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.
Effective October 1, 2018, we implemented organizational changes, consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. Certain operations previously reported in “Other” within our segment disclosures are now managed and presented within the new H&P Technologies reportable segment. As a result, beginning with the reporting of first quarter 2019, our operations are organized into the following reportable business segments: U.S. Land, Offshore, International Land and H&P Technologies. Certain other corporate activities and our real estate operations are included in Other. All segment disclosures have been recast for these segment changes. Refer to Note
15
—Business Segments and Geographic Information for further details on H&P Technologies, our new reportable segment.
Our U.S. Land operations are primarily located in Colorado, Louisiana, Ohio, Oklahoma, New Mexico, North Dakota, Pennsylvania, Texas, Utah, West Virginia and Wyoming. Additionally, Offshore operations are conducted in the Gulf of Mexico and our International Land operations have rigs primarily located in
four
international locations: Argentina, Bahrain, Colombia and United Arab Emirates (“U.A.E.”).
We also own, develop and operate limited commercial real estate properties. Our real estate investments, which are located exclusively within Tulsa, Oklahoma, include a shopping center, multi-tenant industrial warehouse properties, and undeveloped real estate.
Fiscal Year 2019 Acquisition
On November 1, 2018, we completed an acquisition of an unaffiliated company, Angus Jamieson Consulting (“AJC”), which is now a wholly-owned subsidiary of the Company, for a total consideration of approximately
$3.4
million. AJC is a software-based training and consultancy company based in Inverness, Scotland and is widely recognized as an industry leader in wellbore positioning. The operations of AJC are included in the H&P Technologies reportable business segment. The acquisition of AJC has been accounted for as a business combination in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
805, Business Combinations, which requires the assets acquired and liabilities assumed to be recorded at their acquisition date fair values. The allocation of the purchase price includes goodwill of
$3.1
million.
NOTE
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 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 (“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 GAAP for complete financial statements and, therefore, should be read in conjunction with the Consolidated Financial Statements and notes thereto in our
2018
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. Certain prior period financial information has been recast to reflect the current year’s presentation as it relates to the new reportable segment, H&P Technologies, effective October 1, 2018. Refer to Note
15
–Business Segments and Geographic Information. Additionally, the prior comparative periods presented in the Unaudited Condensed Consolidated Financial Statements have been adjusted in accordance with the adoption of accounting standard updates included in the Recently Issued Accounting Updates table below.
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of Helmerich & Payne, Inc. and its domestic and foreign subsidiaries. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the fiscal year are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) from the date the Company gains control until the date when the Company ceases to control the subsidiary. All significant 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 any highly liquid investment with an original maturity of three months or less. Approximately
$318.9 million
of cash and cash equivalents reside in accounts in the United States and the remaining
$15.9 million
are in other countries. Our cash, cash equivalents and short-term investments are subject to global economic as well as credit risk, and international accounts are subject to risks specific to the countries where they are located. Some of our U.S. bank accounts also carry balances greater than the federally insured limit.
We had restricted cash of
$34.3 million
and
$41.5 million
at
June 30, 2019
and
2018
, respectively, and
$41.8 million
and
$39.1 million
at
September 30, 2018
and
2017
, respectively. Of the total at
June 30, 2019
and
September 30, 2018
,
$3.0 million
and
$11.3 million
, respectively, is related to the acquisition of drilling technology companies,
$2.0 million
as of each of
June 30, 2019
and
September 30, 2018
is from the initial capitalization of the captive insurance company, and
$29.3 million
and
$28.5 million
, respectively, represents an additional amount management has elected to restrict for the purpose of potential insurance claims in our wholly-owned captive insurance company. The restricted amounts are primarily invested in short-term money market securities. See Recently Issued Accounting Updates below for changes to the presentation of restricted cash effective October 1, 2018 as a result of adopting Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.
The restricted cash and cash equivalents are reflected within the following line items on the Unaudited Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
September 30,
|
(in thousands)
|
2019
|
|
2018
|
|
2018
|
|
2017
|
Cash
|
$
|
334,775
|
|
|
$
|
306,426
|
|
|
$
|
284,355
|
|
|
$
|
521,375
|
|
Restricted Cash
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
30,543
|
|
|
34,614
|
|
|
39,830
|
|
|
32,439
|
|
Other assets
|
3,788
|
|
|
6,902
|
|
|
2,000
|
|
|
6,695
|
|
Total cash, cash equivalents, and restricted cash
|
$
|
369,106
|
|
|
$
|
347,942
|
|
|
$
|
326,185
|
|
|
$
|
560,509
|
|
Drilling Revenues
Contract drilling revenues are comprised of daywork drilling contracts for which the related revenues and expenses are recognized as services are performed and collection is reasonably assured and it is determined to be probable that a significant reversal will not occur. For certain contracts, we receive payments contractually designated for the mobilization of rigs and other drilling equipment. Mobilization payments received, and direct costs incurred for the mobilization, are deferred and recognized on a straight-line basis over the term of the related drilling contract. Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred. Refer to Note
9
—Revenue from Contracts with Customers for additional information regarding our contract drilling services revenue.
Recently Issued Accounting Updates
Changes to U.S. GAAP are established by the FASB in the form of Accounting Standards Updates ("ASU's") 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
|
Recently Adopted Accounting Pronouncements
|
ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting
|
Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. Regardless of whether the change to the terms or conditions of the award requires modification accounting, the existing disclosure requirements and other aspects of U.S. GAAP associated with modification, such as earnings per share, continue to apply.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required. There was no impact to our unaudited condensed consolidated financial statements and disclosures.
|
ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
|
The ASU changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement. Employers should present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Employers should present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. The amendments are applied retrospectively for the presentation of the service cost component and other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required, on a retrospective basis. The retrospective impact was not material to our unaudited condensed consolidated financial statements and disclosures.
|
ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash
|
The ASU requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending cash amounts for the periods shown on the statement of cash flows.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required, on a retrospective basis. The retrospective impact on the unaudited condensed consolidated statement of cash flows for the nine months ended June 30, 2018 was an increase of $2.4 million in net cash provided by operating activities.
|
ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
|
Under prior U.S. GAAP, the tax effects of intra-entity asset transfers (intercompany sales) were deferred until the transferred asset was sold to a third party or otherwise recovered through use. This was an exception to the principle in ASC 740, Income Taxes, that generally requires comprehensive recognition of current and deferred income taxes. The new guidance eliminates the exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity recognizes the tax expense from the sale of the asset in the seller's tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer's jurisdiction is also recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers of inventory. The income tax consequences from the sale of inventory from one member of a consolidated entity to another will continue to be deferred until the inventory is sold to a third party.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required. There was no material impact to our unaudited condensed consolidated financial statements and disclosures.
|
|
|
|
|
|
ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
|
The ASU was intended to reduce diversity in practice in presentation and classification of certain cash receipts and cash payments by providing guidance on eight specific cash flow issues.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required, on a retrospective basis. The retrospective impact on the unaudited condensed consolidated statement of cash flows for the nine months ended June 30, 2018 is a reclassification of $10.6 million from net cash provided by operating activities to net cash used in financing activities.
|
ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
|
The standard requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. At adoption, a cumulative-effect adjustment to beginning retained earnings is recorded to reflect the fair value of such investments at the date of adoption in retained earnings rather than accumulated other comprehensive income.
|
October 1, 2018
|
We adopted this ASU during the first quarter of fiscal year 2019, as required. As a result, changes in the fair value of our equity investments have been recognized in net income since the date of adoption, and our future results of operations will continue to be subject to stock market fluctuations for these investments. The cumulative catch up impact that was recorded to the beginning balance of retained earnings at October 1, 2018 was a reclassification of $44.0 million ($29.1 million after-tax) of cumulative gains from the beginning balance of accumulated other comprehensive income.
|
ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)
|
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The update outlined a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and superseded other revenue recognition guidance, including industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled for those goods or services. The update also required disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Furthermore, as part of Topic 606, the FASB introduced ASC 340-40, Other Assets and Deferred Costs, which provides guidance on the capitalization of contract related costs that are not within the scope of other authoritative literature. Companies could use either a full retrospective or a modified retrospective approach to adopt the updates.
|
October 1, 2018
|
We adopted this topic, using the modified retrospective transitional approach, during the first quarter of fiscal year 2019, as required. We recognized the cumulative effect by initially applying the revenue standard as an adjustment to the opening balance of retained earnings during the period (October 1, 2018). Refer to Note 9—Revenue from Contracts with Customers for the impact of the adoption.
|
ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement
|
This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project, where entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This update is effective for annual and interim periods beginning after December 15, 2019.
|
June 30, 2019
|
We early adopted this ASU during the third quarter of fiscal year 2019. The adoption did not have a material impact to our unaudited condensed consolidated financial statements and disclosures. Refer to Note 12—Fair Value Measurement of Financial Instruments.
|
ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income
|
This ASU relates to the impacts of the tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). The guidance permits the reclassification of certain income tax effects of the Tax Reform Act from Accumulated Other Comprehensive Income (Loss) to Retained Earnings. The guidance also requires certain new disclosures. This update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal periods and early adoption is permitted. Entities may adopt the guidance using one of two transition methods, retrospective to each period (or periods) in which the income tax effects of the Tax Reform Act related to the items remaining in Other Comprehensive Income are recognized or at the beginning of the period of adoption.
|
June 30, 2019
|
We early adopted this ASU during the third quarter of fiscal year 2019. We reclassified $4.2 million from accumulated other comprehensive income (loss) to retained earnings for stranded income tax effects resulting from the Tax Reform Act. The adoption did not have a material impact to our unaudited condensed consolidated financial statements and disclosures.
|
|
|
|
|
|
Standards that are not yet adopted as of June 30, 2019
|
ASU No. 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract
|
This ASU aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement. ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This update is effective for annual and interim periods beginning after December 15, 2019.
|
October 1, 2020
|
We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.
|
ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans—General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans
|
This ASU amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit, pension and other postretirement plans. This update is effective for annual and interim periods ending after December 15, 2020.
|
October 1, 2021
|
We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.
|
ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) and related ASU’s issued subsequent
|
This ASU introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new model will apply to: (1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and certain other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income(loss), and (4) beneficial interests in securitized financial assets. This update is effective for annual and interim periods beginning after December 15, 2019.
|
October 1, 2020
|
We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.
|
ASU No. 2016-02, Leases (Topic 842) and related ASU’s issued subsequent
|
ASU No. 2016-02 will require organizations that lease assets — referred to as “lessees” — to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to current U.S. GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASU 2016-02 mandates a modified retrospective transition method of adoption with an option to use certain practical expedients.
|
October 1, 2019
|
We are currently evaluating the impact the new guidance may have on our consolidated financial statements and disclosures.
|
Cash Flows
The following is a summary of the retrospective impact of our adoption of ASU No. 2016-15 and ASU No. 2016-18:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2018
|
(in thousands)
|
Historical
Accounting
Method
|
|
Effect of
Adoption of
ASU No. 2016-15
|
|
Effect of
Adoption of
ASU No. 2016-18
|
|
As
Adjusted
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
Change in prepaid expenses and other
|
$
|
(11,798
|
)
|
|
$
|
—
|
|
|
$
|
2,175
|
|
|
$
|
(9,623
|
)
|
Change in noncurrent assets
|
5,898
|
|
|
—
|
|
|
207
|
|
|
6,105
|
|
Change in accrued liabilities
|
30,043
|
|
|
10,625
|
|
|
—
|
|
|
40,668
|
|
Cash provided by operating activities
|
358,421
|
|
|
10,625
|
|
|
2,382
|
|
|
371,428
|
|
|
|
|
|
|
|
|
|
Payment of contingent consideration from acquisition of business
|
—
|
|
|
(10,625
|
)
|
|
—
|
|
|
(10,625
|
)
|
Cash used in financing activities
|
(231,186
|
)
|
|
(10,625
|
)
|
|
—
|
|
|
(241,811
|
)
|
Self-Insurance
We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability. Generally, deductibles range from
$1 million
to
$5 million
per occurrence depending on the coverage and whether a claim occurs outside or inside of the United States. Insurance is purchased over deductibles to reduce our exposure to catastrophic events. Estimates are recorded for incurred outstanding liabilities for workers’ compensation, general liability claims and claims that are incurred but not reported. Estimates are based on adjuster estimates, historical experience and statistical methods that we believe are reliable. We also engage actuaries to perform reviews of our domestic casualty losses as well as losses in our captive insurance company. Nonetheless, insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.
International Land Drilling Risks
International Land 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 land operations will be subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements, 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. In Argentina, while our dayrate is denominated in U.S. dollars, we are paid in Argentine pesos. The Argentine branch of one of our second-tier subsidiaries remits U.S. dollars to its U.S. parent by converting the Argentine pesos into U.S. dollars through the Argentine Foreign Exchange Market and repatriating the U.S. dollars. Argentina has a history of implementing currency controls which restrict the conversion and repatriation of U.S. dollars. These controls have not been in place in Argentina since December of 2016.
Argentina’s economy is considered highly inflationary, which is defined as cumulative inflation rates exceeding
100 percent
in the most recent three-year period based on inflation data published by the respective governments. Nonetheless, all of our foreign subsidiaries use the U.S. dollar as the functional currency and local currency monetary assets and liabilities are remeasured into U.S. dollars with gains and losses resulting from foreign currency transactions included in current results of operations.
For the
three and nine
months ended
June 30, 2019
, we experienced an aggregate foreign currency gain of
$0.1 million
and an aggregate foreign currency loss of
$4.6 million
, respectively. For the
three and nine
months ended
June 30, 2018
, we recorded aggregate foreign currency losses of
$1.1 million
and
$2.5 million
, respectively. In the future, we may incur larger currency devaluations, foreign exchange restrictions or other difficulties repatriating U.S. dollars from Argentina or elsewhere, which could have a material adverse impact on our business, financial condition and results of operations.
Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities. While we believe that neither operating through such entities nor pursuing 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.
Although we attempt to minimize the potential impact of such risks by operating in more than
one
geographical area, during the
nine
months ended
June 30, 2019
, approximately
7.7 percent
of our operating revenues were generated from international locations in our contract drilling business compared to
10.1 percent
during the
nine
months ended
June 30, 2018
. During the
nine
months ended
June 30, 2019
, approximately
92.1 percent
of operating revenues from international locations were from operations in South America compared to
95.4 percent
during the
nine
months ended
June 30, 2018
. Substantially all of the South American operating revenues were from Argentina and Colombia. 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 DISCONTINUED OPERATIONS
Current and noncurrent liabilities of our discontinued operations consist of municipal and income taxes payable and social obligations due within the country of Venezuela. Expenses incurred for in-country obligations are reported as discontinued operations within our Unaudited Condensed Consolidated Statements of Operations. The activity for the
three and nine
months ended
June 30, 2019
was primarily due to the remeasurement of uncertain tax liabilities as a result of the devaluation of the Venezuela bolivar. Early in 2018, the Venezuelan government announced that it changed the existing dual-rate foreign currency exchange system by eliminating its heavily subsidized foreign exchange rate, which was
10
Bolivars per United States dollar, and relaunched an exchange system known as DICOM. The Venezuela government also established a new currency called the “Sovereign Bolivar,” which was determined by the elimination of
five
zeros from the old currency. The DICOM floating rate was approximately
6,566
Bolivars per United States dollar at
June 30, 2019
. The DICOM floating rate might not reflect the barter market exchange rates.
NOTE 4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of
June 30, 2019
and
September 30, 2018
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Estimated Useful Lives
|
|
June 30, 2019
|
|
September 30, 2018
|
Contract drilling equipment
|
4 - 15 years
|
|
$
|
8,486,332
|
|
|
$
|
8,442,081
|
|
Real estate properties
|
10 - 45 years
|
|
71,114
|
|
|
68,888
|
|
Other
|
2 - 23 years
|
|
469,933
|
|
|
471,310
|
|
Construction in progress
|
|
|
158,936
|
|
|
163,968
|
|
|
|
|
9,186,315
|
|
|
9,146,247
|
|
Accumulated depreciation
|
|
|
(4,602,642
|
)
|
|
(4,288,865
|
)
|
Property, plant and equipment, net
|
|
|
$
|
4,583,673
|
|
|
$
|
4,857,382
|
|
Depreciation
Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was
$141.9 million
and
$143.1 million
for the
three months ended June 30, 2019
and
2018
, respectively, and
$423.6 million
and
$430.0 million
for the
nine months ended June 30, 2019
and
2018
, respectively. Included in depreciation expense is abandonments of
$1.4 million
and
$7.0 million
for the three months ended
June 30, 2019
and
2018
, respectively, and
$6.8 million
and
$22.5 million
for the
nine
months ended
June 30, 2019
and
2018
, respectively.
During the
nine months ended June 30, 2019
, we shortened the estimated useful life of certain components of rigs planned for conversion resulting in an increase in depreciation expense during the
nine months ended June 30, 2019
of approximately
$4.5 million
. This will also increase the depreciation expense for the next three months by approximately
$0.7 million
and will decrease the depreciation expense for fiscal years 2020, 2021, 2022, 2023, and 2024 by
$0.8 million
,
$0.8 million
,
$0.6 million
,
$0.3 million
, and
$0.3 million
, respectively and thereafter by
$0.5 million
.
Gain on Sale of Assets
We had gains on sales of assets of
$10.0 million
and
$4.3 million
for the
three months ended June 30, 2019
and
2018
, respectively, and
$27.1 million
and
$15.1 million
for the
nine months ended June 30, 2019
and
2018
, respectively. These gains were primarily related to reimbursement for drill pipe damaged or lost in drilling operations.
Impairments
During the third quarter of fiscal year 2019, the Company's management performed a detailed assessment, considering a number of approaches, to maximize the utilization and enhance the margins of the domestic and international FlexRig4 asset groups. In June 2019, this assessment concluded that marketing a smaller fleet of these two asset groups would provide the best economic outcome. As such, the decision was made to downsize the number of domestic and international FlexRig4 drilling rigs, to be marketed to our customers, from
71
rigs to
20
domestic rigs and from
10
rigs to
8
international rigs, and utilize the major interchangeable components of the decommissioned drilling rigs within these asset groups as capital spares for all of our remaining rig fleet. This has reduced the aggregate net book values of the asset groups as of June 30, 2019 from
$317.8 million
to
$107.5 million
for domestic rigs and from
$55.7 million
to
$47.8 million
for international rigs. Following the downsizing process, we performed a detailed study to optimize the quantities of capital spares and drilling support equipment required to support the future operations of our rig fleet going forward. These decisions and analysis resulted in a write down of excess capital spares and drilling support equipment, which had an aggregate net book value of
$235.3 million
, to their estimated proceeds to ultimately be received on sale or disposal based on our historical experience with sales and disposals of similar assets, resulting in an impairment of
$224.3 million
, which was recorded in our Unaudited Condensed Consolidated Statement of Operations for the three months ended June 30, 2019. Of the
$224.3 million
total impairment charge recorded,
$216.9 million
and
$7.4 million
was recorded in our U.S. Land and International Land segment, respectively, during the three months ended June 30, 2019. The significant assumptions in the valuation are classified as Level 2 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.
Due to the downsizing of our domestic and international FlexRig4 asset groups, at June 30, 2019, we performed impairment testing on these two asset groups. We concluded that the net book values of the asset groups are recoverable through estimated undiscounted cash flows with a surplus. The most significant assumptions used in our undiscounted cash flow model include: timing on awards of future drilling contracts, operating dayrates, operating costs, rig reactivation costs, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition. The assumptions are consistent with the Company's internal forecasts for future years. These significant assumptions are classified as Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures, as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts. Although we believe the assumptions used in our analysis are reasonable and appropriate and the probability-weighted average of expected future undiscounted net cash flows exceed the net book value for each of the domestic and international FlexRig4 asset groups as of June 30, 2019, different assumptions and estimates could materially impact the analysis and our resulting conclusion.
NOTE 5 GOODWILL AND INTANGIBLE ASSETS
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, or when indications of potential impairment exist.
All of our goodwill is within our H&P Technologies reportable segment.
The following is a summary of changes in goodwill (in thousands):
|
|
|
|
|
Balance at September 30, 2018
|
$
|
64,777
|
|
Additions (Note 1)
|
3,125
|
|
Balance at June 30, 2019
|
$
|
67,902
|
|
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 in accordance with our policies for valuation of long-lived assets. Intangible
assets arising from business acquisitions consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
September 30, 2018
|
(in thousands)
|
Estimated Useful Lives
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
Finite-lived intangible asset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed technology
|
15 years
|
|
$
|
70,200
|
|
|
$
|
9,089
|
|
|
$
|
61,111
|
|
|
$
|
70,000
|
|
|
$
|
5,589
|
|
|
$
|
64,411
|
|
Trade name
|
20 years
|
|
5,700
|
|
|
451
|
|
|
5,249
|
|
|
5,700
|
|
|
237
|
|
|
5,463
|
|
Customer relationships
|
5 years
|
|
4,000
|
|
|
1,267
|
|
|
2,733
|
|
|
4,000
|
|
|
667
|
|
|
3,333
|
|
|
|
|
$
|
79,900
|
|
|
$
|
10,807
|
|
|
$
|
69,093
|
|
|
$
|
79,700
|
|
|
$
|
6,493
|
|
|
$
|
73,207
|
|
Amortization expense in the Unaudited Condensed Consolidated Statements of Operations was
$1.4 million
for each of the
three months ended June 30, 2019
and
2018
and
$4.2 million
and
$3.9 million
for the
nine months ended June 30, 2019
and
2018
, respectively
.
Estimated intangible amortization is estimated to be approximately
$5.8 million
for each of the next three succeeding fiscal years and approximately
$5.1 million
for fiscal year 2023.
NOTE
6
DEBT
At
June 30, 2019
and
September 30, 2018
, we had the following unsecured long-term debt outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
September 30, 2018
|
(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 March 19, 2025
|
$
|
500,000
|
|
|
$
|
(8,349
|
)
|
|
$
|
491,651
|
|
|
$
|
500,000
|
|
|
$
|
(6,032
|
)
|
|
$
|
493,968
|
|
|
500,000
|
|
|
(8,349
|
)
|
|
491,651
|
|
|
500,000
|
|
|
(6,032
|
)
|
|
493,968
|
|
Less long-term debt due within one year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Long-term debt
|
$
|
500,000
|
|
|
$
|
(8,349
|
)
|
|
$
|
491,651
|
|
|
$
|
500,000
|
|
|
$
|
(6,032
|
)
|
|
$
|
493,968
|
|
Senior Notes
HPIDC 2025 Notes
On March 19, 2015, our wholly-owned direct subsidiary, Helmerich & Payne International Drilling Co. (“HPIDC”), issued
$500 million
of
4.65 percent
10
-year unsecured senior notes (the “HPIDC 2025 Notes”). Interest on the HPIDC 2025 Notes is payable semi-annually on March 15 and September 15. The debt discount is being amortized to interest expense using the effective interest method. The debt issuance costs are amortized straight-line over the stated life of the obligation, which approximates the effective interest method.
Private Exchange Offer and Consent Solicitation
On November 19, 2018, we commenced an offer to exchange (the “Exchange Offer”) any and all outstanding HPIDC 2025 Notes for (i) up to
$500.0 million
aggregate principal amount of new
4.65 percent
10
-year unsecured senior notes of the Company (the “Company 2025 Notes”), with registration rights, and (ii) cash. Concurrently with the Exchange Offer, we solicited consents (the “Consent Solicitation”) to adopt certain proposed amendments (the “Proposed Amendments”) to the indenture governing the HPIDC 2025 Notes, which include eliminating substantially all of the restrictive covenants in such indenture and limiting the reporting covenant under such indenture. On December 20, 2018, we settled the Exchange Offer, pursuant to which we issued approximately
$487.1 million
in aggregate principal amount of Company 2025 Notes. Interest on the Company 2025 Notes is payable semi-annually on March 15 and September 15 of each year, commencing March 15, 2019. The terms of the Company 2025 Notes are governed by an indenture, dated December 20, 2018, as amended and supplemented by the first supplemental indenture thereto, dated December 20, 2018, each among the Company, HPIDC and Wells Fargo Bank, National Association, as trustee.
Following the consummation of the Exchange Offer, HPIDC had outstanding approximately
$12.9 million
in aggregate principal amount of HPIDC 2025 Notes. In connection with the Consent Solicitation, the requisite number of consents to adopt the Proposed Amendments was received. Accordingly, on December 20, 2018, HPIDC, the Company and Wells Fargo Bank, National Association, as trustee, entered into a supplemental indenture to the indenture governing the HPIDC 2025 Notes to adopt the Proposed Amendments.
Registered Exchange Offer
On February 15, 2019, we commenced a registered exchange offer (the “Registered Exchange Offer”) to exchange the Company 2025 Notes for new SEC-registered notes that are substantially identical to the terms of the Company 2025 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), and certain transfer restrictions, registration rights and additional interest provisions relating to the Company 2025 Notes do not apply to the new notes. The Registered Exchange Offer expired on March 18, 2019, and approximately
99.99%
of the Company 2025 Notes were exchanged.
The Company 2025 Notes that were not exchanged pursuant to the Registered Exchange Offer have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities law.
Credit Facilities
On November 13, 2018, we entered into an unsecured revolving credit facility (the “2018 Credit Facility”), which will mature on November 13, 2023. The
2018 Credit Facility
has
$750 million
in aggregate availability with a maximum of
$75 million
available for use as letters of credit. The 2018 Credit Facility also permits aggregate commitments under the facility to be increased by
$300 million
, subject to the satisfaction of certain conditions and the procurement of additional commitments from new or existing lenders. The 2018 Credit Facility is currently guaranteed by HPIDC, which guarantee is subject to release following or simultaneously with the repayment or exchange of the HPIDC 2025 Notes and HPIDC’s release as a guarantor under the Company 2025 Notes. The borrowings under the 2018 Credit Facility accrue interest at a spread over either the London Interbank Offered Rate (LIBOR) or the Base Rate. 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 or, in the event the Company has no such rating, the debt rating for senior unsecured debt of HPIDC, both as determined by Moody’s and Standard & Poor’s (“S&P”). The spread over LIBOR ranges from
0.875 percent
to
1.500 percent
per annum and commitment fees range from
0.075 percent
to
0.200 percent
per annum. Based on the unsecured debt rating of HPIDC on
June 30, 2019
, the spread over LIBOR would have been
1.125
percent had borrowings been outstanding under the facility and commitment fees are
0.125
percent. There is a financial covenant in the 2018 Credit Facility that requires us to maintain a total debt to total capitalization ratio of less than
50 percent
. The
2018 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, 2019
, there were
no
borrowings, but there was
one
letter of credit outstanding in the amount of
$10.0 million
, leaving
$740.0 million
available to borrow under the 2018 Credit Facility.
In connection with entering into the
2018 Credit Facility
, we terminated our
$300 million
unsecured credit facility under the credit agreement dated as of July 13, 2016 by and among HPIDC, as borrower, the Company, as guarantor, Wells Fargo, National Association, as administrative agent, and the lenders party thereto.
At
June 30, 2019
, we had
two
outstanding letters of credit with banks under bilateral line of credit agreements, in the amounts of
$25.5 million
and
$2.1 million
, respectively.
At
June 30, 2019
, we also had a
$12.0 million
unsecured standalone line of credit facility, for the purpose of obtaining the issuance of bid and performance bonds, as needed, for international operations. Nothing was outstanding under the
$12.0 million
facility as of
June 30, 2019
.
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, 2019
, we were in compliance with all debt covenants.
NOTE 7 INCOME TAXES
Our income tax benefit from continuing operations for the
nine months ended June 30, 2019
and
2018
was
$(5.6) million
and
$(494.0) million
, respectively, resulting in effective tax rates of
7.0 percent
and
15,472.2 percent
, respectively. Our income tax provision (benefit) from continuing operations for the
three months ended June 30, 2019
and
2018
was
$(32.0) million
and
$10.5 million
, respectively, resulting in effective tax rates of
17.2 percent
and
446.2 percent
, respectively. Effective tax rate differences from the U.S. federal statutory rate for the three and
nine months ended June 30, 2019
and
2018
are primarily due to state and foreign income taxes, permanent non-deductible items and discrete adjustments. The total benefit recorded for discrete adjustments for the
nine months ended June 30, 2019
was
$8.2 million
. The discrete adjustments primarily relate to a decrease in our deferred state income tax rate, return to provision adjustments, and the recording of a tax benefit related to the reversal of an uncertain tax liability. The total benefit recorded for discrete adjustments for the
nine months ended June 30, 2018
was
$492.2 million
. The 2018 discrete adjustments primarily relate to a reduction of the statutory federal income tax rate as part of the Tax Reform Act, an increase to our deferred state income tax rate, and return to provision adjustments.
For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax positions associated with our U.S. and international operations that could result in increases or decreases of our unrecognized tax benefits. However, we do not expect the increases or decreases to have a material effect on our results of continuing operations or financial position.
NOTE 8 SHAREHOLDERS’ EQUITY
Our Board of Directors (the "Board") has authorized the Company to repurchase up to
four million
common shares per calendar year. The repurchases may be made using our cash and cash equivalents or other available sources. We had
no
purchases of common shares during the
nine months ended June 30, 2019
and
2018
.
Components of accumulated other comprehensive loss were as follows:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 30,
2019
|
|
September 30,
2018
|
Pre-tax amounts:
|
|
|
|
Unrealized appreciation on securities
(1)
|
$
|
—
|
|
|
$
|
44,023
|
|
Unrealized actuarial loss
|
(20,818
|
)
|
|
(21,693
|
)
|
|
$
|
(20,818
|
)
|
|
$
|
22,330
|
|
After-tax amounts:
|
|
|
|
Unrealized appreciation on securities
(1)
|
$
|
—
|
|
|
$
|
29,071
|
|
Unrealized actuarial loss
|
(16,085
|
)
|
|
(12,521
|
)
|
|
$
|
(16,085
|
)
|
|
$
|
16,550
|
|
|
|
(1)
|
As disclosed in Note
2
—Summary of Significant Accounting Policies, Risks and Uncertainties, we adopted
ASU No. 2016-01 on October 1, 2018. The standard requires that changes in the fair value of our equity investments must be recognized in net income.
|
The following is a summary of the changes in accumulated other comprehensive loss, net of tax, by component for the three and
nine months ended June 30, 2019
:
|
|
|
|
|
|
Three Months Ended
June 30, 2019
|
(in thousands)
|
Defined Benefit
Pension Plan
|
Balance at March 31, 2019
|
$
|
(12,072
|
)
|
Adoption of ASU No. 2018-02
(1)
|
(4,239
|
)
|
|
(16,311
|
)
|
Activity during the period
|
|
Amounts reclassified from accumulated other comprehensive loss
|
226
|
|
Net current-period other comprehensive loss
|
226
|
|
Balance at June 30, 2019
|
$
|
(16,085
|
)
|
|
|
(1)
|
As disclosed in Note
2
—Summary of Significant Accounting Policies, Risks and Uncertainties, we adopted
ASU No. 2018-02 as of June 30, 2019. The standard permits the reclassification of certain income tax effects of the Tax Reform Act from Accumulated Other Comprehensive Income (Loss) to Retained Earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
(in thousands)
|
Unrealized
Appreciation
on Equity
Securities
|
|
Defined
Benefit
Pension Plan
|
|
Total
|
Balance at September 30, 2018
|
$
|
29,071
|
|
|
$
|
(12,521
|
)
|
|
$
|
16,550
|
|
Adoption of ASU No. 2016-01
(1)
|
(29,071
|
)
|
|
—
|
|
|
(29,071
|
)
|
Adoption of ASU No. 2018-02
(2)
|
—
|
|
|
(4,239
|
)
|
|
(4,239
|
)
|
|
—
|
|
|
(16,760
|
)
|
|
(16,760
|
)
|
Activity during the period
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
675
|
|
|
675
|
|
Net current-period other comprehensive loss
|
—
|
|
|
675
|
|
|
675
|
|
Balance at June 30, 2019
|
$
|
—
|
|
|
$
|
(16,085
|
)
|
|
$
|
(16,085
|
)
|
|
|
(1)
|
As disclosed in Note
2
—Summary of Significant Accounting Policies, Risks and Uncertainties, we adopted ASU No. 2016-01 on October 1, 2018. The transition provisions enforced upon adoption require any unrealized gains or losses as of October 1, 2018 to be recognized in the beginning balance of equity.
|
|
|
(2)
|
As disclosed in Note
2
—Summary of Significant Accounting Policies, Risks and Uncertainties, we adopted
ASU No. 2018-02 as of June 30, 2019. The standard permits the reclassification of certain income tax effects of the Tax Reform Act from Accumulated Other Comprehensive Income (Loss) to Retained Earnings.
|
The following provides detail about accumulated other comprehensive loss components, which were reclassified to the Unaudited Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassified from
Accumulated Other
Comprehensive
Income (Loss)
|
|
Reclassified from
Accumulated Other
Comprehensive
Income (Loss)
|
|
Affected Line
Item in the Consolidated
Statements of Operations
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Amortization of net actuarial loss on defined benefit pension plan
|
$
|
(291
|
)
|
|
$
|
(461
|
)
|
|
$
|
(874
|
)
|
|
$
|
(1,382
|
)
|
|
Other income (expense)
|
|
65
|
|
|
124
|
|
|
199
|
|
|
397
|
|
|
Income tax provision
|
Total reclassifications for the period
|
$
|
(226
|
)
|
|
$
|
(337
|
)
|
|
$
|
(675
|
)
|
|
$
|
(985
|
)
|
|
Net of tax
|
A cash dividend of
$0.71
per share was declared on March 6, 2019 for shareholders of record on May 13, 2019, and was paid on June 3, 2019. An additional cash dividend of
$0.71
per share was declared on June 5, 2019 for shareholders of record on August 12, 2019, payable on September 3, 2019. The dividend payable is included in accounts payable in the Unaudited Condensed Consolidated Balance Sheets.
NOTE
9
REVENUE FROM CONTRACTS WITH CUSTOMERS
Impact of Adoption
Effective October 1, 2018, we adopted ASU No. 2014-09, "Revenue from Contracts with Customers" and ASC 340-40, “Contracts with Customers.” ASC 606 introduced a five‑step approach to revenue recognition and ASC 340-40 introduced detailed rules for contract revenue related costs. Details of the new requirements as well as the impact on our Unaudited Condensed Consolidated Financial Statements are described below.
We have applied ASC 606 in accordance with the modified retrospective transitional approach recognizing the cumulative effect of initially applying the revenue standard as an adjustment to the opening balance of retained earnings during this period (October 1, 2018). Comparative prior year periods were not adjusted. In applying the modified retrospective approach, we elected practical expedients for (a) completed contracts as described in ASC 606-10-65-c2, and (b) contract modifications as described in ASC 606-10-65-1-f(4), allowing the application of the revenue standard only to contracts that were not completed as of the date of initial application and to reflect the aggregate effect of all modifications that occur before the adoption date in accordance with the new standard when: (i) identifying the satisfied and unsatisfied performance obligations, (ii) determining the transaction price, and (iii) allocating the transaction price to the satisfied and unsatisfied performance obligations. We believe that the impact on the opening balance of retained earnings during the period (October 1, 2018) would not have been significantly different had we not elected to use the practical expedients.
ASC 606 uses the terms “contract asset” and “contract liability” to describe what might more commonly be known as “accrued or unbilled revenue” and “deferred revenue”, respectively; however, the standard does not prohibit an entity from using alternative descriptions in the statement of financial position. We have adopted the terminology used in ASC 606 to describe such balances. Apart from providing more extensive disclosures for our revenue transactions, the application of ASC 606 has not had a significant impact on our financial position and/or financial performance.
Contract Drilling Services Revenue
Substantially all 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 contract drilling services 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 contract 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.
Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer. For contracts that are terminated by customers prior to the expirations of their fixed terms, contractual provisions customarily require early termination amounts to be paid to us. Revenues from early terminated contracts are recognized when all contractual requirements have been met. During the
three months ended June 30, 2019
and
2018
, early termination revenue was approximately
$0.8 million
and
$6.0 million
, respectively. During the
nine months ended June 30, 2019
and
2018
, early termination revenue was approximately
$9.1 million
and
$14.3 million
, respectively.
We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, for which we incur costs and earn revenues. Many of these costs are variable, or dependent upon the activity that is actually performed each day under the related contract. Accordingly, reimbursements that we receive for out-of-pocket expenses are recorded as revenues and the out-of-pocket expenses for which they relate are recorded as operating costs during the period to
which they relate within the series of distinct time increments. All of our revenues are recognized net of sales taxes, when applicable.
With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service and are recognized ratably over the related contract term that drilling services are provided.
Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the contract term. The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced or no payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.
Contract Costs
Mobilization costs include certain direct costs incurred for mobilization of contracted rigs. These costs relate directly to a contract, enhance resources that will be used in satisfying the future performance obligations and are expected to be recovered. These costs are capitalized when incurred and recorded as current or noncurrent contract fulfillment cost assets (depending on the length of the initial contract term), and are amortized on a systematic basis consistent with the pattern of the transfer of the goods or services to which the asset relates which typically includes the initial term of the related drilling contract or a period longer than the initial contract term if management anticipates a customer will renew or extend a contract, which we expect to benefit from the cost of mobilizing the rig. Abnormal mobilization costs are fulfillment costs that are incurred from excessive resources, wasted or spoiled materials, and unproductive labor costs that are not otherwise anticipated in the contract price and are expensed as incurred. As of
June 30, 2019
, we had capitalized fulfillment costs of
$15.9 million
.
If capital modification
costs are incurred for rig modifications or if upgrades are required for a contract, these costs are considered to be capital improvements. These costs are capitalized as property, plant and equipment and depreciated over the estimated useful life of the improvement.
Remaining Performance Obligations
The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of
June 30, 2019
was approximately
$1.6 billion
, of which approximately
$0.5 billion
is expected to be recognized during the remainder of fiscal year
2019
, approximately
$0.9 billion
during fiscal year
2020
,
and approximately
$0.2 billion
in fiscal year
2021
and thereafter. These amounts do not include anticipated contract renewals. 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; however, due to the level of capital deployed by our customers on underlying projects, we have not been materially adversely affected by contract cancellations or modifications in the past. We do not have material long-term contracts related to our H&P Technologies segment.
Contract Assets and Liabilities
Amounts owed from our customers under our revenue contracts are typically billed on a monthly basis as the service is being provided and are due within
1
-
30
days of billing. Such amounts are classified as accounts receivable on our Unaudited Condensed Consolidated Balance Sheets. Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within prepaid expenses and other current assets within our Unaudited Condensed Consolidated Balance Sheets.
Under certain of our contracts, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within accrued liabilities and other noncurrent liabilities in our Unaudited Condensed Consolidated Balance Sheets. Contract balances are presented at the net amount at a contract level.
The following table summarizes the balances of our contract assets and liabilities at the dates indicated:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 30, 2019
|
|
October 1, 2018
|
Contract assets
|
$
|
1,551
|
|
|
$
|
2,600
|
|
|
|
|
|
|
(in thousands)
|
June 30, 2019
|
Contract liabilities balance at October 1, 2018
|
$
|
30,032
|
|
Payment received/accrued and deferred
|
21,656
|
|
Revenue recognized during the period
|
(30,903
|
)
|
Contract liabilities balance at June 30, 2019
|
$
|
20,785
|
|
NOTE 10 STOCK-BASED COMPENSATION
On March 2, 2016, the Helmerich & Payne, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”) was approved by our stockholders. The 2016 Plan, among other things, authorizes the Human Resources Committee of the Board to grant non-qualified stock options, restricted stock awards and performance share units to selected employees and to non-employee directors. Restricted stock may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than market price of the underlying stock on the date of grant. Stock options expire
10
years after the grant date. Awards outstanding under the Helmerich & Payne, Inc. 2005 Long-Term Incentive Plan and the Helmerich & Payne, Inc. 2010 Long-Term Incentive Plan remain subject to the terms and conditions of those plans. During the
nine months ended June 30, 2019
, there were
no
non-qualified granted stock options, as we have, prospectively and for fiscal year
2019
, replaced stock options with performance share units as a component of our executives’ long-term equity incentive compensation. We have also eliminated stock options as an element of our director compensation program.
The Board has determined to award stock-based compensation to directors solely in the form of restricted stock.
During the
nine months ended June 30, 2019
,
474,775
shares of restricted stock awards and
145,153
performance share units were granted under the 2016 Plan.
A summary of compensation cost for stock-based payment arrangements recognized in selling, general and administrative expense is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Compensation expense
|
|
|
|
|
|
|
|
Stock options
|
$
|
719
|
|
|
$
|
1,815
|
|
|
$
|
3,073
|
|
|
$
|
5,887
|
|
Restricted stock
|
6,771
|
|
|
6,111
|
|
|
19,374
|
|
|
17,585
|
|
Performance share units
|
1,388
|
|
|
—
|
|
|
3,020
|
|
|
—
|
|
|
$
|
8,878
|
|
|
$
|
7,926
|
|
|
$
|
25,467
|
|
|
$
|
23,472
|
|
Stock Options
A summary of stock option activity under all existing long-term incentive plans for the
three and nine
months ended
June 30, 2019
is presented in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
(in thousands, except per share amounts and years)
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term in Years
|
|
Aggregate
Intrinsic
Value
|
Outstanding at April 1, 2019
|
3,292
|
|
|
$
|
60.77
|
|
|
|
|
|
Exercised
|
(15
|
)
|
|
42.67
|
|
|
|
|
|
Forfeited/Expired
|
(14
|
)
|
|
62.24
|
|
|
|
|
|
Outstanding at June 30, 2019
|
3,263
|
|
|
$
|
60.85
|
|
|
5.42
|
|
$
|
3,158
|
|
Vested and expected to vest at June 30, 2019
|
3,263
|
|
|
$
|
60.85
|
|
|
5.42
|
|
$
|
3,158
|
|
Exercisable at June 30, 2019
|
2,505
|
|
|
$
|
60.37
|
|
|
4.69
|
|
$
|
3,158
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2019
|
(in thousands, except per share amounts)
|
Shares
|
|
Weighted
Average
Exercise
Price
|
Outstanding at October 1, 2018
|
3,499
|
|
|
$
|
58.62
|
|
Exercised
|
(213
|
)
|
|
24.21
|
|
Forfeited
|
(23
|
)
|
|
60.77
|
|
Outstanding at June 30, 2019
|
3,263
|
|
|
$
|
60.85
|
|
The total intrinsic value of options exercised during the
three and nine
months ended
June 30, 2019
was
$0.3 million
and
$7.9 million
, respectively.
As of
June 30, 2019
, the unrecognized compensation cost related to stock options was
$3.9 million
, which is expected to be recognized over a weighted-average period of
2.1 years
.
Restricted Stock
Restricted stock awards consist of our common stock and are time-vested over
four years
. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the closing price of our shares on the grant date. As of
June 30, 2019
, there was
$41.8 million
of total unrecognized compensation cost related to unvested restricted stock awards. That cost is expected to be recognized over a weighted-average period of
2.4 years
.
A summary of the status of our restricted stock awards as of
June 30, 2019
and changes in restricted stock outstanding during the
nine
months then ended is presented below:
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2019
|
(in thousands, except per share amounts)
|
Shares
|
|
Weighted Average
Grant Date Fair
Value per Share
|
Outstanding at October 1, 2018
|
1,001
|
|
|
$
|
63.74
|
|
Granted
|
475
|
|
|
58.45
|
|
Vested
(1)
|
(369
|
)
|
|
64.32
|
|
Forfeited
|
(17
|
)
|
|
61.01
|
|
Outstanding at June 30, 2019
|
1,090
|
|
|
$
|
61.28
|
|
|
|
(1)
|
The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding
requirements
.
|
Performance Share Units
We have made awards to certain employees that are subject to market-based performance conditions ("performance share units"). Subject to the terms and conditions set forth in the applicable performance share unit award agreements and the 2016 Plan, grants of performance share units are subject to a vesting period of
three years
(the “Vesting Period”) that is dependent on the achievement of certain performance goals. Such performance share unit awards consist of
two
separate components. Performance share units that comprise the first component are subject to a
three
-year performance cycle. Performance share units that comprise the second component are further divided into
three
separate tranches, each of which is subject to a separate
one
-year performance cycle within the full
three
-year performance cycle. The vesting of the performance share units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance share unit award throughout the Vesting Period.
At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance share units. The vesting of units ranges from
zero
to
200%
of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date.
The grant date fair value of performance share units was determined through use of the Monte Carlo simulation method. The Monte Carlo simulation method requires the use of highly subjective assumptions. Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined Peer Group companies’ stock, risk free rate of return,
dividend yields and cross-correlations between our and our self-determined Peer Group companies. As of
June 30, 2019
, there was
$6.1 million
of unrecognized compensation cost related to unvested performance share unit awards. That cost is expected to be recognized over a weighted-average period of
1.9 years
.
A summary of the status of our performance share units as of
June 30, 2019
and changes in performance share units outstanding during the
nine
months then ended is presented below:
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2019
|
(in thousands, except per share amounts)
|
Shares
|
|
Weighted Average
Grant Date Fair
Value per Share
|
Outstanding at October 1, 2018
|
—
|
|
|
$
|
—
|
|
Granted
|
145
|
|
|
62.66
|
|
Outstanding at June 30, 2019
|
145
|
|
|
$
|
62.66
|
|
NOTE 11 EARNINGS (LOSS) 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, nonvested restricted stock and performance share 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)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Numerator:
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
(154,621
|
)
|
|
$
|
(8,174
|
)
|
|
$
|
(74,400
|
)
|
|
$
|
490,835
|
|
Income (loss) from discontinued operations
|
(62
|
)
|
|
166
|
|
|
(433
|
)
|
|
(10,616
|
)
|
Net income (loss)
|
(154,683
|
)
|
|
(8,008
|
)
|
|
(74,833
|
)
|
|
480,219
|
|
Adjustment for basic earnings per share
|
|
|
|
|
|
|
|
Earnings allocated to unvested shareholders
|
(772
|
)
|
|
(717
|
)
|
|
(2,332
|
)
|
|
(4,241
|
)
|
|
|
|
|
|
|
|
|
Numerator for basic earnings (loss) per share:
|
|
|
|
|
|
|
|
From continuing operations
|
(155,393
|
)
|
|
(8,891
|
)
|
|
(76,732
|
)
|
|
486,594
|
|
From discontinued operations
|
(62
|
)
|
|
166
|
|
|
(433
|
)
|
|
(10,616
|
)
|
|
(155,455
|
)
|
|
(8,725
|
)
|
|
(77,165
|
)
|
|
475,978
|
|
Adjustment for diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
Effect of reallocating undistributed earnings of unvested shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Numerator for diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
From continuing operations
|
(155,393
|
)
|
|
(8,891
|
)
|
|
(76,732
|
)
|
|
486,604
|
|
From discontinued operations
|
(62
|
)
|
|
166
|
|
|
(433
|
)
|
|
(10,616
|
)
|
|
$
|
(155,455
|
)
|
|
$
|
(8,725
|
)
|
|
$
|
(77,165
|
)
|
|
$
|
475,988
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per share - weighted-average shares
|
109,425
|
|
|
108,905
|
|
|
109,324
|
|
|
108,818
|
|
Effect of dilutive shares from stock options, restricted stock and performance share units
|
—
|
|
|
—
|
|
|
—
|
|
|
520
|
|
Denominator for diluted earnings (loss) per share - adjusted weighted-average shares
|
109,425
|
|
|
108,905
|
|
|
109,324
|
|
|
109,338
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share:
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
(1.42
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
4.47
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.10
|
)
|
Net income (loss)
|
$
|
(1.42
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
4.37
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share:
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
(1.42
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
4.45
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.10
|
)
|
Net income (loss)
|
$
|
(1.42
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
4.35
|
|
We had a net loss for the
three and nine
months ended
June 30, 2019
and the three months ended June 30, 2018. Accordingly, our diluted earnings per share calculation for these periods were equivalent to our basic earnings per share calculation since diluted earnings 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 average shares attributable to outstanding equity awards were excluded from the calculation of diluted earnings (loss) 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)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Shares excluded from calculation of diluted earnings (loss) per share
|
2,753
|
|
|
929
|
|
|
2,768
|
|
|
1,585
|
|
Weighted-average price per share
|
$
|
64.22
|
|
|
$
|
75.56
|
|
|
$
|
64.21
|
|
|
$
|
68.51
|
|
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 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 assets held in a Non-Qualified Supplemental Savings Plan are carried at fair value, which totaled
$15.8 million
at
June 30, 2019
and
$16.2 million
at
September 30, 2018
. The assets are comprised of mutual funds that are measured using Level 1 inputs.
Short-term investments 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. The securities are recorded at fair value.
Our non-financial assets, such as intangible assets, goodwill and property, plant and equipment, are recorded at fair value when acquired in a business combination or when an impairment charge is recognized. 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.
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. The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those investments.
The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at
June 30, 2019
and
September 30, 2018
.
The following table summarizes our assets and liabilities measured at fair value presented in our Unaudited Condensed Consolidated Balance Sheet as of
June 30, 2019
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Fair Value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Recurring fair value measurements:
|
|
|
|
|
|
|
|
Short-term investments:
|
|
|
|
|
|
|
|
Certificates of deposit
|
$
|
6,728
|
|
|
$
|
—
|
|
|
$
|
6,728
|
|
|
$
|
—
|
|
Corporate and municipal debt securities
|
12,180
|
|
|
—
|
|
|
12,180
|
|
|
—
|
|
U.S. government and federal agency securities
|
26,840
|
|
|
26,840
|
|
|
—
|
|
|
—
|
|
Total short-term investments
|
45,748
|
|
|
26,840
|
|
|
18,908
|
|
|
—
|
|
Cash and cash equivalents
|
334,775
|
|
|
334,775
|
|
|
—
|
|
|
—
|
|
Investments
|
32,517
|
|
|
32,226
|
|
|
291
|
|
|
—
|
|
Other current assets
|
30,543
|
|
|
30,543
|
|
|
—
|
|
|
—
|
|
Other assets
|
3,788
|
|
|
3,788
|
|
|
—
|
|
|
—
|
|
Total assets measured at fair value
|
$
|
447,371
|
|
|
$
|
428,172
|
|
|
$
|
19,199
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Contingent earnout liability
|
$
|
9,555
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,555
|
|
At
June 30, 2019
, our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S. Agency issued debt securities, equity securities with active markets and money market funds that are classified as restricted assets. The current portion of restricted amounts are included in prepaid expenses and other and the noncurrent portion is included in other assets. For these items, quoted current market prices are readily available.
At
June 30, 2019
, assets measured at fair value using Level 2 inputs include certificates of deposit, municipal bonds and corporate bonds measured using broker quotations that utilize observable market inputs.
Our financial instruments measured using Level 3 inputs consist of potential earnout payments associated with the acquisition of AJC in fiscal year
2019
and MOTIVE Drilling Technologies, Inc. in fiscal year 2017. The valuation techniques used for determining the fair value of the potential earnout payments use a Monte Carlo simulation which evaluates numerous potential earnings and pay out scenarios.
The following table presents a reconciliation of changes in the fair value of our financial assets and liabilities classified as Level 3 fair value measurements in the fair value hierarchy for the indicated periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net liabilities at beginning of period
|
$
|
9,015
|
|
|
$
|
15,702
|
|
|
$
|
11,160
|
|
|
$
|
14,879
|
|
Additions
|
—
|
|
|
—
|
|
|
673
|
|
|
—
|
|
Total gains or losses:
|
|
|
|
|
|
|
|
Included in earnings
|
540
|
|
|
(175
|
)
|
|
(2,278
|
)
|
|
5,148
|
|
Settlements
(1)
|
—
|
|
|
(6,125
|
)
|
|
—
|
|
|
(10,625
|
)
|
Net liabilities at end of period
|
$
|
9,555
|
|
|
$
|
9,402
|
|
|
$
|
9,555
|
|
|
$
|
9,402
|
|
|
|
(1)
|
Settlements represent earnout payments that have been paid or earned during the period.
|
The following table provides quantitative information about our Level 3 unobservable inputs at
June 30, 2019
:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Percentage
|
Contingent Consideration
|
$
|
9,555
|
|
|
Monte Carlo simulation
|
|
Discount rate
|
|
11.0
|
%
|
|
|
|
|
|
Revenue volatility
|
|
13.0
|
%
|
|
|
|
|
|
Risk free rate
|
|
2.0
|
%
|
The following information presents the supplemental fair value information about long-term fixed-rate debt at
June 30, 2019
and
September 30, 2018
:
|
|
|
|
|
|
|
|
|
(in millions)
|
June 30, 2019
|
|
September 30, 2018
|
Carrying value of long-term fixed-rate debt
|
$
|
491.7
|
|
|
$
|
494.0
|
|
Fair value of long-term fixed-rate debt
|
$
|
530.0
|
|
|
$
|
509.3
|
|
The fair value for the
$500 million
fixed-rate debt was based on broker quotes. The notes are classified within Level 2 as they are not actively traded in markets.
We adopted ASU No. 2016-01 on October 1, 2018, and as a result, we recognize our marketable equity securities that have readily determinable fair values at fair value, with changes in such values reflected in net income. Previously, we recognized changes in fair value of equity securities in other comprehensive income in the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss). There is no longer a requirement to consider whether the decline in fair value is other-than-temporary. When equity securities are sold, the cost of securities used in determining realized gains and losses is based on the average cost basis of the security sold.
The estimated fair value of our equity securities, reflected on our Unaudited Condensed Consolidated Balance Sheets as Investments, is based on Level 1 inputs. As of
June 30, 2019
, we recorded a loss of
$50.3 million
, which resulted from the decrease in the fair value of our investments from
September 30, 2018
.
The following is a summary of our securities, which excludes assets held in a Non-Qualified Supplemental Savings Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
Equity Securities:
|
|
|
|
|
|
|
|
June 30, 2019
|
$
|
38,473
|
|
|
$
|
14,865
|
|
|
$
|
(21,112
|
)
|
|
$
|
32,226
|
|
September 30, 2018
|
$
|
38,473
|
|
|
$
|
44,023
|
|
|
$
|
—
|
|
|
$
|
82,496
|
|
NOTE 13 EMPLOYEE BENEFIT PLANS
Components of Net Periodic Benefit Cost
The following provides information at
June 30, 2019
related to the Company-sponsored domestic defined benefit pension plan, the Helmerich & Payne, Inc. Employee Retirement Plan (the “Pension Plan”):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Interest cost
|
$
|
1,097
|
|
|
$
|
1,013
|
|
|
$
|
3,291
|
|
|
$
|
3,041
|
|
Expected return on plan assets
|
(1,386
|
)
|
|
(1,386
|
)
|
|
(4,158
|
)
|
|
(4,158
|
)
|
Recognized net actuarial loss
|
291
|
|
|
461
|
|
|
874
|
|
|
1,382
|
|
Settlement
|
1,548
|
|
|
—
|
|
|
1,548
|
|
|
—
|
|
Net pension expense
|
$
|
1,550
|
|
|
$
|
88
|
|
|
$
|
1,555
|
|
|
$
|
265
|
|
According to ASC 960, Plan Accounting-Defined Benefit Pension Plans, if the lump sum distributions made during a plan year exceed the total of the projected service cost and interest cost for the plan year, settlement accounting is required. Lump sum payments exceeded this threshold during the three and nine months ended June 30, 2019. Accordingly, we recognized settlement expense of
$1.5 million
for the three and nine months ended June 30, 2019, in other expense within our Condensed Consolidated Statements of Operations.
Employer Contributions
We did
no
t contribute to the Pension Plan during the
nine
months ended
June 30, 2019
. We could make contributions for the remainder of fiscal year
2019
to fund distributions in lieu of liquidating assets.
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, 2019
, we had purchase commitments for equipment, parts and supplies of approximately
$21.8 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. HPIDC, our wholly-owned subsidiary and the parent company of our Venezuelan subsidiary, has a lawsuit pending in the United States District Court for the District of Columbia against the Bolivarian Republic of Venezuela, Petroleos de Venezuela, S.A. and PDVSA Petroleo, S.A., seeking damages for the taking of their Venezuelan drilling business in violation of international law. While there exists the possibility of realizing a recovery, we are currently unable to determine the timing or amounts we may receive, if any, or the likelihood of recovery.
No
contingent gains were recognized in our Unaudited Condensed Consolidated Financial Statements.
In January 2018, an employee of HPIDC suffered personal injury and subsequently, brought a lawsuit against the operator and H&P. Pursuant to the terms of the drilling contract between HPIDC and the operator, HPIDC indemnified the operator in the lawsuit, subject to certain limitations. H&P has settled this matter on behalf of itself and the operator with
$21.0 million
of the settlement amount to be paid by the Company. The settlement was paid out during the
nine months ended June 30, 2019
. While we believe we had meritorious defenses to the matter, we determined that settlement was a reasonable alternative to the uncertainty and expense associated with a jury trial.
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
We are a global contract drilling company based in Tulsa, Oklahoma with operations in all major U.S. onshore basins as well as South America and the Middle East.
Our contract 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.
Effective October 1, 2018, we implemented organizational changes, consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. Certain operations previously reported in “other” within our segment disclosures are now managed and presented within the new H&P Technologies reportable segment. As a result, beginning with the reporting of first quarter 2019, our operations are organized into the following reportable business segments: U.S. Land, Offshore, International Land and H&P Technologies. Certain other corporate activities and our real estate operations are included in Other. All segment disclosures have been recast for these segment changes. Consolidated revenues and expenses reflect the elimination of intercompany transactions.
Segment Performance
We evaluate segment performance based on income or loss from continuing operations (segment operating income) before income taxes which includes:
|
|
•
|
Revenues from external and internal customers
|
|
|
•
|
Allocated general and administrative costs
|
|
|
•
|
Asset impairment charges
|
but excludes corporate costs for other depreciation, income from asset sales and other corporate income and expense.
General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.
Summarized financial information of our reportable segments for the
three months ended June 30, 2019
and
2018
is shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
(in thousands)
|
U.S. Land
(1)
|
|
Offshore
|
|
International
Land
|
|
H&P
Technologies
|
|
Other
|
|
Eliminations
|
|
Total
|
External Sales
|
$
|
593,297
|
|
|
$
|
37,674
|
|
|
$
|
46,283
|
|
|
$
|
7,534
|
|
|
$
|
3,186
|
|
|
$
|
—
|
|
|
$
|
687,974
|
|
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
1,842
|
|
|
8
|
|
|
$
|
(1,850
|
)
|
|
—
|
|
Total Sales
|
593,297
|
|
|
37,674
|
|
|
46,283
|
|
|
9,376
|
|
|
3,194
|
|
|
(1,850
|
)
|
|
687,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss)
|
(138,205
|
)
|
|
5,078
|
|
|
(5,023
|
)
|
|
(8,810
|
)
|
|
(731
|
)
|
|
—
|
|
|
(147,691
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
(in thousands)
|
U.S. Land
|
|
Offshore
|
|
International
Land
|
|
H&P
Technologies
(2)
|
|
Other
(2)
|
|
Eliminations
|
|
Total
|
External Sales
|
$
|
536,582
|
|
|
$
|
37,669
|
|
|
$
|
63,297
|
|
|
$
|
7,693
|
|
|
$
|
3,631
|
|
|
$
|
—
|
|
|
$
|
648,872
|
|
Intersegment
|
599
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
303
|
|
|
(902
|
)
|
|
—
|
|
Total Sales
|
537,181
|
|
|
37,669
|
|
|
63,297
|
|
|
7,693
|
|
|
3,934
|
|
|
(902
|
)
|
|
648,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss)
|
34,339
|
|
|
3,780
|
|
|
4,332
|
|
|
(9,052
|
)
|
|
1,826
|
|
|
—
|
|
|
35,225
|
|
|
|
(1)
|
Includes
$9.1 million
of technology related sales, of which
$1.8 million
is fulfilled by the H&P Technologies business segment.
|
|
|
(2)
|
Prior period information has been recast to reflect the change in operating segments.
|
Summarized financial information of our reportable segments for the
nine months ended June 30, 2019
and
2018
is shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
(in thousands)
|
U.S. Land
(1)
|
|
Offshore
|
|
International
Land
|
|
H&P
Technologies
|
|
Other
|
|
Eliminations
|
|
Total
|
External Sales
|
$
|
1,842,054
|
|
|
$
|
109,167
|
|
|
$
|
163,378
|
|
|
$
|
25,199
|
|
|
$
|
9,642
|
|
|
$
|
—
|
|
|
$
|
2,149,440
|
|
Intersegment
|
—
|
|
|
—
|
|
|
—
|
|
|
4,154
|
|
|
23
|
|
|
(4,177
|
)
|
|
—
|
|
Total Sales
|
1,842,054
|
|
|
109,167
|
|
|
163,378
|
|
|
29,353
|
|
|
9,665
|
|
|
(4,177
|
)
|
|
2,149,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss)
|
47,602
|
|
|
16,778
|
|
|
9,575
|
|
|
(27,088
|
)
|
|
1,988
|
|
|
—
|
|
|
48,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2018
|
(in thousands)
|
U.S. Land
|
|
Offshore
|
|
International
Land
|
|
H&P
Technologies
(2)
|
|
Other
(2)
|
|
Eliminations
|
|
Total
|
External Sales
|
$
|
1,480,951
|
|
|
$
|
104,018
|
|
|
$
|
178,970
|
|
|
$
|
16,842
|
|
|
$
|
9,662
|
|
|
$
|
—
|
|
|
$
|
1,790,443
|
|
Intersegment
|
634
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|
(1,409
|
)
|
|
—
|
|
Total Sales
|
1,481,585
|
|
|
104,018
|
|
|
178,970
|
|
|
16,842
|
|
|
10,437
|
|
|
(1,409
|
)
|
|
1,790,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss)
|
86,159
|
|
|
17,954
|
|
|
7,171
|
|
|
(26,400
|
)
|
|
4,842
|
|
|
—
|
|
|
89,726
|
|
|
|
(1)
|
Includes
$20.9 million
of technology related sales, of which
$4.2 million
is fulfilled by the H&P Technologies business segment.
|
|
|
(2)
|
Prior period information has been recast to reflect the change in operating segments.
|
The following table reconciles segment operating income (loss) per the tables above to income from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
As adjusted
|
|
|
|
As adjusted
|
Segment operating income (loss)
|
$
|
(147,691
|
)
|
|
$
|
35,225
|
|
|
$
|
48,855
|
|
|
$
|
89,726
|
|
Gain on sale of assets
|
9,960
|
|
|
4,313
|
|
|
27,050
|
|
|
15,133
|
|
Corporate selling, general and administrative costs and corporate depreciation
|
(30,143
|
)
|
|
(33,232
|
)
|
|
(94,344
|
)
|
|
(96,108
|
)
|
Operating income (loss) from continuing operations
|
(167,874
|
)
|
|
6,306
|
|
|
(18,439
|
)
|
|
8,751
|
|
Other income (expense)
|
|
|
|
|
|
|
|
Interest and dividend income
|
2,349
|
|
|
2,109
|
|
|
6,861
|
|
|
5,680
|
|
Interest expense
|
(6,257
|
)
|
|
(5,993
|
)
|
|
(17,145
|
)
|
|
(17,794
|
)
|
Loss on investment securities
|
(13,271
|
)
|
|
—
|
|
|
(50,228
|
)
|
|
—
|
|
Other
|
(1,599
|
)
|
|
(61
|
)
|
|
(1,051
|
)
|
|
170
|
|
Total unallocated amounts
|
(18,778
|
)
|
|
(3,945
|
)
|
|
(61,563
|
)
|
|
(11,944
|
)
|
Income (loss) from continuing operations before income taxes
|
$
|
(186,652
|
)
|
|
$
|
2,361
|
|
|
$
|
(80,002
|
)
|
|
$
|
(3,193
|
)
|
The following table presents total assets by reportable segment:
|
|
|
|
|
|
|
|
|
(in thousands)
|
June 30,
2019
|
|
September 30,
2018
|
Total assets
|
|
|
|
U.S. Land
|
$
|
4,742,605
|
|
|
$
|
5,012,378
|
|
Offshore
|
100,490
|
|
|
105,439
|
|
International Land
|
318,195
|
|
|
362,033
|
|
H&P Technologies
|
149,712
|
|
|
146,957
|
|
Other
|
31,232
|
|
|
29,525
|
|
|
5,342,234
|
|
|
5,656,332
|
|
Investments and corporate operations
|
555,145
|
|
|
558,535
|
|
Total assets from continuing operations
|
5,897,379
|
|
|
6,214,867
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
$
|
5,897,379
|
|
|
$
|
6,214,867
|
|
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)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating revenues
|
|
|
|
|
|
|
|
United States
|
641,270
|
|
|
585,126
|
|
|
1,984,695
|
|
|
1,610,319
|
|
Argentina
|
40,977
|
|
|
50,272
|
|
|
123,666
|
|
|
148,901
|
|
Colombia
|
3,451
|
|
|
10,639
|
|
|
28,075
|
|
|
22,872
|
|
Other Foreign
|
$
|
2,276
|
|
|
$
|
2,835
|
|
|
$
|
13,004
|
|
|
$
|
8,351
|
|
Total
|
$
|
687,974
|
|
|
$
|
648,872
|
|
|
$
|
2,149,440
|
|
|
$
|
1,790,443
|
|
Refer to Note
9
—Revenue from Contracts with Customers for additional information regarding the recognition of revenue upon adoption of ASC 606.
NOTE 16 GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
In March 2015, HPIDC, a wholly-owned subsidiary of the Company, issued senior unsecured notes in an aggregate principal amount of
$500 million
. In December 2018, the Company completed the Exchange Offer, pursuant to which
$487.1 million
aggregate principal amount of the HPIDC notes was exchanged for new senior unsecured notes of the Company in an equal aggregate principal amount (see Note 6—Debt). The
$12.9 million
of remaining HPIDC notes continue to be fully and unconditionally guaranteed by the Company. No subsidiaries of the Company currently guarantee such notes, subject to certain provisions that if any subsidiary guarantees certain other debt of HPIDC or the Company, then such subsidiary will provide a guarantee of the obligations under such notes.
In connection with the Exchange Offer, HPIDC fully and unconditionally guaranteed the Company’s newly issued
$487.1 million
of notes. No other subsidiaries of the Company currently guarantee such notes, subject to certain provisions that if any subsidiary guarantees certain other debt of the Company, then such subsidiary will provide a guarantee of the obligations under such notes. In February 2019, approximately
$487.0 million
aggregate principal amount of such notes was subsequently exchanged in the Registered Exchange Offer for substantially identical new notes of the Company registered under the Securities Act.
See Note
6
-–Debt to the Unaudited Condensed Consolidated Financial Statements for more information about the Registered Exchange Offer.
In connection with the notes described above, we are providing the following unaudited condensed consolidating financial information in accordance with the SEC disclosure requirements, so that separate financial statements of HPIDC are not required to be filed. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements. Unaudited condensed consolidating financial information for HPIDC and the Company is shown in the tables below.
CONDENSED CONSOLIDATING BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
94,354
|
|
|
$
|
224,838
|
|
|
$
|
15,583
|
|
|
$
|
—
|
|
|
$
|
334,775
|
|
Short-term investments
|
—
|
|
|
44,071
|
|
|
1,677
|
|
|
—
|
|
|
45,748
|
|
Accounts receivable, net
|
(291
|
)
|
|
462,885
|
|
|
46,582
|
|
|
(993
|
)
|
|
508,183
|
|
Inventories of materials and supplies, net
|
—
|
|
|
118,530
|
|
|
31,596
|
|
|
—
|
|
|
150,126
|
|
Prepaid expenses and other
|
14,414
|
|
|
19,160
|
|
|
43,684
|
|
|
148
|
|
|
77,406
|
|
Total current assets
|
108,477
|
|
|
869,484
|
|
|
139,122
|
|
|
(845
|
)
|
|
1,116,238
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
15,774
|
|
|
32,226
|
|
|
291
|
|
|
—
|
|
|
48,291
|
|
Property, plant and equipment, net
|
45,450
|
|
|
4,270,440
|
|
|
267,783
|
|
|
—
|
|
|
4,583,673
|
|
Intercompany receivables
|
299,182
|
|
|
1,959,592
|
|
|
522,577
|
|
|
(2,781,351
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
—
|
|
|
67,902
|
|
|
—
|
|
|
67,902
|
|
Intangible assets, net
|
—
|
|
|
—
|
|
|
69,093
|
|
|
—
|
|
|
69,093
|
|
Other assets
|
318
|
|
|
6,471
|
|
|
5,393
|
|
|
—
|
|
|
12,182
|
|
Investment in subsidiaries
|
5,926,270
|
|
|
277,550
|
|
|
—
|
|
|
(6,203,820
|
)
|
|
—
|
|
Total assets
|
$
|
6,395,471
|
|
|
$
|
7,415,763
|
|
|
$
|
1,072,161
|
|
|
$
|
(8,986,016
|
)
|
|
$
|
5,897,379
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
84,703
|
|
|
$
|
45,946
|
|
|
$
|
3,789
|
|
|
$
|
(361
|
)
|
|
$
|
134,077
|
|
Accrued liabilities
|
25,190
|
|
|
205,630
|
|
|
26,113
|
|
|
(484
|
)
|
|
256,449
|
|
Total current liabilities
|
109,893
|
|
|
251,576
|
|
|
29,902
|
|
|
(845
|
)
|
|
390,526
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
482,962
|
|
|
8,689
|
|
|
—
|
|
|
—
|
|
|
491,651
|
|
Deferred income taxes
|
(4,273
|
)
|
|
783,109
|
|
|
48,191
|
|
|
—
|
|
|
827,027
|
|
Intercompany payables
|
1,690,102
|
|
|
259,027
|
|
|
832,122
|
|
|
(2,781,251
|
)
|
|
—
|
|
Other
|
21,733
|
|
|
47,537
|
|
|
9,220
|
|
|
—
|
|
|
78,490
|
|
Noncurrent liabilities - discontinued operations
|
—
|
|
|
—
|
|
|
14,631
|
|
|
—
|
|
|
14,631
|
|
Total noncurrent liabilities
|
2,190,524
|
|
|
1,098,362
|
|
|
904,164
|
|
|
(2,781,251
|
)
|
|
1,411,799
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Common stock
|
11,208
|
|
|
100
|
|
|
—
|
|
|
(100
|
)
|
|
11,208
|
|
Additional paid-in capital
|
501,585
|
|
|
52,437
|
|
|
1,040
|
|
|
(53,477
|
)
|
|
501,585
|
|
Retained earnings
|
3,750,785
|
|
|
6,025,212
|
|
|
137,055
|
|
|
(6,162,267
|
)
|
|
3,750,785
|
|
Accumulated other comprehensive income (loss)
|
(16,085
|
)
|
|
(11,924
|
)
|
|
—
|
|
|
11,924
|
|
|
(16,085
|
)
|
Treasury stock, at cost
|
(152,439
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152,439
|
)
|
Total shareholders’ equity
|
4,095,054
|
|
|
6,065,825
|
|
|
138,095
|
|
|
(6,203,920
|
)
|
|
4,095,054
|
|
Total liabilities and shareholders’ equity
|
$
|
6,395,471
|
|
|
$
|
7,415,763
|
|
|
$
|
1,072,161
|
|
|
$
|
(8,986,016
|
)
|
|
$
|
5,897,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
273,214
|
|
|
$
|
11,141
|
|
|
$
|
—
|
|
|
$
|
284,355
|
|
Short-term investments
|
—
|
|
|
41,461
|
|
|
—
|
|
|
—
|
|
|
41,461
|
|
Accounts receivable, net
|
(29
|
)
|
|
499,644
|
|
|
65,859
|
|
|
(272
|
)
|
|
565,202
|
|
Inventories of materials and supplies, net
|
—
|
|
|
127,154
|
|
|
30,980
|
|
|
—
|
|
|
158,134
|
|
Prepaid expenses and other
|
20,783
|
|
|
10,649
|
|
|
35,539
|
|
|
(573
|
)
|
|
66,398
|
|
Total current assets
|
20,754
|
|
|
952,122
|
|
|
143,519
|
|
|
(845
|
)
|
|
1,115,550
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
16,200
|
|
|
82,496
|
|
|
—
|
|
|
—
|
|
|
98,696
|
|
Property, plant and equipment, net
|
46,859
|
|
|
4,515,077
|
|
|
295,446
|
|
|
—
|
|
|
4,857,382
|
|
Intercompany receivables
|
161,532
|
|
|
2,024,652
|
|
|
294,206
|
|
|
(2,480,390
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
—
|
|
|
64,777
|
|
|
—
|
|
|
64,777
|
|
Intangible assets, net
|
—
|
|
|
—
|
|
|
73,207
|
|
|
—
|
|
|
73,207
|
|
Other assets
|
268
|
|
|
907
|
|
|
4,080
|
|
|
—
|
|
|
5,255
|
|
Investment in subsidiaries
|
5,981,197
|
|
|
172,513
|
|
|
—
|
|
|
(6,153,710
|
)
|
|
—
|
|
Total assets
|
$
|
6,226,810
|
|
|
$
|
7,747,767
|
|
|
$
|
875,235
|
|
|
$
|
(8,634,945
|
)
|
|
$
|
6,214,867
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
83,819
|
|
|
$
|
43,626
|
|
|
$
|
5,483
|
|
|
$
|
(264
|
)
|
|
$
|
132,664
|
|
Accrued liabilities
|
43,449
|
|
|
164,542
|
|
|
37,093
|
|
|
(580
|
)
|
|
244,504
|
|
Total current liabilities
|
127,268
|
|
|
208,168
|
|
|
42,576
|
|
|
(844
|
)
|
|
377,168
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
—
|
|
|
493,968
|
|
|
—
|
|
|
—
|
|
|
493,968
|
|
Deferred income taxes
|
(7,112
|
)
|
|
834,714
|
|
|
25,534
|
|
|
—
|
|
|
853,136
|
|
Intercompany payables
|
1,701,694
|
|
|
178,759
|
|
|
599,837
|
|
|
(2,480,290
|
)
|
|
—
|
|
Other
|
22,225
|
|
|
48,836
|
|
|
22,545
|
|
|
—
|
|
|
93,606
|
|
Noncurrent liabilities - discontinued operations
|
—
|
|
|
—
|
|
|
14,254
|
|
|
—
|
|
|
14,254
|
|
Total noncurrent liabilities
|
1,716,807
|
|
|
1,556,277
|
|
|
662,170
|
|
|
(2,480,290
|
)
|
|
1,454,964
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Common stock
|
11,201
|
|
|
100
|
|
|
—
|
|
|
(100
|
)
|
|
11,201
|
|
Additional paid-in capital
|
500,393
|
|
|
52,437
|
|
|
1,040
|
|
|
(53,477
|
)
|
|
500,393
|
|
Retained earnings
|
4,027,779
|
|
|
5,910,955
|
|
|
169,449
|
|
|
(6,080,404
|
)
|
|
4,027,779
|
|
Accumulated other comprehensive income
|
16,550
|
|
|
19,830
|
|
|
—
|
|
|
(19,830
|
)
|
|
16,550
|
|
Treasury stock, at cost
|
(173,188
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(173,188
|
)
|
Total shareholders’ equity
|
4,382,735
|
|
|
5,983,322
|
|
|
170,489
|
|
|
(6,153,811
|
)
|
|
4,382,735
|
|
Total liabilities and shareholders’ equity
|
$
|
6,226,810
|
|
|
$
|
7,747,767
|
|
|
$
|
875,235
|
|
|
$
|
(8,634,945
|
)
|
|
$
|
6,214,867
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Operating revenue
|
$
|
—
|
|
|
$
|
633,284
|
|
|
$
|
58,870
|
|
|
$
|
(4,180
|
)
|
|
$
|
687,974
|
|
Operating costs and other
|
2,942
|
|
|
780,880
|
|
|
76,383
|
|
|
(4,357
|
)
|
|
855,848
|
|
Operating loss from continuing operations
|
(2,942
|
)
|
|
(147,596
|
)
|
|
(17,513
|
)
|
|
177
|
|
|
(167,874
|
)
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
(35
|
)
|
|
(12,639
|
)
|
|
330
|
|
|
(177
|
)
|
|
(12,521
|
)
|
Interest expense
|
(6,083
|
)
|
|
(132
|
)
|
|
(42
|
)
|
|
—
|
|
|
(6,257
|
)
|
Equity in net loss of subsidiaries
|
(145,440
|
)
|
|
(3,417
|
)
|
|
—
|
|
|
148,857
|
|
|
—
|
|
Loss from continuing operations before income taxes
|
(154,500
|
)
|
|
(163,784
|
)
|
|
(17,225
|
)
|
|
148,857
|
|
|
(186,652
|
)
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
183
|
|
|
(43,271
|
)
|
|
11,057
|
|
|
—
|
|
|
(32,031
|
)
|
Loss from continuing operations
|
(154,683
|
)
|
|
(120,513
|
)
|
|
(28,282
|
)
|
|
148,857
|
|
|
(154,621
|
)
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
7,244
|
|
|
—
|
|
|
7,244
|
|
Income tax provision
|
—
|
|
|
—
|
|
|
7,306
|
|
|
—
|
|
|
7,306
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(62
|
)
|
Net loss
|
$
|
(154,683
|
)
|
|
$
|
(120,513
|
)
|
|
$
|
(28,344
|
)
|
|
$
|
148,857
|
|
|
$
|
(154,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018 as adjusted (Note 2)
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Operating revenue
|
$
|
—
|
|
|
$
|
574,252
|
|
|
$
|
74,647
|
|
|
$
|
(27
|
)
|
|
$
|
648,872
|
|
Operating costs and other
|
4,151
|
|
|
557,994
|
|
|
80,639
|
|
|
(218
|
)
|
|
642,566
|
|
Operating income (loss) from continuing operations
|
(4,151
|
)
|
|
16,258
|
|
|
(5,992
|
)
|
|
191
|
|
|
6,306
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
107
|
|
|
1,854
|
|
|
278
|
|
|
(191
|
)
|
|
2,048
|
|
Interest expense
|
(108
|
)
|
|
(5,117
|
)
|
|
(768
|
)
|
|
—
|
|
|
(5,993
|
)
|
Equity in net loss of subsidiaries
|
(4,883
|
)
|
|
(2,093
|
)
|
|
—
|
|
|
6,976
|
|
|
—
|
|
Income (loss) from continuing operations before income taxes
|
(9,035
|
)
|
|
10,902
|
|
|
(6,482
|
)
|
|
6,976
|
|
|
2,361
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
(1,027
|
)
|
|
17,384
|
|
|
(5,822
|
)
|
|
—
|
|
|
10,535
|
|
Loss from continuing operations
|
(8,008
|
)
|
|
(6,482
|
)
|
|
(660
|
)
|
|
6,976
|
|
|
(8,174
|
)
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
8,383
|
|
|
—
|
|
|
8,383
|
|
Income tax provision
|
—
|
|
|
—
|
|
|
8,217
|
|
|
—
|
|
|
8,217
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
166
|
|
Net loss
|
$
|
(8,008
|
)
|
|
$
|
(6,482
|
)
|
|
$
|
(494
|
)
|
|
$
|
6,976
|
|
|
$
|
(8,008
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Operating revenue
|
$
|
—
|
|
|
$
|
1,951,221
|
|
|
$
|
202,447
|
|
|
$
|
(4,228
|
)
|
|
$
|
2,149,440
|
|
Operating costs and other
|
8,526
|
|
|
1,937,425
|
|
|
226,824
|
|
|
(4,896
|
)
|
|
2,167,879
|
|
Operating income (loss) from continuing operations
|
(8,526
|
)
|
|
13,796
|
|
|
(24,377
|
)
|
|
668
|
|
|
(18,439
|
)
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
(77
|
)
|
|
(45,275
|
)
|
|
1,602
|
|
|
(668
|
)
|
|
(44,418
|
)
|
Interest income (expense)
|
(13,202
|
)
|
|
(4,844
|
)
|
|
901
|
|
|
—
|
|
|
(17,145
|
)
|
Equity in net income (loss) of subsidiaries
|
(55,331
|
)
|
|
6,254
|
|
|
—
|
|
|
49,077
|
|
|
—
|
|
Loss from continuing operations before income taxes
|
(77,136
|
)
|
|
(30,069
|
)
|
|
(21,874
|
)
|
|
49,077
|
|
|
(80,002
|
)
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
(2,303
|
)
|
|
(11,884
|
)
|
|
8,585
|
|
|
—
|
|
|
(5,602
|
)
|
Loss from continuing operations
|
(74,833
|
)
|
|
(18,185
|
)
|
|
(30,459
|
)
|
|
49,077
|
|
|
(74,400
|
)
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
22,798
|
|
|
—
|
|
|
22,798
|
|
Income tax provision
|
—
|
|
|
—
|
|
|
23,231
|
|
|
—
|
|
|
23,231
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(433
|
)
|
|
—
|
|
|
(433
|
)
|
Net loss
|
$
|
(74,833
|
)
|
|
$
|
(18,185
|
)
|
|
$
|
(30,892
|
)
|
|
$
|
49,077
|
|
|
$
|
(74,833
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2018 as adjusted (Note 2)
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Operating revenue
|
$
|
—
|
|
|
$
|
1,584,970
|
|
|
$
|
205,537
|
|
|
$
|
(64
|
)
|
|
$
|
1,790,443
|
|
Operating costs and other
|
12,360
|
|
|
1,542,815
|
|
|
227,186
|
|
|
(669
|
)
|
|
1,781,692
|
|
Operating income (loss) from continuing operations
|
(12,360
|
)
|
|
42,155
|
|
|
(21,649
|
)
|
|
605
|
|
|
8,751
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
210
|
|
|
5,226
|
|
|
1,019
|
|
|
(605
|
)
|
|
5,850
|
|
Interest expense
|
(274
|
)
|
|
(15,368
|
)
|
|
(2,152
|
)
|
|
—
|
|
|
(17,794
|
)
|
Equity in net income of subsidiaries
|
494,574
|
|
|
3,191
|
|
|
—
|
|
|
(497,765
|
)
|
|
—
|
|
Income (loss) from continuing operations before income taxes
|
482,150
|
|
|
35,204
|
|
|
(22,782
|
)
|
|
(497,765
|
)
|
|
(3,193
|
)
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
1,931
|
|
|
(459,571
|
)
|
|
(36,388
|
)
|
|
—
|
|
|
(494,028
|
)
|
Income from continuing operations
|
480,219
|
|
|
494,775
|
|
|
13,606
|
|
|
(497,765
|
)
|
|
490,835
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
9,127
|
|
|
—
|
|
|
9,127
|
|
Income tax provision
|
—
|
|
|
—
|
|
|
19,743
|
|
|
—
|
|
|
19,743
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(10,616
|
)
|
|
—
|
|
|
(10,616
|
)
|
Net income
|
$
|
480,219
|
|
|
$
|
494,775
|
|
|
$
|
2,990
|
|
|
$
|
(497,765
|
)
|
|
$
|
480,219
|
|
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net loss
|
$
|
(154,683
|
)
|
|
$
|
(120,513
|
)
|
|
$
|
(28,344
|
)
|
|
$
|
148,857
|
|
|
$
|
(154,683
|
)
|
Other comprehensive income, net of income taxes:
|
|
|
|
|
|
|
|
|
|
Minimum pension liability adjustments, net
|
78
|
|
|
148
|
|
|
—
|
|
|
—
|
|
|
226
|
|
Other comprehensive income
|
78
|
|
|
148
|
|
|
—
|
|
|
—
|
|
|
226
|
|
Comprehensive loss
|
$
|
(154,605
|
)
|
|
$
|
(120,365
|
)
|
|
$
|
(28,344
|
)
|
|
$
|
148,857
|
|
|
$
|
(154,457
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net loss
|
$
|
(8,008
|
)
|
|
$
|
(6,482
|
)
|
|
$
|
(494
|
)
|
|
$
|
6,976
|
|
|
$
|
(8,008
|
)
|
Other comprehensive income, net of income taxes:
|
|
|
|
|
|
|
|
|
|
Unrealized depreciation on securities, net
|
—
|
|
|
13,826
|
|
|
—
|
|
|
—
|
|
|
13,826
|
|
Minimum pension liability adjustments, net
|
101
|
|
|
236
|
|
|
—
|
|
|
—
|
|
|
337
|
|
Other comprehensive income
|
$
|
101
|
|
|
$
|
14,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,163
|
|
Comprehensive income (loss)
|
$
|
(7,907
|
)
|
|
$
|
7,580
|
|
|
$
|
(494
|
)
|
|
$
|
6,976
|
|
|
$
|
6,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net loss
|
$
|
(74,833
|
)
|
|
$
|
(18,185
|
)
|
|
$
|
(30,892
|
)
|
|
$
|
49,077
|
|
|
$
|
(74,833
|
)
|
Other comprehensive income, net of income taxes:
|
|
|
|
|
|
|
|
|
|
Minimum pension liability adjustments, net
|
233
|
|
|
442
|
|
|
—
|
|
|
—
|
|
|
675
|
|
Other comprehensive income
|
233
|
|
|
442
|
|
|
—
|
|
|
—
|
|
|
675
|
|
Comprehensive loss
|
$
|
(74,600
|
)
|
|
$
|
(17,743
|
)
|
|
$
|
(30,892
|
)
|
|
$
|
49,077
|
|
|
$
|
(74,158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2018
|
(in thousands)
|
Helmerich & Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net income
|
$
|
480,219
|
|
|
$
|
494,775
|
|
|
$
|
2,990
|
|
|
$
|
(497,765
|
)
|
|
$
|
480,219
|
|
Other comprehensive income, net of income taxes:
|
|
|
|
|
|
|
|
|
|
Unrealized appreciation on securities, net
|
—
|
|
|
5,657
|
|
|
—
|
|
|
—
|
|
|
5,657
|
|
Minimum pension liability adjustments, net
|
295
|
|
|
690
|
|
|
—
|
|
|
—
|
|
|
985
|
|
Other comprehensive income
|
295
|
|
|
6,347
|
|
|
—
|
|
|
—
|
|
|
6,642
|
|
Comprehensive income
|
$
|
480,514
|
|
|
$
|
501,122
|
|
|
$
|
2,990
|
|
|
$
|
(497,765
|
)
|
|
$
|
486,861
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2019
|
(in thousands)
|
Helmerich
& Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International
Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net cash provided by (used in) operating activities
|
$
|
(15,599
|
)
|
|
$
|
657,016
|
|
|
$
|
17,954
|
|
|
$
|
—
|
|
|
$
|
659,371
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(7,355
|
)
|
|
(389,615
|
)
|
|
(6,600
|
)
|
|
—
|
|
|
(403,570
|
)
|
Purchase of short-term investments
|
—
|
|
|
(70,175
|
)
|
|
(1,677
|
)
|
|
—
|
|
|
(71,852
|
)
|
Payment for acquisition of business, net of cash acquired
|
(2,781
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,781
|
)
|
Proceeds from sale of short-term investments
|
—
|
|
|
68,015
|
|
|
—
|
|
|
—
|
|
|
68,015
|
|
Intercompany transfers
|
7,355
|
|
|
(7,355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Proceeds from asset sales
|
6
|
|
|
32,585
|
|
|
3,636
|
|
|
—
|
|
|
36,227
|
|
Net cash used in investing activities
|
(2,775
|
)
|
|
(366,545
|
)
|
|
(4,641
|
)
|
|
—
|
|
|
(373,961
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
235,058
|
|
|
(235,058
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Dividends paid
|
(235,058
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235,058
|
)
|
Debt issuance costs paid
|
(3,912
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,912
|
)
|
Payments for employee taxes on net settlement of equity awards
|
(6,420
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,420
|
)
|
Proceeds from stock option exercises
|
2,901
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,901
|
|
Other intercompany transfers
|
111,339
|
|
|
(103,788
|
)
|
|
(7,551
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
103,908
|
|
|
(338,846
|
)
|
|
(7,551
|
)
|
|
—
|
|
|
(242,489
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents and restricted cash
|
85,534
|
|
|
(48,375
|
)
|
|
5,762
|
|
|
—
|
|
|
42,921
|
|
Cash and cash equivalents and restricted cash, beginning of period
|
6,037
|
|
|
273,214
|
|
|
46,934
|
|
|
—
|
|
|
326,185
|
|
Cash and cash equivalents and restricted cash, end of period
|
$
|
91,571
|
|
|
$
|
224,839
|
|
|
$
|
52,696
|
|
|
$
|
—
|
|
|
$
|
369,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2018 as adjusted (Note 2)
|
(in thousands)
|
Helmerich
& Payne, Inc.
(Guarantor)
|
|
Helmerich & Payne
International
Drilling Co.
(Issuer)
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
Consolidated
|
Net cash provided by operating activities
|
$
|
1,914
|
|
|
$
|
350,557
|
|
|
$
|
18,957
|
|
|
$
|
—
|
|
|
$
|
371,428
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(8,725
|
)
|
|
(306,278
|
)
|
|
(7,655
|
)
|
|
—
|
|
|
(322,658
|
)
|
Purchase of short-term investments
|
—
|
|
|
(52,159
|
)
|
|
—
|
|
|
—
|
|
|
(52,159
|
)
|
Payment for acquisition of business, net cash acquired
|
(47,886
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,886
|
)
|
Proceeds from sale of short-term investments
|
—
|
|
|
52,470
|
|
|
—
|
|
|
—
|
|
|
52,470
|
|
Intercompany transfers
|
56,611
|
|
|
(56,611
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Proceeds from asset sales
|
—
|
|
|
26,737
|
|
|
1,312
|
|
|
—
|
|
|
28,049
|
|
Net cash used in investing activities
|
—
|
|
|
(335,841
|
)
|
|
(6,343
|
)
|
|
—
|
|
|
(342,184
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
230,368
|
|
|
(230,368
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Dividends paid
|
(230,368
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(230,368
|
)
|
Payments for employee taxes on net settlement of equity awards
|
(5,978
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,978
|
)
|
Proceeds from stock option exercises
|
5,160
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,160
|
|
Payment of contingent consideration from acquisition of business
|
—
|
|
|
—
|
|
|
(10,625
|
)
|
|
—
|
|
|
(10,625
|
)
|
Net cash used in financing activities
|
(818
|
)
|
|
(230,368
|
)
|
|
(10,625
|
)
|
|
—
|
|
|
(241,811
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents and restricted cash
|
1,096
|
|
|
(215,652
|
)
|
|
1,989
|
|
|
—
|
|
|
(212,567
|
)
|
Cash and cash equivalents and restricted cash, beginning of period
|
9,385
|
|
|
507,504
|
|
|
43,620
|
|
|
—
|
|
|
560,509
|
|
Cash and cash equivalents and restricted cash, end of period
|
$
|
10,481
|
|
|
$
|
291,852
|
|
|
$
|
45,609
|
|
|
$
|
—
|
|
|
$
|
347,942
|
|