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BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION | 6 Months Ended
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Mar. 31, 2020
Segment Reporting [Abstract] |
BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION | NOTE 17 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 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. As of March 31, 2020, our contract drilling services business includes the following reportable operating segments: U.S. Land, Offshore, International Land and H&P Technologies. This is consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. Additionally, during the fourth quarter of fiscal year 2019, we migrated our FlexApp offerings into our H&P Technologies segment. The activity of our FlexApps was previously included in our U.S. Land segment. All segment disclosures have been restated, as practicable, for these segment changes. Our real estate operations, our incubator program for new research and development projects, and our wholly owned captive insurance companies are included in "Other". 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. Other includes additional non-reportable operating segments. 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) 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
but excludes gain on sale of assets and corporate selling, general and administrative costs and corporate depreciation. 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 March 31, 2020 and 2019 is shown in the following tables:
| Three Months Ended March 31, 2020
(in thousands) | U.S. Land |  | Offshore |  | International Land |  | H&P Technologies |  | Other |  | Eliminations |  | Total
External Sales | $ | 530,664 |  |  | $ | 33,079 |  |  | $ | 51,250 |  |  | $ | 15,297 |  |  | $ | 3,349 |  |  | $ | — |  |  | $ | 633,639 |
Intersegment | — |  |  | — |  |  | — |  |  | 2,412 |  |  | 10,649 |  |  | (13,061 | ) |  | — |
Total Sales | 530,664 |  |  | 33,079 |  |  | 51,250 |  |  | 17,709 |  |  | 13,998 |  |  | (13,061 | ) |  | 633,639 |
Segment Operating Income (Loss) | (309,093 | ) |  | (3,319 | ) |  | (152,469 | ) |  | (33,574 | ) |  | 376 |  |  | — |  |  | (498,079 | )
| Three Months Ended March 31, 2019
(in thousands) | U.S. Land (1) |  | Offshore |  | International Land |  | H&P Technologies (1) |  | Other |  | Eliminations |  | Total
External Sales | $ | 617,533 |  |  | $ | 34,583 |  |  | $ | 50,808 |  |  | $ | 14,729 |  |  | $ | 3,215 |  |  | $ | — |  |  | $ | 720,868 |
Intersegment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total Sales | 617,533 |  |  | 34,583 |  |  | 50,808 |  |  | 14,729 |  |  | 3,215 |  |  | — |  |  | 720,868 |
Segment Operating Income (Loss) | 102,015 |  |  | 4,531 |  |  | 7,968 |  |  | (3,808 | ) |  | 1,164 |  |  | — |  |  | 111,870 |
(1) | Prior period information has been restated to reflect the transfer of FlexApp revenue and the related costs from U.S. Land to H&P Technologies. Certain FlexApp revenue not separately priced in drilling contracts, and recorded in the U.S. Land segment, was impracticable to retrospectively quantify, and as such was not restated.
Summarized financial information of our reportable segments for the six months ended March 31, 2020 and 2019 is shown in the following tables:
| Six Months Ended March 31, 2020
(in thousands) | U.S. Land |  | Offshore |  | International Land |  | H&P Technologies |  | Other |  | Eliminations |  | Total
External Sales | $ | 1,039,492 |  |  | $ | 73,334 |  |  | $ | 97,712 |  |  | $ | 31,150 |  |  | $ | 6,608 |  |  | $ | — |  |  | $ | 1,248,296 |
Intersegment | — |  |  | — |  |  | — |  |  | 5,111 |  |  | 18,545 |  |  | (23,656 | ) |  | — |
Total Sales | 1,039,492 |  |  | 73,334 |  |  | 97,712 |  |  | 36,261 |  |  | 25,153 |  |  | (23,656 | ) |  | 1,248,296 |
Segment Operating Income (Loss) | (252,403 | ) |  | 3,009 |  |  | (149,354 | ) |  | (38,125 | ) |  | (705 | ) |  | — |  |  | (437,578 | )
| Six Months Ended March 31, 2019
(in thousands) | U.S. Land (1) |  | Offshore |  | International Land |  | H&P Technologies (1) |  | Other |  | Eliminations |  | Total
External Sales | $ | 1,236,958 |  |  | $ | 71,493 |  |  | $ | 117,095 |  |  | $ | 29,465 |  |  | $ | 6,455 |  |  | $ | — |  |  | $ | 1,461,466 |
Intersegment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total Sales | 1,236,958 |  |  | 71,493 |  |  | 117,095 |  |  | 29,465 |  |  | 6,455 |  |  | — |  |  | 1,461,466 |
Segment Operating Income (Loss) | 177,928 |  |  | 11,699 |  |  | 14,597 |  |  | (10,397 | ) |  | 2,718 |  |  | — |  |  | 196,545 |
(1) | Prior period information has been restated to reflect the transfer of FlexApp revenue and the related costs from U.S. Land to H&P Technologies. Certain FlexApp revenue not separately priced in drilling contracts, and recorded in the U.S. Land segment, was impracticable to retrospectively quantify, and as such was not restated.
The following table reconciles segment operating income per the tables above to income 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) | 2020 |  | 2019 |  | 2020 |  | 2019
Segment operating income | $ | (498,079 | ) |  | $ | 111,870 |  |  | $ | (437,578 | ) |  | $ | 196,545 |
Gain on sale of assets | 10,310 |  |  | 11,546 |  |  | 14,589 |  |  | 17,090 |
Corporate selling, general and administrative costs and corporate depreciation | (30,772 | ) |  | (28,270 | ) |  | (64,184 | ) |  | (64,200 | )
Operating income (loss) from continuing operations | (518,541 | ) |  | 95,146 |  |  | (487,173 | ) |  | 149,435 |
Other income (expense) |  |  |  |  |  |  |
Interest and dividend income | 3,566 |  |  | 2,061 |  |  | 5,780 |  |  | 4,512 |
Interest expense | (6,095 | ) |  | (6,167 | ) |  | (12,195 | ) |  | (10,888 | )
Gain (loss) on investment securities | (12,413 | ) |  | 5,878 |  |  | (9,592 | ) |  | (36,957 | )
Gain on sale of subsidiary | — |  |  | — |  |  | 14,963 |  |  | — |
Other | (398 | ) |  | 17 |  |  | (797 | ) |  | 548 |
Total unallocated amounts | (15,340 | ) |  | 1,789 |  |  | (1,841 | ) |  | (42,785 | )
Income (loss) from continuing operations before income taxes | $ | (533,881 | ) |  | $ | 96,935 |  |  | $ | (489,014 | ) |  | $ | 106,650 |
The following table presents total assets by reportable segment:
(in thousands) | March 31, 2020 |  | September 30, 2019
Total assets (1) |  |  |
U.S. Land | $ | 4,158,450 |  |  | $ | 5,099,583 |
Offshore | 111,116 |  |  | 102,442 |
International Land | 179,170 |  |  | 217,094 |
H&P Technologies | 151,577 |  |  | 184,558 |
Other | 42,503 |  |  | 32,532 |
| 4,642,816 |  |  | 5,636,209 |
Investments and corporate operations | 533,938 |  |  | 203,306 |
Total assets from continuing operations | 5,176,754 |  |  | 5,839,515 |
Discontinued operations | — |  |  | — |
| $ | 5,176,754 |  |  | $ | 5,839,515 |
(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) | 2020 |  | 2019 |  | 2020 |  | 2019
Operating revenues |  |  |  |  |  |  |
United States | $ | 581,520 |  |  | $ | 669,424 |  |  | $ | 1,148,335 |  |  | $ | 1,343,425 |
Argentina | 29,682 |  |  | 41,084 |  |  | 70,291 |  |  | 82,689 |
Bahrain | 10,383 |  |  | 2,526 |  |  | 15,067 |  |  | 5,054 |
United Arab Emirates | 6,280 |  |  | — |  |  | 6,453 |  |  | 4,728 |
Colombia | 4,905 |  |  | 7,198 |  |  | 5,901 |  |  | 24,624 |
Other Foreign | 869 |  |  | 636 |  |  | 2,249 |  |  | 946 |
Total | $ | 633,639 |  |  | $ | 720,868 |  |  | $ | 1,248,296 |  |  | $ | 1,461,466 |
Refer to Note 11—Revenue from Contracts with Customers for additional information regarding the recognition of revenue upon adoption of ASC 606.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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