U.S. LAND DRILLING

        At the end of September 2010, 2009 and 2008, we had 220, 201 and 185, respectively, of our land rigs available for work in the United States. The total number of rigs at the end of fiscal 2010 increased by a net of 19 rigs from the end of fiscal 2009. The increase was due to 14 new FlexRigs having been completed and placed into service, 6 transferred from our international operations and 1 rig transferred to our international operations. Our U.S. land operations contributed approximately 75 percent ($1,412.5 million) of our consolidated operating revenues during fiscal 2010, compared with approximately 78 percent ($1,441.2 million) of consolidated operating revenues during fiscal 2009 and approximately 82 percent ($1,542.0 million) of consolidated operating revenues during fiscal 2008. Rig utilization was approximately 73 percent in fiscal 2010 and approximately 68 percent in fiscal 2009, down from approximately 96 percent in fiscal 2008. Our fleet of FlexRigs maintained an average utilization of approximately 87 percent during fiscal 2010 while our conventional and highly mobile rigs had an average utilization rate of approximately 12 percent. A rig is considered to be utilized when it is operated or being mobilized or demobilized under contract. At the close of fiscal 2010, 183 land rigs were working out of 220 available rigs.

OFFSHORE DRILLING

        Our offshore operations contributed approximately 11 percent in both fiscal years 2010 and 2009 ($202.7 million in fiscal 2010 and $204.7 million in fiscal 2009) of the Company's consolidated operating revenues compared to 8 percent in fiscal year 2008 ($154.5) of the Company's consolidated operating revenues. Rig utilization in fiscal 2010 was approximately 80 percent compared to approximately 89 percent in fiscal 2009 and approximately 75 percent in fiscal 2008. At the end of fiscal 2010, we had seven of our nine offshore platform rigs under contract and continued to work under management contracts for three customer-owned rigs. Revenues from drilling services performed for our largest offshore drilling customer totaled approximately 34 percent of offshore revenues during fiscal 2010.

INTERNATIONAL LAND DRILLING

General

        Our international land operations contributed approximately 13 percent ($247.2 million) of our consolidated operating revenues during fiscal 2010, compared with approximately 10 percent ($187.1 million) of consolidated operating revenues during fiscal 2009 and 9 percent ($161.1 million) in fiscal 2008. Rig utilization in fiscal 2010 was 71 percent, 70 percent in fiscal 2009 and 72 percent in fiscal 2008.

Colombia

        At the end of fiscal 2010, we had six rigs in Colombia. Our utilization rate was approximately 71 percent during fiscal 2010, approximately 88 percent during fiscal 2009 and approximately 87 percent during fiscal 2008. Revenues generated by Colombian drilling operations contributed approximately 3 percent ($57.5 million) of our consolidated operating revenues during fiscal 2010, compared with 4 percent ($77.3 million) of our consolidated operating revenues during fiscal 2009, and 2 percent ($42.4 million) of our consolidated operating revenues during fiscal 2008. Revenues from drilling services performed for our largest customer in Colombia totaled approximately 2 percent of consolidated operating revenues and approximately 12 percent of international operating revenues during fiscal 2010. The Colombian drilling contracts are primarily with large international or national oil companies.

Ecuador

        At the end of fiscal 2010, we had four rigs in Ecuador. The utilization rate in Ecuador was 100 percent in both fiscal 2010 and 2009, compared to 59 percent in fiscal 2008. Revenues generated by Ecuadorian drilling operations contributed approximately 3 percent of our consolidated operating revenues during fiscal 2010, 2009 and 2008 ($52.1 million, $52.3 million and $55.1 million, respectively). Revenues from drilling services performed for the largest customer in Ecuador totaled approximately 2 percent of consolidated operating revenues and approximately 16 percent of international operating revenues during fiscal 2010. The Ecuadorian drilling contracts are primarily with large international or national oil companies.

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Argentina

        At the end of fiscal 2010, we had nine rigs in Argentina. Our utilization rate was approximately 53 percent during fiscal 2010, approximately 52 percent during fiscal 2009 and approximately 88 percent during fiscal 2008. Revenues generated by Argentine drilling operations contributed approximately 3 percent ($55.9 million) of our consolidated operating revenues during fiscal 2010 compared with approximately 2 percent in both fiscal years 2009 and 2008 ($42.1 million in fiscal 2009 and $44.4 million in fiscal 2008). Revenues from drilling services performed for our two largest customers in Argentina totaled approximately 2 percent of consolidated operating revenues and approximately 19 percent of international operating revenues during fiscal 2010. The Argentine drilling contracts are primarily with large international or national oil companies

Other Locations

        In addition to our operations discussed above, at the end of fiscal 2010 we had two rigs in Tunisia, five rigs in Mexico, one rig in Bahrain and one rig en route to Bahrain.

FINANCIAL

        Information relating to revenues, total assets and operating income by reportable operating segments may be found on, and is incorporated by reference to, pages 78 through 82 of our Annual Report (Exhibit 13 to this Form 10-K).

EMPLOYEES

        We had 6,396 employees within the United States (13 of which were part-time employees) and 1,092 employees in international operations as of September 30, 2010.

AVAILABLE INFORMATION

        Information relating to our internet address and information relating to our Securities and Exchange Commission ("SEC") filings may be found on, and is incorporated by reference to, page 84 of our Annual Report (Exhibit 13 to this Form 10-K).

Item 1A.    RISK FACTORS

        In addition to the risk factors discussed elsewhere in this Report, we caution that the following "Risk Factors" could have a material adverse effect on our business, financial condition and results of operations.

Oil and natural gas prices are volatile, and low prices could negatively affect our financial results in the future.

        Our operations can be materially affected by low oil and gas prices. We believe that any significant reduction in oil and gas prices could depress the level of exploration and production activity and result in a corresponding decline in demand for our services. Worldwide military, political and economic events, including initiatives by the Organization of Petroleum Exporting Countries, may affect both the demand for, and the supply of, oil and gas. Fluctuations during the last few years in the demand and supply of oil and gas have contributed to, and are likely to continue to contribute to, price volatility. Any prolonged reduction in demand for our services could have a material adverse effect on our business, financial condition and results of operations.

A sluggish global economy may affect our business.

        As a result of volatility in oil and natural gas prices and a continuing sluggish global economic environment, we are unable to determine whether our customers will further reduce spending on exploration and development drilling or whether customers and/or vendors and suppliers will be able to access financing necessary to sustain their current reduced level of operations, fulfill their commitments and/or fund future operations and obligations. The current global economic environment may continue to impact industry fundamentals and result in reduced demand for drilling rigs. These conditions could have a material adverse effect on our business.

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The contract drilling business is highly competitive.

        Competition in contract drilling involves such factors as price, rig availability, efficiency, condition and type of equipment, reputation, operating safety, and customer relations. Competition is primarily on a regional basis and may vary significantly by region at any particular time. Land drilling rigs can be readily moved from one region to another in response to changes in levels of activity, and an oversupply of rigs in any region may result, leading to increased price competition.

        Although many contracts for drilling services are awarded based solely on price, we have been successful in establishing long-term relationships with certain customers which have allowed us to secure drilling work even though we may not have been the lowest bidder for such work. We have continued to attempt to differentiate our services based upon our FlexRigs and our engineering design expertise, operational efficiency, safety and environmental awareness. This strategy is less effective when lower demand for drilling services intensifies price competition and makes it more difficult or impossible to compete on any basis other than price. Also, future improvements in operational efficiency and safety by our competitors could negatively affect our ability to differentiate our services.

The 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.

        In fiscal 2010, we received approximately 57 percent of our consolidated operating revenues from our ten largest contract drilling customers and approximately 29 percent of our consolidated operating revenues from our three largest customers (including their affiliates). We believe that our relationship with all of these customers is good; however, the loss of one or more of our larger customers could have a material adverse effect on our business, financial condition and results of operations.

International uncertainties and local laws could adversely affect our business.

        International operations are subject to certain political, economic and other uncertainties not encountered in U.S. operations, including increased risks of terrorism, kidnapping of employees, expropriation of equipment as well as expropriation of a particular oil company operator's property and drilling rights, taxation policies, foreign exchange restrictions, currency rate fluctuations and general hazards associated with foreign sovereignty over certain areas in which operations are conducted. On June 30, 2010 the Venezuelan government seized 11 rigs owned by our Venezuelan subsidiary and associated real and personal property.

        There can be no assurance that there will not be changes in local laws, regulations and administrative requirements or the interpretation thereof which could have a material adverse effect on the profitability of our operations or on our ability to continue operations in certain areas. Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities. While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms we find acceptable.

        Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during fiscal 2010, approximately 13 percent of our consolidated operating revenues were generated from the international contract drilling business. During fiscal 2010, approximately 67 percent of the international operating revenues were from operations in South America and approximately 69 percent of South American operating revenues were from Argentina and Colombia.

Our operations are subject to a number of operational risks, including weather.

        Our drilling operations are subject to the many hazards inherent in the business, including inclement weather, blowouts and well fires. These hazards could cause personal injury, suspend drilling operations, seriously damage or destroy the equipment involved and cause substantial damage to producing formations and the surrounding areas. Our offshore drilling operations are also subject to potentially greater

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environmental liability, adverse sea conditions and platform damage or destruction due to collision with aircraft or marine vessels. Specifically, we operate several platform rigs in the Gulf of Mexico. The Gulf of Mexico experiences hurricanes and other extreme weather conditions on a frequent basis, the frequency of which may increase with any climate change. Damage caused by high winds and turbulent seas could potentially curtail operations on such platform rigs for significant periods of time until the damage can be repaired. Moreover, even if our platform rigs are not directly damaged by such storms, we may experience disruptions in operations due to damage to customer platforms and other related facilities in the area.

        We have a new-build rig assembly facility located near the Houston, Texas ship channel. Also, our principal fabricator and other vendors are located in the gulf coast region. Due to their location, these facilities are exposed to potentially greater hurricane damage.

Our operations present risks of loss that, if not insured or indemnified against, could adversely affect our results of operations.

        With the exception of "named wind storm" risk in the Gulf of Mexico, we insure rigs and related equipment at values that approximate the current replacement cost on the inception date of the policy. We self-insure a $1.0 million per occurrence deductible, as well as 10 percent of the estimated replacement cost of offshore rigs and 30 percent of the estimated replacement cost for land rigs and equipment. We also carry insurance with varying deductibles and coverage limits with respect to offshore platform rigs and "named wind storm" risk in the Gulf of Mexico. Rig property insurance coverage expires in May 2011. We are unable to obtain significant amounts of insurance to cover risks of underground reservoir damage; however, we are generally indemnified under our drilling contracts from this risk. The Company self-insures a number of other risks including loss of earnings and business interruption.

        We have insurance coverage for comprehensive general liability, automobile liability, worker's compensation and employer's liability, and certain other specific risks. Generally, casualty deductibles range from $1 million to $2.5 million per occurrence, depending on the type of claim as well as whether a claim occurs inside or outside of the United States. Insurance is purchased over deductibles to reduce our exposure to catastrophic events. We retain a significant portion of our expected losses under our worker's compensation, general liability and automobile liability programs. We record estimates for incurred outstanding liabilities for unresolved worker's compensation, general liability and for claims that are incurred but not reported. Estimates are based on adjuster estimates, historical experience or statistical methods that we believe are reliable. Nonetheless, insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.

        No assurance can be given that all or a portion of our coverage will not be cancelled during fiscal 2011 or that insurance coverage will continue to be available at rates considered reasonable. No assurance can be given that our insurance and indemnification arrangements will adequately protect us against all liabilities that could result from the hazards of our drilling operations. Incurring a liability for which we are not fully insured or indemnified could materially affect our business, financial condition and results of operations.

We depend on a limited number of vendors, some of which are thinly capitalized and the loss of any of which could disrupt our operations.

        Certain key rig components are either purchased from or fabricated by a single or limited number of vendors, and we have no long-term contracts with many of these vendors. Shortages could occur in these essential components due to an interruption of supply or increased demands in the industry. If we are unable to procure certain of such rig components, we would be required to reduce our rig construction or other operations, which could have a material adverse effect on our business, financial condition and results of operations.

        If our principal fabricator, located on the Texas gulf coast, was unable or unwilling to continue fabricating rig components, then we would have to transfer this work to other acceptable fabricators. This transfer could result in significant delay in the completion of new FlexRigs. Any significant interruption in

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the fabrication of rig components could have a material adverse impact on our business, financial condition and results of operations.

        Certain key rig components are obtained from vendors that are, in some cases, thinly capitalized, independent companies that generate significant portions of their business from us or from a small group of companies in the energy industry. These vendors may be disproportionately affected by any loss of business, downturn in the energy industry or reduction or unavailability of credit. Therefore, disruptions in rig component delivery may occur, and such disruptions and terminations could have a material adverse effect on our business, financial condition and results of operations.

Our securities portfolio may lose significant value due to a decline in equity prices and other market-related risks, thus impacting our debt ratio and financial strength.

        At September 30, 2010, we had a portfolio of securities with a total fair value of $326 million. These securities are subject to a wide variety of market-related risks that could substantially reduce or increase the fair value of our holdings. Except for investments in limited partnerships carried at cost, the portfolio is recorded at fair value on our balance sheet with changes in unrealized after-tax value reflected in the equity section of our balance sheet. Any reduction in fair value would have an impact on our debt ratio and financial strength. At November 18, 2010, the fair value of the portfolio had increased to approximately $397 million.

Government regulations and environmental laws could adversely affect our business.

        Many aspects of our operations are subject to government regulation, including those relating to drilling practices and methods and the level of taxation. In addition, the United States and various other countries have environmental regulations which affect drilling operations. Drilling contractors may be liable for damages resulting from pollution. Under United States regulations, drilling contractors must establish financial responsibility to cover potential liability for pollution of offshore waters. Generally, we are indemnified under drilling contracts from liability arising from pollution, except in certain cases of surface pollution. However, the enforceability of indemnification provisions in foreign countries may be questionable.

        We believe that we are in substantial compliance with all legislation and regulations affecting our operations in the drilling of oil and gas wells and in controlling the discharge of wastes. To date, compliance has not materially affected our capital expenditures, earnings, or competitive position, although compliance measures may add to the costs of drilling operations. Additional legislation or regulation may reasonably be anticipated, and the effect thereof on our operations cannot be predicted.

Regulation of greenhouse gases and climate change could have a negative impact on our business.

        Some scientific studies have suggested that emissions of certain gases, commonly referred to as "greenhouse gases" ("GHGs") and including carbon dioxide and methane, may be contributing to warming of the Earth's atmosphere and other climatic changes. In response to such studies, the issue of climate change and the effect of GHG emissions, in particular emissions from fossil fuels, is attracting increasing attention worldwide. We are aware of the increasing focus of local, state, national and international regulatory bodies on GHG emissions and climate change issues. We are aware that The United States Congress is actively considering legislation to reduce GHG emissions. Although it is not possible at this time to predict whether proposed legislation or regulations will be adopted, any such future laws and regulations could result in increased compliance costs or additional operating restrictions. Any additional costs or operating restrictions associated with legislation or regulations regarding GHG emissions could materially impact our business, financial condition and results of operations.

        In addition, because our business depends on the level of activity in the oil and natural gas industry, existing or future laws, regulations, treaties or international agreements related to GHGs and climate change, including incentives to conserve energy or use alternative energy sources, could have an adverse impact on our business if such laws, regulations, treaties or international agreements reduce the worldwide demand for oil and natural gas or otherwise result in reduced economic activity generally. A reduced demand for oil and natural gas or reduced economic activity could materially impact our business, financial condition and results of operations.

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New legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

        The U.S. Environmental Protection Agency, or the EPA, has commenced a study of the potential environmental impacts of hydraulic fracturing, including the impact on drinking water sources and public health, and a committee of the U.S. House of Representatives is also conducting an investigation of hydraulic fracturing practices. Legislation has been introduced before Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the fracturing process. In addition, some states have and others are considering adopting regulations that could restrict hydraulic fracturing in certain circumstances. Any new laws, regulation or permitting requirements regarding hydraulic fracturing could lead to operational delay, or increased operating costs or third party or governmental claims, and could result in additional burdens that could serve to delay or limit the drilling services we provide to third parties whose drilling operations could be impacted by these regulations or increase our costs of compliance and doing business as well as delay the development of unconventional gas resources from shale formations which are not commercial without the use of hydraulic fracturing.

Our business and results of operations may be adversely affected by foreign currency devaluation.

        Contracts for work in foreign countries generally provide for payment in United States dollars, except for amounts required to meet local expenses. However, government-owned petroleum companies may in the future require that a greater proportion of these payments be made in local currencies. Based upon current information, we believe that our exposure to potential losses from currency devaluation in foreign countries is immaterial. With the exception of Argentina, all receivables and payments in foreign counties are currently in U.S. dollars. Cash balances are also kept at an insignificant level which assists in reducing exposure. In Argentina we invoice in U.S. dollars and are paid in pesos equivalent to the dollar invoice. Our Argentine subsidiary then remits the dollars to the parent by exchanging pesos through the Argentine Central Bank. While the Argentine peso was devalued in both 2009 and 2010, the devaluation losses in those years were not material to our financial statements.

Fixed-term contracts may in certain instances be terminated without an early termination payment.

        Fixed-term drilling contracts customarily provide for termination at the election of the customer, with an "early termination payment" to be paid to us if a contract is terminated prior to the expiration of the fixed term. However, under certain limited circumstances, such as destruction of a drilling rig, our bankruptcy, sustained unacceptable performance by us or delivery of a rig beyond certain grace and/or liquidated damage periods, no early termination payment would be paid to us. Even if an early termination payment is owed to us, the current global economic environment may affect the customer's ability to pay the early termination payment.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

        We have in place a $400 million senior unsecured credit facility which expires in December of 2011. We had $10 million borrowed and two letters of credit totaling $21.9 million outstanding against the facility at September 30, 2010. As of November 18, 2010, the $10 million outstanding balance had been paid. The interest rate on the borrowings is based on a spread over LIBOR and we pay a commitment fee based on the unused balance of the facility. The spread over LIBOR as well as the commitment fee is determined according to a scale based on a ratio of our total debt to total capitalization. We also have the option to borrow at the prime rate for maturities of less than 30 days. Interest rates could rise for various reasons in the future and increase our total interest expense, depending upon the amount borrowed against the credit lines.

Shortages of drilling equipment and supplies could adversely affect our operations.

        The contract drilling business is highly cyclical. During periods of increased demand for contract drilling services, delays in delivery and shortages of drilling equipment and supplies can occur. These risks are intensified during periods when the industry experiences significant new drilling rig construction or refurbishment. Any such delays or shortages could have a material adverse effect on our business, financial condition and results of operations.

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New technologies may cause our drilling methods and equipment to become less competitive, resulting in an adverse effect on our financial condition and results of operations.

        Although we take measures to ensure that we use advanced oil and natural gas drilling technology, changes in technology or improvements in competitors' equipment could make our equipment less competitive or require significant capital investments to keep our equipment competitive.

Competition for experienced technical personnel may negatively impact our operations or financial results.

        We utilize highly skilled personnel in operating and supporting our businesses. In times of high utilization, it can be difficult to retain, and in some cases find, qualified individuals. Although to date our operations have not been materially affected by competition for personnel, an inability to obtain or find a sufficient number of qualified personnel could materially impact our business, financial condition and results of operations.

Improvements in or new discoveries of alternative energy technologies could have a material adverse affect on our financial condition and results of operations.

        Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse impact on our business, financial condition and results of operations.

Item 1B.    UNRESOLVED STAFF COMMENTS

        We have received no written comments regarding our periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of our 2010 fiscal year and that remain unresolved.

Item 2.    PROPERTIES

CONTRACT DRILLING

        The following table sets forth certain information concerning our U.S. land and offshore drilling rigs as of September 30, 2010:

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        The following table sets forth information with respect to the utilization of our U.S. land and offshore drilling rigs for the periods indicated:

        The following table sets forth certain information concerning our international drilling rigs as of September 30, 2010:

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        The following table sets forth information with respect to the utilization of our international drilling rigs for the periods indicated:

STOCK PORTFOLIO

        Information required by this item regarding our stock portfolio may be found on, and is incorporated by reference to, page 28 of our Annual Report (Exhibit 13 to this Form 10-K) under the caption, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Item 3.    LEGAL PROCEEDINGS

        We are subject to various claims that arise in the ordinary course of our business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect our business, financial position and results of operations. We are not a party to, and none of our property is subject to, any material pending legal proceedings.

Item 4.    [Removed and reserved.]

OUR EXECUTIVE OFFICERS

        The following table sets forth the names and ages of our executive officers, together with all positions and offices held with the Company by such executive officers. Officers are elected to serve until the meeting of the Board of Directors following the next Annual Meeting of Stockholders and until their successors have been duly elected and have qualified or until their earlier resignation or removal.

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PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        The principal market on which our common stock is traded is the New York Stock Exchange under the symbol "HP". The high and low sale prices per share for the common stock for each quarterly period during the past two fiscal years as reported in the NYSE-Composite Transaction quotations follow: