Helmerich & Payne(US:HP)2025-11-21 21:15Acquisition and Expansion - The company completed the acquisition of KCA Deutag for approximately $2.0 billion, which included a share purchase price of $0.9 billion and $1.1 billion to repay KCA Deutag's existing debt[22]. - Following the acquisition, the company expanded its global operations, now maintaining a presence across the Middle East, South America, Europe, and Africa, enhancing its service capabilities in both land and offshore drilling markets[40]. - The acquisition of KCA Deutag expanded the company's land drilling footprint in the Middle East, South America, Europe, and Africa, enhancing offshore management expertise[64]. Fleet and Utilization - As of September 30, 2025, the North America Solutions fleet consisted of 223 available rigs, with 144 contracted, indicating a utilization rate of approximately 64.5%[31]. - The International Solutions fleet had a total of 137 available rigs, with 88 contracted, reflecting a utilization rate of approximately 64.2%[34]. - The Offshore Solutions fleet included 7 total rigs, with 3 contracted, showing a utilization rate of approximately 42.9%[38]. - The company had 208 active rigs under contract as of September 30, 2025, an increase from 170 in 2024 and 164 in 2023[73]. - The company operates 238 super-spec rigs as of September 30, 2025, following the reconfiguration of 78 FlexRig units into super-spec walking rigs[66]. Revenue and Financial Performance - Revenue from North America Solutions segment contributed approximately 63.0% ($2.4 billion) of consolidated operating revenues in fiscal year 2025, down from 88.7% ($2.4 billion) in 2024[50]. - International Solutions segment accounted for approximately 21.4% ($802.4 million) of consolidated operating revenues in fiscal year 2025, compared to 7.0% ($194.0 million) in 2024[51]. - Offshore Solutions segment contributed approximately 13.9% ($520.4 million) of consolidated operating revenues in fiscal year 2025, up from 3.9% ($106.2 million) in 2024[60]. - The contract drilling backlog was $7.0 billion as of September 30, 2025, up from $1.5 billion in 2024, with approximately 22.6% expected to be fulfilled in fiscal year 2026[80]. Customer and Market Insights - Revenue from the largest North America Solutions drilling customer represented approximately 18.2% ($429.4 million) of the North America Solutions segment revenues in fiscal year 2025[50]. - Revenue from the largest International Solutions drilling customer accounted for approximately 32.3% ($259.0 million) of the International Solutions segment revenues in fiscal year 2025[51]. - The company holds approximately 24.0% of the total market share in U.S. land drilling as of September 30, 2025[47]. Operational Risks and Challenges - The company is subject to various risks, including financial condition, cybersecurity threats, and operational risks associated with drilling and technology[15]. - The company’s drilling services and solutions are highly competitive, with potential impacts from new technologies and market volatility in oil and gas prices[15]. - The company has a significant backlog of drilling services and solutions revenue, although it may not be fully realized due to various operational risks[19]. - The company’s operations are subject to various environmental laws, which may require significant capital expenditures for compliance[102]. - The company expects future compliance costs related to environmental regulations may be material[108]. Human Capital and Safety - The company employs approximately 6,200 employees in the United States and 9,500 internationally as of September 30, 2025[81]. - The company has established a human capital strategy aimed at attracting, retaining, and developing a diverse workforce committed to operational excellence[82]. - The company maintains a robust safety culture, focusing on Serious Injury and Fatality (SIF) reduction strategies and proactive safety measures[90]. Financial Instruments and Investments - The company has $2.1 billion in senior unsecured notes with an estimated fair value of $1.9 billion as of September 30, 2025[381]. - The company has $200 million outstanding under the Term Loan Credit Agreement, due in 2027[381]. - The company has $39.8 million in secured term loans due in 2033 and $43.1 million due in 2034[381]. - The total fair value of equity securities in Tamboran Corp. was $26.0 million as of September 30, 2025, compared to $21.0 million in 2024[383]. - A hypothetical 10% decrease in the market price for marketable equity securities of Tamboran Corp. would decrease the fair value by $2.6 million[384]. - The company made a $14.1 million equity investment in Tamboran Resources, which was later converted into shares of Tamboran Corp.[382]. Contracts and Pricing - Performance-based contracts have produced a positive risk-reward outcome, with compensation partly based on meeting predetermined performance targets[79]. - Daywork contracts charge a rate per day, influenced by location, depth, complexity of the well, and market conditions[78]. - The FlexPool agreements allow customers to enter into fixed-term contracts with flexibility in rig utilization, subject to minimum requirements[77]. Innovation and Technology - The company has advanced automation solutions aimed at reducing variability and improving well economics, with several technologies in various stages of commercial testing[72]. - The company emphasizes continuous improvement and innovation as part of its core values, fostering a culture of teamwork and ethical conduct[84]. Currency and Market Risks - A uniform 10% decline in the U.S. dollar relative to foreign currencies would result in an increase in pre-tax loss of approximately $5.6 million[376]. - The company has not entered into any foreign currency forward exchange contracts to hedge against adverse fluctuations in foreign currency exchange rates[376]. - The company anticipates that compliance with current regulations will not significantly change its competitive position or earnings during fiscal year 2026[108].