BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

NOTE 15 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

Description of the Business

We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S. onshore oil ang gas producing basins as well as South America and the Middle East. Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies.  We believe we are the recognized industry leader in drilling as well as technological innovation.

During the third quarter of fiscal year 2020, as part of our restructuring efforts and consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, we implemented organizational changes. We are now focused on offering our customers an integrated solutions-based approach by combining proprietary rig technology, automation software, and digital expertise into our rig operations rather than a product-based offering, such as a rig or separate technology package. Operations previously reported within the former U.S. Land and H&P Technologies operating and reportable segments are now managed and presented within the North America Solutions reportable segment. As a result, beginning with the third quarter of fiscal year 2020, our drilling services operations are organized into the following reportable operating business segments: North America Solutions, Offshore Gulf of Mexico and International Solutions. All prior period segment disclosures have been recast for these segment changes. Consolidated revenues and expenses reflect the elimination of intercompany transactions.

Each reportable operating segment is a strategic business unit that is managed separately, and consolidated revenues and expenses reflect the elimination of all material intercompany transactions. Our real estate operations, our incubator program for new research and development projects, and our wholly-owned captive insurance companies are included in "Other." External revenues included in “Other” primarily consist of rental income.

Segment Performance

We evaluate segment performance based on income or loss from continuing operations (segment operating income (loss)) before income taxes which includes:

•Revenues from external and internal customers

•Direct operating costs

•Depreciation and amortization

•Allocated general and administrative costs

•Asset impairment charges

•Restructuring charges

but excludes (gain) loss on sale of assets and corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.

Summarized financial information of our reportable segments for the three and six months ended March 31, 2021 and 2020 is shown in the following tables:

	Three Months Ended March 31, 2021
(in thousands)	North America Solutions		Offshore Gulf of Mexico		International Solutions		Other		Eliminations		Total
External sales	$	249,939	$	29,274	$	14,813	$	2,145	$	—	$	296,171
Intersegment	—		—		—		8,680		(8,680)		—
Total sales	249,939		29,274		14,813		10,825		(8,680)		296,171
Segment operating income (loss)	(109,834)		2,978		(3,458)		(1,072)		(3,433)		(114,819)

	Three Months Ended March 31, 2020
(in thousands)	North America Solutions (1)		Offshore Gulf of Mexico		International Solutions		Other		Eliminations		Total
External sales	$	545,961	$	33,079	$	51,250	$	3,349	$	—	$	633,639
Intersegment	—		—		—		10,649		(10,649)		—
Total sales	545,961		33,079		51,250		13,998		(10,649)		633,639
Segment operating income (loss)	(342,667)		(3,319)		(152,469)		376		—		(498,079)

(1)Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

	Six Months Ended March 31, 2021
(in thousands)	North America Solutions		Offshore Gulf of Mexico		International Solutions		Other		Eliminations		Total
External sales	$	451,929	$	61,547	$	25,331	$	3,741	$	—	$	542,548
Intersegment	—		—		—		15,802		(15,802)		—
Total sales	451,929		61,547		25,331		19,543		(15,802)		542,548
Segment operating income (loss)	(182,762)		5,720		(11,815)		3,039		(5,559)		(191,377)

	Six Months Ended March 31, 2020
(in thousands)	North America Solutions (1)		Offshore Gulf of Mexico		International Solutions		Other		Eliminations		Total
External sales	$	1,070,642	$	73,334	$	97,712	$	6,608	$	—	$	1,248,296
Intersegment	—		—		—		18,545		(18,545)		—
Total sales	1,070,642		73,334		97,712		25,153		(18,545)		1,248,296
Segment operating income (loss)	(290,528)		3,009		(149,354)		(705)		—		(437,578)

(1)Operations previously reported within the H&P Technologies reportable segment are now managed and presented within the North America Solutions reportable segment.

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

	Three Months Ended March 31,				Six Months Ended March 31,
(in thousands)	2021		2020		2021		2020
Segment operating loss	$	(114,819)	$	(498,079)	$	(191,377)	$	(437,578)
Gain (loss) on sale of assets	(18,515)		10,310		(6,179)		14,589
Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges	(27,589)		(30,772)		(56,590)		(64,184)
Operating loss from continuing operations	(160,923)		(518,541)		(254,146)		(487,173)
Other income (expense)
Interest and dividend income	4,819		3,566		6,698		5,780
Interest expense	(5,759)		(6,095)		(11,898)		(12,195)
Gain (loss) on investment securities	2,520		(12,413)		5,444		(9,592)
Gain on sale of subsidiary	—		—		—		14,963
Other	(577)		(398)		(2,057)		(797)
Total unallocated amounts	1,003		(15,340)		(1,813)		(1,841)
Loss from continuing operations before income taxes	$	(159,920)	$	(533,881)	$	(255,959)	$	(489,014)

The following table presents total assets by reportable segment:

(in thousands)	March 31, 2021		September 30, 2020
Total assets (1)
North America Solutions	$	3,610,225	$	3,812,718
Offshore Gulf of Mexico	90,530		93,501
International Solutions	167,023		181,181
Other	82,528		22,144
	3,950,306		4,109,544
Investments and corporate operations	637,798		720,077
Total assets from continuing operations	4,588,104		4,829,621
Discontinued operations	—		—
	$	4,588,104	$	4,829,621

(1)Assets by segment exclude investments in subsidiaries and intersegment activity.

The following table presents revenues from external customers by country based on the location of service provided:

	Three Months Ended March 31,				Six Months Ended March 31,
(in thousands)	2021		2020		2021		2020
Operating revenues
United States	$	280,757	$	581,520	$	516,201	$	1,148,335
Argentina	6,979		29,682		8,532		70,291
Bahrain	6,921		10,383		14,470		15,067
United Arab Emirates	—		6,280		990		6,453
Colombia	946		4,905		1,375		5,901
Other Foreign	568		869		980		2,249
Total	$	296,171	$	633,639	$	542,548	$	1,248,296

Refer to Note 9—Revenue from Contracts with Customers for additional information regarding the recognition of revenue upon adoption of ASC 606.