NEWS RELEASE

·

U.S. Land Operations contracted rig count increased by 22 rigs from March 31, 2017 to June 30, 2017 and by 95 rigs from September 30, 2016 to June 30, 2017

·

Growing U.S. Land rig market share(1) is currently at approximately 20% and AC drive rig segment market share at approximately 30%

·

U.S. Land adjusted average rig margin per day increased by over $800(2)

·

Quarterly revenue days expected to increase by approximately 3% to 5% sequentially

·

Average rig revenue per day expected to be slightly over $21,000 (excluding any impact from early termination revenue)

·

Average rig expense per day expected to be roughly $13,700

·

Quarterly revenue days expected to decrease by approximately 10% sequentially

·

Average rig margin per day expected to be approximately $12,500

·

Management contracts expected to generate approximately $4 million in operating income

·

Adjusted quarterly revenue days expected to be roughly unchanged sequentially, resulting in approximately 13 average rigs generating revenue days during the quarter

·

Average rig margin per day expected to be roughly $7,500

·

FY17 capital expenditures are now estimated at roughly $400 million, and potentially higher depending on the timing of expenditures related to upgrading opportunities.  This increase from our prior estimate of $350 million is due to more rigs being upgraded than initially anticipated and higher levels of maintenance capital expenditures as a result of more rigs working than previously estimated.  The revised estimate excludes the acquisition of MOTIVE Drilling Technologies, Inc.

·

FY17 general and administrative expenses are now expected to be approximately $150 million primarily due to the acquisition of MOTIVE Drilling Technologies, Inc., and to a higher level of resources required to support a much higher active rig count than originally anticipated.

·

H&P’s spot pricing in the U.S. Land market continued to increase (approximately 2%) from the date of the second quarter results announcement (April 27, 2017) to July 27, 2017.

·

Since April 27, 2017 (date of second quarter results announcement), 18 AC drive FlexRigs with 1,500 hp drawworks and 750,000 lbs. hookload ratings were upgraded to include a 7,500 psi mud circulating system and/or multiple-well pad capability, resulting in 140 rigs in our fleet today with rig specifications in highest demand(5).

·

During the third fiscal quarter, two FlexRig3s with walking systems were contracted and a third committed. One of the contracted rigs, the initial prototype, deployed to West Texas in May.    Initial rig operations have been strong, and the customer has been pleased with the results.

·

During the third fiscal quarter, FlexRig 531, working for an operator in the Utica Shale, drilled a total measured depth well of approximately 27,750 feet  with an extended reach lateral measuring approximately 19,500 feet.  This was completed in approximately  17 days (from spud to total depth).  

·

On May 22, 2017, the Company announced the acquisition of MOTIVE Drilling Technologies, Inc., the industry leader in the use of cognitive computing to guide the directional drilling process.  The acquisition closed on June 2, 2017.

·

On June 7, 2017, Directors of the Company declared a quarterly cash dividend of $0.70 per share on the Company’s common stock payable September 1, 2017 (as filed on Form 8‑K at the time of the declaration).

·

$0.07 of after-tax income related to retroactive revenue received for five rigs in the International Land Segment

·

$0.03 of after-tax income from long-term contract early termination compensation from customers

·

$0.01 of after-tax gains related to the sale of used drilling equipment

·

$0.02 of after-tax losses from charges related to the MOTIVE Drilling Technologies, Inc. acquisition transaction

·

$0.05 of after-tax losses from abandonment charges related to the decommissioning of used drilling equipment

·

$0.04 of after-tax income from long-term contract early termination compensation from customers

·

$0.09 of after-tax gains related to the sale of used drilling equipment

·

$0.11 of after-tax losses from abandonment charges related to the decommissioning of used drilling equipment

Three Months Ended

Nine Months Ended

CONSOLIDATED STATEMENTS OF

June 30

March 31 

June 30

June 30

OPERATIONS

2017

2017

2016

2017

2016

Operating Revenues:

Drilling — U.S. Land

$

405,516

$

330,967

$

285,028

$

1,000,119

$

1,004,116

Drilling — Offshore

33,711

36,235

30,492

103,758

106,697

Drilling — International Land

55,075

34,757

47,983

157,863

171,529

Other

4,262

3,324

2,983

10,697

10,182

$

498,564

$

405,283

$

366,486

$

1,272,437

$

1,292,524

Operating costs and expenses:

Operating costs, excluding depreciation

337,463

296,829

186,146

881,971

684,401

Depreciation

145,043

152,777

138,690

431,667

422,336

Asset impairment charge

 —

 —

6,250

 —

6,250

General and administrative

42,890

33,519

46,496

110,671

112,381

Research and development

3,058

2,719

2,707

8,585

7,941

Income from asset sales

(1,862)

(14,889)

(547)

(17,593)

(7,820)

526,592

470,955

379,742

1,415,301

1,225,489

Operating income (loss)

(28,028)

(65,672)

(13,256)

(142,864)

67,035

Other income (expense):

Interest and dividend income

1,700

1,338

778

4,028

2,310

Interest expense

(6,364)

(6,084)

(6,407)

(17,503)

(16,652)

Other

(911)

174

534

(350)

926

(5,575)

(4,572)

(5,095)

(13,825)

(13,416)

Income (loss) from continuing operations before income taxes

(33,603)

(70,244)

(18,351)

(156,689)

53,619

Income tax provision

(10,478)

(21,771)

2,842

(50,537)

33,740

Income (loss) from continuing operations

(23,125)

(48,473)

(21,193)

(106,152)

19,879

Income (loss) from discontinued operations, before income taxes

3,223

(94)

2,193

2,705

2,241

Income tax provision

1,897

251

2,200

2,233

6,113

Income (loss) from discontinued operations

1,326

(345)

(7)

472

(3,872)

NET INCOME (LOSS)

$

(21,799)

$

(48,818)

$

(21,200)

$

(105,680)

$

16,007

Basic earnings per common share:

Income (loss) from continuing operations

$

(0.22)

$

(0.45)

$

(0.20)

$

(0.99)

$

0.18

Income (loss) from discontinued operations

$

0.01

$

—

$

 —

$

 —

$

(0.04)

Net income (loss)

$

(0.21)

$

(0.45)

$

(0.20)

$

(0.99)

$

0.14

Diluted earnings per common share:

Income (loss) from continuing operations

$

(0.22)

$

(0.45)

$

(0.20)

$

(0.99)

$

0.17

Income (loss) from discontinued operations

$

0.01

$

—

$

 —

$

 —

$

(0.04)

Net income (loss)

$

(0.21)

$

(0.45)

$

(0.20)

$

(0.99)

$

0.13

Weighted average shares outstanding:

Basic

108,572

108,565

108,047

108,470

107,970

Diluted

108,572

108,565

108,047

108,470

108,523

June 30

September 30

CONSOLIDATED CONDENSED BALANCE SHEETS

2017

2016

ASSETS

Cash and cash equivalents

$

572,787

$

905,561

Short-term investments

39,894

44,148

Other current assets

637,700

622,913

Current assets of discontinued operations

 7

64

Total current assets

1,250,388

1,572,686

Investments

76,986

84,955

Net property, plant, and equipment

5,062,914

5,144,733

Other assets

123,603

29,645

TOTAL ASSETS

$

6,513,891

$

6,832,019

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

$

333,849

$

330,061

Current liabilities of discontinued operations

80

59

Total current liabilities

333,929

330,120

Non-current liabilities

1,434,196

1,445,237

Non-current liabilities of discontinued operations

3,225

3,890

Long-term debt less unamortized discount and debt issuance costs

492,637

491,847

Total shareholders’ equity

4,249,904

4,560,925

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

6,513,891

$

6,832,019

Nine Months Ended

June 30

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

2017

2016

OPERATING ACTIVITIES:

Net income (loss)

$

(105,680)

$

16,007

Adjustment for (income) loss from discontinued operations

(472)

3,872

Income (loss) from continuing operations

(106,152)

19,879

Depreciation

431,667

422,336

Asset impairment charge

 —

6,250

Changes in assets and liabilities

(97,040)

153,624

Income from asset sales

(17,593)

(7,820)

Other

25,367

21,071

Net cash provided by operating activities from continuing operations

236,249

615,340

Net cash provided by (used in) operating activities from discontinued operations

(115)

70

Net cash provided by operating activities

236,134

615,410

INVESTING ACTIVITIES:

Capital expenditures

(300,275)

(219,549)

Purchase of short-term investments

(48,958)

(36,958)

Payment for acquisition of business, net of cash acquired

(70,416)

 —

Proceeds from sale of short-term investments

53,150

32,681

Proceeds from asset sales

17,921

12,804

Net cash used in investing activities

(348,578)

(211,022)

FINANCING ACTIVITIES:

Debt issuance costs

—

(32)

Dividends paid

(229,061)

(224,040)

Exercise of stock options, net of tax withholding

10,458

483

Tax withholdings related to net share settlements of restricted stock

(5,848)

(3,912)

Excess tax benefit from stock-based compensation

4,121

761

Net cash used in financing activities

(220,330)

(226,740)

Net increase (decrease) in cash and cash equivalents

(332,774)

177,648

Cash and cash equivalents, beginning of period

905,561

729,384

Cash and cash equivalents, end of period

$

572,787

$

907,032

Three Months Ended

Nine Months Ended

June 30

March 31 

June 30

June 30

SEGMENT REPORTING

2017

2017

2016

2017

2016

(in thousands, except days and per day amounts)

U.S. LAND OPERATIONS

Revenues

$

405,516

$

330,967

$

285,028

$

1,000,119

$

1,004,116

Direct operating expenses

277,372

238,249

122,694

686,227

460,119

General and administrative expense

13,347

12,573

14,221

37,562

38,790

Depreciation

122,777

131,995

116,061

367,048

355,102

Asset impairment charge

 —

 —

6,250

 —

6,250

Segment operating income (loss)

$

(7,980)

$

(51,850)

$

25,802

$

(90,718)

$

143,855

Revenue days

16,577

13,166

7,483

39,527

29,029

Average rig revenue per day

$

21,986

$

22,654

$

35,474

$

22,902

$

32,251

Average rig expense per day

$

14,256

$

15,612

$

13,780

$

14,942

$

13,532

Average rig margin per day

$

7,730

$

7,042

$

21,694

$

7,960

$

18,719

Rig utilization

52

%  

42

%  

24

%  

42

%  

31

%

OFFSHORE OPERATIONS

Revenues

$

33,711

$

36,235

$

30,492

$

103,758

$

106,697

Direct operating expenses

23,656

26,023

24,249

72,524

81,607

General and administrative expense

969

902

975

2,787

2,674

Depreciation

2,630

3,398

3,184

9,295

9,311

Segment operating income

$

6,456

$

5,912

$

2,084

$

19,152

$

13,105

Revenue days

546

595

637

1,785

2,064

Average rig revenue per day

$

35,644

$

36,006

$

25,568

$

34,204

$

27,086

Average rig expense per day

$

24,141

$

25,189

$

18,823

$

23,300

$

19,721

Average rig margin per day

$

11,503

$

10,817

$

6,745

$

10,904

$

7,365

Rig utilization

75

%  

77

%  

78

%  

77

%  

84

%

INTERNATIONAL LAND OPERATIONS

Revenues

$

55,075

$

34,757

$

47,983

$

157,863

$

171,529

Direct operating expenses

35,006

32,181

38,230

120,537

140,351

General and administrative expense

714

920

772

2,303

2,377

Depreciation

14,428

12,633

13,972

40,248

42,725

Segment operating income (loss)

$

4,927

$

(10,977)

$

(4,991)

$

(5,225)

$

(13,924)

Revenue days

1,633

870

1,274

3,660

3,992

Average rig revenue per day

$

32,708

$

37,340

$

34,693

$

41,134

$

39,382

Average rig expense per day

$

19,645

$

33,649

$

26,156

$

30,328

$

29,050

Average rig margin per day

$

13,063

$

3,691

$

8,537

$

10,806

$

10,332

Rig utilization

47

%  

25

%  

37

%  

35

%  

38

%

U.S. Land Operations

$

41,059

$

32,704

$

19,593

$

94,861

$

67,915

Offshore Operations

$

5,181

$

6,066

$

5,270

$

15,678

$

17,687

International Land Operations

$

1,663

$

2,272

$

3,784

$

7,312

$

14,316

Three Months Ended

Nine Months Ended

June 30

March 31 

June 30

June 30

2017

2017

2016

2017

2016

Operating income (loss)

U.S. Land

$

(7,980)

$

(51,850)

$

25,802

$

(90,718)

$

143,855

Offshore

6,456

5,912

2,084

19,152

13,105

International Land

4,927

(10,977)

(4,991)

(5,225)

(13,924)

Other

(2,569)

(1,134)

(2,186)

(5,752)

(4,839)

Segment operating income (loss)

$

834

$

(58,049)

$

20,709

$

(82,543)

$

138,197

Corporate general and administrative

(27,283)

(19,124)

(30,528)

(67,442)

(68,540)

Other depreciation

(3,852)

(3,822)

(4,456)

(11,751)

(12,037)

Inter-segment elimination

411

434

472

1,279

1,595

Income from asset sales

1,862

14,889

547

17,593

7,820

Operating income (loss)

$

(28,028)

$

(65,672)

$

(13,256)

$

(142,864)

$

67,035

Other income (expense):

Interest and dividend income

1,700

1,338

778

4,028

2,310

Interest expense

(6,364)

(6,084)

(6,407)

(17,503)

(16,652)

Other

(911)

174

534

(350)