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Segment Information
 6 Months Ended
Mar. 31, 2017
Segment Information  
Segment Information

11.Segment Information

 

We operate principally in the contract drilling industry. The contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies.  Our contract drilling business includes the following reportable operating segments: U.S. Land, Offshore and International Land.  Each reportable operating segment is a strategic business unit that is managed separately.  Our primary international areas of operation include Colombia, Ecuador, Argentina, Bahrain, U.A.E. and other South American and Middle Eastern countries.  Other includes additional non-reportable operating segments.  Revenues included in Other consist primarily of rental income.  Consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

 

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

 

·

revenues from external and internal customers

·

direct operating costs

·

depreciation and

·

allocated general and administrative costs

 

but excludes corporate costs for other depreciation, income from asset sales and other corporate income and expense.

 

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.

 

Segment operating income for all segments is a non-GAAP financial measure of our performance, as it excludes certain general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense.  We consider segment operating income to be an important supplemental measure of operating performance by presenting trends in our core businesses.  We use this measure to facilitate period-to-period comparisons in operating performance of our reportable segments in the aggregate by eliminating items that affect comparability between periods.  We believe that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments on an ongoing basis using criteria that are used by our internal decision makers.  Additionally, it highlights operating trends and aids analytical comparisons.  However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect our operating performance in future periods.

 

Summarized financial information of our reportable segments for the six months ended March 31, 2017 and 2016 is shown in the following tables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Segment

 

 

 

External

 

Inter-

 

Total

 

Operating

 

(in thousands)

    

Sales

    

Segment

    

Sales

    

Income (Loss)

 

March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract Drilling

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Land

 

$

594,603

 

$

 —

 

$

594,603

 

$

(82,738)

 

Offshore

 

 

70,047

 

 

 —

 

 

70,047

 

 

12,696

 

International Land

 

 

102,788

 

 

 —

 

 

102,788

 

 

(10,152)

 

 

 

 

767,438

 

 

 —

 

 

767,438

 

 

(80,194)

 

Other

 

 

6,435

 

 

416

 

 

6,851

 

 

(3,183)

 

 

 

 

773,873

 

 

416

 

 

774,289

 

 

(83,377)

 

Eliminations

 

 

 —

 

 

(416)

 

 

(416)

 

 

 —

 

Total

 

$

773,873

 

$

 —

 

$

773,873

 

$

(83,377)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract Drilling

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Land

 

$

719,088

 

$

 —

 

$

719,088

 

$

118,053

 

Offshore

 

 

76,205

 

 

 —

 

 

76,205

 

 

11,021

 

International Land

 

 

123,546

 

 

 —

 

 

123,546

 

 

(8,933)

 

 

 

 

918,839

 

 

 —

 

 

918,839

 

 

120,141

 

Other

 

 

7,199

 

 

429

 

 

7,628

 

 

(2,653)

 

 

 

 

926,038

 

 

429

 

 

926,467

 

 

117,488

 

Eliminations

 

 

 —

 

 

(429)

 

 

(429)

 

 

 —

 

Total

 

$

926,038

 

$

 —

 

$

926,038

 

$

117,488

 

 

 

Summarized financial information of our reportable segments for the three months ended March 31, 2017 and 2016 is shown in the following tables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

Segment

 

 

 

External

 

Inter-

 

Total

 

Operating

 

(in thousands)

    

Sales

    

Segment

    

Sales

    

Income (Loss)

 

March 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract Drilling

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Land

 

$

330,967

 

$

 —

 

$

330,967

 

$

(51,850)

 

Offshore

 

 

36,235

 

 

 —

 

 

36,235

 

 

5,912

 

International Land

 

 

34,757

 

 

 —

 

 

34,757

 

 

(10,977)

 

 

 

 

401,959

 

 

 —

 

 

401,959

 

 

(56,915)

 

Other

 

 

3,324

 

 

208

 

 

3,532

 

 

(1,134)

 

 

 

 

405,283

 

 

208

 

 

405,491

 

 

(58,049)

 

Eliminations

 

 

 —

 

 

(208)

 

 

(208)

 

 

 —

 

Total

 

$

405,283

 

$

 —

 

$

405,283

 

$

(58,049)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract Drilling

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Land

 

$

349,283

 

$

 —

 

$

349,283

 

$

62,521

 

Offshore

 

 

34,325

 

 

 —

 

 

34,325

 

 

3,299

 

International Land

 

 

51,352

 

 

 —

 

 

51,352

 

 

(2,268)

 

 

 

 

434,960

 

 

 —

 

 

434,960

 

 

63,552

 

Other

 

 

3,231

 

 

210

 

 

3,441

 

 

(1,349)

 

 

 

 

438,191

 

 

210

 

 

438,401

 

 

62,203

 

Eliminations

 

 

 —

 

 

(210)

 

 

(210)

 

 

 —

 

Total

 

$

438,191

 

$

 —

 

$

438,191

 

$

62,203

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 31, 

 

March 31, 

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2017

    

2016

 

 

 

 

 

 

 

 

 

 (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

$

(58,049)

 

$

62,203

 

$

(83,377)

 

$

117,488

 

Income from asset sales

 

 

14,889

 

 

2,684

 

 

15,731

 

 

7,273

 

Corporate general and administrative costs and corporate depreciation

 

 

(22,512)

 

 

(23,266)

 

 

(47,190)

 

 

(44,470)

 

Operating income (loss)

 

 

(65,672)

 

 

41,621

 

 

(114,836)

 

 

80,291

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

1,338

 

 

799

 

 

2,328

 

 

1,532

 

Interest expense

 

 

(6,084)

 

 

(5,721)

 

 

(11,139)

 

 

(10,245)

 

Other

 

 

174

 

 

653

 

 

561

 

 

392

 

Total unallocated amounts

 

 

(4,572)

 

 

(4,269)

 

 

(8,250)

 

 

(8,321)

 

Income (loss) from continuing operations before income taxes

 

$

(70,244)

 

$

37,352

 

$

(123,086)

 

$

71,970

 

 

The following table presents total assets by reportable segment:

 

 

 

 

 

 

 

 

 

 

March 31, 

 

September 30, 

 

    

2017

    

2016

 

 

 (in thousands)

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

U.S. Land

 

$

4,938,237

 

$

5,005,299

Offshore

 

 

97,740

 

 

105,152

International Land

 

 

419,354

 

 

487,181

Other

 

 

35,874

 

 

36,141

 

 

 

5,491,205

 

 

5,633,773

Investments and corporate operations

 

 

1,046,943

 

 

1,198,182

Total assets from continued operations

 

 

6,538,148

 

 

6,831,955

Discontinued operations

 

 

36

 

 

64

 

 

$

6,538,184

 

$

6,832,019

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 31, 

 

March 31, 

 

 

    

2017

    

2016

    

2017

    

2016

 

 

 

 

 

 

 

 

 

 (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

370,526

 

$

385,977

 

$

671,085

 

$

795,483

 

Argentina

 

 

23,267

 

 

35,371

 

 

71,349

 

 

85,157

 

Colombia

 

 

8,852

 

 

4,602

 

 

18,223

 

 

11,345

 

Ecuador

 

 

 1

 

 

527

 

 

 2

 

 

4,467

 

Other Foreign

 

 

2,637

 

 

11,714

 

 

13,214

 

 

29,586

 

Total

 

$

405,283

 

$

438,191

 

$

773,873

 

$

926,038