XML 42 R23.htm IDEA: XBRL DOCUMENT v3.23.3
EMPLOYEE BENEFIT PLANS
 12 Months Ended
Sep. 30, 2023
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS
NOTE 13 EMPLOYEE BENEFIT PLANS
We maintain a domestic noncontributory defined benefit pension plan covering certain U.S. employees who meet certain age and service requirements. In July 2003, we revised the Helmerich & Payne, Inc. Employee Retirement Plan (“Pension Plan”) to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen.
The following table provides a reconciliation of the changes in the pension benefit obligations and fair value of Pension Plan assets over the two-year period ended September 30, 2023 and a statement of the funded status as of September 30, 2023 and 2022:
September 30,
(in thousands)20232022
Accumulated benefit obligation$54,646 $60,463 
Changes in projected benefit obligations:
Projected benefit obligation at beginning of year$60,463 $110,352 
Interest cost3,086 2,537 
Actuarial gain(4,940)(16,260)
Benefits paid(3,963)(36,166)
Projected benefit obligation at end of year$54,646 $60,463 
Change in plan assets:
Fair value of plan assets at beginning of year$41,764 $87,255 
Actual return on plan assets979 (14,324)
Employer contribution5,000 5,000 
Benefits paid(3,963)(36,167)
Fair value of plan assets at end of year$43,780 $41,764 
Funded status of the plan at end of year$(10,866)$(18,699)
Fluctuations in actuarial gains and losses during the period are primarily due to changes in the discount rate and investment returns. The mortality table issued by the Society of Actuaries in October 2021 was used for the September 30, 2023 pension calculation. The net pension liability at September 30, 2023 and 2022 was $10.9 million and $18.7 million, respectively. Theses liabilities are recorded within other noncurrent liabilities in our Consolidated Balance Sheets.
The net actuarial loss recognized in Accumulated other comprehensive income (loss) at September 30, 2023 and 2022, and not yet reflected in net periodic benefit cost, was $10.4 million and $15.7 million respectively.
Unrecognized actuarial gains/losses outside of a corridor of the greater of: 1) 10 percent of the Projected Benefit Obligation, or 2) the fair value of assets, are amortized into expense for the year on a straight-line basis over the average remaining service years of participants. Amortization is not carried from year-to-year as the calculation resets each year.
The weighted average assumptions used for the pension calculations were as follows:
September 30,
2023    2022    2021
Discount rate for net periodic benefit costs5.44 %2.75 %2.66 %
Discount rate for year-end obligations5.77 %5.44 %2.75 %
Expected return on plan assets4.50 %4.25 %3.50 %
We made a voluntary contribution of $5.0 million during each fiscal year 2023, 2022, and 2021. In fiscal year 2024, we do not expect minimum contributions required by law to be needed. However, we may make contributions in fiscal year 2024 if needed to fund unexpected distributions in lieu of liquidating pension assets.
Components of the net periodic pension expense were as follows:
Year Ended September 30,
(in thousands)202320222021
Interest cost$3,086 $2,537 $2,925 
Expected return on plan assets1
(1,762)(2,481)(3,722)
Recognized net actuarial loss1,139 2,080 3,205 
Settlement expense— 9,031 3,448 
Other— — (81)
Net pension expense$2,463 $11,167 $5,775 
(1)The Company uses the fair value of plan assets in determining the expected return on plan assets.
We record settlement expense when benefit payments exceed the total annual interest costs. During March 2022, the Company's domestic noncontributory defined benefit pension plan was amended to include a limited lump sum distribution option and a special eligibility window to be available to certain participants. During the period beginning on May 2, 2022 and ending on June 30, 2022, these participants could elect the limited lump sum distribution. This one-time lump sum was subsequently paid in August 2022 and resulted in a pension settlement charge of $7.8 million during the year ended September 30, 2022.
The following table reflects the expected benefits to be paid from the Pension Plan in each of the next five fiscal years, and in the aggregate for the five years thereafter (in thousands):
Year Ended September 30,
202420252026202720282029 – 2033Total
$4,790 $5,698 $5,009 $5,114 $4,494 $21,168 $46,273 
Investment Strategy and Asset Allocation
Our investment policy and strategies are established with a long-term view in mind. The investment strategy is intended to help pay the cost of the Pension Plan while providing adequate security to meet the benefits promised under the Pension Plan. We maintain a diversified asset mix to minimize the risk of a material loss to the portfolio value that might occur from devaluation of any single investment. In determining the appropriate asset mix, our financial strength and ability to fund potential shortfalls are considered. Pension Plan assets are invested in portfolios of diversified public-market equity securities and fixed income securities. The Pension Plan does not directly hold securities of the Company.
The expected long-term rate of return on Pension Plan assets is based on historical and projected rates of return for current and planned asset classes in the Pension Plan’s investment portfolio after analyzing historical experience and future expectations of the return and volatility of various asset classes.
During the 2021 fiscal year, we implemented a glide-path strategy with a goal to reduce risk as certain funded levels are achieved and began aligning our fixed income exposure with our pension liabilities. The target allocation for 2024 and the asset allocation for the Pension Plan at the end of fiscal years 2023 and 2022, by asset category, were as follows:
Target AllocationSeptember 30,
Asset Category2024    2023    2022
U.S. equities17 %17 %18 %
International equities12 12 11 
Fixed income71 71 71 
Total100 %100 %100 %
Plan Assets
The fair value of Pension Plan assets at September 30, 2023 and 2022, summarized by level within the fair value hierarchy described in Note 12—Fair Value Measurement of Financial Instruments, are as follows:
September 30, 2023
(in thousands)Total    Level 1    Level 2    Level 3
Short-term investments$1,018 $1,018 $— $— 
Mutual funds:
Domestic stock funds7,299 7,299 — — 
Bond funds30,319 30,319 — — 
International stock funds5,120 5,120 — — 
Total mutual funds42,738 42,738 — — 
Oil and gas properties24 — — 24 
Total$43,780 $43,756 $— $24 
September 30, 2022
(in thousands)Total    Level 1    Level 2    Level 3
Short-term investments$555 $555 $— $— 
Mutual funds:
Domestic stock funds7,318 7,318 — — 
Bond funds29,093 29,093 — — 
International stock funds4,739 4,739 — — 
Total mutual funds41,150 41,150 — — 
Oil and gas properties59 — — 59 
Total$41,764 $41,705 $— $59 
As of September 30, 2023 and 2022, the Pension Plan’s financial assets utilizing Level 1 inputs are valued based on quoted prices in active markets for identical securities. As of September 30, 2023 and 2022, the Pension Plan’s assets utilizing Level 3 inputs consist of oil and gas properties. The fair value of oil and gas properties is determined by Wells Fargo Bank, N.A., based upon actual revenue received for the previous twelve-month period and experience with similar assets.
Defined Contribution Plan
Substantially all employees on the U.S. payroll may elect to participate in our 401(k)/Thrift Plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first five percent of the participant’s compensation subject to certain limitations. The annual expense incurred for this defined contribution plan was $25.8 million, $24.8 million and $13.6 million in fiscal years 2023, 2022 and 2021, respectively.