurring costs are primarily related to third-party legal, advisory and valuation services and are included in Acquisition transaction costs on the Unaudited Condensed Consolidated Statements of Operations.
Pro Forma Financial Information
The supplemental pro forma financial information presented below is for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the Acquisition had been completed on the date indicated, does not reflect synergies that might have been achieved, and is not indicative of future results of operations.
The summarized unaudited pro forma financial information reflects several adjustments to reflect preliminary purchase price accounting and differences in accounting policies between International Financial Reporting Standards ("IFRS") and U.S. GAAP. These adjustments account for incremental depreciation and amortization expenses based on the fair value of KCA Deutag’s assets, the elimination of interest expenses from KCA Deutag’s historical borrowings, and the addition of H&P debt to fund the acquisition. The pro forma adjustments are based upon currently available information and certain assumptions that H&P believes are reasonable under the circumstances. The tax impact of these adjustments was determined using statutory tax rates.
The following unaudited pro forma combined financial information presents results for the three and nine months ended June 30, 2025 and 2024, as if we had completed the Acquisition on October 1, 2023:
Three Months Ended June 30,
Nine Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Revenue
$
1,040,924
$
1,139,718
$
3,220,357
$
3,366,714
Net income (loss)
(161,899)
59,989
(177,803)
216,324
Net income attributable to non-controlling interest
859
13,319
6,138
10,355
Net income (loss) attributable to Helmerich & Payne, Inc.
Property, plant and equipment as of June 30, 2025 and September 30, 2024 consisted of the following:
(in thousands)
Estimated Useful Lives
June 30, 2025
September 30, 2024
Drilling services equipment
2 - 15 years
$
8,095,850
$
6,671,975
Tubulars
4 years
605,423
552,773
Real estate properties
10 - 45 years
8,223
48,617
Other
2 - 23 years
612,104
460,857
Construction in progress1
203,822
106,183
9,525,422
7,840,405
Accumulated depreciation
(5,117,266)
(4,824,128)
Property, plant and equipment, net
$
4,408,156
$
3,016,277
Assets held-for-sale
$
14,238
$
—
(1)Included in construction in progress are costs for projects in progress to upgrade or refurbish certain rigs in our existing fleet. Additionally, we include other advances for capital maintenance purchase-orders that are open/in process. As these various projects are completed, the costs are then classified to their appropriate useful life category.
KCA Deutag Acquisition
Refer to Note 3—Business Combination for additional information regarding the property, plant and equipment acquired in connection with the Acquisition.
Depreciation
Depreciation expense during the three months ended June 30, 2025 and 2024 was $160.8 million and $96.2 million, including abandonments of $0.1 million during each respective period. Depreciation expense during the nine months ended June 30, 2025 and 2024 was $405.1 million and $291.5 million, including abandonments of $2.0 million and $3.2 million, respectively. These expenses are recorded within Depreciation and amortization on our Unaudited Condensed Consolidated Statements of Operations.
In November 2022, a fire at a wellsite caused substantial damage to one of our super-spec rigs within our North America Solutions segment. The major components were destroyed beyond repair and considered a total loss, and, as a result, these assets were written off and the rig was removed from our available rig count. At the time of the loss, the rig was fully insured under replacement cost insurance. During the nine months ended June 30, 2024, we recognized a gain on involuntary conversion of the rig of $5.5 million which represents the insurance proceeds received in excess of the carrying value of the rig and therefore was recognized as a gain within operating income during the nine months ended June 30, 2024.
Assets Held-for-Sale
During the three months ended June 30, 2025, we committed to a plan to sell a significant portion of our real estate portfolio, including a shopping center comprised of approximately 371,000 leasable square feet with a net book value of $11.0 million. Separately, within the same period, we identified 16 land rigs within our International Solutions operating segment that met the asset held-for-sale criteria with an aggregate remaining net book value of $3.2 million. As a result, a combined total of $14.2 million in real estate and land rig assets were reclassified from Property, plant and equipment to Assets held-for-sale on our Unaudited Condensed Consolidated Balance Sheets during the period.
During the nine months ended June 30, 2025, we identified a domestic drilling rig that met the asset held-for-sale criteria. The rig's net book value of $1.7 million was written down to its estimated scrap value of $0.2 million, resulting in a non-cash impairment charge of $1.5 million in our North America Solutions segment during the nine months ended June 30, 2025.
Gain on Reimbursement of Drilling Equipment
We recognized a gain of $6.8 million and $26.1 million during the three and nine months ended June 30, 2025 as compared to a gain of $9.7 million and $24.7 million during the three and nine months ended June 30, 2024, respectively, related to customer reimbursement for the current replacement value of lost or damaged drill pipe. Gains related to these asset sales are recorded in Gains on reimbursement of drilling equipment within our Unaudited Condensed Consolidated Statements of Operations.
Operating lease commitments, including probable extensions1
$
188,019
$
104,535
Discounted using the lessee's incremental borrowing rate
$
144,947
$
77,316
(Less): short-term leases recognized on a straight-line basis as expense
(445)
(404)
(Less): other
(1,543)
(182)
Lease liability recognized
$
142,959
$
76,730
Of which:
Current lease liabilities
$
34,132
$
16,997
Non-current lease liabilities
108,827
59,733
(1)Our future minimum rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future. Those probable extensions are included in the operating lease liability balance.
The recognized right-of-use assets relate to the following types of assets:
(in thousands)
June 30, 2025
September 30, 2024
Real estate properties
$
113,902
$
66,842
Drilling equipment
6,311
234
Total right-of-use assets
$
120,213
$
67,076
Lease Costs
The following table presents certain information related to the lease costs for our operating leases:
Three Months Ended June 30,
Nine Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Operating lease cost
$
9,727
$
3,077
$
21,135
$
9,069
Short-term lease cost
6,659
445
19,903
1,166
Total lease cost
$
16,386
$
3,522
$
41,038
$
10,235
Lease Terms and Discount Rates
The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases:
Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at June 30, 2025 (in thousands) are as follows:
Fiscal Year
Amount
Remainder of 2025
$
9,104
2026
22,520
2027
17,152
2028
15,440
2029
14,420
Thereafter
77,129
Total1
$
155,765
(1)Our future minimum rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future. Those probable extensions are included in the operating lease liability balance.
Of the $155.8 million of future minimum rental payments, $61.8 million is attributable to our recently acquired subsidiary, KCA Deutag.
During the fiscal year ended September 30, 2024, we amended the lease for our Tulsa industrial facility. As part of the amendment, we extended the lease term, now continuing through June 30, 2035 with twofive-year renewal options, resulting in an increase of $18.1 million to the right-of-use assets and lease liability on our Consolidated Balance Sheet. We recognized one of the five-year renewal options as part of our right-of-use assets and lease liabilities. This contract is accounted for as an operating lease. The future minimum lease payments for the Tulsa industrial facility represent a material portion of the amounts shown in the table above.
During the fiscal year ended September 30, 2024, we amended the lease for our Tulsa corporate headquarters, resulting in a $5.9 million increase to right-of-use assets and lease liability on our Consolidated Balance Sheets. The additional right of use asset will be amortized over the remaining 11 years of the original lease term. The future minimum lease payments for our corporate headquarters office space represent a material portion of the amounts shown in the table above.
NOTE 6 GOODWILL AND INTANGIBLE ASSETS
Due to the Acquisition, we recognized increases to our goodwill and intangible assets balances as of June 30, 2025. The goodwill and intangible assets recognized as a result of the Acquisition are considered preliminary. The purchase price allocation may be subject to future adjustments due to the final valuation of acquired assets and assumed liabilities, working capital adjustments, and the valuation of deferred taxes, and any such future adjustments may be recognized in earnings immediately as an adjustment to the impairment charge discussed below. The final valuation will be completed within the measurement period, no later than one year from the Acquisition Date, as allowed by ASC 805. During the three months ended June 30, 2025, we recorded certain measurement period adjustments that increased the fair value of inventory and intangible assets each by $2.0 million and decreased goodwill by $4.0 million. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
Goodwill
Goodwill represents the excess of the purchase price over the fair values of the assets acquired and liabilities assumed in a business combination, at the date of acquisition. Goodwill is not amortized but is tested for potential impairment at the reporting unit level, at a minimum on an annual basis in the fourth fiscal quarter, or when indications of potential impairment exist. Our reporting units with goodwill are H&P Technologies, International Solutions, Offshore Solutions, and Kenera.
During the third fiscal quarter of 2025, due primarily to the sustained decline in our share price and market capitalization, we identified indicators of potential impairment of goodwill and performed an interim impairment test. We estimated the fair value of each reporting unit using a market approach, incorporating significant unobservable, or Level 3, inputs, as defined by the fair value hierarchy. We employed a combination of the guideline public company method and the guideline transactions method, leveraging company comparisons and analyst reports from the energy industry, which supported a range of fair values derived from annualized earnings before interest, income taxes, depreciation and amortization ("EBITDA") multiples between 2.5x and 5.5x for guideline public companies and between 3.4x and 7.6x for guideline transactions. We then derived an estimated fair value of each reporting unit based on an EBITDA multiple at or below the peer-median trading multiple.
Based on our interim goodwill impairment test as of June 30, 2025, we concluded that the International Solutions and Kenera reporting units' carrying value exceeded their respective estimated fair value. As a result, we recorded a non-cash goodwill impairment charge of $128.4 million and $44.9 million, respectively, during the three months ended June 30, 2025, which represented a full impairment of the goodwill allocated to these reporting units. The estimated fair values of our H&P Technologies and Offshore Solutions reporting units as of June 30, 2025 exceeded their respective carrying values by approximately 76 percent and 20 percent, respectively. These estimates reflect management’s best judgments as of June 30, 2025; however, changes in key assumptions or market conditions could yield materially different outcomes. We will continue to monitor events and circumstances that may affect fair values.
The following table sets forth our goodwill balance by segment for the periods indicated:
(in thousands)
North America Solutions
International Solutions
Offshore Solutions
Other
Total
Goodwill balance at September 30, 2024
$
45,653
$
—
$
—
$
—
$
45,653
Acquisition of KCA Deutag1
—
131,351
121,906
44,907
298,164
Measurement period adjustments
—
(3,000)
(1,000)
—
(4,000)
Impairment charges
—
(128,351)
—
(44,907)
(173,258)
Goodwill balance at June 30, 2025
$
45,653
$
—
$
120,906
$
—
$
166,559
(1)The allocation of goodwill is preliminary and may be updated as we continue to evaluate the benefits of expected commercial synergies to our segments.
Intangible Assets
Finite-lived intangible assets are amortized using the straight-line method over the period in which these assets contribute to our cash flows and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with our policies for valuation of long-lived assets. After initial recognition, in-process research and development ("IPR&D") assets are considered indefinite-lived until the abandonment or completion of the associated research and development effort. Acquired IPR&D is not amortized, but is subject to an annual impairment assessment. Our intangible assets consist of the following:
June 30, 2025
September 30, 2024
(in thousands)
Weighted Average Estimated Useful Lives
Gross Carrying Amount
Accumulated Amortization
Net
Gross Carrying Amount
Accumulated Amortization
Net
Finite-lived intangible assets:
Developed technology
14 years
$
110,516
$
45,300
$
65,216
$
89,096
$
40,047
$
49,049
Customer relationships
9 years
432,200
25,005
407,195
—
—
—
Intellectual property
13 years
2,000
781
1,219
2,000
662
1,338
Trade name
13 years
16,725
2,743
13,982
5,865
2,105
3,760
Indefinite-lived intangible asset:
In-process research and development
Indefinite
6,183
—
6,183
—
—
—
$
567,624
$
73,829
$
493,795
$
96,961
$
42,814
$
54,147
Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was $18.7 million and $1.6 million for the three months ended June 30, 2025 and 2024, respectively and $31.1 million and $4.8 million for the nine months ended June 30, 2025 and 2024, respectively.
Over the next five years, amortization expense is estimated to be as follows:
As of June 30, 2025 and September 30, 2024, we have the following long-term debt outstanding with maturity shown in the following table:
June 30, 2025
September 30, 2024
(in thousands)
Face Amount
Unamortized Discount and Debt Issuance Cost
Book Value
Face Amount
Unamortized Discount and Debt Issuance Cost
Book Value
Unsecured senior notes:
Due December 1, 2027
$
350,000
$
(2,576)
$
347,424
$
350,000
$
(2,907)
$
347,093
Due December 1, 2029
350,000
(3,579)
346,421
350,000
(3,703)
346,297
Due September 29, 2031
550,000
(3,814)
546,186
550,000
(4,262)
545,738
Due December 1, 2034
550,000
(6,943)
543,057
550,000
(6,946)
543,054
Total unsecured senior notes
$
1,800,000
$
(16,912)
$
1,783,088
$
1,800,000
$
(17,818)
$
1,782,182
Unsecured term loan credit agreement:
Due January 15, 2027
327,000
(1,171)
325,829
—
—
—
Secured term loan credit agreements:
Due December 31, 2033
40,647
(915)
39,732
—
—
—
Due December 31, 2034
43,947
(901)
43,046
—
—
—
Total secured term loan credit agreements
$
84,594
$
(1,816)
$
82,778
$
—
$
—
$
—
Total debt
$
2,211,594
$
(19,899)
$
2,191,695
$
1,800,000
$
(17,818)
$
1,782,182
Less: current portion of long-term debt
(6,859)
—
(6,859)
—
—
—
Total long-term debt, net
$
2,204,735
$
(19,899)
$
2,184,836
$
1,800,000
$
(17,818)
$
1,782,182
Senior Notes Issued in Fiscal Year 2024
On September 17, 2024, we completed a private offering of $1.25 billion aggregate principal amount of senior notes, comprised of the following tranches (collectively, the “Notes”): $350.0 million aggregate principal amount of 4.65 percent senior notes due 2027 issued at a price equal to 99.958 percent of their face value, $350.0 million aggregate principal amount of 4.85 percent senior notes due 2029 issued at a price equal to 99.883 percent of their face value and $550.0 million aggregate principal amount of 5.50 percent senior notes due 2034 issued at a price equal to 99.670 percent of their face value. Interest on the Notes is payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2025.
On January 16, 2025, H&P completed the Acquisition, and the Company used the net proceeds of the Notes, together with the proceeds of its term loan credit agreement (discussed below) and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag’s outstanding indebtedness, and to pay related fees and expenses. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
In connection with the issuance of the Notes, the Company also entered into a registration rights agreement, dated as of September 17, 2024 (the "Registration Rights Agreement"), with the initial purchasers of the Notes named therein. Under the Registration Rights Agreement, the Company agreed, among other things, to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange each series of the Notes for freely tradable notes (“Registered Notes”) having terms identical in all material respects to each such series of Notes (the “Registered Exchange Offer”). Accordingly, on May 15, 2025, the Company filed a registration statement on Form S-4 with the SEC, which was declared effective on May 28, 2025. On May 28, 2025, the Company launched the Registered Exchange Offer, which expired on July 10, 2025. Substantially all of the Notes were tendered and exchanged for Registered Notes in the Exchange Offer.
The indenture governing the Notes contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the Notes also contains customary events of default with respect to the Notes.
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 as amended (the "Securities Act") and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.
In June 2022, we settled a registered exchange offer (the “2022 Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes. All of the 2031 Notes were exchanged in the Registered Exchange Offer.
The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes.
Term Loan Credit Agreement
On August 14, 2024, the Company entered into an unsecured term loan credit agreement (the "Term Loan Credit Agreement"), among the Company, Morgan Stanley Senior Funding, Inc. (“MSSF”) as administrative agent, and the other lenders party thereto.On the Closing Date, the Company drew an aggregate principal amount of $400.0 million under the Term Loan Credit Agreementfor purposes of financing the Acquisition. The Term Loan Credit Agreement matures at the two-year anniversary of the funding of the term loans unless earlier terminated pursuant to the terms of the Term Loan Credit Agreement. On January 16, 2025, H&P completed the Acquisition, and the Company used the proceeds from the Term Loan Credit Agreement, together with the net proceeds from the Notes, and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag's outstanding indebtedness, and to pay related fees and expenses. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination. During the three and nine months ended June 30, 2025, the Company repaid $48.0 million and $73.0 million, respectively, of the outstanding balance on the Term Loan Credit Agreement. As such, the outstanding balance as of June 30, 2025, was $327.0 million. In July 2025, we repaid $47.0 million, decreasing the outstanding balance on the Term Loan Credit Agreement to $280.0 million.
The benchmark rate is the Secured Overnight Financing Rate ("SOFR"). We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 1.0 percent to 1.625 percent per annum and zero to 0.625 percent per annum, respectively. Commitment fees for both rates range from 0.10 percent to 0.250 percent per annum. Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR was 1.375 percent and commitment fees were 0.175 percent. As of June 30, 2025, the interest rate on the Term Loan was 5.793 percentper annum. The weighted average variable interest rate on all amounts outstanding under the Term Loan was 5.796 percent and 5.731 percentfor the three and nine months ended June 30, 2025.
Bridge Loan Facility
In connection with, and concurrently with the entry into, the Purchase Agreement, the Company entered into a debt commitment letter dated July 25, 2024 with MSSF, pursuant to which MSSF committed, subject to satisfaction of standard conditions, to provide the Company with an unsecured 364-day bridge loan facility in an aggregate principal amount of approximately $2.0 billion (the “Bridge Loan Facility”) the proceeds of which would, if drawn, be used to fund the Acquisition. In connection with the Bridge Loan Facility, the Company incurred approximately $10.6 million in commitment fees during the fiscal year ended September 30, 2024. Due to the execution of the other financing arrangements discussed above, the commitments under the Bridge Loan Facility were reduced to $335.3 million as of September 30, 2024. As a result, we recognized approximately $9.2 million of commitment fees recorded within Interest expense on the Consolidated Statement of Operations during fiscal year 2024. As of September 30, 2024, approximately $1.4 million in commitment fees were deferred and included in Prepaid assets and other, net within the Consolidated Balance Sheet. On October 15, 2024, the remaining commitments under the Bridge Loan Facility were reduced such that there were no remaining commitments available, and the Bridge Loan Facility was automatically terminated in accordance with its terms. Upon termination of the facility, we recognized the remaining $1.4 million of commitment fees within Interest expense on the Unaudited Condensed Consolidated Statement of Operations during the nine months ended June 30, 2025.
In connection with the completion of the Acquisition, KCA Deutag Energy LLC (“KCAD Energy”) became a wholly-owned subsidiary of the Company. On April 25, 2024, KCAD Energy entered into the 2024 Oman Facility, which is fully drawn.
The 2024 Oman Facility provides for term loan borrowings of $45.5 million, which bear interest payable quarterly at a fixed rate of 7.00 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2024 Oman Facility plus 2.60 percent. On February 9, 2025, we received the final draw down of $1.4 million. During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively. Of the $43.9 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year. These secured bank loans are wholly denominated in Omani rial. The value of these borrowings in Omani rial is OMR 17.6 million. The commitments under the 2024 Oman Facility mature December 31, 2034.
There is an annual financial covenant in the 2024 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. The 2024 Oman Facility and related agreements contain additional terms, conditions, restrictions and covenants that we believe are usual and customary in secured debt arrangements for companies of similar size and credit quality.
2023 Oman Facility
In connection with the completion of the Acquisition, KCAD Energy became a wholly-owned subsidiary of the Company. On June 19, 2023, KCAD Energy entered into the 2023 Oman Facility, which is fully drawn.
The 2023 Oman Facility provides for term loan borrowings of $45.6 million, which bear interest payable quarterly at a fixed rate of 6.25 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2023 Oman Facility plus 2.79 percent. During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively. Of the $40.6 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year. These secured bank loans are wholly denominated in Omani rial. The value of these borrowings in Omani rial is OMR 17.6 million. The commitments under the 2023 Oman Facility mature December 31, 2033.
There is an annual financial covenant in the 2023 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. The 2023 Oman Facility and related agreements contain additional terms, conditions, restrictions and covenants that we believe are usual and customary in secured debt arrangements for companies of similar size and credit quality.
Amended Credit Facility
On August 14, 2024, the Company entered into an Amended and Restated Credit Agreement (the "Amended Credit Facility") with the lenders party thereto (the "Revolving Credit Agreement Lenders"), the issuing lenders party thereto and Wells Fargo, National Association ("Wells Fargo") as administrative agent, swing line lender and issuing lender, which amended and restated the Credit Agreement, dated as of November 13, 2018 (as amended through Amendment No. 2 to the Credit Agreement dated as of March 8, 2022, the “Existing Credit Agreement”), among the Company, the lenders party thereto and Wells Fargo, as administrative agent, swing line lender and issuing lender.
Under the terms of the Amended Credit Facility, the Company may obtain unsecured revolving loans in an aggregate principal amount not to exceed $950.0 million outstanding at any time. $775.0 million of the revolving commitments under the Amended Credit Facility expire on November 12, 2028 and $175.0 million of the revolving commitments mature on November 10, 2027 (the “Stated Maturity Date”), but the Company may request twoone-year extensions of the Stated Maturity Date, subject to satisfaction of certain conditions. Commitments under the Amended Credit Facility may be increased by up to $100.0 million, subject to the agreement of the Company and new or existing Revolving Credit Agreement Lenders.
The proceeds of the loans made under the Amended Credit Facility may be used by the Company for (i) working capital and other general corporate purposes, (ii) for the payment of fees and expenses related to the entering into of the Amended Credit Facility and the other credit documents and (iii) for the refinancing of the extensions of credit under the Existing Credit Agreement.
The benchmark rate is the SOFR. We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 0.875 percent to 1.500 percent per annum and zero to 0.50 percent per annum, respectively. Commitment fees for both rates range from 0.075 percent to 0.200 percent per annum. Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR would have been 1.25 percent had borrowings been outstanding under the Amended Credit Facility and commitment fees would have been 0.15 percent. There is a financial covenant in the Amended Credit Facility that requires us to maintain a total funded debt to total capitalization ratio of less than or equal to 55.0 percent. The Amended Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company. As of June 30, 2025, there were no borrowings or letters of credit outstanding, leaving $950.0 million available to borrow under the Amended Credit Facility.
As of June 30, 2025, we had $400.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds. Of the $400.0 million, $175.3 million was outstanding as of June 30, 2025. Separately, we had $44.9 million in standby letters of credit and bank guarantees outstanding. In total, we had $220.2 million outstanding as of June 30, 2025.
The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality. At June 30, 2025, we were in compliance with all debt covenants.
NOTE 8 INCOME TAXES
We use an estimated annual effective tax rate for purposes of determining the income tax provision during interim reporting periods. In calculating our estimated annual effective tax rate, we consider forecasted annual pre-tax income and estimated permanent book versus tax differences. Adjustments to the effective tax rate and estimates could occur during the year as information and assumptions change which could include, but are not limited to, changes to the forecasted amounts, estimates of permanent book versus tax differences, and changes to tax laws and rates.
Our income tax expense for the three months ended June 30, 2025 and 2024 was $29.0 million and $33.7 million, respectively, resulting in effective tax rates of (21.8) percent and 27.5 percent, respectively. Our income tax expense for the nine months ended June 30, 2025 and 2024 was $92.1 million and $96.0 million, respectively, resulting in effective tax rates of (764.9) percent and 26.3 percent, respectively.
Effective tax rates differ from the U.S. federal statutory rate of 21.0 percent for the three and nine months ended June 30, 2025, primarily due to non-deductible items, state and foreign income taxes, and discrete tax adjustments. The significant difference between the effective tax rate and the U.S. federal statutory rate for the three and nine months ended June 30, 2025 was primarily driven by the non-deductible goodwill impairment recognized during the current quarter and foreign losses for which no tax benefit has been recognized.
Effective tax rates differ from the U.S. federal statutory rate of 21.0 percent for the three and nine months ended June 30, 2024 primarily due to state and foreign income taxes, permanent non-deductible items, and discrete tax adjustments. The discrete tax adjustments for the three and nine months ended June 30, 2024 primarily relate to equity compensation and return to provision adjustments.
As of June 30, 2025, we have recorded unrecognized tax benefits and related interest and penalties of approximately $24.5 million. We cannot predict with certainty if we will achieve ultimate resolution of any additional uncertain tax positions associated with our U.S. and international operations resulting in any additional material increases or decreases of our unrecognized tax benefits for the next twelve months.
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as 100% bonus depreciation for assets placed in service after January 19, 2025 and full expensing of domestic research and development expenditures. ASC 740, “Income Taxes”, requires the effects of the changes in tax rates and laws on deferred tax and current tax balances to be recognized in the period in which the legislation is enacted. The Company is still evaluating the impact of the OBBBA and the results of such evaluations will be reflected on our Form 10-K for the fiscal year ending September 30, 2025.
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 and are held as treasury shares on our Unaudited Condensed Consolidated Balance Sheets. We did not make any share repurchases during the three and nine months ended June 30, 2025. We did not make any share repurchases during the three months ended June 30, 2024. During the nine months ended June 30, 2024, we repurchased 1.4 million common shares at an aggregate cost of $51.6 million, including excise tax of $0.3 million.
A cash dividend of $0.25 per share was declared on June 3, 2025 for shareholders of record on August 15, 2025, payable on August 29, 2025. As a result, we recorded a Dividend payable of $25.2 million on our Unaudited Condensed Consolidated Balance Sheets as of June 30, 2025.
Accumulated Other Comprehensive Income (Loss)
Components of accumulated other comprehensive income (loss) were as follows:
June 30,
September 30,
(in thousands)
2025
2024
Pre-tax amounts:
Unrealized pension actuarial loss on U.S. Plan
$
(7,425)
$
(7,632)
Unrealized gain (loss) on available-for-sale debt securities
383
(662)
Unrealized gain on foreign currency translation adjustment
15,325
—
$
8,283
$
(8,294)
After-tax amounts:
Unrealized pension actuarial loss on U.S. Plan
$
(5,678)
$
(5,838)
Unrealized gain (loss) on available-for-sale debt securities
296
(512)
Unrealized gain on foreign currency translation adjustment
14,883
—
$
9,501
$
(6,350)
Investments classified as available-for-sale debt securities are reported at fair value with unrealized gains and losses excluded from net income and reported in other comprehensive income.
The following is a summary of the changes in accumulated other comprehensive income (loss), net of tax, for the three and nine months ended June 30, 2025:
Three Months Ended June 30, 2025
(in thousands)
Unrealized Gain (Loss) on Available-for-Sale Securities
Defined Benefit Pension Plan
Foreign Currency
Translation Adjustment
Total
Balance at beginning of period
$
388
$
(5,731)
$
6,407
$
1,064
Other comprehensive income (loss) before reclassifications
(216)
—
8,476
8,260
Amounts reclassified from accumulated other comprehensive income
124
53
—
177
Net current-period other comprehensive income (loss)
Unrealized Gain (Loss) on Available-for-Sale Securities
Defined Benefit Pension Plan
Foreign Currency Translation Adjustment
Total
Balance at beginning of period
$
(512)
$
(5,838)
$
—
$
(6,350)
Other comprehensive income before reclassifications
684
—
14,883
15,567
Amounts reclassified from accumulated other comprehensive income
124
160
—
284
Net current-period other comprehensive income
808
160
14,883
15,851
Balance at June 30, 2025
$
296
$
(5,678)
$
14,883
$
9,501
NOTE 10 REVENUE FROM CONTRACTS WITH CUSTOMERS
Drilling Services Revenue
The majority of our drilling services are performed on a “daywork” contract basis, under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market. These drilling services, including our technology solutions, represent a series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Because our customers benefit equally throughout the service period and our efforts in providing drilling services are incurred relatively evenly over the period of performance, revenue is recognized over time using a time-based input measure as we provide services to the customer. For any contracts that include a provision for pooled term days at contract inception, followed by the assignment of days to specific rigs throughout the contract term, we have elected, as a practical expedient, to recognize revenue in the amount for which the entity has a right to invoice, as permitted by ASC 606.
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 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. The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets. Total revenue recognized from performance contracts, including performance bonuses, was $309.8 million and $941.4 million, of which $14.1 million and $48.1 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2025, respectively. Total revenue recognized from performance contracts, including performance bonuses, was $294.4 million and $880.4 million, of which $11.8 million and $37.4 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2024, respectively.
Contract Costs
As of June 30, 2025 and September 30, 2024, we had capitalized fulfillment costs of $33.2 million and $19.2 million, respectively.
Remaining Performance Obligations
The total aggregate transaction price allocated to the unsatisfied performance obligations, is commonly referred to as backlog. As of June 30, 2025, our firm backlog was approximately $5.4 billion, of which approximately $0.6 billion is expected to be recognized during the remainder of fiscal year 2025, approximately $1.2 billion is expected to be recognized during fiscal year 2026, and approximately $3.6 billion is expected to be recognized during fiscal year 2027 and thereafter. The firm backlog figure includes $4.0 billion attributed to our recently acquired subsidiary, KCA Deutag. The firm backlog amounts do not include anticipated contract renewals or expected performance bonuses as part of its calculation. Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations. Our contracts are subject to cancellation or modification at the election of the customer. Although we have not been materially adversely affected by contract cancellations or modifications in the past due to the level of capital deployed by our customers on underlying projects, the early termination of a contract or suspension of operations may result in a rig being idle for an extended period of time, could adversely affect our financial condition, results of operations and cash flows. The agreements within our recently acquired subsidiary, KCA Deutag, contain provisions for optional early termination or suspension without any associated early termination fee and could cause the actual amount of revenue earned to significantly vary from the backlog reported.
The following tables summarize the balances of our contract assets (net of allowance for estimated credit losses) and liabilities at the dates indicated:
(in thousands)
June 30, 2025
September 30, 2024
Contract assets, net
$
10,134
$
4,563
(in thousands)
June 30, 2025
Contract liabilities balance at September 30, 2024
$
29,052
Acquisition of KCA Deutag1
22,982
Payment received/accrued and deferred
59,914
Revenue recognized during the period
(58,859)
Contract liabilities balance at June 30, 2025
$
53,089
(1)Contract liabilities acquired in the KCA Deutag Acquisition were measured at fair value at the Acquisition Date. Refer to Note 3—Business Combination for additional information regarding the Acquisition.
NOTE 11 EARNINGS PER COMMON SHARE
ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.
Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.
Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, non-vested restricted stock and performance units.
Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended June 30,
Nine Months Ended June 30,
(in thousands, except per share amounts)
2025
2024
2025
2024
Numerator:
Net income (loss) attributable to common shareholders
$
(162,758)
$
88,685
$
(106,332)
$
268,689
Adjustment for basic earnings per share
Earnings allocated to unvested shareholders
(345)
(1,211)
(1,104)
(3,700)
Numerator for basic earnings per share
(163,103)
87,474
(107,436)
264,989
Adjustment for diluted earnings per share
Effect of reallocating undistributed earnings of unvested shareholders
—
1
—
4
Numerator for diluted earnings per share
$
(163,103)
$
87,475
$
(107,436)
$
264,993
Denominator:
Denominator for basic earnings per share - weighted-average shares
99,422
98,752
99,214
98,891
Effect of dilutive shares from restricted stock and performance share units
—
255
—
225
Denominator for diluted earnings per share - adjusted weighted-average shares
99,422
99,007
99,214
99,116
Basic earnings (loss) per common share:
$
(1.64)
$
0.89
$
(1.08)
$
2.68
Diluted earnings (loss) per common share:
$
(1.64)
$
0.88
$
(1.08)
$
2.67
We had a net loss for three and nine months ended June 30, 2025. Accordingly, our diluted loss per share calculation was equivalent to our basic loss per share calculation since diluted loss per share excluded any assumed exercise of equity awards. These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period.
The following potentially dilutive average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive:
Three Months Ended June 30,
Nine Months Ended June 30,
(in thousands, except per share amounts)
2025
2024
2025
2024
Potentially dilutive shares excluded as anti-dilutive
3,548
2,318
2,852
2,374
Weighted-average price per share
$
48.32
$
60.00
$
52.02
$
60.32
NOTE 12 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use the following fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs:
•Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
•Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Fair Value Measurements
The following tables summarize our financial assets and liabilities measured at fair value and indicate the level in the fair value hierarchy in which we classify the fair value measurement as of the dates indicated below:
June 30, 2025
(in thousands)
Fair Value
Level 1
Level 2
Level 3
Assets
Short-term investments:
Corporate and municipal debt securities
$
21,128
$
—
$
21,128
$
—
Total
21,128
—
21,128
—
Long-term Investments:
Recurring fair value measurements:
Equity securities:
Non-qualified supplemental savings plan
17,436
17,436
—
—
Investment in Tamboran
22,218
22,218
—
—
Other equity securities
1,632
1,632
—
—
Debt securities:
Investment in Galileo, net
38,972
—
—
38,972
Geothermal debt securities, net
2,000
—
—
2,000
Other debt securities
250
—
—
250
Total
$
82,508
$
41,286
$
—
$
41,222
As of June 30, 2025, our short-term debt security investments in held to maturity bonds totaled $0.2 million. These investments are measured at cost, less any impairments.
As of June 30, 2025, our equity security investments in geothermal energy and other equity security investments were $14.1 million and $5.8 million, respectively. These investments were measured at cost, less any impairments.
September 30, 2024
(in thousands)
Fair Value
Level 1
Level 2
Level 3
Assets
Short-term investments:
Corporate debt securities
$
33,813
$
—
$
33,813
$
—
U.S. government and federal agency securities
53,490
53,490
—
—
Investment in ADNOC Drilling
205,616
205,616
—
—
Total
292,919
259,106
33,813
—
Long-term investments:
Recurring fair value measurements:
Equity securities:
Non-qualified supplemental savings plan
15,633
15,633
—
—
Investment in Tamboran
20,958
20,958
—
—
Debt securities:
Investment in Galileo, net
27,044
—
—
27,044
Geothermal debt securities, net
2,000
—
—
2,000
Other debt securities
4,588
4,338
—
250
Total
$
70,223
$
40,929
$
—
$
29,294
As of September 30, 2024, our equity security investments in geothermal energy were $25.8 million, of which $0.1 million was measured at fair value as of September 30, 2024. The remaining $25.7 million is measured at cost, less any impairments. Our other equity security investments totaled $4.3 million and our debt security investments in held to maturity bonds totaled $0.3 million. These investments are measured at cost, less any impairments.
Short-term investments primarily include securities classified as trading securities. Both realized and unrealized gains and losses on trading securities are included in Other income (expense) in the Unaudited Condensed Consolidated Statements of Operations. These securities are recorded at fair value. Level 1 inputs include U.S. agency issued debt securities with active markets and money market funds. For these items, quoted current market prices are readily available. Level 2 inputs include corporate and municipal bonds measured using broker quotations that utilize observable market inputs.
During September 2021, the Company made a $100.0 million cornerstone investment in ADNOC Drilling in advance of its announced initial public offering, representing 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake and subject to a three-year lockup period. ADNOC Drilling’s initial public offering was completed on October 3, 2021, and its shares are listed and traded on the Abu Dhabi Securities Exchange. During September 2024, the three-year lockup period expired and the balance was reclassified to Short-term investments on our Consolidated Balance Sheets.
During the nine months ended June 30, 2025, we sold our equity securities of 159.7 million shares in ADNOC Drilling and received net proceeds of approximately $193.3 million. During the nine months ended June 30, 2025, we recognized a loss of $12.4 million on our Unaudited Condensed Consolidated Statements of Operations, related to this investment, of which $8.4 million is associated with the change in fair value of the investment and $4.0 million relates to transaction fee associated with the sale of the securities. During the three and nine months ended June 30, 2024, we recognized a gain of $5.6 million and $3.5 million, respectively, as a result of the change in fair value of the investment. This investment was classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange, and was measured at fair value with any gains or losses recorded within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statements of Operations.
Long-term Investments
Equity Securities Our long-term investments include debt and equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan") and are recorded within Investments on our Unaudited Condensed Consolidated Balance Sheets. Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs.
Equity Securities with Fair Value Option In October 2022, we made a $14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources. In December 2023, all shares of Tamboran Resources were transferred to Tamboran Corp. in exchange for depository interests in Tamboran Corp. Depository interests, referred to as CHESS Depository Interests, each representing beneficial interests of 1/200th of a share of Tamboran Corp. common stock, are listed on the Australian Stock Exchange under the ticker symbol "TBN." Tamboran Corp. is focused on developing a natural gas resource in Australia's Beetaloo Sub-basin.
On June 4, 2024, the Company entered into a convertible note agreement with Tamboran Corp. 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. 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 NYSE or NASDAQ Stock Exchange. On June 26, 2024, Tamboran Corp. completed an initial public offering of its common stock on the NYSE and its common stock is listed on the NYSE, under the ticker "TBN". As a result of this offering, the convertible note of $9.4 million was converted into 0.5 million common shares of Tamboran Corp.
We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage, operational involvement and role on the investee's board of directors. As of June 30, 2025, our combined equity ownership was approximately 6.1 percent representing 1.0 million common shares in Tamboran Corp. We consider this investment to have a readily determinable fair value and have elected to account for this investment using the fair value option with any changes in fair value recognized through net income. Under the guidance, Topic 820, Fair Value Measurement, this investment is classified as a Level 1 investment based on the quoted stock price which is publicly available. Our investment is classified as a long-term equity investment within Investments on our Unaudited Condensed Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income and recorded within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statements of Operations. During the three and nine months ended June 30, 2025, we recognized gain (loss) of $(0.8) million and $1.3 million, respectively, as a result of the change in fair value of the investment compared to a gain of $1.9 million and $3.7 million during the three and nine months ended June 30, 2024, respectively.
Debt Securities During April 2022, the Company made a $33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of notes with an option to convert into common shares of the parent of Galileo Holdco 2. Galileo specializes in liquification, natural gas compression and re-gasification modular systems and technologies to make the production, transportation, and consumption of natural gas, biomethane, and hydrogen more economically viable. The convertible note bears interest at 5.0 percent per annum with a maturity date to the earlier of April 2027 or an exit event (as defined in the agreement as either an initial public offering or a sale of Galileo). During the fiscal year ended September 30, 2023, our convertible note agreement was amended to include any interest which has accrued but not yet compounded or issued as a note. As a result, we include accrued interest in our total investment balance.
During the nine months ended June 30, 2025, our convertible note agreement was amended to extend the maturity date to the earlier of December 2027 or an exit event. The convertible note will continue to bear interest through the extended maturity date. We do not intend to sell this investment prior to its maturity date or an exit event. During the nine months ended June 30, 2025, as a result of the change in fair value of the investment due to credit related factors, we reversed our previously recognized allowance for credit losses, which resulted in a unrealized gain of $10.2 million within Gain (loss) on investment securities on our Unaudited Condensed Consolidated Statement of Operations and a unrealized gain of $0.4 million within other comprehensive income (loss), respectively.
The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at the dates included below:
June 30, 2025
Fair Value
(in thousands)
Valuation Technique
Unobservable Inputs
$
38,972
Black-Scholes-Merton model
Discount rate
17.5
%
Risk-free rate
4.0
%
Equity volatility
95.0
%
September 30, 2024
Fair Value
(in thousands)
Valuation Technique
Unobservable Inputs
$
27,044
Black-Scholes-Merton model
Discount rate
18.7
%
Risk-free rate
3.5
%
Equity volatility
66.0
%
The above significant unobservable inputs are subject to change based on changes in economic and market conditions. The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. Significant increases or decreases in the discount rate, risk-free rate, and equity volatility in isolation would result in a significantly lower or higher fair value measurement. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.
A majority of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and are measured using Level 3 unobservable inputs based on the absence of market activity. The following table reconciles changes in the fair value of our Level 3 assets for the periods presented below:
We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these nonfinancial assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired. These assets generally include property, plant and equipment, goodwill, intangible assets, and operating lease right-of-use assets. If measured at fair value in the Unaudited Condensed Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy. Further details on any changes in valuation of these assets is provided in their respective footnotes.
Equity Securities
We also hold various other equity securities without readily determinable fair values, primarily comprised of geothermal investments. These equity securities are initially measured at cost, less any impairments, and will be marked to fair value once observable changes in identical or similar investments from the same issuer occur. All of our long-term equity securities are measured using Level 3 unobservable inputs based on the absence of market activity.
The following table reconciles changes in the balance of our equity securities, without readily determinable fair values, including investments that have been marked to fair value on a nonrecurring basis, for the periods presented below:
Three Months Ended June 30,
Nine Months Ended June 30,
(in millions)
2025
2024
2025
2024
Assets at beginning of period
$
45,519
$
30,152
$
30,090
$
28,232
Purchases
594
1,105
1,528
3,641
Disposals1
(27,117)
—
(27,117)
(616)
Transfer in
320
—
320
—
Total gains:
Included in earnings2
624
—
15,119
—
Assets at end of period
$
19,940
$
31,257
$
19,940
$
31,257
(1)During the three months ended June 30, 2025, we liquidated one of our geothermal equity investments for $27.1 million.
(2)The gains recorded during the three and nine months ended June 30, 2025 were attributable to the change in fair value of various geothermal equity investments as a result of disposals or observable price changes in identical or similar investments during the periods.
Other Financial Instruments
The carrying amount of cash and cash equivalents and restricted cash approximates fair value due to the short-term nature of these items. The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S. Government and in federally insured deposit accounts. The carrying value of accounts receivable, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at June 30, 2025 and September 30, 2024.
The fair values of the long-term fixed-rate debt is based on broker quotes at June 30, 2025 and September 30, 2024. The unsecured senior notes and unsecured term loan credit agreement are classified within Level 2 of the fair value hierarchy as they are not actively traded in markets.
The following information presents the supplemental fair value information for our long-term fixed-rate debt at June 30, 2025 and September 30, 2024:
Carrying Value at June 30, 2025
Fair Value at June 30, 2025
Using Inputs Considered as:
(in thousands)
Level 1
Level 2
Level 3
Unsecured senior notes:
2027 Notes
$
347,424
$
—
$
344,943
$
—
2029 Notes
346,421
—
331,894
—
2031 Notes
546,186
—
460,944
—
2034 Notes
543,057
—
503,486
—
Unsecured term loan credit agreement:
2027 Term Loan
325,829
—
322,275
—
Secured term loan credit agreements:
2023 Oman Facility1
36,297
—
—
36,297
2024 Oman Facility1
39,622
—
—
39,622
Total long-term debt
$
2,184,836
$
—
$
1,963,542
$
75,919
(1)The secured term credit agreements are classified as nonpublic debt, meaning their value was directly negotiated between the involved parties and is not observable in the market. As a result, they are categorized as Level 3. Since this debt is nonpublic, the carrying value and the fair value of the loans are identical.
Carrying Value at September 30, 2024
Fair Value at September 30, 2024
Using Inputs Considered as:
(in thousands)
Level 1
Level 2
Level 3
Unsecured senior notes:
2027 Notes
$
347,093
$
—
$
350,700
$
—
2029 Notes
346,297
—
345,100
—
2031 Notes
545,738
—
471,350
—
2034 Notes
543,054
—
535,700
—
Total long-term debt
$
1,782,182
$
—
$
1,702,850
$
—
NOTE 13 EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans
We maintain a domestic noncontributory defined benefit pension plan covering certain U.S. employees who meet certain age and service requirements. In July 2003, we revised the Helmerich & Payne, Inc. Employee Retirement Plan (“U.S. Plan”) to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen.
As a result of the Acquisition, we now maintain pension plans in Germany and the UK (collectively, the "Non-U.S. Plans"). These plans had net pension liability of $103.2 million ($136.4 million in obligations and $33.2 million in plan assets) as of the Acquisition Date. Of the $103.2 million, $4.2 million is presented in Accrued liabilities within Current liabilities and $99.0 million is presented in Retirement benefit obligations within Noncurrent liabilities, on the opening balance sheet presented in Note 3—Business Combination. In fiscal year 2025, we do not expect minimum contributions required by law to be needed. However, we may make contributions in fiscal year 2025 if needed as benefit payments come due.
The Company recognizes the unfunded status of its Non-U.S. Plans, based on the projected benefit obligation, as retirement benefit obligations. Changes in the funded status are recognized in our Unaudited Condensed Consolidated Statements of Comprehensive Income in the period in which they occur. Prior to June 30, 2025, Retirement benefit obligations were presented in Other within Noncurrent liabilities on our Consolidated Balance Sheets. To conform with the current period presentation, we reclassified amounts previously presented in Other within Noncurrent liabilities to the Retirement benefit obligations line, within Noncurrent liabilities, on our Unaudited Condensed Consolidated Balance Sheets as of September 30, 2024.
Components of the net periodic pension expense recognized in the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2025 and 2024, respectively, is comprised of the following:
U.S. Plan
Non-U.S. Plans
Three Months Ended June 30,
Three Months Ended June 30,
(in thousands)
2025
2024
2025
Service cost
$
—
$
—
$
1,157
Interest cost
657
754
1,663
Expected return on plan assets1
(573)
(482)
(586)
Recognized net actuarial loss
69
174
—
Settlement expense
303
—
—
Net pension expense
$
456
$
446
$
2,234
U.S. Plan
Non-U.S. Plans1
Nine Months Ended June 30,
Nine Months Ended June 30,
(in thousands)
2025
2024
2025
Service cost
$
—
$
—
$
2,121
Interest cost
1,971
2,262
3,245
Expected return on plan assets
(1,719)
(1,446)
(1,140)
Recognized net actuarial loss
207
522
—
Settlement expense
303
—
—
Net pension expense
$
762
$
1,338
$
4,226
(1)The Company did not have Non-U.S. Plans prior to the Acquisition which occurred on January 16, 2025.
Service cost is included within Selling, general and administrative while all other components are recorded within Other income (expense) on the Unaudited Condensed Consolidated Statements of Operations.
NOTE 14 COMMITMENTS AND CONTINGENCIES
Purchase Commitments
Equipment, parts, and supplies are ordered in advance to promote efficient construction and capital improvement progress. At June 30, 2025, we had outstanding purchase commitments for equipment, parts and supplies of approximately $165.6 million.
Guarantee Arrangements
We are contingently liable to sureties in respect of bonds issued by the sureties in connection with certain commitments entered into by us in the normal course of business. We have agreed to indemnify the sureties for any payments made by them in respect of such bonds.
Contingencies
During the ordinary course of our business, contingencies arise resulting from an existing condition, situation or set of circumstances involving an uncertainty as to the realization of a possible gain or loss contingency. We account for gain contingencies in accordance with the provisions of ASC 450, Contingencies, and, therefore, we do not record gain contingencies or recognize income until realized. The property and equipment of our Venezuelan subsidiary was seized by the Venezuelan government on June 30, 2010. Our wholly-owned subsidiaries, Helmerich & Payne International Drilling Co. ("HPIDC"), and Helmerich & Payne de Venezuela, C.A. filed a lawsuit in the United States District Court for the District of Columbia on September 23, 2011 against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A. and PDVSA Petroleo, S.A., seeking damages for the seizure of their Venezuelan drilling business in violation of international law and for breach of contract. While there exists the possibility of realizing a recovery on HPIDC's expropriation claims, we are currently unable to determine the timing or amounts we may receive, if any, or the likelihood of recovery.
In September 2019, H&P and a subsidiary brought a lawsuit against a general liability insurance carrier and an insurance broker alleging bad faith and breach of contract related to an improperly imposed endorsement included in our 2017-2018 and 2018-2019 umbrella liability policies. During the three months ended June 30, 2025, the parties agreed to settle the matter for $27.5 million and, as a result, we recorded a gain within Other income (expense) during the third fiscal quarter on our Unaudited Condensed Consolidated Statements of Operations.
The Company and its subsidiaries are parties to various other pending legal actions arising in the ordinary course of our business. We maintain insurance against certain business risks subject to certain deductibles. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate resolution of such items will not have a material adverse impact on our financial condition, cash flows, or results of operations. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed.
NOTE 15 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION
Description of the Business
During the second quarter of fiscal year 2025, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions. Beginning on the Closing Date, Offshore Solutions now includes the results from the acquired KCA Deutag offshore management contract operations. Similarly, our International Solutions segment now includes the results from the acquired KCA Deutag land operations. Operating results related to KCA Deutag's Kenera business unit are included in "Other" along with results from our real estate operations and our wholly-owned captive insurance companies. Our North America Solutions operating segment remains unchanged. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S. onshore oil and gas producing basins as well as the Middle East, Europe, Latin America, and Australia. Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. We believe we are the recognized industry leader in drilling as well as technological innovation. We focus on offering our customers an integrated solutions-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations rather than a product-based offering, such as a rig or separate technology package. Our drilling services operations are organized into the following reportable operating business segments: North America Solutions, International Solutions, and Offshore Solutions.
Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions. External revenues included in “Other” primarily consist of rental, manufacturing and engineering services income.
Segment Performance
We evaluate segment performance based on segment operating income (loss) before income taxes which includes:
•Revenues from external and internal customers
•Direct operating costs
•Depreciation and amortization
•Research and development
•Allocated general and administrative expenses
•Asset impairment charges
•Restructuring charges
but excludes gain on reimbursement of drilling equipment, other gain on sale of assets, corporate selling, general and administrative costs, corporate depreciation, corporate acquisition transactions costs, corporate asset impairment charges, and corporate restructuring charges.
General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods may be used which we believe to be a reasonable reflection of the utilization of services provided.
Summarized financial information of our reportable segments for the three and nine months ended June 30, 2025 and 2024 is shown in the following tables:
The following table reconciles segment operating income (loss) per the tables above to income before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:
Three Months Ended June 30, 2025
Nine Months Ended June 30, 2025
(in thousands)
2025
2024
2025
2024
Segment operating income (loss)
$
(63,985)
$
160,262
$
202,620
$
468,649
Gain on reimbursement of drilling equipment
6,773
9,732
26,149
24,687
Other loss on sale of assets
(1,347)
(2,730)
(2,136)
(2,718)
Corporate selling, general and administrative costs, corporate depreciation, corporate acquisition transaction costs, corporate asset impairment charges, and corporate restructuring charges
(69,710)
(53,807)
(221,853)
(140,756)
Operating income (loss)
(128,269)
113,457
4,780
349,862
Other income (expense)
Interest and dividend income
2,856
11,888
31,854
29,189
Interest expense
(29,200)
(4,336)
(79,836)
(12,969)
Gain (loss) on investment securities
(337)
389
14,084
102
Foreign currency exchange loss
(9,216)
(2,144)
(16,137)
(4,509)
Other
31,258
3,134
33,214
2,991
Total unallocated amounts
(4,639)
8,931
(16,821)
14,804
Income (loss) before income taxes
$
(132,908)
$
122,388
$
(12,041)
$
364,666
The following table reconciles segment total assets to total assets as reported on the Unaudited Condensed Consolidated Balance Sheets:
(in thousands)
June 30, 2025
September 30, 2024
Total assets1
North America Solutions
$
3,099,587
$
3,225,410
International Solutions
2,504,474
685,833
Offshore Solutions
645,611
73,119
Other
324,751
157,877
6,574,423
4,142,239
Investments and corporate operations
287,580
1,639,659
$
6,862,003
$
5,781,898
(1)Assets by segment exclude investments in subsidiaries and intersegment activity.
The following table presents revenues from external customers by country based on the location of service provided:
Three Months Ended June 30,
Nine Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Operating revenues
United States
$
659,364
$
648,816
$
1,876,295
$
1,911,122
Saudi Arabia
103,752
—
201,673
—
Norway
82,854
—
161,159
—
Argentina
39,634
38,064
119,245
107,964
Oman
45,089
—
114,709
—
Azerbaijan
38,922
—
81,681
—
Germany
16,027
—
33,079
—
Bahrain
8,304
4,602
21,576
13,634
Columbia
9,742
31
20,688
8,976
Kuwait
10,508
—
19,680
—
Other Foreign
26,728
6,211
84,480
21,118
Total
$
1,040,924
$
697,724
$
2,734,265
$
2,062,814
Refer to Note 10—Revenue from Contracts with Customers for additional information regarding the recognition of revenue.
The following table presents property, plant and equipment by country based on the location of service provided:
(in thousands)
June 30, 2025
September 30, 2024
Property, plant and equipment, net
United States
$
2,576,767
$
2,752,325
Saudi Arabia
991,640
149,472
Oman
449,849
—
Germany
81,417
—
Argentina
71,414
62,533
Kuwait
41,947
—
Colombia
38,520
19,243
Norway
24,629
—
Bahrain
23,221
19,807
Other Foreign
108,752
12,897
Total
$
4,408,156
$
3,016,277
NOTE 16 RESTRUCTURING CHARGES
Beginning in the third quarter of fiscal year 2025, we initiated a workforce reduction plan to help improve operating margins by reducing direct and indirect support costs. As a result, during the three months ended June 30, 2025, we incurred costs of approximately $4.7 million, primarily related to one-time severance payments to involuntarily terminated employees. These expenses are recorded within Restructuring charges on our Unaudited Condensed Consolidated Statements of Operations.
This Quarterly Report on Form 10‑Q (“Form 10‑Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Form 10-Q are forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “project,” “target,” “continue,” or the negative thereof or similar terminology, and such statements include, but are not limited to, statements regarding the Acquisition (as defined herein) and the anticipated benefits; and impact of such transaction, the timing and terms of recommencement of suspended rigs related to the Acquisition, our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. Forward-looking statements are based upon current plans, estimates, and expectations that are subject to risks, uncertainties, and assumptions, many of which are beyond our control and any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The inclusion of such statements should not be regarded as a representation that such plans, estimates, or expectations will be achieved.
Factors that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements include, but are not limited to:
•our ability to achieve the strategic and other objectives relating to the Acquisition;
•the risk that we are unable to integrate KCA Deutag International Limited's ("KCA Deutag") operations in a successful manner and in the expected time period;
•the volatility of future oil and natural gas prices;
•contracting of our rigs and actions by current or potential customers;
•the effects of actions by, or disputes among or between, members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing nations (together, “OPEC+”) with respect to production levels or other matters related to the prices of oil and natural gas;
•changes in future levels of drilling activity and capital expenditures by our customers, whether as a result of global capital markets and liquidity, changes in prices of oil and natural gas or otherwise, which may cause us to idle or stack additional rigs, or increase our capital expenditures and the construction, upgrade or acquisition of rigs;
•changes in worldwide rig supply and demand, competition, or technology;
•possible cancellation, suspension, renegotiation or termination (with or without cause) of our contracts as a result of general or industry-specific economic conditions, mechanical difficulties, performance or other reasons;
•expansion and growth of our business and operations;
•our belief that the final outcome of our legal proceedings will not materially affect our financial results;
•the impact of federal, state and foreign legislative and regulatory actions and policies, affecting our costs and increasing operating restrictions or delay and other adverse impacts on our business;
•environmental or other liabilities, risks, damages or losses, whether related to storms or hurricanes (including wreckage or debris removal), collisions, grounding, blowouts, fires, explosions, other accidents, terrorism or otherwise, for which insurance coverage and contractual indemnities may be insufficient, unenforceable or otherwise unavailable;
•the impact of geopolitical developments and tensions, war and uncertainty involving or in the geographic region of oil-producing countries (including the ongoing armed conflicts between Russia and Ukraine and conflicts in Israel, and any related political or economic responses and counter-responses or otherwise by various global actors or the general effect on the global economy);
•global economic conditions, such as a general slowdown in the global economy, supply chain disruptions, inflationary pressures, the impact of new or additional tariffs, currency fluctuations, and instability of financial institutions, and their impact on the Company;
•our financial condition and liquidity;
•tax matters, including our effective tax rates, tax positions, results of audits, changes in tax laws, treaties and regulations, tax assessments and liabilities for taxes;
•the occurrence of security incidents, including breaches of security, or other attack, destruction, alteration, corruption, or unauthorized access to our information technology systems or destruction, loss, alteration, corruption or misuse or unauthorized disclosure of or access to data;
•potential impacts on our business resulting from climate change, greenhouse gas regulations, and the impact of climate change related changes in the frequency and severity of weather patterns;
•potential long-lived asset impairments; and
•our sustainability strategy, including expectations, plans, or goals related to corporate responsibility, sustainability and environmental matters, and any related reputational risks as a result of execution of this strategy.
Additional factors that could cause actual results to differ materially from our expectations or results discussed in the forward‑looking statements are disclosed in our 2024 Annual Report on Form 10‑K under Part I, Item 1A— “Risk Factors” and Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All subsequent written and oral forward‑looking statements, express or implied, are expressly qualified in their entirety by such cautionary statements.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Because of the underlying risks and uncertainties, we caution you against placing undue reliance on these forward-looking statements. We assume no duty to update or revise these forward‑looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.
Executive Summary
H&P through its operating subsidiaries provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies. During the second quarter of fiscal year 2025, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions. Beginning on the Closing Date, Offshore Solutions now includes the results from the acquired KCA Deutag offshore management contract operations. Similarly, our International Solutions segment now includes the results from the acquired KCA Deutag land operations. Operating results related to KCA Deutag's Kenera business unit are included in "Other" along with results from our real estate operations and our wholly-owned captive insurance companies. Our North America Solutions operating segment remains unchanged. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
As of June 30, 2025, our drilling rig fleet included a total of 368 drilling rigs. Our reportable operating business segments consist of the North America Solutions segment with 224 rigs, the International Solutions segment with 137 rigs, and the Offshore Solutions segment with seven offshore platform rigs as of June 30, 2025. Although the Offshore Solutions segment has a fleet of platform rigs, the majority of its revenues are derived from asset-light management contracts. At the close of the third quarter of fiscal year 2025, we had 213 active contracted rigs, of which 140 were under a fixed-term contract and 73 were working well-to-well, compared to 170 contracted rigs at September 30, 2024. Our long-term strategy remains focused on innovation, technology, safety, operational excellence, and reliability. As we move forward, we believe that our rig fleet, technology offerings, financial strength, contract backlog and strong customer and employee base position us very well to respond to continued cyclical and often times, volatile market conditions and to take advantage of future opportunities.
Market Outlook
Our revenues are primarily derived from the capital expenditures of companies involved in the exploration, development and production of crude oil and natural gas (“E&Ps”). Generally, the level of capital expenditures is dictated by capital budgets set to achieve respective production targets in relation to current and expected future prices of crude oil and natural gas, which are determined by various supply and demand factors and have historically been volatile. Furthermore, E&Ps have become more fiscally disciplined in their level of capital expenditures relative to commodity price fluctuations and the amount of free cash flows that can be returned to their shareholders, which has resulted in less volatility within the oilfield service businesses, including our operations.
Earlier in calendar 2025, the announcements by the U.S. government regarding the implementation of global tariffs and OPEC+ regarding the planned increase of crude oil supply created a high level of uncertainty in the global energy markets. More recently, heightened geopolitical tensions in the Middle East have perpetuated and elevated the level of uncertainty further. Although we do not anticipate that these announcements and events, particularly the tariff announcements and the armed conflict in the Middle East, will have a direct material impact on the Company's operations or financial results, we believe the indirect effects could lead to reduced activity and profitability for the remainder of fiscal 2025, or possibly even further, until the global economic impacts of these events are fully realized. Since these announcements, both crude oil and natural gas prices have fluctuated more with crude oil prices lower than levels a year ago. Such volatility could lead E&Ps to adjust their capital budgets lower and reduce planned capital expenditures, which could ultimately impact our business through lower than expected activity levels.
Recent Developments
KCA Deutag Acquisition
On the Closing Date, H&P completed the Acquisition of KCA Deutag pursuant to the Purchase Agreement. H&P paid aggregate cash consideration of approximately $2.0 billion, which consisted of the share purchase price of $0.9 billion and $1.1 billion which was used to contemporaneously repay or redeem certain of KCA Deutag existing debt, including, as applicable, the payment of all accrued and unpaid interest, premiums, and fees. The cash consideration was funded through a combination of net proceeds from the Company’s September 2024 senior notes offering, net proceeds from the funding of the Company’s Term Loan Credit Agreement, cash on hand, and monetization of our investment in ADNOC Drilling.
KCA Deutag is a diverse global drilling company. The company derives a significant portion of its revenues and cash flow from its land operations and has a substantial land drilling presence in the Middle East with additional operations in South America, Europe, and Nothern Africa. In addition to its land operations, the company has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada. Management contract operations provide services to customer platforms where the customer owns the drilling rig. KCA Deutag’s Kenera business unit comprises manufacturing and engineering operations, including Bentec, with three facilities serving the energy industry. See Note 3—Business Combination for additional details related to the Acquisition.
Subsequent to the announcement of the Acquisition in July 2024 through July 2025, KCA Deutag and the Company have received notifications of contract suspensions for rigs from the legacy KCA Deutag rig fleet operating in Saudi Arabia. Through June 30, 2025, the Company's total rig suspensions were 26 rigs; however, subsequent to June 30, 2025, the Company has received notification of one additional rig suspended bringing the total rigs suspensions in country to 27 rigs.
At the time the Acquisition was announced, we initially expected to realize approximately $25 million in synergies. Since that time, we have been able to conduct a more detailed analysis of possible synergies, and we also launched a broader review of our enterprise cost structure. We now anticipate realizing in excess of $25 million of cost savings from the combination of synergies associated with the Acquisition and other permanent cost-saving initiatives (such as our workforce reduction plan discussed in Note 16—Restructuring Charges) and anticipate reducing our overall cost structure by approximately $50 to $75 million. We believe these cost-saving efforts will become increasingly evident in the forthcoming quarters.
Contract Backlog
As of June 30, 2025 and September 30, 2024, our total contract drilling backlog, being the expected future dayrate revenue from executed contracts, was $7.3 billion and $1.5 billion, respectively. The increase in backlog from September 30, 2024 to June 30, 2025 is primarily due to the completion of the Acquisition. Approximately 27.8 percent of the June 30, 2025 total backlog is reasonably expected to be fulfilled through fiscal year 2026, as a majority of our contracts are long term.
The following table sets forth the total backlog by reportable segment as of June 30, 2025 and September 30, 2024, and the percentage of the June 30, 2025 backlog reasonably expected to be fulfilled in fiscal year 2025:
(in billions)
June 30, 2025
September 30, 2024
Firm contracts1:
North America Solutions
$
0.5
$
0.7
International Solutions
3.9
0.8
Offshore Solutions
1.0
—
5.4
1.5
Optional contract extension periods:
International Solutions2
0.5
—
Offshore Solutions
1.4
—
1.9
—
Total backlog
$
7.3
$
1.5
(1)These amounts do not include anticipated contract renewals or expected performance bonuses.
(2)Included in the International Solutions reportable segment's backlog balance at June 30, 2025 is $236.0 million of expected revenue from certain contracts in Saudi Arabia that have been temporarily suspended and are expected to gradually resume operations. The information presented in the table above reflects the fact that we expect these contracts to be extended for a period of time at least equal to the expected suspension period.
The total backlog figures for the International Solutions and Offshore Solutions reporting segments, as of June 30, 2025 include $3.5 billion and $2.4 billion, respectively, attributed to our recently acquired subsidiary, KCA Deutag.
The early termination of a contract or suspension of operations may result in a rig being idle for an extended period of time, which could adversely affect our financial condition, results of operations and cash flows. The agreements within our recently acquired subsidiary, KCA Deutag, contain provisions for optional early termination or suspension without any associated early termination fees. Early terminations could cause the actual amount of revenue earned to significantly vary from the backlog reported. See Item 1A—"Risk Factors—Our current backlog of drilling services and solutions revenue may decline and may not be ultimately realized as fixed‑term contracts and may, in certain instances, be terminated without an early termination payment” and Item 1A—Risk Factors—"The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations” within our 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), regarding fixed term contract risk.
Results of Operations for the Three Months Ended June 30, 2025 and 2024
Consolidated Results of Operations
Net Income (Loss) Attributable to Helmerich & Payne Inc. We reported a loss of $162.8 million ($(1.64) diluted share) for the three months ended June 30, 2025 compared to income of $88.7 million ($0.88 diluted share) for the three months ended June 30, 2024.
Operating Revenue During the three months ended June 30, 2025 and 2024, consolidated operating revenues were $1.0 billion and $0.7 billion, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $348.6 million of revenue during the three months ended June 30, 2025.
Direct Operating Expenses, Excluding Depreciation and AmortizationDirect operating expenses were $735.3 million and $416.0 million for the three months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $290.4 million in direct operating expenses during the three months ended June 30, 2025.
Other Operating Expenses Other operating expenses were $31.1 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $20.6 million of costs associated with Kenera's manufacturing and engineering operations.
Depreciation and Amortization Expense Depreciation and amortization expense increased to $179.5 million during the three months ended June 30, 2025 compared to $97.8 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $74.3 million in depreciation and amortization expense during the three months ended June 30, 2025.
Selling, General and Administrative Expense Selling, general and administrative expenses increased to $65.5 million during the three months ended June 30, 2025 compared to $60.2 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $13.3 million in selling, general and administrative expenses during the three months ended June 30, 2025. The increase was partially offset by a $7.9 million decrease in professional services, consulting, and IT related expenses.
Acquisition Transaction Costs During the three months ended June 30, 2025 and 2024, we recognized $8.6 million and $6.7 million, respectively, in acquisition transaction costs associated with the Acquisition. These non-recurring costs are primarily related to third-party legal, advisory and valuation services. See Note 3—Business Combination for additional details related to the Acquisition.
Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $173.3 million associated with our International Solutions and Kenera reporting units. See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.
Interest Expense Interest expenses were $29.2 million and $4.3 million for the three months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by interest associated with our September 2024 senior notes offering and Term Loan Credit Agreement. See Note 7—Debt for additional details related to our debt agreements.
Gain (Loss) on Investment Securities During the three months ended June 30, 2025, we recognized an aggregate loss of $0.3 million on investment securities. The aggregate loss primarily consisted of a $0.8 million loss on our investment in Tamboran, partially offset by a $0.6 million gain on a geothermal equity investment due to changes in the fair value of the investments. During the three months ended June 30, 2024, we recognized a gain of $0.4 million on investment securities. The gain consisted of a $5.6 million gain and $1.9 million gain on our equity investments in ADNOC Drilling and Tamboran Corp., respectively; both of which were a result of increases in the fair market value of the stocks. These gains were offset by a $7.1 million loss recognized during the three months ended June 30, 2024 as a result of a Blue Chip Swap transaction that occurred during the period.
Income Taxes For the three months ended June 30, 2025, we had income tax expense of $29.0 million (which includes a discrete tax expense of $1.3 million primarily related to return to provision adjustments, a decrease to the deferred state income tax rate and certain foreign taxes) compared to income tax expense of $33.7 million for the three months ended June 30, 2024 (which includes a discrete tax benefit of $0.8 million related to return to provision adjustments). Our statutory federal income tax rate for fiscal year 2025 and 2024 is 21.0 percent (before incremental state and foreign taxes).
North America Solutions
Three Months Ended June 30,
(in thousands, except operating statistics)
2025
2024
% Change
Operating revenues
$
592,214
$
620,040
(4.5)
%
Direct operating expenses
326,042
342,564
(4.8)
Depreciation and amortization
88,078
89,207
(1.3)
Research and development
7,617
10,623
(28.3)
Selling, general and administrative expense
10,972
14,239
(22.9)
Acquisition transaction costs
7
—
—
Restructuring charges
1,849
—
—
Segment operating income
$
157,649
$
163,407
(3.5)
Financial Data and Other Operating Statistics1:
Direct margin (Non-GAAP)2
$
266,172
$
277,476
(4.1)
Revenue days3
13,400
13,683
(2.1)
Average active rigs4
147
150
(2.0)
Number of active rigs at the end of period5
141
146
(3.4)
Number of available rigs at the end of period
224
232
(3.4)
Reimbursements of "out-of-pocket" expenses
$
73,268
$
74,915
(2.2)
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating Revenues Operating revenues were $592.2 million and $620.0 million in the three months ended June 30, 2025 and 2024, respectively. The decrease in operating revenues was primarily due to lower activity levels and per revenue day pricing levels.
Direct Operating Expenses Direct operating expenses decreased to $326.0 million during the three months ended June 30, 2025 as compared to $342.6 million during the three months ended June 30, 2024. This decrease was primarily due to lower activity levels and a decrease in per revenue day material and supplies expense.
International Solutions
Three Months Ended June 30,
(in thousands, except operating statistics)
2025
2024
% Change
Operating revenues
$
265,803
$
47,882
455.1
%
Direct operating expenses
231,695
45,352
410.9
Depreciation and amortization
66,734
2,797
2,285.9
Selling, general and administrative expense
5,014
2,481
102.1
Acquisition transaction costs
141
—
—
Asset impairment charges
128,352
—
—
Restructuring charges
380
—
—
Segment operating loss
$
(166,513)
$
(2,748)
(5,959.4)
Financial Data and Other Operating Statistics1:
Direct margin (Non-GAAP)2
$
34,108
$
2,530
1,248.1
Revenue days3
6,573
1,067
516.0
Average active rigs4
72
12
500.0
Number of active rigs at the end of period5
69
12
475.0
Number of available rigs at the end of period
137
23
495.7
Reimbursements of "out-of-pocket" expenses
$
10,736
$
2,069
418.9
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating RevenuesOperating revenues were $265.8 million and $47.9 million in the three months ended June 30, 2025 and 2024, respectively. The $217.9 million increase in operating revenues was primarily driven by an additional $194.1 million in revenue generated from expanded operations following the Acquisition. Additionally, the increase in operating revenues was attibutable to increased FlexRig® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.
Direct Operating Expenses Direct operating expenses increased to $231.7 million during the three months ended June 30, 2025 as compared to $45.4 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $159.9 million in direct operating expenses during the three months ended June 30, 2025. Additionally, the increase in direct operating expenses was attributable to start up costs associated with our increased FlexRig® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.
Depreciation and Amortization Expense Depreciation expense increased to $66.7 million during the three months ended June 30, 2025 compared to $2.8 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $53.3 million in depreciation and amortization expense during the three months ended June 30, 2025.
Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $128.4 million associated with our International Solutions reporting unit. See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 91 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating RevenuesOperating revenues were $161.8 million and $27.2 million in the three months ended June 30, 2025 and 2024, respectively. The $134.6 million increase in operating revenues was primarily driven by an additional $135.9 million in revenue generated from expanded operations following the Acquisition.
Direct Operating Expenses Direct operating expenses increased to $139.0 million during the three months ended June 30, 2025 as compared to $19.6 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $119.8 million in direct operating expenses during the three months ended June 30, 2025.
Depreciation and Amortization Expense Depreciation expense increased to $12.7 million during the three months ended June 30, 2025 compared to $1.8 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $11.1 million in depreciation and amortization expense during the three months ended June 30, 2025.
Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows:
Three Months Ended June 30,
(in thousands)
2025
2024
% Change
Operating revenues
$
42,898
$
17,261
148.5
%
Direct operating expenses
63,000
21,413
194.2
Depreciation
2,010
277
625.6
Research and development
212
—
—
Selling, general and administrative expense
2,383
362
558.3
Asset impairment charges
44,907
—
—
Restructuring charges
390
—
—
Operating loss
$
(70,004)
$
(4,791)
(1,361.2)
Operating RevenuesWe continue to use our Captive insurance companies to insure the deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the Company's international casualty and rig property programs. Operating revenues of $42.9 million and $17.3 million during the three months ended June 30, 2025 and 2024, respectively, primarily consisted of $16.3 million and $14.7 million, respectively, in intercompany premium revenues recorded by the Captives. These revenues were eliminated upon consolidation. During the three months ended June 30, 2025, operating revenues also consisted of $23.7 million from Kenera's manufacturing and engineering operations, of which, $4.5 million is related to intercompany revenues that were eliminated upon consolidation.
Direct Operating Expenses Direct operating expenses of $63.0 million and $21.4 million during the three months ended June 30, 2025 and 2024, respectively, primarily consisted of $29.3 million and $5.3 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $10.1 million and $9.5 million, respectively, and medical stop loss expenses of $4.4 million and $4.1 million, respectively. The change to accruals for estimated losses was primarily due to actuarial valuation adjustments by our third-party actuary. During the three months ended June 30, 2025, direct operating expenses also consisted of $20.6 million from Kenera's manufacturing and engineering operations.
Asset Impairment Charges During the three months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $44.9 million associated with our Kenera reporting unit. See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.
Results of Operations for the Nine Months Ended June 30, 2025 and 2024
The Compnay's results presented for the nine months ended June 30, 2025 reflect a full 273 days of legacy H&P operations and 166 days of KCA Deutag operations, as the Acquisition was completed on January 16, 2025.
Consolidated Results of Operations
Net Income (Loss) Attributable to Helmerich & Payne Inc. We reported a loss of $106.3 million ($(1.08) per diluted share) for the nine months ended June 30, 2025 compared to income of $268.7 million ($2.67 per diluted share) for the nine months ended June 30, 2024.
Operating Revenue Consolidated operating revenues were $2.7 billion and $2.1 billion for the nine months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $669.2 million of revenue during the nine months ended June 30, 2025.
Direct Operating Expenses, Excluding Depreciation and AmortizationDirect operating expenses were $1.9 billion and $1.2 billion for the nine months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $551.1 million in direct operating expenses during the nine months ended June 30, 2025.
Other Operating Expenses Other operating expenses were $35.7 million and $3.3 million for the nine months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $32.8 million of costs associated with Kenera's manufacturing and engineering operations.
Depreciation and Amortization Expense Depreciation and amortization expense increased to $436.2 million during the nine months ended June 30, 2025 compared to $296.4 million during the nine months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $131.4 million in depreciation and amortization expense during the nine months ended June 30, 2025.
Selling, General and Administrative Expense Selling, general and administrative expenses increased to $209.4 million during the nine months ended June 30, 2025 compared to $178.0 million during the nine months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $32.9 million in selling, general and administrative expenses during the nine months ended June 30, 2025.
Acquisition Transaction Costs During the nine months ended June 30, 2025 and 2024, we recognized approximately $49.0 million and $7.5 million, respectively, in acquisition transaction costs associated with the Acquisition. These non-recurring costs are primarily related to third-party legal, advisory and valuation services. See Note 3—Business Combination for additional details related to the Acquisition.
Asset Impairment Charges During the nine months ended June 30, 2025, we recorded asset impairment charges of $175.1 million primarily driven by a non-cash goodwill impairment charge of $173.3 million associated with our International Solutions and Kenera reporting units. See Note 6—Goodwill and Intangible Assets for additional details related to the impairment charges.
Interest Expense Interest expenses were $79.8 million and $13.0 million for the nine months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by interest expense associated with our September 2024 senior notes offering and Term Loan Credit Agreement. See Note 7—Debt for additional details related to our debt agreements.
Gain on Investment Securities During the nine months ended June 30, 2025, we recognized an aggregate gain of $14.1 million on investment securities. The aggregate gain consisted of $15.0 million, $10.2 million and $1.3 million of gains on various geothermal equity investments, our investment in Galileo, and our investment in Tamboran, respectively, due to changes in the fair value of the investments. The gain was partially offset by a $12.4 million loss on our sale of equity securities in ADNOC Drilling, of which $8.4 million is associated with the change in the fair value of the investment and $4.0 million relates to transaction fees associated with the sale of the securities. During the nine months ended June 30, 2024, we recognized an aggregate gain of $0.1 million on investment securities. The gains consisted of $3.7 million and $3.5 million of gains on our equity investments in Tamboran Corp. and ADNOC Drilling, respectively; both of which were results of increases in the fair market values of the stock. The gains on our equity investments in Tamboran and ADNOC Drilling were offset by a $7.1 million loss recognized as a result of the Blue Chip Swap transaction that occurred during the period.
Income Taxes For the nine months ended June 30, 2025we had income tax expense of $92.1 million (which includes a discrete tax expense of $2.1 million primarily related to equity compensation, return to provision adjustments, a decrease to the deferred state income tax rate and certain foreign taxes) compared to income tax expense of $96.0 million (which includes a discrete tax benefit of $1.6 million related to equity compensation and return to provision adjustments) for the nine months ended June 30, 2024. Our statutory federal income tax rate for fiscal year 2025 and 2024 is 21.0 percent (before incremental state and foreign taxes).
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating Revenues During the nine months ended June 30, 2025, operating revenue decreased by $37.6 million compared to the same period in 2024. This decrease was mainly driven by reduced activity levels.
Direct Operating Expenses Direct operating expenses decreased to $992.5 million during the nine months ended June 30, 2025 as compared to $1.0 billion during the nine months ended June 30, 2024. This decrease was primarily driven by a decrease in rig activity.
Depreciation and Amortization Expense Depreciation and amortization expense decreased to $263.6 million during the nine months ended June 30, 2025 as compared to $273.8 million during the nine months ended June 30, 2024. The decrease was primarily driven by $10.9 million of accelerated depreciation recognized during the nine months ended June 30, 2024 for components on rigs that were scheduled for conversion.
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating RevenuesOperating revenues were $561.2 million and $148.5 million in the nine months ended June 30, 2025 and 2024, respectively. The $412.7 million increase in operating revenues was primarily driven by an additional $375.3 million in revenue generated from expanded operations following the Acquisition. Additionally, the increase in operating revenues was attributable to increased FlexRig® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.
Direct Operating Expenses Direct operating expenses increased to $507.1 million during the nine months ended June 30, 2025 as compared to $125.0 million during the nine months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $306.2 million in direct operating expense during the nine months ended June 30, 2025. Additionally, the increase in direct operating expenses was attributable to start up costs associated with our increased FlexRig® activity levels in Saudi Arabia from the commencement of operations for rigs previously awarded during fiscal year 2024.
Depreciation and Amortization Expense Depreciation expense increased to $128.7 million during the nine months ended June 30, 2025 compared to $7.5 million during the nine months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $102.8 million in depreciation and amortization expense during the nine months ended June 30, 2025.
Asset Impairment Charges During the nine months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $128.4 million associated with our International Solutions reporting unit. See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.
(1)These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.
(2)Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.
(3)Defined as the number of contractual days we recognized revenue for during the period.
(4)Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e., 273 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
Operating RevenuesOperating revenues were $340.1 million and $78.7 million in the nine months ended June 30, 2025 and 2024, respectively. The $261.4 million increase in operating revenues was primarily driven by an additional $258.6 million in revenue generated from expanded operations following the Acquisition.
Direct Operating Expenses Direct operating expenses increased to $284.6 million during the nine months ended June 30, 2025 as compared to $62.2 million during the nine months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $222.0 million in direct operating expense during the nine months ended June 30, 2025.
Depreciation and Amortization Expense Depreciation expense increased to $22.4 million during the nine months ended June 30, 2025 compared to $5.8 million during the three months ended June 30, 2024. The increase was primarily driven by the completion of the Acquisition, resulting in an additional $17.2 million in depreciation and amortization expense during the nine months ended June 30, 2025.
Results of our other operations, excluding corporate selling, general and administrative costs, and corporate depreciation, are as follows:
Nine Months Ended June 30,
(in thousands)
2025
2024
% Change
Operating revenues
$
107,704
$
53,628
100.8
%
Direct operating expenses
123,825
53,412
131.8
Depreciation
3,943
1,224
222.1
Research and development
212
—
—
Selling, general and administrative expense
5,011
1,065
370.5
Acquisition transaction costs
21
—
—
Asset impairment charges
44,907
—
—
Restructuring charges
390
—
—
Operating loss
$
(70,605)
$
(2,073)
(3,305.9)
Operating RevenuesWe continue to use our Captive insurance companies to insure the deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the Company's international casualty and rig property programs. Operating revenues of $107.7 million and $53.6 million during the nine months ended June 30, 2025 and 2024, respectively, primarily consisted of $50.8 million and $45.7 million, respectively, in intercompany premium revenues recorded by the Captives. These revenues were eliminated upon consolidation. During the nine months ended June 30, 2025, operating revenues also consisted of $48.3 million from Kenera's manufacturing and engineering operations, of which, $12.4 million is related to intercompany revenues that were eliminated upon consolidation.
Direct Operating Expenses Direct operating expenses of $123.8 million and $53.4 million during the nine months ended June 30, 2025 and 2024, respectively, primarily consisted of $43.5 million and $10.4 million, respectively, in adjustments to accruals for estimated losses allocated to the Captives, rig and casualty insurance premiums of $31.8 million and $28.5 million, respectively, and medical stop loss expenses of $14.8 million and $11.4 million, respectively. The change to accruals for estimated losses was primarily due to actuarial valuation adjustments by our third-party actuary. During the nine months ended June 30, 2025, direct operating expenses also consisted of $32.8 million from Kenera's manufacturing and engineering operations.
Asset Impairment Charges During the nine months ended June 30, 2025, we recorded a non-cash goodwill impairment charge of $44.9 million associated with our Kenera reporting unit. See Note 6—Goodwill and Intangible Assets for additional details related to the goodwill impairment charges.
Liquidity and Capital Resources
Sources of Liquidity
Our sources of available liquidity include existing cash balances on hand, cash flows from operations, and availability under the Amended Credit Facility. Our liquidity requirements include meeting ongoing working capital needs, funding our capital expenditure projects, paying dividends declared, repaying our outstanding indebtedness, and funding the Acquisition. Historically, we have financed operations primarily through internally generated cash flows. During periods when internally generated cash flows are not sufficient to meet liquidity needs, we may utilize cash on hand, borrow from available credit sources, access capital markets or sell our investments. Likewise, if we are generating excess cash flows or have cash balances on hand beyond our near-term needs, we may return cash to shareholders through dividends or share repurchases, or we may invest in highly rated short-term money market and debt securities. These investments can include U.S. Treasury securities, U.S. Agency issued debt securities, highly rated corporate bonds and commercial paper, certificates of deposit and money market funds. However, in some international locations we may make short-term investments that are less conservative, as equivalent highly rated investments are unavailable.
We may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity as necessary, fund our additional purchases, exchange or redeem senior notes, or repay any amounts under the Amended Credit Facility. Our ability to access the debt and equity capital markets depends on a number of factors, including our credit rating, market and industry conditions and market perceptions of our industry, general economic conditions, our revenue backlog and our capital expenditure commitments.
Our cash flows fluctuate depending on a number of factors, including, among others, the number of our drilling rigs under contract, the revenue we receive under those contracts, the efficiency with which we operate our drilling rigs, the timing of collections on outstanding accounts receivable, the timing of payments to our vendors for operating costs, and capital expenditures. As our revenues increase, net working capital is typically a use of capital, while conversely, as our revenues decrease, net working capital is typically a source of capital.
Net working capital (defined as current assets less current liabilities) was $680.7 million and $745.1 million as of June 30, 2025 and September 30, 2024, respectively.
As of June 30, 2025, we had cash and cash equivalents of $166.1 million, restricted cash of $61.1 million and short-term investments of $21.3 million. Our cash flows for the nine months ended June 30, 2025, and 2024 are presented below:
Nine Months Ended June 30,
(in thousands)
2025
2024
Net cash provided by (used in):
Operating activities
$
336,000
$
515,907
Investing activities
(1,872,510)
(353,998)
Financing activities
220,654
(196,145)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
14,322
—
Net decrease in cash, cash equivalents and restricted cash
$
(1,301,534)
$
(34,236)
Operating Activities
Cash flows provided by operating activities was $336.0 million and $515.9 million for the nine months ended June 30, 2025 and 2024, respectively. The change in cash provided by operating activities is primarily driven by start-up costs associated with our commencement of our operations in Saudi Arabia and acquisition transaction costs associated with the Acquisition. Net cash outflows related to the change in working capital was $101.9 million and $30.0 million for the nine months ended June 30, 2025 and 2024, respectively.
Investing Activities
Capital Expenditures Our capital expenditures during the nine months ended June 30, 2025 were $362.2 million compared to $389.1 million during the nine months ended June 30, 2024. The decrease in capital expenditures is driven by the lower equipment overhauls and certain long-term projects including skidding to walking rig conversions.
Net Sales of Short-Term Investments Our net sales of short-term investments during the nine months ended June 30, 2025 were $261.4 million compared to net sales of $3.6 million during the nine months ended June 30, 2024. The increase in activity is primarily driven by $193.3 million of net proceeds received from the liquidation of shares in ADNOC Drilling and our ongoing liquidity management.
Net Sales of Long-Term Investments Our net sales of long-term investments during the nine months ended June 30, 2025 were $29.9 million compared to net purchases of $9.2 million during the nine months ended June 30, 2024. The increase in net sales activity is primarily driven by $27.1 million and $4.9 million of proceeds received from the liquidation of one of our equity security investments and one of our debt security investments, respectively.
Payment for the Acquisition of Business, Net of Cash Received During the nine months ended June 30, 2025 H&P completed the Acquisition by paying approximately $2.0 billion in cash. This included acquiring $196.7 million in cash and cash equivalents, resulting in a net cash payment of$1.8 billion. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
Sale of AssetsOur proceeds from asset sales during the nine months ended June 30, 2025 were $34.9 million compared to proceeds of $35.1 million during the nine months ended June 30, 2024.
Financing Activities
DividendsWe paid cash dividends of $0.75 per share during the nine months ended June 30, 2025. Comparatively, during the nine months ended June 30, 2024, we paid dividends of $1.26 per share, comprising of a base cash dividend of $0.75 and a supplemental cash dividend of $0.51. Total dividends paid were $75.5 million and $126.4 million during the nine months ended June 30, 2025 and 2024, respectively.
Debt Issuance Proceeds and PaymentOn January 16, 2025, we received $400.0 million of proceeds from the Term Loan Credit Agreement. During the nine months ended June 30, 2025, the Company repaid $73.0 million of the outstanding balance on the Term Loan Credit Agreement. For additional information regarding debt issuance and repayment, refer to Note 7—Debt.
Repurchase of Shares The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year. The repurchases are made using our cash and cash equivalents or other available sources and are held as treasury shares on our Unaudited Condensed Consolidated Balance Sheets. We did not make any share repurchases during the nine months ended June 30, 2025. We repurchased 1.4 million common shares at an aggregate cost of $51.6 million, including excise tax of $0.3 million during the nine months ended June 30, 2024.
Senior Notes Issued in Fiscal Year 2024
On September 17, 2024, we completed a private offering of $1.25 billion aggregate principal amount of senior notes, comprised of the following tranches (collectively, the “Notes”): $350.0 million aggregate principal amount of 4.65 percent senior notes due 2027 issued at a price equal to 99.958 percent of their face value, $350.0 million aggregate principal amount of 4.85 percent senior notes due 2029 issued at a price equal to 99.883 percent of their face value and $550.0 million aggregate principal amount of 5.50 percent senior notes due 2034 issued at a price equal to 99.670 percent of their face value. Interest on the Notes is payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2025.
On January 16, 2025, H&P completed the Acquisition, and the Company used the net proceeds of the Notes, together with the proceeds of its term loan credit agreement (discussed below) and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag’s outstanding indebtedness, and to pay related fees and expenses. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination.
In connection with the issuance of the Notes, the Company also entered into a registration rights agreement, dated as of September 17, 2024 (the "Registration Rights Agreement"), with the initial purchasers of the Notes named therein. Under the Registration Rights Agreement, the Company agreed, among other things, to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange each series of the Notes for freely tradable notes (“Registered Notes”) having terms identical in all material respects to each such series of Notes (the “Registered Exchange Offer”). Accordingly, on May 15, 2025, the Company filed a registration statement on Form S-4 with the SEC, which was declared effective on May 28, 2025. On May 28, 2025, the Company launched the Registered Exchange Offer, which expired on July 10, 2025. Substantially all of the Notes were tendered and exchanged for Registered Notes in the Exchange Offer.
The indenture governing the Notes contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the Notes also contains customary events of default with respect to the Notes.
Senior Notes Issued in Fiscal Year 2021
On September 29, 2021, we issued $550.0 million aggregate principal amount of the 2.90% senior notes due 2031 ("the 2031 Notes") in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act as amended (the "Securities Act") and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.
In June 2022, we settled a registered exchange offer (the “2022 Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes. All of the 2031 Notes were exchanged in the Registered Exchange Offer.
The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens; engage in sale and lease-back transactions; and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture governing the 2031 Notes also contains customary events of default with respect to the 2031 Notes.
On August 14, 2024, the Company entered into an unsecured term loan credit agreement (the "Term Loan Credit Agreement"), among the Company, Morgan Stanley Senior Funding, Inc. (“MSSF”) as administrative agent, and the other lenders party thereto.On the Closing Date, the Company drew an aggregate principal amount of $400.0 million, which reduced the commitments under the Company's bridge loan facility (refer to Note 7—Debt for additional information regarding the Bridge Loan Facility) for purposes of financing the Acquisition. The Term Loan Credit Agreement matures at the two-year anniversary of the funding of the term loans unless earlier terminated pursuant to the terms of the Term Loan Credit Agreement. On January 16, 2025, H&P completed the Acquisition, and the Company used the proceeds from the Term Loan Credit Agreement, together with the net proceeds from the Notes, and cash on hand, to finance the purchase price for the Acquisition, to repay or redeem certain of KCA Deutag's outstanding indebtedness, and to pay related fees and expenses. For additional information regarding the completion of the Acquisition, refer to Note 3—Business Combination. During the three and nine months ended June 30, 2025, the Company repaid $48.0 million and $73.0 million, respectively, of the outstanding balance on the Term Loan Credit Agreement. As such, the outstanding balance as of June 30, 2025, was $327.0 million. In July 2025, we repaid $47.0 million, decreasing the outstanding balance on the Term Loan Credit Agreement to $280.0 million.
The benchmark rate is the Secured Overnight Financing Rate ("SOFR"). We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 1.0 percent to 1.625 percent per annum and zero to 0.625 percent per annum, respectively. Commitment fees for both rates range from 0.10 percent to 0.250 percent per annum. Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR was 1.375 percent and commitment fees were 0.175 percent. As of June 30, 2025, the interest rate on the Term Loan was 5.793 percent per annum. The weighted average variable interest rate on all amounts outstanding under the Term Loan was 5.796 percent and 5.731 percentfor the three and nine months ended June 30, 2025.
2024 Oman Facility
In connection with the completion of the Acquisition, KCA Deutag Energy LLC (“KCAD Energy”) became a wholly-owned subsidiary of the Company. On April 25, 2024, KCAD Energy entered into the 2024 Oman Facility, which is fully drawn.
The 2024 Oman Facility provides for term loan borrowings of $45.5 million, which bear interest payable quarterly at a fixed rate of 7.00 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2024 Oman Facility plus 2.60 percent. On February 9, 2025, we received the final draw down of $1.4 million. During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively. Of the $43.9 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year. These secured bank loans are wholly denominated in Omani rial. The value of these borrowings in Omani rial is OMR $17.6 million. The commitments under the 2024 Oman Facility mature December 31, 2034.
There is an annual financial covenant in the 2024 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. The 2024 Oman Facility and related agreements contain additional terms, conditions, restrictions and covenants that we believe are usual and customary in secured debt arrangements for companies of similar size and credit quality.
2023 Oman Facility
In connection with the completion of the Acquisition, KCAD Energy became a wholly-owned subsidiary of the Company. On June 19, 2023, KCAD Energy entered into the 2023 Oman Facility, which is fully drawn.
The 2023 Oman Facility provides for term loan borrowings of $45.6 million, which bear interest payable quarterly at a fixed rate of 6.25 percent per annum for the first two years and thereafter, at a rate that is the higher of (x) 5.50 percent and (y) the reference rate specified in the 2023 Oman Facility plus 2.79 percent. During the three and nine months ended June 30, 2025, the Company repaid $0.8 million and $1.7 million of the outstanding balance on the facility, respectively. Of the $40.6 million borrowings outstanding at June 30, 2025, a total of $3.4 million is payable within one year. These secured bank loans are wholly denominated in Omani rial. The value of these borrowings in Omani rial is OMR $17.6 million. The commitments under the 2023 Oman Facility mature December 31, 2033.
There is an annual financial covenant in the 2023 Oman Facility that requires KCAD Energy to maintain a debt service coverage ratio of at least 1.20:1.00. The 2023 Oman Facility and related agreements contain additional terms, conditions, restrictions and covenants that we believe are usual and customary in secured debt arrangements for companies of similar size and credit quality.
On August 14, 2024, the Company entered into an Amended and Restated Credit Agreement (the "Amended Credit Facility") with the lenders party thereto (the "Revolving Credit Agreement Lenders"), the issuing lenders party thereto and Wells Fargo, National Association ("Wells Fargo") as administrative agent, swing line lender and issuing lender, which amended and restated the Credit Agreement, dated as of November 13, 2018 (as amended through Amendment No. 2 to the Credit Agreement dated as of March 8, 2022, the “Existing Credit Agreement”), among the Company, the lenders party thereto and Wells Fargo, as administrative agent, swing line lender and issuing lender.
Under the terms of the Amended Credit Facility, the Company may obtain unsecured revolving loans in an aggregate principal amount not to exceed $950.0 million outstanding at any time. $775.0 million of the revolving commitments under the Amended Credit Facility expire on November 12, 2028 and $175.0 million of the revolving commitments mature on November 10, 2027 (the “Stated Maturity Date”), but the Company may request two one-year extensions of the Stated Maturity Date, subject to satisfaction of certain conditions. Commitments under the Amended Credit Facility may be increased by up to $100.0 million, subject to the agreement of the Company and new or existing Revolving Credit Agreement Lenders.
The proceeds of the loans made under the Amended Credit Facility may be used by the Company for (i) working capital and other general corporate purposes, (ii) for the payment of fees and expenses related to the entering into of the Amended Credit Facility and the other credit documents and (iii) for the refinancing of the extensions of credit under the Existing Credit Agreement.
The benchmark rate is the SOFR. We can elect to borrow at either an adjusted SOFR rate or an adjusted base rate, plus an applicable margin. The adjusted SOFR rate is the forward-looking term rate based on SOFR for the applicable tenor of one, three, or six months, plus 0.10 percent per annum. The adjusted base rate is a fluctuating rate per annum equal to the highest of (i) the administrative agent's prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) the one-month adjusted SOFR rate plus 1.0 percent. We also pay a commitment fee on the unused balance of the facility. Borrowing spreads as well as commitment fees are determined based on the debt rating for senior unsecured debt of the Company, as determined by Moody’s and Standard & Poor’s. The applicable margin for SOFR borrowings and adjusted base rate borrowings ranges from 0.875 percent to 1.500 percent per annum and zero to 0.50 percent per annum, respectively. Commitment fees for both rates range from 0.075 percent to 0.200 percent per annum. Based on the unsecured debt rating of the Company on June 30, 2025, the spread over SOFR would have been 1.25 percent had borrowings been outstanding under the Amended Credit Facility and commitment fees would have been 0.15 percent. There is a financial covenant in the Amended Credit Facility that requires us to maintain a total funded debt to total capitalization ratio of less than or equal to 55.0 percent. The Amended Credit Facility contains additional terms, conditions, restrictions and covenants that we believe are usual and customary in unsecured debt arrangements for companies of similar size and credit quality, including a limitation that priority debt (as defined in the credit agreement) may not exceed 17.5 percent of the net worth of the Company. As of June 30, 2025, there were no borrowings or letters of credit outstanding, leaving $950.0 million available to borrow under the Amended Credit Facility.
As of June 30, 2025, we had $400.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds. Of the $400.0 million, $175.3 million was outstanding as of June 30, 2025. Separately, we had $44.9 million in standby letters of credit and bank guarantees outstanding. In total, we had $220.2 million outstanding as of June 30, 2025.
The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality. At June 30, 2025, we were in compliance with all debt covenants.
Future Cash Requirements
Our operating cash requirements, scheduled debt repayments, interest payments, any declared dividends, and estimated capital expenditures for fiscal year 2025 are expected to be funded through current cash and cash to be provided from operating activities. However, there can be no assurance that we will continue to generate cash flows at current levels. If needed, we may decide to obtain additional funding from our $950.0 million Amended Credit Facility. Our indebtedness under our unsecured senior notes totaled $1.8 billion at June 30, 2025 and comprised of the following maturities: $350.0 million due December 2027, $350.0 million due December 2029, $550.0 million due September 2031, and $550.0 million due December 2034. Our indebtedness under our unsecured term loan credit agreement totaled $327.0 million at June 30, 2025 and matures in January 2027. Our indebtedness under our secured term loan credit agreements totaled $84.6 million at June 30, 2025, of which $6.9 million is due within one year, and the remaining balance is required to be paid on a quarterly basis through the respective maturity dates of December 2033 and December 2034. This debt is allocated specifically to finance the ongoing rig construction activities in Oman.
As of June 30, 2025, we had a $614.6 million deferred tax liability on our Unaudited Condensed Consolidated Balance Sheets, primarily related to temporary differences between the financial and income tax basis of property, plant and equipment. Our capital expenditures over the last several years have been subject to accelerated depreciation methods (including bonus depreciation) available under the Internal Revenue Code of 1986, as amended, enabling us to defer a portion of cash tax payments to future years. Future levels of capital expenditures and results of operations will determine the timing and amount of future cash tax payments. We expect to be able to meet any such obligations utilizing cash and investments on hand, as well as cash generated from ongoing operations. As of June 30, 2025, we have recorded unrecognized tax benefits and related interest and penalties of approximately $24.5 million.
Material Commitments
Material commitments as reported in our 2024 Annual Report on Form 10-K have not changed significantly as of June 30, 2025, other than those disclosed in Note 3—Business Combination, Note 5—Leases, Note 7—Debt, and Note 14—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements.
Critical Accounting Policies and Estimates
Our accounting policies and estimates that are critical or the most important to understand our financial condition and results of operations, and that require management to make the most difficult judgments, are described in our 2024 Annual Report on Form 10-K. Based on management's evaluation, except as discussed below there have been no material changes in these critical accounting policies and estimates.
Fair Value Estimates in Business Combination Accounting
In addition to the critical accounting policies and estimates previously disclosed, due to the Acquisition, we also consider estimates used in applying the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, to be part of our critical accounting policies and estimates due to the high degree of judgment and complexity in its application. The acquisition method of accounting involves the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. This allocation process involves the use of estimates and assumptions made in connection with estimating the fair value of assets acquired and liabilities assumed including cash flows expected to be derived from the use of the asset, the timing of such cash flows, the remaining useful life of assets, estimated asset replacement costs, and applicable discount rates. Acquisition accounting allows for up to one year to obtain the information necessary to finalize the fair value of all assets acquired and liabilities assumed at January 16, 2025. Refer to Note 3—Business Combination to the accompanying condensed consolidated financial statements for additional information about accounting for the Acquisition.
Impairment of Long-lived Assets, Goodwill and Other Intangible Assets
Management assesses the potential impairment of our long‑lived assets and finite-lived intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Changes that could prompt such an assessment may include equipment obsolescence, changes in the market demand, periods of relatively low rig utilization, declining revenue per day, declining cash margin per day, completion of specific contracts, change in technology and/or overall changes in general market conditions. If a review of the long‑lived assets and finite-lived intangibles indicates that the carrying value of certain of these assets or asset groups is more than the estimated undiscounted future cash flows, an impairment charge is made, as required, to adjust the carrying value to the estimated fair value. Cash flows are estimated by management considering factors such as prospective market demand, recent changes in rig technology and its effect on each rig’s marketability, any cash investment required to make a rig marketable, suitability of rig size and makeup to existing platforms, and competitive dynamics including utilization. The fair value of drilling rigs is determined based upon either an income approach using estimated discounted future cash flows, a market approach considering factors such as recent market sales of rigs of other companies and our own sales of rigs, appraisals and other factors, a cost approach utilizing new reproduction costs adjusted for the asset age and condition, and/or a combination of multiple approaches. The use of different assumptions could increase or decrease the estimated fair value of assets and could therefore affect any impairment measurement.
We review goodwill for impairment annually in the fourth fiscal quarter or more frequently if events or changes in circumstances indicate it is more likely than not that the carrying amount of the reporting unit holding such goodwill may exceed its fair value. We initially assess goodwill for impairment based on qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying amount. If further testing is necessary or a quantitative test is elected, we quantitatively compare the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds the fair value, an impairment charge will be recognized in an amount equal to the excess; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.
During the third fiscal quarter of 2025, due primarily to the sustained decline in our share price and market capitalization, we identified indicators of potential impairment of goodwill and performed an interim impairment test. We estimated the fair value of each reporting unit using a market approach, incorporating significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. We employed a combination of the guideline public company method and the guideline transactions method, leveraging company comparisons and analyst reports from the energy industry, which supported a range of fair values derived from annualized earnings before interest, income taxes, depreciation and amortization ("EBITDA") multiples between 2.5x and 5.5x for guideline public companies and between 3.9x and 9.8x for guideline transactions. We then derived an estimated fair value of each reporting unit based on an EBITDA multiple at or below the peer-median trading multiple.
Based on our interim goodwill impairment test as of June 30, 2025, we concluded that the International Solutions and Kenera reporting units' carrying value exceeded their respective estimated fair value. As a result, we recorded a non-cash goodwill impairment charge of $128.4 million and $44.9 million, respectively, during the three months ended June 30, 2025, which represented a full impairment of the goodwill allocated to these reporting units. The estimated fair values of our H&P Technologies and Offshore Solutions reporting units as of June 30, 2025 exceeded their respective carrying values by approximately 75.8 percent and 20.3 percent, respectively. These estimates reflect management’s best judgments as of June 30, 2025; however, changes in key assumptions or market conditions could yield materially different outcomes. We will continue to monitor events and circumstances that may affect fair values.
Due to the goodwill impairment described above, we also considered whether there was an indicator of impairment of our long-lived assets (including our finite-lived intangible assets) as of June 30, 2025. For the period ended June 30, 2025, we evaluated the suspension of land rigs in Saudi Arabia and the finite-lived intangible assets of our Saudi Arabia and Kenera operations for potential indicators of impairment and determined that further impairment analysis was unnecessary. These determinations are based on conditions as of June 30, 2025; should circumstances change, our conclusions could materially differ.
As of June 30, 2025, total goodwill was $166.6 million and property, plant and equipment, net was $4.4 billion. We will continue to monitor market and operational conditions and perform further impairment testing if triggering events arise.
Recently Issued Accounting Standards
See Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties to the Unaudited Condensed Consolidated Financial Statements for new accounting standards not yet adopted.
Non-GAAP Measurements
Direct Margin
Direct margin is considered a non-GAAP metric. We define "Direct margin" as operating revenues less direct operating expenses. Direct margin is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. Direct margin is not a substitute for financial measures prepared in accordance with U.S. GAAP and should therefore be considered only as supplemental to such U.S. GAAP financial measures.
The following table reconciles direct margin to segment operating income (loss), which we believe is the financial measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to direct margin.
Three Months Ended
Nine Months Ended
June 30,
June 30,
June 30,
June 30,
(in thousands)
2025
2024
2025
2024
NORTH AMERICA SOLUTIONS
Segment operating income
$
157,649
$
163,407
$
461,803
$
455,030
Add back:
Depreciation and amortization
88,078
89,207
263,565
273,799
Research and development
7,617
10,623
26,560
32,318
Selling, general and administrative expense
10,972
14,239
42,266
43,812
Acquisition transaction costs
7
—
41
—
Asset impairment charges
—
—
1,507
—
Restructuring charges
1,849
—
1,849
—
Direct margin (Non-GAAP)
$
266,172
$
277,476
$
797,591
$
804,959
INTERNATIONAL SOLUTIONS
Segment operating income (loss)
$
(166,513)
$
(2,748)
$
(215,980)
$
8,606
Add back:
Depreciation and amortization
66,734
2,797
128,715
7,549
Selling, general and administrative expense
5,014
2,481
12,268
7,334
Acquisition transaction costs
141
—
351
—
Asset impairment charges
128,352
—
128,352
—
Restructuring charges
380
—
380
—
Direct margin (Non-GAAP)
$
34,108
$
2,530
$
54,086
$
23,489
OFFSHORE SOLUTIONS
Segment operating income
$
8,769
$
5,010
$
29,649
$
8,140
Add back:
Depreciation and amortization
12,681
1,798
22,438
5,807
Selling, general and administrative expense
1,294
799
3,322
2,515
Acquisition transaction costs
—
—
60
—
Restructuring charges
29
—
29
—
Direct margin (Non-GAAP)
$
22,773
$
7,607
$
55,498
$
16,462
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a description of our market risks, see the following:
•Note 2—Summary of Significant Accounting Policies, Related Risks and Uncertainties to the Unaudited Condensed Consolidated Financial Statements contained in Item 1 of Part I hereof with regard to foreign currency exchange rate risk which is incorporated herein by reference;
•Note 7—Debt to the Unaudited Condensed Consolidated Financial Statements contained in Item 1 of Part I hereof with regard to interest rate risk which is incorporated herein by reference; and
•Note 12—Fair Value Measurement of Financial Instruments to the Unaudited Condensed Consolidated Financial Statements contained in Item 1 of Part I hereof with regard to equity price risk which is incorporated herein by reference;
•“Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2024 Annual Report on Form 10-K filed with the SEC on November 13, 2024;
As of the end of the period covered by this report, an evaluation was performed with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2025 at ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no material changes in our internal control over financial reporting that have occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 14—Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements for information regarding our legal proceedings.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors previously disclosed in Part I, Item 1A— “Risk Factors” in our 2024 Annual Report on Form 10-K.
The following documents are included as exhibits to this Form 10-Q. Those exhibits below that are incorporated herein by reference are indicated as such by the information supplied in the parenthetical thereafter. If no parenthetical appears after an exhibit, the exhibit is filed or furnished herewith.
Financial statements from the quarterly report on Form 10-Q of Helmerich & Payne, Inc. for the quarter ended June 30, 2025, filed on August 8, 2025, formatted in Inline Extensive Business Reporting Language (XBRL): (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Shareholders’ Equity, (v) the Unaudited Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements.
104
Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HELMERICH & PAYNE, INC.
(Registrant)
Date:
August 8, 2025
By:
/S/ JOHN W. LINDSAY
John W. Lindsay Director, President and Chief Executive Officer
Date:
August 8, 2025
By:
/S/ J. KEVIN VANN
J. Kevin Vann Senior Vice President and Chief Financial Officer (Principal Financial Officer)
