Business Segments

12 Months Ended

Dec. 31, 2013

Business Segments

14. Business Segments

The Company’s revenues, operating profits and identifiable assets are primarily attributable to three business segments: (i) contract drilling of oil and natural gas wells, (ii) pressure pumping services and (iii) the investment, on a non-operating working interest basis, in oil and natural gas properties. Each of these segments represents a distinct type of business. These segments have separate management teams which report to the Company’s chief operating decision maker. The results of operations in these segments are regularly reviewed by the chief operating decision maker for purposes of determining resource allocation and assessing performance. As discussed in Note 2, in January 2011, the Company exited the electric wireline business. Operating results for that business for the year ended December 31, 2011 is presented as discontinued operations in the consolidated statements of operations.

Contract Drilling — The Company markets its contract drilling services to major and independent oil and natural gas operators. As of December 31, 2013, the Company had 279 marketable land-based drilling rigs in the continental United States, Alaska and western and northern Canada.

For the years ended December 31, 2013, 2012 and, 2011, contract drilling revenue earned in Canada was $86.6 million, $79.4 million and $106 million, respectively. Additionally, long-lived assets within the contract drilling segment located in Canada totaled $69.1 million and $72.6 million as of December 31, 2013 and 2012, respectively.

Pressure Pumping — The Company provides pressure pumping services to oil and natural gas operators primarily in Texas and the Appalachian region. Pressure pumping services are primarily well stimulation and cementing for the completion of new wells and remedial work on existing wells. Well stimulation involves processes inside a well designed to enhance the flow of oil, natural gas, or other desired substances from the well. Cementing is the process of inserting material between the hole and the pipe to center and stabilize the pipe in the hole.

Oil and Natural Gas — The Company owns and invests in oil and natural gas assets as a non-operating working interest owner. The Company’s oil and natural gas interests are located primarily in Texas and New Mexico.

Major Customer — During 2013, one customer accounted for approximately $286 million or 10.5% of the Company’s consolidated operating revenues. These revenues were earned in both the Company’s contract drilling and pressure pumping businesses. No single customer accounted for 10% or more of consolidated operating revenues in 2012 or 2011.

The following tables summarize selected financial information relating to the Company’s business segments (in thousands):

	Years Ended December 31,
	2013			2012			2011
Revenues:
Contract drilling	$	1,684,878		$	1,826,519		$	1,673,629
Pressure pumping		979,166			841,771			845,803
Oil and natural gas		57,257			59,930			50,559
Total segment revenues		2,721,301			2,728,220			2,569,991
Elimination of intercompany revenues(a)		(5,267	)		(4,806	)		(4,048	)
Total revenues	$	2,716,034		$	2,723,414		$	2,565,943
Income from continuing operations before income taxes:
Contract drilling	$	266,262		$	349,393		$	346,083
Pressure pumping		87,244			132,795			193,440
Oil and natural gas		19,948			27,210			23,982
		373,454			509,398			563,505
Corporate and other		(54,647	)		(45,843	)		(42,903	)
Net gain on asset disposals(b)		3,384			33,806			4,999
Interest income		918			554			187
Interest expense		(28,359	)		(22,750	)		(15,652	)
Other		1,691			508			582
Income from continuing operations before income taxes	$	296,441		$	475,673		$	510,718
Identifiable assets:
Contract drilling	$	3,569,588		$	3,538,289		$	3,252,116
Pressure pumping		761,199			784,128			748,643
Oil and natural gas		58,656			54,188			44,990
Corporate and other(c)		297,684			180,306			176,152
Total assets	$	4,687,127		$	4,556,911		$	4,221,901
Depreciation, depletion, amortization and impairment:
Contract drilling	$	438,728		$	390,316		$	344,312
Pressure pumping		129,984			111,062			73,279
Oil and natural gas		24,400			21,417			16,962
Corporate and other		4,357			3,819			2,726
Total depreciation, depletion, amortization and impairment	$	597,469		$	526,614		$	437,279
Capital expenditures:
Contract drilling	$	504,508		$	744,949		$	784,686
Pressure pumping		122,782			194,117			198,061
Oil and natural gas		31,245			29,888			22,884
Corporate and other		3,926			5,034			5,947
Total capital expenditures	$	662,461		$	973,988		$	1,011,578

(a) Includes contract drilling intercompany revenues related to drilling services provided to the oil and natural gas exploration and production segment.

(b) Net gains or losses associated with the disposal of assets relate to corporate strategy decisions of the executive management group. Accordingly, the related gains or losses have been separately presented and excluded from the results of specific segments.

(c) Corporate and other assets primarily include cash on hand and certain deferred tax assets.