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Helmerich & Payne, Inc. Announces Third Quarter Results

July 28, 2021

July 28, 2021

 

  • H&P's North America Solutions segment exited the third quarter of fiscal year 2021 with 121 active rigs, up over 10% during the quarter
  • The Company ended the quarter with $558 million in cash and short-term investments and no amounts drawn on its $750 million revolving credit facility culminating in approximately $1.3 billion in available liquidity
  • Quarterly North America Solutions operating gross margins(1) increased $11 million to $75 million sequentially, as revenues increased by $31 million to $281 million and expenses increased by $20 million to $206 million
  • The Company reported a fiscal third quarter net loss of $(0.52) per diluted share; including select items(2) of $0.05 per diluted share
  • Deployment of our drilling automation technologies and utilization of new commercial models kept pace with the increase in rig activity with roughly 25% of our active FlexRig® fleet utilizing AutoSlide®, and over 30% of the fleet contracted with some form of performance-based contract
  • H&P continues to invest in new and diversified technologies for long-term sustainability through geothermal opportunities as well as power management applications on the rig site
  • On June 2, 2021, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share, payable on August 31, 2021, to stockholders of record at the close of business on August 17, 2021

TULSA, Okla.--(BUSINESS WIRE)-- Helmerich & Payne, Inc. (NYSE: HP) reported a net loss of $56 million, or $(0.52) per diluted share, from operating revenues of $332 million for the quarter ended June 30, 2021, compared to a net loss of $121 million, or $(1.13) per diluted share, on revenues of $296 million for the quarter ended March 31, 2021. The net losses per diluted share for the third and second quarters of fiscal year 2021 include $0.05 and $(0.53), respectively, of after-tax gains and losses comprised of select items(2). For the third quarter of fiscal year 2021, select items(2) were comprised of:

  • $0.08 of after-tax gains pertaining to a non-cash fair market adjustment to our equity investment, income tax adjustments related to certain discrete tax items, and discontinued operations related to adjustments resulting from currency fluctuations
  • $(0.03) of after-tax losses pertaining to a non-cash impairment for fair market adjustments to decommissioned rigs that are held for sale, restructuring charges, and changes in the fair values of certain contingent liabilities

Net cash provided by operating activities was $31 million for the third quarter of fiscal year 2021 compared to net cash provided by operating activities of $78 million in the prior quarter, which benefited from a large income tax refund.

President and CEO John Lindsay commented, "The rig count and market share gains we have secured since the industry lows almost a year ago is a testament to H&P's position as the leading drilling solutions provider. While we have experienced moderation in this upward trajectory, we still expect activity and pricing to continue to increase over the next quarter as the availability of super-spec rigs tightens. We remain optimistic that current crude oil prices will translate into even higher activity and pricing levels in the fourth calendar quarter leading into 2022.

"We continue to affect change in the industry through the use of new commercial models and digital technology solutions. There is a growing appreciation for the value proposition H&P provides, and more customers are partnering with us to achieve better drilling outcomes. When utilized on a FlexRig® platform, H&P's digital technology and automation solutions are able to enhance drilling outcomes both in terms of efficiency gains and wellbore quality, resulting in improved long-term well economics and returns. This outcome-based approach delivers more predictive, consistent and superior well results over an entire drilling program, lowering overall well costs and downhole risks, and greatly reducing the potential for costly outliers. Minimizing downhole variation with the appropriate planning, technology and execution can produce positive economic results in a drilling program.

"The methods, the equipment, the technology and the risk profile in the drilling of unconventional oil and gas wells has evolved significantly over the past few decades; however, the legacy dayrate model has not. This has resulted in an unsustainable allocation of the economic benefits that have been accruing over the past several years through the drilling of more efficient and better-quality wells. Consequently, the pricing model for providing better drilling outcomes needs to evolve. H&P's new commercial models aim to better align us with our customer's goals and allow us to share in the value-added outcomes we help create."

Senior Vice President and CFO Mark Smith also commented, "The Company's solid financial position and strong financial stewardship remain resolute, giving us plenty of flexibility in our capital allocation strategy to take advantage of additional investment opportunities in the future should they arise and to maintain our steadfast commitment of returning cash to shareholders.

"We have continued to make investments, and explore future investments, in geothermal companies targeting the ambitious goal of affordable, reliable, and clean energy on a global scale. At present, we have a robust set of geothermal investment opportunities across a diverse technological and drilling spectrum. These opportunities not only include providing our drilling and technology solutions, but also direct investments into companies working toward accessing geothermal heat to create low-carbon and scalable base load power generation in an economically viable manner. Additionally, we continue to invest resources and work with our customers to provide customized power management solutions at the rig site that result in improved environmental and economic outcomes.

"Within the constructs of a smaller industry going forward, reducing our operating cost structure remains a high priority for the Company and steps have been underway to make this happen. Recent actions will result in an estimated annualized savings of $7 million with that full benefit captured in calendar 2022. Further, we have many other ongoing initiatives that will result in additional cost savings, that will be recognized incrementally over the next several quarters. Over time we expect these cost saving measures to culminate into meaningful, long-term improvements in our cost structure."

John Lindsay concluded, “The strength of our people, financial position, and drilling solutions will continue to provide us an edge in this improving market. Our track record of forming new and cementing existing partnerships with customers that manifest from our commitment to mutual long-term success."

Operating Segment Results for the Third Quarter of Fiscal Year 2021

North America Solutions:

This segment had an operating loss of $43.7 million compared to an operating loss of $109.8 million during the previous quarter. The decrease in the operating loss was primarily due to the prior quarter being adversely impacted by impairments related to fair market adjustments to decommissioned rigs that are held for sale and restructuring charges. Absent the select items(2) for the quarters, this segment's operating loss declined by $13.9 million on a sequential basis, due mainly to a higher level of rig activity.

Operating gross margins(1) increased by $10.9 million to $75.0 million as both revenues and expenses increased sequentially. Operating results were still negatively impacted by the costs associated with reactivating rigs; $5.9 million in the third fiscal quarter compared to $9.7 million in the second fiscal quarter.

International Solutions:

This segment had an operating loss of $3.5 million compared to an operating loss of $3.5 million during the previous quarter. Operating gross margins(1) improved slightly to a negative $1.4 million from a negative $1.9 million in the previous quarter. Current quarter results included a $0.6 million foreign currency loss primarily related to our South American operations compared to a $2.4 million foreign currency loss in the second quarter of fiscal year 2021.

Offshore Gulf of Mexico:

This segment had operating income of $5.7 million compared to operating income of $3.0 million during the previous quarter. Operating gross margins(1) for the quarter were $9.2 million compared to $6.2 million in the prior quarter.

Operational Outlook for the Fourth Quarter of Fiscal Year 2021

North America Solutions:

  • We expect North America Solutions operating gross margins(1) to be between $72-$82 million
  • We expect to exit the quarter at between 127-132 contracted rigs

International Solutions:

  • We expect International Solutions operating gross margins(1) to be relatively flat between $(2)-$0 million, exclusive of any foreign exchange gains or losses

Offshore Gulf of Mexico:

  • We expect Offshore Gulf of Mexico operating gross margins(1) to be between $7-$9 million

Other Estimates for Fiscal Year 2021

  • Gross capital expenditures are now expected to at the lower end of our previous guidance range of $85 to $105 million range. Ongoing asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are still expected to total approximately $25 million in fiscal year 2021. Note the sale of the offshore platform rig during the first quarter of fiscal year 2021 is excluded from this number.
  • Depreciation and amortization expenses are still expected to be approximately $425 million
  • Research and development expenses for fiscal year 2021 are now expected to be roughly $20 to 25 million
  • Selling, general and administrative expenses for fiscal year 2021 are still expected to be approximately $160 million

Select Items Included in Net Income per Diluted Share

Third quarter of fiscal year 2021 net loss of $(0.52) per diluted share included $0.05 in after-tax gains comprised of the following:

  • $0.01 of non-cash after-tax gains from discontinued operations related to adjustments resulting from currency fluctuations
  • $0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $0.05 of income tax adjustments related to certain discrete tax items
  • $(0.01) of non-cash after-tax losses for impairments related to fair market value adjustments to decommissioned rigs that are held for sale
  • $(0.01) of after-tax losses related to restructuring charges
  • $(0.01) of after-tax losses related to the change in the fair values of certain contingent liabilities

Second quarter of fiscal year 2021 net loss of $(1.13) per diluted share included $(0.53) in after-tax losses comprised of the following:

  • $0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $0.02 of non-cash after-tax gains from discontinued operations related to adjustments resulting from currency fluctuations
  • $(0.01) of after-tax losses related to restructuring charges
  • $(0.17) of after-tax losses pertaining to the sale of excess drilling equipment and spares
  • $(0.39) of non-cash after-tax losses for impairments related to fair market value adjustments to decommissioned rigs that are held for sale

Conference Call

A conference call will be held on Thursday, July 29, 2021, at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s third quarter fiscal year 2021 results. Dial-in information for the conference call is (877) 876-9176 for domestic callers or (785) 424-1670 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the internet by logging on to the Company’s website at http://www.helmerichpayne.com and accessing the corresponding link through the investor relations section by clicking on “Investors” and then clicking on “News and Events - Events & Presentations” to find the event and the link to the webcast.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. At June 30, 2021, H&P's fleet included 242 land rigs in the U.S., 32 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s future financial position, operations outlook, business strategy, dividends, budgets, projected costs and plans and objectives of management for future operations are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s SEC filings, including but not limited to its annual report on Form 10‑K and quarterly reports on Form 10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. We undertake no duty to update or revise our forward-looking statements based on changes in internal estimates, expectations or otherwise, except as required by law.

We use our Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on our Investor Relations website at www.helmerichpayne.com.

Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig and AutoSlide, which may be registered or trademarked in the U.S. and other jurisdictions.

(1) Operating gross margin is defined as operating revenues less direct operating expenses.

(2) See the corresponding section of this release for details regarding the select items. The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside of the Company's core business operations.

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

(in thousands, except per share amounts)

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

2021

 

2021

 

2020

 

2021

 

2020

Operating revenues

 

 

 

 

 

 

 

 

 

Drilling services

$

329,774

 

 

$

294,026

 

 

$

314,405

 

 

$

868,581

 

 

$

1,556,093

 

Other

2,439

 

 

2,145

 

 

2,959

 

 

6,180

 

 

9,567

 

 

332,213

 

 

296,171

 

 

317,364

 

 

874,761

 

 

1,565,660

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

Drilling services operating expenses, excluding depreciation and amortization

255,471

 

 

230,313

 

 

205,198

 

 

684,473

 

 

1,022,270

 

Other operating expenses

1,481

 

 

1,274

 

 

1,549

 

 

4,117

 

 

4,286

 

Depreciation and amortization

104,493

 

 

106,417

 

 

110,161

 

 

317,771

 

 

372,298

 

Research and development

5,610

 

 

5,334

 

 

3,638

 

 

16,527

 

 

16,730

 

Selling, general and administrative

41,719

 

 

39,349

 

 

43,108

 

 

120,371

 

 

134,894

 

Asset impairment charge

2,130

 

 

54,284

 

 

 

 

56,414

 

 

563,234

 

Restructuring charges

2,110

 

 

1,608

 

 

15,495

 

 

3,856

 

 

15,495

 

(Gain) loss on sale of assets

(3,434)

 

 

18,515

 

 

(4,201)

 

 

2,745

 

 

(18,790)

 

 

409,580

 

 

457,094

 

 

374,948

 

 

1,206,274

 

 

2,110,417

 

Operating loss from continuing operations

(77,367)

 

 

(160,923)

 

 

(57,584)

 

 

(331,513)

 

 

(544,757)

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest and dividend income

1,527

 

 

4,819

 

 

771

 

 

8,225

 

 

6,551

 

Interest expense

(5,963)

 

 

(5,759)

 

 

(6,125)

 

 

(17,861)

 

 

(18,320)

 

Gain (loss) on investment securities

2,409

 

 

2,520

 

 

2,267

 

 

7,853

 

 

(7,325)

 

Gain on sale of subsidiary

 

 

 

 

 

 

 

 

14,963

 

Other

(970)

 

 

(577)

 

 

(2,914)

 

 

(3,027)

 

 

(3,711)

 

 

(2,997)

 

 

1,003

 

 

(6,001)

 

 

(4,810)

 

 

(7,842)

 

Loss from continuing operations before income taxes

(80,364)

 

 

(159,920)

 

 

(63,585)

 

 

(336,323)

 

 

(552,599)

 

Income tax benefit

(23,659)

 

 

(36,624)

 

 

(17,578)

 

 

(78,398)

 

 

(116,853)

 

Loss from continuing operations

(56,705)

 

 

(123,296)

 

 

(46,007)

 

 

(257,925)

 

 

(435,746)

 

Income from discontinued operations before income taxes

1,150

 

 

2,293

 

 

9,151

 

 

10,936

 

 

22,675

 

Income tax provision

 

 

 

 

8,743

 

 

 

 

22,463

 

Income from discontinued operations

1,150

 

 

2,293

 

 

408

 

 

10,936

 

 

212

 

Net loss

$

(55,555)

 

 

$

(121,003)

 

 

$

(45,599)

 

 

$

(246,989)

 

 

$

(435,534)

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(0.53)

 

 

$

(1.15)

 

 

$

(0.43)

 

 

$

(2.40)

 

 

$

(4.05)

 

Income from discontinued operations

$

0.01

 

 

$

0.02

 

 

$

 

 

$

0.10

 

 

$

 

Net loss

$

(0.52)

 

 

$

(1.13)

 

 

$

(0.43)

 

 

$

(2.30)

 

 

$

(4.05)

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(0.53)

 

 

$

(1.15)

 

 

$

(0.43)

 

 

$

(2.40)

 

 

$

(4.05)

 

Income from discontinued operations

$

0.01

 

 

$

0.02

 

 

$

 

 

$

0.10

 

 

$

 

Net loss

$

(0.52)

 

 

$

(1.13)

 

 

$

(0.43)

 

 

$

(2.30)

 

 

$

(4.05)

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (in thousands):

 

 

 

 

 

 

 

 

 

Basic

107,896

 

 

107,861

 

 

107,439

 

 

107,790

 

 

108,185

 

Diluted

107,896

 

 

107,861

 

 

107,439

 

 

107,790

 

 

108,185

 

HELMERICH & PAYNE, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

 

June 30,

 

September 30,

(in thousands except share data and share amounts)

2021

 

2020

Assets

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

370,553

 

 

$

487,884

 

Short-term investments

187,256

 

 

89,335

 

Accounts receivable, net of allowance of $1,885 and $1,820, respectively

233,632

 

 

192,623

 

Inventories of materials and supplies, net

90,537

 

 

104,180

 

Prepaid expenses and other, net

91,477

 

 

89,305

 

Assets held-for-sale

10,088

 

 

 

Total current assets

983,543

 

 

963,327

 

 

 

 

 

Investments

36,886

 

 

31,585

 

Property, plant and equipment, net

3,281,082

 

 

3,646,341

 

Other Noncurrent Assets:

 

 

 

Goodwill

45,653

 

 

45,653

 

Intangible assets, net

75,634

 

 

81,027

 

Operating lease right-of-use asset

53,116

 

 

44,583

 

Other assets, net

19,371

 

 

17,105

 

Total other noncurrent assets

193,774

 

 

188,368

 

 

 

 

 

Total assets

$

4,495,285

 

 

$

4,829,621

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$

64,193

 

 

$

36,468

 

Dividends payable

27,324

 

 

27,226

 

Accrued liabilities

173,784

 

 

155,442

 

Total current liabilities

265,301

 

 

219,136

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

Long-term debt, net

481,002

 

 

480,727

 

Deferred income taxes

584,633

 

 

650,675

 

Other

154,049

 

 

147,180

 

Noncurrent liabilities - discontinued operations

2,393

 

 

13,389

 

Total noncurrent liabilities

1,222,077

 

 

1,291,971

 

 

 

 

 

Shareholders' Equity:

 

 

 

Common stock, $.10 par value, 160,000,000 shares authorized, 112,222,865 and 112,151,563 shares issued as of June 30, 2021 and September 30, 2020, respectively, and 107,898,782 and 107,488,242 shares outstanding as of June 30, 2021 and September 30, 2020, respectively

11,222

 

 

11,215

 

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

 

 

 

Additional paid-in capital

523,281

 

 

521,628

 

Retained earnings

2,679,859

 

 

3,010,012

 

Accumulated other comprehensive loss

(24,814)

 

 

(26,188)

 

Treasury stock, at cost, 4,324,083 shares and 4,663,321 shares as of June 30, 2021 and September 30, 2020, respectively

(181,641)

 

 

(198,153)

 

Total shareholders’ equity

3,007,907

 

 

3,318,514

 

Total liabilities and shareholders' equity

$

4,495,285

 

 

$

4,829,621

 

HELMERICH & PAYNE, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

Nine Months Ended June 30,

(in thousands)

2021

 

2020

OPERATING ACTIVITIES:

 

 

 

Net loss

$

(246,989)

 

 

$

(435,534)

 

Adjustment for income from discontinued operations

(10,936)

 

 

(212)

 

Loss from continuing operations

(257,925)

 

 

(435,746)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

317,771

 

 

372,298

 

Asset impairment charge

56,414

 

 

563,234

 

Amortization of debt discount and debt issuance costs

994

 

 

1,358

 

Provision for credit loss

8

 

 

4,151

 

Stock-based compensation

21,240

 

 

32,059

 

(Gain) loss on investment securities

(7,853)

 

 

7,325

 

(Gain) loss on sale of assets

2,745

 

 

(18,790)

 

Gain on sale of subsidiary

 

 

(14,963)

 

Deferred income tax benefit

(66,102)

 

 

(122,366)

 

Other

8,849

 

 

(1,580)

 

Changes in assets and liabilities

13,721

 

 

59,311

 

Net cash provided by operating activities from continuing operations

89,862

 

 

446,291

 

Net cash used in operating activities from discontinued operations

(41)

 

 

(38)

 

Net cash provided by operating activities

89,821

 

 

446,253

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

Capital expenditures

(49,173)

 

 

(120,960)

 

Purchase of investments

(236,784)

 

 

(78,303)

 

Proceeds from sale of investments

139,430

 

 

66,033

 

Proceeds from sale of subsidiary

 

 

15,056

 

Proceeds from asset sales

26,775

 

 

31,200

 

Other

 

 

(50)

 

Net cash used in investing activities

(119,752)

 

 

(87,024)

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

Dividends paid

(81,815)

 

 

(233,124)

 

Proceeds from stock option exercises

 

 

4,100

 

Payments for employee taxes on net settlement of equity awards

(2,160)

 

 

(3,752)

 

Payment of contingent consideration from acquisition of business

(250)

 

 

(4,250)

 

Share repurchase

 

 

(28,504)

 

Other

(719)

 

 

(446)

 

Net cash used in financing activities

(84,944)

 

 

(265,976)

 

Net increase (decrease) in cash and cash equivalents and restricted cash

(114,875)

 

 

93,253

 

Cash and cash equivalents and restricted cash, beginning of period

536,747

 

 

382,971

 

Cash and cash equivalents and restricted cash, end of period

$

421,872

 

 

$

476,224

 

 

Three Months Ended

 

Nine Months Ended

SEGMENT REPORTING

June 30,

 

March 31,

 

June 30,

 

June 30,

(in thousands, except operating statistics)

2021

 

2021

 

2020

 

2021

 

2020

NORTH AMERICA SOLUTIONS OPERATIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

281,132

 

 

$

249,939

 

 

$

254,434

 

 

$

733,061

 

 

$

1,325,076

 

Direct operating expenses

206,172

 

 

185,841

 

 

152,663

 

 

549,322

 

 

832,229

 

Segment gross margin (2)

74,960

 

 

64,098

 

 

101,771

 

 

183,739

 

 

492,847

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

96,997

 

 

99,917

 

 

102,699

 

 

297,238

 

 

336,098

 

Research and development

5,605

 

 

5,329

 

 

3,459

 

 

16,400

 

 

15,871

 

Selling, general and administrative expense

12,583

 

 

12,960

 

 

13,533

 

 

37,223

 

 

42,798

 

Asset impairment charge

2,130

 

 

54,284

 

 

 

 

56,414

 

 

406,548

 

Restructuring charges

1,388

 

 

1,442

 

 

7,237

 

 

2,969

 

 

7,237

 

Segment operating loss

$

(43,743)

 

 

$

(109,834)

 

 

$

(25,157)

 

 

$

(226,505)

 

 

$

(315,705)

 

Operating Statistics (1):

 

 

 

 

 

 

 

 

 

Average active rigs

119

 

 

105

 

 

89

 

 

102

 

 

157

 

Number of active rigs at the end of period

121

 

 

109

 

 

68

 

 

121

 

 

68

 

Number of available rigs at the end of period

242

 

 

242

 

 

262

 

 

242

 

 

262

 

Reimbursements of "out-of-pocket" expenses

$

33,282

 

 

$

27,290

 

 

$

27,806

 

 

$

79,361

 

 

$

164,540

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL SOLUTIONS OPERATIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

15,278

 

 

$

14,813

 

 

$

22,477

 

 

$

40,609

 

 

$

120,189

 

Direct operating expenses

16,690

 

 

16,718

 

 

27,595

 

 

50,931

 

 

99,634

 

Segment gross margin (2)

(1,412)

 

 

(1,905)

 

 

(5,118)

 

 

(10,322)

 

 

20,555

 

 

 

 

 

 

 

 

 

 

 

Depreciation

573

 

 

415

 

 

996

 

 

1,361

 

 

16,634

 

Selling, general and administrative expense

1,346

 

 

1,138

 

 

1,129

 

 

3,463

 

 

3,832

 

Asset impairment charge

 

 

 

 

 

 

 

 

156,686

 

Restructuring charges

207

 

 

 

 

2,297

 

 

207

 

 

2,297

 

Segment operating loss

$

(3,538)

 

 

$

(3,458)

 

 

$

(9,540)

 

 

$

(15,353)

 

 

$

(158,894)

 

Operating Statistics (1):

 

 

 

 

 

 

 

 

 

Average active rigs

5

 

 

4

 

 

11

 

 

5

 

 

15

 

Number of active rigs at the end of period

6

 

 

5

 

 

8

 

 

6

 

 

8

 

Number of available rigs at the end of period

32

 

 

32

 

 

32

 

 

32

 

 

32

 

Reimbursements of "out-of-pocket" expenses

$

1,152

 

 

$

1,613

 

 

$

3,079

 

 

$

5,324

 

 

$

6,875

 

 

 

 

 

 

 

 

 

 

 

OFFSHORE GULF OF MEXICO OPERATIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

33,364

 

 

$

29,274

 

 

$

37,494

 

 

$

94,911

 

 

$

110,828

 

Direct operating expenses

24,127

 

 

23,069

 

 

28,967

 

 

73,452

 

 

91,660

 

Segment gross margin (2)

9,237

 

 

6,205

 

 

8,527

 

 

21,459

 

 

19,168

 

 

 

 

 

 

 

 

 

 

 

Depreciation

2,938

 

 

2,593

 

 

3,004

 

 

8,137

 

 

8,591

 

Selling, general and administrative expense

592

 

 

634

 

 

1,248

 

 

1,895

 

 

3,293

 

Restructuring charges

 

 

 

 

1,262

 

 

 

 

1,262

 

Segment operating income

$

5,707

 

 

$

2,978

 

 

$

3,013

 

 

$

11,427

 

 

$

6,022

 

Operating Statistics (1):

 

 

 

 

 

 

 

 

 

Average active rigs

4

 

 

4

 

 

5

 

 

4

 

 

5

 

Number of active rigs at the end of period

4

 

 

4

 

 

5

 

 

4

 

 

5

 

Number of available rigs at the end of period

7

 

 

7

 

 

8

 

 

7

 

 

8

 

Reimbursements of "out-of-pocket" expenses

$

8,342

 

 

$

5,193

 

 

$

8,224

 

 

$

21,403

 

 

$

24,888

 

(1)

 

These operating metrics allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. Beginning in the first quarter of fiscal year 2021, these operating metrics replaced previously used per day metrics. As a result, prior year comparative information is also provided above.

(2)

 

Segment gross margin and operating income/loss have limitations and should not be used as alternatives to revenues, expenses, or operating income/loss, which are performance measures determined in accordance with GAAP.

Segment reconciliation amounts were as follows:

 

Three Months Ended June 30, 2021

(in thousands)

North America
Solutions

 

Offshore Gulf
of Mexico

 

International
Solutions

 

Other

 

Eliminations

 

Total

Operating revenue

$

281,132

 

 

$

33,364

 

 

$

15,278

 

 

$

2,439

 

 

$

 

 

$

332,213

 

Intersegment

 

 

 

 

 

 

9,379

 

 

(9,379)

 

 

 

Total operating revenue

$

281,132

 

 

$

33,364

 

 

$

15,278

 

 

$

11,818

 

 

$

(9,379)

 

 

$

332,213

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

202,630

 

 

21,923

 

 

16,547

 

 

15,852

 

 

 

 

256,952

 

Intersegment

3,542

 

 

2,204

 

 

143

 

 

13

 

 

(5,902)

 

 

 

Total drilling services & other operating expenses

$

206,172

 

 

$

24,127

 

 

$

16,690

 

 

$

15,865

 

 

$

(5,902)

 

 

$

256,952

 

 

Nine Months Ended June 30, 2021

(in thousands)

North America
Solutions

 

Offshore Gulf
of Mexico

 

International
Solutions

 

Other

 

Eliminations

 

Total

Operating revenue

$

733,061

 

 

$

94,911

 

 

$

40,609

 

 

$

6,180

 

 

$

 

 

$

874,761

 

Intersegment

 

 

 

 

 

 

25,181

 

 

(25,181)

 

 

 

Total operating revenue

$

733,061

 

 

$

94,911

 

 

$

40,609

 

 

$

31,361

 

 

$

(25,181)

 

 

$

874,761

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

540,497

 

 

67,043

 

 

50,483

 

 

30,567

 

 

 

 

688,590

 

Intersegment

8,825

 

 

6,409

 

 

448

 

 

270

 

 

(15,952)

 

 

 

Total drilling services & other operating expenses

$

549,322

 

 

$

73,452

 

 

$

50,931

 

 

$

30,837

 

 

$

(15,952)

 

 

$

688,590

 

Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses, corporate restructuring charges, and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

The following table reconciles segment operating income (loss) per the information above to loss from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

 

Three Months Ended

 

Nine Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

(in thousands)

2021

 

2021

 

2020

 

2021

 

2020

Operating income (loss)

 

 

 

 

 

 

 

 

 

North America Solutions

$

(43,743)

 

 

$

(109,834)

 

 

$

(25,157)

 

 

$

(226,505)

 

 

$

(315,705)

 

International Solutions

(3,538)

 

 

(3,458)

 

 

(9,540)

 

 

(15,353)

 

 

(158,894)

 

Offshore Gulf of Mexico

5,707

 

 

2,978

 

 

3,013

 

 

11,427

 

 

6,022

 

Other

(4,670)

 

 

(1,072)

 

 

4,389

 

 

(1,631)

 

 

3,704

 

Eliminations

(3,298)

 

 

(3,433)

 

 

 

 

(8,857)

 

 

 

Segment operating loss

$

(49,542)

 

 

$

(114,819)

 

 

$

(27,295)

 

 

$

(240,919)

 

 

$

(464,873)

 

Gain (loss) on sale of assets

3,434

 

 

(18,515)

 

 

4,201

 

 

(2,745)

 

 

18,790

 

Corporate selling, general and administrative costs and corporate depreciation

(31,259)

 

 

(27,589)

 

 

(34,490)

 

 

(87,849)

 

 

(98,674)

 

Operating loss

$

(77,367)

 

 

$

(160,923)

 

 

$

(57,584)

 

 

$

(331,513)

 

 

$

(544,757)

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest and dividend income

1,527

 

 

4,819

 

 

771

 

 

8,225

 

 

6,551

 

Interest expense

(5,963)

 

 

(5,759)

 

 

(6,125)

 

 

(17,861)

 

 

(18,320)

 

Gain (loss) on investment securities

2,409

 

 

2,520

 

 

2,267

 

 

7,853

 

 

(7,325)

 

Gain on sale of subsidiary

 

 

 

 

 

 

 

 

14,963

 

Other

(970)

 

 

(577)

 

 

(2,914)

 

 

(3,027)

 

 

(3,711)

 

Total unallocated amounts

(2,997)

 

 

1,003

 

 

(6,001)

 

 

(4,810)

 

 

(7,842)

 

Loss from continuing operations before income taxes

$

(80,364)

 

 

$

(159,920)

 

 

$

(63,585)

 

 

$

(336,323)

 

 

$

(552,599)

 

SUPPLEMENTARY STATISTICAL INFORMATION

Unaudited

U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS