Risk Factors Summary
This summary briefly lists the principal risks and uncertainties facing our business, which are only a select portion of those risks. A more complete discussion of those risks and uncertainties is set forth in this Form 10‑K under Item 1A— “Risk Factors.” Additional risks not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial condition or results of operations could be materially and adversely affected. Our business is subject to the following principal risks and uncertainties:
Business and Operating Risks
• the level of activity in the oil and natural gas industry;
• global economic conditions and volatility in oil and gas prices;
• the drilling services and solutions business is highly competitive;
• consolidation in our industry may impact our results of operations;
• new technologies may cause our drilling methods and equipment to become less competitive;
• our drilling and technology related operations are subject to a number of operational risks, and we are not fully insured against all of these risks;
• cybersecurity risks and other information technology risks;
• risks associated with our acquisitions, dispositions and investments;
• we may be unable to successfully integrate KCA Deutag's business;
• the impact of technology disputes and limitations on our ability to protect or enforce our intellectual property rights;
• the effect of unexpected events;
• our reliance on management and competition for experienced personnel;
• the effect of the loss of one or a number of our large customers;
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• our current backlog of drilling services and solutions revenue may not be fully realized;
• risks associated with our contracts with national oil companies ("NOCs");
• control of oil and natural gas reserves by NOCs may affect demand for our services;
• fixed costs may not decline in proportion to decreases in rig utilization and dayrates;
• shortages of drilling equipment, supplies or other key materials;
• inflation and cost increases may impact our sales margins and profitability;
• unionization efforts and labor regulations in certain countries in which we operate;
• the impact and effects of public health crises, pandemics and epidemics;
• the effect of improvements in or new discoveries of alternative energy technologies;
• risks associated with doing business in certain foreign countries;
Financial Risks
• covenants in our debt agreements restrict our ability to engage in certain activities;
• we may be required to record impairment charges with respect to our drilling rigs and other assets;
• the impact of a downgrade in our credit ratings;
• our ability to access capital markets could be limited;
• credit, market and interest rate risks may negatively impact the value of our marketable securities;
• our inability to generate cash to service all of our indebtedness;
Legal and Regulatory Risks
• the physical effects of climate change and the impact of the regulation of greenhouse gases and climate change;
• the impact of new legislation and regulatory initiatives related to hydraulic fracturing or other aspects of the oil and gas industry;
• risks related to our statements and disclosures regarding our sustainability goals and initiatives;
• failure to comply with the U.S. Foreign Corrupt Practices Act or foreign anti-bribery legislation;
• complex and evolving laws and regulations regarding data privacy, data security and consumer protection;
• government policies, mandates and regulations specifically affecting the energy sector and related industries;
• the impact of legal claims and litigation;
• the effect of additional tax liabilities, limitations on our use of net operating losses and tax credits and/or our significant net deferred tax liability;
• failure to comply with or changes to governmental and environmental laws;
Risks Related to Our Common Stock and Corporate Structure
• we may reduce or suspend our dividend in the future;
• the market price of our common stock may be highly volatile;
• certain provisions of our corporate governing documents could make an acquisition of our company more difficult;
• the choice of forum provision in our bylaws could limit our stockholders’ ability to obtain what such stockholders’ believe to be a favorable judicial forum for disputes with us or our directors, officers, or employees;
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• the effect of public and investor sentiment towards climate change, fossil fuels and other sustainability matters on our cost of capital and the price of our common stock;
PART I
ITEM 1. BUSINESS
Overview
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) was incorporated under the laws of the State of Delaware on February 3, 1940 and is successor to a business originally organized in 1920. We provide 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. We are an important partner for a number of oil and gas exploration and production companies, but we focus primarily on the drilling segment of the oil and gas production value chain. Our 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.
KCA Deutag Acquisition
On January 16, 2025 (the “Closing Date” or "Acquisition Date"), H&P completed its acquisition of the entire issued share capital (the "Acquisition") of KCA Deutag International Limited ("KCA Deutag") pursuant to the Sale and Purchase Agreement (the "Purchase Agreement"). H&P paid aggregate cash consideration of approximately $2.0 billion, which consisted of the share purchase price of $0.9 billion and $1.1 billion which was used to contemporaneously repay or redeem certain of KCA Deutag's existing debt, including, as applicable, the payment of all accrued and unpaid interest, premiums, and fees.
KCA Deutag is a diverse global drilling company. The company derives a significant portion of its revenues and cash flow from its land operations and has a substantial land drilling presence in the Middle East with additional operations in South America, Europe, and Northern Africa. In addition to its land operations, the company has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada. Management contract operations provide services to customer platforms where the customer owns the drilling rig. KCA Deutag’s BENTEC™ (formally Kenera) business unit comprises manufacturing and engineering operations with four facilities serving the energy industry.
Subsequent to September 30, 2025, we announced the rebranding of KCA Deutag’s Kenera business unit to BENTEC™. The BENTEC™ name, already recognized in the market, will now represent all products and services previously associated with Kenera and its sub-brands. Accordingly, throughout this document and in future references, Kenera will be referred to as BENTEC™.
Our Segments
During the second quarter of fiscal year 2025, the naming convention for one of our reportable segments changed from Offshore Gulf of Mexico to Offshore Solutions. Beginning on the Closing Date, Offshore Solutions now includes the results from the acquired KCA Deutag offshore management contract operations. Similarly, our International Solutions segment now includes the results from the acquired KCA Deutag land operations. Operating results related to KCA Deutag's BENTEC™ business unit are included in "Other" along with results from our real estate operations and our wholly-owned captive insurance companies. Our North America Solutions operating segment remains unchanged. Refer to Note 17—Business Segments and Geographic Information for further details on our reportable segments.
Our North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Our International Solutions operations are conducted in major international oil and gas markets, primarily in the Middle East and Latin America. Our Offshore Solutions operations consist of asset-light offshore management contracts and contracted rig platforms located in U.S. federal waters, the North Sea and Norwegian Sea off the coast of Norway, Caspian Sea and other international waters.
Our "Other" operations is comprised of our BENTEC™ manufacturing and engineering activities, our real estate operations, and our wholly-owned captive insurance companies. BENTEC™ operates four facilities that serve the energy industry. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center containing approximately 372,000 leasable square feet and approximately 176 acres of undeveloped real estate. Our wholly owned captive insurance companies (the “Captives”) are primarily used to fund self-insured retentions ("SIRs") and deductibles for our workers’ compensation, general liability, automobile liability, rig property and a medical stop-loss program. To mitigate the financial impact of significant events, the Company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers.
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Drilling Fleet
The following map shows the number of available rigs by basin in our North America Solutions reportable segment as of September 30, 2025:
The following table sets forth certain information concerning our North America Solutions drilling rigs as of September 30, 2025:
NORTH AMERICA SOLUTIONS FLEET
Location
Super-Spec FlexRig ® 1
Non Super-Spec FlexRig ® 2
Total Fleet
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Totals
(1) AC drive, minimum of 1,500 horsepower drawworks, minimum of 750,000 lbs. hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability.
(2) AC drive, 1,500 horsepower drawworks, 500,000 or 750,000 lbs. hookload rating, 5,000 or 7,500 psi mud circulating system, may or may not have multiple-well pad capability.
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The following table sets forth certain information concerning our International Solutions drilling rigs as of September 30, 2025:
INTERNATIONAL SOLUTIONS FLEET
Location
AC (FlexRig ® 3) 2
AC (FlexRig ® 4) 3
AC SCR Mechanical
AC SCR Desert 1
SCR 4
Other AC
Total Available Fleet
Total Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Saudi Arabia 5
Oman
Argentina
Colombia
Germany
Bahrain
Pakistan
Kuwait 6
Australia
Rest of World
Totals
(1) `Desert rigs are designed for reliable drilling in extreme weather conditions, specifically in harsh and remote desert environments. Mobile desert rigs are designed for easy transport and quick on-site rig-up while stationary desert rigs are deployed for longer term drilling. Depending on the draw works, these rigs typically feature a mast hook load capacity ranging from 500,000 to 2,000,000 lbs. Powered by dependable Caterpillar engines and equipped with mud pumps that operate at a working pressure of 5,000 to 7,500 psi, they deliver optimal performance under the toughest conditions.
(2) The FlexRig ® 3 is equipped with an AC drive, 1,500 horsepower drawworks, and a 750,000 lb. hookload rating. It can be equipped with an optional skid or walking system, third mud pump, and 7,500 psi high pressure mud system. Nine rigs in Argentina are equipped with skid systems, a third mud pump and 7,500 psi high pressure mud systems.
(3) The FlexRig ® 4 model has a small footprint and is designed to be highly mobile. The rig is equipped with a 300,000 lb. mast, 400HP top drive and two mud pumps. Range 3 drill pipe is used without setback. The rig is capable of horizontal and vertical drilling, but is primarily used for vertical drilling.
(4) A silicon-controlled-rectifier (“SCR”) system converts alternate current (“AC”) produced by one or more AC generator sets into direct current (“DC”). The SCR rigs are equipped with 3,000 horsepower drawworks to drill deep conventional wells.
(5) Includes 27 rigs as of September 30, 2025 that are contracted but not earning revenue due to contract suspensions.
(6) Includes two leased rigs generating revenue as of September 30, 2025.
The following table sets forth certain information concerning our Offshore Solutions drilling rigs as of September 30, 2025:
OFFSHORE SOLUTIONS FLEET
Location
Shallow Water 1
Deep Water 1
Total Fleet
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Total Available
Rigs Contracted
Louisiana 2
Gulf of America
Totals
(1) Shallow water rigs operate on fixed facilities and deep water rigs operate on floating facilities.
(2) Rigs are idle, stacked on land and not in state waters.
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Drilling Services and Solutions
We are the largest provider of super-spec AC drive land rigs in the Western Hemisphere. Following our acquisition of KCA Deutag in January 2025, we have significantly expanded our global operations and now maintain a presence across the Middle East, South America, Europe, and Africa. Our operations span both land and offshore drilling markets, enabling us to serve a more diverse and geographically distributed customer base.
We operate principally in North America and specialize in shale and unconventional resource plays, drilling challenging and complex wells in oil and gas producing basins. In the United States, our customers include a diverse mix of large independent, major, mid-sized and small cap oil companies as well as private independent companies (including those backed by private equity), primarily focused on unconventional shale basins.
Internationally, our customer base has expanded to include major international and national oil companies across the Middle East, Europe, Africa, and Latin America. The acquisition has also enhanced our offshore capabilities, particularly in the North Sea and Northern Africa, and has positioned us to deliver greater earnings visibility, cash flow generation, and long-term value creation.
Revenue from drilling services performed for our largest drilling customer totaled approximately 12.0 percent ($451.3 million) and 11.0 percent ($302.6 million) of our total consolidated revenues during fiscal years 2025 and 2024, respectively. We did not have any individual customers that represented 10% or more of our total consolidated revenues in fiscal year 2023.
The following table presents operating statistics for the fiscal years 2025, 2024, and 2023:
Year Ended September 30,
North America Solutions
International Solutions
Offshore Solutions
Revenue days 1
Average active rigs 2
Number of active rigs at the end of period 3
Number of available rigs at the end of period
(1) Defined as the number of contractual days for owned and leased rigs with recognized revenue during the period.
(2) Active rigs generate revenue for the Company; accordingly 'average active rigs' represents the average number of rigs generating revenue during the applicable period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 365 days). This includes the impact of downsizing our fleet and/or rigs that have been reclassified to assets held-for-sale. See Note 4—Property, Plant and Equipment to our Consolidated Financial Statements.
(3) Defined as the number of rigs generating revenue at the applicable end date of the time period.
Our Segments
North America Solutions Segment
We believe we operate the largest and most technologically advanced AC drive drilling rig fleet in North America and have a presence in most of the U.S. shale and unconventional basins. We have 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 our active rigs are capable of drilling horizontal or directional wells. As of September 30, 2025, we had approximately 24.0 percent of the total market share in U.S. land drilling and approximately 33.7 percent of the super-spec market share in U.S. land drilling. In the United States, we have the industry's largest super-spec fleet and had 144 of our 223 marketed rigs active under contract as of September 30, 2025 of which 73 were under fixed‑term contracts, and 71 were working well-to-well.
Our 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. This technology is intended to address our customers' unique challenges based upon their goals and desired outcomes which will often vary from well to well, basin to basin.
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Our North America Solutions segment contributed approximately 63.0 percent ($2.4 billion) of our consolidated operating revenues during fiscal year 2025, compared to approximately 88.7 percent ($2.4 billion) and 87.7 percent ($2.5 billion) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. In North America, our 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). Revenue from drilling services performed for our largest North America Solutions drilling customer totaled approximately 18.2 percent ($429.4 million) of the North America Solutions segment revenues during fiscal year 2025.
International Solutions Segment
Our International Solutions segment conducts operations primarily in Saudi Arabia, Argentina, Oman, Bahrain, Germany, Colombia, and Kuwait. As of September 30, 2025, we had 88 land rigs contracted for work in locations outside of the United States. Our International Solutions operations contributed approximately 21.4 percent ($802.4 million) of our consolidated operating revenues during fiscal year 2025, compared to approximately 7.0 percent ($194.0 million) and 7.4 percent ($212.6 million) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. Revenue from drilling services performed for our largest International Solutions drilling customer totaled approximately 32.3 percent ($259.0 million) of the International Solutions segment revenues during fiscal year 2025.
Saudi Arabia As of September 30, 2025, we had 44 available rigs in Saudi Arabia. Revenues generated by Saudi Arabia within the International Solutions operating segment contributed approximately 6.9 percent ($259.0 million) of our consolidated operating revenues in fiscal year 2025. All of our revenues in Saudi Arabia are from contracts with the national oil company. During the first quarter of the year ended September 30, 2025, we commenced operations for our eight FlexRig ® 's in Saudi Arabia.
Argentina As of September 30, 2025, we had 16 available rigs in Argentina. Revenues generated by Argentine drilling operations within the International Solutions operating segment contributed approximately 4.2 percent ($155.7 million) of our consolidated operating revenues during fiscal year 2025 compared to approximately 5.2 percent ($142.5 million) and 4.8 percent ($137.4 million) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. The Argentine drilling contracts are primarily with large international or national oil companies.
Oman As of September 30, 2025, we had 25 available rigs in Oman. Revenues generated by Oman drilling operations within the International Solutions operating segment contributed approximately 4.7 percent ($177.9 million) of our consolidated operating revenues in fiscal year 2025. All of our revenues during fiscal year 2025 were generated from expanded operations following the Acquisition. Oman drilling contracts are with international oil companies, a partner of the national oil company, and a private independent oil company.
Bahrain As of September 30, 2025, we had four available rigs in Bahrain. Within the International Solutions operating segment, drilling revenues generated in Bahrain contributed approximately 0.8 percent ($30.8 million) of our consolidated operating revenues in fiscal year 2025, compared to approximately 0.7 percent ($18.0 million) and 0.5 percent ($15.4 million) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. All of our revenues in Bahrain are from a partner of the local national oil company.
Germany As of September 30, 2025, we had four available rigs in Germany. Revenues generated by German drilling operations within the International Solutions operating segment contributed approximately 1.0 percent ($38.8 million) of our consolidated operating revenues in fiscal year 2025. All of our revenues during fiscal year 2025 were generated from expanded operations following the Acquisition. German drilling contracts are primarily with private independent oil companies.
Colombia As of September 30, 2025, we had nine available rigs in Colombia. Within the International Solutions operating segment, drilling services revenues generated in Colombia contributed approximately 1.0 percent ($36.1 million) of our consolidated operating revenues in fiscal year 2025, compared to approximately 0.3 percent ($9.3 million) and 1.6 percent ($46.7 million) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. The Colombian drilling contracts that generated revenue during the fiscal year were primarily with large international or national oil companies.
Kuwait As of September 30, 2025, we had four available rigs in Kuwait, in addition to two leased rigs. Revenues generated by Kuwait drilling operations within the International Solutions operating segment contributed approximately 0.8 percent ($30.7 million) of our consolidated operating revenues in fiscal year 2025. During fiscal year 2025, all revenues were generated from expanded operations following the Acquisition and are attributable to two leased rigs operating under contract with the national oil company.
Offshore Solutions Segment
Our Offshore Solutions segment has been in operation since 1968 and currently consists of seven platform rigs located in U.S. federal waters. Our 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, we provide management contract services to contracted rig platforms located in U.S. federal waters, the North Sea and Norwegian Sea off the coast of Norway, Caspian Sea and other international waters. We supply the rig equipment and crews and the operator, who owns the platform, will typically provide production equipment or other necessary facilities.
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As of September 30, 2025, three of the seven offshore rigs were under contract. Our Offshore Solutions operations contributed approximately 13.9 percent ($520.4 million) of our consolidated operating revenues during fiscal year 2025, compared to approximately 3.9 percent ($106.2 million) and 4.5 percent ($130.2 million) of our consolidated operating revenues during fiscal years 2024 and 2023, respectively. Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 45.2 percent ($235.0 million) of offshore revenues during fiscal year 2025.
Other Operations
Other operations is primarily comprised of our BENTEC™ manufacturing and engineering operations, with four facilities serving the energy industry. We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma. Our real estate investments include a shopping center and undeveloped real estate.
We also continue to use our Captive insurance subsidiaries to fund SIRs and deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, medical stop-loss program, and certain international casualty and rig property programs.
Our manufacturing and engineering operations, real estate operations and our wholly-owned captive insurance companies are included in "Other" within our segment disclosures.
Rigs, Equipment, R&D, and Facilities
Since the late 1990s, we have advanced a new generation of drilling rigs prioritizing safety, mobility, and performance. Our FlexRig® platform, first introduced in 1998, has evolved through continuous innovation and has delivered higher-value wells and improved operational efficiency for our customers.
In 2025, we acquired KCA Deutag, expanding our land drilling footprint in the Middle East, South America, Europe, and Africa and adding valuable offshore management expertise in regions such as the North Sea, Angola, Azerbaijan, and Canada. This acquisition complements our rig portfolio and broadens our customer reach.
KCA Deutag’s BENTEC™ business unit adds manufacturing and engineering capabilities through four facilities that will be integrated into our existing infrastructure to support rig upgrades, retrofits and component overhauls within our vertically integrated model. Our facilities in Galena Park, Texas, and Tulsa, Oklahoma-area facilities will continue to provide rig assembly and modular component support, now enhanced by BENTEC™'s engineering depth.
The acquisition also strengthens our super-spec rig fleet. We have reconfigured 78 FlexRig® units into super-spec walking rigs, and will evaluate potential upgrades to select KCA Deutag rigs. 'Super-spec' standards include: AC drive, minimum 1,500 horsepower drawworks, minimum of 750,000 lbs. hookload rating, 7,500 psi mud circulating system, and multiple-well pad capability. As of September 30, 2025, we operate 238 super-spec rigs.
Fleet uniformity remains a cornerstone of our strategy. Integration of KCA Deutag’s assets will emphasize standardized controls, adaptive crew training, and a centralized supply chain to maintain consistent, safe, and reliable operations across our expanded fleet.
Our Rig Systems Monitoring and Support Center (RSMS) and Remote Operations Centers (ROCs) will now support the expanded fleet, providing 24/7 monitoring, real-time feedback, and engineering support to optimize performance and reduce nonproductive time. We believe the integration of KCA Deutag’s rigs into our digital ecosystem will enhance wellbore positioning and execution across geographies.
We continue to advance our automation solutions, which leverage machine-human collaboration to reduce variability and improve well economics. These technologies are enabled by our uniform digital fleet and will be extended to applicable KCA Deutag rigs. Our path toward autonomous drilling remains a strategic priority, and the acquisition accelerates our ability to deploy these solutions globally.
We operate legacy H&P vertically integrated facilities for manufacturing, upgrades, retrofits, modifications, overhauls, recertification, and repairs of our rigs and equipment. Our facility located in Galena Park, Texas is primarily utilized for overall rig assembly, overhaul, recommissioning and recertification while our facility near Tulsa, Oklahoma is primarily utilized for modular rig component overhauls and repairs. BENTEC™ operates four facilities that deliver integrated solutions for drilling equipment manufacturing, upgrades, overhauls, and repairs. The Bad Bentheim, Germany facility serves as the main engineering and manufacturing hub; Dammam, Saudi Arabia focuses on services, overhauls, and rig upgrades; Nizwa, Oman provides regional service, repair, and manufacturing capabilities; and Poltava, Ukraine supports the maintenance and servicing of BENTEC™ equipment and rigs.
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We continue to see adoption and growth with our technologically enabled automation solutions. We designed these solutions to address our customers' dependence on human decision-making to design, execute and optimize crude oil and natural gas extraction. These technologies enable us to deploy data-driven solutions that reduce variability and costs for achieving optimal outcomes. These solutions are designed to enhance wellbore quality and placement, improve cost performance and well economics, and achieve better consistency at reduced risk. Our automation-focused solutions and applications are enabled by our uniform digital fleet that provide a platform for machine-human collaboration during the drilling process to improve efficiency. Our path to autonomous drilling continues to evolve with several solutions in various stages of commercial testing.
Markets and Competition
Our business largely depends on the level of capital spending by oil and gas companies for exploration and production activities. The level of capital spending has traditionally been correlated to oil and gas prices. Oil and gas prices can be volatile at times depending upon both near and long-term supply and demand factors. Sustained increases or decreases in the prices of oil and natural gas generally have a material impact on the exploration and production activities of our customers. As such, significant declines in the prices of oil and natural gas may have a material adverse effect on our business, financial condition and results of operations. As of September 30, 2025, we had 208 active rigs under contract, compared to 170 and 164 rigs under contract as of September 30, 2024 and 2023, respectively. For further information concerning risks associated with our business, including volatility surrounding oil and natural gas prices and the impact of low oil prices on our business, see Item 1A—Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10‑K.
Our industry is highly competitive, and we strive to differentiate our services based upon the quality of our FlexRig ® drilling rigs and our engineering design expertise, operational efficiency, software technologies, and safety and environmental awareness. The number of available rigs generally exceeds demand in many of our markets, resulting in significant price competition. We compete against many drilling companies, some of whom are present in more than one of our operating regions. In the United States, we compete with Nabors Industries Ltd., Patterson-UTI Energy, Inc., Precision Drilling Corporation, and many other competitors with regional operations. Internationally, we compete directly with various contractors at each location where we operate. In the Gulf of America platform rig market, we primarily compete with Nabors Industries Ltd. and Blake International Rigs, LLC. For further information concerning risks associated with competition in our industry, see Item 1A—Risk Factors—Business and Operating Risks.
Drilling Contracts
Our drilling contracts are obtained through competitive bidding or as a result of direct negotiations with customers. Our contracts vary in their terms and rates depending on the nature of the operations to be performed, the duration of the work, the amount and type of equipment and services provided, the geographic areas involved, market conditions and other variables. In many instances, our contracts cover multi‑well or pad and multi‑year projects. Contracts generally contain renewal or extension provisions exercisable at the option of the customer. The option to extend and the pricing are mutually agreed upon by both the customer and H&P. In most instances, contracts provide for additional payments for mobilization and demobilization of the rig.
The duration of our drilling contracts are generally either “well‑to‑well/pad-to-pad” or for a fixed term. “Well‑to‑well” contracts can be terminated at the option of either party upon the completion of drilling of any one well. Fixed-term contracts generally have a minimum term of at least six months up to multiple years. These contracts customarily provide for termination at the election of the customer, but may include an “early termination payment” to be paid to us if the contract is terminated prior to the expiration of the fixed term. However, under certain limited circumstances such as destruction of a drilling rig, bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us.
Each drilling rig operates under a separate drilling contract and, in some instances, these contracts are part of an over-arching term agreement known as a FlexPool. These agreements are with a limited number of domestic customers that operate multiple rigs, oftentimes across multiple basins in the U.S. Under the FlexPool agreements, customers enter into a fixed term contract covering a minimum amount of drilling days, utilizing a minimum number of drilling rigs and have the flexibility to employ more or fewer rigs as long as the minimum number of rigs (outlined in the agreement) is maintained. If any provisions are violated, as in a customer operating below the minimum number of rigs, early termination payments may apply.
Daywork Contracts
Daywork contracts are contracts under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, specification of the rig provided, operating conditions, the duration of the contract, and the competitive forces of the market.
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Performance-based Contracts
Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets. These types of contracts typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers. For example, some performance targets are set based upon days to drill a well or the number of lateral feet drilled in zone per day. We often use our automated technology solutions to assist in achieving the performance targets. The risks associated with these contracts relate to the failure to reach the agreed upon performance targets. If we do not meet these targets, we will not receive additional compensation above the base dayrate. The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets. Based on our operational track record throughout fiscal year 2025 and drilling expertise, our performance-based contracts have produced a positive risk-reward outcome. Refer to Note 10—Revenue from Contracts with Customers for additional information related to performance-based contracts.
Contract Backlog
Our contract drilling backlog was $7.0 billion and $1.5 billion as of September 30, 2025 and 2024, respectively. Approximately 22.6 percent of the September 30, 2025 backlog is reasonably expected to be fulfilled in fiscal year 2026. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—"Contract Backlog" included in this Form 10-K for additional information pertaining to backlog.
Employees
As of September 30, 2025, we had approximately 6,200 employees within the United States and approximately 9,500 employees in our international operations. The number of employees fluctuates depending on the current and expected demand for our services. We consider our employee relations to be robust. None of our U.S. employees are represented by a union. However, some of our international employees are unionized.
Human Capital Objectives and Programs
At Helmerich & Payne, our people are the foundation of our success. We are committed to cultivating a workplace culture that reflects our core values, prioritizes safety, and supports the development and well-being of our employees. Our human capital strategy is designed to attract, retain, and grow a diverse and talented workforce that shares our commitment to operational excellence and responsible energy development.
Core Values and Culture
Our culture is defined by The H&P Way, which articulates our purpose of improving lives through efficient and responsible energy, and the values that guide our behaviors and decisions. These values include:
• Actively C.A.R.E.™ – We are expected to treat one another with respect. We care about each other, and from a safety perspective, we promote Controlling and Removing Exposures (“C.A.R.E.”) for ourselves and others.
• Service Attitude – We should do our part and more for those around us, to consider the needs of others and provide solutions to meet the needs of our colleagues, customers, and communities.
• Innovative Spirit – We will embrace continuous improvement and are willing to try new approaches. We seek to make decisions with a long-term view in mind.
• Teamwork – We should listen to one another and collaborate across teams to achieve shared goals and deliver value.
• Do The Right Thing – Means being honest and transparent. We aim to tackle tough situations, make decisions and speak up when needed.
These values are embedded in our daily operations and serve as the foundation for our employee experience, leadership development, and decision-making processes.
Talent Attraction & Retention
We recognize that recruiting and retaining skilled employees is critical to our success. Our global recruitment teams support rig operations by sourcing, hiring, onboarding, and reassigning personnel. During periods of reduced activity, we maintain relationships with former employees to facilitate re-engagement when appropriate.
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We leverage multiple channels for recruiting including our careers site, social media, job fairs, and relationships with educational institutions to attract qualified, diverse, motivated and responsible candidates. Our approach is designed to support consistent staffing and long-term workforce sustainability.
Education and Training
We support the ongoing development of our employees. Our onboarding programs emphasize safety, ethical conduct, and inclusive teamwork. Training is managed by our Human Resources Shared Services team, which facilitates alignment with H&P’s core values and strategic goals.
Key training programs include:
• New Employment Safety Training – Prepares new hires in safety-sensitive roles to work safely on our rigs and provides them with required certifications and cultural orientation.
• Short Service Employee Training – Provides technical, on-the-job training under the guidance of a mentor.
• Ethics and Compliance Training – Covers topics such as our Code of Conduct, anti-discrimination, data privacy, trade compliance and anti-corruption, among others.
• Drillers’ Performance Academy – An in-person workshop focused on leadership, team dynamics, and technology training.
• Leadership Series Training – In person and online courses available to current and aspiring leaders, aligned with The H&P Way.
Safety Training and Serious Injury and/or Fatality ("SIF") Reduction Program
Safety is a core component of our culture. We strive to build an Actively Caring workforce that prioritizes:
• Personal safety and health
• The safety and health of others
• Protection of the Environments in which we work
Our employees are encouraged to provide open feedback and proactively address exposures that pose health and safety risks. Through training and accountability, we reinforce the importance of safe practices and risk mitigation.
Safety Leadership
Since 2015, we have redefined safety success beyond traditional metrics like Total Recordable Incident Rate ("TRIR"). By maintaining open communication and collaborating with field employees, we have built a strong culture of C.A.R.E. Employees are recognized and rewarded for identifying and reporting near-miss incidents with serious injury or fatality potential. This approach supports a proactive safety culture and strengthens organizational health.
SIF Strategy
Our Serious Injury and Fatality ("SIF") strategy is centered on identifying and mitigating high-risk exposures. While we continue to track traditional safety metrics for benchmarking, our safety culture is guided by more meaningful indicators such as:
• SIF Potential Rate
• SIF Mitigated Rate
We prioritize learning from incidents with SIF potential, even when no injury occurs, and escalate investigations accordingly. Our vision for safety is rooted in prevention, transparency, and continuous improvement.
Culture and Belonging
We believe that creating an environment where our employees feel valued and respected drives engagement, better leverages the unique talents and perspectives of our people to innovate and enhances our ability to attract and retain a diversified workforce. H&P is an equal opportunity employer and is committed to equal opportunity employment. H&P has established an employee Culture & Belonging Council with global employee representation. These priorities are evidenced by formalized policies regarding equal opportunity and a discrimination-free workplace.
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Employee Benefits, Health and Wellness
We offer competitive compensation and benefits designed to support the health, well-being, and financial security of our employees. Eligibility for specific benefits is subject to applicable plan terms, conditions, and qualification requirements.
For U.S.-based employees, our benefits include:
• Comprehensive medical, dental, and vision coverage
• Health Savings Accounts ("HSAs") and Flexible Spending Accounts ("FSAs")
• 401(k) retirement savings plan with company matching contributions
• Employer-paid life and disability insurance
• Employee Assistance Program ("EAP") offering wellness and support services
• The H&P Way Fund, providing emergency financial assistance
• Discounts on technology, travel, and personal purchases
• Educational Assistance Plan for eligible undergraduate and select graduate programs
• Paid time off programs including vacation, holidays, bereavement, and sick leave
For employees outside the United States, we offer regionally appropriate benefits that are competitive within local markets and aligned with applicable laws and cultural norms.
Insurance and Risk Management
Our operations are subject to a number of operational risks, including personal injury and death, environmental, cyber, and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us. Furthermore, if a significant accident or other event occurs and is not fully covered by insurance or an enforceable or recoverable indemnity from a customer, it could have a material adverse effect on our business, financial condition and results of operations.
We have indemnification agreements with many of our customers and we also maintain liability and other forms of insurance. In general, our drilling contracts contain provisions requiring our customers to indemnify us for, among other things, well control events and reservoir damage. However, our contractual rights to indemnification may be unenforceable or limited due to negligent or willful acts by us, or subcontractors and/or suppliers or by reason of state anti-indemnity laws. Our customers and other third parties may also dispute these indemnification provisions, or we may be unable to transfer these risks to our drilling customers or other third parties by contract or indemnification agreements.
We insure working land rigs and related property and equipment at values that approximate the current replacement costs on the inception date of the policies. However, we self-insure large SIRs and deductibles under these policies. We also carry insurance with varying SIRs, deductibles, and coverage limits with respect to stacked rigs, offshore platform rigs, and “named windstorm” risk in the Gulf of America.
We have insurance coverage for comprehensive general liability, automobile liability, workers’ compensation and employer’s liability, and certain other specific risks. Insurance is purchased over SIRs or deductibles to reduce our exposure to catastrophic events. We retain a significant portion of our expected losses under our workers’ compensation, general liability and automobile liability programs. We self-insure a number of other risks including loss of earnings and business interruption. We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage.
Our insurance may not in all situations provide sufficient funds to protect us from all liabilities that could result from our operations. Our coverage includes aggregate policy limits. As a result, we retain the risk for any loss in excess of these limits. No assurance can be given that all or a portion of our coverage will not be canceled, that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss. Further, we may experience difficulties in collecting from our insurers or our insurers may deny all or a portion of our claims for insurance coverage. For further information see Item 1A—Risk Factors—Business and Operating Risks—Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.
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Government Regulations
Our operations are affected from time to time and in varying degrees by foreign and domestic political developments and a variety of federal, state, foreign, regional and local laws, rules and regulations, including those relating to:
• drilling of oil and natural gas wells;
• directional drilling services;
• protection of the environment;
• workplace health and safety;
• labor and employment;
• data privacy;
• taxation;
• exportation or importation of equipment, technology and software;
• currency conversion and repatriation;
• global anti-corruption laws; and
• government sanctions and embargo listing.
Environmental laws and regulations that apply to our 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, species, or habitats. Applicable environmental laws and regulations also include similar foreign, state or local counterparts to the above-mentioned federal laws, which regulate air emissions, water discharges, and management of hazardous substances and waste. Additionally, regulations relating to the protection of threatened or endangered species or critical habitats may result in limitations on exploration and production activities. Environmental laws can have a material adverse effect on the drilling industry, including our operations, and compliance with such laws may require us to make significant capital expenditures, such as the installation of costly equipment or operational changes, and may affect the resale values or useful lives of our drilling rigs.
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 our operations and that this information be provided to employees, state and local governments, emergency responders and citizens.
A number of countries actively regulate and control the importation and/or exportation of oil and gas and other aspects of the oil and gas industries in their countries. In addition, government actions and initiatives by OPEC+ may continue to contribute to oil price volatility. In some areas of the world, government activity has adversely affected the amount of exploration and development work done by oil and gas companies and influenced their need for drilling services, and likely will continue to do so.
In addition, we are 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 our 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”), as well as similar laws enacted in other states. Because we conduct business in France and the UK, we are also subject to the European General Data Protection Regulation (“GDPR”) and the UK Data Protection Act. Our operations in the Middle East and Colombia are subject to similar data privacy and data protection laws. to comply with applicable laws or regulations or acts of could subject us to , or other sanctions. For more information, see Item 1A— “Risk Factors — to comply with the U.S. Foreign Practices Act or foreign anti‑ legislation could affect our business and Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection. ”
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We are 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. Such regulations regarding exports and imports of covered goods or dealings with sanctioned countries, persons or entities include licensing, recordkeeping and reporting requirements. Failure to comply with applicable laws and regulations relating to customs, tariffs, sanctions and export controls may subject us to criminal sanctions or civil remedies, including fines, denial of export privileges, injunctions or seizures of assets. For more information, see Item 1A— “Risk Factors — Government policies, mandates, and regulations specifically affecting the energy sector and related industries, regulatory policies or matters that affect a variety of businesses, taxation polices, and political instability could adversely affect our financial condition and results of operations. ”
We are 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. In addition, we are subject to certain requirements to contribute to retirement funds or other benefit plans, and laws in some jurisdictions may require payment of statutorily calculated amounts to employees upon termination of employment.
We monitor our compliance with applicable governmental rules and regulations in each country of operation. We have made and will continue to make the required expenditures to comply with current and future regulatory requirements. We do not anticipate that compliance with currently applicable rules and regulations and required controls will significantly change our competitive position, capital spending or earnings during fiscal year 2026. We believe we are materially compliant with applicable rules and regulations and, to date, the cost of such compliance has not been material to our business or financial condition. However, future events such as additional laws and regulations, changes in existing laws and regulations or their interpretation or more vigorous enforcement policies of regulatory agencies, may require additional expenditures by us, which may be material. Specifically, the expansion of the scope of laws or regulations protecting the environment has accelerated in recent years, particularly outside the United States, and we expect this trend to continue. Accordingly, there can be no assurance that we will not incur significant compliance costs in the future. See Item 1A— “Risk Factors — Failure to comply with or changes to governmental and environmental laws could adversely affect our business.”
Sustainability
H&P has helped its customers supply energy for more than a century, and we continue to innovate and improve the ways in which we can provide energy safely, reliably, and efficiently. The Company continues to evolve and refine its sustainability strategy rooted in our core value to "do the right thing," as discussed above.
Available Information
Our website is located at www.helmerichpayne.com. Annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K, and amendments to those reports, earnings releases, and financial statements are made available free of charge on the investor relations section of our website as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission ("SEC"). The information contained on our website, or accessible from our website, including our Sustainability Reports and related information, is not incorporated into, and should not be considered part of, this Form 10‑K or any other documents we file with, or furnish to, the SEC. The SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Annual reports, quarterly reports, current reports, amendments to those reports, earnings releases, financial statements and our various corporate governance documents are also available free of charge upon written request.
Investors and others should note that we announce material financial information to our investors using our investor relations website (https://ir.hpinc.com/investors), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our stockholders and the public about our company, our services and other issues. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website.
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ITEM 1A. RISK FACTORS
An investment in our securities involves a variety of risks. In addition to the other information included and incorporated by reference in this Form 10-K and the risk factors discussed elsewhere in this Form 10-K, the following risk factors should be carefully considered and read in conjunction with the other information in this Form 10-K, as they could have a material adverse effect on our business, financial condition and results of operations. There may be other additional risks, uncertainties and matters not presently known to us or that we believe to be immaterial that could nevertheless have a material adverse effect on our business, financial condition and results of operations.
BUSINESS AND OPERATING RISKS
Our business depends on the level of activity in the oil and natural gas industry, which is significantly impacted by the current and expected price of oil and natural gas as well as the volatility in those prices and other factors.
Our business depends on the conditions of the land and offshore oil and natural gas industry. Demand for our services and the rates we are able to charge for such services depend on oil and natural gas industry exploration and production activity and expenditure levels, which are directly affected by both long- and short-term trends in oil and natural gas prices and market expectations regarding such prices. Oil prices are particularly sensitive to actual and perceived threats to geopolitical stability, global economic conditions, and to changes in production from OPEC+ member states. For example, the ongoing armed conflicts between (i) Russia and Ukraine and (ii) the conflicts in the Middle East and the continuation of, or any escalation in the severity of, these conflicts, has led and may continue to lead to an increase in the volatility of global oil and gas prices, which could have a corresponding negative impact on the capital expenditure of oil and gas companies as a result of the higher perceived risk.
Oil and natural gas prices and production levels, as well as market expectations regarding such prices and production levels, have been volatile, which has had, and may in the future have, adverse effects on our business and operations. The volatility in prices and production levels are impacted by many factors beyond our control, including:
• the domestic and foreign supply of, and demand for, oil, natural gas and related products;
• the cost of exploring for, developing, producing and delivering oil and natural gas;
• uncertainty in capital and commodities markets and the ability of oil and natural gas producers to access capital;
• the availability of and constraints in storage and transportation capacity, including, for example, takeaway constraints experienced in the Permian Basin over the past several years;
• the worldwide economy;
• expectations about future oil and natural gas prices and production levels (including as a result of certain economic initiatives, such as those related to artificial intelligence);
• local and international political, economic, health and weather conditions, especially in oil and natural gas producing countries, including, for example, the impacts of local and international pandemics and other disasters;
• actions of OPEC, its members and other oil producing nations, such as Russia, relating to oil price and production levels, including announcements of potential changes to such levels;
• the levels of production of oil and natural gas of non-OPEC countries;
• the continued development of shale plays which may influence worldwide supply and prices;
• tax, trade and tariff policies of the United States and other countries involved in global energy markets;
• political and military conflicts, hostilities or perceived hostilities in oil producing regions or other geographical areas or acts of terrorism in the United States or elsewhere;
• technological advances that are related to oil and natural gas recovery or that affect the global demand or supply for energy;
• the development, exploitation and market acceptance of alternative energy sources as part of a transition to a lower carbon economy;
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• focus by the investment community on sustainability practices in the oil and natural gas industry;
• legal and other limitations or restrictions on exportation and/or importation of oil and natural gas;
• laws and governmental regulations affecting the use of oil and natural gas; and
• the environmental and other laws and governmental regulations affecting exploration and development of oil and natural gas reserves.
The level of land and offshore exploration, development and production activity and the prices of oil and natural gas are volatile and are likely to continue to be volatile in the future. Higher oil and natural gas prices do not necessarily translate into increased activity because demand for our services is typically driven by our customers’ expectations of future commodity prices, as well as our customers' ability to access sources of capital to fund their operating and capital expenditures. However, a sustained decline in worldwide demand for oil and natural gas, as well as excess supply of oil or natural gas coupled with storage and transportation capacity constraints, shutting in of wells or wells being drilled but not completed, prolonged low oil or natural gas prices or a reduction in the ability of our customers to access capital, has resulted in, and may in the future result in, reduced exploration and development of land and offshore areas and a decline in the demand for our services, which has had, and may in the future, have a material adverse effect on our business, financial condition and results of operations.
Global economic conditions and volatility in oil and gas prices may adversely affect our business.
Concerns over global economic conditions, energy costs, geopolitical issues, supply chain disruptions, inflation, the availability and cost of credit have contributed to increased economic uncertainty. An economic slowdown or recession in the United States or in any other country that significantly affects the supply of or demand for oil or natural gas could negatively impact our operations and therefore adversely affect our results. Global economic conditions have a significant impact on oil and natural gas prices and stagnation or deterioration in global economic conditions could result in less demand for our services and could cause our customers to reduce their planned spending on exploration and development drilling. Adverse global economic conditions may cause our customers, vendors and/or suppliers to lose access to the financing necessary to sustain or increase their current level of operations, fulfill their commitments and/or fund future operations and obligations. Furthermore, challenging economic conditions may result in certain of our customers experiencing or otherwise becoming to pay vendors, including us. In the past, global economic conditions, and expectations for future global economic conditions, have sometimes significantly in a relatively short period of time and there can be no assurance that global economic conditions or expectations for future global economic conditions will recover in the near term or not quickly again due to one or more factors. These conditions could have a material effect on our business, financial condition and results of operations.
The drilling services and solutions business is highly competitive, and a surplus of available drilling rigs may adversely affect our rig utilization and profit margins.
Competition in drilling services and solutions involves such factors as price, efficiency, condition, type and operational capability of equipment, reputation, operating safety, environmental impact, customer relations, rig availability and excess rig capacity in the industry. Competition may vary significantly by region at any particular time. Land drilling rigs can be readily moved from one region to another in response to changes in levels of activity, which could result in an oversupply of rigs in any region, leading to increased price competition. In addition, development of new drilling technology by competitors has increased in recent years, which could negatively affect our ability to differentiate our services.
We operate in a very competitive industry, and we are not always successful in raising or maintaining our existing prices. From time to time we are able to increase our prices, but we may not be able to do so at a rate that is sufficient to offset rising costs. The inability to maintain our pricing and to increase our pricing as costs increase to offset rising costs and capital expenditures could adversely affect our rig utilization and profit margins.
Various factors within our industry could cause there to be substantially more drilling rigs available than necessary to meet demand even as oil and natural gas prices, and drilling activity, increase. In the event of a surplus of available and more competitive drilling rigs, we may continue to experience difficulty in replacing fixed‑term contracts, extending expiring contracts or obtaining new contracts in the spot market, and new contracts may contain lower dayrates and substantially less favorable terms, which could have a material adverse effect on our business, financial condition and results of operations. As of September 30, 2025, 132 of our available rigs were not under contract.
Further, as a result of any significant reduction in the demand for oil and natural gas services, certain of our competitors may engage in bankruptcy proceedings, debt refinancing transactions, management changes, or other strategic initiatives in an attempt to reduce operating costs to maintain a position in the market. This could result in such competitors emerging with stronger or healthier balance sheets and in turn an improved ability to compete with us in the future.
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Consolidation in our industry may impact our results of operations.
Business consolidations within the oil and gas industry in recent years have resulted in some of our largest customers combining and using their size and purchasing power to seek economies of scale and pricing concessions. Continuing consolidation within the industry may result in reduced capital spending by some of our customers or the acquisition of one or more of our primary customers, which may lead to decreased demand for our products and services. There is no assurance that we will be able to maintain our level of sales to a customer after its consolidation with another company or replace that revenue with increased business activity with other customers. Additionally, corporate consolidations among our competitors could significantly alter industry conditions and competition within the industry. As a result, the acquisition of one or more of our primary customers or consolidations among our competitors may have a significant adverse impact on our business, results of operations, financial condition and cash flows. We are unable to predict what effect consolidations in the industry may have on prices, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customers.
New technologies may cause our drilling methods and equipment to become less competitive, and it may become necessary to incur higher levels of capital expenditures in order to keep pace with the disruptive trends in the drilling industry. Growth through the building of new drilling rigs and improvement of existing rigs is not assured.
The market for our services is characterized by continual technological developments that have resulted in, and will likely continue to result in, substantial improvements in the functionality and performance, including environmental performance, of rigs and equipment. Our customers increasingly demand the services of newer, higher specification drilling rigs, as well as new and improved technology, such as drilling automation technology and lower-emissions operations and services. This results in a bifurcation of the drilling fleet and is evidenced by the higher specification drilling rigs (e.g., AC rigs) generally operating at higher overall utilization levels and dayrates than the lower specification drilling rigs (e.g., SCR rigs). In addition, a significant number of lower specification rigs are being stacked and/or removed from service.
Although we take measures to ensure that we develop and use advanced oil and natural gas drilling technology, changes in technology, improvements by competitors and increasing customer demands for new and improved technology could make our equipment less competitive. There can be no assurance that we will:
• have sufficient capital resources to improve existing rigs or build new, technologically advanced drilling rigs;
• avoid cost overruns inherent in large fabrication projects resulting from numerous factors such as shortages or unscheduled delays in delivery of equipment or materials, inadequate levels of skilled labor, unanticipated increases in costs of equipment, materials and labor, design and engineering problems, and financial or other difficulties;
• successfully deploy idle, stacked, new or upgraded drilling rigs;
• effectively manage the increased size or future growth of our organization and drilling fleet;
• maintain crews necessary to operate existing or additional drilling rigs; or
• successfully improve our financial condition, results of operations, business or prospects as a result of improving existing drilling rigs or building new drilling rigs.
In the event that we are successful in developing new technologies for use in our business, there is no guarantee of future demand for those technologies. Customers may be reluctant or unwilling to adopt our new technologies. We may also have difficulty negotiating satisfactory terms for our technology services or may be unable to secure prices sufficient to obtain expected returns on our investment in the research and development of new technologies.
If we are not successful in upgrading existing rigs and equipment or building new rigs in a timely and cost‑effective manner suitable to customer needs, demand for our services could decline and we could lose market share. One or more technologies that we may implement in the future may not work as we expect and our business, financial condition, results of operations and reputation could be adversely affected as a result. Additionally, new technologies, services or standards could render some of our services, drilling rigs or equipment obsolete, which could reduce our competitiveness and have a material adverse impact on our business, financial condition and results of operations.
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Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.
Our operations are subject to many hazards inherent in the business in which we operate, including inclement weather, natural disasters, unplanned power outages, blowouts, explosions, well fires, loss of well control, equipment failure, computer system disruptions, pollution, and reservoir damage. These hazards could cause significant environmental and reservoir damage, personal injury and death, suspension of operations, serious damage or destruction of equipment and property and substantial damage to producing formations and surrounding lands and waters. An accident or other event resulting in significant environmental or property , or or involving our employees or other persons could also trigger by federal, state or local authorities. Such an or other event and subsequent management efforts could cause us to incur substantial expenses in connection with and remediation as well as cause lasting to our reputation, of customers and an to obtain insurance.
Our Offshore Solutions operations are also subject to potentially significant risks and liabilities attributable to or resulting from adverse environmental conditions, including pollution of offshore waters and related negative impact on wildlife and habitat, adverse sea conditions and platform damage or destruction due to collision with aircraft or marine vessels. Our Offshore Solutions operations may also be negatively affected by a blowout or an uncontrolled release of oil or hazardous substances by third parties whose offshore operations are unrelated to our operations. We operate several platform rigs in the Gulf of America. The Gulf of America experiences hurricanes and other extreme weather conditions on a frequent basis, which may increase in frequency and severity as a result of climate change. See below “—The physical effects of climate change and the regulation of greenhouse gases and climate change could have a negative impact on our business.” caused by high winds and turbulent seas could potentially operations on our platform rigs for significant periods of time until the can be repaired. Moreover, we may experience in operations due to to customer platforms and other related facilities in the area. We also lease a fabrication facility near the Houston, Texas ship channel, regularly have land drilling operations proximate to the gulf coast, and our principal fabricator and other vendors are also located in the gulf coast region, all of which could be to or by hurricanes and other extreme weather conditions, including coastal flooding, which in turn could result in increased operating costs or decreases in revenues and affect our business, financial condition, and results of operations.
It is customary in our business to have mutual indemnification agreements with customers on a “knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel, subcontractors, and property. In general, our drilling contracts contain provisions requiring our customers to indemnify us for, among other things, well control events and reservoir damage. However, our contractual rights to indemnification may be unenforceable or limited due to negligent or willful acts by us, our subcontractors and/or suppliers. Additionally, certain states, including Texas, New Mexico, Wyoming, and Louisiana, have enacted statutes generally referred to as "oilfield anti-indemnity acts," which expressly limit certain indemnity agreements contained in or related to indemnification in contracts, and could expose the Company to financial loss. Furthermore, other states may enact similar oilfield anti-indemnity acts.
Our customers and other third parties may also dispute, or be unable to meet, their contractual indemnification obligations to us due to financial, legal or other reasons. Accordingly, we may be unable to transfer these risks to our customers and other third parties by contract or indemnification agreements. Incurring a liability for which we are not fully indemnified or insured could have a material adverse effect on our business, financial condition and results of operations.
In addition, we maintain insurance coverage of the types and in the amounts that we believe to be customary in the industry, but we do not insure against all risks, either because insurance is not available or because it is not commercially justifiable. See Item 1—Business—"Insurance and Risk Management” for a description of our insurance coverage. Our insurance will not in all situations provide sufficient funds to protect us from all losses and liabilities that could result from our operations. Our coverage includes aggregate policy limits. As a result, we retain the risk for any loss in excess of these limits. No assurance can be given that insurance coverage will continue to be available at rates considered reasonable or that our coverage will respond to a specific loss. Further, we may experience difficulties in collecting from our insurers or our insurers may deny all or a portion of our claims for insurance coverage.
If a significant accident or other event occurs and is not fully covered by insurance or an enforceable or recoverable indemnity from a customer, it could have a material adverse effect on our business, financial condition and results of operations.
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Our business is subject to cybersecurity and information technology system disruption risks.
Our operations depend on effective and secure information technology systems, including our own systems and the systems of third party vendors upon which we rely, such as those providing cloud services to us. Potential unauthorized occurrences on or through our information technology systems, including as a result of cybersecurity incidents, that may result in adverse effects on the confidentiality, integrity, and availability of these systems and data residing therein continue to grow. Cybersecurity threats could include, but are not limited to, cybersecurity incidents, such as ransomware attacks, denial-of-service attacks, phishing attacks, malicious software; unauthorized or unlawful access, release, corruption or loss of our data; employee or insider error; in communication; of our intellectual property or theft of our FlexRig ® and other sensitive or proprietary technology; or or to our data delivery systems or other cybersecurity and infrastructure systems, including our property and equipment. In addition, a significant number of our employees now work remotely. Remote work relies heavily on the use of remote networking and online conferencing services that employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which the Company to additional cybersecurity risks. This risk is with the of technologies like artificial intelligence, which third parties are using to create new, sophisticated and more frequent attacks. Furthermore, geopolitical tensions or , such as the ongoing armed between Russia and Ukraine and the in the Middle East, may further heighten the risk of cybersecurity attacks. Our information technology systems and those of our third party vendors are also subject to due to occurrences other than cybersecurity , such as natural or power .
Cybersecurity threats, such as cybersecurity incidents or other disruptions involving our own systems or those of our third-party vendors, could:
• disrupt our operations including operational technologies as well as our corporate information technology systems,
• negatively impact our ability to compete,
• result in the theft or misappropriation of funds,
• cause the loss, corruption or misappropriation of personal, proprietary or confidential information,
• expose us to litigation, regulatory action, and potential liability, and
• result in injury to our reputation, downtime, loss of revenue, and increased costs to prevent, respond to or mitigate cybersecurity incidents or other cybersecurity threats.
It is possible that our business, financial and other systems, as well as those of our third-party vendors, could be compromised. While various procedures and controls are being utilized to mitigate exposure to such risk, there can be no assurance that the procedures and controls that we implement, or which we cause third party service providers to implement, will be sufficient to protect our systems, data or other property. See Item 1C—Cybersecurity for a description of cybersecurity controls and procedures. A Security incident or other cybersecurity threat could have a material adverse effect on our business, financial condition, cash flows, results of operations, and reputation. Further, as cybersecurity incidents continue to evolve, we will be required to incur additional costs to continue to modify or enhance our protective measures or to investigate or remediate the effects of cybersecurity incidents.
Our acquisitions, dispositions and investments may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our liquidity, consolidated results of operations and consolidated financial condition.
We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests. These strategic transactions, among others, are intended to (but may not) result in access to new markets, the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk and the failure to achieve such intended benefits could have a material adverse effect on our business. Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock. These transactions may also affect our liquidity, consolidated results of operations and consolidated financial condition.
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These transactions also involve risks, and we cannot ensure that:
• any acquisitions we attempt will be completed on the terms announced, or at all;
• any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits;
• any acquisitions would be successfully integrated into our operations and internal controls, including those related to financial reporting, disclosure and cyber and information security;
• the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, or that we will appropriately quantify the exposure from known risks;
• any disposition would not result in decreased earnings, revenue, or cash flow;
• use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses; or
• any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
While we generally seek to obtain indemnities for liabilities arising from events occurring before such acquisitions, we may be unable to do so, and any indemnities we do obtain will be limited in amount and duration, may be held to be unenforceable or the seller may not be able to indemnify us.
We have allocated a portion of the purchase price of certain acquisitions to goodwill and other intangible assets. The amount allocated to goodwill is the excess of the purchase price over the net identifiable assets acquired. At September 30, 2025, we had goodwill of $182.9 million and other intangible assets, net of $485.5 million. If we experience future negative changes in our business climate or our results of operations such that we determine that goodwill or intangible assets are impaired, we will be required to record impairment charges with respect to such assets.
We may be unable to successfully integrate KCA Deutag’s business or achieve the anticipated benefits of the acquisition, or the anticipated benefits attributable to the acquisition may vary from our expectations.
Our ability to achieve the anticipated benefits of the acquisition will depend in part upon whether we can integrate KCA Deutag's business into our existing business in an efficient and effective manner. We may not be able to accomplish this integration process successfully. The integration process may be subject to delays or changed circumstances, and we can give no assurance that our expectations with respect to integration or cost savings as a result of the acquisition will materialize or that KCA Deutag's assets will perform in accordance with our expectations. For example, subsequent to the announcement of the Acquisition in July 2024, KCA Deutag and the Company received notifications of contract suspensions for a number of rigs operating in Saudi Arabia. The success of the acquisition will depend, in significant part, on the Company’s ability to successfully integrate the acquired business, grow the revenue of the Company and realize the anticipated strategic benefits from the acquisition. Additionally, the integration process may result in the of ongoing business and there could be potential unknown liabilities and expenses associated with the acquisition that were not discovered in the course of performing due diligence. The integration may also require significant time and focus from management following the acquisition which may the Company’s business and results of operations.
The Company believes that the addition of KCA Deutag will complement its strategy and provide operational and financial scale. This growth and the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected. Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or may take longer to achieve than anticipated. If the Company is not able to achieve or realize the anticipated benefits expected from the acquisition within the anticipated timing or at all, its business and operating results may be adversely affected.
Prior to its acquisition, KCA Deutag was a private company and not required to maintain a system of internal controls over financial reporting that would meet the standards of a public company, including the requirements under the Sarbanes-Oxley Act of 2002. We are in the process of integrating KCA Deutag into our system of internal controls over financial reporting and implementing additional internal controls where appropriate. As we continue to integrate and improve the operations of KCA Deutag, we may need to implement additional internal controls and procedures. The costs that we may incur to implement such controls and procedures may be substantial, and we could encounter unexpected delays and challenges in this implementation.
Our future success will depend, in part, on our ability to manage our expanded business by, among other things, integrating the assets, operations and personnel of KCA Deutag in an efficient and timely manner, consolidating systems, internal controls and management controls and successfully integrating relationships with customers, vendors and business partners. Failure to successfully manage the combined operations may have an adverse effect on our business, reputation, financial condition and results of operations.
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Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold.
Drilling rigs use proprietary technology and equipment which can involve potential infringement of a third party’s rights, or a third party’s infringement of our rights, including patent rights. The majority of the intellectual property rights relating to our drilling rigs and technology services are owned by us or certain of our supplying vendors. From time to time, we or our customers or supplying vendors become involved in disputes over infringement of intellectual property rights relating to equipment or technology owned or used by us. As a result, we may lose access to important equipment or technology, be required to cease use of some equipment or technology, be forced to modify our drilling rigs or technology, or be required to pay license fees or royalties for the use of equipment or technology. Regardless of the merits, any such claims generally result in significant legal and other costs, including reputational harm, and may distract management from running our business.
There can also be no assurance that the steps we take to obtain, maintain, protect, and enforce our intellectual property rights will be adequate. Our business may be adversely affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected. In addition, we may lose a competitive advantage in the event we are unsuccessful in enforcing our rights against third parties, third parties are successful in enforcing their rights against us, or our competitors are able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets. As a result, any technology involving us or our customers or supplying vendors or on our ability to protect or enforce our intellectual property rights could have a material impact on our business, financial condition and results of operations.
Unexpected events could disrupt our business and adversely affect our results of operations.
Unexpected or unanticipated events, including, without limitation, computer system disruptions, unplanned power outages, fires or explosions at drilling rigs, natural disasters such as hurricanes and tornadoes (occurrences of which may increase in frequency and severity as a result of climate change), war or terrorist activities, supply disruptions, failure of equipment, changes in laws and/or regulations impacting our businesses, pandemic illness and other unforeseeable circumstances that may arise from our increasingly connected world or otherwise, could adversely affect our business. It is not possible for us to predict the occurrence or consequence of any such events. However, any such events could create unforeseen liabilities, reduce our ability to provide drilling and related technology services, reduce demand for our services, or make it more or to provide services, any of which may ultimately have a material effect on our business, financial condition and results of operations.
Reliance on management and competition for experienced personnel may negatively impact our operations or financial results.
We greatly depend on the efforts of our executive officers and other key employees to manage our operations. Similarly, we utilize highly skilled personnel in operating and supporting our businesses and in developing new technologies. In times of high utilization, it can be difficult to find and retain qualified individuals and, during the recent period of sustained declines in oil and natural gas prices, there have been reductions in the oil field services workforce, both of which have resulted and may in the future result in higher labor costs. The loss of members of management or the inability to attract and retain qualified personnel could have a material adverse effect on our business, financial condition and results of operations. In addition, the unexpected loss of members of management, qualified personnel or a significant number of employees due to disease, disability, or death, could have a detrimental effect on us.
The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations.
In fiscal year 2025, we received approximately 54.0 percent of our consolidated operating revenues from our ten largest drilling services and solutions customers (including their affiliates) and approximately 25.6 percent of our consolidated operating revenues from our three largest drilling services and solutions customers (including their affiliates). If one or more of our larger customers terminated their contracts, failed to renew existing contracts with us, suspended active contracts for a prolonged period or refused to award us with new contracts, it could have a material adverse effect on our business, financial condition and results of operations. Further, consolidation among oil and natural gas exploration and production companies may reduce the number of available customers. See “—Consolidation in our industry may impact our results of operations” for additional disclosure regarding consolidations in our industry.
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Our current backlog of drilling services and solutions revenue may decline and may not be fully realized as fixed‑term contracts and, in certain instances, these contracts can be terminated without an early termination payment or suspended without standby or force majeure compensation.
Fixed‑term drilling contracts typically allow customers to terminate the agreement early for convenience, default, or extended force majeure events. An “early termination payment” is usually owed to us if a contract is terminated prior to expiration of the fixed term. However, in the event of default, such as destruction of a drilling rig, our bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us. Even in cases where such payment is owed, customers may be unable or unwilling to pay it during depressed market conditions and may seek to , negotiate, or the contract instead. Additionally, some drilling contracts within our recently acquired KCA Deutag subsidiary do not include provisions for early payments or compensation for drilling .
Regardless of the reason for an early termination or suspension of a contract, such termination or suspension can lead to a drilling rig being idle for an extended period if we cannot promptly secure new contracts on substantially similar terms, which could have a material adverse effect on our business, financial condition and results of operations. As of September 30, 2025, our drilling services backlog was approximately $4.8 billion for future revenues under firm commitments. Our drilling services backlog may decline over time if existing contract term coverage is not replaced by new term contracts or price modifications for existing contracts. Factors, such as low or declining oil prices and reduced capital spending by our customers can contribute to this decline. Our inability or the inability of our customers to meet contractual obligations may have a material adverse impact on our business, financial condition and results of operations.
Our contracts with NOCs may expose us to greater risks than we normally assume in contracts with non-governmental customers.
We currently own and operate rigs and have deployed technology under contracts with foreign national oil companies. In the future, we may expand our International Solutions operations and enter into additional, significant contracts with national oil companies. The terms of these contracts may contain non-negotiable provisions and may expose us to greater commercial, political, operational, and other risks than we assume in other contracts. Foreign contracts may expose us to materially greater environmental liability and other claims for damages (including consequential damages) and personal injury related to our operations, or the risk that the contract may be terminated or suspended by our customer without cause on short-term notice, contractually or by governmental action, or under certain conditions that may not provide us with an early termination payment or standby compensation. We can provide no assurance that increased risk exposure will not have an impact on our future operations or that we will not increase the number of rigs contracted, or the amount of technology deployed, to national oil companies with commensurate additional contractual risks. Risks that accompany contracts with national oil companies could ultimately have a material impact on our business, financial condition and results of operations.
Control of oil and natural gas reserves by NOCs may affect the demand for our services and products and create additional risks in our operations.
Much of the world’s oil and natural gas reserves are controlled by NOCs, which may require their contractors to meet local content requirements or other local standards, such as conducting our operations through joint ventures with local partners that could be difficult or undesirable for us to meet. The failure to meet the local content requirements and other local standards may adversely affect our operations in those countries. In addition, our ability to work with NOCs is subject to our ability to negotiate and agree upon acceptable contract terms.
Our drilling services operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates.
Our drilling services operating expense includes all direct and indirect costs associated with the operation, maintenance and support of our drilling equipment, which is often not affected by changes in dayrates and utilization. During periods of reduced revenue and/or activity, certain of our fixed costs (such as depreciation) may not decline and often we may incur additional costs. During times of reduced utilization, reductions in costs may not be immediate as we may incur additional costs associated with maintaining and cold stacking a rig, or we may not be able to fully reduce the cost of our support operations in a particular geographic region due to the need to support the remaining drilling rigs in that region. Accordingly, a decline in revenue due to lower dayrates and/or utilization may not be offset by a corresponding decrease in drilling services and solutions expense, which could have a material adverse impact on our business, financial condition and results of operations.
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Shortages of drilling equipment, supplies or other key materials could adversely affect our operations.
The drilling services and solutions business is highly cyclical. During periods of increased demand for drilling services and solutions and periods of supply chain disruption, delays in delivery and shortages of drilling equipment and supplies can occur and it may take longer for our suppliers to service drilling components. Additionally, suppliers may seek to increase prices for equipment, supplies, and services, which we are unable to pass through to our customers, either due to contractual obligations or market constraints in the drilling services and solutions business. Further, certain key rig components, parts and equipment are also either purchased from, fabricated or serviced by a limited number of vendors, which, in some cases, may be thinly capitalized and disproportionately affected by any loss of business, downturn in the energy industry, supply chain disruptions, or reduction or availability of credit. The failure of one or more third-party suppliers, manufacturers or service providers to provide equipment, components, parts or services, whether due to capacity constraints, labor or other labor-related , production or delivery , price increases, quality control issues, or other decreased availability of parts and equipment, is beyond our control and could materially our operations or result in the , or of drilling contracts, thereby causing a of contract drilling backlog and/or revenues to us, as well as an increase in operating costs. To date, as an industry leader, we have effectively managed these , , and by engaging in near and long-term demand planning with multiple suppliers who provide and service key rig components, parts and equipment. However, if we are not to effectively manage these and in the future, they could have a material effect on our business, financial condition and results of operations.
Continuing inflation and cost increases may impact our sales margins and profitability.
Increases in the cost of labor, materials, parts, equipment, global transportation and logistics costs and other operational components have the potential to adversely affect our results of operations, cash flows and financial position by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers for our services. In addition, our customers are also affected by inflation and the rising costs of goods and services used in their businesses, which could negatively impact their ability to purchase our services, which could adversely impact our revenue and profitability. There is no guarantee that we can increase selling prices, replace lost revenue, or reduce costs to fully mitigate the effect of inflation on our costs and business, which may adversely impact our sales margins and profitability.
Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility.
Certain of our international employees are unionized, and efforts may be made from time to time to unionize other portions of our workforce. We may in the future be subject to strikes or work stoppages and other labor disruptions in connection with unionization efforts or renegotiation of existing contracts with unions representing our international employees. For example, worker strikes of short duration are common in Argentina and our operations have experienced such strikes in the past. Union expansion, if successful, new collective bargaining agreements or work stoppages could materially increase our labor costs, reduce our revenues or limit our operational flexibility. Further, our responses to any union organizing efforts could negatively impact our reputation and have adverse effects on our business, financial condition and results of operations.
The impact and effects of public health crises, pandemics and epidemics could have a material adverse effect on our business, financial condition and results of operations.
Public health crises, pandemics and epidemics and fear of such events have adversely impacted and may in the future again adversely impact our operations, the operations of our customers and the global economy, including worldwide demand for oil and natural gas and the level of demand for our services. We are not able to enumerate all potential risks to our business from such events. The full extent of the impact of public health crises, pandemics and epidemics on our business operations and financial results will depend largely on future developments and various factors beyond our control, such as the duration, severity and sustained geographic spread, and the impact and effectiveness of governmental actions to contain and treat such outbreaks, including government policies and restrictions; vaccine hesitancy, vaccine mandates, and voluntary or mandatory quarantines; and the global response surrounding such uncertainties.
Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations.
Fuel conservation measures, alternative fuel requirements and increasing consumer demand for alternatives to oil and natural gas could reduce demand for oil and natural gas. Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations.
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Our business and results of operations may be adversely affected by foreign political, economic and social instability risks, foreign currency restrictions and devaluation, and various local laws associated with doing business in certain foreign countries.
We currently have drilling operations in South America (primarily Argentina and Colombia), the Middle East, Europe, Africa and Australia. In the future, we may further expand the geographic reach of our operations. As a result, we are exposed to several political, economic and other uncertainties not encountered in U.S. operations, including increased risks of social unrest, strikes, terrorism, war, kidnapping of employees, nationalization, and forced negotiation or modification of contracts; difficulty resolving disputes (including technology disputes) and enforcing contract provisions, expropriation of equipment as well as expropriation of oil and gas exploration and drilling rights; taxation policies; foreign exchange restrictions and restrictions on repatriation of income and capital; currency rate fluctuations; increased governmental ownership and regulation of the economy and industry in the markets in which we operate; economic and financial instability of national oil companies; restrictive governmental regulation; bureaucratic delays; increased compliance costs; and general associated with foreign sovereignty over certain areas in which operations are conducted.
South American countries, in particular, have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and general economic and political instability. From time to time, these risks have impacted our business. For example, in Argentina, while our dayrate is denominated in U.S. dollars, we are paid in Argentine pesos and Argentina has a history of implementing currency controls, which limit our ability to access U.S. Dollars in Argentina and repatriate cash from our Argentina operations. Argentina’s economy is currently considered highly inflationary, which is defined as cumulative inflation rates exceeding 100% in the most recent three-year period based on inflation data published by the respective governments. Nonetheless, all of our foreign operations 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 fiscal year 2025, we recognized aggregate foreign currency losses of $3.8 million in Argentina. Our aggregate foreign currency losses across all of our operations for fiscal years 2025, 2024 and 2023 were $9.7 million, $5.5 million and $6.4 million, respectively. However, in the future, we may incur larger currency devaluations, foreign exchange restrictions or other repatriating U.S. dollars from Argentina or elsewhere, which could have a material impact on our business, financial condition and results of operations. The Central Bank of Argentina maintains currency controls that limit our ability to access U.S. dollars in Argentina and remit cash from our Argentine operations. The execution of certain trades known as Blue Chip Swaps effectively results in a parallel U.S. dollar exchange rate.
As a result of the KCA Deutag acquisition, we have also recently expanded operations into Europe and Africa and have increased our presence in the Middle East. Certain aspects related to operating in these new regions may present new obstacles including a less familiar geopolitical landscape, new customers with whom we have less established relationships, pressure from local governments to hire local employees, use local suppliers or to direct business to nationalized companies, unfamiliar operating conditions and a distinct regulatory environment.
Additionally, there can be no assurance that there will not be changes in local laws, regulations and administrative requirements or the interpretation thereof, which could have a material adverse effect on the profitability of our operations or on our ability to continue operations in certain areas. 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 have limited control or hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities. 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 we find acceptable.
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.
FINANCIAL RISKS
Covenants in our debt agreements restrict our ability to engage in certain activities.
Our current debt agreements pertaining to certain long‑term unsecured debt, our unsecured Amended and Restated Credit Agreement (the "Amended Credit Facility") and our unsecured term loan credit agreement (the "Term Loan Credit Agreement") contain, and our future financing arrangements likely will contain, various covenants that may in certain instances restrict our ability to, among other things, incur, assume or guarantee additional indebtedness, incur liens, sell or otherwise dispose of all or substantially all of our assets, enter into new lines of business, and merge or consolidate. In addition, the Amended Credit Facility and the Term Loan Credit Agreement require us to maintain a funded leverage ratio (as defined therein) of less than or equal to 55 percent and certain priority debt (as defined therein) may not exceed 17.5 percent of our net worth (as defined therein). Such restrictions may limit our ability to successfully execute our business plans, which may have adverse consequences on our operations.
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We may be required to record impairment charges with respect to our drilling rigs and other assets.
We evaluate our drilling rigs and other assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Lower utilization and dayrates adversely affect our revenues and profitability. Prolonged periods of low utilization and dayrates may result in the recognition of impairment charges if future cash flow estimates, based upon information available to management at the time, indicate that the carrying value of an asset group may not be recoverable. Drilling rigs in our fleet may become impaired in the future if oil and gas prices decline or remain low for a prolonged period of time or if market conditions deteriorate or if we restructure our drilling fleet.
Any impairment could have a material adverse effect on our consolidated financial statements. The facts and circumstances included in our impairment assessments are described in Part II, Item 8—Financial Statements and Supplementary Data.
A downgrade in our credit ratings could negatively impact our cost of and ability to access capital.
Our ability to access capital markets or to otherwise obtain sufficient financing is enhanced by our senior unsecured debt ratings as provided by major U.S. credit rating agencies. Factors that may impact our credit ratings include debt levels, liquidity, asset quality, cost structure, commodity pricing levels, industry conditions and other considerations. A ratings downgrade could adversely impact our ability in the future to access debt markets, increase the cost of future debt, and potentially require us to post letters of credit for certain obligations.
Our ability to access capital markets could be limited.
From time to time, we may need to access capital markets to obtain financing. Our ability to access capital markets for financing could be limited by oil and gas prices, our existing capital structure, our credit ratings, the state of the economy, the health or market perceptions of the drilling and overall oil and gas industry, ESG-related regulatory and investor requirements, the liquidity of the capital markets and other factors. Many of the factors that affect our ability to access capital markets are outside of our control. There have been efforts within the investment community (including investment advisors, investment fund managers, sovereign wealth funds, public pension funds, universities and individual investors) to promote the divestment of, or limit investment in, the stock of companies in the oil and gas industry, which, if successful, could limit our ability to access capital markets. See “—Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock. ” No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could have a material adverse impact on our business, financial condition and results of operations.
Our marketable securities may lose significant value due to credit, market and interest rate risks.
The value of our marketable securities are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by unusual events, such as global health crises and political instability. A significant loss in value of our investments would negatively impact our debt ratio and financial strength.
We may not be able to generate cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations.
Our ability to make future scheduled payments on or to refinance our debt obligations, including any future debt obligations, depends on our financial position, results of operations and cash flows. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investment decisions and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. Furthermore, these alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial position at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would be a (if not waived) and would likely result in a reduction of our credit rating, which could our ability to seek additional capital or or refinance our indebtedness.
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LEGAL AND REGULATORY RISKS
The physical effects of climate change and the regulation of greenhouse gases and climate change could have a negative impact on our business.
The physical and regulatory effects of climate change and a global transition to a low carbon economy could have a negative impact on our operations, our customers’ operations and the overall demand for our customers' products and services. In recent years, international, national, state, regional and local regulatory bodies have focused on emissions of certain gases, commonly referred to as “greenhouse gases” (“GHGs”) including carbon dioxide and methane, and climate change issues. Legislation to regulate GHG emissions has periodically been introduced, and such legislation may be proposed or adopted in the future. These efforts have included consideration of cap-and-trade programs, carbon taxes, GHG reporting, tracking programs, attestation requirements and regulations that directly limit GHG emissions from certain sources. Some of the proposals would require industries to meet stringent new standards that would require substantial reductions in carbon emissions. Those reductions could be costly and difficult to implement.
In recent years, the United States has twice entered into and withdrawn from the “Paris Agreement” that requires member countries to review and “represent a progression” in their intended nationally determined GHG contributions. Recent changes in, and resulting uncertainty around, the United States' approach to climate change and GHG regulation further complicate efforts to prepare for future policy changes.
It is not possible at this time to fully predict the timing and effect of climate change or the extent and contents of any additional GHG legislation, regulations or other measures adopted by governments that may impact our business. However, more aggressive efforts by governments and non-governmental organizations to reduce GHG emissions have occurred and may continue based on the findings set forth in the IPCC Reports and any such future laws and regulations could result in increased compliance costs, reduced returns on investment, or additional operating restrictions. They may also affect the demand for our customers' products and, accordingly, our services. In addition, increasing attention to the risks of climate change has resulted in an increased possibility of litigation, legislation, or investigations brought by public and private entities against oil and gas companies in connection with their GHG emissions. As a result, we or our customers may become subject to court orders compelling a reduction of GHG emissions or requiring financial, actual, or other mitigation of the effects of climate change. If we are unable to recover or pass through a significant level of our costs or are required to change our practices related to complying with climate change-related regulatory requirements imposed on us, it could have a material adverse impact on our business, financial condition and results of operations. Further, to the extent financial markets view climate change and GHG emissions as a financial risk, this could impact our cost of or access to capital. Climate change and GHG regulation could also impact the drilling programs of our customers and, consequently, , limit or reduce the services we provide. An increased focus by the public on the reduction of GHG emissions as well as the results of the physical impacts of climate change could affect the demand for our customers’ products and have a effect on our business.
Governments have enacted, and may continue to enact, laws and regulations that mandate or provide economic incentives for the development of technologies and sources of energy other than oil and gas, such as wind and solar. Such legislation incentivizes the development, use and investment in these technologies and alternative energy sources and could accelerate the shift away from traditional oil and gas. If these future laws and regulations result in customers reducing their production of oil and gas, they could ultimately have an adverse effect on our business and prospects.
Beyond financial and regulatory impacts, the projected severe effects of climate change have the potential to directly affect our facilities and operations and those of our customers and suppliers, which could result in more frequent and severe disruptions to our business and those of our customers and suppliers, increased costs to repair damaged facilities or maintain or resume operations, and increased insurance costs. See above, “—Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us.”
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New legislation and regulatory initiatives relating to hydraulic fracturing or other aspects of the oil and gas industry could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
Several political and regulatory authorities, governmental bodies, and environmental groups devote resources to campaigns aimed at eradicating hydraulic fracking. We do not engage in any hydraulic fracturing activities. However, it is a common practice in our industry for our customers to recover natural gas and oil from shale and other formations through the use of horizontal drilling combined with hydraulic fracturing. Hydraulic fracturing is the process of creating or expanding cracks, or fractures, in formations using water, sand and other additives pumped under high pressure into the formation. The hydraulic fracturing process is typically regulated by state oil and natural gas commissions. Several states have adopted or are considering adopting regulations that could impose more stringent permitting, public disclosure, waste disposal and/or well construction requirements on oil and gas development, including hydraulic fracturing operations, or otherwise seek to ban fracturing activities altogether. In addition to state laws, some local municipalities have adopted or are considering adopting land use restrictions, such as city ordinances, that may restrict or prohibit the performance of well drilling in general and/or hydraulic fracturing in particular. Members of the U.S. Congress are analyzing, and a number of federal agencies have historically been requested to review, and, under the current or future administrations, may be requested to review again, a variety of environmental issues associated with hydraulic fracturing and the possibility of more stringent regulation. At September 30, 2025, we had approximately 37 rigs placed on federal land and three rigs in federal waters. Any new laws, regulations or permitting requirements regarding hydraulic fracturing could impact the drilling programs of our customers and, consequently, , limit or reduce the services we provide. For example, the Environmental Protection Agency has asserted federal regulatory authority pursuant to the federal Safe Drinking Water Act over certain hydraulic fracturing activities involving the use of diesel fuels. Widespread regulation significantly restricting or prohibiting hydraulic fracturing or other drilling activity by our customers could have a material impact on our business, financial condition and results of operations.
Further, we conduct drilling activities in numerous states, including Oklahoma, where seismic activity may occur. In recent years, Oklahoma has experienced an increase in earthquakes. Studies are ongoing, but some parties believe that there is a correlation between hydraulic fracturing related activities and the increased occurrence of seismic activity. As a result, federal and state legislatures and agencies may seek to further regulate, restrict or prohibit hydraulic fracturing activities. Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques, operational delays or increased operating and compliance costs in the production of oil and natural gas from shale plays, added difficulty in performing hydraulic fracturing, and potentially a decline in the completion of new oil and gas wells, which could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide.
Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks.
We have developed, and may continue to develop and set, goals, targets, or other objectives related to sustainability matters. Statements related to these goals, targets and objectives reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals, targets, and objectives expose us to numerous operational, reputational, financial, legal, and other risks. Our ability to achieve any stated goal, target, or objective, including with respect to emissions reduction, is subject to numerous factors and conditions, some of which are outside of our control. Examples of such factors include: (1) the extent our customers' decisions directly impact, relate to, or influence the use of our equipment that creates the emissions we report, (2) the availability and cost of low- or non-carbon-based energy sources and technologies or abatement technologies, (3) evolving regulatory requirements affecting sustainability standards or disclosures, and (4) the availability of suppliers that can meet our sustainability and other standards. In addition, standards for tracking and reporting on sustainability matters, including climate-related matters, have not been harmonized and continue to evolve. Our processes and controls for reporting sustainability matters may not always comply with evolving and disparate standards for identifying, quantifying, and reporting such metrics, including sustainability-related disclosures that may be required of in-scope companies under U.S. state or federal regulations, and such standards may change over time, which could result in significant revisions to our current goals, reported in such goals, or ability to such goals in the future. Future acquisitions or dispositions may also impact our reporting, process, and on such goals. Our business may also face increased from investors and other stakeholders, including from parties that ESG initiatives, related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. Our sustainability practices cannot meet all investor or other stakeholder expectations and standards, which continue to evolve, and our reputation, our ability to attract or retain employees or customers, and our as an investment or business partner could be affected. Similarly, our or perceived to pursue or fulfill our sustainability-focused goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to various reporting standards with respect to these matters, within the timelines we announce, or at all, could affect our business or reputation, as well as us to government enforcement actions and private .
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Failure to comply with the U.S. Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business.
The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar anti‑bribery laws in other jurisdictions, including the United Kingdom Bribery Act 2010, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We operate in many parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti‑bribery laws may conflict with local customs and practices and impact our business. Although we have programs in place requiring compliance with anti‑bribery legislation, any failure to comply with the FCPA or other anti‑bribery legislation could subject us to civil and criminal penalties or other sanctions, which could have a material adverse impact on our business, financial condition and results of operation. In addition, investors could view potential , inquiries or of under the FCPA or similar laws, which could affect our reputation and the market for our shares. We could also face , sanctions and other from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or of business operations in those jurisdictions and the seizure of drilling rigs or other assets.
Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection.
The regulatory environment surrounding data privacy, data security and consumer protection is rapidly evolving and subject to constant change. New laws and regulations in this space pose increasingly complex compliance challenges, which may elevate our costs. In the normal course of business, we and our third-party partners collect, process, and store data that is subject to those specific laws and regulations.
Complying with the varying regulatory requirements outlined in foreign, federal, state, and local regulations is becoming increasingly complex, and could increase the costs and difficulty of compliance. Furthermore, violations of applicable privacy and data security laws, including but not limited to the GDPR, the CCPA as amended by the CPRA, and other U.S. sector-specific and comprehensive state privacy and data security laws, could result in significant penalties.
The GDPR applies to entities operating in the EU that process personal data and entities outside the EU that process personal data to provide goods or services to EU residents, directly or indirectly through vendors and subcontractors. As interpretation and enforcement of the GDPR evolves, it creates a range of new compliance obligations, which could cause us to incur costs and require us to change our business practices in a manner that does not align with our business objectives. Failure to comply could result in significant penalties of up to a maximum of four percent of our total global turnover of the preceding financial year or up to €20.0 million, which may materially adversely affect our business, reputation, results of operations, and revenue.
The CCPA, as amended by the CPRA gives California residents certain rights in relation to their personal data, and imposes obligations on certain entities that do business in California to protect those rights, which may apply to us. As the interpretation and enforcement of the CCPA/CPRA evolve, new compliance obligations emerge and may modify understanding regarding obligations imposed under the laws and regulations. Complying with these obligations could cause us to incur costs and shift our business practices in a manner that does not align with our business objectives. Significant financial penalties imposed by the CCPA/CPRA for noncompliance may materially adversely affect our business, results of operations and revenue. Similar legislation has been adopted in a number of other states, and is being considered by others.
Non-compliance with these and other privacy, data security, and consumer protection laws could also expose us to regulatory investigations, which could require significant resources for resolution and potentially result in fines and prospective relief. In addition, regulators may issue orders to stop processing personal data, which could disrupt operations. We could also be subject to litigation from persons or corporations allegedly affected by violations of these laws. Any violation of these laws or harm to our reputation could have a material adverse effect to our business, financial condition, reputation, or results of operations and prospects.
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Government policies, mandates, and regulations specifically affecting the energy sector and related industries, regulatory policies or matters that affect a variety of businesses, taxation polices, and political instability could adversely affect our financial condition and results of operations.
Energy production and trade flows are subject to government policies, mandates, regulations, and trade agreements. Governmental policies affecting the energy industry, such as taxes, tariffs, duties, price controls, subsidies, incentives, foreign exchange rates, economic sanctions and import and export restrictions, can influence the viability and volume of production of certain commodities, the volume and types of imports and exports, whether unprocessed or processed commodity products are traded, and industry profitability. Disruptions of this sort can affect the price of oil and natural gas and may cause our customers to change their plans for exploration and production levels, in turn reducing the demand for our services. Moreover, many countries, including the United States, control the import and export of certain goods, services and technology and impose related import and export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities. In particular, U.S. sanctions are targeted against certain countries that are heavily involved in the petroleum and petrochemical industries, which includes drilling activities.
Future government policies may adversely affect the supply of, demand for, and prices of oil and natural gas, restrict our ability to do business in existing and target markets, and adversely affect our business, financial condition and results of operations. The laws and regulations concerning import and export activity, recordkeeping and reporting, including customs, export controls and economic sanctions, are complex and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our operations. Ongoing economic challenges may increase some governments’ efforts to enact, enforce, amend or interpret laws and regulations as a method to increase revenue. Shipments can be delayed and denied import or export for a variety of reasons, some of which are outside our control and some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any to comply with applicable legal or regulatory requirements governing international trade could also result in and civil and sanctions, such as , , from government contracts, seizure of shipments and of import and export privileges.
Our business, financial condition and results of operations could be affected by political instability and by changes in other governmental policies, mandates, regulations, and trade agreements, including monetary, fiscal and environmental policies, laws, regulations, acquisition approvals, and other activities of governments, agencies, and similar organizations. These risks include, but are not limited to, changes in a country’s or region’s economic or political conditions, local labor conditions and regulations, safety and environmental regulations, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, currency exchange fluctuations, burdensome taxes and tariffs, enforceability of legal agreements and judgments, adverse tax, administrative agency or judicial outcomes, and regulation or taxation of greenhouse gases. International risks and uncertainties, including changing social and economic conditions as well as terrorism, political hostilities, and war, could limit our ability to transact business in these markets and could adversely affect our business, financial condition and results of operations.
Legal claims and litigation could have a negative impact on our business.
The nature of our business makes us susceptible to legal proceedings and governmental investigations from time to time. We design much of our own equipment and fabricate and upgrade such equipment in facilities that we operate. We also design and develop our own technology. If such equipment or technology fails to perform as expected, or if we fail to maintain or operate the equipment properly, there could be personal injuries, property damage, and environmental contamination, which could result in claims against us. Our ownership and use of proprietary technology and equipment could also result in infringement of intellectual property claims against us. See above “ —Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could impact our costs, revenues, and any competitive we hold. " The Company also owns and operates a large fleet of motor vehicles, which creates an increased exposure to motor vehicle . Also, we may be subject, and have been subject in the past, to resulting from involving motor vehicles. These lawsuits have resulted, and may result in the future, in the payment of substantial settlements or and increases in our insurance costs. In addition, during periods of market conditions we may be subject to an increased risk of our customers, vendors, former employees and others initiating legal proceedings us. Lawsuits or us could have a material effect on our business, financial condition and results of operations. Any or , even if fully indemnified or insured, could impact our reputation among our customers and the public, and make it more for us to compete effectively or obtain adequate insurance in the future.
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Additional tax liabilities, limitations on our use of net operating losses and tax credits and/or our significant net deferred tax liability could affect our financial condition, income tax provision, net income, and cash flows.
We are subject to income taxes in the United States and numerous other foreign and state jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly audited by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than what is reflected in income tax provisions and accruals. An audit or litigation could materially affect our financial position, income tax provision, net income, or cash flows in the period or periods challenged. Tax rates in the various jurisdictions in which our subsidiaries are organized and conduct their operations may change significantly as a result of political or economic factors beyond our control. It is also possible that future changes to tax laws (including tax treaties in any of the jurisdictions that we operate in) could impact our ability to realize the tax savings recorded to date. Our ability to benefit from our deferred tax assets depends on us having sufficient future taxable income to utilize our net operating loss and tax credit carryforwards before they expire. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), generally imposes an annual on the amount of net operating and other pre-change tax attributes (such as tax credits) that may be used to offset taxable income by a corporation that has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more shareholders (or groups of shareholders) that are each deemed to own at least 5 percent of our stock change their ownership by more than 50 percentage points over their lowest ownership percentage during a rolling three-year period. As of September 30, 2025, we have not experienced an ownership change and, therefore, utilization of our applicable tax attributes was not subject to an annual (except for an immaterial portion thereof that we inherited in connection with an acquisition during 2017). However, if we were to experience ownership changes in the future as a result of subsequent shifts in our stock ownership, our ability to use certain pre-change tax attributes could potentially accelerate or permanently increase our future tax liabilities. Additionally, our future tax rates could be affected by changes in tax laws (including tax treaties) or their interpretation. For example, the One Big Bill Act signed into law on July 4, 2025, included many provisions such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modification to the international tax framework and the restoration of tax treatment for certain business provisions. The legislation has multiple dates, with certain provisions in fiscal year 2025 and others implemented through fiscal year 2027. Currently, the legislation should not have a material impact on our tax rate.
Our deferred tax liability associated with property, plant and equipment is significant, which could materially increase the amount of cash income taxes that we pay in the future and, thus, adversely affect our cash flows. Our future capital expenditures, our results of operations and changes in income tax laws could significantly impact the timing of the reversal of our deferred tax liabilities and the timing and amount of our future cash income taxes. While management intends to minimize our income taxes payable in future years to the extent possible, the amount and timing of cash income taxes ultimately paid are based on the aforementioned factors as well as others and are subject to change.
Failure to comply with or changes to governmental and environmental laws could adversely affect our business.
Many aspects of our operations are subject to various laws and regulations in the jurisdictions where we operate, including those relating to drilling practices and comprehensive and frequently changing laws and regulations relating to the safety and protection of human health and the environment. Environmental laws apply to the oil and gas industry including those regulating air emissions, discharges to water, and the transport, storage, use, treatment, disposal and remediation of, and exposure to, solid and hazardous wastes and materials. These laws can have a material adverse effect on the drilling industry, including our operations, and compliance with such laws may require us to make significant capital expenditures, such as the installation of costly equipment or operational changes, and may affect the resale values or useful lives of our drilling rigs. If we fail to comply with these laws and regulations, we could be exposed to substantial administrative, civil and criminal penalties, delays in permitting or performance of projects and, in some cases, injunctive relief. Violations of environmental laws may also result in liabilities for personal , property and natural resource and other costs and . In addition, environmental laws and regulations in the United States impose a variety of requirements on “responsible parties” related to the of oil spills and liability for from such spills. As an owner and operator of drilling rigs, we may be deemed to be a responsible party under these laws and regulations. Additionally, certain actions by federal, state and local regulators relating to the protection of or species or habitats may result in on exploration and production activities, thereby reducing demand for our services.
Additional legislation or regulation and changes to existing legislation and regulation may reasonably be anticipated, and the effect thereof on our operations cannot be predicted. The expansion of the scope of laws or regulations protecting the environment has accelerated in recent years, particularly outside the United States, and we expect this trend to continue. To the extent new laws are enacted or other governmental actions are taken that prohibit or restrict drilling in areas where we operate or impose additional environmental protection requirements that result in increased costs to the oil and gas industry, in general, or the drilling industry, in particular, our business or prospects could be materially adversely affected.
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RISKS RELATED TO OUR COMMON STOCK AND CORPORATE STRUCTURE
We may reduce or suspend our dividend in the future.
We have paid a quarterly dividend for many years and commencing in fiscal 2023 paid a quarterly supplemental dividend in addition to the established base dividend as part of a supplemental capital allocation plan. On July 25, 2024, we announced that we would suspend our supplemental dividend in fiscal year 2025 as a part of the acquisition of KCA Deutag announced in July 25, 2024. Our most recent quarterly base dividend declared was $0.25 per share. In the future, our Board of Directors may, without advance notice, determine to reduce or suspend our dividends in order to maintain our financial flexibility and best position the Company for long‑term success. The declaration and amount of future dividends is at the discretion of our Board of Directors and will depend on our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements and other factors and restrictions our Board of Directors deems relevant. In addition, any elimination of, or downward revision in our dividend payments could have an adverse effect on the market price of our common stock. The likelihood that dividends will be reduced or suspended is increased during periods of market or uncertainty. In addition, our ability to pay dividends may be limited by agreements governing our indebtedness now or in the future. There can be no assurance that we will not reduce our dividend or that we will continue to pay a dividend in the future.
The market price of our common stock may be highly volatile, and investors may not be able to resell shares at or above the price paid.
The trading price of our common stock may be volatile. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as other general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating or financial performance. The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this Form 10-K, may have a significant impact on the market price of our common stock:
• changes in customer needs, expectations or trends and our ability to maintain relationships with key customers;
• our ability to implement our business strategy;
• changes in our capital structure, including the issuance of additional debt;
• public announcements (including the timing of these announcements) regarding our business, financial performance and prospects or new products or services, product enhancements, technological advances or strategic actions, such as acquisitions, restructurings or significant contracts, by our competitors or us;
• trading activity in our stock, including portfolio transactions in our stock by us, our executive officers and directors, and significant stockholders or trading activity that results from the ordinary course rebalancing of stock indices in which we may be included;
• short-interest in our common stock, which could be significant from time to time;
• our inclusion in, or removal from, any stock indices;
• investor perception of us and the industry and markets in which we operate;
• increased focus by the investment community on sustainability practices at our company and in the oil and natural gas industry generally;
• changes in earnings estimates or buy/sell recommendations by securities analysts;
• whether or not we meet earnings estimates of securities analysts who follow us;
• regulatory or legal developments in the United States and foreign countries where we operate; and
• general financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity markets.
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Certain provisions of our corporate governing documents could make an acquisition of our company more difficult.
The following provisions of our charter documents, as currently in effect, and Delaware law could discourage potential proposals to acquire us, delay or prevent a change in control of us or limit the price that investors may be willing to pay in the future for shares of our common stock:
• our certificate of incorporation permits our Board of Directors to issue and set the terms of preferred stock and to adopt amendments to our bylaws;
• our bylaws contain restrictions regarding the right of stockholders to nominate directors and to submit proposals to be considered at stockholder meetings;
• our bylaws restrict the right of stockholders to call a special meeting of stockholders; and
• we are subject to provisions of Delaware law which restrict us from engaging in any of a broad range of business transactions with an “interested stockholder” for a period of three years following the date such stockholder became classified as an interested stockholder.
The choice of forum provision in our bylaws could limit our stockholders’ ability to obtain what such stockholders’ believe to be a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that unless we consent to the selection of an alternative forum (a) the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder, employee or agent to us or our stockholders, (iii) any action asserting a claim against us or any director, officer, stockholder, employee or agent arising out of or relating to any provision of the General Corporation Law of the State of Delaware (the “DGCL”), our certificate of incorporation or our bylaws, or (iv) any action asserting a claim against us or any director, officer, stockholder, employee or agent governed by the internal affairs doctrine of the State of Delaware. If the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding will be another state or federal court located within the State of Delaware; and (b) the sole and exclusive forum for any asserting a cause of action arising under the Securities Act will be the federal district courts of the United States of America. This forum provision is not intended to apply to arising under the Exchange Act. While the Delaware Supreme Court has upheld the validity of similar provisions under the DGCL, there is uncertainty as to whether a court in another state would enforce such a forum selection provision. Our forum provision does not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
This choice of forum provision may subject a stockholder to increased costs to bring a claim and limit a stockholder's ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with the Company or its directors, officers or other employees or agents, which may discourage such lawsuits. It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock.
There have been efforts within the investment community (including by investment advisors, investment fund managers, sovereign wealth funds, public pension funds, universities and individual investors) to promote the divestment of, or limit investment in, the stock of companies in the oil and gas industry. There has also been pressure on lenders and other financial services companies to limit or curtail financing of companies in the oil and gas industry. Because we operate within the oil and gas industry, if these efforts continue or expand, our stock price and our ability to raise capital may be negatively impacted.
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Some members of the investment community have increased their focus on ESG practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, DE&I initiatives, and heightened governance standards. As a result, we may continue to face pressure regarding our ESG disclosures and practices. See above "— Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks." Additionally, members of the investment community and ratings agencies may screen companies such as ours for ESG disclosures and performance before investing in or rating our stock or other securities and many large institutional investors have committed to allocating a percentage of their investment products towards ESG investments. With respect to any of these investors or ratings agencies, our ESG disclosures and efforts may not satisfy the investor requirements or their requirements may not be made known to us. If we or our securities are unable to meet the ESG standards or investment criteria set by these investors and funds, we may lose investors or investors may allocate a portion of their capital away from us, our cost of capital may increase, and our stock price may be negatively impacted.
Likewise, others in the investment community (and some regulators) have expressed opposition to certain ESG initiatives, including by advancing "anti-ESG" policies. This divergence in stakeholder expectations may increase legal and compliance costs, expose us to political or reputational risks, and potentially disrupt relationships with certain stakeholders.
