16.Guarantor and Non-Guarantor Financial Information

In March 2015, Helmerich & Payne International Drilling Co. (“the issuer”), a wholly-owned subsidiary of Helmerich & Payne, Inc. (“parent”, “the guarantor”), issued senior unsecured notes with an aggregate principal amount of $500.0 million. The notes are fully and unconditionally guaranteed by the parent. No subsidiaries of parent currently guarantee the notes, subject to certain provisions that if any subsidiary guarantees certain other debt of the issuer or parent, then such subsidiary will provide a guarantee of the obligations under the notes.

In connection with the notes, we are providing the following condensed consolidating financial information for the issuer, Helmerich & Payne International Drilling Co. and parent/guarantor, Helmerich & Payne, Inc., in accordance with the Commission disclosure requirements. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(in thousands)

	Three Months Ended December 31, 2015
	Guarantor/			Issuer			Non-Guarantor						Total
	Parent			Subsidiary			Subsidiaries			Eliminations			Consolidated

Operating revenue	$	—		$	405,537		$	82,327		$	(17	)	$	487,847
Operating costs and other	2,705			356,751			90,122			(401		)	449,177
Operating income (loss) from continuing operations	(2,705		)	48,786			(7,795		)	384			38,670

Other income	20			656			180			(384		)	472
Interest expense	(62		)	(4,718		)	256			—			(4,524		)
Equity in net income (loss) of subsidiaries	17,549			(8,197		)	—			(9,352		)	—
Income (loss) from continuing operations before income taxes	14,802			36,527			(7,359		)	(9,352		)	34,618
Income tax provision	(1,200		)	19,227			693			—			18,720
Income (loss) from continuing operations	16,002			17,300			(8,052		)	(9,352		)	15,898

Income from discontinued operations before income taxes	—			—			104			—			104
Income tax provision	—			—			—			—			—
Income from discontinued operations	—			—			104			—			104

Net income (loss)	$	16,002		$	17,300		$	(7,948	)	$	(9,352	)	$	16,002

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended December 31, 2015
	Guarantor/		Issuer			Non-Guarantor						Total
	Parent		Subsidiary			Subsidiaries			Eliminations			Consolidated

Net income (loss)	$	16,002	$	17,300		$	(7,948	)	$	(9,352	)	$	16,002
Other comprehensive income (loss), net of income taxes:
Unrealized depreciation on securities, net	—		(11,010		)	—			—			(11,010		)
Minimum pension liability adjustments, net	107		206			—			—			313
Other comprehensive income (loss)	107		(10,804		)	—			—			(10,697		)
Comprehensive income (loss)	$	16,109	$	6,496		$	(7,948	)	$	(9,352	)	$	5,305

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(in thousands)

	Three Months Ended December 31, 2014, as adjusted
	Guarantor/			Issuer		Non-Guarantor						Total
	Parent			Subsidiary		Subsidiaries			Eliminations			Consolidated

Operating revenue	$	—		$	952,109	$	108,694		$	(16	)	$	1,060,787
Operating costs and other	3,021			629,038		99,389			(1,032		)	730,416
Operating income (loss) from continuing operations	(3,021		)	323,071		9,305			1,016			330,371

Other income	1			921		703			(1,016		)	609
Interest expense	(7		)	18		(601		)	—			(590		)
Equity in net income of subsidiaries	205,359			6,718		—			(212,077		)	—
Income from continuing operations before income taxes	202,332			330,728		9,407			(212,077		)	330,390
Income tax provision	(1,276		)	126,122		1,921			—			126,767
Income from continuing operations	203,608			204,606		7,486			(212,077		)	203,623

Loss from discontinued operations before income taxes	—			—		(15		)	—			(15		)
Income tax provision	—			—		—			—			—
Loss from discontinued operations	—			—		(15		)	—			(15		)

Net income	$	203,608		$	204,606	$	7,471		$	(212,077	)	$	203,608

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended December 31, 2014, as adjusted
	Guarantor/		Issuer			Non-Guarantor					Total
	Parent		Subsidiary			Subsidiaries		Eliminations			Consolidated

Net income	$	203,608	$	204,606		$	7,471	$	(212,077	)	$	203,608
Other comprehensive income (loss), net of income taxes:
Unrealized depreciation on securities, net	—		(42,244		)	—		—			(42,244		)
Minimum pension liability adjustments, net	82		114			—		—			196
Other comprehensive income (loss)	82		(42,130		)	—		—			(42,048		)
Comprehensive income	$	203,690	$	162,476		$	7,471	$	(212,077	)	$	161,560

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

	December 31, 2015
	Guarantor/			Issuer			Non-Guarantor					Total
	Parent			Subsidiary			Subsidiaries		Eliminations			Consolidated

ASSETS
Current assets:
Cash and cash equivalents	$	(705	)	$	816,342		$	32,593	$	—		$	848,230
Short-term investments	—			47,708			—		—			47,708
Accounts receivable, net of reserve	(8		)	309,127			64,782		(5		)	373,896
Inventories	—			86,889			40,353		—			127,242
Prepaid expenses and other	26,550			7,133			43,825		(6,357		)	71,151
Current assets of discontinued operations	—			—			8,449		—			8,449
Total current assets	25,837			1,267,199			190,002		(6,362		)	1,476,676

Investments	11,748			73,528			—		—			85,276
Property, plant and equipment, net	62,282			5,038,560			429,975		—			5,530,817
Intercompany	15,821			1,233,222			253,557		(1,502,600		)	—
Other assets	10,304			1,023			36,248		(10,070		)	37,505
Investment in subsidiaries	5,631,533			219,311			—		(5,850,844		)	—

Total assets	$	5,757,525		$	7,832,843		$	909,782	$	(7,369,876	)	$	7,130,274

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt due within one year	$	—		$	39,092		$	—	$	—		$	39,092
Accounts payable	79,879			10,922			5,646		(5		)	96,442
Accrued liabilities	11,610			218,527			46,166		(6,357		)	269,946
Current liabilities of discontinued operations	—			—			3,310		—			3,310
Total current liabilities	91,489			268,541			55,122		(6,362		)	408,790

Noncurrent liabilities:
Long-term debt	—			492,668			—		—			492,668
Deferred income taxes	—			1,268,943			36,728		(10,070		)	1,295,601
Intercompany	818,406			164,173			520,021		(1,502,600		)	—
Other	17,337			24,425			56,021		—			97,783
Noncurrent liabilities of discontinued operations	—			—			5,139		—			5,139
Total noncurrent liabilities	835,743			1,950,209			617,909		(1,512,670		)	1,891,191

Shareholders’ equity:
Common stock	11,130			100			—		(100		)	11,130
Additional paid-in capital	427,590			46,856			374		(47,230		)	427,590
Retained earnings	4,589,597			5,574,085			236,377		(5,810,462		)	4,589,597
Accumulated other comprehensive loss	(12,074		)	(6,948		)	—		6,948			(12,074		)
Treasury stock, at cost	(185,950		)	—			—		—			(185,950		)
Total shareholders’ equity	4,830,293			5,614,093			236,751		(5,850,844		)	4,830,293

Total liabilities and shareholders’ equity	$	5,757,525		$	7,832,843		$	909,782	$	(7,369,876	)	$	7,130,274