Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Investor Presentation (September 2014)
45 slides from Helmerich & Payne's investor presentation, Sep 4, 2014
Slide 1: Forward-looking Statements
Statements within this presentation are “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of hi
Slide 2: About Helmerich & Payne
U.S. land drilling market share leader Focused on innovation and returns on capital Leader in ongoing industry land rig replacement cycle Most modern and capable land drilling fleet Strong balance sheet About Helmerich & Payne
Slide 3: H&P's Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and announced new build commitments as of September 3, 2014.
Slide 4: H&P Activity as of September 3, 2014
H&P Activity as of September 3, 2014 Rigs Working/Contracted 291 290 1 9 28 328 Rigs Available 335 302 33 9 35 379 44 423 % Contracted 87% 96% 3% 100% 80% 87% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet 6 of the 302 AC Drive FlexRigs are e
Slide 5: U.S. Land Active Rig Count
U.S. Land Active Rig Count BHI Industry Rig Count Through Second Quarter of Calendar 2014
Slide 6: H&P Continues to Capture Market Share
H&P Continues to Capture Market Share As of October 2008 (Peak) (~1,900 Active Rigs in U.S. Land) As of August 2014 (~1,900 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data. PDS’ market share includes both PDS and Grey Wolf rigs. Additionall
Slide 7: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller * Includes 44 announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2014 and fiscal 2015. (335 H&P Contracted Land Rigs as of 9/3/14*)
Slide 8: Unconventional Drilling Growth in Permian
Unconventional Drilling Growth in Permian Note: The above estimates are derived from Rig Data. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower.
Slide 9: Innovation & Applied Technology – FlexRig AC Driven Systems
Innovation & Applied Technology – FlexRig® AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities 31
Slide 10: The FlexRig Difference: Key Advantages
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency AC technology providing precise control and increased capability Computerized electronic driller more precisely controls down-hole parameters FlexRig designs are suited for both efficient well t
Slide 11: Technology & Quality Service Make a Difference
Technology & Quality Service Make a Difference (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin per day for PTEN, NBR, PDS, and UNT. (3) Utilization is herein calculated to be average active rigs divided by estimated available marketab
Slide 12: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 373 49
Slide 13: Ten Year Profit Comparison
* NBR’s operating income corresponds to its U.S. Lower 48, U.S. Offshore and Alaska business units. Ten Year Profit Comparison ** PTEN’s operating income includes drilling operations in Canada.
Slide 14: General Market Comments
General Market Comments The replacement cycle continues. U.S. land market trends continue to benefit H&P. International land markets are slowly evolving. Our operational outlook for the fourth fiscal quarter remains unchanged.
Slide 15: The Replacement Cycle Continues
As of August 2014 (~1,900 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,900 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and co
Slide 16: H&P's Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. **Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and PDS.
Slide 17: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Increasing market demand for AC drive rigs Slightly improving spot market pricing Continued customer focus on drilling efficiency, technology and safety Conversations with customers for additional new build orders continue
Slide 18: Unconventional Plays Shaping Landscape
Unconventional Plays Shaping Landscape Well Complexity is increasing: Horizontal and directional wells make up about 80% of wells drilled in the U.S. Extended reach laterals progressively longer Multi-well pad drilling gaining acceptance in more areas This all creates an expanding level of demand fo
Slide 19: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 20: Active U.S. Land Rigs by Rig Type
Active U.S. Land Rigs by Rig Type Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 hor
Slide 21: Growth / Decline in U.S. Lower 48 Rig Activity
Growth / Decline in U.S. Lower 48 Rig Activity As of 9/3/14 *Represents average active rigs for NBR, PTEN, and UNT.
Slide 22: Announcing Additional New Build FlexRigs
Announcing Additional New Build FlexRigs Announcing long-term contracts for nine new FlexRigs in the U.S. Contracts announced this fiscal year for a total of 83 new FlexRigs, 39 of which have already been delivered Now building at a cadence of four FlexRigs per month Flexibility in managing our own
Slide 23: Growing Shareholder Value
| Growing Shareholder Value | Lead Innovation Expand Drive Well Market Share Costs Down Satisfy Customers
Slide 24: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs Our competitive advantage is also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 25: Delivering Safety – H&P vs. Industry (IADC)
Delivering Safety – H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 – 2013) OSHA Recordable Injury Incidence Rates H&P = 0.84 IADC w/o H&P = 1.81 Injuries per 200,000 Man Hours
Slide 26: FlexRigs Delivering Drilling Efficiencies
FlexRigs Delivering Drilling Efficiencies We have over 1,400 rig years of AC Drive FlexRig drilling experience. Drilled over 52 million feet in 2012 Drilled in excess of 61 million feet in 2013 Improved our footage per day by 23% in 2012 Improved our footage per day by 14% in 2013
Slide 27: Return on Equity
Return on Equity * Including gains from the sale of investment securities and discontinued operations, H&P's corresponding ROE resulted in 15.4%. ** The corresponding ROE values for the selected companies exclude certain extraordinary, non-recurring charges.
Slide 28: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on August 26, 2014.
Slide 29: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of August 26, 2014
Slide 30: In Summary
In Summary: H&P’s long term strategy for growing shareholder value: Innovation Technology Safety and operational excellence Customer satisfaction
Slide 31: Additional References
ry mee Additional References
Slide 32: A Value Proposition Example – H&P vs. Competitors
A Value Proposition Example – H&P vs. Competitors Permian Basin – Horizontal Well Estimated Estimated Peer H&P FlexRig3 Conventional Rig AC Rig Average (Spot Market) 1. Drilling days 15.4 12.1 Other days No Data 3.0 3.0 Moving days 4.0 3.0 Total rig revenue days per well 22.4 18.1 2. Drilling contra
Slide 33: H&P's U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Slide 34: Distribution of Announced New Builds
Distribution of Announced New Builds Of the 83 new build FlexRigs announced so far during this fiscal year, 33 are going to the Permian, 18 to the Oklahoma Woodford, 15 to the Eagle Ford, five to the Tuscaloosa Marine Shale, four each to the Utica and Bakken, two to the Haynesville and one each to t
Slide 35: H&P's Pad Capable Fleet
H&P’s Pad Capable Fleet Roughly half of H&P’s U.S. Land active rigs are equipped with hydraulic skid systems. Our pad capable fleet is fully utilized. Customers continue to contract/add skid systems to existing FlexRigs. (As of September 3, 2014)
Slide 36: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY12 FY15 FY15 FY15 FY16 FY16 U.S. Land 173.6 165.2 155.8 142.1 122.9 110.1 102.9 International Land 15.5 17.5 17.3 17.0 16.3 14.2 14.0 Offshore 1.9 1.0 1.0 1.0 1.0 1.0 1.0 Total 191.0 183.7 174.1 160.1 140.2 125.3 117.9 Number o
Slide 37: H&P's International Land Operations Rig Fleet Status
H&P’s International Land Operations Rig Fleet Status (as of September 3, 2014) Active In-Transit Idle Total Argentina 7 5 1 13 Bahrain 3 3 Colombia 5 3 8 Ecuador 5 1 6 Mozambique 1 1 Tunisia 2 2 U.A.E. 2 2 Total 23 5 7 35
Slide 38: U.S. Land Average Daywork Margins
U.S. Land Average Daywork Margins(1) (1) Does not include the impact of early contract termination revenue.
Slide 39: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) * Excludes gains from the sale of investment securities and discontinued operations. H&P's unadjusted ROIC resulted in 14.7%. ** The corresponding ROIC values for the selected companies exclude certain extraordinary, non-recurring charges.
Slide 40: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of August 26, 2014.
Slide 41: Changes in Lower 48 U.S. Land Rig Count
Changes in Lower 48 U.S. Land Rig Count * PDS’ active rig count includes both PDS and Grey Wolf rigs.
Slide 42: H&P vs. Industry U.S. Land Customer Base
H&P vs. Industry U.S. Land Customer Base Note: The above estimates corresponding to the active rig fleet in the U.S. are derived from multiple sources including Rig Data and corporate filings.
Slide 43: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and CME Oil Prices Natural Gas Prices
Slide 44: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 45: End of Document
End of Document
Helmerich & Payne — Investor Presentation (September 2014) on 6ix