Helmerich & Payne Stock

Helmerich & Payne, Inc., together with its 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.

The company is an important partner for a number of oil and gas exploration and production companies, but it focuses primarily on the drilling segment of the oil and gas production value chain. The company's technology services focus on developing, promoting and commercializing technologies designed to improve the efficiency and accuracy of drilling operations, as well as wellbore quality and placement.

The company's drilling services operations are organized into the following business segments: North America Solutions, Offshore Gulf of Mexico, and International Solutions.

North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Such states include Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming.

Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S. federal waters in the Gulf of Mexico and the company's International Solutions operations have rigs and/or services primarily located in five international locations: Argentina, Bahrain, Colombia, the United Arab Emirates (U.A.E.), and Australia. The company's operations in Australia commenced in the fourth fiscal quarter of 2023.

The company also owns and operates a limited number of commercial real estate properties located in Tulsa, Oklahoma. The company's real estate investments include a shopping center containing approximately 365,000 leasable square feet and approximately 176 acres of undeveloped real estate. The company's research and development endeavors include both internal development and external acquisition of developing technologies. The company's wholly-owned captive insurance companies (the Captives) are primarily used to insure the deductibles for its workers' compensation, general liability, automobile liability, rig property and a medical stop-loss program. The company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs. The company's real estate operations, its incubator program for new research and development projects, and its wholly-owned captive insurance companies are included in Other.

Drilling Services and Solutions

The company is the largest provider of super-spec AC drive land rigs in the Western Hemisphere. Operating principally in North and South America, the company specializes in shale and unconventional resource plays, drilling challenging and complex wells in oil and gas producing basins in the United States and in international locations. In the United States, the company has a diverse mix of customers consisting of large independent, major, mid-sized and small cap oil companies and private independent companies (including private equity-backed companies) that are primarily focused on unconventional shale basins. In South America and the Middle East, the company's customers primarily include major international and national oil companies.

Segments

North America Solutions segment

This segment operates the largest and most technologically advanced AC drive drilling rig fleet in North America and has a presence in most of the U.S. shale and unconventional basins. The company has the leading market share in at least two of the most active oil basins, which include the Permian Basin and Eagle Ford Shale. All of the company's active rigs are capable of drilling horizontal or directional wells. As of September 30, 2023, the company had approximately 23.6 percent of the total market share in U.S. land drilling and approximately 33.4 percent of the super-spec market share in U.S. land drilling. In the United States, the company has the industry's largest super-spec fleet with 231 rigs, of which 145 were under contract at September 30, 2023. In total, 147 of the company's 233 marketed rigs were active under contract, 85 were under fixed-term contracts, and 62 were working well-to-well as of September 30, 2023.

The company's drilling technology within this segment enables a solutions-based approach that provides performance-driven drilling services designed to help deliver greater levels of drilling efficiency, accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores with lower overall risk.

The company's North America Solutions segment contributed approximately 87.7 percent of its consolidated operating revenues during fiscal year 2023 (year ended September 30, 2023). In North America, the company's customers are primarily from the major integrated oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies).

Offshore Gulf of Mexico segment

This segment consists of seven platform rigs in the Gulf of Mexico. The company supplies the rig equipment and crews and the operator, who owns the platform, will typically provide production equipment or other necessary facilities. The company's offshore rig fleet operates on conventional fixed leg platforms and floating platforms attached to the sea floor with mooring lines, such as Spars and Tension Leg Platforms. Additionally, the company provides management contract services to customer platforms where the customer owns the drilling rig. As of September 30, 2023, four of the seven offshore rigs were under contract.

International Solutions segment

This segment conducts operations in Argentina, Colombia, Bahrain, the U.A.E., and Australia. As of September 30, 2023, the company had thirteen land rigs contracted for work in locations outside of the United States. The company's International Solutions operations contributed approximately 7.4 percent of its consolidated operating revenues during fiscal year 2023.

Argentina: As of September 30, 2023, the company had 12 available rigs in Argentina. Revenues generated by Argentine drilling operations contributed approximately 4.8 percent of its consolidated operating revenues during fiscal year 2023. Revenues from drilling services performed for the company's two largest customers in Argentina totaled approximately 3.0 percent of its consolidated operating revenues and approximately 40.2 percent of its international operating revenues during fiscal year 2023. The Argentine drilling contracts are primarily with large international or national oil companies.

Colombia: As of September 30, 2023, the company had five available rigs in Colombia. Revenues generated by Colombian drilling operations contributed approximately 1.6 percent of its consolidated operating revenues in fiscal year 2023. Revenues from drilling services performed for the company's two largest customers in Colombia totaled approximately 1.6 percent of its consolidated operating revenues and approximately 22.0 percent of its international operating revenues during fiscal year 2023. The Colombian drilling contracts are primarily with large international or national oil companies.

Bahrain: As of September 30, 2023, the company had three available rigs in Bahrain. All of the company's revenues in Bahrain are from a partner of the local national oil company.

United Arab Emirates: During the years ended September 30, 2023, the company's operations in U.A.E. consisted of services provided to ADNOC Drilling Company P.J.S.C. (ADNOC Drilling), primarily in the form of secondment labor, as part of the strategic alliance that was announced in September 2021. As of September 30, 2023, the company had one available rig in the U.A.E.

Australia: During the year ended September 30, 2023, the company commenced drilling operations in Australia. All of the company's revenue in Australia is from one customer Tamboran, a publicly traded company. As of September 30, 2023, the company had one available rig in Australia.

Other Operations

The company owns and operates a limited number of commercial real estate properties located in Tulsa, Oklahoma. The company's real estate investments include a shopping center and undeveloped real estate.

The company continues to use its captive insurance subsidiaries (the Captives) to insure the deductibles for its domestic workers' compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from its international casualty and rig property programs.

The company's incubator program includes activity related to investments in emerging technology companies.

The company's real estate operations, its incubator program, and its wholly-owned captive insurance companies are included in Other within its segment disclosures.

Rigs, Equipment, R&D, and Facilities

The company has a strategic initiative to develop a new generation drilling rig that would be the safest, fastest-moving and highest performing rig in the land drilling market. The company' has a FlexRig drilling rig. The company introduced its first AC drive rigs, which incorporated new drilling technology and improved safety and environmental design. These rigs found immediate success by delivering higher value wells to the customer and marked the beginning of the AC land rig revolution.

As of September 30, 2023, the company had built over 200 FlexRig rigs that align with this strategy. In 2011, the company introduced a FlexRig design for long lateral drilling of multiple wells from a single location and for drilling horizontally in unconventional shale reservoirs. The new design preserved the key performance features of earlier designs but added a bi-directional skidding system and equipment capacities suitable for drilling long lateral wells. As of September 30, 2023, the company had a total of 242 super-spec rigs.

In 2017, the company introduced its first walking rig by reconfiguring some of its uni-directional skid designed FlexRig drilling rigs. Since then, the company has reconfigured, converted, and upgraded a total of 68 FlexRig drilling rigs to super-spec walking rigs.

The company has overseen the design and assembly of all of its AC FlexRig drilling rigs, and its different rig classes share many common components. The company co-designed the control systems for its rigs and have the right to make any changes or modifications to those systems that it desires. The company provides experienced drilling and maintenance support for its operations, which provides value by reducing nonproductive time in its operations and improving drilling performance through its Rig Systems Monitoring and Support Center (RSMS) and Remote Operations Centers (ROCs). The company's SMS and ROCs are manned 24 hours a day, seven days a week, with the ability to monitor and detect trends in drilling and drilling services performance onboard its rigs. The company's monitoring group within the RSMS provides real-time help and feedback to its wellsite employees, as well as its customers, to fully optimize its operational performance. Additionally, the company's RSMS and ROCs have staffs of engineers and industry experts that work with its customers to enhance wellbore positioning, drilling program execution and overall drilling performance. The monitoring group and the company's performance engineers capture its drilling work steps to help provide high quality and reliable results for its customers.

The company has two facilities that provide vertically integrated solutions for drilling rig manufacturing, upgrades, retrofits and modifications, as well as overhauling, recertification, and repairs as it relates to its rigs and equipment. These facilities utilize lean manufacturing processes to enhance quality and efficiency, as well as provide important insights into the maintenance and wear of equipment on its rigs.

The company continues to see adoption and growth with its technologically enabled automation solutions. The company designed its automation solutions to address challenges within its customers' businesses as much of the drilling process is heavily dependent on human decision-making to design, execute and optimize crude oil and natural gas extraction. The company's automation-focused solutions and applications are enabled by its uniform digital fleet and are designed to provide additional value to its customers' well programs by providing a platform for machine-human collaboration during the drilling process to improve efficiency. The company's path to autonomous drilling continues to evolve with several solutions in various stages of commercial testing. All of the company's technologies play an important role in developing its strategy as it head towards autonomous drilling.

During the first quarter of fiscal year 2022, the company sold the assets associated with two lower margin service offerings, trucking and casing running services, which contributed approximately 2.8 percent to its consolidated revenues during fiscal year 2021, in two separate transactions.

Markets

As of September 30, 2023, the company had 164 active rigs under contract.

Competition

In the United States, the company competes with Nabors Industries Ltd., Patterson-UTI Energy, Inc., Precision Drilling Corporation, and many other competitors with regional operations. In the Gulf of Mexico platform rig market, the company primarily competes with Nabors Industries Ltd. and Blake International Rigs, LLC.

Government Regulations

Environmental laws and regulations that apply to the company's operations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), the Resource Conservation and Recovery Act (each, as amended) and similar laws that provide for responses to, and liability for, air emissions, water discharges or releases of oil or hazardous substances into the environment, including damages to natural resources.

The Occupational Safety and Health Act and other similar laws and regulations govern the protection of the health and safety of employees. The OSHA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in the company's operations and that this information be provided to employees, state and local governments, emergency responders and citizens.

In addition, the company is subject to a variety of other U.S. and foreign laws and regulations, including, but not limited to, the U.S. Foreign Corrupt Practices Act, other anti-bribery and anti-corruption laws, and data privacy, data security and consumer protection laws. The U.S. Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Data privacy, data security, and consumer protection laws in the U.S. that apply to the company's operations include the Critical Infrastructure Act and the CAN-SPAM Act, and at the state level, the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA). Because it conducts business in France and the U.K., the company is also subject to the European General Data Protection Regulation (GDPR) and the UK Data Protection Act. The company's operations in the Middle East and Colombia are subject to similar data privacy and data protection laws.

The company is also subject to the jurisdiction of the U.S. Treasury Department's Office of Foreign Assets Control, the U.S. Commerce Department's Bureau of Industry and Security, the U.S. Customs and Border Protection and other U.S. and non-U.S. laws and regulations governing the international trade of goods, services and technology.

The company is also subject to regulation by numerous other regulatory agencies, including but not limited to, the U.S. Department of Labor, which sets employment practice standards for workers.

History

Helmerich & Payne, Inc. was founded in 1920. The company was incorporated under the laws of the state of Delaware in 1940.