Helmerich & Payne(HP) - 2019 Q4 - Annual Report

Part I Business Helmerich & Payne is a contract drilling services company with four segments, primarily driven by U.S. Land operations and a $1.2 billion contract backlog - The company operates through four segments, with the U.S. Land segment being the largest, contributing 85% of consolidated operating revenues in fiscal 2019[14][33] Drilling Rig Fleet Status as of September 30, 2019 | Segment | Total Available Rigs | Rigs Contracted | | :--- | :--- | :--- | | U.S. Land | 299 | 194 | | Offshore | 8 | 6 | | International Land | 31 | 18 | - H&P Technologies is a new segment focused on developing and commercializing advanced digital drilling technologies applicable to both H&P and non-H&P rigs[41] Contract Backlog Comparison (in billions) | Segment | Sep 30, 2019 | Sep 30, 2018 | | :--- | :--- | :--- | | U.S. Land | $1.0 | $0.9 | | Offshore | — | — | | International Land | $0.2 | $0.2 | | Total | $1.2 | $1.1 | - As of September 30, 2019, the company employed 7,767 in the U.S. and 743 internationally, with no unionized U.S. employees[66] Risk Factors The company faces significant risks from oil and gas price volatility, intense competition, technological obsolescence, operational hazards, and international political instability - Business operations are highly dependent on the volatile oil and natural gas industry activity and prices[92] - The highly competitive contract drilling market, with a surplus of rigs, leads to pricing pressure and impacts rig utilization and profit margins[98][100] - New technologies may render existing equipment obsolete, requiring increased capital expenditures; 120 available rigs were not under contract as of September 30, 2019[102][101] - Operations are exposed to significant hazards like environmental damage and weather events, with potentially insufficient insurance or indemnities to cover all losses[105][106][111] - International operations face political and economic risks, particularly in Argentina, resulting in $8.2 million in foreign currency losses in fiscal 2019[153][154][156] - The $1.2 billion contract backlog may not be fully realized due to potential customer termination of fixed-term contracts, sometimes without early termination payments[135] Unresolved Staff Comments The company has no unresolved written comments from the SEC staff as of the end of fiscal year 2019 - No unresolved written comments from the SEC staff were issued 180 days or more before the end of fiscal year 2019[166] Properties The company's properties include drilling rigs, a fabrication facility near Houston, a maintenance facility near Tulsa, and investment real estate in Tulsa - The company primarily owns its drilling rigs and ancillary equipment[167] - Key real properties include a fabrication facility near Houston, Texas, and a maintenance facility near Tulsa, Oklahoma[167] - The company owns commercial real estate for investment in Tulsa, Oklahoma, including a shopping center and industrial warehouses[168] Legal Proceedings The company is engaged in a lawsuit against Venezuela for the 2010 expropriation of its drilling business, with uncertain recovery timing and amount - A lawsuit was filed in 2011 against Venezuela for the expropriation of its drilling business, with the timing, amount, and likelihood of recovery currently undeterminable[169] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[170] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Helmerich & Payne's common stock trades on the NYSE, with recent share repurchases and historical underperformance against key indices - The company's common stock is traded on the New York Stock Exchange under the symbol 'HP'[172] - In Q4 fiscal 2019, the company repurchased 1,000,000 shares at an average price of $42.78 per share[174] Stock Performance Indexed Returns (Base Period Sep 2014 = 100) | Company / Index | Sep 2018 | Sep 2019 | | :--- | :--- | :--- | | Helmerich & Payne, Inc. | 82.00 | 55.00 | | S&P 500 Index | 157.00 | 164.00 | | S&P 1500 Oil & Gas Drilling Index | 57.00 | 30.00 | Selected Financial Data A five-year financial summary shows fiscal 2019 operating revenues of $2.8 billion and a net loss of $33.7 million Five-Year Summary of Selected Financial Data (in thousands, except per share data) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $2,798,490 | $2,487,268 | $1,804,741 | $1,624,332 | $3,161,702 | | Net income (loss) | $(33,656) | $482,672 | $(128,212) | $(56,828) | $420,427 | | Diluted earnings (loss) per share | $(0.34) | $4.37 | $(1.20) | $(0.54) | $3.85 | | Total assets | $5,839,515 | $6,214,867 | $6,439,988 | $6,832,019 | $7,147,242 | | Debt to capital ratio | 10.8% | 10.1% | 10.6% | 9.7% | 9.1% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses fiscal 2019 financial performance, market outlook, and liquidity, highlighting a net loss due to asset impairment and a new H&P Technologies segment Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency, commodity prices, and equity prices, while interest rate risk is minimal due to fixed-rate debt - The company faces foreign currency risk in Argentina, where a hypothetical 10% decrease in peso value would have an insignificant impact on monetary assets[280] - Demand for drilling services is highly dependent on volatile crude oil and natural gas prices, impacting E&P capital spending[282] - Interest rate risk is minimal due to $487.1 million in fixed-rate senior notes at 4.65% and no outstanding variable-rate credit facility borrowings[285] - Equity price risk exists from a $16.3 million marketable securities portfolio, where a 10% price decrease would reduce its value by $1.6 million[286] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal year 2019, including balance sheets, income statements, and detailed notes on key events Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None reported[524] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2019, with no changes in internal control - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of period-end[525] - No changes occurred in the company's internal control over financial reporting during the fourth quarter of fiscal 2019[525] Other Information The company reports no other information for this item - None reported[526] Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 Proxy Statement - Information for this item is incorporated by reference from the company's 2020 Proxy Statement[527] Executive Compensation Information on executive and director compensation is incorporated by reference from the 2020 Proxy Statement - Information for this item is incorporated by reference from the company's 2020 Proxy Statement[529] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership and equity compensation plans is incorporated by reference from the 2020 Proxy Statement - Information for this item is incorporated by reference from the company's 2020 Proxy Statement[530] Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2020 Proxy Statement - Information for this item is incorporated by reference from the company's 2020 Proxy Statement[531] Principal Accountant Fees and Services Information on principal accountant fees and services is incorporated by reference from the 2020 Proxy Statement - Information for this item is incorporated by reference from the company's 2020 Proxy Statement[532] Part IV Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Form 10-K, including governance documents and debt agreements - Consolidated financial statements are listed and included in Item 8 of the report[534][535] - A detailed list of all exhibits filed with the Form 10-K is provided, including governance documents, debt agreements, and compensation plans[536][537][539] Form 10-K Summary The company did not provide a Form 10-K summary - None provided[543]