Helmerich & Payne (HP) risk factors, FY2024 10-K

BUSINESS AND OPERATING RISKS

1. 01Our business depends on the level of activity in the oil and natural gas industry, which is significantly impacted by the current and expected price of oil and natural gas as well as the volatility in those prices and other factors
2. 02Global economic conditions and volatility in oil and gas prices may adversely affect our business
3. 03The drilling services and solutions business is highly competitive, and a surplus of available drilling rigs may adversely affect our rig utilization and profit margins
4. 04Consolidation in our industry may impact our results of operations
5. 05Our drilling and technology related operations are subject to a number of operational risks, including environmental and weather risks, which could expose us to significant losses and damage claims. We are not fully insured against all of these risks and our contractual indemnity provisions may not fully protect us
6. 06Our business is subject to cybersecurity and information technology system disruption risks
7. 07Our acquisitions, dispositions and investments may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our liquidity, consolidated results of operations and consolidated financial condition
8. 08While we generally seek to obtain indemnities for liabilities arising from events occurring before such acquisitions, we may be unable to do so, and any indemnities we do obtain will be limited in amount and duration, may be held to be unenforceable or the seller may not be able to indemnify us
9. 09Technology disputes and limitations on our ability to protect or enforce our intellectual property rights could negatively impact our costs, revenues, and any competitive advantage we hold
10. 10Unexpected events could disrupt our business and adversely affect our results of operations
11. 11Reliance on management and competition for experienced personnel may negatively impact our operations or financial results
12. 12The loss of one or a number of our large customers could have a material adverse effect on our business, financial condition and results of operations
13. 13Our current backlog of drilling services and solutions revenue may decline and may not be ultimately realized as fixed‑term contracts and may, in certain instances, be terminated without an early termination payment
14. 14Our contracts with NOCs may expose us to greater risks than we normally assume in contracts with non-governmental customers
15. 15Control of oil and natural gas reserves by NOCs may affect the demand for our services and products and create additional risks in our operations
16. 16Our drilling services operating expense includes fixed costs that may not decline in proportion to decreases in rig utilization and dayrates
17. 17Shortages of drilling equipment, supplies or other key materials could adversely affect our operations
18. 18Continuing inflation and cost increases may impact our sales margins and profitability
19. 19Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility
20. 20The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations
21. 21Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations
22. 22Our business and results of operations may be adversely affected by foreign political, economic and social instability risks, foreign currency restrictions and devaluation, and various local laws associated with doing business in certain foreign countries

FINANCIAL RISKS

1. 23Covenants in our debt agreements restrict our ability to engage in certain activities
2. 24We may be required to record impairment charges with respect to our drilling rigs and other assets
3. 25A downgrade in our credit ratings could negatively impact our cost of and ability to access capital
4. 26Our ability to access capital markets could be limited
5. 27Our marketable securities may lose significant value due to credit, market and interest rate risks
6. 28We may not be able to generate cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations

LEGAL AND REGULATORY RISKS

1. 29The physical effects of climate change and the regulation of greenhouse gases and climate change could have a negative impact on our business
2. 30New legislation and regulatory initiatives relating to hydraulic fracturing or other aspects of the oil and gas industry could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the services we provide
3. 31Our aspirations, goals and initiatives related to sustainability and emissions reduction, and our public statements and disclosures regarding them, expose us to numerous risks
4. 32Failure to comply with the U.S. Foreign Corrupt Practices Act or foreign anti‑bribery legislation could adversely affect our business
5. 33Our business is subject to complex and evolving laws and regulations regarding privacy, data security and consumer protection
6. 34Government policies, mandates, and regulations specifically affecting the energy sector and related industries, regulatory policies or matters that affect a variety of businesses, taxation polices, and political instability could adversely affect our financial condition and results of operations
7. 35Legal claims and litigation could have a negative impact on our business
8. 36Additional tax liabilities, limitations on our use of net operating losses and tax credits and/or our significant net deferred tax liability could affect our financial condition, income tax provision, net income, and cash flows
9. 37Failure to comply with or changes to governmental and environmental laws could adversely affect our business

RISKS RELATED TO OUR COMMON STOCK AND CORPORATE STRUCTURE

1. 38We may reduce or suspend our dividend in the future
2. 39The market price of our common stock may be highly volatile, and investors may not be able to resell shares at or above the price paid
3. 40Certain provisions of our corporate governing documents could make an acquisition of our company more difficult
4. 41The choice of forum provision in our bylaws could limit our stockholders’ ability to obtain what such stockholders’ believe to be a favorable judicial forum for disputes with us or our directors, officers, or employees
5. 42Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our cost of capital and the price of our common stock
6. 43We have incurred a substantial amount of additional debt to complete the Acquisition. Our debt level may limit our financial and business flexibility
7. 44The Acquisition is subject to a number of conditions, which, if not fulfilled, or not fulfilled in a timely manner, may delay or reduce the anticipated benefits of the Acquisition, result in additional expenditures of money and resources, or result in termination of the Purchase Agreement
8. 45If the Acquisition is consummated, we may be unable to successfully integrate KCA Deutag’s business or achieve the anticipated benefits of the Acquisition, or the anticipated benefits attributable to the Acquisition may vary from our expectations
9. 46Our business relationships may be subject to disruption due to uncertainty associated with the Acquisition, which could have a material adverse effect on our results of operations, cash flows and financial position pending and following the Acquisition
10. 47Uncertainties associated with the Acquisition may cause a loss of management personnel and other key employees, which could adversely affect our future business and operations
11. 48Failure to complete the Acquisition could negatively impact our stock price and have a material adverse effect on our results of operations, cash flows and financial position
12. 49We will incur significant transaction costs in connection with the Acquisition
13. 50The Acquisition represents an expansion outside of our current geographic regions, and we may encounter new obstacles operating in different geographic regions
14. 51The pendency of the Acquisition could adversely affect the Company’s business, results of operations and financial condition