NOTE 15 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

Description of the Business

We are a global contract drilling company based in Tulsa, Oklahoma with operations in all major U.S. onshore basins as well as South America and the Middle East. Our contract 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.

Effective October 1, 2018, we implemented organizational changes, consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. Certain operations previously reported in “other” within our segment disclosures are now managed and presented within the new H&P Technologies reportable segment. As a result, beginning with the reporting of first quarter 2019, our operations are organized into the following reportable business segments: U.S. Land, Offshore, International Land and H&P Technologies. Certain other corporate activities and our real estate operations are included in Other. All segment disclosures have been recast for these segment changes. Consolidated revenues and expenses reflect the elimination of intercompany transactions.

Segment Performance

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.

Summarized financial information of our reportable segments for the three months ended December 31, 2018 and 2017 is shown in the following tables:


	December 31, 2018
					International		H&P
(in thousands)	U.S. Land		Offshore		Land		Technologies		Other		Eliminations		Total
External Sales	$	624,241	$	36,910	$	66,287	$	9,920	$	3,240	$	—	$	740,598
Intersegment		582		—		—		—		234	$	(816)		—
Total Sales		624,823		36,910		66,287		9,920		3,474		(816)		740,598

Segment Operating Income (Loss)		79,668		7,168		6,630		(10,344)		1,554		—		84,676

	December 31, 2017
					International		H&P
(in thousands)	U.S. Land		Offshore		Land		Technologies (1)		Other (1)		Eliminations		Total
External Sales	$	461,640	$	33,366	$	63,214	$	2,849	$	3,018	$	—	$	564,087
Intersegment		—		—		—		—		220		(220)		—
Total Sales		461,640		33,366		63,214		2,849		3,238		(220)		564,087

Segment Operating Income (Loss)		24,745		8,725		3,534		(8,815)		1,498		—		29,687

(1)

Prior period information has been recast to reflect the change in operating segments.

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


	Three Months Ended
	December 31,
	2018		2017
(in thousands)			As adjusted
Segment operating income	$	84,676	$	29,687
Income from asset sales		5,545		5,565
Corporate selling, general and administrative costs and corporate depreciation		(35,932)		(31,643)
Operating income from continuing operations		54,289		3,609
Other income (expense)
Interest and dividend income		2,450		1,724
Interest expense		(4,720)		(5,773)
Loss on investment securities		(42,844)		—
Other		541		441
Total unallocated amounts		(44,573)		(3,608)
Income from continuing operations before income taxes	$	9,716	$	1

The following table presents total assets by reportable segment:


	December 31,		September 30,
(in thousands)	2018		2018
Total assets
U.S. Land	$	5,076,230	$	5,012,378
Offshore		103,650		105,439
International Land		328,718		362,033
H&P Technologies		153,170		146,957
Other		29,678		29,525
		5,691,446		5,656,332
Investments and corporate operations		452,895		558,535
Total assets from continuing operations		6,144,341		6,214,867
Discontinued operations		—		—
	$	6,144,341	$	6,214,867

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


	Three Months Ended
	December 31,
(in thousands)	2018		2017
Operating revenues
United States	$	674,001	$	500,758
Argentina		41,605		48,829
Colombia		17,426		11,996
Other Foreign		7,566		2,504
Total	$	740,598	$	564,087

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