Helmerich & Payne, Inc. (H&P), together with its subsidiaries, provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.
The company is an important partner for a number of oil and gas exploration and production companies, but the company focuses primarily on the drilling segment of the oil and gas production value chain. The company’s technology services focus on...
Helmerich & Payne, Inc. (H&P), together with its subsidiaries, provides performance-driven drilling solutions and technologies that are intended to make hydrocarbon recovery safer and more economical for oil and gas exploration and production companies.
The company is an important partner for a number of oil and gas exploration and production companies, but the company focuses primarily on the drilling segment of the oil and gas production value chain. The company’s technology services focus on developing, promoting and commercializing technologies designed to improve the efficiency and accuracy of drilling operations, as well as wellbore quality and placement.
The company’s drilling services operations are organized into the following reportable operating business segments: North America Solutions, International Solutions and Offshore Gulf of Mexico. The company’s North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand. Such states include: Colorado, Louisiana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah, West Virginia, and Wyoming. The company’s International Solutions operations have rigs and/or services primarily located in five international locations: Argentina, Australia, Bahrain, Colombia and the United Arab Emirates (‘U.A.E.’). Additionally, the company commenced operations in Saudi Arabia in the first quarter of fiscal 2025.
The company also owns and operates a limited number of commercial real estate properties located in Tulsa, Oklahoma. The company’s real estate investments include a shopping center containing approximately 371,000 leasable square feet and approximately 176 acres of undeveloped real estate. The company’s research and development endeavors include both internal development and external acquisition of developing technologies. The company’s wholly-owned captive insurance companies (the ‘Captives’) are primarily used to insure the deductibles for the company’s workers’ compensation, general liability, automobile liability, rig property and a medical stop-loss program. The company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs. The company’s real estate operations and its wholly-owned captive insurance companies are included in ‘Other’.
Pending KCA Deutag Acquisition
On July 25, 2024, H&P and certain of its wholly owned subsidiaries entered into a Sale and Purchase Agreement (the ‘Purchase Agreement’) to acquire KCA Deutag. The transaction is expected to close prior to calendar 2024 year end, subject to customary closing conditions and regulatory approvals.
KCA Deutag is a diverse global drilling company. The company has a significant land drilling presence in the Middle East, with additional operations in South America, Europe and Africa. In addition to its land operations, KCA Deutag has asset-light offshore management contract operations in the North Sea, Angola, Azerbaijan and Canada, with super major customers and long-term earnings visibility through a robust backlog. KCA Deutag’s Kenera segment comprises manufacturing and engineering businesses, including Bentec, with three facilities serving the energy industry, representing a longer-term growth opportunity.
Drilling Services and Solutions
The company is the largest provider of super-spec AC drive land rigs in the Western Hemisphere. Operating principally in North and South America, the company specializes in shale and unconventional resource plays, drilling challenging and complex wells in oil and gas producing basins in the United States and in international locations. In the United States, the company has a diverse mix of customers consisting of large independent, major, mid-sized and small cap oil companies and private independent companies (including private equity-backed companies) that are primarily focused on unconventional shale basins. In South America and the Middle East, the company’s customers primarily include major international and national oil companies.
Segments
North America Solutions Segment
The company operates 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. The company has the leading market share in at least two of the most active oil basins, which include the Permian Basin and Eagle Ford Shale. All of the company’s active rigs are capable of drilling horizontal or directional wells. As of September 30, 2024, the company had approximately 26.1 percent of the total market share in U.S. land drilling and approximately 34.6 percent of the super-spec market share in U.S. land drilling. In the United States, the company has the industry's largest super-spec fleet and had 151 of the company’s 228 marketed rigs active under contract as of September 30, 2024 of which 88 were under fixed-term contracts, and 63 were working well-to-well.
The company’s drilling technology within this segment enables a solutions-based approach that provides performance-driven drilling services designed to help deliver greater levels of drilling efficiency, accuracy, consistency, optimization and a reduction of human error to create higher quality wellbores with lower overall risk.
In North America, the company’s customers are primarily from the major integrated oil companies, large independent oil companies, small cap oil companies and private independent companies (including private equity-backed companies).
International Solutions Segment
The company’s International Solutions segment conducts operations primarily in Argentina, Bahrain, Australia, U.A.E. and Colombia. Additionally, the company commenced operations in Saudi Arabia in the first quarter of fiscal 2025. As of September 30, 2024, the company had 16 land rigs contracted for work in locations outside of the United States.
Argentina
As of September 30, 2024, the company had 12 available rigs in Argentina. The Argentine drilling contracts are primarily with large international or national oil companies.
Bahrain
As of September 30, 2024, the company had four available rigs in Bahrain. All of the company’s revenues in Bahrain are from a partner of the local national oil company.
Australia
The company’s operations in Australia commenced in the fourth fiscal quarter of 2023. All of the company’s revenue in Australia is from one customer, Tamboran Resources Corporation, a publicly traded company (‘Tamboran Corp.’). As of September 30, 2024, the company had one available rig in Australia.
The United Arab Emirates
During the year ended September 30, 2024, the company’s operations in U.A.E. consisted of services provided to ADNOC Drilling Company P.J.S.C. (‘ADNOC Drilling’), primarily in the form of secondment labor. As of September 30, 2024, the company had no rigs available in the U.A.E.
Colombia
As of September 30, 2024, the company had five available rigs in Colombia. The Colombian drilling contracts that generated revenue during the fiscal year were primarily with large international or national oil companies.
Saudi Arabia
During the year ended September 30, 2024, the company began mobilizing five super-spec rigs to the Kingdom of Saudi Arabia. The company commenced operations in the first quarter of fiscal 2025.
Offshore Gulf of Mexico Segment
The company’s Offshore Gulf of Mexico segment consists of seven platform rigs in the Gulf of Mexico. The company supplies the rig equipment and crews and the operator, who owns the platform, will typically provide production equipment or other necessary facilities. The company’s offshore rig fleet operates on conventional fixed leg platforms and floating platforms attached to the sea floor with mooring lines, such as Spars and Tension Leg Platforms. Additionally, the company provides management contract services to customer platforms where the customer owns the drilling rig.
As of September 30, 2024, three of the seven offshore rigs were under contract.
Other Operations
The company owns and operates a limited number of commercial real estate properties located in Tulsa, Oklahoma. The company’s real estate investments include a shopping center and undeveloped real estate.
The company continues to use its captive insurance subsidiaries to insure the deductibles for the company’s domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the company's international casualty and rig property programs.
The company’s real estate operations and its wholly-owned captive insurance companies are included in ‘Other’ within the company’s segment disclosures.
Rigs, Equipment, R&D, and Facilities
As of September 30, 2024, the company built over 200 FlexRig rigs that align with this strategy. An important part of the company’s strategy was to design a rig that could support continuous improvement through upgrade capability of the hardware and software on the rigs to take advantage of technology improvements and lengthening the industry rig replacement cycle. These upgrades included, but were not limited to, enhanced drilling control systems and software, skid and walking systems for drilling multiple well pads, 7,500 psi mud systems, set back capacity to accommodate the pipe that longer laterals demanded, and additional mud system capacity.
In 2011, the company introduced a FlexRig design for long lateral drilling of multiple wells from a single location and for drilling horizontally in unconventional shale reservoirs. The new design preserved the key performance features of earlier designs but added a bi-directional skidding system and equipment capacities suitable for drilling long lateral wells.
In 2016, the company saw the further progression of longer lateral wells, which brought additional technical challenges. At that time, the company began delivering rigs to the market that were equipped and capable of drilling these longer lateral wells. The industry would later refer to these rigs as super-spec rigs, which have the following specific characteristics: 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, 2024, the company had a total of 242 super-spec rigs.
In 2017, the company introduced its first walking rig by reconfiguring some of the company’s uni-directional skid designed FlexRig drilling rigs. Since then, the company has reconfigured, converted, and upgraded a total of 73 FlexRig drilling rigs to super-spec walking rigs.
The company has overseen the design and assembly of all of its AC FlexRig drilling rigs, and the company’s different rig classes share many common components. The company co-designed the control systems for its rigs and has the right to make any changes or modifications to those systems that the company desires. In addition, the company’s fleet has greater scale than any other competitor, which enables the company to upgrade its existing FlexRig drilling rigs to super-spec in a capital efficient way. Further, the company’s fleet is supported by a company-owned supply chain that provides standardized materials directly to the rigs from the company’s regional warehouses.
The company provides experienced drilling and maintenance support for its operations, which provides value by reducing nonproductive time in the company’s operations and improving drilling performance through the company’s Rig Systems Monitoring and Support Center (‘RSMS’) and Remote Operations Centers (‘ROCs’). The company’s RSMS and ROCs are manned 24 hours a day, seven days a week, with the ability to monitor and detect trends in drilling and drilling services performance onboard the company’s rigs. The company’s monitoring group within the RSMS provides real-time help and feedback to the company’s wellsite employees, as well as the company’s customers, to fully optimize its operational performance. Additionally, the company’s RSMS and ROCs have staffs of engineers and industry experts that work with the company’s customers to enhance wellbore positioning, drilling program execution and overall drilling performance. The monitoring group and the company’s performance engineers capture the company’s drilling work steps to help provide high quality and reliable results for the company’s customers.
The company has two facilities that provide vertically integrated solutions for drilling rig manufacturing, upgrades, retrofits and modifications, as well as overhauling, recertification, and repairs as it relates to the company’s rigs and equipment. These facilities utilize lean manufacturing processes to enhance quality and efficiency, as well as provide important insights into the maintenance and wear of equipment on the company’s rigs. The company’s facility located in Galena Park, Texas is primarily utilized for overall rig assembly, overhaul, recommissioning and recertification while the company’s facility near Tulsa, Oklahoma is primarily utilized for modular rig component overhauls and repairs.
The company continues to see adoption and growth with its technologically enabled automation solutions. The company designed its automation solutions to address challenges within the company’s customers’ businesses as much of the drilling process is heavily dependent on human decision-making to design, execute and optimize crude oil and natural gas extraction. Utilizing these technologies, the company is able to deploy a more data-driven solution compared to human decisions and execution, thereby reducing variability and the costs around achieving optimal outcomes. These solutions are designed to continue to help provide differentiated value for the company’s customers through enhanced wellbore quality and placement, improved cost performance and well economics, and better consistency at reduced risk. The company’s automation-focused solutions and applications are enabled by its uniform digital fleet and are designed to provide additional value to the company’s customers' well programs by providing a platform for machine-human collaboration during the drilling process to improve efficiency. The company’s path to autonomous drilling continues to evolve with several solutions in various stages of commercial testing. All of the company’s technologies play an important role in developing the company’s strategy as the company head towards autonomous drilling.
Markets and Competition
As of September 30, 2024, the company had 170 active rigs under contract.
In the United States, the company competes with Nabors Industries Ltd., Patterson-UTI Energy, Inc., Precision Drilling Corporation, and many other competitors with regional operations. In the Gulf of Mexico platform rig market, the company primarily competes with Nabors Industries Ltd. and Blake International Rigs, LLC.
Government Regulations
Environmental laws and regulations that apply to the company's operations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), the Resource Conservation and Recovery Act (each, as amended) and similar laws that provide for responses to, and liability for, air emissions, water discharges or releases of oil or hazardous substances into the environment, including damages to natural resources.
The Occupational Safety and Health Act and other similar laws and regulations govern the protection of the health and safety of employees. The OSHA hazard communication standard, the Environmental Protection Agency community right-to-know regulations under Title III of CERCLA, the Emergency Planning and Community Right-to-Know Act and similar state statutes and local regulations require that information be maintained about hazardous materials used in the company's operations and that this information be provided to employees, state and local governments, emergency responders and citizens.
In addition, the company is subject to a variety of other U.S. and foreign laws and regulations, including, but not limited to, the U.S. Foreign Corrupt Practices Act, other anti-bribery and anti-corruption laws, and data privacy, data security and consumer protection laws. The U.S. Foreign Corrupt Practices Act and similar anti-bribery and anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Data privacy, data security, and consumer protection laws in the U.S. that apply to the company's operations include the Critical Infrastructure Act and the CAN-SPAM Act, and at the state level, the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA). Because it conducts business in France and the U.K., the company is also subject to the European General Data Protection Regulation (GDPR) and the UK Data Protection Act. The company's operations in the Middle East and Colombia are subject to similar data privacy and data protection laws.
The company is also subject to the jurisdiction of the U.S. Treasury Department's Office of Foreign Assets Control, the U.S. Commerce Department's Bureau of Industry and Security, the U.S. Customs and Border Protection and other U.S. and non-U.S. laws and regulations governing the international trade of goods, services and technology.
The company is also subject to regulation by numerous other regulatory agencies, including but not limited to, the U.S. Department of Labor, which sets employment practice standards for workers.
History
Helmerich & Payne, Inc. was founded in 1920. The company was incorporated under the laws of the state of Delaware in 1940.
