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REVENUE FROM CONTRACTS WITH CUSTOMERS
 9 Months Ended
Jun. 30, 2025
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS
NOTE 10 REVENUE FROM CONTRACTS WITH CUSTOMERS
Drilling Services Revenue
The majority of our drilling services are performed on a “daywork” contract basis, under which we charge a rate per day, with the price determined by the location, depth and complexity of the well to be drilled, operating conditions, the duration of the contract, and the competitive forces of the market. These drilling services, including our technology solutions, represent a series of distinct daily services that are substantially the same, with the same pattern of transfer to the customer. Because our customers benefit equally throughout the service period and our efforts in providing drilling services are incurred relatively evenly over the period of performance, revenue is recognized over time using a time-based input measure as we provide services to the customer. For any contracts that include a provision for pooled term days at contract inception, followed by the assignment of days to specific rigs throughout the contract term, we have elected, as a practical expedient, to recognize revenue in the amount for which the entity has a right to invoice, as permitted by ASC 606.
Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets. These types of contracts are relatively new to the industry and typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers. The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets. Total revenue recognized from performance contracts, including performance bonuses, was $309.8 million and $941.4 million, of which $14.1 million and $48.1 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2025, respectively. Total revenue recognized from performance contracts, including performance bonuses, was $294.4 million and $880.4 million, of which $11.8 million and $37.4 million was related to performance bonuses recognized due to the achievement of performance targets during the three and nine months ended June 30, 2024, respectively.
Contract Costs
As of June 30, 2025 and September 30, 2024, we had capitalized fulfillment costs of $33.2 million and $19.2 million, respectively.
Remaining Performance Obligations
The total aggregate transaction price allocated to the unsatisfied performance obligations, is commonly referred to as backlog. As of June 30, 2025, our firm backlog was approximately $5.4 billion, of which approximately $0.6 billion is expected to be recognized during the remainder of fiscal year 2025, approximately $1.2 billion is expected to be recognized during fiscal year 2026, and approximately $3.6 billion is expected to be recognized during fiscal year 2027 and thereafter. The firm backlog figure includes $4.0 billion attributed to our recently acquired subsidiary, KCA Deutag. The firm backlog amounts do not include anticipated contract renewals or expected performance bonuses as part of its calculation. Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations. Our contracts are subject to cancellation or modification at the election of the customer. Although we have not been materially adversely affected by contract cancellations or modifications in the past due to the level of capital deployed by our customers on underlying projects, the early termination of a contract or suspension of operations may result in a rig being idle for an extended period of time, could adversely affect our financial condition, results of operations and cash flows. The agreements within our recently acquired subsidiary, KCA Deutag, contain provisions for optional early termination or suspension without any associated early termination fee and could cause the actual amount of revenue earned to significantly vary from the backlog reported.
Contract Assets and Liabilities
The following tables summarize the balances of our contract assets (net of allowance for estimated credit losses) and liabilities at the dates indicated:
(in thousands)June 30, 2025September 30, 2024
Contract assets, net$10,134 $4,563 
(in thousands)June 30, 2025
Contract liabilities balance at September 30, 2024
$29,052 
Acquisition of KCA Deutag1
22,982 
Payment received/accrued and deferred
59,914 
Revenue recognized during the period(58,859)
Contract liabilities balance at June 30, 2025
$53,089 
(1)Contract liabilities acquired in the KCA Deutag Acquisition were measured at fair value at the Acquisition Date. Refer to Note 3—Business Combination for additional information regarding the Acquisition.